Advanced Technology Services, Inc. v. KM Docs, LLC

Filing 59

ORDER denying 56 Motion for Attorney Fees and Costs. Signed by Judge Thomas W. Thrash, Jr on 6/27/2013. (ss)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ADVANCED TECHNOLOGY
SERVICES, INC.,
Plaintiff,
v.

CIVIL ACTION FILE
NO. 1:11-CV-3121-TWT

KM DOCS, LLC, et al.,
Defendants.

OPINION AND ORDER

The Defendants move for attorneys’ fees and costs, which may be awarded in
the Court’s discretion to the prevailing party in a civil action under the Copyright Act.
The Court granted the Defendants’ Motion for Summary Judgment on the Plaintiff’s
claim of copyright infringement. The Defendants argue that the Plaintiff’s copyright
claim was frivolous and objectively unreasonable, and was brought to harass the
Defendants. The Court finds that while the Plaintiff did not produce sufficient
evidence in discovery to defeat the Defendants’ motion on the copyright claim, the
claim was not frivolous and was not objectively unreasonable. Furthermore, there is
no evidence to support the Defendants’ speculative assertion that the Plaintiff brought
the copyright claim to harass the Defendants.
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I. Background
The Plaintiff, Advanced Technology Services, Inc. (“ATS”), sells a document
imaging software program called OptiDoc. (Compl. ¶ 5.) OptiDoc is a complete
document management program that integrates with other software packages.
(Mischke Aff. ¶¶ 7-8.) The Defendants Miles Waldron and Harvey Heath are both
former employees of ATS. Waldron was a lead software engineer for ATS and had
access to the source code for OptiDoc while employed by the company. (Compl. ¶¶
7 & 11.) While at ATS, Waldron signed a Trade Secrets Agreement and a NonCompetition, Non-Solicitation and Non-Disclosure Agreement. (Compl. ¶ 10.)
Waldron resigned from ATS on June 1, 2010 (Compl. ¶ 12) and Heath resigned on or
about July 7, 2010. (Compl. ¶ 13.) On July 17, 2010, Waldron and Heath announced
their company KM Docs with screen shots of their software DocUnity and DocDNA.
(Compl. ¶ 14.) DocUnity and DocDNA are document imaging products that compete
with ATS’ OptiDoc software. ATS states that DocUnity and DocDNA are similar in
look and function to OptiDoc. (Compl. ¶¶ 14-15.) The Plaintiff alleges that
“[d]efendants Heath and Waldron conspired together during the last year of
employment with ATS to unlawfully take, misappropriate and steal the OptiDoc
software.” (Pl.’s Br. in Opp’n to Defs.’ Mot. to Dismiss, at 5.)

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The Complaint was filed in the Superior Court of Fulton County, Georgia on
September 8, 2011, and was removed to this Court on September 15, 2011 [Doc. 1].
The Plaintiff brought several claims in addition to its claim for copyright
infringement, including misappropriation, conversion, tortious interference with
Waldron’s contract, tortious interference with ATS’ contract with customers, breach
of contract, fraud, violation of the Georgia RICO Act, injunctive relief, breach of
fiduciary duty to ATS, theft of corporate opportunity, conspiracy, punitive damages,
and attorneys’ fees. The Defendants filed a Motion for Summary Judgment on
February 4, 2013 [Doc. 42].
On April 9, 2013, the Court ruled on the Defendants’ Motion for Summary
Judgment [Doc. 53]. The Defendants prevailed on the copyright claim in their Motion
for Summary Judgment. The Court declined to exercise supplemental jurisdiction
over the remaining state law claims, and remanded the action to the Superior Court of
Fulton County.
II. Attorneys’ Fees and Costs Under the Copyright Act
The award of attorneys’ fees and costs under the Copyright Act is within the
discretion of the Court. 17 U.S.C. § 505; Fogerty v. Fantasy, Inc., 510 U.S. 517, 534
(1994). The Court may choose to consider “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the case) and the
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need in particular circumstances to advance consideration of compensation and
deterrence.” Fogerty, 510 U.S. at 534 n. 19. These factors are merely possible factors
that the Court may choose to consider and are nonexclusive.
III. Discussion
The Defendants argue that the Plaintiff’s copyright claim was frivolous and
objectively unreasonable, and was brought to harass the Defendants. The Court
disagrees.

The Plaintiff’s evidence of copyright infringement consisted of

photographic and video evidence and circumstantial evidence. The Defendants
published screen shots and YouTube videos of its product DocUnity/DocDNA, and
these screen shots and videos demonstrated similarities to the Plaintiff’s OptiDoc
product. (Second Mischke Aff. ¶ 12.) The screen shots also demonstrated a software
concept that ATS alone had developed. (Id. at ¶ 6.)
The Plaintiff also had circumstantial evidence of copyright infringement.
Defendant Waldron had previously tried to sell OptiDoc source code to a third party
(Id. at ¶ 3), and soon after leaving ATS’ employment the Defendants attended a trade
show with their competing document product. Writing the source code from scratch
for a program like OptiDoc or DocUnity/DocDNA would take an experienced
software engineer approximately four years. (First Mischke Aff. ¶¶ 16, 19.) The
Defendants had access to ATS’ product (Id. at ¶¶ 12-13) and a motive to copy ATS’
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product in order to eliminate the time and expense of creating a document imaging
program from scratch.
The Defendants argue that because the Plaintiff failed to hire an expert to
compare the source code of OptiDoc and DocUnity/DocDNA, the Plaintiff did not
actually intend to prosecute its copyright claims, and simply intended to harass the
Defendants. This argument is very speculative, and based upon the reasoning above,
the Court finds that the Plaintiff pursued its copyright claim in good faith.
While a finding of bad faith is not necessary to award attorneys’ fees and costs,
see Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F.2d 821, 832 (11th
Cir. 1982), the Court’s finding that the Plaintiff did not bring its copyright claim in
bad faith weighs in its favor in the Court’s determination to deny attorneys’ fees and
costs to the Defendants. See Sherry Mfg. Co. v. Towel King of Florida, Inc., 822 F.2d
1031, 1034 (11th Cir. 1987) (holding that the losing plaintiff's good faith is a factor
which the district court can consider in its discretion to justify the denial of fees). As
the Court does not believe that the Plaintiff exercised bad faith, the primary purpose
behind imposing costs as a deterrent mechanism is absent. See, e.g., Kebodeaux v.
Schwegmann Giant Super Mkts., Civ. Act. No. 92-2086, 1994 U.S. Dist. LEXIS
13072, at *3 (E.D. La. Sept. 14, 1994) (finding that “it would be inconsistent with the

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purposes of the Copyright Act to deter plaintiffs...from bringing suits when they have
reason to believe, in good faith, that their copyrights have been infringed.”).
IV. Conclusion
For the reasons set forth above, the Court DENIES the Defendants’ Motion for
Attorneys’ Fees and Costs [Doc. 56].
SO ORDERED, this 27 day of June, 2013.

/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge

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