GlobeRanger Corporation v. Software AG et al

Filing 152

ORDER granting in part and denying in part 135 Motion for Summary Judgment; granting in part and denying in part 138 Motion for Summary Judgment. (Ordered by Judge Jane J Boyle on 6/20/2014) (Judge Jane J Boyle)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
GLOBERANGER CORPORATION
Plaintiff,
v.
SOFTWARE AG,
SOFTWARE AG USA, INC., NANIQ
SYSTEMS, LLC, and MAIN SAIL LLC,
Defendants.

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CIVIL ACTION NO. 3:11–CV–0403–B

MEMORANDUM OPINION AND ORDER
Software AG USA, Inc. and Software AG, Inc. (together, “SAG”), joined by Naniq Systems
LLC (“Naniq”) (collectively, “Defendants”),1 move for summary judgment on Plaintiff GlobeRanger
Corporation’s (“GlobeRanger”) four state law claims, which include trade secret misappropriation,
tortious interference with a contract, unfair competition, and conspiracy. Having conducted a
lengthy review of the parties’ briefing and submissions, the Court finds summary judgement
appropriate solely for GlobeRanger’s tortious interference claim. Accordingly, the Court GRANTS
IN PART and DENIES IN PART Defendants’ Motions for Summary Judgment (docs. 135, 138).
I.
BACKGROUND
This case centers on Defendants’ alleged misappropriation of GlobeRanger’s radio frequency
identification (“RFID”) technology. GlobeRanger installed the RFID solution at issue for the U.S.

1

Main Sail LLC (“Main Sail”) was dismissed from this case on May 13, 2014 (doc. 151) while
Defendants SAG’s and Naniq’s Motions for Summary Judgement were pending.

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Navy (the “Navy Solution”)2 as part of a subcontract signed in 2007. GlobeRanger claims that SAG
improperly gained access to the Navy Solution while working on a subsequent RFID project for the
Navy, and that SAG used this access to reverse–engineer its own commercial RFID solution. SAG
now argues in its Motion for Summary Judgement that its actions were lawful because the Navy had
the right to disclose the Navy Solution under federal procurement regulations. The facts pertinent
to this analysis, gleaned from the summary judgment record, are as follows.
A.

RFID Technology

RFID is wireless technology that uses radio wave signals for the purpose of automatically
identifying and tracking objects. This automatic identification system starts with RFID “tags” and
“readers.” The tag is attached to the desired object and stores information, such as “identification
numbers, location, or specifications of the tagged product.”3 The reader emits radio waves that signal
tags, as they come in range, to automatically send back their stored data, which the RFID reader
“then relays to a computer system installed with identification software.”4
New technological developments over the past three decades have led commercial and
government entities to adopt RFID across various applications, including electronic highway toll
collectors, employee ID cards, and automatic payment systems.5 Relevant to this analysis, RFID

2

For ease of reference, the Court calls the package of RFID technology that Defendants allegedly
accessed in stealing GlobeRanger’s trade secrets the “Navy Solution.” In reality, Defendants appear to
have accessed at least two different solutions that GlobeRanger implemented for the Navy.
3

Justin M. Schmidt, RFID and Privacy: Living in Perfect Harmony, 34 RUTGERS COMPUTER &
TECH. L.J. 247, 250 (2007).
4

Id. at 249–50.

5

See id. at 255–57.

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technology has become a powerful inventory management tool for many organizations. It allows
enterprises to tag inventory as it arrives, automatically track that inventory as it moves within
warehouses or to new facilities and eventually to the end–users. The enterprise can use the data its
RFID readers automatically compile in a central computer system to analyze customer spending and
automate business processes like inventory re–ordering.
B.

GlobeRanger’s Development and Protection of its RFID Solution

Established in 1999, GlobeRanger is a small Texas–based company that has spent years
implementing automatic identification technology for both private and government customers. In
the early 2000s, GlobeRanger was hired by companies that include Anheuser Busch, Ford Motor
Company and John Deere to install automatic identification systems for purposes such as asset
tracking and warehouse inventory processing. (Pl.’s App., Doc. 146, at 1–7, 415.) In the mid–2000s,
GlobeRanger’s business improved markedly after the Department of Defense (“DoD”) issued a series
of mandates requiring all DoD entities to implement RFID technology in an effort to improve
inventory logistics.6 The record shows GlobeRanger subcontracted7 on various RFID projects aimed
at complying with these DoD mandates.
The most prominent example of GlobeRanger’s work for the DoD was the RFID solutions
it installed for the Defense Logistics Agency (“DLA”), an agency tasked with acquiring goods and
supplies from commercial suppliers and distributing those goods and supplies to U.S. and foreign

6

See Sheila C. Stark & Euza P. Nagle, Full Speed Ahead with DoD Identification Requirements: Next
Stop, Radio Frequency Identification, PROCUREMENT LAW., Fall 2004, at 11, 11.
7

The government often contracts directly with“prime” contractors, who then enter into
contracts with subcontractors to carry out more discrete tasks.

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military services. GlobeRanger performed this work pursuant to its non–exclusive resale agreement
that it signed in 2005 with Psion Teklogix (“Psion”). This agreement made Psion—an RFID
hardware manufacturer—a non–exclusive reseller of GlobeRanger’s RFID products and services to
government agencies. (See id. at 8–18.) Under this agreement, GlobeRanger implemented RFID
solutions at various depots operated by the DLA starting in 2005. (Id. at 19–21, 416–17.) And since
the DoD’s mandate required commercial suppliers to integrate with these RFID systems,
GlobeRanger sold similar RFID solutions to DLA suppliers, including Honeywell Aeuropace and
Sopacko Packaging. (Id. at 62–66, 336, 417.) By 2007, an industry analyst noted that “GlobeRanger
currently has over 89 deployments of its [RFID technology].” (Id. at 67.)
GlobeRanger benefitted from this widespread deployment of its RFID technology across
various enterprises. It “provided GlobeRanger with the knowledge of how to deploy and orchestrate
a myriad of types and brands of hardware” and the ability to “integrate” its technology “with
enterprise business systems . . . and automate enterprise business processes.” (Id. at 416.) This
experience led to the development of GlobeRanger’s “proprietary RFID Solution,” which it calls the
“GlobeRanger Solution.” (Pl.’s Br. Supp. Resp. (“Pl.’s Resp.”), Doc. 145, at 1.)
The GlobeRanger Solution is a package of RFID technology that GlobeRanger developed and
assembled to license to customers.8 At the GlobeRanger Solution’s core is the iMotion platform,
which is a combination of software and other components that GlobeRanger has licensed to

8

GlobeRanger does not explicitly define the GlobeRanger Solution in its brief, and at times,
describes it in vague terms. This appears to stem, in part, from the fact that GlobeRanger was continually
improving its RFID technology over the course of its existence, such that its core package of RFID
technology differs somewhat across different periods of time.

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customers since 2001 for tracking and processing purposes.9 (Pl.’s App. 337, 414–15.) GlobeRanger
later developed and added Solution Accelerators and Expansion Packs to round out its GlobeRanger
Solution. Though not clearly defined, Solution Accelerators and Expansion Packs appear to be
packages of technology that are added to the iMotion platform to perform certain functions, such
as integrating and communicating with the RFID technology or the enterprise’s computer systems.
(See id. at 336–39, 415.) Functionally, the GlobeRanger Solution filters raw RFID reads “into
meaningful business events, on a real time basis, through four layers,” starting with the device
adapter and ending with a workflow, which “is a series of instructions or rules telling a computer
what to do in response to various inputs.” (Id. at 415–16.)
The GlobeRanger Solution is not a one–size–fits–all product; it must be molded according
to each customer’s RFID needs and computer systems. This customization includes adding
“components, workflows, and business processes,” with the end product being a custom RFID
“solution.” (Id. at 414.) For example, the Navy Solution, discussed in more detail later, was built
using the GlobeRanger Solution as its base and adding customized features unique to the Navy that
may differ from those GlobeRanger built into the “Daisy Solution” for Daisy Brand. (Id. at 417.)
Ultimately, GlobeRanger spent over $30 million to develop the GlobeRanger Solution. (Id.
at 414.) To protect its investment, GlobeRanger requires that users “review and click ‘agree’ to the
terms of” GlobeRanger’s End User License Agreement (“EULA”) before that solution may be
activated or moved to a different device. (Id. at 426.) Under its EULA, GlobeRanger retains all
intellectual property rights in its solution, and prohibits disclosure of its product without

9

(See, e.g., Pl.’s App. 14–15 (describing, in GlobeRanger’s agreement with Psion, the iMotion
platform as including various software and other components).)

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GlobeRanger’s written consent.10 GlobeRanger also uses license keys that are both device specific and
node–locked, which “means that once a license file is activated, the program cannot be moved to
a different device, or the program will lock” until a new license is activated. (Id.) GlobeRanger’s
further protects its information by making employees sign non–disclosure agreements (“NDAs”)
when hired, and requiring employees to sign certifications that all confidential information has been
returned upon severance. (Id. at 419.) GlobeRanger similarly requires contractors working on its
solutions to sign NDAs agreeing not to disclose or claim title to GlobeRanger’s intellectual property.
(Id. at 419.)
C.

Events Preceding the Alleged Misappropriation

In 2005, the Navy entered into contracts with prime contractors CACI International, Inc.
(“CACI”) and Science Applications International Corp. (“SAIC”) to assist in implementing an RFID
system per the DoD’s RFID mandate. (See Def.’s App., Doc. 137, at 196–240, 379–393.) SAIC, in
turn, entered into a renewable subcontract with GlobeRanger, in 2007, providing that GlobeRanger
would participate in the implementation of RFID solutions at selected sites. (See id. at 86–115.)
Pursuant to its subcontract, GlobeRanger built and implemented the Navy Solution at three different
Navy locations: Kanehoe Bay (“K–BAY”), Pearl Harbor, and San Diego. (Id. at 51.)
By 2008, the Navy decided to implement a centralized, enterprise–wide RFID system to cover
700 different sites. (Id. at 138.) To evaluate what platform to use in building this enterprise–wide
RFID solution, an Architecture Evaluation Team was assembled. (Id. at 117.) Led by the Navy’s

10

(See Pl.’s App. 9–10 (“All such U.S. Federal Government end–users shall not provide or
otherwise make available the Software or documentation, or any portion thereof, in any form to any third
party without the prior written approval of [GlobeRanger].”).)

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Robert Bacon, the Team included two additional Navy employees and six representatives from the
Navy’s various contractors, including two consulting firms later named as defendants in this case,
Main Sail and Naniq.11 (Id.) The Architecture Evaluation Team limited its assessment to just two
products/companies: the GlobeRanger Solution and SAG’s webMethods. (Id. at 126, 156, 162.)
SAG consists of two U.S. subsidiaries of the German technology company Software AG.12
SAG’s software suite, webMethods, was apparently chosen as one of the candidates for the Navy’s
enterprise–wide RFID project because of the Navy’s familiarity with webMethods on prior projects.
(Id. at 156.) Additionally, webMethods is a leading middleware product, capable of linking numerous
systems to a central location. But as SAG admits, webMethods had never been used for the specific
purpose of enabling an RFID system. (Pl.’s App. 213–18.) Likewise, SAG essentially had no
experience implementing RFID technology before the Navy’s evaluation process began. (Id.)
Nevertheless, after an extended process, the Architecture Evaluation Team issued a report
in February 2009 recommending SAG’s webMethods. (Def.’s App. 126–30.) The Navy considered
this report, and in November 2009 expressed approval by entering into a contract with SAG
concerning the implementation of an RFID solution using webMethods as a platform. (Id. at
267–94.) Meanwhile, the Navy ordered GlobeRanger to stop its RFID subcontracting work on
October 9, 2009, and informed GlobeRanger that the Navy’s three existing RFID sites would be
“converted to the new RFID Enterprise Architecture Solution next calender year.” (Id. at 172.)

11

As mentioned, Main Sail, who did not seek summary judgment, was dismissed from this case
after settling with GlobeRanger. Naniq, who involuntarily dissolved in 2011, joined in SAG’s Motion.
12

Software AG, the publically–trade German technology company, was dismissed from this case
on April 12, 2013 due to lack of personal jurisdiction. (See Doc. 71.)

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D.

The Alleged Misappropriation

Pursuant to its contract with the Navy, SAG supported the Navy’s RFID Asset Visibility
Enterprise (“RAVE”) project team, which included, among others, Bacon and representatives from
Naniq and Main Sail. GlobeRanger submits evidence purportedly showing that SAG wrongfully
accessed the Navy Solution during the RAVE project in at least three ways.13
First, Defendants and the Navy’s Bacon allegedly misrepresented their intentions to
GlobeRanger in order to access and copy images of the Navy Solution on two different occasions so
that SAG could study and reverse–engineer its own solution using webMethods as a platform. The
first of these images was made around September 2009, when Naniq copied an image of the Navy
Solution that GlobeRanger had installed for the Navy at K–BAY. Naniq was able to do this because
of an email in which Bacon requested a license key, claiming that Naniq would “be coming by to see
the GR server for routine maintenance and to take a scan.” (Pl.’s App. 227.) In sending a license key
to Naniq, GlobeRanger reminded it, among other things, that “the use of such license keys and
GlobeRanger Software shall be limited to the direct support of the Navy’s existing installation of
GlobeRanger Software and for no other purpose otherwise be subject to the terms of the
GlobeRanger [EULA].” (Id. at 239.) And while Main Sail, unlike Naniq, was not under contract to
help with the Navy Solution at K–BAY, Main Sail’s representative sent emails trying to help Naniq
unlock the Solution at K–BAY and following up to ensure the key was received. (See id. at 228–29,
232–33.) After receiving this key, Naniq confirmed that it was able to capture “a fully functioning

13

The Court does not explore a fourth potential source—GlobeRanger’s partial data dictionary.
GlobeRanger never mentions the partial data dictionary in its facts detailing Defendants’ “theft,” and
never presses it as a source in which Defendants acquired its trade secrets, even though it mentions the
data dictionary in its pleadings as a source SAG used to discover the trade secrets.

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image of the server at Kbay.” (Id. at 228.)
The second of these images was made in January 2010, when Naniq again copied an image
of the Navy Solution, this time at Pearl Harbor. In this instance, Naniq obtained the key directly
from a GlobeRanger representative through an email exchange on January 8, 2010. (Id. at 243.) In
it, Naniq claimed it simply needed the key to run maintenance on the K–BAY solution. (Id.) That
same day, Main Sail sent an email confirming Naniq was “ready to install a copy of GlobeRanger with
the Pearl configuration on a windows server provided by” the Navy. (Id. at 248.)
Subsequently, the RAVE team can be seen openly discussing what they were using these
images for. Naniq, for example, discussed how RAVE team leader Bacon “is interested in having
[Naniq] come into the Lab next week and load the GlobeRanger instances currently implemented
at Navy sites on either a windows XP or Windows Server box.” (Id. at 246.) Naniq further noted that
the RAVE team wanted to “demonstrate how [they] can access these instances to better understand
the [Navy Solution’s] workflows, legacy systems, integration, and reporting. This will provide the
ability to reach into the current solution at various locations and duplicate this effort in webMethods
in the lab environment.” (Id.) Bacon similarly wrote that “getting the exact instances of what we
have running with GR loaded into a workstation will streamline the development/conversion process
. . . . This should be very beneficial to [the Navy] and WebMethods.” (Id. at 246.) A presentation
from the RAVE team indicates that these images had been loaded onto servers in designated labs.
(Id. at 251.) This presentation even notes that one of the RAVE team’s goals is to “[r]eplicate
current GlobeRanger functionality.” (Id. at 276.) And at an RFID conference in April 2010, Bacon,
when asked publically about the Navy’s RFID project, openly admitted: “We had a jump start
because we had already . . . implemented [the other sites] using GlobeRanger servers on every site.
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So we sort of had that in our hip pockets which helped us jump start webMethods because we just
reverse engineered code from GlobeRanger—which saved us.” (Id. at 323.)
Second, SAG also purportedly had access to GlobeRanger’s proprietary information through
technical manuals that were delivered with the Navy Solution. (See Def.’s App. 341–67.) These
manuals apparently helped SAG discover, among other things, GlobeRanger’s Business Processes and
Architecture. (See Def.’s Br. Supp. Mot. Summ. J. (“Def.’s Mot.”), Doc. 136, at 14 nn. 13, 14.)
GlobeRanger defines its Business Processes as the “secret sauce” that allows the “software and
hardware components of RFID work in harmony,” telling the RFID system, among other things, what
it “should do about” raw RFID reads that the reader picks up. (First Am. Compl. (“FAC”), Doc. 79,
¶ 15.) Its Architecture is “the blueprint for how the RFID System will be implemented and
maintained in the context of the larger enterprise.” (Id. ¶ 16.) SAG accessed this proprietary
information, among other ways, through the technical manuals GlobeRanger delivered with the
Navy Solution. On the front cover, GlobeRanger warned readers:
This document contains material that is proprietary property of and confidential to
GlobeRanger and its suppliers. Disclosure outside of GlobeRanger and its suppliers
is prohibited except by written permission, license agreement, product evaluation
license agreement or other confidentiality agreement.
(Def.’s App. 341.)
Third, GlobeRanger points to one final source in which SAG gained access to its trade
secrets: Jason Miller, a former GlobeRanger employee who in late 2009 joined XIO Strategies, a
contractor that worked in a support position for the RAVE team. (Pl.’s App. 421.) Like all
GlobeRanger employees, Miller signed an NDA when he was hired and an exit certification when
he left GlobeRanger in June 2009. (Id. at 97–100.) Nonetheless, Miller responded to SAG’s multiple

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requests for information regarding the GlobeRanger Solution. (See id. at 295–99, 331–32, 396–400.)
These correspondences show Miller explaining various aspects of GlobeRanger’s RFID technology,
including workflows, the positioning and configuration of various components, and how GlobeRanger
integrates its technology with certain computer operating systems. (See id.)
Despite not having an RFID solution of its own before the RAVE project, SAG now markets
a product called “webMethods RFID.” (Id. at 330.) GlobeRanger maintains that this product
“includes GlobeRanger capabilities that SAG accessed as a result of its theft of GlobeRanger’s trade
secrets.” (Pl.’s Resp. 13.)
E.

Resolution of the Motions to Dismiss and Remand

This case arrived in this Court on March 1, 2011, via a Notice of Removal (doc. 1). Shortly
thereafter, Defendants moved to dismiss (docs. 6, 12) pursuant to Federal Rule of Civil Procedure
12(b)(6), arguing primarily that GlobeRanger’s state law claims failed as a matter of law because they
were preempted by the Copyright Act. In response, GlobeRanger asserted that its claims were not
preempted by the Copyright Act, and also filed a Motion to Remand (doc. 10), contending that this
Court lacked subject matter jurisdiction to hear its state law claims. Though these issues have not
been raised anew in the pending motion, how they were resolved is significant to the judicial
estoppel/admission argument analyzed below.
In August 2011, the Court issued two memorandum opinions, both turning on its conclusion
that GlobeRanger’s claims were preempted by the Copyright Act. In its first Order (doc. 27), the
Court denied GlobeRanger’s Motion to Remand and found that it had jurisdiction over
GlobeRanger’s claims through the Copyright Act provisions asserted by Defendants. In its second
Order (doc. 28), the Court granted Defendants’ motions to dismiss and concluded, similarly, that
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GlobeRanger’s claims were preempted by the Copyright Act and therefore failed as a matter of law.
The Court allowed GlobeRanger to replead it claims pursuant to the Copyright Act, which
GlobeRanger declined to do (doc. 31), instead opting to appeal the Court’s rulings.
On August 17, 2012, the Fifth Circuit reversed this Court’s Rule 12(b)(6) dismissal of
GlobeRanger’s claims and remanded the case back to this Court for further proceedings. See
GlobeRanger Corp. v. Software AG, 691 F.3d 702 (5th Cir. 2012). In doing so, the Fifth Circuit
concluded: (1) “GlobeRanger has pled factual allegations that at least in part fall outside the scope
of copyright” and are therefore not preempted, and (2) “the defendants have argued enough for a
basis for preemption on GlobeRanger’s conversion claim to stay in federal court.” Id. at 710.
F.

Pending Motions for Summary Judgment

Following the Fifth Circuit’s remand, GlobeRanger filed the version of its complaint currently
before the Court—the First Amended Complaint (doc. 79) (“FAC”). The FAC contains four Texas
state law claims, including misappropriation of trade secrets, unfair competition, tortious interference
with a contract, and conspiracy.
On December 18, 2013, the parties filed a Joint Motion to Continue Trial and Modify
Scheduling Order (doc. 130) asking the Court, among other things, to set briefing deadlines for
Defendants’ anticipated “motion for summary judgment limited to the government
contracts/intellectual property issue.” The parties requested that the Court “consider this discrete
summary judgment issue on an expedited basis.”
After the Court granted the Joint Motion (doc. 131), SAG filed its Motion for Summary
Judgment on January 15, 2014. Naniq joined SAG’s Motion, claiming “the grounds, arguments and
authorities asserted by SAG against GlobeRanger are sufficient to allow the Court to also grant
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summary judgment for Naniq.” (Naniq’s Mot. Summ. J., Doc. 138.) After GlobeRanger responded
to both motions, SAG filed its Reply on March 4, 2014, rendering the motions ripe for consideration.
II.
LEGAL STANDARDS
Federal Rule of Civil Procedure 56(a) provides that summary judgment is appropriate “if the
movant show that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” FED. R. CIV. P. 56(a). “A fact is material if it ‘might affect the outcome
of the suit under the governing law,’ and a dispute is genuine if ‘the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.’” Tagore v. United States, 735 F.3d
324 (5th Cir. 2013) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). In
determining whether a genuine dispute exists, the Court must “consider all facts and evidence in the
light most favorable to the nonmoving party [,] . . . draw all reasonable inferences in favor of the
nonmoving party [,] . . . [and] disregard all evidence favorable to the moving party that the jury is
not required to believe.” Haverda v. Hay County, 723 F.3d 586, 591 (5th Cir. 2013) (quotation marks
and internal citations omitted).
Procedurally, the movant “bears the initial responsibility of informing the district court of the
basis of its motion, and identifying those portions of” the record “which it believes demonstrate the
absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Where the non–movant bears the burden of proving the material facts at trial, the movant may
satisfy its summary judgment burden by “merely demonstrat[ing] an absence of evidentiary support
in the record for the non–movant’s case.” Wesley v. Gen. Drivers, Warehousemen & Helpers Local 745,
660 F.3d 211, 213 (5th Cir. 2011) (quoting Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir.
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2010)). If the movant satisfies this burden, “the burden shifts to the non–movant to produce
evidence of the existence” of a genuine dispute of a material fact for trial. Bayle, 615 F.3d at 355.
III.
ANALYSIS
SAG moves for summary judgment on all four of GlobeRanger’s Texas state law claims, which
include trade secret misappropriation, tortious interference with an existing contract, unfair
competition, and conspiracy. SAG focuses primarily on the merits of GlobeRanger’s trade secret
misappropriation claim. It also argues that GlobeRanger cannot establish certain essential elements
of the tortious interference claim. Lastly, SAG challenges GlobeRanger’s unfair competition and
conspiracy claims by arguing simply that summary judgment is appropriate for the same reasons it is
proper for GlobeRanger’s other two claims. The Court addresses each disputed claim in turn.
A.

Trade Secret Misappropriation

To establish SAG’s liability for trade secret misappropriation under Texas law, GlobeRanger
must prove: “‘(a) a trade secret existed; (b) the trade secret was acquired through a breach of a
confidential relationship or discovered by improper means; and (c) use of the trade secret without
authorization.’” Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 874 (5th Cir. 2013) (quoting Phillips
v. Frey, 20 F.3d 623, 627 (5th Cir. 1994)). The first two elements are at issue here.14
SAG challenges the first two elements of GlobeRanger’s claim with essentially the same
argument. To summarize, SAG argues that the Navy had the right to disclose all relevant technology

14

As GlobeRanger points out, SAG, in one of its footnotes, appears to address the third element
as well. (See Def.’s Mot. 34 n.21.) But since SAG never explicitly cites the third element as a ground for
summary judgment, the Court finds it unnecessary to consider the evidence and arguments GlobeRanger
with respect to the third element.

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and information surrounding the Navy Solution under governing provisions of the Defense Federal
Acquisition Regulation Supplement (“DFARS”), and thus, the Court should conclude as a matter
of law that (a) GlobeRanger failed to adequately protect its “secrets” and (b) SAG’s acquisition of
GlobeRanger’s purported secrets, via the Navy, was lawful. But while SAG frames this dispute as
purely legal—one “involv[ing] the interpretation of contracts and government regulations” (Def.’s
Reply 2)—there are numerous unresolved factual issues surrounding this claim. These unresolved
factual issues take shape as the Court begins its discussion of the parties’ key legal dispute—the
Navy’s right to disclose the Navy Solution under DFARS—before turning to the actual trade secret
elements at issue.
1.

What Rights to the Navy Solution did the Navy Acquire under DFARS?

The parties take opposing positions regarding the Navy’s rights to GlobeRanger’s proprietary
information under DFARS. SAG maintains that DFARS’s “technical data” or “noncommercial
computer software” provisions apply, and as such, the Navy indisputably had the right to disclose
GlobeRanger’s technology and information. GlobeRanger, on the other hand, argues that DFARS’s
“commercial computer software” provisions apply, and therefore, the Navy did not have the right to
disclose the Navy Solution in these circumstances.
i.

Legal issues surrounding the Navy’s rights under DFARS

In general, all government contracts are subject to the Federal Acquisition Regulations
(“FAR”). For DoD contracts, FAR is supplemented by DFARS, whose technology provisions regulate
the Navy contracts relevant to this dispute.15 The DFARS provisions at issue are most easily

15

Citations made herein are to the version of FARS and DFARS in effect in December 2007,
when the subcontract between GlobeRanger and SAIC was signed. That said, the DFARS provisions

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addressed by posing two related questions: (1) which set of DFARS provisions govern? and (2) what
disclosure rights do these governing regulations grant the Navy under the circumstances of this case?
First, the Court asks whether DFARS’s technical data, noncommercial computer software,
or commercial computer software regulations apply. This issue seems to turn on whether the
contractual item at issue qualifies as “technical data,” “noncommercial computer software,” or
“commercial computer software/commercial computer software documentation.”
DFARS 252.227–7013 covers the government’s “Rights in Technical Data—Noncommercial
Items.” Technical data refers to “recorded information, regardless of the form or method of the
recording, of a scientific or technical nature.” 48 C.F.R. § 252.227–7013(a)(14). Notably, technical
data “does not include computer software.” Id. And for all practical purposes, “computer software
documentation” is also excluded from the technical data regulations.16
DFARS 252.227–7014 regulates the government’s “Rights in Noncommercial Computer
Software and Noncommercial Computer Software Documentation.” Computer software is defined
as “computer programs, source code, source code listings, object code listings, design details,
algorithms, processes, flow charts, formulae, and related material that would enable the software to
be reproduced, recreated, or recompiled.” Id. § 252.227–7014(a)(4). Computer software

central to this case have not been significantly altered since 1995. See Peter Dugan, Less is More:
Encouraging Greater Competition in Computer Software Procurement by Simplifying the DFARS Licensing
Scheme, 39 Pub. Cont. L.J. 465, 469 (2010).
16

Technical data’s definition actually encompasses “computer software documentation.” 48
C.F.R. § 252.227–7013(a)(14). But confusingly, the technical data regulations elsewhere indicate that
the government’s technical data rights do not apply to computer software documentation. See id. §
252.227–7013(b). Instead, computer software documentation is governed either the noncommercial or
commercial computer software regulations, depending on what type of software the documentation relates
to.

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documentation under DFARS “means owner’s manuals, user’s manuals, installation instructions,
operation instructions, and other similar items, regardless of storage medium, that explain the
capabilities of the computer software or provide instructions for using the software.” Id. §
252.227–7014(a)(5). Computer software and its documentation are “noncommercial” so long as the
computer software does not fit the definition of “commercial computer software.” Id. §
252.227–7014(a)(13).
DFARS § 227.7202 governs the DoD’s rights in “Commercial Computer Software” and
“Commercial Computer Software Documentation.” Computer software and its documentation are
“commercial” if the computer software qualifies as “commercial computer software” under DFARS’s
definition, which covers “software developed or regularly used for non-governmental purposes” that
meet one of the following four criterion:
(i) Has been sold, leased, or licensed to the public;
(ii) Has been offered for sale, lease, or license to the public;
(iii) Has not been offered, sold, leased, or licensed to the public but will be
available for commercial sale, lease, or license in time to satisfy the delivery
requirements of this contract; or
(iv) Satisfies criterion expressed in paragraph (a)(1)(i), (ii), or (iii) of this
clause and would require only minor modification to meet the requirements
of this contract.
Id. § 252.227–7014(a)(1). The Navy Solution can only qualify as “commercial computer software”
if it meets criterion (iv) listed above—the “minor modification” criterion—because, as GlobeRanger
concedes, the Navy Solution is not an out–of–the–box product. A “minor modification” is one “that
does not significantly alter the non–governmental function or purpose of the software or is of the type
customarily provided in the commercial marketplace." Id. § 252.227-7014(a)(12).
Second, after determining which set of DFARS regulations apply, the next question to

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consider is what rights the applicable regulations grant the Navy in these circumstances. More
specifically, what disclosure rights could the Navy have acquired under each set of regulations? As
detailed below, the undisputed facts show that the Navy’s disclosure was permissible under DFARS
if the technical data or noncommercial software regulations apply, but if the commercial software
regulations apply, the Navy’s disclosure would not have been undisputedly permitted by DFARS.
Pursuant to DFARS § 252.7013's provisions, the government may obtain one of three
licenses in technical data. Id. § 252.227–7013(b). The broadest technical data license—“unlimited
rights”—grants the government the right, among other things, to “disclose technical data in whole
or in part, in any manner, and for any purposes whatsoever, and to have or authorize others to do
so.” Id. § 252.227–7013(a)(15). The second tier license—“government purpose rights”—also allows
the government to disclose the technical data, but not “for commercial purposes.” Id. §
252.227–7013(a)(12). The third is the “limited rights” license, which prohibits unauthorized
disclosures of technical data. Id. § 252.227–7013(a)(13). Which of the three technical data licenses
the government obtains depends on various factors, only one of which requires discussion for
purposes of this motion.17 Specifically, unless the technical data is “conspicuously” marked in
accordance with the regulation’s strict requirements detailed in DFARS § 252.277–7013, the
government, by default, obtains an unlimited rights license to the unmarked technical data. Id. §
252.227–7013(f). Here, since GlobeRanger never claims it marked the Navy Solution in accordance
with DFARS § 252.277–7013, the Navy indisputably obtained an unlimited rights license if
GlobeRanger delivered technical data. Thus, if the Navy Solution or its relevant components qualify

17

A second, potentially relevant, factor is the source of funding (i.e., government or private) for
the technical data’s development. But the Court need not address this factor for purposes of this motion.

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as technical data, the Court must conclude, as a matter of law, that the Navy had the right to
disclose this technical data to SAG.
Under DFARS § 252.7014's noncommercial software regulations, the Court would be
compelled to reach the same conclusion as it would under DFARS’s technical data regulations. As
GlobeRanger admits, the noncommercial software regulations are “just like [the] technical data”
regulations in that both “provide the government with different types of rights depending on factors
such as . . . the use of restrictive legends.” (Pl.’s Resp. 24.) Therefore, the Court must, likewise,
conclude that the Navy indisputably had the right to disclose the Navy Solution and its components
if they qualify as noncommercial software or noncommercial software documentation.
DFARS § 227.7202's commercial software regulations are more favorable to DoD
contractors. These provisions provide that “[c]ommercial computer software and commercial
computer software documentation shall be acquired under the licenses customarily provided to the
public unless such licenses are inconsistent with Federal procurement law or do not otherwise satisfy
user needs.” Id. § 227.7202–1(a). Thus, if the Navy Solution and its components qualify as
“commercial computer software” or “commercial computer software documentation,” no default
government licenses attach to GlobeRanger’s proprietary information. Instead, DFARS instructs that
these commercial items “shall be acquired under the licenses [GlobeRanger] customarily provided
to the public,” which—if agreed to by the Navy—would be GlobeRanger’s EULA.
To summarize, the Navy’s disclosure rights primarily turn on how the Navy Solution and its
components are characterized under DFARS’s technology provisions. Favoring SAG, if the Navy
Solution and its relevant components qualify, as a matter of law, as “technical data,” “noncommercial
computer software,” or “noncommercial computer software documentation,” the undisputed facts
- 19 -

show that the Navy’s disclosure of GlobeRanger’s proprietary information to SAG was permissible
under DFARS. Favoring GlobeRanger, if the Navy Solution or its relevant components reasonably
qualify as “commercial computer software” or “commercial computer software documentation,” the
default license rights in DFARS’s technical data and noncommercial software provisions do not
apply, and as such, the Navy’s disclosure would not have been undisputedly permitted by DFARS.
ii.

Genuine disputes exist regarding the Navy’s rights under DFARS

While the above discussion appears to present a pure legal dispute, the summary judgment
record reveals a number of genuine factual issues that confound the Court’s attempt to discern the
Navy’s precise rights under DFARS. The primary disputes, as follows, are whether the Navy Solution
and its relevant components qualify as (1) “technical data” or “computer software,” and (2) whether
the software components fall under the “commercial computer software” definition.
First, a genuine dispute exists as to whether the Navy Solution qualifies as “computer
software” under DFARS. The summary judgment record shows the Navy Solution to be made up of
hardware, software, and other components, all of which GlobeRanger added its know–how and
experience to during the implementation process. Because of this mixture, SAG—who concedes that
at least part of the Navy Solution contained software18—attempts to break the Solution down into
discrete components and show that the Navy had the right to disclose each relevant component
under DFARS. The relevant components identified by SAG include “[t]he data that [SAG] allegedly
sought to replicate (GlobeRanger’s Architecture and Business Processes) and the items that [SAG]

18

SAG does not dispute that the Navy Solution consists, at least in part, of "computer software"
as defined by DFARS. (See Def.'s Mot. 3.)

- 20 -

allegedly acquired to facilitate the misappropriation of trade secrets (the license keys . . . )19,” which
“are all technical data” according to SAG. (Def.’s Mot. 14.) But there are two major shortcomings
in SAG’s suggested approach.
The first is that GlobeRanger’s theory of liability, and supporting evidence, require a more
holistic view of SAG’s theft, which trade secret misappropriation law allows. GlobeRanger contends,
and the evidence reasonably suggests, that SAG unlawfully accessed the entire Navy Solution and
used it to reverse–engineer its own RFID solution with webMethods as a base. This holistic approach
is sufficient under the flexible legal standards governing trade secret misappropriation,20 even though
the summary judgment record does not clearly indicate which particular Navy Solution components
SAG “acquired” or “used.” But the Navy Solution’s mixture of relevant components leaves the
Navy’s rights to the entire Solution unclear under the rigid definitions of DFARS, which—in
contrast to trade secret law—purports to clearly delineate the parties’ rights to tangible items
delivered pursuant to DoD contracts. Nonetheless, as mentioned, GlobeRanger’s burden here is
merely to show that genuine factual issues exist regarding the lawfulness of the Navy’s disclosure.

19

SAG also discusses GlobeRanger’s partial data dictionary, but as mentioned above in the
Background section, GlobeRanger does not press this as a source of its trade secrets.
20

See, e.g., Metallurgical Indus. Inc. v. Fourtek, Inc., 790 F.2d 1195, 1201-02 (5th Cir. 1986)
(“Because each case must turn on its own facts, no standard formula for [determining whether a trade
secret exists] can be devised. . . . The definition of “trade secret” will therefore be determined by weighing
all equitable considerations.”); Lamont v. Vaquillas Energy Lopeno Ltd., 421 S.W.3d 198, 213 (Tex. App.
2013) (“A complete catalogue of improper means [for purposes of the second trade secret element] is not
possible. In general they are means which fall below the generally accepted standards of commercial
morality and reasonable conduct.”) (quotations and citations omitted); RESTATEMENT (THIRD) OF
UNFAIR COMPETITION § 40 cmt. c (1995) (“There are no technical limitations on the nature of the
conduct that constitutes ‘use’ of a trade secret . . . . As a general matter, any exploitation of the trade
secret that is likely to result in injury to the trade secret owner or enrichment to the defendant is a ‘use’
[for purposes of trade secret liability].”).

- 21 -

And since GlobeRanger has shown that at least part of what the Navy disclosed qualifies as
“computer software,” the Court cannot agree with SAG that the Navy’s disclosure was indisputably
lawful under DFARS’s “technical data” provisions.
The second problem with SAG’s proposed analysis has to do with its argument regarding the
classification of the Navy Solution components identified in GlobeRanger’s FAC. Contrary to SAG’s
contentions, the evidence does not undisputedly show that the Navy had the right to disclose these
items, which include GlobeRanger’s Architecture, Business Processes, and license keys.
For GlobeRanger’s Architecture and Business Processes, genuine factual issues exist regarding
whether these items are “technical data” or “computer software.” Under DFARS, only “recorded
information” qualifies as “technical data.” 48 C.F.R. § 252.227–7013(a)(14). To show GlobeRanger’s
Architecture and Business Processes are “recorded information,” SAG cites, without explanation,
GlobeRanger’s technical manuals that were delivered with the Navy Solution. (Def.’s Mot. 14 nn.
13, 14.) While this arguably suggests that GlobeRanger’s Architecture and Business Processes were
recorded in some form, other evidence depicts these items as nothing more than abstract concepts
emanating from the Navy Solution’s various components. In relation to the Architecture, for
example, GlobeRanger’s employees have described a “design process” by which GlobeRanger arranges
its RFID technology using its experience and know–how, deciding, for instance, which expansion
packs to use or how many device adapters to install in light of the RFID–reader layout. (Pl.’s App.
338–39.) Similarly, evidence suggests that the Business Processes are standard ideas and methods
that GlobeRanger developed over time to turn simple tag reads into useful business events. (See, e.g.,
FAC ¶ 15.) These abstract concepts may have been brought to life through the Navy Solution’s
tangible components, but that does not mean these ideas and processes were thereby deemed
- 22 -

“recorded” and delivered as “technical data” to the Navy. Indeed, a reasonable juror could just as
well conclude that GlobeRanger’s Architecture and Business Processes qualify as “computer
software” in light of the evidence showing that these concepts originate from the Navy Solution’s
tangible components, which include computer software.
To the extent the Business Processes and Architecture are “recorded” in GlobeRanger’s
technical manuals, as SAG contends, the evidence reasonably shows this item to be “commercial
computer software documentation” under DFARS. As mentioned, computer software
documentation includes “owner’s manuals, user’s manuals, installation instructions, operating
instructions, and other similar items . . . that explain the capabilities of the computer software or
provide instructions for using the software.” 48 C.F.R. § 252.227–7013(a)(4). Here, the evidence
reasonably shows that the technical manuals contain installation and operating instructions
explaining the capabilities and use of the Navy Solution’s software, qualifying the manuals as
“computer software documentation.” (See Def.’s App. 340–67.) The evidence also demonstrates that
the manuals were “commercial” because they relate to the Navy Solution’s software, which, as
discussed below, reasonably comports with the “commercial computer software” definition.
Likewise, a genuine dispute exists regarding whether GlobeRanger’s license keys qualify as
“technical data” or “computer software.” GlobeRanger submits evidence describing the license key
as “a special security program . . . owned and operated by GlobeRanger [that] may be required to
render operational the Licensed Software.” (Pl.’s App. 86 (emphasis added).) The evidence also
shows that the license key is a device specific and node–locked, meaning that GlobeRanger’s
software cannot be accessed for the first time or on any new device without the license key activating
the software. (Id. at 426.) This is enough to allow a reasonable juror to conclude that GlobeRanger’s
- 23 -

license keys qualify, under DFARS’s “computer software” definition, as a "computer progra[m]” or
some sort of “related material that would enable the software to be reproduced, recreated, or
recompiled.” 48 C.F.R. § 252.227-7014(a)(4).
Second, having found the evidence reasonably shows that the Navy Solution’s relevant
components qualify as “computer software,” the Court similarly concludes that a genuine dispute
exists regarding whether this software is “commercial.” Under the circumstances of this case, the
definition of “commercial computer software,” cited in full above, can be broken down into three
requirements that GlobeRanger must establish. Specifically, the Navy Solution’s software must: (1)
have been “developed or regularly used for non–governmental purposes,” (2) “[s]atisf[y] criterion
expressed in paragraph (a)(1)(i), (ii), or (iii) of” the commercial software definition,21 and (3)
“require only minor modification to meet the requirements of [the Navy] contract.” 48 C.F.R. §
252.227–7014(a)(1).
Here, genuine disputes exist for each of the above three requirements. For the first,
GlobeRanger shows that the Navy Solution’s core, software–related components—the iMotion
platform, Solution Accelerators, and Expansion Packs—are “regularly used” in the GlobeRanger
Solution package licensed to non–governmental customers. (See Pl.’s App. 1–24, 414–16.) While
SAG contends otherwise, its argument raises factual issues requiring credibility choices that are not
for the Court to resolve at this point in the proceedings. Likewise, the second requirement is met,

21

See 48 C.F.R. § 252.227–7014(a)(1) (providing that commercial software “(i) Has been sold,
leased, or licensed to the public; (ii) Has been offered for sale, lease, or license to the public; (iii) Has not
been offered, sold, leased, or licensed to the public but will be available for commercial sale, lease, or
license in time to satisfy the delivery requirements of this contract; or (iv) Satisfies criterion expressed in
paragraph (a)(1)(i), (ii), or (iii) of this clause and would require only minor modification to meet the
requirements of this contract”).

- 24 -

because the evidence shows, for the same reasons just discussed, that the Navy Solution’s software
“has been sold, leased, or licensed to the public” as required by paragraph (a)(1)(i) of the commercial
software definition. The bigger question here, is whether GlobeRanger’s modifications to its
GlobeRanger Solution in building the Navy Solution qualify as “minor” under DFARS.
As a reminder, a “minor modification” is one “that does not significantly alter the
nongovernmental function or purpose of the software or is of the type customarily provided in the
commercial marketplace.” Id. § 252.227–7014(a)(12). Here, there is a genuine factual dispute
regarding whether the Navy Solution’s modifications are those “customarily provided” to
GlobeRanger’s commercial customers. GlobeRanger’s representatives aver that the Navy Solution’s
customizations are “minor” in that GlobeRanger “customarily provide[s]” these same type of
modifications in a commercial setting. (Pl.’s App. 337–39, 417–18.) This includes, for example,
modifying the GlobeRanger Solution’s workflows to integrate with Navy’s Oracle database in the
same way GlobeRanger modifies workflows for its commercial customers who also employ an Oracle
database. (Id. at 418.) Similarly, another GlobeRanger representative’s testimony shows that
GlobeRanger altered the GlobeRanger Solution’s Expansion packs to meet the Navy’s needs in the
same soft of way GlobeRanger “customarily” does for commercial customers. (See id. at 338.) Though
a jury may ultimately find these modifications to be more than “minor” as defined by DFARS,
GlobeRanger has presented enough evidence, at this point, for a reasonable juror to conclude that
the Navy Solution contains “commercial computer software” under DFARS.
In sum, the Court concludes that genuine issues of fact exist regarding whether the Navy
Solution qualifies as technical data, noncommercial computer software, or commercial computer
software under DFARS. As such, the Court cannot conclude, as a matter of law, that the Navy had
- 25 -

the right to disclose the Navy Solution under DFARS “technical data” or “noncommercial computer
software” regulations. And based on the Court’s above discussion regarding the Navy’s rights to
commercial computer software, as well as the below analysis that expands on this discussion, the
Court cannot conclude as a matter of law that the Navy had the right to disclose the Navy Solution,
which the evidence reasonably shows to be made up, at least in part, of commercial computer
software.
iii.

Addressing SAG’s counter–arguments

In its Reply, SAG emphasizes three points that it believes show that the Navy’s disclosures
were indisputably lawful despite the genuine factual issues just discussed. These counter–points
include: (a) GlobeRanger is foreclosed from arguing that its RFID solution is “computer software”
in light of its prior representations in this case, (b) the written government contracts in this case did
not call for commercial software, and as such, GlobeRanger cannot establish that the commercial
software regulations govern, and (c) since the government at least partially funded the Navy
Solution, GlobeRanger cannot show that its software was commercial. (Def.’s Reply 5.) As explained
below, none of these argument persuade the Court to conclude, as a matter of law, that the Navy
was permitted to disclose GlobeRanger’s RFID technology under DFARS.
a.

Judicial admission/estoppel

SAG’s first contention is that the doctrines of judicial estoppel and admission foreclose
GlobeRanger’s “commercial computer software” arguments in light of its prior statements concerning
preemption under the Copyright Act. Specifically, SAG highlight GlobeRanger’s representations in
its Fifth Circuit Appellate Brief that: the “Complaint defines the GlobeRanger RFID Solution as
something markedly different” than “computer software,” as it is defined by the Copyright Act; the
- 26 -

allegations specifically state “that Defendants did not copy GlobeRanger’s software”; and the alleged
trade secrets involve “elements external to the [computer] program, such as GlobeRanger’s Business
Processes and Architecture.” (Def.’s Reply (quoting Def.’s App. 1, 4, 8) (emphasis omitted).) As
SAG points out, the Fifth Circuit ultimately sided with GlobeRanger on the copyright preemption
issue, reasoning that “[e]ven though the allegations . . . include copying of specific expressions” of
computer software, GlobeRanger also “alleges that it implements RFID solutions” that “include the
types of procedures, processes, systems, and method of operation that are excluded from copyright
protection under” the Copyright Act.22 GlobeRanger Corp., 691 F.3d at 708–09.
Based on the foregoing, SAG maintains that the “Court should treat GlobeRanger’s [prior]
statements . . . as judicial admissions or judicial estoppel” and prohibit GlobeRanger from arguing
that the Navy Solution qualifies as “computer software” under DFARS. (Def.’s Reply 7.)
GlobeRanger counters that it is not foreclosed from making this argument, because its prior position
was simply “that this case is not about literal copying of software.” (Pl.’s Resp. 19 (emphasis in
original).) Instead, according to GlobeRanger, its “core allegations has always been . . . that SAG
wrongfully obtained a live, customized configuration of GlobeRanger Solution, and then spent
months in a secret lab, accessing, studying, and reverse engineering how the GlobeRanger Solution
worked and achieved its various functionalities.” (Id. at 20 (emphasis in original).) Since it agrees
that GlobeRanger’s positions are not inconsistent, the Court finds that GlobeRanger is not foreclosed

22

For the copyright preemption defense to apply, a two prong test must be satisfied.
GlobeRanger’s above–cited representations relate to the first prong: whether the claim falls within the
subject matter of the Copyright Act, which excludes from protection “any idea, procedure, process,
system, method of operation, concept, principle, or discovery, regardless of the form in which it is
described, explained, illustrated, or embodied in such work.” 17 U.S.C. § 102(b).

- 27 -

from arguing that the Navy Solution is “computer software.”
First, judicial estoppel does not foreclose GlobeRanger’s “computer software” arguments.
According to the Fifth Circuit, “[j]udicial estoppel is a common law doctrine that prevents a party
from assuming inconsistent positions in litigation.” In re Superior Crewboats, Inc., 374 F.3d 330, 334
(5th Cir. 2004). As “courts have uniformly recognized,” judicial estoppel’s “purpose is to protect the
integrity of the judicial process by prohibiting parties from deliberately changing positions according
to the exigencies of the moment.” New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (internal
citations and quotation marks omitted). The Fifth Circuit has “‘identified at least two limitations on
the application of the doctrine: (1) it may be applied only where the position of the party to be
estopped is clearly inconsistent with its previous one; and (2) that party must have convinced the
court to accept that previous position.’” Ahrens v. Perot Sys. Corp., 205 F.3d 831, 833 (5th Cir. 2000)
(quoting In re Costal Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999)). Nonetheless, since “judicial
estoppel is an equitable doctrine, [] the decision whether to invoke it [is] within the [district] court’s
discretion.” Coastal Plains, 179 F.3d at 205.
Here, judicial estoppel is not applicable because GlobeRanger has not “asserted a legal
position that is ‘plainly inconsistent’ with a position asserted in a prior case.” In re Oparaji, 698 F.3d
231, 235 (5th Cir. 2012) (Love v. Tyson Foods, Inc., 677 F.3d 258, 261 (5th Cir.2012)). In relation
to copyright preemption, GlobeRanger emphasized the non–software components of the Navy
Solution in an effort to show that its allegations do not involve the copying of computer software’s
expressive elements. Now, GlobeRanger emphasizes the software components of the Navy Solution
in an effort to establish a completely different legal proposition—that the Navy did not have the right
to disclose the Navy Solution to SAG. In both instances, GlobeRanger’s “core allegations” are the
- 28 -

same: “SAG wrongfully obtained a live, customized configuration of GlobeRanger Solution”—whose
software components are emphasized in this motion—“and then spent months in a secret lab,
accessing, studying, and reverse engineering” the Solution’s non–expressive elements, namely, “how
[it] worked and achieved its various functionalities.” (Pl.’s Resp. 20 (emphasis in original).)
To the extent GlobeRanger’s legal positions are inconsistent at all, that inconsistency is
implied. But the Fifth Circuit has “expressed reluctance to apply judicial estoppel in situations where
a party’s alleged change of position is merely implied rather than clear and express.” Oparaji, 698 F.3d
at 237. Without question, GlobeRanger, in emphasizing the non–expressive elements of its RFID
technology for purposes of preemption, did not “clearly” or “expressly” adopt a different position than
the one it takes now regarding the characterization of the Navy Solution under DFARS. Indeed,
“[d]espite the semantic inconsistency, it is legally possible” for GlobeRanger to adopt these two
positions regarding the role of software in this case and still prevail on both grounds.23 Hopkins v.
Cornerstone Am., 545 F.3d 338, 347 (5th Cir. 2008). Accordingly, given that there is no “legal
inconsistency” in its positions, GlobeRanger cannot be estopped from arguing that its RFID solution
contains “computer software” as defined by DFARS. Id.
Second, GlobeRanger is also not foreclosed from arguing that the Navy Solution qualifies as
computer software under the doctrine of judicial admissions. As the Fifth Circuit notes, “[a] judicial
admission is a formal concession in the pleadings or stipulations by a party or counsel that is binding

23

Compare GlobeRanger, 691 F.3d at 707 (explaining that while “nonliteral aspect of computer
programs are within the scope of copyright [,] . . . copyright protection [does not] swee[p] so broadly as to
encompass whole structures or systems of which software is only a part”), with 48 C.F.R. §
252.227–7013(a)(3) (defining computer software broadly to encompass even “processes, flow charts,
formulae and related material that would enable the software to be reproduced, recreated, or
recompiled”).

- 29 -

on the party making them.” Martinez v. Bally's Louisiana, Inc., 244 F.3d 474, 476 (5th Cir. 2001).
Whereas judicial estoppel deals with a party’s positions on a legal issue, judicial admission concerns
a party’s factual representations. When applicable, a judicial admission “has the effect of withdrawing
a fact from contention.” Id. For the doctrine to apply, the purported admission “must be made
intentionally as a waiver, releasing the opponent from proof of fact.’” United States v.
Chavez–Hernandez, 671 F.3d 494, 501 (5th Cir. 2012) (quoting Martinez, 244 F.3d at 476). And like
judicial estoppel, the doctrine of judicial admissions cannot be used to exclude a party’s present
statement unless it is “inconsistent with or contrary to” its past statement. Giddens v. Cmty. Educ.
Centers, Inc., 540 F. App'x 381, 390-91 (5th Cir. 2013) (citing Davis v. A.G. Edwards & Sons, Inc.,
823 F.2d 105, 107–08 (5th Cir.1987)). As before, whether to treat prior “statements in briefs as
binding judicial admissions of fact . . . is within [the Court’s] discretion.” City Nat. Bank v. United
States, 907 F.2d 536, 544 (5th Cir. 1990).
As with judicial estoppel, the Court concludes that the doctrine of judicial admissions does
not apply, since GlobeRanger’s prior statements are not “contrary to a fact essential to the theory of
recovery.” Heritage Bank v. Redcom Labs., Inc., 250 F.3d 319, 329 (5th Cir. 2001). GlobeRanger never
claimed, while arguing preemption, that its RFID technology does not include computer software or
that the Navy had the right to any of its technology at issue under DFARS. And as detailed above,
its prior statements are consistent with its current representation; GlobeRanger has simply
emphasized different aspects of the RFID technology while arguing two completely different legal
issues. Even assuming GlobeRanger’s representations contain factual inconsistencies, there is no
reasonable indication that GlobeRanger made its prior statements “intentionally as a waiver,
releasing [SAG] from proof of fact” regarding the Navy Solution’s composition or the Navy’s rights
- 30 -

to GlobeRanger’s technology. Martinez, 244 F.3d at 476. Accordingly, the Court has no reasonable
basis to exclude GlobeRanger’s “computer software” representations under the doctrine of judicial
admissions.
Lastly, GlobeRanger’s arguments concerning the Navy Solution’s “commercial” nature are,
likewise, not foreclosed under the doctrines of judicial estoppel or admissions. SAG highlights a
second set of representations by GlobeRanger that it believes are inconsistent. Specifically, SAG
points out that GlobeRanger previously argued, in its Motion to Remand, that the Navy Solution was
a custom–built solution, not an out–of–the–box product. (Def.’s Reply 6 (citing Def.’s App.
430–31).). SAG claims that these prior representations should foreclose GlobeRanger from arguing
now that the Navy Solution contains GlobeRanger’s “existing, commercially–available platform and
component capabilities” with “minor modification[s],” as defined by the DFARS’s “commercial
computer software” regulations. (Id. (citing Pl.’s Resp. 9).) But like before, these prior statements are
neither legally nor factually inconsistent with GlobeRanger’s representations. In its current brief,
GlobeRanger even admits “every solution [it] sells is slightly different”; it simply goes on to elaborate,
as it did not do in its Motion to Remand brief, that these differences constitute “minor
modification[s]” under DFARS. (Pl.’s Resp. 25.) These representations simply supplement the prior
representations—there is no inconsistency. And even if there was, the Court cannot foreclose
GlobeRanger’s arguments for additional reasons. For judicial estoppel, the Court did not rely on
GlobeRanger’s representations when it denied GlobeRanger’s Motion to Remand. For judicial
admission, there is no indication that GlobeRanger’s prior representations were intended to release
SAG from proof of fact regarding the degree to which the Navy Solution was modified. Accordingly,
neither judicial estoppel nor judicial admission apply in these circumstances.
- 31 -

b.

The lack of a written commercial software contract

The next point SAG raises is that “the prime contract and subcontract that undisputedly
governed GlobeRanger’s work for the Navy call for GlobeRanger to provide services and technical
data,” and “[t]here is no evidence that GlobeRanger ever entered into any licensing agreement or
contract to provide commercial computer software to the Navy.” (Def.’s Reply 5.) According to
SAG, since the evidence shows that GlobeRanger failed “to push SAIC to obtain [a commercial
software] licensing arrangement from the Navy[,] . . . it must live with the contracts that govern its
work for the Navy, which involve technical data and not commercial software.” (Id. at 12.)
The only real counter GlobeRanger seems to offer is that, as long as the Navy Solution
contained “commercial computer software” as defined by DFARS, the regulations automatically bind
the Navy to GlobeRanger’s EULA, even if no evidence shows the Navy actually agreed to be bound
by the EULA’s terms. But as discussed in relation to GlobeRanger’s tortious interference claim,
DFARS does not seem to support this argument made by GlobeRanger. Nonetheless, this deficiency
does not prevent the Court from finding in GlobeRanger’s favor for its trade secret claim.
To be fair, DFARS leaves the Navy’s rights somewhat uncertain in these
circumstances—where a subcontractor delivers commercial computer software to the government
without indicating in its written subcontract or in any direct agreement with the government that
commercial software is involved. But this legal ambiguity regarding the parties’ contractual rights
does not mean the Court must adopt SAG’s position for purposes of GlobeRanger’s trade secret
claim. In fact, the main problem with SAG’s argument is that it seemingly forgets that GlobeRanger
is not obligated, under trade secret misappropriation law, to show that the Navy’s rights were

- 32 -

restricted by the EULA or some other written or even express agreement.24 Instead, GlobeRanger
simply must show, at least for this portion of the analysis, that genuine factual disputes exist in regard
to the Navy’s right to disclose the Navy Solution. As detailed above, GlobeRanger has done just that.
What SAG now points to is merely evidence (written contracts) supporting its own factual position
that GlobeRanger delivered technical data and/ot noncommercial software, rather than commercial
software. What SAG fails to identify, however, is some legal authority that would persuade the Court
to find that the Navy, by default, obtains the right to disclose a subcontractor’s commercial software
simply because the subcontractor did not procure the Navy’s express acceptance of the commercial
license’s terms.
For starters, DFARS’s commercial software regulations make clear that “[a] specific contract
clause governing the government’s rights in commercial computer software or commercial computer
software documentation is not prescribed.” 48 C.F.R. § 227.7202–4. This is in stark contrast to the
technical data and noncommercial software provisions, which require contractors to incorporate
particular clauses in their government contracts and follow specific procedures, or else the
government will automatically obtain specific, default license rights in the technology in question.
The commercial software regulations have no such pre–conditions before a contractor can assert its
rights. And should the government and contractor fail to follow DFARS’s instructions to see that
the commercial software is “acquired under the license customarily provided to the public,” the
commercial software regulations provide no back–up, default license rights like the technical data

24

See Phillips v. Frey, 20 F.3d 623, 631 (5th Cir. 1994) (“[T]he Supreme Court of Texas [has]
held that an express agreement was not necessary [for a trade secret claim] where the actions of the
parties and the nature of their relationship, taken as a whole, established the existence of a confidential
relationship.”).

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and noncommercial software provisions. Id. § 227.7202–1(a).
Moreover, nothing in DFARS suggests that technology qualifying as “commercial computer
software” somehow reverts to “noncommercial computer software” or “technical data” and becomes
governed by those DFARS provisions simply because the parties’ rights are unclear under the
commercial software regulations. In fact, the applicable set of DFARS regulations is determined
solely based on whether the technology at issue qualifies as technical data (DFARS § 252.227–7013),
noncommercial software (DFARS § 252.227–7014), or commercial software (DFARS § 227.7202).
If the applicable regulation was, instead, determined by how the parties define the technology in their
written contracts as SAG suggests, then DFARS’s detailed definitions of these applicable terms
would be meaningless.
Finally, neither government contract provision cited by SAG convince the Court to find
differently. First, SAG points to a regulation instructing the government and contractors not to “use
the [technical data] clause when the only deliverable items are computer software or computer
software documentation.” Id. § 227.7103–6(a). But again, the summary judgment record shows the
Navy Solution contained a mixture of components, which makes it is entirely reasonable to conclude
that GlobeRanger delivered both technical data and computer software, and thus, there is no
violation of this provision.25 Second, SAG also highlights a single sentence from the commercial
software regulations stating: “The specific rights granted to the Government shall be enumerated in
the contract license agreement or an addendum thereto.” Id. § 227.7202–3(b). But immediately

25

Even if only software and software documentation was delivered, this DFARS provision is
merely intended to instruct the parties on when to use the technical data provision. If, for example, the
contractor and government accidentally included the technical data provision when only software was
delivered, the provision, by its terms, would not automatically render the delivered items “technical data.”

- 34 -

preceding this isolated sentence is another that reads: “If the Government has a need for rights not
conveyed under the license customarily provided to the public, the Government must negotiate with
the contractor to determine if there are acceptable terms for transferring such rights.” Id. Thus,
reading the entire clause—rather than the isolated portion SAG cites—shows that, in the event “the
Government has a need for rights not conveyed” in the contractor’s commercial software license and
decides to negotiate for more rights, only then must the Government’s “specific rights” to the
commercial software “be enumerated in [a] contract license agreement or addendum thereto.” Id.
Since this is clearly not the circumstances of this case—the Navy never indicated it needed greater
rights and no negotiations took place—GlobeRanger was not required to enumerate the Navy’s
specific rights to its commercial software in a written contract.
c.

Source of funding for the commercial software

The third and final counter–argument raised by SAG is that the Navy Solution’s software “is
not commercial because it was developed exclusively for the Navy using U.S. taxpayer funds.” (Def.’s
Reply 13.) But the commercial software regulations, unlike the technical data and noncommercial
software regulations, do not grant the government different rights based on the commercial software’s
source of funding. Instead, they simply require that the software qualify as “commercial,” which
includes commercial software that contains “minor modification[s],” regardless of whether those
modifications were funded by the government or otherwise.26 48 C.F.R. § 252.227–7014(a)(1). Thus,

26

See Andrea B. Mayner, Understanding DFARS Technical Data Rights Regulations, CONT. MGMT.,
Nov. 2004, at 16, 23 (noting that “contractors are able to make minor modifications to commercial
software at government expense” under DFARS and the software “will still be considered commercial”);
see also Christine C. Trend, Killing the Goose that Laid the Golden Egg: Data Rights Law and Policy in
Department of Defense Contracts, 34 Pub. Cont. L.J. 287, 323 (2005) (noting the same).

- 35 -

so long as the Navy Solution qualifies as commercial computer software, it makes no difference
whether the Navy paid for any portion of GlobeRanger’s developmental work. And since the Court
already found genuine issues exist regarding whether the Navy Solution qualifies as commercial
software, the Court rejects SAG’s contention that the Navy indisputably had the right to disclose
the Navy Solution in light of the government funding GlobeRanger apparently received.
2.

Trade Secret Misappropriation Elements in Dispute

Having found that genuine factual issues surround the Navy’s right to disclose the Navy
Solution, the Court now turns to the two disputed trade secret misappropriation elements in this
case: (1) the existence of a trade secret, and (2) acquisition of the trade secret through a breach of
confidence or improper means.
i.

Element 1: Existence of a Trade Secret

Under Texas law, “[a] trade secret is ‘any formula, pattern, device or compilation of
information which is used in one’s business and presents an opportunity to obtain an advantage over
competitors who do not know or use it.’” Southwestern Energy Prod. Co. v. Berry–Helfand, 411 S.W.3d
581, 597 (Tex. App. 2013) (quoting In re Bass, 113 S.W.3d 735, 739 (Tex. 2003)). Whether a trade
secret exists “‘is properly considered a question of fact to be decided by the judge or jury as
fact–finder.’” Wellogix, 716 F.3d at 874 (quoting Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 150
(5th Cir. 2004)).
SAG does not challenge GlobeRanger’s ability to show that the Navy Solution contained
trade secrets. Rather, SAG contends that GlobeRanger’s proprietary information lost its trade–secret
status when GlobeRanger delivered the Navy Solution to the Navy without adequate protections.
More specifically, SAG maintains that since “GlobeRanger provided its RFID solution to the Navy
- 36 -

without restriction, the RFID solution does not qualify for trade secret protection.” (Def.’s Mot. 25.)
But given the Court’s above conclusions regarding the Navy’s disputed rights under DFARS, SAG’s
contention is without merit.
First, the primary line of authority SAG relies on here can be easily dismissed. SAG compares
these circumstances to federal cases in which DoD contractors lost the trade–secret status of their
“technical data” upon delivering such data to the government without complying with DFARS’s
marking requirements.27 But since genuine factual issues exist regarding whether the Navy Solution’s
relevant components qualify as technical data, the Court finds these cases distinguishable.
Second, SAG also relies on cases applying Texas law to more generally argue that
GlobeRanger’s disclosure of its RFID technology to the Navy destroyed the secrecy of its supposed
trade secrets. As SAG points out, “[a] trade secret must be a secret” under Texas law.28 Applying this
principle, courts “have held that the unrestricted disclosure of trade–secret information to third
parties, outside the context of a confidential relationship, destroys the trade–secret status of the
information.”29 But importantly, disclosure only defeats the information’s trade–secret status if the

27

See, e.g., L–3 Commc’ns Westwood Corp. v. Robichaux, No. 06–279, 2008 WL 577560, at *8
(E.D. La. Feb. 29, 2008); Secure Servs. Tech., Inc. v. Time & Soace Processing, Inc., 722 F, Supp, 1354,
1360 (E.D. Va. 1989); Conax Fl. Corp. v. United States, 824 F.2d 1124, 1128 (D.C. Cir. 1987).
28

INEOS Grp. Ltd. v. Chevron Phillips Chem. Co., 312 S.W.3d 843, 852 (Tex. App. 2009); see
also Luccous v. J.C. Kinley Co., 376 S.W.2d 336, 338 (Tex. 1964) (“It is self–evident that the subject
matter of a trade secret must be kept secret.”); Southwestern Energy Prod. Co. v. Berry-Helfand, 411
S.W.3d 581, 597 (Tex. App. 2013) (“There must be a substantial amount of attendant secrecy for
information to be a trade secret.”).
29

INEOS Grp., 312 S.W.3d at 852 (citing Numed, Inc. v. McNutt, 724 S.W.2d 432, 435 (Tex.
App. 1987) and Interox America v. PPG Indus., Inc., 736 F.2d 194, 202 (5th Cir. 1984)).

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disclosure is made without “reasonable precautions to ensure [the information’s] secrecy.”30 Thus,
“[i]f a voluntary disclosure occurs in a context that would not ordinarily occasion public exposure,
and in a manner that does not carelessly exceed the imperatives of a beneficial transaction, then the
disclosure is properly limited and the requisite secrecy retained.”31 Likewise, disclosure does not
destroy the information’s secrecy where the owner establishes “a confidential relationship with the
other party, by contract or otherwise.” Southwestern Energy, 736 F.2d at 597.
Here, there are genuine disputes regarding whether GlobeRanger delivered the Navy Solution
to the Navy with adequate precautions to ensure the secrecy of its proprietary information. Again,
the Court already concluded that the Navy did not have the undisputed right to disclose the Navy
Solution to SAG. And though no evidence shows an express contract between the Navy and
GlobeRanger, the summary judgment record reveals various other protections GlobeRanger put in
place to maintain the secrecy of its information and create confidential relationships with those who
ultimately passed the Navy Solution on to SAG. For example, GlobeRanger protects its RFID
solutions, including the Navy Solution, with device–specific license keys that are “node–locked,
meaning that once a license file is activated, the software cannot be moved to a different device, or
the program will lock, and the user cannot gain access without activation of a new license.” (Pl.’s
Resp. 7 (citing Pl.’s App. 426).) GlobeRanger also mandates that employees sign NDAs along with
exit certifications and requires contractors—including those working on the Navy Solution—to sign
30

Interox Am. v. PPG Indus., Inc., 736 F.2d 194, 202 (5th Cir. 1984) (citing E.I. duPont
deNemours & Co. v. Christopher, 431 F.2d 1012, 1015 (5th Cir. 1970)).
31

Taco Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1124 (5th Cir. 1991) (“[T]he
disclosure of Taco Cabana plans to contractors did not extinguish their secrecy.”) (citing Metallurgical
Industries, 790 F.2d at 1200; International Election Systems Corp. v. Shoup, 452 F.Supp. 684, 707–08 (E.D.
Pa.1978); Nucor Corp. v. Tennessee Forging Steel Service, Inc., 476 F.2d 386, 390 (8th Cir.1973)).

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similar NDAs. Further, upon delivering new license keys to the Navy’s contractors, GlobeRanger
reminded recipients that the keys were to be used “for direct support of the Navy’s existing
installation of GlobeRanger’s Software and for no other purpose and otherwise subject to the terms
of the GlobeRanger [EULA].” (Pl.’s App. 238–41.) Similarly, the technical manuals that
GlobeRanger delivered had a clear disclaimer that “[d]isclosure outside of GlobeRanger and its
suppliers is prohibited.” (Def.’s App. 341.) Simply put, the evidence does not indisputably show that
GlobeRanger made an “unrestricted disclosure of [its] trade–secret information to third parties.”
INEOS Grp., 312 S.W. at 852. Rather, a jury could reasonably conclude that GlobeRanger delivered
the Navy Solution to the Navy with “reasonable precautions to ensure [the] secrecy” of its
proprietary information. Interox, 736 F.2 at 202. The Court, therefore, concludes that genuine factual
disputes exist with respect to the first element of GlobeRanger’s trade secret claim.
ii.

Element 2: Acquisition through breach of confidence or improper means

The second element requires GlobeRanger to show that SAG acquired the trade secrets
“through a breach of a confidential relationship or discovered by improper means.” Alcatel USA, Inc.
v. DGI Techs., Inc., 166 F.3d 772, 784 (5th Cir. 1999). To show a breach of confidence, “no express
agreement is necessary, but . . . the confidence reposed in the other person must, in some way, be
manifest—if not by words, then by the acts of the parties or the whole picture of their relationship.”
Furr’s Inc. v. United Speciality Advertising Co., 385 S.W.2d 456, 459 (Tex. App. 1964) (citing Hyde
Corp. v. Huffines, 158 Tex. 566 (1958)). Improper means is a catch–all concept that imposes liability
on defendants for acts that “‘include theft, fraud, unauthorized interception of communications,
inducement of or knowing participation in a breach of confidence, and other means either wrongful
in themselves or wrongful under the circumstances of the case.’” Wellogix, 716 F.3d at 876 (quoting
- 39 -

Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 636 (Tex. App. 2007)).
GlobeRanger presents evidence showing three primary instances in which the Navy or its
contractors received information from GlobeRanger that contained, or facilitated SAG’s acquisition
of, GlobeRanger’s trade secrets.32 First, in mid–2009, a series of emails originating with Navy’s Robert
Bacon resulted in GlobeRanger issuing a new license key that made its way to a RAVE team member
(Naniq) who later confirmed a fully functioning image of the Navy Solution’s server at K–BAY had
been made.33 When GlobeRanger delivered the key, it reminded the recipients that the key was to
be used solely for the operation of GlobeRanger’s existing solution and subject to the terms of its
EULA. Second, in January 2010, the RAVE team (via Naniq) represented to GlobeRanger that it
needed another license key for the Navy Solution at Pearl Harbor to conduct maintenance. But in
reality, the RAVE team used the key to generate a second fully–functional image of the Navy
Solution. RAVE Project team records later show these images were being studied to replicate
GlobeRanger’s RFID technology using SAG’s webMethods as a base. Third, GlobeRanger’s delivery
of its technical manuals also facilitated SAG’s access to GlobeRanger’s trade secrets. The manuals
had a clear disclaimer on the front cover, instructing readers that disclosure of the information to
third parties is prohibited. Because the Court previously found that the Navy did not have the right,
as a matter of law, to disclose these items, a reasonable juror could conclude that SAG’s acquisition
of the trade secrets was improper or entailed a breach of confidence.
Nonetheless, SAG contends that it cannot be held liable for the trade secrets it acquired,

32

Since it finds these to be sufficient for the second element, the Court need not consider the
parties’ dispute regarding SAG’s acquisition of the secrets through Miller, Naniq, and Main Sail.
33

The evidence the Court relies on here is cited in detail in the Background section, supra.

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because it was unaware that the Navy did not hold the proper licenses in the Navy Solution. Since
SAG indirectly acquired the trade secrets, it cannot be held liable unless it “‘learned the secret from
a third person with notice of the facts that it was a secret and that the third person's disclosure of it
was otherwise a breach of his duty to [another].’” Metallurgical Indus, 790 F.2d at 1204 (quoting
RESTATEMENT (FIRST) OF TORTS § 757(c)). GlobeRanger need not, however, show SAG actually
knew its acquisition of the trade secrets was improper. Rather, it is enough if SAG should have
known of the impropriety of its acquisition, meaning “from the information which [SAG] ha[d], a
reasonable man would infer the facts in question, or if, under the circumstances, a reasonable man
would be put on inquiry and an inquiry pursued with reasonable intelligence and diligence would
disclose the facts.’” Id. (quoting RESTATEMENT (FIRST) OF TORTS § 757 cmt.1).
Here, GlobeRanger submitted sufficient evidence for a reasonable juror to conclude that
SAG, at the very least, was on inquiry notice of the facts that the Navy Solution contained
GlobeRanger’s trade secrets and that the Navy and its contractors did not have the undisputed right
to disclose those trade secrets. GlobeRanger highlights testimony from SAG’s executive admitting
its employees “‘had access to see [GlobeRanger’s] software” and workflows “captured in the
GlobeRanger solution for purposes of understanding what the Navy wanted [SAG] workflows to look
like when [SAG] replaced the GlobeRanger solution.” (Pl.’s Resp. 29 (quoting Pl.’s App. 219).)
Being experienced government contractors, SAG should have at least known to inquire into whether
the Navy had the proper license rights to this RFID technology. Even more, SAG had just finished
directly competing with GlobeRanger for the precise Navy contract SAG was performing under when
it was handed its competitor’s intellectual property to reverse–engineer. And this was just one of the
multiple government contracts throughout 2009 and 2010 that SAG and GlobeRanger competed
- 41 -

for. (See Pl.’s App. 420.) Although certain evidence suggests SAG reasonably thought the Navy had
the right to disclose the Navy Solution, GlobeRanger has at least made out a prima facie case
regarding SAG’s knowledge of the impropriety of its trade secret acquisition.
In conclusion, a number of genuine factual issues remain with respect to the first two disputed
elements of GlobeRanger’s trade secret misappropriation claim. Among others, these genuine
disputes include: the characterization of the Navy Solution under DFARS; whether the Navy was
permitted to disclose the Navy Solution under DFARS; whether GlobeRanger’s proprietary
information was sufficiently “secret”; the lawfulness of SAG’s acquisition of GlobeRanger’s trade
secrets; and SAG’s notice of the impropriety of its trade secret acquisition. In light of the above, the
Court DENIES SAG’s Motion to the extent it seeks summary judgment on GlobeRanger’s trade
secret misappropriation claim.
B.

Tortious Interference with an Existing Contract

Next, SAG challenges GlobeRanger’s tortious interference with an existing contract claim.
To establish this claim under Texas law, GlobeRanger must prove the following elements: “(1) an
existing contract subject to interference, (2) a willful and intentional act of interference with the
contract, (3) that proximately caused the plaintiff's injury, and (4) caused actual damages or loss.”
Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000) (citing ACS
Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex.1997)).
GlobeRanger presents two theories of liability here. First, it claims that SAG interfered with
its contract with the Navy by causing the Navy to violate the terms of GlobeRanger’s EULA. Second,
GlobeRanger maintains that SAG similarly interfered with its confidentiality agreements with Jason
Miller, Naniq, and Main Sail. The Court addresses each theory in turn.
- 42 -

1.

Interference with the EULA between GlobRanger and the Navy

SAG argues that GlobeRanger cannot show it interfered with any contract GlobeRanger had
with the Navy, because “there is no evidence that GlobeRanger had a valid contract with the Navy.”
(Def.’s Mot. 38.) In support, SAG submits that (a) GlobeRanger admittedly “‘never entered into a
contract directly with the Naval Supply Systems Command office,’” and (b) “there is no evidence
that the Navy’s designated contracting officer reviewed and consented to GlobeRanger’s EULA” as
required by government contract regulations. (Id. at 38, 39 (quoting Def.’s App. 478).)
GlobeRanger counters that DFARS’s commercial computer software regulations
“automatically” bind the Navy to the EULA “unless [the Navy] negotiate[s] other rights.” (Pl.’s Resp.
39 (emphasis in original).) GlobeRanger maintains that it “is not obligated to demonstrate that
anyone at the Navy (and certainly not a contracting officer) clicked the EULA themselves.” (Id. at
40 (emphasis in original).) Unlike the disputes discussed above, this one is purely legal, and thus, ripe
for consideration at this stage in the proceedings.
“It is axiomatic that a cause of action for tortious interference with a contract will not lie in
the absence of a contract.” S & A Marinas, Inc. v. Leonard Marine Corp., 875 S.W.2d 766, 768 (Tex.
App. 1994). GlobeRanger, thus, cannot “sustain a cause of action for tortious interference with a
contract,” without proof of “a valid, existing contract subject to interference.” Gillum v. Republic
Health Corp., 778 S.W.2d 558, 565 (Tex. App. 1989). GlobeRanger has failed to present any
evidence in support of this essential requirement.
As an initial matter, GlobeRanger has a subcontractor relationship with the Navy, and “it
is well–established that subcontractors normally are not in privity with the Government except
where the prime contractor is a mere government agent.” Central Freight Lines, Inc. v. United States,
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87 Fed. Cl. 104, 108 (Fed. Cir. 2009) (citation omitted). “In the absence of such agency, courts have
routinely held that a subcontractor has no standing or contractual cause of action to sue the
government.” Id. (citations omitted). It is undisputed that GlobeRanger never directly entered into
a contract with the Navy. GlobeRanger also does not claim that SAIC was a mere agent of the Navy.
GlobeRaner’s only assertion here is that DFARS’s commercial software regulations automatically
bind the Navy to the EULA’s terms. This argument, however, does not comport with the law.
The DFARS’s provision GlobeRanger relies on states that “[c]ommercial computer software
. . . shall be acquired under the licenses customarily provided to the public unless such licenses are
inconsistent with Federal procurement law or do not otherwise satisfy user needs.” 48 C.F.R. §
227.7202–1(a). GlobeRanger points to the “shall be acquired” language of this subsection as proof
that the government is automatically bound to a contractor’s commercial license the moment that
contractor delivers commercial computer software. But there is no reason to believe that this is the
intent of DFARS’s “shall be acquired” language.
Consider the context of this language—it falls under section –1 of DFARS § 227.7202, which
covers the DoD’s “Policy” regarding commercial computer software acquisitions. Subsection (a),
which GlobeRanger relies on, states this policy: commercial software “shall be acquired” under the
contractor’s standard commercial license, “unless such licenses” do not fit with the government’s
needs. By inserting “shall be acquired” in the beginning of this subsection, the DoD makes its policy
clear: assure commercial software contractors that DoD contract officers generally must (“shall”)
agree to the terms of the contractor’s commercial license so that such contractors are encouraged

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to work with DoD entities without fear of being subjected to DFARS’s harsh, default licenses.34 Put
differently, this mandatory language tells “the contractor and Contracting Officer” that they are
“supposed to use the contractor’s commercial license.”35 However, contrary to GlobeRanger’s
suggestions, the words “shall be acquired” do not serve as a blanket acceptance on the DoD’s behalf
anytime a contractor delivers commercial computer software. To find otherwise would render the
caveat in subsection (a)—“unless such licenses are inconsistent with Federal procurement law or do
not otherwise satisfy user needs”—meaningless. After all, if the government were truly bound to a
commercial license it never even gets to review, then it would never be able to determine if an
inconsistency with other procurement provisions exists or if the license satisfies user needs.36
Similarly, the commercial software provisions mandating that the government “must negotiate” for
any additional rights it needs would also be superfluous. Id. § 227.7202–3(b). In short, a fair reading
of DFARS § 227.7202–1(a) is that it sets out the rules by which GlobeRanger, SAIC, and the Navy
should have agreed to limit the Navy’s rights, but it does not relieve GlobeRanger of its obligation to
show that the Navy actually agreed to the terms of its EULA.37

34

See Dugan, supra, at 472 (discussion the policy behind the commercial software regulations).

35

See W. Jay DeVecchio, Rights in Technical Data & Computer Software Under Government
Contracts: Key Questions & Answers, 12-6 Briefing Papers 1, 4 (2012) (emphasis added).
36

See Trend, supra, at 324 (noting the government “cannot accept the commercial license” in
certain circumstances).
37

See OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY, &
LOGISTICS, INTELLECTUAL PROPERTY: NAVIGATING THROUGH COMMERCIAL WATERS 30 (2001),
available at http://www.acq.osd.mil/dpap/docs/intelprop.pdf (“DoD takes the rights customarily offered to
the public . . . unless those rights do not meet DoD’s minimum needs or violate Federal procurement law.
In all cases, a copy of the standard commercial license or any SNLR must be attached to the contract
[before the DoD may be bound to its terms].”); Mayner, supra, at 24 (explaining how an “end–user
license agreement” can be “placed inside the shrink wrap,” as well as “into the software” to ensure

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In addition to being unsupported by the DFARS provision at issue, GlobeRanger’s argument
runs contrary to other government contracting regulations applicable in these circumstances. As a
general matter, government “[c]ontracts may be entered into and signed on behalf of the
Government only by contracting officers.”38 48 C.F.R. § 1.601. The prime contract between SAIC
and the Navy reinforce this rule by providing that “[t]he Contracting Officer is the only person
authorized to approve changes in any requirements of this contract.” (Def.’s App. 226.) These clear
mandates would undeniably be violated if the Court were to adopt GlobeRanger’s argument and find
the Navy is bound to an agreement it never agreed to or authorized others to agree to on its own
behalf. At the very least, it would seem that the Navy needs to receive some notice of the EULA
before it can be bound by its terms.39 But here, there is no evidence the Navy ever saw the EULA,
much less reviewed and agreed to its terms. Similarly, there is no evidence that any contractor acting
on the Navy’s behalf agreed to the EULA. Indeed, the EULA that GlobeRanger supposedly attached
to its software could have just as well been “clicked”—that is, agreed to—by its own employees as
they helped implement the Navy Solution. Under these circumstances, the Court has no reasonable
basis to conclude that the Navy agreed to be bound by the EULA’s terms.
2.

Interference with Agreements with Miller, Naniq, and Main Sail

acceptance).
38

GlobeRanger refers to this as a “special rul[e] of government contract formation.” (Pl.’s Resp.
39.) But this FAR provision is not simply for “special” circumstances. In fact, this clause falls under FAR’s
“General” rules for, among other things, “Contracting Authority, and Responsibilities.”
39

Cf. DeVecchio, supra, at 4 ("[I]f the primes are not forwarding subcontractors’ commercial
licenses, the prime contractor is not doing what it is supposed to do. And if the prime will not forward the
information, then the subcontractor should send it directly to the Government, while also making sure
that the subcontract agreement with the prime incorporates the subcontractor's commercial license").

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GlobeRanger argues, alternatively, that “even if SAG had not tortiously interfered with
GlobeRanger’s EULA, SAG interfered with GlobeRanger’s confidentiality agreements with Jason
Miller, Naniq, and Main Sail.” (Pl.’s Resp. 40.) As SAG points out, this theory of liability “is
completely absent from the Complaint, which expressly limits GlobeRanger’s tortious interference
claim to contracts between GlobeRanger and the Navy.” (Def.’s Reply 22.) Accordingly, SAG asserts
that “this claim is not appropriate for consideration.” (Id.) The Court agrees.
It is within this Court’s discretion to “disregard claims or theories of liability not present in
the complaint and raised first in a motion opposing summary judgment.” De Franceschi v. BAC Home
Loans Servicing, L.P., 477 F. App'x 200, 204 (5th Cir. 2012) (unpublished); see also Cutrera v. Bd. of
Sup'rs of Louisiana State Univ., 429 F.3d 108, 113 (5th Cir. 2005). Here, as pointed out by SAG,
GlobeRanger’s assertion that SAG interfered with the confidentiality agreements signed by Jason
Miller, Naniq, and Main Sail is completely absent from the FAC.40 Moreover, GlobeRanger stated
in its interrogatories that its “claim is based upon Defendants’ actions in causing the breach of
various provisions of GlobeRanger’s EULA.” (Def.’s App. 469.) Thus, SAG’s first notice of
GlobeRanger’s new theory was in GlobeRanger’s Response to SAG’s Motion for Summary Judgment.
This is not sufficient. GlobeRanger cannot “avoid summary judgment . . . by relying on allegations
that” SAG interfered with “other contracts” that GlobeRanger never mentioned until now. Days Inn
Worldwide, Inc. v. Sonia Investments, No. 3:04-cv-2278, 2006 WL 3103912, at *17 (N.D. Tex. Nov.
2, 2006). Therefore, the Court declines to consider whether GlobeRanger’s alternative theory of
liability satisfies its tortious interference with a contract claim.

40

(See FAC ¶ 107 (“Plaintiff had a valid contract(s) with Navy AIT . . . .”).)

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In conclusion, GlobeRanger’s tortious interference claim fails as a matter of law, because (a)
GlobeRanger did not establish the existence of a contract between it and the Navy, and (b) the only
other contracts GlobeRanger submits are not appropriate for the Court to consider, for the first time,
in ruling on SAG’s Motion. Thus, the Court GRANTS SAG summary judgment with respect to
GlobeRanger’s tortious interference with a contract claim.
C.

Unfair Competition and Conspiracy

SAG’s summary judgment assertions regarding GlobeRanger’s unfair competition and
conspiracy claims can be quickly dismissed on similar grounds. For the unfair competition claim,
SAG points out that “Texas courts apply trade secrets law” when the plaintiff’s trade secret claim is
recast “under the ‘unfair competition’ umbrella.” (Def.’s Mot. 36 (citing Los Cucos Mexican Café, Inc.
v. Sanchez, No. 13–05–578–CV, 2007 WL 1288820, at *2 (Tex. App. May 3, 2007).) Accordingly,
SAG argues that summary judgment is appropriate for GlobeRanger’s unfair competition claim “for
the same reasons that summary judgment is appropriate on GlobeRanger’s trade secrets claim.” (Id.)
However, since the Court denied summary judgment on GlobeRanger’s trade secret misappropriation
claim, summary judgment is not appropriate for GlobeRanger’s unfair competition claim. Likewise,
SAG contends that “GlobeRanger cannot succeed on its underlying tort claims and summary
judgment is therefore proper on the derivative conspiracy claim.” (Id.) But again, the Court upheld
GlobeRanger’s trade secret misappropriation claim, and therefore, summary judgment is not proper
for GlobeRanger’s derivative conspiracy claim.41 Accordingly, the Court DENIES SAG’s Motion to

41

See Arthur W. Tifford, PA v. Tandem Energy Corp., 562 F.3d 699, 709 (5th Cir. 2009) (“A
defendant's liability is derivative of an underlying tort; without independent tortious conduct, there is no
actionable civil conspiracy claim.”).

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the extent it seeks summary judgment on these two claims.
IV.
CONCLUSION
For the foregoing reasons, the Court finds genuine issues of material fact exist for
GlobeRanger’s trade secret misappropriation, unfair competition, and conspiracy claims. It concludes,
however, that summary judgement is appropriate with respect to GlobeRanger’s tortious interference
with an existing contract claim, because GlobeRanger’s failed to establish the existence of a contract
that SAG interfered with. Therefore, the Court GRANTS IN PART SAG’s and Naniq’s Motions
for Summary Judgment (docs. 135, 138) with respect to GlobeRanger’s tortious interference with an
existing contract claim and DENIES IN PART SAG’s and Naniq’s motions to the extent they seek
summary judgment on GlobeRanger’s other three claims. Further, the Court DISMISSES WITH
PREJUDICE Count IV (tortious interference with an existing contract) of GlobeRanger’s First
Amended Complaint (doc. 79).
SO ORDERED
SIGNED: June 20, 2014.

_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE

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