United States District Court, D. Minnesota
Alexander Farrell, Esq., Hellmuth & Johnson PLLC, counsel
for Plaintiff Neil Leonard Haddley.
H. Little, Esq., Autumn Gear, Esq., and Heidi J.K. Fessler,
Esq., Barnes & Thornburg LLP, counsel for Defendants.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants Next Chapter
Technology, Inc.'s (“NCT”), Vaughn
Mulcrone's, and dataBridge LLC's Second Motion for
Partial Summary Judgment (Doc. No. 177) and a Motion for
Partial Summary Judgment (Doc. No. 182) brought by Plaintiff
Neil Leonard Haddley (“Plaintiff” or
“Haddley”). For the reasons set forth below, the
Court grants Defendants' motion and denies
facts of this case were thoroughly set forth in a prior order
denying Defendants' prior motion for summary judgment
dated September 26, 2018 (the “September Order”).
(Doc. No. 197.) Many of the previously recited facts are
relevant to the present motions. The Court will summarize and
supplement the facts as necessary.
is the creator and copyright holder of Scanning Enabler, a
software program that allows users to scan paper documents
into electronic form. (Doc. No. 69 (Consolidated Amended
Complaint (“CAC”)) ¶¶ 33, 35.) Scanning
Enabler contains two main components: the Server Software and
the ActiveX Control. Scanning Enabler resides on and is used at
the server; workstations can connect to the server and access
the software via ActiveX controllers. In order to download
Scanning Enabler, one must use a valid license key.
(Id. ¶ 42.)
licenses CaseWorks, an electronic document management system
(“EDMS”), to Minnesota counties. CaseWorks
includes a scanning feature. In 2009, NCT entered into a
re-seller arrangement for Scanning Enabler with Haddley's
company, Dark Blue Duck Solutions, LLC (“DBD”).
In 2011, Haddley began working for NCT, first as a consultant
and later as Chief Technical Officer (“CTO”). In
2012 and 2013, the scanning software component used in
CaseWorks was Scanning Enabler, which was licensed from
Enabler was installed on servers in Clay and Steele Counties.
Clay County shared a server environment with Becker, Otter
Tail, and Isanti Counties. Steele County shared a server
environment with Waseca, Mower, and Dodge Counties.
Defendants claim that the Scanning Enabler licenses were
unrestricted single-server licenses designated for
installation on production servers hosted at both Clay and
Steele Counties and allowing for other counties in the shared
environments to download the software. Defendants also assert
that Haddley authorized and personally participated in the
sharing and use of Scanning Enabler by County Defendants in
the above server environments. Haddley, however, disputes
that he knew of and acquiesced to the unrestricted use of
Scanning Enabler on the shared server environments. Haddley
also asserts that he issued two licenses each to Clay and
Steele Counties, through NCT as Haddley's reseller, and
that the licenses did not permit Clay and Steele Counties to
allow other counties to download the software.
terminated Haddley in October 2013 and asserts that it
learned that Haddley was attempting to enter the market to
compete with NCT. NCT submits that, in response, it developed
its own scanning module based on software development kits
(“SDKs”) that it purchased from Atalasoft, a
commercial vendor, and commissioned dataBridge LLC to
complete the development of the scanning module. In the
spring of 2014, NCT introduced its scanning module, NCT SCAN,
into new releases of CaseWorks. In November of 2014, NCT
disabled Scanning Enabler in existing installations and
replaced it with NCT SCAN.
action, Plaintiff brings three claims: (1) copyright
infringement against NCT, Mulcrone, and County Defendants for
exceeding the licenses Haddley sold by permitting the eight
County Defendants, instead of just Steele and Clay Counties,
to use the Scanning Enabler at the Clay and Steele County
servers; (2) copyright infringement against NCT, Mulcrone,
and dataBridge LLC for creating an infringing derivative work
based on the Scanning Enabler; and (3) a claim under the
Digital Millennium Copyright Act (“DMCA”), 17
U.S.C. § 1201(a)(1)(A) and § 1202(b)(1), against
NCT, Mulcrone, and the County Defendants. NCT asserts the
following counterclaims: (1) breach of employment agreement;
(2) breach of duty of loyalty; and (3) unfair competition.
now moves for partial summary judgment in his favor on Counts
I and III, as well as on NCT and Mulcrone's
counterclaims. Defendants also move for partial summary
judgment in their favor on Count II of Haddley's CAC.
judgment is appropriate if the “movant shows 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). Courts must view the evidence, and the
inferences that may be reasonably drawn from the evidence, in
the light most favorable to the nonmoving party. Weitz
Co., LLC v. Lloyd's of London, 574 F.3d 885, 892
(8th Cir. 2009). However, “[s]ummary judgment procedure
is properly regarded not as a disfavored procedural shortcut,
but rather as an integral part of the Federal Rules as a
whole, which are designed ‘to secure the just, speedy
and inexpensive determination of every action.'”
Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)
(quoting Fed.R.Civ.P. 1).
moving party bears the burden of showing that there is no
genuine issue of material fact and that it is entitled to
judgment as a matter of law. Enter. Bank v. Magna
Bank, 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving
party must demonstrate the existence of specific facts in the
record that create a genuine issue for trial. Krenik v.
Cty. of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). A
party opposing a properly supported motion for summary
judgment “may not rest upon mere allegation or denials
of his pleading, but must set forth specific facts showing
that there is a genuine issue for trial.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
Count I (Copyright Infringement)
Count I, Haddley asserts that Defendants (NCT, Mulcrone, and
County Defendants) infringed his copyright in the Scanning
Enabler software by distributing and making copies of
Scanning Enabler software available to unlicensed parties who
then downloaded the software.
previously moved for summary judgment on these claims,
arguing that, as a matter of law, they were licensed to use
the Scanning Enabler software. In the September Order, the
Court explained that numerous fact disputes exist as to the
following issues: who held the licenses of the Scanning
Enabler software-NCT or Clay and Steele Counties; which
particular software agreement(s) governed; and whether the
relevant licenses were unrestricted such that they allowed
multiple counties to share the Scanning Enabler software. The
Court also concluded, on Defendants' motion, that fact
issues preclude summary judgment on the issue of implied