IP Law Daily, COPYRIGHT—6th Cir.: Summary judgment affirmed in favor company accused of purloining the software source code, (Sep 29, 2025)

By Carolin Dennis, B.Sc., LL.B., LL.M.

District court did err because the software company delayed the investigation regarding trade secret misappropriation and failed to provide the copyrighted code of the allegedly copied software.

In an unpublished opinion, the U.S. Court of Appeals for the Sixth Circuit affirmed the district court’s decision granting summary judgment in favor of a company accused of purloining the source code of VisualSmalltalk Enterprise (VSE) software. The Sixth Circuit held that the district court did not err in granting summary judgment because the copyright owner was barred by the statute of limitations from bring a trade secrets claim and failed to show infringement of the ‘100 Registration (Cincom Systems, Inc. v. LabWare, Inc., No. 24-3726 (6th Cir. Sept. 26, 2025)).

Background. VSE is a software-development tool that enables users to write their own programs in the Smalltalk language, which they can then sell to other users. VSE was originally created by ObjectShare, Inc. (ObjectShare). In 1999, ObjectShare sold all its rights in VSE to Seagull Software, Inc. (Seagull), along with related assets (including several copyright registrations). Seagull immediately licensed back certain rights in the program to the seller, ObjectShare. These included the exclusive, perpetual right to market and license VSE directly or indirectly to third party end-users for the express purpose of building Smalltalk-based applications. Thereafter, an Ohio software company Cincom Systems, Inc. (Cincom) purchased ObjectShare and all of its assets. Under the agreement, ObjectShare owned the software and its copyright, while Cincom held the exclusive right to market, license, and distribute it to third parties.

At a developers’ conference in Germany in 2019, Cincom witnessed a demonstration by LabWare, Inc. (LabWare) of a product that it said was using VSE software. Cincom notified LabWare of its infringement, but the matter was never resolved. Cincom then filed suit in 2020, alleging that LabWare had purloined its software and improperly marketed, licensed, developed, and distributed products built upon it. In addition, the complaint asserted, LabWare had improperly provided maintenance and support to third party users of the software. The complaint asserted claims of copyright infringement, misappropriation of trade secrets under the Ohio Uniform Trade Secrets Act (OUTSA), conversion, and unjust enrichment. In 2021, the district court dismissed the latter two claims because they were preempted by OUTSA, leaving only the copyright infringement and trade secrets claims. Both parties moved for summary judgment and the district court granted LabWare’s motion. Cincom appealed, arguing that the district court erred by granting summary judgment in favour of LabWare.

OUTSA claim. Cincom’s trade secret claim arose under the OUTSA. The Sixth Circuit noted that misappropriation is discoverable if the owner has knowledge of such facts as would lead a fair and prudent man, using ordinary care and thoughtfulness, to make further inquiry. In 2019, Cincom investigated LabWare’s use of VSE and modification of the software. That investigation resulted in Cincom bringing an action in January 2020. However, LabWare argued that Cincom was on inquiry notice of alleged trade secret misappropriation in 2014. The district court agreed, granting summary judgment for LabWare on the trade-secret claim after determining that Cincom’s suit was untimely, because it fell outside OUTSA’s four-year limitations period.

The Sixth Circuit noted that if a fair and prudent man, using ordinary care and thoughtfulness would have conducted a deeper investigation in 2014 than Cincom did, then the district court correctly determined that OUTSA’s four-year time-bar provision applies. But if, in 2014, Cincom had no reason to further investigate whether LabWare was modifying VSE’s source code, then the statute of limitations would not have begun to run until Cincom received such notice in 2019.

The Sixth Circuit agreed with the district court that Cincom was not stymied by a lack of documentation and others’ responses, because it did not seek documentation or responses in 2014—not from Andres Valloud, not from LabWare itself, and not even from Seagull/Rocket Software, Inc. (Seagull’s successor), which it had previously contacted under similar circumstances. The Sixth Circuit observed that if Cincom had made at least some showing of chasing down these leads, then it would at least arguably have behaved as a reasonably prudent person should, and LabWare would not be entitled to summary judgment based on the OUTSA statutory time limit. Under the circumstances, the appeals court found that Cincom was on inquiry notice of LabWare’s trade secret misappropriation in 2014, and its misappropriation claim was time-barred by OUTSA’s statute of limitations.

Copyright infringement claim. Cincom argued on appeal that the district court erred by granting summary judgment against its copyright infringement claim. Cincom alleged that LabWare engaged in various forms of unauthorized copying of the VSE Version 3.1 software, without obtaining Cincom’s permission despite Cincom’s exclusive copyright in the software. However, Cincom has no copyright registration on VSE Version 3.1, the software that LabWare allegedly copied. Instead, Cincom alleged infringement of a copyright registration for Registration TX 3-733-100 (the ’100 Registration), issued in 1994, which covers Version 1.3 of the VSE Software. Two other registrations, TXu 192-061 and TX 951-742 (Prior Registrations), issued in 1984 and 1985, apparently cover even older versions of VSE. Cincom alleged infringement of only the ‘100 Registration, not the Prior Registrations.

To show that LabWare infringed the ’100 Registration by copying Version 3.1, Cincom was required to show that LabWare copied code protected by the ’100 Registration. However, the only evidence Cincom produced was a single-page printout from the Copyright Office’s official database entry for the ’100 Registration. The printout identified the subject of the registration as “Smalltalk/V [i.e., VSE] PM (version 1.3),” and described the basis of the registrations as “New Matter: rev. & supplemental text.” Cincom did not produce a copy of the actual code protected by the ’100 Registration, which the original owner (ObjectShare) was required to deposit with the Copyright Office to obtain the registration for Version 1.3.

The Sixth Circuit noted that to prevail on a copyright-infringement claim, the claimant must prove two elements: ownership of a valid copyright, and copying of constituent elements of the work that are original. The parties did not dispute that Cincom has a valid interest in the ’100 Registration, even though the registration itself is now owned by Rocket. However, Cincom failed to show which, if any, portions of Version 3.1’s code come from the protected portion of Version 1.3.

Further, there was no evidence in the record that any of the code in Version 3.1 was “new matter” protected by the ’100 Registration, so the Sixth Circuit could not engage in the required substantial-similarity analysis to determine whether any copyright infringement occurred. Therefore, summary judgment in favor of LabWare on the copyright-infringement claim was appropriate.

The Case is No. 24-3726.

Judge: Boggs, D.

Attorneys: Joseph Michael Callow (Callow & Utter) for Cincom Systems Inc. Douglas M. Garrou (Hunton Andrews Kurth LLP) for LabWare, Inc.

Companies: Cincom Systems Inc.; LabWare, Inc.

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