IP Law Daily, TRADE SECRETS—W.D. Ky.: Summary judgment granted in part in jail management software dispute, (Jun 21, 2022)

By Kevin M. Finson, J.D.

Summary judgment was granted against a software company that alleged trade secret misappropriation without sufficient specificity against the original developer of the software.

A software company could not remedy its refusal to specify the trade secrets it claimed were misappropriated by the original author of a software called JailTracker, who had assigned the software to and was employed by the plaintiff, the federal district court in Bowling Green, Kentucky, has held. The time to put that sort of claim in the record was during discovery, which had already closed. However, the court held that the plaintiff, rather than the original developer, was the legal owner of JailTracker (N. Harris Computer Corp. v. DSI Investments, LLC, June 17, 2022, Stivers, G.).

N. Harris Computer Corporation (Harris Corp.) was a developer and marketer of software, including its product JailTracker, a jail management program. Harris Corp., through a subsidiary, purchased JailTracker from its developer David Ogles and Digitech Services. After the purchase, Ogles became an employee of another Harris Corp. subsidiary and worked largely with JailTracker. The agreement of sale included an assignment of inventions provision, along with confidentiality, non-compete, and non-solicitation provision, under which Ogles assigned all related inventions for a period of one year after he ceased employment with Harris Corp. Ogles’s relationship with his supervisor eventually deteriorated and he was terminated. Shortly thereafter, Ogles created a new jail management product, E-Jail, and began marketing it. Harris Corp. sued and obtained a preliminary injunction blocking sale of E-Jail to its customers until the non-solicitation provision expired. Both parties moved for summary judgment.

Ownership of E-Jail. Both parties moved for summary judgment on the issue of whether the assignment of inventions acted to transfer ownership of E-Jail to Harris Corp. Ogles argued that it did not because the agreement was overbroad and unconscionable. Applying North Carolina law, the court determined that the one-year period was reasonable and was calculated to protect Harris Corp’s purchase of JailTracker and that the limitation to inventions related to work performed as part of his employment was not unduly burdensome. The court granted summary judgment, finding that E-Jail was covered by the agreement and therefore belonged to Harris Corp.

Trade secrets. Ogles argued that Harris Corp. failed to specify with particularity the trade secrets they alleged Ogles misappropriated. Harris Corp. did identify those secrets, the court held, but only in a declaration filed in opposition to Ogles’ summary judgment motion. Harris Corp. had refused to so specify during the discovery period, and the court would not allow a party to so enlarge the record after discovery had closed. Summary judgment was granted to Ogles, dismissing the trade secrets claims against him.

The Case is No 1:19-cv-00142-GNS-HBB.

Attorneys: Chad E. Wallace (Baker Donelson Bearman Caldwell & Berkowitz, PC) for N. Harris Computer Corp., Colossus, Inc. and InterAct911 Corp.

Companies: N. Harris Computer Corp.; Colossus, Inc.; InterAct911 Corp.

Cases: TradeSecrets TechnologyInternet KentuckyNews