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Productivity-Quality Systems, Inc. v. Cybermetrics Corp.

United States District Court, S.D. Ohio, Western Division, Dayton

April 30, 2018


          Walter H. Rice District Judge.


          Sharon L. Ovington United States Magistrate Judge.

         I. Introduction

         Plaintiff Productivity-Quality Systems, Inc. an Defendant CyberMetrics Corporation are computer software developers. They are competitors in the battle for clients to use their respective software products that operate to improve quality control. The market for clients who use, or might use, their software products appears to be very large in light of Plaintiff's assertion that it serves “clients in all 50 states, Europe, Africa, and Australia.” (Doc. #1, ¶9).

         Plaintiff alleges that CyberMetrics conspired with one of Plaintiff's former employees, Jeff Aughton, to misappropriate and exploit software that Aughton had developed while under Plaintiff's employ. Id. at ¶5. Plaintiff claims that through such activities, CyberMetrics has infringed Plaintiff's copyrights in violation of federal law, misappropriated its trade secrets and other proprietary information in violation of Ohio law, and tortiously interfered with its contract with Aughton.

         Defendant CyberMetrics seeks dismissal of Plaintiff's Complaint under Fed.R.Civ.P. 12(b)(6) or, alternatively, dismissal or transfer of venue under Fed.R.Civ.P. 12(b)(3) and 28 U.S.C. § 1406. Plaintiff opposes dismissal under Rule 12(b)(6). Plaintiff also opposes dismissal or transfer for improper venue.

         II. Background

         When reviewing Plaintiff's Complaint under Rule 12(b)(6), the Court accepts the Complaint's well-pleaded factual allegations as true, construes the Complaint in Plaintiff's favor, and draws all reasonable inferences in Plaintiff's favor. Bickerstaff v. Lucarelli, 830 F.3d 388, 396 (6th Cir. 2016). Doing so reveals the following.

         Plaintiff is an Ohio corporation with a principle business address in Dayton, Ohio. After Plaintiff was incorporated in 1984, it began to offer “its flagship statistical process control software, SQCpack….” (Doc. #1, ¶7). This software assists its users in collecting, analyzing, and processing data and statistics related to quality control. It is a “widely distributed product, and is currently installed on workstations at many Fortune 100 companies and household names in the automotive, pharmaceutical, and software development industries, among others.” Id. at ¶10. Soon after Plaintiff's incorporation it secured a toll-free telephone number, 800-777-3020, which it still retains today.

         In 1986, Plaintiff expanded its software products to include “GAGEpack gage management software. GAGEpack allows … clients to manage various measurement devices, instruments and gages.” Id. at ¶11. In 1991, Plaintiff applied for and received U.S. Copyright Registrations for its GAGEpack, SQCpack 3.1, and SQCpack plus 1.2 software. In 1999, Plaintiff supplemented its SQCpack with “CHARTrunner.” Id. at ¶13. CHARTrunner helps Plaintiff's clients create charts and graphs based on statistical data collected by Plaintiff's software. To demonstrate the types of charts and graphs CHARTrunner can create, Plaintiff has for years provided its clients with sample charts and graphs. Id. at ¶14.

         Returning to the eighties, in 1988 Defendant CyberMetrics began selling GAGEtrack, a product that competes with Plaintiff's GAGEpack. Id. at ¶36. At that time, CyberMetrics secured a toll-free telephone number, 800-777-7020. This number has one different digit different from Plaintiff's toll-free phone number, 800-777-3020.

         Jeff Aughton began working for Plaintiff in 1989 as a software developer. He worked on SQCpack, GAGEpack, and he later helped develop CHARTrunner before and after its release. At some point during Aughton's first 24 years with Plaintiff, he became a manager. This position gave him access to all Plaintiff's “proprietary information, including its trade secrets, source code for all its software, and other confidential information regarding [Plaintiff's] clients and business plans.”[2] Id. at ¶24.

         It appears that for many years no litigious problems existed between Plaintiff and CyberMetrics. Hints that this might be changing began to emerge in 2013 when one of its former employees, David Todd, informed Plaintiff that he had been working with Jeff Aughton to develop software based on CHARTrunner. At that time, Plaintiff still employed Aughton. Todd told Plaintiff that his company planned to call its CHARTrunner-based product “ProSPC.” Id. at ¶24. Todd also informed Plaintiff that his company planned to offer ProSPC in competition with Plaintiff's software products. Id.

         Plaintiff investigated and confirmed that Aughton was involved with ProSPC and planned to work with Todd to sell ProSPC through Todd's company. Aughton had written ProSPC back in 2007. He had also written (in 2006 or 2007) a program called PqChartCore-“charting code that was developed from and intended to be used in CHARTrunner….” Id. at ¶29. “Aughton ultimately inserted code from PqChartCore into both ProSPC and GAGEpack.” Id. at ¶31. Plaintiff owns both PqChartCore and ProSPC. Id. at ¶32.

         Upon learning of Aughton's involvement with Todd and his company, Plaintiff demoted Aughton from his managerial position. He resigned from Plaintiff's employ in May 2015. Several weeks later, he formed his own company called Factoria, Ltd.

         What's all this have to do with Defendant CyberMetrics? The Complaint alleges that before August 2017, CyberMetrics hired Aughton and his company, Factoria, Ltd, to help create certain software products. At the time CyberMetrics hired Aughton, Plaintiff no longer employed him.[3] The names CyberMetrics chose for its Aughton-related products- InSPC and InSPC+are mellifluously reminiscent of the name-ProSPC-of the product Aughton had developed in 2006 or 2007 while working for Plaintiff. This leads to Plaintiff's central remonstrance:

Under direction by CyberMetrics, Jeff Aughton used his specialized knowledge of [Plaintiff's] SQCpack, CHARTrunner, and GAGEpack, software as well as the derivative works of those software derivatives ProSPC and PqChartCore, to create copies and/or derivative works of those software which would ultimately be known as InSPC and InSPC…. Investigation of [these CyberMetrics products] has revealed glaringly substantial similarities with [Plaintiff's] Copyright protected software.
* * *
CyberMetrics employed Aughton with the intention of copying [Plaintiff's] Productivity Quality Software, such as SQCpack, CHARTrunner, ProSPC, PqChartCore, and GAGEpack, in order to fast track InSPC and/or InSPC as a product sufficient to compete with [Plaintiff's] decades of experience in statistical process control software.

Id. at 9, ¶s 42-43; id. at 10, ¶52. Plaintiff's Complaint continues to tell this tale with several examples, such as “largely” or “virtually identical” formatting and naming conventions within CyberMetrics' software files that correspond to Plaintiff's software products. Id. at ¶s 44-45. The Complaint next alleges, “review of ‘properties' files from [CyberMetrics'] InSPC language database and a similar language from [Plaintiff's] GAGEpack contain identical information, including the name “Jeff' which appears in an author line for both, and the name ‘PQ Systems (Europe) Ltd.' which appears in the Company line for both.” Id. at ¶46. And, “Aughton's involvement in the development of [CyberMetrics'] InSPC “is confirmed by the multiple instances of ‘developed by Factoria' appearing within the program.” Id. at ¶47.

         The Complaint further maintains that CyberMetrics provides sample charts for its clients through InSPC or InSPC. Those charts are similar to the charts Plaintiff provides its clients through CHARTrunner and SQCpack.

         In August 2017, CyberMetrics began offering InSPC and InSPC to the public.

         Plaintiff claims that CyberMetrics has and continues to reproduce, make derivative works of, distribute, and display Plaintiff's copyright-protected works including SQCpack, GAGEpack, CHARTrunner, ProSPC, PqChartCore, and related sample charts in violation of the Copyright Act of 1976, 17 U.S.C. §§ 106 and 501. Plaintiff further claims that CyberMetrics has misappropriated Plaintiff's trade secrets in violation of Ohio Rev. Code §1333.61, et seq., and has tortiously interfered with, and caused a breach of, Plaintiff's valid and existing contract with Aughton.

         III. Discussion: Plaintiff's Claims

         A. Plausibility

         Under Federal Rule of Civil Procedure 8, “A pleading that states a claim for relief must contain: ... a short and plain statement of the claim showing that the pleader is entitled to relief; and ... a demand for the relief sought....” This standard “does not require ‘detailed factual allegations, ' but it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955 (2007); Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932 (1986)).

         “To survive a motion to dismiss, a litigant must allege enough facts to make it plausible that the defendant bears legal liability. The facts cannot make it merely possible that the defendant is liable; they must make it plausible. Bare assertions of legal liability absent some corresponding facts are insufficient to state a claim.” Agema v. City of Allegan, 826 F.3d 326, 331 (6th Cir. 2016) (citing Iqbal, 556 U.S. at 678) (other citations omitted).

         The complaint does not need “detailed factual allegations, ” Iqbal, 556 U.S. at 678, but it must contain “ ‘more than labels and conclusions, and a formulaic recitation of the elements of a cause of action.' ” Albrecht v. Treon, 617 F.3d 890, 893 (6th Cir. 2017) (citations omitted). “A plaintiff must ‘plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' A plaintiff falls short if she pleads facts ‘merely consistent with a defendant's liability' or if the ...

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