Cincom Systems, Inc. v. LABWARE, INC.

CourtDistrict Court, S.D. Ohio
DecidedAugust 22, 2024
Docket1:20-cv-00083
StatusUnknown

This text of Cincom Systems, Inc. v. LABWARE, INC. (Cincom Systems, Inc. v. LABWARE, INC.) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cincom Systems, Inc. v. LABWARE, INC., (S.D. Ohio 2024).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO WESTERN DIVISION - CINCINNATI CINCOM SYSTEMS, INC., : Case No. 1:20-cv-83 Plaintiff, Judge Matthew W. McFarland

LABWARE, INC., Defendant.

ORDER AND OPINION

This matter is before the Court on Defendant’s Motion for Summary Judgment (Doc. 83), Plaintiff's Motion to Exclude Expert Testimony of Benjamin Goldberg (Doc. 85), Plaintiff's Motion to Exclude Expert Testimony of Daniel McGavock (Doc. 86), Plaintiff's Motion in Limine to Exclude Defendant's Use of Plaintiff’s Virtual Smalltalk Enterprise 2000 Manuals (Doc. 87), Plaintiff's Motion to Exclude Testimony and Evidence for Violation of the Source Code Inspection Protocol (Doc. 88), and Plaintiff's Motion for Partial Summary Judgment (Doc. 92).1 Each motion has been fully briefed. (See Docs. 98- 109.) Thus, these matters are ripe for review. For the reasons detailed below, Plaintiff's motions to exclude expert testimony and evidence (Docs. 85, 86, 87, and 88) are DENIED, Defendant's Motion for Summary

1 Defendant requests oral arguments on both motions for summary judgment. (See Defendant's Motion for Summary Judgment, Doc. 83, Pg. ID 9341; Defendant's Response to Plaintiff's Motion for Summary Judgment, Doc. 102, Pg. ID 11691.) The undersigned finds that oral arguments are not “essential to the fair resolution” of these motions. See S.D. Ohio Civ. R. 7.1(b)(2). Accordingly, Defendant's requests are denied.

Judgment (Doc. 83) is GRANTED, and Plaintiff's Motion for Partial Summary Judgment (Doc. 92) is DENIED. FACTS Plaintiff Cincom Systems, Inc. is a software development company. (See Fortman Dep., Doc. 52, Pg. ID 528; Bish Dep., Doc. 53, Pg. ID 1584.) Defendant LabWare, Inc. is a

company that distributes laboratory information management systems (“LIMS”). (Goldberg Report, Doc. 62-1, Pg. ID 4099-4100.) The controversy here stems from Defendant's allegedly unauthorized use of Plaintiff's software in developing LIMS. (See Compl., Doc. 1.) I. The Software Smalltalk is a computer programming language invented in the 1970s. (SmallTalk White Paper, Doc. 68-10, Pg. ID 5613.) Visual Smalltalk Enterprise (“VSE”) is a software

program based on Smalltalk. (See Buck Report, Doc. 56-1, Pg. ID 2720.) VSE operates within a “virtual machine” (“VM”), which is software that runs the Smalltalk code. (See Bates Dep., Doc. 68, Pg. ID 5479.) VSE has had multiple releases and brand name changes over the years. (Plaintiff's Interrog. Response, Doc. 84-1, Pg. ID 9389.) Relevant here, Digitalk, Inc., which owned VSE at the time, released Smalltalk/V Version 1.3 (“Smalltalk Version 1.3”) in 1991. (See id.) II. VSE-Related Purchases and Acquisitions In 1992, Labware Holdings, formerly known as LabWare Inc., purchased VSE licenses from Digitalk. (See First Kershner Dep., Doc. 71, Pg. ID 6328-29, 6361.) Digitalk

became known as ParcPlace-Digitalk Inc., which continued selling VSE products. (Id. at Pg. ID 6329.) ParcPlace-Digitalk released Version 3.1 of VSE in 1995. (See Plaintiff's Interrog. Response, Doc. 53-2, Pg. ID 1496.) LabWare Holdings purchased licenses for Version 3.1 in 1998. (See First Kershner Dep., Doc. 71, Pg. ID 6340, 6364.) The VSE licenses that LabWare Holdings purchased from ParcPlace-Digitalk, Inc. included a printed, software license known as the “Shrinkwrap License.” (Shrinkwrap License, Doc. 71-21, Pg. ID 6603.) The Shrinkwrap License granted LabWare Holdings the right to (1) “provide the [VSE] to a single developer solely for use in developing end-user software applications,” (2) “transfer the [VSE] from one developer to another, or to another individual or entity, provided that the transferring user permanently cease use of [the VSE] and destroys all copies,” and (3) “reproduce and distribute executable files created by using the [VSE].” (Id.) The Shrinkwrap License prohibited LabWare Holdings from reverse engineering or distributing VSE. (Id.) LabWare Holdings used VSE to develop a product called “LabWare LIMS.” (Goldberg Report, Doc. 62-1, Pg. ID 4099-4100.) LabWare LIMS is mainly used by pharmaceutical and energy companies to manage laboratory workflows and data. (Id.) Defendant, a subsidiary of LabWare Holdings, focuses on the sale of LIMS products in the United States. (First Kershner Dep., Doc. 71, Pg. ID 6361-62; Second Kershner Dep., Doc. 77, Pg. ID 8009-10; Certificate of Incorporation, Doc. 84-5, Pg. ID 9530.) Shortly after LabWare Holdings’ purchase, ParcPlace-Digitalk became known as ObjectShare, Inc. (See Buck Report, Doc. 56-1, Pg. ID 2726-27.) In 1999, ObjectShare sold its rights to VSE to Seagull Software, Inc. (See Ayers Dep., Doc. 53, Pg. ID 1250-52; April

1999 Asset Purchase Agreement, Doc. 84-2, Pg. ID 9439.) In return for the sale, Seagull licensed back limited, exclusive rights in VSE to ObjectShare. (Ayers Dep., Doc. 53, Pg. ID 1250-52.) These exclusive rights were as follows: a perpetual, world-wide, royalty-free, non-transferable, limited license to . . . (a) market and license the [VSE] Software directly or indirectly through distributors to third party end-users for the express purpose of building Smalltalk-based applications, (b) perform maintenance modifications, bug- fixing, error fixing and related support services for its then current licensees ..., and (c) sub-license the [VSE] Software to third parties for the express purpose of providing Support Services on behalf of ObjectShare. (Software License Agreement, Doc. 54-1, Pg. ID 1873.) Later that year, ObjectShare sold its rights in VSE to Plaintiff. (See Asset Purchase Agreement, Doc. 65-3.) Among the assets that changed hands were two Smalltalk-related copyrights: U.S. Copyright Registration No. TX 3-733-100 (“’100 Registration”) and U.S. Copyright Registration No. TX-1-564-488 (“’488 Registration”). (See id. at Pg. ID 4769, 4794, 4806-07.) After its purchase, Plaintiff abandoned the Shrinkwrap License and created a new licensing model. (Ayers Dep., Doc. 53, Pg. ID 1324-26.) Under the new model, VSE licensees paid for their license through annual subscription fees and percentages of revenue derived from selling VSE-based applications. (Id.) The Court has limited information about the ‘100 Registration. The parties provided a single-page document referring to the registration in the United States Copyright Office Public Catalog. (‘100 Registration, Doc. 84-8, Pg. ID 9541.) The registered work's title is “Smalltalk/ V PM (version 1.3).” (Id.) The document identifies the “type of work” as a “computer file” and clarifies in its “description” that it covers a “computer program.” (Id.) It adds that it is related to two previous registrations and provides that

the basis of the ‘100 Registration is “New Matter: rev. & supplemental text.” (Id.) In 2006, LabWare Holdings bought a license to the source code for VSE’s VM from Seagull. (See Distribution and Source Code License Agreement, Doc. 71-20.) This license included “a nontransferable, nonassignable, nonexclusive, worldwide right and license to access, store, run, display, load, use, produce, reproduce, copy, translate, modify, or adapt the Source Code solely as necessary to support and maintain the Software for use with [LabWare] Products.” (Id. at Pg. ID 6596.) LabWare then “extensive[ly]” modified the VM source code (“Modified VM Source Code”). (Goldberg Report, Doc. 62-1, Pg. ID 4122-23.) It did so to “fix errors and make improvements to the VM” to use in its LIMS products. (Id.) Ill. Plaintiff's Discovery of Defendant’s Use of VSE In April 2014, executives working for Plaintiff became aware that a former employee had begun working for Defendant. (See Employee Email, Doc. 53-5, Pg.

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