Scanvec Amiable Ltd. v. Chang

80 F. App'x 171
CourtCourt of Appeals for the Third Circuit
DecidedOctober 15, 2003
DocketNos. 02-4385, 03-1043
StatusPublished
Cited by20 cases

This text of 80 F. App'x 171 (Scanvec Amiable Ltd. v. Chang) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scanvec Amiable Ltd. v. Chang, 80 F. App'x 171 (3d Cir. 2003).

Opinion

OPINION

COWEN, Circuit Judge.

Amica Software, Inc., Jim Chang and Luciana Chang (together “Amica”) appeal two orders of the District Court concerning a temporary restraining order and a preliminary injunction entered in favor of appellees Scanvec Amiable Limited and Scanvec Amiable, Inc. (together “Scanvec”). Amica argues that the Court erred by declining to impose retroactive security for the TRO after the order was dissolved by the entry of the preliminary injunction. In a separate appeal, Amica challenges the District Court’s decision to expand the preliminary injunction without conducting an evidentiary hearing, or increasing the amount of the security bond. As part of this second appeal, Amica also argues that the District Court’s findings concerning civil conspiracy, misappropriation of trade secrets, and unfair competition are erroneous, and that the District Court exceeded its jurisdiction under the Lanham Act. We find no abuse in the District Court’s discretionary determinations, and no reversible errors of law in either order. Accordingly, we will affirm.

I.

This case arises from the establishment of a computer software company by former officers, directors, and employees of Scanvec. Scanvec develops computer programs sold throughout the world. Scanvec’s premier product is PhotoPRINT, a program that creates computer images for printing on wide form at digital printers (“WTPPs”). Approximately one-third of Scanvec’s PhotoPRINT sales are made to original equipment manufacturers (“OEMs”) of WFPs, including Hewlett-Packard and Roland DG Corporation. Scanvec designed private-label versions of PhotoPRINT for these OEMs by, in part, customizing the International Color Consortium Color Profiles (“ICC Profiles”) needed to produce accurate digital reproductions on WFPs.

PhotoPRINT was originally designed and sold by Amiable Technologies, a company owned by Defendants Jim Chang and Yuan Chang. In 1998, Amiable merged into Scanvec, and Jim and Yuan became shareholders in, and board members of, the new company. The Changs’ employment agreements prohibited both from competing with Scanvec for two years after their departure. In July 1999, Jim Chang was fired from his position as President of Scanvec. In November 2001, Jim and Yuan resigned from Scanvec’s board.

In May 2001, prior to their resignation, the Changs launched a new software company in China called Amica. Yuan Chang was listed as Amica’s legal representative, and Amica used Scanvec’s Beijing office as its company address. In the fall of 2001, Jim Chang’s wife Luciana brokered an agreement that terminated all of Scanvec’s Chinese distributors in favor of an exclusive contract with a company called Sun-Pack. SunPack, however, shared the same office space as Amica (which, as noted, was also Scanvee’s space). In November 2001, SunPack changed its name to Jia Peng Si Hai, which was essentially Amica’s Chinese trade name. Scanvec’s representative to SunPack, Kevin Sun, clandestinely worked for Amica through the end of 2001.

In early 2002, Amica hired several of Scanvec’s former software engineers and began marketing ColorPRINT, a program (like PhotoPRINT) for printing images on WFPs. Early versions of ColorPRINT, and a similar product called ImaRIP, incorporated hundreds of Scanvec’s ICC Profiles.

[174]*174Finally, Jim Chang entered into a contract with Roland DG to produce a private-label version of ColorPRINT (called Roland Select Color, or “RSC”) for Roland’s new line of WFPs. One of Roland’s requirements for RSC was the creation of a customized rendering intent similar to the one used by Scanvec in PhotoPRINT known as “SpotColor.” Pursuant to this agreement, ColorPRINT’s source code included references to SpotColor, although, as discussed further below, the functionality of the rendering intent remains unclear.

Scanvec commenced this action on August 27, 2002 by filing a complaint and an ex parte motion for a temporary restraining order. On the same day Judge Berle M. Schiller, sitting as emergency judge, entered the requested TRO without requiring the posting of a security bond, or making any findings as to why a bond was unnecessary. The case was then assigned to Judge Petrese B. Tucker, who conducted a six-day hearing on the requested preliminary injunction between September 6 and September 13. Amica did not object to the continuation of the TRO during the hearing, and pending a ruling on the preliminary injunction.

On October 3, 2002, the District Court granted Scanvec’s application for a preliminary injunction in part, enjoining Amica from using certain trademarks, trade secrets, and goodwill. The District Court solicited the parties’ recommendations on the amount of security, and following their response, set a bond requirement of $390,000 on November 4, 2002. The District Court also determined that no security requirement would be imposed for the period during which the TRO was in place.

On October 18, 2002, Scanvec filed an emergency motion for reconsideration of the October 3 order citing newly discovered evidence demonstrating that the Amica defendants had made material misrepresentations during the injunction hearing. On November 12, 2002, following opening and opposition briefs, Scanvec filed a motion for leave to file a reply brief, attaching the proposed brief to the new motion. On November 15, Scanvec sought leave to file an additional supplement. On December 17, 2002, the District Court granted Scanvec leave to file the supplemental materials, and directed that Amica file any opposing materials by December 19. Amica timely filed its response, but argued that it did not have sufficient time to address all of the allegations raised in Scanvec’s supplements.

On December 23, 2002, the District Court granted Scanvec’s motion for reconsideration and expanded the prehminary injunction to prevent Amica from selling ColorPRINT, and its derivative products. The District Court’s order stated that the security of $350,000 previously posted by Scanvec was sufficient to support the expanded injunction.

Amica filed a motion to stay the expanded injunction on December 30, which the District Court denied on January 6, 2003. On January 10, 2003, Amica filed a motion to stay pending appeal with this Court, which this Court denied on January 27, 2003.

II.

Amica first appeals1 the District Court’s November 4, 2002 order declining to impose a security bond for the TRO period between August 27 and October 3. We agree that the District Court’s failure to justify the waiver of a security bond is erroneous, but conclude that we cannot retroactively increase the amount of security imposed during the period of the now-[175]*175expired TRO. Accordingly, the District Court’s November 4 order will be affirmed.2

Federal Rule of Civil Procedure 65(c) states that “[n]o restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper.” We have strictly interpreted the bond requirement of Rule 65(c), noting that “[w]hile there are exceptions, the instances in which a bond may not be required are so rare that the requirement is almost mandatory.” Frank’s GMC Truck Center, Inc. v. Gen. Motors Corp., 847 F.2d 100, 110 (3d Cir.1988).

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Bluebook (online)
80 F. App'x 171, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scanvec-amiable-ltd-v-chang-ca3-2003.