Xtomic, LLC v. Active Release Techniques, LLC

340 F. Supp. 3d 1092
District Court, D. Colorado·Decided September 13, 2018·No. Civil Action No. 14-cv-02901–RM–KMT·Published·Cited by 2 cases

Opinion

RAYMOND P. MOORE, United States District Judge

The parties' cross-motions for summary judgment ask the Court to determine two issues arising under the Copyright Act of 1976, 17 U.S.C. § 101 et seq . First, Plaintiff's motion seeks a declaratory judgment that it owns the copyright in the code to four computer programs. Second, Defendants' motion asks the Court to find that *1095Plaintiff, based on its conduct, granted an implied, unlimited, nonexclusive license to retain, use, and modify the software programs, which is a complete defense to Plaintiff's second cause of action for copyright infringement.

For the reasons discussed below, the Court GRANTS Plaintiff's motion for partial summary judgment. The Court DENIES Defendants' motion for summary judgment.

I. BACKGROUND

The following are the undisputed and material facts taken from the parties' statements of undisputed facts and accompanying exhibits.

A. Plaintiff and Defendants' Relationship

Plaintiff is a computer software and development company. (ECF No. 118-1, Pl.'s Sep. Statement of Undisputed Mat. Facts ("Pl.'s SUMF"), Pl.'s SUMF ¶ 2.) Plaintiff creates, develops, and maintains a variety of computer software, software applications, data management applications, and practice management applications. (Id. ) Defendants1 provide healthcare services directly to patients and through a network of providers who have been trained in Defendants' "soft-tissue manipulation techniques." (ECF No. 121-1, Defs.' Sep. Statement of Undisputed Mat. Facts ("Defs.' SUMF"), Defs.' SUMF ¶¶ 1, 2.)

The parties' businesses overlapped as Plaintiff provided software development and other IT services to Defendants from 2002 to 2013. (Id. , Defs.' SUMF ¶ 5.) Defendants terminated the business relationship with Plaintiff in 2013-which is also when the parties' conflicting copyright ownership claims over the programs began. (Id. , Defs.' SUMF ¶ 25.) The disputes revolve around four programs referred to by the parties as follows: the (1) Admin Program; (2) EPN Program; (3) EHR Service Application; and (4) PMS Program. (Id. , Defs.' SUMF ¶ 6.) There are no written agreements between Plaintiff and Defendants regarding any of the programs. (Id. , Defs.' SUMF ¶ 24.)

Although Defendants refer to the programs "collectively," the factual assertions surrounding the Admin and EPN Programs are very different than those surrounding the EHR and PMS Programs. As such, the Court will discuss the Admin and EPN Programs together and the EHR and PMS Programs together.

B. The Programs

1. The Admin Program and EPN Program

The parties do not dispute that the Admin Program and EPN Program were developed at Defendants' request to assist in managing its data. (ECF No. 121-1, Defs.' SUMF ¶¶ 8, 11.) Plaintiff provided both programs on a monthly basis for which it charged in arrears. (Id. , Defs.' SUMF ¶¶ 10, 13.) Plaintiff adds that it only invoiced Active Release Techniques, LLC for use of the Admin Program whereas it only invoiced ART Corporate Solutions, Inc. for use of the EPN Program. (Id. , Defs.' SUMF, AF2 ¶¶ 10, 13.)

The parties also do not dispute that the Admin Program and EPN Program *1096were hosted on servers owned by Plaintiff. (Id. , Defs.' SUMF ¶ 20.) It is uncontested that, throughout the parties' business relationship, Defendants' employees and providers could access and use both programs. (Id. , Defs.' SUMF ¶ 19.) But Plaintiff asserts that Defendants did not have access to the source code3 for the Admin Program or EPN Program; did not have the ability to modify the programs; and the programs were never installed on a computer or server owned or controlled by Defendants. (Id. , Defs.' SUMF, AF ¶ 19.) Similarly, Plaintiff contends that only its employees had access to its servers. (Id. , Defs.' SUMF, AF ¶ 20.) Plaintiff claims that it, and it alone, made the conscious decision to limit Defendants' electronic access to the programs and Defendants' physical access to its servers. (Id. )

Defendants reply that Plaintiff provided the source code for the Admin Program and EPN Program in 2008 and again in 2013. (Id. , Defs.' SUMF, Reply to AF ¶ 19.)4 Furthermore, Defendants assert that the Plaintiff provided them the source code and placed no restrictions on their access to, or use of, the source code. (Id. ) With regard to hosting the programs on Plaintiff's servers, Defendants state that it was a decision the parties mutually agreed upon. (Id. , Defs.' SUMF, Reply to AF ¶ 20.) Then, Defendants note that Plaintiff helped transition the source code to a new vendor and did not "put any limits on that[,]" in 2008. (Id. ) Although it is unclear from the parties' filings, it appears that the preceding factual contentions are limited to the state of affairs before May of 2013.

In May 2013, Defendants terminated the business relationship with Plaintiff. (Id. , Defs.' SUMF ¶ 25.) According to Defendants, it was at that time Plaintiff voluntarily turned over the source code and related files for the Admin Program and EPN Program for a second time. (Id. , Defs.' SUMF ¶ 26.) Defendants cite testimony from one of Plaintiff's principals to further claim that the source code was turned over without any restrictions on Defendants' access to, or use of, it. (Id. , Defs.' SUMF, Reply to AF ¶ 26.)

According to Plaintiff, Defendants requested the source code to the Admin Program and EPN Program to run the programs on Defendants' servers so that Plaintiff would not have access to Defendants' data. (Id. , Defs.' SUMF, AF ¶ 26.) Plaintiff admits that it provided Defendants the source code to the Admin Program and EPN Program. (ECF No. 113-3, Resps. to RFA Nos. 9 ant 11 at 25-26.) But Plaintiff contends that after being "harassed" by third-party vendors, it "finally acquiesced to [Defendants' demands] with the promise from [Plaintiff] that [Plaintiff], *1097within a few months, cease using the Admin Program and the EPN Program." (ECF No. 121-1, Defs.' SUMF, AF ¶ 26.) And Plaintiff states that it did not give permission to modify or create derivative works with respect to the Admin Program and EPN Program. (Id. ) Despite Defendants' promise, Plaintiff asserts that Defendants continue to use the programs to this day. (Id. )

Finally, Defendants state that they paid Plaintiff approximately $2 million between 2002 and 2013. (Id. , Defs.' SUMF, ¶ 23.) Plaintiff responds that Defendants only paid $1,747,531.09 over that time period, of which "less than 30%" was for use of the Admin Program and EPN Program. (Id. , Defs.' SUMF, AF ¶ 23.)

2. The EHR Service Application and PMS Program

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Xtomic, LLC v. Active Release Techniques, LLC, 340 F. Supp. 3d 1092 (D. Colo. 2018).

340 F. Supp. 3d 1092 (Xtomic, LLC v. Active Release Techniques, LLC) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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