313 F. Supp. 3d 484
S.D. Ill.2018Background
- Broker Genius developed AutoPricer v.3, a web-based dynamic ticket-pricing application after multi-year, multi-million dollar development; users license the product under online Terms of Use that prohibit creating or distributing derivative works.
- Drew Gainor, a former Broker Genius user with extensive industry experience, used AutoPricer in mid–2016 and continued access into 2017; Broker Genius records show Gainor accepted an Updated Terms of Use on July 7, 2016.
- After leaving active use, Gainor co‑founded Seat Scouts and led development and launch of a competing product, Command Center (announced summer 2017, launched November 1, 2017).
- Broker Genius sued Gainor, Seat Scouts and related entities asserting breach of contract and unjust enrichment, and moved for a preliminary injunction to stop marketing and sales of Command Center.
- The court held an evidentiary hearing, found extensive architectural and UI/UX similarities between AutoPricer and Command Center, noted a lack of independent requirements engineering by defendants, and found circumstantial evidence that Gainor used knowledge gained from AutoPricer to build Command Center.
- The court concluded Broker Genius demonstrated likely success on its breach‑of‑contract claim, irreparable harm from reputational/customer loss, and that the balance of hardships/public interest favor an injunction; it granted a preliminary injunction and set security at $100,000.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gainor assented to the Updated Terms of Use | Broker Genius: system logs and continued access show Gainor clicked to accept on July 7, 2016 | Gainor: disputes remembering assent and says Broker Genius employee may have completed registration | Court: Likely assented on July 7, 2016; continued access plus records support assent |
| Whether the Terms of Use bar creation/distribution of a product derived from AutoPricer | Broker Genius: the clickwrap forbids creating/distributing derivative works of the Site/Apps | Defendants: contend similarities reflect common industry knowledge/prior art, not derivation | Court: Contract unambiguous; prohibition covers works traceable to AutoPricer; not a non‑compete |
| Whether Command Center was derived from AutoPricer (traceability/substantial similarity) | Broker Genius: pervasive UI/UX, architecture, widget set, and rapid post‑use development show derivation; lack of requirements engineering supports copying | Defendants: point to prior products, Gainor's industry experience, obvious design choices, different page layouts and some UI differences | Court: Likely derived — extraordinary overall similarity, proximity in time, early drafts/wireframes, and missing independent requirements engineering support traceability |
| Whether preliminary injunction appropriate (irreparable harm, balance of hardships, public interest) | Broker Genius: loss of customers, inventory, goodwill and reputation cannot be remedied by money alone | Defendants: injunction would foreclose competition; Broker Genius has investor capital to survive | Court: Irreparable harm shown for breach‑of‑contract claim; balance of hardships and public interest favor injunction; unjust enrichment claim alone insufficient for injunction |
Key Cases Cited
- Broker Genius, Inc. v. Zalta, 280 F. Supp. 3d 495 (S.D.N.Y. 2017) (prior related opinion addressing trade secrets and contractual issues)
- Benihana, Inc. v. Benihana of Tokyo, LLC, 784 F.3d 887 (2d Cir. 2015) (standards for preliminary injunction in Second Circuit)
- Register.com, Inc. v. Verio, Inc., 356 F.3d 393 (2d Cir. 2004) (irreparable harm and enforcement of online terms of use)
- Meyer v. Uber Techs., Inc., 868 F.3d 66 (2d Cir. 2017) (enforceability of clickwrap agreements requires conspicuous notice and unambiguous assent)
- Tom Doherty Assocs., Inc. v. Saban Entm't, Inc., 60 F.3d 27 (2d Cir. 1995) (loss of goodwill can constitute irreparable harm)
- Eng v. Smith, 849 F.2d 80 (2d Cir. 1988) (plaintiff need only show better than 50% chance of success to satisfy likelihood of success standard)
- Terwilliger v. Terwilliger, 206 F.3d 240 (2d Cir. 2000) (contract interpretation is question of law when language is unambiguous)
- Random House, Inc. v. Rosetta Books LLC, 150 F. Supp. 2d 613 (S.D.N.Y. 2001) (contract ambiguity and the court's role in interpretation)