Compulife Software Inc. v. Moses Newman
959 F.3d 1288
| 11th Cir. | 2020Background:
- Compulife developed the Transformative Database (compilation of insurers rate tables) and licensed it via PC quoter (local encrypted DB + optional web quoter HTML) and an internet-engine license (hosted engine plus DB). The web-quoter HTML is copyrighted.
- Defendants (NAAIP / BeyondQuotes, run by Rutstein and others) operated quote engines on thousands of sites and BeyondQuotes, monetizing referrals to brokers; they obtained access to Compulife data through (a) misleading email access to MSCC/Vam DB and (b) hiring a hacker (Natal) who scraped >43 million quotes for two ZIP codes.
- Compulife brought two consolidated suits (the “08” and “42” cases) alleging copyright infringement of the HTML, trade-secret misappropriation of the Transformative Database, Lanham Act/Florida false advertising claims, and a Florida anti-hacking statute claim.
- The magistrate judge found Compulife owned a valid copyright and that the database was a trade secret but ruled for defendants on infringement and misappropriation, and also rejected the Lanham Act and CADRA claims.
- The Eleventh Circuit affirmed the rejection of false-advertising and CADRA claims, but vacated and remanded the copyright and trade-secret rulings because the magistrate judge misallocated burdens, misapplied legal standards, and failed to make adequate findings of fact and law.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Copyright infringement (HTML/web-quoter code) | Compulife: defendants copied protectable portions of Compulife's copyrighted HTML and used it to serve quotes; factual copying established | Defendants: copied portions are unprotectable (industry-standard, functional, or public-domain elements); no substantial similarity after filtration | Vacated and remanded: judge erred by placing burden on Compulife to prove protectability, by assessing substantiality relative to infringing work rather than Compulife's work, and by failing to make required findings; remand for proper filtration and substantial-similarity analysis |
| Trade-secret misappropriation (Transformative Database) | Compulife: database is a trade secret; defendants acquired/used it by misrepresentation (email access), by hiring a scraper (improper means), and by using scraped data to fuel their engines | Defendants: quotes were publicly accessible, so acquisition/use not wrongful or not a secret; if accessed, usage was innocent or purchased from third parties | Vacated and remanded: magistrate judge failed to analyze all statutory varieties of misappropriation (acquisition and use), wrongly treated public availability of individual quotes as dispositive, and failed to decide whether volume of data taken or scraping constituted improper means; remand to decide improper means and whether substantial compilation was taken |
| False advertising (Lanham Act and Florida equivalents) | Compulife: defendants advertised quote engines without disclosing source; this deceived consumers and diverted business | Defendants: no specific false or misleading statement was proved; any general claim of providing quotes is not deceptive about source and lacks materiality | Affirmed: Compulife failed to identify particular false/misleading ads at trial; appellate arguments partly unpreserved and not clearly erroneous; Lanham Act/FDUTPA/common-law claims fail |
| Florida Computer Abuse and Data Recovery Act (CADRA) | Compulife: defendants obtained information from a protected computer and transmitted commands without authorization | Defendants: access did not involve a statutory "technological access barrier," so CADRA not triggered | Affirmed: statute defines "protected computer" as one accessible only by employing a technological access barrier; Compulife failed to prove such a barrier, so CADRA claim fails |
Key Cases Cited
- Bateman v. Mnemonics, Inc., 79 F.3d 1532 (11th Cir. 1996) (software copying and filtration principles)
- Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) (originality and unprotectable facts)
- Computer Associates Int'l, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992) (abstraction-filtration-comparison test)
- MiTek Holdings, Inc. v. Arce Eng'g Co., 89 F.3d 1548 (11th Cir. 1996) (probative similarity and program copying standards)
- Peter Letterese & Associates v. World Inst. of Scientology Enterprises, 533 F.3d 1287 (11th Cir. 2008) (substantial-similarity analysis)
- Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) (qualitative importance of copied material)
- Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974) (trade-secret misappropriation: improper means vs reverse engineering)
- E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012 (5th Cir. 1970) (improper acquisition by reconnaissance can be misappropriation)
- Penalty Kick Management v. Coca-Cola Co., 318 F.3d 1284 (11th Cir. 2003) (broad definition of "use" of a trade secret)
- Home Design Services, Inc. v. Turner Heritage Homes Inc., 825 F.3d 1314 (11th Cir. 2016) (filtration burden and summary-judgment guidance)