971 F.3d 616
6th Cir.2020Background
- Carrier used ECIMOS’s Integrated Process Control System (IPCS) at 103 runtest stations in its Collierville HVAC plant; IPCS stores test results in a database-script source code that ECIMOS copyrighted.
- Carrier migrated ECIMOS’s VB6 software onto Windows 7 and later contracted Amtec to build a new testing system (RES/MES); Carrier’s IT manager copied an ECIMOS results-table (the “Hoal Table”) and shared it with Amtec.
- ECIMOS sued for breach of contract, trade-secret misappropriation, and copyright infringement; a jury found for ECIMOS on all three claims (but found no copyright infringement of IPCS software source code) and awarded $7.5M ($1.5M contract, $1M actual copyright damages, $5M disgorgement).
- The district court reduced actual copyright damages to $282,800 (crediting only licensing fees and a migration fee), left the $5M disgorgement intact, enjoined use of the RES but stayed the injunction pending creation of a non‑infringing database, and ordered Carrier to pay a $50/month per station license for continued use of trade-secret material.
- On appeal the Sixth Circuit (1) affirmed that Carrier infringed ECIMOS’s database-script source code, (2) held ECIMOS met the statutory burden for disgorgement by presenting Carrier’s gross revenues and affirmed the $5M disgorgement, (3) reduced actual copyright damages to $164,800 (licensing fees only), and (4) reduced contract damages to $401,250 as the only non‑speculative contract award; it affirmed the injunction rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Copyright infringement (database-script code) | ECIMOS: Carrier copied protectable elements (Hoal Table, aliasing, typos) and used them to help Amtec build RES. | Carrier: any copying was inadvertent, nonfunctional, de minimis, and not actionable as a matter of law. | Court: Affirmed infringement; jury reasonably found substantial similarity and use beyond a trivial copy. |
| De minimis / qualitative importance of copied code | ECIMOS: copied elements (and patterns like typos/aliasing) were qualitatively significant evidence of broader copying. | Carrier: Hoal Table was tiny (167 lines) and nonfunctional in RES, so de minimis. | Court: Rejected de minimis defense; qualitative significance and corroborating evidence (typos, aliasing, expert analysis) made copying actionable. |
| Actual copyright damages measure | ECIMOS: $1M (or reinstatement of full $1,021,000 proposal + licensing losses). | Carrier: Limit to unpaid station licensing fees only (approx. $164,800). | Court: Actual damages limited to lost licensing revenue attributable to the copyrighted database—$164,800. |
| Disgorgement burden and amount | ECIMOS: permitted to present Carrier’s gross Collierville revenues to jury; sought disgorgement of profits. | Carrier: ECIMOS must prove profits attributable to infringement, not just gross revenue. | Court: Statute requires copyright owner to present gross revenue; defendant must prove non-attributable profits. Jury’s $5M disgorgement (2.2% of plant profit) upheld. |
| Contract damages for breach (migration/confidentiality) | ECIMOS: full $1.5M (upgrade quote + licensing/other losses). | Carrier: Award should be limited to demonstrable unpaid licensing fees (~$283,250) or otherwise speculative. | Court: Reduced verdict to non-speculative damages tied to breach—$401,250—and vacated remainder as speculative. |
| Injunction & trade secrets (use vs disclosure; hardware) | ECIMOS: permanent injunction should bar use and disclosure; assembled hardware is protectable trade secret/derivative. | Carrier: Stay justified; some disclosure/use may continue under license; hardware not a trade secret. | Court: Affirmed injunction and its stay pending replacement database; allowed continued use under licensing fee; held assembled hardware is not a trade secret and rejected expansion via "safe-distance" rule. |
Key Cases Cited
- Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (originality requirement for copyright)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 387 F.3d 522 (6th Cir.) (proof standards in infringement suits)
- Kohus v. Mariol, 328 F.3d 848 (6th Cir.) (abstraction-filtration-comparison methodology)
- Ringgold v. Black Ent. Television, Inc., 126 F.3d 70 (2d Cir.) (de minimis defense in copyright)
- Gordon v. Nextel Commc’ns, 345 F.3d 922 (6th Cir.) (de minimis and observability analysis)
- Oracle Am., Inc. v. Google Inc., 750 F.3d 1339 (Fed. Cir.) (qualitative significance of small code excerpts)
- Balsley v. LFP, Inc., 691 F.3d 747 (6th Cir.) (copyright-owner must present gross revenue; infringer bears burden to prove non-attributable profits)
- Bridgeport Music, Inc. v. Justin Combs Publ’g, 507 F.3d 470 (6th Cir.) (disgorgement proof; presenting infringer profits suffices)
- Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390 (commingling of profits and burden allocation)
- Thoroughbred Software Int’l, Inc. v. Dice Corp., 488 F.3d 352 (6th Cir.) (measure of actual damages for software copying)