OCR Solutions, Inc. v. Charactell, Inc.
6:17-cv-00709
M.D. Fla.Jun 23, 2017Background
- OCR Solutions and CharacTell dispute ownership and control of idCliQ software; OCR seeks preliminary injunction for access to idCliQ and to enjoin CharacTell from soliciting OCR's clients.
- OCR alleges an oral joint venture with CharacTell formed by principals Barsky (OCR) and Kahana (CharacTell); CharacTell contends OCR was only a reseller.
- Parties exchanged draft agreements in 2015: CharacTell’s proposal and a subsequent draft reseller agreement expressly treated CharacTell as owner and OCR as exclusive reseller (subject to sales thresholds).
- OCR also relies on a 2012 Mutual Confidentiality Agreement (MCA) claiming CharacTell used disclosed customer lists to poach clients; CharacTell executed a 2013 Formstorm reseller agreement that contains an integration clause and its own confidentiality provisions.
- District court found the record insufficient to show a likely enforceable joint venture (no shared losses, joint property, or joint control) and unclear whether the MCA survived the Formstorm Agreement; denied preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an oral joint venture existed giving OCR co-ownership of idCliQ | OCR: Barsky and Kahana formed an oral joint venture (50/50) during pre-2015 communications | CharacTell: Parties negotiated and memorialized a reseller arrangement; drafts show CharacTell retained ownership | No — OCR failed to show likelihood of success; evidence points to reseller relationship, not joint venture |
| Whether the 2012 Mutual Confidentiality Agreement remains enforceable | OCR: MCA protects customer lists; CharacTell’s solicitations breach MCA, warranting injunction | CharacTell: Formstorm Agreement supersedes prior agreements and contains its own confidentiality terms | No — court found it unclear whether MCA survived the Formstorm Agreement; OCR did not show substantial likelihood of success |
| Whether OCR will suffer irreparable harm absent injunction | OCR: Loss of customers, inability to support clients without idCliQ access constitutes irreparable harm | CharacTell: Injunctive relief (especially source code turnover) would impose severe harm to CharacTell’s proprietary interests | Irreparable harm: Court found OCR showed likely irreparable harm (loss of customers/goodwill) but this factor alone did not carry the motion |
| Balance of harms and public interest from granting injunction | OCR: Access needed to preserve business and clients | CharacTell: Turnover of source code or broad access would risk disclosure of long-developed proprietary software and be devastating | Balance/public interest: Weighs against OCR for requested relief (particularly surrendering source code); injunction denied |
Key Cases Cited
- Schiavo ex rel. Schindler v. Schiavo, 403 F.3d 1223 (11th Cir. 2005) (four-factor preliminary injunction framework)
- Siegel v. LePore, 234 F.3d 1163 (11th Cir. 2000) (preliminary injunction is extraordinary; movant’s burden)
- McDonald's Corp. v. Robertson, 147 F.3d 1301 (11th Cir. 1998) (movant’s burden for injunction)
- BellSouth Telecommunications, Inc. v. MCI Metro Access Transmission Services, LLC, 425 F.3d 964 (11th Cir. 2005) (loss of customers/goodwill can be irreparable injury)
- Mass. Property Insurance Underwriting Ass'n v. Georgaklis, 931 N.E.2d 995 (Mass. 2010) (elements/focus for joint venture formation)
- Winey v. William E. Dailey, Inc., 636 A.2d 744 (Vt. 1993) (joint venture elements)
- Prime Insurance Syndicate, Inc. v. B.J. Handley Trucking, Inc., 363 F.3d 1089 (11th Cir. 2004) (place of contract formation rule)