Paycom Payroll, LLC v. Richison
758 F.3d 1198
| 10th Cir. | 2014Background
- David Richison (author) wrote payroll software (BOSS, Independence) while at Ernest Group; he later formed Period and wrote Period Indy and then Cromwell. Ernest Group owns copyrights to Independence by assignment and alleged infringement by Cromwell.
- Parties settled by consent decree appointing a special master to determine whether Cromwell infringed BOSS and/or Independence; the special master’s report was to be filed under seal for Attorneys’ Eyes Only.
- Special Master Kendyl Román concluded Cromwell infringed both BOSS and Independence; the district court adopted the report and ordered destruction of Cromwell copies.
- David sought access to the sealed report (waived by consent decree), objected to the special master’s use of 2001 versions (versus registered 1999 versions), and argued the report failed to apply the abstraction-filtration-comparison test and thus reached an incorrect substantial-similarity finding.
- The Tenth Circuit vacated the district court’s adoption of the report and remanded, concluding the special master failed adequately to document application of the abstraction-filtration-comparison test; the court declined to disqualify Román but ordered a more thorough report.
Issues
| Issue | Plaintiff's Argument (Ernest Group) | Defendant's Argument (Richison/Period) | Held |
|---|---|---|---|
| 1. Access to Special Master’s Report | Enforcement of Attorneys’ Eyes Only restriction agreed in consent decree is proper. | Richison argued denial of access violated due process and was unwaivable. | Restriction was waivable; no fundamental unwaivable right to view report — challenge rejected. |
| 2. Versions Analyzed | Use of 2001 versions was agreed before trial; ownership/registration issue was waived. | Richison argued only 1999 versions were registered, so master erred analyzing 2001 versions. | Court held Richison waived this argument by proposing 2001 versions below; issue not considered on appeal. |
| 3. Adequacy of Special Master’s Analysis / Substantial Similarity | Report sufficiently showed copying and supported infringement findings. | Report failed to document abstraction-filtration-comparison, conflated copying-in-fact with protectable-expression analysis, and offered insufficient analysis to find substantial similarity. | Vacated district court’s adoption; remanded for a more thorough report applying abstraction-filtration-comparison. |
| 4. Need to Replace Special Master | Román remains impartial and qualified; any disagreements don’t require disqualification. | Richison claimed Román was tainted by receiving plaintiffs’ critique and was unqualified. | Court rejected disqualification; refused to order a new special master but left door open if future facts warrant. |
Key Cases Cited
- Mitel, Inc. v. Iqtel, Inc., 124 F.3d 1366 (10th Cir. 1997) (discusses when expedited analysis may be appropriate and the abstraction-filtration-comparison framework)
- Country Kids 'N City Slicks, Inc. v. Sheen, 77 F.3d 1280 (10th Cir. 1996) (endorses abstraction-filtration-comparison test for software)
- Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823 (10th Cir. 1993) (describes levels of abstraction and filtration in program comparison)
- Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010) (copyright registration requirement is nonjurisdictional)
- Blehm v. Jacobs, 702 F.3d 1193 (10th Cir. 2012) (standard of review for substantial similarity is de novo)
- In re City of New York, 607 F.3d 923 (2d Cir. 2010) (approves Attorneys’ Eyes Only protective orders in trade-secret contexts)