Sergey Efremov v. Geosteering, LLC
01-16-00358-CV
| Tex. App. | Mar 14, 2017Background
- GeoSteering, an oil‑field services company, developed proprietary geosteering software (RigComms). Efremov, a scientist/programmer, began working for GeoSteering in 2009; there was no written employment agreement.
- Efremov wrote algorithms in Matlab (.m files). GeoSteering’s engineer rewrote chosen algorithms in C# for RigComms; Efremov assisted during implementation.
- From 2009–2013 Efremov shared source files via Dropbox. In 2013 he compiled many algorithms into a binary GS_Toolbox (executable, passcode/expiry protected) and removed some .m files from Dropbox. Access later became more restricted.
- GeoSteering sued for declaratory judgment (that Efremov was an employee and the employer owned the code) and claims including breach of contract, breach of fiduciary duty, conversion, and trade‑secret misappropriation; it sought injunctive relief. The trial court granted a temporary injunction finding Efremov an employee and GeoSteering the owner of the code.
- Efremov appealed interlocutorily, arguing federal preemption, lack of status‑quo (no possession), no probable right to recovery, statute of frauds/writing requirement, and that the trial court made unnecessary dispositive findings.
Issues
| Issue | Plaintiff's Argument (GeoSteering) | Defendant's Argument (Efremov) | Held |
|---|---|---|---|
| 1. Whether state claims are preempted by the Copyright Act | Claims seek a state‑law declaration of employment/ownership and fiduciary/contract remedies that are not governed exclusively by the Copyright Act | Copyright Act preempts state law claims that are equivalent to exclusive federal copyright rights | Not preempted as pleaded: declaration of ownership/employment and breach‑of‑contract/fiduciary claims turn on employment status, not interpretation of Copyright Act; preemption not resolved for some other claims in this interlocutory appeal |
| 2. Whether the injunction preserves the status quo | Status quo was sharing/access to source code and GS_Toolbox between the parties prior to the dispute | Trial court created a new arrangement because Efremov had not been sharing the GS_Toolbox source immediately before suit | Trial court did not abuse discretion: evidence showed historical open access through 2013 and continued partial sharing; injunction preserved the pre‑dispute status quo |
| 3. Whether GeoSteering showed a probable right to recovery (probable success) | Presented evidence of an oral work‑for‑hire employment relationship, salary, control, training, and company practices supporting probable right on breach‑of‑contract and fiduciary claims | Efremov argued he was an independent contractor (1099, d/b/a, paid a flat sum, provided own tools) and statute of frauds requires a written employment contract | GeoSteering met the temporary‑injunction standard: produced evidence tending to sustain its claims; trial court reasonably found a probable right to recovery |
| 4. Whether the employment agreement required a writing (statute of frauds and Copyright §204) | Oral indefinite‑term employment is performable within one year so statute of frauds does not apply; if work made for hire, employer is initial copyright owner so §204 writing requirement (transfer) is inapplicable | Agreement must be in writing (statute of frauds); federal §204 requires written transfer of copyrights | Court held statute of frauds inapplicable because employment was indefinite‑term; §204 inapplicable if work was made for hire because employer is initial owner; trial court’s finding of employment stands for injunction purposes |
| 5. Whether the trial court’s factual/legal findings improperly decided merits | GeoSteering argued temporary findings are non‑binding and appropriate to support injunctive relief | Efremov claimed the order contained dispositive findings amounting to summary judgment | Court rejected Efremov’s argument: temporary injunction findings are not preclusive at trial and do not constitute summary judgment |
Key Cases Cited
- TMC Worldwide, L.P. v. Gray, 178 S.W.3d 29 (Tex. App.—Houston [1st Dist.] 2005) (temporary injunction standard and extraordinary‑remedy principles)
- Butler v. Continental Airlines, Inc., 31 S.W.3d 642 (Tex. App.—Houston [1st Dist.] 2000) (discussion of copyright preemption of state misappropriation claims)
- Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999) (state misappropriation claims preempted where core rights mirror copyright exclusive rights)
- Daboub v. Gibbons, 42 F.3d 285 (5th Cir. 1995) (framework for copyright preemption analysis)
- Community for Creative Non‑Violence v. Reid, 490 U.S. 730 (U.S. 1989) (agency/common‑law factors for determining employee vs. independent contractor in work‑for‑hire context)
- Tel. Equip. Network, Inc. v. TA/Westchase Place, Ltd., 80 S.W.3d 601 (Tex. App.—Houston [1st Dist.] 2002) (probable‑right‑to‑recover standard for injunctions)