Spear Marketing, Incorporated v. BancorpSouth Bank
791 F.3d 586
| 5th Cir. | 2015Background
- SMI alleged Texas state-law claims for theft of trade secrets related to VaultWorks, a banking software, where customers could view only UI outputs, not the source or object code.
- BCS was a major VaultWorks customer; the parties had a multi-year license and extensions, with the last extension in March 2010 and the relationship lasting until 2012.
- ARGO developed CIO, a Cash Inventory Optimization product, intended to integrate with BANKPRO Teller; CIO uses different predictive algorithms and is installed on bank computers.
- In 2010 ARGO discussed integrating CIO with BCS’s existing BANKPRO Teller; on April 1, 2010 ARGO stated integration would be possible; SMI disclosed VaultWorks confidential information to ARGO during demonstrations in April 2010.
- BCS and ARGO pursued CIO with BCS; CIO was implemented by end of 2011; SMI was notified January 12, 2012 that VaultWorks agreement would not be renewed, expiring February 2012.
- SMI filed suit in September 2012 in Texas state court alleging ten claims; Defendants removed to federal court asserting complete preemption under the Copyright Act; after discovery, the district court granted summary judgment and denied remand, which SMI appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal was proper under complete preemption | SMI contends removal based on preemption was improper because not all claims were preempted. | BCS/ARGO maintain removal proper because the Copyright Act preempts the state claims at issue. | Removal proper; complete preemption applies. |
| Time-of-filing rule for evaluating removal | Record should include amended complaint narrowing claims, affecting jurisdiction. | Jurisdiction is determined at removal using the original petition; post-removal amendments do not defeat jurisdiction. | District court correctly used the Original Petition for removal analysis. |
| Whether TTLA and conversion claims are completely preempted | Some preemption arguments treat TTLA/conversion claims as not fully preempted. | TTLA and conversion claims are preempted to the extent they cover trade secrets and related ideas fixed in a tangible medium. | TTLA and conversion claims are completely preempted; district court's ruling upheld. |
| Whether misappropriation of trade secrets supports liability | Defendants used SMI’s trade secrets in developing and implementing CIO. | No evidence shows use of SMI’s trade secrets; timing or access alone is insufficient without substantial similarity or copying. | No triable issue on use of trade secrets; misappropriation claim dismissed. |
| Whether remaining eight claims were properly disposed of or waived | SMI asserted remaining claims independent of preemption. | Waiver due to failure to brief/argue eight remaining claims on appeal. | Eight remaining claims waived; affirmed dismissal on the former bases. |
Key Cases Cited
- GlobeRanger Corp. v. Software AG, 691 F.3d 702 (5th Cir. 2012) (complete preemption of subject matter under § 301(a))
- Carson v. Dynegy, Inc., 344 F.3d 446 (5th Cir. 2003) (two-part preemption test for § 301(a) applicability)
- Daboub v. Gibbons, 42 F.3d 289 (5th Cir. 1995) (preemption framework and scope guidance)
- ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (preemption scope discussion cited in § 301(a))
- Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867 (5th Cir. 2013) (use and copying concepts in preemption context)
- Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424 (2d Cir. 2012) (illustrates preemption concepts across circuits)