United States District Court, D. Maryland
XINIS UNITED STATES DISTRICT JUDGE.
case centrally concerns the copyrightability of a database
that supports a royalty research business. Pending before the
Court is Defendants IntangibleSpring, Inc.
(“IntangibleSpring”) and Raul Pacheco Quintanilla
(“Pacheco”)'s motion for summary judgment
(ECF No. 123), Plaintiff RoyaltyStat, LLC
(“RoyaltyStat”)'s cross-motion for summary
judgment (ECF No. 135), and the parties' dispute over the
allegedly privileged nature of certain documents submitted as
part of the record evidence. ECF No. 146. The motions are
fully briefed. A conference call was held on April 3, 2019,
regarding RoyaltyStat's claims of privilege (ECF Nos.
151-52), and no further hearing is necessary. See
Loc. R. 105.6. For the following reasons, the Court grants in
part and denies in part Defendants' motion for summary
judgment, denies RoyaltyStat's motion for summary
judgment, and finds that RoyaltyStat has waived any privilege
associated with the exhibit in question.
LLC (“RoyaltyStat”) publishes a database of
royalty rate information gathered primarily from licensing
agreements included within corporations' Securities and
Exchange Commission (“SEC”) filings. ECF No. 63-1
at 2. The RoyaltyStat database is comprised of information
extracted from the agreements. ECF No. 125-48 at 2.
Subscribers pay RoyaltyStat a fee to access the database
through unique usernames and passwords, after signing a
subscription agreement that limits use of the data. ECF No.
135-2 at 46-47.
was the first royalty database on the market. In 1997, Dr.
Ednaldo Silva, RoyaltyStat's founder, published an
article about the potential for such databases. ECF No. 63-1
at 2; ECF No. 135-15 at 4. Since the company's inception,
Silva has acted as RoyaltyStat's managing director. In
that capacity, he has established RoyaltyStat's employee
responsibilities and manages its staff. ECF No. 113-1 at 18;
ECF No. 135-6 at 7.
hired Pacheco in 2000. From 2000 to 2004, Pacheco extracted
information from license agreements and made suggestions for
how to edit fields for the database. ECF No. 129-1 at 29; ECF
No. 125-24 at 2. Pacheco's access to the database was
password protected. ECF No. 125-20 at 2. During the course of
Pacheco's employment, he secured permission to download
the database onto his computer to complete his work. ECF No.
140-2 at 3. Silva also expressly directed Pacheco to not
disclose specific database information to anyone outside the
company. ECF No. 125-27 at 5; ECF No. 135-8 at 1. Pacheco
understood that access to the database was limited to
subscribers who paid and signed the subscription agreement.
ECF No. 135-2 at 46-47.
Pacheco's lengthy tenure with RoyaltyStat, Silva referred
to Pacheco as an independent contractor and as an intern for
the company. ECF No. 140-8 at 2; ECF No. 141-5. In the
beginning, Pacheco completed his work on a computer that
Silva had purchased for him. ECF No. 145-5 at 5. Pacheco
worked in Silva's home or an apartment paid for by Silva.
ECF No. 141-5 at 2. At some point, however, Pacheco purchased
his own computer for use with RoyaltyStat and, in 2001, he
began to work from Mexico. ECF No. 145-5 at 6; ECF No. 135-2
at 26. The parties dispute whether Pacheco signed a
confidentiality agreement in connection with his employment.
Compare ECF No. 129-2 at 2, with ECF No.
145-4 at 5-6. In 2002, Pacheco began to work as a supervisor
and sales representative for RoyaltyStat. ECF No. 129-2 at 4.
During his tenure, RoyaltyStat paid Pacheco a monthly stipend
and commissions earned in connection with Pacheco's sales
of subscriptions. ECF No. 135-2 at 30.
2004, Pacheco ceased his data extraction work entirely to
focus on sales. Id. However, as late as January
2011, Pacheco continued to download portions of the
RoyaltyStat database. ECF No. 125-61 at 3. In September 2011,
RoyaltyStat terminated Pacheco and revoked his permission to
access and download the database. ECF No. 129-2 at 5.
after his termination, Pacheco founded IntangibleSpring. ECF
No. 129-2 at 5. IntangibleSpring maintains a database that
directly competes with RoyaltyStat. Id. The two
databases are similar in style, design, and business
objectives-to provide easily accessible royalty information
for paid subscribers. At its inception in 2011,
IntangibleSpring's database included approximately 10,
000 agreements, roughly the same number of agreements as in
the RoyaltyStat database. ECF No. 135-14 at 1; ECF No. 135-20
at 1. IntangibleSpring claimed to be adding about 600
agreements per month to their database, but only had
[XXXXX] records in 2018. ECF No.
135-20; ECF No. 125-52 at 9. Pacheco testified that he used
the knowledge he acquired while employed with RoyaltyStat on
locating relevant data to build the IntangibleSpring
database. ECF No. 129-10 at 10.
represents that, unlike RoyaltyStat, it does not include data
from certain types of licensing agreements or agreements
obtained from Freedom of Information Act requests. ECF No.
129-2 at 5. Yet, IntangibleSpring's database included
four entries gained from Freedom of Information Act requests.
ECF No. 137-7 at 13. The data accessible through
IntangibleSpring's database employs language also found
in RoyaltyStat's database that does not appear in the
original licensing agreements, including errors that are
found in RoyaltyStat's descriptions of agreements. ECF
No. 137-7 at 19. RoyaltyStat's descriptions overlapped
with the text of the source agreements 98% of the time, while
IntangibleSpring's only overlapped 45% of the time. ECF
No. 125-52 at 29. Out of RoyaltyStat's 16 and
IntangibleSpring's 49 data categories, the titles of five
categories overlapped verbatim. ECF No. 125-52 at 11.
registered its database with the United States Copyright
Office and was issued certificates, effective in 2009 and
2015, regarding original expression in the text, selection,
coordination, and arrangement of data. ECF No. 125-45; ECF
No. 125-46. However, RoyaltyStat did not seek any special
relief for its trade secrets when depositing portions of its
database to the Copyright Office. See Id. On
December 23, 2015, RoyaltyStat filed this action against
Pacheco and IntangibleSpring, alleging violations of the
Copyright Act, 17 U.S.C. § 101 et seq.; the
Lanham Act, 15 U.S.C. § 1125(a); the Maryland Uniform
Trade Secrets Act (“MUTSA”), Md. Code, Com. Law
§ 11-1201 et seq.; and tortious interference
with contract. Defendants now move for summary judgment in
their favor on all claims, contending that RoyaltyStat has
failed to generate sufficient triable issues of genuine
material fact. RoyaltyStat cross-moves for summary judgment
in its favor solely as to the MUTSA claim.
Standard of Review
judgment is appropriate when the Court, construing all
evidence and drawing all reasonable inferences in the light
most favorable to the non-moving party, finds no genuine
dispute exists as to any material fact, thereby entitling the
movant to judgment as a matter of law. Fed.R.Civ.P. 56(a);
see In re Family Dollar FLSA Litig., 637 F.3d 508,
512 (4th Cir. 2011). Summary judgment must be granted
“against a party who fails to make a showing sufficient
to establish the existence of an element essential to that
party's case, and on which that party will bear the
burden of proof at trial.” Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986).
responding to a proper motion for summary judgment, ”
the opposing party “must present evidence of specific
facts from which the finder of fact could reasonably find for
him or her.” Venugopal v. Shire Labs., 334
F.Supp.2d 835, 840 (D. Md. 2004), aff'd sub nom.
Venugopal v. Shire Labs., Inc., 134 Fed.Appx. 627 (4th
Cir. 2005) (citing Anderson v. Liberty Lobby, 477
U.S. 242, 252 (1986); Celotex, 477 U.S. at 322-23)).
Genuine disputes of material fact are not created
“through mere speculation or the building of one
inference upon another.” Othentec Ltd. v.
Phelan, 526 F.3d 135, 140 (4th Cir. 2008) (quoting
Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985)).
Where a party's statement of a fact is “blatantly
contradicted by the record, so that no reasonable jury could
believe it, ” the Court credits the record. Scott
v. Harris, 550 U.S. 372, 380 (2007).
as here, cross motions for summary judgment are filed, a
court must ‘evaluate each party's motion on its own
merits, taking care [in each instance] to draw all reasonable
inferences against the party whose motion is under
consideration.'” Snyder ex rel. Snyder v.
Montgomery Cty. Pub. Sch., No. DKC 2008-1757, 2009 WL
3246579, at *5 (D. Md. Sept. 29, 2009) (quoting Mingus
Constructors, Inc. v. United States, 812 F.2d 1387, 1391
(Fed. Cir. 1987)).
preliminary matter, the Court must determine whether it may
consider as part of the record evidence a report which had
been attached to an email that Pacheco's supervisor,
Marcia Coutinho, sent to him and Silva. RoyaltyStat contends
that the report is protected by the attorney-client
privilege. The report in question is a representative sample
of a competitor database. Silva had forwarded the email and
attachments from Coutinho to RoyaltyStat's attorney for
the purposes of receiving legal advice as to whether the
competitor was infringing on RoyaltyStat's copyright, to
which the attorney responded in writing. However, Pacheco was
not included in the correspondence with the attorney.
do not seek to use the letter written by the attorney, but do
wish to admit the other emails and the attached report that
was sent to Pacheco. RoyaltyStat objects on privilege
grounds. Attorney-client privilege protects confidential
communications between lawyer and client from disclosure.
Hawkins v. Stables, 148 F.3d 379, 383 (4th Cir.
1998). Courts narrowly construe the privilege because
“its application interferes with ‘the truth
seeking mission of the legal process.'” In re
Grand Jury Subpoena: Under Seal, 415 F.3d 333, 338 (4th
Cir. 2005) (quoting United States v. Tedder, 801
F.2d 1437, 1441 (4th Cir. 1986)). “The party invoking
the attorney-client privilege bears the burden of
demonstrating its applicability.” Clark v. Unum
Life Ins. Co. of Am., 799 F.Supp.2d 527, 536 (D. Md.
disclosure inconsistent with maintaining the confidential
nature of the attorney-client relationship waives the
attorney-client privilege.” United States v.
Jones, 696 F.2d 1069, 1072 (4th Cir. 1982). However,
disclosure of protected attorney communications between and
among corporate employees does not waive the privilege
“if the information is relayed from a non-lawyer
employee or officer to other employees or officers of the
corporation on a need to know basis.” F.C. Cycles,
Int'l, Inc. v. Fila Sport, S.P.A., 184 F.R.D. 64, 71
(D. Md. 1998); see also Upjohn Co. v. United States,
449 U.S. 383, 393 (1981). Similarly, when the information is
disclosed to a third-party who needs to know the information,
and who “is the ‘functional equivalent' of an
employee for the corporation, ” disclosure does not
amount to waiver. Maxtena, Inc. v. Marks, No. DKC
11-0945, 2014 WL 4384551, at *20 (D. Md. Sept. 2, 2014).
purposes of this analysis, the Court assumes without deciding
that the report attached to the request for attorney advice
was protected by the attorney-client privilege when forwarded
to counsel. However, even giving RoyaltyStat the benefit of
the doubt in that respect, the email chain reflects that
RoyaltyStat waived any privilege as to the report itself when
the report was forwarded to Pacheco after Silva received the
attorney's advice. The email correspondence reflects that
Pacheco was first asked to compare the competitor database to
RoyaltyStat's before the attorney was involved. Then,
after Silva obtained his attorney's advice,
Pacheco received a copy of the report without any further
instruction or communication. Nowhere does the email chain
suggest that Pacheco was given the report so he could follow
counsel's guidance. Nor did anyone advise Pacheco that
such information is privileged or somehow protected from
disclosure. See United States ex rel. Barko v.
Halliburton Co., 74 F.Supp.3d 183, 190-91 (D.D.C. 2014).
Thus, finding that any privilege was waived, the Court will
consider the exhibit.
also argues that evidence pertaining to RoyaltyRange, another
competitor, must not be considered by the Court because it
was produced “at the end of discovery” and is
inadmissible hearsay. ECF No. 145 at 6. However, these
documents are not, on their face, inadmissible. Rather, they
appear to be the business records of RoyaltyRange.
See Fed. R. Evid. 803(6). IntangibleSpring's
expert also intends to opine on issues of copyrightability
based in part on the RoyaltyRange report. The expert opinions
are not currently the subject of any separate challenge and
so the underlying data is relevant in that respect.
See Fed. R. Evid. 703. Thus, at this stage, the
Court will consider this evidence.
Court next turns to the parties' motions for summary
judgment. The Court first considers Defendants' motion
for summary judgment challenging the sufficiency of the
evidence as to all claims against them, and next