Tribune Software Case Given Boot by 6th Circuit

     CINCINNATI (CN) - A software developer did not infringe on a subscriber-tracking system it helped develop for the Chicago Tribune when it created a similar program for The Plain Dealer in Cleveland, the 6th Circuit ruled.
     Automated Solutions Corp. (ASC) sued Paragon Data Systems Inc. over eight years ago, shortly after the parties ended a joint venture to develop the "Single Copy Distribution System," or SCDS, a software program the Tribune used to track newspaper subscriptions.
     Though Paragon abandoned all its ownership rights to the system when it terminated the companies' contract, it developed DRACI for The Plain Dealer based on a 2004 contract with that company for an analogous software system.
     ASC claimed Paragon's 2004 tracking system infringed on the one both companies devised, but Paragon's sole programmer claimed to have developed most of the code "in his head" and wrote it "from scratch."
     During trial proceedings in the Northern District Court of Ohio, forensic examiners determined that failed hard drives, coupled with an inadequate backup system, prevented them from accessing key files associated with Paragon's development of DRACI.
     ASC subsequently moved for sanctions and damages based on claims that Paragon destroyed evidence of their copyright infringement, but a federal magistrate determined "Paragon was at most negligent, and that it had not acted with any degree of willful or malicious behavior."
     The magistrate also granted Paragon partial summary judgment and dismissed the copyright-infringement claim after deciding that ASC had failed to specify which portions of the SDCS software were protected under the Copyright Act.
     With the remaining claims deemed contingent on the validity of the company's copyright-infringement claim, they were dismissed as well.
     ASC argued on appeal that the failed hard drives contained evidence proving Paragon copied SCDS while developing its DRACI system.
     A three-judge panel with the 6th Circuit affirmed, however, ruling that "whether Paragon was negligent in failing to preserve the Sun Server and hard drive does not advance a showing of relevance, which is a necessary finding for the district court to impose sanctions."
     "To the extent that ASC cites a transcript of an interview that its investigator held with [the programmer] as support for its argument that Paragon used the SCDS as a model for DRACI, we note that the interview appears to have been highly suggestive, and in any event, [the programmer's] statements during the interview are unsworn, and thus of limited reliability," according to the ruling for the panel by U.S. District Judge Roger Cleland, sitting by designation from Detroit.
     ASC also failed to challenge the finding that Paragon had no duty to preserve back-up files once the company became involved in the lawsuit.
     "Because the only evidence in the record suggested that the back-up tapes were rewritten daily and used only for disaster recovery, they were not subject to Paragon's duty to preserve," Cleland wrote.
     Citing numerous affidavits presented throughout the case, the panel likewise rejected claims that Paragon willfully destroyed evidence of its alleged infringement.
     "The magistrate judge first noted an affidavit from [a Paragon officer] who attested that Paragon never intentionally withheld or destroyed evidence, and at all times complied in good faith with its discovery obligations," Cleland wrote. "[The officer] also stated that Paragon is a small company with only eleven employees. Additionally, Paragon submitted affidavits from many of its prior attorneys in both the state and federal litigation, all attesting that they were not aware of any evidence withholding, and that they believed Paragon's discovery responses were truthful and accurate when they were made. Despite ASC's attempts to cast doubt on the notion that Paragon and its counsel acted in good faith, it did not submit any evidence suggesting that Paragon willfully withheld evidentiary material." (p. 15)
     Relevant to the panel's decision is the 2010 decision in R.C. Olmstead Inc. v. CU Interface LLC, a similar software-infringement case in which the 6th Circuit ruled that "the plaintiff had failed to create a triable issue of fact as to whether the defendant had copied original elements of the plaintiff's software."
     The panel specifically cited the failure of ASC's expert witness, a professor emeritus of computer science at the University of Akron, to point out which elements of the SDCS were copied by Paragon.
     The professor "states that he 'distilled' the SDCS software to its 'unique protectable expression,' but does not elaborate on which portions of the data are unique, what makes them unique, or why their particular form is not dictated by practical realities ... and therefore not subject to copyright protection," Cleland wrote (emphasis in original).