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Inspection Management Systems, Inc. v. Open Door Inspections

October 19, 2009

INSPECTION MANAGEMENT SYSTEMS, INC., PLAINTIFF,
v.
OPEN DOOR INSPECTIONS, INC., MICHAEL R. SCHEIDERICH; KEVIN SCHEIDERICH; BOB FISHER; RUN TANGENT, LLC, DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Through the present lawsuit, Plaintiff Inspection Management Systems, Inc. ("Plaintiff" or "IMS") seeks to prevent Defendants from marketing their software program for managing home inspections, on grounds that said program is unlawfully derived from software previously developed by IMS. Plaintiff claims that Defendant Michael Scheiderich subscribed to the IMS software and violated the contractual conditions of its use by making the software available to engineers in India for purposes of developing a competing product.

Plaintiff further contends that the companies with which Defendant Scheiderich was affiliated, Defendants Open Door Inspections and Run Tangent, LLC, either ratified Scheiderich's actions or alternatively, that Scheiderich acted as their undisclosed authorized agent in subscribing to and using Plaintiff's software. Presently before the Court is a Motion to Dismiss Count I and Count III of Plaintiff's Second Amended Complaint, brought by Defendants Open Door Inspections, Inc. Michael Scheiderich, and Run Tangent, LLC (collectively referred to as "Defendants" unless otherwise indicated). Defendants' Motion is brought pursuant to Federal Rule 12(b)(6) on grounds that said causes of action fail to state any viable claim.*fn1

BACKGROUND

According to Plaintiff's First Amended Complaint, IMS has developed unique scheduling, management, and business automation software that allows home inspectors to automate key business processes. Second Amended Complaint ("SAC"), ¶ 5. In February of 2007, Michael Scheiderich registered as a user of the IMS software, and according to the SAC, he simultaneously executed an electronic End User Licensing Agreement ("EULA") as part of his user registration process. Under the terms of the EULA (a copy of which is attached to the SAC as Exhibit "A") a non-transferable license to use the IMS software was granted.

The user also acknowledged IMS' exclusive proprietary rights in the system and agreed not to disclose any information, for a period of three years after accepting the EULA, to any person who has not also accepted the EULA. See EULA, Ex. "A" to Pl.'s SAC, ¶¶ 13, 18, 21. Paragraph 21(b) of the EULA contains the following stipulation:

You agree that the information being provided by IMS, Inc. is confidential and derives its value, in part, from its confidential nonpublic nature. You further agree that in the event you breach this agreement, IMS, Inc., will suffer irreparable harm.

Id., ¶ 21(b).

According to Plaintiff, at all times relevant to Scheiderich's activities as alleged in the SAC, he acted as an undisclosed duly authorized agent for Defendants Run Tangent, LLC and Open Door Inspections, Inc. Alternatively, Plaintiff alleges that Run Tangent and Open Door ratified Defendant Scheiderich's actions. SAC, ¶ 11.

The SAC goes on to allege that on October 1, 2008, individuals both using Michael Scheiderich's IMS logon simultaneously accessed the IMS software from Georgia (where Scheiderich allegedly resided) and from India. Both users thereafter remained online utilizing the IMS program for approximately one hour. FAC, ¶¶ 15-16.

IMS contends that the simultaneous logon was orchestrated so that software engineers in India could emulate its software. IMS bases its contention in this regard on the fact that in November 2008, IMS President, Russell Colliau, attended a sales demonstration made by Michael Scheiderich to market new home inspection software similar to that developed by Plaintiff. SAC, ¶¶ 19-22.

Based on the initial evidence provided by IMS, along with its claim that Defendants intended a launch of their new, allegedly infringing software, at a national home inspectors trade show to be held in Florida between January 21, 2009, and January 25, 2009, the Court granted IMS' initial request for a temporary restraining order on January 16, 2009 in order to protect against the threat of irreparable harm pending a more thorough review of the claims made by IMS. Plaintiff's subsequent request for a preliminary injunction was, however, denied.

Defendants then proceeded to file a Motion for Partial Summary Judgment, along with a Motion to Dismiss in an attempt to adjudicate in their favor the claims being asserted by Plaintiff. By Memorandum and Order filed July 9, 2009, the Court denied Defendants' summary judgment claims, but granted Defendants' Motion to Dismiss Plaintiff's claims for breach of contract, unfair competition, and false advertising. Because leave to amend was afforded, Plaintiff filed its SAC on July 29, 2009. Defendants subsequently filed the Motion to Dismiss now before ...


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