Paycom Payroll, et al v. Richison, et al, No. 13-6181 (10th Cir. 2014)Annotate this Case
David Richison began a payroll processing company in the 1990s in Oklahoma with his niece and nephew, Shannon and Chad Richison. The company was called "Ernest Group, Inc." and did business under the name "Paycom Payroll." David wrote two software programs for use at the company. The first program, ("BOSS") was assigned to Ernest Group in 1999. The second was called "Independence." David left Ernest Group and moved to Maryland where he formed his own payroll company, "Period Financial Corporation." David wrote a third program, "Indy," based in part on Independence. In 2009, Ernest Group filed a copyright infringement suit against David and Period, alleging that Indy infringed on Ernest Group's copyright in BOSS. Shortly after filing its complaint, Ernest Group registered a copyright in Independence, calling it a work-for-hire. By 2011, David had written a fourth program, "Cromwell," which would become a new basis for Ernest Group's lawsuit. The parties ultimately settled and agreed to the entry of a consent decree. All of Ernest Group's claims were released, except a claim for injunctive relief based on infringement. All rights to Independence were assigned to Ernest Group, and the parties agreed that a special master be assigned to determine whether Cromwell infringed on BOSS or Independence. The parties could not agree, however, which version of Cromwell should have been the subject of the special master's analysis. The special master ultimately found copyright infringement occurred, and the district court adopted the special master's report. David and his company appealed. Upon review, the Tenth Circuit found the special master did not document his application of each step of the abstraction-filtration-comparison test, and that "[h]is report reads consonantly with the misconception that an infringement analysis begins and ends with 'copying in fact.'" The Court therefore vacated the district court's order adopting the report and remanded with instructions for the district court to request a more thorough report with which to analyze Ernest Group's infringement claim.