MPAY Inc. v. Erie Custom Computer Applications, Inc., No. 19-2206 (8th Cir. 2020)
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MPAY, a Massachusetts corporation that develops and owns payroll-processing software that it licenses to its customers, appealed the district court's denial of its motion for a preliminary injunction against appellees. MPAY claimed that it was entitled to such relief based on its copyright-infringement and trade-secrets-misappropriation claims.
The Eighth Circuit affirmed in part and vacated in part, holding that appellees demonstrated that their copying, disclosure, and possession of the source code were authorized by the Software Development and License Agreement that MPAY signed with its business partner. Therefore, MPAY has not shown a likelihood of success on the merits of its copyright infringement or trade-secrets-misappropriation claims, and the district court did not err in so concluding. The court also held that MPAY's assertion, that the district court erroneously concluded MPAY's harms were compensable with money damages and so were not irreparable, lacked merit. Furthermore, the balance of the equities and the public interest do not favor an injunction. The court remanded for further proceedings on the question of whether the contractors wrongfully sublicensed use of the software.
Court Description: [Gruender, Author, with Wollman and Kobes, Circuit Judges] Civil case - Injunctions. Plaintiff sought a preliminary injunction to halt distribution of the source code for its payroll system software; the district court denied the motion because plaintiff failed to show a likelihood of success on the merits and the other factors to be considered in granting injunctive relief were not in its favor; with respect to success on the merits, the software development and licensing agreement plaintiff signed with its business partner allowed the partner to copy and share the software with the defendant contractors to help them develop enhanced software products called for under the agreement; because the disclosure of the source code was authorized, plaintiff's copyright-infringement and trade secret misappropriation claims fail and it could not show a likelihood of success on the merits; the district court did not err in concluding plaintiff had failed to show irreparable harm; nor did the court err in finding that neither balance of the equities nor the public interest supported issuance of an injunction; remanded for further proceedings on the question of whether the contractors wrongfully sublicensed use of the software.
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