MEMORANDUM & ORDER
O'MALLEY, District Judge.
Plaintiff, Microsoft Corporation, brings this action against defendant, Action Software, asserting claims for copyright and trademark infringement and common law and statutory unfair competition, and asking for damages, injunctive relief, a constructive trust and an accounting. In its counterclaim, Action Software seeks a declaratory judgment that defendant is not infringing Microsoft's copyright or trademark and asserts its own claim of common law unfair competition. On October 4, 2000, Microsoft filed a Motion for Preliminary Injunction. For the reasons set forth below, that Motion is
In its Motion for Preliminary Injunction, Microsoft originally sought an order enjoining Action from acquiring, selling, or distributing any "unauthorized" Microsoft software, including both counterfeit software and software which, though manufactured by Microsoft itself, had not been authorized for resale. As to this later category, Microsoft focused on Action's sale of Microsoft Fulfillment Software.
Thereafter, the parties informed the Court that they were attempting to work out their differences and that they were contemplating an agreed dismissal of those claims relating to the sale of Microsoft Fulfillment software — the claims upon which the Court understood Microsoft's Motion for Preliminary Injunction were primarily premised. On January 22, 2001,
At that point, the parties asked that the Court conduct a settlement conference to help them resolve their remaining differences. The Court did conduct a settlement conference on March 2, 2001, but it is clear that the parties remain far apart in their assessment of an appropriate settlement value for this case and, more importantly, of the legal meaning of the facts developed during the course of discovery. Given these fundamental differences, the Court concluded, and the parties agreed, that the parties' time would be best spent preparing to present those differences to a jury. Accordingly, the Court concluded the settlement conference by setting this matter for trial on July 23, 2001.
Despite Microsoft's withdrawal of its claims based on Fulfillment Software, Microsoft's Motion for Preliminary Injunction, through greatly narrowed in scope, remains pending. For the reasons stated below, Microsoft's Motion for a preliminary injunction is
Microsoft creates and manufactures software. Microsoft has created such programs as Windows 95, Windows 98, Windows NT Server 4.0, Microsoft Office 97 and 2000, which include Microsoft Access, Microsoft Excel, Microsoft Outlook, Microsoft PowerPoint, and Microsoft Word. Microsoft has registered trademarks for each of these programs, and secured copyrights for its intellectual property. Action Software is a broker of software, and often deals in Microsoft software. It is not an "authorized" Microsoft dealer in the sense that it does not have a distribution agreement directly with Microsoft.
On April 11, 2000, Microsoft filed the complaint in this action. On October 4, 2000, Microsoft asked this Court for a preliminary injunction against Action. Microsoft contends Action was selling counterfeit software — that is, software that Microsoft did not manufacture, but which appeared to be and was held out to be Microsoft merchandise.
On October 12, 2000, this Court held a preliminary injunction hearing. Through the testimony of Tamara Sellers, a paralegal employed by Microsoft, Microsoft asserts that Action, three years ago, sold one piece of counterfeit software at a computer fair. Microsoft did not move to have that single piece of counterfeit software admitted into evidence. Microsoft also asserts that, during a raid of another software broker, it came across both counterfeit software (as the Court defines it here) and invoices from Action showing Action sold merchandise to this rogue broker. Microsoft conceded, however, that, to date, it has no evidence linking the Action invoices to the counterfeit items. In other words, the Action invoices could be linked to non-counterfeit items sold by the rogue broker. Microsoft did not establish the existence of any recent counterfeit sales by Action, nor did it proffer evidence of any offers to sell counterfeit items in the future.
Action asserts, through Action employees Alexander Belfer and Samantha Belfer, that it had one independent contractor who, several years ago, apparently sold limited amounts of counterfeit software while also selling software for Action. Action asserts that this individual did not sell counterfeit software on Action's behalf and that any such sales were in contravention of Action's own policies and directions with respect to the transfers of counterfeit software. Action's principals testified, without contradiction, that, when they became aware that this seller was dealing in counterfeit goods, they ceased all dealings with her.
The owners of Action also both testified that they took care not to sell counterfeit goods by examining samples of all merchandise received from a new supplier. The Action owners testified that the sale of counterfeit goods would greatly jeopardize their business dealings with their own customers, and that they had no intention of selling counterfeit goods, either now or in the future. Action asserts that it sells Microsoft software exactly as it receives it from its suppliers, wrapped in plastic in a jewel case, with Microsoft labeling on it, including, at times, labeling prohibiting resale.
II. PRELIMINARY INJUNCTION STANDARD
When determining whether to issue a preliminary injunction, the Court normally considers four equitable factors, "(1) whether the movant has a strong likelihood of success on the merits; (2) whether the movant would suffer irreparable injury without the injunction; (3) whether the issuance of the injunction would cause substantial harm to others; and (4) whether the public interest would be served by issuance of the injunction." Rock & Roll Hall of Fame & Museum, Inc. v. Gentile Prods., 134 F.3d 749, 753 (6th Cir.1998). Because an injunction against infringing
III. FINDINGS OF FACT
There was no evidence presented at the preliminary injunction hearing indicating that Action is currently engaged in the sale of counterfeit software. Microsoft presented evidence of only one sale of counterfeit software, occurring over three years ago; it has not referred to or provided any evidence to support the claim that a continuing or contemporary sale of counterfeit merchandise is occurring or that there is even a meaningful threat that any such sale might occur.
IV. Microsoft's Motion to Dismiss Action's Counterclaim for Unfair Competition.
Microsoft has filed a Motion to Dismiss Action's Counterclaim for Unfair Competition (docket no. 26). Microsoft asserts that Action has failed to state a claim upon which relief can be granted under Rule 12(b)(6) because the tort of unfair competition premised on filing a vexatious lawsuit against a competing business does not exist under Ohio law.
In this assertion, Microsoft is wrong. Ohio is one of the first states to recognize that lawsuits implemented with the design to gain an unfair advantage over a competing business are a basis for a common law suit for unfair competition. In Henry Gehring Co. v. McCue, 23 Ohio App. 281, 154 N.E. 171 (1926), an Ohio court recognized that the tort of unfair competition could include the institution of litigation not brought in good faith, but rather for the purpose of destroying a rival. The Ohio Appellate Court held:
Id. In 1984, the Ohio Supreme Court reiterated this holding in Water Management v. Stayanchi, 15 Ohio St.3d 83, 472 N.E.2d 715 (1984). In that case, the Court stated:
Id. at 716 (emphasis added).
This tort has been referred to as recently as a few months ago in Molten Metal Engineering v. Metaullies Systems, Co., 2000 WL 739470 (Ohio App.2000), where the court reiterated that the tort of unfair competition includes unfair commercial practices such as malicious litigation. See also Robert L. Tucker, Vexatious Litigation as Unfair Competition, and the Applicability of the Noerr-Pennington Doctrine, 22 Ohio N.U. L.Rev. 119 (1995); Trademarks, Tradenames and Unfair Competition, 88 OH Jur.3d Trade Regulation § 66 (1989) ("While unfair competition is commonly defined in terms of the doctrine that no one may sell his goods as those of another, it has come to develop a broader connotation in recent years and so may consist of unethical business practices not necessarily amounting to the passing off of goods or services. Specific examples of this broadening include malicious litigation calculated to injure the business of another. ..").
Microsoft also argues that Action will not be able to prove that Microsoft's conduct fulfills the elements of the tort for unfair competition. This may very well be true. The Court, however, makes no determination at this time about Action's ability to ultimately succeed on this claim.
For these reasons, Microsoft's motion to dismiss count II of defendant's amended counterclaims is
Microsoft has not shown a likelihood of successfully establishing that Action is currently distributing counterfeit software or that there is an imminent threat that it will do so during the pendency of these proceedings. Accordingly, Microsoft's Motion for a Preliminary Injunction is