PER CURIAM:
These consolidated cases arise from a copyright dispute between General Universal Systems, Inc. ("GUS") and HAL, Inc. GUS sued HAL, two of its officers, and several of HAL's customers claiming that HAL infringed its copyright in a freight packaging software system, misappropriated related trade secrets, violated the Lanham Act, and breached a contract with Joe Lopez. The district court dismissed GUS's copyright, Lanham Act, and trade secret claims on summary judgment and, following a jury trial, granted HAL judgment as a matter of law on the contract claim. GUS subsequently filed a second suit against several of HAL's customers, which the district court dismissed on the basis of collateral estoppel. The district court also awarded costs and attorneys' fees to HAL as the prevailing party on the copyright claim. GUS has appealed each of the district court's determinations.
For the reasons we will explain, we AFFIRM in part, REVERSE in part, and REMAND to the district court for proceedings consistent with this opinion.
I
The facts and procedural history of this nine-year-old dispute are long and, in some instances, in sharp dispute. With the exception of the contract claim, the underlying claims were each dismissed on summary judgment, and we view those facts in the light most favorable to GUS, the non-movant.
A
In 1979, GUS developed a software system — the CHAMPION PACKER Computer Software Program — for one of its clients, Joe Lopez. The CHAMPION PACKER program was a tracking system designed for use in the freight forwarding and shipping industry. GUS licensed the software to Lopez, retaining all rights to any improvements to the program, and eventually obtained a copyright registration in 1981.
Sometime later, Lopez created a derivative version of CHAMPION PACKER by converting it from the BASIC 4 programming language to the COBOL language, and began selling his version, LOPEZ COBOL, as a replacement for CHAMPION PACKER.
Lopez claimed that MEPAW was an unauthorized copy of LOPEZ COBOL and that Parkin and Herrin had breached their obligation to compensate him for providing the LOPEZ COBOL system. Under threat of litigation from GUS, Lopez assigned his contract claim to GUS and agreed to assist GUS with a copyright infringement suit against HAL, Parkin, and Herrin. GUS filed its first suit against HAL on May 23, 1995 ("GUS 1"), raising various claims under federal and state law. The focus of the case, however, was GUS's claim that HAL had infringed its copyright in the CHAMPION PACKER system by copying the LOPEZ COBOL system. GUS sought damages, injunctive relief, and attorneys' fees.
On November 17, 1997, HAL filed a motion for partial summary judgment on the issue of copyright infringement, arguing that GUS could not establish that MEPAW copied the nonliteral elements of either LOPEZ COBOL or CHAMPION PACKER. In particular, HAL faulted GUS for failing to conduct an Altai analysis, the methodology used to analyze claims of nonliteral copying of software, asserting that without this analysis, GUS could not show that the MEPAW source code copied protectable elements of either CHAMPION PACKER or LOPEZ COBOL. In response, GUS argued that Altai did not apply to all of its infringement claims, such as its claims that HAL copied source code. GUS asserted that Altai applied only to claims that nonliteral elements of the software were copied. HAL in turn challenged GUS's source code infringement claim, arguing both that GUS had agreed that Altai analysis would be used to analyze the infringement claims and that GUS had never before put forth a theory of literal infringement.
A few months later, on February 13, 1998, HAL filed a second motion for partial summary judgment, this time focusing on the issue of copyrightability. HAL argued that GUS could not prove that it owned a valid copyright in the software because its copyright registration covered only data entry screens and record layout samples and not the software as a whole. HAL also noted that GUS had produced no evidence describing their software system as it existed in 1983, the date when Lopez allegedly copied it, because there was no extant copy of the 1983 version of GUS's CHAMPION PACKER software.
On February 18, 1998, GUS filed its own motion for partial summary judgment in which it argued that it could prove as a matter of law that HAL had infringed its copyright in the freight forwarding software. Specifically, GUS claimed that it could prove that HAL had directly or literally copied portions of LOPEZ COBOL, noting in particular that the MEPAW system used fields, record layouts, and actual executable code taken directly from LOPEZ COBOL. As proof, GUS attached four exhibits which it asserted were examples of direct copying: (1) a database layout listing the layout of fields used by the MEPAW and LOPEZ COBOL systems; (2) a directory list comparing data entry fields used by the two software systems; (3) a print-out of a program from the MEPAW system indicating that it was created on October 25, 1983, by Lopez; and (4) invoices generated by the two systems. HAL challenged each of these exhibits, arguing that none established improper copying, and renewed its claim that GUS could not prevail under the Altai analysis.
A Magistrate Judge recommended granting HAL's first motion and dismissing the claims of nonliteral copyright infringement, but recommended denying HAL's second motion on copyrightability. The Magistrate Judge also recommended denying GUS's motion on literal copying, concluding that there were genuine issues of material fact precluding summary disposition.
The district court reviewed the record de novo, concluded that there was no plain error in the Magistrate Judge's Memorandum and Recommendation (M&R), and adopted it as its own. The court departed from the Magistrate Judge's recommendation with regard to GUS's summary judgment motion on literal copyright infringement. The court concluded that GUS had failed to raise a genuine issue of material fact on the issue and granted HAL summary judgment on the claim.
Having concluded that there was no copyright infringement, the court soon dismissed GUS's related Lanham Act, conversion, misappropriation, and trade secret claims. The sole remaining claim — Lopez's breach of contract claim against Parkin and Herrin — was tried to a jury in September 2000. After a three day trial, the jury found that Parkin and Herrin had breached their agreement with Lopez and awarded him $250,000 in damages plus $106,000 in attorneys' fees. However, the court also awarded HAL, Herrin, and Parkin a total of $448,928.73 in costs, attorneys' fees, and expenses incurred in successfully defending the copyright cause of action.
Approximately one year later, in September 2001, the court modified this judgment. First, the court concluded that Larry Lee, GUS's first attorney who withdrew as counsel-of-record in late 1997, was entitled to receive one-third of Lopez's judgment as attorneys' fees for work performed prior to his withdrawal as counsel. Lee had filed a complaint-in-intervention in January 1998, but GUS had failed to respond or deny the allegations in that complaint. Second, on September 26, 2001, the court set aside the jury verdict altogether and granted HAL, Herrin, and Parkin judgment as a matter of law on the contract claim. The court concluded that the evidence presented was legally insufficient to support the jury's verdict because Lopez had admitted, in a prior bankruptcy proceeding, that he did not own any interest in HAL.
HAL, Herrin, and Parkin filed motions seeking to enforce their judgment, including a motion for turnover relief and a motion to require GUS to post a $65,000
B
In April 2001, nearly two years after the district court dismissed GUS's copyright claims on summary judgment, GUS filed a second, parallel suit against three of HAL's customers: Boaz Export Crating Co., Cargo Crating Co., and Dixie Box & Crating of Texas, Inc.
While this motion was pending, Parkin allegedly admitted in a hearing that HAL copied portions of LOPEZ COBOL. Without bringing this information to the court's attention, GUS responded to Boaz's motion, arguing that LOPEZ COBOL was not at issue in the prior suit and that collateral estoppel could not apply. The district court disagreed and granted Boaz's motion to dismiss.
Shortly thereafter, GUS filed a Rule 60(b) motion in the original suit against HAL. Pointing to Parkin's admission of copying, GUS argued that the judgment was procured through misconduct. The district court rejected this argument, finding neither perjury nor misconduct on Parkin's part. GUS appeals the court's rejection of its Rule 60(b) motion, and also argues that Parkin's alleged perjury should bar the application of collateral estoppel in the Boaz suit.
C
GUS's primary focus on appeal is the court's grant of summary judgment on the copyright issue. GUS also protests the dismissal of its trade secret, misappropriation, and Lanham Act claims; the award of fees to HAL and Boaz based on their successful defense against GUS's copyright charges; the court's grant of judgment as a matter of law on the contract claim; the order requiring the posting of a bond, and the turnover order.
We will address each of these issues in turn.
II
At the heart of GUS's appeal is its claim that the district court erred in granting HAL summary judgment on the issue of copyright infringement. GUS protests the court's decision on a number of grounds. First, GUS disputes the court's dismissal of its copyright claims under Altai, arguing that this doctrine does not apply to claims of source code copying. Second, GUS argues that the court impermissibly granted summary judgment on the issue of literal source code copying even though the Magistrate Judge admitted that there were genuine issues of material fact on this issue. Third, GUS contends that the court imposed an improper legal standard by holding that literal infringement requires that the two computer programs be virtually identical. Finally, GUS protests several other related decisions, such as the court's award of fees to HAL and its turnover order.
A
We review the district court's grant of summary judgment de novo.
To establish a prima facie case of copyright infringement, a copyright owner must prove "(1) ownership of a valid copyright, and (2) copying [by the defendant] of constituent elements of the work that are original."
To prove actionable copying under the second prong, a plaintiff must make two showings. First, the plaintiff must, as a factual matter, prove that the defendant "actually used the copyrighted material to create his own work."
If the plaintiff demonstrates factual copying, he must next demonstrate that the copying is legally actionable by showing that the allegedly infringing work is substantially similar to protectable elements of the infringed work. "[A] side-by-side comparison must be made between the original and the copy to determine whether a layman would view the two works as `substantially similar.'"
It is settled that computer programs are entitled to copyright protection.
B
GUS's first argument on appeal focuses on the district court's use of the Altai test. GUS asserts that Altai applies only to claims that an infringer has copied a computer program's nonliteral elements, like its structure, sequence, organization, and user interface, and not to claims that source code was copied.
Although we have generally endorsed the Altai test to evaluate claims that nonliteral software elements were copied, we have not explicitly addressed whether that test should be used to evaluate charges that a program's source or object code was copied. We need not answer this question today, however, because contrary to GUS's claim, the district court did not use the Altai test to decide any source code copying claims. Rather, the court used Altai only in its decision to dismiss claims that nonliteral elements were copied. As the court stated in its order, "[a]bsent a valid Altai analysis to establish unlawful copying of the non-literal aspects of the computer programs, Defendants are entitled to summary judgment."
Nor did the district court err in dismissing these claims of nonliteral copying. On filing this suit, GUS alleged that HAL copied nonliteral aspects of CHAMPION PACKER and LOPEZ COBOL. When HAL filed a summary judgment motion on this issue, arguing essentially that GUS could not prove that MEPAW copied any nonliteral elements, GUS responded by claiming that source code was copied. However, nowhere in its response did GUS present evidence disputing HAL's assertion that summary judgment was appropriate
We find no error in the district court's use of Altai or in its decision granting HAL summary judgment on the issue of nonliteral infringement.
C
Turning from Altai, we next address GUS's arguments that the court applied an overly restrictive test for evaluating its claim that source code was copied. GUS presents two distinct arguments. First, GUS urges that there were genuine issues of material fact. Second, GUS argues that the court imposed an overly rigid standard for literal copying by requiring that the infringed program be virtually identical, rather than substantially similar, to the copyrighted program.
We reject GUS's arguments and conclude that summary judgment was appropriate.
1
To evaluate GUS's claim, some background is necessary. Shortly after HAL filed its summary judgment motion on the nonliteral copying issue, GUS filed its own motion for summary judgment on the issue of source code copying. In this motion, GUS argued for the first time that HAL "directly" copied LOPEZ COBOL's source code. GUS attached four exhibits as evidence of this copying: (1) a printout that purported to be a "database layout" listing the names of fields used by the MEPAW and LOPEZ COBOL systems; (2) a directory list giving the names of data entry fields used by the two software systems; (3) a print-out of a program contained in MEPAW that was created on October 25, 1983, by Jose Lopez; and (4) print-outs of invoices generated by the LOPEZ COBOL and MEPAW systems. GUS argued that the first three of these exhibits constituted evidence of "direct, line by line copying." For the fourth exhibit, GUS argued that the layouts of the MEPAW and LOPEZ COBOL invoices were almost exactly the same, suggesting that the source code which generated them must also be strikingly similar.
HAL filed a lengthy response to GUS's motion, challenging each of these exhibits and accusing GUS of misrepresenting the facts. Specifically, HAL attached an affidavit from Parkin indicating that the first exhibit was a database layout that Lopez gave to Defendant Al Parkin to enhance; the second exhibit was not used in MEPAW; the third exhibit was a program Parkin obtained while he worked for the General Services Administration and was not authored by Lopez; and the fourth exhibit was a generic invoice of a type found in every packing system. HAL also attached several affidavits from other parties, some of which attested to the substantial differences between the two software packages while others disputed GUS's contention that HAL had access to the CHAMPION and LOPEZ COBOL programs. HAL ended its response with a charge that there was no evidence supporting GUS's infringement claims and with a request that the court dismiss the action in its entirety. GUS did not reply to HAL's motion.
On the issue of substantial similarity, a Magistrate Judge concluded that the four exhibits GUS submitted were inadequate to sustain a finding as a matter of law that MEPAW and LOPEZ COBOL were substantially
The district court conducted a de novo review of the record, concluded that there was no plain error in the Magistrate Judge's Memorandum and Recommendation, and adopted the report as its own. However, the court employed a different analysis of the infringement issue. The court noted, first, that to prove literal copying, a plaintiff must show identical or virtually identical copying of substantial portions of a program. Second, the court stated that such identical copying would not generally be present when the two programs are written in a different programming language. The court concluded that GUS had failed to present evidence raising a genuine issue of material fact, denied GUS's summary judgment motion, and granted summary judgment to HAL.
2
We are ultimately persuaded that summary dismissal was appropriate because of GUS's failure to adduce evidence to support its charges of copying and substantial similarity.
As a preliminary matter, we reject GUS's contention that the district court's decision to grant summary judgment was procedurally improper — that the court granted summary judgment to HAL sua sponte, without a motion for summary judgment by HAL before it. In response to GUS's summary judgment motion, HAL asserted that it was entitled to a "finding[ ] that the plaintiffs are unable to prove both non-literal copying under the Altai analysis, and direct copying." Citing GUS's failure to adduce any evidence supporting its claims of source code copying, HAL charged that GUS had no evidence of copying and urged the district court to dismiss the entire case. While not labeled as a cross-motion for summary dismissal, HAL sought summary judgment on the issue of literal copying and requested the court to act accordingly. The court's action was not improper.
We are persuaded that summary judgment was appropriate because GUS
GUS's difficulty stems, ultimately, from the muddled nature of its infringement claims. As the district court noted, when GUS first filed its infringement suit, it claimed only that HAL misappropriated nonliteral elements of CHAMPION PACKER, like its structure, sequence, and organization. GUS broadened its claims in its summary judgment motion, asserting that HAL directly copied source code from CHAMPION. The exhibits that GUS attached as evidence of source code copying, however, did not reflect the change in the nature of its claims. Two of the exhibits — the database layout and directory listing — are at best evidence that HAL copied nonliteral elements from LOPEZ COBOL; they do not provide evidence of source code copying.
Only the third exhibit contains any source code. It is a print-out of a software program GUS claims Lopez wrote on October 25, 1983. GUS's expert, Dr. Nassar, asserts that he found this program in the MEPAW system and that a "strikingly similar" copy exists in LOPEZ COBOL. GUS, however, fails to provide the copy from LOPEZ COBOL's source code for comparison. Nor does GUS refute HAL's denial that Lopez wrote the program and that HAL obtained properly from other channels.
In short, GUS presented insufficient evidence of source code copying to survive summary judgment. When GUS filed its motion for summary judgment, it did not need to marshal all its facts to support its infringement claims. But when HAL responded with an allegation that GUS could produce no evidence on basic elements of its claims, GUS was required to come forward with tangible evidence. It failed to do so, and summary judgment for HAL was appropriate.
3
We affirm the dismissal of GUS's claims of source code copying.
D
After dismissing GUS's copyright claims, the district court awarded HAL attorneys' fees as the prevailing party. GUS contests the award of fees, arguing in particular that because it brought and litigated its copyright claims in good faith, an award of fees was inappropriate.
The decision to impose costs lies in the sound discretion of the district court,
III
GUS next disputes the district court's dismissal of its Lanham Act claims. GUS argued to the district court that HAL, by copying and marketing GUS's software as HAL's own, engaged in "reverse palming off" in violation of § 43(a) of the Lanham Act.
GUS's first argument depends entirely upon its copyright argument, which we have rejected. The district court committed no error in dismissing GUS's copyright infringement claims. GUS's first Lanham Act argument must fail as well.
GUS's second argument is more problematic. In just one sentence, GUS asserts that a Lanham Act claim does not require that a defendant prove "substantial similarity" through the type of Altai-analysis that the district court demanded in this case. GUS offers no argument or explanation on this point, and cites no authority for its statement. Failing to adequately brief this contention, GUS has waived it.
Even were we inclined to flesh out GUS's argument, its Lanham Act claim would face the Supreme Court's recent decision in Dastar Corp. v. Twentieth Century Fox.
The Court rejected the plaintiffs' claim, concluding that the term "origin" in § 43(a) applies only to "the producer of the tangible goods that are offered for sale, and not to the author of any idea, concept, or communication embodied in those goods."
While there are some differences between Dastar and the situation at hand, we find Dastar's reasoning controlling. GUS has not accused HAL of taking tangible copies of its software, removing its trademarks, and selling them as its own. Rather, GUS asserts that HAL copied the ideas, concepts, structures, and sequences embodied in its copyrighted work. In sum and substance, GUS's claim is simply a claim that HAL has infringed its copyright in LOPEZ COBOL. Dastar makes clear that such claims are not actionable under § 43(a).
The district court's grant of summary judgment to HAL on GUS's Lanham Act claims is affirmed.
IV
GUS next contests the district court's dismissal of its state law claim of trade secret theft. Shortly before trial, HAL filed a summary judgment motion on this issue, arguing that GUS could not prove all of the essential elements of its claim. The district court agreed, disposing of GUS's claim on two alternative grounds. First, the court concluded that Texas law requires that the claimed trade secret have been discovered through improper means. The court found no improper means in this case because the HAL Defendants obtained access to the LOPEZ COBOL System pursuant to a written agreement with Lopez. Second, the court observed that Texas law requires that a person asserting a trade secret must take reasonable precautions to protect the claimed trade secret. The court found that the undisputed evidence showed that GUS had failed to do so. Based on these two alternative grounds, the court concluded that LOPEZ COBOL, "was not properly protected as a trade secret."
GUS argues that the court applied an outmoded and overly restrictive test for trade secret misappropriation. We agree.
A
We review a district court's interpretation of state law de novo.
B
The district court first concluded that GUS could not prevail under the first prong of the trade secret theft test. The court held that Texas law requires that a person asserting a trade secret take reasonable precautions to protect it.
The Texas Supreme Court recently clarified that to determine whether there is a trade secret protected from disclosure or use, a court must examine six relevant but nonexclusive criteria: (1) the extent to which the information is known outside the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to safeguard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
The district court did not engage in this broad inquiry, but instead focused solely on Lopez's alleged failure to take "reasonable precautions" to protect LOPEZ COBOL, pointing to Lopez having allowed Parkin to copy LOPEZ COBOL onto a personal computer and take it with him to Arizona. The court, however, overlooked the fact that Lopez and Parkin were engaged in a joint venture to exploit that very software. There was also uncontroverted evidence that Lopez carefully secured his software system from parties other than Herrin and Parkin — that is, that Lopez took reasonable precautions to protect LOPEZ COBOL from persons other than those selected by Lopez to have access for limited purposes.
Further factual development may shed light on whether trade secret protection is appropriate. We conclude, therefore, that a genuine dispute of material fact precludes determination whether LOPEZ COBOL was properly protected as a trade secret.
C
Summary judgment may yet have been appropriate if the district court's second basis for judgment independently bars GUS's claim. As an alternative basis for dismissing GUS's trade secret claim, the court concluded that GUS could not satisfy the second prong of the trade secret claim. Specifically, the court concluded that HAL did not acquire LOPEZ COBOL through improper means.
However, Texas trade secret law does not impose liability only when improper means are used. Under Texas law, there is liability for trade secret misappropriation if either "(a) he discovers the secret by improper means, or (b) his disclosure or use [of the trade secret] constitutes a breach of confidence reposed in him by the other in disclosing the secret to him."
HAL, for its part, vigorously asserts that there was no confidential relationship among the parties.
The district court erred in not considering whether GUS might prevail by demonstrating a breach of a confidential relationship. On the present record, there is a genuine issue of material fact and summary judgment was inappropriate.
D
We reverse the district court's grant of summary judgment in favor of HAL on GUS's claim of trade secret theft.
V
GUS's next set of arguments focuses on its contract claims.
Finding no reversible error on either issue, we affirm.
A
GUS first contends that the court abused its discretion in excluding evidence of HAL's sales or the value of the market for HAL's software at the time of trial. Specifically, the court refused to allow GUS to question defense witnesses regarding statements on HAL's website that the market for HAL's software was one billion dollars per year. The court also refused to allow GUS to introduce evidence that Parkin copied LOPEZ COBOL to create MEPAW, HAL's primary asset. GUS also contends that the court abused its discretion in instructing the jury that Lopez's damages were to be measured at the time of HAL's breach, rather than at the time of trial, and in refusing to charge the jury that Lopez might be entitled to specific performance.
1
We examine first the court's contested evidentiary rulings. We review a district court's exclusion of evidence for abuse of discretion.
As a preliminary matter, we reject GUS's contention that the court's refusal to allow evidence of the value of the market for HAL's software was error. This evidence was irrelevant to determining the value of HAL either at the time of the breach or at trial. Similarly, we find no error in the court's exclusion of evidence
2
A somewhat more difficult question is raised by GUS's twin assertions that Lopez's contractual damages should have been measured as of the time of trial, rather than the time of breach, and that Lopez should have received specific performance instead of damages. HAL responds that GUS's claim for damages measured as of trial is nothing more than a request for specific performance, which is disfavored under Texas law and not merited in this case.
We review jury instructions for abuse of discretion.
We find no error in the district court's decision rejecting GUS's request of specific performance. Under Texas law, specific performance is an equitable remedy that is normally available only when the complaining party cannot be fully compensated through the legal remedy of damages or when damages may not be accurately ascertained.
We also reject GUS's claim that its damages should have been calculated as of the time of trial rather than at the time of breach. "[T]he rule in Texas has long been that contract damages are measured at the time of breach, and not by the bargained-for goods' market gain as of the time of trial."
The Texas Supreme Court reinforced this rule in Miga v. Jensen.
B
We next review the court's decision granting HAL judgment as a matter of law on the contract claim. The district court based its decision on two independent grounds. First, the court concluded that statements made by Lopez in a prior bankruptcy proceeding were judicial admissions that barred his contract claim.
GUS presents two arguments against the district court's invocation of judicial estoppel: first, that HAL waived the judicial estoppel argument by not raising it before the district court, and second, that Lopez's prior statements were not judicial admissions. There is a strong argument that the court abused its discretion in treating these statements as judicial admissions: the jury heard the statements Lopez made in his bankruptcy filing but accepted Lopez's explanation at trial, and neither HAL nor the court itself ever thought to treat these statements as judicial admissions until over two years after trial.
We need not decide that issue, however, because GUS fails to overcome the court's second basis for granting JMOL — that the evidence was legally insufficient to support the verdict. Indeed, GUS presents no argument on this issue at all: it focuses its entire argument on the court's invocation of judicial estoppel.
Even were we to reach the issue, we find no error in the district court's conclusion on this issue. At trial, the only evidence of damages presented was Lopez's testimony that he spent $250,000 in the development of LOPEZ COBOL. The jury clearly seized upon this figure and granted him damages in that amount. However, while this testimony may have been evidence of his investment in the venture, it did not speak to the value of the company itself at the time of breach, and it thus provided no basis for the award of damages for breach of contract. To recover on its contract claim, GUS was required to prove damages. To do so, it had to introduce evidence showing the value of the stock that HAL wrongfully withheld from Lopez. It could have done so in many ways — by proving the market value of that stock, or, since this was a closely corporation, by proving the market value of the assets of the company after deducting its liabilities
C
Finding no error, we affirm the district court's order granting HAL judgment as a
VI
After losing its copyright claim against HAL, GUS filed suit against several of HAL's customers (collectively "Boaz") for copyright infringement based on their use of MEPAW. Boaz moved to dismiss the suit, arguing that the HAL case conclusively decided the issue of MEPAW's infringement and that collateral estoppel barred GUS from re-litigating the same issue. The district court agreed and dismissed the case.
Events that occurred in that proceeding, however, form the basis of several of GUS's claims on appeal. According to GUS, HAL made two admissions in the Boaz suit that MEPAW copied portions of LOPEZ COBOL. Specifically, GUS alleges that Parkin testified during a hearing that MEPAW copied certain elements of LOPEZ COBOL, a claim that Professor Davis, an expert hired by HAL, essentially reiterated in an expert report. Armed with these alleged admissions, GUS filed a Rule 60(b) motion for relief from judgment in the original HAL suit, seeking to overturn the original judgment. GUS argued that the admissions were evidence that HAL committed fraud and perjury in the first suit and that GUS was entitled to postjudgment relief. The district court denied GUS's motion, and GUS appeals that decision.
For the same basic reason, GUS challenges the district court's use of collateral estoppel in the Boaz suit, contending that the HAL suit does not merit collateral estoppel effect in light of Parkin's admission of copying. GUS also contests the court's decision granting Boaz attorneys' fees, arguing that the case was dismissed on a procedural technicality and that an award of fees is inappropriate.
A
We first examine GUS's arguments concerning the denial of its Rule 60(b) motion. GUS contends that, given HAL's misconduct, relief is justified on two grounds: first, because HAL committed fraud and perjury within the meaning of Rule 60(b)(3), and second, because Parkin's and Davis's admissions constituted "newly discovered evidence" under Rule 60(b)(2). We find neither basis persuasive.
1
Rule 60(b)(3) allows a district court to relieve a party from a final judgment if the adverse party committed fraud, misrepresentation, or other misconduct.
Determining whether a party has made a sufficient showing to warrant relief lies in the sound discretion of the district court. We therefore review the court's decision only for an abuse of discretion.
GUS bases its argument on two isolated statements from the Boaz record, but neither is sufficient to demonstrate misconduct. First, during a hearing in the Boaz case, Parkin stated on cross-examination that "[s]ome of the data fields in the purchase order system was supplied by Mr. Lopez. I have never denied that. Didn't deny it in the other case." Second, Professor Davis stated in an expert report that "[i]t is my understanding that as one consequence of this agreement [between Parkin, Lopez, and Herrin], Mr. Parkin used some components of Lopez COBOL code in the creation of MEPAW, with the full knowledge, permission, and indeed the active cooperation of Mr. Lopez." GUS urges that these two statements reveal that HAL did indeed copy LOPEZ COBOL and that HAL's representations to the contrary in the original suit were false. We disagree.
First, GUS misunderstands what was at issue in the first case and why its copyright charges were dismissed. As we explained above, to prove copyright infringement, a plaintiff must demonstrate factual copying — that the defendant actually copied the software — and then actionable copying — that the allegedly infringing work is substantially similar to protected elements of the infringed work. GUS's copyright claims were dismissed because it failed to adduce evidence supporting the second prong of this test, not because GUS could not prove that HAL had actually copied MEPAW. It was assumed, for purposes of the summary judgment motion, that factual copying had occurred. Yet the evidence that GUS points to now — Parkin's statements — is at best evidence of factual copying, if it is even that. It says nothing about whether such copying was actionable. In short, it does nothing to unsettle the reasoning behind the district court's dismissal of GUS's copyright claims or to correct the fundamental deficiency in GUS's infringement argument.
Moreover, GUS overstates the import of Parkin's and Davis's statements by taking them out of context and misrepresenting the conflict with the position taken by HAL in the original suit. GUS, for example, fails to report that Parkin also stated repeatedly in that hearing that HAL did not copy LOPEZ COBOL, that it only used information and expertise supplied by Lopez, and that Lopez consented to this use. All of these statements were consistent with statements made by HAL in the original litigation.
2
Under Rule 60(b)(2), a losing party may seek relief from a judgment because of "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b)." As with Rule 60(b)(3) motions, the decision whether to grant relief lies within the sound discretion of the court.
First, as the district court noted, the newly discovered evidence was not available at the time of trial: Parkin's statement occurred in a hearing held on November 16, 2001, and Davis's report was prepared on November 1, 2001. These statements, then, were created after the entry of final judgment on September 27, 2001.
More importantly, GUS has not shown either that the evidence is material or that it would have produced a different result in the original case. Indeed, the precise opposite is apparent. As noted above, GUS's infringement claims were dismissed because GUS failed to provide evidence of substantial similarity. Parkin's and Davis's bare statements do nothing to unsettle this holding.
3
Finding no abuse of discretion, we affirm the district court's rejection of GUS's motion for relief from judgment.
B
For similar reasons, we also reject GUS's argument that the district court erred in invoking collateral estoppel to dismiss the Boaz suit. GUS argues, again, that the prior HAL judgment was procured by fraud and perjury which prevented GUS from fully and fairly presenting its case against HAL. GUS further argues that Parkin's and Davis's admissions constitute new evidence that distinguishes the factual basis of the HAL and BOAZ suits, making collateral estoppel inappropriate. However, GUS failed to present any of these arguments to the district court, and it has waived its right to present them here.
Finding no error, we affirm the district court's invocation of collateral estoppel in the Boaz suit.
C
GUS next argues that the district court abused its discretion in awarding attorneys' fees to Boaz on its defense of the copyright claims. As we noted above, the decision to impose costs to the prevailing party in a copyright infringement action lies in the sound discretion of the district court.
The district court carefully considered the issue in the Boaz case and applied the factors endorsed by the Supreme Court in Fogerty v. Fantasy.
We affirm the court's award of fees.
VII
For the foregoing reasons, we affirm the decisions of the district court, reversing only the district court's dismissal of General Universal's trade secret claim in Case Number 01-21114. We remand that claim to the district court for further proceedings not inconsistent with this opinion. All outstanding motions are denied.
FootNotes
Indeed, former Section 757 of the Restatement of Torts, a provision which the Texas courts have cited approvingly in the past, cites a partnership as an example of the type of relationship imposing a duty not to misuse a trade secret. See Restatement of Torts § 757, cmt. on clause (b).
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