Case 3:11-cv-00403-B Document 394 Filed 06/11/15 Page 1 of 35 PageID 12140
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF TEXAS
`DALLAS DIVISION
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`§§
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`§§
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`§ CIVIL ACTION NO. 3:11-CV-0403-B
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`§
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`§
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`GLOBERANGER CORPORATION
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` Plaintiff,
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`v.
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`SOFTWARE AG USA, INC. et al.,
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` Defendants.
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`MEMORANDUM OPINION AND ORDER
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`Before the Court are Defendants’ Rule 50(b) Motion for Judgment as a Matter of Law
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`(“Motion for JMOL”) and Rule 59 Motion for a New Trial and Alternatively, for a Remittitur
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`(“Motion for New Trial or Remittitur” or “Motion for New Trial”). For the reasons that follow, the
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`Court DENIES both Motions (docs. 372 & 374).
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`I.
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`MOTION FOR JMOL1
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`The Court begins by addressing the Motion for JMOL filed by Defendants Software AG USA,
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`Inc. and Software AG, Inc. (together, “Software AG”). Software AG timely filed this Motion
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`following the Court’s entry of judgment in accordance with the jury’s verdict, finding in favor of
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`Plaintiff GlobeRanger Corporation (“GlobeRanger”) on its trade secret misappropriation claim and
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`awarding GlobeRanger $15 million in compensatory damages. Software AG now asserts that “[t]he
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`Court should vacate its judgment and render judgment in favor of Software AG for multiple,
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`1 The relevant facts and procedural history of this case can be found among the numerous pretrial
`orders issued in this case. See, e.g., Doc. 152, Mem. Op. & Or. (“First MSJ Order”).
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`Case 3:11-cv-00403-B Document 394 Filed 06/11/15 Page 2 of 35 PageID 12141
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`independent reasons.” Doc. 373, Def.’s Br. Supp. Rule 50(b) Mot. J. Matter Law (“Def.’s Mot.
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`JMOL”) 1.
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`The first ground Software AG offers in support of their request for judgment as a matter of
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`law is that GlobeRanger’s claim “is preempted by the Copyright Act.” Id. Second, in the event
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`GlobeRanger’s claim is not preempted, Software AG asserts that the Court must conclude that it
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`“lacks subject-matter jurisdiction and [that] remand is the only appropriate option.” Id. at 1-2. Third,
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`Software AG next submits in support of their Motion for JMOL that “GlobeRanger failed to present
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`legally sufficient evidence to support elements of its misappropriation claim.” Id. at 2-3. Fourth,
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`Software AG argues that GlobeRanger also failed to present “legally sufficient evidence” of its
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`damages. Id. at 3. Before taking up these contentions, the Court briefly addresses the applicable
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`standard of review.
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`A.
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`Rule 50(b) Legal Standard
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`Rule 50(b) of the Federal Rules of Civil Procedure allows a party to file a renewed motion for
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`judgment as a matter of law following the entry of judgment. FED. R. CIV. P. 50(b). Such motions
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`“should be granted if the evidence is legally insufficient, such that ‘the facts and inferences point so
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`strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could
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`not arrive at a contrary verdict.’” Abraham & Veneklasen Joint Venture v. Am. Quarter Horse Ass'n,
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`776 F.3d 321, 327 (5th Cir. 2015) (quoting Boeing v. Shipman, 411 F.2d 365, 374 (5th Cir. 1969) (en
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`banc), overruled on other grounds by Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331, 336 (5th Cir.
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`1997) (en banc)). In reviewing a Rule 50(b) motion, “facts are viewed, and inferences made, in the
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`light most favorable to the nonmovant.” X Technologies, Inc. v. Marvin Test Sys., Inc., 719 F.3d 406,
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`411 (5th Cir. 2013) (citing Arthur J. Gallagher & Co. v. Babcock, 703 F.3d 284, 293 (5th Cir. 2012)).
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`Case 3:11-cv-00403-B Document 394 Filed 06/11/15 Page 3 of 35 PageID 12142
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`B.
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`Copyright Preemption
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`Software AG first moves for judgment as a matter of law on the ground that GlobeRanger’s
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`trade secret misappropriation claim is preempted by the Copyright Act. “The Copyright Act expressly
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`preempts all causes of action falling within its scope, with a few exceptions.” Daboub v. Gibbons, 42
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`F.3d 285, 288 (5th Cir. 1995) (referencing 17 U.S.C. § 301(a)). Before finding a claim is preempted
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`by the Copyright Act, the Fifth Circuit “has held that both prongs of a two-factor test must be
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`satisfied.” Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003). Under the first prong, “the claim
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`is examined to determine whether it falls ‘within the subject matter of copyright’ as defined by 17
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`U.S.C. § 102.” Id. (citing Daboub, 42 F.3d at 289). For the second prong, “‘the cause of action is
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`examined to determine if it protects rights that are equivalent to any of the exclusive rights of a
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`federal copyright, as provided in 17 U.S.C. § 106.’” Id. (quoting Daboub, 42 F.3d at 289).
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`Here, the parties solely dispute whether the second prong of the copyright preemption
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`analysis is satisfied for GlobeRanger’s trade secret misappropriation claim. As mentioned, the second
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`prong of the copyright preemption analysis asks whether the state law claim at issue “protects rights
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`that are ‘equivalent’ to any of the exclusive rights of a federal copyright,” which include “the
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`exclusive right to reproduce, distribute, perform, and display the copyrighted work.” Daboub, 42 F.3d
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`at 289 (citations omitted); see 17 U.S.C. § 106 (listing the exclusive rights granted by the Copyright
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`Act). “The test for evaluating the equivalency of rights is commonly referred to as the ‘extra element’
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`test.” Carson, 344 F.3d at 456 (citing Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772, 787
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`(5th Cir. 1999)). Under this test, “if the act or acts of [the defendant] about which [the plaintiff]
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`complains would violate both [state] law and copyright law, then the state right is deemed equivalent
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`to copyright.” Alcatel, 166 F.3d at 787 (citation omitted). On the other hand, if the state law claim
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`Case 3:11-cv-00403-B Document 394 Filed 06/11/15 Page 4 of 35 PageID 12143
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`carries “one or more qualitatively different elements” in comparison to a federal copyright claim,
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`“then the right granted under state law does not lie within the general scope of copyright, and
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`preemption does not occur.” Id. (citation and quotation marks omitted).
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`Before addressing the parties’ dispute with respect to the second prong, some background on
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`the evolution of the preemption issue over the four-year course of these proceedings is helpful.
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`1.
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`Copyright Preemption Background
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`At the inception of this case, Software AG argued that GlobeRanger’s trade secret
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`misappropriation claim was preempted by the Copyright Act. See Doc. 1, Def.’s Notice of Removal
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`2-5. At that time, the Court found Software AG’s contentions persuasive and granted their Rule
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`12(b)(6) motion to dismiss on copyright preemption grounds. See Doc. 27, Mem. Op. & Or. Denying
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`Mot. Remand (“Order Denying Remand”); Doc. 28, Mem. Op. & Or. Granting Mot. Dismiss. 4-5.
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`In finding GlobeRanger’s trade secret misappropriation claim preempted based on the pleadings, the
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`Court concluded that the first prong was satisfied based on language in GlobeRanger’s original
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`petition suggesting “that this action centers on the software and not the process, and thus is within
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`the subject matter of the Copyright Act.” Order Denying Remand 6-7. In regard to the second
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`prong, the Court similarly focused on “the core of GlobeRanger’s misappropriation of trade secrets
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`. . . allegations.” Id. at 8. These core allegations, the Court found, merely suggested that “Defendants
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`wrongfully copied and misused GlobeRanger’s RFID Solution software,” thereby “destroy[ing] the
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`competitive advantage GlobeRanger obtained by spending considerable time and money on
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`development.” Id. Since this alleged theory of liability seemed to cover “the same purpose as the
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`Copyright Act and [to] protec[t] the same interests,” the Court concluded that the second prong
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`was also satisfied, and that GlobeRanger’s trade secrets claim was, therefore, preempted. Id.
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`GlobeRanger promptly appealed the Court’s Rule 12(b)(6) dismissal. On September 14, 2012,
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`the Fifth Circuit reversed this Court’s finding of preemption. See GlobeRanger Corp. v. Software AG,
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`691 F.3d 702 (5th Cir. 2012). In doing so, the Fifth Circuit concluded that the first prong of the
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`preemption analysis was not satisfied under the Rule 12(b)(6) standard of review, given that
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`“GlobeRanger ha[d] pled factual allegations that at least in part fall outside the scope of copyright.”
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`Id. at 710. And with the first prong of the analysis unsatisfied, the Fifth Circuit declined to address
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`the second prong with respect to GlobeRanger’s trade secret misappropriation claim. See id. at 709-
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`10. Furthermore, the Fifth Circuit noted that it only meant to “reach [] modest conclusions” in
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`reversing this Court’s dismissal on the pleadings, and that the Court should consider Software AG’s
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`copyright preemption defense anew on remand, “with the aid of a more developed record.” See
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`id.(emphasis added).
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`On remand, however, copyright preemption took a back seat to other complex issues in this
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`case—that is, until Software AG re-urged the preemption defense in a Rule 50 motion at the close
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`of GlobeRanger’s case-in-chief in November 2014. For its part, after remand from the Circuit,
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`GlobeRanger amended and refined its claims, and ultimately “decided to streamline a complex case
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`by jettisoning the aspects of its claims that were not focused on [Software AG’s] misappropriation
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`of GlobeRanger’s proprietary software . . . and the trade secrets embedded therein.” Doc. 385, Pl.’s
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`Resp. Opp’n Mot. JMOL 2-3. GlobeRanger, accordingly, in response to Software AG’s reassertion
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`of copyright preemption at trial, conceded that the first prong had been satisfied. See id. at 3. That
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`left only the second prong to consider, which the Court does below, mindful of the foregoing
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`procedural history.
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`Case 3:11-cv-00403-B Document 394 Filed 06/11/15 Page 6 of 35 PageID 12145
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`2.
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`Copyright Preemption Analysis
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`Software AG argues, in its Motion for JMOL, that the Court should simply adopt its prior
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`determination, at the pleadings stage, that GlobeRanger’s trade secret misappropriation claim satisfies
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`the second prong of the copyright preemption analysis. See Def.’s Mot. JMOL 5-7. In Software AG’s
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`view, a contrary finding would require the Court to “reverse” itself on its prior ruling. Id. at 6. The
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`Court should not do this, Software AG submits, because its prior ruling that trade secret
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`misappropriation is equivalent to copyright is “in line with the only other precedent from within the
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`Northern District of Texas[,] . . . the only Texas state court to consider this issue[,] . . . [and]
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`decisions from other federal district courts within Texas.” Id. at 6-7.2
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`GlobeRanger counters first by highlighting all the developments in this case that brought its
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`trade secret misappropriation claim to this point in the proceedings. See Pl.’s Resp. Opp’n Mot.
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`JMOL 1-3. It then argues that the Court should now find its trade secrets claim is not preempted,
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`because its claim is not equivalent to a federal copyright claim. See id. at 3-9. “Unlike copyright
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`claims,” GlobeRanger reasons, “claims for misappropriation of trade secrets require a showing of
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`secrecy and a breach of a confidential relationship” or improper use. Id. at 4. GlobeRanger contends
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`that this conclusion is supported by “the weight of authority as well as the better-reasoned
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`authority—including all on-point federal appellate authority of which GlobeRanger is aware.” Id. at
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`9.3 As follows, the Court finds GlobeRanger’s contentions here more persuasive.
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`2 The cases cited here by Software AG include: MicroSource, Inc. v. Superior Signs, Inc., No.
`3:97-cv-2733-G, 1998 WL 119537 (N.D. Tex. Mar. 9, 1998) (Fish, J.); Butler v. Cont’l Airlines, Inc., 31
`S.W.3d 642 (Tex. App. 2000); Beardmore v. Jacobson, No. 4:13-cv-361, 2014 WL 3543726 (S.D. Tex. July
`14, 2014); Butler v. Cont’l Airlines, Inc., No. Civ. A. 01-2194, 2001 WL 1509545 (S.D. Tex. Nov. 19, 2001).
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`3 The circuit court cases cited here by GlobeRanger include: Stromback v. New Line Cinema, 384 F.3d
`283 (6th Cir. 2004); Seng-Tiong Ho v. Taflove, 648 F.3d 489 (7th Cir. 2011); Computer Assoc. Int’l, Inc. v.
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`As both parties agree, the Fifth Circuit has never specifically addressed the second prong of
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`the copyright preemption analysis in the context of a Texas trade secret misappropriation claim.
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`Nevertheless, its decisions in Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772 (5th Cir.
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`1999) and Computer Mgmt. Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396 (5th Cir. 2000)
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`are instructive.
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`In Alcatel, the Fifth Circuit was faced with the question of whether the plaintiff’s claim for
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`“misappropriation under the Texas common law of unfair competition” was preempted by the
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`Copyright Act.4 166 F.3d at 785. After finding the first prong satisfied, the Fifth Circuit held with
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`respect to the second prong that “[d]espite the seemingly divergent purposes of federal copyright law
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`and state misappropriation law, . . . under the discrete facts of this case, the rights protected under
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`these laws are equivalent.” Id. at 788. The Fifth Circuit reasoned that “the acts that form the basis
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`of [the] misappropriation claim touch on interests clearly protected by the Copyright Act, including”
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`the defendant’s “reproduction” and “use” of the plaintiff’s copyrighted materials, and its “distribution
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`of [derivatively-prepared] works in competition with [the plaintiff].” Id. at 789. The Fifth Circuit also
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`Altai, Inc., 982 F.2d 693 (2d Cir. 1992); Dun & Bradstreet Software Servs., Inc. v. Grace Consulting, Inc., 307
`F.3d 197 (3d Cir. 2002); Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147 (1st Cir. 1994);
`Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655 (4th Cir. 1993); S.O.S., Inc. v. Payday, Inc., 886 F.2d
`1081 (9th Cir. 1989); Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823 (10th Cir. 1993); Bateman
`v. Mnemonics, Inc., 79 F.3d 1532 (11th Cir. 1996).
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`4 While the plaintiff in Alcatel also asserted a trade secret misappropriation claim, see 166 F.3d at 777,
`the Fifth Circuit did not consider whether this claim was preempted. It only considered preemption in relation
`to the unfair competition by misappropriation claim, which differs significantly from trade secret
`misappropriation under Texas law. See Bayco Products, Inc. v. Lynch, No. 3:10-CV-1820-D, 2011 WL
`1602571, at *10 n.5 (N.D. Tex. Apr. 28, 2011) (“As noted in United States Sporting Products, Inc. v. Johnny
`Stewart Game Calls, 865 S.W.2d 214 (Tex. App. 1993, writ denied), the unfair competition by
`‘misappropriation’ cause of action is different from ‘misappropriation of trade secrets’ or the ‘trademark
`infringement’ variety of unfair competition.”).
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`rejected the notion that the state law requirements of “‘extensive time, labor, skill, and money” and
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`“in competition with” were extra elements that rendered the plaintiff’s rights qualitatively different
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`under Texas and federal law. See id. Under “the circumstances that are before us in the instant case,”
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`the Fifth Circuit reasoned, these supposed extra elements are either “necessarily contemplated” by
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`copyright or fall within “the scope of protection afforded by copyright law,” the Fifth Circuit found.
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`Id. Therefore, it concluded “that, because [the plaintiff] has failed to demonstrate the presence of
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`any element that renders different in kind its rights under state and federal law, [the plaintiff’s] state
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`misappropriation claim is preempted by federal copyright law.” Id.
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`Conversely, the Fifth Circuit in Computer Mgmt. Assistance held that a plaintiff’s cause of
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`action under the Louisiana Unfair Trade Practices Act was not preempted, because the protection
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`the plaintiff sought pursuant to this state law was “not ‘equivalent’ to that provided by the Copyright
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`Act.” 220 F.3d at 404-05. The Circuit reasoned that, unlike copyright, the plaintiff’s state law claim
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`for relief from the defendant’s unfair trade practices “requires proof of fraud, misrepresentation or
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`other unethical conduct.” Id. at 404.
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`Here, GlobeRanger has demonstrated the presence of “extra” elements at the core of its
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`Texas misappropriation of trade secrets claim, including the elements of impropriety and secrecy. To
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`illustrate, first consider the rights created by copyright and enjoyed by copyright holders. Copyright
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`intends to “promote and protect creativity.” Alcatel, 166 F.3d at 787 (citations omitted). It does this
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`by giving qualifying authors—those who put forth the effort necessary to create an “original”
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`work—exclusive rights to the work over a set duration of time. See id. at 787-89; 17 U.S.C. § 302(a)
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`(providing that a copyright generally “endures for a term consisting of the life of the author and 70
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`years after the author’s death”). The nature of these exclusive rights granted to copyright holders has
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`been aptly described by the Seventh Circuit as follows:
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`Rights “equivalent to any of the exclusive rights within the general scope of
`copyright” are rights established by law—rights that restrict the options of persons
`who are strangers to the author. Copyright law forbids duplication, public
`performance, and so on, unless the person wishing to copy or perform the work gets
`permission; silence means a ban on copying. A copyright is a right against the world.
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`ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1454 (7th Cir. 1996).
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`In contrast, the rights of a trade secret holder are rooted in principles of “equity.” K&G Oil
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`Tool & Serv. Co. v. G&G Fishing Tool Serv., 158 Tex. 594, 606, 314 S.W.2d 782, 790 (Tex. 1958).
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`Indeed, the “rights” a trade secret owner is said to possess are merely “‘secondary consequences of
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`the primary fact that the law makes some rudimentary requirements of good faith.’” Hyde Corp. v.
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`Huffines, 158 Tex. 566, 577 (Tex. 1958) (quoting E. I. Du Pont De Nemours Powder Co. v. Masland,
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`244 U.S. 100, 102 (1917)). In other words, a trade secret holder’s rights only exist to the extent
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`someone “acquired the trade secret by breach of a confidential relationship or other improper
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`means,” and can only be enforced against those privy to the breach or impropriety. Gen. Universal
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`Sys., Inc. v. HAL, Inc., 500 F.3d 444, 449 (5th Cir. 2007). For this reason, courts have often “stressed
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`the blameworthy conduct of the defendant as the basis of this tort.” Metallurgical Indus. Inc. v.
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`Fourtek, Inc., 790 F.2d 1195, 1203 (5th Cir. 1986) (citation omitted); see also K&G Oil, 158 Tex.
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`at 602, 314 S.W.2d at 787 (“The basis of a trade secret case is a breach of contract or wrongful
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`disregard of confidential relationships.”) (citation and quotation marks omitted). This is in stark
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`contrast to copyright infringement, which courts have described as “a strict liability tort” in the sense
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`“that plaintiffs do not need to prove a defendant's mental state.” Guzman v. Hacienda Records &
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`Recording Sutdio, Inc., No. 6-12-CV-42, 2014 WL 6982331, at *5 n.9 (S.D. Tex. Dec. 9, 2014)
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`(citations and quotation marks omitted). Therefore, like the extra element of “fraud,
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`misrepresentation or other unethical conduct” in Computer Mgmt. Assistance, the breach of
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`confidence/improper use element required by Texas law renders GlobeRanger’s trade secret rights
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`different in kind from its rights under the Copyright Act.
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`In addition, consistent with the equitable principles underlying trade secret misappropriation,
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`the rights of a trade secret owner last only as long as the owner keeps his protected information
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`secret. See Luccous v. J. C. Kinley Co., 376 S.W.2d 336, 338 (Tex. 1964) (“It is self-evident that the
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`subject matter of a trade secret must be secret.”) (citation omitted). Compare this to copyright,
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`which grants rights lasting a discrete period of time to reward an author’s past creative efforts; trade
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`secret misappropriation, on the other hand, offers indefinite protection to those who continuously
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`and diligently protect the secrecy of their work. This secrecy requirement, therefore, is yet another
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`way in which GlobeRanger’s rights under the law of trade secret misappropriation qualitatively differ
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`from its rights under the Copyright Act. See, e.g., Seng-Tiong Ho, 648 F.3d at 503 (“A claim of trade
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`secret misappropriation, then, requires that the information have a status of secrecy . . . [, which]
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`go[es] beyond the rights regulated under the Copyright Act.”).
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`Software AG’s contention that the Court must contradict itself to reach the above result
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`ignores the nearly four years of complex litigation that took place since the Court’s initial ruling on
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`their copyright preemption defense. That ruling was made on GlobeRanger’s original petition, which
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`the Court believed, at its “core,” alleged nothing more than a copyright infringement claim stylized
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`as trade secret misappropriation. After the Fifth Circuit reversed and remanded, the parties engaged
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`in years of extensive discovery and pretrial motion practice before copyright preemption was once
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`again raised at trial, more than two years later. In the meantime, GlobeRanger amended its pleadings
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`multiple times, and produced extensive evidence demonstrating the true nature of its trade secrets
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`claim. Moreover, the issues of whether GlobeRanger kept its information “secret” and whether
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`Software AG acquired this information improperly were revealed as central elements of
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`GlobeRanger’s claim.5 On the basis of these developments and the reasoning discussed above, the
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`Court is now persuaded that GlobeRanger has adequately shown that its trade secrets claim asserts
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`qualitatively different rights than those governed by the Copyright Act. Therefore, the Court
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`concludes that GlobeRanger’s trade secrets claim is not preempted, and rejects Software AG’s
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`Motion for JMOL to the extent it seeks relief on this basis.
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`C.
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`Subject Matter Jurisdiction
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`Software AG next contends that, in the event the Court finds that GlobeRanger’s trade
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`secrets claim is not preempted by the Copyright Act, “it still must vacate its judgment because, at
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`that time, it will lack the necessary subject-matter jurisdiction to adjudicate this action.” Def.’s Mot.
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`JMOL 8-9. As it did with the copyright preemption issue, the Court begins by offering context to
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`Software AG’s contentions vis-à-vis a brief background discussion as to how the Court has
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`maintained jurisdiction over GlobeRanger’s claims up to this point.
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`1.
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`Subject Matter Jurisdiction Background
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`GlobeRanger originally filed this action in state court, “asserting claims of misappropriation
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`of trade secrets, conversion, unfair competition, conspiracy, and tortious interference” under Texas
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`state law. Order Denying Remand 2. The named defendants, including Software AG, subsequently
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`removed GlobeRanger’s state law claims to this Court pursuant to 28 U.S.C. § 1441(a), which allows
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`5 See, e.g., First MSJ Order 36 (addressing Software AG's contention “that GlobeRanger’s proprietary
`information lost its trade-secret status when GlobeRanger delivered the Navy Solution to the Navy without
`adequate protections”); Def.'s Mot. JMOL 20 (arguing that “GlobeRanger presented no legally sufficient
`evidence that Software AG acquired any of its proprietary information improperly”).
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`for the removal of cases from state court “if the case could have originally been filed in federal court.”
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`Id. The federal jurisdictional basis asserted by Software AG was that GlobeRanger’s claims were
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`preempted by the Copyright Act, giving this Court subject matter jurisdiction under the doctrine of
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`complete preemption. See id. Under this doctrine—which applies to claims preempted by the
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`Copyright Act—“‘the pre-emptive force of a statute is so extraordinary that it converts an ordinary
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`state common-law complaint into one stating a federal claim for purposes of the well-pleaded
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`complaint rule.’” GlobeRanger, 691 F.3d at 705-05 (quoting Caterpillar, Inc. v. Williams, 482 U.S. 386,
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`396 (1987)).
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`With its state action removed, GlobeRanger moved to remand its claims back to state court,
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`which the Court denied on the ground that all of GlobeRanger’s state law claims were completely
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`preempted by the Copyright Act. See Order Denying Remand. The Fifth Circuit, as mentioned, later
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`reversed the Court on its related order dismissing all of GlobeRanger’s claims on copyright
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`preemption grounds. See GlobeRanger, 691 F.3d at 707-09. Having found that “at least some of
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`GlobeRanger’s claims are not preempted at this stage,” id. at 715, the Fifth Circuit then turned to
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`the issue of jurisdiction.
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`In framing the issue of federal jurisdiction, the Fifth Circuit noted that if the Copyright Act
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`“plausibly preempts some but not all” of GlobeRanger’s claims, “then the case can continue in federal
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`court.” Id. at 706. The reason for this, the Fifth Circuit explained in a similar case, is that “[w]hen
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`a complaint raises both completely-preempted claims and” state law claims that are not completely
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`preempted, “the court may exercise removal jurisdiction over the completely-preempted claims and
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`supplemental jurisdiction (formerly known as ‘pendent jurisdiction’) over the remaining claims.”
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`Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 337-38 (5th Cir. 1999); see also 28 U.S.C. §
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`1367(a). But “[i]f none of [GlobeRanger’s] claims were preempted,” the Fifth Circuit continued in
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`this case, “there would not be federal jurisdiction under the complete preemption doctrine” or
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`otherwise. GlobeRanger, 691 F.3d at 709.
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`With these legal parameters set, the Fifth Circuit turned to “[t]he best argument . . . for
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`preemption,” which was the one made for “GlobeRanger’s conversion claim,” and concluded that
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`“the defendants have argued enough of a basis for preemption on GlobeRanger’s conversion claim
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`to stay in federal court.” Id. at 709-10. The court noted, however, that its “conclusion on conversion
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`is without prejudice to GlobeRanger’s ability to prove its claim” is not preempted. Id. at 709.
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`Therefore, the Fifth Circuit remanded back to this Court with instructions that “[i]f, with the aid
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`of a more developed record, . . . the district court concludes that neither the conversion claim nor
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`any other is preempted, it will lack jurisdiction over this case.” Id.
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`On remand, GlobeRanger, as alluded to before, decided not to re-allege its conversion claim;
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`its tortious interference claim was dismissed during summary judgment; and leading up to trial, it
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`refined its remaining claims by dropping its unfair competition claim and focusing exclusively on its
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`trade secret misappropriation and related conspiracy allegations. Following a trial, the jury returned
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`a verdict in GlobeRanger’s favor on its trade secrets claim, which the Court in its above discussion
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`found to be outside the scope of the Copyright Act, and therefore, not preempted.
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`2.
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`Subject Matter Jurisdiction Analysis
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`Even though this case proceeded all the way to trial without Software AG raising the issue,
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`they argue in their Motion for JMOL that the Court lacks jurisdiction over GlobeRanger’s claim now
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`that judgment has been entered against them. More precisely, Software AG contends that the Court
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`cannot exercise jurisdiction under the complete preemption doctrine any longer, since as the above
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`discussion illustrates, the Court has not affirmatively found any of GlobeRanger’s claims to be
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`preempted by the Copyright Act during these remand proceedings. See Def.’s Mot. JMOL 9-13. And
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`though GlobeRanger argues that supplemental jurisdiction over its state law claim remains
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`appropriate, Software AG counters that this “argument puts the cart before the horse because it
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`assumes (wrongly) that there is a federal jurisdictional predicate that the Court can use to exercise
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`supplemental jurisdiction over the trade-secret misappropriation claim.” Id. at 9.
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`GlobeRanger strongly disagrees with Software AG’s assessment, arguing that the federal
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`jurisdictional predicates in this case include at least some of GlobeRanger’s original claims, which
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`Software AG “used as jurisdictional hooks to remove the case on the basis of preemption.” Pl.’s Resp.
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`Opp’n Mot. JMOL 10. While, admittedly, none of these so-called “hooks” remain in play at this
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`point in the proceedings, GlobeRanger contends that its voluntary abandonment of these claims does
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`not defeat the Court’s continuing jurisdiction over this case and its supplemental jurisdiction over
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`the pendant state law claim that remains. See id. at 11-13. As follows, the Court agrees.
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`The Court’s ability to exercise supplemental jurisdiction over GlobeRanger’s trade secret
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`misappropriation claim is governed by 28 U.S.C. § 1367, which provides in relevant part that “in any
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`civil action of which the district courts have original jurisdiction, the district courts shall have
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`supplemental jurisdiction over all other claims that are so related to claims in the action within such
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`original jurisdiction that they form part of the same case or controversy under Article III of the
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`United States Constitution.” 28 U.S.C. § 1367(a). Even if the Court has the power to assert
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`supplemental jurisdiction over GlobeRanger’s state law claim, however, “[t]hat power need not be
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`exercised in every cases in which it is found to exist.” United Mine Workers of Am. v. Gibbs, 383 U.S.
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`715, 726 (1966). The Court, instead, “may decline to exercise supplemental jurisdiction over a
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`claim” based on its discretionary consideration of various statutory and common law factors. 28
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`U.S.C. § 1367(c); Enochs v. Lampasas Cnty., 641 F.3d 155, 158-59 (5th Cir. 2011).
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`In this case, Software AG does not contend that the relevant statutory and common law
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`factors support a discretionary remand of GlobeRanger’s trade secrets claim. Instead, Software AG
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`attacks the Court’s power to exercise supplemental jurisdiction in the first place; not because the
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`trade secrets claim is not sufficiently “related” to the other claims as required to exercise
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`supplemental jurisdiction, but rather, because in Software AG’s view, the Court has no “original
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`jurisdiction” to supplement under 28 U.S.C. § 1367(a).
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`Software AG’s position here would make sense if the Court had affirmatively determined on
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`remand that all of GlobeRanger’s original claims fall outside the scope of copyright, stripping the
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`Court of the “original jurisdiction” that it appeared to have at the pleadings stage. In fact, that is the
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`precise scenario laid out by the Fifth Circuit when it remanded this case—instructing that this Court
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`“will lack jurisdiction over this case” if it finds, “with the aid of a more developed record,” that the
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`Fifth Circuit’s “modest conclusions” on the pleadings are not supported by the facts, and that, in
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`reality, “neither the conversion claim nor any other is preempted.” GlobeRanger, 691 F.3d at 709-10.
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`This scenario is what led to the two appellate court decisions that Software AG relies on here.6 In
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`McClelland v. Gronwaldt, for example, the Fifth Circuit concluded that the district court had no
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`“basis for original jurisdiction to support removal” after finding that none of the state law claims
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`6 As Software AG partially concedes, see Def.’s Mot. JMOL 11, the third case they cite here in
`support, Jones v. Roadway Express, Inc., is distinguishable, because the Fifth Circuit there based its conclusion
`that remand was necessary on a statute prohibiting removal of cases arising under a state’s workmen
`compensation laws, not on the fact that no completely-preempted or other federal law claims remained in the
`case. See 931 F.2d 1086, 1091-92 (5th Cir. 1991).
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`alleged were completely preempted. 155 F.3d 507, 519 (5th Cir. 1998). Likewise, the Eleventh
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`Circu