Appeal from the 400th District Court Fort Bend County, Texas
Trial Court Case No. 16-DCV-229519
consists of Chief Justice Radack and Justices Jennings and
Radack Chief Justice
GeoSteering LLC sued defendant/appellant Sergey Efremov
seeking a temporary restraining order, a temporary
injunction, a permanent injunction, and damages. The trial
court entered a temporary injunction in GeoSteering's
favor, and Efremov brought this interlocutory appeal.
service of "geosteering" involves monitoring
drilling operations using real-time data. GeoSteering is an
oil field service company that provides geosteering services.
GeoSteering developed custom proprietary geosteering
is a scientist, mathematician, and a computer programmer. He
began doing work for GeoSteering in 2009. GeoSteering alleges
he was an employee; Efremov claims he was an independent
contractor. The parties did not have a written contract
governing the relationship.
issue in this case is software source code developed by
Efremov. Efremov developed algorithms in Matlab, a programing
language with an ".m" file extension. When
GeoSteering determined a particular algorithm would be
commercially useful, a GeoSteering software engineer would
rewrite the Matlab .m file in C# programing language so that
the algorithm could be implemented in RigComms. Efremov would
assist GeoSteering's software engineer, explaining and
testing the code as necessary during implementation.
petition alleges that from November 2009 until approximately
February 2014, Efremov freely shared access to the software
source code with GeoSteering through Dropbox. Because Efremov
was consistently updating Dropbox files, GeoSteering did not
discover that Efremov had stopped sharing code until the
later part of 2015. In 2013, at GeoSteering's suggestion,
Efremov compiled all the algorithms he was working on into a
single executable file "toolbox" named the
GS_Toolbox. Executable files do not reveal the source code,
and require a passcode license key generated by Efremov which
expires, denying access, after thirty or sixty days and
requires renewal by Efremov. GeoSteering alleges that in
January 2014, unbeknownst to GeoSteering, Efremov removed all
the .m files that had not yet been implemented in RigComms,
eliminating GeoSteering's access to the source code.
considers both the software source code and the GS_Toolbox to
be its confidential, proprietary, and trade secret
information. In its petition, it requests a declaratory
judgment that Efremov is an employee of GeoSteering and that
all software source code and the GS_Toolbox is the sole
property of GeoSteering as the employer. GeoSteering also
seeks damages for breach of contract, promissory estoppel,
conversion, money had and received, breach of fiduciary duty,
and trade secret misappropriation. GeoSteering also requested
that the trial court issue a temporary restraining order, and
then an injunction.
trial court entered a temporary injunction in
GeoSteering's favor. Its order stated that that Efremov
is an employee of GeoSteering and accordingly all software
source codes and the GS_Toolbox developed is the sole
property of the employer, GeoSteering. It stated that Efromov
breached his fiduciary duty to
GeoSteering and breached his agreement with GeoSteering. The
temporary injunction ordered Efremov to provide access to
GS_Toolbox and prohibited Efremov from using, copying,
marketing, or trying to license the software code.
raises the following issues in his appellant's brief:
1. "The state court had no jurisdiction over
Plaintiff's claims because they were preempted by federal
2. "The temporary injunction was granted in error
because the status quo between the parties had not been such
that Plaintiff was in possession of the source code."
3. "The district court should not have a granted a
temporary injunction because Plaintiff had not established a
probability of recovery on its causes of action."
4. "The trial court erroneously found that Dr. Efremov
was an employee of GeoSteering, all the while no written
contract between the parties existed and the statute of
frauds required a writing."
5. "The court made erroneous and unnecessary factual
findings and legal pronouncements."
temporary injunction's purpose is to preserve the status
quo of the litigation's subject matter pending a trial on
the merits. TMC Worldwide, L.P. v. Gray, 178 S.W.3d
29, 36 (Tex. App.-Houston [1st Dist.] 2005, no pet.) (citing
Walling v. Metcalfe, 863 S.W.2d 56, 57 (Tex. 1993)).
A temporary injunction is an extraordinary remedy and does
not issue as a matter of right. Id. To obtain a
temporary injunction, the applicant must plead and prove
three specific elements: (1) a cause of action against the
defendant; (2) a probable right to the relief sought; and (3)
a probable, imminent, and irreparable injury in the interim.
Id. (citing Butnaru v. Ford Motor Co., 84
S.W.3d 198, 204 (Tex. 2002)). A probable right to the relief
sought is shown by alleging a cause of action and presenting
evidence that tends to sustain it. Tel. Equip. Network,
Inc. v. TA/Westchase Place, Ltd., 80 S.W.3d 601, 607
(Tex. App.-Houston [1st Dist.] 2002, no pet.). An injury is
irreparable if the injured party cannot be adequately
compensated in damages or if the damages cannot be measured
by any certain pecuniary standard. Id. at 610.
decision to grant or deny a temporary injunction lies in the
sound discretion of the trial court, and the court's
ruling is subject to reversal only for a clear abuse of
discretion. TMC Worldwide, 178 S.W.3d at 36 (citing
Walling, 863 S.W.2d at 58). We must not substitute
our judgment for the trial court's judgment unless the
trial court's action was so arbitrary that it exceeded
the bounds of reasonable discretion. Id. (citing
Johnson v. Fourth Ct. App., 700 S.W.2d 916, 918
(Tex. 1985)). In reviewing an order granting or denying a
temporary injunction, we draw all legitimate inferences from
the evidence in a manner most favorable to the trial
court's judgment. Id. (citing CRC-Evans
Pipeline Int'l v. Myers, 927 S.W.2d 259, 262 (Tex.
App.-Houston [1st Dist.] 1996, no writ)). "Abuse of
discretion does not exist if the trial court heard
conflicting evidence and evidence appears in the record that
reasonably supports the trial court's decision."
Tanguy v. Laux, 259 S.W.3d 851, 856 (Tex.
App.-Houston [1st Dist.] 2008, no pet.).
first issue, Efremov argues that GeoSteering's claims are
preempted by the federal Copyright Act, rendering the Fort
Bend County state district court without jurisdiction.
GeoSteering contends that its request for a declaration that
Efremov is its employee and that GeoSteering owns the source
code is not preempted. We agree with GeoSteering.
On and after January 1, 1978, all legal or equitable rights
that are equivalent to any of the exclusive rights within the
general scope of copyright as specified by section 106 [17
U.S.C. § 106] in works of authorship that are fixed in a
tangible medium of expression and come within the subject
matter of copyright as specified by sections 102 and 103 [17
U.S.C. §§ 102 and 103], whether created before or
after that date and whether published or unpublished, are
governed exclusively by this title. Thereafter, no person is
entitled to any such right or equivalent right in any such
work under the common law or statutes of any State.
17 U.S.C. § 301(a). Claims for relief that arise under
the Copyright Act fall within the exclusive jurisdiction of
the federal courts, to the exclusion of any state court. 28
U.S.C. § 1338(a). A two-part test determines whether a
state law claim is preempted by the Copyright Act. Spear
Mktg. Inc. v. BancorpSouth Bank, 791 F.3d 586, 594 (5th
Cir. 2015). First, the claim is examined to determine whether
it falls "within the subject matter of copyright"
as defined by 17 U.S.C. § 102. Id. Second,
"the cause of action is examined to determine if it
protects rights that are equivalent to any of the exclusive
rights of a federal copyright, as provided in 17 U.S.C.
§ 106." Id.
the two-part test for determining preemption,
GeoSteering's claims satisfy the first prong, as source
code is recognized as copyrightable work under 17 U.S.C.
§ 102. E.g., Vault Corp. v. Quaid Software
Ltd., 847 F.2d 255, 259 (5th Cir. 1988) ("Congress
amended the Copyright Act in 1974 to include computer
programs in the definition of protectable literary
works."); Apple Computer, Inc. v. Franklin Computer
Corp., 714 F.2d 1240, 1249 (3d Cir. 1983) ("[A]
computer program, whether in object code or source code, is a
'literary work' and is protected from unauthorized
copying, whether from its object or source code
version."). The parties, however, dispute whether
GeoSteering's claims satisfy the second prong.
relies primarily on this Court's decision in Butler
v. Continental Airlines, Inc., 31 S.W.3d 642 (Tex.
App.-Houston [1st Dist.] 2000, pet. denied). In that case,
Butler sued his former employer, Continental Airlines,
alleging that "Continental copied and misappropriated
the computer macros [Butler] authored" while he was
employed at Continental. Id. at 648. Butler
held that the first prong of preemption was satisfied because
"[c]omputer programs fall within the subject matter of
copyright, " Id. at 650 (citing Daboub v.
Gibbons, 42 F.3d 285, 289-90 (5th Cir.1995)). We next
analyzed whether Butler's claims satisfied the second
preemption prong, i.e., whether the claim protects rights
equivalent to any of the exclusive rights of a federal
copyright, ultimately deciding that it did:
A state law claim is equivalent to a copyright claim where
the core of the state law theory of recovery goes to wrongful
copying. Daboub, 42 F.3d at 289-90. This inquiry
requires a comparison of the nature of the rights protected
under the Copyright Act with the nature of the state law
rights being asserted. Alcatel USA, Inc. v. DGI
Technologies, Inc., 166 F.3d 772, 787 (5th Cir. 1999). A
state law cause of action is equivalent to the rights granted
by the Copyright Act if "the mere act of reproduction,
distribution, or display infringes it." Taquino v.
Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (5th Cir.
1990). In other words, a state law claim is equivalent to
federal copyright law rights if the elements of the state law
cause of action would not establish qualitatively different
conduct by the defendant than the elements for an action
under the Copyright Act. Alcatel, 166 F.3d at 787;
Daboub, 42 F.3d at 290. "Federal courts have
repeatedly recognized that allowing state claims where the
core of the complaint centers on wrongful copying would
render the preemption ...