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BHL Boresight, Inc. v. Geo-Steering Solutions, Inc.

United States District Court, S.D. Texas, Houston Division

March 29, 2017

BHL BORESIGHT, INC., et al, Plaintiffs,
GEO-STEERING SOLUTIONS, INC., et al, Defendants.



         Pending before the Court in the above-referenced cause is Defendants Geo-Steering Solutions, Inc. and Geo-Steering Solutions USA, Inc.'s (collectively, “GSSI”) Motion for Reconsideration of Order. Doc. 150. Having considered the Motion, Response, Reply, and the law, the Court grants GSSI's Motion and modifies its prior Opinion and Order as follows.

         I. Background

         The facts of this case are recited extensively in this Court's prior Opinion and Order and will not be repeated at length here. The crux of the parties' dispute is whether GSSI-one of BHL's direct competitors in the oil and gas exploration industry-developed its geosteering software using BHL's software. See Docs. 1, 19. Believing that it did, BHL first sent a warning letter to GSSI threatening legal action for its alleged violations of BHL's intellectual property rights. Doc. 19-8. When GSSI failed to respond, BHL initiated this suit. See Doc. 1.

         In its Original Complaint, BHL cites 28 U.S.C. § 1338[1] as grounds for this Court's jurisdiction. Id. ¶ 1. BHL's Complaint also notes that the software GSSI allegedly misappropriated provides an electronic reminder to the licensed user that “Boresight's Software is subject to copyright protection, ” and argues that it is the sole owner of the software and trade secrets at issue. Id. ¶¶ 20, 62. GSSI responded by asserting eight counterclaims against BHL, including three requests for copyright non-infringement declarations. Doc. 19 at ¶¶ 10-36.

         On July 6, 2015, BHL filed its Motion to Dismiss. Doc. 27. In its Motion it argued that the Court lacks subject-matter jurisdiction of GSSI's copyright non-infringement counterclaims because BHL did not assert a copyright claim in its Complaint and there is no “substantial controversy of sufficient immediacy and reality between [the parties] to warrant the Court's jurisdiction over these three counterclaims.” Id. at 12.

         On March 29, 2016, the Court granted BHL's Motion and dismissed, with prejudice, the three copyright non-infringement claims at issue in the present Motion for Reconsideration. Doc. 140.[2] BHL subsequently filed its proposed First Amended Complaint in which it removed its “inadvertent reference to a copyright statute.” Doc. 149-1.

         GSSI's Motion for Reconsideration argues that the Court erred in dismissing its declaratory-judgment claims because the Court (1) relied on overruled case law to determine there was no substantive cause of action; and (2) misapplied current precedent to the facts of this case to conclude that the controversy was not sufficiently immediate and real to render it an actual controversy under the Declaratory Judgment Act (“DJA”). Id. After a thorough review of the law, the Court agrees.

         II. Legal Standard

         A motion for reconsideration “calls into question the correctness of a judgment.” In re Transtexas Gas Corp., 303 F.3d 571, 581 (5th Cir. 2002). “[S]uch a motion is not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment.” Templet v. Hydro Chem., Inc., 367 F.3d 473, 479 (5th Cir. 2004) (citing Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990)). Rather, it merely serves to allow “a party ‘to correct manifest errors of law or fact or to present newly discovered evidence.'” Waltman v. Int'l Paper Co., 875 F.2d 468, 473 (5th Cir. 1989) (quoting Keene Corp. v. Int'l Fidelity Ins. Co., 561 F.Supp. 656, 665 (N.D. Ill. 1982), aff'd, 735 F.2d 1367 (7th Cir. 1984)). A motion for reconsideration may also be used to bring an intervening change in the controlling law to the court's attention. Schiller v. Physicians Res. Grp., Inc., 342 F.3d 563, 567- 68 (5th Cir. 2003) (citing In re Benjamin Moore & Co., 318 F.3d 626, 629 (5th Cir. 2002)). Nevertheless, “[r]econsideration of a judgment after its entry is an extraordinary remedy that should be used sparingly.” Templet, 367 F.3d at 479 (citing Clancy v. Emp'rs Health Ins. Co., 101 F.Supp.2d 463, 465 (E.D. La. 2000)).

         III. Analysis

         In its Motion for Reconsideration, GSSI first directs the Court's attention to Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 169 (2010), a decision in which the Supreme Court held that the Copyright Act's “registration requirement is nonjurisdictional.” Doc. 150 at 3-6 (quoting Muchnick, 559 U.S. at 169 (internal quotation marks omitted)). GSSI also contends that “[a]part from the jurisdictional issue, ” the Supreme Court has made it clear that a declaratory-judgment defendant does not need to be able to sue the declaratory-judgment plaintiff in order for the plaintiff to file its declaratory judgment suit and for the Court to have jurisdiction over the matter.” Id. at 6, 7. (citing MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118, 132 (2007)).

         Because the Court's earlier Order and Opinion was based on pre-Reed district court decisions, the Court vacates the portion of its earlier Opinion in which it held that GSSI's declaratory-judgment claims for copyright non-infringement were barred because BHL could not assert a copyright infringement claim against Defendants without proof of copyright registration. See Doc. 140 at 9-10.

         GSSI next urges that the Court's alternative ground for dismissing its counterclaims- that the controversy between the parties was not immediate and real enough to render it an “actual controversy” under the DJA-is flawed because: (1) BHL had already sued GSSI for misappropriating BHL's software when GSSI counterclaimed for declaratory judgments of copyright non-infringement; (2) BHL threatened legal action against GSSI for copyright infringement before GSSI sought declaratory judgment; and (3) GSSI is engaged in actual manufacture, use, or sale of the GSSI software at issue in this case. Doc. 150 at 8-12. BHL renews its ...

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