United States District Court, S.D. Texas, Houston Division
OPINION AND ORDER
MELINDA HARMON UNITED STATES DISTRICT JUDGE
before the Court in the above-referenced cause is Plaintiff
Epic Tech's (“Epic”) Motion for Default
Judgment (“Motion”) against Defendants Frank
Lara, individually and PC Sweeps, LLC (“Lara and
Sweeps”). Doc. 42. The Court previously entered a
default against Lara and Sweeps on November 2, 2017. Doc. 48.
After careful consideration of the filings, record, and law,
the Court is of the opinion that the motion should be
alleges that Lara and Sweeps modified and distributed
Epic's Legacy sweepstakes software in violation of
Epic's registered copyrights and trademarks, unregistered
trademarks, and that they misappropriated Epic's trade
secrets. Doc. 1 at 1-2, 10. Epic seeks a default judgment on
statutory damages for willful copyright and trademark
infringement, seeks a permanent injunction against Lara and
Sweeps's continuing use of Epic's Legacy sweepstakes
software, and seeks attorney's fees, post-judgment
interest, and costs. Docs. 1 at 28; 42 at 6-7.
owns Legacy, a proprietary sweepstakes software system, and
various associated copyrights, trademarks, and trade secrets.
Doc. 1 at 3-10. Some of these copyrights and trademarks are
federally registered. See Id. at 7-10. According to
Epic, Legacy's software system is a “promotional
tool” where licensed businesses “provide
entries into a server-based sweepstakes either through the
making of a qualified purchase or after following the rules .
. . of the sweepstakes.” Id. at 3-4, ¶
12. “Patrons can then either reveal the results of
their entries through using entertaining games available on
the computer terminals, or by requesting that the results be
immediately revealed.” Id.
complaint also explains how Legacy operates and how Epic
protects its code from manipulation. Legacy operates across a
network consisting of a server, a management terminal, a
point of sale terminal, computer terminals for customers'
use, and a management terminal. Doc. 1 at 4, ¶ 13. It
features “highly confidential mathematical
formulas” and source code that neither patrons nor
businesses licensing Legacy may view. Id. at 6,
¶ 16. Instead, “[a]ccess to the server is only
available to high security level employees of Epic Tech, via
sophisticated password protection mechanisms, ” and a
“kill code” can be used to “disable the
software.” Id. at 6-7. Utilizing this code,
Legacy creates a “variety of entertaining games, which
have proprietary names, themes, images, sounds, and even
7, 2015, Epic brought this lawsuit, alleging that Lara and
Sweeps “gained unauthorized possession” of
Epic's Legacy software, renaming it as “Falcon,
” and “have engaged in a scheme to secretly
modify, copy, and distribute the software to unauthorized
third parties within the state of Texas, ” North
Carolina, and Florida. Id. at 1-2, 10, 13. Attached to
Epic's complaint are the sworn declarations of Jason
Queen, Epic's Director of Information Technology, Doc.
2-1 at Ex. 1, and James Fierro, Epic's private
investigator, Id. at Ex. 2; the deposition
transcripts of Robert Cavazos, an owner of an infringing
sweepstakes parlor in Texas, Id. at Ex. 3, Kevin
Frank, an installation and maintainer of Falcon terminals,
Id. at Ex. 4 and Richard Schappel, a distributor of
Falcon software, Id. at Ex. 5; an assignment of
copyrights to Epic, Id. at Ex. 6; a copyright,
Id. at Ex 7, and two trademark registrations,
Id. at Ex. 8. Additional copyright and trademark
registrations are attached to Epic's Motion for Default
Judgment. Doc. 42 at Ex. 4, 5.
to Queen, Epic's IT. Director, Lara and Sweeps
distributed “Falcon software, ” which is
“directly copied from [Epic's] software.”
Doc. 2-1 at 3-6. Queen's allegation is based upon
photographs taken by Fierro at a business location at 16097
N. Loop Dr., Ste E, Socorro, Texas 79927 (“North
Loop”), and personal observations of Falcon's
“management terminal software, ” as follows:
Lucky Duck Game:
Id. at 3-10, 14-16. Queen also claims that he
personally observed Falcon software in multiple locations in
North Carolina and Florida. Id. at 6. In addition to
North Carolina and Florida, Queen “believes that the
Falcon software is being distributed in other states
including Arizona, California, and Colorado.”
Id. at 11.
alleges that the depositions provide additional evidence of a
scheme where Lara and Sweeps would distribute and install
Falcon software, and then retrieve a portion of the revenue.
Doc. 1 at 11, 13. According to the deposition of Cavazos,
Lara installed the software at North Loop, and picked up a
weekly cash payment of 50% of revenues derived from Falcon.
Doc. 2-1 at 54:5, 59:7-10, 88:5-12, Ex. 3. According to the
depositions of Frank and Schappel, Lara distributed the
software to them for installation, Lara activated the
software, and Lara received 5% of profits. Id. at
Ex. 4, 5.
alleges that Epic owns the copyrights for the above software
and icons. Relevant to the default judgment, Queen alleges
that Epic owns these five copyrights for the Lucky Duck game
and one for the Ritzy Kitty game: Copyright Registration Nos.
PA0001828303 (lucky duck screen displays), VA0001745520
(lucky duck game icons and screens), VA0001779200 (cherries),
VA0001779211 (bell), VA0001779212 (watermelon), and
VA0001943259 (Ritzy Kitty). Id. at 3; Doc. 42 at
13-14. According to the exhibits attached to the motion for
default judgment and a supplement to that motion, Epic owns
each of these copyrights through assignment, conveyance, or
direct copyright claim. Docs. 42-4, Ex. 4 (copies of
copyright filings); 2-1 at 368-372, Ex. 6 (assignment of
copyrights to Epic); 50. While, the supplemental filing walks
through the transfer of the copyright claims from filing to
Epic, we do not include this roadmap in the opinion because
the Court granted Epic's motion to seal the supplemental
filing. Doc. 50.
also alleges that Epic owns two federal trademarks for the
Lucky Duck, U.S. Trademark Registration No. 3, 853, 565, and
Reel Cats games, U.S. Trademark Registration No. 3, 782, 626.
Doc. 2-1 at 3. The below example screen shots were taken from
Falcon software used in North Carolina:
to the exhibits attached to the motion for default judgment,
Gateway Gaming, LLC registered federal trademarks for Lucky
Duck and Reel Cats, and later assigned those trademarks to
Epic. Doc. 42-5, Ex. 5. Epic also alleges common law
trademarks for Storefront and Community Prize, but Queen only
references other “registered trademarks.” Docs. 1
at 9, ¶ 28; 2-1 at 4, ¶ 11, as follows:
Doc. 1 at 14.
Queen alleges that the similarities of the management
terminal software of both Falcon and Legacy proves that
Falcon used a copy of Legacy's computer code, which is
Epic's trade secret. Id. at 8-11.
Epic sued Lara and Sweeps alleging that they willfully
infringed on six of Epic's copyrights under 17 U.S.C.
§ 501, two trademarks under 15 U.S.C. § 1114, two
common law trademarks under state law, and its trade secret
computer code. Id. at 15-29; Doc. 42 at 6-7.
effected service on Lara and Sweeps. On May 13, 2015, Epic
served Lara under Rule of Civil Procedure 4(e)(2)(B) by
leaving copies of the Complaint and Summons with someone of
suitable age and discretion who resides at Lara's
residence. Doc. 17. On the same date, Epic served Sweeps
under Rule of Civil Procedure 4(h)(1)(B) by effecting service
on Lara, the president of Sweeps, and by delivering a copy of
the summons and of the complaint to Ms. Holseth, Accounts
Manager of Sweeps. Doc 18.
April 7, 2017, Epic moved for default judgment against Laura
and Sweeps, seeking statutory damages for willful conduct, a
permanent injunction, and attorney's fees. Doc. 42. Under
the Local Rules of the Southern District of Texas, Epic
served the motion for default judgment upon the Defendants
via certified mail, with return receipt requested.