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Digital Drilling Data Systems LLC v. Petrolink Services Inc.

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

May 16, 2018

DIGITAL DRILLING DATA SYSTEMS LLC, Plaintiff,
v.
PETROLINK SERVICES INC. and LEE GEISER Defendants.

          OPINION AND ORDER

          MELINDA HARMON UNITED STATES DISTRICT JUDGE

         Pending before the Court in the above-referenced cause of action are the following motions:

         Filed by Plaintiff Digital Drilling Data Systems, LLC (“Digidrill” or “Plaintiff”):

1. Motion for Summary Judgment on Copyrightability (Doc. 93)
2. Motion for Partial Summary Judgment Against Defendants' Affirmative Defense of Fair Use (Doc. 94)
3. Motion for Summary Judgment on Violation of the Digital Millennium Copyright Act Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 95)
4. Motion for Summary Judgment on Copyright Infringement Under 17 U.S.C. § 501(a) (Doc. 96)

         Filed by Defendant Lee Geiser, president and chief executive of Petrolink Services, Inc.:

5. Motion for Summary Judgment on Copyright and Unjust Enrichment Causes of Action (Doc. 70)

         Filed by Defendants Petrolink Services, Inc. and Lee Geiser (“Petrolink” or “Defendants”):

6. Motion for Partial Summary Judgment on Anti-Circumvention Causes of Action under 17 U.S.C. § 1201(a)(1)(A) (Doc. 73)
7. Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 87)
8. Motion for Partial Summary Judgment on Damages Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 89)
9. Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 90)
10. Motion for Partial Summary Judgment with Respect to Digidrill's Indirect Profits Damages (Doc. 106)

         Having considered the Motions, all responses thereto, the relevant facts and the applicable law, the Court finds that Plaintiff's Motion for Summary Judgment on Copyrightability (Doc. 93) is granted in part and denied in part, Defendants' Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 87) is granted in part and denied in part, Defendants' Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 90) is granted in part and denied in part, Plaintiff's Motion for Summary Judgment on Copyright Infringement Under 17 U.S.C. § 501(a) (Doc. 96) is denied, Defendants' Motion for Partial Summary Judgment on Anti-Circumvention Causes of Action under 17 U.S.C. § 1201(a)(1)(A) (Doc. 73) is granted, Plaintiff's Motion for Summary Judgment on Violation of the Digital Millennium Copyright Act Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 95) is denied, Defendant Lee Geiser's Motion for Summary Judgment on Copyright and Unjust Enrichment Causes of Action (Doc. 70) is denied, Plaintiff's Motion for Partial Summary Judgment Against Defendants' Affirmative Defense of Fair Use (Doc. 94) is denied as moot, Defendants' Motion for Partial Summary Judgment on Damages Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 89) is denied as moot, and Defendants' Motion for Partial Summary Judgment with Respect to Digidrill's Indirect Profits Damages (Doc. 106) is denied as moot.

         I. FACTUAL BACKGROUND

         A. The DataLogger program

         This case arises from alleged violations by Defendants Petrolink and its president Lee Geiser of United States copyright law. Specifically, Plaintiff alleges that Defendants Petrolink and Geiser (1) engaged in copyright infringement in violation of 17 U.S.C. § 501(a); (2) willfully violated the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201(a)(1) by circumventing a technological measure that effectively controlled access to Plaintiff's copyrighted work; and (3) willfully violated the U.S. Copyright Act, 17 U.S.C. §§ 106(1), 501, and 1201(a)(1)(A) by knowingly circumventing the copyright protection measures embedded by Plaintiff for the purpose of extracting copyrighted data for its own commercial gain. Plaintiff further alleges that Defendant Petrolink was unjustly enriched by selling Plaintiff's copyrighted data as its own and has garnered profits that rightfully belong to Plaintiff.

         Plaintiff Digidrill is a leading provider of software and hardware to directional drilling companies in North America. Digidrill's primary product is DataLogger, a “measuring while drilling” (“MWD”) software package popular among independent operators that assists oil and gas companies in their efforts to accurately steer drill bits into specific targets thousands of feet underground. It functions by providing drilling companies and well operators with accurate and real-time data that aids in successfully geosteering the drill bit.

         DataLogger itself is an application consisting of software installed on a computer that works in conjunction with rig sensors and other tools located at the end of the drill pipe. Doc. 93 at 4-5. Digidrill has registered copyrights in the DataLogger software version 4.9, registration number TXU1842064, and version 5, registration number TXU1842092. First Amended Complaint (“FAC”) at 1-2.

         When DataLogger is running on a computer, it has two primary processes: one is that the Interface Process receives input and performs calculations which indicate measurements of interest to the user; the other is that the Database Process stores all the raw data upon which the calculations are based as well as the manipulated data in an organized schema. The schema and the data are available only to licensed users and only in measured pieces allowed by DataLogger. Doc. 95 at 1.

         The Interface Process receives raw data gathered by MWD tools and sensors from deep in a well as a drill bit cuts through underground formations and performs calculations on the raw data to generate logs, accurate survey reports, corrected gamma readings, and other useful information on a real-time basis. Additionally, the Interface Process uses the host computer to stream the raw data to other entities working at the well site via a Wellsite Transfer Specification (WITS) feed for no additional license fee. Meanwhile, all the data, both raw and manipulated, is written onto, read from, retained, and stored on the Database Process.

         Of the calculations made to correct the raw data, two are of particular importance in this lawsuit. First, Digidrill applies its own allegedly proprietary formula to raw gamma data received from the downhole gamma ray sensor, using a scaling process which combines multiple correction factors to correct and improve the usability of the raw gamma readings. The corrected gamma reading is stored in a field called “API” in a table called “GAMMA” in the DataLogger Database. Correct gamma readings are essential to properly geosteer a well into a targeted zone.

         Second, Digidrill applies its own allegedly proprietary method to correct the depth measurements for the drill bit as it cuts through the formation. DataLogger uses a pre-configured, discretionary determination to record depth values at certain intervals, corrects the depth measurement using a method which allows for clean, even-stepped logs, then exports the downhole logging data into a “.LAS” file. The corrective step applied prior to exporting the data reduces the number of ways the measurement values can become skewed due to interpolation. The corrected depth measurement values are stored in the “MD” field in several different DataLogger Database tables, including ones called “WITS” and “GAMMA.” Licensed users of the DataLogger Application have access to the corrected and accurate drilling data on a real-time basis, but the amended data has never intentionally been made available in real-time to any third parties such as Petrolink. Doc. 93 at 9.

         In addition to performing corrective calculations on raw data, Digidrill also organizes and sorts the data into a logical schema so that the massive amount of data can be easily read and made use of by Digidrill customers. The Database schema includes 27 separate tables into which the data is sorted and organized, with an aggregate of 433 columns. There are endless ways to potentially organize the data, but the precise number of tables and fields in the schema developed by Digidrill are encoded within the DataLogger source code. Given the vast amount of data needing to be structured and organized into a usable, readable format, it took many years to develop the DataLogger Database schema into its current, user-friendly layout. Id. at 10. Digidrill implemented original nomenclature to designate each table and field and set up a system where the entries in different tables can relate to each other. Id. at 11. These relationships, which are programmed into the source code of DataLogger, allow Digidrill to develop an information hierarchy by connecting pieces of data that are related to each other in some abstract way.

         The DataLogger Database was originally formatted to be opened using a program called Microsoft Access. As its schema became more complex, however, Digidrill decided to convert the Database from a Microsoft Access format to the Firebird Database format, a different format more capable of smoothly handling the DataLogger Database's complexity. While Microsoft Access and Firebird are different formats, Digidrill was able to maintain the general database schema in the new format, with a few minor changes. The schema of the DataLogger Database is generated by DataLogger's 3000 lines of source code using the Firebird Database Server program upon installation of DataLogger by a user. Doc. 93 at 15. Data stored on the Firebird server is capable of being queried by DataLogger users with off-the-shelf software products. Doc. 73-1 at 1. As will be discussed further, this lawsuit arises because Petrolink managed to gain access to this data gathered by DataLogger and stored in the DataLogger Database, and then Petrolink used the data it acquired to advance its own business interests.

         B. Petrolink's Alleged Hack

         Petrolink is a competitor of Digidrill. Petrolink was developing a real-time drilling data visualization program and Digidrill was also planning to develop a similar type of program. In order to display a visualization of real-time data, Petrolink needed the actual, corrected data, which the DataLogger program had already determined and recorded. Therefore, rather than starting from scratch and gathering its own original drilling data, Petrolink used the corrected data stored in the DataLogger Database as input for its visualization program. Doc. 73-1 at 1. In order to obtain the real-time data it needed from Digidrill, Petrolink developed a program, also called the “hack, ” “Scraper, ” or “Rig WITSML” program, to break into the DataLogger Database and make copies of the accurate data in real-time, including portions of the database schema and the corrected survey and gamma data. Id.; Doc. 93 at 16. The parties dispute whether Petrolink accessed Digidrill's information in violation of the DMCA's anti-circumvention rule, how far Digidrill's copyright in DataLogger extends beyond the source code itself, and whether Petrolink's actions constitute copyright infringement.

         II. STANDARD OF REVIEW

         Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure only “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56. A dispute is genuine only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 106 S.Ct. 2505, 2513 (1986).

         The party moving for summary judgment bears the initial burden of “informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 1355-56 (1986); Wise v. E.I. Dupont de Nemours & Co., 58 F.3d 193, 195 (5th Cir. 1995). The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence. Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). “Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” Fed.R.Civ.P. 56(e).

         The Court will view the summary judgment evidence in the light most favorable to the non-movant. Rosado v. Deters, 5 F.3d 110, 122 (5th Cir. 1993). The non-movant must respond to the motion by setting forth particular facts indicating that there is a genuine issue for trial. Mississippi River Basin Alliance v. Westphal, 230 F.3d 170, 174 (5th Cir. 2000). “After the non-movant has been given the opportunity to raise a genuine factual issue, if no reasonable juror could find for the non-movant, summary judgment will be granted.” Id.

         III. ANALYSIS

         A. Copyrightability

         It is undisputed that Digidrill's copyright registrations cover the DataLogger source code; the parties do dispute, however, how far the copyright in the source code extends and what it actually covers beyond the source code itself. Specifically, the parties dispute whether it covers the DataLogger database, the database schema, and the corrected data output.

         Defendants Petrolink and Lee Geiser filed a motion for summary judgment, Doc. 87, with respect to the causes of action for copyright infringement, Counts 1 and 3 the First Amended Complaint (“FAC”). In that motion, they argue that summary judgment is proper on the copyright infringement causes of action for two reasons: (1) Digidrill's copyright registrations are only in the DataLogger computer program itself and do not extend to cover the measurements entered by the user, the schema created by the software, or the data output; and (2) Digidrill is not asserting a copyright in the works at issue in this case, the Firebird databases themselves. In other words, Defendants argue that no copyright infringement occurred because the copied works are not subject to copyright in the first place.

         Plaintiff also filed a motion for summary judgment on the issue of copyrightability, Doc. 93, arguing that both the database schema and the corrected data output are subject to copyright. Plaintiff contends that Digidrill owns the copyright in the DataLogger Database because it is created by DataLogger, and because the DataLogger Database is generated by the copyrighted DataLogger source code, it is a nonliteral element of the copyrighted DataLogger program subject to copyright. Defendants assert that the database is primarily a result of user input, but Plaintiff argues that even though MWD users input information into DataLogger's wizard screen, the database schema and corrected data reflect the content of the DataLogger program code and fall within Digidrill's copyright.

         Furthermore, while Defendant maintains that the actual data output represents uncopyrightable facts, Plaintiff argues that the data output is the product of DataLogger's unique and creative formulas and contains a creative spark, rendering it subject to copyright. Plaintiff likens the output to “predictions, ” which courts have found to be copyrightable. See CCC Information Services, Inc. v. MacLean Hunter Market Reports, Inc., 44 F.3d. 61, 67 (2d Cir. 1994) (holding that a company's prediction of future facts is copyrightable).

         i. The Firebird databases

         As a preliminary matter, Defendants' assertion that Plaintiff attempts to claim that its copyright extends to the source code of the Firebird software and databases is incorrect. See Doc. 87 at 22. As Plaintiff states in its response, Digidrill has never alleged infringement of the Firebird Database software. Doc. 110 at 22. Firebird is merely a template-like application used by DataLogger to serve as a repository for displaying and saving the DataLogger database. Id. at 23. When DataLogger creates a database, it opens the Firebird database server to embody the DataLogger Database created from DataLogger's source code. Id. at 23-24. The Firebird application itself does not contain any of Digidrill's ...


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