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BidPrime, LLC v. Smartprocure, Inc.

United States District Court, W.D. Texas, Austin Division

June 18, 2018

BIDPRIME, LLC, Plaintiff,
v.
SMARTPROCURE, INC., d/b/a SmartProcure, JEFFREY RUBENSTEIN, and MARC DIGERONIMO, Defendants.

          ORDER

          ROBERT PITMAN UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff BidPrime, LLC's (“BidPrime”) Motion for Entry of a Temporary Restraining Order and to Set a Hearing on Plaintiff's Motion for a Preliminary Injunction, (Dkt. 3), and the parties' responsive briefing. On June 12, 2018, the parties participated in a hearing on BidPrime's motion. After considering the motion, the supporting evidence, and the relevant law, the Court finds that the motion should be denied.

         I. BACKGROUND

         BidPrime is a Texas company that uses its proprietary software to monitor and aggregate real-time requests for proposals, bids, and contracts issued by public and private entities in the United States and Canada. (Compl., Dkt. 1, at ¶¶ 12-13). BidPrime's service is designed to reduce the amount of time that its customers would need to spend searching for bids themselves. (Id. ¶¶ 13-14). BidPrime developed the software that it uses to monitor, collect, and store information about bid requests. (Id. ¶ 17). BidPrime also developed the software that customers use to search and view information about the bid requests that the company monitors and collects. (Id.). BidPrime operates a closed website that allows registered users to view the bid requests that the company collects. (Id. ¶¶ 14-16).

         Defendant SmartProcure, Inc., d/b/a GovSpend (“SmartProcure”) is “one of BidPrime's largest competitors.” (Id. ¶ 23). Defendant Jeffrey Rubenstein (“Rubenstein”) is SmartProcure's President, CEO, and founder; Defendant Marc DiGeronimo (“DiGeronimo”) is SmartProcure's Director of Sales. (Id. ¶¶ 4-5). According to BidPrime, SmartProcure offered to buy unlimited access to BidPrime's website and proprietary database in 2017. (Schwartzbeck Decl., Pl.'s Ex. A, Dkt. 4-1, ¶ 18). During negotiations, Rubenstein signed up for a free trial to access BidPrime.com, which ended when negotiations stalled in November 2017. (Id. ¶¶ 19-22).

         Several months later, Rubenstein and DiGeronimo accessed BidPrime's website on a number of occasions through the accounts of two SmartProcure customers and an account registered to a fake identity created by DiGeronimo. (Rubenstein Decl., Defs.' Ex. A, Dkt. 11-3, ¶¶ 14-20). When accessing BidPrime's website, Defendants both manually and automatically-using software called “bots”-obtained large quantities of bid data. (Id. ¶ 15; Schwartzbeck Decl., Pl.'s Ex. A, Dkt. 4-1, ¶¶ 29-42). Altogether, BidPrime estimates that Defendants obtained data related to 52, 175 bid requests. (Schwartzbeck Decl., Pl.'s Ex. A, Dkt. 4-1, ¶ 43).

         On the basis of these allegations, BidPrime asserts causes of action against Defendants for (1) violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (“CFAA”); (2) violations of the Stored Communications Act, 18 U.S.C. §§ 2701, 2707 (“SCA”); (3) violations of the Texas Harmful Access by Computer Act, Tex. Civ. Prac. & Rem. Code §§ 143.001 et seq. (“THACA”); (4) violations of the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code §§ 134A.001 et seq. (“TUTSA”); (5) common law misappropriation of trade secret information; (6) violations of the Texas Theft Liability Act, Tex. Civ. Prac. & Rem. Code §§ 134.001 et seq.; (7) conversion; (8) trespass to chattels; (9) breach of contract; (10) unjust enrichment; and (11) civil conspiracy. (Id. at 18-30).

         On the same day it filed its complaint, BidPrime filed this motion for a temporary restraining order (“TRO”), in which it asks the Court to enjoin Defendants from accessing BidPrime's website without authorization, using information contained on BidPrime's website, or deleting information from SmartProcure's computers that might be evidence relevant to this action. (Mot. TRO, Dkt. 3, at 2-4). BidPrime only bases its request for a TRO on its CFAA, THACA, breach of contract, and misappropriation of trade secrets claims. (Mem. Supp. Mot. TRO, Dkt. 4, at 16).

         II. LEGAL STANDARD

         The party moving for a TRO must establish that: “(1) there is a substantial likelihood that the movant will prevail on the merits; (2) there is a substantial threat that irreparable harm will result if the injunction is not granted; (3) the threatened injury outweighs the threatened harm to the defendant; and (4) the granting of the [TRO] will not disserve the public interest.” Clark v. Prichard, 812 F.2d 991, 993 (5th Cir. 1987). “A [TRO] is an extraordinary remedy and should only be granted if the plaintiffs have clearly carried the burden of persuasion on all four requirements.” Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008) (citation and quotation marks). Upon reviewing BidPrime's motion, the Court concludes that BidPrime has failed to demonstrate (1) a substantial likelihood that it will prevail on the merits of its trade secrets claims, or (2) that irreparable harm will likely result if an injunction is not granted on the basis of BidPrime's CFAA, THACA, or breach of contract claims.

         III. DISCUSSION

         A. Misappropriation of Trade Secrets

         BidPrime argues that the Court should enter a TRO on the basis of its trade secret misappropriation claims. (Mem. Supp. Mot. TRO, Dkt. 4, at 24-27). The Court finds that a TRO is not warranted on the basis of these claims because BidPrime has failed to show a substantial likelihood of success on the merits of these claims at this stage in the litigation.

         To establish trade secret misappropriation in Texas, a plaintiff must show “(a) the existence of a trade secret; (b) a breach of a confidential relationship or improper discovery of the trade secret; (c) use of the trade secret; and (d) damages.” Daniels Health Scis., L.L.C. v. Vascular Health Scis., L.L.C., 710 F.3d 579, 583 (5th Cir. 2013). Although public information cannot be a trade secret, a combination of public information can, in certain circumstances, be a trade secret. Id. However, to qualify as a trade secret, the owner of that combination of ...


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