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Equistar Chemicals L.P. v. Indeck Power Equipment Co.

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

September 16, 2019

EQUISTAR CHEMICALS, L.P., Plaintiff,
v.
INDECK POWER EQUIPMENT COMPANY Defendant.

          MEMORANDUM AND RECOMMENDATION

          FRANCES H. STACY UNITED STATES MAGISTRATE JUDGE.

         Pending in this case, which has been referred by the District Judge to the Magistrate Judge for all pretrial proceedings, is Plaintiff Equistar Chemicals, L.P.'s Motion for Partial Summary Judgment (Document No. 23), and Defendant's Motion for Final Summary Judgment (Document No. 25). Having considered the cross motions for summary judgment, the responses and additional briefing, the summary judgment evidence, and the applicable law, the Magistrate Judge RECOMMENDS, for the reasons set forth below, that Plaintiffs Motion for Partial Summary Judgment and Defendant's Motion for Final Summary Judgment both be DENIED.

         I. Background

         This case is essentially a breach of contract and declaratory judgment action based on Plaintiff Equistar Chemicals, L.P.'s ("Equistar") purchase of two steam boilers and related control instrumentation from Indeck Power Equipment Company ("Indeck") for $6.7 million. As is not disputed, Equistar planned to use the boilers for petrochemical production in their Tuscola, Illinois facility. Two documents accompanied the sale: (1) the Master Maintenance Repair Operating Materials, Shop Repair Services, and Occasional On-Site Services Contract ("Master Contract"), effective December 8, 2015, and (2) a purchase order agreement, effective December 11, 2015. The terms provided in the Master Contract govern the parties' relationship and specifically provided that they could not be modified or amended by any purchase order. No. one disputes that the terms were never amended.

         In mid 2017, Indeck delivered the boilers, and the programmable logic controllers (known as and referred to herein as "PLC's) used to control the boilers, to Equistar at Equistar's Tuscola facility. That PLCs were delivered with the software installed on them, and upon delivery, Indeck worked with Equistar to customize the software. Prior to, upon delivery, and after delivery, Equistar made repeated requests for access to the software source code. Indeck has refused each of those requests. That repeated refusal has led to this lawsuit, with Equistar alleging that it is entitled to "read and write" access to the instrumentation software source code, and asserting a claim against Indeck for breach of the Master Contract. Equistar also seeks a declaration that it either owns, or has an irrevocable license to, the source code under the terms of the Master Contract.

         II. Arguments for Summary Judgment

         The parties have filed Cross Motions for Summary Judgment on Equistar's claim(s) that it is entitled to read and write access to the source code. Equistar argues that it is entitled to such access under sections 19(b), 19(a)(iii) and/or 19(d) of the parties' Master Contract. Indeck, in contrast, argues that the source code is its "confidential information," the ownership of which it retained under section 19(a)(1) and 19(a)(iii) of the Master Contract, and that the only "license" Equistar obtained under the Master Contract was a license to "use" the software. As is relevant to the claims and issues in this case, the Master Contract provides as follows:

1. Definitions. The following definitions shall set forth the meaning of the terms used herein. If a term is undefined, its ordinary meaning shall apply.
"Buyer Data"shall mean any and all Buyer provided data, records, and information (i) to which Seller has access, (ii) that is provided to Seller by Buyer, (iii) that is or may be incorporated into any of Seller's Work, and (iv) that may be Buyer proprietary or Confidential Information. Buyer Data may also include: any Drawings, data, Specifications, instructions (operations and maintenance), schedules, packing lists, and any other literature provided by the Subcontractors or Suppliers but excludes any intellectual property of such parties and Seller Intellectual Property. Buyer Data is and shall remain the properly of Buyer and Buyer shall retain exclusive rights and ownership thereto.
"Seller Intellectual Property" shall mean any Seller information, in any form, that includes trade secrets, copyrights, inventions, patents, discoveries, know-how, samples, techniques, specifications, drawings, designs, design concepts, manuals, processes and testing methodology. Seller Intellectual Property includes Confidential Information of Seller and shall not include any Buyer Data or Confidential Information of Buyer. Seller shall retain exclusive rights and ownership of Seller Intellectual Property and Seller is not obligated to provide Buyer any such information of Seller considered proprietary by Seller except as necessary for purposes of the Contract.
19. Ownership.
a. Intellectual Property Ownership.
i. Title to all Buyer Data plans and Specifications, Drawings, and technical data, including, but not limited to, drawings, flow diagrams, layout details and specifications, computer programs and their contents which (i) have been furnished by Buyer to Seller shall belong to and remain the property of Buyer. All intellectual property and results of the Work, including software, models, designs, drawings, documents, inventions and know-how, conceived or developed by Seller in connections with the Contract are the sole property of Seller.
ii. No right, title, or interest in Seller Intellectual Property will be transferred to Buyer under this Contract, including Seller Intellectual Property which existed prior to, or is created during or independent of, the performance of the Contract.
iii. For Buyer Data, Seller shall promptly disclose to Buyer all inventions, discoveries and improvements (whether patentable or not) conceived or made by Seller, jointly with Buyer, and resulting from Seller's Work under this Contract, or from information made available to, or acquired by Seller, or its employees, under this Contract. Seller ...

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