Fifth Circuit Drills Down to Details in Drilling Database Disagreement
In a wide-ranging opinion, the US Court of Appeals for the Fifth Circuit held that copying unimportant database schema from a proprietary database did not constitute infringement. The Court also held that where the technological measure that the defendant allegedly circumvented did not effectively control access to the work, there was no Digital Millennium Copyright Act (DMCA) violation. Moreover, the Court found error in not treating the defendant as the sole prevailing party on the copyright and DMCA claims for purposes of attorneys’ fees, notwithstanding plaintiff’s success on other claims. Digital Drilling Data Systems, LLC v. Petrolink Services, Inc., Case No. 19-20116 (5th Cir. July 2, 2020) (Duncan, J.).
Digital Drilling Data Systems (Digidrill) provides software used in oil drilling operations. Digidrill’s software collects data from underground sensors in order to help above-ground operators steer the drill. Digidrill’s systems compile the data into a database that is accessible through a variety of programs, including Digidrill’s DataLogger software. DataLogger includes a security feature that allows access only if a certain USB key is inserted in the computer running the software.
One of Digidrill’s competitors was Petrolink Services. Concerned about losing a large customer to Digidrill, Petrolink obtained a laptop running DataLogger along with the USB key. It soon realized that the database storing the data used by DataLogger was accessible without the USB key. Because Digidrill had not changed certain default settings, all that was required to gain access was a commonly known default administrator username and password. Petrolink then designed a program to copy data from the Digidrill database, including relevant portions of the database schema.
Digidrill sued Petrolink for copyright infringement, DMCA violation and unjust enrichment. The district court entered summary judgment against Digidrill on its copyright infringement and DMCA claims. The district court allowed the unjust enrichment claim to go to trial, where the jury awarded damages to Digidrill. Petrolink then sought fees and costs as a prevailing party under the Copyright Act and DMCA, which the district court denied because both parties had prevailed on some claims. Both parties appealed.
The Fifth Circuit affirmed the summary judgment against Digidrill on its copyright and DMCA claims. As for the copyright claim, the Court cited its own precedent and noted that “[T]o prove copyright infringement, a plaintiff must establish (1) ownership of a valid copyright; (2) factual copying; and (3) substantial similarity.” The only element at issue here was the third prong, substantial similarity.
Digidrill contended that even though Petrolink copied only 5% of DataLogger’s copyrighted schema, a reasonable trier of fact might nevertheless have found substantial similarity due to the “qualitative importance” of that small copied portion. The Fifth Circuit rejected Digidrill’s qualitative importance argument, concluding that there was no record evidence establishing the importance of the copied schema to the DataLogger program as a whole. Thus, “[W]hile the question of substantial similarity typically should be left to the factfinder, summary judgment may be appropriate if the court can conclude . . . that no reasonable juror could find substantial similarity.”
As for the DMCA claim, the Fifth Circuit noted that the USB key associated with DataLogger did not effectively control access to the underlying database, which was accessible using the default administrator username and password. The Court reasoned that because the security measures associated with DataLogger did not effectively control access to the database, Petrolink could not have violated the DMCA by circumventing it. Moreover, the Court reasoned that Petrolink had not circumvented the username and password on the database because it had used a username and password (i.e., Petrolink had gone through the authentication process, not around it). According, the Court affirmed summary judgment against Digidrill on its DMCA claim.
As for Digidrill’s unjust enrichment claim, the Court found that it was not preempted by copyright law. The Court reasoned that an unjust enrichment claim is not preempted if it requires a showing of an additional element than would be required to prove copyright infringement. In this case, the additional element was the allegation that Petrolink had induced Digidrill’s customers to violate the terms of their license agreements. As for Petrolink’s argument that Digidrill could not show unjust enrichment because it had not alleged that Petrolink violated a law or legal duty, the Court explained that “taking of an undue advantage,” an element of unjust enrichment under Texas law, does not require violation of a law or legal duty.
Finally, the Court vacated and remanded the district court’s order denying Petrolink’s motion for fees and costs. The Court reasoned that Petrolink alone prevailed on the copyright and DMCA claims and that such claims are severable from other claims such as unjust enrichment when assessing entitlement to fees under the Copyright Act and DMCA. Because the district court had failed to treat Petrolink as the sole prevailing party and had failed to formally conduct part of the required analysis, it vacated the denial of fees and remanded for the district court to conduct a proper analysis.