MGE UPS Systems, Inc. (“MGE”) appeals the district court’s Federal Rule of Civil Procedure 50(a) dismissal of its Digital Millennium Copyright Act (“DMCA”) claim against Power Maintenance International, Inc. (“PMI”); General Electric Company (“GE”); GE Consumer and Industrial, Inc.; and GE Industrial Systems, Inc. (collectively, “GE/PMI”). MGE also appeals the district court’s denial of prejudgment interest on MGE’s damages award. GE/PMI cross-appeals on four grounds: (1) whether the district court erred in dismissing GE/PMI’s Rule 50(a) motion because MGE failed to present evidence of damages, or in the alternative, whether the district court erred in dismissing GE/PMI’s Rule 50(b) motion because the $4.6 million jury award was not a reasonable calculation of damages; (2) whether MGE impermissibly double-recovered damages; (3) whether the parties had a tolling agreement in place that permitted MGE to recover damages prior to December 17, 2001; and (4) whether the district court erred in granting MGE injunctive relief against GE/PMI.
Uninterruptible power supply (“UPS”) machines are used during periods of power outages to provide power to critical operating systems. MGE manufactures several lines of UPS machines, some of which require the use of MGE’s copyrighted software programs Pacret and Muguet during servicing. This software fixes calibration problems more quickly than traditional manual servicing techniques. Without the software, a service technician can still partially service an MGE UPS machine, but a number of critical procedures (including recalibration and adjustment of voltage levels) can only be performed through use of the software, which works only on MGE-manufactured devices.
The software requires connection of an external hardware security key (called a “dongle”) to the laptop serial port. Each dongle has an expiration date, a maximum number of uses, and a unique password. When the software is activated, it searches for a properly programmed dongle before it will fully launch. Once launched, the software will go through a second series of protocol exchanges with the data located on the UPS machine’s microprocessors to confirm that MGE software is communicating with MGE hardware. If the protocol exchange is successful, MGE’s software proceeds to collect system status information for the technician.
Years after MGE introduced its security technology, a number of software hackers published information on the internet disclosing general instructions on how to defeat the external security features of a hardware key. Once the software is cracked and the security key is defeated, the software can be accessed and used without limitation.
PMI is a critical power service company servicing a variety of brands of UPS machines, including MGE UPS machines. PMI initially subcontracted MGE to perform software service on MGE UPS machines, but sometime before June 2000, a group of PMI employees obtained at least one copy of MGE’s software from an unknown source. GE acquired PMI in 2001.
Judge(s): Barksdale, Garza, and Prado
Jurisdiction: U.S. Court of Appeals, Fifth Circuit
Related Categories: Civil-Procedure, Technology, Damages
| Circuit Court Judge(s) | Circuit Court Judge Jurisdiction(s) |
| Rhesa Barksdale | |
| Emilio Garza | |
| Edward Prado |
| Plaintiff Lawyer(s) | Plaintiff Law Firm(s) |
| Zachary Groover | Kennedy, Clark & Williams, PC |
| Stephen Kennedy | Kennedy, Clark & Williams, PC |
| Defendant Lawyer(s) | Defendant Law Firm(s) |
| Joseph Cleveland | Brackett & Ellis, PC |
| Jeremy Coffman | Brackett & Ellis, PC |
| Richard Gateley | Brackett & Ellis, PC |
