Software company GlobeRanger Corporation (“GlobeRanger”) obtained a $15 million judgment from the United States District Court for the Northern District of Texas in a trade secrets misappropriation action against Software AG USA, Inc. (“Software AG”), a competing company. Software AG appealed, arguing that federal copyright law preempted GlobeRanger’s trade secret claim. The Fifth Circuit affirmed, finding no preemption.
GlobeRanger’s trade secret claim stems from its radio frequency identification (RFID) technology, which is most commonly used for electronic readers in tollbooths (e.g. E-Zpass). GlobeRanger uses RFID technology to manage its inventory. GlobeRanger claimed that Software AG misappropriated its RFID technology after taking over GlobeRanger’s subcontract with the NAVY to implement the technology. After a jury trial, GlobeRanger was awarded $15 million in compensatory damages.
On appeal, Software AG argued that federal copyright law preempted GlobeRanger’s trade secret claim. The United States Court of Appeals for the Fifth Circuit affirmed the judgment below, finding copyright law did not preempt GlobeRanger’s claim. The court reasoned that trade secrets claims seek to protect different rights than those protected under federal copyright law. The court explained that the claims are not based on Software AG copying the RFID technology, but that they did not have access to authorize it. Since a trade secret claim includes this element of unauthorized access, the court held it is different from copyright, and therefore not preempted.
The Fifth Circuit’s Opinion can be found here: http://tsi.brooklaw.edu/cases/globeranger-corp-v-software-ag-inc/filings/fifth-circuit-finds-copyright-act-does-not-preempt-