Summary Judgment Granted for Haynes and Boone Client ARGO Data Resource Corporation

06/16/2014


DALLAS – A federal court has granted summary judgment in favor of ARGO Data Resource Corporation, represented by Haynes and Boone, LLP, after finding no support for the plaintiff’s claims that ARGO’s Cash Inventory Optimization (CIO) product incorporated plaintiff’s alleged trade secrets.

U.S. District Judge Jane J. Boyle found no evidence that ARGO and BancorpSouth stole trade secrets relating to Spear Marketing Inc.’s (SMI) VaultWorks software, which was designed to help banks monitor cash levels. In so doing, the court threw out all nine of the tort claims advanced by SMI with prejudice in a decisive victory for the defendants and an affirmation of the ingenuity of ARGO’s CIO software solution, which uses a complex algorithm to forecast future cash needs for bank branches, vaults and ATMs.

Dallas Partners David Harper and Jason Bloom defended ARGO in the lawsuit.

The dispute arose after SMI contacted ARGO “out of the blue” in 2010 and offered to sell VaultWorks for $2 million. Spear alleged that ARGO used this encounter to gain information about VaultWorks. Co-defendant BancorpSouth, which was also a longtime ARGO customer, had previously used the VaultWorks cash management system to manage how much cash it maintained at its ATM locations and branches, but subsequently switched to ARGO’s advanced forecasting solution—CIO.

Spear Marketing filed its lawsuit in a Texas state court asserting nine state-law claims, but the Haynes and Boone team and BancorpSouth attorneys swiftly removed the action to federal court on the complex theory of copyright preemption. SMI subsequently amended its complaint to drop a claim and sought to remand the action back to state court. But the court rejected the effort, finding that SMI’s claims were at least partially preempted by federal copyright law, such that the entire case would remain in federal court. Defendants then used the discovery process to tee the case up for summary judgment.

In granting summary judgment in favor of the defendants, the court noted that ARGO’s CIO software solution was created and available for customer implementation more than a year before SMI ever contacted ARGO “out of the blue” in an effort to sell ARGO its VaultWorks solution. The court additionally observed that CIO was vastly different from SMI’s VaultWorks program in numerous respects, including that it used a complex process to forecast banks’ cash needs, rather than simply identifying branch surplus based on teller input. Moreover, the court noted that ARGO had offered, prior to the lawsuit, to allow a third-party expert to compare CIO and VaultWorks to assure SMI that there was no misappropriation—an offer which SMI declined. In part quoting from the defendants’ summary judgment briefing, the court observed:

This was SMI’s chance to obtain the proof that it now struggles to identify—proof of the specific characteristics that CIO and VaultWorks allegedly share. But SMI, instead, filed suit based on its unsubstantiated allegations. And despite nearly a year of discovery— hiring two experts, neither of whom examined CIO or its related documentation—SMI continues to rely purely on its unfounded suspicions. Simply put, SMI, in the words of Defendants, “has…elected to ignore CIO entirely, bury its head in the sand, and claim that circumstantial evidence shows trade secret use.” Under these circumstances, the Court cannot conclude that SMI’s scant evidence reasonably implies use.

The case is Spear Marketing Inc. v. Argo Data Resource Corp., case number 3:12-CV-03583-B, in the U.S. District Court for the Northern District of Texas.

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