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Shapiro v. Laxman

June 14, 2007


The opinion of the court was delivered by: Lindsay, Magistrate Judge:


The court's June 11, 2007 order is withdrawn. Due to a change in the court's schedule, the parties together with their respective experts are directed to appear before the undersigned on June 27, 2007 at 11:00 a.m.


I. Factual Background

The plaintiffs filed their complaint on October 30, 2006 pursuant to the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030 et seq., the Copyright Act, 15 U.S.C. §§ 501 et seq., and the Lanham Act, 15 U.S.C. §§ 1116 et seq. According to the plaintiffs, Edward Shapiro ("Shapiro"), the principal of Edward Shapiro, P.C., developed a computer program called the "Shaplaw Program" to automate law practices allowing attorneys to practice law in a more efficient manner. The Shaplaw Program is alleged to employ an "intricate series of interrelated, well-defined litigation steps, including manual and automated data entry, document processing, document creation, and the conduct of evidence gathering (i.e., discovery)." Compl. at ¶ 27. Plaintiffs allege that Shapiro maintains registration of a copyright for the software. According to the plaintiffs, defendant Shreenath Laxman ("Laxman"), a former employee of Shapiro, worked in the development of the Shaplaw Program. According to the plaintiffs, Shapiro provided Laxman with an employee manual specifying that Laxman was required to maintain trade secrets in confidence. Upon recommendation from Laxman, Shapiro hired defendants Saliesh Peringatt and Neural IT to provide maintenance and support services in connection with the Shaplaw Program. The plaintiffs further allege that defendant Stefan Belinfanti, Esq. ("Belinfanti"), an employee of Shapiro, also worked on the development of the Shaplaw Program.

The plaintiffs claim that the individual defendants formed Vidhi Technological Services, LLC ("Vidhi"), a competing company, and that Vidhi is controlled by Laxman and Belinfanti and that the defendants met with the plaintiffs' competitors and potential customers. The plaintiffs claim that the defendants misappropriated the plaintiffs' trade secrets and directly competed with the plaintiffs, infringing on the plaintiffs' copyright and utilizing their trade secrets.

II. Procedural History

At the time the plaintiffs filed their complaint they also moved by order to show cause for a temporary restraining order and a preliminary injunction. Following a hearing on plaintiffs' application on November 1, 2006, District Judge Arthur D. Spatt entered a temporary retraining order enjoining the defendants from infringing upon the plaintiffs' copyrighted computer software program and from using the plaintiffs' trade secrets. The TRO was twice extended by Judge Spatt through December 1, 2006. By Memorandum of Decision and Order dated December 1, 2006, Judge Spatt denied defendants' application to vacate the restraining order and entered a preliminary injunction prohibiting the defendants from using the plaintiffs' copyrighted material or trade secrets and preventing the defendants from misappropriating or selling or marketing the infringing program. Judge Spatt also referred the case to the undersigned for the purpose of holding an evidentiary hearing on the issue of whether to continue the preliminary injunction.

The parties appeared before the undersigned on December 1, 2006, and after hearing from the parties, this court ordered an exchange of copies of the programs which form the basis of this litigation. This was done in order to allow each side an opportunity to conduct a comparison of the relevant programs. The parties were also directed to provide the court with a status letter by December 13, 2006 advising when they would be prepared for the evidentiary hearing. See Order, dated December 1, 2006. Since that time, the progress of this case has been as summarized below:

* Plaintiffs requested, with the defendants' consent, that the deadline for the submission of the joint status letter be extended from December 13, 2006 to December 22, 2006. That application was granted by order dated December 13, 2006.

* Rather than submitting a joint status letter as was directed, each side submitted a status letter on December 22, 2006. Despite the court's December 1, 2006 order, neither side had fully produced their software. Based on the parties' submissions, the court ordered full production by December 29, 2006. The parties were also directed to submit another joint status letter by January 5, 2007 to facilitate the scheduling of a hearing. See order, dated December 27, 2006.

* By joint letter dated January 5, 2007, the parties requested an extension through January 12, 2007 in order to determine how much time would be needed by their respective experts to prepare for the evidentiary hearing. The plaintiffs represented that they had produced their Shaplaw Program with instructions on a CD-ROM along with a sample database. The defendants represented that, on December 29, 2006, they produced their computer programs in electronic format to the plaintiffs via e-mail and furnished links to web sites to enable the plaintiffs to immediately view and analyze the programs in their executable form. Defendants reported that the plaintiffs requested further information regarding the programs (not specified to the court) and the defendants provided that information on January 4, 2007. Although each side reported that they had provided all relevant information requested, the plaintiffs asserted that defendants had yet to produce "instructions or other information which identify the produced files, tell us which files make up each program, explain how the files are used in connection with each program, or provide the minimum system requirements needed to run their programs." The court granted a joint request for more time and ordered that a joint status letter be filed by January 12, 2007.

* On January 12, 2007, the parties submitted a joint status report. While the defendants again represented that they would be prepared to proceed with the hearing on February 12, 2007, the plaintiffs reported that their expert was still unable to estimate how long it will take to perform an analysis of the defendants' program. According to the plaintiffs, the defendants still had not produced sufficient information to allow their expert to operate the defendants' programs. Because the plaintiffs made no attempt to resolve this issue prior to seeking judicial intervention, the court directed the parties to meet and confer in an effort to resolve this issue. A telephone status conference was scheduled for January 24, 2007 to resolve any remaining discovery issues and to finalize a hearing date. See order, dated January 17, 2007. This teleconference was subsequently adjourned to January 30th at plaintiff's request.

* The court heard lengthy argument from the parties during the January 30, 2007 teleconference regarding the sufficiency of the defendants' production. It appeared during the conference that plaintiffs' problems accessing the program were not the result of a lack of cooperation on the defendants' part but were essentially technical problems which required expert intervention. Accordingly, the undersigned directed that the parties' ...

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