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Compulife Software, Inc. v. Newman

United States District Court, S.D. Florida

June 12, 2017

COMPULIFE SOFTWARE, INC., Plaintiff,
v.
MOSES NEWMAN et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          ROBIN L. ROSENBERG UNITED STATES DISTRICT JUDGE

         THIS CAUSE is before the Court on the Motion for Preliminary Injunction and Memorandum of Law in Support [DE 5][1] filed by Plaintiff, Compulife Software, Inc. (“Compulife”). The Court has carefully reviewed Compulife's Motion and all pertinent portions of the record. In addition, the Court held an evidentiary hearing on March 30 and 31, 2017, and is otherwise fully advised in the premises. The Court now issues this Memorandum Opinion and Order setting forth its findings of fact and conclusions of law. For the reasons set forth below, Compulife's Motion is DENIED.

         I. INTRODUCTION

         This is an action for misappropriation of trade secrets and copyright infringement. See DE 1; DE 24.[2] In the Motion presently before the Court, Compulife-a software company whose products allow insurance agents and consumers to obtain quotes for term life insurance-seeks preliminary injunctive relief to prevent further misappropriation and infringement. See DE 31.[3]Having failed to establish that it will suffer irreparable injury unless the injunction issues, Compulife is not entitled to preliminary injunctive relief.

         II. FINDINGS OF FACT

         The Court finds that the following facts have been established by a preponderance of the evidence.

         A. Compulife and Term4Sale

         Robert Barney is the president and majority shareholder of Compulife. DE 70 ¶ 1; Hrg. Tr. Vol. 1 at 17:13-14. Compulife is the creator and manufacturer of the Compulife Quotation System, a software program that allows individuals to compare term life insurance products and rates. DE 70 ¶¶ 3-4; Hrg. Tr. Vol. 1 at 17:15-18. Compulife itself does not sell insurance. DE 70 ¶ 4; Hrg. Tr. Vol. 1 at 17:19-20.

         Compulife's software includes both host-based software residing on a server and web-based software consisting of HTML code. Hrg. Tr. Vol. 1 at 17:21-18:13. The web-based HTML code allows an individual to visit a website and enter certain information-such as age, sex, and amount of insurance desired-in order to request life insurance quotes. Hrg. Tr. Vol. 1 at 18:4-25. The HTML code then submits that request to the host-based software, which looks up the rates and product information for various insurance companies, calculates premiums, and produces quotes that are ultimately displayed on the website. Hrg. Tr. Vol. 1 at 18:4-19:8.

         The purpose of the HTML code is to communicate with the host-based software. Hrg. Tr. Vol. 1 at 27:2-6. To that end, the HTML code contains specific variable names and variable values created by Compulife, which are necessary to communicate effectively with the host- based software in order to generate quotes. Hrg. Tr. Vol. 1 at 20:23-22:13; Hrg. Tr. Vol. 2 at 43:13-44:5.

         The server on which the host-based software resides also houses Compulife's database of digital information about the term life insurance market, products, and rates. Hrg. Tr. Vol. 1 at 27:7-17, 28:4-25. Compulife obtains this information, including rate tables, from insurance companies, but does not own this information. Hrg. Tr. Vol. 1 at 74:2-9. This information is public and is provided to other companies offering software that competes with Compulife's. Hrg. Tr. Vol. 1 at 74:5-11; Hrg. Tr. Vol. 2 at 6:13-18.

         However, Compulife enters this information into its software using confidential and proprietary technology. Hrg. Tr. Vol. 1 at 28:4-9. Compulife compiles this information into a database in a confidential manner and encrypts the database to prevent reverse engineering. Hrg. Tr. Vol. 1 at 28:17-25; Hrg. Tr. Vol. 2 at 44:6-45:13. For that reason, Compulife considers the way it stores its information to be a trade secret. Hrg. Tr. Vol. 1 at 74:2-5. The host-based software calculates premiums and generates quotes by accessing this database of information residing on the server. Hrg. Tr. Vol. 1 at 27:7-13, 30:11-31:4. Mr. Barney believes that Compulife's quotes are unique due to the manner in which Compulife stores this information and the procedures Compulife uses to calculate premiums. Hrg. Tr. Vol. 2 at 6:19-21.

         When an insurance company changes its rates, Compulife updates the rate tables and other information within its database. Hrg. Tr. Vol. 1 at 28:13-16, 31:5-19. This information is constantly updated to reflect changes in the term life insurance market. Hrg. Tr. Vol. 1 at 40:8- 13, 75:21-24. If information is not timely updated, or if Compulife produces an inaccurate quote for any other reason, Compulife's customers-most of whom are insurance agents who use Compulife's products daily to generate quotes for individual consumers-immediately contact Compulife to complain. Hrg. Tr. Vol. 1 at 76:7-24; Hrg. Tr. Vol. 2 at 7:23-8:8.

         Compulife has registered its software with the United States Copyright Office. DE 70 ¶ 10; DE 70-1; Hrg. Ex. 79. Compulife's “2010 HTML Source Code” was registered on May 29, 2015 and assigned registration number TX 8-106-364. DE 70 ¶ 10; Hrg. Tr. Vol. 2 at 42:3-10; Hrg. Ex. 2; Hrg. Ex. 79.

         In addition to licensing its software, Compulife maintains a website at www.term4sale.com (“Term4Sale”). Hrg. Tr. Vol. 1 at 19:9-14. Term4Sale is a public website that allows visitors to obtain life insurance quotes at no cost. Hrg. Tr. Vol. 1 at 19:14-15. Term4Sale also provides visitors with a list of insurance agents, all of whom are Compulife customers, to contact if the visitors are interested in purchasing life insurance. Hrg. Tr. Vol. 1 at 19:16-20. Term4Sale generates life insurance quotes using Compulife's web-based HTML code, host-based software, and database of information in the manner described above. Hrg. Tr. Vol. 1 at 19:11-14.

         Compulife competes with several companies that offer life insurance quotes online, including Ninja Quote (which joined the market in 2016) and Nerd Wallet. Hrg. Tr. Vol. 1 at 74:12-75:7. Like Compulife, these companies obtain rate tables from life insurance companies and use them to calculate premiums that appear on their websites. Hrg. Tr. Vol. 1 at 75:8-20.

         B. NAAIP ...


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