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OCR Solutions, Inc. v. Charactell, Inc.

United States District Court, M.D. Florida, Orlando Division

June 22, 2017

OCR SOLUTIONS, INC., Plaintiff,
v.
CHARACTELL, INC. and CHARACTELL, LTD., Defendants.

          ORDER

          JOHN ANTOONI II United States District Judge

         Plaintiff OCR Solutions, Inc. (OCR) and Defendants CharacTell, Inc. and CharacTell, Ltd. (collectively, CharacTell) filed claims and counterclaims against one another regarding OCR's use of identification card-reading software called "idCliQ." CharacTell claims that it solely owns idCliQ and that OCR was merely a reseller of its product. CharacTell is currently preventing OCR from reselling idCliQ despite OCR's claims that it co-owns the product under an oral joint venture agreement. OCR now seeks a preliminary injunction to provide it access to the idCliQ software, which would enable it to provide support to its existing clients and to obtain new clients during the course of the litigation. (Mot. Prelim. Inj., Docs. 45 &48, at25).[1] OCR also seeks to prevent CharacTell from luring away OCR's clients under a signed Mutual Confidentiality Agreement. (Id.). After considering the motion, CharacTell's response in opposition, (Doc. 51), the parties' argument at a June 9, 2017 hearing, (Mins., Doc. 59), and the parties' evidence, (Docs. 47, 49, 49-1, 49-2, 51-1, 51-2, 51-3), the motion must be denied.

         To obtain a preliminary injunction the movant must establish "(1) a substantial likelihood of success on the merits; (2) that irreparable injury will be suffered if the relief is not granted; (3) that the threatened injury outweighs the harm the relief would inflict on the non-movant; and (4) that entry of the relief would serve the public interest." Schiavo ex rel. Schindlerv. Schiavo, 403 F.3d 1223, 1225-26 (11th Cir. 2005). '"[A] preliminary injunction is an extraordinary and drastic remedy not to be granted unless the movant clearly establishe[s] the "burden of persuasion"' as to each of the four prerequisites." Siege I v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000) (quoting McDonald's Corp. v. Robertson, 147 F.3d 1301, 1306 (11th Cir. 1998)).

         A. Likelihood of Success on the Merits

         OCR's motion for a preliminary injunction is premised on the likelihood that it will ultimately establish that (1) there was a valid oral agreement between the parties establishing a joint venture in the creation, marketing, and sale of idCliQ, and (2) the Mutual Confidentiality Agreement signed by the parties is enforceable.

         1. Joint Venture Agreement

         "A joint venture is a special relationship of two or more parties to engage in and carry out a single business venture for joint profit." Winey v. William E. Dailey, Inc., 636 A.2d 744, 751 (Vt. 1993) (internal citation and quotation marks omitted). Under both Massachusetts law and Vermont law, [2] a joint venture agreement can be made orally. Mass. Prop. Ins. Underwriting Ass'n v. Georgaklis, 931 N.E.2d 995, 999 (Mass. 2010); Misloskv v. Wilhelm, 286 A.2d 267, 271 (Vt. 1971). The crucial issue in deciding whether a joint venture existed is whether the parties intended to associate as joint venture partners. Georgaklis, 931 N.E.2d at 999; Mislosky, 286 A.2d at 271. Additional factors to consider include whether the parties each (1) shared in the profits and losses; (2) contributed money, assets, or talents, to a common undertaking; (3) had a "joint property interest in the subject matter of the venture"; and (4) had "a right to participate in the control of the venture." Georgaklis, 931 N.E.2d at 999 (citation and quotation marks omitted); accord Winey, 636 A.2d at 751 ("[T]here must be an agreement to share in profits and losses, joint control or right to control, a joint proprietary interest in the subject matter and a community of interest in the performance of the common purpose.").

         OCR's strongest argument in favor of the existence of a joint venture agreement is a February 2, 2015 email from Eya! Barsky, OCR's president, to Paz Kahana, president of both CharacTell entities, in which Barsky states that he "never received the joint venture agreement that you spoke about before my move [to Florida]." (Ex. E to Third Barsky Deck, Doc. 49-1 at 32).[3] In response, Kahana stated, "You are correct, I drafted it while I was in Israel." (jdj. In late February or early March 2015, the agreement drafted by Kahana was sent by Ofer Comay, vice president of CharacTell, Ltd., to Barsky. (Third Barsky Decl., Doc. 49, ¶ 25; Kahana Deck, Doc. 51-1, ¶ 29). The proposed agreement included the following general terms:

1. idCliQ technology is based on technology [CharacTell] has already developed and as such belongs entirely to [CharacTell].
2. [CharacTell] is free to sell any of its technologies or the entire company without hindrance.
3. OCR[] is licensed to sell [CharacTell] products which includes idCliQ from [CharacTell] at most favorable terms.
4. OCR[] may-with prior consultation . . . and approval by [CharacTell-] offer to sell [CharacTell] technology to its clients. In such case, if [CharacTell] accepts this offer.. . OCR will get [a] percentage of the sale.

         (Ex. F to Third Barsky Decl., Doc. 49-1 at 33). With regard to CharacTell's "Stand-Alone Products"-which included idCliQ-the proposed agreement specifically stated:

1. OCR[] will have exclusive sales rights during 2015.
2. OCR[] will continue to have exclusive rights in 2016 if net income in 2015 is above 800K ....
3. OCR[] will continue to have exclusive rights in 2017 if net income in 2016 ...

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