     Case: 14-10753        Document: 00513100328   Page: 1   Date Filed: 06/30/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                       United States Court of Appeals

                                    No. 14-10753
                                                                                Fifth Circuit

                                                                              FILED
                                                                          June 30, 2015

SPEAR MARKETING, INCORPORATED,                                           Lyle W. Cayce
                                                                              Clerk
                Plaintiff - Appellant

v.

BANCORPSOUTH BANK; ARGO DATA RESOURCE CORPORATION,

                Defendants - Appellees




                     Appeal from the United States District Court
                          for the Northern District of Texas


Before WIENER, SOUTHWICK, and GRAVES, Circuit Judges.
WIENER, Circuit Judge:
      Plaintiff-Appellant Spear Marketing, Inc. (“SMI”) brought various Texas
state law claims against Defendants-Appellees BancorpSouth Bank (“BCS”)
and ARGO Data Resource Corp. (“ARGO”) (collectively, “Defendants”) in Texas
state court. SMI’s claims related to Defendants’ alleged theft of trade secrets
in connection with a software program developed and sold by SMI. Defendants
removed the case to federal court on the basis of complete preemption by the
Copyright Act. 1 The district court denied SMI’s motion to remand and, after




      1   See 17 U.S.C. § 301(a).
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                                    No. 14-10753
discovery, granted Defendants’ motion for summary judgment on the merits of
the claims. SMI appeals both decisions. We affirm.


                       I.     FACTS AND PROCEEDINGS

      SMI is a small, family-run business that produces one product for the
banking industry, a computer program called VaultWorks. VaultWorks helps
banks manage their cash inventories so that each of their branches has the
optimum supply of cash available on site. The program enables banks to
identify surplus cash in vaults and ATMs, track daily cash inventory, and
eliminate unnecessary cash deliveries to branch and ATM locations.
      Although VaultWorks is a software program, none of SMI’s customers
has access to the software itself. Instead, “SMI’s customers can only view the
specific user interface screens and reports they are given access to via the
internet.” 2 Bank branches enter their daily cash information into VaultWorks
using these interface screens, and VaultWorks’s output data is then displayed
to those branches. SMI acknowledges that none of its customers was ever
provided with the source code, object code, or software for VaultWorks.
      BCS was one of SMI’s largest customers. BCS and SMI first entered into
a one-year agreement for the use of VaultWorks in May 2002. The parties
extended the agreement several times, the last extension occurring in March
2010 for a term of two years.
      ARGO, like SMI, develops software for the banking industry.                 It is
significantly larger than SMI and offers a range of products. At all relevant
times, BCS used ARGO’s automatic teller program, BANKPRO Teller. Around
2004, ARGO began to develop its own cash management program, which



      2  Spear Mktg., Inc. v. BancorpSouth Bank, No. 3:12-CV-3583-B, 2014 WL 2608485, at
*1 (N.D. Tex. June 11, 2014).
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                                     No. 14-10753
ARGO envisioned would eventually be bundled with its BANKPRO Teller.
This product, named Cash Inventory Optimization (“CIO”), uses different
predictive algorithms than does VaultWorks. Because CIO is installed directly
on a bank’s computers, it is integrated with the rest of the bank’s operating
system. 3 CIO thus “eliminates ‘the need for branch personnel to manually
input cash data,’ as bank employees must do with VaultWorks.” 4
      Starting in 2008, ARGO began pitching CIO and an upgraded version of
the BANKPRO Teller system to BCS. BCS demurred on both products until
March 2010, when it told ARGO that it would be interested in CIO if that
system could be integrated with the existing version of BANKPRO Teller that
BCS was then using rather than ARGO’s upgraded replacement product.
ARGO discussed this concern internally and, on April 1, 2010, emailed BCS
that this integration would be possible.
      Also around April 1, 2010, SMI contacted ARGO to see if it would be
interested in acquiring SMI. ARGO expressed interest, representing that it
neither had nor was currently developing a cash management product similar
to VaultWorks. On the strength of ARGO’s expression and representations,
SMI arranged to demonstrate VaultWorks to ARGO, which it did over the
phone and online on April 6.           During this demonstration, which lasted
approximately one hour, SMI disclosed confidential business and technical
information about VaultWorks.           After a few more exchanges, ARGO lost
interest in acquiring SMI and stopped responding to SMI’s emails.
      Through the rest of 2010, ARGO continued marketing CIO to BCS.
Finally, in early January 2011, BCS agreed to license CIO from ARGO. The
two companies conducted a lengthy implementation process that lasted the



      3   See id. at *3.
      4   Id. (citation omitted).
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                                  No. 14-10753
rest of the year. During this time, BCS sent ARGO various screenshots of the
VaultWorks user interface because ARGO needed historical cash usage data
from BCS’s branches to troubleshoot CIO’s forecasting function. That data was
readily accessible from the VaultWorks output screens for each branch.
      CIO was finally implemented successfully at the end of 2011, and BCS
“notified SMI on January 12, 2012 of its intention not to renew the VaultWorks
Agreement.” 5 That agreement thus expired in February 2012.
      In September 2012, SMI filed this suit against Defendants in Texas state
court, alleging ten causes of action: violation of the Texas Theft Liability Act
(“TTLA”), misappropriation of trade secrets, conversion, unjust enrichment,
fraud, constructive fraud, breach of contract, tortious interference, unfair
competition, and civil conspiracy. SMI claimed that Defendants had stolen
both technical and business trade secrets related to VaultWorks.
      Defendants removed the case to federal court on the ground that SMI’s
claims were completely preempted by the Copyright Act. SMI then amended
its state court petition (“Original Petition”) to delete its conversion claim and
remove various references to copying and distribution. It then moved for
remand, contending that removal had been improper because none of its claims
were preempted.        SMI explained in its opening brief that it voluntarily
abandoned its conversion claim “[t]o narrow the issues in this lawsuit” and that
it removed portions of its TTLA claim related to copying of trade secrets “even
though this district’s own precedent holds [those portions] are not preempted
by the Copyright Act.” The district court denied SMI’s motion, holding that
the conversion and TTLA claims were completely preempted. The court did
not consider whether SMI’s remaining claims were preempted, choosing
instead to exercise supplemental jurisdiction over them per 28 U.S.C. § 1367.


      5   Id. at *6.
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                                       No. 14-10753
       After discovery, Defendants filed a motion for summary judgment,
seeking dismissal of all of SMI’s remaining claims. The district court granted
this motion, holding that “SMI ha[d] failed to establish that genuine factual
disputes exist for certain essential elements of its nine Texas state law claims,
and as such, summary judgment in Defendants’ favor [wa]s warranted.” 6 SMI
timely appealed the summary judgment order and the order denying its motion
to remand.


                                    II.    ANALYSIS

A.     Denial of SMI’s Motion to Remand
       1.     Standard of Review
       “We review the denial of a motion to remand to state court de novo.” 7
Under this standard, “[a]ny underlying findings of fact are subject to review
for clear error.” 8
       2.     Time-of-Filing Rule
       The district court considered SMI’s motion to remand by evaluating the
Original Petition for grounds for removal. SMI asserts that the district court
should have considered SMI’s amended complaint (“Amended Complaint”), in
which SMI dropped its conversion claim and deleted language accusing
Defendants of copying VaultWorks.                 Defendants counter that removal is
assessed according to the time-of-filing rule.
       “[J]urisdictional facts are determined at the time of removal, and
consequently post-removal events do not affect that properly established
jurisdiction.” 9   It is this court’s established precedent that once a case is



       6 Id. at *19.
       7 Energy Mgmt. Servs., LLC v. City of Alexandria, 739 F.3d 255, 257 (5th Cir. 2014)
(quoting Roland v. Green, 675 F.3d 504, 511 (5th Cir. 2012)).
       8 Camsoft Data Sys., Inc. v. S. Elecs. Supply, Inc., 756 F.3d 327, 333 (5th Cir. 2014).
       9 Louisiana v. Am. Nat. Prop. & Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014).

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                                        No. 14-10753
properly removed, the district court retains jurisdiction even if the federal
claims are later dropped 10 or dismissed. 11 In Brown v. Southwestern Bell
Telephone Co., we held that “[w]hen a defendant seeks to remove a case, the
question of whether jurisdiction exists is resolved by looking at the complaint
at the time the petition for removal is filed.” 12 We noted that “when there is a
subsequent narrowing of the issues such that the federal claims are eliminated
and only pendent            state    claims remain,         federal jurisdiction         is not
extinguished.” 13 We wrote a thorough and definitive explanation of this issue
in Hook v. Morrison Milling Co.:
       Before analyzing our appellate jurisdiction over this appeal, we first
       note that the district court’s subject matter jurisdiction was proper at all
       times. To begin with, this case was properly removed pursuant to 28
       U.S.C. § 1446. Hook’s original petition alleged, inter alia, that she was
       wrongfully discharged in retaliation for filing a workers’ compensation
       claim. . . . MMC’s removal of Hook’s claims was unquestionably proper.
       Furthermore, Hook’s subsequent deletion of her wrongful discharge
       claim does not render MMC’s removal improper. We have stated on
       several occasions that a post-removal amendment to a petition that
       deletes all federal claims, leaving only pendent state claims, does not
       divest the district court of its properly triggered subject matter
       jurisdiction. In a jurisdictional inquiry, we look at the complaint as it
       existed at the time the petition for removal was filed, regardless of any
       subsequent amendments to the complaint. 14

       Nothing cited by SMI disturbs this conclusion. First, SMI relies on 28
U.S.C. § 1447(c), which requires a district court to remand an action “[i]f at any



       10  See, e.g., Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 528 (5th
Cir. 2009) (“Once the case is removed, a plaintiff’s voluntary amendment to a complaint will
not necessarily defeat federal jurisdiction . . . .”); Brown v. United Parcel Serv., Inc., No. 99-
10092, 2000 WL 1701739, at *1 n.1 (5th Cir. Oct. 31, 2000) (unpublished).
        11 See, e.g., Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999) (“A

district court, in its discretion, may remand supplemental state law claims when it has
dismissed the claims that provide the basis for original jurisdiction.”).
        12 901 F.2d 1250, 1254 (5th Cir. 1990) (emphasis added).
        13 Id. (emphasis added).
        14 38 F.3d 776, 779–80 (5th Cir. 1994) (emphases added) (footnotes omitted) (citations

omitted).
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                                        No. 14-10753
time before final judgment it appears that the district court lacks subject
matter jurisdiction.” 15 But this “any time” language regarding jurisdictional
defects must be read in tandem with the first sentence of the subsection, which
requires that motions to remand on the basis of procedural defects be brought
within thirty days of removal. When § 1447(c) is read in its entirety, it is clear
that this rule does nothing more than specify the time in which remands for
jurisdictional or procedural defects may be instituted; it contains no
substantive provisions whatsoever.
       Second, SMI quotes the Supreme Court’s decision in Grupo Dataflux v.
Atlas Global Group, L.P. as limiting the time-of-filing rule to diversity cases, 16
but nothing in that case suggests that the rule is not equally applicable to
federal question cases.           And again, SMI ignores our direct precedent
catalogued above.
       Third, SMI relies on the Third Circuit’s decision in New Rock Asset
Partners, L.P. v. Preferred Entity Advancements, Inc., which held that, in a case
in federal court solely because of the involvement of the Resolution Trust
Corporation (“RTC”), subsequent dismissal of the RTC did affect federal
jurisdiction. 17 But New Rock stands for the very limited proposition that 12
U.S.C. § 1441a(l)(1), which allowed removal of cases when the RTC was a
party, could not support retaining jurisdiction once the RTC ceased to be a
party. 18 The decision makes no pronouncements as to that case’s applicability



       15  28 U.S.C. § 1447(c).
       16  541 U.S. 567, 570–71 (2004) (“This time-of-filing rule is hornbook law (quite
literally) taught to first-year law students in any basic course on federal civil procedure. It
measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship
against the state of facts that existed at the time of filing—whether the challenge be brought
shortly after filing, after the trial, or even for the first time on appeal.” (footnote omitted)).
        17 101 F.3d 1492, 1495, 1503 (3d Cir. 1996).
        18 12 U.S.C. § 1441a(l)(1) was repealed by the Dodd-Frank Wall Street Reform and

Consumer Protection Act, Pub. L. No. 111-203, § 364(b), 124 Stat. 1376, 1555 (2010).
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to other federal question cases. 19 Moreover, the Third Circuit is in the minority
on this issue, 20 and, in an analogous case involving the FDIC, we firmly
rejected New Rock’s very small exception to the time-of-filing rule. 21
       We conclude that the district court was correct to consider only the
Original Petition when deciding SMI’s motion to remand. SMI has conflated
the question whether the initial removal was proper—which follows the time-
of-filing rule—with the question whether the district court should, in its
discretion, remand the case when the federal claims disappear as the case
progresses. 22 SMI’s motion sought remand under § 1447(c) and contended that
removal had been improper, so the relevant record was the Original Petition.
       3.     Complete Preemption
       We turn now to the question whether the Original Petition provided a
basis for federal jurisdiction. Defendants removed this case on the ground that
17 U.S.C. § 301(a), which establishes the exclusivity of the federal Copyright
Act, completely preempts SMI’s claims. Although preemption is usually a
defense and thus not a basis for removal, when “the pre-emptive force of a
[federal] statute is so ‘extraordinary’ that it converts an ordinary state
common-law complaint into one stating a federal claim for purposes of the well-
pleaded complaint rule,” removal is proper. 23                  In GlobeRanger Corp. v.




       19   Furthermore, the Third Circuit went on to allow continued supplemental
jurisdiction under 28 U.S.C. § 1367. See New Rock, 101 F.3d at 1510–11.
        20 See Adair v. Lease Partners, Inc., 587 F.3d 238, 242 (5th Cir. 2009) (“In the minority

is the Third Circuit, which holds that original federal jurisdiction ceases with the dismissal
of a FIRREA federal corporation and only supplemental jurisdiction remains.”).
        21 See Bank One Tex. Nat’l Ass’n v. Morrison, 26 F.3d 544, 547–48 (5th Cir. 1994) (per

curiam).
        22 See Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999); Bentley

v. Tarrant Cty. Water Control & Improvement Dist. No. One, No. 94-41044, 1995 WL 534726,
at *2 (5th Cir. 1995) (unpublished).
        23 GlobeRanger Corp. v. Software AG, 691 F.3d 702, 705 (5th Cir. 2012) (quoting

Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987)) (internal quotation mark omitted).
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                                       No. 14-10753
Software AG, we held that § 301(a) “completely preempts the substantive
field.” 24
       We use a two-part test to determine whether a state law claim is
preempted by the Copyright Act:
       First, the claim is examined to determine whether it falls “within the
       subject matter of copyright” as defined by 17 U.S.C. § 102. And second,
       “the cause of action is examined to determine if it protects rights that
       are ‘equivalent’ to any of the exclusive rights of a federal copyright, as
       provided in 17 U.S.C. § 106.” 25

A claim must satisfy both prongs of this test to be preempted. 26 If any claim is
preempted, however, the entire action may be removed. 27 Applying this test,
the district court held that SMI’s TTLA and conversion claims were at least
partially preempted by § 301(a). It then exercised supplemental jurisdiction
over the remainder of SMI’s state law claims.
       a.     Subject Matter of Copyright
       The statutory basis for complete copyright preemption is found in 17
U.S.C. § 301(a), which states:
       [A]ll legal or equitable rights that are equivalent to any of the exclusive
       rights within the general scope of copyright as specified by section 106
       in works of authorship that are fixed in a tangible medium of expression
       and come within the subject matter of copyright as specified by sections
       102 and 103, whether . . . published or unpublished, are governed
       exclusively by this title. Thereafter, no person is entitled to any such
       right or equivalent right in any such work under the common law or
       statutes of any State. 28

       Section 102(a) extends federal copyright protection to “original works of
authorship fixed in any tangible medium of expression.” 29 Section 102(b)


       24Id. at 706.
       25Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003) (footnote omitted) (citation
omitted) (quoting Daboub v. Gibbons, 42 F.3d 285, 289 (5th Cir. 1995)).
      26 See id.
      27 See GlobeRanger, 691 F.3d at 706.
      28 17 U.S.C. § 301(a) (emphasis added).
      29 Id. § 102(a).

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                                     No. 14-10753
excludes from copyright protection “any idea, procedure, process, system,
method of operation, concept, principle, or discovery, regardless of the form in
which it is described, explained, illustrated, or embodied in such work.” 30
      The parties dispute whether § 301(a) preemption extends to all works
satisfying the requirements of § 102(a), even those that also contain
noncopyrightable material as defined in § 102(b). SMI asserts that it carefully
defined its trade secrets to include only “know-how, ideas, procedures,
processes, systems, methods of operation, and concepts,” thus excluding them
from the subject matter of copyright. Defendants counter that the first element
of the preemption analysis focuses not on the copyrightability of the expression
at issue, but on whether the alleged work is the type of work described in 17
U.S.C. § 102. According to Defendants, the relevant inquiry is whether the
property at issue—in this case, a software program—is an original, fixed work
under § 102(a). If it is, then it does not matter if it also contains elements that
are unprotected under § 102(b).
      We have never definitively addressed this interaction of § 301(a) and
§ 102. GlobeRanger, our most recent foray into copyright preemption, appears
to touch on the issue, but the claims in that case involved actual physical acts,
not just software:
      The current case contains plausible allegations that extend beyond
      software. For example, one part of GlobeRanger’s petition alleges that
      “Defendants could see how GlobeRanger went about actually deploying
      on site, how it set up its readers, how it tagged its product, how it
      incorporated business process into the design of the warehouse, and how
      it had trained sailors.” 31




      30  Id. § 102(b). Section 103, which is not relevant to this case, extends copyright
protection to compilations and derivative works. Id. § 103.
       31 GlobeRanger, 691 F.3d at 708 (emphasis added).

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We thus held that at least some of the plaintiff’s claims were not preempted. 32
But GlobeRanger did not squarely address the question whether processes and
systems that had been fixed in a tangible medium of expression are included
in the subject matter of copyright. 33
         Neither do our other copyright preemption cases shed much light on the
instant question. Many of our decisions rest on the second (“equivalency”)
element of the preemption test, 34 sometimes because the parties concede the
subject-matter element. 35        In fact, only two of our cases discuss the subject
matter of copyright at any length. First, Alcatel USA, Inc. v. DGI Technologies,
Inc.     came   close    to   concluding      that    “the    use     of   uncopyrightable
information . . . contained within . . . copyrightable works” does not prevent
preemption. 36 Second, we held in Brown v. Ames that a musician’s name and
likeness do not fall within the subject matter of copyright because a persona is
not an original work produced by an author. 37 The distinguishing feature of
Brown was that the misappropriation claim involved the use of a
fundamentally intangible concept. 38


         32See id. at 709.
         33There is some limited Fifth Circuit support for the idea that § 301(a) preempts more
than the Copyright Act protects. See Real Estate Innovations, Inc. v. Hous. Ass’n of Realtors,
Inc., 422 F. App’x 344, 348–49 (5th Cir. 2011) (per curiam) (unpublished) (“Though perhaps
counter-intuitive, it is settled that the absence of a copyright registration does not preclude
the application of the doctrine of preemption that exists under the Copyright Act.”).
        34 See Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003); Comput. Mgmt.

Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 404 (5th Cir. 2000); Taquino v.
Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (5th Cir. 1990).
        35 See Real Estate Innovations, 422 F. App’x at 349; Daboub v. Gibbons, 42 F.3d 285,

289 (5th Cir. 1995).
        36 166 F.3d 772, 786 (5th Cir. 1999) (emphasis omitted). But, in Alcatel, the plaintiff

“consistently framed its misappropriation count in the context of [the defendant’s] use of its
firmware, operating system software and DSP manuals”—all tangible media—and failed to
object to the district court’s jury instruction on the defendant’s “use of these works” rather
than on the “specific pieces of information contained in them.” Id.
        37 201 F.3d 654, 658 (5th Cir. 2000).
        38 See id. at 659 (comparing names and likenesses to vocal styles, which are also

fundamentally unfixed and not copyrightable).
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       Looking to other circuits, we find a clear and lopsided split.                     The
Second, 39 Fourth, 40 Sixth, 41 and Seventh Circuit, 42 as well as the Ninth Circuit
en banc, 43 all recognize that, for the purpose of preemption under § 301(a),
ideas fixed in tangible media fall within the subject matter of copyright. Only
the Eleventh Circuit disagrees, holding that “[i]deas are substantively
ineligible for copyright protection and, therefore, are categorically excluded
from the subject matter of copyright” even if “expressed in a tangible
medium.” 44
       The venerable treatise Nimmer on Copyright agrees with the majority of
circuits: “Though the matter is not without controversy, [Nimmer] concludes
that the better view is that ideas do fall within the subject matter of copyright
for purposes of pre-emption (albeit pre-emption may still be avoided on the
basis of lack of equivalence).” 45 This treatise notes that “the majority position
in the courts comports with legislative history.” 46               Furthermore, Nimmer
points to two policy justifications for this position: (1) Congress made a policy
decision to exclude ideas from federal copyright protection, so “state laws that



       39  Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424, 430 (2d
Cir. 2012); see also Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 849 (2d Cir. 1997)
(“Copyrightable material often contains uncopyrightable elements within it, but Section 301
preemption bars state law misappropriation claims with respect to uncopyrightable as well
as copyrightable elements.”).
        40 U.S. ex rel. Berge v. Bd. of Trustees of the Univ. of Ala., 104 F.3d 1453, 1463 (4th

Cir. 1997).
        41 Stromback v. New Line Cinema, 384 F.3d 283, 300 (6th Cir. 2004); Wrench LLC v.

Taco Bell Corp., 256 F.3d 446, 455 (6th Cir. 2001).
        42 ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir. 1996).
        43 Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 979 (9th Cir. 2011) (en

banc) (“[S]tate-law protection for fixed ideas falls within the subject matter of copyright and
thus satisfies the first prong of the statutory preemption test, despite the exclusion of fixed
ideas from the scope of actual federal copyright protection.”).
        44 Dunlap v. G&L Holding Grp., Inc., 381 F.3d 1285, 1297 (11th Cir. 2004).
        45 1 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 1.01[B][2][c]

(Matthew Bender, Rev. Ed.).
        46 5 NIMMER, supra note 45, § 19D.03[A][2][b].

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                                     No. 14-10753
protect fixed ideas trench upon” this deliberate exclusion; and (2) “if ideas were
deemed outside the ‘scope’ of copyright protection—so that state laws
protecting them could never be considered pre-empted—the result would be
that state law could be used to protect . . . even those ideas embodied in
published literary works.” 47
      The Fourth Circuit’s explanation in U.S. ex rel. Berge v. Board of Trustees
of the University of Alabama aligns with Nimmer. 48 In noting that § 102(b)
excludes ideas from protection but that § 301(a) preempts everything that falls
within the scope of copyright, the court remarked simply that “scope and
protection are not synonyms.” 49         It went on to observe that “the shadow
actually cast by the Act’s preemption is notably broader than the wing of its
protection.” 50   The position of the majority of circuits clearly delineates
between the purpose of federal copyright preemption and that of federal
copyright protection. Congress intended the Copyright Act to protect some
expressions but not others, and it wrote § 301(a) to ensure that the states did
not undo this decision:
      [O]ne function of § 301(a) is to prevent states from giving special
      protection to works of authorship that Congress has decided should be
      in the public domain, which it can accomplish only if “subject matter of
      copyright” includes all works of a type covered by sections 102 and 103,
      even if federal law does not afford protection to them. 51




      47   Id.
      48   104 F.3d 1453, 1463 (4th Cir. 1997).
        49 Id.
        50 Id.
        51 Wrench LLC v. Taco Bell Corp., 256 F.3d 446, 455 (6th Cir. 2001) (quoting ProCD,

Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir. 1996)).
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       Finding this reasoning is persuasive, 52 we join the majority position and
hold that state law claims based on ideas fixed in tangible media are preempted
by § 301(a).
       When we apply this principle to SMI’s claims, we see that the technical
trade secrets found within VaultWorks fall within the subject matter of
copyright. First, computer software is a tangible medium protected by the
Copyright Act. 53 Second, SMI claims as trade secrets, inter alia, “the selection
of categories of input data used by VaultWorks . . . [and] selection of categories
of output data to be generated by VaultWorks.” Although some of these may
be ideas, they are “fixed,” so to speak, in the VaultWorks software user
interface. As the crux of SMI’s case is that ARGO stole its trade secrets by
(1) enticing SMI to perform a demo of its software to ARGO, as part of an
acquisition pitch, and (2) receiving screenshots of VaultWorks from BCS
during the implementation of CIO, SMI cannot dispute that these ideas have
appeared in a tangible medium. And as the tangible medium falls within the
subject matter of copyright as defined in § 102(a), so do the specific trade
secrets contained within it.
       b.      Equivalency of Copyright Protection and State Law Claims
       Having established that SMI’s trade secrets fall within the subject
matter of copyright, the next step in the complete preemption analysis is the
equivalency test: We examine SMI’s causes of action “to determine if [they]
protect[] rights that are ‘equivalent’ to any of the exclusive rights of a federal




       52  Cf. Daboub v. Gibbons, 42 F.3d 285, 288 (5th Cir. 1995) (“Section 301(a)
accomplishes the general federal policy of creating a uniform method for protecting and
enforcing certain rights in intellectual property by preempting other claims.” (emphasis
added)).
       53 See Eng’g Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1341 (5th Cir.

1994), opinion supplemented on denial of reh’g, 46 F.3d 408 (5th Cir. 1995).
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                                        No. 14-10753
copyright.” 54 The district court held that SMI’s conversion and TTLA claims
were completely preempted, and we agree.
       In the conversion section of the Original Petition, SMI claimed that it
owned “certain physical property, documents, and confidential information
pertaining to VaultWorks” and “certain trade secrets pertaining to [its]
proprietary ideas, processes, and/or other methodologies of VaultWorks.” SMI
then contended that Defendants “knowingly or intentionally, with malice, and
without SMI’s consent, exercised dominion and control over SMI’s property.”
       To the extent that SMI’s claim alleges conversion of physical property, it
is not preempted by § 301(a). 55 Physical property—as opposed to intellectual
property fixed in a tangible medium—does not fall within the scope of interests
protected by the Copyright Act. 56 As for intangible property, we have held
“that claims for conversion of intangible property are preempted.” 57 Thus,
SMI’s conversion claim, to the extent it alleges conversion of intangible
“confidential information” and “certain trade secrets,” is preempted.
       SMI’s TTLA claim, as advanced in its Original Petition, consists of three
allegations: (1) Defendants “stole[] SMI’s physical property, documents, and
confidential information”; (2) they “copied objects, materials, devices or
substances, including writings representing SMI’s confidential information”;
and (3) they “communicated and transmitted SMI’s confidential information.”
Although we have never applied the equivalency test to claims under the Texas


       54   Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003) (quoting Daboub, 42 F.3d
at 289).
       55  See id. at 457.
       56  See id. (noting that a state law protecting rights in physical property does not
obstruct the purpose of the Copyright Act).
        57 GlobeRanger Corp. v. Software AG, 691 F.3d 702, 709 (5th Cir. 2012) (citing Daboub,

42 F.3d at 289–90); see also Real Estate Innovations, Inc. v. Hous. Ass’n of Realtors, Inc., 422
F. App’x 344, 350 (5th Cir. 2011) (per curiam) (unpublished); Alcatel USA, Inc. v. DGI Techs.,
Inc., 166 F.3d 772, 786 (5th Cir. 1999); Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488,
1501 (5th Cir. 1990).
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                                       No. 14-10753
Theft Liability Act, one of our district courts has concluded that a TTLA claim
“is preempted as to the theft of trade secrets that fall within the subject matter
of copyright.” 58 The court did note that under Texas law, theft includes a mens
rea requirement—“knowingly”—but relied on the well-established rule that
“elements of knowledge do not establish an element that is qualitatively
different from a copyright infringement claim” to hold that the plaintiff’s TTLA
claim was nonetheless preempted. 59 And, SMI’s other allegations fall squarely
within the exclusive rights protected by 17 U.S.C. § 106.                           Copying,
communicating, and transmitting are equivalent acts to reproducing and
distributing. 60 Thus, SMI’s TTLA claim is also preempted. 61
       We conclude by affirming the district court’s denial of SMI’s motion to
remand and holding that it properly exercised jurisdiction over this action as
a result of complete preemption by the Copyright Act. 62


       58  M-I LLC v. Stelly, 733 F. Supp. 2d 759, 791 (S.D. Tex. 2010).
       59  Id. at 790–91. This conclusion is consistent with Nimmer: “[T]he mere fact that a
state law requires scienter as a condition to liability, whereas the Copyright Act does not,
cannot save the state law from pre-emption.” 1 NIMMER, supra note 45, § 1.01[B][1].
        60 17 U.S.C. § 106(a)(1), (a)(2).
        61 The district court, having concluded that two of SMI’s claims were preempted,

declined to consider whether its eight remaining claims were also preempted. Finding
instead that all of SMI’s claims derive from the same nucleus of operative fact, it exercised
supplemental jurisdiction over those remaining eight claims under 28 U.S.C. § 1367. This
exercise of supplemental jurisdiction over the non-preempted claims was not error.
        62 We do not decide the appropriate course of action for claims found to be completely

preempted. As a general rule, when a claim is completely preempted, it is considered to be
grounded in federal law even if pleaded in terms of state law. Aetna Health Inc. v. Davila,
542 U.S. 200, 207–08 (2004). That is the rationale behind allowing complete preemption to
serve as an exception to the well-pleaded complaint rule. Yet that doctrinal theory does not
answer the question, “What is the status of that claim?” District courts in this circuit are
split. Most hold that “[c]omplete preemption results in dismissal of the state-law claim,” even
though they “typically allow plaintiffs to replead and assert the dismissed state law claims
as federal claims.” Encompass Office Sols., Inc. v. Ingenix, Inc., 775 F. Supp. 2d 938, 949
(E.D. Tex. 2011). Defendants, as well as the Second Circuit, urge this approach. See
Briarpatch Ltd., L.P. v. Phx. Pictures, Inc., 373 F.3d 296, 308–09 (2d Cir. 2004). But at least
one of our district courts does not dismiss the claim, instead treating it as having become a
properly asserted federal claim and proceeding to adjudicate it on the merits. See Kersh v.
UnitedHealthcare Ins. Co., 946 F. Supp. 2d 621, 630 (W.D. Tex. 2013). We have never
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                                       No. 14-10753
B.     Summary Judgment
       1.     Standard of Review
       “We review a grant of summary judgment de novo under the same
standard applied by the district court.” 63 Summary judgment is appropriate
when “there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” 64 We consider the evidence in the




squarely addressed this question, even though our decision in GlobeRanger appears to
provide support for the dismissal approach. See 691 F.3d at 706 (noting that if all of the
plaintiff’s claims were preempted by the Copyright Act, “the case should be dismissed”); see
also Quality Infusion Care Inc. v. Humana Health Plan of Tex. Inc., 290 F. App’x 671, 676–
77 (5th Cir. 2008) (unpublished). But see McGowin v. ManPower Int’l, Inc., 363 F.3d 556,
558, 559 (5th Cir. 2004) (affirming dismissal of a claim completely preempted by ERISA on
the ground that the claim was therefore barred due to failure to exhaust administrative
remedies, thus implying that the state law claim was automatically converted to a federal
one).
        The parties did not brief this issue, and the district court did not appear to consider
it. Indeed, the district court neither dismissed the partially preempted claims (while allowing
SMI to amend) nor expressly converted those claims to federal ones (i.e., treated them like
claims for copyright infringement), before granting Defendants’ motion for summary
judgment. Any error, however, is harmless, as SMI cannot satisfy the elements of copyright
infringement. “A copyright infringement claim requires proof of (1) ownership of a valid
copyright and (2) actionable copying, which is the copying of constituent elements of the work
that are copyrightable.” Bridgmon v. Array Sys. Corp., 325 F.3d 572, 576 (5th Cir. 2003).
Actionable copying consists of (1) actual copying, i.e. “whether the alleged
infringer . . . ‘actually used the copyrighted material in his own work’”; and (2) substantial
similarity between the two works. Id. (quoting Eng’g Dynamics, Inc. v. Structural Software,
Inc., 26 F.3d 1335, 1340 (5th Cir. 1994)). As discussed further infra, SMI has produced no
evidence that ARGO actually used VaultWorks in developing CIO. Actual copying may also
be proved with circumstantial evidence “if the defendant had access to the copyrighted work
and there is ‘probative similarity’ between the works.” Id. (quoting Eng’g Dynamics, 25 F.3d
at 1340). But, even if SMI were to rely exclusively on circumstantial evidence, it has not
pointed to any similarities between the two products sufficient to satisfy the “probative
similarity” test. See Positive Black Talk Inc. v. Cash Money Records, Inc., 394 F.3d 357, 370
(5th Cir. 2004) (defining probative similarity as “similarities between the two works (whether
substantial or not) that, in the normal course of events, would not be expected to arise
independently”). Furthermore, SMI has not performed a side-by-side comparison of the two
programs, a failure fatal to the substantial similarity prong of the test. See Bridgmon, 325
F.3d at 577 (“[T]he law of this circuit prohibits finding copyright infringement without a side-
by-side comparison of the two works . . . .”).
        63 Boone v. Citigroup, Inc., 416 F.3d 382, 392–93 (5th Cir. 2005).
        64 FED. R. CIV. P. 56(a).

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                                            No. 14-10753
light most favorable to the nonmoving party and draw all reasonable inferences
in its favor. 65
         “Once a movant who does not have the burden of proof at trial makes a
properly supported motion” for summary judgment, “the burden shifts to the
nonmovant to show that [the motion] should not be granted.” 66 To do so, the
nonmovant must “identify specific evidence in the record and . . . articulate the
precise manner in which that evidence supports his or her claim.” 67 Neither
we nor the district court has a duty to “sift through the record in search of
evidence to support” the nonmovant’s opposition to summary judgment. 68
         2.        Misappropriation of Trade Secrets
         “Trade secret misappropriation under Texas law is established by
showing: (a) a trade secret existed; (b) the trade secret was acquired through a
breach of a confidential relationship or discovered by improper means; and (c)
use of the trade secret without authorization from the plaintiff.” 69 In their
motion for summary judgment, Defendants challenged the first and third
elements of the test, contending that (1) SMI’s purported trade secrets were
not entitled to legal protection because they were not “substantially secret”;
and (2) Defendants did not “use” SMI’s purported trade secrets in developing
or implementing the CIO software.                   SMI responded that (1) it had taken
precautions to protect its trade secrets; and (2) Defendants used these trade
secrets to develop CIO and validate the implementation of that software for
BCS.      The district court, assuming without deciding that SMI did indeed



         65   See Lawyers Title Ins. Corp. v. Doubletree Partners, L.P., 739 F.3d 848, 856 (5th Cir.
2014).
          Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
         66

          Id.; accord RSR Corp. v. Int’l Ins. Co., 612 F.3d 851, 857 (5th Cir. 2010).
         67
       68 Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994) (quoting Skotak v. Tenneco

Resins, Inc., 953 F.2d 909, 915 n.7 (5th Cir. 1992)).
       69 Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 874 (5th Cir. 2013) (quoting

Phillips v. Frey, 20 F.3d 623, 627 (5th Cir. 1994)).
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                                        No. 14-10753
possess the trade secrets at issue, held that SMI had not demonstrated that
they were “used” in the manner described by SMI, so SMI had failed to point
to any genuine dispute regarding the third element of its misappropriation
claim.
       “As a general matter, any exploitation of the trade secret that is likely to
result in injury to the trade secret owner or enrichment to the defendant is a
‘use[.]’” 70 We have noted that the definition of “use” is “broad” 71 and includes
such activities as “marketing goods that embody the trade secret, employing
the trade secret in manufacturing or production, relying on the trade secret to
assist or accelerate research or development, or soliciting customers through
the use of information that is a trade secret.” 72                   Despite this generous
definition of “use,” however, we agree with the district court that SMI has
failed to point to any evidence suggesting that ARGO or BCS used its purported
trade secrets.
       First, SMI contends that it “produced a substantial amount of direct
evidence establishing that BancorpSouth shared SMI’s trade secrets with
ARGO in order to help ARGO finalize the development and implantation [sic]
of CIO.” It then cites, without explanation, 73 seven documents from the record,
some of which suggest disclosure of information related to VaultWorks, but
none of which indicates that this information was used “to help ARGO finalize
the development and implantation [sic] of CIO.” In other words, SMI has
produced evidence relevant to the second element of its misappropriation
claim, but not to the third. Our analysis might be different if, for example,
SMI had also alleged that ARGO modified CIO’s source code after accessing


       70 Id. at 877 (alteration in original) (quoting Gen. Universal Sys., Inc. v. HAL, Inc., 500
F.3d 444, 451 (5th Cir. 2007)).
       71 Bohnsack v. Varco, L.P., 668 F.3d 262, 279 (5th Cir. 2012).
       72 Wellogix, 716 F.3d at 877 (quoting Gen. Universal Sys., 500 F.3d at 451).
       73 See Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).

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                                        No. 14-10753
SMI’s trade secrets, or that ARGO had redesigned CIO’s interface in some way,
and if SMI had supported such allegations with some proof of these changes.
But, we have stated that when the trade secret at issue is a technical feature
of a computer program—as opposed to “marketing or mode of doing business
trade secret[]”—“the issue of misuse boils down to evidence of copying.” 74 SMI
has produced nothing to suggest that ARGO copied any design elements of
VaultWorks, 75 let alone that ARGO used SMI’s purported trade secrets in any
manner.
       Second, SMI contends “that, on multiple occasions, ARGO requested
access to SMI’s trade secrets so that it could test and validate its own product,
and . . . BancorpSouth sent ARGO those trade secrets.” But SMI’s record
citations indicate, at most, that ARGO requested data from BCS so that it
could calibrate CIO to handle anomalous cashflow situations. SMI does not
and cannot claim as its own trade secret BCS’s branch cashflow data.
Moreover, SMI incorrectly credits an unpublished case from this court, Cudd
Pressure Control Inc. v. Roles, 76 for holding that “an alleged misappropriator’s
use of a trade secret ‘to validate’ its own product was enough to raise a genuine
issue of material fact as to trade secret use.” In Cudd, however, a former
employee showed Cudd Pressure Control’s confidential financial data to
potential investors to secure financing for his own newly formed competing
venture, in essence “validat[ing]” that such a business model was viable. 77 This
type of validation is qualitatively different from the validation that allegedly




       74 Plains Cotton Coop. Ass’n of Lubbock v. Goodpasture Comput. Serv., Inc., 807 F.2d
1256, 1263 (5th Cir. 1987) (emphasis added).
       75 See id. (“If appellees did not in any way ‘copy’ any part of appellant’s protected idea

or expression, then appellant cannot demonstrate trade secret misappropriation any more
than it can show copyright infringement.”).
       76 328 F. App’x 961 (5th Cir. 2009) (unpublished).
       77 Id. at 966.

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                                       No. 14-10753
occurred here—the use of BCS’s own records, as displayed in a printout from
VaultWorks, to test CIO’s predictions with BCS’s historical data.                      SMI’s
reliance on Cudd is misplaced.
       Third, SMI advances a theory of trade secret use premised on timing.
According to SMI, “a jury could reasonably infer that [Defendants] used SMI’s
trade secrets” because ARGO, after years of unsuccessful attempts to license
CIO to BCS, made headway with BCS at about the same time that SMI
attempted to sell VaultWorks to ARGO. But, not only does SMI fail to identify
how its trade secrets were allegedly used by Defendants, 78 it also cites no legal
authority for the proposition that a mere coincidence in timing can support an
inference of trade secret use.
       Rather, it appears that SMI relies on the access-plus-similarity test
proposed by the Restatement (Third) of Unfair Competition for circumstantial
proof of trade secret use: “Although the trade secret owner bears the burden of
proving unauthorized use, proof of the defendant’s knowledge of the trade
secret together with substantial similarities between the parties’ products or
processes may justify an inference of use by the defendant.” 79 But SMI points
to no similarity between CIO’s interface with BCS’s BANKPRO Teller system
and VaultWorks’s interface. In fact, despite ARGO’s invitation, SMI never had



       78  As a factual matter, it appears that BCS’s long-standing reservations about CIO
concerned its integration with the text-based teller program—BANKPRO Teller, also
developed by ARGO—that BCS was using. ARGO was working on addressing this concern
before SMI ever demonstrated VaultWorks to ARGO. Moreover, though SMI claims that,
during its demonstration of VaultWorks to ARGO, it “described how data from an automated
teller system was interfaced into VaultWorks directly,” it never explains how ARGO then
used this information to integrate CIO with the teller system. Mere knowledge of how
VaultWorks functioned is insufficient to imply use of VaultWorks’s trade secrets; otherwise,
the second and third elements of the misappropriation test would collapse into each other.
        79 RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 40 cmt. c (1995) (emphasis

added); see also Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 451 n.5 (5th Cir. 2007)
(“[T]he Texas Supreme Court has at times relied on the Restatement 3d of Unfair
Competition.” (citing In re Bass, 113 S.W.3d 735, 739–40 (Tex. 2003))).
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                                       No. 14-10753
any expert perform a side-by-side comparison of the two programs. Instead,
SMI rests its entire argument for similarity on the coincidence of timing and
on the fact that VaultWorks and CIO perform the same general function. The
element of “substantial similarity” would be rendered toothless, however, if it
could be satisfied by the mere fact that two products occupy the same
commercial niche. Such an overly generous application of the test would allow
an inference of use in virtually every trade secret misappropriation claim in
which there is evidence of disclosure. This cannot be the result intended by
the Restatement.
       On this evidence, it would not be reasonable for a jury to infer that
Defendants used SMI’s trade secrets. 80 We therefore affirm the district court’s
dismissal of SMI’s claim of misappropriation of trade secrets.
       3.     SMI’s Remaining Claims
       The district court also dismissed all of SMI’s remaining claims. It held
that each of these claims (1) requires a finding of trade secret misappropriation
and thus fail with the misappropriation claim, and (2) fails for an independent
reason.
       SMI’s opening brief addresses its misappropriation claim only, omitting
entirely any mention of its eight remaining claims. SMI has therefore waived
its right to appeal the district court’s judgment with respect to these claims. 81



       80 SMI also alleges that the district court improperly weighed evidence by crediting
“ARGO’s claim that CIO was market-ready before ARGO had access to SMI’s VaultWorks-
related trade secrets” over evidence showing that “CIO was not fully implemented at
BancorpSouth for more than a year after ARGO had gained access to SMI’s trade secrets.”
Contrary to SMI’s assertions, these statements are not contradictory. A new product may be
ready for sale and still require a significant rollout effort. Indeed, SMI implicitly
acknowledges the existence of these two distinct phases in a computer program’s lifecycle
when it contends that its trade secrets were used by ARGO in the “development and
implantation [sic] of CIO” (emphasis added).
       81 See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 260 n.9 (5th Cir. 1995)

(“[W]e do not consider issues raised for the first time in a reply brief.”).
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                                          No. 14-10753
Moreover, SMI’s reply brief contains only the conclusional statement:
“Likewise, SMI’s remaining claims were viable.” It then cites only part of
SMI’s prior briefing in the district court. This bare bones citing does not satisfy
the requirements of Federal Rule of Appellate Procedure 28(a). 82 By failing to
identify any error in the district court’s reasoning or submit any new authority
in support of its position, SMI has waived merits consideration of its remaining
eight claims.


                                   III.    CONCLUSION

       For the foregoing reasons, we AFFIRM the district court’s order denying
SMI’s motion for remand and its judgment dismissing SMI’s action with
prejudice.




       82  See Alameda Films SA de CV v. Authors Rights Restoration Corp. Inc., 331 F.3d
472, 483 (5th Cir. 2003) (“Defendants do not provide us with any basis—either in their
argument or by reference to the voluminous record—for determining that the district court
committed the proffered errors. Thus, ‘[i]n the absence of logical argumentation or citation
to authority, we decline to reach the merits of these claims.’” (alteration in original) (quoting
Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 532 (5th Cir. 1996))); United
States v. Posada-Rios, 158 F.3d 832, 867 (5th Cir. 1998) (“Murga cannot satisfy the
requirements of Fed. R App. P. 28(a)(5) by merely referring to briefing filed with the district
court.”); see also X Techs., Inc. v. Marvin Test Sys., Inc., 719 F.3d 406, 411 n.3 (5th Cir. 2013)
(characterizing Posada-Rios as “holding that arguments that do not satisfy Federal Rule of
Appellate Procedure 28 because they ‘merely refer[ ] to briefing filed with the district court’
are waived” (alteration in original) (quoting 158 F.3d at 867)).
                                               23
