California judges dismisses part of company's software copying claim

On Thursday, Judge Maxime Chesney dismissed part of a software copying complaint by Bmmsoft (BMM) against White Oaks Technology, Inc. (WOTI).  BMM alleged that WOTI had copied and distributed its EDMT Server software and disclosed its confidential information in violation of the End User License Agreement (EULA).

When an end user wants to install software on a computer a license agreement frequently pops up and the user must agree to its terms in order to install the software.  The EULA in this case prohibited copying the software and disclosing confidential information within the software.  The complaint has two claims at issue here 1) breach of the license agreement and 2) Misappropriation of trade secrets.

WOTI defended the breach of contract claim by stating that it was installing the software for the Air Force, and that the EULA was with the Air Force and not with WOTI.  The Court agreed, and dismissed the claim.

The court found that under California law the disclosure of the trade secret imparted a duty by the Air Force to BMM to maintain the secrecy of the confidential information.  Since WOTI knew of the disclosure of the secrets to the Air Force it could be liable for any misappropriation of that information.  BMM alleged that WOTI misappropriated the software by selling it to the Air Force without a license to do so from BMM.

Judge Chesney allowed the misappropriation of a trade secret claim to go into discovery.  The case is Bmmsoft, Inc. v. White Oaks Tech., No. C-09-4562 and the opinion is below the jump.



Here is the opinion

BMM v. WOTI MTD MSJ