Robins Kaplan Secures Complete Dismissal of $160 Million Copyright and Software License Dispute

On June 14, 2022, a Minnesota federal jury issued a complete defense verdict in favor of Erie Custom Computer Applications, Inc. and Payroll World, Inc., two second-generation family-owned payroll processing companies, dismissing $27.4 million in remaining claims in a significant software licensing dispute. Including previously dismissed claims, total asserted damages in this case exceeded $160 million.

In March 2019, MPAY Inc. filed suit against multiple companies that compete in the payroll servicing and human capital management software industries, asserting claims of copyright infringement, trade secret misappropriation, tortious interference with prospective economic advantage, and breach of contract.

In the complaint, MPAY alleged that defendants improperly used, copied, and distributed source code and software related to MPAY's payroll processing software, and that in doing so, defendants violated a membership agreement of OnePoint Solutions, LLC, a software commercialization company to which MPAY and the defendants were members, and to which MPAY had provided source code development and licensing rights.

Robins Kaplan LLP served as lead defense counsel for defendants Erie Custom Computer Applications, Inc. and Payroll World, Inc.

Earlier in the case, Robins Kaplan secured a summary judgment ruling that dismissed trade secret misappropriation, copyright infringement, and breach of contract related to the alleged misuse of source code owned and licensed by OnePoint, which together represented exposure of nearly $86.8 million for defendants. Through successful pre-trial motion practice, the firm then eliminated approximately $45.1 million in additional potential liability.

On June 14, 2022, a federal jury awarded defendants a complete defense verdict on the remaining claims of breach of contract, direct copyright infringement, contributory copyright infringement, vicarious copyright infringement, and tortious interference with prospective economic advantage related to alleged improper sublicensing and distribution of software executable programs used for payroll processing. MPAY requested approximately $27.4 million in damages from the jury.

"This hard-fought verdict allows our clients to continue to develop and license their industry-leading payroll processing software to small business customers," said Robins Kaplan Partner David Prange.

"This was bet-the-company litigation that was a significant threat to our clients’ licensing business,” noted Christopher Larus, Chair of the Robins Kaplan IP and Technology Litigation Group. “We are thrilled to have obtained a sweeping verdict in their favor."

The Robins Kaplan trial team consisted of Christopher Larus, David Prange, Benjamen Linden, Emily Tremblay, Rajin Olson, and Akina Khan.