Braden Group BV et al v. Energylink Corporation

OCR transcription for search; preserved printed pages are authoritative

Case 4:26-cv-04367 Document55-~ Filed 07/06/26 in TXSD Page 1of6

United States District Court
Southem Distict of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT Junie 1, 2024
FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION
BRADEN GROUP B.V. and BRADEN §
AMERICAS, INC., §
§
Plaintiffs, §
VS. § CIVIL ACTION NO. 4:23-cyv-626
§
ENERGYLINK CORPORATION d/b/a §
ENERGYLINK INTERNATIONAL, §
§
Defendant. §
§
ORDER

Pending before the Court is Defendant EnergyLink Corporation and EnergyLink
International Inc.’s (““Defendant” or “EnergyLink”) Motion for Judgment on the Pleadings on
Plaintiffs’ Unfair Competition Claim. (Doc. No. 49). Plaintiffs Braden Group B.V. and Braden
Americas, Inc. (“Plaintiffs” or “Braden”) filed a response. (Doc. No. 53). EnergyLink filed a reply
(Doc. No. 54), and Braden filed a surreply (Doc. No. 55). Upon examining the pleadings and the
applicable law, the Court DENIES the motion for the following reasons.

I. Background

In its Second Amended Complaint, Braden alleges copyright infringement against
EnergyLink, alleging that EnergyLink’s reproduced, distributed, and prepared derivative works
based on Braden’s alleged proprietary engineering drawings. (Doc. No. 44 at 1). The engineering
drawings allegedly concerned innovative selective catalytic reduction systems (“SCR”) and related
solutions that help gas turbine systems generate cleaner power and reduce emissions. (/d.). Braden
alleges that it owns all of the right, title, and interest, including the copyright, in the fifteen

engineering drawings at issue. Braden alleges that in or around 2018, former employees of

AUTHENTICATED
U.S. GOVERNMENT
INFORMATION

GPO.

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Braden’s predecessor-in-interest Innova Global Ltd. (“Innova”) left Innova and formed
EnergyLink. Braden believes that EnergyLink, or these former employees who formed
EnergyLink, intentionally and unlawfully took copies of the engineering drawings from Innova
and improperly reproduced, distributed, and prepared derivative works using the drawings.

In addition to alleging copyright infringement, Braden brings several claims for declaratory
judgment based on copyright ownership, as well as a claim for unfair competition under Texas
law. This claim for unfair competition is the heart of the present motion. The claim alleges that
EnergyLink has “approximately 600 boxes of paper documents, as well as electronic documents
from Innova Global Ltd.” (/d. at 17). Braden alleges that EnergyLink’s use and possession of the
documents contained in the approximately 600 boxes has interfered and will continue to interfere
with Braden’s business prospects and operations.

In EnergyLink’s answer, EnergyLink denies the allegations, seeks declaratory judgment of
no trade secret misappropriation, and countersues for defamation, business disparagement, tortious
interference with prospective business relationships, unfair competition, and false advertising.
(Doc. No. 48).

EnergyLink additionally filed this motion for judgment on the pleadings of Braden’s unfair
competition claim (Count V). (Doc. No 49). EnergyLink argues that the claim is preempted by the
federal Copyright Act.

Il. Legal Standard

A motion for judgment on the pleadings under Rule 12(c) is subject to the same standard
as a motion to dismiss under Rule 12(b)(6). Gentilello v. Rege, 627 F.3d 540, 544-545 (Sth Cir.
2010). A defendant may file a motion to dismiss a complaint for “failure to state a claim upon
which relief may be granted.” Fed. R. Civ. P. 12(b)(6). Similarly, a plaintiff may file a Rule
12(b)(6) motion to dismiss a counterclaim. See Kansas v. Nebraska, 527 U.S. 1020 (1999). To

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defeat a motion to dismiss under Rule 12(b)(6), a plaintiff must plead “enough facts to state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556 U.S. 662, 663 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin
to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has
acted unlawfully.” /d. (quoting Twombly, 550 U.S. at 556). “Where a complaint pleads facts that
are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility
and plausibility of entitlement to relief.’” Jd. (quoting Twombly, 550 U.S. at 557).

In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the
complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm
Mut. Auto. Ins. Co., 509 F.3d 673, 675 (Sth Cir. 2007). The Court is not bound to accept factual
assumptions or legal conclusions as true, and only a complaint that states a plausible claim for
relief survives a motion to dismiss. /gbal, 556 U.S. at 678-79. When there are well-pleaded factual
allegations, the court assumes their veracity and then determines whether they plausibly give rise
to an entitlement to relief. Jd.

Ill. Analysis

In its motion, EnergyLink contends that Braden’s state law claim for unfair competition, is
preempted by federal copyright law. (Doc. No. 49). Braden disagrees. While the fifteen specified
engineering drawings would certainly fall within the subject matter of copyright, Braden argues
that the 600 amorphous boxes do not because they are fangible assets that EnergyLink has
exploited and failed to return. (Doc. No. 53 at 5).

Courts in the Fifth Circuit apply a two-part test to determine whether a state law claim is

preempted by the United States Copyright Act (the “Copyright Act”), 17 U.S.C. § 101. Motion

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Med. Techs., L.L.C. v. Thermotek, Inc., 875 F.3d 765, 773 (Sth Cir. 2017). First, the Court must
ask “whether the intellectual property at issue is within the subject matter of copyright.” Jd. If it
is, the Court should find preemption if the state law claim protects “rights in that property that are
equivalent to any of the exclusive rights within the general scope of copyright.” /d.

i. Subject Matter of Copyright

Section 301 of the Copyright Act preempts state protection of works that fall within the
scope of copyright, “regardless whether the works are actually afforded protection under the Act.”
Ultraflo Corp. v. Pelican Tank Parts, Inc., 845 F.3d 652, 656 (Sth Cir. 2017). In other words, the
intellectual property at issue need not necessarily be protected by copyright law for preemption to
apply—it just needs to fall within the general subject matter of copyright.

Section 102 of the Copyright Act provides that “works of authorship include...pictorial,
graphic, and sculptural works.” 17 U.S.C. § 102. Section 101 defines “pictorial, graphic, and
sculptural works” to include technical drawings. Ultraflo, 845 F.3d at n.3. The Fifth Circuit has
held that design and engineering drawings are clearly within the subject matter of copyright. See
id. (citing Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (Sth Cir. 1990) (treating
engineering drawings as copyrightable); see also M—I LLC v. Stelly, 733 F.Supp.2d 759, 782 (S.D.
Tex. 2010) (holding that the tool designs, drawings, and specifications at issue fall within the
subject matter of copyright). The Fifth Circuit has also held that “useful articles,” while excluded
from copyright protection, fall within the subject matter of copyright for preemption purposes
because allowing state law to protect such works would “undermine the ‘deliberate exclusion’ of
such subject matter from the federal copyright scheme.” Ultraflo, 845 F.3d at 657 (citing Spear

Mktg. v. BancorpSouth Bank, 791 F.3d 586, 596 (Sth Cir. 2015)).

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The subject matter inquiry requires the Court to determine “what intellectual property [the
plaintiff] is seeking to protect.” Ultraflo, 845 F.3d at 656. Here, Braden’s unfair competition claim
is based on approximately 600 boxes of paper documents and electronic documents from Innova.
Braden has provided no more information regarding the contents of these documents, though they
seem to be distinct from the fifteen engineering drawings, which are known and identified. While
Braden certainly alleges copyright infringement for the fifteen engineering drawings (and thus any
tort claim based on them would be preempted), it does not allege that the 600 boxes of documents
contain engineering drawings.!

As previously discussed, the Fifth Circuit has indicated that design and engineering
drawings, technical specifications, schematics, and “useful articles” fall within the subject matter
of copyright. Although it is possible that the 600 boxes contain these kinds of documents, the
parties have not offered any evidence (or allegations) regarding the contents of the boxes. They
have not characterized or sorted the documents into workable categories that would allow the
Court to assess whether contents of the boxes fall within the subject matter of copyright. In fact, it
appears that EnergyLink has not supplemented its discovery responses or produced any of the at-
issue documents. (Doc. No. 53 at 4). Thus, it is completely unknown to the Court what kinds of
documents are at issue, or whether the documents can be characterized as design and engineering
drawings, technical specifications, schematics, and useful articles that in all likelihood would be

preempted. Accordingly, this Court cannot say as a matter of law that these amorphous boxes of

'Since the contents of the boxes and the uses of the documents are unknown, Braden characterizes its claim for unfair
competition as more of a conversion action than one based in copyright.

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documents, with their contents and uses unknown, fall within the subject matter of copyright.? As
such, the Court must deny EnergyLink’s motion for judgment on the pleadings. (Doc. No. 49).
IV. Conclusion

Since the parties have provided no categorization, characterization, or indication as to the
contents of the 600 boxes of paper documents that were allegedly used in Innova’s business, the
Court cannot say as a matter of law that the 600 boxes of paper documents fall within the subject
matter of copyright. Accordingly, the Court hereby DENIES EnergyLink’s motion for judgment
on the pleadings. (Doc. No. 49). The second amended complaint remains the operative complaint

in this action.

Signed at Houston, Texas, this 17 day of June, 2024.

een

Andrew S. Hanen
United States District Judge

? While the parties spend most of their briefings discussing the second step in the preemption analysis—equivalent
rights—the Court cannot reach that question without addressing the first step. Further, the Court cannot say that Braden
“conceded” this element as EnergyLink proposes. (Doc. No. 54 at 1). Rather, neither party has given the Court any
information regarding these documents, so the Court’s analysis is limited to what is alleged in the second amended
complaint. (Doc. No. 44). The second amended complaint merely states that these boxes were “used in Innova Global
Ltd.’s business.” Any number of documents may be used in a company’s business without falling in the subject matter
of copyright. Still, the Court cautions the parties about basing a claim on such voluminous documents. If the parties
have yet to sort through the 600 boxes, then the likelihood that a jury can do so is slim.

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