Company Claims Department Infringed Proprietary Educational Data Management Software
On April 6, 2020, eScholar LLC ("eScholar") filed suit against the Nebraska Department of Education (the "Department") for, among other things, alleged copyright infringement of eScholar's educational software.
In its complaint, eScholar claims the Department engaged in “willful and unauthorized reverse engineering, trade secret violations and wrongful use and direct copyright infringement . . .” of eScholar’s educational data management software, eScholar Uniq-ID© (the “Software”). eScholar provides a series of copyright registrations relating to the Software.
eScholar asserts that the Software “is central to [it’s] suite of educational data management software products . . .” and that it “continues to garner substantial revenue and a competitive advantage for [eScholar] in the education data management marketplace.” As set forth in the complaint, the Software is, “a system for assigning and managing unique identifiers whose purpose . . . is to, ‘provide a single source of standardized individual student records and other education-related . . . data for analysis . . . to improve student and teacher performance and to meet State and Federal accountability requirements . . . .’”
eScholar recounts in great detail that the Software “design is not obvious.” Furthermore, eScholar claims that the decisions it makes related to the Software are "original work and constitute[] a highly proprietary trade secret . . . .” eScholar notes that it “prominently displays its copyright protection” for the Software, and that it “goes to great lengths in protecting its proprietary and copyrighted products . . . .”
eScholar asserts that the Department was a customer from 2004 until 2019. In October 2019, the Department notified eScholar that it would be terminating its agreement for the Software and stated the Department would be replacing the Software with a system the Department developed in-house. Upon receipt of this information, eScholar engaged in research regarding the Department’s in-house system, and “immediately identified striking similarities between a number of [the Department] web pages . . . and the [Software] web pages.” eScholar notified the Department that it believed the Department "reversed engineered or copied critical components of the copyright protected" Software. The Department denied these allegations.
In the complaint, eScholar states “[i]t is undisputed that the [Department] had complete and unfettered access to the [Software].” eScholar asserts various acts of infringement including infringement of the Software “Compare web page,” and the “individual Person Information web page.” eScholar asserts that it “is unaware of any other student identifier system currently used by agencies in the United States that maintains a similar design or layout” to the Software. “Moreover, it should be noted that earlier versions of the [Software] displayed information differently,” so eScholar claims that the way it has chosen to arrange and display information in the Software is not the only possible model.
eScholar purports “the world can easily steal the [c]ompany’s intellectual property by simply going to the [Department]’s publicly accessible web site . . .” and viewing the Department’s “system instructions which substantially mirror documentation that was developed by [eScholar].”
eScholar is seeking, among other things, $15,000,000 in monetary damages, and a preliminary injunction to prohibit the Department from “exploiting or in any way using” it’s in-house system, including prohibiting the Department from publishing information about it’s system “which is clearly a derivative work” of eScholar’s Software, and enjoining the Department “from using any protected elements of [the Software] . . . protected under federal copyright law . . . .”