Digital Drilling Data Sys. LLC v. Petrolink Servs. Inc.

DIGITAL DRILLING DATA SYSTEMS LLC, Plaintiff, v. PETROLINK SERVICES INC. and LEE GEISER Defendants.

CIVIL ACTION NO. 4:15-CV-02172

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

ENTERED: May 17, 2018

May 16, 2018

OPINION AND ORDER

Pending before the Court in the above-referenced cause of action are the following motions:

Filed by Plaintiff Digital Drilling Data Systems, LLC ("Digidrill" or "Plaintiff"):

1. Motion for Summary Judgment on Copyrightability (Doc. 93)

2. Motion for Partial Summary Judgment Against Defendants' Affirmative Defense of Fair Use (Doc. 94)

3. Motion for Summary Judgment on Violation of the Digital Millennium Copyright Act Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 95)

4. Motion for Summary Judgment on Copyright Infringement Under 17 U.S.C. § 501(a) (Doc. 96)

Filed by Defendant Lee Geiser, president and chief executive of Petrolink Services, Inc.:

5. Motion for Summary Judgment on Copyright and Unjust Enrichment Causes of Action (Doc. 70)

Filed by Defendants Petrolink Services, Inc. and Lee Geiser ("Petrolink" or "Defendants"):

6. Motion for Partial Summary Judgment on Anti-Circumvention Causes of Action under 17 U.S.C. § 1201(a)(1)(A) (Doc. 73)

7. Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 87)

8. Motion for Partial Summary Judgment on Damages Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 89) 9. Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 90)

10. Motion for Partial Summary Judgment with Respect to Digidrill's Indirect Profits Damages (Doc. 106)

Having considered the Motions, all responses thereto, the relevant facts and the applicable law, the Court finds that Plaintiff's Motion for Summary Judgment on Copyrightability (Doc. 93) is granted in part and denied in part, Defendants' Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 87) is granted in part and denied in part, Defendants' Motion for Partial Summary Judgment on Copyright Infringement and Unjust Enrichment Causes of Action (Doc. 90) is granted in part and denied in part, Plaintiff's Motion for Summary Judgment on Copyright Infringement Under 17 U.S.C. § 501(a) (Doc. 96) is denied, Defendants' Motion for Partial Summary Judgment on Anti-Circumvention Causes of Action under 17 U.S.C. § 1201(a)(1)(A) (Doc. 73) is granted, Plaintiff's Motion for Summary Judgment on Violation of the Digital Millennium Copyright Act Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 95) is denied, Defendant Lee Geiser's Motion for Summary Judgment on Copyright and Unjust Enrichment Causes of Action (Doc. 70) is denied, Plaintiff's Motion for Partial Summary Judgment Against Defendants' Affirmative Defense of Fair Use (Doc. 94) is denied as moot, Defendants' Motion for Partial Summary Judgment on Damages Under 17 U.S.C. § 1201(a)(1)(A) (Doc. 89) is denied as moot, and Defendants' Motion for Partial Summary Judgment with Respect to Digidrill's Indirect Profits Damages (Doc. 106) is denied as moot.

I. FACTUAL BACKGROUND

A. The DataLogger program

This case arises from alleged violations by Defendants Petrolink and its president Lee Geiser of United States copyright law. Specifically, Plaintiff alleges that Defendants Petrolinkand Geiser (1) engaged in copyright infringement in violation of 17 U.S.C. § 501(a); (2) willfully violated the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1201(a)(1) by circumventing a technological measure that effectively controlled access to Plaintiff's copyrighted work; and (3) willfully violated the U.S. Copyright Act, 17 U.S.C. §§ 106(1), 501, and 1201(a)(1)(A) by knowingly circumventing the copyright protection measures embedded by Plaintiff for the purpose of extracting copyrighted data for its own commercial gain. Plaintiff further alleges that Defendant Petrolink was unjustly enriched by selling Plaintiff's copyrighted data as its own and has garnered profits that rightfully belong to Plaintiff.

Plaintiff Digidrill is a leading provider of software and hardware to directional drilling companies in North America. Digidrill's primary product is DataLogger, a "measuring while drilling" ("MWD") software package popular among independent operators that assists oil and gas companies in their efforts to accurately steer drill bits into specific targets thousands of feet underground. It functions by providing drilling companies and well operators with accurate and real-time data that aids in successfully geosteering the drill bit.

DataLogger itself is an application consisting of software installed on a computer that works in conjunction with rig sensors and other tools located at the end of the drill pipe. Doc. 93 at 4-5. Digidrill has registered copyrights in the DataLogger software version 4.9, registration number TXU1842064, and version 5, registration number TXU1842092. First Amended Complaint ("FAC") at 1-2.

When DataLogger is running on a computer, it has two primary processes: one is that the Interface Process receives input and performs calculations which indicate measurements of interest to the user; the other is that the Database Process stores all the raw data upon which the calculations are based as well as the manipulated data in an organized schema. The schema andthe data are available only to licensed users and only in measured pieces allowed by DataLogger. Doc. 95 at 1.

The Interface Process receives raw data gathered by MWD tools and sensors from deep in a well as a drill bit cuts through underground formations and performs calculations on the raw data to generate logs, accurate survey reports, corrected gamma readings, and other useful information on a real-time basis. Additionally, the Interface Process uses the host computer to stream the raw data to other entities working at the well site via a Wellsite Transfer Specification (WITS) feed for no additional license fee. Meanwhile, all the data, both raw and manipulated, is written onto, read from, retained, and stored on the Database Process.

Of the calculations made to correct the raw data, two are of particular importance in this lawsuit. First, Digidrill applies its own allegedly proprietary formula to raw gamma data received from the downhole gamma ray sensor, using a scaling process which combines multiple correction factors to correct and improve the usability of the raw gamma readings. The corrected gamma reading is stored in a field called "API" in a table called "GAMMA" in the DataLogger Database. Correct gamma readings are essential to properly geosteer a well into a targeted zone.

Second, Digidrill applies its own allegedly proprietary method to correct the depth measurements for the drill bit as it cuts through the formation. DataLogger uses a pre-configured, discretionary determination to record depth values at certain intervals, corrects the depth measurement using a method which allows for clean, even-stepped logs, then exports the downhole logging data into a ".LAS" file. The corrective step applied prior to exporting the data reduces the number of ways the measurement values can become skewed due to interpolation. The corrected depth measurement values are stored in the "MD" field in several different DataLogger Database tables, including ones called "WITS" and "GAMMA." Licensed users ofthe DataLogger Application have access to the corrected and accurate drilling data on a real-time basis, but the amended data has never intentionally been made available in real-time to any third parties such as Petrolink. Doc. 93 at 9.

In addition to performing corrective calculations on raw data, Digidrill also organizes and sorts the data into a logical schema so that the massive amount of data can be easily read and made use of by Digidrill customers. The Database schema includes 27 separate tables into which the data is sorted and organized, with an aggregate of 433 columns. There are endless ways to potentially organize the data, but the precise number of tables and fields in the schema developed by Digidrill are encoded within the DataLogger source code. Given the vast amount of data needing to be structured and organized into a usable, readable format, it took many years to develop the DataLogger Database schema into its current, user-friendly layout. Id. at 10. Digidrill implemented original nomenclature to designate each table and field and set up a system where the entries in different tables can relate to each other. Id. at 11. These relationships, which are programmed into the source code of DataLogger, allow Digidrill to develop an information hierarchy by connecting pieces of data that are related to each other in some abstract way.

The DataLogger Database was originally formatted to be opened using a program called Microsoft Access. As its schema became more complex, however, Digidrill decided to convert the Database from a Microsoft Access format to the Firebird Database format, a different format more capable of smoothly handling the DataLogger Database's complexity. While Microsoft Access and Firebird are different formats, Digidrill was able to maintain the general database schema in the new format, with a few minor changes. The schema of the DataLogger Database is generated by DataLogger's 3000 lines of source code using the Firebird Database Serverprogram upon installation of DataLogger by a user. Doc. 93 at 15. Data stored on the Firebird server is capable of being queried by DataLogger users with off-the-shelf software products. Doc. 73-1 at 1. As will be discussed further, this lawsuit arises because Petrolink managed to gain access to this data gathered by DataLogger and stored in the DataLogger Database, and then Petrolink used the data it acquired to advance its own business interests.

B. Petrolink's Alleged Hack

Petrolink is a competitor of Digidrill. Petrolink was developing a real-time drilling data visualization program and Digidrill was also planning...