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DaimlerChrysler Servs. v. Summit Nat'l

United States District Court for the Eastern District of Michigan, Southern Division

May 22, 2006, Decided ; May 22, 2006, Filed

Case No. 02-71871



This case began just over four years ago, when Defendant Summit [*2]  National, Inc. ("SNI") discovered that it had an ownership interest in Automated Leasing Account System ("ALAS") software, which was used by Plaintiff DaimlerChrysler Services ("DCS"). SNI's predecessor, Stockholder Systems, Inc. ("SSI"), had entered into a perpetual software licensing agreement with DCS's predecessor, Mercedes-Benz Credit Corporation ("MBCC"). SNI determined that DCS was in breach of the agreement, and sent a letter to DCS demanding DCS to cease use of ALAS.

DCS responded with a declaratory action against SNI, apparently attempting to shake off a pesky litigant. SNI counterclaimed, however, and as the facts developed in its favor--or were represented to have developed in its favor--this case turned into a massive lawsuit with hundreds of millions of dollars in potential damages, most of which were based on SNI's copyright and trade secret claims. Now, after a number of twists and turns and further development of the facts, the case has come full circle. For the reasons discussed below, the Court hereby DISMISSES SNI's copyright and trade secrets claims.

I. Background

The early background to this case has been accurately summarized by the Sixth Circuit [*3]  Court of Appeals:

In 1983, SSI, which owned and marketed ALAS, entered into a "Software System Agreement" under which SSI granted MBCC a "perpetual license" to use ALAS at its Portland, Oregon facility. DCS is the successor-in-interest to MBCC. ALAS provided the software platform used by DCS to track leasing contracts, leasing customers, and vehicles subject to lease in the United States and Canada. The Software Agreement contemplated that the software would be used only by DCS at the Portland facility to process its own data and the data of any of DCS's wholly owned subsidiaries. The agreement stated that DCS could not use ALAS, which was a "trade secret," at any other facility without notifying SSI and/or paying a license fee to SSI. There was also a non-disclosure provision in the agreement, charging DCS with the responsibility to "take all reasonable steps to ensure" that ALAS or any portion thereof would not be made available to any other person, firm, or corporation without SSI's written consent. DCS reserved "the right to modify the Products to meet DCS's particular needs and requirements," and SSI "acknowledged the proprietary rights of DCS in any such modification." SSI [*4]  retained the right to terminate the agreement if DCS breached the agreement and failed to take corrective action within thirty days of receiving notice from SSI of such breach. . . .

The last recorded installation of ALAS occurred in April 1993 in the Philippines. At some point between 1983 and 1998, Checkfree apparently acquired the rights to a system called ALAS from SSI. In July 1998, CheckFree sold certain assets to SNI. . . . One of these assets was the ALAS software and that SNI acquired all rights related to ALAS. . . . 1

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2006 U.S. Dist. LEXIS 32049 *; 2006 WL 1420812


Subsequent History: Later proceeding at DaimlerChrysler Servs. v. Summit Nat'l, 2006 U.S. Dist. LEXIS 53780 ( E.D. Mich., Aug. 3, 2006)

Affirmed in part and appeal dismissed in part by Daimler-Chrysler Servs. N. Am., LLC v. Summit Nat'l, Inc., 2008 U.S. App. LEXIS 17804 (6th Cir.) (6th Cir. Mich., 2008)

Prior History: DaimlerChrysler Servs. N. Am., LLC v. Summit Nat'l, Inc., 144 Fed. Appx. 542, 2005 U.S. App. LEXIS 18063 (6th Cir.), 2005 FED App. 724N (6th Cir.) (6th Cir. Mich., 2005)


trade secret, source code, Software, third party, damages, licensed, misappropriation, notice, disclosure, breached, summary judgment, ownership, genuine issue of material fact, disclosing, secret, customers, employees, possessed, terminate, rights, copyright infringement, contract claim, counterclaim, injunction, secrecy, banks

Business & Corporate Compliance, Ownership Rights, Distribution, Infringement, Copyright Law, Formalities, Notice, General Overview, Trade Secrets Law, Trade Secret Determination Factors, Definition Under Uniform Act, Definition Under Common Law, Protection of Secrecy, Misappropriation Actions, Elements of Misappropriation, Existence & Ownership, Protected Information