IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 08-10521

MGE UPS SYSTEMS INC

Plaintiff - Appellant - Cross-Appellee

v.

GE CONSUMER AND INDUSTRIAL INC; GE INDUSTRIAL SYSTEMS INC;

GE N E R A L E LE C TR IC COM PA N Y ; POW E R M A IN T E N A N C E

INTERNATIONAL INC

Defendants - Appellees - CrossAppellants

Appeal from the United States District Court

for the Northern District of Texas

Before BARKSDALE, GARZA, and PRADO, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

MGE UPS Systems, Inc. (“MGE”) appeals the district court’s Federal Rule

of Civil Procedure 50(a) dismissal of its Digital Millennium Copyright Act

(“DMCA”) claim against Power Maintenance International, Inc. (“PMI”); General

Electric Company (“GE”); GE Consumer and Industrial, Inc.; and GE Industrial

Systems, Inc. (collectively, “GE/PMI”). MGE also appeals the district court’s

denial of prejudgment interest on MGE’s damages award. GE/PMI cross-appeals

on four grounds: (1) whether the district court erred in dismissing GE/PMI’s

Rule 50(a) motion because MGE failed to present evidence of damages, or in the

United States Court of Appeals

Fifth Circuit

F I L E D

July 20, 2010

Lyle W. Cayce

Clerk

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alternative, whether the district court erred in dismissing GE/PMI’s Rule 50(b)

motion because the $4.6 million jury award was not a reasonable calculation of

damages; (2) whether MGE impermissibly double-recovered damages; (3)

whether the parties had a tolling agreement in place that permitted MGE to

recover damages prior to December 17, 2001; and (4) whether the district court

erred in granting MGE injunctive relief against GE/PMI.

I

Uninterruptible power supply (“UPS”) machines are used during periods

of power outages to provide power to critical operating systems. MGE

manufactures several lines of UPS machines, some of which require the use of

MGE’s copyrighted software programs Pacret and Muguet during servicing.

This software fixes calibration problems more quickly than traditional manual

servicing techniques. Without the software, a service technician can still

partially service an MGE UPS machine, but a number of critical procedures

(including recalibration and adjustment of voltage levels) can only be performed

through use of the software, which works only on MGE-manufactured devices.

The software requires connection of an external hardware security key

(called a “dongle”) to the laptop serial port. Each dongle has an expiration date,

a maximum number of uses, and a unique password. When the software is

activated, it searches for a properly programmed dongle before it will fully

launch. Once launched, the software will go through a second series of protocol

exchanges with the data located on the UPS machine’s microprocessors to

confirm that MGE software is communicating with MGE hardware. If the

protocol exchange is successful, MGE’s software proceeds to collect system status

information for the technician.

Years after MGE introduced its security technology, a number of software

hackers published information on the internet disclosing general instructions on

how to defeat the external security features of a hardware key. Once the

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software is cracked and the security key is defeated, the software can be

accessed and used without limitation.

PMI is a critical power service company servicing a variety of brands of

UPS machines, including MGE UPS machines. PMI initially subcontracted

MGE to perform software service on MGE UPS machines, but sometime before

June 2000, a group of PMI employees obtained at least one copy of MGE’s

software from an unknown source. GE acquired PMI in 2001.

In December 2004, MGE filed suit against GE/PMI for, inter alia,

copyright infringement, misappropriation of trade secrets, unfair competition,

conversion, and DMCA violations. GE/PMI does not dispute liability, inasmuch

as it admits to recovering a laptop from a former PMI employee that contained

hacked MGE software, and admits to five instances of this software’s use from

June 2000 through May 2002. MGE alleges that GE/PMI used the software a

total of 428 times, including uses after the district court granted MGE a

preliminary injunction against GE/PMI’s use of MGE’s software and trade

secrets.

During the proceedings for this action, GE/PMI moved, renewed, and

re-urged motions for summary judgment and judgment as a matter of law

pursuant to Federal Rules of Civil Procedure 50(a) and (b) arguing, inter alia,

that MGE could not sustain a DMCA cause of action against GE/PMI. After

initially denying GE/PMI’s pretrial motion for summary judgment and its Rule

50(a) motion on MGE’s DMCA claim, the district court dismissed the DMCA

claim during an off-record jury charge conference. The jury found that GE/PMI

had infringed MGE’s copyrights, misappropriated MGE’s trade secrets, and

committed unfair business practices. The jury awarded MGE the following

damages:

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A. Damages for misappropriation of trade secrets on MGE’s data

disk:

1. Net profits earned by GE/PMI from January 1, 2001 to

December 17, 2001: $460,000

2. Net profits earned by GE/PMI from December 18, 2001

to August 15, 2005: $1,852,000

B. Damages for copyright infringement:

1. Net profits earned by GE/PMI from January 1, 2001 to

December 17, 2001: $368,000

2. Net profits earned by GE/PMI from December 18, 2001

to August 15, 2005: $1,852,000

C. Damages for misappropriation of MGE software trade secrets:

1. Net profits earned by GE/PMI from January 1, 2001 to

December 17, 2001: $92,000

2. Net profits earned by GE/PMI from December 18, 2001

to August 15, 2005: $0

TOTAL: $4,624,000

The district court awarded MGE the total jury verdict, post-judgment

interest, a permanent injunction against GE/PMI, impoundment of infringing

materials, taxable costs, and attorney’s fees. The district court declined to award

prejudgment interest on the damage awards.

II

MGE argues that the district court erred in granting GE/PMI’s Rule 50(a)

motion dismissing MGE’s DMCA violation claim. We review de novo a trial

court’s decision on a Rule 50(a) motion for judgment as a matter of law, viewing

all of the evidence “in the light and with all reasonable inferences most favorable

to the party opposed to the motion.” Resolution Trust Corp. v. Cramer, 6 F.3d

1102, 1109 (5th Cir. 1993) (internal quotations omitted). A Rule 50(a) motion is

properly granted “[i]f the facts and inferences point so strongly and

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overwhelmingly in favor of the moving party . . . that reasonable jurors could not

have arrived at a contrary verdict.” Id. (citation omitted).

GE/PMI argues that MGE’s dongle does not actually prevent copying of

MGE’s software, but merely prevents access to the software. Once that access

is breached, there are no barriers to copying the software. Accordingly, GE/PMI

argues that MGE’s software is “freely accessible” within the meaning of the

DMCA because the dongle does not block the type of “access” the DMCA is

designed to prevent. Furthermore, though the MGE software in GE/PMI’s

possession “was modified” to eliminate the need for a dongle, MGE has not

presented evidence that a PMI employee initially modified the software.

One of Congress’ purposes behind enacting the DMCA was targeting the

circumvention of technological protections. See Davidson & Assocs. v. Jung, 422

F.3d 630, 639–40 (8th Cir. 2005). The DMCA’s anti-circumvention provision

states, “No person shall circumvent a technological measure that effectively

controls access to a work protected under this title.” 17 U.S.C. § 1201(a)(1)(A).

To “circumvent a technological measure” means to “descramble a scrambled

work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove,

deactivate, or impair a technological measure, without the authority of the

copyright owner.” Id. § 1201(a)(3)(A). “Effectively controls access to a work”

means that “the measure, in the ordinary course of its operation, requires the

application of information, or a process or a treatment, with the authority of the

copyright owner, to gain access to the work.” Id. § 1201(a)(3)(B). GE/PMI does

not contest that MGE’s software was a work protected under Title 17 of the

Copyright Act.

The DMCA does not describe the type of “access”-controlling technological

measure required to invoke the DMCA’s protections, and this is an issue of first

impression in this Circuit. MGE proposes a definition from a Fifth Circuit

non-DMCA case that discussed copyright issues and determined “access” to

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include “an opportunity to view the copyrighted work.” Ferguson v. Nat’l Broad.

Co., 584 F.2d 111, 113 (5th Cir. 1978) (citing 3 M. NIMMER, COPYRIGHT § 13.02(A)

(1978)). Reading this definition alongside definitions from Merriam-Webster’s

dictionary and Black’s Law Dictionary, MGE concludes that “access” means

“viewing, making use of, or using the protected work.” MGE argues that dongles

prevented access to its software and that without using both this hardware key

and its corresponding password, a user cannot view, gain access to, or make use

of the software.

However, MGE advocates too broad a definition of “access;” their

interpretation would permit liability under § 1201(a) for accessing a work simply

to view it or to use it within the purview of “fair use” permitted under the

Copyright Act. Merely bypassing a technological protection that restricts a user

from viewing or using a work is insufficient to trigger the DMCA’s

anti-circumvention provision. The DMCA prohibits only forms of access that

would violate or impinge on the protections that the Copyright Act otherwise

affords copyright owners. See Chamberlain Group, Inc. v. Skylink Techs., Inc.,

381 F.3d 1178, 1202 (Fed. Cir. 2004). The Federal Circuit, in analyzing the

DMCA’s anti-circumvention provision, concluded that it “convey[s] no additional

property rights in and of themselves; [it] simply provide[s] property owners with

new ways to secure their property.” Id. at 1193–94. Indeed, “virtually every

clause of § 1201 that mentions ‘access’ links ‘access’ to ‘protection.’” Id. at 1197.

Without showing a link between “access” and “protection” of the copyrighted

work, the DMCA’s anti-circumvention provision does not apply. The owner’s

technological measure must protect the copyrighted material against an

infringement of a right that the Copyright Act protects, not from mere use or

viewing. Id. at 1204; see also Lexmark Int’l, Inc. v. Static Control Components,

Inc., 387 F.3d 522, 547 (6th Cir. 2004) (finding no DMCA anti-circumvention

liability where an authentication sequence in a printer microchip blocked one

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form of access (printer function) but permitted free access from other avenues

(for example, anyone who purchased that brand of printer could download a copy

of the program)).

Here, MGE has not shown that bypassing its dongle infringes a right

protected by the Copyright Act. MGE’s dongle merely prevents initial access to

the software. If no dongle is detected, the software program will not complete

the start-up process. However, even if a dongle is present, it does not prevent

the literal code or text of MGE’s copyrighted computer software from being freely

read and copied once that access is obtained; there is no encryption or other form

of protection on the software itself to prevent copyright violations. Because the

dongle does not protect against copyright violations, the mere fact that the

dongle itself is circumvented does not give rise to a circumvention violation

within the meaning of the DMCA.

Moreover, the DMCA’s anti-circumvention provision does not apply to the

use of copyrighted works after the technological measure has been circumvented,

targeting instead the circumvention itself. Universal City Studios, Inc. v. Corley,

273 F.3d 429, 443 (2d Cir. 2001). MGE cites no evidence that a GE/PMI

employee or representative was responsible for altering the Pacret and Muguet

software such that a dongle was not required to use the software. Without

proving GE/PMI actually circumvented the technology (as opposed to using

technology already circumvented), MGE does not present a valid DMCA claim.

See id. (“[T]he DMCA targets the circumvention of digital walls guarding

copyrighted material (and trafficking in circumvention tools), but does not

concern itself with the use of those materials after circumvention has occurred.”).

Because the DMCA does not apply to mere use of a copyrighted work, and

because MGE has not shown that GE/PMI circumvented MGE’s software

protections in violation of the DMCA, the district court did not err in granting

GE/PMI’s Rule 50(a) motion dismissing MGE’s DMCA claim.

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III

GE/PMI argues the district court erred in denying its Rule 50(a) motion

with regard to MGE’s claim under the Copyright Act because the testimony of

MGE’s damages expert had been stricken, and MGE improperly relied on PMI’s

total gross revenue figure rather than the portion reasonably related to the

copyright infringement. For the same reason, GE/PMI argues MGE failed to

prove all the elements of its state law misappropriation of trade secrets and

unfair competition claims: without introducing evidence of PMI’s profits related

to the infringement, MGE has failed to prove damages for these claims.

A

GE/PMI argues that the district court erred in denying its Rule 50(a)

motion because MGE failed to present sufficient evidence of damages. Under 17

U.S.C. §§ 504(a)(1) and (b), a copyright owner is permitted to recover his own

“actual damages,” including lost profits and “reasonable royalty rates,” or what

a willing buyer would have been reasonably required to pay a willing seller as

a licensing fee for the actual use of the copyrighted material by the infringers.

Davis v. Gap, Inc., 246 F.3d 152, 167 (2d Cir. 2001). A copyright owner may also

seek “any profits of the infringer that are attributable to the infringement and

are not taken into account in computing the actual damages.” 17 U.S.C.

§ 504(b). If the copyright owner chooses to claim infringer’s profits, “the

copyright owner is required to present proof only of the infringer’s gross revenue,

and the infringer is required to prove his or her deductible expenses and the

elements of profit attributable to factors other than the copyrighted work.” Id.;

see also Estate of Vane v. Fair, Inc., 849 F.2d 186, 188 (5th Cir. 1988) (applying

this standard to copyright infringement action seeking infringer’s profits).

GE/PMI argues that MGE failed to satisfy the first step of proving infringer’s

profits because MGE’s only evidence of gross revenues was Exhibit DX-37, a

one-page bar graph showing PMI’s “total revenue” from all lines of business from

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2001 through 2004. GE/PMI contends that this chart includes undifferentiated

gross revenue from servicing a variety of brands of equipment, not merely MGE

equipment, and therefore does not reflect revenues “attributable to the

infringement.”

“[O]nce liability has been shown, § 504(b) creates an initial presumption

that the infringer’s ‘profits . . . attributable to the infringement’ are equal to its

gross revenue.” Bonner v. Dawson, 404 F.3d 290, 294 (4th Cir. 2005) (alteration

in original) (quoting 17 U.S.C. § 504(b)). “In meeting its initial burden, however,

a copyright holder must show more than the infringer’s total gross revenue from

all of its profit streams. . . . Rather, ‘gross revenue’ refers only to revenue

reasonably related to the infringement.” Id. (emphases added); see also Davis,

246 F.3d at 159–60 (finding proffered evidence of defendant’s total gross

revenues too broad to support a copyright infringement claim based on

defendant’s use of plaintiff’s copyrighted eyeglasses in an ad campaign); Estate

of Vane, 849 F.2d at 188, 190 (finding that “a lump-sum figure for profits

attributable to the television commercials that contained infringed material as

a whole without accounting for the fact that the infringed material constituted

only a fraction of any given commercial” was too speculative a connection to

sustain damages); Taylor v. Meirick, 712 F.2d 1112, 1122 (7th Cir. 1983) (finding

insufficient for § 504(b) purposes that plaintiff showed defendant’s gross

revenues from the sales of all products instead of demonstrating gross revenues

from sale of the infringing products).

MGE sought over $100 million in damages based almost exclusively on the

testimony of its only damages expert, Dr. Laurance Prescott. Dr. Prescott’s

testimony related to two damage models: (1) MGE’s lost profits; and (2)

recovering a reasonable royalty. Notably, Dr. Prescott did not testify to

GE/PMI’s profits attributable to the infringement. The district court carried

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GE/PMI’s Federal Rule of Evidence 702 and Daubert objections to Dr. Prescott’s

1

testimony and permitted him to testify at trial. After hearing his testimony, the

district court concluded that it should be stricken in its entirety, determining

that Dr. Prescott’s conclusions regarding MGE’s lost profits were based on

insufficient facts and data, including unsupported assumptions regarding MGE’s

lost market share and service pricing. The district court also found Dr. Prescott

had no experience in assessing hypothetical reasonable royalty rates and that

his proffered hypothetical reasonable royalty rate was not based on objective

analysis.

Once Dr. Prescott’s testimony was stricken, MGE offered a final witness,

MGE general manager Michael O’Brien, who presented testimony relating only

to MGE’s reasonable royalty damages. O’Brien was never designated as an

expert on damage calculations. The district court ultimately found his testimony

insufficient to permit MGE to offer a jury instruction on reasonable royalty

damages.

2

MGE’s only remaining evidence of damages was DX-37, the bar graph

indicating PMI’s total revenue from 2001 through 2004. Though this was an

exhibit prepared by GE/PMI, the district court admitted the exhibit during Dr.

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592 (1993). 1

Typically, to demonstrate reasonable royalty damages, a plaintiff presents evidence 2

as to “what the parties would have agreed to as a fair price for licensing the defendant to put

the trade secret to the use the defendant intended at the time the misappropriation took

place.” Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 539 (5th Cir. 1974). 

However, O’Brien was only able to testify as to the royalty amounts that MGE would ask a

competitor to pay to prevent that competitor from entering the UPS service industry))that is,

staggeringly high royalty amounts that would price out competitors. Such amounts are not

cognizable as a “reasonable royalty” calculation at which a buyer and seller would agree to be

market value for a particular piece of software. See Alcatel USA, Inc. v. Cisco Sys., 239 F.

Supp. 2d 660, 669 (E.D. Tex. 2002) (“[T]his measure is to be calculated based on a reasonable

royalty to which the parties would have agreed at the time of the alleged misappropriation.

While the Court recognizes that some degree of speculation is inherent in calculating a

suppositious licensing agreement between two parties that has never occurred, this

hypothetical construct . . . must contain some degree of certitude.” (emphasis added)).

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Prescott’s re-direct examination. MGE questioned Dr. Prescott only on the lack

of GE revenue represented on DX-37’s graph. Dr. Prescott was not questioned

about whether the total PMI revenue indicated on the graph represented

revenue related to PMI’s infringement of MGE’s copyright.

3

GE/PMI argues that it would not have included DX-37 in its proposed

exhibits had it known that Dr. Prescott’s testimony would be stricken because

4

it had no idea MGE would be seeking GE/PMI’s profits rather than MGE’s own

lost profits and reasonable royalties. MGE contends that seeking defendant’s

profits was not a new theory of recovery because the Joint Pretrial Order

indicates that it sought “monetary damages pursuant to 17 U.S.C. § 504” for

copyright infringement. This provision encompasses all types of damages

available for copyright infringement, including the copyright owner’s actual

damages, the infringer’s profits attributable to the infringement, and statutory

damages. However, in its Federal Rule of Civil Procedure 26(a) disclosures,

when asked to provide “a computation of each category of damages claimed,”

MGE indicated that Dr. Prescott’s testimony would comprise its damages

calculation. Dr. Prescott only testified to MGE’s actual damages: MGE’s own

lost profits and reasonable royalty rates. In other words, the record indicates

that MGE planned to rely entirely on its actual damages claim; GE/PMI had no

reason to think that MGE was seeking GE/PMI’s profits attributable to the

infringement, nor was it prepared to defend against such a claim.

“[W]hen one of the prima facie elements of a claim is damages and the

claimant fails to introduce evidence of those damages, he or she commits a fatal

 The trial transcript indicates that MGE may have been trying to refer to a different 3

graph (DX-42, a comparison of MGE UPS equipment gross revenue versus UPS service gross

revenue from 1997 through 2007) when it requested to admit DX-37.

GE/PMI alleges it only intended to use DX-37 to impeach Dr. Prescott’s assertion that 4

as MGE’s revenues went down, GE/PMI’s revenues went up; the exhibit shows PMI’s total

revenue remaining relatively constant from 2001 through 2004.

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error.” Prunty v. Ark. Freightways, Inc., 16 F.3d 649, 652 (5th Cir. 1994). MGE’s

decision to seek GE/PMI’s profits was clearly a last-minute attempt to save its

copyright infringement claim from dismissal for failure to prove damages. MGE

has not succeeded. GE/PMI presented evidence that approximately 10% of PMI’s

UPS service business came from MGE-branded machines, and MGE’s software

was usable only with MGE UPS machines and not with competitors’ products.

Thus, PMI’s total revenue far exceeds the approximately 10% of revenue

reasonably related to the infringement of MGE’s copyright. MGE needed to

present a more narrowly tailored calculation of PMI’s profits in order to cognize

a claim for copyright damages “attributable to the infringement.” Accordingly,

the district court erred in denying GE/PMI’s Rule 50(a) motion on MGE’s

copyright infringement claims because MGE has not shown damages under

§ 504(b).

B

GE/PMI argues the district court erred in denying its Rule 50(a) motion

regarding MGE’s misappropriation of trade secrets and unfair competition

claims because the evidence did not support damages for these claims. At the

close of MGE’s case, the only evidence introduced to support its damages claims

was the aforementioned DX-37 chart showing PMI’s total revenues earned from

all sources of income. GE/PMI contends that without evidence of PMI’s net

profits earned on the MGE equipment at issue, MGE’s state law claims should

have been dismissed on GE/PMI’s Rule 50(a) motion.

There is little precedent under Texas law to guide us in determining

whether MGE has sustained the burden of proof required of a plaintiff seeking

to recover a defendant’s net profits. In the only reported Texas case involving

the recovery of defendant’s profits for a misappropriation of trade secrets claim,

the Dallas Court of Appeals held that although defendant’s profits are a “proper

element[ ] of damages in a case involving the wrongful use of a trade secret,” a

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plaintiff cannot recover damages without offering evidence “to show the actual

profit made by [defendant].” Elcor Chem. Corp. v. Agri-Sul, Inc., 494 S.W.2d

204, 214 (Tex. Civ. App.))Dallas 1973, writ ref’d n.r.e.); see also Carbo Ceramics,

Inc. v. Keefe, 166 F. App’x 714, 723 (5th Cir. 2006) (unpublished) (interpreting

Texas law to permit a plaintiff to “seek damages measured by the defendant’s

actual profits resulting from the use or disclosure of the trade secret”); Houston

Mercantile Exch. Corp. v. Dailey Petroleum Corp., 930 S.W.2d 242, 248 (Tex.

App.))Houston [14th Dist.] 1996, no writ) (finding that, as a threshold

requirement to recovering damages for trade secret and unfair competition

claims, “a plaintiff must produce evidence from which the jury may reasonably

infer that the damages sued for have resulted from the conduct of the

defendant”).

In the instant matter, MGE faces the same problems showing “actual

profits resulting from the use or disclosure of the trade secret” as it did on its

copyright claim. DX-37 demonstrated PMI’s total revenue, not “actual profits.”

MGE has not presented evidence that provides any means of distinguishing

revenue PMI gained from other sources from revenue gained through

misappropriation of MGE’s trade secrets, let alone a calculation of profits from

the relevant portion of revenue. MGE attempts to distinguish Elcor by arguing

that DX-37 is “credible evidence of PMI’s profits,” but MGE needed to take

additional steps to deduct unrelated revenue and costs from these total figures

in order to demonstrate PMI’s profits related to the infringement. MGE failed

to do so.

However, MGE argues that comment f to the RESTATEMENT (THIRD) OF

UNFAIR COMPETITION § 45 (1995) governs damages under Texas law, and

contends that it met its burden under this burden-shifting framework:

The traditional form of restitutionary relief in an action for the

appropriation of a trade secret is an accounting of the defendant’s

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profits on sales attributable to the use of the trade secret. . . . The

plaintiff has the burden of establishing the defendant’s sales; the

defendant has the burden of establishing any portion of the sales

not attributable to the trade secret and any expenses to be deducted

in determining net profits.

MGE points to PMI’s total revenue in DX-37 and argues that, under the

Restatement, this exhibit satisfies its burden of proof with regard to PMI’s

“sales” of providing service to UPS machines. MGE contends that GE/PMI

subsequently had the burden of demonstrating which portions of PMI’s revenue

were not attributable to the state law claims, which it failed to do.

Texas courts have not adopted the RESTATEMENT (THIRD) OF UNFAIR

COMPETITION in its entirety and whether § 45’s comment f is controlling in Texas

courts is still an open question. See, e.g., In re Bass, 113 S.W.3d 735, 739–40

(Tex. 2003) (following the original RESTATEMENT OF TORTS’ definition of and

factors used to identify trade secrets, despite this section’s slight alteration

thereof in the RESTATEMENT (THIRD) OF UNFAIR COMPETITION ); Lear Siegler, Inc.

5

v. Perez, 819 S.W.2d 470, 471–72 (Tex. 1991) (adopting an “instructive” portion

of the RESTATEMENT (SECOND) OF TORTS but noting that the Texas Supreme

Court has not adopted the RESTATEMENT in its entirety). The burden-shifting

procedures noted in comment f are not included in the first RESTATEMENT OF

TORTS, whose definition of and factors used to identify trade secrets are still used

by Texas courts. See In re Bass, 113 S.W.3d at 739–40. Neither the Texas

Supreme Court nor any of the Texas appellate courts have specifically applied

comment f to determine a defendant’s profits in a trade secret action. Given that

comment f’s standard sets a plaintiff’s burden of proof for trade secret damages

The concept of unfair competition, which was originally included in the first 5

RESTATEMENT OF TORTS and was tentatively slated for inclusion in the RESTATEMENT (SECOND)

OF TORTS, is now addressed in the RESTATEMENT (THIRD) OF UNFAIR COMPETITION.

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lower than the standard applied in Elcor, we conclude that the Texas Supreme

Court would not adopt the burden-shifting procedures of comment f.

 Accordingly, the district court erred in declining to grant GE/PMI’s Rule

50(a) motion on MGE’s misappropriation of trade secrets and unfair competition

claims.

IV

GE/PMI contends the district court erred in denying its Rule 50(b) motion

at the close of the case because there was legally insufficient evidence to support

the jury’s $4.6 million damage award; in denying its request to apply the

One-Satisfaction Rule to MGE’s recovery under Texas law; and in concluding

that damages from acts occurring before December 17, 2001 were not barred by

the three-year statute of limitations under both the Copyright Act and Texas

law. Additionally, MGE contends the district court abused its discretion by

denying MGE’s request for prejudgment interest on damages. Because the

district court erred in dismissing GE/PMI’s Rule 50(a) motion at the close of

MGE’s case because MGE has failed to prove its damages claims, these

arguments are moot.

V

GE/PMI appeals the district court’s grant of a permanent injunction

against GE/PMI’s use of MGE’s software and trade secrets. We review the

denial or grant of a permanent injunction for an abuse of discretion.

Schlotzsky’s, Ltd. v. Sterling Purchasing & Nat’l Distrib. Co., 520 F.3d 393, 402

(5th Cir. 2008).

Section 502 of the Copyright Act authorizes the court to grant “‘final

injunctions on such terms as it may deem reasonable to prevent or restrain

infringement of a copyright.’” Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d

772, 790 (5th Cir. 1999) (quoting 17 U.S.C. § 502(a)). GE/PMI contends that in

2005 it turned over the only infringing article, a laptop that had not been used

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No. 08-10521

since 2002, and that the only data disk found was in a former employee’s

possession who admitted to keeping it for his own reference after he left the

company. However, GE/PMI admitted to five instances of direct copyright

infringement, and MGE presented numerous instances of GE/PMI’s infringing

activity at trial, including some uses of MGE software that occurred after the

district court entered its preliminary injunction and impoundment order in

August 2005. Additionally, the laptops of two trial witnesses who admitted to

using MGE software and trade secrets, respectively, were never recovered, and

GE/PMI failed to offer conclusive evidence to account for these laptops’ absence.

Given that there may be infringing materials still in GE/PMI’s possession,

and given GE/PMI’s failure to conform to the constraints of the preliminary

injunction, the district court did not abuse its discretion in granting a permanent

injunction against GE/PMI’s future use of MGE’s software and trade secrets.

VI

For the foregoing reasons, we AFFIRM the district court’s grant of

GE/PMI’s Rule 50(a) motion dismissing MGE’s DMCA claim. We also AFFIRM

the district court’s grant of a permanent injunction against GE/PMI’s use of

MGE’s software and trade secrets. We REVERSE the district court’s denial of

GE/PMI’s Rule 50(a) motion on MGE’s copyright infringement, unfair

competition, and misappropriation of trade secrets claims for MGE’s failure to

prove damages under 17 U.S.C. § 504(b) and Texas law, and RENDER a takenothing judgment for MGE.

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