IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-10753

SPEAR MARKETING, INCORPORATED, 

 Plaintiff - Appellant

v.

BANCORPSOUTH BANK; ARGO DATA RESOURCE CORPORATION, 

 Defendants - Appellees

Appeal from the United States District Court

for the Northern District of Texas

Before WIENER, SOUTHWICK, and GRAVES, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellant Spear Marketing, Inc. (“SMI”) brought various Texas 

state law claims against Defendants-Appellees BancorpSouth Bank (“BCS”) 

and ARGO Data Resource Corp. (“ARGO”) (collectively, “Defendants”) in Texas 

state court. SMI’s claims related to Defendants’ alleged theft of trade secrets 

in connection with a software program developed and sold by SMI. Defendants 

removed the case to federal court on the basis of complete preemption by the 

Copyright Act.1 The district court denied SMI’s motion to remand and, after

 

1 See 17 U.S.C. § 301(a).

United States Court of Appeals

Fifth Circuit

FILED

June 30, 2015

Lyle W. Cayce

Clerk

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discovery, granted Defendants’ motion for summary judgment on the merits of 

the claims. SMI appeals both decisions. We affirm.

I. FACTS AND PROCEEDINGS

SMI is a small, family-run business that produces one product for the 

banking industry, a computer program called VaultWorks. VaultWorks helps 

banks manage their cash inventories so that each of their branches has the 

optimum supply of cash available on site. The program enables banks to 

identify surplus cash in vaults and ATMs, track daily cash inventory, and 

eliminate unnecessary cash deliveries to branch and ATM locations.

Although VaultWorks is a software program, none of SMI’s customers 

has access to the software itself. Instead, “SMI’s customers can only view the 

specific user interface screens and reports they are given access to via the 

internet.”2 Bank branches enter their daily cash information into VaultWorks 

using these interface screens, and VaultWorks’s output data is then displayed 

to those branches. SMI acknowledges that none of its customers was ever 

provided with the source code, object code, or software for VaultWorks.

BCS was one of SMI’s largest customers. BCS and SMI first entered into 

a one-year agreement for the use of VaultWorks in May 2002. The parties 

extended the agreement several times, the last extension occurring in March 

2010 for a term of two years.

ARGO, like SMI, develops software for the banking industry. It is 

significantly larger than SMI and offers a range of products. At all relevant 

times, BCS used ARGO’s automatic teller program, BANKPRO Teller. Around 

2004, ARGO began to develop its own cash management program, which 

 

2 Spear Mktg., Inc. v. BancorpSouth Bank, No. 3:12-CV-3583-B, 2014 WL 2608485, at 

*1 (N.D. Tex. June 11, 2014).

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ARGO envisioned would eventually be bundled with its BANKPRO Teller.

This product, named Cash Inventory Optimization (“CIO”), uses different 

predictive algorithms than does VaultWorks. Because CIO is installed directly

on a bank’s computers, it is integrated with the rest of the bank’s operating 

system.3 CIO thus “eliminates ‘the need for branch personnel to manually 

input cash data,’ as bank employees must do with VaultWorks.”4

Starting in 2008, ARGO began pitching CIO and an upgraded version of 

the BANKPRO Teller system to BCS. BCS demurred on both products until 

March 2010, when it told ARGO that it would be interested in CIO if that 

system could be integrated with the existing version of BANKPRO Teller that 

BCS was then using rather than ARGO’s upgraded replacement product. 

ARGO discussed this concern internally and, on April 1, 2010, emailed BCS 

that this integration would be possible.

Also around April 1, 2010, SMI contacted ARGO to see if it would be 

interested in acquiring SMI. ARGO expressed interest, representing that it 

neither had nor was currently developing a cash management product similar 

to VaultWorks. On the strength of ARGO’s expression and representations, 

SMI arranged to demonstrate VaultWorks to ARGO, which it did over the 

phone and online on April 6. During this demonstration, which lasted 

approximately one hour, SMI disclosed confidential business and technical 

information about VaultWorks. After a few more exchanges, ARGO lost

interest in acquiring SMI and stopped responding to SMI’s emails.

Through the rest of 2010, ARGO continued marketing CIO to BCS. 

Finally, in early January 2011, BCS agreed to license CIO from ARGO. The 

two companies conducted a lengthy implementation process that lasted the

 

3 See id. at *3.

4 Id. (citation omitted).

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rest of the year. During this time, BCS sent ARGO various screenshots of the 

VaultWorks user interface because ARGO needed historical cash usage data 

from BCS’s branches to troubleshoot CIO’s forecasting function. That data was 

readily accessible from the VaultWorks output screens for each branch.

CIO was finally implemented successfully at the end of 2011, and BCS 

“notified SMI on January 12, 2012 of its intention not to renew the VaultWorks 

Agreement.”5 That agreement thus expired in February 2012.

In September 2012, SMI filed this suit against Defendants in Texas state 

court, alleging ten causes of action: violation of the Texas Theft Liability Act 

(“TTLA”), misappropriation of trade secrets, conversion, unjust enrichment, 

fraud, constructive fraud, breach of contract, tortious interference, unfair 

competition, and civil conspiracy. SMI claimed that Defendants had stolen 

both technical and business trade secrets related to VaultWorks. 

Defendants removed the case to federal court on the ground that SMI’s 

claims were completely preempted by the Copyright Act. SMI then amended 

its state court petition (“Original Petition”) to delete its conversion claim and 

remove various references to copying and distribution. It then moved for 

remand, contending that removal had been improper because none of its claims 

were preempted. SMI explained in its opening brief that it voluntarily 

abandoned its conversion claim “[t]o narrow the issues in this lawsuit” and that 

it removed portions of its TTLA claim related to copying of trade secrets “even 

though this district’s own precedent holds [those portions] are not preempted 

by the Copyright Act.” The district court denied SMI’s motion, holding that 

the conversion and TTLA claims were completely preempted. The court did 

not consider whether SMI’s remaining claims were preempted, choosing 

instead to exercise supplemental jurisdiction over them per 28 U.S.C. § 1367.

 

5 Id. at *6.

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After discovery, Defendants filed a motion for summary judgment, 

seeking dismissal of all of SMI’s remaining claims. The district court granted 

this motion, holding that “SMI ha[d] failed to establish that genuine factual 

disputes exist for certain essential elements of its nine Texas state law claims, 

and as such, summary judgment in Defendants’ favor [wa]s warranted.”6 SMI 

timely appealed the summary judgment order and the order denying its motion 

to remand.

II. ANALYSIS

A. Denial of SMI’s Motion to Remand

1. Standard of Review

“We review the denial of a motion to remand to state court de novo.”7 

Under this standard, “[a]ny underlying findings of fact are subject to review 

for clear error.”8 

2. Time-of-Filing Rule

The district court considered SMI’s motion to remand by evaluating the 

Original Petition for grounds for removal. SMI asserts that the district court 

should have considered SMI’s amended complaint (“Amended Complaint”), in 

which SMI dropped its conversion claim and deleted language accusing 

Defendants of copying VaultWorks. Defendants counter that removal is 

assessed according to the time-of-filing rule.

“[J]urisdictional facts are determined at the time of removal, and 

consequently post-removal events do not affect that properly established 

jurisdiction.”9 It is this court’s established precedent that once a case is 

 

6 Id. at *19.

7 Energy Mgmt. Servs., LLC v. City of Alexandria, 739 F.3d 255, 257 (5th Cir. 2014)

(quoting Roland v. Green, 675 F.3d 504, 511 (5th Cir. 2012)).

8 Camsoft Data Sys., Inc. v. S. Elecs. Supply, Inc., 756 F.3d 327, 333 (5th Cir. 2014).

9 Louisiana v. Am. Nat. Prop. & Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014).

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properly removed, the district court retains jurisdiction even if the federal 

claims are later dropped10 or dismissed.11 In Brown v. Southwestern Bell 

Telephone Co., we held that “[w]hen a defendant seeks to remove a case, the 

question of whether jurisdiction exists is resolved by looking at the complaint 

at the time the petition for removal is filed.”12 We noted that “when there is a 

subsequent narrowing of the issues such that the federal claims are eliminated 

and only pendent state claims remain, federal jurisdiction is not

extinguished.”13 We wrote a thorough and definitive explanation of this issue 

in Hook v. Morrison Milling Co.:

Before analyzing our appellate jurisdiction over this appeal, we first 

note that the district court’s subject matter jurisdiction was proper at all 

times. To begin with, this case was properly removed pursuant to 28 

U.S.C. § 1446. Hook’s original petition alleged, inter alia, that she was 

wrongfully discharged in retaliation for filing a workers’ compensation 

claim. . . . MMC’s removal of Hook’s claims was unquestionably proper. 

Furthermore, Hook’s subsequent deletion of her wrongful discharge 

claim does not render MMC’s removal improper. We have stated on 

several occasions that a post-removal amendment to a petition that 

deletes all federal claims, leaving only pendent state claims, does not 

divest the district court of its properly triggered subject matter 

jurisdiction. In a jurisdictional inquiry, we look at the complaint as it 

existed at the time the petition for removal was filed, regardless of any 

subsequent amendments to the complaint.14

Nothing cited by SMI disturbs this conclusion. First, SMI relies on 28 

U.S.C. § 1447(c), which requires a district court to remand an action “[i]f at any 

 

10 See, e.g., Lone Star OB/GYN Assocs. v. Aetna Health Inc., 579 F.3d 525, 528 (5th 

Cir. 2009) (“Once the case is removed, a plaintiff’s voluntary amendment to a complaint will 

not necessarily defeat federal jurisdiction . . . .”); Brown v. United Parcel Serv., Inc., No. 99-

10092, 2000 WL 1701739, at *1 n.1 (5th Cir. Oct. 31, 2000) (unpublished).

11 See, e.g., Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999) (“A 

district court, in its discretion, may remand supplemental state law claims when it has 

dismissed the claims that provide the basis for original jurisdiction.”).

12 901 F.2d 1250, 1254 (5th Cir. 1990) (emphasis added).

13 Id. (emphasis added).

14 38 F.3d 776, 779–80 (5th Cir. 1994) (emphases added) (footnotes omitted) (citations 

omitted).

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time before final judgment it appears that the district court lacks subject 

matter jurisdiction.”15 But this “any time” language regarding jurisdictional

defects must be read in tandem with the first sentence of the subsection, which 

requires that motions to remand on the basis of procedural defects be brought 

within thirty days of removal. When § 1447(c) is read in its entirety, it is clear 

that this rule does nothing more than specify the time in which remands for 

jurisdictional or procedural defects may be instituted; it contains no 

substantive provisions whatsoever.

Second, SMI quotes the Supreme Court’s decision in Grupo Dataflux v. 

Atlas Global Group, L.P. as limiting the time-of-filing rule to diversity cases,16

but nothing in that case suggests that the rule is not equally applicable to 

federal question cases. And again, SMI ignores our direct precedent 

catalogued above.

Third, SMI relies on the Third Circuit’s decision in New Rock Asset 

Partners, L.P. v. Preferred Entity Advancements, Inc., which held that, in a case 

in federal court solely because of the involvement of the Resolution Trust 

Corporation (“RTC”), subsequent dismissal of the RTC did affect federal 

jurisdiction.17 But New Rock stands for the very limited proposition that 12 

U.S.C. § 1441a(l)(1), which allowed removal of cases when the RTC was a 

party, could not support retaining jurisdiction once the RTC ceased to be a 

party.18 The decision makes no pronouncements as to that case’s applicability 

 

15 28 U.S.C. § 1447(c).

16 541 U.S. 567, 570–71 (2004) (“This time-of-filing rule is hornbook law (quite 

literally) taught to first-year law students in any basic course on federal civil procedure. It 

measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship 

against the state of facts that existed at the time of filing—whether the challenge be brought 

shortly after filing, after the trial, or even for the first time on appeal.” (footnote omitted)).

17 101 F.3d 1492, 1495, 1503 (3d Cir. 1996).

18 12 U.S.C. § 1441a(l)(1) was repealed by the Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Pub. L. No. 111-203, § 364(b), 124 Stat. 1376, 1555 (2010).

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to other federal question cases.19 Moreover, the Third Circuit is in the minority

on this issue,20 and, in an analogous case involving the FDIC, we firmly

rejected New Rock’s very small exception to the time-of-filing rule.21

We conclude that the district court was correct to consider only the 

Original Petition when deciding SMI’s motion to remand. SMI has conflated 

the question whether the initial removal was proper—which follows the timeof-filing rule—with the question whether the district court should, in its 

discretion, remand the case when the federal claims disappear as the case 

progresses.22 SMI’s motion sought remand under § 1447(c) and contended that 

removal had been improper, so the relevant record was the Original Petition.

3. Complete Preemption

We turn now to the question whether the Original Petition provided a 

basis for federal jurisdiction. Defendants removed this case on the ground that 

17 U.S.C. § 301(a), which establishes the exclusivity of the federal Copyright 

Act, completely preempts SMI’s claims. Although preemption is usually a 

defense and thus not a basis for removal, when “the pre-emptive force of a 

[federal] statute is so ‘extraordinary’ that it converts an ordinary state 

common-law complaint into one stating a federal claim for purposes of the wellpleaded complaint rule,” removal is proper.23 In GlobeRanger Corp. v. 

 

19 Furthermore, the Third Circuit went on to allow continued supplemental 

jurisdiction under 28 U.S.C. § 1367. See New Rock, 101 F.3d at 1510–11.

20 See Adair v. Lease Partners, Inc., 587 F.3d 238, 242 (5th Cir. 2009) (“In the minority 

is the Third Circuit, which holds that original federal jurisdiction ceases with the dismissal 

of a FIRREA federal corporation and only supplemental jurisdiction remains.”).

21 See Bank One Tex. Nat’l Ass’n v. Morrison, 26 F.3d 544, 547–48 (5th Cir. 1994) (per 

curiam).

22 See Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999); Bentley 

v. Tarrant Cty. Water Control & Improvement Dist. No. One, No. 94-41044, 1995 WL 534726, 

at *2 (5th Cir. 1995) (unpublished).

23 GlobeRanger Corp. v. Software AG, 691 F.3d 702, 705 (5th Cir. 2012) (quoting 

Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987)) (internal quotation mark omitted).

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Software AG, we held that § 301(a) “completely preempts the substantive 

field.”24

We use a two-part test to determine whether a state law claim is 

preempted by the Copyright Act:

First, the claim is examined to determine whether it falls “within the 

subject matter of copyright” as defined by 17 U.S.C. § 102. And second, 

“the cause of action is examined to determine if it protects rights that 

are ‘equivalent’ to any of the exclusive rights of a federal copyright, as 

provided in 17 U.S.C. § 106.”25

A claim must satisfy both prongs of this test to be preempted.26 If any claim is 

preempted, however, the entire action may be removed.27 Applying this test, 

the district court held that SMI’s TTLA and conversion claims were at least 

partially preempted by § 301(a). It then exercised supplemental jurisdiction 

over the remainder of SMI’s state law claims.

a. Subject Matter of Copyright

The statutory basis for complete copyright preemption is found in 17 

U.S.C. § 301(a), which states:

[A]ll legal or equitable rights that are equivalent to any of the exclusive 

rights within the general scope of copyright as specified by section 106 

in works of authorship that are fixed in a tangible medium of expression 

and come within the subject matter of copyright as specified by sections 

102 and 103, whether . . . published or unpublished, are governed 

exclusively by this title. Thereafter, no person is entitled to any such 

right or equivalent right in any such work under the common law or 

statutes of any State.28

Section 102(a) extends federal copyright protection to “original works of 

authorship fixed in any tangible medium of expression.”29 Section 102(b) 

 

24 Id. at 706.

25 Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003) (footnote omitted) (citation 

omitted) (quoting Daboub v. Gibbons, 42 F.3d 285, 289 (5th Cir. 1995)).

26 See id.

27 See GlobeRanger, 691 F.3d at 706.

28 17 U.S.C. § 301(a) (emphasis added).

29 Id. § 102(a).

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excludes from copyright protection “any idea, procedure, process, system, 

method of operation, concept, principle, or discovery, regardless of the form in 

which it is described, explained, illustrated, or embodied in such work.”30

The parties dispute whether § 301(a) preemption extends to all works 

satisfying the requirements of § 102(a), even those that also contain 

noncopyrightable material as defined in § 102(b). SMI asserts that it carefully 

defined its trade secrets to include only “know-how, ideas, procedures, 

processes, systems, methods of operation, and concepts,” thus excluding them 

from the subject matter of copyright. Defendants counter that the first element 

of the preemption analysis focuses not on the copyrightability of the expression 

at issue, but on whether the alleged work is the type of work described in 17 

U.S.C. § 102. According to Defendants, the relevant inquiry is whether the 

property at issue—in this case, a software program—is an original, fixed work 

under § 102(a). If it is, then it does not matter if it also contains elements that 

are unprotected under § 102(b).

We have never definitively addressed this interaction of § 301(a) and 

§ 102. GlobeRanger, our most recent foray into copyright preemption, appears 

to touch on the issue, but the claims in that case involved actual physical acts, 

not just software:

The current case contains plausible allegations that extend beyond 

software. For example, one part of GlobeRanger’s petition alleges that 

“Defendants could see how GlobeRanger went about actually deploying 

on site, how it set up its readers, how it tagged its product, how it 

incorporated business process into the design of the warehouse, and how 

it had trained sailors.”31

 

30 Id. § 102(b). Section 103, which is not relevant to this case, extends copyright 

protection to compilations and derivative works. Id. § 103.

31 GlobeRanger, 691 F.3d at 708 (emphasis added).

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We thus held that at least some of the plaintiff’s claims were not preempted.32 

But GlobeRanger did not squarely address the question whether processes and 

systems that had been fixed in a tangible medium of expression are included 

in the subject matter of copyright.33

Neither do our other copyright preemption cases shed much light on the 

instant question. Many of our decisions rest on the second (“equivalency”) 

element of the preemption test,34 sometimes because the parties concede the 

subject-matter element.35 In fact, only two of our cases discuss the subject 

matter of copyright at any length. First, Alcatel USA, Inc. v. DGI Technologies, 

Inc. came close to concluding that “the use of uncopyrightable 

information . . . contained within . . . copyrightable works” does not prevent 

preemption.36 Second, we held in Brown v. Ames that a musician’s name and 

likeness do not fall within the subject matter of copyright because a persona is

not an original work produced by an author.37 The distinguishing feature of 

Brown was that the misappropriation claim involved the use of a 

fundamentally intangible concept.38

 

32 See id. at 709.

33 There is some limited Fifth Circuit support for the idea that § 301(a) preempts more 

than the Copyright Act protects. See Real Estate Innovations, Inc. v. Hous. Ass’n of Realtors, 

Inc., 422 F. App’x 344, 348–49 (5th Cir. 2011) (per curiam) (unpublished) (“Though perhaps 

counter-intuitive, it is settled that the absence of a copyright registration does not preclude 

the application of the doctrine of preemption that exists under the Copyright Act.”).

34 See Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003); Comput. Mgmt. 

Assistance Co. v. Robert F. DeCastro, Inc., 220 F.3d 396, 404 (5th Cir. 2000); Taquino v. 

Teledyne Monarch Rubber, 893 F.2d 1488, 1501 (5th Cir. 1990).

35 See Real Estate Innovations, 422 F. App’x at 349; Daboub v. Gibbons, 42 F.3d 285, 

289 (5th Cir. 1995).

36 166 F.3d 772, 786 (5th Cir. 1999) (emphasis omitted). But, in Alcatel, the plaintiff 

“consistently framed its misappropriation count in the context of [the defendant’s] use of its 

firmware, operating system software and DSP manuals”—all tangible media—and failed to 

object to the district court’s jury instruction on the defendant’s “use of these works” rather 

than on the “specific pieces of information contained in them.” Id.

37 201 F.3d 654, 658 (5th Cir. 2000).

38 See id. at 659 (comparing names and likenesses to vocal styles, which are also 

fundamentally unfixed and not copyrightable).

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Looking to other circuits, we find a clear and lopsided split. The 

Second,39 Fourth,40 Sixth,41 and Seventh Circuit,42 as well as the Ninth Circuit

en banc,43 all recognize that, for the purpose of preemption under § 301(a), 

ideas fixed in tangible media fall within the subject matter of copyright. Only 

the Eleventh Circuit disagrees, holding that “[i]deas are substantively 

ineligible for copyright protection and, therefore, are categorically excluded 

from the subject matter of copyright” even if “expressed in a tangible 

medium.”44

The venerable treatise Nimmer on Copyright agrees with the majority of 

circuits: “Though the matter is not without controversy, [Nimmer] concludes 

that the better view is that ideas do fall within the subject matter of copyright 

for purposes of pre-emption (albeit pre-emption may still be avoided on the 

basis of lack of equivalence).”45 This treatise notes that “the majority position 

in the courts comports with legislative history.”46 Furthermore, Nimmer

points to two policy justifications for this position: (1) Congress made a policy 

decision to exclude ideas from federal copyright protection, so “state laws that 

 

39 Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424, 430 (2d 

Cir. 2012); see also Nat’l Basketball Ass’n v. Motorola, Inc., 105 F.3d 841, 849 (2d Cir. 1997) 

(“Copyrightable material often contains uncopyrightable elements within it, but Section 301 

preemption bars state law misappropriation claims with respect to uncopyrightable as well 

as copyrightable elements.”).

40 U.S. ex rel. Berge v. Bd. of Trustees of the Univ. of Ala., 104 F.3d 1453, 1463 (4th 

Cir. 1997).

41 Stromback v. New Line Cinema, 384 F.3d 283, 300 (6th Cir. 2004); Wrench LLC v. 

Taco Bell Corp., 256 F.3d 446, 455 (6th Cir. 2001).

42 ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir. 1996).

43 Montz v. Pilgrim Films & Television, Inc., 649 F.3d 975, 979 (9th Cir. 2011) (en 

banc) (“[S]tate-law protection for fixed ideas falls within the subject matter of copyright and 

thus satisfies the first prong of the statutory preemption test, despite the exclusion of fixed 

ideas from the scope of actual federal copyright protection.”).

44 Dunlap v. G&L Holding Grp., Inc., 381 F.3d 1285, 1297 (11th Cir. 2004).

45 1 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 1.01[B][2][c] 

(Matthew Bender, Rev. Ed.).

46 5 NIMMER, supra note 45, § 19D.03[A][2][b].

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protect fixed ideas trench upon” this deliberate exclusion; and (2) “if ideas were 

deemed outside the ‘scope’ of copyright protection—so that state laws 

protecting them could never be considered pre-empted—the result would be 

that state law could be used to protect . . . even those ideas embodied in 

published literary works.”47

The Fourth Circuit’s explanation in U.S. ex rel. Berge v. Board of Trustees 

of the University of Alabama aligns with Nimmer.48 In noting that § 102(b) 

excludes ideas from protection but that § 301(a) preempts everything that falls 

within the scope of copyright, the court remarked simply that “scope and 

protection are not synonyms.”49 It went on to observe that “the shadow 

actually cast by the Act’s preemption is notably broader than the wing of its 

protection.”50 The position of the majority of circuits clearly delineates

between the purpose of federal copyright preemption and that of federal 

copyright protection. Congress intended the Copyright Act to protect some 

expressions but not others, and it wrote § 301(a) to ensure that the states did 

not undo this decision: 

[O]ne function of § 301(a) is to prevent states from giving special 

protection to works of authorship that Congress has decided should be 

in the public domain, which it can accomplish only if “subject matter of 

copyright” includes all works of a type covered by sections 102 and 103, 

even if federal law does not afford protection to them.51

 

47 Id.

48 104 F.3d 1453, 1463 (4th Cir. 1997).

49 Id.

50 Id.

51 Wrench LLC v. Taco Bell Corp., 256 F.3d 446, 455 (6th Cir. 2001) (quoting ProCD, 

Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir. 1996)).

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Finding this reasoning is persuasive,52 we join the majority position and 

hold that state law claims based on ideas fixed in tangible media are preempted 

by § 301(a).

When we apply this principle to SMI’s claims, we see that the technical 

trade secrets found within VaultWorks fall within the subject matter of 

copyright. First, computer software is a tangible medium protected by the 

Copyright Act.53 Second, SMI claims as trade secrets, inter alia, “the selection 

of categories of input data used by VaultWorks . . . [and] selection of categories 

of output data to be generated by VaultWorks.” Although some of these may 

be ideas, they are “fixed,” so to speak, in the VaultWorks software user 

interface. As the crux of SMI’s case is that ARGO stole its trade secrets by 

(1) enticing SMI to perform a demo of its software to ARGO, as part of an 

acquisition pitch, and (2) receiving screenshots of VaultWorks from BCS 

during the implementation of CIO, SMI cannot dispute that these ideas have 

appeared in a tangible medium. And as the tangible medium falls within the 

subject matter of copyright as defined in § 102(a), so do the specific trade 

secrets contained within it.

b. Equivalency of Copyright Protection and State Law Claims

Having established that SMI’s trade secrets fall within the subject 

matter of copyright, the next step in the complete preemption analysis is the 

equivalency test: We examine SMI’s causes of action “to determine if [they] 

protect[] rights that are ‘equivalent’ to any of the exclusive rights of a federal 

 

52 Cf. Daboub v. Gibbons, 42 F.3d 285, 288 (5th Cir. 1995) (“Section 301(a) 

accomplishes the general federal policy of creating a uniform method for protecting and 

enforcing certain rights in intellectual property by preempting other claims.” (emphasis 

added)).

53 See Eng’g Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1341 (5th Cir. 

1994), opinion supplemented on denial of reh’g, 46 F.3d 408 (5th Cir. 1995).

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copyright.”54 The district court held that SMI’s conversion and TTLA claims 

were completely preempted, and we agree.

In the conversion section of the Original Petition, SMI claimed that it 

owned “certain physical property, documents, and confidential information 

pertaining to VaultWorks” and “certain trade secrets pertaining to [its] 

proprietary ideas, processes, and/or other methodologies of VaultWorks.” SMI 

then contended that Defendants “knowingly or intentionally, with malice, and 

without SMI’s consent, exercised dominion and control over SMI’s property.”

To the extent that SMI’s claim alleges conversion of physical property, it 

is not preempted by § 301(a).55 Physical property—as opposed to intellectual 

property fixed in a tangible medium—does not fall within the scope of interests 

protected by the Copyright Act.56 As for intangible property, we have held 

“that claims for conversion of intangible property are preempted.”57 Thus, 

SMI’s conversion claim, to the extent it alleges conversion of intangible

“confidential information” and “certain trade secrets,” is preempted.

SMI’s TTLA claim, as advanced in its Original Petition, consists of three 

allegations: (1) Defendants “stole[] SMI’s physical property, documents, and 

confidential information”; (2) they “copied objects, materials, devices or 

substances, including writings representing SMI’s confidential information”; 

and (3) they “communicated and transmitted SMI’s confidential information.” 

Although we have never applied the equivalency test to claims under the Texas 

 

54 Carson v. Dynegy, Inc., 344 F.3d 446, 456 (5th Cir. 2003) (quoting Daboub, 42 F.3d 

at 289).

55 See id. at 457. 56 See id. (noting that a state law protecting rights in physical property does not 

obstruct the purpose of the Copyright Act).

57 GlobeRanger Corp. v. Software AG, 691 F.3d 702, 709 (5th Cir. 2012) (citing Daboub, 

42 F.3d at 289–90); see also Real Estate Innovations, Inc. v. Hous. Ass’n of Realtors, Inc., 422 

F. App’x 344, 350 (5th Cir. 2011) (per curiam) (unpublished); Alcatel USA, Inc. v. DGI Techs., 

Inc., 166 F.3d 772, 786 (5th Cir. 1999); Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488, 

1501 (5th Cir. 1990).

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Theft Liability Act, one of our district courts has concluded that a TTLA claim 

“is preempted as to the theft of trade secrets that fall within the subject matter 

of copyright.”58 The court did note that under Texas law, theft includes a mens 

rea requirement—“knowingly”—but relied on the well-established rule that 

“elements of knowledge do not establish an element that is qualitatively 

different from a copyright infringement claim” to hold that the plaintiff’s TTLA 

claim was nonetheless preempted.59 And, SMI’s other allegations fall squarely 

within the exclusive rights protected by 17 U.S.C. § 106. Copying, 

communicating, and transmitting are equivalent acts to reproducing and 

distributing.60 Thus, SMI’s TTLA claim is also preempted.61

We conclude by affirming the district court’s denial of SMI’s motion to 

remand and holding that it properly exercised jurisdiction over this action as 

a result of complete preemption by the Copyright Act.62

 

58 M-I LLC v. Stelly, 733 F. Supp. 2d 759, 791 (S.D. Tex. 2010).

59 Id. at 790–91. This conclusion is consistent with Nimmer: “[T]he mere fact that a 

state law requires scienter as a condition to liability, whereas the Copyright Act does not, 

cannot save the state law from pre-emption.” 1 NIMMER, supra note 45, § 1.01[B][1].

60 17 U.S.C. § 106(a)(1), (a)(2).

61 The district court, having concluded that two of SMI’s claims were preempted, 

declined to consider whether its eight remaining claims were also preempted. Finding

instead that all of SMI’s claims derive from the same nucleus of operative fact, it exercised 

supplemental jurisdiction over those remaining eight claims under 28 U.S.C. § 1367. This 

exercise of supplemental jurisdiction over the non-preempted claims was not error. 62 We do not decide the appropriate course of action for claims found to be completely 

preempted. As a general rule, when a claim is completely preempted, it is considered to be 

grounded in federal law even if pleaded in terms of state law. Aetna Health Inc. v. Davila, 

542 U.S. 200, 207–08 (2004). That is the rationale behind allowing complete preemption to 

serve as an exception to the well-pleaded complaint rule. Yet that doctrinal theory does not 

answer the question, “What is the status of that claim?” District courts in this circuit are 

split. Most hold that “[c]omplete preemption results in dismissal of the state-law claim,” even 

though they “typically allow plaintiffs to replead and assert the dismissed state law claims 

as federal claims.” Encompass Office Sols., Inc. v. Ingenix, Inc., 775 F. Supp. 2d 938, 949 

(E.D. Tex. 2011). Defendants, as well as the Second Circuit, urge this approach. See

Briarpatch Ltd., L.P. v. Phx. Pictures, Inc., 373 F.3d 296, 308–09 (2d Cir. 2004). But at least 

one of our district courts does not dismiss the claim, instead treating it as having become a 

properly asserted federal claim and proceeding to adjudicate it on the merits. See Kersh v. 

UnitedHealthcare Ins. Co., 946 F. Supp. 2d 621, 630 (W.D. Tex. 2013). We have never 

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B. Summary Judgment

1. Standard of Review

“We review a grant of summary judgment de novo under the same 

standard applied by the district court.”63 Summary judgment is appropriate 

when “there is no genuine dispute as to any material fact and the movant is 

entitled to judgment as a matter of law.”64 We consider the evidence in the 

 

squarely addressed this question, even though our decision in GlobeRanger appears to 

provide support for the dismissal approach. See 691 F.3d at 706 (noting that if all of the 

plaintiff’s claims were preempted by the Copyright Act, “the case should be dismissed”); see 

also Quality Infusion Care Inc. v. Humana Health Plan of Tex. Inc., 290 F. App’x 671, 676–

77 (5th Cir. 2008) (unpublished). But see McGowin v. ManPower Int’l, Inc., 363 F.3d 556, 

558, 559 (5th Cir. 2004) (affirming dismissal of a claim completely preempted by ERISA on 

the ground that the claim was therefore barred due to failure to exhaust administrative 

remedies, thus implying that the state law claim was automatically converted to a federal 

one).

The parties did not brief this issue, and the district court did not appear to consider 

it. Indeed, the district court neither dismissed the partially preempted claims (while allowing 

SMI to amend) nor expressly converted those claims to federal ones (i.e., treated them like 

claims for copyright infringement), before granting Defendants’ motion for summary 

judgment. Any error, however, is harmless, as SMI cannot satisfy the elements of copyright 

infringement. “A copyright infringement claim requires proof of (1) ownership of a valid 

copyright and (2) actionable copying, which is the copying of constituent elements of the work 

that are copyrightable.” Bridgmon v. Array Sys. Corp., 325 F.3d 572, 576 (5th Cir. 2003). 

Actionable copying consists of (1) actual copying, i.e. “whether the alleged 

infringer . . . ‘actually used the copyrighted material in his own work’”; and (2) substantial 

similarity between the two works. Id. (quoting Eng’g Dynamics, Inc. v. Structural Software, 

Inc., 26 F.3d 1335, 1340 (5th Cir. 1994)). As discussed further infra, SMI has produced no 

evidence that ARGO actually used VaultWorks in developing CIO. Actual copying may also 

be proved with circumstantial evidence “if the defendant had access to the copyrighted work 

and there is ‘probative similarity’ between the works.” Id. (quoting Eng’g Dynamics, 25 F.3d 

at 1340). But, even if SMI were to rely exclusively on circumstantial evidence, it has not 

pointed to any similarities between the two products sufficient to satisfy the “probative 

similarity” test. See Positive Black Talk Inc. v. Cash Money Records, Inc., 394 F.3d 357, 370 

(5th Cir. 2004) (defining probative similarity as “similarities between the two works (whether 

substantial or not) that, in the normal course of events, would not be expected to arise 

independently”). Furthermore, SMI has not performed a side-by-side comparison of the two 

programs, a failure fatal to the substantial similarity prong of the test. See Bridgmon, 325 

F.3d at 577 (“[T]he law of this circuit prohibits finding copyright infringement without a sideby-side comparison of the two works . . . .”).

63 Boone v. Citigroup, Inc., 416 F.3d 382, 392–93 (5th Cir. 2005). 64 FED. R. CIV. P. 56(a).

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light most favorable to the nonmoving party and draw all reasonable inferences 

in its favor.65 

“Once a movant who does not have the burden of proof at trial makes a 

properly supported motion” for summary judgment, “the burden shifts to the 

nonmovant to show that [the motion] should not be granted.”66 To do so, the 

nonmovant must “identify specific evidence in the record and . . . articulate the 

precise manner in which that evidence supports his or her claim.”67 Neither 

we nor the district court has a duty to “sift through the record in search of 

evidence to support” the nonmovant’s opposition to summary judgment.68

2. Misappropriation of Trade Secrets

“Trade secret misappropriation under Texas law is established by 

showing: (a) a trade secret existed; (b) the trade secret was acquired through a 

breach of a confidential relationship or discovered by improper means; and (c) 

use of the trade secret without authorization from the plaintiff.”69 In their 

motion for summary judgment, Defendants challenged the first and third 

elements of the test, contending that (1) SMI’s purported trade secrets were 

not entitled to legal protection because they were not “substantially secret”; 

and (2) Defendants did not “use” SMI’s purported trade secrets in developing 

or implementing the CIO software. SMI responded that (1) it had taken 

precautions to protect its trade secrets; and (2) Defendants used these trade 

secrets to develop CIO and validate the implementation of that software for 

BCS. The district court, assuming without deciding that SMI did indeed 

 

65 See Lawyers Title Ins. Corp. v. Doubletree Partners, L.P., 739 F.3d 848, 856 (5th Cir. 

2014).

66 Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). 67 Id.; accord RSR Corp. v. Int’l Ins. Co., 612 F.3d 851, 857 (5th Cir. 2010).

68 Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994) (quoting Skotak v. Tenneco 

Resins, Inc., 953 F.2d 909, 915 n.7 (5th Cir. 1992)).

69 Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 874 (5th Cir. 2013) (quoting 

Phillips v. Frey, 20 F.3d 623, 627 (5th Cir. 1994)).

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possess the trade secrets at issue, held that SMI had not demonstrated that 

they were “used” in the manner described by SMI, so SMI had failed to point 

to any genuine dispute regarding the third element of its misappropriation 

claim.

“As a general matter, any exploitation of the trade secret that is likely to 

result in injury to the trade secret owner or enrichment to the defendant is a 

‘use[.]’”70 We have noted that the definition of “use” is “broad”71 and includes 

such activities as “marketing goods that embody the trade secret, employing 

the trade secret in manufacturing or production, relying on the trade secret to 

assist or accelerate research or development, or soliciting customers through 

the use of information that is a trade secret.”72 Despite this generous 

definition of “use,” however, we agree with the district court that SMI has 

failed to point to any evidence suggesting that ARGO or BCS used its purported 

trade secrets. 

First, SMI contends that it “produced a substantial amount of direct 

evidence establishing that BancorpSouth shared SMI’s trade secrets with 

ARGO in order to help ARGO finalize the development and implantation [sic] 

of CIO.” It then cites, without explanation,73 seven documents from the record, 

some of which suggest disclosure of information related to VaultWorks, but 

none of which indicates that this information was used “to help ARGO finalize 

the development and implantation [sic] of CIO.” In other words, SMI has 

produced evidence relevant to the second element of its misappropriation 

claim, but not to the third. Our analysis might be different if, for example,

SMI had also alleged that ARGO modified CIO’s source code after accessing 

 

70 Id. at 877 (alteration in original) (quoting Gen. Universal Sys., Inc. v. HAL, Inc., 500 

F.3d 444, 451 (5th Cir. 2007)).

71 Bohnsack v. Varco, L.P., 668 F.3d 262, 279 (5th Cir. 2012).

72 Wellogix, 716 F.3d at 877 (quoting Gen. Universal Sys., 500 F.3d at 451).

73 See Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).

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SMI’s trade secrets, or that ARGO had redesigned CIO’s interface in some way, 

and if SMI had supported such allegations with some proof of these changes. 

But, we have stated that when the trade secret at issue is a technical feature 

of a computer program—as opposed to “marketing or mode of doing business 

trade secret[]”—“the issue of misuse boils down to evidence of copying.”74 SMI 

has produced nothing to suggest that ARGO copied any design elements of 

VaultWorks,75 let alone that ARGO used SMI’s purported trade secrets in any 

manner.

Second, SMI contends “that, on multiple occasions, ARGO requested 

access to SMI’s trade secrets so that it could test and validate its own product, 

and . . . BancorpSouth sent ARGO those trade secrets.” But SMI’s record 

citations indicate, at most, that ARGO requested data from BCS so that it 

could calibrate CIO to handle anomalous cashflow situations. SMI does not 

and cannot claim as its own trade secret BCS’s branch cashflow data. 

Moreover, SMI incorrectly credits an unpublished case from this court, Cudd 

Pressure Control Inc. v. Roles,76 for holding that “an alleged misappropriator’s 

use of a trade secret ‘to validate’ its own product was enough to raise a genuine 

issue of material fact as to trade secret use.” In Cudd, however, a former 

employee showed Cudd Pressure Control’s confidential financial data to 

potential investors to secure financing for his own newly formed competing 

venture, in essence “validat[ing]” that such a business model was viable.77 This 

type of validation is qualitatively different from the validation that allegedly 

 

74 Plains Cotton Coop. Ass’n of Lubbock v. Goodpasture Comput. Serv., Inc., 807 F.2d 

1256, 1263 (5th Cir. 1987) (emphasis added).

75 See id. (“If appellees did not in any way ‘copy’ any part of appellant’s protected idea 

or expression, then appellant cannot demonstrate trade secret misappropriation any more 

than it can show copyright infringement.”).

76 328 F. App’x 961 (5th Cir. 2009) (unpublished).

77 Id. at 966.

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occurred here—the use of BCS’s own records, as displayed in a printout from 

VaultWorks, to test CIO’s predictions with BCS’s historical data. SMI’s 

reliance on Cudd is misplaced.

Third, SMI advances a theory of trade secret use premised on timing. 

According to SMI, “a jury could reasonably infer that [Defendants] used SMI’s 

trade secrets” because ARGO, after years of unsuccessful attempts to license 

CIO to BCS, made headway with BCS at about the same time that SMI 

attempted to sell VaultWorks to ARGO. But, not only does SMI fail to identify 

how its trade secrets were allegedly used by Defendants,78 it also cites no legal 

authority for the proposition that a mere coincidence in timing can support an 

inference of trade secret use. 

Rather, it appears that SMI relies on the access-plus-similarity test 

proposed by the Restatement (Third) of Unfair Competition for circumstantial 

proof of trade secret use: “Although the trade secret owner bears the burden of 

proving unauthorized use, proof of the defendant’s knowledge of the trade 

secret together with substantial similarities between the parties’ products or 

processes may justify an inference of use by the defendant.”79 But SMI points 

to no similarity between CIO’s interface with BCS’s BANKPRO Teller system 

and VaultWorks’s interface. In fact, despite ARGO’s invitation, SMI never had 

 

78 As a factual matter, it appears that BCS’s long-standing reservations about CIO 

concerned its integration with the text-based teller program—BANKPRO Teller, also 

developed by ARGO—that BCS was using. ARGO was working on addressing this concern 

before SMI ever demonstrated VaultWorks to ARGO. Moreover, though SMI claims that, 

during its demonstration of VaultWorks to ARGO, it “described how data from an automated 

teller system was interfaced into VaultWorks directly,” it never explains how ARGO then 

used this information to integrate CIO with the teller system. Mere knowledge of how 

VaultWorks functioned is insufficient to imply use of VaultWorks’s trade secrets; otherwise, 

the second and third elements of the misappropriation test would collapse into each other. 

79 RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 40 cmt. c (1995) (emphasis 

added); see also Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 451 n.5 (5th Cir. 2007) 

(“[T]he Texas Supreme Court has at times relied on the Restatement 3d of Unfair 

Competition.” (citing In re Bass, 113 S.W.3d 735, 739–40 (Tex. 2003))).

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any expert perform a side-by-side comparison of the two programs. Instead, 

SMI rests its entire argument for similarity on the coincidence of timing and 

on the fact that VaultWorks and CIO perform the same general function. The 

element of “substantial similarity” would be rendered toothless, however, if it 

could be satisfied by the mere fact that two products occupy the same 

commercial niche. Such an overly generous application of the test would allow 

an inference of use in virtually every trade secret misappropriation claim in 

which there is evidence of disclosure. This cannot be the result intended by 

the Restatement.

On this evidence, it would not be reasonable for a jury to infer that 

Defendants used SMI’s trade secrets.80 We therefore affirm the district court’s 

dismissal of SMI’s claim of misappropriation of trade secrets.

3. SMI’s Remaining Claims

The district court also dismissed all of SMI’s remaining claims. It held

that each of these claims (1) requires a finding of trade secret misappropriation 

and thus fail with the misappropriation claim, and (2) fails for an independent 

reason.

SMI’s opening brief addresses its misappropriation claim only, omitting 

entirely any mention of its eight remaining claims. SMI has therefore waived 

its right to appeal the district court’s judgment with respect to these claims.81 

 

80 SMI also alleges that the district court improperly weighed evidence by crediting 

“ARGO’s claim that CIO was market-ready before ARGO had access to SMI’s VaultWorksrelated trade secrets” over evidence showing that “CIO was not fully implemented at 

BancorpSouth for more than a year after ARGO had gained access to SMI’s trade secrets.” 

Contrary to SMI’s assertions, these statements are not contradictory. A new product may be 

ready for sale and still require a significant rollout effort. Indeed, SMI implicitly 

acknowledges the existence of these two distinct phases in a computer program’s lifecycle 

when it contends that its trade secrets were used by ARGO in the “development and

implantation [sic] of CIO” (emphasis added).

81 See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 260 n.9 (5th Cir. 1995)

(“[W]e do not consider issues raised for the first time in a reply brief.”).

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Moreover, SMI’s reply brief contains only the conclusional statement: 

“Likewise, SMI’s remaining claims were viable.” It then cites only part of

SMI’s prior briefing in the district court. This bare bones citing does not satisfy 

the requirements of Federal Rule of Appellate Procedure 28(a).82 By failing to 

identify any error in the district court’s reasoning or submit any new authority 

in support of its position, SMI has waived merits consideration of its remaining 

eight claims.

III. CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s order denying 

SMI’s motion for remand and its judgment dismissing SMI’s action with 

prejudice.

 

82 See Alameda Films SA de CV v. Authors Rights Restoration Corp. Inc., 331 F.3d 

472, 483 (5th Cir. 2003) (“Defendants do not provide us with any basis—either in their 

argument or by reference to the voluminous record—for determining that the district court 

committed the proffered errors. Thus, ‘[i]n the absence of logical argumentation or citation 

to authority, we decline to reach the merits of these claims.’” (alteration in original) (quoting 

Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 532 (5th Cir. 1996))); United 

States v. Posada-Rios, 158 F.3d 832, 867 (5th Cir. 1998) (“Murga cannot satisfy the 

requirements of Fed. R App. P. 28(a)(5) by merely referring to briefing filed with the district 

court.”); see also X Techs., Inc. v. Marvin Test Sys., Inc., 719 F.3d 406, 411 n.3 (5th Cir. 2013) 

(characterizing Posada-Rios as “holding that arguments that do not satisfy Federal Rule of 

Appellate Procedure 28 because they ‘merely refer[ ] to briefing filed with the district court’ 

are waived” (alteration in original) (quoting 158 F.3d at 867)).

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