Act Claim, at 4.) Passport’s contributions to the CS2000 product, according to DIB, are limited to
“ideas, concepts or communications,” which are not protected by the Lanham Act. Dastar, 539 US.
at 34. The court concludes there are disputes of fact on this issue. Passport cites sublicense
agreements between DIB and its member stores that specifically identify software modules that
Passport claims it produced. (Computer Software License Agreements, Passport Exhibits BB - LL.)
DIB's “build books,” which document the modules and programs each member store requested, list
modules that Passport claims it created separately, and DIB issues invoices to its member stores that
charge the stores separately for those modules. (Build Books, Passport Exhibit CCCCC; Invoices,
Passport Exhibit DDDDD.)

It is undisputed that DIB used Passport software and, to some degree, incorporated Passport’s
software into its own computer system. The parties dispute the degree to which the CS2000 relies
on Passport's original work, as compared with DIB’s contribution. As explained in Montgomery v.
Noga, 168 F.3d 1282, 1299 n. 27 (11th Cir. 1999), “the doctrine of reverse passing off is applicable
in situations where a defendant resells another person's product that has been only ‘slightly
modified.” In Montgomery, the court upheld a jury verdict in favor of plaintiff on a “reverse passing
off’ claim where defendants downloaded copyrighted software and incorporated it as a utility on their
CD/ROM product with plaintiff's copyright notice deleted. The court distinguished circumstances
in which a defendant “substantially modified” the plaintiff's product and marketed the resulting
product toa different group of customers, for different purposes. 168 F.3d at 1299 n. 27, citing Roho,
Inc. v. Marquis, 902 F.2d 356 (5th Cir. 1990). Montgomery's careful attention to the manner and

method in which defendant used plaintiff's product counsels against the grant of summary judgment

14


Passport Exhibit HHHH.) Ina letter to John Miller in late November, Schafer repudiated the non-
interference letter, pointing out that “the commitment you received was not from me or a
representative of Great Plains that is authorized to commit the company in any direction.”
(Undated e-mail message from Gary Schafer, Passport Exhibit OO0.)?

DIB contends, as well, that there is no evidence that either DIB or its broker was aware of
any agreement between Great Plains and Passport that purportedly restricted Great Plains’ right to
negotiate directly with DIB. It is clear, however, that both DIB and Great Plains recognized that
their deal might generate a lawsuit: on November 14, DIB’s general counsel, Thomas Burroughs,
contacted Schafer to request that the agreement between DIB and Great Plains require Great Plains
to “cooperate” with DIB in any litigation brought by Passport. (11/14/00 Burroughs e-mail, Passport
Exhibit IIII.) The November 30, 2000 agreement between DIB and Great Plains did require Great
Plains to cooperate in good faith in any litigation that might arise between Passport and DIB related
to the use of the software or to the Great Plains/DIB relationship. (Great Plains/DIB Source Code
License Agreement, DIB Exhibit 2, 1 9(b).)

As the court explained in its earlier opinion, DIB never used the source code it purchased
from Great Plains. Karla Wygant, DIB's manager of retail data processing, testified that she
compared the RealWorld software with the Passport source code DIB had been using, and placed
the RealWorld software in a file cabinet. DIB continued using the software furnished by Passport,

with the enhancements that Passport and DIB had made to the Great Plains product. (Wygant Dep.,

3 Passport contends Schafer also falsely claimed he had not begun meeting with DIB

representatives until November, but no such claim appears in the materials Passport cites (Schafer’s
message and Karla Wygant’s deposition testimony, Passport Exhibits OOO, KKK).

5


claim. To the extent DIB recovered license fees from its member stores for their use of software
created and owned by Passport, the court acknowledges that Passport may be able to establish a
claim for recovery of such fees. The court has presumed, however, without clear guidance from the
parties on this issue, that “maintenance fees . . . are payments for services actually rendered by DIB
and did not constitute a disguised royalty payment.” Id. at 17. The court also noted the testimony
of Passport President John Miller that DIB’s sublicensees were not obligated to use Passport for
support. Id. at 15. In its motion to modify, Passport emphasizes the testimony of Jeffrey Wilson that
member stores who purchase software from DIB are in fact required to pay support and maintenance
fees, (Motion to Clarify, at 10, citing Wilson Dep., Passport Exhibit M, at 66-67.) Passport notes,
further, that the Dealer License required DIB to assign its rights under any sublicenses to Passport
upon termination of the license. (Motion to Clarify, at 9, citing Dealer License, Passport Exhibit I,
19.516.)

In light of its continued uncertainty about the nature and function of these fees, the court
will withdraw its rulings on this claim. If “support and maintenance fees” are in reality periodic
license payments, Passport may be entitled to argue that some portion of those fees are appropriately
attributable to the software contributions made by Passport and allegedly wrongfully retained by DIB.
If “support and maintenance fees” mean fees paid by member stores for DIB’s services in supporting
and maintaining the software, the court would assume that the only portion of that fee recoverable
by Passport would be the amount member stores paid for such fees, less the cost to DIB of providing
the service. Passport’s recovery might be reduced, further, to reflect that Passport contributed only
a portion of the software DIB provided to its member stores and that Great Plains terminated
Passport's own license in the RealWorld software in May 2001. The court notes, finally, its doubts

18


the termination was a breach of contract, DIB argues, any resulting damages were caused by Great
Plains’ actions, not those of DIB.

The court agrees. Passport may be correct that Great Plains wronged it by terminating its
license and that DIB wronged it by continuing to use Passport’s enhancements to the RealWorld
code without paying Passport. Passport’s characterization of the deal between DIB and Great Plains
as tortious interference, however, appears to rest on suspicion. For example, citing some e-mail
correspondence between a software supervisor at Great Plains and Karla Wygant of DIB, Passport
notes that Great Plains did not initially even send the “RMCobol” version of the Real World software
to DIB, a circumstance that, according to Passport, demonstrates that neither party understood or
expected that DIB would actually use the Great Plains software in its unmodified form. (11/7/00
Jermyn e-mail message, Passport Exhibit PPPP.)* Passport characterizes the deal between DIB and
Great Plains as a “sham transaction” because both DIB and Great Plains knew that DIB could not
use the Great Plains/RealWorld code without modifications. The fact that DIB could not use the
unedited code does not, however, require the conclusion that DIB did not have a legitimate business
interest in purchasing license for its use. Even before contacting Great Plains, DIB had approached

Passport directly, seeking to negotiate an unlimited license for the software being used by DIB’s

°(.,.continued)
software, (5/14/01 Schafer letter, DIB Exhibit 15.) The court expresses no opinion concerning the
truth of Schafer’s assertions or whether the alleged poor performance on Passport’s part justifies
termination within the language of the relevant agreements. To the court's knowledge, Passport has
not sued Great Plains itself for wrongful termination.

° In the court’s view, nothing about this message demonstrates that the failure to send

DIB a usable version of the RealWorld software was intentional, but the court assumes for purposes
of this discussion that both Great Plains and DIB personnel were aware that DIB was unable to use
the original RealWorld software without modifications.

10


renew the written license agreement with Passport but, according to John Miller, RealWorld
representative Robert Johnson “said that we should continue to service the dealers that we had
already licensed, but that we could not license any new dealers . . . . because of a change in
ownership...” (Id. at 102.) Passport points out, however, that the July 1988 Master Value Added
Distributor Agreement between Passport and RealWorld contemplated automatic renewal for
additional one-year periods in return for a $100,000 annual fee. (MVAD, Passport Exhibit H,
9 13.1(a). In addition, in March 1998, Passport and RealWorld executed an addendum extending
the term of an agreement referred to as the Master Value Added Distributor Agreement through
March 2010, subject to further renewal. (Master Distributor Agreement, Passport Exhibit G,
Addendum.) (The court is uncertain why this addendum to the Master Distributor Agreement
refers to the Master Value Added Distributor Agreement; nor has Passport explained why Mr. Miller,
who signed the Addendum in March 1998, apparently had no recollection of that document when
he testified at his March 25, 2003 deposition. No mention is made here by either party of Passport’s
apparent obligation to pay $100,000.00 per year for its continued license rights.)

Until about November 2000, software provided by DIB to its member stores included a
Passport copyright notice on a “splash screen.” * Atsome point after entering into its agreement with
Great Plains, DIB repackaged the software it had been providing to its member stores by removing
PSI’s name and copyright notice from the splash screen and replacing Passport’s name and copyright

notice with the name “CS2000,” which DIB used for its computer system. (Wygant Dep., Passport

‘ “Splash screen is a computer term for an image that appears while a program or

operating system is loading.” http://en.wikipedia.org/wiki/Splash_screenAT


Passport Exhibit L, at 23-25.) Nevertheless, in February 2001, DIB advised Passport it would no
longer provide a royalty report reflecting its sublicensing of software because “we are no longer buying
product from you.” (2/8/02 Gibson e-mail message, 2/8/02, Passport Exhibit PPP.) Passport
responded with a certified letter declaring DIB in default under the 1989 license agreement, a letter
that Burroughs forwarded to Schafer of Great Plains. (2/15/01 Burroughs letter, Passport Exhibit Q.)
At Burroughs’ request, Schafer later furnished copies of the Great Plains/Passport agreements for
Burroughs’ review. (3/29/01 messages, Passport Exhibits JJJJ, KKKK.)

Just six months later, ina May 14, 2001 letter, Great Plains terminated its license agreement
with Passport. Schafer’s letter announcing the termination cited, as reasons, Passport's failure to
meet certain sales and marketing goals (goals Passport claims are not contained in the Great
Plains/Passport agreement), Passport’s failure to continue marketing Great Plains’ products, and
Passport’s improper use of Great Plains’ trademarks. (5/14/01 Schafer Letter, Passport Exhibit
LLLL.) In an e-mail exchange the following day, Schafer advised Burroughs that the termination
was “based upon poor performance and issues outside of the Do It Best Relationship.” ‘Thomas
Burroughs, responded that Great Plains’ termination of the Passport license might generate a
“change of heart” on Passport’s part concerning its disputes with DIB. (E-mail messages, Passport
Exhibit MMMM.) At his deposition, Schafer testified that he did not recall discussing Passport’s
termination with anybody from DIB (Schafer Dep., DIB Exhibit 5, at 37-41), and that he did not
show the termination letter to Mr. Burroughs before sending it. (Id. at 100.)

DIB notes that John Miller testified that the written agreements by which Passport obtained
the original (unenhanced) software from RealWorld, Great Plain’s predecessor, expired by their
terms no later than 1991. (J. Miller Dep., DIB Exhibit 35, at 102-106.) RealWorld declined to

6


about Passport’s apparent continued confidence that all terms of the Dealer License (including the
termination provisions) continued in full force and effect until 2001.
CONCLUSION

For the foregoing reasons, Do It Best Corporation’s motion for summary judgment on
Passport’s counterclaim of tortious interference with contract (Doc. No. 210) is granted; both
parties’ motions for summary judgment on Passport’s Lanham Act counterclaim (Doc. Nos. 261,
286) are denied; and Passport’s motion for clarification or modification of this court’s March 31,
2005 ruling (Doc. No. 321) is granted in part and denied in part.

ENTER:

Dated: September 12, 2005 mAh fire

REBECCA R. PALLM PAP
United States PALLY ge

19


DIB contends it is entitled to summary judgment on this claim because Passport cannot
establish the third element: that DIB induced a breach. DIB asserts that there is no evidence that
DIB intentionally induced Great Plains to breach its agreement with Passport; indeed, Gary Schafer
has no recollection of having discussed the matter with anyone at DIB before issuing the termination
letter in May 2001. He testified unequivocally that he did not show Mr. Burroughs the letter before
sending it. Nor has Passport identified any evidence that anyone at DIB was aware of the
termination until after it happened. Passport makes much of the fact that DIB obtained from Great
Plains a copy of the license agreement between Great Plains and Passport, but DIB has never denied
being aware of the existence of that agreement. Passport urges, as well, that the termination
benefitted DIB: Burroughs commented when he learned of the termination that it might generate
a “change of heart” on Passport’s part (presumably with respect to the price tag Passport had
attached to the enhanced software). Again, however, DIB has not denied Passport’s assertions that
DIB stood to benefit from Great Plains’ decision to terminate Passport’s license. DIB argues only that
there is no evidence that DIB was involved in that decision.

DIB did approach Great Plains and attempt to negotiate its own license for the RealWorld
software, but DIB contends this effort was justified as fair business competition. DIB insists that
Great Plains did not breach its contract with Passport when it terminated Passport’s license; indeed,

Passport has not identified what provisions of its license Great Plains violated.’ To the extent that

5 The Master Distributor Agreement, dated March 22, 1984, and the Master Value

Added Distributor Agreement, dated July 1, 1988, both include provisions authorizing termination
by RealWorld under certain circumstances. (MDA, Passport Exhibit G, 1 18; MVADA, Passport
Exhibit H, 1 13.) Gary Schafer’s termination letter cited, as reasons for termination, Passport’s poor
sales volume, inadequate number of new customers or software authorizations, and failure to register
(continued...)


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
DO IT BEST CORP.,
Plaintiff,
v. No. O1 7674
PASSPORT SOFTWARE, INC., Judge Rebecca R. Pallmeyer

Defendant

PASSPORT SOFTWARE, INC.,
Counter-Plaintiff,
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DO IT BEST CORP., )
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Counter-Defendant.
MEMORANDUM OPINION AND ORDER

Counter-Plaintiff Passport Software, Inc. (“Passport”), claims that Plaintiff/Counter-
Defendant Do It Best Corp. (“DIB”) is in breach of a software licensing agreement between the
parties and has committed other wrongful acts, including infringement of Passport’s copyrights in the
licensed software. Last year the court dismissed Passport’s fraud claim but denied DIB’s motion to
dismiss Passport’s Lanham Act claim and claim of tortious interference with contractual relations.
Do It Best Corp. v. Passport Software, Inc. No. 01 C 7674, 2004 WL 1660814 (N.D. Il. July 23, 2004)
(“Do It Best I”). Several months later, the court granted DIB’s motion for summary judgment on
Passport's civil conspiracy claim and granted summary judgment on one aspect of Passport’s breach

of contract claim. The court denied DIB’s motion for summary judgment on Passport’s trade secret

AC


claim). Indeed, the circumstances demonstrate that Passport intended that Great Plains’ purported
commitment not to interfere with the Passport/DIB negotiations would remain a secret from DIB.

DIB’s motion for summary judgment on Passport’s tortious interference claim is granted.
IL. Lanham Act

In Count XI of the Third Amended Counterclaim, Passport alleges that DIB violated § 43(a)
of the Lanham Act, 15 U.S.C. § 1125(a), by removing Passport’s copyright notices from portions of
the Programs and replacing them with its own such notices. (Third Amended Complaint, Count XI
419 37, 48.) In denying DIB’s motion to dismiss this count, this court observed that, although the
parties had not so characterized it, Passport’s false designation of origin claim is fairly understood as
a “reverse passing off” claim, in which a producer misrepresents the goods or services of some one else
as its own. Do It Best I, 2004 WL 1660814 at *16-18, citing Dastar Corp. v. Twentieth Century Fox
Film Corp., 539 U.S. 23, 27 n.1 (2003). The Seventh Circuit has explained that “an author could
file a Lanham Act claim, as opposed to a copyright infringement claim, . . . to ensure that his name
is associated with a work when the work is used; this is known as a ‘reverse passing off claim.”
Kennedy v. Nat'l Juvenile Detention Ass'n, 187 F.3d 690, 96 (7th Cir. 1999), citing Waldman Pub.
Corp. v. Landoll, Inc., 43 F.3d 775, 781 (2d Cir.1994).

To prevail under the Lanham Act, Passport must prove “(1) that [DIB] used a false
designation of origin ... in connection with goods or services; (2) that such goods or services
entered interstate commerce; and (3) that [Passport] ... believes [it] is likely to be damaged as a
result of the misrepresentation.” Kennedy, 187 F.3d at 695-96, citing Web Printing Controls Co., Inc. v.
Oxy-Dry Corp., 906 F.2d 1202, 1204 (7th Cir. 1990). Put more simply, Passport survives summary
judgment if it shows a triable issue of fact on its claim of a protectible trademark and a likelihood of

12


member stores. It is undisputed that Passport could not provide such a license without the
involvement of Great Plains, the owner of the original RealWorld software. DIB itself had made
some contributions to the software modifications and could have intended to continue negotiating
with Passport for the license to Passport's own contributions to the software. Perhaps DIB hoped
Passport would reduce its $1.8 million demand for that license. Or, DIB could, as Passport has
elsewhere argued, have intended to use Passport’s work without paying for it. However improper
such an intention may be, it does not establish that DIB had no legitimate interest in purchasing
Great Plains’ portion of the code. More significantly, DIB’s purchase of an unlimited license from
Great Plains does not constitute an interference in Passport’s agreement with Great Plains.
Passport has also suggested that DIB's negotiations with Great Plains constitutes tortious
interference with Great Plains’ agreement “not to interfere” in DIB’s agreement with Passport,
expressed in Ellen Saley’s undated letter. Gary Schafer advised John Miller that such an agreement
was unenforceable because Ms. Saley was not authorized to make such a commitment on the part
of Great Plains; nor is the court certain what consideration, if any, Passport gave for the
“noninterference agreement.” Notably, Passport has not sued Great Plains for breach of this
contract. DIB points out that Passport did not mention the “noninterference” agreement in its Third
Amended Counterclaim, and argues that Passport ought not be permitted to insert a new claim at
this stage. (DIB’s Reply in Support of its Motion for Summary Judgment on Passport’s Tortious
Interference Claim, at 3 n.1.) Assuming the agreement was binding on Great Plains, the court agrees
with DIB that Passport’s tortious interference claim fails because there is no evidence that DIB was
aware of that agreement. See HPI Health Care Servs., 131 Ill.2d at 154, 545 N.E.2d at 676 (showing
of “defendant's awareness of this contractual relation” a required element of the tortious interference

11


Exhibit M, at 82-83; Wygant Dep., Passport Exhibit L, at 46-47; Wygant Dep., Passport Exhibit U,
at 199-200.) Jeffrey Wilson of DIB acknowledged that “the CS 2000, as it is used today in [DIB’s}
member stores, does . . . still include some or all of the software which was delivered by Passport to
{DIB.]” (Wilson Dep., Passport Exhibit M, at 6-7.)

DISCUSSION
L Tortious Interference Claim

In Count XII of its Third Amended Counterclaims, Passport asserts that DIB interfered with
Passport's contractual relationship with Great Plains Software, Inc., the successor to the corporation
from which Passport licensed software that it later enhanced and licensed to DIB. Passport alleges
that DIB knew of its agreement with Great Plains and, in March 2001, induced Great Plains to
terminate that agreement. (Third Amended Counterclaims, 14 39, 43.) As damages, Passport
claims “the loss of the sale of the unlimited license rights to DIB, the loss of its business relationship
with Great Plains” and the expense of this litigation. (Passport’s Memorandum in Opposition to
DIB’s Motion for Summary Judgment on Passport’s Tortious Interference Claim, at 14.)

The elements of tortious interference with contract are: “‘(1) the existence of a valid and
enforceable contract between the plaintiff and another; (2) the defendant’s awareness of this
contractual relation; (3) the defendant's intentional and unjustified inducement of a breach of the
contract; (4) a subsequent breach by the other, caused by defendant's wrongful conduct; and (5)
damages.” Voelker v. Porsche Cars North America, Inc., 353 F.3d 516, 527-528 (7th Cir. 2003),
quoting HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ti.2d 145, 154-55, 545

N.E.2d 672, 676 (1989).


determining which portions of the code were products of Passport’s programming; Passport asserts
that, in the course of providing that assistance, Passport personnel discovered for the first time that
DIB was using Passport’s source code in a module it had falsely claimed to have independently
authored. John Miller, Passport’s president, advised DIB’s general counsel on October 2, 2000, of
his belief that DIB’s use of Passport’s code required the payment of additional royalties. (10/2/00
Miller letter, Passport Exhibit LLL.)

Four days later, on October 6, 2000, DIB officials approached Great Plains itself through a
broker and, on November 30, 2000, agreed to license the RealWorld software directly from Great
Plains for just $150,000.00. Passport characterizes this agreement between Great Plains and DIB as
a violation of Great Plains’ own agreement “not to interfere in [sic] with the sale of unlimited
licensing rights to DIB.” (Passport’s Memorandum in Opposition to DIB’s Motion for Summary
Judgment on Passport’s Tortious Interference Claim, at 7.) DIB asserts that neither DIB, Great
Plains, nor the broker ever “concealed” their negotiations from Passport, but Passport points out that
on October 2, 2000, Ellen Saley of Great Plains assured John Miller that DIB would not purchase
the RealWorld original code from Great Plains because that code would be useless to DIB without
the enhancements that had been furnished by Passport. (Saley e-mail message, Passport Exhibit
NNN.) Passport notes, further, that on November 14, 2000, a DIB vice president wrote a message
to DIB’s president and its general counsel, noting that Passport had contacted her about software
rights, but that she intended to delay responding until after the deal between DIB and Great Plains
had been finalized. (11/14/00 Williams message, Passport Exhibit GGGG.) A week later, DIB’s
attorney, Thomas Burroughs, advised Gary Schafer of Great Plains that John Miller had
“promised/threatened to call me first thing this morning.” (11/21/00 Burroughs e-mail message,

4


to either party in this case, where the degree to which DIB’s computer package simply reuses
Passport's own programming efforts is hotly contested.

Nor is the court persuaded by DIB’s contention that Passport’s failure to identify how it has
been injured warrants the entry of summary judgment. In Web Printing Controls Co. v. Oxy-Dry
Corp., 906 F.2d 1202 (7th Cir. 1990), a reverse passing-off claim by the manufacturer of printing
equipment against a competitor, the Seventh Circuit reversed a judgment in favor of defendant,
noting that the elements necessary to establish a violation of § 43(a) of the Lanham Act do not
include a showing of actual injury or actual confusion. Proof of actual injury would be required for
an award of damages, but the likelihood of confusion is sufficient harm to establish harm to the
plaintiff. Recognizing that the measure of Passport’s damages for the alleged Lanham Act violation
may well be identical to the measure of damages for copyright infringement, the court is nevertheless
reluctant to grant summary judgment on this basis.

Both parties’ motions for summary judgment on Passport's Lanham Act claim are denied.
Ill. Motion to Clarify and/or Modify

Finally, Passport seeks clarification or modification of certain issues that the court addressed
in Do It Best Il. That motion is granted in part and denied in part as follows:

A. Joint Authorship: In its earlier opinion, the court concluded that DIB had not met
its burden of establishing the absence of disputes of fact on this issue. Do It Best II, 2005 WL 743083,
at *6, That conclusion does not support summary judgment in favor of Passport on this issue, either.
Passport's request for summary judgment on DIB's joint authorship theory is denied.

B. Contract Claim: Passport has argued that the Dealer License that the parties entered
into in 1984 continued in force and effect until Passport terminated it early in 2001. In its motion

15


had raised first in its reply memorandum: that the code is not copyrightable. 2005 WL 743083, at
*3, Passport now asks the court to “clarif[y] . .. hat DIB cannot rebut [Passport’s] presumption of
copyrightability.” (Motion to Clarify, at 5.) The request is denied. The court did not address the
argument at all, and certainly did not conclude that the presumption of copyrightability is
irrebuttable in this case.

D. Civil Conspiracy Claim: Passport argues here that the court addressed just one of
the two torts supporting its claim of civil conspiracy: copyright infringement. In today's opinion, the
court dismisses the tortious interference claim, as well. Passport has suggested no other reason that
the court should revisit its ruling on civil conspiracy, and the court declines at this point to entertain
any further summary judgment motions.

E. Damages: Passport seeks reconsideration of the court's damages rulings in two
respects. First, Passport argues that the court erred in concluding that Passport is entitled to recover
“maintenance fees,” if at all, only under a contract theory. Second, Passport asks the court to correct
its statement that “[u]nless PSI has evidence of independent acts of infringement that post-date May
2002, it may not be entitled to any recovery on its copyright claim.” Do It Best II, 2005 WL 743083
at *20. In its response to this motion, DIB acknowledges that the court’s statement is properly
limited to statutory damages. The court therefore grants Passport’s motion and amends the sentence
in question to read as follows: “Unless PSI has evidence of independent acts of infringement that
post-date May 2002, it may not be entitled to any recovery of statutory damages on its copyright
claim.”

With respect to the matter of maintenance fees: having reviewed the record on this issue, the

court acknowledges continued uncertainty about the nature of this element of Passport’s damages

17


modifications and enhancements furnished by Passport, recommended that DIB contact Great Plains
Corp.’ and PSI at the same time, as Great Plains would “have the leverage to push Passport to sell
the rights.” (Grady e-mail message, 9/18/00, Passport Exhibit RR, at 2.) When DIB approached
Passport, Passport (which had earlier lost another customer to Great Plains) attempted to obtain
Great Plains’ agreement not to interfere in any sale of the software from Passport to DIB. (Saley
Dep., Passport Exhibit SSS at 23-24, 29-33.) Ellen Saley did write a letter to Muriel (Spencer)
Miller of Passport, assuring her that “Great Plains hereby agrees that it’s [sic] employees, agents,
attorneys, directors or officers, past and present, will not interfere or intervene with your customer
directly or indirectly regarding [the licensing arrangement between Passport and Do It Best].”
(Undated letter, Passport Exhibit EEE.)’ Ms. Saley prepared a draft sublicense agreement between
Passport and DIB, setting the price for the RealWorld software component of the license fee at
$200,000.00. (Id.; draft Sublicense Agreement, Passport Exhibit JJJ.) Muriel Miller of Passport
testified that Passport’s President , John Miller, planned to offer an unlimited license in the enhanced
software to DIB for $4.8 million, but Ms. Miller herself mistakenly conveyed a proposed price of $1.8
figure to DIB. (M. Miller Dep., Passport Exhibit EEEE, at 166-67.) Presumably unwilling to pay

such a substantial premium for the software enhancements, DIB sought Passport’s assistance in

‘ Great Plains Software was the successor to RealWorld Corporation, the entity from

which Passport originally obtained the software that Passport enhanced and provided under license
to DIB. The court uses the names RealWorld and Great Plains at times interchangeably.

Passport asserts that it did not reveal to Great Plains the identity of its customer until
after Great Plains had “agreed not to interfere” in the deal (Passport’s Response to DIB’s Statement
of Undisputed Material Facts in Support of its Motion for Summary Judgment Tortious Interference,
444, citing Miller Dep., Passport Exhibit AA, 123), but the letter documenting the agreement itself
explicitly refers to Passport’s customer as “Do It Best Corporation.”

3


misappropriation claims and denied both parties’ motions for summary judgment on the copyright
infringement claim. The court's opinion also addressed Passport’s damages theories, sustaining DIB’s
objections to some of those theories. See Do It Best Corp. v. Passport Software, Inc., No. O1 C7674,
2005 WL 743083 (N.D. fll. March 31, 2005) (“Do It Best IT”). Now before the court are DIB’s
motion for summary judgment on Passport’s claim of tortious interference with contractual relations
and the parties’ cross-motions for summary judgment on Passport’s Lanham Act claim. In addition,
Passport seeks reconsideration of the court's earlier summary judgment rulings. For the reasons set
forth below, the motions are granted in part and denied in part.
FACTS
The facts are described in some detail in the court's earlier opinion and will be summarized
here only as necessary for context. In January 1989, the parties to this case entered into a licensing
arrangement pursuant to which Passport furnished to DIB software that Passport itself had obtained
through a license with RealWorld Corporation, and then modified and enhanced for use by DIB.
(Dealer License for RealWorld Software, Passport Exhibit I.) Under the terms of its license, DIB,
a hardware cooperative, was entitled to provide copies of the licensed software to DIB’s member
stores. As described in the court's earlier opinion, the licensing agreement between DIB and Passport
expired by its terms in 1994. It was subject to renewal, and though the parties failed to take the
formal steps required by the agreement for renewal, there is evidence that they continued operating
under the terms of the original agreement at least until 1999.
In August 2000, Karla Wygant of DIB asked Muriel Miller of Passport to sell to DIB
unlimited rights to the software. (Muriel Miller Dep., DIB Exhibit 13, at 146-47.) Passport notes
that a consultant for DIB, aware that DIB used both the RealWorld original software and the

2


confusion as to the origin of the software product DIB is distributing. Ty, Inc. v. Jones Group, Inc.,
237 F.3d 891, 897 (7th Cir. 2001). In the court’s view, the evidence that DIB removed Passport’s
copyright from software created by Passport meets that test. Several courts have held that removing
the copyright notice from a product and falsely relabelling it can constitute unlawful “reverse passing
off.” See, e.g., Johnson v. Jones, 149 F.3d 494, 503 (6th Cir. 1998) (defendant who removed plaintiffs
name and seal from a set of architectural plans and substituted his own had “represented [the plans]
to be his own work” and was thus liable for false designation of origin); United States Media Corp. v.
Edde Entertainment Inc., 40 U.S.P.Q.2d 1581, 1588 (S.D.N.Y. 1996) a claim of false designation of
origin “may be supported . . . by further acts on the part of the infringer falsely representing itself as
the owner of the work” created by plaintiff).

In the leading case, Dastar, the defendant released a set of videos based on a television series
that plaintiffs had created years earlier. The copyright on the scries had expired, however, and the
Supreme Court reversed a judgment for plaintiffs on their claim of false designation of origin. To
hold otherwise, the Court explained, “would be akin to finding that § 43(a) created a species of
perpetual patent and copyright, which Congress may not do.” 539 U.S. at 37. Importantly, the
Court observed that, had defendant bought some of plaintiffs’ videotapes and “merely repackaged
them as its own,” the Court would have sustained the claim. Id. at 31. Passport here urges that DIB
merely repackaged Passport’s software as its own.

DIB insists that its own modifications to the software defeat Passport’s Lanham Act claim.
Specifically, DIB claims its efforts included “fixing errors in and modifying the source code, compiling
the source code into object code, loading the object code onto its servers, and delivering the servers
to its members.” (DIB’s Reply in Support of its Motion for Summary Judgment on Passport’s Lanham

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for clarification, Passport asserts that the court erroneously found “no evidence that [Passport]
attempted to collect fees or royalties on sublicenses after 1994.” (Motion of Passport Software, Inc.
to Clarify and/or Modify the Court Order of March 31, 2005 (hereinafter, “Motion to Clarify”), at 2.)
Such a statement does not appear in Do It Best II. The court did comment on what it perceived as
the lack of evidence that Passport had attempted to collect fees or royalties on sublicenses, but did
so in the context of denying DIB’s motion for summary judgment on Passport’s contract claim for the
period until January 1999. Passport now notes its statement in an earlier filing that it “has not
received any license or royalty payments from DIB for sublicensing activity since October of 2000.”
(Motion to Clarify, at 3, citing Passport’s Response in Opposition to Motion of Do It Best Corp. for
Summary Judgment on Passport’s Breach of Contract Claim, at 24.) That statement does not require
the conclusion that Passport was receiving such payments until October 2000, but the court will
assume this is what Passport meant to convey. To the extent that DIB continued making license or
royalty payments, the court will simply reiterate that some business relationship continued between
the parties even after January 1999, though the record is insufficient for the court to determine the
precise terms of that relationship. In particular, absent further evidence on the matter, the court
rejects Passport’s apparent contention that all terms of the Dealer License remained in force and
effect. Notably, the court’s earlier opinion acknowledged the possibility that an “implied license”
existed after January 1999. Do It Best I, 2005 WL 743083, at *5.

Cc. Copyright Infringement Claim: In Do It Best Il, this court addressed DIB’s three
arguments for judgment in its favor on this issue: (a) that DIB enjoys an “irrevocable implied
license,” (b) that DIB is a joint author of the software, and (c) that Passport is guilty of misuse of its
copyright registrations. The court expressly declined to consider an argument that it concluded DIB

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