United States District Court, W.D. Arkansas, Fayetteville Division
MEMORANDUM OPINION AND ORDER
TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE
before the Court are two dispositive motions and related
filings. The first motion is Plaintiff and Counter-Defendant
Dale Oliver's Motion for Partial Summary Judgment (Doc.
29), and a Statement of Facts (Doc. 30) and Brief in Support
(Doc. 31). Oliver's Motion seeks, inter alia, a
declaration that Oliver is still a one-third owner of DB
Squared, LLC, a limited liability company he formed alongside
Bruce and Blair Johanson.Defendants Bruce Johanson, Blair
Johanson, and DB Squared, LLC (collectively, “DB
Squared” or the “Company”) have filed a
Response in Opposition (Doc. 45). The second pending motion
is DB Squared's Motion for Partial Summary Judgment (Doc.
35), and a Statement of Facts (Doc. 36) and Brief in Support
(Doc. 37). DB Squared's Motion seeks, inter
alia, a declaration that it is the true owner of the
copyright to the software. Oliver has submitted a Response in
Opposition (Doc. 47). For the reasons explained below,
Oliver's Motion for Partial Summary Judgment is
GRANTED, and DB Squared's Motion for
Partial Summary Judgment is DENIED.
case centers around a once-thriving business relationship
that soured after more than a decade. Prior to their
association with Plaintiff Oliver, brothers Bruce and Blair
Johanson (“the Johansons”) operated a firm,
Johanson Consulting, Inc. As part of their work, the
Johansons employed a methodology related to job valuation and
employment compensation. However, as neither brother was an
expert in computer code, the need soon arose for the addition
of an individual who was an expert in computer
programming to make the method commercially viable.
Fortunately, Johanson Consulting had worked with just such a
computer programmer, Oliver, in the past, and the three
ultimately decided to go into business together to develop
and commercialize computer software related to compensation
management planning and advising.
achieve these goals, Oliver and the Johansons formed DB
Squared as an Arkansas limited liability company on March 16,
2005, executing an Operating Agreement on the same day. The
Operating Agreement provided that each of the three members
would own a third of the membership interests in the newly
formed LLC. Given their backgrounds, the work of the newly
established company would be divided according to the
owners' expertise, with the Johansons being primarily
responsible for client relationships and Oliver serving as
the strategy and product development leader.
the parties dispute the state of the existing program before
Oliver began his work,  it is undisputed that, by 2008, an
improved version of the program, entitled JESAP 2008, had
been created. The parties then sought to register the program
with the U.S. Copyright Office.
March 27, 2008, Oliver filed a registration application with
the Copyright Office. (Doc. 35-6). In the application, Oliver
identified himself as a principal of DB Squared but also
checked the box indicating he was the “Author” of
the JESAP software. After receiving an email from Tamika
Butler, a Registration Specialist at the Copyright Office,
noting the inconsistency between his claim of authorship and
his title as an officer of the Company and after
communicating with the Johansons, Oliver ultimately requested
that Ms. Butler “[m]ake the application a “work
made for hire” for the company DB Squared, LLC. (Doc.
35-7, p. 2). The copyright application for the JESAP 2008
software was then approved, and the registration record
listed the work as a work made for hire and DB Squared as the
author of the copyright (the “JESAP 2008
Copyright”). (Doc. 35-8, p. 2).
timeline following the registration of the JESAP 2008 program
is disputed, but some of the key dates and facts are clear.
Following the registration of the JESAP 2008 Copyright, newer
versions of the software were created, and the program was
ultimately renamed DBCompensation in 2009 or 2010 as part of
the company's rebranding efforts to make the software
more commercially viable. As apparent from the record, many
iterations of the JESAP and later DBCompensation products
prominently displayed a message reading: “© DB
Squared, LLC.” As the member with computer programming
expertise, Oliver was responsible for changing the computer
code so that these copyright registration notices would be
displayed when users accessed the software. (Doc. 35-11, p.
to this rebranding effort, newer versions of the
DBCompensation software were created and Oliver and the
Johansons, on behalf of DB Squared, made considerable efforts
to sell, market, or license the software program
DBCompensation to potential buyers. Oliver testified that as
late as June 2016, he attended the World at Work conference
in order to sell the DBCompensation product on behalf of DB
Squared. (Doc. 35-4, p. 45).
the reasons are unclear, on October 24, 2016, Oliver
submitted an email to the rest of the company announcing that
he was resigning from DB Squared effective immediately. (Doc.
35, Ex. 14). At the time of his resignation, Oliver was the
Chief Technology Officer (“CTO”) of DB Squared.
Blair Johanson responded by email to Oliver's resignation
on October 26. His email noted that he understood
Oliver's frustration with trying to finalize the newest
version of the DBCompensation software, DBComp 10, but would
like the opportunity to discuss the resignation with Oliver.
He also asked if there was a way to get over this hurdle and
move forward with the Company's strategic growth plan.
(Doc. 35-14, p. 2). On October 30, 2016, Oliver sent another
company-wide email apologizing for his odd behavior the week
before. In the email, Oliver noted that he had been trying so
hard to bring DBComp 10 to a successful conclusion and that,
if desired, “[he] will be pleased to temporarily
continue on at DB Squared to see DBC 10 through to a
successful conversion, testing, implementation, and
conclusion.” (Doc. 35-16, p. 2). Moreover, he noted
that “[o]nce the DBC 10 rollout has concluded (provided
you decide that it would be helpful to have me back on the
team until then) it seems like this presents an excellent
opportunity for me [to] let Blair and Bruce take it from
here. DB Squared is at a terrific place now with so many
excellent things put in place, and with a very bright future
ahead. Removing the cost of my services will free up
additional financial resources for the company.”
extent to which Oliver actually returned to “the
team” is unclear to the Court, but sometime in the next
four months, Oliver began to assert that he was the sole
owner of the DBCompensation software. As a result, he
retained attorneys who then sent at least one
cease-and-desist letter on his behalf to DB Squared alleging
that, in the absence of the Company obtaining a license from
Oliver or his wholly owned company, Applied Computer
Technology (“ACT”), he would have no choice but
to begin litigation to vindicate his ownership interests in
the copyright and DB Squared. (Doc. 35-19, p. 2).
February 2017, Oliver submitted a new copyright registration
to the Copyright Office for the DBCompensation software. In
the application, he listed himself as the author of the
copyright and indicated that, unlike his application for the
JESAP 2008 software, this was not a work made for hire. In
support of his application, Oliver submitted a number of
pages of source code to the Copyright Office after first
inserting “Author” and “Dale Oliver”
on the pages. (Doc. 35-4, p. 35). As Oliver stated during his
deposition, those insertions were not native to the copy of
the program stored at DB Squared. Id. The copyright
application was ultimately approved, and copyright TX
8-299-255 was issued on February 21 for the DBCompensation
software, listing Oliver as the sole author (the
then filed the present lawsuit, seeking, among other relief:
(1) a declaration that he is still a member of DB Squared,
LLC with a one-third membership interest; (2) judicial
dissolution of the Company; (3) a declaration that he is the
true author (and resulting owner) of the DBCompensation
Copyright; and (4) damages for copyright infringement.
Squared filed a counterclaim seeking, among other things: (1)
a declaration that the Company is the rightful owner of the
copyrighted software in question, because Oliver's
subsequent registration of the DBCompensation Copyright was
procured by fraud on the Copyright Office, and thus invalid
and/or unenforceable; (2) damages for infringement of the
JESAP 2008 Copyright owned by DB Squared; and (3) damages for
Oliver's alleged breach of a fiduciary duty.
legal standard for summary judgment is well established.
Under Federal Rule of Civil Procedure 56(a), “[t]he
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” The
Court must review the facts in the light most favorable to
the opposing party and give that party the benefit of any
inferences that can be drawn from those facts. Canada v.
Union Elec. Co., 135 F.3d 1211, 1212-13 (8th Cir. 1997).
The moving party bears the burden of proving the absence of a
genuine dispute of material fact and that it is entitled to
judgment as a matter of law. See Fed. R. Civ. P.
56(c); Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986); Nat'l Bank
of Commerce of El Dorado, Ark. v. Dow Chem. Co., 165
F.3d 602 (8th Cir. 1999).
certain facts are undisputed, the summary judgment standard
also requires a demonstration that “‘the movant
[be] entitled to judgment as a matter of law.' Thus, the
last matter that the court must address in ruling on a
summary-judgment motion is whether legal theory or doctrine
supports the movant's position that judgment should be
entered.” Charles A. Wright & Arthur R. Miller, 10A
Federal Practice & Procedure Civil § 2725.3 (Apr.
2018). While novel or complex legal issues should not
forestall the grant of summary judgment that is otherwise
appropriate under the Rules, “their presence in the
action may suggest that a fuller development of the facts
would be helpful to their resolution. In those circumstances,
the court may deny summary judgment.” Id.
Oliver's Motion for Partial Summary Judgment
Motion is premised on the argument that his resignation from
DB Squared did not eliminate his one-third ownership interest
in the Company. In support of that argument, Oliver cites to
Ark. Code Ann. § 4-32-802(c), which provides that:
A member may withdraw from a limited liability company only
at the time or upon the happening of an event specified in
the articles of organization or an operating agreement.
Unless the articles of organization or operating agreement
provides otherwise, a member may not withdraw from a limited