Argued: September 14, 2017
from the United States District Court for the Eastern
District of Virginia, at Alexandria. Anthony John Trenga,
District Judge. (1:15-cv-01451-AJT-TCB)
Francis Gilbert Gleason, Jr., GLEASON & GLEASON, P.C.,
Ashland, Massachusetts, for Appellant.
Thomas Stancil, ROBBINS, RUSSELL, ENGLERT, ORSECK, UNTEREINER
& SAUBER LLP, Washington, D.C., for Appellee.
Kathryn S. Zecca, Donald Burke, Shai D. Bronshtein, ROBBINS,
RUSSELL, ENGLERT, ORSECK, UNTEREINER & SAUBER LLP,
Washington, D.C., for Appellee.
WYNN, FLOYD, and HARRIS, Circuit Judges.
HARRIS, CIRCUIT JUDGE
2011, OpenRisk, LLC contracted with MicroStrategy Services
Corporation to create a cloud environment that would host
OpenRisk data and programming. But soon after, OpenRisk faced
insolvency, and three of its principal officers resigned. At
issue in this case is whether MicroStrategy wrongfully
continued to provide services to OpenRisk's ex-employees
after they had left and formed a new company, Spectant Group
particular, OpenRisk alleges that at the direction of its
recently departed officers and without its knowledge,
MicroStrategy copied and transferred data from the OpenRisk
cloud environment to a new environment established for
Spectant. And then, according to OpenRisk, MicroStrategy
deleted the data from OpenRisk's environment, without the
notice of termination required by the parties' contract.
When OpenRisk became aware of the copying and deletion of its
data, it sued MicroStrategy for computer fraud under
Virginia's Computer Crimes Act and for other state-law
district court granted summary judgment almost entirely in
MicroStrategy's favor. The primary issue now on appeal is
whether the district court correctly held that the federal
Copyright Act preempts OpenRisk's computer fraud claims.
We agree with the district court that it does. We further
agree that MicroStrategy is entitled to summary judgment on
OpenRisk's other claims against it. Accordingly, we
affirm the district court's judgment in its entirety.
was a start-up company that ceased operations in 2011,
shortly after the resignation of three of its key employees:
President Craig Ott, Chief Technology Officer Shajy Mathai,
and Chief Scientist Richard Murnane. This dispute arises out
of MicroStrategy's dealings with the three employees,
before and, critically, after their resignations.
Mathai, and Murnane began their relationship with
MicroStrategy even before they formed OpenRisk, using
MicroStrategy-licensed software to develop a computer program
that would allow insurance companies to analyze exposure to
natural disasters. Their business model included the creation
of a web-based platform that customers could access on the
"cloud, " or via the internet. To further this
effort, they partnered with investors to establish OpenRisk
in January 2011, and in September 2011, OpenRisk contracted
with MicroStrategy for "cloud services."
the parties' contract, MicroStrategy agreed to provide
OpenRisk with access to space on MicroStrategy's servers
- a "cloud environment" - on which OpenRisk would
store data and run the software it was licensing. In
exchange, OpenRisk agreed to make initial payments to
MicroStrategy of $15, 000 on October 31 and November 30,
2011, followed by quarterly payments of $63, 000 thereafter,
totaling approximately $1.26 million over the contract's
the time it entered into this contract with MicroStrategy,
OpenRisk was already in dire financial straits. When OpenRisk
was unable to close negotiations with a new investor, Ott,
Mathai, and Murnane all resigned from OpenRisk and formed a
new company, Spectant. And with MicroStrategy's help,
OpenRisk alleges, they took OpenRisk's data with them.
OpenRisk points in its complaint to two key acts by
MicroStrategy. First, on December 13, 2011, just hours after
receiving a cease-and-desist letter from OpenRisk urging it
to "cease and refrain from doing any work and making any
efforts to commercialize the OpenRisk property with [Ott,
Mathai, and Murnane], " J.A. 1068-70, MicroStrategy
copied the data from the OpenRisk cloud environment and
transferred it to a new environment created for Spectant. And
second, on or around January 11, 2012, and after OpenRisk
failed to make its first quarterly payment under the
contract, MicroStrategy deleted the entire OpenRisk
environment and all of its ...