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NAPOLI v. SEARS

October 5, 1993

JOAN T. NAPOLI, Plaintiff,
v.
SEARS, ROEBUCK AND CO., a corporation, and KEANE, INC., a corporation, Defendants.



The opinion of the court was delivered by: MARVIN E. ASPEN

 MARVIN E. ASPEN, District Judge:

 Plaintiff Joan T. Napoli brings this action against Sears, Roebuck & Co. and Keane, Inc., alleging copyright infringement, misappropriation of trade secrets, breach of contract and conversion. Presently before the court are (i) Keane's motion to dismiss Counts I and II, for copyright infringement and misappropriation of trade secrets, respectively, to the extent they are directed against Keane, and to dismiss Keane from the action; and (ii) Napoli's motion for partial summary judgment regarding her ownership of a valid and enforceable copyright. For the reasons set forth below, we grant Keane's motion to dismiss and deny Napoli's motion for summary judgment.

 I. Legal Standards

 A motion to dismiss should not be granted unless it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); see also Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir. 1988); Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 89 L. Ed. 2d 574, 106 S. Ct. 1265 (1986). We take the "well-pleaded allegations of the complaint as true and view them, as well as reasonable inferences therefrom, in the light most favorable to the plaintiff." Balabanos v. North Am. Inv. Group, Ltd., 708 F. Supp. 1488, 1491 n.1 (N.D. Ill. 1988) (citing Ellsworth).

 Under the Federal Rules of Civil Procedure, summary judgment is appropriate if "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). This standard places the initial burden on the moving party to identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting Rule 56(c)). Once the moving party has done this, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(c). In deciding a motion for summary judgment, the court must read all facts in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Griffin v. Thomas, 929 F.2d 1210, 1212 (7th Cir. 1991).

 II. Background

 In 1989, Sears decided to develop a computer program designed to improve the quality and efficiency of the services offered by the Home Fashions Department at Sears. For the next year, various Sears employees, led by Melody Villafana, the National Inventory and Systems Manager of Furniture of the Home Fashions Department, worked on the "Sears System." They planned the overall structure of the Sears System, provided the layout and graphic design of the screens and reports to be generated, selected all of the data that was to be included, and designed the layout and presentation of that data. Finally, Villafana developed and introduced new terms necessary for the computerization of Sears' business process.

 Because the Sears employees had limited experience working in the DataEase software that had been selected for the Sears System, Villafana contracted with Norrell Services, an outside company, to help complete the programming in August, 1990. Norrell originally sent Richard Francis to assist Sears, but he left Norrell in November, 1990. Norrell then sent the plaintiff, Joan Napoli. She worked with Villafana at Sears until March of 1991, when she was fired from Norrell and left Sears. At that time, the Sears System was still incomplete, and all work on it apparently ceased.

 In July, 1991, Napoli contacted Sears and offered to complete the Sears System. Napoli and Sears then entered into an agreement whereby Napoli would complete the Sears System and provide a limited warranty period. In return, Sears agreed to pay Napoli $ 10,000. Napoli began work on completing the existing system, but claims that in October, 1991, she concluded that the Sears System, as it had been developed, suffered from a fundamental design flaw. She informed Villafana of this fact, and told her that she was considering entirely redesigning the internal structure of the system. Villafana told her not to do so, and informed her that Sears would be under no obligation to her if she did. Sears continued to provide extensive assistance to Napoli; it gave her mock-ups of visual screens and sample reports produced by the uncompleted system, and Villafana and Napoli were in frequent contact.

 In January, 1992, Napoli delivered a computer system to Sears, which Napoli claims is the system she developed after the failure of the Sears System. Sears paid her $ 10,000, pursuant to the July agreement, and Napoli provided the repair assistance that she had promised. However, Sears claims that the system which Napoli provided was never fully functional. The relationship between the two parties began to break down in Spring of 1992, and Napoli ultimately demanded that Sears return her source code, which Sears did. However, Napoli contends that Sears made and retained a copy of the source code, which it provided to defendant Keane, Inc., for the purpose of evaluating it and preparing a derivative version.

 III. Keane's Motion to Dismiss

 Keane has moved to dismiss both Count I, for copyright infringement, and Count II, for misappropriation of trade secrets, to the extent that each count is directed toward Keane, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because these are the only claims against Keane, Keane also seeks to be dismissed from the action.

 A. Count I: Copyright Infringement

 In the alternative, Napoli contends that her complaint supports a claim of vicarious or contributory infringement. Although the parameters of these two theories of infringement are not particularly clear, see Sony Corp. v. Universal City Studios, 464 U.S. 417, 435 n.17, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984), ...


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