Sunday, June 16, 2013

Foray Technologies

By PETE BENNETT - Contra Costa Watch EMAIL
Phone: 510-460-5641
Posted: 06/13/2013

Reposted to Protect My Sons as in 2004 my truck was an arson target, my truck was ablaze on 680, my truck later targeted by hit and run driver, my Ford Explorer rigged ABS system to flip me while driving north, in 2011 returning from a week of working in Modesto for PG&E someone followed me for 50 miles then tried to flip me, and on July 20th 2011 they blinded me then pushed me into oncoming traffic.  


And I know quite a few of this victim list and that is one too many.   

Related: Arson / Arson
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KWAN SOFTWARE ENGINEERING, INC., Plaintiff, v. FORAY
TECHNOLOGIES, LLC, Defendant.
No. C 12-03762 SI
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
CALIFORNIA
2013 U.S. Dist. LEXIS 14708
January 22, 2013, Decided
January 22, 2013, Filed
PRIOR HISTORY: Kwan Software Eng'g, Inc. v. Foray
Techs., LLC, 2012 U.S. Dist. LEXIS 157194 (N.D. Cal.,
Nov. 1, 2012)
CORE TERMS: software, digital, workflow,
authenticity, authentication, customer, authenticate,
guidelines, literally, hash, falsity, Lanham Act, user,
preliminary injunction, false advertising, injunction,
consumer, algorithm, video, irreparable harm, message,
authenticated, literal, purports, false statements,
advertisement, technology, authenticating, acquisition,
distance
COUNSEL: [*1] For Kwan Software Engineering, Inc.,
a California corporation, doing business as Veripic, Inc.,
Plaintiff: Dhaivat H. Shah, LEAD ATTORNEY, David
Ira Tobias Siegel, GRELLAS SHAH LLP, Cupertino,
CA; George Grellas, George Grellas & Associates,
Cupertino, CA.
For Foray Technologies, LLC, Delaware Limited
Liability Company, Defendant: Chip Cox, James Steven
Greenan, Greenan, Peffer, Sallander & Lally, LLP, San
Ramon, CA.
JUDGES: SUSAN ILLSTON, United States District
Judge.
OPINION BY: SUSAN ILLSTON
OPINION
ORDER DENYING PLAINTIFF'S MOTION FOR A
PRELIMINARY INJUNCTION; DENYING
MOTIONS FOR LEAVE TO FILE
SUPPLEMENTAL EVIDENCE
Plaintiff Kwan Software Engineering, Inc., d/b/a
Veripic, Inc. ("Veripic") has moved to enjoin defendant
Foray Technologies LLC ("Foray") from making certain
public representations that allegedly constitute false
advertising under § 43(a) of the Lanham Act and under
California law. Foray has filed an opposition, and Veripic
has replied. The Court held a hearing on the motion on
December 17, 2012. Having considered the parties'
arguments, the Court hereby DENIES plaintiff's motion
for a preliminary injunction, for the reasons discussed
below.
BACKGROUND
Veripic is a California corporation that provides [*2]
software for handling digital evidence to police and fire
departments, as well as to other entities that need to store
and retrieve photos, video, and audio files. First
Amended Complaint ("FAC") ¶ 1, 7, 9. Veripic and
Foray are direct competitors in the digital
evidence-related software market, which mainly consists
Page 1of law enforcement agencies. Id. ¶ 9.
Veripic's complaint states seven causes of action
against Foray: (1) copyright infringement; (2) inducement
of breach of contract; (3) contributory and induced
copyright infringement; (4) violation of the Digital
Millennium Copyright Act; (5) false advertising and
unfair competition under the Lanham Act; (6) false
advertising under California Law; and (7) unfair
competition under California Law. However, Veripic's
instant motion only seeks to enjoin Foray's behavior with
respect to allegations of false advertising under § 43(a) of
the Lanham Act (15 U.S.C. § 1125(a)) and under Cal.
Bus. & Prof. Code § 17500, et seq.
Veripic produces and sells the "Digital Photo Lab"
("DPL") software, which is "a centerpiece of its digital
evidence management suite designed for law enforcement
agencies." FAC ¶ 8. The "most popular" feature of
Veripic's [*3] DPL software is the "Calibration Module,"
which permits users to measure the real life length of
objects (in inches or metric units) or distances between
objects in a photo using a "simple point and click." Id. ¶
10. As a result, users can know the precise distances
within photos and accurately print life-size or scaled
images. Id. ¶ 11.
Foray produces and sells the Authenticated Digital
Asset Management System ("ADAMS") software to the
same customer base as Veripic targets with its DPL
software. 1 Id. ¶ 9. Foray's ADAMS software has an
"Image Calibration Utility" that performs substantially
the same function as Veripic's "Calibration Module" -- to
allow users to accurately abstract real-life distance from a
photo. Id. ¶ 15-16. However, until July 2009, Foray's
Utility did so in a more "cumbersome" way than Veripic's
"simple point and click" method. Id. Foray's Utility
required customers to know the exact real life horizontal
or vertical distance in a photo and to engage in a
"multi-step process" in order to obtain real life
measurements. Id. ¶ 16.
1 Although "ADAMS" originally referred to the
software at issue in this case, Foray now uses
"ADAMS" to cross-brand a suite of related
products, [*4] including ADAMS Property &
Evidence, ADAMS Crime Scene Photo/Video,
ADAMS Bag & Tag, ADAMS Latent/ACE-V,
and ADAMS Video Interview.
The ADAMS software employs a "hash function,"
which allows the user to validate whether a piece of
digital evidence has been manipulated or altered between
the time it is entered into the ADAMS software system
and a later time when a user wishes to make use of that
piece of digital evidence. Id. ¶ 32. Veripic's DPL
software has technology that allows the user to validate
not only whether digital evidence has been altered since it
was entered in the Veripic software system, but also
whether the digital evidence has been altered from the
moment the picture was originally taken.
The gravamen of Veripic's false advertising claim is
that since 2008, Foray has misled the public about certain
industry standards and the capabilities of Foray's own
software, and by implication, the capabilities of Veripic's
similar software, insofar as they comply with those
standards. FAC ¶ 22-39. In particular, it is alleged that
Foray falsely represents that its ADAMS software has the
ability to "authenticate" images consistent with guidelines
propounded by the Scientific Working [*5] Group on
Imaging Technology ("SWGIT"). Id. ¶ 23-24.
Accordingly, Veripic now seeks to enjoin Foray from (1)
using the name "Authenticated Digital Asset
Management System" or "ADAMS" or any other name
that states or implies that Foray's software authenticates
digital assets; (2) stating that Foray's software
authenticates digital assets; (3) representing that SWGIT
guidelines endorse the use of hash functions as the best
way to authenticate digital assets and that Foray's
software complies with SWGIT guidelines; and (4)
stating that Foray's software is the only software that
complies with the SWGIT "requirement" contained in the
workflow described in SWGIT Section 13. If successful
on this motion, Veripic also requests that Foray post in a
prominent place on the landing site of its website that it
has been preliminarily enjoined from making the above
statements and linking a copy of the Court's order
granting the motion.
LEGAL STANDARD
"A plaintiff seeking a preliminary injunction must
establish that he is likely to succeed on the merits, that he
is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his
favor, and that an injunction [*6] is in the public
interest." Winter v. Nat. Res. Def. Council, Inc., 555 U.S.
7, 20, 129 S. Ct. 365, 172 L. Ed. 2d 249 (2008). A
preliminary injunction is an extraordinary remedy never
awarded as of right. Id. at 24 (citing Munaf v. Geren, 553
Page 2
2013 U.S. Dist. LEXIS 14708, *2U.S. 674, 689-690, 128 S. Ct. 2207, 171 L. Ed. 2d 1,
(2008)). In each case, courts "must balance the competing
claims of injury and must consider the effect on each
party of the granting or withholding of the requested
relief." Winter v. Nat. Res. Def. Council, Inc., 555 U.S. at
24 (citing Amoco Production Co. v. Village of Gambell,
AK, 480 U.S. 531, 542, 107 S. Ct. 1396, 94 L. Ed. 2d 542
(1987)).
DISCUSSION
Veripic contends that an injunction is necessary in
order to prevent a loss of prospective customers and
damage to its goodwill. Veripic also contends that Foray's
misrepresentations threaten the effectiveness of criminal
investigations and prosecutions nationwide, where law
enforcement officials are erroneously relying on evidence
management software that is not capable of doing what it
purports to do. Foray responds that Veripic's fears are
overstated because the purchasers are highly
sophisticated consumers capable of discerning whether
the product they purchased is actually capable of
performing the functions it purports to perform. More
important, [*7] Foray denies that the three "false"
statements at issue here are literally false, as required by
the Lanham Act. Therefore, Foray contends that Veripic
has no likelihood of success on the merits. It is to that
first issue the Court now turns.
1. Likelihood of Success on the Merits
To succeed on a claim of false advertising under the
Lanham Act, the plaintiff must show that: (1) the
defendant made a false statement either about its own or
another's product; (2) in a commercial advertisement; (3)
that deceived or has the tendency to deceive a substantial
segment of its audience; (4) that the deception is material,
in that it is likely to influence the purchasing decision; (5)
that the defendant caused its false statement to enter
interstate commerce; and (6) plaintiff has been or is likely
to be injured as a result of the false statement, either by
direct diversion of sales from itself to the defendant, or
by a lessening of the goodwill associated with plaintiff's
product. Newcal Indus., Inc. v. Ikon Office Solutions, 513
F.3d 1038, 1052 (9th Cir. 2008).
2
2 The parties agree that false advertising under
California law requires the same showing of
falsity as the Lanham Act.
To demonstrate [*8] falsity within the meaning of
the Lanham Act, a plaintiff may show that the statement
was literally false, either on its face or by necessary
implication, or that the statement was literally true but
likely to mislead or confuse consumers. Southland Sod
Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir.
1997). To be "literally false" the statement must be
unambiguously false. In re Century 21-RE/MAX Real
Estate Adver. Claims Litig., 882 F. Supp. 915, 923 (C.D.
Cal. 1994).
When evaluating statements for literal falsity, the
statements should be analyzed in their full context.
Southland Sod Farms,108 F.3d at 1139. Where the
statements were made to sophisticated consumers with
unique background knowledge and experience, the court
should consider that as part of the relevant context. See,
e.g.,Core-Vent Corp. v. Nobel Industries, 163 F.3d 605,
[published in full-text format at 1998 U.S. App. LEXIS
22175] at * 4 (9th Cir. 1998) (unpub.) ("Of course, we do
not ignore the context in which these studies were
presented ( . . . to a professional conference and . . . in a
scientific journal); Campagnolo S.R.L. v. Full Speed
Ahead, Inc., 2010 U.S. Dist. LEXIS 46176, at *18 (W.D.
Wash. May 11, 2010) ( to determine literal falsity, "the
first question [*9] is: what does the person to whom the
advertisement is addressed find to be the message?");
Utah Medical Products v. Clinical Innovations, 79 F.
Supp. 2d 1290, 1309 (D. Utah 1999) ("While actual
consumer confusion is not necessary to assert a claim of
literal falsity, the perspective of the relevant consumer
population is necessary in determining whether the
advertising could be viewed as false.").
Three statements are at the heart of Veripic's false
advertising claim. Foray contends that Veripic cannot
establish falsity, materiality, and injury for any of the
three statements. As to falsity, Veripic contends only that
the statements are literally false. Veripic does not present
any evidence that, in the alternative, the statements
misled, confused, or deceived consumers. All three
statements revolve around the meaning of the term
"authenticity" as that term is understood by law
enforcement customers and others in the market for
digital evidence management software.
A. Statement One
Veripic alleges that Foray has disseminated the
following false statement in advertisements and responses
to requests for proposals: "Foray's ADAMS software is
the only software that complies with the SWGIT [*10]
Page 3
2013 U.S. Dist. LEXIS 14708, *6'requirement' contained in the workflow described in
Section 13, Best Practices for Maintaining the Integrity
of Digital Images and Digital Video of the SWGIT
Guidelines." Mot. at 7. Connected with that statement,
Foray also advertises "NOTE: While some vendors may
claim they are ASCLD or SWGIT compliant, no other
digital evidence management vendor complies with the
SWGIT workflow #2 [described in Section 13 of the
SWGIT Guidelines]. ONLY the FORAY ADAMS
solution meets this requirement!" Id. at 9. Foray made
these statements to law enforcement agencies in Oakland
County, Michigan and Seattle, Washington. Kwan Decl.,
Exs. A, B.
Veripic argues that this statement is literally false in
two ways: (1) the Section 13 SWGIT workflow ("Section
13") referenced in Foray's advertisement is not a
"requirement," but rather it is "workflow #2" of four
"example" workflows listed in that section; (2) the word
"only" is literally false because ADAMS is not alone
among software consistent with this workflow, since
Veripic's DPL software is also consistent with this
workflow. Foray contends that this statement is accurate
in its context.
The "requirement" at issue here is referred to as an
"example" in [*11] the SWGIT workflow. Siegel Decl.,
Ex 1 at 4. Each "workflow" is simply a list of steps users
may take in order to achieve some software objective.
SWGIT describes these workflows as "best practices"
and prefaces that, "[t]he following . . . list of specific
workflow examples . . . is not exhaustive as each
situation requires tailoring a specific process that should
be outlined in an organization's SOPs." Id. Veripic
contends that calling an example a "requirement" is
literally false. Foray argues that its use of "requirement"
does not mean that its software is the only way to be
consistent with the SWGIT workflow. Rather, its
ADAMS software is one known way to comply with
SWGIT. In context, the Court agrees with Foray. The
Oxford English Dictionary defines "requirement" as
"something wanted or needed." Oxford English
Dictionary, 3d Ed. Here, Foray states that its use of
"requirement" is intended to convey that its software uses
a series of steps known to be wanted or needed by the
example workflow -- i.e, consistent with it, as it is
written. Foray argues that its use of "requirement" does
not exclude the possibility that others can add or change
steps in the workflow. Its use here [*12] only guarantees
to customers that Foray's software, at a minimum, is
consistent with the example.
Veripic also takes issue with Foray's assertion that
only its ADAMS software complies with workflow #2.
Veripic contends that this use of "only" is literally false
because Veripic's DPL software also "fits within the same
workflow." Mot. at 10. However, Veripic undercuts its
argument in the very same sentence, noting that in
complying with the workflow, DPL "also provides other
features to ensure the integrity of digital evidence stored
in its stems." Id. Veripic's product cannot be literally
consistent with the workflow where its product deviates
from the steps listed in that workflow in order to "provide
other features." Foray contends that it uses "only" to
mean that its software is the only one that meets the
workflow's specific series of steps, not its general
outcome. As Foray points out, the left column of
workflow #2 describes a series of steps in which copies
of the original image are created, so that processing
functions can be performed in an outside program, while
maintaining the original image. See Kwan Decl., Ex. A at
13. In other words, the user can make working copies of
[*13] digital files and work on them in other imaging
software, such as Adobe Photoshop. Veripic specifically
eschewed this process as cumbersome and brags that its
DPL "has methods for enhancing images without
changing the actual file, and without creating messy
duplicates, allowing you to enhance your evidence but
never compromise it." Witzke Decl., Ex. A. Thus,
Veripic's DPL software does not simply have "other
features." Rather, it has an entirely different, perhaps
better or simpler method for achieving the outcome
described in workflow #2, that nonetheless does not
literally comply with it. Moreover, Foray has shown that
it literally complies with the specific set of steps
described in the workflow, regardless of whether other
workflows can be designed to achieve the same outcome.
Therefore, the Court cannot say that Veripic is likely to
succeed on the merits of its Lanham Act claim with
respect to this statement, where it has not made a
threshold showing of literal falsity.
B. Statement Two
Veripic argues that Foray's statement "that its
ADAMS software complied with SWGIT guidelines that
state that the use of a hash function is the best way to
authenticate digital assets" is also literally [*14] false.
According to Veripic, hash functions do not allow a user
to authenticate, as SWGIT uses that term, but rather, hash
Page 4
2013 U.S. Dist. LEXIS 14708, *10functions validate integrity. Section 13 of the SWGIT
guidelines, cited by Foray in support of the above
statement, is entitled "Best Practices for Maintaining the
Integrity of Digital Images and Digital Video." Siegel
Decl., Ex. 1. Veripic says this section has "nothing to do
with authenticating digital assets." Mot. at 10. On
Veripic's reading, SWGIT guidelines draw a bright line
distinction between "integrity" and "authenticity."
SWGIT guidelines state, "authenticity differs
significantly from integrity." Siegel Decl., Ex. 1.
Accordingly, "[i]ntegrity ensures that the information
presented is complete and unaltered from the time of
acquisition until its final disposition. For example, the
use of a hash function can verify that a copy of a digital
image file is identical to the file from which it was
copied, but it cannot demonstrate the veracity of the
scene depicted in the image." Id., Ex. 2. Authenticating
software, however, validates whether "a questioned
image or video is an accurate representation of the
original data by some defined criteria." Id. In response,
[*15] Foray argues that there are various industry
understandings of "authenticity" and "integrity," and that
integrity as Veripic defines it, is really a subset of
authenticity. In other words, there are at least two types
of authenticity: (1) acquisition authenticity (what Veripic
calls "integrity"), which ensures that the file itself has not
been changed since created or acquired; and (2) subject
matter authenticity, which ensures that the photo is what
it purports to be, the substance of the photo has not been
altered, and one can rely on the photo to draw real world
conclusions, such as distance and position.
Although Veripic argues that the distinction between
integrity and authenticity is inviolate, Foray presents
significant evidence that the terms are ambiguous,
overlapping, and sometimes interchangeable.
Notwithstanding their warning that the terms are distinct,
SWGIT's guidelines, read in their entirety, use those
terms loosely and interchangeably. For example, in
Section 13, SWGIT states "authentication is the process
of substantiating that the content is an accurate
representation of what it purports to be." Siegel Decl., Ex.
1. Yet in Section 14, SWGIT refers to authenticity, [*16]
stating, "[i]n the absence of a witness who can testify to
the origin of a questioned image or video, it may be
possible for an examiner to authenticate such data by
identifying its origin." Id. Ex. 2. In other words, Section
14 suggests that authentication requires confirmation of
the origin of data, which is precisely what Veripic says is
part of integrity validation, not authentication. In fact,
how would one know that data is an accurate
representation of what it purports to be (Veripic's
"authenticity") without necessarily confirming that the
data is complete and unaltered (Veripic's "integrity")
since its creation? Veripic's own promotional materials
define Foray's ADAMS as "acquisition authentication"
software, which "refers to knowing that a photo hasn't
changed starting from when it enters the computer
moving forward." Witzke Decl., ¶ 7, Ex. A, VeriPic FAQ
¶ 2 (emphasis in original).
Moreover, law enforcement professionals in the
industry use authenticity in a variety of ways, some of
which are consistent with what Foray claims its ADAMS
software actually does. According to Foray's expert Kerri
McClary, "authenticate" frequently refers to the various
steps taken when capturing, [*17] processing and
handling digital photographs to maintain their
"authenticity" in order to provide a foundation in court
that the digital photograph accurately portrays the scene.
3 McClary Decl., ¶ 5. Veripic's rebuttal declaration by
Richard McEvoy, Jr., does not actually dispute this. See
McEvoy Decl., ¶ 10 ("procedures for authentication of
digital evidence must encompass the entire lifespan of
that evidence . . . "). Authenticity in the legal evidentiary
context encompasses both acquisition and subject matter
authenticity, i.e., a witness may testify that a photo
accurately depicts the then-existing reality, and also by
implication, that the photo file has not been manipulated.
3 Veripic's evidentiary objection to the McClary
declaration, that it was unsigned, is
OVERRULED. Foray has properly validated the
signature. See Docket No. 47.
The evidence presented by the parties demonstrates
that at best, that term authenticity is ambiguous as used in
Foray's public statements. The SWGIT definition cited by
Veripic states that authentication is used "to discern if a
questioned image or video is an accurate representation
of the original data by some defined criteria." Siegel
Decl., Ex. 2. [*18] However, SWGIT Guidelines
nowhere define the criteria. Accordingly, Veripic has not
shown that there is a clear-cut definition of authenticity
from which Foray's statements clearly and
unambiguously deviate. Customers in the market for
"authenticating" software have multiple understandings
of what authenticating software is capable of doing and
what criteria to use to set authentication expectations.
Sellers and industry experts similarly have multiple
Page 5
2013 U.S. Dist. LEXIS 14708, *14understandings. Given this ambiguity, the Court cannot
say that Veripic is likely to succeed on the merits of its
Lanham Act claim based on this statement.
C. Statement Three
The third Foray statement Veripic alleges is literally
false is that the "ADAMS software 'authenticates' digital
assets" and that therefore, Foray misleads consumer in
naming its software "Authenticated Digital Asset
Management System" (i.e., ADAMS). The view that its
software authenticates is "a foundational part of Foray's
markets and sales of its software." Mot. at 12. In support,
Veripic cites the signature block of Foray employee
emails, which describe Foray as offering "image
authentication solutions." Kwan Decl., Ex. E. This
signature block, noting that Foray [*19] offers
"solutions" plural, actually supports Foray's contention
that it uses authentication to refer to its suite of products
that involve not just crime scene photographs, but also
latent fingerprints, footwear impressions, blood spatter,
and other kinds of evidence that its software
authenticates, as industry consumers think of that term.
Moreover, the Court has already discussed why Veripic
has not demonstrated literal falsity by using SWGIT
guidelines as the standard from which Foray's claims of
authenticity deviate.
Veripic contends that Foray's definition of
authenticity is also inconsistent with the way the National
Institute of Standards and Technology ("NIST") uses that
term. Foray advertises that, "[o]nly Foray Technologies
uses a SHA-256 secure hash algorithm, which is the
current NIST standard (NIST FIPTS 180-2 Secure Hash
Algorithm) for authenticating digital evidence." Kwan
Decl., Ex. A. NIST FIPTS 180-02 has four algorithms,
SHA-1, SHA-256, SHA-384, and SHA-512. Id., Ex. D.
These algorithms, including SHA-256, "produce a
condensed representation" of a computer file called a
"message digest." Id. And the message digest for each
computer file is unique. Id. Thus, software [*20] can
deduce whether a file has been altered by comparing
message digests at different points in the life of a file.
And according to NIST, "[t]hese algorithms enable the
determination of a message's integrity." Id. Thus, Veripic
contends that nowhere does NIST FIPTS 180-2 state that
these algorithms have anything to do with authentication.
NIST does mention authentication in the very next
sentence, stating that message digests help generate
"authentication codes," which are part of confirming
"integrity." Kwan Decl, Ex. D. Thus, rather than resolve
the ambiguity, Veripic's reference to NIST only
exacerbates it. Foray points to evidence from an October
2, 2012, press release in which NIST announced the
winner of its five-year competition to find a new
cryptographic hash algorithm, where it wrote, "[h]ash
algorithms are use widely for cryptographic applications
that ensure the authenticity of digital documents, such as
digital signatures and message authentication codes."
Hennings Decl., ¶ 5, Ex. A. Moreover, Veripic's
president, John Kwan, used a similar understanding of
authentication in a patent application, stating, "[t]his
invention relates to methods of data authentication and
more [*21] particularly, but not exclusively, provides a
system and method for creating, attaching, and using
[hash functions] of digital data to authenticate the claim."
Hennings Decl., ¶ 6, Ex. B.
Veripic argues that Foray has for years used NIST
and SWGIT as reference points to frame the meaning of
"authentication" and it cannot now disclaim that use. As
an example, Veripic points to a presentation by Foray's
vice president of program management, David Witzke, to
the International Association for Identification, wherein
he states that SWGIT "provide[s] us with the guidelines
for the processing of anything digital." Wu Decl., ¶¶ 3-4,
Ex. W1. But later in that presentation, consistent with
Foray's position here, Witzke states, "[u]nder section 13
of the SWGIT guidelines we actually get into some of the
requirements for tracking and maintaining the
authentication of images." Id. In other words, Foray is
suggesting publicly that it understands SWGIT Section
13 to address acquisition authenticity.
Given the state of the evidence, Foray's use of
authenticity in its advertising is far from being literally
false, understood in context. Veripic relies on a hair
splitting, literal reading of NIST and [*22] SWGIT
statements that are themselves inconsistent or ambiguous.
Accordingly, Veripic has not offered evidence sufficient
to justify an injunction because it has not shown likely
success on the merits. Because Veripic is unlikely to be
able to show falsity, the Court need not address the
parties' additional arguments regarding materiality and
injury, except to say that Veripic's arguments here
likewise appear to be weak. Similarly, the Court need not
address Foray's argument that Veripic has unclean hands,
and that Veripic's authentication argument is actually an
undeclared trademark infringement action.
Page 6
2013 U.S. Dist. LEXIS 14708, *182. Irreparable Harm
Plaintiffs must also establish a likelihood that they
will suffer irreparable harm absent injunctive relief.
Winter v. Natural Resources Defense Council, 555 U.S.
7, 20, 129 S. Ct. 365, 172 L. Ed. 2d 249 (2008). In
particular, plaintiffs must establish that "remedies
available at law, such as monetary damages, are
inadequate to compensate for that injury." Boomerangit,
Inc. v. ID Armor, Inc., 2012 U.S. Dist. LEXIS 86382, at
*11 (N.D. Cal. June 21, 2012).
Veripic's theory of irreparable harm is that it will
lose prospective customers and business goodwill. While
goodwill and loss of prospective customers [*23] may
sometimes support a finding of irreparable harm, see
Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., 240
F.3d 832, 841 (9th Cir. 2001), Veripic has presented no
evidence of actual losses. At best, it presents a
speculative declaration from its company president in
which he states that six customers have told Veripic that
it was their understanding that "Foray authenticated
digital images in the same manner as Veripic." Kwan
Decl. ¶ 25. Moreover, Kwan states that he only recently
became aware of what Foray was telling customers to
deceive them into believing Foray authenticates digital
images. Id. ¶ 26. And "on information and belief," Kwan
believes that Veripic has lost several customers to whom
Foray previously sent an advertisement regarding Foray's
alleged compliance with SWGIT Section 13's
"requirement." Id. ¶ 27.
Veripic's arguments are unavailing for several
reasons. First, as to the urgency of an injunction, Veripic
was made aware, or should have been aware of, Foray's
alleged misrepresentations since at least June 1, 2011,
when the City of Seattle made available to Veripic the
Foray request for proposal response that contains the
offending statements. See Kwan Decl., ¶ [*24] 8, Ex. B.
Such a delay hardly bespeaks of the urgency typical in
successful preliminary injunction motions. See Oakland
Tribune, Inc. v. Chronicle Pub. Co., Inc. 762 F.2d 1374
(9th Cir. 1985) ("Plaintiff's long standing delay seeking a
preliminary injunction implies a lack of urgency and
irreparable harm."). Second, Veripic fails to present any
evidence tending to show that the loss of customers is
anything more than speculation or the result of legitimate
competition. In fact, most customers purchase one of
these competing software suites only after first reviewing
responses to requests for proposals, company
presentations and extensive research. Thus, any loss of
customers may be due to the fact that as between
ADAMS and DPL, customers with knowledge of the
differences between the products -- whether called
integrity validation or authentication -- prefer one brand
over the other.
Veripic has not shown that the harm it imagines is
more than speculative. Accordingly, it has not shown
irreparable harm sufficient to justify a preliminary
injunction.
3. Balance of Hardships
Veripic seeks a broad, five part injunction, wherein
Foray would be enjoined from (1) using the name
"Authenticated [*25] Digital Asset Management
System" or "ADAMS" or any other name that states or
implies that Foray's software authenticates digital assets;
(2) stating that Foray's software authenticates digital
assets; (3) representing that SWGIT guidelines endorse
the use of hash functions as the best way to authenticate
digital assets and that Foray's software complies with
SWGIT guidelines; and (4) stating that Foray's software
is the only software that complies with the SWGIT
"requirement" contained in the workflow described in
SWGIT Section 13. Veripic also requests that Foray post
in a prominent place on the landing site of its website that
it has been preliminarily enjoined from making the above
statements and linking a copy of the Court's order
granting the motion.
The scope of the relief sought goes far beyond
preserving the status quo before trial. Veripic effectively
proposes that Foray discontinue or change the entire
branding of its products. As Foray states, this would end
its business during the pendency of this case. Such drastic
relief cannot be supported only by speculation that future
customers may not purchase Veripic products.
4. Public Interest
Veripic has not made a sufficient showing [*26] that
the injunction it seeks is in the public interest. Veripic is
correct that there may be crucial legal implications of
having law enforcement erroneously rely on software that
does not do what it purports to do. Veripic contends that
ultimately, evidence may be thrown out of court because
it was not properly authenticated. Mot. at 21. This
concern, however, is overstated and unsupported. Here,
sophisticated customers invest significant time and
Page 7
2013 U.S. Dist. LEXIS 14708, *22energy into purchasing this software, and also have
precise understandings of what they need that software to
be able to do in order to gather, store, and validate
evidence in a legal setting. Veripic presents no evidence
to the contrary. Therefore, Veripic has not stated a
compelling public interest in an injunction.
CONCLUSION
For the foregoing reasons, Veripic has not shown
that an injunction should issue. Accordingly, the Court
hereby DENIES Veripic's motion for a preliminary
injunction. The Court also DENIES as MOOT Foray's
motion for leave to file a declaration and deposition
testimony and DENIES as untimely Veripic's
administrative motion for leave to file supplemental
evidence. This order resolves Docket Nos. 22, 48 and 52.
IT IS SO [*27] ORDERED.
Dated: January 22, 2013
/s/ Susan Illston
SUSAN ILLSTON
United States District Judge
Page 8

2013 U.S. Dist. LEXIS 14708, *26

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