A New York jury found in favor of Broker Genius in its case against Seat Scouts on Wednesday, with Judge Sydney H. Stein ordering that Drew Gainor and Seat Scouts LLC must continue to refrain from making their Command Center product available to the market, following a preliminary injunction from May 2018. Gainor and his company were also hit with a combined $4.5 million in damages.
“We are happy to have this matter resolved,” said Sam Sherman, CEO and Founder of Broker Genius in a statement posted on the company’s website. “We believe in the free market and encourage new competition, but it has to be done fairly. Today’s victory protects all SaaS companies inside and outside our space that rely on their Terms of Use to protect them from unfair competition.”
It is unclear at this time whether an appeal will be filed. Two earlier rulings in the case – the preliminary injunction and a contempt charge related to Seat Scouts launching its Event Watcher product in the immediate aftermath of that injunction – are currently on appeal. In a statement sent to TicketNews, Mr. Gainor said that his company was “exploring [their] options.”
Broker Genius filed the lawsuit against Seat Scouts in November of 2017, contending that the company’s Command Center product was unlawfully built on pilfered technology in breach of their terms of service, stemming to a period of time where Mr. Gainor had used their AutoPricer product prior to his launch of Command Center.
The trial victory is the third legal win in similar cases for Broker Genius, which also sued Price-Meister and NRZ Entertainment in 2017 alleging their products were derivative works of AutoPricer. Price-Meister accepted a permanent injunction in early December of 2017, but maintained that it “acted in good faith and the technology we used was our own.”
Later that same month, NRZ Entertainment settled, admitting that its TickPricer product was “improperly derived” from AutoPricer.
In a statement emailed to TicketNews Wednesday afternoon following the verdict, Mr. Gainor maintained that his company had “done nothing wrong” and that the judgement could have “profoundly negative nationwide implications.”
“[The ruling] has weaponized a Terms of Use containing plain vanilla copyright language present in virtually every commercial website in the country,” Gainor wrote. “The Court, sitting in diversity, wrongly precluded us from telling the jury that the provision prohibiting the creation of a “derivative work” is a copyright provision, and that Broker Genius dropped the claim because it had no copyright claim. Instead, the Court directed the jury to expand the provision’s meaning far beyond its well-established copyright protections.
“If allowed to stand, the result would create a regime where all 50 states have their own inconsistent interpretations of what constitutes a “derivative work” outside of its meaning under the copyright law.”
In its verdict, the jury found Gainor and Seat Scouts liable for unfair competition based off their having used proprietary knowledge of AutoPricer in the development of Command Center, awarding Broker Genius $1.5 million on that count. Additionally, Gainor was liable for breach of contract, with the jury awarding $3 million in damages on that count.
With the trial over, Sherman says his company is glad to focus on product after more than a year of legal action. “We look forward to focusing all of our resources on our technology and creating more value for our clients.”
