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News / May 15, 2018

Terms of Use Save Proprietary Technology Supporting Award of Preliminary Injunction

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Broker Genius is the owner of an innovative and lucrative software as a service (SaaS) ticket brokering product. On May 11th, in Broker Genius, Inc. v. Volpone, No. 17-cv-8627 (SHS), 2018 U.S. Dist. LEXIS 80096 (S.D.N.Y. May 11, 2018) Judge Sidney Stein in the Southern District of New York entered a preliminary injunction against Seat Scouts, a company run by ex-Broker Genius client, Drew Gainor, enjoining defendants from selling their copy-cat SaaS product, Command Center. In the last 6 months, Broker Genius has obtained permanent injunctions against two other ex- clients who both admitted deriving copy-cat products in violation of Broker Genius’ Terms of Use (“ToU”).

While the Court in Broker Genius, Inc. v. Zalta, 280 F. Supp. 3d 495 (S.D.N.Y. 2017) denied a preliminary injunction on Broker Genius’ trade secrets claim, because it had failed to maintain the technology as trade secret, a permanent injunction was subsequently entered based on defendants’ violation of the ToU.

Not only is the Seat Scouts decision notable for Broker Genius having met the high bar for obtaining a preliminary injunction - especially on a contract claim, but also because the courts’ 40 page opinion demonstrates the import of having an well-drafted, effective ToU that may be the last weapon an SaaS company has against a client turned technology thief.

Broker Genius was represented by Partners Veronica Mullally Munoz and Daniel Melman of Pearl Cohen’s New York office.

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