Opinion
Civil Action No. 04-3816.
September 23, 2004
MEMORANDUM
Presently before the Court is the Motion of Plaintiff Steven A. Zimmer (Zimmer) for a Preliminary Injunction against his former employer Cooper Neff Advisors, Inc. (Cooper Neff). The Complaint alleges violation of the Copyright Act of 1976, 17 U.S.C. 101 et seq. and for other related claims.
The core of this dispute is the ownership of a sophisticated computer software model that Zimmer was using to select stocks in the management of a Hedge Fund. Zimmer contends that he completed the development of this model by the year 2002 prior to his being hired by Cooper Neff on March 26, 2003. Cooper Neff contends that it was developed while he was employed by them, and that under the terms of a written contract with Zimmer, Cooper Neff is the owner. Cooper Neff also claims ownership under 17 U.S.C.A. 201(b). Zimmer disputes the validity of the written contract and the claim under the Copyright Act.
In addition to this action, there is a prior action which was filed in the Court of Common Pleas in Montgomery County, Pennsylvania captioned Cooper Neff Advisors, Inc. vs. Zimmer, at 04-19491. In that action Cooper Neff had obtained a Temporary Restraining Order against Zimmer, preventing his use of the model in question. Cooper Neff voluntarily withdrew that Temporary Restraining Order.
In this action we granted Zimmer's request for a Temporary Restraining Order on August 18, 2004. On September 21 and 22, 2004 we held a preliminary injunction hearing.
In order to obtain the extraordinary remedy of a preliminary injunction, Zimmer must establish that there is a reasonable likelihood that he will succeed on the merits and that he is reasonably likely to suffer irreparable harm if relief is denied. We must also consider whether injunctive relief will cause the Defendant Cooper Neff irreparable injury and whether granting the preliminary relief is in the public interest. See Adams vs. Freedom Forge Corp., 204 F.3d 475, 484, 487 (3d Cir. 2000).
Even assuming that Zimmer can establish that there is a reasonable likelihood of success on the merits the preliminary injunction should be denied. The granting of the preliminary injunction would cause Cooper Neff irreparable harm and would not be in the public interest.
I come to this conclusion based on the testimony of Scott Kelley, Director of Marketing for Cooper Neff. The Q S F Fund is composed of three sub-strategies. T Q S is one of the three strategies and is the one the computer model at issue is used to manage. In marketing the Fund to potential investors, they were told that it is composed of three sub-strategies. The issuance of this preliminary injunction would take away T Q S which is a critical component of the Fund because it was the most profitable and was described as dramatically better than the other two. Approximately 50% of the Q S F Fund was invested in the T Q S strategy.
The T Q S strategy was frozen as a result of the Temporary Restraining Order issued, because without the use of the model which is the subject of this suit that strategy could not be maintained. After the issuance of the Temporary Restraining Order all efforts to continue to interest new investors and market the Q S F Fund had to stop. This was necessary because the T Q S strategy played such a crucial role in the Fund's performance and because investors were told it would be part of the Fund.
Although the T Q S strategy was only one of three strategies employed by the Fund, because it takes time to develop a model or strategy one cannot easily obtain a substitute. Kelley explained that if one could not replace the T Q S strategy it could be viewed as a material change in the Fund.
At the time the Temporary Restraining Order was issued by this Court there was approximately $50,000,000 invested in the Fund and there would be a major impact on the Fund if it could not use the model until after a trial on the merits.
When Zimmer left the employ of Cooper Neff he was to start work at a new employer, QVT, which is also a Hedge Fund operator. When QVT was advised of the original Temporary Restraining Order from the Court in Montgomery County Mr. Zimmer was not permitted to begin his new employment. Basically the position of the Plaintiff seems to be that he cannot be employed without the use of his computer model. I think it is probably true that without the exclusive use of his model he cannot be employed at as high a level as he could be with it. Mr. Zimmer has worked as the manager of mutual funds for many years. He appears to be highly qualified and employable in that part of the investment field as testified to by Andrew Sterge, the former CEO of Cooper Neff, and Andrew Lo, Defendant's expert. The only time that Mr. Zimmer was ever employed as the manager of a Hedge Fund was during his time with Cooper Neff. I therefore find that the failure of Mr. Zimmer to have the exclusive right to use the program in question does not prevent him from gaining other lucrative employment.
I therefore enter the following Order.