Case 3:11-cv-01218-GAG Document 25 Filed 03/17/11 Page 1 of 24

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

ABARCA HEALTH, LLC and PHARMACY Civ. No. 11-1218 (GAG)

INSURANCE CORPORATION OF AMERICA

PLAINTIFFS, RE: INJUNCTIVE RELIEF,

COPYRIGHT INFRINGEMENT
v. AND DAMAGES

PHARMPIX CORPORATION; HERMINIO

JOSÉ CORREA GARCÉS; JANE DOE AND PLAINTIFFS REQUEST JURY
THE CONJUGAL PARTNERSHIP TRIAL
COMPOSED BY THEM; JAIME FIGUEROA
TORRES; MARY DOE AND THE CONJUGAL
PARTNERSHIP COMPOSED BY THEM;
MARTY MARTINEZ FRATICELLI; ANA ROE
AND THE CONJUGAL PARTNERSHIP
COMPOSED BY THEM; AND MARCOS A.
GONZALEZ CARBALLO; SUSAN ROE AND
THE CONJUGAL PARTNERSHIP
COMPOSED BY THEM

DEFENDANTS.

MOTION TO DISMISS AND MOTION IN OPPOSITION TO MOTION REQUESTING

PRELIMINARY INJUNCTION

TO THE HONORABLE COURT:

NOW COME Defendants PharmPix Corporation; Martty Martínez Fraticelli;

Marcos González Carballo; Herminio Correa Garcés; Jaime Figueroa Torres, and the

conjugal partnership composed between Jaime Figueroa Torres and Mary Doe, through

their undersigned attorney, and respectfully state, allege and pray:

I. INTRODUCTION

On February 25, 2011, plaintiffs, Abarca Health, LLC (“Abarca”) and Pharmacy

Insurance Corporation of America (“PICA”) filed a complaint against defendants for

several causes of actions, namely; copyright infringement, unfair competition, unlawful

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appropriation and divulgation of trade secrets, breach of contract, and breach of

fiduciary duty. In order to bring their claims before this Honorable Court, plaintiffs have

made unsupported allegations under sections 501 – 504 of the Copyright Act and

section 43(a) of the Lanham Act by claiming that they own two copyrights over a

computer software program named “Pharmacy Agent”, which they allege co-defendants

are somehow infringing. Along with their complaint, plaintiffs have filed a motion

requesting a preliminary injunction to enjoin defendants from continuing the alleged

infringing conduct, where they basically reiterate their claims of infringement against

defendants.

However, it will be proven that plaintiffs’ allegations fail to state a claim for

infringement upon which this court may grant the requested relief. It is evident from

plaintiffs’ allegations, as well as from the exhibits attached to their complaint, that

plaintiffs support their claim solely on speculation and fail to at least identify which

elements, –if any,- of their computer software are being allegedly infringed, and what

elements of defendants’ software cause the alleged infringement. Simply put: plaintiffs’

copyright infringement claims lack ripeness, since they are based on mere allegations

without any evidence to support their claims and furthermore, they do not specify what

part of their software is being allegedly infringed by defendants’ software. As it is

evident by plaintiffs’ discovery request [Docket No. 5], plaintiffs’ claim and

request is nothing more than a fishing expedition and an excuse to sneak into

defendants’ trade secrets and proprietary information.

Moreover, plaintiffs’ allegations are only supported by the suspicious statements

of Mr. Scott Domínguez, one of plaintiffs’ and defendants’ former employees, who,

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among others: (1) was forced to resign for mishandling PICA’s corporate resources; (2)

continued accessing PharmPix’s database and servers after being terminated from his

employment; and (3) provided plaintiffs with unreliable evidence to support a copyright

infringement cause of action. Certainly, Mr. Dominguez’ illegal actions are very

suspicious and make us wonder; what does Mr. Scott Domínguez gain by providing

this kind of misleading information to plaintiffs? Obviously, the forced answer is

that at the very least, he is gaining something from plaintiffs.

Nevertheless, as it will be further discussed in detail, not only plaintiffs are not

entitled to the requested injunctive relief; plaintiffs are not entitled to seek any

remedy before this Court at all. A comprehensive review of plaintiffs’ complaint and

exhibits clearly shows that more than 90% of the allegations set forth in their complaint

are for breach of contract, not under the Copyright or the Lanham Acts. Rather,

plaintiffs’ allegations and exhibits show that their claims arise under state contract law

and, accordingly, they must be heard before the courts of the Commonwealth of Puerto

Rico. Therefore, not only should this Honorable Court deny plaintiffs’ request for

preliminary injunction without the need of a hearing, but to the extent that plaintiffs’ own

complaint lacks a bona fide claim for copyright infringement or unfair competition

against defendants, the same should be dismissed for lack of federal jurisdiction and for

failure to state a claim upon which relief can be granted.

Finally, but certainly not least, we must bring before this Honorable Court’s

attention that the herein appearing defendants have a copyright registration for

their software, which predates any of plaintiffs’ copyright registrations.

Accordingly, the ownership rights that flow from defendants’ registration are far

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superior to those alleged by plaintiffs and this register constitutes prima facie

evidence of such rights. Likewise, defendants’ prior copyright registration

defeats the prima facie evidence standard that plaintiffs must show, and as such,

they cannot meet the burden to prove their copyright infringement claims.

II. ARGUMENT

A. GROUNDS FOR DISMISSAL

1) The Copyright infringement standard.

Plaintiffs cannot meet their burden to prove that a preliminary injunction is

warranted against defendants, due to the fact that their copyright infringement

allegations are not ripe, since they have not shown: (1) ownership of a valid copyright,

and (2) copying of constituent elements of the work that are original. See Feist

Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 1296, 113

L.Ed.2d 358 (1991); see also Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d

1147, 1160 n. 19 (1st Cir.1994); Concrete Mach. Co. v. Classic Lawn Ornaments, Inc.,

843 F.2d 600, 605 (1st Cir.1988). (Our emphasis) To show ownership of a valid

copyright and therefore satisfy Feist's first prong, a plaintiff must prove that the work as

a whole is original and that the plaintiff complied with applicable statutory formalities.

See Engineering Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1340 (5th

Cir.1994). The plaintiff must then prove that the copying of copyrighted material was so

extensive that it rendered the offending and copyrighted works substantially similar. See

Engineering Dynamics, 26 F.3d at 1341.

Works are substantially similar within the intendment of copyright law if they are

so alike that the later (unprotected) work can fairly be regarded as appropriating the

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original expression of the earlier (protected) work. See Yankee Candle Co. v.

Bridgewater Candle Co., 259 F.3d 25, 33 (1st Cir.2001). “A copyright plaintiff must

establish specifically that the allegedly infringing work is substantially similar to

the plaintiff’s work with regard to its protected elements. Thus, in an action for

infringement, it must be determined both whether the similarities between the works are

substantial from the point of view of the lay observer and whether those similarities

involve copyrightable material.” Oravec v. Sunny Isles Luxury Ventures, L.C., 527 F.3d

1218, 1224, 86 U.S.P.Q. 2d 1661 (11th Cir. 2008). (Our emphasis)

In the case at hand, plaintiffs cannot prove the requisite infringement because,

first, defendants have a valid copyright registration over their software, which in fact

predates those of plaintiffs. (See Exhibit 1) Second, there is no evidence that

defendants have violated any of the exclusive rights listed on 1 U.S.C. §106. According

to the complaint, at different times between 2005 and 2009, co-defendants Martty

Martínez, Marcos González, Herminio Correa, and Jaime Figueroa worked for PICA

and, and during said time, some of them helped develop the Pharmacy Agent.

However, plaintiffs contend that once co-defendants Martínez, González, Correa, and

Figueroa left PICA and eventually created PharmPix, they developed a computer

software program that, in plaintiffs’ opinion, infringes upon its copyrights of the

Pharmacy Agent software.

Nevertheless, plaintiffs have not produced a single shred of evidence in support

of their claim or allegations about what parts of their software are being copied; they

have not even showed their software and have not described in what way, if any,

defendants are infringing said copyrighted work. Moreover, plaintiffs have not made

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any allegations about what aspects are similar; they only make allegations of

functionality which are not protected by copyright law.

If plaintiffs have not even asserted to have personally seen the alleged infringing

work, how can then they ascertain that the works at issue “are so alike”? We must point

out that this case does not revolve around any two products which can be distinguished

by a lay observer, such as a plush toy or the lyrics to a song; this is about highly

technological products which are composed of thousands of lines and codes, some of

which may not even be copyrightable. However, as we already established, general

allegations are not enough to support a copyright infringement claim. Accordingly, by

failing to draft a well pleaded complaint, plaintiffs have not put this Court, or defendants,

in a position to determine if the alleged infringement is upon the software’s source code

or any other of its components. Therefore, plaintiffs’ allegations fail to state a claim

upon which relief can be granted.

Further, given the fact that plaintiffs do not have firsthand knowledge of their own

infringement claims, they blindly rely on the speculations drawn by Mr. Scott

Domínguez, who alleges to have worked on what he thought to be “an essentially exact

copy” of plaintiffs’ Pharmacy Agent. (Exhibit B of the complaint, ¶ 11). Nevertheless,

Mr. Dominguez’ allegations are so unbelievable that they deserve no credibility from this

Court.

First, Mr. Dominguez was asked by co-defendant Herminio Correa to resign to

his job at PICA after he was discovered using corporate time and resources to advance

his personal interests by launching vitualitpr.com, which is still up and running and

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serves as his consulting business’ website.1 (See Exhibit 2) Second, Dominguez was

eventually given a second chance, this time to work directly for defendants at PharmPix

but was also fired on December 6, 2010, after the poor performance shown as a

Director of IT Infrastructure during the preceding weeks and because of his continued

absenteeism. Furthermore, PharmPix discovered that while away from its premises and

even after discharged of his duties, Mr. Dominguez installed remote access programs to

log in to PharmPix’s systems from outside of PharmPix’s premises, and indeed

accessed PharmPix systems through different user accounts. (See Exhibit 4) Mr.

Dominguez also requested a password change request to PharmPix’s “DynDNS”

technology service provider in order to gain access to PharmPix’s backups and

confidential data. (See Exhibit 5) As if it were not enough, on December 17, 2011 Mr.

Dominguez again tried to log in to PharmPix systems through several user accounts,

but given the fact that PharmPix took protective measures and immediately blocked him

out of PharmPix’s systems, these last attempts failed. (See Exhibits 4 and 6)

Conveniently, he did not mention any of this in his statement.

Now, a few months after his dismissal and intrusive acts, Mr. Dominguez

miraculously resurfaces as the closest and only contact to the alleged infringing

program and serves as a witness for plaintiffs, who are in fact PharmPix’s biggest

competitors and are only interested in searching upon defendants’ trade secrets.

Nonetheless, it is more than certain that if there is one person likely to intrude and copy

another’s private property it is Mr. Dominguez. As anticipated, we keep asking

ourselves: what does Mr. Scott Domínguez gain for intruding into defendants’

1
While at PICA, Mr. Dominguez had access to every server, given the fact that he was a “system administrator”.
See also Exhibit 3: Mr. Dominguez’ profile in LinkedIn at http://www.linkedin.com/in/scottdominguez. Ironically,
Mr. Dominguez’ professional profile does not make any reference to his previous work experience at PICA.

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systems and afterwards providing misleading information to plaintiffs?

Obviously, we have to presume that at the very least, he is being somehow

remunerated by plaintiffs or has some sort of interest in the outcome of this case.

Moreover, not only Mr. Dominguez is biased against defendants and might have

possibly copied its trade secrets, but his expertise field is not in software programming

or development, but rather in infrastructure management and disaster recovery.

Therefore, it is outrageous for Mr. Dominguez to state that defendants solicited him any

copies of PICA’s proposals, when he was especially hired because of his qualifications

as a disaster recovery expert. (See Exhibit 3 - linkdn) Likewise, said qualifications do

not render him as a reliable source to adequately describe the whole complexity of

defendants’ computer program. Even assuming arguendo that he is qualified to do so,

it is beyond belief that after four (4) years he can remember every single aspect of both

plaintiffs’ and defendants’ respective computer programs’ thousands of codes and

conclude that they are identical. However, it is at the same time contradictory how

Domínguez can draw such a serious conclusion but not make any specific description of

both softwares in his statement under penalty of perjury. More so, it is unbelievable

how plaintiffs take his testimony at face value and rely on it to build their copyright

infringement claims, but do not allege in their complaint what are those aspects of both

programs that are similar, or how defendants’ copyrighted software infringes upon

plaintiffs’ software.

As it is evident, Mr. Domínguez’ testimony is in itself insufficient to prove

plaintiffs’ case. Again, nothing in his testimony may lead the Court to determine that

defendants infringe plaintiffs’ copyrights because there is simply no mention as to which

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are the protected elements of plaintiffs’ software, or how and when were they allegedly

infringed by defendants. Thus, plaintiffs’ copyright claims are nothing more than

unsupported speculative conclusions that render the instant case unripe. Accordingly,

plaintiffs fail to make allegations enough as to put this Court in position to identify what

parts of the softwares are similar. Again, mere allegations are not enough to show the

existence copyright infringement, particularly, when plaintiffs’ own motion requesting an

expedited discovery clearly shows that they do not have evidence to support their

claims. As such, their complaint is a mere fishing expedition.

(i) The software functionality argument.

In the declaration under penalty of perjury provided by Mr. Dominguez, he

alleges that both programs at issue are similar because they have the same

functionality. First of all, the fact that both softwares may perform the same functions

does not imply that substantial similarity exists among them, or that plaintiffs’ software

was actually copied by defendants. Second, it is a matter of patent law, not copyright

law, to protect the functionality aspects of a work of art. In cases like the one at issue,

said determination is controlling, for a “computer software is essentially utilitarian in

nature”, see Computer Associates International Inc. v. Altai Inc., 982 F.2d 693 (2nd Cir.

1992). Its non-creative portions are not susceptible to copyright protection. Accordingly,

“those elements of a computer program that are necessarily incidental to its function

are…unprotectable.” Id. at p. 705. Consequently, if plaintiffs seek protection for the

functionality of their software, then plaintiffs needed to obtain a patent over said

process; but that is not the case at hand because no patent exists for any aspect their

software. Therefore, if what plaintiffs believe is being infringed is their software’s

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functionality, then this Honorable Court need not make any further analysis.

2) Plaintiffs’ lack of federal jurisdiction and their failure to state a claim

upon which a remedy can be granted.

Plaintiffs’ unripe infringement claims come as no surprise, however, for plaintiffs’

real claims arise under Puerto Rico contract law. Their only interest in alleging copyright

infringement and requesting an expedited discovery is a mere pretext to gain federal

jurisdiction and to sneak into defendants trade secrets by creatively labeling their

complaint as arising under the Copyright Act. Nonetheless, the First Circuit has

addressed this issue before by pertinently stating that:

In order to gain access to a federal forum, a litigant must allege particulars

which raise some substantial federal issue. This meager helping of facts
served up by this plaintiff do not meet the standards for such a bill of fare.
Though “that which we call a rose by another name would smell as
sweet,” W. Shakespeare, Romeo and Juliet (1595), we must parse
causes of action as they are, not as the pleader might fondly wish
they were. “The jurisdiction of the federal district courts cannot be
manipulated by the simple expedient of creative labeling” [citation
omitted]… We will not assume jurisdiction over what is essentially a
garden-variety contract dispute, notwithstanding [sic] [plaintiffs]
heroic efforts to costume it in the guise of a copyright action. Royal
v. Leading Edge Products, Inc., 833 F.2d 1, 5 (1st Cir. 1987) (Our
emphasis.)

A simple look over the facts averred in plaintiffs’ complaint and the corresponding

exhibits, show that plaintiffs seek remedies for an alleged breach of co-defendants

duties under their non-compete and confidentiality agreements, as well as for allegedly

breaching their fiduciary duties as officials of PICA. As it can be seen, plaintiffs fairly

elaborate in detail their contractual breaches claims, but fail to do the same with regard

to their copyright claims. Plaintiffs claim is in essence one for breach of contract.

Therefore, given the fact that plaintiffs’ claim does not present a federal question, that

no diversity exists among the parties, and due to plaintiffs’ failure to properly elaborate

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their copyright infringement theory this Court lacks subject matter jurisdiction. As such,

the above captioned case must be heard by the courts of the Commonwealth of Puerto

Rico.

According to the above, this Court is faced with a clear contractual dispute

slightly dressed as a copyright dispute. Nevertheless, “an aroma of copyright” is

insufficient to make an action one arising under the Copyright Act. See Muse v. Mellin,

212 F.Supp. 315, 316; 339 F.2d 888. Accordingly, and contrary to plaintiffs’

expectations, “[t]he word copyright is not so compelling as to invoke federal jurisdiction

upon its mere mention.” See Tbn. Shaw v. Kastner, 151 Misc. 2d 654, 573 NY2d 595,

598 (Sup. 1991).

Fed. R. Civ. P. 8(a) establishes in pertinent part that “[a] pleading that states a

claim for relief must contain: (1) a short and plain statement of the grounds for the

court’s jurisdiction, unless the court already has jurisdiction and the claim needs

no new jurisdictional support.” (Our emphasis) With regards to copyright infringement

claims, a complaint alleging copyright infringement complies with Fed. R. Civ. P. 8(a)

when the plaintiff asserts: (1) which specific original works form the subject of the

copyright claim; (2) that the plaintiff owns the copyrights in the works; (3) that the

copyrights have been registered in accordance with the statute; and (4) by what acts

[and] during what time the defendant infringed the copyright. Jacobs v. Carnival Corp.,

2009 WL 856637, 4 (S.D.N.Y. 2009). (Our emphasis) Hence, plaintiff must include

sufficient factual allegations that explain how the defendant copied, displayed or

distributed infringing copies of a copyrighted work. Mere factual allegations will not

suffice. Miller v. Facebook, 2010 WL 1292708. (Our emphasis) Otherwise, “conclusory

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pleading of jurisdictional and factual allegations invites a motion to dismiss.” Kema v.

Kopwerwhats, 2010 WL 726640.

Plaintiffs’ copyright claims prove deficient and evidently do not comply with Fed.

R. Civ. P. 8(a). As it was broadly discussed in previous sections, it is evident from

plaintiffs’ allegations, as well as from the exhibits attached to their complaint, that their

copyright claims are based solely on speculation. It is also evident since they are

requesting discovery in order to support their claims. Nonetheless, although plaintiffs

must establish specifically that the allegedly infringing work is substantially similar to its

work with regard to its protected elements2, plaintiffs have not produced a single

shred of evidence in support thereof; they have not produced the alleged copyrighted

software and have not described in what way, if any, defendants are infringing the

same. They have not even asserted to have personally seen the alleged infringing

work. By failing to draft a well pleaded complaint, plaintiffs have not put this Court, or

defendants, in a position to determine what elements of their computer program are

allegedly being copied.

Therefore plaintiffs have not stated a claim upon which relief can be granted

under Fed. R. Civ. P. 12(b)(6), but rather they have only pleaded conclusory allegations

with no supporting evidence. However, “[a] court is not bound to credit bald assertions,

unsupportable conclusions and opprobrious epithets woven into the fabric of the

complaint.” In re Colonial Mortgage Bankers, Corp., 324 F.3d 12, 15 (2003). It is then

pertinent to recur to the 6th Circuit’s decision in National Business Development

Services, Inc. v. American Credit Educ. and Consulting Inc., 299 Fed. Appx. 509 (2008).

Faced with an identical factual pattern as in the case at issue, the court noted:
2
See Oravec v. Sunny Isles Luxury, LC. 527 F. 3d 1218, 1224 (2008).

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In the instant case, Plaintiff’s complaint contains a blanket assertion of

entitlement to relief, but does not contain any factual allegations
supporting that assertion. There is neither (1) an identification of a
work produced by Defendants that infringes upon Plaintiff’s
copyrighted work, nor (2) a description of the manner in which
Defendant’s works infringe upon Plaintiff’s work… [T]he Court is not
required to accept Plaintiff’s bare legal conclusions. Plaintiff’s
complaint amounts to no more than a speculative claim that
Defendants may have produced some work that in some way
infringed upon Plaintiff’s works. This pleading is insufficient, and
Plaintiff’s action must be dismissed. Id, at 511-512. (Our emphasis.)

Again, plaintiffs have engaged in conclusory pleading of jurisdictional and factual

allegations, and as such their complaint warrants a motion to dismiss.

(i) Unfair competition under the Lanham Act and under the Puerto Rico
Trademark Law, Law Number 169 of December 16, 2009.

Moreover, not only plaintiffs have attempted to gain federal jurisdiction by

invoking the Copyright Act, but they have also invoked Section 43(a) of the Lanham

Act3 and Article 27(A)(2) of the Puerto Rico Trademark Law4 in an attempt to frame their

theory for unfair competition. However, said attempt again proves how plaintiffs

intermingle with different kinds of intellectual property provisions in order to draw

confusion and to keep covering what undoubtedly constitutes allegations of a breach of

contract that, as a matter of law, must be evaluated in state court. Plaintiffs allege that

“the illegal misuse of proprietary information constitutes an interference with Abarca’s

goodwill and reputation, which has caused and continues to cause damages to

plaintiffs, as a software product developed and created by plaintiffs is misrepresented

as PharmPix’s”. (Docket No. 1, ¶ 64) (Our emphasis)

Notwithstanding plaintiffs’ contentions, the cited provisions are designed to

protect trademarks. A trademark is any word, name, symbol, or device used by a

3
15 USC Sec. 1125.
4
Law Number 169 of December 16, 2009.

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manufacturer or seller “to identify his goods and distinguish them from those

manufactured or sold by others. See Lanham Act §45. This is problematic for plaintiffs

because, given the fact that the functionality of their softwares cannot be protected

through a copyright and they have not applied for a patent either, we must presume

then that what plaintiffs intend to protect are the source codes and other components

that altogether configure their software. Nonetheless, different from non-technological

products, such as a cereal brand, a cookie, or hair gel, etc., an encoded source code or

those remaining algorithms and alike components that configure a software can never

be a source of origin because its end user will never be able to see it and thus, consider

it as a source of origin. But then again, if plaintiffs have not described what parts of

their software have been allegedly infringed, how can a consumer identify a

software as that of plaintiffs’? More so, how can a consumer be confused among

plaintiffs’ and defendants’ softwares if plaintiffs do not describe how they may be alike?

Hence, plaintiffs’ reliance on the aforementioned provisions also falls short for they do

not apply to the case at hand.

In light of the foregoing, plaintiffs’ complaint should be dismissed by this Court

because the only federal elements to their claims are unripe, unfounded and unsuitable;

drafted for the sole purpose of acquiring federal jurisdiction, harassing defendants and

scouting into their trade secrets.

B) GROUNDS FOR A PRELIMINARY INJUNCTION

We incorporate by reference the arguments previously discussed in previous

sections as if fully restated herein.

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Section 410(c) of the Copyright Act, 17 U.S.C. § 410(c), specifically states that

“[i]n any judicial proceedings the certificate of a registration made before or within five

years after the first publication of the work shall constitute prima facie evidence of the

validity of the copyright and the facts stated in the certificate” (capitalization omitted). As

the legal or beneficial owner of an exclusive right under Copyright Law, Plaintiff is

entitled to institute an action for infringement pursuant to Section 501 of the Copyright

Act, 17 U.S.C. § 501. Injunctive relief is among the remedies afforded to Plaintiff in the

case of infringement, whereby Section 502 of the Copyright Act, 17 U.S.C. § 502, allows

any court having jurisdiction over a copyright claim to grant temporary and final

injunctions on such terms as it may deem will reasonably prevent or restrain

infringement of a copyright.

Nonetheless, it is well established that a preliminary injunction is an extraordinary

and drastic remedy that should not be granted unless the movant, by a clear showing,

carries the burden of persuasion. See, Wright & Miller, Federal Practice and Procedure,

(2nd Ed. 1995) Volume 11A, Chapter 9, §2948, p. 129-130. (Our emphasis.) Over time,

the First Circuit has crafted a four-part framework for use in determining whether to

grant or deny preliminary injunctive relief in a copyright case. Under this formulation,

trial courts must consider: (i) the likelihood that the movant will succeed on the merits;

(ii) the possibility that, without an injunction, the movant will suffer irreparable harm; (iii)

the balance of relevant hardships as between the parties; and (iv) the effect of the

court's ruling on the public interest. Coquico, Inc. v. Rodriguez-Miranda, 562 F.3d 62, 65

(1st Cir. 2009); Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 112, 115 (1st

Cir. 2006).

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1) Plaintiffs are not likely to succeed on the merits.

For the reasons set forth in prior sections, plaintiffs have not met the burden of

proof necessary for the issuance of a preliminary injunction; general allegations are not

enough to support a copyright infringement claim. As it is evident, defendants have a

valid copyright certificate over its software, which in fact predates those of plaintiffs.

Likewise, there is no evidence that defendants have violated any of the exclusive rights

listed on 1 U.S.C. §106. On the other hand, it is undisputed that: (1) plaintiffs have not

produced a single shred of evidence in support of their claim; (2) they have not

produced the alleged copyrighted work; and (3) they have not described in what

way, if any, defendants are infringing plaintiffs’ software; and (4) they have not

even asserted to have seen the alleged infringing work, and as such cannot attest

that the works at issue are similar. Accordingly, plaintiffs have not put this Court, or

defendants, in a position to determine the essence of the alleged infringement and

therefore are not likely to succeed on the merits of their copyright infringement claims.

Moreover, plaintiffs’ infringement allegations are only supported by the

speculations drawn by Mr. Scott Domínguez, whose allegations deserve no credibility

from this Court, due to the barely credible nature of its testimony, and his evident

animosity towards defendants. Again, if Mr. Dominguez’ testimony were to be granted

certain level of credibility, it is also a proven fact that he makes no mention as to which

are the protected elements of plaintiffs’ software, or how and when they were allegedly

infringed, or even how they are similar, other than they may be functionality alike.

Likewise, his testimony also proves deficient for in his opinion, the softwares at issue

have similar functionality, an aspect which must be analyzed under patent law, not

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copyright law. Therefore, Mr. Domínguez’ testimony is in itself insufficient to prove

plaintiffs’ case. Nothing in his testimony may lead the Court to determine that

defendants infringe plaintiffs’ copyrights. Thus, plaintiffs are not likely to succeed on the

merits of their copyright infringement claims.

2) Plaintiffs will not suffer irreparable harm if injunctive relief is not

granted.

As shown in preceding sections, plaintiffs’ claims are insufficient to obtain federal

jurisdiction and to show a likelihood of success on the merits. The fact that plaintiffs

have requested an expedited discovery further supports defendants’ contention that

their claim is merely speculative, as they have no evidence to support defendants’ claim

for copyright infringement. Accordingly, plaintiffs will not suffer irreparable harm if

injunctive relief is not granted. How can then they be at risk of suffering irreparable harm

if they cannot meet their burden of establishing that they are likely to succeed on the

merits?

In the recent case of Coquico, Inc. v. Rodriguez-Miranda, 562 F.3d 62 (1st Cir.

2009), cited by plaintiff in its Memorandum of Law, the First Circuit established that:

The propriety of preliminary injunctive relief depends on an amalgam of

four factors: (i) the likelihood that the movant will succeed on the merits;
(ii) the possibility that, without an injunction, the movant will suffer
irreparable harm; (iii) the balance of relevant hardships as between the
parties; and (iv) the effect of the court's ruling on the public interest.
Borinquen Biscuit Corp. v. M.V. Trading Corp., 443 F.3d 112, 115 (1st Cir.
2006). The first of these four factors normally weighs heaviest in the
decisional scales. New Comm Wireless Servs., Inc. v. SprintCom, Inc.,
287 F.3d 1, 9 (1st Cir. 2002). That is especially true in copyright cases
because the resolution of the other three factors often turns on the
plaintiff's likelihood of success. See, e.g., Concrete Mach. Co. v. Classic
Lawn Orns., Inc., 843 F.2d 600, 611-12 (1st Cir. 1988).

Most importantly, in the aftermath of the recent eBay case the presumption of

irreparable harm in the context preliminary injunctions regarding intellectual property

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has been seriously questioned and limited, even where there is a showing of likelihood

of success. eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 390, 126 S. Ct. 1837,

164 L. Ed. 2d 641 (2006).

In fact, the Second Circuit has stated that the effect of eBay is that courts now

must take into consideration all four factors when determining whether to issue an

injunction for copyright infringement. On Saliger v. Colting, 607 F.3d 68, 82 (2d Cir. N.Y.

2010), the Second Circuit stated: “[a]fter eBay, however, courts must not simply

presume irreparable harm”. See eBay, 547 U.S. at 393. Rather, plaintiffs must show

that, on the facts of their case, the failure to issue an injunction would actually

cause irreparable harm. Salinger v. Colting, 607 F.3d at 82. (Our emphasis) The

correct standard, thus, is that the Court’s inquiry may end if a plaintiff fails to establish

probability of success on the merits, but not the other way around; the inquiry cannot

end with a finding of probability of success on the merits. See New Comm Wireless

Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir. 2002) The Court must examine all

factors and afford them their due weight.

In a balanced analysis of the traditional factors, perhaps the single most

important prerequisite for the issuance of a preliminary injunction is a demonstration

that the applicant will suffer irreparable harm if it is not granted. See, Wright & Miller,

supra, §2948.1, p. 139. The burden of demonstrating that a denial of interim injunctive

relief would cause irreparable harm is placed squarely upon the movant. See,

Narragansett Tribe v. Guilbert, 934 F. 2d 4, 6 (1st Cir. 1991). This burden is substantial.

“Speculative injury does not constitute irreparable injury sufficient to warrant

granting a preliminary injunction.” Caribbean Marine Servs v. Baldrige, 844 F.2d

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668, 674 (9th Cir. 1988). (Our emphasis) Moreover, speculative injury is not

sufficient; there must be more than an unfounded fear on the part of the

applicant. See, Public Service Co. of New Hampshire v. Town of Newbury, 835 F. 2d

380, 383 (1st Cir. 1987). (Our emphasis.) To establish irreparable harm, a plaintiff needs

to show, at least, that its legal remedies are inadequate. See, Ross-Simons of Warwick,

Inc. v. Baccarat, Inc. (1st Cir. 1996). Also, plaintiff must establish that it stands to suffer a

substantial injury that is not accurately measurable or adequately compensable by

money damages. Ross-Simons v. Baccarat, 102 F. 2d at 16, citing Multi-Channel TV

Cable Co. v. Charlottesville Quality Cable Operating Co., 22 F. 3d 546, 551 (4th Cir.

1994). In that sense, even the threat of loss of most of an applicant’s business may not

be enough to show irreparable harm. See, Instant Air Freight Co. v. C.F. Air Freight,

Inc., 882 F. 2d 797 (3rd Cir. 1989).

In the case at hand, plaintiffs’ irreparable harm arguments do not transcend the

level of a speculative injury. Furthermore, it is undisputed that since day one plaintiffs

have not even shown or described what constituent elements of their Pharmacy Agent

are allegedly being infringed. Accordingly, how can then plaintiffs be awarded a

presumption of irreparable harm if they cannot even prove the existence of substantial

similarity? Moreover, plaintiffs resume their irreparable harm theory by saying that:

If a preliminary injunction is not granted, PharmPix would be allowed to

infringe on Abarca’s copyright on a daily basis, by using protected
software without any authorization or license, through the hundreds or
thousands of transactions that it would be processing with Abarca’s
“Pharmacy Agent” software. A preliminary injunction is the only way
that, at this time, this Court will be assured that PharmPix does not commit
future and daily infringements, which will have a substantial and
irreparable effect on Abarca’s competitive position in the market,
potential loss of future business, all of which would result in a
severe and adverse effect on Abarca’s goodwill in the market.”

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(Plaintiffs’ memorandum of law, Docket 4-1, at ¶ 2)(Our emphasis)

Ironically, contrary to plaintiffs’ allegations, they have not always been in the

Pharmacy Benefit Manager (PBM) market. (See Exhibit 7) It was not until 2010 after co-

defendants resigned at PICA and when Abarca acquired PICA’s intellectual property

that plaintiffs entered into the PBM business. Therefore, it is outrageous for plaintiffs –

new competitors in the PBM services industry- to speculate as to the possible damage

that their position in the market would suffer. Moreover, it is beyond belief how they

speculate on defendants’ potential “hundreds or thousands of transactions”, when

PharmPix is a relatively small company that is practically beginning operations.

3) Defendants’ injuries far outweigh any harm that Plaintiffs may suffer
if a Preliminary Injunction is not granted.

Plaintiffs rely on Concrete v. Machinery Co., Inc. v. Classic Lawn Ornaments, Inc.

843 F.2d 600 (1st Cir. 1988) interpretation of the balance of hardships with regards to

businesses which are “exclusively based on an infringing activity”. Accordingly, without

presenting any evidence to those effects, plaintiffs firmly conclude that “PharmPix

has been able to conduct its operations based on the Pharmacy Agent software it

unlawfully copied.” (Docket No. 4 at p. 20, ¶ 2). Nonetheless, as shown before,

plaintiffs’ conclusions are based on mere speculations for they do not have firsthand

knowledge of their own allegations. However, even assuming for the sake of argument

that plaintiffs would suffer an injury if a preliminary injunction is not granted, it is

defendants who will definitely suffer real and greater injuries if they are enjoined from

using their software. Defendants who will be forced to expose confidential information

and trade secrets due to plaintiffs’ vicious and unsupported speculations. Also, if

enjoined from using their copyrighted software, defendants’ business operations will

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cease and such, will definitely suffer irreparable harm. Clearly, defendants’ damages

will far exceed any possible damage that plaintiffs may face.

Likewise, plaintiffs’ real intentions are to sneak into defendants’ software and its

several components (including its source code), which undisputedly constitutes

PharmPix’s biggest trade secret. In other words, the real goal behind plaintiffs’ fishing

expedition is to improve their own software at defendants’ expense. However, in a fair

balance of hardships defendants cannot be compelled to help plaintiffs’ in such an

endeavor because their objective is to unfairly compete with defendants given the fact

that they do not possess the necessary human resources to improve their software on

their own.

Moreover, contrary to plaintiffs’ contentions, PharmPix does not base its

operations on infringing activities, but rather, the creation of its software is the result of

arduous and pain staking efforts which have lead them to obtain a valid copyright for

their software, a copyright registration that predates plaintiffs’ copyrights for their

Pharmacy Agent. PharmPix has invested over $600,000 to develop its software, and a

result of said investments of time, resources and money, PharmPix has earned the right

to secure the ownership over its valuable software program with numerous licensing

and commercial prospects. Therefore, should this Honorable Court grant any credibility

to plaintiffs’ unfounded allegations, it is defendants who will be prevented from

generating revenue by licensing their product to their currently enrolled clients, and

potential ones, and thus be forced to close its operations. In other words, all of the rights

PharmPix was granted through the issuance of its copyright certificate will be worthless.

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Thus, defendants’ injuries will far outweigh those injuries that will allegedly be suffered

by plaintiffs and as a result, the balance of hardships shifts in favor of defendants.

4) The effect of the court's ruling on the public interest.

Since Congress has elected to grant certain exclusive rights to the owner
of a copyright in a protected work, it is virtually axiomatic that the
public interest can only be served by upholding copyright
protections and, correspondingly, prevent the misappropriation of
the skills, creative energies, and resources which are invested in the
protected work. Coquico, Inc. v. Rodriguez Miranda, 2007 U.S. Dist.
LEXIS 76570 at 15-16, citing Apple Computer Inc. 714 F.2d at 1255. (Our
emphasis)

Not only plaintiffs have failed to show likelihood of success on the merits in the

case at hand, but their request for a preliminary injunction will have an adverse effect on

the public interest for the very same reasons on which they support their argument.

Although plaintiffs may have been issued with copyright certificates over their

computer software, it is not less of a fact that defendants themselves were also issued a

copyright certificate for their own computer software, which, as previously shown,

predates plaintiffs’ certificates and constitutes prima facie evidence of their rights over

their software. Nevertheless, plaintiffs seek to enjoin defendants from exercising their

granted rights by raising false and speculative allegations supported only by the biased,

unreliable, and inexpert testimony of an individual who evidently only cares about

nothing more than his own interests. Accordingly, how can the skills, creative energies,

and resources invested by defendants in their own copyrighted software be

safeguarded if defendants are enjoined from exploiting it because of Mr. Dominguez’

vicious and false testimony? How can then the public interest be best served if

defendants’ copyright protections are not upheld due to plaintiffs’ vague and speculative

unsupported allegations? Certainly, not by punishing defendants by striping them off of

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their legally acquired copyrights and by allowing plaintiffs to scout into their trade

secrets trough their meritless copyright infringement claims.

III. CONCLUSION

As it has been proven, plaintiffs’ allegations and exhibits show that their claims

arise under state contract law and accordingly, must not be entertained by this Court as

it lacks subject matter jurisdiction. Plaintiffs have brought an unripe, unsupported

copyright infringement claim before this Court in order to invoke this Honorable Court’s

jurisdiction, and have clearly failed to meet their burden of properly alleging a copyright

claim. They have not identified what parts of the software are similar, they have ignored

the rights granted to defendants’ through their previously issued copyright registration,

and have solely relied on the speculations of a person whose credibility and partiality

are questioned by many factors. By no means have either plaintiffs or their witness

identified which elements –if any- of plaintiffs’ computer software are being infringed,

and what elements of defendants’ software cause the alleged infringement, because

simply, no copyright infringement exists.

In light of the foregoing, this Honorable Court should deny plaintiffs’ request for

preliminary injunction and concurrently dismiss their complaint for lack of federal

jurisdiction and for failure to state a claim upon which a relief can be granted.

WHEREFORE, defendants hereby respectfully request from this Honorable

Court that an order be entered denying plaintiffs’ request for a preliminary injunction and

further dismissing plaintiffs’ complaint for lack of federal jurisdiction and for their failure

to state a remedy upon which relief can be granted.

RESPECTFULLY SUBMITTED

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In San Juan, Puerto Rico on this March 17th, 2011.

IT IS HEREBY CERTIFIED that on this date, I electronically filed the foregoing with the
Clerk of the Court using the CM/ECF system that will send notification of such filling to
the attorneys of record.

s/Samuel F. Pamias-Portalatin
Samuel F. Pamias-Portalatin
USDC No. 220309
Hoglund & Pamias, P.S.C.
256 Eleanor Roosevelt Street
San Juan, Puerto Rico 00918
Telephone: 787-772-9200
Facsimile: 787-772-9533
E-mail: samuel@hhoglund.com

Attorney for Defendants

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