United States District Court, D. Colorado
TITAN MANUFACTURING SOLUTIONS, INC., a Nevada corporation, Plaintiff,
NATIONAL COST, INC., a Florida corporation d/b/a National Tax Group, LEE FERRY, and STEPHANIE REYNOSO, Defendants.
ORDER DENYING RENEWED MOTION FOR PRELIMINARY
WILLIAM J. MARTINEZ UNITED STATES DISTRICT JUDGE
Titan Manufacturing Solutions, Inc.
(“Plaintiff”), sues Defendants National Cost,
Inc., Leigh Ferry, and Stephanie Reynoso (together,
“Defendants”) for breach of contract, trade
secret misappropriation in violation of the Colorado Uniform
Trade Secrets Act (“CUTSA”), Colo. Rev. Stat.
§§ 7-74-101 to -110, and related causes of action.
Currently before the Court is Plaintiff's Renewed Motion
for Temporary Restraining Order and Preliminary Injunction.
(ECF No. 38.) Despite the motion's title, it only
attempts to justify a preliminary injunction, not a temporary
reasons explained below, the Court finds that no evidentiary
hearing is needed because Plaintiff fails to show that it
faces irreparable harm, even accepting Plaintiff's
version of the facts. The motion is therefore denied.
following narrative is drawn from Plaintiff's
perspective, unless otherwise noted.
“develops proprietary tax solutions for, among other
things, the Research and Development Tax Credit (the
‘R&D Tax Credit').” (ECF No. 38-1 ¶
2.) The R&D Tax Credit is particularly complex.
(Id. ¶ 3.) “Among other software
solutions, [Plaintiff] developed Titan Armor®, an online,
web-based software platform that efficiently captures,
defensibly documents, and accurately calculates the R&D
Tax Credit.” (Id. ¶ 5.)
“Oversimplified, Armor is essentially a
highly-specialized version of TurboTax® for the R&D
Tax Credit.” (ECF No. 38 at 2 n.1.) Armor is a
particularly effective tool because Plaintiff itself assists
taxpayers claiming the R&D Tax Credit, and Plaintiff has
spent ten years providing free audit support to those
clients, so it “has gained unparalleled insight [in]to
how the IRS evaluates the R&D tax credit.” (ECF No.
38-1 ¶¶ 4, 9-10, 14.) Plaintiff estimates that it
has invested at least 4, 000 manhours in these audit support
activities, plus another 15, 000 manhours specifically in
“developing and refining” the Armor application.
(Id. ¶¶ 6, 11.)
proprietary aspect of Titan Armor® is its Task Library, a
proprietary list of descriptions of client activity that
allows Titan Armor® to sort various research and
development expenses into fields for analysis, and provides
critical documentation and substantiation for the R&D Tax
Credit.” (Id. ¶ 15.) “The Titan
Armor® Task Library is not known outside of Titan and its
licensees, each of which has executed licensing and user
agreements with strict confidentiality protections.”
(Id. ¶ 16.)
proprietary aspect of Titan Armor® is its Qualifying
Questionnaire, a proprietary qualitative assessment of the
R&D Tax Credit regulations based on Titan's extensive
audit experience. The Qualifying Questionnaire includes
questions that taxpayers are likely to see during the audit
process, but that are not present in the Internal Revenue
Code.” (Id. ¶ 20.)
National Cost, Inc. (“NCI”), describes itself as
a “company that helps businesses with their tax
solutions, including R&D Tax Credit assistance by
providing the necessary documentation consistent with
[federal requirements].” (ECF No. 48-2 ¶ 1.)
Defendant Ferry is president of the company. (Id.)
Defendant Reynoso is the company's director of
operations. (ECF No. 14 at 7, ¶ 6.)
January 2018, NCI began licensing Armor from Plaintiff. (ECF
No. 38-3 at 6.)
cost of the license was a monthly fee (“Monthly
Fee”) for access to the web platform (id. at
3), and then a separate fee for each final report generated
(“Report Fee”) (ECF No. 48-1 at 12). NCI, like
all licensees, agreed that it would not
copy, modify, reproduce, distribute, republish, display, post
or transmit in any form or by any means, create a derivative
work of, reverse engineer, or decompile any aspect of the
Service, or otherwise attempt to create unauthorized access
to the Service and/or modified versions of the Service,
including (without limitation) for the purpose of building a
similar or competitive product or service.
(ECF No. 38-3 at 4.) The Terms of Service that apply to the
Armor website contain an identical prohibition, and further
prohibit sharing login information with non-licensed parties.
(ECF No. 38-4 at 2, ¶¶ 8, 9.)
February 2019, Defendants hired a third party, Leigh Database
Development (“Leigh”), to create a Microsoft
Access database to replicate Armor's functionality.
(See ECF No. 38-5.) Defendants say they did so
because, among other reasons, they concluded that Armor's
cost was not worth the value it created and that NCI
“could do the calculations ...