Broker Genius Inc. v. Seat Scouts LLC

Background

The court addressed a series of letters from Broker Genius Inc., Seat Scouts LLC, and Drew Gainor. The immediate issue was whether products identified in Seat Scouts’ June 8, 2020 letter—Reconciler, the Sync suite, and Data and Analytics—fell within a permanent injunction issued on February 7, 2019.

Before this order, the court had found the defendants in contempt for violating a preliminary injunction. After a ten-day jury trial, the jury awarded Broker Genius $3,000,000 against Gainor on a breach-of-contract claim and $1,500,000 against Gainor and Seat Scouts on an unfair-competition claim. The court entered judgment on January 22, 2019. The permanent injunction prohibited Seat Scouts and Gainor from, among other things, indirectly making, using, distributing, or selling any web application or software derived in whole or in part from Broker Genius’s AutoPricer V3 product. The Court of Appeals for the Second Circuit later affirmed the contempt order, judgment, and permanent injunction.

Issue

Seat Scouts had concluded on its own that the listed products were not covered by the permanent injunction and said they would be sold within two weeks. The court had previously stated that resolving whether products were covered required additional fact-finding and expert testimony. The question therefore remained whether the products were derived, in whole or in part, from AutoPricer V3.

Ruling

The court held that Seat Scouts could not unilaterally decide the products were outside the injunction. Judge Sidney H. Stein ordered that, under the permanent injunction, Seat Scouts was prohibited from selling Reconciler, the Sync suite—including Mobile Transfer, Refund Manager, and Inventory Distribution and Order Processing—and Data and Analytics pending the court’s determination of whether such a sale would violate the injunction.

This order did not itself decide whether the products were covered by the permanent injunction. It preserved the existing restriction while that question remained for the court to determine. The opinion also expressed concern about the defendants’ conduct, including alleged efforts to avoid paying the judgment, but the operative order addressed the proposed sale of the specified products.