Network Data Rooms, LLC v. Saulrealism LLC

Background

Network Data Rooms, LLC sued Saulrealism LLC and Ryan Saul to recover what it described as missing source code for the DealTable Virtual Data Room Platform. It sought two forms of preliminary relief:

- Prohibitive Relief: an order preventing the defendants from destroying, disclosing, transferring, or using Network Data Rooms’s confidential, proprietary, and trade-secret information, including the platform’s codebase and related decompiled source code. - Mandatory Relief: an order requiring the defendants to turn over the original codebase and all copies in their possession, custody, or control.

The court had previously entered a temporary restraining order granting the Prohibitive Relief. The defendants opposed only the Mandatory Relief.

Evidence and credibility findings

At a two-day hearing, David Delorge testified that Saul had downloaded the code without authorization, moved it to a self-owned GitHub repository, and used a personal computer to modify it. Saul testified that he never downloaded the code, accessed it through Network Data Rooms’s Azure account, and saved his work in the company’s secure Azure DevOps repository.

The court appointed Terry Patterson as an independent expert under Federal Rule of Evidence 706. Patterson reviewed Network Data Rooms’s Microsoft Azure account, its Azure DevOps repository, and Saul’s virtual machine. Patterson opined that code had not been deployed from Saul’s virtual machine during the relevant period, that no code had been saved to the DevOps repository during that period, and that Saul must have downloaded the code to a personal computer to make changes and complete website builds. The review, however, covered only one of thirteen projects in the DevOps account. Patterson also found that Delorge had administrator access that could have allowed him to change Saul’s account credentials.

The court then learned that an exhibit containing emails attributed to Delorge and Saul had apparent date discrepancies. Network Data Rooms acknowledged that the defendants had raised legitimate concerns about the email. Delorge later asserted his Fifth Amendment right against self-incrimination rather than appear at a scheduled sanctions hearing. The court found that none of Delorge’s testimony was credible and concluded that his misconduct also cast doubt on Patterson’s findings. The court said it remained unclear whether Delorge could have altered the materials Patterson reviewed or deleted and concealed the code.

Legal standard

A party seeking a preliminary injunction generally must show either a likelihood of success on the merits or serious questions supporting the claim together with a strongly favorable balance of hardships, as well as likely irreparable harm without an injunction. A mandatory preliminary injunction, which requires affirmative action rather than merely prohibiting conduct, requires a stronger showing: a clear or substantial likelihood of success and a strong showing of irreparable harm.

The parties agreed that requiring the defendants to turn over the source code and copies would be a mandatory preliminary injunction.

Ruling

The court held that Network Data Rooms had not presented enough credible evidence to show a clear or substantial likelihood of success. Because that required showing was absent, the court did not address irreparable harm. The court also found that the balance of hardships favored the defendants if Saul were ordered, under threat of contempt sanctions, to produce code he did not have.

The order states that the motion for a temporary restraining order and preliminary injunction was GRANTED in part and DENIED in part. The Prohibitive Relief was granted as unopposed. The Mandatory Relief was denied.