GlobeRanger is a software company that specializes in radio frequency identification (RFID) technology. GlobeRanger RFID solutions focus on inventory management, allowing users to filter, process and store inventory information in real time. Pursuant to a contract through the Department of Defense, GlobeRanger installed RFID technology solutions at three Navy bases. The Navy then decided to consolidate into an enterprise-wide RFID solution to be run from one location. The Navy awarded the contract to Software AG and ordered GlobeRanger to stop its work. GlobeRanger sued Software AG for misappropriating its trade secrets, alleging that Software AG accessed some of GlobeRanger’s data, manuals and software while working on the Navy contract.
GlobeRanger initially filed its lawsuit against Software AG in federal court. Software AG objected, arguing lack of federal court jurisdiction, so GlobeRanger dismissed its federal lawsuit and filed in state court. Software AG then decided that the lawsuit belonged in federal court and removed the case to federal court. The district court denied GlobeRanger’s motion to remand and ruled that GlobeRanger’s misappropriation claims were preempted by the Copyright Act. GlobeRanger appealed that decision to the Fifth Circuit, which reversed and remanded the case to the district court. (GlobeRanger I). Software AG appealed to the Fifth Circuit in the second appeal after a $15 million jury verdict in GlobeRanger’s favor. Software AG argued that GlobeRanger’s trade secret claim was preempted by federal copyright right law, but that even if the trade secret claim was not preempted, the federal court lacked jurisdiction due to the lack of a federal law claim. The Fifth Circuit ruled that GlobeRanger’s trade secret claim was not preempted, but that GlobeRanger’s dropped conversion claim was preempted and supported the required federal jurisdiction.