Avtec Systems, Inc. v. Peiffer

Jeffrey Peiffer (defendant) worked for Avtec Systems, Inc. (Avtec) (plaintiff). Peiffer’s job involved creating and using computer programs to produce orbital simulations for satellites. Peiffer was not a salaried employee. While Peiffer worked for Avtec, Peiffer created a computer-software program that performed orbital simulations. However, Avtec did not direct Peiffer to develop the program. Peiffer developed the program at home on his own initiative, using only his own time and his own computer. Peiffer called this original program the .309 version. Peiffer showed the program to Avtec’s president and another employee, who suggested modifications to make the program suitable for client demonstrations. Peiffer made temporary modifications and demonstrated the program to potential Avtec clients, helping Avtec win a contract. Peiffer got a bonus for helping get the contract. Later, an Avtec employee identified errors in the program, which Peiffer corrected with permanent modifications. Ultimately, Peiffer’s supervisor told Peiffer that Avtec was not interested in the program and put Peiffer in touch with Paul Kisak (defendant). Peiffer converted the program from a demonstration tool into a standalone product, known as the 2.05 version. Kisak’s company, Kisak-Kisak, Inc. (KKI) (defendant), successfully marketed the 2.05 version. Avtec then claimed copyright ownership of the .309 version, arguing that the program was a work for hire. Avtec sued Peiffer, Kisak, and KKI in federal district court. The court found that Peiffer owned the copyright but that he had violated trade-secret misappropriation and fiduciary-duty laws. On appeal, in Avtec I, the Fourth Circuit affirmed the fiduciary-duty breach but vacated the other rulings. On remand, the district court again found that Peiffer had created the original program outside the scope of his employment and, therefore, owned the program’s copyright. The district court also found that Peiffer had not misappropriated Avtec’s trade secrets and that he owed no damages for his fiduciary-duty breach. Avtec appealed to the Fourth Circuit for a second time.