deceptive licensing practices under a novel theory of lost business opportunity.
Although difficult to discern with precision, defendants' argument appears to run as follows. MAI implies in their customer agreements that they will license their software to third-party service contractors when in fact they do not. If MAI's prospective customers only knew that the manufacturer never authorizes third-party service competitors to use its diagnostic software, then some of them might negotiate "more favorable terms." Specifically, some of their prospective customers might insist that the manufacturer license its copyrighted diagnostic software to the contractors of the customer's choosing -- possibly including the defendants. This convoluted theory of economic injury is far too speculative to satisfy to the distinct and palpable harm requirement of Article III. Moreover, the requisite causal connection between conduct and injury cannot be deduced from the hazy chain of inferences defendants ask this court to draw.
Finally, it is unclear what effective redress, if any, the court could offer defendants under section 17203, even assuming that defendants' nebulous lost business opportunity amounted to a cognizable injury under Article III. Compensation for a lost business opportunity is a measure of damages and not restitution to the alleged victims. Meta-Film Associates, Inc. v. MCA, Inc., 586 F. Supp. 1346, 1363 (C.D. Cal. 1986). Defendants' claim for monetary relief is accordingly barred by the rule limiting recovery under section 17203 to restitution and injunctive relief. See e.g. E.W. French & Sons, Inc., 885 F.2d 1392, 1401 (9th Cir. 1989) (damages are not available under section 17203).
A restitutionary remedy would only be available to the victims of MAI's purportedly misleading contracts -- the allegedly overcharged customers -- and not by MAI's competitors. Moreover, defendant's prayer for injunctive relief -- an order reforming MAI's software agreements to compel MAI to license its copyrighted software to third-party competitors -- appears to be preempted under the federal copyright act, which confers on MAI an exclusive right to reproduce and distribute its software. 17 U.S.C. section 106(1)(3); see also Florida Avocado Growers v. Paul, 373 U.S. 132, 142-43, 10 L. Ed. 2d 248, 83 S. Ct. 1210 (1963) (state law preempted when compliance with both state and federal law is impossible). Defendants are not entitled to restitution and their claims for damages and injunctive relief are barred as a matter of law. Accordingly, defendants' counterclaim is contrary to the third constitutional limitation on standing, which requires a substantial likelihood that the relief requested will prevent or redress the injury. McMichael, 709 F.2d 1268.
Although the court dismisses the counterclaim on the threshold consideration of standing, it notes that it would likely reach a similar result on the merits. The defendants' counterclaim rests largely on an issue of contractual construction which is a question of law for the court to decide. Nevets C.M., Inc. v. Nissho Iwai American Corp., 726 F. Supp. 525, 531 (D.N.J. 1989). Taking as true all of defendant's factual allegations, the court finds that there is nothing unfair or misleading about the plaintiff's customer licensing agreements that would justify relief under section 17200. The substance of defendants' claim is as follows:
MAI words its software licensing agreements so as to create the impression that MAI customers "may give access to the software" not just to the customers' own employees and to MAI's employees, but also to "others authorized by MAI in writing. " This clause implies that MAI actually does authorize persons other than its customers' employees and its own employees to use the software. Otherwise the clause would be meaningless.