The opinion of the court was delivered by: FOGEL
ORDER GRANTING PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION
Plaintiff's motion for preliminary injunction was heard on July 13, 1998 and again, following supplemental briefing, on August 28, 1998. For the reasons discussed below, Plaintiff's motion is granted.
Plaintiff CyberMedia, Inc. ("CyberMedia") is a computer software manufacturer. Its products include a computer cleanup program called UnInstaller, which allows users to remove unwanted applications, files and other clutter from their computers.
Defendant Symantec Corporation ("Symantec") also manufactures computer software. Among its products is a program called Norton Uninstall Deluxe ("NUD"), a computer cleanup program marketed in direct competition with CyberMedia's UnInstaller. Symantec acquired NUD from co-defendant ZebraSoft, Inc. ("ZebraSoft"), a software development company which created NUD for Symantec pursuant to contract.
This action arises from CyberMedia's allegations that Symantec's NUD product infringes CyberMedia's copyright in its UnInstaller product. In particular, CyberMedia alleges that the ZebraSoft employees who created NUD previously worked on UnInstaller, and that these ZebraSoft employees simply lifted blocks of source code from UnInstaller and used that code to create NUD. CyberMedia filed suit on February 4, 1998, asserting claims for copyright infringement, misappropriation of trade secrets and unfair competition against Symantec, ZebraSoft and three of ZebraSoft's officers.
On May 15, 1998, CyberMedia filed the present motion for preliminary injunction. CyberMedia seeks an order: (1) prohibiting Defendants from manufacturing or distributing any infringing version of NUD or any infringing works derived therefrom; (2) requiring Defendants to recall NUD from all distributors; (3) requiring Defendants to deliver all originals and copies of NUD to CyberMedia for impoundment in a bonded warehouse during the pendency of this action; (4) requiring Defendants to return to CyberMedia all copies of UnInstaller source code, except code provided to Defendants' counsel in connection with this litigation; and (5) requiring Defendants to file affidavits detailing the manner in which they have complied with the order granting preliminary injunction. Symantec and ZebraSoft oppose the motion.
In this judicial circuit, a party seeking a preliminary injunction must show either (1) a likelihood of success on the merits and the possibility of irreparable injury or (2) the existence of serious questions going to the merits and the balance of hardships tipping in the movant's favor. See Roe v. Anderson, 134 F.3d 1400, 1401-02 (9th Cir. 1998); Apple Computer, Inc. v. Formula International, Inc., 725 F.2d 521, 523 (9th Cir. 1984). These formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases. See Roe, 134 F.3d at 1402.
Under the first formulation set forth above, CyberMedia may obtain a preliminary injunction if it demonstrates a likelihood of success on the merits and the possibility of irreparable injury.
A. Likelihood Of Success On The Merits
In order to prevail on its copyright infringement claim, CyberMedia must prove: (1) ownership of a valid copyright in UnInstaller and (2) copying of expression protected by that copyright. See Triad Systems Corp. v. Southeastern Express Co., 64 F.3d 1330, 1335 (9th Cir. 1995).
1. Ownership Of Copyright
As proof that it owns a valid copyright in UnInstaller, CyberMedia offers its copyright registration for the program, dated November 26, 1997. This registration creates a rebuttable presumption that CyberMedia's copyright in the program is valid.
See 17 U.S.C. § 410(c); Entertainment Research Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d 1211, 1217 (9th Cir. 1997), cert. denied, 140 L. Ed. 2d 468, U.S. , 118 S. Ct. 1302 (1998); Apple Computer, 725 F.2d at 523. Defendants may rebut this presumption by introducing "some evidence or proof" that CyberMedia's copyright in the work is not valid. See Entertainment Research Group, 122 F.3d at 1217. If Defendants rebut the presumption, the burden shifts back to CyberMedia to demonstrate the validity of its copyright. See id. at 1218. The Court concludes that, for purposes of the present motion, CyberMedia may meet this burden by showing that it is likely to succeed on the merits of its claim that it owns a valid copyright in UnInstaller.
Defendants contend that a plaintiff seeking a preliminary injunction in a copyright action must show more than a likelihood of success on the merits regarding its ownership of a valid copyright; instead, they argue, such a plaintiff must show even at this preliminary stage an absence of a genuine issue of fact regarding this element of its claim. Neither of the cases cited by Defendants, nor any other authority of which the Court is aware, supports this proposition.
In Siebersma v. Van de Berg, 64 F.3d 448 (8th Cir. 1995), the Court of Appeals reversed the district court's order granting summary judgment on the issue of copyright ownership and in so doing also dissolved the preliminary injunction which had been issued on the basis of the summary judgment ruling. In Video Trip Corp. v. Lightning Video, Inc., 866 F.2d 50 (2d Cir. 1989), the Court of Appeals affirmed the district court's denial of an application for preliminary injunction, holding that factual issues regarding ownership of the copyright in question in that case precluded a determination that the applicant had demonstrated a probability of success on the merits. Nothing in these cases suggests that a heightened standard applies to applications for preliminary injunction in copyright actions.
Defendants attempt to rebut the presumption of validity by contending that CyberMedia acquired UnInstaller by means of a fraudulent transfer which should be set aside. Under California's version of the Uniform Fraudulent Transfer Act ("UFTA"), a transfer is fraudulent if it is made "with actual intent to hinder, delay, or defraud" any creditor of the transferor. Cal. Civil Code § 3439.04(a). A defrauded creditor may seek to have such a transfer voided to the extent necessary to satisfy the creditor's claim. See Cal. Civil Code § 3439.07(a)(1). However, a transfer made fraudulent by the transferor's intent may not be voided against a person "who took in good faith and for a reasonably equivalent value." Cal. Civil Code § 3439.08(a).
CyberMedia acquired UnInstaller from a company called Luckman Interactive, Inc. ("Luckman") in April 1997. Luckman had acquired UnInstaller during a 1996 merger with UnInstaller's previous ...