UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
July 29, 2009
WYATT TECHNOLOGY CORPORATION, A CALIFORNIA CORPORATION, PLAINTIFF,
MALVERN INSTRUMENTS INCORPORATION, A MASSACHUSETTS CORPORATION; DAVID DOLAK, AN INDIVIDUAL, DEFENDANTS.
The opinion of the court was delivered by: Dean D. Pregerson United States District Judge
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS FOR PARTIAL SUMMARY JUDGMENT ON COPYRIGHT AND NON-COPYRIGHT CLAIMS
[Motions filed on June 29, 2009]
Before the Court are two Motions for Partial Summary Judgment filed by Defendants Malvern Instruments Inc. and David Dolak. In the first Motion, Defendants move for partial summary judgment on Plaintiff's copyright claims. In the second Motion, Defendants move for summary judgment on Plaintiff's non-copyright claims, i.e., those for misappropriation of trade secrets, Lanham Act damages, intentional interference with prospective economic advantage, unfair competition, and accounting. Plaintiff Wyatt Technology Corporation opposes both motions.*fn1 On the Friday afternoon before the hearing on these motions, Plaintiff also filed a Rule 56(f) request. After reviewing the materials submitted by the parties, hearing oral argument, and considering the evidence in detail, the Court denies the Rule 56(f) request as untimely and grants in part and denies in part the Motions for Summary Judgment for the reasons discussed below.
A. Factual Background*fn2
Plaintiff Wyatt Technologies Corporation ("Wyatt" or "Plaintiff") and Defendant Malvern Instruments Incorporated ("Malvern") are competitors in the particle analysis field. Second Amended Complaint ("SAC") ¶ 64. Both manufacture, market, and/or sell laser light scattering goods and services relating to measuring molecular weights and characterization of molecules and particles. Id. The technology is called dynamic light scattering ("DLS"). Plaintiff markets and sells a DLS instrument called a "DynaPro." SAC ¶ 28. Malvern sells a DLS insrument called the Zetasizer Nano. Id. ¶ 64.
In November 2004, Plaintiff acquired certain physical and intangible assets of Proterion Corporation through an Asset Purchase Agreement ("APA"). Proterion Corporation's wholly-owned subsidiary Protein Solutions provided technology to the biomolecular research community. One product of Protein Solutions was the DynaPro DLS Instrument. Among the assets Plaintiff acquired were the DynaPro product line and physical assets, the website domain, software code, customer databases, manufacturing software programs and databases and related documents, and patents.
Beginning in October 2007, Plaintiff registered certain copyrights related to those assets. Those copyright registrations included registrations for: (1) a software program entitled "DYNAMICS v.6.2.05"; (2) a software program entitled "DYNAMICS v.6.3.40"; (3) a software program entitled "DYNAMICS v.5.26.56"; (4) an installation CD entitled "DYNAMIC INSTALLATION CD v.6.3.40"; (5) an installation CD entitled "DYNAMICS INSTALLATION CD v.5.26.56"; (6) text and graphs entitled "PSI Books, Dynamic Light Scattering"; (7) text and graphs constituting the "Protein Solutions" web site; (8) text titled "PSI Books"; and (9) text titled "PSI Frequently Asked Questions."
In January 2003, Malvern hired Defendant David Dolak ("Dolak"), a former Protein Solutions employee. Malvern hired Dr. Kevin Mattison, a former Protein Solutions employee, in 2002. It is undisputed Malvern additionally hired Dr. Ulf Nobbman, also a former Protein Solutions employee, though the parties dispute when Dr. Nobbman began working with Malvern. See Non-Copyright SGI ¶ 7. Dolak was employed by Protein Solutions as its Marketing and Sales Manager for over five years prior to being hired by Malvern.
According to Plaintiff, Dolak signed a confidentiality agreement and breached his obligations under that agreement by conveying confidential information to Malvern and third parties.
According to Plaintiff, through the manufacture, marketing, and sale of the Zetasizer Nano, Malvern and Dolak have infringed Plaintiff's copyrights. See SAC ¶ 49. Additionally, Plaintiff claims that Malvern has used false advertising and misappropriation of Plaintiff's trade secrets to acquire a position in the market.
B. Procedural History
Plaintiff filed this suit on December 21, 2007, and filed its SAC, the governing pleading, on April 14, 2008.*fn3 The SAC seeks to bring fourteen causes of action against Defendants Malvern and Dolak (collectively, "Defendants"): (1) nine claims for copyright infringement (U.S. Copyright Nos. TXu 1-569-097, TXu 1-569-098, TXu 1-569-099, TX 6-812-045, TX 6-812-047, TX 6-812-053, TX 6-813-868, TX 6-813-833, and TX 6-816-834); (2) false advertising in violation of the Lanham Act; (3) misappropriation of trade secrets in violation of California Civil Code §3425.1(b); (4) tortious interference with prospective business advantage in violation of California law; (5) unfair competition under California law; and (6) accounting.
Defendants now bring two motions for partial summary judgment: one on Plaintiff's copyright claims, and one on Plaintiff's non-copyright claims.*fn4
II. PROCEDURAL STANDARD - SUMMARY JUDGMENT
Summary judgment is appropriate where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law."
Fed. R. Civ. P. 56(c). All reasonable inferences from the evidence must be drawn in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A genuine issue exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party"; and material facts are those "that might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248. A party opposing summary judgment must come forward with specific facts, supported by admissible evidence, showing a genuine issue for trial. Fed. R. Civ. P. 56(e); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995).
III. PLAINTIFF'S RULE 56(f) REQUEST
In the afternoon of the Friday before the Monday morning hearing on Defendants' Motions for Summary Judgment, Plaintiff submitted a document titled "Declaration of Frank Frisenda in Support of Request for Denial or Continuance of Summary Judgment under FRCP 56(f)." See Dkt. No. 161 (July 24, 2009). Pursuant to Rule 56(f), a court may deny a summary judgment motion or order a continuance "[i]f a party opposing the motion shows by affidavit that, for specified reasons, it cannot present facts essential to justify its opposition." Fed. R. Civ. P. 56(f).
In addition to for the reasons identified by Defendants, see Defs.' Opposition to Plaintiff's Request (Dkt. No. 162) (July 27, 2009) (noting, among other points, that Plaintiff does not explain which of the various summary judgment grounds may be defeated by information to be obtained through the limited remaining discovery), the Court denies this request as untimely. Although the Court granted Plaintiff's request to reopen discovery a full week prior to the time Plaintiff's Oppositions were due -- and over a week before Plaintiff filed its Oppositions -- Plaintiff wholly failed to request a Rule 56(f) continuance until the Friday afternoon prior to the hearing on the Motions. Prior to that point, at no point in the voluminous materials submitted to the Court did Plaintiff suggest that more information was necessary or would be helpful. The Court denies Plaintiff's Rule 56(f) request as untimely.
III. DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AS TO PLAINTIFF'S COPYRIGHT CLAIMS
Defendants first move for summary judgment on Plaintiff's copyright claims. With respect to claims 1 through 5 and claim 7, Defendants argue that the Court should grant summary judgment in their favor because Malvern's software (claims 1 through 5) and website (claim 7) are not substantially similar to any protected elements of Plaintiff's work.*fn5 With respect to claims 6 and 8, Defendants argue that the Court should grant summary judgment in their favor because the copyrights in the works have been abandoned. With respect to claim 9, Defendants argue that Plaintiff has no evidence of actual damages and is not entitled to statutory damages or attorneys' fees. Additionally, Dolak argues that he is not individually liable with respect to claims 1 through 8. Finally, Defendants argue that Plaintiff cannot get statutory damages or attorneys' fees as to any of its copyright claims.
A. Legal Framework
1. Copyright Infringement Analysis
In order to succeed on a claim for copyright infringement, a plaintiff must show that it owns the copyright and that the defendant copied protected elements of the work. Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 636 (9th Cir. 2008)(quoting Cavalier v. Random House, Inc., 297 F.3d 815, 822 (9th Cir. 2002)). A plaintiff may prove copying through circumstantial evidence that establishes (1) the defendant had access to the copyrighted work and (2) the protected portions of the works are substantially similar. Id. at 636-37. The issue of substantial similarity can be amenable to summary judgment if "no reasonable juror could find substantial similarity of ideas and expression." Funky Films, Inc. v. Time Warner Entm't Co., L.P., 462 F.3d 1072, 1076 (9th Cir. 2006).
The Ninth Circuit uses a two-part test -- an extrinsic test and an intrinsic test -- to determine whether two works are substantially similar. Jada Toys, Inc., 518 F.3d at 637. While the extrinsic test considers whether there are substantial similarities in both ideas and expression, the intrinsic test measures expression subjectively, from the standpoint of the ordinary reasonable observer. Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1442 (9th Cir. 1994). On summary judgment, courts look only to the extrinsic test. When applying the extrinsic test, "a court must filter out and disregard the nonprotectable elements in making its substantial similarity determination." Cavalier, 297 F.3d at 822. Put differently, in the extrinsic test, the court uses "analytic dissection to determine the scope of copyright protection before works are considered as a whole." Apple Computer, Inc., 35 F.3d at 1443.
In Apple Computer, the Ninth Circuit identified three steps as "helpful" to follow in performing the substantial similarity analysis. Id. First, the plaintiff must identify the sources of the alleged similarity between its work and the defendant's work. Id.
Second, using "analytic dissection," the court must determine "whether any of the allegedly similar features are protected by copyright." In so doing, the Court must separate ideas from potentially protectable expression. Id. "[T]o that expression, the court must then apply the relevant limiting doctrines in the context of particular medium involved." Id. Analytic dissection is appropriate because the party claiming infringement may place no reliance upon similarity in expression resulting from unprotectable elements. Id. at 1446. Instead, "the unprotectable elements have to be identified, or filtered, before the works can be considered as a whole." Id. Limiting doctrines that bear on the amount of protection of the work include the merger doctrine, the constraints of the medium that limit the options for expression, and originality. Id. at 1444-45. Pursuant to the merger doctrine, when an idea and its expression are indistinguishable, the expression will only be protected against nearly identical copying. Id. at 1444. In the copyright context, "originality" is defined as material created by the author.
Third, the Court "must define the scope of the plaintiff's copyright-that is, decide whether the work is entitled to 'broad' or 'thin' protection." Id. at 1443. Depending on the degree of protection, the court must set the appropriate standard for a subjective comparison of the works to determine whether, as a whole, they are sufficiently similar to support a finding of illicit copying. Id. at 1443. A work afforded broad protection is then compared as a whole with the allegedly infringing design to determine if the two are substantially similar. Computer Access Tech. Corp. v. Catalyst Enters., Inc., 2001 WL 34118030, *14 (N.D. Cal. June 13, 2001) (Jenkins, J.). On the other hand, a work afforded thin protection is compared as a whole with the allegedly infringing design to determine if the two are "virtually identical." Id. (citing Apple Computer, 35 F.3d at 1446-47).
2. Software and Copyright
These rules apply equally to software, Apple Computer, 35 F.3d at 1445 ("[G]raphical user interface audiovisual works are subject to the same process of analytical dissection as are other works."), though software tends to enjoy more limited copyright protection because of its functional nature. As Apple Computer suggests, "not all copyrighted works are entitled to the same level of protection": "[t]o the extent that a work is functional or factual it may be copied, as may those expressive elements of the work that must necessarily be used as incident to expression of the underlying ideas, functional concepts, or facts." Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1524 (9th Cir. 1992)(internal citation and quotation marks omitted). As a general rule, copyright protection does not apply to any "idea, procedure, process, system, method of operations . . . regardless of the form in which it is described, explained, illustrated, or embodied in such work." 17 U.S.C. § 102(b). Because computer programs can have creative elements but are also fundamentally functional, software tends to enjoy relatively weak protection and is subjected to a high standard for similarity before there will be infringement. Id. at 1524-26; see Sony, 203 F.3d at 603; Apple Computer, 35 F.3d at 1446 (computer programs entitled to "thin" protection).
For example, a plaintiff is not entitled to copyright protection for features such as calculators and other methods of operation. 17 U.S.C. § 102(b); see also Calyx Technologies, Inc. v. Ellie Mae, Inc., 2005 WL 2036918, *3 (N.D. Cal. August 22, 2005) (Illston, J.).*fn6 Similarly, common methods for organizing and depicting data are generally not protected. See Computer Access, 2001 WL 34118030 at *15. Moreover, to the extent the screen display merely includes a "blank form," the material is not entitled to protection. 37 C.F.R. § 202.1(c); Bibbero Sys., Inc. v. Colwell Sys., Inc., 893 F.2d 1104, 1107 (9th Cir. 1990). Under Bibbero, "the blank forms rule denies copyrightability to forms consisting entirely of spaces for the recording of information, whether labeled or unlabeled, that are not accompanied by text conveying information, such as instructions regarding the use of forms." Advanz Behavioral Mgmt. Res., Inc. v. Miraflor, 21 F. Supp. 2d 1179, 1189 (C.D. Cal. 1998).
B. Claims 1 through 5
With respect to the SAC's First through Fifth Claims, Defendants argue that there is no substantial similarity between the various Malvern works and the Wyatt works. In particular, Defendants focus on a lack of substantial similarity between protected elements because of the largely unprotected nature of much of the work.*fn7 Plaintiff's Opposition includes nearly no explanation; while some of Plaintiff's evidence supports access (which Defendants do not contest in this motion), almost none of it addresses substantial similarity, and Plaintiff provides no analysis connecting the evidence. The Court considers only the screen display basis for copyright infringement, not any source code similarities.*fn8
1. First Claim
The First Claim alleges infringement by Malvern's Dispersion Technology Software Version 5 ("DTS v.5") of Plaintiff's Dynamics v. 6.2.05 software ("Dynamics v.6"). Specifically, Plaintiff claims that Malvern has infringed Plaintiff's software in the following ways: (1) the DTS v.5 hydrodynamic diameter estimate software includes the same inputs and is calculated through the same models as the Dynamics v.6 and yield the same results, SAC Ex. 18 at 128-29; (2) infringement of the Dynamics v.6 Statistics Table because the operator can hide certain results, id. at 130-31; and (3) infringement of the Dynamics v.6 "units" menu because each displays a check mark next to the selected units, id. at 132-33.
Wyatt complains that the calculator "incorporates substantially similar elements and produces substantially similar results." Ransom Decl., Ex. A at 10. The hydrodynamic radius calculator estimates the hydrodynamic radius of a molecule based on the molecule's weight and molecular family. Copyright Reply SUF ¶ 2. The calculator contains a blank form that allows the user to enter the required information. Id. The calculator then returns a hydrodynamic radius estimate based upon mathematical relationship between the data values that are derived from empirical data. Id. ¶¶ 2, 4. According to Defendants, the estimated diameter of a molecule is a function of well-known equations and the data necessary to create the equations can be found publicly. Mattison Decl. ¶ 10. Wyatt disagrees only in part: Wyatt agrees that the basic relationship is defined through a well-known equation, see Copyright SGI ¶ 36; Copyright Opp'n at 10, but represents that the calculations are based on a proprietary model, see Collins Decl. ¶ 8; Copyright Opp'n at 10. Plaintiff's calculator requires the user to enter four values ("DynaPro model," "Molecular Family," "Molecular Weight," and "Power") and provides two different results (estimated hydrodynamic radius and data about the requirements to run an experiment on that particular particle). Ransom Decl., Ex. B at 23. Defendants' software includes a single input (molecular weight) and returns four hydrodynamic diameter estimates as a result (one for each of the four "molecular families"). Id.
After analytical dissection, the Court finds that there is no substantial similarity between the screen displays of the two calculators. Plaintiff cannot protect the idea of the hydrodynamic radius calculator based on molecular weight. Additionally, Plaintiff cannot protect functions or elements that are indispensable to the idea of a hydrodynamic radius calculator. Defendants have submitted evidence that molecular weight is an indispensable input value and estimated hydrodynamic radius or diameter is an indispensable output value. Mattison Decl. ¶ 10.
Plaintiff's cited evidence does not address this issue. See Collins Decl. ¶¶ 8-9. A calculator is a method of operation that does not enjoy copyright protection. 17 U.S.C. § 102(b); Calyx Tech., 2005 WL 2036918 at *3. Moreover, to the extent the screen display is a "blank form," it is also generally not entitled to protection. 37 C.F.R. § 202.1; Bibbero, 893 F.2d at 1107-08. What remains is the arrangement of the screen display. There are limited ways to display the information the idea rests on conveying. Here, they are not "virtually identical," see Apple, 35 F.3d at 1442, 1449, as the forms ask for different information.*fn9
b. Statistics Table (Hiding/Showing Results, Units)
Plaintiff's "statistics table" allows the user to compare measurements. The interface allows the user to modify which data is visible and what units of measure are displayed. SAC, Ex. 18 at 130, 131. Malvern's software also allows a user to compare experiment data. The types of data included on Plaintiff's table are mean, standard deviation, and %S. Id. at 130. The idea for a table that allows the user to compare values generated by experiments is not protectable, nor are calculations such as means, standard deviations, and percentages, which are common mathematical formulas. Common ways of organizing and depicting data, such as a table view and an option to hide columns are common ways to display information. Cf. Apple, 35 F.3d at 1444. The Court agrees with Defendants that all of the similarities rest in these common data-display issues. To the extent Plaintiff argues that the drop-down "units" menu is substantially similar, the Court notes that the menu commands are not protected. See Lotus Dev. Corp. v. Borland Int'l, Inc., 49 F.3d 807, 815 (1st Cir. 1995).
2. Second Claim
In the Second Claim for Relief, Plaintiff alleges that Malvern's ZetaSizer Nano software infringes the copyright for the software program Dynamics v.6.3.40. Plaintiff specifically alleges that the "tree design" interface and the standard operating procedure features of the two works are substantially similar. SAC ¶¶ 86-87 & Ex. 19 at 134-35.
a. Tree Design
Plaintiff's software allows a user to specify the parameters for a given experiment. Copyright Reply SUF ¶ 8. The screen display is organized using a "tree design structure." Id. Once a user selects the information he or she wishes to view, that information appears on the right side of the screen. Id. Malvern's "SOP" or "standard operating procedure" interface allows a user to control the parameters for Zetasizer Nano experiments. Additionally, there appear to be some differences between the functionality of the two designs. See Mattison Decl. ¶¶ 14-17. Although Plaintiff attempts to dispute this fact, the purported evidence supporting a similarity in functionality is not presented in an admissible way. See Collins Decl. ¶¶ 15-18; Defs.' Evidentary Objections, ¶¶ 15-17 (pp. 10-13). In any event, the Court addresses the tree design structure without reference to the functionality behind them. See Sega, 977 F.2d at 1524.
To the extent Plaintiff alleges that Malvern's display infringes Plaintiff's copyright because it organizes information using a "tree design" interface, that organizational approach is common and flows from computer screen displays. Likewise, the idea and function of choosing actions to be included in an experiment cannot be protected. Aside from those similarities, the two displays convey different information. See SAC, Ex. 19 at 134. Although they have a similar look, the Court agrees that they are not similar enough to fall within the thin protection afforded to the display. Accordingly, the Court finds that there is no genuine issue as to substantial similarity.
b. SOP Player
Dynamics also includes a feature that allows a user to repeat the same action multiple times within an experiment. Copyright Reply SUF ¶ 11. The user can customize which actions will be performed during the experiment by selecting options from a list and clicking an "Add" or "Delete" button. Id. Like the DynaPro, Malvern's SOP player also allows a user to repeat an action multiple times within an experiment and to customize the experiment by selecting the options from a list. SAC, Ex. 19 at 135; Mattison Decl. ¶ 19.*fn10 Malvern's SOP Player selection menu includes icons, while Wyatt's is text-only. The programs have overlapping options, but are labeled differently, are not totally coextensive, and are sometimes in different locations. SAC, Ex. 19 at 135.*fn11
Methods for organizing information and commands are "methods of operation" that are both unprotected and common to software programs. Focusing on the "unique selection and arrangement of Malvern's screen display" likewise yields no substantial similarity, as the displays contain noticeable differences. For example, the Malvern "SOP Player" is styled as creating a "playlist" with icons, while the Wyatt DynaPro portrays a text-only command structure. Given the thin protection already afforded to Plaintiff's work, there can be no substantial similarity as a matter of law.
The Court therefore grants the Motion with respect to the screen displays for the Second Claim.
3. Third Claim
Plaintiff's Third Claim alleges infringement of the "Axial Ratio (Elliptical Shape) Calculator," a support calculation included in Dynamics Software v. 5.26.56 that is referred to as the Perrin Shape Factor. SAC ¶ 94. Plaintiff alleges that Defendants' DTS "contains Protein Utilities including 'Calculations' containing a 'Shape Estimate' section." Id. ¶ 95. Plaintiff alleges that the DTS "implements a substantially identical function in virtually the same manner." Id. Plaintiff appears to allege infringement (1) of an axial ratio calculator that estimates the shape of a molecule based on its molecular weight, specific volume, and hydrodynamic radius and (2) a calculator that estimates a molecule's weight based on its hydrodynamic radius. Id. ¶¶ 94-95 & Ex. 20 at 136-38.
a. Axial Ratio Calculator
Plaintiff's Axial Ratio (Elliptical Shape) Calculator allows the user to estimate the shape of a protein based upon a measured radius and molecular weight. Ransom Decl., Ex. C (Collins Depo.) at 27:5-9. It contains a blank form that allows the user to enter data about a molecule, including molecular weight, specific volume, and measured radius. Ransom Decl., Ex. B. at 34. The theoretical basis for Plaintiff's calculator is a series of mathematical equations referred to in the scientific community as the "Perrin shape factor." Ransom Decl., Ex. C (Collins Depo.) at 29. Protein Solutions found a way to articulate the Perrin series of equations -- a pre-existing nonproprietary formula -- in C code. Id. at 31-32. In order to calculate the axial ratio using the Perrin equations, three values are necessary: molecular weight, radius, and volume. Id. at 33-34. Malvern's software also includes a calculator that estimates shape using the Perrin shape factor. See Mattison Decl. ¶¶ 20-21.
The idea of an axial ratio calculator, the idea of using the Perrin equations, and elements that are indispensable to those ideas, are not protected. Rather, as relevant to this motion, Plaintiff's infringement claim rests on the unique selection and arrangement of Plaintiff's screen display. Plaintiff points to the following similarities: (1) the input variables of the two calculators are the same, and presented in the same order; (2) the output variables of the two calculators are listed in the same order; and (3) both designs incorporate simple "boxes" for the input and display of data.*fn12 Collins Decl. ¶ 29. Additionally, Plaintiff argues that its particular method of implementing the Perrin function need not be as it and Malvern did. Plaintiff offers two examples of other ways to implement an axial ratio calculator: one used in a program called SEDNTERP and one used in an earlier version of Protein Solutions software. See id. ¶¶ 25-26, 28 & Exs. 2-5. Plaintiff points out the different input choices and graphical display of the former, see id. Exs. 2-3, and the open window boxes of the latter, see id. Ex. 5.
Defendants do not infringe Plaintiff's copyright by using a blank form, which in and of itself is not protectable. Bibbero, 893 F.2d at 1107. Defendant argues that because the layout of a screen display is "driven by functionality and contains no artistic elements, it cannot receive copyright protection." Copyright Mot. at 13. While the Court finds that the two screens are nearly identical in look, the Court cannot find a genuine issue as to infringement here. Although there may be more than one way to display and arrange the information, the options are limited: even the other calculators cited by Plaintiff involve a similar, form-type look, and the existence of two other ways to convey the information does not suggest that there are significantly more. Granting copyright protection in Plaintiff's look -- a blank form that is perhaps the simplest, most purely functional approach -- would risk significantly limiting the ways to express this nonproprietary idea. The Court therefore holds that any protection in the arrangement of Plaintiff's calculator is, at most, paper-thin. The minor differences between the forms are enough to defeat infringement on that form.
b. Molecular Weight Calculator
The molecular weight calculator estimates a molecule's molecular weight based on its hydrodynamic radius. Copyright Reply SUF ¶ 18. The calculator contains a blank form that allows the user to enter the required information, and then returns two estimated weight values: one derived from a "standard curve" and one based on a molecular volume model. Id. Malvern's software also contains a molecular weight calculator, which includes boxes on a blank form. SAC, Ex. 20 at 137-38. Unlike the DynaPro calculator, Malvern's calculator does not provide a volume-based estimate; rather, it returns only "standard curve" estimates. Mattison Decl. ¶¶ 23-24. Additionally, while the DynaPro calculator returns two estimates for one molecular family at a time, the Malvern calculator returns only a standard curve estimate each for four molecular protein families. Id.; Ransom Decl., Ex. B at 35-36. None of the labels on the calculators are the same, though they appear to represent the same or related values. Ransom Decl., Ex. B at 35-36.*fn13
For the same reasons discussed with respect to the calculators in Claim 1, the Court finds that there is no genuine issue of material fact as to infringement of the screen displays.
4. Fourth Claim
Plaintiff's Fourth Claim alleges infringement of the Dynamics Installation CD v. 6.3.40 by Defendants' DTS software. SAC ¶¶ 99, 103. In particular, Plaintiff argues that its PSI Static MW Calculator software module and Malvern's Zetasizer Nano DTS "Protein Utilities" "Debye Plot" are substantially similar. Collins Decl. ¶ 35. Plaintiff's software includes a tool called a "Zimm Plot," which is a "plot of the static light scattering signal as a function of concentration and scattering angle. Ransom Decl, Ex. C (Collins Decl.) at 35-36; Mattison Decl. ¶ 26. Plaintiff's software includes a blank form in which the user can input 13 different parameters, each of which affects the resulting Zimm plot, and allows two possible units of measure. SAC, Ex. 21 at 139. Malvern's software permits the user to generate a Debye Plot, a plot that also represents scattered light intensity data, with some differences.*fn14 Most of the parameters it uses are required for the measurement or allow it greater functionality. Ransom Decl., Ex. C (Collins Depo.) at 37-38. As Plaintiff has previously described the two layouts:
Most of the [input] parameters . . . are identical (differences are slight changes to the names or the 'units' associated with the values). The layout is different. The 'calculated paramters' are presented on the left hand side in the Protein Solutions calculator v. the right hand side in the Malvern calculator. The Malvern presents the 'User Defined Parameters' across the top in a horizontal fashion rather than a vertical fashion -- this is because the Protein Solutions calculator presents both the data table and the graph on the same page whereas Malvern has separated these into two different 'tabs'.
Ransom Decl., Ex. B at 40.
The Court finds that there are no genuine issues of material fact as to infringement. The majority of the similarities appear to arise from similar ideas, facts, and function, and a blank form. The display itself is, in fact, different. Although Plaintiff has submitted what appears to be evidence suggesting similarities in the underlying code or access to the material, see Collins Decl. ¶¶ 35-43, the Court does not see a reading of this evidence that bears on substantial similarity in the screen display, and Plaintiff has provided no analysis whatsoever that would guide the Court in the inferences it would ask the Court to draw from the cited paragraphs of the Collins declaration, or how they bear on Plaintiff's argument.*fn15 Accordingly, the Court does not see a genuine issue of material fact as to the screen displays alleged to be infringing in the Fourth Claim for Relief.
5. Fifth Claim
The Fifth Claim alleges that Malvern's Zetasizer Nano software infringes Plaintiff's Dynamics Installation CD v.5.26.56. Specifically, Plaintiff alleges that a feature in Malvern's software entitled "Trend -- Temperature Ranges" infringes Plaintiff's "Write DSS File" feature. SAC, Ex. 22 at 144. Plaintiff's "Write DSS File" screen allows a user to specify the initial and final temperatures for an experiment and direct the DynaPro to take measurements at user-specific intervals. Ransom Decl., Ex. C (Collins Depo.) at 40-41. The screen display includes seven blank spaces in which the user can input information, including: (1) initial temperature settings, (2) final temperature setting, (3) increment, (4) wait time, and (5) number of measurements. SAC, Ex. 22 at 144. Likewise, Malvern's software allows the user to specify the starting and ending temperatures for an experiment and the temperature increment at which measurements should be taken. Id. Malvern's screen display includes four inputs: (1) start temperature, (2) end temperature, (3) temperature interval, and (4) number of steps. Id.
The idea of a feature that allows a user to specify temperature values and increments for an experiment, as well as elements that are indispensable to the idea (i.e., start temperature, end temperature, and increment value), are not protected. To the extent Plaintiff's display is a blank form, Plaintiff likewise cannot succeed on its infringement claim. Looking at the arrangement of the screen displays, the Court notes that they have different layouts, different options, and different ways of adjusting the variables. See SAC, Ex. 22 at 144. Given the thin protection afforded to copyright claims, the Court finds that these differences defeat an infringement claim with respect to the screen displays. Plaintiff has pointed to no evidence that would raise a genuine issue of material fact as to anything but access. See Copyright SGI ¶¶ 24-26 (citing Collins Decl. ¶¶ 45-47).
As discussed above, the Court finds in Defendants' favor on the screen displays asserted in the First through Fifth Claims, particularly in light of the thin protection provided to the software displays at issue. As far as the Court can tell from reviewing Plaintiff's submissions (which lack helpful analysis), Plaintiff has not presented evidence supporting a genuine issue of material fact as these claims.
C. Claim 7
In the Seventh Claim, Plaintiff alleges that Malvern's website infringes the Protein Solutions Website. Specifically, Plaintiff claims that Malvern's "Zetasizer Nano Minimum Concentration Calculator" infringes Plaintiff's "DynaPro Minimum Concentration Calculator." SAC, Ex. 24 at 150-52. Because of their limited sensitivity, DLS instruments require a minimum concentration of particle to perform measurements of it. Mattison Decl. ¶ 30. The minimum concentration required by Zetasizer Nano instruments is slightly different than that required by DynaPro insruments. Id.
Plaintiff's website includes a calculator that uses molecular weight to determine minimum concentration. SAC, Ex. 24 at 151. A user inputs the protein's molecular weight, and the calculator returns three numbers representing the minimum concentration required for a different product model. Id. The calculator includes buttons labeled "calculate" and "clear." Id. Malvern's calculator also includes molecular weight as the sole input and a results screen that gives the minimum concentration by product model. Id. at 150. It further includes a display of the estimated radius and diameter of the protein and data regarding requirements to measure zeta potential. Id.*fn16
For the reasons discussed above with respect to the First and Third Claims, the Court finds that there is no genuine issue of material fact as to substantial similarity.
D. Claims 6 and 8
Defendants move for summary judgment on the Sixth and Eighth Claims for Relief on the ground that the copyrights in the works underlying those claims have been waived or abandoned.
Waiver and abandonment of copyright protection provide defenses to claims of copyright infringement. "[W]aiver or abandonment of copyright 'occurs only if there is an intent by the copyright proprietor to surrender rights in his work.'" A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1026 (9th Cir. 2001) (quoting 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.06 (2000)). Generally, "an overt act evidencing such an intent is necessary to establish abandonment." 4 Nimmer on Copyright § 13.06; Hampton v. Paramount Pictures Corp., 279 F.2d 100, 104 (9th Cir. 1960) ("Rights gained under the Copyright Law . . . may be abandoned. Abandonment of such rights, however, must be manifested by some overt act indicative of a purpose to surrender the rights and allow the public to copy."). The Ninth Circuit has suggested that a copyright holder may abandon some rights without abandoning others. See Micro Star v. Formgen, Inc., 154 F.3d 1107, 1114 (9th Cir. 1998) ("Given that it overtly encouraged players to make and freely distribute new levels, FormGen may indeed have abandoned its exclusive right to do the same. But abandoning some rights is not the same as abandoning all rights, and FormGen never overtly abandoned its rights to profit commercially from new levels."). But see 4 Nimmer on Copyright § 13:06 & n.17.
In Hadady Corp. v. Dean Witter Reynolds, Inc., 739 F. Supp. 1392, 1399 (C.D. Cal. 1990), the court found that the copyright holder had abandoned copyright protection and granted summary judgment in favor of defendant on that issue. The Hadady plaintiff distributed a weekly newsletter, which included a copyright notice that stated the copyright would last for two days. Id. The Hadady notice stated: "The information contained in this letter is protected by U.S. copyright laws through noon EST on the 2d day after its release[.]" Id. at 1395. Even though the defendant did not subscribe to the newsletter, the court held that the plaintiff had "abandoned copyright protection to the information contained therein with respect to the whole world." Id. Summary judgment was warranted even though the plaintiff had submitted a declaration stating that "he did not subjectively intend by the two day notice to abandon Hadady Corp.'s copyright interest." Id. Because his declaration "fl[ew] in the face of the only possible meaning the two-day copyright notice conveyed," the court explained that it did not raise a triable issue of fact. Id. Moreover, although abandonment ended when the plaintiff changed the form of the copyright notice, the revised notice did not avoid abandonment as to the newsletters that were distributed prior to the change. Id.
Claim Six addresses U.S. Copyright No. TX 6-812-053, "PSI BOOKS: DYNAMIC LIGHT SCATTERING." SAC ¶¶ 115-23. According to the SAC, PSI Books: Dynamic Light Scattering is end-user learning tools, and includes a library, "PSI Books." Id. ¶ 119. Claim Eight addresses U.S. Copyright No. TX 6-816-833, "PSI BOOKS." Id. ¶¶ 132-40. According to the SAC, PSI Books is software which includes dialog support for the implementation of the DLS system.
Id. ¶ 135. All of the written work reflected in PSI Books: Dynamic Light Scattering is also included in the larger volume that is PSI Books. See Ransom Decl. ¶ 7 & Exs. D-E.*fn17
The front page of PSI Books -- both as distributed by Protein Solutions and in the deposit materials that Wyatt provided to the Copyright Office -- includes the following statement: "Currently, there are no restrictions on this material. You may install it on as many PC systems as you like, and you may distribute it freely to your colleagues." Ransom Decl., Ex. E at 275. Plaintiff's copyright 30(b)(6) witness affirmed that Protein solutions made these materials freely available to the public and had no problem with their distribution. See Ransom Decl., Ex. C (Robert Collins Depo.) at 47:2-14, 48:2-5. In his declaration submitted in support of Plaintiff's Opposition to the Motion, Collins states that Protein Solutions "never intended to 'abandon' PSI Books," but rather intended "to make the material readily available to end users and potential end users on a widespread, global basis." Collins Decl. ¶ 51. In particular, "Protein Solutions encouraged its customers and prospective customers to distribute PSI Books, thereby promoting Protein Solutions and its unique capabilities and technologies, chiefly the DynaPro instrument, throughout the world." Id.
Defendants analogize this case to Hadady. They argue that the Collins Declaration does nothing more than state a subjective intent. In the face of what they point to as a clear statement that there were "no restrictions" on the material and deposition testimony that supports an intent to freely allow distribution, Defendants argue that the Collins Declaration does not raise a triable issue. The Court agrees. First, the Court notes that Defendants have pointed to evidence that would support a finding of an overt act manifesting an intent to abandon copyright protection. The first page of the relevant material expressly states that there are "no restrictions" on the material. Moreover, at his deposition, Collins testified that "if someone downloaded [the material] from the website and then made a thousand copies and handed it out on the street corner, Protein Solutions would have been fine with [those actions.]" Ransom Decl., Ex. C (Collins Depo.) at 47:10-14. Additionally, Collins confirmed that Protein Solutions never "placed any restrictions on what someone who received a copy of PSI Books could do with it." Id. at 48:2-5. Although Protein Solutions' language does not exactly mirror that in Hadady -- it said "no restrictions" as opposed to explicitly framing copyright protection as being two days in length -- Plaintiff does not argue that this is a meaningful distinction, and the Court also does not view it as one. By stating that there were "no restrictions" on the material, the language effectively stated that the author had abandoned those rights.
There is no evidence or argument before the Court that would create a genuine issue of material fact to the contrary. For example, Plaintiff does not suggest that other language in the notice would mitigate any abandonment argument. For instance, Plaintiff does not argue that the use of the term "currently" or the examples provided by the notice limited the blanket "no restrictions" language.*fn18 Moreover, the only cited portions of the deposition testimony that directly ask about policies and restrictions -- as opposed to conversations or discussions -- indisputably support that there were none. Finally, Plaintiff does not suggest that Protein Solutions may have abandoned certain exclusive rights conferred by the Copyright Act, but not others that are relevant here. Cf. Micro Star, 154 F.3d at 1114. Indeed, Plaintiff's argument on the issue of abandonment rests entirely on the Collins Declaration for factual support.*fn19 See Copyright Opp'n at 22-23.
Plaintiff has not presented evidence (or argument about the inferences to be drawn from Defendants' evidence) that would create a triable issue as to abandonment. In light of the overt statements and the deposition testimony, then, the Court finds that summary judgment is warranted in Defendants' favor on the Sixth and Eighth Claims.
E. Defendant Dolak: Claims 1 through 8
Defendant Dolak also argues that he is not individually liable with respect to the First through Eighth Claims. Liability for copyright infringement exists "if the defendant engages in personal conduct that encourages or assists the infringement." Napster, 239 F.3d at 1019 (internal quotation marks omitted). Knowledge and material contribution are required. See id. at 1020, 1022.
Defendant has submitted evidence that David Dolak had no role in the creation of any of the allegedly infringing works in the First through Eighth Claims. Dolak Decl. ¶¶ 3-5. In response, Plaintiff submits evidence that addresses the copyrights that are the subject of the Ninth Claim, see Copyright SGI ¶ 32 (citing Collins Decl. ¶¶ 68-71), but provides no explanation how that evidence bears on the First through Eighth Claims. In its Opposition, Plaintiff also suggests (1) that as the webmaster of Protein Solutions, Dolak had knowledge of and materially assisted in the copyright infringement, and (2) that Dolak receives performance bonuses tied to the sale of Malvern's product. See Copyright Opp'n at 4. Plaintiff points to Exhibit 22 of the Frisenda Declaration, portions of the Dolak Deposition, as evidence supporting these assertions, but does not explain that citation. On the Court's review of that Exhibit, the only portion that would potentially appear to support Plaintiff's argument is testimony that Dolak linked to the Malvern website. Plaintiff does not support its other statements.
Defendants do not specifically present evidence that would negate contributory infringement by Dolak; that is, while they have presented evidence that Dolak was not involved in the creation of the infringing products, they have not presented evidence that he neither knew of them nor materially contributed to any potential infringement through his sales. Although the Court might be hesitant to accept Plaintiff's submission as sufficient to defeat summary judgment had Defendants met their initial burden, the Court finds that they have not done so. The Court therefore declines to enter summary judgment as to Dolak's liability.*fn20
E. Actual Damages for Claim 9
Defendants move for summary judgment on damages for Plaintiff's Ninth Claim on the ground that Plaintiff has no actual damages as to that claim. In particular, Defendants argue that Plaintiff does not have evidence connecting infringement of the PSI Frequently Asked Questions (the copyrighted work that is the basis of claim 9) with actual damages. The Court agrees. Although Plaintiff's disclosures and the Wyatt declaration provide a sufficient basis for Plaintiff to seek to prove actual damages in this suit as a whole, at no point do any of those documents provide a connection between claim 9 and actual damages. The Court therefore grants the motion as to Claim 9 actual damages.
F. Statutory Damages and Attorneys' Fees
Finally, Defendants move for summary judgment on the issues of statutory damages and attorneys' fees for Plaintiff's copyright claims. Pursuant to 17 U.S.C. § 412, a plaintiff's entitlement to statutory damages is limited. That section provides, in relevant part:
In any action under this title, other than . . . an action for infringement of the copyright of a work that has been preregistered under section 408(f) before the commencement of the infringement and that has an effective date of registration not later than the earlier of 3 months after the first publication of the work or 1 month after the copyright owner has learned of the infringement . . . , no award of statutory damages or of attorney's fees, as provided by sections 504 and 505, shall be made for--
(1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or
(2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.
17 U.S.C. § 412. It is undisputed that the copyrights' effective dates were more than three months after the first publication of the work underlying the registration and that Defendants' alleged infringement of each copyright commenced prior to Plaintiff's registration of the copyright. See Copyright SGI ¶¶ 34-35. Because Plaintiff is therefore not entitled to statutory damages or attorneys' fees, the Court grants summary judgment on this issue.
As discussed above, the Court grants Defendants' partial summary judgment motion on the copyright claims as to all but Dolak's liability. The Court denies that portion of the motion without prejudice.
IV. DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AS TO PLAINTIFF'S NON-COPYRIGHT CLAIMS
Defendants move for partial summary judgment on the remaining five claims in the SAC, the non-copyright claims. Plaintiff has opposed the Motion.
A. Tenth Claim for Relief: Lanham Act
Plaintiff's Tenth Claim for Relief alleges a claim for false advertising under § 43 of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). SAC ¶¶ 149-55. Defendants move for summary judgment solely on the damages claim, and solely on the ground that Plaintiff cannot prove that it has suffered actual injury as a result of the allegedly false advertising.*fn21
The Lanham Act authorizes injunctive relief, damages, profits, costs, and attorneys' fees, depending on what is appropriate in a particular circumstance. Section 1117(a) of Title 15 of the United States Code, which governs damages, provides, in relevant part:
When . . . a violation under [§] 1125(a) . . . of this title . . . shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . subject to the principles of equity to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. . . . In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all element of a cost or deduction claimed. . . . If the court shall find the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such a sum as the court shall find to be just, according to the circumstances of the case.
15 U.S.C. § 1117(a).
Defendants argue that Plaintiff's must prove, as an essential element of the cause of action, actual damages resulting from allegedly false advertising. With respect to injunctive relief, "a competitor need not prove injury when suing to enjoin conduct that violates section 43(a)" of the Lanham Act. Harper House, Inc. v. Thomas Nelson, Inc., 889 F.2d 197, 210 (9th Cir. 1989). To obtain monetary relief under § 1117, however, a plaintiff generally "must prove both the fact and the amount of damage," which "are typically measured by any direct injury which the plaintiff would have earned but for the infringement." Lindy Pen Co., Inc. v. Bic Pen Corp., 982 F.2d 1400, 1407 (9th Cir. 1993)(citing 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 30:27 (1984)). "Because proof of actual damage is often difficult, a court may award damages based on defendant's profits on the theory of unjust enrichment." Id. As the Ninth Circuit explained in Harper House, Inc. v. Thomas Nelson, Inc., "actual evidence of some injury resulting from the deception is an essential element of the plaintiff's case" when a plaintiff seeks actual damages. 889 F.2d 197, 210 (9th Cir. 1989) (emphasis in original). The cases seem to hold, however, that "an inability to show actual damages does not alone preclude recovery under [15 U.S.C. §] 1117." Lindy Pen, 982 F. 2d 1400, 1410-11 (9th Cir. 1993). Rather, the Ninth Circuit appears to prefer a "totality of the circumstances" approach. Id.; Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1136 (9th Cir. 1997); see Healthport Corp. v. Tanita Corp. of Am., 563 F. Supp. 2d 1169, 1181 (D. Or. 2008). Cf. 5 McCarthy on Trademarks and Unfair Competition § 30:77 (4th ed.) ("If plaintiff shows no probability of actual loss caused by the infringement, the court may deny any recovery of damages. Since it may be very difficult for plaintiff to prove the fact and amount of damage to its good will, plaintiff should be allowed the chance to prove this with whatever evidence he can muster.").
The Court finds that summary judgment is not warranted here. It is unclear whether Defendants simply move on actual damages pursuant to 15 U.S.C. § 1117(a)(2) or on the entirety of § 1117(a) relief. In either case, because the statute and the Ninth Circuit appear to provide an approach depending on equity and the totality of the circumstances, and because actual damages can be particularly difficult to prove, the Court finds summary judgment inappropriate and prefers that Plaintiff be given the opportunity to present evidence on these issues. Although the evidence may not ultimately be convincing or sufficient,*fn22 to the extent it relies on the testimony of various individuals and the nature of the industry, the Court finds that it is appropriate to allow that evidence be heard at trial. See Wyatt Decl. ¶ 34.
B. Eleventh Claim for Relief: Misappropriation of Trade Secret
The heart of Defendants' Non-Copyright Motion is the portion challenging Plaintiff's trade secret claim. The SAC alleges that Defendants misappropriated the following trade secrets from Wyatt:
(1) the customer database; (2) confidential information relating to the finances of Proterion; (3) confidential information relating to research development, manufacturing, suppliers, and distributors of Proterion; (4) confidential information relating to the technical processes of Proterion; (5) confidential information relating to the marketing and distribution agreements of Proterion's products; (6) confidential information relating to types and volumes of products sold to Proterion's customers; (7) confidential information relating to Proterion's strategies and plans as to the pricing of goods sold to Proterion's customers; (8) confidential information relating to Proterion's entire marketing and production plans, including its short term and long term strategy; (9) confidential information relating to knowledge of customer preferences of changes in Proterion's products; (10) confidential information relating to Proterion's plans for new products and changes to existing products; and (11) confidential information relating to Acquired Assets set forth in the Purchase Agreement at ¶ 1.1(c)-(h). SAC ¶ 165. Defendants move for summary judgment on the grounds that (1) the trade secrets Plaintiff identifies do not constitute trade secrets, (2) they are not owned by Plaintiff, and (3) they were not used by Defendants. Non-Copyright Mot. at 4. Plaintiff does not submit any legal analysis or argument on this subject, but appears to address the trade secrets through factual discussion.*fn23
Pursuant to the Uniform Trade Secrets Act, codified in California at California Civil Code § 3426 et seq., a plaintiff may bring a cause of action for monetary relief for "misappropriation." Cal. Civ. Code § 3426.3. As relevant here, "[m]isappropriation" is
(2) Disclosure or use of a trade secret of another without express or implied consent by a person who:
(B) [a]t the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was:
(i) [d]erived from or through a person who had utilized improper means to acquire it; (ii) [a]cquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) [d]erived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use[.]
Cal. Civ. Code § 3426.1(b)(2). The term "improper means" includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Id. § 3426.1(a). And a "trade secret" is information that (1) derives actual or potential independent economic value "from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use" and (2) is the subject of reasonable efforts to maintain its secrecy. Id. § 3426.1(d). California law requires the plaintiff to "identify the trade secret with reasonable particularity." Cal. Civ. Proc. Code § 2019.210. Mere possession of a trade secret does not constitute misappropriation. Central Valley Gen. Hosp. v. Smith, 162 Cal. App. 4th 501, 528-29 (2008).
1. Asset Purchase Agreement
Defendants move for summary judgment on a number of the alleged trade secret claims on the ground that Plaintiff did not acquire the trade secret through the Asset Purchase Agreement. Specifically, Defendants argue that the APA's list of "Acquired Assets," in conjunction with the APA Amendment, provide the limit of what was acquired by Wyatt from Proterion. Section 1.1 of the APA provides:
At the Closing, subject to Section 1.2, Seller shall sell and assign to Buyer, free and clear of all security interests, encumbrances, restrictions on transfer, or adverse claims, and Buyer shall buy from Seller, all of Seller's right, title and interest in the following assets except any assets that constitute Excluded Assets (the "Acquired Assets"):
(a) The physical assets of Proterion effectively conveyed to Seller which are in the possession, custody or control of the Seller, exclusive of office equipment, furniture and related assets located at Proterion's office in Somerset, New Jersey.
(b) The website domain: Proterion.com.
(c) Exclusive rights to all software source and compiled code developed for Proterion, to the extent available to the Assignee.
(d) Exclusive rights to all customer databases, servers, prospective customer databases and servers, etc.
(e) Exclusive rights to all manufacturing software programs and databases relating to the manufacturing, resource and planning for manufacturing any equipment by Proterion.
(f) Exclusive rights to all documentation relating to the fabrication fo such instruments.
(g) Exclusive rights to all Aviv Instrument product drawings, know-how, etc.
(h) All patents and know-how relating to the PWR technology.
Ratner Decl., Ex. 1 (APA) at § 1.1. Defendants note that information regarding finances, technical processing, marketing agreements, strategies and plans as to the pricing of goods, marketing and product plans and strategies, knowledge of customer preferences, and research development, manufacturing, suppliers, and distributors are not specifically listed in the Acquired Assets. Because the Court finds that this information could plausibly be encompassed by (a)-(g), above,*fn24 the Court finds that the APA does not, in and of itself, provide a basis for summary judgment as to various of the trade secret arguments.
2. Protein Solutions Customer Database
With respect to the customer database, Defendants move for summary judgment on the ground that there is no genuine issue of material fact as to whether Defendants used the information in the customer database. Defendants set out in detail evidence supporting their claim that they did not use the customer database. See Mot. at 5-8; Non-Copyright SUF ¶¶ 9, 19-24. Additionally, they argue that each of the bases Plaintiff identifies as supporting its claim (1) does not show that Defendants "used" information and (2) is contradicted by undisputed evidence. Although the Court does not doubt that Defendants have proffered potentially legitimate explanations on which they may yet succeed at trial and have marshaled evidence in support of them, the Court finds that evidence presented by Plaintiff and inferences to be drawn from the entirety of the evidence leave genuine issues of material fact underlying this claim. See, e.g., Collins Decl. ¶ 27. Accordingly, the Court denies summary judgment with respect to the customer database.*fn25
3. Protein Solutions' Financial Information
Plaintiff claims that Defendants misappropriated financial information, specifically financial data "embodied in the Sage software program data files and detailed budgetary data contained in MS Word, Excel, and/or email text formats." Ratner Decl., Ex. 3 at 30:9-12. That information "[i]ncludes detailed historical financial performance by model, territory, and time; cost of goods sold; sales and marketing budgets and performances for comprehensive annual plans incorporating advertising, website, [t]ravel, trade-shows, direct mail, etc." Id. at 30:12-15. In moving for summary judgment on misappropriation of this information, Defendants argue (1) that this information is "too imprecise to constitute trade secrets," Non-Copyright Mot. at 10, and (2) Plaintiff has no evidence that Defendants actually "used" the information.
With regard to the former, the Court finds that summary judgment is not warranted. Plaintiff's responses to interrogatories explain what the information is and why it was valuable and important. See Ratner Decl., Ex. 3 at 30; id., Ex. 5 at 86. A compilation of data, including customer invoices and pricing, can be deserving of trade secret protection. See, e.g., Amerisourcebergen Drug Corp. v. Am. Assoc. Druggists, Inc., 2008 WL 248933, *25 (E.D. Pa. Jan. 29, 2008).
In support of their argument that there is no evidence of use, Defendants note that Plaintiff primarily relies on former Protein Solutions employees' access to certain information, and submit the declarations of Dolak, Mattison, and Nobbman, who state that they never used any information they may have had. In Opposition, Plaintiff points to access at Wyatt. See Collins Decl. ¶ 30. Plaintiff also argues that Dr. Mattison possessed a CD-ROM in his Malvern office containing "an abundance of data related to Proterion matters," see id.; Non-Copyright Opp'n at 8, though the cited evidence lacks foundation, see Defs.' Objections at 84-85; Fed. R. Evid. 602.*fn26 Additionally, Plaintiff points to access that Malvern had through its participation in the bidding process to acquire Proterion assets, see Non-Copyright Opp'n at 8; Collins Decl. ¶¶ 31-32, though this evidence also lacks factual foundation, see Defs.' Objections at 85-86; Fed. R. Evid. 602. Finally, Plaintiff argues that this data must have provided Malvern insight to determining "financial feasability for pursuing new product or market opportunities" because Malvern later entered the market. Opp'n at 9.
The Court cannot find that Plaintiff's showing raises a genuine issue of material fact as to use. In particular, much of Plaintiff's evidence of Defendants' access is submitted without a factual foundation. The remaining evidence -- that the employees had access to this information while at Wyatt and that Malvern later entered the market -- is not sufficient to support use of the information except in a completely speculative manner. The Court therefore grants summary judgment as to the financial information.
4. Confidential Information Relating to Technical Processes
In the category of "technical processes," Plaintiff identifies its trade secrets as "[d]etailed technical procedures and processes associated with design, manufacturing, quality control, etc., of the DynaPro." Ratner Decl., Ex. 3 at 32; see id., Ex. 7.*fn27 For example, Plaintiff claims that Protein Solutions had pre-shipping quality assurance testing processes in which the former Protein Solutions' employees were involved or of which they had knowledge. Ratner Decl., Ex. 7. Through the information contained on the Mattison CD-ROM, the Court finds that Plaintiff has submitted sufficient evidence to establish a genuine issue of material fact as to these issues. Although the Court notes that this evidence does not appear to make a specific connection between the possession of this information and use, the Court finds that the evidence could support reasonable inferences in Plaintiff's favor that would establish this information.*fn28
5. Confidential Information Relating to Marketing and Distribution Agreements
Plaintiff also claims that Defendants misappropriated marketing and distribution agreements, which Plaintiff defines as "past and present agreements between Proterion and their distributors for international marketing and selling of the DynaPro which includes unit volumes; prices; transfer prices (discounts)."
Ratner Decl., Ex. 3 at 33. Defendant argues that Plaintiff has no evidence that Defendants used the information. In support of their arguments, Defendants have submitted the Declarations of Mattison, Dolak, and Nobbmann, who have testified that they did not use the information. In Opposition to the Motion, Plaintiff relies on access to the information while the three employees were at Proterion. Collins Decl. ¶¶ 42-44. Additionally, Plaintiff suggests that Defendants' CD-ROM contains a proprietary agreement. Non-Copyright SGI ¶ 64 (citing Collins Decl. ¶ 45 & Frisenda Decl., Ex. 6). On this point, the Collins Declaration lacks foundation and does not attach the CD, and the Court did not find the particular relevant information in its review of Exhibits 6 and 7 of the Frisenda Declaration. In this situation, moreover, former access to agreements, without more, raises no inference of subsequent use. As far as the Court can tell, Plaintiff has not provided evidence supporting examples of how it proposes Defendants used this information. Accordingly, the Court grants summary judgment as to this issue.
6. Confidential Information Relating to Protein Solutions' Strategies and Plans as to the Pricing of Goods Sold
Plaintiff claims that Defendants misappropriated information related to strategies and plans regarding pricing of goods. In particular, Plaintiff identifies as comprising the trade secret: "[k]nowledge of product prices and underlying strategies and tactics, as well as understanding gross profit margins which may determine lowest selling price." Ratner Decl., Ex. 3 at 35; id.
Ex. 10. Defendants move for summary judgment on a number of grounds.
First, Defendants argue that information as to pricing does not constitute a trade secret because it is not "secret" and because Plaintiff does not derive independent economic value from it. See Cal. Civ. Code § 3246.1(d). In the same vein, Defendants note that Plaintiff did not use Protein Solutions' pricing strategy, which suggests that Plaintiff derived limited economic advantage from it. Ratner Decl., Ex. 24 (Clifford Wyatt Depo.) at 553-55. Defendants submit evidence that Plaintiff "do[es] not, in general, compete on a price basis; we compete on a basis of quality." Ratner Decl., Ex. 26 (Philip Wyatt Depo.) at 652. In fact, Philip Wyatt testified at his deposition that Wyatt's "prices are not intended to be competitive. They're often the highest prices in the field, but that goes with the best products[.]" Id. at 653. Additionally, Defendants have submitted evidence that Protein Solutions customers disclosed competitors' quoted prices to competitors. Ratner Decl., Ex. 22 (Collins Depo.) at 536-37; id., Ex. 24 (Clifford Wyatt Depo.) at 553. Moreover, Defendants submit evidence that Plaintiff does not place any confidentiality restrictions on its customers. Ratner Decl., Ex. 26 (Philip Wyatt Depo.) at 644-45 (Q: "Is there a reverse, a circumstance under which Wyatt would ask the customer to sign a confidentiality agreement to protect any information provided by Wyatt?" A: "I don't think so."); id. at 654:16-25).
Defendants also argue that there is no evidence that Defendants used any information about pricing strategy and profit margins. In particular, Defendants note that it is undisputed that the former Proterion employees did not control pricing at Malvern. Non-Copyright Reply SUF ¶ 26.
Plaintiff does not submit evidence refuting any of this information. Rather, it argues that prices are not the entirety of the alleged trade secret; rather, it further encompasses "strategies" and an understanding of profit margins. Plaintiff points to (1) a conclusory suggestion of access in the bidding process for Proterion and (2) a conclusory statement that, at Protein Solutions, "Dolak was involved in discussion regarding product model pricing [and] Nobbman was aware of distributor pricing[.]" Collins Decl. ¶ 46.
The Court finds no genuine issue of material fact as to trade secret misappropriation of pricing information. The undisputed facts show that actual prices were not secret, Wyatt did not use Protein Solutions' pricing strategy, and the former employees did not disclose any information they may have known to Malvern. Additionally, Plaintiff's only evidence purportedly refuting these facts is too conclusory to raise a genuine issue in the face of Defendants' detailed evidence. See F.T.C. v. Publ'g Clearing House, Inc., 104 F.3d 1168, 1171 (9th Cir. 1997)("A conclusory, self-serving affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine issue of material fact."). The Court therefore grants summary judgment as to this issue.
7. Marketing and Product Plans and Strategies
Plaintiff claims that Defendants misappropriated marketing and product plans and strategies. Specifically, Plaintiff describes the alleged trade secret as "[d]etailed marketing and promotion plans and strategies contemplated or implemented for the successful generation of revenue and profile; for creating and dominating a market segment." Ratner Decl., Ex. 1 at 37. It "[i]ncludes detailed information on the trade shows attended as well as detailed website design and other advertising including direct mail as part of the integrated marketing plan." Id. Plaintiff points to web advertising (including the identification of top search terms like "dynamic light scattering") and trade shows as confidential marketing strategies. Through the Collins Declaration, Plaintiff explains that Dolak was webmaster at Protein Solutions and therefore knew the key search terms, which he later used to direct traffic to the Malvern site and his site. Collins Decl. ¶¶ 54-56.
Defendants move for summary judgment on the basis that none of the strategies identified are secret. Participation in an industry conference is an inherently public approach, even if Malvern only attended after it hired Dolak. Additionally, relevant search terms of the light scattering industry and other keywords are publicly disclosed and publicly accessible. See Ratner Decl., Ex. 26 (Philip Wyatt Depo.) at 617 (website is public), 640-41 (other competitors use the phrase "dynamic light scattering" on their websites); id. at Ex. 12 at 141 (Google search showing that other competitors also advertise through keywords identified by Plaintiff). The Court agrees with Defendants that such strategies cannot be considered trade secrets as a matter of law. As Plaintiff has not identified any further allegations or evidence supporting this trade secret claim, the Court grants summary judgment on this claim.
8. Knowledge of Customer Preferences
Plaintiff claims that Defendants misappropriated trade secrets related to customer preference. Plaintiff defines the trade secret as constituting "[d]etailed feedback via information gathered from the field sales and support team, as well as by confidential market surveys, providing a better understanding of customer needs and requirements." Ratner Decl., Ex. 3 at 38. According to Plaintiff, "[t]hese data are utilized to produce new products, software, support materials, etc. for the purpose of capturing and maintaining market share vis-a-vis a stronger competitive position." Id.
Defendant moves for summary judgment on two basic grounds. First, Defendant argues that customer preferences do not constitute a trade secret for Plaintiff because customers can and do disclose information relating to their own preferences and requirements. The Court is not convinced that summary judgment is appropriate on the basis of this argument. The compilation of this data could be considered a trade secret. Defendants' cited authorities address these issues under a different standard.
Second, Defendant argues that Plaintiff has not presented evidence establishing a genuine issue of material fact as to "use." Plaintiff bases its claim on (1) Dolak's former position with Protein Solutions, which included sales and marketing and helping to design the questionnaires; (2) the fact that the ZetaSizer Nano and its software incorporate similar features as the DynaPro based on customer preferences; and (3) the fact that customer preference information was contained on Dr. Mattison's CD-ROM and had information such as a design for a Japanese customer that was later incorporated in the Malvern ZetaSizer Nano.*fn29 Although the Court agrees with Defendants that the evidence of actual use is perhaps weak, the Court finds that it is sufficient to create a genuine issue of material fact and declines to grant summary judgment on this issue.
9. Planned Changes in Products
Plaintiff also claims that Defendants misappropriated trade secrets regarding planned product changes. Plaintiff defines the trade secret as embodied in "[d]etailed schedules defining courses of action and their priorities related to the implementation of new products and features, typically based upon customer preferences, for the purpose of generating revenue growth or maintaining market share." Id. at 39.*fn30
Defendants specifically address four products Plaintiff appears to claim were misappropriated trade secrets. With respect to Protein Solutions' purported plans to develop a plate sampler and prototype for a plate reader, the Court finds that there is no triable issue as to that product. See Non-Copyright Mot. at 18, 19; Non-Copyright Reply SUF ¶¶ 30, 34, 35. The Court finds that summary judgment is warranted as to Protein Solutions' cuvette information because Plaintiff has not submitted evidence establishing a triable issue. See id. at 19; Non-Copyright Reply SUF ¶ 29. With respect to the Protein Solutions' Software, the Court finds that there are genuine issues of material fact, in light of Plaintiff's argument regarding the solvent builder. Although Plaintiff's inferential steps may not ultimately be convincing, it is not the Court's role to weigh evidence. To the extent Defendants move on other portions of the software, the Court agrees that there is no genuine issue of material fact. With respect to the Protein Solutions' Bias Adaptor, the Court also finds that Plaintiff has not presented any evidence establishing a genuine issue of material fact.
Thus, the Court grants in part and denies in part this portion of the Motion.
10. Confidential Information Relating to Types and Volumes of Products Sold to Customers
Plaintiff also claims that Defendants misappropriated confidential information regarding types and volumes of products sold to customers. Plaintiff defines this trade secret as "[h]istorical data showing the unit and dollar sales volume for each product, model, accessory, etc." Ratner Decl., Ex. 3 at 25. Relying on the declarations of the former Proterion employees now working for Malvern, Defendant argues that this claim fails because those defendants did not use or disclose information in this category after their employment with Protein Solutions ended. Non-Copyright Mot. at 20. Although Plaintiff does not separately address this claim, because the Court finds that evidence going to this claim is largely coextensive with evidence going to the customer database claims, the Court finds summary judgment inappropriate.
11. Confidential Information Relating to Research Development, Manufacturing, Suppliers, and Distributors
Plaintiff also claims that Defendants misappropriated confidential information relating to research and development, manufacturing, suppliers, and distributors. Plaintiff defines this category as "[d]etailed knowledge of R&D projects; manufacturing bills of materials (i.e., parts required to make the product); suppliers of certain components as well as the detailed specifications of these components which are not always published; historical quality control issues, distributors and their strategies." Ratner Decl., Ex. 3 at 32.
With respect to misappropriation of R&D projects and software/firmware issues, the Court grants in significant part and denies in small part the motion as described above in subsection III(B)(9). See Ratner Decl., Ex. 26 (Philip Wyatt Depo.) at 662:17-25. Defendants otherwise move for summary judgment on the ground that the employees claim they did not use or disclose any of this information after their employment ended. With respect to any remaining claims, the Court finds that Plaintiff has presented no triable issue of material fact as to this information. See Non-Copyright Opp'n at 9-10; Collins Decl. ¶¶ 33-34.
Thus, the Court grants in part and denies in part the motion with respect to Plaintiff's trade secret claim. The Court grants summary judgment with respect to financial data, marketing and distribution agreements, pricing information, marketing and product plans and strategies, and R&D. The Court grants in part and denies in part summary judgment with respect to product development. The Court denies the motion with respect to customer database information, technical processes, customer preferences, and volume and types of sales to customers.
C. Twelfth Claim for Relief: Intentional Interference with Economic Advantage
Defendants next move for summary judgment on Plaintiff's claim for intentional interference with economic advantage. SAC ¶¶ 174-79. To succeed on a claim for tortious interference with prospective economic advantage, a plaintiff must establish the following elements: (1) the existence of a specific economic relationship between the plaintiff and third parties that may economically benefit the plaintiff; (2) knowledge by the defendants of that relationship; (3) intentional acts by the defendants designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) damages to the plaintiffs. Rickards v. Canine Eye Registration Found., Inc., 704 F.2d 1449, 1456 (9th Cir. 1983). The tort "initially requir[es] proof the business relationship contained the probability of future economic relationship"--the tort is inapplicable to "hypothetical relationships" not developed at the time of the allegedly tortious acts. Westside Center Assoc. v. Safeway Stores 23, Inc., 42 Cal. App. 4th 507, 522 (1996) (it must be "reasonably probable that the prospective economic advantage would have been realized but for defendant's interference"). Additionally, a plaintiff must prove that the defendants' interference with prospective economic relations "was wrongful 'by some other measure beyond the fact of interference itself.'" Silicon Knights, Inc. v. Crystal Dynamics, Inc., 983 F. Supp. 1303, 1311 (N.D. Cal. 1997) (quoting Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 393 (1995)). Defendants first argue that Plaintiff has no evidence of a "reasonably probable future economic benefit" from the customers it identifies. Defendants have submitted evidence in the form of deposition testimony from various Wyatt employees discussing current and potential clients, obtaining business, and competitors in the industry. See Non-Copyright SUF ¶ 37. Plaintiff has submitted no evidence addressing a reasonably probable future benefit,*fn31 though some of the evidence submitted by Defendants could be read in Plaintiff's favor to explain why customers would be better suited to choose either Malvern or Wyatt products. As Plaintiff's evidence addresses no specific relationship with any specific customer and consists entirely of general statements, Plaintiff's evidence does not create a genuine issue of material fact as to why Plaintiff had a "reasonably probable future economic benefit" from any of them, as opposed to simply competing for business with competitors.*fn32 Accordingly, the Court grants Defendants' motion on this ground. The Court need not address Defendants' alternative argument that Plaintiff cannot demonstrate that Malvern engaged in an independently wrongful act. See Mot. at 23-24.
D. Thirteenth Claim for Relief: California's Unfair Competition Law
Defendants also move for summary judgment on Plaintiff's Thirteenth Claim, which seeks recovery under California's unfair competition law, California Business and Professions Code §§ 17200, 17500 ("UCL"). As Defendants explain, Plaintiff's UCL claim is derived from its other claims -- the Lanham Act, trade secret misappropriation, etc. Because the Court has not considered the merits of Plaintiff's Lanham Act claim (which was not raised in Defendants' Motion), the Court finds summary judgment inappropriate on this claim.
E. Fourteenth Claim for Relief: Accounting
Because accounting can be an appropriate part of a plaintiff's remedy in Lanham Act cases, see Healthport Corp. v. Tanita Corp. of Am., 563 F. Supp. 2d 1169, 1182 (D. Or. 2008), the Court denies Defendants' Motion on this ground.
Thus, the Court grants in part and denies in part the Non-Copyright Motion for Summary Judgment.
For the foregoing reasons, the Court grants in part and denies in part the motions. The Court denies Plaintiff's Rule 56(f) request. The Court grants in significant part the Copyright Motion, and grants in part and denies in part the Non-Copyright Motion. Where the Court denies Defendants' Motions, it does so without prejudice.
IT IS SO ORDERED.