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Actuate Corporation v. Construction Specialties

June 8, 2012


The opinion of the court was delivered by: Claudia Wilken United States District Judge


Defendant Construction Specialties, Inc. (CS) moves for partial summary judgment as to Plaintiff Actuate Corporation's 14 claims based on CS's alleged failure to pay a license transfer 15 fee, pursuant to its agreement to license Actuate software, when 16 it transferred that software from one server to another. Docket 17 No. 31. Actuate opposes the motion for partial summary judgment 18 and moves for leave to amend its complaint to add allegations 19 based on facts purportedly uncovered during the course of 20 discovery. Docket No. 34. Defendant opposes that motion. Having 21 considered all of the parties' submissions and oral argument, the 22 Court grants CS's motion for partial summary judgment, and 23 Actuate's motion for leave to amend is granted in part and denied 24 in part. 25


Actuate owns and licenses software developed to meet the 27 needs of large business enterprises. CS is engaged in the 28 manufacture of specialty architectural products. Actuate offers 2 licenses for use of its software on a "per CPU" basis for 3 unlimited users or on a "Named User" basis for a specified number 4 of users. A CPU is defined as a single core of a single processor 5 on a single machine. 6

On May 21, 1999, CS purchased, for the first time, a single CPU license for Actuate's software. Declaration of Dylan Boudraa 8 in Support of Actuate's Opp. to CS's Mot. for Summ. J., ¶ 6. The 9 license agreement, dated March 8, 1999, contained a "No copies" 10 provision under section 1.03. Id. at ¶ 6 and Ex. B. It stated, No copies. Except as expressly allowed by the terms of this license, You shall not copy or modify any portion of the Software other than that You may make (1) copy of the computer program portion of the Software solely for archival or backup purposes. Id. at Ex. B.

On September 13, 2000, CS purchased another CPU license, for a 16 total of two. The software under both CPU licenses was installed 17 on a single two-CPU server, referred to as the old production 18 server. On March 17, 2004, CS obtained a new production server. 19

On July 11, 2004, CS installed the Actuate software, residing on 20 the old production server, onto the new one. Declaration of Craig 21 S. Hilliard in Support of CS's Mot. for Summ. J., Ex. J, Forensic 22 Analysis Summary Report. 23 Licensing agreements dated July 13, 2003 and June 10, 2004 24 applied to the Actuate software on the new production server 25 through the remainder of 2004. The "No copies" provision in 26 section 1.03 in both agreements was the same as that quoted above. 27

Boudraa Dec., Exs. E and F. Actuate concedes that section 1.03 of 28 the license agreements "remained relatively unchanged" from May 2 21, 1999 to May 15, 2005. Boudraa Dec. at ¶ 8. For the purpose 3 of this motion, the agreements with the identical section 1.03 are 4 referred to as the Version Seven agreement. 5 CS does not dispute that on July 12, 2005, it upgraded its

Actuate software to Version 8SP1. At the time of the upgrade, CS 7 accepted a license agreement dated May 15, 2005. Section 1.4 of 8 the agreement required that, 9

Prior to the initial installation of any Software, You shall notify Actuate in writing in accordance with the procedure set forth at http://www.actuate/license of the model name and number, location, CPU speed, and CPU type of the server on which any server component of the Software is to be installed. Once installed, You must obtain Actuate's written consent before You move any Software from any CPU to another CPU, which may be subject to a CPU upgrade transfer license fee . . . If Actuate grants its consent, You may reinstall the Software on the new CPU on the condition that You delete the Software from the previous CPU within five (5) days of successful installation. Boudraa Dec., Ex. F.

However, Actuate has not produced any evidence that, at any 18 time after July 12, 2005, CS moved its software from one CPU to 19 another, such that it would have been required to pay a license 20 transfer fee pursuant to the software licensing agreement. 21 2 causes of action for copyright infringement and for breach of 23 contract. It alleged that it held rights and title to federally 24 registered copyrights covering its Actuate 10 software and earlier 25 versions thereof. Compl. at ¶ 9. Although Actuate's complaint 26 alluded to the existence of multiple licensing agreements with CS 27 over the years, the sole licensing agreement discussed in detail 28

On October 1, 2010, Actuate filed suit against CS, alleging

in the complaint was the May 15, 2005 agreement that pertained to 2 Version 8SP1 of Actuate's software.*fn1 3

Actuate alleged that CS breached the terms of the "License

Agreement" by: 5

* Authorizing and/or distributing content generated by the Copyrighted Work to 687 users of various capacities, well in excess the 6 Named User licenses it had purchased;

* Operating the Copyrighted Work on an unlicensed CPU;

* Transferring the Copyrighted Work from one server to another without paying for license transfer fees specified in the License Agreement;

* Making unauthorized copies of the Copyrighted Work;

* Installing at least one update without paying the required maintenance fees as provided under the License Agreement.

Compl. at ¶ 16. 16

The complaint's copyright infringement claim alleges that CS 17 reproduced, displayed, and ...

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