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Servicenow, Inc. v. Stonebranch, Inc.

United States District Court, Ninth Circuit

December 20, 2013

SERVICENOW, INC., Plaintiff,
v.
STONEBRANCH, INC., Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION

RICHARD SEEBORG, District Judge.

I. INTRODUCTION

The subject of this copyright infringement action is certain computer software produced by plaintiff ServiceNow, Inc. known as "Glide." ServiceNow describes Glide as "uniquely user-friendly architecture that allows users with little or no computer programming training to develop their own applications." ServiceNow previously licensed copies of Glide to Opswise Software, a California-based company. Through a two-step merger process, Opswise was dissolved and its assets and operations eventually became part of defendant Stonebranch, Inc., which undisputedly uses elements of Glide in its own software and services products, still known as "the Opswise Automation Center."

Stonebridge contends it is not subject to personal jurisdiction in this forum and moves to dismiss on that basis. ServiceNow seeks a preliminary injunction against Stonebridge's continued use of Glide.

Stonebridge obtained the software in dispute by acquiring Opswise, a California-based company, and even relies on the Opswise license as a defense to infringement, a license agreement originally formed between California entities and expressly governed by California law. These circumstances are sufficient to support jurisdiction over Stonebridge in California. The motion to dismiss will therefore be denied.

The motion for a preliminary injunction presents a somewhat closer call. Stonebridge admits it is using Glide, and, for purposes of this motion, does not contest copyrightability. Its arguments that it has a license, express or implied, and/or that Opswise has waived its infringement claims, are less than compelling. Those contentions, however, present at least some factual uncertainty weighing against the grant of a preliminary injunction. Additionally, while ServiceNow may have the right in the abstract to block any use of its software, the question arises as to its ability to withhold consent to assignment of the Opswise license to Stonebridge under the circumstances here.

Of greater import on the question of irreparable harm is ServiceNow's failure to act more promptly, coupled with the absence of an adequate evidentiary showing as to the likelihood of the claimed harms. Combined with other facts suggesting that the injury to ServiceNow lies in not receiving royalties, as opposed to being injured by the mere use of Glide, monetary damages likely will be sufficient even if liability is proven. Accordingly, the motion for a preliminary injunction must also be denied.

II. BACKGROUND

ServiceNow describes itself as "a leading provider of information technology service management software that allows customers to lower their operational costs and enhance efficiency." It offers a suite of applications based on its Glide platform. As noted above, that platform is designed to allow users with little or no computer programming training to develop their own applications. As also noted above, ServiceNow has registered copyrights in the software, the validity of which Stonebridge does not challenge, for purposes of these motions.

ServiceNow originally licensed its Glide software to JME Software, LLC, for development of a specific product line of software applications. In 2008, ServiceNow consented to the partial assignment of that license to Opswise in connection with Opswise's asset purchase of that product line. That agreement provided that Opswise would be bound by the same duties, liabilities, and obligations specified in the original license.

In January of 2011, defendant Stonebranch's parent holding company (SB Holdings International, Inc.) created a wholly-owned merger subsidiary (Opswise Acquisition Company) to merge with Opswise and be the post-merger surviving entity. In December of that year, in what Stonebranch characterizes as a "separate transaction, " Opswise Acquisition Company was merged into Stonebranch.

Based on these facts, ServiceNow contends "Stonebranch devised a corporate transaction in 2011 to gain access to ServiceNow's software-without ever compensating ServiceNow-while extinguishing Opswise's separate corporate existence." In addition to denying any wrongful intent, Stonebranch argues that it was not even a party to the merger that ended Opswise's existence as a California entity, and that the merger it later effected in December was with a fellow Georgia-based company.[1]

The parties dispute the extent to which they are competitors. ServiceNow insists that Stonebranch's products compete with some of ServiceNow's offerings, and Stonebranch's distribution of unauthorized versions of the Glide ...


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