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Jobscience, Inc v. Cvpartners, Inc.

United States District Court, Ninth Circuit

January 9, 2014

JOBSCIENCE, INC, Plaintiff,
v.
CVPARTNERS, INC, et al., Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS FIRST AMENDED COMPLAINT

WILLIAM ALSUP, District Judge.

In this copyright infringement action involving a recruiting software license, defendants move to dismiss all claims in the first amended complaint under FRCP 12(b)(6). For the reasons stated below, the motion is GRANTED IN PART AND DENIED IN PART.

STATEMENT

Plaintiff Jobscience, Inc. develops and licenses recruiting software applications. Defendants are individuals and entities alleged to have copied Jobscience's software application, which was licensed to defendant CVPartners, Inc. The theory in the operative first amended complaint (Dkt. No. 15) is that:

Defendants licensed Jobscience's software application and then conspired to misappropriate Plaintiff Jobscience's proprietary and confidential trade secrets, by gaining access through fraud and deceit, intentionally copying Jobscience software, recreating infringing software applications, creating alter ego limited liability companies to shield themselves, and then selling the product of their conspiracy for illicit financial gain to the detriment of Jobscience.

(Compl. ¶ 1).

According to the complaint, plaintiff created a software application called "Jobscience;" the relevant additions include JS 2 Jobscience Recruiting Package Version 4.01.19 (2012) and JS 2 Jobscience Recruiting Package Version 2.01 (2009), both subjects of copyrights. In September 2010, defendant CVPartners executed a Master Agreement, with a End User License and Agreement (EULA), to license plaintiff's software application. The agreement was renewed in August 2011. The complaint alleges that defendant Brandon Metcalf, formerly Senior Director of Technology at CVPartners:

fraudulently induced Plaintiff to give him access to Jobscience software code, processes and methods, by requesting such access under the guise that he would access such code for the purpose consistent with the Agreement and the confidentiality provisions thereof. Metcalf gained access to Plaintiff's trade secrets consisting of software code and other proprietary information.... After accessing the code through fraudulent means, by misrepresenting his intent and purpose, Defendants reverse engineered, copied and converted for Defendants' own use, the Jobscience copyrighted software application and its elements.

(Compl. ¶ 27). In November 2011, defendant Skipan SAAS LLC was formed, with Brandon Metcalf as COO. In January 2012, defendant Skipan LLC was formed. "[I]n a matter of months, Defendants were allegedly able to create and market a software application that took Jobscience several years and millions of dollars in investment to create and perfect." In August 2012, CVPartners provided notice that they were terminating the license. Plaintiff thereafter discovered a "replica of the Jobscience job board" on CVPartners' website. "The job board, which was one of the functional elements of Plaintiff's software solution, was so similar to Jobscience that Jobscience's own employees were fooled to believe that the Jobscience job board was still up on the CVPartners website" (Compl. ¶¶ 21, 22, 24, 25, 28, 30, 34, 35).

The complaint alleges thirteen claims for relief: (1) copyright infringement, (2) breach of contract, (3) intentional interference with economic relations, (4) negligent interference with economic relations, (5) misappropriation of trade secrets, (6-7) unfair competition, (8) fraud and deceit, (9) negligent misrepresentation, (10) conversion, (11) breach of the implied covenant of good faith and fair dealing, (12) conspiracy, and (13) constructive trust.

On December 3, defendants moved to dismiss with prejudice all claims, as well as "the assertion of alter-ego liability" in the first amended complaint pursuant to FRCP 12(b)(6).

ANALYSIS

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949-50 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when there are sufficient factual allegations to draw a reasonable inference that the defendants are liable for the misconduct alleged. While a court "must take all of the factual allegations in the complaint as true, " it is "not bound to accept as true a legal conclusion couched as a factual allegation."

COPYRIGHT INFRINGEMENT (COUNT I).

Defendants argue that the complaint fails to state a claim for copyright infringement. To plead copyright infringement, plaintiff must plead (1) ownership of a valid copyright and (2) copying of protected expression by the alleged infringers. See Feist Pubs., Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The second element may be established by showing that the works in question are substantially similar in their protected elements and that the alleged infringers had access to the copyrighted works. Rice v. Fox Broad. Co., 330 F.3d 1170, 1174 (9th Cir. 2003).

The parties do not dispute that the first element is adequately pled. Jobscience obtained copyright certificates for JS 2 Jobscience Recruiting Package Version 4.01.19 and JS 2 Jobscience Recruiting Package Version 2.01.

The issue is whether the second element is adequately pled. Defendants argue that the complaint fails to allege (1) what each defendant allegedly infringed and how their actions constitute infringement, (2) access to works entitled to copyright protection, and (3) virtual identity of works entitled to copyright protection (Br. 5-7). Defendants also argue that plaintiff's concede that the job board "was one of the functional elements of Plaintiff's software solution" and functional elements of software are not ...


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