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Ximpleware, Inc. v. Versata Software, Inc.

United States District Court, N.D. California, San Jose Division

May 16, 2014

XIMPLEWARE, INC., Plaintiff,
v.
VERSATA SOFTWARE, INC., et al., Defendants.

ORDER GRANTING-IN-PART DEFENDANTS' MOTIONS TO DISMISS (RE: DOCKET NOS. 25, 33, 38, 39)

PAUL S. GREWAL, Magistrate Judge.

Think of the millions of lines of source code licensed in this country and around the world under the terms of version 2 of Richard Stallman's GNU General Public License. And yet it appears that only one court has yet to weigh in on an elementary question arising from the license: what does it mean to distribute? Before the court are four motions to dismiss that place that question front-and-center. The motions are brought by Defendants: (1) Ameriprise Financial, Inc. and Ameriprise Financial Services, Inc.;[1] (2) United HealthCare Services, Inc.;[2] (3) Pacific Life Ins. Co., the Prudential Ins. Co. of America, Wellmark, Inc. and Aviva USA Corp.[3] and (4) Versata Software, Inc., Trilogy Development Group, Inc. and Aurea Software, Inc.[4] Plaintiff XimpleWare, Inc. opposes each motion, and the parties appeared for a hearing.[5] After considering the arguments, both at the hearing and in the papers, the court adopts in its entirety Judge Ilston's recent conclusion that the kind of source code distribution alleged here can establish a breach of the GPL sufficient to render the use of code unlicensed. But distribution by one customer is not distribution by all. The motions are therefore GRANTED, but only IN-PART.

I. BACKGROUND

A. The Parties

Plaintiff XimpleWare is a California corporation based in Milpitas engaged in the design, development and distribution of computer software.[6] XimpleWare spent over a decade developing and fine-tuning its copyrighted software product, known as "VTD-XML" or "VTD XML Extended" (collectively, the "Product"), which reads and parses XML code more efficiently and faster than alternative XML parsers. Efficiency and speed are critical in many applications of XML, especially in large scale enterprise data interchange applications where entire server computers are dedicated to handling streams of XML data. If XML data can be processed faster, then fewer servers are needed, less leased space in data centers is needed for those servers, and less energy is required to power those servers-altogether greatly reducing computing needs and costs.[7]

XimpleWare made the business decision to license the Product and related source code under an "open source" license known as the GNU General Public License version 2. The GPL requires, among other things, that: (1) any changes made to the code carry notices stating that the files were changed, and the dates of all changes; (2) any code created or derived from GPL-protected code must also be licensed under the GPL; (3) copyright notices must print or display when the code is run; and (4) when distributed, the program must be accompanied by the complete machine-readable source code.[8] All four conditions must be met, [9] and the GPL requires strict compliance.[10]

XimpleWare is the owner of all right, title, and interest in various patents related to the Product and related source code, including U.S. Patent Nos. 7, 133, 857, 7620, 652, and 7, 761, 459.[11] The first patent at issue (the 857 Patent), filed in 2002 and issued in 2006, is titled "Processing Structured Data, " and contains 43 claims (including 7 independent claims) covering methods, apparatuses, and program storage devices for "efficiently processing a structured data file" or "efficiently processing structured data"-including XML. The 652 Patent, filed in 2006 and issued in 2009, contains 35 claims (including 8 independent claims) for methods, apparatuses, and program storage devices, and focuses on efficiently processing structured data like XML. The 459 Patent, filed in 2006 and issued in 2010, contains 24 claims (including 4 independent claims) for methods, apparatuses, hardware devices, and program storage devices, and again focuses on efficiently processing structured data like XML.

Versata is a Delaware corporation with its principal place of business in Austin, Texas.[12] Trilogy, the parent of Versata, is a California corporation that shares a principal place of business with Versata in Austin.[13]

Aurea is a California corporation that merged with Trilogy and Versata and is believed to also be based out of Austin.[14]

Ameriprise Financial, Inc. and Ameriprise Financial Services, Inc. are Delaware corporations with their principal place of business in Minneapolis.[15] Ameriprise is one of Versata's customers.

Pacific Life is a Nebraska corporation with its principal place of business in Newport Beach, California.[16]

United HealthCare is a Minnesota corporation focused on managed health care with its principal place of business in Minnetonka, Minnesota.[17]

MetLife is a New York corporation that provides insurance, annuities and employment benefit programs with its principal place of business in Manhattan.[18]

Prudential is a New Jersey corporation that provides insurance and financial services out of its principal place of business in Newark.[19]

Wellmark is an Iowa insurance corporation that operates as Blue Cross and Blue Shield of Iowa with a principal ...


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