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Flextronics International, Ltd. v. Parametric Technology Corp.

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

May 28, 2014

FLEXTRONICS INTERNATIONAL, LTD. and FLEXTRONICS INTERNATIONAL USA, INC. Plaintiffs,
v.
PARAMETRIC TECHNOLOGY CORPORATION, Defendant.

ORDER GRANTING-IN-PART DEFENDANT'S MOTION TO DISMISS (RE: DOCKET NO. 168)

PAUL S. GREWAL, Magistrate Judge.

Defendant Parametric Technology Corporation once again moves to dismiss Plaintiff Flextronics International's claims under the Computer Fraud and Abuse Act, [1] Flextronics' claims under the California Computer Data Access And Fraud Act, [2] and Flextronics' common law claims for trespass to chattels and conversion. This court previously granted PTC's motion to dismiss Flextronics' original complaint.[3] The parties appeared for a hearing. Having considered the parties' respective arguments, the court GRANTS PTC's motion, but only IN-PART.

I. BACKGROUND

In 1998, Flextronics and PTC executed an "Enterprise Agreement, " which granted Flextronics a license to use PTC's software on its computers. It did so, and for over a decade, the two companies lived in harmony. Then, on July 26, 2012, PTC informed Flextronics that it had become aware of numerous unauthorized copies of the software in use on Flextronics' machines and was gravely concerned about these "cracked copies" being used in violation of the license agreement.[4] Flextronics began investigating these claims, and in the course of doing so, discovered that PTC had "concealed certain embedded technology in the PTC software" that it was using to access, obtain and transmit information in, from and about Flextronics' system back to PTC.[5] Less than a month after this discovery, Flextronics filed suit against PTC for various computer crimes, as well as for a declaratory judgment of non-infringement of copyright and performance on the Enterprise Agreement.[6] PTC denied Flextronics' allegations and countered with its own claims for copyright infringement and breach of contract.[7]

After an extended hearing on the matter, the court granted PTC's motion for a preliminary injunction, [8] as well as its first motion to dismiss.[9] In granting PTC's motion to dismiss, the court held that two sentences of conclusory allegations were insufficient to sustain a six-count complaint.[10] Consistent with the court's order, on February 4, 2014, Flextronics filed an amended complaint that is the subject of the present motion.

II. LEGAL STANDARDS

A. Article III Standing

To satisfy Article III, a plaintiff "must show that (1) it has suffered an injury in fact' that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision."[11] A suit brought by a plaintiff without Article III standing is not a "case or controversy, " and an Article III court lacks subject matter jurisdiction over the suit.[12] In that event, the suit should be dismissed under Fed. R. Civ. Pro. 12(b)(1).[13]

The injury required by Article III may exist by virtue of "statutes creating legal rights, the invasion of which creates standing."[14] In such cases, the "standing question... is whether the constitutional or standing provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief."[15] At all times the threshold question of standing "is distinct from the merits of [a] claim" and does not require "analysis of the merits."[16] The Supreme Court also has instructed that the "standing inquiry requires careful judicial examination of a complaint's allegations to ascertain whether the particular plaintiff is entitled to an adjudication of the particular claims asserted."[17]

B. Rule 12(b)(6)

A complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief."[18] If a plaintiff fails to proffer "enough facts to state a claim to relief that is plausible on its face, " the complaint may be dismissed for failure to state a claim upon which relief may be granted.[19] A claim is facially plausible "when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."[20] Accordingly, under Fed.R.Civ.P. 12(b)(6), which tests the legal sufficiency of the claims alleged in the complaint, "[d]ismissal can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."[21] "A formulaic recitation of the elements of a cause of action will not do."[22]

On a motion to dismiss, the court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party.[23] The court's review is limited to the face of the complaint, materials incorporated into the complaint by reference, and matters of which the court may take judicial notice.[24] However, the court need not accept as true allegations that are conclusory, unwarranted deductions of fact, or unreasonable inferences.[25]

"Dismissal with prejudice and without leave to amend is not appropriate unless it is clear... that the complaint ...


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