United States District Court, N.D. California
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS
MAXINE M. CHESNEY, District Judge.
Before the Court is defendant ATopTech, Inc.'s ("ATopTech") "Motion to Dismiss Counts XI and XII of Synopsys, Inc.'s Amended Complaint, " filed October 15, 2014, by which ATopTech seeks dismissal, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, of two claims, breach of contract and breach of the implied covenant of good faith and fair dealing, as set forth in plaintiff Synopsys, Inc.'s ("Synopsys") Amended Complaint ("AC"). Synopsys has filed opposition, to which ATopTech has replied. Having read and considered the papers filed in support of and in opposition to the motion, the Court hereby rules as follows.
I. Breach of Contract
A. Breach Allegations
1. Copying and Unauthorized Use
In its AC, Synopsys, as in its initial complaint, alleges ATopTech breached the parties' Connections Program License Agreement ("CPLA") by "cop[ying] PrimeTime and GoldTime input and output formats into [ATopTech's] Aprisa user documentation and software" (AC ¶ 35) and "possessing and using proprietary PrimeTime and GoldTime input and output formats and other proprietary confidential information following the CPLA's termination" (id. ¶ 99). In its prior order, the Court found Synopsys' allegations of copying impermissibly vague and conclusory to the extent Synopsys did not identify the "other" information that allegedly was copied. (See Order Granting in Part and Denying in Part Defendant's Motion to Dismiss ("Order"), filed October 24, 2013, at 29:14-18.) In that regard, the AC provides no additional specificity.
Accordingly, for the reasons stated in the Court's prior order, the AC is subject to dismissal to the extent it alleges a breach based on the copying or use of "other proprietary information."
By the same order, however, the Court found the complaint sufficiently alleged copying of GoldTime and PrimeTime input and output formats. (See Order at 29:11-14, 20-23). As to those allegations, ATopTech argues the CPLA prohibits copying and use only for purposes other than those allowed therein, that the AC includes no facts identifying any such prohibited use, and, further, that the input and output formats are not confidential information because all such material, as Synopsys alleges (see AC ¶¶ 23-24), was publicly filed with the Copyright Office. As set forth in the Court's prior order, Synopsys has alleged sufficient facts to show copying and use, and, given the CPLA's provision precluding ATopTech from "mak[ing] copies... without the prior written consent of [Synopsys]" (see Alexander Decl., filed October 15, 2014, Ex. A, Section 3.2(viii)), whether such conduct was or was not in accordance with the CPLA's provisions is a factual dispute not properly subject to resolution on a motion to dismiss. See Newcal Indus., v. Ikon Office Solution, 513 F.3d 1038, 1051 (9th Cir. 2008) (holding dismissal under Rule 12(b)(6) improper where argument in support thereof "hinge[d] on factual disagreements rather than legal deficiencies"). The Court agrees, however, that any information filed with the Copyright Office is no longer confidential. See KEMA, Inc. v. Koperwhats, No. C-09-1587 MMC, 2010 WL 726640, at *4 (N.D. Cal. Mar. 1, 2010) (rejecting argument that, in light of Copyright Office's restrictions on access and copying, source code submitted to Copyright Office remained protected as trade secret).
Accordingly, the AC is not subject to dismissal to the extent it alleges a breach by ATopTech's copying and unauthorized use of proprietary GoldTime and PrimeTime input and output formats prior to Synopsys' filing such material with the Copyright Office, and is subject to dismissal to the extent it alleges a breach after the time of such filing.
In its AC, Synopsys alleges ATopTech breached the CPLA by "disclosing to its customers Synopsys' proprietary PrimeTime and GoldTime input and output formats" (AC ¶ 97). As in its initial complaint, Synopsys alleges it is in possession of Aprisa documentation "revealing that Aprisa includes proprietary PrimeTime and GoldTime input and output formats" in its software and user documentation (see id. ¶ 35). In response to the Court's prior order dismissing such claim, Synopsys has added an allegation that ATopTech "distributes" such software and user documents to its customers. (See id. ¶ 97). The Court finds Synopsys' allegations now suffice to support its claim of breach based on disclosure. Further, as set forth above, and contrary to ATopTech's argument, the AC sufficiently alleges such formats were confidential prior to Synopsys' filing them with the Copyright Office.
Accordingly, the AC is not subject to dismissal to the extent it alleges a breach by ATopTech's disclosure of proprietary PrimeTime and GoldTime input and output formats prior to Synopsys' filing such material with the Copyright Office.
3. Reverse Engineering
In its AC, Synopsys, for the first time, alleges ATopTech breached the CPLA by "using reverse engineering of Synopsys' GoldTime software." (AC ¶ 36.) In support thereof, Synopsys alleges ATopTech advertises its product, Aprisa, as having "excellent correlation with sign-off timing' and a tight correlation' with Synopsys' PrimeTime software" (id.), and further alleges, "on information and belief, " that such degree of ...