United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTION TO DISQUALIFY COUNSEL
LUCY H. KOH, District Judge.
Plaintiffs Evgeny Epikhin ("Epikhin") and Dmitri Redlikh ("Redlikh") (collectively, "Plaintiffs") bring suit against defendants Game Insight North America, Game Insight, and GIGL (collectively, "Game Insight") and Game Garden, LLC ("Game Garden") (together, with Game Insight, "Distributor Defendants"), as well as against Fly High Games ("Fly High") and Yury Pomortsev ("Pomortsev"). Before the Court is Game Garden's motion to disqualify Plaintiffs' counsel, Shannon Gallagher ("Gallagher"). ECF No. 25.
The Court finds this matter suitable for decision without oral argument under Civil Local Rule 7-1(b) and hereby VACATES the motion hearing set for May 14, 2015, at 1:30 p.m. The case management conference set for that date and time is hereby CONTINUED to June 11, 2015, at 1:30 p.m. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court hereby GRANTS Game Garden's motion to disqualify Plaintiffs' counsel.
A. Factual Background
The crux of this lawsuit is who owns the rights to Cat Story, a free mobile application ("app") in which players build a virtual village for cats shipwrecked on an island and send the cats on various quests and adventures. ECF No. 1 ("Compl.") ¶¶ 21-23, 50-60. The app is distributed by Game Garden and Game Insight, pursuant to a license from Fly High. Id. ¶¶ 29, 54-57. From November 2011 to September 2013, Game Garden, a California Corporation, was owned by Pomortsev, Maxim Bakanovich ("Bakanovich"), and Plaintiffs. Id. ¶ 34; ECF No. 26-1 ("Redlikh Decl.") ¶ 3. Game Garden was managed by Taras Titarenko ("Titarenko"), Redlikh's lifelong friend. Redlikh Decl. ¶ 13; ECF No. 26-2 ("Titarenko Decl.") ¶ 1.
Plaintiffs allege that the app which became Cat Story was first conceived in early 2012 at South Port Studios, LLC ("South Port"), a Russian corporation owned solely by Redlikh but managed by Pomortsev. Compl. ¶¶ 20-23; Redlikh Decl. ¶¶ 2, 9. At the time, Plaintiffs say, the app was called PussyVille. Compl. ¶ 24. According to Plaintiffs, South Port employees participated in various tasks related to PussyVille, including development of the game concept; creation of art, code and graphics; deployment of game mechanics; and development of a marketing strategy for the app. Id. ¶ 25. Plaintiffs claim that PussyVille contained computer code based on and derived from code created by South Port in connection with earlier app projects such as Fairy Farm. Id. ¶ 27.
Starting in late 2012, things started to go awry. Plaintiffs allege that Pomortsev informed Redlikh that the owner of Fly High was interested in helping develop PussyVille in exchange for a share in the app's profits. Compl. ¶ 37. Plaintiffs allege further that Pomortsev, without authority or Plaintiffs' prior consent, began to share with Fly High information regarding PussyVille. Id. ¶ 38. While this sharing was happening, Plaintiffs claim that Pomortsev was representing to them that South Port employees were no longer working to develop PussyVille. Id. ¶ 40. In an e-mail to Plaintiffs dated January 18, 2013, Pomortsev allegedly wrote, " PussyVille is not being developed." Id. ¶ 41. Despite these representations, Plaintiffs claim that Pomortsev and Bakanovich had started a new gaming company, Fair Play Studios, which was secretly working with Fly High to develop the app that would become Cat Story. Id . ¶ ¶ 36, 42.
Startek Invest Limited ("Startek"), a corporation organized under the laws of Cyprus, was another company owned solely by Redlikh. Redlikh Decl. ¶ 1. Though Startek is mentioned nowhere in Plaintiffs' complaint, Redlikh says that Startek "was the owner of rights to certain gaming applications that were developed by South Port." Id. ¶ 6. Startek and Game Garden entered into a series of service contract agreements whereby Game Garden would distribute games created by South Port but owned by Startek. Id. ¶¶ 13-14; Titarenko Decl. ¶¶ 4-5. The last such agreement, dated March 21, 2013, did not include PussyVille in either the list of games then in development or the list of games then being distributed by Game Garden. Titarenko Decl. Ex. A. To be clear, though, Plaintiffs allege that South Port, not Startek, owned the rights to PussyVille. See Compl. ¶¶ 38, 49-50, 58.
Due to various difficulties, the relationship between Game Garden's four owners began to deteriorate beyond repair. By May 2013, the owners decided to part ways. Compl. ¶ 45. Over the next several months, Plaintiffs negotiated with Pomortsev and Bakanovich to sell Plaintiffs' ownership interests in Game Garden. Id. ¶ 46. Gallagher allegedly represented Plaintiffs during these negotiations, while Pomortsev and Bakanovich were represented initially by Andrey Novokreshchenov and later by Anastasiya Fugett ("Fugett"). ECF No. 26-3 ("Gallagher Decl.") ¶¶ 2-3, 5, 8; ECF No. 26-4 Exs. A-B. Fugett, whose last name at the time was Malchenko, also represented the individuals who were buying Plaintiffs' shares (the "Buyers"). ECF No. 25-2 ("Fugett Decl.") ¶ 2; ECF No. 26-4 Ex. B. Plaintiffs eventually sold their ownership interests in Game Garden to the Buyers on September 9, 2013. Compl. ¶ 48. Plaintiffs allege that the sale agreement listed certain games, apps, and projects that were part of the transaction. Id. ¶ 49. The agreement, Plaintiffs say, made no mention of PussyVille, whose rights and title were allegedly transferred from South Port to Plaintiffs on September 13, 2013. Id. ¶¶ 49, 58.
On August 2, 2013-more than a month before Plaintiffs sold their interest in Game Garden-the domain name www.catstorygame.com was registered by Fly High's owner. Compl. ¶ 53. According to Plaintiffs, Distributor Defendants have since distributed Cat Story through various platforms: Game Insight began distributing Cat Story through Apple's App Store on September 19, 2013, id. ¶ 54; Game Insight began distributing Cat Story through Google Play on January 24, 2014, id. ¶ 55; Game Garden began distributing Cat Story through Amazon on February 1, 2014, id. ¶ 56; and Game Garden began distributing Cat Story through Windows Mobile on April 1, 2014, id. ¶ 57.
Plaintiffs claim to have filed for copyright protection on both PussyVille and Cat Story. Compl. ¶¶ 59-60. The record indicates that Plaintiffs have registered Cat Story with the U.S. Copyright Office. See ECF No. 23-1 Ex. A (screenshot of record of registration for Cat Story, Copyright Registration Number TXu XXXXXXXXX). The effective date of Cat Story 's registration is September 24, 2014. Id.
B. Procedural History
On September 29, 2014, Plaintiffs filed their complaint in this action. In the complaint, Plaintiffs allege that Cat Story contains significant art, graphics, and other copyrightable material created by South Port during its development of PussyVille; that the rights in this copyrightable material were properly assigned to Plaintiffs; and that these rights are infringed by Distributor Defendants' distribution of Cat Story. Compl. ¶¶ 1, 25-27, 58. On that basis, Plaintiffs bring causes of action for direct copyright infringement under 17 U.S.C. § 501 (first cause of action), contributory copyright infringement (third cause of action), and vicarious copyright infringement (fourth cause of action) ...