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Oracle America, Inc. v. Hewlett Packard Enterprise Co.

United States District Court, N.D. California

July 15, 2016

ORACLE AMERICA, INC., et al., Plaintiffs,
v.
HEWLETT PACKARD ENTERPRISE COMPANY, Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS RE: ECF NO. 44

          JON S. TIGAR United States District Judge.

         This is a copyright infringement action brought by Oracle America, Inc. (“Oracle”) against Hewlett Packard Enterprise Company (“HP”). Before the Court is HP’s Motion to Dismiss. ECF No. 44. The motion will be granted in part and denied in part.[1]

         I.BACKGROUND

         A. Factual Background[2]

         Oracle is a supplier of enterprise hardware and software systems, as well as technical support and consulting services related to those systems, which include its line of Sun server systems. ECF No. 1 ¶¶ 2, 20. These servers generally run on Oracle’s Solaris operating system. Id. ¶ 19. “[C]ustomers who own Oracle/Sun hardware may also purchase technical support services from Oracle which entitle those customers to Solaris Updates for their Oracle/Sun hardware, operating systems and firmware that run on that hardware.” Id. ¶ 21. “Solaris Updates are available to customers with active support contracts with Oracle to download from Oracle’s password-protected, secure customer support website.” Id. Oracle owns copyrights covering the software comprising its Solaris operating system, as well as the related system firmware. Id. ¶ 57, 60.

         HP is also a supplier of enterprise hardware and software systems. Id. ¶ 25. HP offers support services related to Oracle’s Sun-branded hardware systems, “often as part of a ‘multi-vendor’ support solution that includes support for the customer’s servers from other manufacturers.” Id. ¶ 4. HP has subcontracted with other entities, including TERiX Computer Company, Inc. (“Terix”), “to provide all or some of the support services for [its] customer’s Oracle servers.” Id.

         Oracle asserts that “[f]or years, HP distributed, and conspired with others to distribute, copyrighted, proprietary Oracle software code without authorization and in knowing violation of Oracle’s intellectual property rights.” Id. ¶ 1. According to Oracle, HP partnered with Terix “to sell hardware and software support services that included the provision of software patches, updates, and bug fixes for Oracle’s proprietary Solaris operating system and related system firmware used on Oracle’s Sun-branded computers (collectively, ‘Solaris Updates’), ” despite the fact that “HP knew that Oracle required customers who wanted to access and install Solaris Updates to purchase a technical support agreement from Oracle that granted rights to [Oracle’s] intellectual property.” Id. Oracle further contends that “HP falsely represented to customers that HP and Terix could lawfully provide Solaris Updates and other support services at a lower cost than Oracle, and then worked with Terix to improperly access and provide Oracle’s proprietary Solaris Updates to customers.” Id. HP is also alleged to have “directly installed Solaris Updates obtained from Terix on its customer’s servers-even after HP employees raised concerns to HP executives and its legal department that doing so violated Oracle’s copyrights and technical support policies.” Id.

         Oracle previously sued Terix for copyright infringement for the same underlying conduct, resulting in Terix stipulating to judgment in favor of Oracle. Id. Oracle claims that until mid-2015 “Terix falsely told Oracle hardware customers that they did not need to purchase an annual support agreement with Oracle to obtain Solaris Updates.” Id. ¶ 31. Terix would put one of its customer’s servers “on support with Oracle and then obtain access credentials that Terix then used to download Solaris Updates and firmware updates for Oracle’s support website for all of the customer’s servers on support with Terix” in violation of Oracle’s technical support policies, which required a separate, active technical support agreement with Oracle for each server. Id. ¶ 32.

         Terix created a presentation, known as “Clearvision, ” which it would give to customers, “stat[ing] incorrectly that customers were entitled to all Solaris Updates for free by virtue of the software license customers received when they first licensed Solaris.” Id. ¶ 34. “HP knew about Clearvision and the purpose it served to secure support business from Oracle’s customers [and] helped Terix set up Clearvision presentations with customers who questioned the legality of obtaining Solaris Updates from Terix/HP . . . .” Id.

         During the Terix litigation, Oracle claims it learned that “[p]ursuant to [an] arrangement between HP and Terix, HP would provide customers with Sun server hardware support and directed the customer to Terix for Sun server software support, including the provision of Oracle’s copyrighted Solaris Updates, which neither HP nor Terix had authorization to provide.” Id. ¶ 41. For example, after receiving a request from a customer to provide support for its Sun/Oracle servers, HP “worked with Terix to pitch a joint HP-Terix solution and told [the customer] that HP (via Terix) could provide Solaris Updates.” Id. ¶ 42. After the customer’s employees “raised concerns with HP that the HP-Terix solution might infringe Oracle’s intellectual property rights, ” HP represented to the customer that it “was entitled to Solaris Updates by virtue of its original purchase of Solaris.” Id. After the customer “moved [its support contract] to HP and Terix [from Oracle], HP facilitated Terix’s provision of Solaris Updates by fielding requests from [the customer] and directing [the customer] to Terix to obtain numerous Solaris patches that were applied to some or all of [the customer’s] Solaris servers.” Id.

         Oracle also alleges that “HP itself provided unlawfully obtained Solaris Updates and firmware updates to its customers.” Id. ¶ 51. For example, Oracle identifies a particular customer with which HP had a direct service relationship that covered its Oracle/Sun servers. Id. Oracle asserts that “HP engineers obtained Solaris Updates from Terix and then installed those updates on [that customer’s] Oracle/Sun servers, ” despite the fact that an HP employee “raised concerns with HP executives (that were escalated to the HP legal department) about whether Terix had the lawful right to provide [such] Solaris Updates.” Id.

         B. Procedural Background

         On March 22, 2016, Oracle filed its Complaint against HPE, asserting claims for (1) copyright infringement under 17 U.S.C. §§ 101 et seq., (2) intentional interference with contractual relations, (3) intentional interference with prospective economic relations, and (4) unfair competition under California Business and Professions Code § 17200. ECF No. 1. On April 29, 2016, HPE filed a Motion to Dismiss the Complaint, ECF No. 34, which motion the Court now considers.

         C. Jurisdiction

         This Court has jurisdiction over Oracle’s copyright infringement claims under 28 U.S.C. § 1331 and supplemental jurisdiction over Oracle’s state law claims under 28 U.S.C. § 1367.

         II.LEGAL STANDARD

         On a motion to dismiss, the Court accepts the material facts alleged in the complaint, together with all reasonable inferences to be drawn from those facts, as true. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). However, “the tenet that a court must accept a complaint’s allegations as true is inapplicable to threadbare recitals of a cause of action’s elements, supported by mere conclusory statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To be entitled to the presumption of truth, a complaint’s allegations “must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).

         To survive a motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Plausibility does not mean probability, but it requires “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 687. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. In the Ninth Circuit, “[i]f there are two alternative explanations, one advanced by defendant and the other advanced by plaintiff, both of which are plausible, plaintiff’s complaint survives a motion to dismiss under Rule 12(b)(6). Plaintiff’s complaint may be dismissed only when defendant’s plausible alternative explanation is so convincing that plaintiff’s explanation is implausible.” Starr, 652 F.3d at 1216 (emphasis in original).

         III. ANALYSIS

         A. Copyright Infringement

         Oracle’s first claim alleges that HP directly and indirectly infringed various copyrights covering Oracle’s software. In its motion to dismiss, HP argues that Oracle has failed to state ...


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