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Artifex Software, Inc. v. Hancom, Inc.

United States District Court, N.D. California

April 25, 2017

ARTIFEX SOFTWARE, INC., Plaintiff,
v.
HANCOM, INC., Defendant.

          ORDER RE: DEFENDANT'S MOTION TO DISMISS RE: DKT. NO. 18

          JACQUELINE SCOTT CORLEY United States Magistrate Judge.

         Plaintiff Artifex Software Inc. (“Artifex”) brings breach of contract and copyright infringement claims against Defendant Hancom, Inc. Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) is now pending before the Court.[1] (Dkt. No. 18.) After carefully considering the arguments and briefing submitted, the Court concludes that oral argument is unnecessary, see Civ. L.R. 7-1(b), and DENIES the motion to dismiss.

         BACKGROUND

         A. Complaint Allegations

         Plaintiff develops and licenses software products that interpret files written in a page description language such as Adobe Systems Incorporated's Portable Document Format (“PDF”) files. (Complaint ¶¶ 13-14.) PDF files generally permit a document created on one platform to be displayed and/or printed on another platform exactly as it was on the first platform. (Id. ¶ 14.) Plaintiff owns Ghostscript which is the most widely used PDF interpreter not developed by Adobe Systems. (Id. ¶¶ 1, 16.) Ghostscript interprets files written in PDF for display on a computer screen or for printing. (Id. ¶ 15.) Plaintiff has expended substantial amounts on research and development of Ghostscript to improve and update the product. (Id. ¶ 16.)

         Plaintiff's business is based on the revenues it derives from being the “exclusive commercial licensing agent of the Ghostscript interpreter technologies.” (Id. ¶ 17.) Plaintiff offers commercial licenses to Ghostscript as well as for the public a conditional open source license called the GNU General Public License (“GNU GPL”). (Id. at ¶¶ 1, 17.) For those seeking to commercially distribute Ghostscript or any product that incorporates it, Plaintiff will grant a license to use, modify, copy, and/or distribute Ghostscript for a fee. (Id. ¶ 17.) There is no charge for licenses granted under the GNU GPL although such users must “comply with certain open-source licensing requirements.” The GNU GPL was created to promote the open-source development of software products. (Id. ¶ 18.)

         On July 29, 2008, Plaintiff obtained a copyright from the Registrar of Copyrights Certificate of Registration No. TX 6-854-034 for Ghostscript version 8.54 and all previous versions. (Id. ¶ 29; Dkt. No. 1-2 (Ex. 2).) On December 6, 2016, Plaintiff filed an application to register Ghostscript version 8.71. (Complaint ¶ 29; Dkt. No. 1-3 (Ex. 3)) Plaintiff placed copyright notices on Ghostscript versions 8.54 and 8.71. (Complaint ¶ 30.)

         Defendant is a South Korean software company that owns and develops Hangul, a word processing software used primarily in South Korea and the United States as an alternative to Microsoft Word, as well as Hancom Office, a suite of software programs which include Hangul, a spreadsheet software, and a presentation software. (Id. ¶¶ 2, 19.) Defendant incorporated Ghostscript into its Hangul software “beginning as early as 2013.” (Id. ¶¶ 2, 20.) Because Defendant did not have a commercial license for Ghostscript, its use and distribution of Ghostscript constituted consent to the terms of the GNU GPL. (Id. ¶ 21.) Section 9 of the GNU GPL states:

You are not required to accept this License in order to receive or run a copy of the Program. Ancillary propagation of a covered work occurring solely as a consequence of using peer-to-peer transmission to receive a copy likewise does not require acceptance. However, nothing other than this License grants you permission to propagate or modify any covered work. These actions infringe copyright if you do not accept this License. Therefore, by modifying or propagating a covered work, you indicate your acceptance of this License to do so.

(Complaint ¶ 21; Dkt. No. 1-1 (Ex. 1) at 10.) In addition, Defendant's website stated that it had licensed Ghostscript under the GNU GPL. (Id. ¶ 2.) Nonetheless, Defendant failed to comply with key provisions of the GNU GPL. (Id. ¶¶ 2, 22.) In particular, because Defendant integrated Ghostscript into its software without revealing to the end-user that Ghostscript was part of the Hancom software, the GNU GPL required Defendant to distribute its software with the accompanying source code. (Id. ¶¶ 22-24.) Defendant did not do so and thus violated the GNU GPL, terminating Defendant's license to use Ghostscript. (Id. ¶¶ 25-28.) Defendant's failure to obtain a commercial license deprived Plaintiff of a licensing fee, or, alternatively, its failure to comply with the GNU GPL deprived Plaintiff of the opportunity “to further promote the advancement of interpreter technologies.” (Id. ¶¶ 1, 3, 17.)

         Defendant “purportedly removed Ghostscript from the Hancom software in August 2016 after receiving a demand letter from Artifex.” (Id. ¶ 20.)

         B. Procedural Background

         Plaintiff Artifex alleges two claims for relief: (1) breach of contract, and (2) copyright infringement. Plaintiff seeks permanent injunctive relief enjoining Defendant from further use of any products using Ghostscript, enjoining Defendant from directly or indirectly infringing Artifex's copyright in Ghostscript, and requiring Defendant to distribute to each licensee of Hangul and Hancom Office the complete source code for the products in accordance with the GNU GPL. (Complaint at pp. 11-12.[2]) Plaintiff also seeks compensatory, consequential, statutory, and exemplary damages, as well as attorney's fees and costs. (Id.)

         Defendant responded to the complaint by filing the underlying ...


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