United States District Court, N.D. California
ORDER DENYING PLAINTIFF'S MOTION FOR JUDGMENT ON
THE PLEADINGS AND GRANTING AND DENYING VARIOUS SEALING
MOTIONS RE: DKT. NOS. 52, 51, 59, 61, AND 68
WILLIAM H. ORRICK, UNITED STATES DISTRICT JUDGE
Autodesk, Inc. brings this action against defendants Joseph
Alter and Joseph Alter, Inc. (collectively,
“Alter”) for declaratory judgment of license and
non-infringement of U.S. Patent No. 6, 720, 962 (the
“'962 Patent”), which Alter had previously
licensed to The Walt Disney Company (“Disney”),
who licensed it to Autodesk. In turn, Alter asserts
counterclaims against Autodesk for declaratory judgment of no
license or exhaustion, direct and indirect infringement, and
intentional and negligent interference with prospective
economic advantage. Autodesk now moves for judgment on the
pleadings because: (1) it is licensed to the '962 Patent
pursuant to Alter's Settlement and License Agreement with
Disney (“the '962 License Agreement”), (2)
Alter's rights to enforce the '962 Patent are
exhausted, and (3) Alter's counterclaims are barred,
estopped, and foreclosed by the express terms of the '962
License Agreement. However, the record does not contain
sufficient information for me to make such a ruling; it is
missing, among other things, the license agreement between
Disney and Autodesk, the scope of which is in dispute.
Although the language in the '962 License Agreement is
broad, there needs to be more factual development before I
can determine as a matter of law that Autodesk is correct. I
DENY its motion for judgment on the pleadings.
is a Delaware corporation with its principal place of
business in San Rafael, California. Complaint
(“Compl.”) (Dkt. No. 1) ¶ 4. It is a global
industry-leader in digital design technologies and develops
“Maya” software, a program that enables film and
design professionals to “create lifelike images,
realistic animations, extraordinary visual effects, and
full-length feature films.” Id.
Alter is a resident of Westlake Village, California who
invents and develops computer animation software.
Id. ¶ 5; Counterclaim and Answer
(“Countercl.”) (Dkt. No. 34) ¶ 39. He is the
sole inventor of, and owner of rights in, the '962
Patent. Compl. ¶ 5. The '962 Patent, entitled
“Hair Generation and Other Natural Phenomena with
Surface Derived Control Volumes in Computer Graphics and
Animation, ” was filed on December 4, 2000, and issued
to him on April 13, 2004. Id.; Compl., Ex. A
('962 Patent) (Dkt. No. 1-1) at 2. The '962 Patent
discloses and claims certain methods for creating simulated
human and animal hair using computer graphics and animation.
Countercl. ¶ 55.
Joseph Alter, Inc., Joseph Alter's eponymous small
business, is a California corporation with its principal
place of business in Westlake Village, California. Compl.
¶ 5. It makes, markets, and sells “Shave and a
Haircut” software, a computer graphics program for
simulating realistic animation of hair and fur that moves
naturally. Id. ¶¶ 6, 12; Countercl. ¶
45. Shave and a Haircut is sold as an extension (or
“plug-in”) to Autodesk's Maya software.
Compl. ¶¶ 6, 12. The core technology underlying the
Shave and a Haircut software is claimed in Alter's
'962 Patent. Countercl. ¶ 45. Joseph Alter, Inc. is
listed as the assignee of rights in the '962 Patent.
Compl. ¶¶ 5, 13.
counter-defendant Disney is a Delaware corporation with its
principal place of business in Burbank, California.
Countercl. ¶ 41. Disney created “XGen”
software, a procedural geometry instancing tool used in
computer generated animation, which is sold as a plug-in to
Autodesk's Maya software. Id. ¶ 47. In
developing XGen, Disney “incorporated features that
practice the ['962] Patent.” Compl., Ex. B (2016
Alter v. Disney Complaint) (Dkt. No. 1-2) ¶ 8.
Alter's Shave and a Haircut software competes with
Disney's XGen software. Countercl. ¶¶ 49, 64,
August 2011, Autodesk announced that it had signed an
agreement with Disney to license and sell Disney's XGen
software as a plug-in to Maya. Compl. ¶ 14. On October
5, 2011, Alter, proceeding pro se, filed an infringement
action against Disney in the Central District of California,
alleging that Disney's development and licensing of XGen
to Autodesk infringed the claims in the '962 Patent.
Id. ¶ 15; see Motion for Judgment on
the Pleadings (“MJP”) (Dkt. No. 52[redacted];
Dkt. No. 51-4[under seal]), Ex. B (2011 Alter v. Disney
Complaint) (Dkt. No. 52-2). Alter and Disney resolved the
litigation by entering into a Settlement and License
Agreement (“'962 License Agreement”), dated
January 31, 2012, under which the parties stipulated to
dismiss with prejudice all claims and counterclaims asserted
in the action. Compl. ¶ 5; see MJP, Ex. C
('962 License Agreement) (Dkt. No. 52-3[redacted]; Dkt.
No. 51-6[under seal]) at 2. Pursuant to the '962 License
Agreement, in exchange for “a small settlement
payment” Alter granted Disney a perpetual license to
the '962 Patent, released all claims regarding
Disney's use of the '962 Patent, and covenanted not
to sue Disney or its affiliates, customers, and other third
parties in connection with the '962 Patent. Countercl.
¶ 48; see MJP, Ex. C §§ 2.1-2.3, 2.5.
procedural history of this case is somewhat complex. On July
22, 2016, one month before Autodesk brought the instant
action, Alter filed a complaint for monetary damages against
Disney in Superior Court of California, County of Los
Angeles, which Disney removed to the Central District of
California. Compl. ¶ 16; Reply to Countercl. (Dkt. No.
37) ¶ 53. The complaint asserted four causes of action
related to Disney's alleged breach of the '962
License Agreement by licensing XGen to Autodesk: (1) breach
of contract; (2) breach of the implied covenant of good faith
and fair dealing; (3) intentional interference with
prospective economic advantage; and (4) negligent
interference with prospective economic advantage.
See Compl., Ex. B ¶¶ 13-29. The complaint
alleged that after January 31, 2012, with Disney's
knowledge and consent, “Autodesk developed and expanded
upon the features of XGen and created essentially a new
product by the same name, which at its core is still
infringing the ['962] Patent.” Id. ¶
on August 17, 2016, Autodesk filed the instant action against
Alter for declaratory judgment of license and
non-infringement of the '962 Patent. Alter moved to
dismiss for lack of subject matter jurisdiction, or in the
alternative, to stay the action pending resolution of its
earlier-filed action against Disney. Dkt. No. 14. Alter's
motion was denied on November 14, 2016. That same day, Alter
voluntarily dismissed its action in the Central District.
See Dkt. Nos. 31, 35.
November 28, 2016, Alter filed an answer to Autodesk's
complaint and asserted counterclaims for: (1) declaratory
judgment of no license to, or exhaustion of, the '962
Patent against Disney and Autodesk; (2) infringement of the
'962 Patent against Autodesk; (3) indirect infringement
of the '962 Patent against Disney; (4) breach of contract
against Disney; (5) breach of the implied covenant of good
faith and fair dealing against Disney; (6) intentional
interference with prospective economic advantage against
Autodesk and Disney; and (7) negligent interference with
prospective economic advantage against Autodesk and Disney.
Countercl. ¶¶ 65-97. Autodesk filed an answer to
Alter's counterclaims on December 19, 2016. Dkt. No. 37.
Autodesk filed the motion for judgment on the pleadings,
Disney moved to sever and transfer Alter's counterclaims
against it to the Central District of California pursuant to
the forum selection clause contained in the '962 License
Agreement. Dkt. No. 60[redacted]; Dkt. No. 59-4[under seal].
Alter opposed transfer; Autodesk did not take a position.
Following an initial review of the briefing, I ordered the
parties to show cause why this entire action should not be
transferred to the Central District of California on the
basis that the claims in this case are premised on the
'962 License Agreement, which was negotiated, drafted,
executed, and performed in the Central District by parties
who are located in the Central District. Dkt. No. 77. Disney
responded that it had reached an agreement with Alter to
dismiss Alter's counterclaims against it with prejudice
(Dkt. No. 78); Alter, in light of its stipulation with
Disney, requested that this case be resolved in this District
(Dkt. No. 80); and Autodesk similarly opposed transfer (Dkt.
No. 79). Pursuant to the stipulation between Alter and
Disney, I dismissed counter-defendant Disney with prejudice.
Dkt. No. 82.
Federal Rule of Civil Procedure 12(c), “[a]fter the
pleadings are closed-but early enough not to delay trial-a
party may move for judgment on the pleadings.”
Fed.R.Civ.P. 12(c). Rule 7(a) provides that the only
pleadings allowed are: “(1) a complaint; (2) an answer
to a complaint; (3) an answer to a counterclaim designated as
a counterclaim; (4) an answer to a crossclaim; (5) a
third-party complaint; (6) an answer to a third-party
complaint; and (7) if the court orders one, a reply to an
answer.” Fed.R.Civ.P. 7(a). “Judgment on the
pleadings is properly granted when, accepting all factual
allegations in the complaint as true, there is no issue of
material fact in dispute, and the moving party is entitled to
judgment as a matter of law.” Chavez v. United
States, 683 F.3d 1102, 1108 (9th Cir. 2012) (internal
quotation marks omitted). When deciding such a motion,