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Synopsys, Inc. v. Innogrit, Corp.

United States District Court, N.D. California, San Jose Division

June 26, 2019

SYNOPSYS, INC., Plaintiff,
v.
INNOGRIT, CORP., Defendant.

          ORDER GRANTING PRELIMINARY INJUNCTION

          LUCY H. KOH, UNITED STATES DISTRICT JUDGE

         On April 23, 2019, the Court denied Plaintiffs ex parte application for a temporary restraining order. ECF No. 16 at 6. However, the Court also ordered Defendant to show cause why a preliminary injunction should not issue. Id. The Court permitted the parties to brief whether a preliminary injunction is appropriate here. Before the Court is the question of whether to impose a preliminary injunction in the instant case. Having considered the parties' submissions, the relevant law, and the record in this case, the Court GRANTS a preliminary injunction.

         I. BACKGROUND

         A. Factual Background

         Plaintiff is a provider of electronic design automation (“EDA”). ECF No. 39 (first amended complaint, or “FAC”) at ¶ 8. EDA refers to “using computers to design, verify, and simulate the performance of electronic circuits.” Id. Plaintiff has invested substantial sums of money in designing EDA software, and offers a variety of software applications to purchasers. Id. at ¶¶ 10, 11.

         In order to access Plaintiff's software, customers purchase licenses, which grant “customers limited rights to install [Plaintiff's] EDA software and to access and use specific . . . software programs subject to control by [Plaintiff] via its license key system.” Id. at ¶ 11. The license key system is a “security system that controls access to its licensed software by requiring a user to access an encrypted control code provided by [Plaintiff] in order to execute the licensed software.” Id. The “encrypted control code is contained in a license key file that specifies the location(s) where the licensed software is authorized to be used and controls certain aspects of the licensed software, including among other items the quality and term of the licensed software in accordance with the purchased license terms.” Id.

         In early 2017, Synopsys International Ltd. (“Synopsys Ltd.”), a wholly-owned subsidiary of Plaintiff Synopsys, Inc., began negotiations to license the EDA software to Defendant. Id. at ¶ 18. On January 20, 2017, an end user license and maintenance agreement (“EULA”) was executed between Synopsys Ltd.-Plaintiff's wholly-owned subsidiary charged with distribution and oversight of Synopsys software in China-and Defendant for Defendant's use of Plaintiff's software at the address Defendant provided. Id. at ¶ 19. The address Defendant provided is located in Shanghai, China. Id.

         However, around May 2017, months after the EULA specifying use exclusively in Shanghai was signed, Plaintiff accused Defendant of pirating Plaintiff's software for use in Defendant's San Jose, California office. Id. at ¶ 27. Plaintiff alleges that Defendant's circumvention of the license key system “has enabled [Defendant] to use [Plaintiff's] software without authorization many thousands of times.” Id.

         Plaintiff's first cause of action is for violations of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201(a)(1). Id. at ¶¶ 48-57. Plaintiff's second cause of action is for violations of another section of the DMCA, 17 U.S.C. § 1201(a)(2). Id. at ¶¶ 58-65.

         B. Procedural History

         On April 17, 2019, Plaintiff filed a complaint against Defendant. ECF No. 1. On April 18, 2019, Plaintiff filed an ex parte motion for: (1) a temporary restraining order; (2) an order to show cause why a preliminary injunction should not issue; (3) expedited discovery; and (4) entry of protective order. ECF No. 12. On April 23, 2019, the Court: (1) denied entry of a temporary restraining order; (2) ordered Defendant to show cause why a preliminary injunction should not issue; (3) granted expedited discovery; and (4) denied without prejudice the request to enter a protective order. ECF No. 16. Specifically, the Court denied entry of a temporary restraining order because the Court determined that Plaintiff could not show that Plaintiff would be irreparably harmed in the absence of a temporary restraining order. Id. at 4-6. On May 14, 2019, Defendant filed a response to the Court's order to show cause why a preliminary injunction should not issue. ECF No. 31 (“Def.'s Br.”). On May 23, 2019, Plaintiff filed a first amended complaint. ECF No. 33. On June 4, 2019, Plaintiff filed a response to the Court's order to show cause why a preliminary injunction should not issue. ECF No. 43 (“Pl.'s Br.”).

         II. LEGAL STANDARD

         A plaintiff seeking a preliminary injunction must make a four-fold showing: (1) that he is likely to succeed on the merits; (2) that he is likely to suffer irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips in his favor; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008); Amer. Trucking Assocs., Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009).

         Moreover, the party seeking the injunction bears the burden of proving these elements. Klein v. City of San Clemente, 584 F.3d 1196, 1201 (9th Cir. 2009). “A preliminary injunction is ‘an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of ...


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