United States District Court, N.D. California
ORDER GRANTING IN PART PLAINTIFFS' MOTION AND
DENYING DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT RE:
DKT. NOS. 86, 88, 89, 95
GONZALEZ ROGERS, UNITED STATES DISTRICT COURT JUDGE
Adobe Systems Incorporation (“Adobe”) brings this
action for copyright and trademark infringement against
defendants NA Tech Direct Inc., formerly known as
TigerDirect, Inc., and Tiger Direct, Inc. (“Tiger
Direct”); Avenue Industrial Supply Company Limited,
formerly known as NA Tech Canada.CA Inc., formerly known as
TigerDirect.CA, Inc. (“Tiger Direct CA”); SYX
Distribution Inc., and SYX Services Inc. (collectively,
“Defendants”). Defendants are former licensees of
Adobe's software that Adobe alleges exceeded the scope of
their licenses. Adobe brings six causes of action: (i)
copyright infringement, (ii) trademark infringement, (iii)
Lanham Act violations, (iv) trademark dilution, (v)
contributory copyright infringement, and (vi) contributory
before the Court are the parties' cross-motions for
summary judgment. Adobe seeks summary judgment for its
direct copyright infringement, contributory copyright
infringement, and contributory trademark infringement claims.
Defendants oppose Adobe's motion and cross-move for
summary judgment on the knowledge element of contributory
infringement. Defendants also seek summary judgment on their
statute of limitations, latches, and collateral estoppel
Defendants seek summary judgment for trademark dilution and
unfair competition, arguing that Adobe has “failed to
state a claim” for those causes of action. Having
considered the papers, as well as arguments by counsel on
October 8, 2019, the Court Grants in Part
and Denies in Part Adobe's motion for
summary judgment and Denies Defendants'
motions for the same.
where evidence is noted, the following facts are taken from
the statements of undisputed facts. Adobe sells software
programs protected by registered copyrights and trademarks.
Starting in 2009, Adobe entered into agreements with the
Defendants that authorized them to serve as resellers of
Adobe's software subject to a restricted license. Each
defendant is an affiliated subsidiary of the others under the
parent company Systemax Inc. The agreements were renewed with
substantially the same licensing restrictions every year
until the “TigerDirect” brand was sold to PCM,
Inc. in 2015.
relevant to this motion, Adobe's agreements included four
licensing restrictions. First, the agreements restricted
sales to end-users only. The agreements expressly prohibited
sales to “resellers.” Second, the license
agreements restricted purchases of Adobe's software to
authorized distributors. Third, the license agreements
imposed restrictions on resale of Academic, Educational, or
Student-Teacher (“EDU”) versions of Adobe
Software. Defendants could only sell one copy per
year of EDU software to qualified educational end users or
entities after obtaining verification of educational status
(e.g., a student ID). Further sales of EDU software to
resellers were expressly prohibited.
Adobe imposed special restrictions on volume licensed
software. Under the Transactional Licensing Program, an
organization (such as a company) could purchase Adobe
software and activate it on multiple computers, paying a
smaller additional fee for each license. Volume licensed
software could only be distributed within a single
organization and sales outside of that organization were
prohibited. Adobe used serial keys to track and control
distribution of volume licensed software.
August 2013, Adobe began investigating a set of companies
operated by Canadian resident Pierre Francis (collectively,
“Software Tech”) for violations of the resale
license restrictions. Adobe's chief investigator, Michael
Draper, purchased serial keys from Software Tech, which he
determined to be sold in violation of Adobe's volume
license. Adobe's database showed that the serial keys had
been originally assigned to the Defendants. However, the
database showed that the Defendants sold the keys to
apparently legitimate customers and did not show sales to
Software Tech. (Dkt. No. 89-15 (“Draper Decl.”)
¶ 18; Dkt. No. 89-1 (“Pham Decl.”) ¶ 9
& Ex. 19 (“Draper Depo.”) at 29:20-31:7.)
Adobe sued Software Tech in the Northern District of
California on May 9, 2014.
the same time, in August 2014 Tiger Direct CA's
“Adobe Product Champion, ” Jacqui Stilson, began
an internal investigation into the company's sales to
resellers. Ms. Stilson ran a report and noticed a number of
sales to known resellers, including Software Tech, as well as
improper sales of EDU and volume licensed software. Ms.
Stilson reached out to her manager, Stuart McCowan, as well
as the General Manager at Tiger Direct CA, Anthony Clark,
about the unauthorized sales. In so doing, Ms. Stilson
identified Kan.An Qin, Software Tech's sales person at
Tiger Direct CA, as responsible for unauthorized volume
license sales. In the following months, Ms. Stilson emailed
Mr. Clark, Mr. McCowan, and Mr. Qin informing them that
Software Tech was a reseller not authorized to receive Adobe
software. Ms. Stilson's email was forwarded to Adam
Shaffer, the Executive Vice President of Merchandise and
Marketing for all Defendants. (See Dkt. No. 94-2
(“Sarney Decl.”) ¶ 11 & Ex. 10
October 16, 2014, Ms. Stilson informed Justin Ward, a senior
account manager at Adobe, about the unauthorized sales. Mr.
Ward responded by forwarding a highlighted Adobe license
agreement and stating that the unauthorized sales must stop.
Mr. McCowan also emailed Mr. Shaffer indicating that he
talked to Mr. Ward and that if he could not “assure him
that these grey-market sales in Canada will stop
(completely), then he's going to simply hand this over to
Adobe's legal team.” Mr. Ward's supervisor,
Ryan Dyck, then talked to Mr. Shaffer, but did not raise the
unauthorized sales with Adobe's legal department. Adobe
did not add the Defendants to the Software Tech litigation.
Mr. Clark nevertheless emailed several sales persons,
including Mr. Qin, telling them to stop unauthorized
discovery in early 2015, Adobe learned that Software Tech
purchased most of its Adobe software from the Defendants
using fake customer information. (Draper Decl. ¶ 19.)
Software Tech would create fake customer names and contact
information, as well as fake schools, to purchase EDU and
volume licensed software from the Defendants. In 2017,
Software Tech's former sales manager, Haik Moushaghayan,
began cooperating with Adobe and told them that Defendants
knew about Software Tech's resale scheme. (Draper Decl.
¶ 21.) Shortly after, Adobe filed the instant lawsuit.
(Id.) Software Tech defaulted in its case, and a
default judgment was entered in September 2016.
judgment is appropriate if “there is no genuine issue
as to any material fact and that the moving party is entitled
to judgment as a matter of law.” Fed.R.Civ.P. 56(c).
Factual disputes are only “genuine” if the
evidence could cause a reasonable jury to reach a verdict for
the other party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 252 (1986). The movant can meet its burden by
“showing . . . there is an absence of evidence to
support the nonmoving party's case.” Fairbank
v. Wunderman Cato Johnson, 212 F.3d 528, 531 (9th Cir.
2000) (citation and quotation omitted). Once the movant meets
its burden of showing the absence of genuine issues of
material fact that burden shifts to the nonmoving party, who
must demonstrate the existence of a material issue of fact.
Mahdavi v. C.I.A., 898 F.2d 156 (9th Cir. 1990)
opposing summary judgment must “go beyond the pleadings
and by [its] own affidavits, or by the depositions, answers
to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for
trial.” Turner v. Brown, 961 F.2d 217 (9th
Cir. 1992) (citations omitted). The opposition party
“cannot rest on the allegations in his pleadings to
overcome a motion for summary judgment.” Id.
Defendants “must do more than simply show that there is
some metaphysical doubt as to the material facts.”
Matsushita Elec. Inudus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986).
Direct Copyright Infringement
moves for summary judgment for direct copyright infringement
based on Defendants' alleged violations of their license
agreements with Adobe. Defendants argue that their
affirmative defenses of waiver, estoppel, and acquiescence,
as well as statute of limitations, preclude summary judgment.
The Court will first analyze Adobe's evidence of direct
copyright infringement and then consider Defendants'
affirmative defenses of waiver, estoppel, or acquiescence.
The Court will consider the defense of statute of limitations
in the next section.
Adobe's Evidence of Direct Copyright
for copyright infringement requires the plaintiff to show
that “(1) it owns valid copyrights in the works at
issue, and (2) defendant encroached upon plaintiff's
exclusive rights under the Copyright Act.”
Microsoft Corp. v. EEE Business Inc., 555 F.Supp.2d
1051, 1055 (N.D. Cal. 2008). Although transfer of a copy
ordinarily terminates the copyright holder's rights, a
licensing agreement has no such effect. S.O.S., Inc. v.
Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989).
Accordingly, a licensor may sue a licensee for copyright
infringement if the licensee exceeds the scope of the license
with respect to a right protected by the Copyright Act, such
as the right to distribution. MDY Indus., LLC v. Blizzard
Ent't, Inc., 629 F.3d 928, 940 (9th Cir. 2010).
indisputably owns the registered copyrights for the software
programs at issue. Adobe has produced certificates of
copyright registrations to establish a presumption that the
copyrights are valid. (RJN Ex. 1.) Adobe indisputably
licensed the copyrighted works to the Defendants subject to
multiple restrictions. Adobe also produced admissible
evidence to show violations of these
restrictions. However, in order to be entitled to
summary judgment, Adobe was obligated to attribute specific
conduct to each Defendant. See Adobe Sys. Inc. v. Blue
Source Group, Inc., 125 F.Supp.3d 945, 964 (N.D. Cal.
2015); Sun Microsystems Inc. v. Hynix Semiconductor
Inc., 608 F.Supp.2d 1166, 1194 (N.D. Cal. 2009).
Nevertheless, Adobe moved for summary judgment for all
Defendants based on conduct linked to only two of the
Defendants, namely unauthorized sales to Tiger Direct and
unauthorized purchases by SYX Distribution Inc.Further, each
unauthorized sale constitutes a separate act of copyright
infringement. See Petrella v. Metro-Goldwyn-Mayer,
Inc., 572 U.S. 663, 671 (2014). The Court therefore
cannot conclude that Defendants are liable for all
unauthorized sales where Adobe failed to provide sufficiently
the Court finds that Adobe has met its initial burden to show
direct copyright infringement only for those sales for which
it produced concrete evidence linked to a specific Defendant,
namely those set forth in footnote 7, subject to the analysis
regarding the statute of limitations defense in Section
II.D.1 below. Adobe has not met its burden as to its
remaining direct copyright infringement claims.
Defendants' Waiver, Acquiescence, and Estoppel
do not dispute Adobe's evidence, but argue that their
affirmative defenses of waiver, acquiescence, and estoppel
preclude summary judgment. Waiver occurs “if there
is an intent by the copyright proprietor to surrender rights
in his work, ” as “manifested by an overt act
indicative of a right-holder's intent to completely
abandon those rights.” Taylor Holland LLC v. MVMT
Watches, Inc., 2:15-cv-03578-CVW-JC, 2016 U.S. Dist.
LEXIS 187379, at **16-17 (C.D. Cal. Aug. 11, 2016) (citations
omitted). Acquiescence “limits a party's right to
bring suit following an affirmative act by word or
deed by the party that conveys implied consent to
another.” Seller Agency Council, Inc. v. Kennedy
Ctr. For Real Estate Educ., Inc., 621 F.3d 981, 988 (9th
Cir. 2010) (emphasis in original). Acquiescence requires that
“the senior user actively represented that it would not
assert a right or a claim.” Id. at 989.
Estoppel occurs if: “(1) the plaintiff knew of the
defendant's allegedly infringing conduct; (2) the
plaintiff intended that the defendant rely upon his conduct
or act so that the defendant has a right to believe it is so
intended; (3) the defendant is ignorant of the true facts;
and (4) the defendant detrimentally relied upon the
plaintiff's conduct.” Bangkok Broad. & T.V.
Co. v. IPTV Corp., 742 F.Supp.2d 1101, 1115 (C. D. Cal.
2010) (citation omitted). Equitable estoppel “is
disfavored and should only be applied as needed to avoid
injustice.” Id. (citation omitted).
argue that Adobe waived, acquiesced, or became estopped from
asserting its claims because it failed to sue Defendants upon
discovering the unauthorized sales thus: Ms. Stilson informed
Mr. Ward at Adobe of Defendants' unauthorized sales in
October 2014, and Mr. Ward instructed her to stop those
violations of the licensing agreement. Mr. Dyck at Adobe then
threatened to refer the matter to Adobe's legal team, but
never did so, and Adobe did not join the Defendants to the
ongoing Software Tech litigation. Mr. Craig, the Executive
Vice President for Business to Business at Tiger Direct,
nonetheless emailed several Tiger Direct sales persons
telling them to stop unauthorized sales.
record, Adobe's failure to act does not create a genuine
dispute regarding Defendants' affirmative defenses.
Absence of lawsuit does not constitute an
“affirmative” or “overt” act as
necessary for waiver or acquiescence. See Taylor
Holland, 2016 U.S. Dist. LEXIS 187379, at *17. On the
contrary, Adobe's admonishments over the unauthorized
sales shows lack of intent to acquiesce or abandon
its rights. See id. at *15. Similarly, estoppel is
not appropriate because Defendants were not ignorant of their
infringement and did not rely on Adobe's apparent
inaction. Indeed, Mr. Clark's email directing sales
persons to stop unauthorized sales shows that Defendants knew
of the sales and acted in anticipation of Adobe's
enforcement of its rights.
cited authorities do not persuade otherwise. For instance,
Watermark Publishers v. High Tech System, No.
95-3839-IEG (CGA), 1997 WL 717677 (S.D. Cal. June 18, 1997)
illustrates an estoppel case far different from this one. In
Watermark, a plaintiff sent a cease-and-desist
letter to a defendant regarding a map displayed at a visitor
center. Id. at *2. The defendant, believing that the
plaintiff was referring to a different map,
responded that they had taken down the display. Id.
Three years later, the plaintiff saw the first map again and
sued the defendant. Id. The court found that the
plaintiff was estopped from asserting its claims because
“[defendant] had a right to believe that [plaintiff]
intended him to rely on its failure to pursue its claim after
he replace[d] the Le Sage Riviera display” and
“was ignorant of the fact that [plaintiff] believed
that the Lakeport display infringed its copyright.”
Id. at *8. Here, Defendants were not
ignorant that the unauthorized sales infringed Adobe's
copyright and did not rely on Adobe's inaction
to continue those sales. Defendants thus failed to demonstrate
a genuine dispute that waiver, estoppel, or acquiescence
precludes summary judgment for direct copyright infringement.
the Court Grants in Part Adobe's motion
for summary judgment for direct copyright infringement for
one sale to SunPumps, Inc. and five sales to J&B Medical
Supply Co. as these are not subject to the statute of
limitations analysis. Adobe's motion is
Denied for all other claims of direct