Aqua Connect v. Code Rebel LLC et al

Filing 218

ORDER Re: Defendants' Motion in Limine No. 2 to Exclude Improper Character Evidence 191 by Judge Ronald S.W. Lew: The Court GRANTS IN PART AND DENIES IN PART Defendants Motion in Limine. SEE ORDER FOR COMPLETE DETAILS. (jre)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 Aqua Connect, Inc., 12 13 14 15 16 17 18 19 ) ) ) Plaintiff, ) ) ) v. ) ) ) Code Rebel, LLC; Arben ) Kryeziu; Volodymyr Bykov; ) and Does 1 through 300 ) inclusive, ) ) ) Defendants. ) ) 20 CV 11-5764 RSWL (MANx) ORDER Re: Defendants’ Motion in Limine No. 2 to Exclude Improper Character Evidence [191] Currently before the Court is Defendants’ Motion in 21 Limine to Exclude Improper Character Evidence [191]. 22 The Court, having reviewed all papers submitted 23 pertaining to this Motion and having considered all 24 arguments presented to the Court, NOW FINDS AND RULES 25 AS FOLLOWS: 26 The Court GRANTS IN PART AND DENIES IN PART 27 Defendants’ Motion in Limine. 28 // 1 1 2 I. Background Both Plaintiff and Defendants sell and market 3 software. Second Amended Compl. (“SAC”) ¶¶ 3, 6. 4 Defendant Kryeziu is the managing partner and the only 5 member of Defendant Code Rebel. According to the SAC, 6 Defendant Bykov is a resident of Russia and worked as 7 an agent of Defendant Code Rebel and “at the behest of 8 Defendant Kryeziu.” 9 Id. ¶¶ 4, 7. Plaintiff alleges that Defendant Bykov, in his 10 capacity as an agent of Defendant Code Rebel, 11 downloaded a free, fourteen-day trial version of 12 Plaintiff’s Aqua Connect Terminal Server (“ACTS”) 13 software on or about January 24, 2008. Id. ¶ 7. ACTS 14 allows users to interact with Apple Mac computers 15 and/or servers. Defs.’ Stmt. of Uncontroverted Facts 16 and Conclusions of Law (“SUF”) ¶ 3. Before installing 17 ACTS, Defendant Bykov agreed to an End User License 18 Agreement (“EULA”), which forbids reverse engineering. 19 See SAC ¶¶ 8, 10, Ex. 1. Plaintiff claims all 20 Defendants colluded to reverse engineer ACTS and create 21 a competing software product, IRAPP TS, in violation of 22 the EULA. Id. ¶ 11. According to Defendants, IRAPP TS 23 allows users to view and fully interact with remote or 24 locally networked Mac OS X terminal servers. 25 SUF ¶ 2. Based on Defendants’ alleged reverse engineering of 26 ACTS and subsequent distribution of IRAPP TS, Plaintiff 27 brings this current Action against Defendants for (1) 28 breach of contract; (2) false promise; (3) unfair 2 1 competition under California Business and Professions 2 Code § 17200; and (4) unjust enrichment. 3 4 II. Legal Standard A court may make a definitive ruling on the record 5 admitting or excluding evidence, either at or before 6 trial. Fed. R. Evid. 103. Regardless of a court’s 7 initial decision on a motion in limine, however, it may 8 revisit the issue at trial. See Luce v. United States, 9 469 U.S. 38, 41-42 (1984) (“[E]ven if nothing 10 unexpected happens at trial, the district court is 11 free, in the exercise of sound judicial discretion, to 12 alter a previous limine ruling.”). “The Supreme Court 13 has recognized that a ruling on a motion in limine is 14 essentially a preliminary opinion that falls entirely 15 within the discretion of the district court.” United 16 States v. Bensimon, 172 F.3d 1121, 1127 (9th Cir. 1999) 17 (citing Luce, 469 U.S. at 41-42). 18 For purposes of trial, only relevant evidence is 19 admissible. Fed. R. Evid. 402. Evidence is relevant 20 if it is probative - having “any tendency to make a 21 fact more or less probable than it would be without the 22 evidence” - and material - “of consequence in 23 determining the action.” 24 Fed. R. Evid. 401. Federal Rule of Evidence 404(a)(1) provides that 25 “[e]vidence of a person’s character or character trait 26 is not admissible to prove that a person acted in 27 accordance with the character or trait.” Similarly, 28 Federal Rule of Evidence 404(b)(1) provides that 3 1 “[e]vidence of a crime, wrong, or other act is not 2 admissible to prove character in order to show that on 3 a particular occasion the person acted in accordance 4 with the character.” 5 However, evidence of specific acts is admissible 6 for other purposes, “such as proving motive, 7 opportunity, intent, preparation, plan, knowledge, 8 identity, absence of mistake, or lack of accident.” 9 Fed. R. Evid. 404(b)(2). 10 Alternatively, under Federal Rule of Evidence 406, 11 “[e]vidence of a person’s habit or an organization’s 12 routine practice may be admitted to prove that on a 13 particular occasion the person or organization acted in 14 accordance with the habit or routine practice.” This 15 evidence may be admitted without corroboration or 16 eyewitness. Id. In other words, habit evidence may be 17 admitted to prove acts in accordance with the habit. 18 19 III. Analysis Defendants seek to exclude all evidence regarding: 20 (1) CherryOS, PearPC, and Maui X-Stream, (2) a 21 purported conflict between Defendants and Apple, and 22 (3) any other references to wrongful acts committed by 23 Defendants. Defendants base their Motion on Federal 24 Rule of Evidence 404. 25 A. CherryOS, PearPC, and Maui X-Stream Evidence 26 The Court finds that evidence regarding CherryOS, 27 PearPC, and Maui X-Stream may be admitted pursuant to 28 Federal Rule of Evidence 404(b)(2). 4 1 The Ninth Circuit has held that “other act” 2 evidence may be admitted pursuant to Rule 404(b) if the 3 following test is satisfied: “(1) there must be 4 sufficient proof for the jury to find that the 5 defendant committed the other act; (2) the other act 6 must not be too remote in time; (3) the other act must 7 be introduced to prove a material issue in the case; 8 and (4) the other act must, in some cases, be similar 9 to the offense charged.” Duran v. City of Maywood, 221 10 F.3d 1127, 1132-33 (9th Cir. 2000). 11 Furthermore, as the Ninth Circuit has indicated, 12 “Rule 404(b) is a rule of inclusion... Once it has been 13 established that evidence offered serves” to prove a 14 permitted purpose, “the ‘only’ conditions justifying 15 the exclusion of the evidence are those described in 16 Rule 403: unfair prejudice, confusion of the issues, 17 misleading the jury, undue delay, waste of time, or 18 needless presentation of cumulative evidence.” United 19 States v. Cherer, 513 F.3d 1150, 1157 (9th Cir. 2008) 20 (quoting United States v. Curtin, 489 F.3d 935, 944 21 (9th Cir. 2007)). 22 For the first element of the Duran test, where a 23 party seeks to introduce “other act” evidence under 24 Rule 404(b), the Court applies the test for conditional 25 relevancy found in Rule 104(b). Huddleston v. United 26 States, 485 U.S. 681, 689-690 (1988). In other words, 27 the Court “simply examines all the evidence in the case 28 and decides whether the jury could reasonably find the 5 1 conditional fact... by a preponderance of the 2 evidence.” 3 Id. at 690. The Court finds that the first element of the Duran 4 test is established as Plaintiff’s expert report by 5 Kristian Hermansen presents sufficient proof of shared 6 source code between PearPC and CherryOS for a jury to 7 find that Maui X-Stream took PearPC source code for 8 CherryOS without proper attribution. Houkom Decl. in 9 Support of Motion in Limine No. 12 [190], Ex. A at 1. 10 For example, the Report finds many shared error 11 messages embedded in CherryOS that can be traced back 12 to PearPC and other open source software. Id. at 5-13. 13 A reasonable jury could thus conclude that Maui X14 Stream took PearPC source code without proper 15 attribution. 16 Addressing the second element of the Duran test, 17 the Court finds that the Maui X-Stream incident is not 18 too remote in time from the acts alleged in the instant 19 case to mandate exclusion. Gaps of up to thirteen 20 years between the “other act” and a case at hand have 21 been found to be not too remote. See United States v. 22 Ross, 886 F.2d 264, 267 (9th Cir. 1989) (finding that 23 in a case where the defendant was charged with 24 improperly using his wife’s social security number, 25 evidence he had also done so thirteen years prior was 26 not too remote in time to require exclusion). In 27 contrast, the Defendants are alleged to have violated 28 the EULA in 2008, three years after the Maui X-Stream 6 1 incident. SAC ¶¶ 7-12. Also, Defendant Code Rebel’s 2 website indicates that Kryeziu conceived of IRAPP TS in 3 2005, around the same time that Maui X-Stream was 4 accused of impropriety. 5 Hagemann Decl., Ex. 1. With respect to the third Duran element, the Court 6 finds that this evidence may be offered to prove a 7 material issue: Defendant Kryeziu’s knowledge about the 8 taking of open source code without proper attribution, 9 how to spot such activities by his coders, and whether 10 he directed or participated in any reverse engineering. 11 As CTO of Maui X-Stream during the “Cherry OS debacle,” 12 Defendant Kryeziu presumably would have knowledge about 13 the taking of open source code without proper 14 attribution and how to spot such activities by his 15 coders. Kryeziu Dep. 157:22. The Ninth Circuit has 16 recognized that prior acts may be used to establish 17 that a party has specialized knowledge of how a 18 particular activity was conducted. See United States 19 v. Martinez, 182 F.3d 1107, 1112 (9th Cir. 1999) 20 (reasoning that prior convictions for importing drugs 21 tended to prove specialized knowledge of how drugs are 22 imported and, therefore, knowledge of courier’s drug 23 possession). Here, the evidence suggests that 24 Defendant Kryeziu has specialized knowledge of using 25 third party source code. Given that Defendant Kryeziu 26 states that he extensively monitors the operations at 27 Defendant Code Rebel, it would be unlikely for him to 28 not know whether Defendant Code Rebel’s programmers 7 1 were reverse engineering ACTS or other third party 2 code. Proof of such knowledge would tend to establish 3 Defendant Kryeziu and Defendant Code Rebel’s collusion, 4 collaboration, or direction in the reverse engineering 5 at issue. 6 Alternatively, evidence covered by Federal Rule of 7 Evidence 404(b) “may be used for impeachment purposes.” 8 United States v. Gay, 967 F.2d 322, 328 (9th Cir. 1992) 9 citing United States v. Stockton, 788 F.2d 210, 219 n. 10 15 (4th Cir. 1985). The Maui X-Stream evidence is 11 necessary to explain why Defendant Kryeziu would 12 describe such elaborate means of monitoring his 13 programmers. Moreover, it would make Defendant Bykov’s 14 denial that such monitoring efforts were ever 15 implemented all the more convincing in impeaching 16 Defendant Kryeziu’s credibility. 17 The Court also finds that the fourth element of the 18 Duran test is satisfied. The Maui X-Stream incident is 19 similar to the facts in the instant case. In both 20 cases, Defendant Kryeziu’s company was accused of 21 stealing free software. SAC ¶ 7; Houkom Decl. in 22 Support of Motion in Limine No. 12 [190], Ex. A at 1. 23 Additionally, at least as presented in Plaintiff’s 24 expert reports, the conduct in the Maui X-Stream case 25 was very similar to the reverse engineering in the 26 instant case. Id.; Houkom Decl. in Support of Motion 27 in Limine No. 8, [207] Ex. A. 28 Because the Court finds all four elements of the 8 1 Duran test are met, Plaintiff’s evidence regarding 2 CherryOS, PearPC, and Maui X-Stream is admissible under 3 Rule 404(b)(2). As such, the Court need not determine 4 whether the evidence would additionally be admissible 5 under Rule 406. 6 The Court also finds that the prejudicial effect of 7 the evidence here does not substantially outweigh its 8 probative value. The key to Rule 403 is not whether 9 evidence is prejudicial to a party - for almost all 10 adverse evidence is - but whether the evidence’s 11 “probative value is substantially outweighed by the 12 danger of unfair prejudice.” Batiz v. Am. Commer. Sec. 13 Servs., 776 F.Supp.2d 1087, 1092 (C.D. Cal. 2011). 14 The Court finds that the danger of unfair prejudice 15 presented by the evidence here does not substantially 16 outweigh the evidence’s probative value. Evidence 17 concerning code misappropriation at Maui X-Stream 18 suggests that Defendant Kryeziu had the requisite 19 knowledge to notice and stop any reverse engineering 20 taking place at Defendant Code Rebel. 21 evidence is probative. Thus, such However prejudicial the Maui X- 22 Stream evidence may be, that Court finds that such 23 prejudicial effect does not substantially outweigh its 24 probative value. 25 Accordingly, the Court DENIES Defendants’ Motion 26 with respect to excluding evidence of CherryOS, PearPC, 27 and Maui X-Stream. Defendants may raise this objection 28 again if it appears Plaintiff’s sole purpose in 9 1 presenting this evidence is to show Defendants in a bad 2 light. 3 B. Evidence of Purported Conflict Between Defendants 4 and Apple 5 Defendants also seek to exclude all references to 6 purported conflicts between Defendants and Apple. The 7 Court construes this to refer to Plaintiff’s expert 8 report by Lee Gummerman, which concludes that 9 Defendants reversed engineered Apple’s OS X operating 10 system and breached Apple’s End User License Agreement 11 (“EULA”). 12 The Court finds that evidence of Defendants’ 13 reverse engineering of Apple’s OS X - and their 14 corresponding breach of Apple’s EULA - is admissible 15 under Federal Rule of Evidence 404. 16 The Court first finds that, as to Rules 401 and 17 402, the evidence of Defendants’ reverse engineering of 18 Apple’s OS X is highly relevant. The reverse 19 engineering of Apple’s OS X was Defendant Bykov’s 20 asserted method of obtaining the APIs used in IRAPP TS. 21 Houkom Decl. in Support of Motion in Limine No. 8, 22 [207] Ex. A at 6. Defendant Bykov’s testimony is 23 strongly contradicted, and thus impeachable, by the 24 Report; therefore it is more likely that Defendant 25 Bykov reverse engineered ACTS. Even if Defendant 26 Bykov’s story were accurate, he would not only be more 27 knowledgeable about reverse engineering in general, but 28 also about reverse engineering software in the Apple 10 1 ecosystem. Likewise, reverse engineering is the key 2 issue in this case, meaning that evidence suggesting 3 reverse engineering occurred is certainly relevant. 4 As to Rule 404, the Court again applies the Duran 5 test for “other act” evidence. 6 The Court finds that the first element of the Duran 7 test is satisfied. The Gummerman Report presents 8 sufficient evidence that Defendant Bykov reverse 9 engineered Apple’s OS X. The report analyzes Defendant 10 Bykov’s actions with respect to discovering the 11 existence and attributes of several APIs. Houkom Decl. 12 in Support of Motion in Limine No. 8, [207] Ex. A. 13 Additionally, the report concludes that Defendant 14 Bykov’s methods needed reverse engineering of OS X or 15 of ACTS to be successful. Id. Thus, a reasonable jury 16 could find that Defendants reverse engineered Apple’s 17 OS X. 18 The Court also finds the second Duran element 19 satisfied. The reverse engineering of Apple’s OS X 20 allegedly occurred in conjunction with the reverse 21 engineering of ACTS. Houkom Decl. in Support of Motion 22 in Limine No. 8, [207] Ex. A, at 5-7. Therefore, 23 because the two acts occurred at the same time, they 24 cannot be too remote to warrant exclusion of the 25 evidence of the reverse engineering of Apple’s OS X. 26 The Court finds that the third element of the Duran 27 test is also met. This evidence may be used as 28 impeachment evidence to contradict Defendant Bykov’s 11 1 asserted method of finding the APIs at issue, as 2 permitted by Federal Rule of Evidence 404(b). Gay, 967 3 F.2d at 328. 4 The Court finds that the fourth element is also 5 satisfied because the alleged reverse engineering of 6 Apple’s OS X is precisely the conduct alleged to have 7 occurred with the ACTS software. 8 The last issue is whether the evidence can weather 9 Rule 403 scrutiny. 10 Cherer, 513 F.3d at 1157. The Court finds that with respect to the assertion 11 that Defendants reverse engineered OS X, the danger of 12 unfair prejudice does not substantially outweigh the 13 probative value. Defendant Bykov’s alleged reverse 14 engineering of Apple’s OS X establishes his knowledge, 15 and thus competency, in reverse engineering. 16 Furthermore, it shows that Defendant Bykov knew how to 17 reverse engineer in the Apple ecosystem. However 18 prejudicial the evidence of reverse engineering of 19 Apple’s OS X may be, the danger of such prejudice does 20 not substantially outweigh its probative value. 21 Accordingly, the Court DENIES Defendants’ Motion 22 with respect to evidence regarding Defendants’ reverse 23 engineering of OS X. 24 However, the Court finds that the prejudicial 25 effect of the evidence substantially outweighs the 26 probative value with respect to Defendants’ alleged 27 breach of Apple’s EULA. Defendants’ purported breach 28 of the Apple EULA is not at issue in this case. 12 Even 1 if Defendants actually did breach the Apple EULA, that 2 issue is not material; it is collateral to the issues 3 to be raised at trial. Such evidence is likely to 4 mislead a jury or confuse the issues. 5 Accordingly, the Court GRANTS Defendants’ Motion 6 with respect to any mention that Defendants breached 7 Apple’s EULA. 8 C. Any Other Character Evidence 9 The Court DENIES the Motion with respect to any 10 evidence referencing any other purportedly wrongful 11 acts allegedly committed by any of the Defendants. 12 Defendants neither identify what this evidence is nor 13 specify how Plaintiff intends to offer this evidence. 14 Furthermore, as Rule 404(b)(2) clearly contemplates, 15 character evidence is not categorically excluded. 16 R. Evid. 404(a)(2), (b)(2). Fed. Additionally, character 17 evidence may still be offered as long as it is not used 18 to prove a person acted in accordance with that 19 character. 20 21 Fed. R. Evid. 404(a)(1). IV. Conclusion For the reasons stated above, the Court DENIES 22 Defendants’ Motion in Limine to Exclude Improper 23 Character Evidence with respect to evidence regarding 24 CherryOS, PearPC, and Maui X-Stream, DENIES the Motion 25 with respect to evidence regarding Defendants’ reverse 26 engineering of Apple’s OS X, GRANTS the Motion with 27 respect to any mention that Defendants breached Apple’s 28 EULA, and DENIES the Motion with respect to any 13 1 evidence referencing any other purportedly wrongful 2 acts allegedly committed by any of the Defendants. 3 4 5 IT IS SO ORDERED. 6 DATED: August 28, 2013 7 8 9 HONORABLE RONALD S.W. LEW Senior, U.S. District Court Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14

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