Code Rebel LLC v. Aqua Connect Inc

Filing 14

ORDER RE: DEFENDANT AQUA CONNECT, INC.'S MOTION TO DISMISS, TO STRIKE, AND FOR A MORE DEFINITE STATEMENT 9 by Judge Ronald S.W. Lew: The Court GRANTS in part and DENIES in part Defendant's Motion to Dismiss, GRANTS in part and DENIES in part Defendants Motion to Strike, and DENIES Defendants Motion for a More Definite Statement. SEE ORDER FOR FURTHER DETAILS. (dv)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 Code Rebel, LLC, 12 Plaintiff, 13 14 v. 15 Aqua Connect, Inc. 16 17 18 Defendant. 19 20 ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CV 13-4539 RSWL (MANx) ORDER RE: DEFENDANT AQUA CONNECT, INC.’S MOTION TO DISMISS, TO STRIKE, AND FOR A MORE DEFINITE STATEMENT [9] Currently before the Court is Defendant Aqua 21 Connect, Inc.’s (“Defendant”) Motion to Dismiss and to 22 Strike Plaintiff Code Rebel, LLC’s (“Plaintiff”) 23 Complaint and Defendant’s Motion for More Definite 24 Statement [9]. The Court, having reviewed all papers 25 submitted pertaining to these Motions, NOW FINDS AND 26 RULES AS FOLLOWS: 27 The Court GRANTS in part and DENIES in part 28 Defendant’s Motion to Dismiss, GRANTS in part and 1 1 DENIES in part Defendant’s Motion to Strike, and DENIES 2 Defendant’s Motion for a More Definite Statement. 3 4 I. BACKGROUND Plaintiff is a Hawaiian company that has developed 5 multiple types of remote access software, known by the 6 names iRAPP and iRAPP TS (collectively, the “iRAPP 7 programs”), that allow one or more users to view and 8 fully interact with a remote or locally networked Apple 9 Macintosh computer. Compl. ¶ 6. Defendant is a Nevada 10 corporation and is a direct competitor of Plaintiff, in 11 that Defendant also markets and sells a computer 12 program designed to allow users to remotely access and 13 interact with an Apple Macintosh computer and/or 14 server. Id. at ¶ 9. Defendant’s program is called 15 Aqua Connect Terminal Server, commonly known as “ACTS.” 16 Id. 17 Plaintiff has marketed and sold its iRAPP programs 18 to the public since approximately September of 2007. 19 It alleges that Defendant became aware of the existence 20 of Plaintiff’s iRAPP programs no later than April of 21 2008. Id. at ¶¶ 7,8. Plaintiff alleges that once 22 Defendant became aware that it was a direct competitor 23 of Plaintiff, Defendant embarked on a pattern of 24 defamation and disparagement of both Plaintiff’s 25 programs and Plaintiff itself, with the intent to 26 interfere with Plaintiff’s economic interests and 27 destroy competition. Id. at ¶ 10. Specifically, 28 Plaintiff alleges that Defendant knowingly and/or with 2 1 a reckless disregard for the truth made false 2 representations of fact to third parties, including 3 Plaintiff’s customers and potential customers, 4 regarding Plaintiff and/or the iRAPP programs. Such 5 false representations include (1) asserting that 6 Plaintiff’s iRAPP programs infringe on Defendant’s 7 patents (when Defendant holds no patents) and (2) 8 asserting that the controversial “Cherry OS” product 9 was Plaintiff’s product. Plaintiff also alleges that 10 Defendant offered for sale and sold Defendant’s ACTS 11 program at prices below Defendant’s cost in violation 12 of the Clayton Antitrust Act. 13 Id. at ¶ 11. On June 21, 2013, Plaintiff filed the instant 14 Action against Defendant [1] alleging that Defendant 15 engaged in trade libel, intentional interference with 16 prospective economic advantage, negligent interference 17 with prospective economic advantage, violation of the 18 Clayton Antitrust Act, and unfair business practices. 19 Id. at ¶ 13. Plaintiff seeks damages for lost sales, 20 injuries to Plaintiff’s reputation, and injuries to the 21 iRAPP brand. Id. On August 12, 2013, Defendant filed 22 this Motion to Dismiss, to Strike and for a More 23 Definite Statement [9]. 24 II. LEGAL STANDARD 25 A. Motion to Dismiss 26 Federal Rule of Civil Procedure 12(b)(6) allows a 27 party to move for dismissal of one or more claims if 28 the pleading fails to state a claim upon which relief 3 1 can be granted. Dismissal can be based on a lack of 2 cognizable legal theory or lack of sufficient facts 3 alleged under a cognizable legal theory. Balistreri v. 4 Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 5 1990). However, a party is not required to state the 6 legal basis for its claim, only the facts underlying 7 it. McCalden v. Cal. Library Ass'n, 955 F.2d 1214, 8 1223 (9th Cir. 1990), cert. denied, 112 S. Ct. 2306 9 (1992). In a Rule 12(b)(6) motion to dismiss, a court 10 must presume all factual allegations of the complaint 11 to be true and draw all reasonable inferences in favor 12 of the non-moving party. Klarfeld v. United States, 13 944 F.2d 583, 585 (9th Cir. 1991). 14 The question presented by a motion to dismiss is 15 not whether the plaintiff will prevail in the action, 16 but whether the plaintiff is entitled to offer evidence 17 in support of its claim. 18 550 U.S. 544, 583 (2007). Bell Atl. Corp. v. Twombly, “While a complaint attacked 19 by a Rule 12(b)(6) motion to dismiss does not need 20 detailed factual allegations, a plaintiff’s obligation 21 to provide the ‘grounds’ of his ‘entitle[ment] to 22 relief’ requires more than labels and conclusions, and 23 a formulaic recitation of a cause of action’s elements 24 will not do.” Id. at 555 (internal citation omitted). 25 Although specific facts are not necessary if the 26 complaint gives the defendant fair notice of the claim 27 and the grounds upon which the claim rests, a complaint 28 must nevertheless “contain sufficient factual matter, 4 1 accepted as true, to state a claim to relief that is 2 plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 3 662, 678 (2009) (internal quotation marks omitted). 4 If dismissed, a court must then decide whether to 5 grant leave to amend. The Ninth Circuit has repeatedly 6 held that a district court should grant leave to amend 7 even if no request to amend the pleadings was made, 8 unless the court determines that the pleading could not 9 possibly be cured by the allegation of other facts. 10 Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). 11 The court has discretion to deny leave to amend where 12 deficiencies cannot be cured. Keniston v. Roberts, 717 13 F.2d 1295, 1300 (9th Cir. 1983). 14 B. Motion to Strike 15 Federal Rule of Civil Procedure 12(f) states that 16 “[t]he court may strike from a pleading an insufficient 17 defense or any redundant, immaterial, impertinent, or 18 scandalous matter.” Fed. R. Civ. P. 12(f). 19 “Immaterial” matter is that which has no essential or 20 important relationship to the claim for relief or the 21 defenses being pleaded. Fantasy, Inc. v. Fogerty, 984 22 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other 23 grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). 24 “Impertinent” matter consists of statements that do not 25 pertain, and are not necessary, to the issues in 26 question.” 27 Id. The purpose of Rule 12(f) is “to avoid the 28 expenditure of time and money that must arise from 5 1 litigating spurious issues by disposing of those issues 2 prior to trial.” Sidney-Vinstein v. A.H. Robbins Co., 3 697 F.2d 880, 885 (9th Cir. 1983). However, motions to 4 strike are regarded with disfavor; the challenged 5 pleading therefore must be viewed in the light most 6 favorable to the pleader. See Colaprico v. Sun 7 Microsystems, Inc., 758 F. Supp. 1335, 1339 (N.D. Cal. 8 1991). See also Pepsico, Inc. v. J.K. Distributors, 9 Inc., No. 8:07CV00657, 2007 WL 2852647, at *2 (C.D. 10 Cal. Sept. 14, 2007) Further, such motions are 11 generally denied unless the allegations have no 12 possible relation to the subject matter of the 13 litigation. See Colaprico, 758 F. Supp. at 1339. 14 C. Motion for a More Definite Statement 15 If a pleading to which a responsive pleading is 16 permitted is so vague or ambiguous that a party cannot 17 reasonably be required to frame a responsive pleading, 18 the party may move for a more definite statement before 19 interposing a responsive pleading. 20 12(e). 21 granted. Fed. R. Civ. P. Rule 12(e) motions are disfavored and rarely Cellars v. Pac. Coast Packaging, Inc., 189 22 F.R.D. 575, 578 (N.D. Cal. 1998). A motion for more 23 definite statement fails where the complaint is 24 specific enough to apprise the moving party of the 25 substance of the claim being asserted. See Bureerong 26 v. Uvawas, 922 F. Supp. 1450, 1461 (C.D. Cal. 1996). 27 Where the information sought by the moving party is 28 available, the motion should be denied. 6 Famolare, Inc. 1 v. Edison Bros. Stores, Inc., 525 F. Supp. 940, 949 2 (E.D. Cal. 1981). 3 III. ANALYSIS 4 A. Defendant’s Request for Judicial Notice 5 As a preliminary matter, Defendant has filed a 6 request for this Court to take judicial notice of 7 Defendant’s pending patent applications. This Court, 8 however, finds that such documents are not necessary 9 for the Court’s analysis. As such, the Court DENIES 10 Defendant’s request as Moot. 11 B. Defendant’s Motion to Dismiss 12 1. 13 Defendant argues that Plaintiff’s trade libel claim Plaintiff’s Trade Libel and Disparagement Claim 14 regarding Defendant’s alleged statements about patent 15 infringement is preempted by patent law. Although it 16 is true that § 154(d) allows a patentee to make its 17 rights known to a potential infringer so that the 18 infringer can determine whether to cease its infringing 19 activity, the patentee must act in good-faith. 20 “[F]ederal patent law preempts state law that punishes 21 merely publicizing a patent in the marketplace[,] 22 unless the plaintiff can show that the patentholder 23 acted in bad faith.” Sandisk Corp v. LSI Corp, No. C 24 09-02737, 2009 WL 3047375, at *2 (N.D. Cal. Sept. 18, 25 2009); Globetrotter Software, Inc. v. Elan Computer 26 Group, Inc., 362 F.3d 1367, 1377 n.9 (Fed. Cir. 2004). 27 If the patentee knows that the patent is invalid, 28 unenforceable, or not infringed, yet represents to the 7 1 marketplace that a competitor is infringing the patent, 2 a clear case of bad faith representations is made out. 3 Sandisk, 2009 WL 3047375 at *2; Zenith Elecs. Corp. v. 4 EXZEC, 182 F.3d 1340, 1354 (Fed. Cir. 1999); see also 5 Bylin Heating Systems, Inc v. M & M Gutters, LLC, No. 6 2:07-CV-00505-FCD-KJM, 2008 WL 744706, at *2 (E.D. Cal. 7 March 18, 2008). A plaintiff asserting that the 8 defendant patent holder acted in bad faith must 9 establish that the claims of infringement were 10 objectively baseless. Sandisk, 2009 WL 3047375 at *2. 11 Here, Plaintiff has alleged sufficient facts that 12 Defendant acted in bad faith when it engaged in false 13 and misleading statements that Plaintiff was infringing 14 on non-existent patents. Moreover, Plaintiff’s 15 allegations establish that Defendant’s statement of 16 infringement was objectively baseless because Plaintiff 17 indicates in its Complaint that Defendant holds no 18 patents. Compl. ¶ 5. Presuming such allegations to be 19 true, the Court finds that Plaintiff’s trade libel 20 claims as to patent allegations are not preempted by 21 federal law. 22 Even though Plaintiff’s trade libel claims as to 23 patent allegations are not preempted by federal law, 24 Plaintiff fails to plead its trade libel claim with 25 requisite particularity. In California, a disparaging 26 statement about a competitor’s product that causes the 27 competitor to suffer pecuniary damages is actionable as 28 trade libel. See Microtec Research, Inc. v. Nationwide 8 1 Mut. Ins. Co., 40 F.3d 968, 972–73 (9th Cir. 1994). To 2 state a claim for trade libel, a plaintiff must allege 3 facts demonstrating a “(1) publication, (2) which 4 induces others not to deal with plaintiff, and (3) 5 special damages.” Aetna Cas. and Sur. Co., Inc. v. 6 Centennial Ins. Co., 838 F.2d 346, 351 (9th Cir. 1988). 7 Trade libel is not, however, a true libel and is not 8 actionable as defamation. Id. (citing Polygram 9 Records, Inc. v. Superior Court, 170 Cal. App. 3d 543, 10 548–49 (1985)); First Advantage Background Services 11 Corp. v. Private Eyes, 569 F. Supp. 2d 929, 937 (N.D. 12 Cal. 2008); Films of Distinction, Inc. v. Allegro Film 13 Prods., Inc., 12 F. Supp. 2d 1068, 1081 (C.D. Cal. 14 1998). 15 Although trade libel is not actionable as 16 defamation, this difference does not diminish the 17 pleading requirements in a trade libel claim, which 18 requires that the claim be based on specific 19 statements. Private Eyes, 569 F. Supp 2d at 937; See, 20 e.g., Eldorado Stone v. Renaissance Stone, Inc., No. 21 04–cv–2562 JM, 2005 WL 5517731, at *3 (S.D. Cal. Aug. 22 9, 2005) (dismissing trade libel claim where plaintiff 23 failed to identify the author or speaker, recipient, 24 time, and location of each allegedly libelous 25 statement); Films of Distinction, 12 F. Supp. 2d at 26 1081 n.8 (“In the Ninth Circuit, a product defamation 27 or trade libel claim must be based on specific 28 statements, and the defamatory character of the 9 1 language must be apparent from the words themselves.”). 2 At a minimum, necessary defamation allegations must 3 identify the time and place of publication as well as 4 the speaker, the recipient of the statement, the 5 substance of the statements, and, in the case of trade 6 libel, special damages. Eldorado, 2005 WL 5517731 at 7 *10-11; see also Private Eyes, 569 F. Supp. 2d at 937. 8 For example, in Private Eyes, the court dismissed a 9 claim for trade libel, holding that the plaintiff gave 10 no indication of who made the allegedly libelous 11 statements, to whom they made those statements, when 12 they made the statements, or what exactly they said. 13 569 F. Supp. 2d at 937. 14 Here, the Court finds that Plaintiff has failed to 15 plead its trade libel claim with requisite 16 particularity. Although Plaintiff indicates in its 17 Complaint that the alleged defamatory statements were 18 made within the last two years by Defendant’s officers, 19 employees, and/or agents, to actual and prospective 20 customers, (Compl. ¶¶ 15,16), Plaintiff fails to 21 identify the specific time and location of each alleged 22 statement. Private Eyes, 569 F. Supp. 2d at 937, 23 (citing Eldorado, 2005 WL 5517731 at *3). This alone 24 is a sufficient basis to grant Defendant’s Motion to 25 Dismiss Plaintiff’s trade libel claim. 26 Moreover, Plaintiff has also failed to allege facts 27 demonstrating special damages. In New.Net, Inc. v. 28 Lavasoft, the court held that a plaintiff could not 10 1 satisfy the special damages requirement for trade libel 2 by simply referring to an amount to be ascertained at 3 trial rather than specifying the amount of damage. 4 F. Supp. 2d 1090, 1113 (C.D. Cal. 1990). 356 The court in 5 New.Net noted that “a bare allegation of the amount of 6 pecuniary loss is insufficient for the pleading of a 7 trade libel claim.” Id.; See also Isuzu Motors Ltd. v. 8 Consumers Union of United States, Inc., 12 F. Supp. 2d 9 1035, 1047 (C.D. Cal. 1998). In Private Eyes, the 10 court noted that the plaintiff merely alleged that the 11 libelous statements “harmed PEI’s business relationship 12 with [a third party].” 569 F. Supp. 2d at 937. 13 However, the court noted that the plaintiff did not 14 allege the amount of business it had from the third 15 party prior to the defendant allegedly making these 16 statements, how much it had after, or the value of the 17 business. Id. The court thereby held that the 18 plaintiff had not adequately pled special damages. 19 Here, Plaintiff provides only a bare allegation 20 that it has or will sustain damages in excess of 21 $100,000.00, but acknowledges that the exact amount 22 will be proven at trial. Compl. ¶ 19. Moreover, 23 Plaintiff does not allege the amount of business it had 24 prior to Defendant allegedly making these statements, 25 how much it had after those statements were made, or 26 the value of the business. 27 Supp. 2d at 937. See Private Eyes, 569 F. Accordingly, the Court finds that 28 Plaintiff has failed to satisfy the special damages 11 1 requirement for a trade libel claim. 2 Accordingly, because Plaintiff has failed to plead 3 its trade libel claim with requisite particularity, the 4 Court GRANTS Defendant’s Motion to Dismiss Plaintiff’s 5 claim for trade libel with leave to amend. 6 2. Plaintiff’s Intentional Interference with 7 Prospective Economic Advantage and Negligent 8 Interference with Economic Advantage Claims 9 As a preliminary matter, Defendant argues that 10 Plaintiff’s claims for intentional interference with 11 prospective economic advantage and negligent 12 interference with prospective economic advantage must 13 be dismissed since they allege fraud without meeting 14 the heightened pleading standard of Rule 9(b); however, 15 both claims need not be dismissed on this ground. In 16 cases where fraud is not a necessary element of a 17 claim, a plaintiff may nonetheless choose to allege in 18 the complaint that the defendant has engaged in 19 fraudulent conduct. Vess v. Ciba-Geigy Corp. USA, 317 20 F.3d 1097, 1103 (9th Cir. 2003). In cases where a 21 plaintiff chooses to allege some fraudulent and some 22 non-fraudulent conduct, only the allegations of fraud 23 are subject to Rule 9(b)’s heightened pleading 24 requirements. Id. at 1104. The text of Rule 9(b) 25 requires only that in “all averments of fraud . . . , 26 the circumstances constituting fraud . . . shall be 27 stated with particularity.” 28 P. 9(b)). Id. (citing Fed. R. Civ. The rule does not require that allegations 12 1 supporting a claim be stated with particularity when 2 those allegations describe non-fraudulent conduct. 3 at 1105. Id. Thus, if particular averments of fraud are 4 insufficiently pled under Rule 9(b), a district court 5 should “disregard” those averments, or “strip” them 6 from the claim. Id. The court should then examine the 7 allegations that remain to determine whether they state 8 a claim. Id. Here, Plaintiff does not allege a claim 9 for fraud, but only alleges “fraud” to the extent that 10 “fraud” is part of allegations that Defendant committed 11 the acts alleged with “malice, oppression, or fraud” 12 and with intent to injure Plaintiff. Opp’n 5:13-16. 13 Moreover, Plaintiff’s allegation of fraud is not a 14 necessary element of Plaintiff’s claims of trade libel, 15 intentional interference with economic advantage, and 16 negligent interference with economic advantage. 17 Accordingly, the Court hereby disregards those fraud 18 averments, and examines the allegations that remain to 19 determine whether they state a claim. 20 To state a claim for intentional interference with 21 prospective economic advantage, a plaintiff must allege 22 (1) an economic relationship between plaintiff 23 and a third party, with probable future economic 24 benefit to plaintiff; (2) defendant’s knowledge 25 of the relationship; (3) intentional acts by 26 defendant designed to disrupt the relationship; 27 (4) actual disruption of the relationship; and 28 (5) economic harm to 13 plaintiff proximately 1 caused by acts of defendant. 2 Metal Lite, Inc. v. Brady Const. Innovations, Inc., 558 3 F. Supp. 2d 1084, 1094 (C.D. Cal. 2007). 4 Here, the Court finds that Plaintiff has 5 sufficiently pled the necessary facts to support the 6 elements of this claim. As to the first element, 7 Plaintiff alleges that an economic and business 8 relationship existed between Plaintiff and its actual 9 and prospective customers of the iRAPP programs. 10 Compl. ¶ 22. Although Plaintiff does not specifically 11 identify existing third parties with whom there was an 12 existing economic or business relationship, Plaintiff’s 13 allegation of interference with “actual and potential 14 customers” is sufficient to satisfy federal pleading 15 requirements. See Aagard v. Palomar Builders, Inc., 16 344 F. Supp. 2d 1211, 1219 (E.D. Cal. 2004). Second, 17 Plaintiff maintains that as a direct competitor of 18 Plaintiff, Defendant knew, or should have known of said 19 economic relationships. Third, Plaintiff alleges facts 20 that Defendant engaged in intentional acts to disrupt 21 those relationships by embarking on a pattern of 22 defamation and disparagement of the iRAPP programs and 23 Plaintiff itself. Compl. ¶¶ 10, 24. Fourth, Plaintiff 24 alleges that due to Defendant’s intentional acts, its 25 relationships with actual and potential customers were 26 disrupted. The court can draw the inference, although 27 not specifically pleaded, that as a direct competitor 28 of Plaintiff, Defendant’s statements adversely affected 14 1 the potential customers’ willingness to purchase 2 Plaintiff’s products. Finally, Plaintiff alleges that 3 it sustained damages in an amount in excess of $100,000 4 as a result of Defendant’s statements being a 5 substantial factor in causing harm to Plaintiff’s 6 business. Id. at ¶¶ 23, 26. Accordingly, because 7 Plaintiff has pled sufficient facts for a claim of 8 intentional interference with prospective economic 9 advantage, the Court DENIES Defendant’s Motion to 10 Dismiss this claim. 11 To state a claim for negligent interference with 12 prospective economic advantage, Plaintiff must 13 demonstrate that: 14 (1) an economic relationship existed between 15 the plaintiff and a third party which contained 16 a reasonably probable future economic benefit 17 or advantage to plaintiff; 18 (2) the defendant knew of the existence of the 19 relationship and was aware or should have been 20 aware that if it did not act with due care its 21 actions would interfere with this relationship 22 and cause plaintiff to lose in whole or in part 23 the probable future economic benefit or 24 advantage of the relationship; 25 (3) the defendant was negligent; and 26 (4) such negligence caused damage to plaintiff 27 in that the relationship was actually 28 interfered with or disrupted and plaintiff lost 15 1 in whole or in part the economic benefits or 2 advantage reasonably expected from the 3 relationship. 4 Unical Enters., Inc. v. Am. Ins. Co., No. CV 05-3511 5 CBM (PJWx), 2005 WL 6133691, at *5 (C.D. Cal. Dec. 14, 6 2005) (quoting N. Am. Chem. Co. v. Sup. Ct., 59 Cal. 7 App. 4th 764, 786 (1997)). 8 Here, as discussed above, Plaintiff has provided 9 sufficient facts to support that economic and business 10 relationships existed between Plaintiff and its actual 11 and prospective customers. Further, as Plaintiff’s 12 direct competitor, Plaintiff has alleged sufficient 13 facts to show that Defendant knew, or should have 14 known, that if it did not act with due care, its 15 actions would interfere with those relationships. 16 Compl. ¶¶ 33, 34. Plaintiff further alleges that 17 Defendant failed to exercise reasonable care. 18 ¶¶ 35, 37-39. Id. at Although not specifically pleaded, the 19 Court can infer from the facts in the Complaint that 20 Defendant acted with a reckless disregard for the truth 21 if it asserted that Plaintiff’s iRAPP programs 22 infringed on Defendant’s existing patents to potential 23 customers without knowing whether or not such a 24 statement was in fact true. Moreover, although not 25 specifically pleaded, the Court can infer that as a 26 direct competitor, Defendant’s statements caused 27 economic damage to the extent that potential customers 28 were less willing to purchase products from Plaintiff 16 1 after hearing Defendant’s statements. Accordingly, 2 because Plaintiff has pled sufficient facts for a claim 3 of negligent interference with prospective economic 4 advantage, the Court DENIES Defendant’s Motion to 5 Dismiss this claim. 6 3. Plaintiff’s Federal Antitrust Claim 7 Defendant argues that Plaintiff’s Antitrust claims 8 cannot apply to Defendant because software is not a 9 commodity. Section 2(a) of the Clayton Antitrust Act 10 (as amended by the Robinson-Patman Act) prohibits any 11 person engaged in commerce to “. . .discriminate in 12 price between different purchasers of commodities . . 13 .” 15 U.S.C. § 13. The Robinson-Patman Act’s 14 prohibition on price discrimination thus extends only 15 to transactions involving commodities. See May Dep’t 16 Store v. Graphic Process Co., 637 F.2d 1211, 1214 (9th 17 Cir. 1980); see also Baun v. Investors Diversified 18 Services, Inc., 409 F.2d 872, 873 (7th Cir. 1969). A 19 sale of commodities is a “sale of ‘goods, wares, or 20 merchandise’ and is not merely a contract for 21 services.” May, 637 F.2d at 1214 (quoting Rangen, Inc. 22 v. Sterling Nelson & Sons, Inc., 351 F.2d 851 (9th Cir. 23 1965)). The Ninth Circuit stated in May that there 24 were “no congressional discussions on the distinction 25 between goods and services,” and that “[l]egislative 26 history reveals only that Congress intended the Act to 27 apply to tangible goods and not services.” May, 637 28 F.2d at 1214 (emphasis added); Windsor Auctions, Inc. 17 1 v. eBay, Inc., No. C-07-06454, 2008 WL 2622791, at *3; 2 Innomed Labs., LLC v. Alza Corp., 368 F.3d 148, 155 (2d 3 Cir. 2004); See also Tele Atlas N.V. v. Navteg Corp., 4 397 F. Supp. 2d 1184, 1192-93 (N.D. Cal. 2005) (holding 5 that the word, “commodity,” means a “tangible good,” 6 such as products or merchandise). 7 When a transaction involves both goods and 8 services, the May court adopted the “dominant nature” 9 test to determine how to characterize the transaction 10 for the purposes of the Robinson-Patman Act. Windsor, 11 2008 WL 2622791 at *4; Standfacts Credit Services, 12 Inc., v. Experian Information Solutions, Inc., 405 F. 13 Supp. 2d 1141, 1156 (C.D. Cal. 2005) (quoting May, 637 14 F.2d at 1215). However, courts only apply the dominant 15 nature test where “the subject of the contract is a 16 combination of goods and intangible rights and 17 services.” Windsor, 2008 WL 2622791 at *4; Innomed 18 Labs., 368 F.3d at 156. 19 Although there is no clear judicial consensus 20 regarding whether software is a “commodity,” for 21 purposes of the Robinson-Patman Act, courts have 22 strictly construed the term “commodity” and held that 23 “it denotes only tangible products of trade.” 24 2008 WL 2622791 at *3 (emphasis added). Windsor, Furthermore, 25 Windsor recognized that software lacks the requirement 26 of a “tangible component.” Id. at *4. On this basis, 27 the Court can infer that software is not a commodity 28 and is not subject to the Robinson-Patman Act. 18 1 Moreover, Plaintiff’s Complaint indicates that the 2 Parties develop multiple types of remote access 3 software; however, Plaintiff provides no evidence or 4 allegations suggesting that Defendant’s ACTS program is 5 anything but an intangible product. In Tele Atlas, in 6 which the court dismissed plaintiff’s antitrust claim, 7 the court noted that the plaintiff did not allege that 8 the defendant had sold a physical item and thus there 9 was no reason to apply the dominant nature test to 10 determine how to characterize the transaction for the 11 purposes of the Robinson-Patman Act. 12 at 1192-93. 397 F. Supp. 2d Similarly here, Plaintiff does not allege 13 that Defendant has sold a physical product. Rather, 14 Plaintiff only alleges that Defendant sells a computer 15 program, but it is unclear whether or not such a 16 program includes physical items. Id. If such a 17 program includes physical items, the Court may apply 18 the “dominant nature” test to characterize the 19 transaction for the purposes of the Robinson-Patman 20 Act. However, because it is unclear whether the 21 program is a combination of goods and intangible rights 22 and services, the Court cannot engage in such an 23 analysis. See Windsor, 2008 WL 2622791 at *4. Because 24 Plaintiff fails to provide sufficient facts to support 25 that Defendant’s software includes physical items or is 26 a tangible product, the Court GRANTS Defendant’s Motion 27 to Dismiss Plaintiff’s Clayton Antitrust claim with 28 leave to amend. 19 1 4. Plaintiff’s Claim of Unfair Business Practices 2 in Violation of California Business & 3 Professions Code § 17043 4 Defendant argues that Defendant is not a “vendor” 5 within the meaning of Cal. Bus. & Prof. Code § 17025 6 and is therefore not liable under § 17043. A vendor is 7 defined as a “seller,” and Plaintiff has alleged that 8 Defendant is the seller of a computer program. 9 LAW DICTIONARY 1590 (9th ed. 2004). BLACK’S As such, Defendant is 10 a vendor within meaning of § 17025. However, Plaintiff 11 nonetheless fails to satisfy the pleading requirements 12 of § 17043. 13 To satisfy the pleading requirements of § 17043, a 14 plaintiff must allege the defendant’s sales price, its 15 cost in the product and its cost of doing business. 16 Rheumatology Diagnostics Lab., Inc. v. Aetna, Inc., 1217 CV-05847-JST, 2013 WL 3242245, at *15 (N.D. Cal. June 18 25, 2013), (citing G.H.I.I. v. MTS, Inc., 147 Cal. App. 19 3d 256, 275 (1983)). Here, Plaintiff provides a bare 20 allegation that Defendant sold its ACTS program at a 21 price below cost, for the purpose of injuring its 22 competitors, in violation of § 17043. However, 23 Plaintiff has completely failed to allege Defendant’s 24 sales price, its cost in the product, and its cost of 25 doing business. Accordingly, the Court GRANTS 26 Defendant’s Motion to Dismiss Plaintiff’s § 17043 claim 27 with leave to amend. 28 20 1 5. Plaintiff’s Claim of Unfair Business Practices 2 in Violation of California Business & 3 Professions Code § 17000 4 California Business & Professions Code § 17000 5 prohibits “unlawful, unfair or fraudulent business 6 act[s] or practice[s]” and “unfair, deceptive, untrue 7 or misleading advertising.” Rolling v. E*Trade Sec., 8 LLC, 756 F. Supp. 2d 1179, 1192 (N.D. Cal. 2010) 9 (citing Cal. Bus. & Prof. Code § 17200). To state a 10 claim under § 17000, a plaintiff must plead that (1) 11 the defendant engaged in one of the practices 12 prohibited by the statute, and (2) the plaintiff 13 suffered actual injury in fact as a result of 14 defendant’s actions. Id. Section 17000 provides a 15 cause of action for any activity “that can properly be 16 called a business practice and that at the same time is 17 forbidden by law.” Microsoft Corp v. A-Tech Corp., 855 18 F. Supp. 308, 313 (C.D. Cal. 1994) (citing Farmers Ins. 19 Exch. v. Superior Ct., 2 Cal.4th 377, 383 (1992)). In 20 essence, “an action based on § 17000 to redress an 21 unlawful business practice ‘borrows’ violations of 22 other laws and treats these violations, when committed 23 pursuant to a business activity, as unlawful practices 24 independently actionable under § 17000.” 25 Id. When a plaintiff who claims to have suffered injury 26 from a direct competitor’s unfair act or practice 27 invokes § 17000, a plaintiff must plead conduct that 28 threatens an incipient violation of an antitrust law or 21 1 violates the policy or spirit of one of those laws 2 because its effects are comparable to or are the same 3 as a violation of the law, or otherwise significantly 4 threatens or harms competition. Cel-Tech Commc’ns, 5 Inc. v. Los Angeles Cellular Tel. Co., 20 Cal. 4th 163, 6 187 (1999). Here, Plaintiff alleges in its Complaint 7 that Defendant engaged in both intentional and 8 negligent interference with economic advantage, which 9 have negatively affected Plaintiff’s business 10 reputation and goodwill. Moreover, Plaintiff has 11 alleged that Defendant engaged in such actions with the 12 intent to destroy competition. Compl. ¶ 3. Presuming 13 such allegations to be true, the Court finds that 14 Plaintiff has sufficiently pled a claim for unfair 15 business practices and DENIES Defendant’s Motion to 16 Dismiss Plaintiff’s § 17000 claim. 17 C. Defendant’s Motion to Strike 18 Defendant seeks to strike Plaintiff’s fraud 19 allegations to the extent that they lack the 20 specificity required by Rule 9(b) and are not capable 21 of amendment. Defendant presumably seeks to strike the 22 portions in the Complaint which allege that Defendant’s 23 “acts of defamation were committed with malice, 24 oppression or fraud . . . ” (Compl. ¶¶ 20, 29, 40) 25 (emphasis added), to the extent that those allegations 26 allege fraud. In Operating Engr’s Pension Trust Fund 27 v. Fife Rock Prod. Co, defendants filed an affirmative 28 defense which alleged that plaintiff’s claims were 22 1 barred by the doctrines of waiver, laches, estoppel, 2 fraud, judicial estoppel, prior breach, and legal 3 excuse. No. C 10–00697 SI, 2010 WL 2635782, at *4 4 (N.D. Cal. June 30, 2010) (emphasis added). The court 5 in Operating Engr’s Pension granted the plaintiff’s 6 motion to strike the affirmative defense of fraud given 7 that the defendants failed to “state with particularity 8 the circumstances constituting fraud.” Id. (citing Fed. 9 R. Civ. P. 9(b)). Similarly here, the Complaint 10 alleges that Defendant’s acts of defamation were 11 “committed with malice, oppression or fraud” without 12 stating with particularity the circumstances 13 constituting fraud. Accordingly, the Court GRANTS 14 Defendant’s Motion to Strike Plaintiff’s fraud 15 allegations with leave to amend. 16 Defendant also moves to strike those allegations 17 regarding patents, arguing that they are preempted by 18 federal law. However, as discussed above, such 19 allegations are not preempted by federal law. 20 Accordingly, the Court DENIES Defendant’s Motion to 21 Strike Plaintiff’s allegations regarding patents. 22 D. Defendant’s Motion for a More Definite Statement 23 Defendant seeks a more definite statement regarding 24 Plaintiff’s claims of trade libel, intentional 25 interference with prospective economic advantage, and 26 negligent interference with prospective economic 27 advantage. However, because the Court grants 28 Defendant’s Motion to Dismiss Plaintiff’s claim for 23 1 trade libel, the Court DENIES as moot Defendant’s 2 Motion for a More Definite Statement for Plaintiff’s 3 trade libel claim. As to Plaintiff’s tortious 4 interference claims, Plaintiff alleges that Defendant 5 made false and misleading statements about Plaintiff’s 6 iRAPP programs, i.e., that Plaintiff’s iRAPP programs 7 infringe on Defendant’s patents (when Defendant holds 8 no patents) and that the controversial “Cherry OS” 9 product was Plaintiff’s product, which interfered with 10 Plaintiff’s relationships with existing and potential 11 customers. Accordingly, the Court finds that the 12 Complaint is specific enough to apprise Defendant of 13 the substance of the claim being asserted and DENIES 14 Defendant’s Motion for a More Definite Statement of 15 Plaintiff’s tortious interference claims. 16 17 IV. CONCLUSION Based on the foregoing, the Court GRANTS in part 18 and DENIES in part Defendant’s Motion to Dismiss, 19 GRANTS in part and DENIES in part Defendant’s Motion to 20 Strike, and DENIES Defendant’s Motion for a More 21 Definite Statement as follows: 22 • The Court GRANTS Defendant’s Motion to Dismiss 23 Plaintiff’s Trade Libel claim and gives 24 Plaintiff twenty days to amend. 25 • The Court DENIES Defendant’s Motion to Dismiss 26 Plaintiff’s claim for Intentional Interference 27 with Prospective Economic Advantage. 28 • The Court DENIES Defendant’s Motion to Dismiss 24 1 Plaintiff’s claim for Negligent Interference 2 with Prospective Economic Advantage. 3 • The Court GRANTS Defendant’s Motion to Dismiss 4 Plaintiff’s claim for violation of the Clayton 5 Antitrust Act and gives Plaintiff twenty days 6 to amend. 7 • The Court GRANTS Defendant’s Motion to Dismiss 8 Plaintiff’s claim for violation of Unfair 9 Business Practices [Cal. Bus. & Prof. Code § 10 17043] and gives Plaintiff twenty days to 11 amend. 12 • The Court DENIES Defendant’s Motion to Dismiss 13 Plaintiff’s claim for violation of Unfair 14 Business Practices [Cal. Bus. & Prof. Code §§ 15 17200 et seq.]. 16 • The Court GRANTS Defendant’s Motion to Strike 17 Plaintiff’s fraud allegations and gives 18 Plaintiff twenty days to amend and DENIES 19 Defendant’s Motion to Strike Plaintiff’s 20 allegations regarding patents. 21 22 • The Court DENIES Defendant’s Motion for a More Definite Statement. 23 /// 24 /// 25 /// 26 /// 27 /// 28 /// 25 1 Additionally, the Court DENIES as moot Defendant’s 2 Request for Judicial Notice. 3 4 5 6 IT IS SO ORDERED. 7 DATED: September 24, 2013 8 9 10 HONORABLE RONALD S.W. LEW Senior, U.S. District Court Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26

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