XimpleWare, Corp v. Versata Software, Inc. et al

Filing 128


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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 XIMPLEWARE CORP., Case No. 13-cv-05160-SI Plaintiff, 8 v. 9 10 United States District Court Northern District of California 11 VERSATA SOFTWARE, INC.; TRILOGY DEVELOPMENT GROUP, INC.; AMERIPRISE FINANCIAL, INC.; and AUREA SOFTWARE, INC., ORDER RE: PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION AND DEFENDANT'S ADMINISTRATIVE MOTION TO FILE UNDER SEAL 12 Defendants. 13 14 On November 21, 2014, the Court held a hearing on plaintiff XimpleWare Corporation’s 15 motion for preliminary injunction. Docket Nos. 102, 125. Also before the Court is defendant 16 17 18 Versata Software, Inc.’s motion to file under seal. For the reasons set forth below the Court GRANTS IN PART and DENIES IN PART XimpleWare’s motion for preliminary injunction; and GRANTS Versata’s motion to file under seal. 19 20 BACKGROUND 21 Plaintiff XimpleWare is a California corporation that develops, designs, and distributes 22 computer software. First Amended Complaint (FAC) ¶¶ 2-3. Zhengyu Zhang and Hui Tian 23 founded XimpleWare in 2002 and in 2004 Zhang began writing the XimpleWare source code. Id. 24 ¶¶ 19-20. This source code is an “XML parser,” which is a piece of software that reads and 25 translates information stored in Extensible Markup Language (XML) documents. Id. ¶¶ 16-18. 26 According to XimpleWare, its source code and software product, known as “VTD-XML,” reads 27 and parses XML at a rate estimated to be five to ten times faster than other current XML parsing 28 1 programs. Id. ¶ 35. XimpleWare decided to license its source code as open source software under 2 a GNU General Public License (GPL).1 Id. ¶ 26. In summer 2013, XimpleWare learned of a lawsuit brought by Versata Software Inc. 4 against Ameriprise in Texas state court, alleging that Ameriprise materially breached Versata’s 5 DCM software license. Id. ¶¶ 49, 50. On November 5, 2013, XimpleWare filed this suit against 6 Versata and Ameriprise for copyright infringement, violation of the Lanham Act, breach of 7 contract, breach of good faith and fair dealing, unjust enrichment, intentional interference with 8 prospective economic advantage, unfair competition, and declaratory relief. 2 9 XimpleWare claims Versata is liable for copyright infringement, alleging Versata’s DCM software 10 product incorporated XimpleWare’s VTD-XML and that Versata commercially distributed its 11 United States District Court Northern District of California 3 DCM product without obtaining a commercial license or permission for the use of XimpleWare’s 12 products, or complying properly with the GPL license. FAC ¶¶ 55-58. Additionally, XimpleWare 13 alleges that Ameriprise distributed Versata’s DCM and VTD-XML to thousands of non-employee 14 financial advisors, thereby violating the GPL.3 Id. ¶¶ 60-61. Docket No. 1. 15 XimpleWare seeks a preliminary injunction barring: (1) Versata from delivering new 16 copies of the DCM software to its customers or otherwise publishing the DCM and; (2) 17 Ameriprise from deploying the DCM to new or existing users. 18 XimpleWare’s second motion to enjoin defendants; the Court denied XimpleWare’s motion for a 19 Temporary Restraining Order in December, 2013.4 Docket Nos. 12, 45. Motion at 1. This is 20 On November 10, 2014, the Court issued an order directing Versata to come to the hearing 21 on plaintiff’s Motion for Preliminary Injunction prepared to present to the Court and XimpleWare 22 23 24 25 26 27 28 1 Open source software is software whose source code is available to the public, free of charge, to use, copy, modify, sublicense, or distribute, subject to the terms of an open source license. FAC ¶ 23. The GNU General Public License is an open source license that prohibits users from copying, modifying, sublicensing, or distributing the software except as expressly provided under the license. Id. ¶ 32. 2 The initial complaint was amended on December 17, 2013. Docket No. 48. 3 XimpleWare maintains Ameriprise made these outside distributions without any attribution to XimpleWare, without XimpleWare’s copyright notice, without reference to XimpleWare’s source code, and without any offer to convey the XimpleWare source code. FAC ¶ 61. 4 Previously, the Court held that XimpleWare failed to show irreparable injury, and therefore denied its application for a Temporary Restraining Order. Docket No. 45. 2 1 proof that the DCM patch is installed and functioning for all of Versata’s DCM customers as well 2 as a statement from Ameriprise that the second patch provided by Versata is functioning. Docket 3 No. 119. At the hearing held November 21, 2014, the Court instructed Versata to file with the 4 Court documentation as to the functioning of the patch at its customers. 5 DISCUSSION 6 I. 7 XimpleWare’s Motion for Preliminary Injunction “[I]njunctive relief to prevent copyright infringement is available as an equitable remedy 9 in the court’s discretion.” Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 994 (9th 10 Cir. 2011). In order to obtain a preliminary injunction, a plaintiff “must establish that he is likely 11 United States District Court Northern District of California 8 to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary 12 relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” 13 Winter v. Natural Resources Defense Council, 555 U.S. 7, 20 (2008) (citations omitted). This is 14 commonly referred to as the “four-factor test” for preliminary injunctive relief. Flexible Lifeline 15 Sys., Inc., 654 F.3d at 994. The Supreme Court has been “very clear that even where infringement 16 had been proven, a plaintiff may not be granted injunctive relief until he satisfies the four-factor 17 test, which includes demonstrating irreparable injury.” 18 MercExchange, L.L.C., 547 U.S. 388, 394 (2006)).1 This principle applies to both patent and 19 copyright cases: “a presumption of irreparable harm is equally improper in a case based on 20 copyright infringement as it is in a case based on patent infringement.” Id. at 996 (citing eBay, 21 547 U.S. at 388). Id. at 995 (citing eBay Inc. v. 22 XimpleWare renews its prior request for an injunction, arguing that Versata has failed to 23 uphold the representations it made to the Court over ten months ago. Reply at 2. At the previous 24 25 26 27 28 1 The Ninth Circuit had a “long-standing practice of presuming irreparable harm upon the showing of likelihood of success on the merits in a copyright infringement case.” Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 995 (9th Cir. 2011). However, since the Supreme Court’s decisions in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) and Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008), this practice is no longer good law. Id. 3 1 hearing on XimpleWare’s motion for a temporary restraining order, the Court noted the 2 representations made by Versata that they had no new sales of their DCM software, did not 3 anticipate any additional sales during the 2013 calendar year, and that all references to 4 XimpleWare in the previously created versions of DCM were removed and a patch was created 5 and would be sent to all of Versata’s customers. Docket No. 46, pg. 37. The Court also stated that 6 it would require, in the future, proof that the representations made by Versata did in fact happen. 7 Id. 8 XimpleWare contends that to date, it has not been offered any evidence of Versata’s 9 delivery of a successful patch to its DCM customers. Docket No. 103, Russo Decl. ¶ 8; Docket No. 104, Halliburton Decl. ¶ 5; Reply at 2. 11 United States District Court Northern District of California 10 At the November 21, 2014 hearing, Versata represented to the Court that it had delivered and installed the patch to four of its eight DCM 12 customers and the patch was successfully functioning for those customers. Docket No. 124 at 7. 13 Versata further stated that it delivered the patch to its four other DCM customers but could not 14 represent that the patch was commercially installed or functioning. 15 requested injunctive relief in the form of a Court order instructing Versata to comply with a final 16 deadline or require Versata to procure a license from XimpleWare.5 Id. at 8. Versata stated that 17 buying a commercial license to use XimpleWare is “something that Versata would be happy to 18 do.” Id. at 14. Id. XimpleWare then 19 Therefore, the Court orders that by no later than February 28, 2015, Versata must provide 20 to the Court evidence—similar to that it provided at the November 21, 2014 hearing—that the 21 patch is commercially installed and functioning at the remaining four DCM customers, or 22 alternatively show cause why it has not purchased a license from XimpleWare to account for the 23 remaining users of XimpleWare's VTD-XML product. 24 25 26 27 28 5 Versata's Request for Judicial Notice, filed after the November 21, 2014 hearing, suggests that XimpleWare is requesting that this Court order Versata’s customers to purchase a license from XimpleWare. Docket No. 127 at 2. However, as discussed at the November 21, 2014 hearing, the issue is whether “Versata should just buy a commercial license to use XimpleWare.” Docket No. 124 at 14. With the exception of Ameriprise, Versata's customers are not parties to this action. 4 1 II. Versata’s Administrative Motion to File Under Seal 2 Versata has filed an administrative motion to file under seal documents submitted to the 3 Court in compliance with the Court’s November 21, 2014 instruction and November 10, 2014 4 order. Docket No. 121. Versata has submitted the declaration of Steven Mitby in support of its 5 administrative motion. Docket No. 121-1. With the exception of a narrow range of documents that are “traditionally kept secret,” 7 courts begin their sealing analysis with “a strong presumption in favor of access.” Foltz v. State 8 Farm Mut. Auto. Ins., 331 F.3d 1122, 1135 (9th Cir. 2003). “A stipulation, or a blanket protective 9 order that allows a party to designate documents as sealable, will not suffice to allow the filing of 10 documents under seal.” Civ. L.R. 79-5(a). When applying to file documents under seal in 11 United States District Court Northern District of California 6 connection with a dispositive motion, the party seeking to seal must articulate “compelling reasons 12 supported by specific factual findings that outweigh the general history of access and the public 13 policies favoring disclosure, such as the public interest in understanding the judicial process.” 14 Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178-79 (9th Cir. 2006) (internal 15 quotations and citations omitted). Where a party seeks to seal documents attached to a non- 16 dispositive motion, a showing of “good cause” under Federal Rule of Civil Procedure 26(c) is 17 sufficient. Id. at 1179-80; see also Fed. R. Civ. P. 26(c). In addition, all requests to file under seal 18 must be “narrowly tailored,” such that only sealable information is sought to be redacted from 19 public access. Civ. L.R. 79-5(b). 20 The Court has considered each of the documents designated as confidential and the 21 corresponding declaration and concludes that Versata has sufficiently shown good cause for filing 22 the documents under seal. Accordingly, the Court GRANTS Versata’s motion to file under seal. 23 24 CONCLUSION 25 Versata is hereby ordered to provide the Court evidence that the patch is commercially 26 installed and functioning at the remaining four DCM customers no later than February 28, 2015, 27 or show cause why it has not purchased a license from XimpleWare to account for the remaining 28 users of XimpleWare's VTD-XML product. 5 1 The Court also GRANTS Versata’s motion to file under seal. 2 3 4 5 6 7 IT IS SO ORDERED. Dated: November 25, 2014 ______________________________________ SUSAN ILLSTON United States District Judge 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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