Lilith Games (Shanghai) Co. Ltd. v. uCool, Inc. et al

Filing 117

ORDER (REDACTED) denying 30 MOTION for Preliminary Injunction filed by Lilith Games (Shanghai) Co. Ltd.. Signed by Judge Samuel Conti on 9/23/2015. (sclc1S, COURT STAFF) (Filed on 9/23/2015)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court

For the Northern District of California

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LILITH GAMES (SHANGHAI) CO.
LTD.,

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Plaintiff,
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v.
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UCOOL, INC. AND UCOOL LTD.,

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Defendants.

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Case No. 15-CV-01267-SC
ORDER DENYING PLAINTIFF'S
MOTION FOR PRELIMINARY
INJUNCTION

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I. INTRODUCTION
Now before the Court is Plaintiff Lilith Games Co.'s

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("Lilith") motion for preliminary injunction.

ECF No. 30 ("Mot.").

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Lilith brings this motion to enjoin Defendants uCool, Inc. and

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uCool LTD ("uCool") from "any further misappropriation of Lilith's

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trade secret" and from "reproducing, copying, preparing any

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derivative works, and/or distributing any of Lilith's registered

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copyrights . . . which necessarily includes Lilith's code that is

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now unlawfully contained in uCool's game Heroes Charge . . . ."

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Mot at 24.

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///

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The motion is fully briefed,1 and oral argument was held on

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September 11, 2015.

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argument, and the relevant law, and for the reasons discussed

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herein, Lilith's motion to preliminarily enjoin uCool is DENIED,

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and uCool's evidentiary objections are OVERRULED.

Having considered the parties' submissions,

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II. BACKGROUND

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Plaintiff Lilith is a video game developer that released the

United States District Court

For the Northern District of California

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game Dao Ta Chuan Qi (translated as "Sword and Tower")2 in China in

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February 2014.

Lilith holds Chinese copyright registrations in

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Sword and Tower's Lua3 source code and alleges that it owns the

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copyrights to that code pursuant to Chinese copyright law.

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and Tower has enjoyed great commercial success, and as of August

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2014, was the leading game in Asia.

Sword

Mot. at 5.

Defendant uCool is a video game marketer who allegedly

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obtained access to Lilith's copyrighted software code for Sword and

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Tower and used it to create its own game, Heroes Charge, which it

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published in the United States in August 2014.

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1

ECF Nos. 69 ("Opp'n"), 77 ("Reply"), 87-1 ("Surreply").
2
The game has also been referred to as "Dota Legends". See, e.g.,
ECF No. 43-01 ¶ 2.
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Lua is a programming language commonly used to develop video
games.

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2

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August 2014, at which point it attempted to resolve the dispute by

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United States District Court

Lilith first learned of uCool's allegedly unlawful copying in

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For the Northern District of California

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issuing a take-down notice to Apple.5

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correspondence through the end of November 2014, when those talks

The parties then exchanged

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stalled without any action from Apple regarding the takedown

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request.
In March 2015, Lilith decided to release Sword and Tower in

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countries outside of China including the United States, Japan, and

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certain European countries.

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the games and because Heroes Charge was already active in many of

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these countries, many users believed that Sword and Tower had been

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copied from Heroes Charge and posted comments to that effect on the

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internet.

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evidence that uCool's alleged copying has created ongoing damage to

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Lilith's reputation and confusion in the marketplace.

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also claims that it has been unable to enter into an exclusive

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distribution agreement in the United States as a result of the

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presence of Heroes Charge in the US market.

Because of the similarities between

See Mot. at 12-13.

Lilith cites these comments as

Id.

Lilith

Id.

Shortly thereafter on March 18, 2015, Lilith filed this action

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-- four months after talks with uCool had broken down.

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Lilith

See https://www.youtube.com/watch?v=GdGKx_IhVbg
Heroes Charge is sold through the Apple and Android (Google Play)
app stores.

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small start-up6 and was reluctant to become involved in costly

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litigation until it was necessary.

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until March 2015, according to Lilith, because the harm to Lilith

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in the form of damage to its reputation and its inability to secure

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exclusive distribution agreements did not become apparent until

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March 2015 when Lilith attempted to enter markets where Heroes

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United States District Court

argues that the four month delay was justified because Lilith is a

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For the Northern District of California

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Charge had already been released.

Filing suit was not necessary

In its first claim for relief for copyright infringement,

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Lilith alleges that uCool copied Lilith's copyrighted source code

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embodied in Sword and Tower and used it to create the source code

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for Heroes Charge.

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work as defined in 17 U.S.C. Section 101, Lilith brings its

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copyright infringement claim under the Berne Convention, an

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international agreement governing copyright.

Because Sword and Tower is not a United States

In its second claim for relief, Lilith alleges that 240,000

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lines of Lua code embodied in Sword and Tower is a trade secret and

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that uCool knowingly misappropriated that trade secret in violation

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of California's Uniform Trade Secrets Act (Cal. Civ. Code § 3426,

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et seq.) when it allegedly used Lilith's code to create Heroes

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Charge.

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evidence of efforts made to maintain the confidentiality of its

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source code.

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secure server and limits access only to those employees who need it

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to perform their duties.

In support of its trade secret claim, Lilith has presented

For example, Lilith stores the source code on a

Lilith also encrypts the Sword and Tower

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It is unclear what Lilith means by "small start-up," particularly
given that Lilith owns the most popular game in Asia.

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source code so that it cannot be easily deciphered.

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one employees who have had access to the source code, however, only

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five signed confidentiality agreements prior to this litigation.

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Two weeks after filing its complaint, Lilith filed a motion
for preliminary injunction.

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withdrew its motion as a result of a dispute with uCool relating to

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a mutual exchange of source code for analysis but re-filed the

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United States District Court

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For the Northern District of California

ECF No. 17.

Of the twenty-

On April 22, 2015, Lilith

motion on May 5, 2015.

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motion for an extension of time so that both sides could perform

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limited discovery prior to the close of briefing on this motion,

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including a mutual exchange of source code.

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response to Lilith's discovery requests, uCool produced a new

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version of the Heroes Charge source code that had yet to be

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released.

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language called C#.

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the Lua version of the Heroes Charge source code.

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analyzed the code that was produced and submitted expert

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declarations as part of their briefing on this motion.

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Nos. 69-17 ("Kitchen Decl."), 74-4 ("Roman Decl."), 109 ("Suppl.

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Roman Decl.").

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the Court heard oral argument on September 11, 2015, at which the

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parties agreed they could be ready for trial in approximately nine

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months.

On June 4, 2015, the Court granted uCool's

ECF No. 48.

In

This new version was written in a different programming
Subsequently, uCool also produced portions of
Both parties

See ECF

In addition to the briefs and supporting papers,

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III. LEGAL STANDARD

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Before a court can grant preliminary injunctive relief, a

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plaintiff must first "establish that he is likely to succeed on the

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merits, that he is likely to suffer irreparable harm in the absence

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of preliminary relief, that the balance of equities tips in his

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favor, and that an injunction is in the public interest."

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Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877

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(9th Cir. 2009) (citations omitted).

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as the "four-factor test."

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577 F.3d 1015, 1021 (9th Cir. 2009).

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Marlyn

This is commonly referred to

See, e.g., Sierra Forest Legacy v. Rey,

Although it was once Ninth Circuit law that a plaintiff in

United States District Court

For the Northern District of California

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copyright cases was entitled to a presumption of irreparable harm

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on a showing of likelihood of success on the merits, the Supreme

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Court ended that practice in eBay Inc. v. MercExchange, L.L.C..

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See 547 U.S. 388, 393-94 (2006) ("[T]his Court has consistently

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rejected invitations to replace traditional equitable

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considerations with a rule that an injunction automatically follows

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a determination that a copyright has been infringed.").

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later in Winter v. Natural Res. Def. Council, Inc., the Court

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further held that the Ninth Circuit's rule allowing for a mere

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"possibility" of irreparable harm was insufficient.

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7, 20 (2008).

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"even in a copyright infringement case, the plaintiff must

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demonstrate a likelihood of irreparable harm as a prerequisite for

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injunctive relief."

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Inc., 654 F.3d 989, 998 (9th Cir. 2011) (emphasis added).

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Moreover, because a preliminary injunction "is an extraordinary

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remedy never awarded as of right," a district court may decide to

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deny a preliminary injunction pursuant to its equitable discretion

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even where success on the merits is likely.

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24; see 17 U.S.C. § 502(a) (providing that a court "may . . . grant

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temporary and final injunctions on such terms as it may deem

Two years

See 555 U.S.

Thus, as the Ninth Circuit has since clarified,

Flexible Lifeline Sys. v. Precision Lift,

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Winter, 555 U.S. at

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reasonable to prevent or restrain infringement of a copyright")

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(emphasis added); eBay Inc., 547 U.S. at 391 (2006); Perfect 10,

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Inc. v. Google, Inc., 653 F.3d 976, 980 (9th Cir. 2011).

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Although eBay and Winters require district courts to consider

preliminary injunction, the Ninth Circuit has held that the factors

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may be balanced such that "a stronger showing of one element may

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United States District Court

each of the factors of the four-factor test before granting a

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For the Northern District of California

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offset a weaker showing of another."

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v. Cottrell, 632 F.3d 1127, 1131 (9th Cir.2011).

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Alliance for the Wild Rockies

In denying a preliminary injunction, however, a court need not

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make findings on all four factors if fewer factors are dispositive

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of the issue.

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consideration of [the balance of hardships and the effect of the

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preliminary injunction on the public interest] alone requires

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denial of the requested injunctive relief.

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do not address the lower courts' holding that plaintiffs have also

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established a likelihood of success on the merits."); Global

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Horizons, Inc. v. United States Dep't of Labor, 510 F.3d 1054, 1058

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(9th Cir. 2007) ("Once a court determines a complete lack of

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probability of success or serious questions going to the merits,

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its analysis may end, and no further findings [on irreparable harm,

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balance of hardships, or public interest] are necessary.").

See Winter, 555 U.S. at 23–24 ("A proper

For the same reason, we

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IV. DISCUSSION

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A.

Mootness

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In its opposition, uCool argues that Lilith's motion is moot

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because uCool recently completed a rewrite of the Heroes Charge

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source code using a different programming language.

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This new

of Lua, the language used by Lilith to write the source code for

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Sword and Tower.

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his declaration showing that the source code is still substantially

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similar notwithstanding the rewrite, including significant portions

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that were "literally copied and are identical" or "copied and then

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translated, modified, reordered, or otherwise obscured in such a

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United States District Court

version of Heroes Charge uses the programming language C# instead

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For the Northern District of California

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way that common code comparison programs would not be able to

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detect the similarities."

Lilith's expert, however, presented evidence in

Roman Decl. ¶ 43.

uCool counters that

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(1) Lilith's analysis only specifically pointed to 19 lines of

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code, (2) C# is so different from Lua "that the new code cannot

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have been copied from Lilith's code but must have been built from

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scratch", and (3) Lilith's analysis focused on external files and

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abstract elements that are not related to the code at issue.

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Surreply at 4.

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The C# version of Heroes Charge was being used by less than 1%

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of users as of the date of the hearing on this motion.

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users continue to use a Lua version of the game, which the parties

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agree contains "significant similarities" to the Lua code embodied

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in Sword and Tower.

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over whether the C# version of Heroes Charge is substantially

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similar to the Lua version of Sword and Tower, therefore, is

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largely academic.

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sections, insofar as the C# version of Heroes Charge merely

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translated Lilith's code from Lua to C#, it would still infringe on

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Lilith's copyright in the same way that a French translation of an

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English novel would infringe on the latter's copyright.

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Kitchen Decl. ¶ 135.

Over 99% of

The parties' dispute

Furthermore, as explained in subsequent

Accordingly, the Court finds that Lilith's motion is not moot.

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B.

Likelihood of Success on the Merits

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Lilith pleads two claims in its Second Amended Complaint:

No. 83 ("SAC").

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likelihood of success on at least one of its claims, it need not

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demonstrate an absolute certainty of success.

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Coughlin, 754 F.2d 1015, 1024–1025 (2d Cir. 1985); Netlist Inc. v.

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United States District Court

copyright infringement and trade secret misappropriation.

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For the Northern District of California

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Diablo Techs., Inc., No. 13-cv-05962, 2015 U.S. Dist. LEXIS 3285,

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at *19-20 (N.D. Cal. Jan. 12, 2015).
1.

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See ECF

While Lilith must set forth evidence to support a

See Abdul Wali v.

Copyright Infringement

In order to demonstrate a likelihood of success on its

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copyright claim, Lilith must show (1) ownership of a valid

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copyright and (2) copying of the original elements of the protected

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work.

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361 (1991).

Feist Publications v. Rural Tel. Serv. Co., 499 U.S. 340,

a.

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Ownership

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Because Lilith claims it owns a Chinese copyright to the

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source code in Sword and Tower, ownership is a question of Chinese

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law.

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F. Supp. 2d 1172, 1174 n.4 (C.D. Cal. 2007).

See Lahiri v. Universal Music & Video Distribution, Inc., 513

Article 59 from the People's Republic of China Copyright Law

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("PRCCL") provides that the State Council is responsible for

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setting measures for the protection of computer software.

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69-2 ("PRCCL Amendments") at 25-26 ("Article 59:

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protection of computer software and of the right of communication

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through information network shall be formulated separately by the

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State Council.") (emphasis added).

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///

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ECF No.

Measures for the

Pursuant to that mandate, the

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State Council has issued Regulations on Computer Software

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("Software Regulations").

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ECF No. 77-9 ("Chu Decl.") ¶ 9.

Article 7 of the Software Regulations states that registration

¶¶ 10-12.

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in a piece of software belongs to its developer."

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organization's "name is mentioned in connection with a piece of

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United States District Court

of a copyright is prima facie evidence of copyright ownership.

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For the Northern District of California

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Id.

software," the organization, "shall, in the absence of proof to the

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contrary, be its developer."

The Software Regulations also state that the "copyright

Id.

Id. ¶ 10.

If an

In addition, Article 13 provides

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that, if an employee develops a piece of software in the course of

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his or her employment, the employer is the owner if just one of the

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following conditions are met:

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(1) the software is developed based on the development
objective explicitly designated in the line of his
service duty;
(2) the software is a foreseeable or natural result of
his work activities in the line of his service duty; or

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(3) the software is developed mainly with the material
and technical resources of the legal entity or other
organization, such as funds, special equipment or
unpublished special information, and the legal entity or
other organization assumes the responsibility thereof.

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Id. ¶ 13.
Here, Lilith owns valid Chinese copyright registrations and

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therefore has provided prima facie evidence of copyright ownership

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under Chinese law.

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undisputed that Lilith is the entity that filed for and obtained

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the copyright registrations and that these registrations expressly

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list Lilith as the copyright owner.

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of the Sword and Tower source code and the copyright for Sword and

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Tower consequently belongs to Lilith.

ECF Nos. 17-1 ¶ 4, 17-2.

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In addition, it is

Thus, Lilith is the developer

Finally, even though the

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source code for Sword and Tower was developed by Lilith's

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employees, Lilith retains ownership of the copyright even if it did

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not secure assignments from those employees because it meets all of

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the conditions set out in Article 13 of the Software Regulations.

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For these reasons, the Court finds that Lilith is likely to
prove copyright ownership at trial.
b.

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Copying

United States District Court

For the Northern District of California

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Copying can be established by either presenting direct

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evidence of copying, or absent that, circumstantial evidence that

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the infringer (1) had access to the copyrighted work, and (2) that

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the parties' works are substantially similar.

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Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir. 2012).
i.

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L.A. Printex Indus.

Access

"Circumstantial evidence of reasonable access is proven in one

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of two ways: (1) a particular chain of events is established

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between the plaintiff's work and the defendants access to that work

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. . . , or (2) the plaintiff's work has been widely disseminated."

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Three Boys Music Corp. v. Bolton, 212 F.3d 477, 482 (9th Cir.

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2000).

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uCool's access is demonstrated by the fact that Lilith's

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copyright declaration can be found in at least one version of

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Heroes Charge.

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recording of the copyright declaration appearing in Heroes Charge).

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Lilith also argues that uCool had access because Sword and Tower

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has been widely disseminated since its release in February 2014.

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It is unclear, however, how this latter argument is relevant unless

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the source code is included anytime a user downloads the game from

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the app store.

See ECF No. 19 ("Ray Decl.") (providing a video

It is the Court's understanding that the source

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code is not disseminated with the game itself, and therefore the

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fact that Sword and Tower has been "downloaded over 29 million

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times through one distribution channel alone" does not help to

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establish access.

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of Lilith's copyright declaration alone, the Court concludes that

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Lilith is likely to satisfy the element of access at trial.
ii.

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United States District Court

For the Northern District of California

Regardless, based on the presence

Substantial Similarity

Computer programs, including video games, are protected under

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Mot. at 16.

copyright law as literary works containing both literal and non-

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literal elements.7

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WHA, 2010 WL 2198204, at *4 (N.D. Cal. May 28, 2010).

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literal elements of a book are the words themselves, the literal

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elements of a computer program are the alphanumeric instructions

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written by a programmer –- i.e., the source code.

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Controls, Inc. v. Phoenix Control Sys., Inc., 886 F.2d 1173, 1175

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(9th Cir. 1989).

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elements, expressive aspects of the source code steps removed from

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the alphanumeric instructions themselves.

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non-literal elements include the characters, setting, and plot

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created by the words on the page.

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elements of a computer program include expressive elements created

See Miller v. Facebook, Inc., No. C 10-00264
Just as the

See Johnson

This can be contrasted with the non-literal

In the case of a book,

Similarly, the non-literal

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The distinction between literal and non-literal elements is
separate from the distinction between literal and non-literal
copying. See Altai, 982 F.2d at 701–02. "Literal" copying is
verbatim copying of original expression. "Non-literal" copying is
"paraphrased or loosely paraphrased rather than word for word."
Lotus Dev. Corp. v. Borland Int'l, 49 F.3d 807, 814 (1st Cir.
1995). Both types of copying are unlawful, and both are at issue
in this case. The Court uses the word "literal" in this order,
however, to distinguish the types of protectable elements, not as a
synonym for verbatim copying.

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user interface (including artwork and other visual elements

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embodied in the code); and -- in the case of sophisticated video

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games -- the plot, characters, and setting of the game.

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1175.

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computer program extends to both literal and non-literal elements

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of a computer program.

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United States District Court

by the source code: the code's order, sequence, and structure; the

2

For the Northern District of California

1

Altai, Inc., 982 F.2d 693, 702 (2d Cir. 1992).

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will examine each in turn.

See id. at

It is well established that copyright protection for a

See id.; Computer Associates Int'l, Inc. v.

1.

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Thus, the Court

Literal Elements

Substantial similarity in the literal elements of a computer

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12

program can be demonstrated either by showing verbatim (or near

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verbatim) copying of the source code or that the "fundamental

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essence" of the code was duplicated.

15

§ 13.03.

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a book passage is duplicated when an infringer paraphrases the

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passage or simply translates it into a different language.

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Similarly, copying will be found where source code is translated

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from one programming language to another or where insignificant

20

changes are made, such as replacing certain terms, reordering lines

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of code, or adding or removing comments.8

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53 (listing common methods used to obfuscate copying).

Returning to the book analogy, the fundamental essence of

See also Roman Decl. ¶

If at least some amount of copying can be shown, whether the

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24

See 4-13 Nimmer on Copyright

works are substantially similar turns on whether the copying is

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26
27

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Similarly, such minor variations violate a
exclusive right to create derivative works.
Copyright § 3.01 ("a work will be considered
if it would be considered an infringing work

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13

copyright holder's
See 1-3 Nimmer on
a derivative work only
. . . .").

1

sufficiently extensive to constitute a substantial portion of the

2

plaintiff's work.

3

quantitative relation of the similar material to the total material

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contained in plaintiff's work is certainly of importance.

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even if the similar material is quantitatively small, if it is

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qualitatively important, the trier of fact may properly find

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substantial similarity."

4-13 Nimmer on Copyright § 13.03.

"The

However,

Id.

United States District Court

For the Northern District of California

8

Lilith embedded within the Sword and Tower source code a

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copyright declaration that, if triggered, results in a pop-up

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window that reads "LILITH GAMES ©."

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convincing evidence that at least one version of Heroes Charge

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contains the code that triggers this copyright declaration.

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Ray Decl..

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pop-up, it conspicuously fails to identify the version of Heroes

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Charge used in those attempts -- that is, whether it used the same

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version used by Lilith (Version 1.8.1) or whether it used later

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versions that uCool had changed subsequent to the start of this

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litigation to prevent the pop-up from appearing.

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refused to provide this information in discovery.

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3, 9, 11.

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Lilith provided the Court with

See

Although uCool claims it was unable to replicate the

uCool also
ECF No. 77-1 ¶¶

The appearance of Lilith's copyright declaration in uCool's

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game is sufficient to establish more than a de minimis level of

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copying.

24

3428 PSG, 2013 U.S. Dist. LEXIS 8113, at *34-36 (N.D. Cal. Jan. 10,

25

2013) (holding that the copying of 145 lines of copyrighted code

26

provided substantial evidence that defendants' actions exceeded

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merely de minimis copying of code).

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Lilith presented other evidence of widespread duplication.

See Brocade Commc'ns Sys v. A10 Networks, Inc., No. 10-

14

If that were not enough,
For

the source code in Sword and Tower as compared to the C# version of

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Heroes Charge.

4

Heroes Charge is identical, merely translated into C#, or

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insignificantly modified.

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79, 87, 88, 97-99.

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of the source code in Sword and Tower as compared to a Lua version

8

United States District Court

example, Lilith provided the Court with side-by-side comparisons of

2

For the Northern District of California

1

of Heroes Charge.

The comparison showed again that much of the

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code is identical.

See, e.g., Suppl. Roman Decl. ¶¶ 16-20, 22.

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The comparisons show that much of the code in

See, e.g., Roman Decl. ¶¶ 70, 71, 74,

Lilith also provided the Court with comparisons

Considering the literal elements of the source code alone, the

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Court finds that a finder of fact is likely to conclude that the

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source code for Heroes Charge is substantially similar to the

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source code for Sword and Tower.

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examines the non-literal elements of the source code in the

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following section.
2.

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Nevertheless, the Court also

Non-Literal Elements

Whether the non-literal elements of a program "are protected

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depends on whether, on the particular facts of each case, the

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component in question qualifies as an expression of an idea, or an

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idea itself."

21

filtration-comparison" test formulated by the Second Circuit and

22

expressly adopted by several other circuits.

23

Accolade, Inc., 977 F.2d 1510, 1525 (9th Cir. 1992) ("In our view,

24

in light of the essentially utilitarian nature of computer

25

programs, the Second Circuit's approach is an appropriate one.").

26

As the Second Circuit explains, this test has three steps.

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abstraction step, the court identifies which aspects of the program

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constitute its expression and which are the ideas.

Id.

The Ninth Circuit has endorsed an "abstraction-

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Sega Enters. Ltd. v.

In the

In the

1

filtration step, the court "sift[s] out all non-protectable

2

material," including ideas and "expression that is necessarily

3

incidental to those ideas."

4

court compares the remaining creative expression with the allegedly

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infringing program.

6

Id. at 706.

In the final step, the

In the expert declaration of Kendyl Roman, Lilith provided an

United States District Court

analysis of the non-literal elements of the Lua source code from

8
For the Northern District of California

7

Sword and Tower and the C# source code from Heroes Charge.

9

Roman states that he applied the abstraction-filtration-comparison

Mr.

10

test in his analysis.

11

application of each step, and it is not entirely clear as a result

12

whether all of the similarities to which he points are protected by

13

copyright.

14

similarities across a significant number of copyrighted elements.

15

For example, at the component level of abstraction, similar groups

16

of files are found in similar directories, such as the files for

17

the user interface.

18

chart level of abstraction, the sequences show that the same

19

algorithm is being implemented.

20

parameter list level of abstraction, the function calls show

21

identical and equivalent parameter lists.

22

the function level of abstraction, many of the functions are

23

identical and show up in the same order inside the file.

24

Mr. Roman, however, failed to document his

Nevertheless, it is clear that there are substantial

Roman Decl. ¶ 67.

In addition, at the flow

Id. ¶ 80.

Further, at the

Id. ¶ 81.

Finally, at

Id. ¶ 82.

Lilith also presents evidence of significant similarities

25

between the Lua versions of both games.

See generally Suppl. Roman

26

Decl..

27

analysis, uCool's own expert admitted in his declaration that

28

"there are significant similarities between the Lua source code for

Although uCool attempts to dispute some aspects of Lilith's

16

1

Heroes Charge and the Lua source code for [Sword and Tower],

2

including similarities in [non-literal elements such as] structure,

3

function calls, and parameter values."

Kitchen Decl. ¶ 135.

After considering expert reports from both sides, the Court

4

literal elements of both the Lua and C# versions of Heroes Charge

7

are substantially similar to the non-literal elements of Sword and

8

United States District Court

finds that a finder of fact is likely to conclude that the non-

6

For the Northern District of California

5

Tower.
3.

9

User Interface

The forgoing analysis is sufficient to establish that Lilith

10
11

is likely to succeed in showing substantial similarity at trial.

12

This includes evidence that uCool copied the source code itself

13

(verbatim, with slight modifications, or by translating it from Lua

14

to C#) as well as non-literal elements of the source code,

15

including its structure, sequence, and organization.

16

remains, however, whether the Court should also take into

17

consideration the visual elements of the games as they appear on

18

the computer screen as well as other aspects perceived by users

19

(collectively "the user interface"9).

The question

20

Both parties assert that Lilith's claims "present a relatively

21

straightforward question of whether uCool copied Lilith's protected

22

source code –- a question that will be largely resolved by

23

comparing the alphanumeric instructions read by a computer . . . ."

24

ECF No. 61 at 1-2, Opp'n at 1.

Lilith also argues, however, that

25
26
27

9

"The user interface, also called the 'look and feel' of the
program, is generally the design of the video screen and the manner
in which information is presented to the user. Johnson Controls,
Inc., 886 F.2d at 1176 n.3.

28

17

they "constitute circumstantial evidence of uCool's unlawful

3

copying [of the Sword and Tower source code]" (Reply at 8).

4

addition, Lilith points in its Second Amended Complaint ("SAC") to

5

the user interface as one of the expressive elements of its source

6

code protected by its copyright.

7

screenshots comparing the visual elements of the two games).

8

United States District Court

the similarities in the games' user interfaces are relevant because

2

For the Northern District of California

1

uCool, however, contends that the Court should strike these and

9

similar references in Lilith's filings because Lilith "waived any

In

See SAC ¶ 13 (providing various

10

argument that it is asserting a copyright in the [user interface]"

11

and admitted in its opposition to the motion to intervene "that

12

comparing screen images is irrelevant to this lawsuit."

13

23.

14

OVERRULED and its request to strike is DENIED.

Opp'n at

For the reasons set forth below, Lilith's objection is

Lilith did not waive its ability to point to the visual

15
16

similarities between the games.

17

comparing the user interfaces.

18

Lilith that it would not have been relevant to this case to compare

19

the intervenors' images with the parties' images.10

20

whether the parties' images infringed the intervenors' copyrighted

21

images is immaterial to whether uCool infringed Lilith's

22

copyrighted source code.

23
24
25
26
27

It included in its SAC screenshots
Further, the Court agrees with

After all,

The same cannot be said, however, about

10

On August 17, 2015, the Court denied a motion to intervene, in
part, because the intervenors' claims focused entirely on the
visual similarities between their games and certain characters in
Heroes Charge and Sword and Tower. ECF No. 93. In its order, the
Court agreed with Lilith and uCool that intervention would be
inappropriate because the intervenors' claims had nothing to do
with Lilith’s source code. The order, however, was not intended to
imply that the visual similarities between Heroes Charge and Sword
and Tower are irrelevant to this case.

28

18

1
2

the similarities between the parties' images.
A video game copyright protects all of the copyrightable

separately protect the user interface of a computer game as an

5

independent audiovisual work (see Data E. USA, Inc. v. Epyx, Inc.,

6

862 F.2d 204, 206 (9th Cir. 1988)), courts have also held that a

7

user interface is a non-literal element of the program's source

8

United States District Court

elements of that game.

4

For the Northern District of California

3

While it is true that the copyright laws

code (see Johnson Controls, Inc., 886 F.2d at 1175; Lotus Dev.

9

Corp. v. Paperback Software Int'l, 740 F. Supp. 37, 63-65 (D. Mass.

10

1990); see also Torah Soft Ltd. v. Drosnin, 136 F. Supp. 2d 276,

11

283 (S.D.N.Y. 2001) (connecting the visual output of a computer

12

program with the underlying program itself)).

13

view, the Copyright Office issues a single copyright registration

14

that protects all of a game's copyrightable elements, regardless of

15

whether the game is registered as a literary or audiovisual work.

16

See 17 U.S.C. § 102(b); 37 C.F.R. § 202.1.

17

claim is focused on its source code, that claim includes all of the

18

non-literal expressive elements of that code as well, including the

19

user interface.

20

Consistent with that

Thus, although Lilith's

uCool argues that copyright protection as it relates to a

21

video game's source code should be considered separately from a

22

game's audiovisual aspects because, in part, there are many ways

23

one can write source code to achieve the same audiovisual output.

24

For that reason, the argument goes, similarities as to the

25

audiovisual outputs are not probative of whether the copyright in

26

the source code was violated.

27
28

While it is true that one cannot conclude based on a game's
visual similarities that the literal alphanumeric instructions

19

Indeed, there are many different ways to write a book to achieve

3

the same non-literal expressive elements of plot, setting,

4

character, and so forth, whether through the selection of different

5

words or the use of different languages.

6

literal expressive elements of that book are substantially the same

7

as another copyrighted book, however, the former has infringed on

8

United States District Court

written by the programmer are the same, that is not the point.

2

For the Northern District of California

1

the latter regardless of whether the words themselves have been

9

copied.

Insofar as the non-

Likewise, infringement will be found where the non-literal

10

elements expressed by a game's source code -- including the user

11

interface -- are substantially similar to another game, even though

12

there are many different ways to write the source code to create

13

those non-literal elements.

14

uCool's attempts to limit the analysis merely to whether the

15

alphanumeric code itself was copied verbatim; copyright analysis is

16

not so simplistic.

For that reason, the Court rejects

17

Accordingly, the Court finds that the user interface of Sword

18

and Tower is one of the various non-literal elements of the source

19

code protected by Lilith's copyright, including the visual elements

20

as depicted through screenshots in Lilith's complaint, motion, and

21

supporting papers.

22

uCool's objection is therefore OVERRULED.

Given the significant evidence of copying in the previous two

23

sections, the Court need not engage in a full analysis of whether

24

the protected elements of the games' user interfaces are

25

substantially similar.

26

similarities between the games' protected elements such as the

27

visual appearance of characters and settings further support the

28

Court's conclusion that Lilith is likely to prove substantial

It is clear, however, that the striking

20

1

similarity at trial.

2

almost identical from the user's standpoint, with only minor

3

modifications.

4

13, Ex. A.

5
6

United States District Court

For the Northern District of California

9

See Mot. 7-10; ECF No. 30-18 ("Yang Decl.") ¶¶ 3-

For the forgoing reasons, the Court finds that Lilith is
likely to succeed on its copyright infringement claim.
2.

7
8

Indeed, the evidence shows that the games are

Trade Secret Misappropriation

In order to demonstrate a likelihood of success on its trade
secret claim under California's Uniform Trade Secrets Act

10

("CUTSA"), Lilith must show (1) the existence of a trade secret,

11

and (2) misappropriation of the trade secret.

12

Diagnostics Corp. v. Terarecon, Inc., 260 F. Supp. 2d 941, 950

13

(N.D. Cal. 2003) (citing Cal. Civ. Code § 3426.1(b)).
a.

14

AccuImage

Existence of a Trade Secret

15

Under California law, a trade secret is defined as something

16

that (1) derives independent economic value, actual or potential,

17

from not being generally known to the public or to other persons

18

who can obtain economic value from its disclosure or use; and (2)

19

is the subject of efforts that are reasonable under the

20

circumstances to maintain its secrecy.

21

34.26.1(b).

Cal. Civil Code §

22

Here, it cannot be questioned that Lilith derives independent

23

economic value from Sword and Tower and by extension its protected

24

source code.

25

efforts to maintain the source code for Sword and Tower as a

26

secret.

What is at issue is whether Lilith made reasonable

27

Reasonable efforts to maintain the secrecy of certain

28

information include limiting access to the information, advising

21

to sign nondisclosure agreements, and keeping secret documents

3

under lock.

4

Communication Services, Inc., 923 F. Supp. 1231, 1253 (N.D. Cal.

5

1995).

6

techniques will not terminate the secrecy provided that the

7

techniques employed were, in and of themselves, reasonably

8

United States District Court

employees of the existence of a trade secret, requiring employees

2

For the Northern District of California

1

prudent."

9

See Religious Technology Center v. Netcom On-Line

"[F]ailure to employ the fullest range of protective

1-1 Milgrim on Trade Secrets § 1.04.

The Court finds that Lilith's efforts to maintain the

10

confidentially of its source code, while not as rigorous as they

11

could have been, were sufficiently reasonable to maintain the code

12

as a trade secret.

13

and limits access only to those employees who need it to perform

14

their duties.

15

so that it cannot be easily deciphered.

16

secure confidentiality agreements from all of the employees that

17

had access to the code, Lilith has presented evidence to show that

18

these employees understood Lilith's code to be confidential

19

business information.

20

that any of these employees disclosed the code to a third party.

Lilith also encrypts the Sword and Tower source code

b.

21
22

Lilith keeps its source code on a secure server

Although Lilith failed to

Further, there is no evidence to suggest

Misappropriation

uCool does not address the misappropriation element in its

23

opposition or surreply.

24

finds that Lilith is likely to succeed on this element as well.

25
26
27

Regardless, the Court takes it up here and

Misappropriation can be established by either acquisition or
disclosure/use:
(b) Misappropriation means:

28

22

(1) Acquisition of a trade secret of another without
express or implied consent by a person who
knows or has reason to know that the trade
secret was acquired by improper means; or

1
2
3

(2) Disclosure or use of a trade secret of another
without express or implied consent by a person
who:

4
5

(A) Used improper means to acquire knowledge of
the trade secret; or

6
(B) At the time of the disclosure or use, knew
or had reason to know that his or her
knowledge of the trade secret was:

7

United States District Court

For the Northern District of California

8
(i)

derived from or through a person who
had
utilized
improper
means
to
acquire it;

(ii)

acquired under circumstances giving
rise to a duty to maintain its
secrecy or limit its use; or

9
10
11
12

(iii) derived from or through a person who
owed a duty to the person seeking
relief to maintain its secrecy or
limit its use.

13
14
15

Cal. Civ. Code § 3426.1.

As explained below, Lilith has shown

16
misappropriation by both acquisition and use.
17
Lilith provided evidence showing that uCool acquired and used
18
the source code embodied in Sword and Tower without Lilith's
19
consent.

As detailed in the Court's copyright analysis above,

20
Lilith has provided significant evidence showing that uCool copied
21
its source code.

This includes convincing evidence that at least

22
one version of Heroes Charge (Version 1.8.1) included a portion of
23
Lilith's code that triggers Lilith's copyright notice.

Insofar as

24
there was copying, there is no dispute that it was done without
25
Lilith's consent.
26
Lilith also provided evidence showing that uCool knew or had
27
reason to know that the source code was acquired by improper means
28

23

is defined as "theft, bribery, misrepresentation, breach or

3

inducement of a breach of a duty to maintain secrecy, or espionage

4

through electronic or other means."

5

uCool would have known, or should have known, that the source code

6

that it copied in order to create Heroes Charge belonged to Lilith

7

given that the user interface is almost identical to Sword and

8

United States District Court

or in breach of a duty to maintain its secrecy.

2

For the Northern District of California

1

"Improper means"

Tower, with which uCool would have been familiar given Sword and

9

Tower's significant success in the video game market.

Cal. Civ. Code § 3426.1.

Further, it

10

is well known that source code is the confidential property of a

11

game's owner.

12

will infer that uCool knew the code was acquired through improper

13

means or in breach of a duty because Lilith would not have given

14

its competitor, uCool, free access to its code.

15
16

In that context, it is likely that a trier of fact

For these reasons, the Court finds that Lilith is likely to
succeed on its trade secret misappropriation claim.

17

C.

Irreparable Harm

18

Lilith must provide "evidence and reasoned analysis" that the

19

remedies available at law, such as monetary damages, are inadequate

20

to compensate for that injury."

21

Alleged harm that is remote or speculative will not be considered

22

irreparable; rather, the movant must demonstrate that the

23

threatened harm is imminent.

24

Town of Parker, 776 F.2d 846, 849–851 (9th Cir. 1985).

25

eBay, 547 U.S. at 391.

See Colorado River Indian Tribes v.

Lilith advances two theories to support its assertion that it

26

will suffer irreparable harm in the absence of a preliminary

27

injunction: damage to its reputation and its alleged inability to

28

secure an exclusive distribution agreement in the United States.

24

Loss of goodwill, as well as damage to reputation, can support

1

Plush Toys, Inc., No. C 12-5543 SBA, 2012 U.S. Dist. LEXIS 169020,

4

*29-33, (N.D. Cal. Nov. 27, 2012).

5

suffered reputational damage because some users have posted

6

comments on the internet accusing Lilith of copying Heroes Charge.

7

For the reasons set forth below, however, the Court is not

8

United States District Court

a finding of irreparable harm.

3

For the Northern District of California

2

convinced that anecdotal comments on the internet establish a

9

likelihood of irreparable harm sufficient to justify extraordinary

10

See Rovio Entm't, Ltd. v. Royal

Lilith argues that it has

relief in the form of a preliminary injunction.
Lilith points to Rovio Entm't, Ltd. v. Royal Plus Toys, Inc..

11
12

Id.

In Rovio, the defendant was allegedly selling unauthorized

13

knockoff plush toys that were inferior but nearly identical in

14

appearance to the plaintiff's products in violation of its

15

copyrights and trademarks.

16

plaintiff suffered irreparable harm, in part, because (1)

17

irreparable harm in trademark cases includes a loss of trade, (2)

18

defendant's product threatened plaintiff's reputation because it

19

posed a potential public health risk, and (3) the potential harm to

20

plaintiff was significant given the "great energy, time and money"

21

plaintiff had spent building its reputation.

Id. at *1.

The court held that the

Id. at *31-32.

22

Although Lilith's evidence suggests the possibility of some

23

damage to its reputation, unlike the plaintiffs in Rovio, Lilith

24

has not expended great energy, time, and money to build its

25

reputation outside of Asia in the markets where its reputation has

26

allegedly been damaged by uCool.

27

newcomer to the United States, Europe, and other markets where

28

Heroes Charge has been released.

Indeed, Lilith is a relative

Moreover, unlike in Rovio where

25

responsible for plaintiff's reputational damage, it does not appear

3

that Heroes Charge is necessarily inferior to Sword and Tower.

4

Thus, while there is the potential for confusion in the market

5

given the similarities between the games, the damage to Lilith's

6

reputation caused by this confusion is relatively small.

7

potential damage is even more limited given that the parties, as

8

United States District Court

the inferiority of the defendant's product was primarily

2

For the Northern District of California

1

stated during the hearing on this motion, are likely to go to trial

9

in only nine months' time.

The

Instead of facing irreparable harm to its reputation, Lilith

10
11

is primarily facing challenges to its ability to expand into new

12

markets.

13

year before Sword and Tower and has built up a significant base of

14

users after an aggressive marketing campaign.

15

penetrate this market given the popularity of Heroes Charge and the

16

fact that Sword and Tower is incredibly similar from a user's

17

perspective.

18

distribution agreements for the release of Sword and Tower in the

19

United States, it is likely that it would have been able to secure

20

much better terms but for the presence of Heroes Charge in the

21

marketplace.

22

nonexclusive distribution contract, however, does not constitute

23

irreparable harm given that it can be quantified and remedied

24

through monetary damages.

Heroes Charge was released in the United States over a

Lilith cannot easily

Although Lilith has been able to secure nonexclusive

The difference in value between an exclusive and

Because Lilith has failed to establish that it will suffer

25
26

imminent harm that cannot be remedied with monetary damages, the

27

Court finds for uCool on this factor.

28

///

26

1

D.

Balance of the Equities

2

"In each case, courts 'must balance the competing claims of

or withholding of the requested relief.'"

5

(quoting Amoco Prod. Co. v. Gambell, 480 U.S. 531, 542 (1987)).

6

doing so, the court balances the injury faced by the applicant for

7

an injunction against the injury that would be sustained by the

8

United States District Court

injury and must consider the effect on each party of the granting

4

For the Northern District of California

3

defendant if relief were granted.

9

v.Watt, 714 F.2d 962, 966–967 (9th Cir. 1983); Brooktree Corp. v.

Winter, 555 U.S. at 24
In

See American Motorcyclist Ass'n

10

Advanced Micro Devices, Inc., 705 F. Supp. 491, 497 (S.D. Cal.

11

1988).
Here, the balance of the equities tips in uCool's favor.

12

If

13

the Court were to grant Lilith's motion, uCool would be forced to

14

take down its most popular game, threatening uCool's viability as a

15

company.

16

885, 910 (N.D. Cal. 2014) ("A preliminary injunction is a drastic

17

remedy and the hardship on a preliminarily enjoined party who is

18

required to withdraw its product from the market before trial can

19

be devastating.").

20

continue to incur a significant amount of fixed costs associated

21

with Heroes Charge.

22

irreparable.

23

after trial, it would likely struggle to recapture its lost market

24

share.

25

industry, there is a good chance that once users are no longer able

26

to use Heroes Charge, they will simply move on to another game.

27

addition, if Heroes Charge was suddenly unavailable for play, uCool

28

///

See also Open Text, S.A. v. Box, Inc., 36 F. Supp. 3d

uCool would not only lose profits but would

Further, the harm to uCool would likely be

Even if uCool was able reintroduce Heroes Charge

Given the dynamic and fast-moving nature of the video game

27

In

1

would likely suffer from a significant loss of goodwill, making it

2

difficult to create trust with players in the future.

3

The equities are also affected by the eight months that passed

for a preliminary injunction.

6

allegedly unlawful copying in August 2014, at which point it

7

attempted to resolve the dispute by issuing a take-down notice.

8

United States District Court

from when Lilith discovered the alleged copying to when it filed

5

For the Northern District of California

4

The parties then exchanged correspondence through the end of

9

November 2014, when those talks stalled without any resolution.

10

Lilith then waited an additional four months before filing this

11

suit, during which time uCool invested millions of dollars in

12

Heroes Charge, including an ad that ran during the Super Bowl.

13

Lilith argues that the four-month delay was justified because it

14

was reluctant to become involved in costly litigation until it was

15

necessary.

16

2015 because the harm to its reputation and its inability to secure

17

exclusive distribution agreements did not become apparent until

18

March 2015.

19

between the games, but even assuming that Lilith was justified in

20

waiting, the delay still affects the equities in this case.

21

made huge investments during those four months that would likely be

22

lost if the Court were to grant a preliminary injunction.

23

Lilith first learned of uCool's

Lilith claims filing suit was not necessary until March

These challenges were foreseeable given the similarity

uCool

In contrast, Lilith does not face significant irreparable harm

24

if an injunction is denied.

As discussed in the previous section,

25

if successful at trial (a mere nine months from now), Lilith could

26

recover significant monetary damages that would compensate it for

27

past harm.

28

permanently enjoin uCool from distributing Heroes Charge moving

At that point, it could also ask the Court to

28

1
2
3

forward.
For these reasons, the Court finds that the balance of
equities tips in favor of uCool.

4

E.

Public Interest

5

If evidence of infringement is strong, then the public

in seeing the copyright laws enforced.

8

United States District Court

interest favors its abatement given that the public has an interest

7

For the Northern District of California

6

v. Parametric Tech., Corp., 2013 U.S. Dist. LEXIS 133403, *28 (N.D.

9

Cal. Sept. 16, 2013).

See Flextronics Int'l, Ltd.

However, "[i]n the typical case, [this]

10

consideration adds little . . . [except where] the public interest

11

implicates separate issues."

12

5-14 Nimmer on Copyright § 14.06.

Here, evidence of infringement is strong, and therefore the

13

public interest tips towards granting the injunction.

However,

14

because there are no issues relating to the public interest

15

separate from Lilith's likelihood of success on the merits, the

16

public interest factor does not weigh heavily in the Court's

17

analysis.

18

F.

Balancing the Factors

19

Having assessed each factor individually, the Court –- using

20

its equitable discretion -- weighs the factors together to

21

determine whether an injunction should ultimately issue.

22

Posner of the Seventh Circuit aptly described the task at hand:

23
24
25
26
27
28

Judge

A district judge asked to decide whether to grant or deny
a preliminary injunction must choose the course of action
that will minimize the costs of being mistaken. Because
he is forced to act on an incomplete record, the danger
of a mistake is substantial.
And a mistake can be
costly.
If the judge grants the preliminary injunction
to a plaintiff who it later turns out is not entitled to
any judicial relief -- whose legal rights have not been
violated -- the judge commits a mistake whose gravity is
measured by the irreparable harm, if any, that the
injunction causes to the defendant while it is in effect.

29

1

Am. Hosp. Supply Corp. v. Hosp. Products Ltd., 780 F.2d 589, 593

2

(7th Cir. 1986).
Accordingly, the Court will only grant an injunction if the

3

by Lilith's likelihood of success on the merits, exceeds the

6

irreparable harm to uCool if the injunction is granted, multiplied

7

by the likelihood that Lilith will not succeed on the merits.11

8

United States District Court

irreparable harm to Lilith if the injunction is denied, multiplied

5

For the Northern District of California

4

See id.; see also Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073,

9

1099 (9th Cir. 2014) (applying a similar test).

Although exact

10

figures cannot be calculated, this formula provides the analytical

11

framework within which the Court must make its decision.
This is a close case.

12

Lilith has demonstrated a strong

13

likelihood of success on the merits.

14

Court's decisions in eBay and Winter, such a showing would have

15

compelled the Court to grant the requested relief.

16

considering the remaining factors, however, the Court finds that

17

granting a preliminary injunction at this juncture would be

18

inappropriate.

19

harm.

20

///

21

///

22

///

23

///

24

///

25

11

26
27
28

Indeed, prior to the Supreme

After

Lilith has not shown a likelihood of irreparable

Further, because of the extent of the irreparable harm to

This framework can also be represented formulaically: Grant
1
∗ , where
preliminary injunction if but only if ∗
Lilith's probability of success on the merits,
the irreparable
harm to the plaintiff if the injunction is not granted, and
the irreparable harm to the defendant if the injunction is granted.
Id.

30

1

the defendant if the injunction is granted, the balance of equities

2

tips decidedly in uCool's favor.

3
4
5

V. CONCLUSION
For the forgoing reasons, Lilith's motion for preliminary

6

injunction is DENIED.

7

uCool's evidentiary objections are

OVERRULED.

United States District Court

For the Northern District of California

8
9

IT IS SO ORDERED.

10
11

Dated: September 23, 2015

12

UNITED STATES DISTRICT JUDGE

13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

31