Yue v. MSC Software Corporation

Filing 46

ORDER re 45 Letter filed by Dongxiao Yue Regarding Discovery Period for Copyright Claims. Signed by Judge Phyllis J. Hamilton on 07/20/2016. (pjhlc2, COURT STAFF) (Filed on 7/20/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DONGXIAO YUE,

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v.

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MSC SOFTWARE CORPORATION,

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United States District Court
Northern District of California

Case No. 15-cv-05526-PJH

Plaintiff,

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Defendant.

ORDER ON PLAINTIFF'S LETTER
REGARDING DISCOVERY PERIOD
FOR COPYRIGHT CLAIMS
Re: Dkt. No. 45

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The court is in receipt of a June 16 letter from pro se plaintiff Dongxiao Yue

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regarding the discovery period for his copyright claims. Dkt. 45. In an order dated June

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15, 2016, the court denied Yue’s motion for leave to amend his complaint and to lift the

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restriction on the discovery period. In relevant part, the court held that Yue’s LLC

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Netbula, and not Yue personally, had standing to being claims alleging fraud concerning

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a 2005 license between Netbula and defendant MSC Software Corporation. Dkt. 44 at 6.

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Because Yue's request to lift the restriction on the discovery period appeared to be based

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on the addition of the new fraud claims, that request was denied as well. Id.

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Yue’s letter to the court indicates that he now intends to join Netbula LLC as a co-

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plaintiff, which will be represented by counsel. Yue’s letter renews his request to extend

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the discovery period beyond the five-year limit established by the court in an earlier order.

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Dkt. 30. Yue now asserts that his previous request to extend the discovery period was

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“based on the copyright claims only.” Dkt. 45.

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Yue’s letter raises the issue of the damages available for copyright claims in light
of the Supreme Court’s decision in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct.

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1962 (2014). Copyright claims have a three-year statute of limitations. 17 U.S.C.

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§ 507(b). Prior to Petrella, there was a split in authority as to whether damages were

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available only within three years from when the suit was filed (the “injury rule”), or

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whether a copyright claim does not accrue until the copyright owner learns of the

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infringement, permitting damages for a longer period so long as suit is brought within

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three years of the infringement’s discovery (the “discovery rule”). See generally Melville

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B. Nimmer & David Nimmer, Nimmer on Copyright, § 12.05[B][2]. In the Ninth Circuit,

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the discovery rule prevails. See Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700,

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706 (9th Cir. 2004).

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Some language in Petrella does appear to embrace an injury-rule analysis. See

United States District Court
Northern District of California

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Petrella, 134 S. Ct. at 1969 (“Under the [Copyright] Act's three-year provision, an

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infringement is actionable within three years, and only three years, of its occurrence.”)

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The Supreme Court, however, did not directly “pass on” the issue of whether the

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discovery rule was available to a plaintiff who was not aware of an earlier infringement.

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Id. at 1969 n.4. Under these circumstances, the Ninth Circuit’s decision in Polar Bear

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Products remains binding precedent in this circuit. See Oracle USA, Inc. v. Rimini St.,

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Inc., No. 2:10-CV-00106-LRH, 2015 WL 5089779, at *6 (D. Nev. Aug. 27, 2015) (“[T]he

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Supreme Court in Petrella expressly declined to reject the discovery rule. As such, the

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discovery rule is still controlling precedent in this action and the court shall deny

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defendants’ motion as to this issue.”) (citation omitted); Wolf v. Travolta, No. CV 14-

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00938-CAS-PJW, 2016 WL 911469, at *13 (C.D. Cal. Mar. 4, 2016) (applying Polar Bear

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Products); accord Panoramic Stock Images, Ltd v. McGraw-Hill Glob. Educ. Holdings,

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LLC, No. 12 C 9881, 2014 WL 6685454, at *3 (N.D. Ill. Nov. 25, 2014) (“Until the Seventh

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Circuit holds otherwise, this court concludes that the discovery rule is still the law of this

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circuit.”); Lefkowitz v. McGraw-Hill Glob. Educ. Holdings, LLC, 23 F. Supp. 3d 344, 357

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(S.D.N.Y. 2014) (“Defendants direct the Court to the Supreme Court's recent decision in

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Petrella . . . reading that case to hold that the injury rule, not the discovery rule, applies to

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federal copyright infringement claims. Petrella does not hold as such.”).
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The court’s June 15 order denied Yue’s request to extend the discovery period

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because it was presented as based on Yue’s fraud claims, which Yue lacks standing to

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assert. See Mot. at 6 (seeking discovery into “the circumstances under which MSC made

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the misrepresentations”); Reply at 8 (“Limiting Discovery May Result in MSC’s

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Perpetuating its Fraud”). If Yue wishes to show that the discovery period should be

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extended based on his copyright claims, he will have a chance to do so. However, under

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Polar Bear Products, Yue will need to make a showing as to why he/Netbula only began

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to suspect infringement in 2014, and could not have, with reasonable diligence,

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discovered it earlier. See 384 F.3d 700 at 706 (9th Cir. 2004) (discovery rule requires
that plaintiff was “unaware of the infringement” and “reasonably could not have

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United States District Court
Northern District of California

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discovered” the infringement earlier).
If Netbula is to be joined as a party, Yue will need to secure counsel to represent

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Netbula, and to obtain either a stipulation from MSC or leave of the court to file an

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amended complaint. See Federal Rule of Civil Procedure 15(a)(2). After an amended

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complaint is filed, the parties shall meet and confer regarding the scope of the discovery

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period in light of the addition of Netbula and any other amendments to the complaint. If

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the parties still cannot agree on the appropriate temporal scope of discovery, plaintiff may

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file a motion seeking appropriate relief from the court.
CONCLUSION

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Yue may file a discovery motion supported by an appropriate declaration on the

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issue of whether discovery period should be extended on the copyright claims. Until such

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motion is filed and granted, or a joint stipulation regarding the discovery period is

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approved by the court, the discovery limit of five years remains.
Yue may file a motion to amend his complaint to add Netbula as a party if a

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stipulation cannot be obtained from the defendant. And, of course, Netbula’s counsel

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must immediately enter an appearance on the docket.

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Lastly, Yue is advised that the court will not respond to “letters” filed on the docket

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in future. If plaintiff would like the court to take some action, he must make his request in

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the form of a motion pursuant to Local Rule 7-2, 7-9, or 7-11.

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IT IS SO ORDERED.
Dated: July 20, 2016

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__________________________________
PHYLLIS J. HAMILTON
United States District Judge

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United States District Court
Northern District of California

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