Cael Technologies (Pvt.) Ltd. v. Precise Voting, LLC. et al
Filing
29
ORDER granting in part and denying in part 28 Motion to Dismiss: Defendants' motion to dismiss is granted to the extent that the Court applies the "injury rule" in determining when Plaintiff's copyright infringement claim accr ues. In doing so, any claim of copyright infringement based on acts allegedly taken by Defendants prior to March 20, 2010 is time-barred and hereby dismissed. To the extent that the Complaint alleges a claim for copyright infringement based on alleged acts by Defendants subsequent to March 20, 2010, it may proceed. In all other respects, Defendants' motion is denied. So Ordered by Judge Leonard D. Wexler on 2/12/2014. (Minerva, Deanna)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-----------------------------------------------------------X
CAEL TECHNOLOGIES (PVT.) LTD.,
MEMORANDUM AND ORDER
Plaintiff,
CV 13-1470
-against-
(Wexler, J.)
PRECISE VOTING, LLC.,
PRECISE VOTING, LLC.,
VOTRITE, LLC.,
Defendants.
-----------------------------------------------------------X
APPEARANCES:
SABHARWAL & FINKEL, LLC
BY: ADAM D. FINKEL, ESQ.
Attorneys for Plaintiff
350 Fifth Avenue, 59th Floor
New York, New York 10118
CITTONE & CHINTA LLP
BY: HENRY JOSEPH CITTONE, ESQ.
PADMAJA CHINTA, ESQ.
Attorneys for Plaintiff
11 Broadway, Suite 615
New York, New York 10004
BARRY M. KRIVISKY, ESQ.
BY: BARRY M. KRIVISKY, ESQ.
Attorneys for Defendants
400 Garden City Plaza
Garden City, New York 11530
WEXLER, District Judge:
Before the Court is the Defendants’ motion to dismiss Plaintiff’s Complaint, pursuant to
-1-
Federal Rule of Civil Procedure 12(b)(6) on the grounds that Plaintiff’s copyright infringement
claim is time-barred. Plaintiff opposes the motion. For the following reasons, Defendants’
motion is granted in part and denied in part.
BACKGROUND
Plaintiff, Cael Technologies (“Cael”), is an Indian corporation that specializes in
providing customized software applications, software product development and other software
products and services. (Compl. ¶ 1.) Defendants Precise Voting, a New York limited liability
company (“Precise New York”), and Precise Voting, a Delaware limited liability company
(“Precise Delaware”), are in the business of manufacturing and marketing electronic voting
machines and services in the United States. (Compl. ¶¶ 3-6.) Defendant VotRite is a wholly
owned subsidiary of Precise Voting and is a provider of electronic voting machines and services,
including rentals, in the United States. (Compl. ¶ 9.)
In early 2005, Plaintiff was approached by an Indian company, SSW Information
Technology Services Private Limited (“WITS India”), to develop an electronic voting machine
system to be marketed worldwide, including in the United States, by the WITS Group Inc.
(“WITS Group”). (Compl. ¶¶ 17-18.) In May 2005, Plaintiff entered into an agreement with
WITS India for the development of a functional voting machine prototype for the United States
market. (Compl. ¶ 19.) The Advanced Electronic Voting System (“AEVS”) prototype was to be
made solely for marketing and demonstration purposes and not for sale. (Compl. ¶ 20.) Plaintiff
referred to the new voting system as “VotRite.” (Compl. ¶ 21.)
Around the same time, Plaintiff entered into an agreement with another Indian company,
-2-
Analogic Technomatics Private Limited (“Analogic”), who was to provide the hardware box for
the AEVS prototype exclusively for Plaintiff and based solely on Plaintiff’s specifications.
(Compl. ¶ 21.) On or about June 28, 2005, Plaintiff delivered the functional AEVS prototype to
the WITS Group in New Jersey. (Compl. ¶ 22.) Plaintiff subsequently delivered four more
functional AEVS prototypes to the WITS Group in New Jersey between late 2005 and August
2006, pursuant to purchase orders placed by the WITS Group. (Compl. ¶ 23.)
In 2008, Plaintiff registered its copyright in the software and source code for the AEVS
prototype in India and was issued Certificate of Registration No. SW-3861/2008 entitled “Cael
Voting Systems Software.” (Compl. ¶ 28.) Plaintiff is the sole owner of this copyright. (Compl.
¶ 30.)
In or about September 2006, Plaintiff entered into another agreement with Analogic for
the manufacture of a close-to-production AEVS prototype, again using software exclusively
developed for Plaintiff and based solely on Plaintiff’s specifications. (Compl. ¶ 31.) Plaintiff
incorporated the copyrighted Cael Voting Systems Software into the AEVS prototype provided
by Analogic and gave it to Analogic for completion of the hardware. (Compl. ¶ 32.) Analogic,
however, failed to deliver the close-to-production AEVS prototype to Plaintiff. (Compl. ¶ 32.)
In or about early 2007, Plaintiff grew suspicious of Analogic and WITS India and
cautioned WITS India against using or reengineering its copyrighted Cael Voting Systems
Software through Analogic or anyone else. (Compl. ¶ 34.) In July 2007, Plaintiff commenced
arbitration proceedings against Analogic in India for breach of its 2006 agreement and to prevent
Analogic from exploiting Plaintiff’s copyrighted software. (Compl. ¶ 35.) During these
proceedings, an interim injunction was issued against Analogic and material evidence was seized
-3-
from Analogic, including hard drives. (Compl. ¶ 35.)
In or about August 2012, Plaintiff received the confidential report of the Andrha Pradesh
Forensic Science Laboratories from the arbitrator. (Compl. ¶ 36.) The report concluded that the
hard drives seized from Analogic contained Plaintiff’s copyrighted Cael Voting Systems
Software. (Compl. ¶ 36.)
In late 2012, Plaintiff began investigating the United States voting machines market.
(Compl. ¶ 37.) During this investigation, Plaintiff discovered that Defendants were marketing an
electronic voting system very similar to Plaintiff’s Voting Systems Software. (Compl. ¶ 37.)
Defendants’ voting machines include the same major features as Plaintiff’s copyrighted Voting
Systems Software, use the same acronym as that of Plaintiff’s proposed prototype - “AEVS” and Defendants formed a susbsidiary using the same name intended to be used by Plaintiff for its
voting system - “VotRite.” (Compl. ¶¶ 39-41.)
Plaintiff alleges that Defendant Precise Voting gained access to Plaintiff’s copyrighted
Voting Systems Software through Analogic or the WITS Group. (Compl. ¶ 38.) Plaintiff bases
this belief on a 2007 online article in which Precise Voting states that through an entity known as
Bright Software Development, Inc., it decompiled a source code that was originally developed by
an Indian programmer who “disappeared” mid-project, for use in its electronic voting machines.
(Compl. ¶ 38 and Ex. B, annexed thereto.) According to Plaintiff, Defendants copied,
decompiled and modified Plaintiff’s copyrighted Voting Systems Software and registered it with
the United States Copyright Office in 2006 as its own software with the title “Voting Machine
Software.” (Compl. ¶ 42; Kapsis Aff. ¶ 6.)
Plaintiff commenced this action on March 20, 2013, alleging copyright infringement.
-4-
Defendants now move to dismiss the Complaint, pursuant to Federal Rule of Civil Procedure
12(b)(6) on the grounds that Plaintiff’s copyright infringement claim is time-barred.1
DISCUSSION
I.
Legal Standard
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, __
U.S. __, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “Facial plausibility” is achieved when the “the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Iqbal, 129 S. Ct. at 1949 (citing Twombly, 550 U.S. at 556). As a general rule, the
court is required to accept as true all of the allegations contained in the complaint. See Iqbal, 129
S. Ct. at 1949; Kassner v. 2nd Ave. Delicatessen, Inc., 496 F.3d 229, 237 (2d Cir. 2007).
However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements . . . are not entitled to the assumption of truth.” Iqbal, 129 S. Ct. at 194950 (citation omitted); see also Twombly, 555 U.S. at 555 (stating that the Court is “not bound to
accept as true a legal conclusion couched as a factual allegation”). “While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations,” which
state a claim for relief. Iqbal,129 S. Ct. at 1950. A complaint that “tenders ‘naked assertion[s]’
1
Defendants also move to dismiss for laches. However, by Order dated September 17,
2013, the Court directed Defendants to move to dismiss based solely upon statute of limitations
grounds. Accordingly, the Court will not consider the laches arguments presented by
Defendants. Defendants are free to renew their laches argument, however, on a motion for
summary judgment.
-5-
devoid of ‘further factual enhancement’” will not suffice. Iqbal, 129 S. Ct. at 1949 (quoting
Twombly, 555 U.S. at 557). Rather, only a complaint that “states a plausible claim for relief”
will survive a motion to dismiss. Iqbal, 129 S. Ct. at 1950.
II.
Statute of Limitations
Pursuant to the United States Copyright Act, civil actions must be “commenced within
three years after the claim accrued.” 17 U.S.C. § 507(b). There is a split among the circuits as to
when a claim for copyright infringement accrues. Under the “injury rule,” a copyright
infringement claim accrues “at the time of each act of infringement, regardless of the copyright
holder’s knowledge of the infringement.” Urbont v. Sony Music Entmt., 863 F. Supp. 2d 279,
281 (S.D.N.Y. 2012). Conversely, under the “discovery rule,” a claim for copyright infringement
“does not accrue until the aggrieved party knows or has reason to know of the injury that forms
the basis of the claim.” Id.
“Neither the Supreme Court nor the Second Circuit has ruled on the appropriate accrual
rule for federal copyright infringement claims.” Id. at 282. Prior to the Supreme Court’s
decision in TRW v. Andrews, 534 U.S. 19 (2001), courts in this Circuit routinely applied the
discovery rule to copyright infringement claims. See Muench Photography, Inc. v. Houghton
Mifflin Harcourt Publ’g Co., No. 09 CV 2669, 2013 U.S. Dist. LEXIS 118870, at *13 (S.D.N.Y.
Aug. 21, 2013). Indeed, the Second Circuit has applied the discovery rule on multiple occasions;
however, each case in which it did so involved a dispute over copyright ownership, not copyright
infringement. See, e.g., Merchant v. Levy, 92 F.3d 51, 56 (2d Cir. 1996); Stone v. Williams, 970
F.2d 1043, 1048-49 (2d Cir. 1992). The Supreme Court’s decision in TRW “prompted courts in
-6-
this Circuit to reexamine whether Stone and Merchant continue to govern the issue of when a
copyright infringement claim accrues.” Muench Photography, 2013 U.S. Dist. LEXIS 118870, at
*13-14.
In Auscape International v. National Geographic Society, 409 F. Supp. 2d 235 (S.D.N.Y.
2004), in contrast to the then-prevailing view in the Circuit, Judge Kaplan held that “a claim for
copyright infringement accrues on the date of the infringement,” thereby adopting the injury rule.
Id. at 247. Judge Kaplan based his holding on both the Supreme Court’s decision in TRW,
which he found counseled against application of the discovery rule except in limited
circumstances, and the legislative history of the Copyright Act. See Auscape, 409 F. Supp. 2d at
242-47.
Following Auscape, “the prevailing trend among the courts in this Circuit has been to
reject application of the discovery rule in favor of the injury rule.” Muench Photography, 2013
U.S. Dist. LEXIS 118870, at *14 (collecting cases). While most of the cases to confront this
issue have been in the Southern District of New York, at least one court here in the Eastern
District has followed Auscape’s lead and applied the injury rule as well. See CA, Inc. v. Rocket
Software, Inc., 579 F. Supp. 2d 355, 360 (E.D.N.Y. 2008) (“The courts in this Circuit have
widely held that a claim for infringement accrues on the date of the alleged infringement rather
than on the date infringement is discovered by the plaintiff, and the Court adopts that view.”).
Accordingly, this Court will follow “the majority approach within this jurisdiction,”
Urbont, 863 F. Supp. 2d at 282, and apply the injury rule to Plaintiff’s copyright infringement
claim. Thus, Plaintiff’s claim of copyright infringement based on acts prior to March 20, 2010 three years prior to the filing of the Complaint - is time-barred. Plaintiff’s Complaint may
-7-
proceed, however, to the extent it alleges a claim for copyright infringement based on alleged
acts by Defendants subsequent to March 20, 2010.
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss is granted to the extent that the
Court applies the “injury rule” in determining when Plaintiff’s copyright infringement claim
accrues. In doing so, any claim of copyright infringement based on acts allegedly taken by
Defendants prior to March 20, 2010 is time-barred and hereby dismissed. To the extent that the
Complaint alleges a claim for copyright infringement based on alleged acts by Defendants
subsequent to March 20, 2010, it may proceed. In all other respects, Defendants’ motion is
denied.
SO ORDERED:
Dated: Central Islip, New York
February 12, 2014
/s/ Leonard D. Wexler
LEONARD D. WEXLER
United States District Judge
-8-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?