Bounce Exchange, Inc. v. Zeus Enterprise Ltd

Filing 46

OPINION & ORDER: Bounce Exchange, Inc. (Bounce) develops and sells software. It brings this suit against Zeus Enterprise Ltd. -- which does business as Yieldify -- alleging infringement of its copyright in certain software related to online advertis ing. Bounce now seeks to amend its complaint to add two claims under the Digital Millennium Copyright Act (DMCA). The DMCA claims rest upon Bounces contention that certain abbreviations of its corporate name used throughout its softwares source cod e constitute copyright management information (CMI) as defined by 17 U.S.C. § 1202(c). This Opinion concludes that incorporating the name of the source codes author or its copyright holder into the source code itself qualifies as an identification of the author or copyright holder for purposes of § 1202(c). For these reasons, Bounces motion to amend with respect to the two DMCA claims is granted.... (Signed by Judge Denise L. Cote on 12/9/2015) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
BOUNCE EXCHANGE, INC.,
:
:
Plaintiff,
:
:
-v:
:
ZEUS ENTERPRISE LTD. d/b/a/ YIELDIFY, :
:
Defendant.
:
:
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15cv3268 (DLC)
OPINION & ORDER

APPEARANCES:
For plaintiff Bounce Exchange, Inc.:
Kristen McCallion
Michael F. Autuoro
FISH & RICHARDSON P.C.
601 Lexington Ave., 52nd Floor
New York, NY 10022
For defendant Zeus Enterprise Ltd. d/b/a Yieldify:
Edward J. DeFranco
QUINN EMANUEL URQUHART & SULLIVAN, LLP
51 Madison Ave., 22nd Floor
New York, NY 10001
DENISE COTE, District Judge:
Bounce Exchange, Inc. (“Bounce”) develops and sells
software.

It brings this suit against Zeus Enterprise Ltd. --

which does business as “Yieldify” -- alleging infringement of
its copyright in certain software related to online advertising.
Bounce now seeks to amend its complaint to add two claims under
the Digital Millennium Copyright Act (“DMCA”).

The DMCA claims

rest upon Bounce’s contention that certain abbreviations of its
corporate name used throughout its software’s source code
constitute “copyright management information” (“CMI”) as defined
by 17 U.S.C. § 1202(c).

This Opinion concludes that

incorporating the name of the source code’s author or its
copyright holder into the source code itself qualifies as an
“identification” of the author or copyright holder for purposes
of § 1202(c).

For these reasons, Bounce’s motion to amend with

respect to the two DMCA claims is granted.
BACKGROUND
The following facts are taken from the proposed second
amended complaint.

Bounce makes and sells proprietary software

that permits its clients to track website users’ behavior and to
target those users with relevant advertising.

Bounce is the

exclusive owner of copyright in this software, including the
underlying source code.

Bounce alleges that in March 2013, two

executives of the United Kingdom-based software company Yieldify
posed as a potential customer and requested a demonstration of
Bounce’s software.

Bounce states that, because of this, it

provided a software demonstration, non-public information, and
marketing materials to Yieldify’s Chief Executive Officer and
Chief Technology Officer.
Bounce states that in February 2015 it discovered that
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Yieldify was selling software source code that was
“substantially similar” to Bounce’s proprietary code, including
software that directly reproduces “portions of the code,
structure, sequence, and organization” of Bounce’s software.
Bounce alleges that Yieldify improperly removed “all references
to and identifications of Bounce Exchange” from the software’s
source code.

The references and identifications in question are

integrated into the text of the Bounce code.

For example, one

portion of the code reads as follows:
bouncex.events = ‘mousemove.bouncex keydown.bouncex
DOMMouseScroll.bouncex mousewheel.bouncex
mousedown.bouncex touchstart.bouncex
touchmove.bouncex’;
bouncex.body.bind(bouncex.events,function()[.]
Yieldify replaced the terms “bounce” and “bouncex” with terms
referring to Yieldify.

For example, the portion of Yieldify’s

source code corresponding to the above code reads
yiel.events = “mousemove.yieldifyx keydown.yieldifyx
DOMMouseScroll.yieldifyx mousewheel.yieldifyx
mousedown.yieldifyx touchstart.yieldifyx touchmove.
Yieldifyx”;
yiel.body.bind(yiel.events,function()[.]
Bounce sent Yieldify a letter on March 11 alleging
copyright infringement and demanding that Yieldify cease its
allegedly infringing activities.

In a response of March 23,

Yieldify denied that it was infringing Bounce’s copyright and
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asserted that the software Bounce cited as infringing was
instead based on open-source software.
Bounce brought suit against Yieldify on April 24, alleging
one count of copyright infringement pursuant to 17 U.S.C. § 501.
On June 16, Bounce filed its first amended complaint.

That

amendment altered the description of the defendant but did not
add any other claims.

Bounce moved to amend its complaint a

second time on October 29; that amendment includes eight
additional causes of action.
November 20.

The motion was fully submitted on

On December 3, the Court partially granted the

motion on certain conditions related to the scope and timing of
discovery.

Bounce Exch., Inc. v. Zeus Enter. Ltd. d/b/a/

Yieldify, No. 15cv3268 (DLC), 2015 WL 7871043, at *3 (S.D.N.Y.
Dec. 3, 2015).

That Opinion and Order reserved the issue of

futility with respect to the two DMCA claims.

That remaining

issue is resolved below.
DISCUSSION
Bounce seeks to amend its complaint to add claims of
wrongful alteration and distribution of copyrighted material
pursuant to the DMCA, 17 U.S.C. § 1202.

Yieldify opposes that

amendment on the ground of futility.
“A court should freely give leave [to amend] when justice
so requires.”

Fed. R. Civ. P. 15(a)(2); accord Grullon v. City
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of New Haven, 720 F.3d 133, 139 (2d Cir. 2013).

Nevertheless,

it remains “within the sound discretion of the court whether to
grant leave to amend.”

John Hancock Mut. Life Ins. Co. v.

Amerford Int'l Corp., 22 F.3d 458, 462 (2d Cir. 1994).

“Reasons

for a proper denial of leave to amend include . . . futility of
[the] amendment . . . .”

AEP Energy Servs. Gas Holding Co. v.

Bank of Am., N.A., 626 F.3d 699, 725 (2d Cir. 2010) (citation
omitted).
“[T]he standard for denying leave to amend based on
futility is the same as the standard for granting a motion to
dismiss.”

IBEW Local Union No. 58 Pension Trust Fund & Annuity

Fund v. Royal Bank of Scotland Grp., PLC, 783 F.3d 383, 389 (2d
Cir. 2015) (citation omitted).

To survive a Rule 12(b)(6)

motion to dismiss, in turn, “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, 556 U.S.

662, 678 (2009) (citation omitted).
Yieldify argues that amending the complaint to add these
causes of action would be futile because the terms Bounce
incorporated into its source code -- “bounce” and “bouncex” -do not satisfy the statutory definition of CMI.

Yieldify is

wrong.
“The DMCA was enacted in 1998 to implement the World
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Intellectual Property Organization Copyright Treaty, and to
update domestic copyright law for the digital age.”

Viacom

Int'l, Inc. v. YouTube, Inc., 676 F.3d 19, 26 (2d Cir. 2012)
(citation omitted).

The DMCA was passed because Congress

recognized that “the ease with which pirates could copy and
distribute a copyrightable work in digital form was overwhelming
the capacity of conventional copyright enforcement to find and
enjoin unlawfully copied material.”

Universal City Studios,

Inc. v. Corley, 273 F.3d 429, 435 (2d Cir. 2001).

With the

DMCA, “Congress sought to combat copyright piracy in its earlier
stages, before the work was even copied.”

Id.

“The DMCA prohibits, among other things, ‘intentionally
remov[ing] or alter[ing] any copyright management information,’
such as the familiar © copyright notice.”

Zalewski v. Cicero

Builder Dev., Inc., 754 F.3d 95, 107 (2d Cir. 2014) (quoting 17
U.S.C. § 1202).

Section 1202 provides, in pertinent part, that

“[n]o person shall . . . intentionally remove or alter any
copyright management information” and that “[n]o person shall .
. . provide copyright management information that is false.”
Id. § 1202(a), (b).

CMI is broadly defined as eight categories

of “information conveyed in connection with copies or
phonorecords of a work or performances or displays of a work.”
17 U.S.C. § 1202(c).

These categories include “[t]he title and
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other information identifying the work,” “[t]he name of, and
other identifying information about, the author of a work,” and
“[t]he name of, and other identifying information about, the
copyright owner of the work.”

Id.

Bounce asserts that the terms “bounce” and “bouncex” that
appear in its source code are CMI.

The terms are a shorthand

form of the official name of the author of the work, and they
are inserted into the code itself.

Section 1202(c) defines CMI

as information “conveyed in connection with” a copyrighted work.
(Emphasis added).

“In connection with,” by plain reading and

common sense, comprehends information conveyed in or with a
copyrighted work if that information otherwise satisfies §
1202(c)’s criteria.

For example, the name of a book’s author

appears typically on both the cover and several pages inside the
book.

Similarly, a painting may bear the painter’s signature on

its canvas.

Indeed, many courts have recognized that forms of

CMI may be contained in the body of a work. 1

Accordingly,

Bounce’s use of its name within the code conveys the identifying
information in connection with the works for which the plaintiff

See, e.g., Williams v. Cavalli, No. CV 14-06659-AB JEMX, 2015
WL 1247065, at *2-3 (C.D. Cal. Feb. 12, 2015) (artists’
signatures displayed in mural were CMI); Fischer v. Forrest, No.
14cv1304 (PAE), 2015 WL 195822, at *8 (S.D.N.Y. Jan. 13, 2015)
(inclusion of the creator’s surname in product name published on
website and in catalogue within copyright-protected text).
1

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seeks copyright protection.
This conclusion is reinforced when one considers the nature
of the copyrighted work at issue here.

Software code may be

entitled to copyright protection if it is sufficiently original.
See Softel, Inc. v. Dragon Med. & Sci. Commc'ns, Inc., 118 F.3d
955, 963-64 (2d Cir. 1997).

But, source code is distinctive in

that -- unlike the software it usually supports -- it is seldom
seen by anyone but software developers.

Weaving CMI into the

text of the source code may be among the most efficient or
security-enhancing ways to include CMI with that code.
Accordingly, the terms “bounce” and “bouncex” are CMI as defined
in § 1202(c).
Yieldify makes three arguments against interpreting the
statute in this manner.

None succeeds.

Yieldify first argues

that what Bounce claims to be CMI is embedded in the source code
to such an extent that it has become a “portion of the work.”
Yieldify contends that the DMCA demands a clear demarcation
between a copyrighted work and any CMI associated with it, and
thus if the purported CMI is a “portion of the work” it cannot
be CMI as a matter of law.

For the reasons described above,

this is wrong.
Yieldify misconstrues the term “in connection with” to
exclude any information that is a “portion” or element of the
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copyrighted work.

Yieldify finds support in several of the

examples of CMI supplied by § 1202(c) -- “title and other
information identifying the work,” “author of a work,” and
“terms and conditions for use of the work” (the emphasis is
Yieldify’s) -- but it reads too much into those phrases.

A

title, author’s name, and even terms and conditions may easily
be displayed as a “portion of” a work “subject to its
copyright.”
Yieldify next argues that the statutory definition of CMI
should be subject to a “narrowing interpretation” limiting CMI
to information that is “assigned” to the work “by automated
systems.”

Because the terms in question are not assigned in

that manner, Yieldify argues, they cannot be CMI.
may swiftly be dismissed.

This argument

“When a statute's language is clear,”

a court’s “only role is to enforce that language according to
its terms.”

Life Receivables Trust v. Syndicate 102 at Lloyd's

of London, 549 F.3d 210, 216 (2d Cir. 2008) (citation omitted).
Yieldify’s argument for a narrow reading of CMI is impossible to
square with the broad language of § 1202(c), which speaks of
“information conveyed in connection with copies of a work.”
Therefore, “a cause of action under § 1202 of the DMCA
potentially lies whenever the types of information listed in §
1202(c)[] and ‘conveyed in connection with copies of a work
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including in digital form’ [are] falsified or removed,
regardless of the form in which that information is conveyed.”
Murphy v. Millennium Radio Grp., 650 F.3d 295, 305 (3d Cir.
2011) (emphasis added) (quoting 17 U.S.C. §1202(c)). 2
Yieldify’s third argument also fails to persuade.

Yieldify

argues that the terms “bounce” and “bouncex,” as used in
Bounce’s source code, are “not specific enough” to identify
Bounce as the code’s author.

Merely because these terms could

be construed to refer to a different entity called “Bounce” or
some permutation thereof, however, does not mean that the terms
cannot qualify as CMI as a matter of law.

Section 1202(c)

states that CMI may consist of “[t]he name of . . . the author
of a work”; it does not forbid using abbreviations or short-form
versions of the author’s name.

The terms “bounce” and “bouncex”

are sufficiently linked to the plaintiff’s full corporate name
to constitute CMI.

Accordingly, Yieldify’s argument that

Bounce’s DMCA claims are futile must fail.
CONCLUSION
The balance of Bounce’s motion to amend is granted.
may add the two DMCA claims to its complaint.

Bounce

As explained in

The out-of-circuit authority upon which Yieldify principally
relies, IQ Group, Ltd. v. Wiesner Pub., LLC, 409 F. Supp. 2d
587, 598 (D.N.J. 2006), has been abrogated by the Third Circuit,
see Murphy, 650 F.3d at 305.
2

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the December 3 Opinion and Order, however, to the extent Bounce
intends to seek discovery on these claims, it must show why any
discovery beyond that already taken under the terms of the July
20 Scheduling Order and the December 3 Opinion and Order is
necessary, and must diligently pursue any such discovery.

Dated:

New York, New York
December 9, 2015
__________________________________
DENISE COTE
United States District Judge

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