ExxonMobil Global Services Company et al v. Gensym Corporation et al

Filing 79

MEMORANDUM OPINION AND ORDER, DENYING 36 MOTION to Dismiss Gensym's Second Amended Counterclaim. Signed by Judge John D. Rainey. (kkc)

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

§

§

§

§

§

§

§
§
§

§

§
§

§

§
§
§
§
§

§

§
§

EXXONMOBIL GLOBAL
SERVICES
EXXON MOBIL
CORP., and EXXONMOBIL
RESEARCH & ENGINEERING CO.,
Plaintiffs/Counter-Defendants,

v.
GENSYM CORP. & VERSATA

ENTERPRISES, IN c.,

Defendants,
GENSYM CORP.,

Counter Plaintiff/Third-Party Plaintiff

v.
INTELLIGENT LABORATORY

SOLUTIONS,

Third-Party Defendant

NO.l:12-CV-442-JDR

MEMORANDUM OPINION AND ORDER
the Court is ExxonMobil Global Services Company,
Corporation,

and

ExxonMobil

"ExxonMobil") Motion to

Company's

and
Gensym's

Mobil
(collectively

Amended Counterclaim (Dkt. No. 36), to

which Gensym Corporation ("Gensym") and Versata

Inc. ("Versata") (collectively

"Gensym") have responded (Dkt. No.
I. Factual Background

This complex case arises in
relevant to Gensym's

Only

below.

claim are

According to the facts set forth
Amended Third Party

a copyright infringement

Second Amended Counterclaims and

III

(Dkt. No. 30), the cornerstone of

1

business is a

computer software program called G2, which Gensym wrote over a period of many years and has
registered with the Copyright Office. G2 can be used as a platform to develop and run G2
applications, which are custom-configured pieces of software that run from' within G2. Since
these applications are written from within G2 and rely completely on the functionality of G2 in
order to run, the "End User" of a G2 application must possess its own copy of G2 in order to run
the application.
Gensym has been doing business with ExxonMobil and Third-Party Defendant Intelligent
Laboratory Solutions, Inc. (ILS) for a number of years.
In 2006, Gensym and ILS entered into a new licensing agreement (the "ILS Agreement")
that granted ILS limited license rights in G2: "(a) to Use the Software for its own application
development purposes; (b) Use the Software to create Bundled Products; (c) Reproduce, sell,
license or otherwise distribute the Software as part of the Bundled Products to End Users; and (d)
Grant object code licenses or sublicenses to End-Users for Software incorporated in the Bundled
Products." (Pet.

~

14 (quoting ILS Agreement § 3.l(a)-(d)).

In 2008, Gensym and ExxonMobil entered into a new licensing agreement for G2 (the
"License Agreement"). Under the License Agreement, ExxonMobil is licensed to use G2 to
create G2 applications, which ExxonMobil then operates at chemical and petroleum refineries
around the world. After ExxonMobil entered into the License Agreement with Gensym,
ExxonMobil paid ILS to develop a G2 application called AED/RTA. All of the application
development work was performed by ILS off-site from ExxonMobil and using ILS's copies of
G2, even though ExxonMobil is not an End User of Bundled Products from ILS.
According to Gensym, ExxonMobil's use of any G2 application created by ILS,
including AEDIR TA, exceeds the scope of the License Agreement and therefore constitutes

2

copyright
of

ExxonMobil now moves to dismiss

claim pursuant to

Rule

Procedure 12(b)( 6).

Legal Standard
Federal

of Civil Procedure 12(b)(6) provides that a party may move to dismiss an

action for "failure to state a

upon which relief may be granted." FED.

a Rule 12(b)(6)

a court must

Cry. P. 12(b)(6).

s

the

as true

and draw all reasonable inferences in her favor. See Leatherman v. Tarrant County Narcotics

Coordination Unit, 507 U.S. 1

Intelligence

, 164 (1

315, 327 (1991). A court may not look beyond
relief should be

279

face of

Co. ofBellaire,

499 U.S.

v.

pleadings to determine whether

v. Robertson, 1

based on the

St. Paul

Cir. 1999)

United

(5th

F.3d 772,

Worldwide Ins. Co., 937 F.2d

v.

Cir. 1991).
can

theory or the

based on ei ther a

Frith v. Guardian

sufficient facts alleged under a cognizable legal theory.

Am., 9

Supp. 2d 734, 737-38 (S.D.
allegations to

and a

Court has held that a
requires more than labels and

his 'entitlement to
of

Atlantic Corp. v. Twombly,

Co. of

1998). While a complaint need not contain detailed

a 12(b)(6) motion, the

"obligation to provide the' grounds'

of

elements of a cause

action will not

" Bell

U.S. 544, 555 (2007) (abrogating the Conley v. Gibson, 355

41 (1957) 'no set

facts' standard as

standard")

omitted).

plausible on its

and

incomplete, negative

facts to state a

must

the speCUlative

a right to relief

Weekly Admin., Inc. v. Bela Corp., 512

on an accepted pleading

137, 140

3

CiL 2007).

to relief that is
" Id.; Nationwide

Analysis

In order to state a claim
of the copyrighted

and (2)

Inc., 1
alleged

copyright infringement, a plaintiff must allege: (1) ownership

F.3d

exists

F. DeCastro, Inc., 220
Giving

v.

790 (5th Cir. 1999). "A copy is legally actionable

actually used

substantial

defendant. Alcatef USA,

by

n ....Hl. .' · ' "

to create his own work, and (2)

copyrighted

" Computer

two

396, 400 (5th

(1) the

Assistance

v. Robert

2000) (quoting Alcatel, 166 F .3d at 790).

to its claim for copyright infringement,

as follows:

50. Gensym's G2 software is registered with the Copyright Office.
51. Gensym's
software contains a substantial amount
original material
(including without limitation code, specifications, documentation and
materials) that is copyrightable subject matter under
Copyright
Act, 17 U.S.C. § 101 et
Without consent, authorization, approval, or license, ILS knowingly,
willfully,
unlawfully
G2 to create a
software
applications
ExxonMobil
others including but not limited to the
AEDIRTA application. Each of these applications was created in G2, runs
out
and is entirely
on G2
operation.
53.
these applications; therefore, is a derivative work
or
contains a
of portions of
As such, each these applications is an
unauthorized copy of
copyrighted work.
distributed copIes of
applications to ExxonMobil and
others. When
provided
applications to ExxonMobil
others it
knew that
applications were unauthorized works
that they would
be further distributed and used by ExxonMobil and others. ExxonMobil in
tum did copy the applications and distributed them to a variety of
facilities.

***

56. Additionally, every instance where ExxonMobil is using
beyond the
scope of a valid License Agreement is an instance where ExxonMobil has
prepared, used, published, displayed and or distributed Gensym's
copyrighted
thereof, or prepared a derivative
thereof
an unlawful manner.

4

57. By this unlawful copying, use, and distribution, ILS and ExxonMobil have
violated Gensym's exclusive rights under 17 U.S.C. § 106.
(Pet.

~~

50-54,56-57.)

Computer software is entitled to copyright protection. Eng 'g Dynamics, Inc. v. Structural

Software, Inc., 26 F.3d 1335, 1341 (5th Cir. 1994); see also Vault Corp. v. Quaid Software Ltd.,
847 F.2d 255, 259 (5th Cir. 1988) (recognizing that the Copyright Act was amended in 1976 "to
include computer programs in the definition of protectable literary works"). Moreover, the use of
computer software outside the scope of a valid licensing agreement constitutes copyright
infringement. See

s.o.s.,

Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989) (cited in

Womack+Hampton Architects, L.L.c. v. Metric Holdings Ltd. P'ship, 102 Fed. App'x 374, 379
(5th Cir. 2004)); see also Gilliam v. Am. Broad. Cos., 538 F.2d 14,20 (2d Cir. 1976); NIMMER
ONCOPYRlGHT, § 1015[A] (1999).
Gensym's allegations against ExxonMobil are therefore sufficient to state a claim for
copyright infringement, and ExxonMobil is not entitled to dismissal of this claim.
IV. Conclusion

For the aforementioned reasons, ExxonMobil's Motion to Dismiss Gensym's Second
Amended Counterclaim (Dkt. No. 36) is DENIED.
It is so ORDERED.
SIGNED this 27th day of March, 2013.

,
JOHN D. RAIN ~y
SENIOR U.S. DISTRICT JUDGE

5

ct~V