Summary
dismissing Airframe's complaint for failure to state a claim
Summary of this case from Airframe Systems v. L-3 CommunicationsOpinion
05 CV 7638 (GBD).
September 6, 2006
MEMORANDUM DECISION AND ORDER
Plaintiff Airframe Systems, Inc., formerly known as Airline Software, Inc., ("Airframe") brings this action against L-3 Communications Corp. ("L-3 Communications"), alleging that L-3 Communications violated the Copyright Act by acquiring and possessing a certain software program source code created by Airframe. Airframe further alleges certain state law claims. L-3 Communications moves to dismiss the complaint for failure to state a claim, and for lack of subject matter jurisdiction. Defendant's motion to dismiss the federal claim under the Copyright Act is granted.
Plaintiff Airframe, a Delaware corporation, is a software developer that produces and licenses software used in connection with aircraft maintenance and engineering services. (Airframe Compl. ¶ 5). Since 1981, Airframe has marketed computer software programs designed to enable airlines and firms engaged in aircraft maintenance, modification, and engineering services. These programs allow the firms to keep and operate automated maintenance, record-keeping, and engineering services systems. (Id. ¶¶ 5, 7). Airframe markets software packages, called software suites, of programs that it intends the licensee to use for a specified purpose. Each software suite is sold separately and has a separate renewable license. (Id. ¶ 10-11).
Software suites originate from a program source code. (Id. ¶ 12, 18). Several independent software suites can stem from this source code. (Id. ¶ 13). Using a program's source code is the only way to modify a licensed software program. Possessing a program's source code would allow an individual to modify, and develop, the software on his own. (Id. ¶ 16) Software developers guard their source code as highly proprietary technology. (Id. ¶ 15). Software developers typically license source code only in exchange for a substantial consideration, for example, a reasonable royalty rate as applied to gross revenues of the customer's applicable operation. (Id. ¶ 16).
Airframe's source code began development in or about 1979. (Id. ¶ 18). It has been continually adjusted, modified, and expanded. (Id.). As a result, it represents a "unique and valuable intangible asset" to Airframe. (Id.). Airframe registered the copyright of the source code that is the subject of this action. Its most recent registration became effective April 16, 2004. (Id. ¶ 40-41).
In 1997, L-3 Communications bought a license from Airframe for part of Airframe's Maintenance and Engineering software suite. (Id. ¶ 20). In exchange for the software suite, L-3 Communications agreed to pay an annual ten thousand dollar license fee, which was renewable yearly. (Id. ¶ 23). The software suite that L-3 Communications purchased derives from the Airframe source code. (Id. ¶ 24). The software suite is, however, a product sold and operating, independently from the source code. (Id.). L-3 Communications never contracted or paid for the source code license. (Id. ¶ 26).
Plaintiff alleges that
Airframe's principal . . . observed the source code in L3's computer library on or about September 1, 2003 at a time when he was given access by L3 to L3's computer network to assist L3 in diagnosing a purported malfunction in Airframe's Maintenance and Engineering software suite; [Airframe's principal] observed the source code in L3's computer library in the course of seeking out the location of Airframe's Maintenance and Engineering software on L3's system for the purpose of identifying software errors.
(Id. ¶ 28). While diagnosing the malfunction, Airframe's principal was "on-line contemporaneously with the L-3's manager . . . who also observed the source code entry in L3's computer library." (Id. ¶ 29).
The principal of Airframe asked the manager of L-3 Communications why the source code was there. (Id. ¶ 30). The manager of L-3 Communications did not answer at the time. (Id. ¶ 30.) He "said he would inquire as to the origin of the placement of Airframe's source code in L3's library." (Id.).
Several days later, L-3 sent Airframe a memorandum, dated September 10, 2003. (Id. ¶ 31) It stated:
L-3 Communications Integrated Systems did not install the source code recently discovered on the [Airframe] application software. The only individual that may have installed the source code was the [Airframe] employee[, who] came to the company to install the application software. He is the only [Airframe] employee that has installed the [Airframe] software at this location.
(Airframe Compl. ¶¶ 30-33). The memorandum further stated that "[L-3 Communications] has not distributed any copies of the source code to any other person or organization." (Id.).
Plaintiff alleges that neither its employee nor a third party "could install source code onto defendant's networks without the active participation of L-3's agents, officers or employees acting in concert." (Id. ¶ 80). L-3 Communications's computer systems, networks, and library require special security clearance for entry, which "comes about solely through the express consent and active intervention and assistance of L3's employees, agents or officers." (Id. ¶¶ 81-82). The Complaint alleges that "any installation by the [aircrame employee] of Airframe's source code came about through the affirmative participation of L3 and its employees, agents or officers who gave [the Airframe employee] clearance to enter L3's protected computer networks and facilities and facilitated such entry." (Compl. ¶ 84). Copyright Infringement Claim
These allegations are contained in the portion of the complaint containing a claim of fraud. The allegations in the section claiming infringement under the Copyright Act merely state that L-3 Communications acquired and possessed the code without legal right or privilege. They do not state any actions taken by L-3 Communications, or claim that L-3 Communications knew, prior to Airframe's knowing, that source code was installed onto the L-3 Communications network systems.
When deciding on a motion to dismiss the action on the pleadings, the court accepts the factual allegations as true and infers in the pleader's favor. See Karedes v. Ackerley Group, Inc., 423 F.3d 107, 113 (2d Cir. 2005) (citing DeMuria v. Hawkes, 328 F.3d 704, 706 (2d Cir. 2003)). A court may not dismiss a case "unless the court is satisfied that the complaint cannot state any set of facts that would entitle the plaintiff to relief."Miller v. Wolpoff Abramson L.L.P., 321 F.3d 292, 300 (2d Cir. 2002) (citing Patel v. Contemporary Classics of Beverly Hills, 259 F.3d 123, 126 (2d Cir. 2001)). A court does not need to accept a plaintiff's conclusory allegations or legal conclusions offered as pleadings. See Cantor Fitzgerald, Inc. v. Lutnick, 313 F.3d 704, 709 (2d Cir. 2002). A complaint consisting solely of those assertions and conclusions of law fails to state a claim.In re Tamoxifen Citrate Antitrust Litig., 429 F.3d 370, 384-385 (2d Cir. 2005); Gregory v. Daly, 243 F.3d 687, 692 (2d Cir. 2001); Leeds v. Meltz, 85 F.3d 51, 52 (2d Cir. 1996). Further, "[C]ourts have required that particular acts [in Copyright claims] be alleged with some specificity." Hartman v. Hallmark Cards, Inc., 639 F. Supp. 816, 820 (W.D. Mo. 1986) (citing Gee v. CBS, Inc., 471 F. Supp. 600, 644 (E.D. Pa.) aff'd, 612 F.2d 572 (1979); Wildlife Internationale, Inc. v. Clements, 591 F. Supp. 1542 (S.D. Ohio 1984)), aff'd, 833 F.2d 117 (8th Cir. 1987) (citations omitted).
Plaintiff has submitted a certification in which its president speculates about manners in which defendant could have utilized the source code. No such allegations are present in the complaint.
Pursuant to the Copyright Act, the copyright owner has exclusive rights to perform and authorize certain acts. 17 U.S.C. § 106. These rights include reproduction, adaptation, distribution, publication, performance, and display. Id. Any other party infringes if he violates these rights presented in 17 U.S.C. §§ 106- 122. To state a claim for copyright infringement, the plaintiff must allege that he owns a valid copyright in the item and that the defendant copied its original elements. See id. A properly pleaded copyright infringement claim must allege (1) which specific original works are the copyright claim's subject, (2) that plaintiff owns the copyright in these works, (3) that the copyrights have been registered in accordance with the statute, and (4) by which acts during what time the defendant infringed on the copyright. See Franklin Electronic Publishers, Inc. v. Unisonic Prod. Corp., 763 F. Supp. 1, 4 (S.D.N.Y. 1991).
The Second Circuit has found that, under certain circumstances, a party may also be held liable as a vicarious or contributory infringer without having committed a direct infringement. One may infringe vicariously or contributorily by intentionally inducing or encouraging direct infringement. See Gershwin Pub. Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162, n. 8 (2d Cir. 1971) (citing Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 396-97 (1968) for the proposition that "resolution of issue . . . depends upon a determination of the function that [the alleged infringer] plays in the total [reproduction] process." (ellipsis in original)). One may also infringe vicariously or contributorily by declining to exercise a right to stop or limit a direct infringer's actions. See Shapiro, Bernstein Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963). The cases in which the Second Circuit has found vicarious or contributory infringement have involved exceptional cases involving a strong business relationship between the primary infringer and vicarious or contributory infringer. See, e.g. id. (concluding, "on the particular facts before [it]," that defendant's relationship to its infringing licensee, as well as its strong concern for the financial success of the infringing activity, renders it liable for the unauthorized sales of the bootleg records).
According to the complaint, the source code was introduced onto defendant's computer, by plaintiff's then-employee, in the course of installing application software in connection with a maintenance and engineering program suite. Plaintiff further alleges that the source code was subsequently observed on the licensed software during a later repair call. Plaintiff's copyright claim contains no allegation of conduct by defendant that violates any of the exclusive rights of plaintiff. Plaintiff does not allege any use of plaintiff's source code. The complaint is devoid of any allegations that defendant has reproduced the source code, distributed the source code, by sale or otherwise, or publically disclosed the source code. The complaint does not allege that defendant misappropriated the source code for its own illegitimate use.
Plaintiff's complaint similarly fails to allege contributory or vicarious infringement by L-3 Communications of plaintiff's copyright. There are no factual allegations in the complaint that defendant intentionally induced or encouraged plaintiff's employee to copy the source code onto defendant's computer. Similarly, there are no allegations in the complaint that defendant profited from infringement by plaintiff's employee.
Airframe merely argues that its employee did not have authority to install its source code on L-3 Communications's system. Airframe submits that L-3 Communications "knew or should have known" this installation violated ordinary business practices. (Id. ¶ 34). Airframe alleges that L-3 Communications participated by giving clearance to the Airframe employee and monitoring his access. The source code's existence on L-3 Communication's systems was then fortuitously discovered at a later date. Plaintiff alleges no facts to support a conclusion that defendant was aware that the source code was on its computer before plaintiff's principal brought this fact to defendant's attention while making a subsequent repair. The complaint merely indicates that defendant granted plaintiff's employee legitimate computer access to perform software installation. It was during this service that the source code was either utilized or installed by plaintiff's own employee. Further, the complaint does not contain allegations that defendant has ever used, or in any way distributed copies of, plaintiff's source code. Plaintiff's mere suggestion that defendant could use the source code to modify the licenced software without paying plaintiff is insufficient to sustain plaintiff's copyright infringement claim. Such a claim based on the bare facts as alleged in the complaint cannot be sustained. Plaintiff's claim under the Copyright Act is dismissed for failure to state a cause of action.
Related State Law Claims
Plaintiff's related claims are state law causes of action. This Court declines to exercise supplemental jurisdiction over these related state law claims. A court may decline to exercise supplemental jurisdiction over state law claims if "the district court has dismissed all claims over which it has original jurisdiction." 28 U.S.C. § 1367(c)(3); Giordano v. City of New York, 274 F.3d 740, 754 (2d Cir. 2001); see also Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7 (1988) (in considering the discretionary exercise of supplemental jurisdiction, the United States Supreme Court noted that "in the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered . . . will point toward declining to exercise jurisdiction over the remaining state-law claims.").
This case is dismissed in its entirety.