Actian Corporation v. AutoClerk, Inc., et al.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ACTIAN CORPORATION, Case No. 25-cv-09136-WHO

8 Plaintiff, ORDER ON THE MOTION TO 9 v. DISMISS

10 AUTOCLERK, INC., et al., Re: Dkt. No. 19 Defendants. 11

12 Before me is a motion to dismiss for failure to state a claim brought by defendants 13 AutoClerk, Inc. (“AutoClerk”) and Best Western International, Inc. (“Best Western”) (together, 14 “defendants”). They principally contend that plaintiff Actian Corporation (“Actian”) has raised 15 only claims that sound in contract and not, as Actian has pleaded, in copyright law. They assert 16 that because Actian has failed to plead a federal claim, I lack jurisdiction. Their motion lacks 17 merit: Actian has adequately alleged copyright claims asserting violations of 17 U.S.C. § 505 as 18 well as a breach of contract claim over which I may exercise supplemental jurisdiction. The 19 motion to dismiss is DENIED. 20 BACKGROUND 21 Actian is a computer software company focused on data management and technology 22 integration. Complaint (“Compl.”) [Dkt. No. 1] ¶ 7. It developed and owns the copyright for 23 “Actian Software,” a “database management system” that companies can embed in other computer 24 programs to support with data management within those companies’ systems. Compl. ¶ 8. It has 25 created a number of versions of the Actian Software: at issue here are (1) Pervasive PSQL v.10 26 (“v.10”); (2) Pervasive PSQL v.11 (“v.11”); and (3) Actian Zen v.13 (“v.13). Compl. ¶ 9. Actian 27 regularly licenses Actian Software to other companies. Compl. ¶ 7. 1 solutions to hotel chains, including to Best Western hotels. Compl. ¶ 10. Its software supports its 2 customers in managing “reservations, check-ins/outs, billing, room cleaning, and other front-desk 3 operations, as well as communicat[ions] with hotel guests.” Id. It has licensed Actian Software 4 (including v.10, v.11, and v.13) since August 2008; its own property management software cannot 5 operate without the Actian Software database management system. Compl. ¶¶ 10–11. 6 The Actian Software Licenses 7 Each version of the Actian Software is associated with corresponding versions of at least 8 one Actian Software License Agreement. Compl. ¶ 13. While v.10 has three corresponding 9 license agreements (the v.10-1 License Agreement, the v.10-2 License Agreement, and the v.10-3 10 License Agreement), v.11 and v.13 each have only one (the v.11 License Agreement and the v.13 11 License Agreement) (together, I will refer to the license agreements as “the License Agreements”). 12 Id. When attempting to download, install, and use the Actian Software, a user must acknowledge 13 a clickwrap agreement that requires anyone downloading the Actian Software to affirmatively 14 consent to the terms of the License Agreements. Compl. ¶ 14. 15 Upon opening any of the License Agreements, a reader is presented with one of the 16 following three admonitions: IMPORTANT: DO NOT INSTALL THE ENCLOSED SOFTWARE UNTIL YOU HAVE 17 READ THIS LICENSE AGREEMENT (“AGREEMENT”). BY INSTALLING THE 18 SOFTWARE, OR AUTHORIZING ANY OTHER PERSON TO DO SO, YOU, AND SUCH OTHER PERSON, IF APPLICABLE, ACCEPT THE TERMS AND 19 CONDITIONS OF THIS LICENSE AGREEMENT. IF YOU DO NOT AGREE TO THE TERMS OF THIS LICENSE AGREEMENT, THEN RETURN THE ENTIRE PACKAGE 20 WITHIN TEN DAYS OF PURCHASE FOR A REFUND. 21 Compl. Exh. A (v.10-1 License Agreement, v. 10-2 License Agreement) Dkt. No. 1-1 at 2, 10. 22 IMPORTANT: DO NOT INSTALL THE ENCLOSED OR DOWNLOADED SOFTWARE UNTIL YOU HAVE READ THIS PERVASIVE PSQL LICENSE 23 AGREEMENT (“AGREEMENT”). BY INSTALLING THE SOFTWARE, OR 24 AUTHORIZING ANY OTHER PERSON TO DO SO, YOU, AND SUCH OTHER PERSON, IF APPLICABLE, ACCEPT THE TERMS AND CONDITIONS OF THIS 25 AGREEMENT. IF YOU DO NOT AGREE TO THE TERMS OF THIS AGREEMENT, DO NOT INSTALL OR USE THE SOFTWARE AND WITH RESPECT TO 26 SOFTWARE DELIVERED (I) ON PHYSICAL MEDIA, RETURN THE ENTIRE PACKAGE WITHIN TEN DAYS OF PURCHASE FOR A REFUND, (II) 27 ELECTRONICALLY, DESTROY ANY DOWNLOADED FILES. Compl. Exh. A (v.10-3 License Agreement, v.11 License Agreement) Dkt. No. 1-1 at 18, 26. 1 PLEASE READ THIS AGREEMENT CAREFULLY BEFORE DOWNLOADING OR 2 INSTALLING THE SOFTWARE. 3

4 This Customer License and Support Services Agreement (“Agreement”) is a legal agreement between the end user downloading or installing the software . . . and Actian 5 Corporation . . . . IF YOU ARE ENTERING INTO THIS AGREEMENT ON BEHALF OF A COMPANY OR AN ENTITY, YOU REPRESENT THAT YOU ARE THE 6 EMPLOYEE OR AGENT OF SUCH COMPANY OR ENTITY AND YOU HAVE THE 7 AUTHORITY TO ENTER INTO THIS AGREEMENT AND LEGALLY BIND YOUR COMPANY OR ENTITY. . . . BY DOWNLOADING, INSTALLING OR USING THE 8 SOFTWARE OR BY CLICKING THE “I ACCEPT” BUTTON BELOW (OR TYPING “Y” OR “YES” IF YOU ARE INSTEAD ASKED FOR A “Y OR N” RESPONSE), YOU 9 ARE AGREEING TO BE BOUND BY THIS AGREEMENT. IF YOU DO NOT ACCEPT THE TERMS OF THIS AGREEMENT, THEN YOU MUST CLICK ON THE 10 “DECLINE” OR “I DO NOT ACCEPT” BUTTON BELOW (OR TYPE “N” OR “NO” IF 11 YOU ARE INSTEAD ASKED FOR A “Y OR N” RESPONSE) AND YOU MAY NOT DOWNLOAD, INSTALL OR USE THE SOFTWARE. This Agreement governs the 12 purchase and use of the software and services described in an Order (defined below). . . . 13 Compl. Exh. A (v.13 License Agreement) Dkt. No. 1-1 at 33. 14 The License Agreements provide a user “a nonexclusive, non-transferable, non- 15 sublicensable right to install and use the Actian Software.” They restrict a user from reproducing 16 the Actian Software at all and from distributing the software outside the scope of the specific 17 License Agreement in any way. Compl. ¶ 17. For example, the v.10-1 and v.10-2 License 18 19 Agreements permit a user to install the Actian Software on one computer with up to five users. 20 Compl. ¶ 18. The v.10-3 License Agreement allows a user to download one copy of the Actian 21 Software on a single computer with one user at a time. Id. The v.11 and v.13 License Agreements 22 contain similar restrictions. Compl. ¶¶ 20–21. Companies seeking access to higher user levels or 23 to use the Actian Software on a greater number of computers must buy different types of licenses 24 (e.g., a 3-user license or a server license). Compl. ¶ 19. 25 The License Agreements include a number of other restrictions. A user has a right to use 26 27 the Actian Software only insofar as it furthers its own internal business—not in conjunction with the Actian Software unless they purchase it for their own use. Compl. ¶ 24. Users are prohibited 1 2 from “pooling” or “multiplexing,” which is a process that artificially reduces the known number of 3 users accessing the Actian Software by means of a shared network: this allows any amount of 4 users to access the Actian Software at one time but only officially logs one user at a time. Compl. 5 ¶ 25. Users are finally prohibited from “using, renting, leasing, sublicensing, transferring, 6 copying, reproducing, displaying, modifying, creating derivative works of, time sharing, 7 disposing” or “assigning[/]transferring any rights, obligations or interests” in the Actian Software 8 without express authorization from Actian. Compl. ¶¶ 27–28. 9 10 Doing any of the aforementioned acts voids the License Agreements. Compl. ¶ 28. Users 11 are required to manage their own use of the Actian Software to ensure it is aligned with the 12 requirements of the License Agreements, although Actian maintains the right to audit user conduct 13 as it relates to the Actian Software. Compl. ¶¶ 29, 35. If a user fails to comply with the 14 enumerated requirements, the License Agreement will terminate immediately. Compl. ¶ 30. 15 Defendants’ Alleged Infringing Activities 16 Actian learned that Best Western acquired AutoClerk in 2024. Compl. ¶ 31. AutoClerk 17 18 assigned its Actian Software license rights to Best Western as a result of that acquisition without 19 Actian’s consent, in violation of the License Agreements. Id. Actian alleges that Best Western’s 20 AutoClerk acquisition was a concerted effort to access and use the Actian Software to improve 21 Best Western’s control over and effective implementation of its hotel operations. Compl. ¶ 33. 22 Best Western now mandates each of its hotels to use AutoClerk as its exclusive property 23 management solutions software. Compl. ¶ 34. 24 25 In late 2024 and early 2025, Actian reached out to defendants and enforced its audit rights 26 pursuant to the License Agreements. Compl. ¶ 35. Actian tried working with defendants to 27 determine to what extent AutoClerk had run afoul of the License Agreements and what licenses some indeterminate amount of time and identified 135 Best Western hotels using the v.10, v.11, 1 2 and v.13 Actian Software. Compl. ¶ 38. 3 Communications ultimately broke down and defendants began to refuse providing the 4 information Actian requested. Compl. ¶ 39. Nevertheless, Actian discovered that defendants had 5 repeatedly reproduced and distributed the Actian Software in violation of the License Agreements. 6 Compl. ¶ 40. Defendants did so in multiple ways. For example, Actian discovered that 7 defendants copied and reused one v.10, 1-user license (limited to one user, one machine) at least 8 696 times—reproducing the Actian Software so that hundreds of Best Western hotels could 9 10 benefit from a single Actian Software license. Compl. ¶ 41. Defendants have also used the Actian 11 Software alongside their own property management solutions application used by third parties and 12 have provided services to third parties using the Actian Software. Compl. ¶ 42. Further, 13 defendants have been “multiplexing” or “pooling” to conceal the actual number of users for each 14 of the Actian Software licenses they have purchased. Compl. ¶ 44. Defendants multiplex both at 15 individual hotel sites (using multiple computers for one licensed user) and remotely with the 16 support of an internet connection. Id. 17 18 Actian contends that these uses of the Actian Software were unlicensed and infringing. 19 The uses not only went beyond the scope of the License Agreements but were the result of willful 20 and intentional “unauthorized reproduction, distribution, redistribution, and/or use of the Actian 21 Software.” Compl. ¶¶ 48–49. 22 Procedural History 23 Actian filed its lawsuit on October 23, 2025, alleging four causes of action against 24 25 defendants: (1) Copyright Infringement in violation of 17 U.S.C. § 505, Compl. ¶¶ 52–57; (2) 26 Contributory Copyright Infringement in violation of 17 U.S.C. § 505, Compl. ¶¶ 58–65; (3) 27 Vicarious Copyright Infringement in violation of 17 U.S.C. § 505, Compl. ¶¶ 66–72; and (4) relief, as well as actual, statutory, and enhanced damages. 1 2 Defendants filed their motion to dismiss the complaint on January 5, 2026. Motion to 3 Dismiss (“Mot.”) [Dkt. No. 19]. Actian opposed the motion and defendants replied. See 4 Opposition to the Motion to Dismiss (“Oppo.”) [Dkt. No. 31]; Reply ISO Motion to Dismiss 5 (“Reply”) [Dkt. No. 32]. I held a hearing on the motion on April 8, 2026. 6 LEGAL STANDARD 7 I. Rule 12(b)(6) 8 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint 9 if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to 10 dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its 11 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when 12 the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant 13 is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation 14 omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. 15 While courts do not require “heightened fact pleading of specifics,” a plaintiff must allege facts 16 sufficient to “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 570. 17 In deciding whether the plaintiff has stated a claim upon which relief can be granted, the 18 Court accepts the plaintiff’s allegations as true and draws all reasonable inferences in favor of the 19 plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court 20 is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of 21 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 22 2008). 23 If the court dismisses the complaint, it “should grant leave to amend even if no request to 24 amend the pleading was made, unless it determines that the pleading could not possibly be cured 25 by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making 26 this determination, the court should consider factors such as “the presence or absence of undue 27 1 undue prejudice to the opposing party and futility of the proposed amendment.” Moore v. Kayport 2 Package Express, 885 F.2d 531, 538 (9th Cir. 1989). 3 II. Rule 12(b)(1) 4 A motion to dismiss filed pursuant to Rule 12(b)(1) is a challenge to the court’s subject 5 matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). “Federal courts are courts of limited 6 jurisdiction,” and it is “presumed that a cause lies outside this limited jurisdiction.” Kokkonen v. 7 Guardian Life Ins. of Am., 511 U.S. 375, 377 (1994). The party invoking the jurisdiction of the 8 federal court bears the burden of establishing that the court has the requisite subject matter 9 jurisdiction to grant the relief requested. Id. 10 A challenge pursuant to Rule 12(b)(1) may be facial or factual. See Safe Air for Everyone 11 v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a facial attack, the jurisdictional challenge is 12 confined to the allegations pled in the complaint. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th 13 Cir. 2004). The challenger asserts that the allegations in the complaint are insufficient “on their 14 face” to invoke federal jurisdiction. See Safe Air, 373 F.3d at 1039. To resolve this challenge, the 15 court assumes that the allegations in the complaint are true and draws all reasonable inference in 16 favor of the party opposing dismissal. See Wolfe, 392 F.3d at 362. 17 “By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by 18 themselves, would otherwise invoke federal jurisdiction.” Safe Air, 373 F.3d at 1039. To resolve 19 this challenge, the court “need not presume the truthfulness of the plaintiff’s allegations.” Id. 20 (citation omitted). Instead, the court “may review evidence beyond the complaint without 21 converting the motion to dismiss into a motion for summary judgment.” Id. (citations omitted). 22 “Once the moving party has converted the motion to dismiss into a factual motion by presenting 23 affidavits or other evidence properly brought before the court, the party opposing the motion must 24 furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter 25 jurisdiction.” Id. (quoting Savage v. Glendale Union High Sch. Dist. No. 205, 343 F.3d 1036, 26 1040 n.2 (9th Cir. 2003)). 27 1 DISCUSSION 2 I. Copyright Infringement Claims 3 Defendants contend that Actian’s claims for copyright infringement fail because its first 4 cause of action (and therefore, the derivative copyright claims brought under causes of action two 5 and three) sounds fully in contract law and not under the Copyright Act. Mot. 10–12; Reply 2–4. 6 Actian recognizes that “it is true that a copyright holder who has granted a license ordinarily 7 waives its right to sue for copyright infringement,” but argues that “a copyright claim is 8 nonetheless proper when the defendant’s actions exceed the scope of the license.” Oppo. 4–5. 9 The heart of the dispute is whether Actian alleges breaches of mere contractual covenants 10 contained within the meaning of the License Agreements or breaches of conditions of the License 11 Agreements themselves. See Ticketmaster L.L.C. v. Prestige Ent., Inc., 306 F.Supp.3d 1164, 1172 12 (C.D. Cal. 2018) (“Breaches of conditions constitute copyright infringement, while breaches of 13 covenants are only actionable under contract law.”). 14 Defendants argue that the following of Actian’s allegations state only breaches of 15 covenant: • AutoClerk has allowed more than one user on a single machine for v.10 Actian 16 Software and has provided it to third parties. 17 • AutoClerk marketed products containing Actian Software beyond internal use and beyond permitted concurrent users. 18 • Best Western’s acquisition of AutoClerk violated the prohibition on assigning AutoClerk’s rights under the License Agreements. 19 Mot. 11. Actian, on the other hand, views these and other allegations as breaches of conditions in 20 violation of the Copyright Act. 21 The Ninth Circuit has addressed the somewhat murky distinction between the two in MDY 22 Industries, LLC v. Blizzard Entertainment, Inc. 629 F.3d 928, 939–942 (9th Cir. 2010). In MDY, 23 plaintiff MDY Industries, LLC (“MDY”) developed a software program that allowed users to 24 automatically play portions of an online computer game called World of Warcraft (“WoW”), 25 created by defendant Blizzard Entertainment, Inc. (“Blizzard”). Id. at 934–35. WoW players 26 must read and accept both a license agreement and a Terms of Use before downloading or playing 27 the game. Id. Those terms prohibited the use of software “bots,” including the type of software 1 designed by MDY. Id. at 936. MDY’s software program did “not alter or copy WoW’s game 2 client software, [did] not allow a player to avoid paying monthly subscription dues to Blizzard, 3 and ha[d] no commercial use independent of WoW.” Id. at 935. 4 MDY filed an action for declaratory relief to determine, in relevant part, whether its 5 software program infringed Blizzard’s copyright rights. Id. at 935. The district court decided in 6 favor of Blizzard, concluding that MDY’s software “contributorily and vicariously infringed 7 Blizzard’s copyrights,” and MDY appealed. Id. at 937. The Ninth Circuit reversed. Id. at 941– 8 42. 9 In reaching its holding, the Ninth Circuit reviewed the state and scope of copyright law and 10 differentiated “contractual covenants” from “license conditions.” Id. at 939–942. “We refer to 11 contractual terms that limit a license’s scope as ‘conditions,’ the breach of which constitute 12 copyright infringement. We refer to all other license terms as ‘covenants,’ the breach of which is 13 actionable only under contract law.” Id. at 939. Further, courts “distinguish between conditions 14 and covenants according to state contract law, to the extent consistent with federal copyright law 15 and policy.” Id. Under California law, “[a] covenant is a promise to do or refrain from doing a 16 specific act. A condition is a qualification to the parties’ obligations; if it occurs, the interest is 17 terminated or enlarged. A condition is created by the mutual assent of the parties and is binding 18 on both, while a covenant is binding on the covenantor only.” San Mateo Cmty. College Dist. v. 19 Half Moon Bay Lt. P’ship., 65 Cal. App. 4th 401, 411 (1998). 20 Here, the License Agreements present a mixture of covenants and conditions. For 21 example, defendants’ alleged acts of allowing more than one user to access a specific license is a 22 breach of a “promise to do or refrain from doing a specific act.” Id. But defendants’ alleged 23 practice of mass copying and redistributing the licensed software goes beyond the scope of the 24 License Agreements. 25 “[F]or a licensee’s violation of a contract to constitute copyright infringement, there must 26 be a nexus between the condition and the licensor’s exclusive rights or copyright.” MDY Indus., 27 629 F.3d at 941. “To recover for copyright infringement based on a breach of a license agreement, 1 complaint must be grounded in an exclusive right of copyright (e.g., unlawful reproduction or 2 distribution.”). Id. at 940. The “potential for infringement [thus] exists only where the licensee’s 3 action (1) exceeds the license’s scope (2) in a manner that implicates some of the licensor’s 4 exclusive statutory rights.” Citing to a Federal Circuit opinion, the Ninth Circuit raised the 5 following example: 6 Consider a license in which the copyright owner grants a person the right to make one and only one copy of a book with the caveat that the licensee may not read the last ten pages. 7 Obviously, a licensee who made a hundred copies of the book would be liable for 8 copyright infringement because the copying would violate the Copyright Act’s prohibition on reproduction and would exceed the scope of the license. Alternatively, if the licensee 9 made a single copy of the book, but read the last ten pages, the only cause of action would be for breach of contract, because reading a book does not violate any right protected by 10 copyright law. 11 Id. (citing to Storage Tech. Corp. v. Custom Hardware Eng’g & Consulting, Inc., 421 F.3d 1307, 12 1315–16 (Fed. Cir. 2005) (citation modified). 13 In MDY, the court held that the “antibot provisions at issue in this case . . . are . . . 14 covenants rather than conditions. An [MDY software] user violates the covenants with Blizzard, 15 but does not thereby commit copyright infringement because [the MDY software] does not 16 infringe any of Blizzard’s exclusive rights. For instance, the use does not alter or copy WoW 17 software.” Id. at 941. Actian’s case requires the opposite outcome, based on the same reasoning. 18 There is a clear nexus between a license condition and Actian’s exclusive copyright. Actian has at 19 least alleged that defendants exceeded the scope of the License Agreements by reproducing and 20 distributing copies of the Actian Software throughout the Best Western network of hotels. See 21 Compl. ¶ 41 (alleging that defendants copied and distributed one version of the Actian Software 22 696 times). The License Agreements limit a user’s ability to copy and redistribute the Actian 23 Software, and by allegedly breaching that condition, defendants will have necessarily infringed 24 upon Actian’s exclusive copyright. This is an actionable claim under the Copyright Act. 25 Because I conclude that Actian has adequately alleged a cause of action for direct 26 copyright infringement, defendants’ arguments that the derivative claims must be dismissed fail 27 since those claims rise and fall with Actian’s claim for direct infringement. The motion to dismiss 1 II. Breach of Contract Claim 2 Defendants next argue that Actian’s fourth cause of action for breach of contract fails 3 because (1) Actian fails to adequately allege a cause of action for breach of contract and (2) the 4 claim runs afoul of the relevant statute of limitations period in any event. Mot. 12–17. I disagree. 5 To adequately allege a cause of action for breach of contract, a plaintiff must allege: “(1) 6 [the] existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) 7 defendant’s breach, and (4) damages to plaintiff as a result of the breach.” Naranjo v. Drs. Med. 8 Ctr. of Modesto, Inc., 111 Cal. App. 5th 408, 430 (2025) (citations omitted). Defendants argue 9 that Actian fails to adequately plead the first and fourth required prongs. 10 First, defendants contend that Actian fails to plead the existence of a valid contract. Mot. 11 13–14. A valid contract requires that “1. Parties [are] capable of contracting; 2. Their [mutual] 12 consent; 3. A lawful object, and 4. A sufficient cause or consideration.” Aton Ctr., Inc. v. United 13 Healthcare Ins. Co., 93 Cal. App. 5th 1214, 1231 (2023). Defendants assert that Actian “fails to 14 plead that AutoClerk assented to the License Agreement.” Mot. 13. They explain, without 15 offering any evidence (judicially noticeable or otherwise), that the License Agreements were 16 “browsewrap” agreements and therefore Actian never “conspicuously presented [the terms of the 17 License Agreements] to the user.” Mot. 14. 18 This belies the clear language of the allegations made in the Complaint. Actian alleges 19 “[t]he v.10 License Agreements, v.11 License Agreement, and v.13 License Agreement are 20 clickwrap agreements.” Compl. ¶ 14. Actian pleaded that the License Agreements “require any 21 individual or entity downloading or installing the Actian Software, including AutoClerk or other 22 users, to affirmatively indicate consent to the terms prior to the downloading and installation of 23 each version of the Actian Software, including any upgrades to a different version of the Actian 24 Software.” Id. Defendants instead ask me to look outside the Complaint (again, to no presented 25 evidence) and simply believe their construction of the presentation of the terms. I cannot do so. 26 See Usher, 828 F.2d at 561. If defendants wish to challenge the sufficiency of mutual assent, they 27 are free to do so at a later stage in this case with a complete presentation of relevant evidence. 1 does not plead any damages in its complaint. Mot. 16–17. Defendants cite Body Jewelz, Inc. v. 2 Valley Forge Insurance Company, where a court held that allegations of “thousands of dollars in 3 damages” was sufficient to sustain a breach of contract claim insofar as damages were concerned. 4 241 F. Supp. 3d 1084, 1091 (C.D. Cal. 2017). Here, Actian pleaded damages in the form of “lost 5 licensing revenue and lost fees” but did not allege an amount of lost revenue and lost fees. Compl. 6 ¶ 77. See also Compl. ¶¶ 77–78 (“As a direct and proximate cause of Defendants’ breaches, 7 Actian suffered and continues to suffer harm and damages . . . Actian is entitled to damages for the 8 breaches, including without limitation, actual and compensatory damages, indirect damages, and 9 consequential damages.”). Actian also alleges that the “breaches are ongoing.” It is more than 10 plausible that the alleged conduct of defendants caused Actian damages: Actian does not have to 11 estimate a specific dollar amount in the Complaint. Discovery will sort out the amount of 12 damages sustained. 13 Third, defendants contend that Actian’s breach of contract claim falls outside the statute of 14 limitations. Mot. 14–16. The statute of limitations for bringing a breach of contract claim is four 15 years. Cal. Civ. P. Code § 337. Defendants argue that since AutoClerk first purchased access to 16 the Actian Software in 2008 and last purchased access to the Actian Software in 2019, Actian’s 17 instant lawsuit (filed October 23, 2025) falls outside the range of either of those purchases. Mot. 18 15. This argument makes little sense. 19 Under California law, “a cause of action accrues at the time when the cause of action is 20 complete with all of its elements.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 806 21 (2005). The “Discovery Rule” acts as an exception to the accrual rule and provides that “accrual 22 of a cause of action [is postponed] until the plaintiff discovers, or has reason to discover, the cause 23 of action.” Id. at 807. To “rely on the discovery rule for delayed accrual of a cause of action, a 24 plaintiff whose complaint shows on its face that his claim would be barred without the benefit of 25 the discovery rule must specifically plead facts to show (1) the time and manner of discovery and 26 (2) the inability to have made earlier discovery despite reasonable diligence.” Id. at 808. 27 At the earliest, the statute of limitations on a breach of contract claim begins to run on the ] Actian plausibly repeats throughout its complaint that it had no reason to “suspect facts” 2 || concerning breach of contract (or copyright) until 2024, when it learned that AutoClerk had 3 assigned the License Agreements to Best Western without Actian’s consent, and started its audit. 4 |} Compl. 31-34. Only at that point did Actian “have reason to at least suspect that a type of 5 || wrongdoing ha[d] injured” it. Fox, 35 Cal. 4th at 807. 6 As explained by the California Supreme Court in Fox: 7 A plaintiff has reason to discover a cause of action when he or she “has reason at least to g suspect a factual basis for its elements.” Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining 9 elements, will generally trigger the statute of limitations period. . . . [A] plaintiffs suspicion of “elements” of a cause of action . . . refer[s] to the “generic” elements of 10 wrongdoing, causation, and harm. . . . Rather than examining whether the plaintiffs suspect facts supporting each specific legal element of a particular cause of action, we look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them. g B Fox, 35 Cal. 4th at 807. For pleading purposes at least, Actian has alleged that it acted well within 14 the four-year statute of limitations after discovering the possible breach in 2024. Defendants’

15 argument that Actian cou/d have initiated an audit at any point within AutoClerk’s 17-year use of

B 16 the Actian Software is a red herring: Actian was allegedly unaware of AutoClerk’s breach until

7 2024. Defendants’ motion is DENIED on the breach of contract claim.

5 18 III. Jurisdictional Challenge 19 Defendants’ jurisdictional challenge is mooted by my decision that Actian has adequately 30 alleged claims rooted in violation of copyright law. Mot. 17. CONCLUSION For the foregoing reasons, defendants’ Motion to Dismiss 1s DENIED. 73 IT IS SO ORDERED. Dated: April 10, 2026

26 liam H. Orrick United States District Judge 27 28