Design Data Corp. v. Unigate Enterprise, Inc.

63 F. Supp. 3d 1062, 2014 WL 3868076, 2014 U.S. Dist. LEXIS 108632
CourtDistrict Court, N.D. California
DecidedAugust 6, 2014
DocketCase No. 12-cv-04131-WHO
StatusPublished
Cited by3 cases

This text of 63 F. Supp. 3d 1062 (Design Data Corp. v. Unigate Enterprise, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Design Data Corp. v. Unigate Enterprise, Inc., 63 F. Supp. 3d 1062, 2014 WL 3868076, 2014 U.S. Dist. LEXIS 108632 (N.D. Cal. 2014).

Opinion

Re: Dkt. Nos. 75, 104

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

WILLIAM H. ORRICK, United States District Judge

The central issue on this motion for summary judgment is whether defendants can be liable for copyright infringement when there is no evidence that defendants copied or used plaintiffs copyrighted software other than having downloaded (but not installed) a copy of the software onto an external hard drive. To insure that plaintiff had ample opportunity to prove its case, I delayed the hearing on this motion for several months, allowed extensive discovery, and considered supplemental briefing. Because I find that the evidence demonstrates only de minimis copying, defendants’ motion for summary judgment must be GRANTED.

BACKGROUND

Plaintiff Design Data Corporation created and owns copyrighted structural steel detailing software called SDS/2. Declaration of Barry Butler (Docket No. 85-11) ¶ 2. SDS/2 is a computer aided design (CAD) software that can produce two and three dimensional drawings and models -of structural steel components. These drawings and models support the design, detailing, fabrication, and erection of structural steel in buildings and other structures. Id. ¶ 4. SDS/2 drawings and models can only be viewed: (1) with the SDS/2 software; (2) with the “SDS/2 Viewer” software; and (3) in electronic [1064]*1064images (and printed versions) exported from SDS/2 (e.g., .pdf or .tiff files). Id. ¶ 3. When SDS/2 is used to design ¿ steel component, the software generates a directory of folders, called “job files” that contain all information and files related to a project, including text files detailing errors and instructions to correct errors. Id. ¶ 8.

Defendants Louis Liu and Helen Zhang are co-owners of defendants Unigate Enterprise, Inc. (UE) and Unigate Graphic, Inc. (UG). Declaration of Helen Zhang (Docket No 75-1), ¶ l.1 UE’s business is providing steel detailing CAD files to customers. Id. ¶ 3. Defendants contend that UE does not do the steel detailing itself, but acts as a “middle-man” between Chinese contractors and clients in the United States. Id. UG does business as Deluxe 3D and provides architectural 3D rendering pictures, also made by contractors in China, to its customers. Id. ¶ 4.

Defendants assert they have never used SDS/2 and simply act as intermediaries between contractors in China and clients in the United States. They admit, however, that they told clients they “could do” steel detailing using SDS/2 and represented that they had offices in China, but in reality they outsourced the work to others in China. Zhang Decl. ¶ 14; Zhang Supplemental Declaration in Support of Reply (Docket No.104-8), ¶ 6; see also Duden Decl. ¶ 8 (email from Zhang explaining detailing work on Hurst Middle School project was done in Unigate’s “Shanghai office”), ¶ 11 (email from Zhang stating that Unigate “can do show [sic] drawings by using SDS/2.”).

Defendants do not dispute that SDS/2 appears to have been used to create drawings and images for five of UE’s projects, but U E contends that the work was actually done in China. Zhang Decl. ¶ 11. Defendants also admit that they forwarded files containing 2D and 3D drawings and models created with SDS/2 to clients and prospective clients—but assert that they did not use SDS/2 themselves. Zhang Decl. ¶ 12; Zhang Supp. Decl. ¶¶ 8-9; Du-den Decl. ¶ 7.2

Defendants admit that Helen Zhang downloaded a copy of SDS/2 to an external hard drive. The parties dispute the purpose and circumstances surrounding that download. DDC contends that Zhang admitted that she paid to download a “cracked” copy of the software, but that she was unable to make it work. Duden Decl. ¶ 14. Zhang asserts that she downloaded a free demonstration copy of SDS/2 from the internet, which she assumed was a legitimate copy, in order to learn “what the software was all about,” but did not install it or try to use it. Zhang Decl. ¶¶ 9, 10,14; Zhang Supp. Decl. ¶ 7.

DDC has not sold a license for SDS/2 to any of the defendants. Based on their investigations (including viewing materials on UE’s website and project files), DDC believed that U E was using SDS/2 with[1065]*1065out a license. Duden Decl. ¶¶ 6-11. Representatives of DDC visited UE on August 7, 2012 to confront defendants. Defendants allowed DDC’s representatives to search their computers and copy files. Duden Decl. ¶ 12; Zhang Decl. ¶ 14. As part of this search, DDC found a folder containing installation files for SDS/2 and three patch files which enable a user to circumvent SDS/2’s licensing requirement, including a file called l-sds2633crk.exe. Duden Decl. ¶ 15.

In July 2013, UE’s counsel hired an expert from Setec to make forensic images of its computer hard drives. Declaration of Michael Kunkle (Docket No. 75-3), ¶ 6. That inspection revealed a single reference to SDS/2 on a computer and a copy of SDS/2 on an external hard drive ,(“G drive”). Id. The reference on the computer was in an antivirus log, showing that the SDS/2 copy was located on the external hard drive. Id. Setec found no evidence that the SDS/2 software ever existed or was installed on the computer. Id. ¶ 7. Examining the copy of SDS/2 on the external hard drive, Setec determined it was still in its original form and found no evidence that the software was ever installed or unpacked on the external drive. Id. ¶ 8; Supplemental Declaration of Michael Kun-kle (Docket No. 102), ¶¶ 5-6.

Defendants filed their initial motion for summary judgment in January 2014. Docket No. 63. The Court granted plaintiffs request to continue the hearing on the summary judgment motion and continue the trial dates to allow plaintiff to take discovery from defendants. Docket No. 73. Defendants filed their renewed motion for summary judgment in March 2014. Docket No. 75. At plaintiffs request, the Court again continued the summary judgment briefing and hearing dates to allow plaintiff to conduct additional forensic inspections of the defendants’ computers. Docket No. 81.

In April 2014, DDC’s expert from IBridge LLC, Joel Brillhart, created forensic images of defendants’ computers and also reviewed the forensic copies made by Setec. Declaration of Joel Brillhart (Docket No. 85-12), ¶ 5. Brillhart was not able to locate or recover a copy of the file “l-sds26336erk.exe” which was found by DDC representatives in August 2012. Brillhart Decl. ¶ 6. However, Mr. Brill-hart found a reference to that specific file as being located on Zhang’s G drive and “quarantined” by an antivirus software program. Id. ¶¶ 7a-e. Brillhart states that because he was unable to locate a copy of the l-sds2633crk.exe file, he concludes that the file must have been purposefully and permanently removed from Zhang’s G drive. Id. ¶ 10. Brillhart also located a file suggesting that a file titled sds2.exe could be found on Zhang’s G drive. Id. ¶¶ 7f-g. Brillhart was also unable to locate any evidence suggesting the SDS Viewer program was ever saved or located on any of UE’s devices. Id. ¶ 11.

Defendants have moved for summary judgment arguing that U E and its principals cannot be held liable for direct infringement of DDC’s copyright in SDS/2 because the mere act of downloading (and not installing or using) a copy of SDS/2 is at most de minimis copying protected under the Copyright Act.

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Cite This Page — Counsel Stack

Bluebook (online)
63 F. Supp. 3d 1062, 2014 WL 3868076, 2014 U.S. Dist. LEXIS 108632, Counsel Stack Legal Research, https://law.counselstack.com/opinion/design-data-corp-v-unigate-enterprise-inc-cand-2014.