Synopsys, Inc v. AzurEngine Technologies, Inc

CourtDistrict Court, S.D. California
DecidedAugust 15, 2019
Docket3:19-cv-01443
StatusUnknown

This text of Synopsys, Inc v. AzurEngine Technologies, Inc (Synopsys, Inc v. AzurEngine Technologies, Inc) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Synopsys, Inc v. AzurEngine Technologies, Inc, (S.D. Cal. 2019).

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8

9 SYNOPSYS, INC., CASE NO. 19cv1443-LAB (AGS)

10 Plaintiff, ORDER GRANTING IN PART AND 11 vs. DENYING IN PART PLAINTIFF’S MOTION FOR TEMPORARY 12 AZURENGINE TECHNOLOGIES, INC., RESTRAINING ORDER, EXPEDITED et al., DISCOVERY, AND ORDER TO SHOW 13 Defendants. CAUSE [Dkt. 4] 14 15

16 Currently before the Court is Plaintiff Synopsys, Inc.’s Motion for (1) a Temporary 17 Restraining Order; (2) an Order to Show Cause re: Preliminary Injunction; and (3) an 18 Order for Expedited Discovery. Dkt. 4. For the reasons below, that motion is GRANTED 19 IN PART and DENIED IN PART. 20 BACKGROUND 21 1. Synopsys’ EDA Software 22 Synopsys is one of the world’s leading producers of Electronic Design Automation 23 (“EDA”) software, which are tools used by microchip manufacturers to design, verify, and 24 simulate the performance of electronic circuits. Synopsys offers a suite of EDA tools that 25 are the result of “hundreds of millions of dollars of investment as well as years of 26 Synopsys’ time.” Dkt. 4 (“TRO”) at 3. 27 / / / 28 1 Synopsys does not sell ownership, copyright, or other intellectual property rights 2 to its EDA software. Instead, the company permits access to its tools only through 3 customized licenses that grant the purchaser limited rights. Synopsys employs strict 4 controls that monitor and limit access in accordance with each licensee’s specific terms. 5 The central feature of these access-control measures is a license key system that 6 requires licensees to input an encrypted key code that can only be obtained from 7 Synopsys. The system monitors a licensee’s use of the software to ensure compliance 8 with the licensee’s specific contract terms. 9 2. AzurEngine’s Alleged Infringement 10 AzurEngine is a San Diego-based startup founded in 2016. The company’s stated 11 mission is to develop “a state-of-art reconfigurable processor for next generation deep 12 learning technologies.” Id. at 5. By all accounts, AzurEngine has moved quickly to meet 13 that goal. It developed its first prototype chip within one year of its founding, and has 14 since embarked on a “major multi-million dollar chipset design project” with an unnamed 15 Chinese business partner. Dkt. 7 (“Opp.”) at 2. 16 Beginning in June 2019, Synopsys’ monitoring programs detected “call-home 17 data” indicating that individuals associated with AzurEngine—a company with no current 18 license from Synopsys—had impermissibly accessed its EDA software. According to 19 Synopsys, this call-home data indicates that AzurEngine has used counterfeit license 20 keys to circumvent Synopsys’ software protections more than 15,000 times. For its part, 21 AzurEngine says it believed it had permission to access Synopsys software because its 22 Chinese business partner “purported to provide AzurEngine with valid licensed access to 23 the Synopsys software.” Id. 24 ANALYSIS 25 Synopsys claims that AzurEngine’s unauthorized use of its software constitutes a 26 violation of the Digital Millennium Copyright Act (“DMCA”). It seeks a temporary 27 restraining order enjoining AzurEngine from further accessing its software. It also seeks 28 1 expedited discovery and an order instructing AzurEngine to show cause why a preliminary 2 injunction shouldn’t be entered against it. 3 1. Temporary Restraining Order 4 The standard for obtaining a temporary restraining order is identical to the standard 5 for obtaining a preliminary injunction, with the primary difference being duration: 6 preliminary injunctions remain in force throughout the litigation, while TROs, which are 7 traditionally entered on an ex parte basis, are limited to 28 days. See Fed. R. Civ. Pro. 8 65(b)(2). To obtain either form of relief, Synopsys must establish “that [it] is likely to 9 succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of 10 preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in 11 the public interest.” Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009) 12 (quoting Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). Each of these 13 factors is met here. 14 a. Synopsys Is Likely to Succeed on the Merits. 15 To prevail on its claim for relief under the DMCA, Synopsys must prove that (1) its 16 software included a technological measure that effectively controls access, (2) 17 AzurEngine circumvented that technological measure, and (3) the Synopsys software that 18 AzurEngine accessed is a work protected under the Copyright Act. See 17 U.S.C. 19 § 1201(a)(1)(A); MDY Indus., LLC v. Blizzard Entm't, Inc., 629 F.3d 928, 952 (9th Cir. 20 2010) (Congress, in enacting § 1201(a)(1)(A), “created a distinct anti-circumvention right 21 . . . without an infringement nexus requirement.”). 22 i. Synopsys’ Software “Effectively Controls” Access. 23 First, Synopsys’ software “effectively controls” access to its suite of EDA software. 24 The software will not run without the licensee “checking out” a license key from a server 25 that is designed to only grant such keys to approved licensees. Every court to consider 26 the issue has found that similar methods of license-control satisfy the “effectively controls” 27 requirement of the DMCA, and this Court does too. See, e.g., Synopsys, Inc. v. 28 1 InnoGrit, Corp., 2019 WL 2617091, at *3 (N.D. Cal. 2019); Dish Network, L.L.C. v. Vicxon 2 Corp., 2013 WL 3894905, at *6 (S.D. Cal. 2013). 3 ii. AzurEngine Likely Circumvented Synopsys’ Software Controls. 4 Synopsys has also plausibly demonstrated that AzurEngine circumvented its 5 controls through the use of counterfeit license keys. These counterfeit keys work by 6 effectively tricking the company’s license-control systems into thinking AzurEngine is a 7 licensed user. As discussed above, Synopsys’ “call-home data” indicates that individuals 8 associated with AzurEngine have circumvented its license-control system at least 15,000 9 times, which is 14,999 more times than would be necessary to find a violation of the 10 DMCA. See Synopsys, Inc. v. InnoGrit, Corp., 2019 WL 2617091, at *3 (N.D. Cal. 2019) 11 (concluding that the use of counterfeit license keys, among other things, constituted 12 “circumvention” under the DMCA). 13 AzurEngine’s responses on this point are unavailing. It argues, for example, that 14 its use of Synopsys software was authorized because one of its business associates— 15 an unnamed “Chinese business partner”—had “purported to provide AzurEngine with 16 valid licensed access to the Synopsys software at issue in this case.” Opp. at 2. But 17 even if it were true that AzurEngine had a valid license, that would not allow the company 18 to use counterfeit keys to circumvent Synopsys’ software protections. Even “lawful 19 purchasers” must establish that they had specific “authorization to circumvent” in order to 20 avoid DMCA liability. Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 863 (9th 21 Cir. 2017). Because Synopsys has shown that AzurEngine likely circumvented its 22 license-control systems, it is irrelevant that AzurEngine believed it had a license to use 23 the software. 24 iii. Synopsys Likely Has a Protectable Copyright Interest in Its 25 Software Code.

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Synopsys, Inc v. AzurEngine Technologies, Inc, Counsel Stack Legal Research, https://law.counselstack.com/opinion/synopsys-inc-v-azurengine-technologies-inc-casd-2019.