The Northern District of California dismissed two claims stemming from alleged unauthorized use and reproduction of a copyrighted computer software. Metabyte, Inc. v. NVIDIA Corp., et al., Case No. 12-0044 (N.D. Cal. April 22, 2013) (available here). Metabyte sued NVIDIA and others for copyright infringement and related claims, including unfair competition, arising out of the alleged theft of Metabyte’s computer code by former employees. Defendants moved to dismiss, and the Court evaluated Metabyte’s claims based on the Federal Computer Fraud and Abuse Act (“the CFAA”), 18 U.S.C. sec. 1030, and California’s Unfair Competition Law (“UCL”). The Court granted the motion and dismissed both of Metabyte’s claims.
Metabyte and NVIDIA are software companies. Defendants David Cook, Viatcheslav Gostrenko, Andrei Osnovich, Michael Yaroslavtsev, and Mikhail Krivega (the “Individual Defendants”) were hired by Metabyte in the 1990s. The Individual Defendants had access to the source code for Metabyte Software and signed confidentiality agreements to prevent disclosure. Between 1999 and 2001, Individual Defendants left Metabyte to work for NVIDIA, which was working on developing its own version of the Metabyte Software. Metabyte alleged that Individual Defendants copied the source code for the Metabyte Software, took the code to NVIDIA, and that NVIDIA used the code to develop its own software.
Alleged CFAA Violations
Per the Court, the CFAA is “designed to target hackers who accessed computers to steal information or to disrupt or destroy computer functionality, as well as criminals who possessed the capacity to access and control high technology processes vital to our everyday lives.” LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1130 (9th Cir. 2009). The CFAA is not a replacement for, or an enhancement to, misappropriation claims. Metabyte alleged that Individual Defendants copied the Metabyte Software source code and took it to NVIDIA in violation of their confidentiality agreements. Defendants argued that the CFAA claims were baseless because Metabyte never alleged that any of the Individual Defendants actually accessed Metabyte’s computers without authorization.
“The Court finds that Plaintiff has not pled facts giving rise to a valid claim under the CFAA. All of Plaintiff’s facts suggest that even if any Individual Defendant did take any part of the Metabyte Software or any other proprietary material with him to NVIDIA, his access to that material occurred during his employment with Plaintiff. Moreover, Plaintiff never suggests beyond conclusory allegations that any Individual Defendant obtained such information without authorization or in excess of his authorization.” Metabyte, Slip Op. Pp. 8-9. The Court dismissed Metabyte’s CFAA claims.
Unfair Competition
In the UCL claim, Metabyte alleged that NVIDIA engaged in unfair competition and unlawful and unfair business practices. Defendants argued preemption by the Copyright Act. A state law action is preempted under the Copyright Act if (1) the rights that Metabyte asserted under state law (UCL) are equivalent to rights protected by the Copyright Act; and (2) the Metabyte Software falls within the meaning of “subject matter” under the Copyright Act. Metabyte and the Defendants disagreed as to whether Metabyte’s rights are equivalent to those protected by the Copyright Act. Metabyte argued that its UCL claim stemmed from misappropriation of trade secrets, therefore the UCL claim was not preempted. Defendants responded that Metabyte’s argument about misappropriation of trade secrets is groundless because the UCL claim was based on the alleged use and reproduction of a copyrighted work. The Court agreed and dismissed Metabyte’s UCL claim with prejudice.
