Adobe Sys. Inc. v. Blue Source Grp., Inc.
| Citation | 125 F.Supp.3d 945 |
| Decision Date | 31 August 2015 |
| Docket Number | Case No. 14–CV–02147–LHK |
| Court | U.S. District Court — Northern District of California |
| Parties | Adobe Systems Incorporated, Plaintiff, v. Blue Source Group, Inc., Defendant. |
Christopher Dain Johnson, Hung Q. Pham, Marcus Freeman Chaney, Nicole L. Drey, Christopher Quang Pham, Johnson & Pham LLP, Woodland Hills, CA, for Plaintiff.
Richard Byron Peddie, Richard Byron Peddie, PC, Boulder, CO, for Defendant.
ORDER DENYING MOTION TO DISMISS
Plaintiff Adobe Systems Inc. ("Adobe") brings the instant lawsuit against Defendant Blue Source Group, Inc. ("Blue Source"), alleging causes of action for trademark infringement under 15 U.S.C. § 1114 ; false designation of origin, false or misleading advertising, and unfair competition, all in violation of 15 U.S.C. § 1125(a) ; trademark dilution in violation of 15 U.S.C. § 1125(c) ; copyright infringement under 17 U.S.C. § 501(a) ; and violation of the unlawful, unfair, and fraudulent prongs of California's Unfair Competition Law, Business and Professions Code § 17200 et seq. ("UCL"). Second Amended Complaint, ECF No. 42–1 ("SAC"), at 1. Before the Court is Blue Source's motion to dismiss Adobe's Second Amended Complaint in its entirety. ECF No. 64 ("Motion"). Adobe opposes the Motion. ECF No. 65 ("Opposition"). Pursuant to Civil Local Rule 7–1(b), the Court finds this matter appropriate for resolution without oral argument, and hereby VACATES the hearing on this matter currently scheduled for September 17, 2015, at 1:30 p.m. The case management conference also scheduled for September 17, 2015 at 1:30 p.m. remains as set. Having considered the parties' submissions, the relevant law, and the record in this case, the Court DENIES Blue Source's Motion, for the reasons stated below.
Adobe is a Delaware corporation with its principal place of business in San Jose, California, and is a maker of computer software. SAC ¶ 1. According to the Second Amended Complaint, Blue Source is a corporation organized under the laws of Maryland, with its principal place of business in Olney, Maryland.1 Id. ¶ 10.
According to the Second Amended Complaint, Adobe is "a global leader in developing and distributing innovative computer software," and Adobe-branded software is well-known to consumers, distributors, and other purchasers. Id. ¶¶ 23–25. Adobe has secured trademark registrations from the U.S. Patent and Trademark Office for various marks, including Adobe, Acrobat, Adobe Premiere, After Effects, Captivate, Creative Suite, Dreamweaver, Fireworks, Flash, Flash Builder, Flash Catalyst, Illustrator, Indesign, Lightroom, and Photoshop (collectively, "Adobe–Branded Software").Id. ¶ 28. Adobe has also secured copyright registrations from the U.S. Copyright Office for various copyrights, including for versions of Adobe–Branded Software. Id. ¶ 29. Adobe has expended "substantial time, money and effort" to build and develop consumer recognition, awareness, and goodwill in Adobe–Branded Software. Id. ¶ 24. As a result of Adobe's efforts, the widespread use of Adobe's software, and the quality of Adobe's products, "[c]onsumers, purchasers and members of the public have become familiar with [Adobe's] software and other products and services and have come to recognize Adobe–Branded Software and the associated marks thereto and associate them exclusively with [Adobe]." Id. ¶ 26.
Adobe imposes restrictions on the distribution of all its software, including Adobe–Branded Software. Id. ¶ 30. According to Adobe, "[e]very piece of Adobe–Branded Software is licensed" pursuant to a Software License Agreement ("SLA"), and every piece of Adobe–Branded Software is subject to restrictions on use, location of distribution, transfer, and in some circumstances who is qualified to obtain the product. Id. For instance, Original Equipment Manufacturer ("OEM") versions of Adobe–Branded Software are intended to be distributed only with approved hardware components as a bundle, and OEM software may not be unbundled or resold without violating the SLA. Id. ¶ 31. Likewise, Adobe–Branded Software intended for academic or educational use ("EDU Software" or "EDU") is intended only for buyers associated with educational institutions. Id. ¶ 32. Therefore, EDU Software may only be distributed by certain distributors to customers who provide proof of qualification, and EDU Software may not be resold without violating the SLA. Id. Adobe also alleges that it distributes versions of its software via Electronic Software Download ("ESD"). Id. ¶ 34. A reseller must be specifically authorized by Adobe to sell ESD versions of Adobe's software, or else such distribution violates the SLA. Id.
The instant litigation stems from a distribution contract entered into between Adobe and former Defendants SoftwareMedia.com, Inc., a company with its principal place of business in Salt Lake City, Utah, and Adam Childers, the president of SoftwareMedia.com, Inc. (collectively, "SoftwareMedia Defendants"). Id. ¶¶ 2, 7, 36. At some point prior to the instant litigation, Adobe and the SoftwareMedia Defendants entered into an Adobe Partner Connection Program Reseller Agreement ("APCPRA"). Id. ¶ 36.
On August 13, 2010, Adobe filed a lawsuit against the SoftwareMedia Defendants in the Northern District of California before U.S. District Judge Jeffrey White, Adobe System Inc. v. Childers et al., Case No. 3:10–CV–03571–JSW (" Adobe I "). Id. ¶ 38. In Adobe I, Adobe alleged that the SoftwareMedia Defendants breached the APCPRA by "offering for sale, selling, importing and distributing unauthorized foreign-made and/or EDU copes of Adobe–Branded Software." Id. On July 29, 2011, Adobe and the SoftwareMedia Defendants entered into a release and settlement agreement ("Adobe I Settlement"), which was signed on October 6, 2011. Id. ¶ 39. Pursuant to the Adobe I Settlement, the SoftwareMedia Defendants agreed not to infringe Adobe's trademarks and copyrights. Id. ¶ 40. Adobe and the SoftwareMedia Defendants also stipulated to a permanent injunction that restrained and enjoined the SoftwareMedia Defendants from infringing Adobe's trademarks and copyrights, including via distribution of OEM, EDU, or foreign-made Adobe–Branded Software outside of the scope of Adobe's licensing restrictions.Id. On October 14, 2011, Judge White dismissed Adobe I with prejudice. Id.
On May 9, 2014, Adobe filed the instant litigation against the SoftwareMedia Defendants only. See ECF No. 1 ("Compl."). In the original Complaint, Adobe alleged that the SoftwareMedia Defendants again breached the terms of the APCPRA by "order[ing] Adobe Creative Suite software products from unauthorized distributors" and "offering for sale, selling, and distributing licenses for counterfeit and/or unauthorized education software to non-education end users." Id. ¶ 31. Adobe alleged causes of action for trademark infringement; false designation of origin, false or misleading advertising, and unfair competition; trademark dilution; copyright infringement; violation of the UCL; and breach of contract. Id. at 1.
On November 10, 2014, Adobe and the SoftwareMedia Defendants filed a stipulation permitting Adobe to file a First Amended Complaint, which added additional factual allegations and a seventh cause of action alleging that the SoftwareMedia Defendants breached the Adobe I Settlement. ECF No. 29; ECF No. 29–1, ¶¶ 104–08. Also pursuant to the stipulation, the SoftwareMedia Defendants filed a Third–Party Complaint alleging that JHS Enterprises, Inc. ("JHS"), United Prospects, Inc. ("UPI"), Bea's Hive LLC, and Blue Source sold the SoftwareMedia Defendants software which infringed Adobe's copyrights and trademarks. ECF No. 29, at 2; ECF No. 29–2, ¶¶ 21–23. The SoftwareMedia Defendants alleged causes of action against JHS, UPI, Bea's Hive LLC, and Blue Source for breach of warranty against infringement pursuant to Utah Code § 70A–2–312(c) ; breach of express/implied contracts; breach of covenant of good faith and fair dealing; and intentional and/or negligent misrepresentations and omissions. Id. ¶¶ 10–45.
On February 2, 2015, Adobe and the SoftwareMedia Defendants stipulated to Adobe's filing of the Second Amended Complaint, the operative Complaint in this matter. ECF No. 42. The Second Amended Complaint added UPI, JHS, and Blue Source as defendants to Adobe's suit, (collectively, with the SoftwareMedia Defendants, "Defendants"). See SAC ¶¶ 8–10. In the SAC, Adobe added allegations against UPI, JHS, and Blue Source, including that UPI, JHS, and Blue Source were "jointly, severally and concurrently liable and responsible" for the infringing conduct of each other named Defendant, because UPI, JHS, and Blue Source supplied the SoftwareMedia Defendants with infringing Adobe software. Id. ¶¶ 12, 43.
Adobe further alleged that all Defendants, including Blue Source, "alter[ed], unbundle[d], and/or change[d] the components of OEM copies of Adobe–Branded Software, before offering for sale, selling and/or distributing these OEM copies to resellers and end users in the United States and within this judicial district." Id. ¶ 45. Adobe alleged that all the named Defendants "are not authorized distributors and/or resellers of OEM copies of Adobe–Branded Software." Id. Adobe also claimed that all the Defendants offered for sale, sold, or distributed (1) unauthorized EDU copies of Adobe–Branded Software; (2) ESD copies of Adobe–Branded Software; and (3) copies of Adobe–Branded Software intended for international distribution, all without authorization and in violation of the scope of Adobe's licensing restrictions.Id. ¶¶ 46–48. Adobe further alleged that all the...
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