Ford Motor Co. v. Launch Tech Co., Case No. 17-12906
| Decision Date | 26 February 2018 |
| Docket Number | Case No. 17-12906 |
| Parties | FORD MOTOR COMPANY and FORD GLOBAL TECHNOLOGIES, LLC Plaintiffs, v. LAUNCH TECH CO. LTD. and LAUNCH TECH (USA), INC. Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Honorable Nancy G. Edmunds
ORDER DENYING DEFENDANT LAUNCH TECH CO. LTD.'S MOTION TO DISMISS [27]; DENYING DEFENDANT LAUNCH TECH (USA), INC.'S MOTION TO DISMISS [33]; AND MOOTING DEFENDANT LAUNCH TECH CO. LTD.'S EMERGENCY MOTION TO STAY [31]
Plaintiffs Ford Motor Company and Ford Global Technologies, LLC (collectively "Ford") bring this action against Defendants Launch Tech Co. LTD. ("Launch China") and Launch Tech (USA), Inc. ("Launch USA") alleging trademark and copyright infringement, false designation of origin, unfair and deceptive trade practices, trademark dilution, misappropriation of trade secrets, and breach of contract. Ford claims that Defendants acted in concert to hack Ford's automobile-diagnostic software, copy Ford's proprietary data compilations, and paste the proprietary data into Defendants' own competing diagnostic software. Ford further claims that Defendants infringed upon the world-famous Ford trademarks, utilizing them in Defendants' diagnostic products and promotional materials.
Currently before the Court are Defendants' motions to dismiss (Dkt. # 27; Dkt. # 33), which have been fully briefed.1 The Court heard oral argument on the motions on February 15, 2018. Also before the Court is Launch China's Emergency Motion to Stay Briefing in Response to Plaintiffs' Motions for Preliminary Injunction and Expedited Discovery (Dkt. # 31) and Ford's response in opposition (Dkt. # 35).2 For the reasons stated below, this Court DENIES Launch China's motion to dismiss, DENIES Launch USA's motion to dismiss, and MOOTS Launch China's motion to stay.
Ford is a Delaware corporation with its principal place of business in Dearborn, Michigan. Ford is a leading automobile manufacturer that also develops and sells automobile repair products. Specifically, Ford has developed the Ford Integrated Diagnostic System ("IDS"), a system which includes hardware and software used to diagnose Ford vehicles and facilitate their service and repair.
Defendant Launch China is a Chinese corporation having its principal place of business in Shenzhen, China. Launch China develops automobile diagnostic products and sells them throughout the world through third-party distributors.3 One such distributor isDefendant Launch USA, a California corporation having its principal place of business in Ontario, California. Launch USA purchases automobile diagnostic products from Launch China and distributes them throughout the United states via a network of distributors.4
According to Ford, Launch China develops the allegedly infringing automobile repair products at issue in this litigation. Ford points to a letter in which counsel for Launch USA represented to Ford that the products sold by Launch USA are "provided complete" by Launch China to Launch USA, and that Launch USA "has nothing to do with writing the software." See Dkt. # 16-5, Pg ID 247. Ford claims that Launch USA markets, sells, furnishes, and supports the allegedly infringing products throughout the United States, including in Michigan.5 Alternatively, Ford claims that Launch China and Launch USA collaborate and develop the allegedly infringing products together. Ford alleges its agents have purchased Defendants' products at retail stores in Michigan.
According to the First Amended Complaint, "Launch Tech"6 is a member of the Equipment and Tools Institute ("ETI"), a Michigan-based trade association with its principal place of business in Farmington Hills, Michigan. See Dkt. # 16-2, Pg ID 235. ETI gathersdiagnostic information from original equipment manufacturers, such as Ford, and makes the information available to other manufacturers of diagnostic tools via its library for ETI members. Ford alleges that Harlan Siegel and John Marsh, Launch USA employees, are active participants in ETI and based in Michigan. See Dkt. # 16-3; Dkt. # 16-4. Ford claims that Launch China obtains diagnostic information relating to Ford vehicles from ETI's library to develop the allegedly infringing products. In the alternative, Ford alleges that Launch USA obtains diagnostic information relating to Ford vehicles from ETI's library and collaborates with Launch China to develop the allegedly infringing products.
Additionally, Ford alleges that a company identified as "L aunch"7 has purchased at least one active version of Ford's IDS software since November 2013.8 See Dkt. # 16-8. The contact information for "L aunch" indicates it is located at 1820 S Miliken Ave., Ontario, California (Launch USA's principal business address) and associated with Launch USA e-mail addresses. See id. In July 2017, Ford provided copies of the End-User License Agreements ("EULAs") applicable to various versions of the IDS software to counsel for Launch China, and noted that Ford believes Defendants are in violation of the EULAs, which expressly prohibit reverse engineering. See Dkt. # 16-19. The applicable EULA must be accepted by a user prior to installation and use of the IDS software. The EULAsalso provide that an "End-User" cannot be a "diagnostic toolmaker." Ford alleges that Defendants acquired and utilized the IDS software despite being diagnostic toolmakers and violated the terms of the EULAs by engaging in reverse engineering. In so doing, Launch China improperly obtained information relating to Ford's vehicles, which it then used to develop the allegedly infringing products at issue in this case. In the alternative, Ford claims that Launch USA improperly obtained information relating to Ford's vehicles from the IDS software and collaborated and conspired with Launch China to develop the allegedly infringing products at issue in this case.9
According to the First Amended Complaint, Defendants acted in concert to hack Ford's IDS system. The IDS software contains various compilations of data, some of which are made generally available pursuant to federal statutes, and some of which constitute trade secrets used by Ford and its network of authorized dealers and repair facilities. Ford protects trade secret information included in the IDS software utilizing encryption and obfuscation technology. Ford also has copyright registrations for several compilations of data included in the IDS software.
According to a declaration from Jared L. Cherry, counsel for Ford, Ford sent a demand letter to counsel for Launch China in July 2017 seeking production of information in an attempt to settle this dispute. See Dkt. # 19, Pg ID 444. On November 14, 2017, Defendants made available for Ford's review the underlying source code and data files thatcorrespond to the products at issue.10 Ford claims it found precise references to 25 files contained in Ford's IDS software preceding data copied from those files; fictitious data records intentionally planted by Ford to ensnare hackers and then copied by Defendants from IDS; highly idiosyncratic expressions inapplicable to Defendants' products; programmer comments referring to the specific versions of IDS from which Defendants extracted data; and code that searches for and discards information associated with certain terms connected to fictitious data intentionally planted by Ford. More specifically, Ford makes the following allegations based on information discovered during the source code review.
Ford has a copyright registration for the CALID_VIDQID_REC file, a data compilation included in the IDS software. See Dkt. # 16-12. Ford alleges that Defendants' products include an improperly obtained copy of Ford's CALID_VIDQID_REC file. According to Ford, the code for the Launch X-431 V product includes multiple references to Ford's CALID_VIDQID_REC file, including a function called "SearchCALID_VIDQID_REC" within a file called "USAFORD_FILE.so." Defendants' software also includes 21 files named FORD00.BIN through FORD_20.BIN which are found in several of Defendants' products. The file named FORD_02.BIN comprises multiple rows and columns, and the columns correspond to and are in the same order as Ford's CALID_VIDQID_REC file. Column A7 in Ford's CALID_VIDQID_REC file includes fictitious records and is not distributed by Ford. Column A7 along with the fictitious records is also found in Defendants' FORD_02.BIN file.
Ford, Launch China, and Launch USA were all involved in a prior lawsuit in which Ford alleged that the defendants, Autel US Inc. and Autel Intelligent Technology Co., Ltd., had copied Ford's CALID_VIDQID_REC file.11 Specifically, Ford alleged that Autel's copying was established by the presence of fictitious entries that included the terms "TEST" and "DUMMY." In this case, Ford alleges that Defendants used information from the Autel litigation to better hide their acts of infringement and misappropriation. Ford notes that Defendants produced a file called DiagReadFile.cpp during the source code review that searchers for and excludes records associated with the terms "TEST" and "DUMMY."
Ford also has a copyright registration for the MNEMONICS_ENG file, another data compilation included in the IDS software. See Dkt. # 16-13. Ford alleges that Defendants' products include an improperly obtained copy of Ford's MNEMONICS_ENG file. According to Ford, the Launch X-431 V product displays text that is identical to specific entries in Ford's MNEMONICS_ENG file. See Dkt. # 16-14. Ford notes that Defendants produced a file called EN_TEXT.TXT during the source code review, which is incorporated into a file called USAFORD_EN.GGP. Ford discovered three examples of idiosyncratic text present at the same frequency in both Defendants' EN_TEXT.TXT file and Ford's MNEMONICS_ENG file. One example involves references to a "tick" button, which Ford's IDS Software incorporates. Despite repeated references to a "tick" button in Defendants' EN_TEXT.TXT...
To continue reading
Request your trial