Meridian Project Systems v. Hardin Const. Co.
| Decision Date | 06 April 2006 |
| Docket Number | No. CIVS04-2728 FCD DAD.,CIVS04-2728 FCD DAD. |
| Citation | 426 F.Supp.2d 1101 |
| Parties | MERIDIAN PROJECT SYSTEMS, INC., Plaintiff, v. HARDIN CONSTRUCTION COMPANY, LLC, and Computer Methods Internation Corp., Defendants. Computer Methods Internation Corp., and Hardin Construction Company, LLC, Counterclaimants, v. Meridian Project Systems, Inc., and James Olsen, John Bodrozic, and Mike Carrington, Counterdefendants. |
| Court | U.S. District Court — Eastern District of California |
Scott William Pink, David Allen Priebe, Matthew G. Jacobs, DLA Piper Rudnick Gray Cary US LLP, Sacramento, CA, David Banie, Rajiv S. Dharnidharka, DLA Piper Rudnick Gray Cary US LLP, East Palo Alto, CA, for Plaintiff.
Chris Gibson, Michael E. Chase, Boutin Dentino Gibson Di Giusto Hodell and West, John Michael Stusiak, Morrison and Foerster LLP, Sacramento, CA, for Defendants.
This matter is before the court on plaintiff Meridian Project Systems, Inc.'s ("Meridian") motion for partial summary judgment on its claims of breach of contract and copyright infringement against defendant Hardin Construction Company, LLC ("Hardin"). Defendant Hardin opposes the motion. For the reasons set forth below,1 plaintiffs motion is GRANTED in part and DENIED in part.2
Meridian is a software company that provides software solutions related to the management of physical infrastructure management and programs. (Def. Hardin's Resp. to Pl.'s Statement of Undisputed Facts ("RUF"), filed Feb. 3, 2006, ¶ 1). One of Meridian's primary products is a project management software called Prolog Manager ("Prolog"), which enables users to automate all aspects of the construction process, from project design to closeout. (RUF ¶¶ 2-3). Defendant Hardin is a construction company and customer of Meridian for the Prolog product. (RUF ¶ 16).
Starting in 1996, Hardin purchased licenses to use various versions of Prolog Manager. (RUF ¶ 17). As part of its standard practice and policy regarding the license and delivery of Prolog versions 5.1 and 6.0, Meridian sends each customer a standard form box containing a CD loaded with the Prolog software. (RUF ¶ 21). The box containing the Prolog CD also contains Meridian's applicable End User License Agreement ("EULA") and a user manual. (RUF ¶ 22). The EULA provides restrictions relating to the use of Prolog. (RUF ¶ 30). Hardin had the ability to return the Prolog product if it did not agree with the EULA, but did not do so; Hardin used Prolog in connection with its business since 1996 without ever returning a single copy that it had registered and installed. (RUF ¶ 25). Hardin never objected to the terms of the EULA. (RUF ¶ 26).
In or around 2000, Hardin first discussed with defendant Computer Methods International Corp. ("CMIC") the possibility of integrating Prolog with CMIC's existing accounting package. (RUF ¶ 33). In late March 2001, however, Hardin's Executive Committee decided to switch from Meridian's project management software, Prolog, to CMIC's project management software. (RUF ¶ 34). Hardin and CMIC discussed producing a document, describing the project management software specifications, that could be included as part of their contract. (Dep. of Danny Philip Bensley, attached as Ex. B to Decl. of Scott W. Pink ("Pink Decl."), filed Jan. 3, 2006, ("Bensley Dep.") at 82:15-23). It was further discussed that a Hardin employee, Chris Wright, would prepare that document. (Id. at 82:24-25).
Wright prepared drafts of desired specifications to be included in the Hardin-CMIC contract. (Id. at 269:3-6). On April 12, 2001, Danny Bensley, Chief Information Officer of Hardin, sent Jeff Weiss, Vice President of Sales and Marketing for CMIC, an e-mail containing the drafts prepared by Wright. (Id. at 268:20-269:10). Meridian asserts that the attachments to this e-mail contained over thirty pages of detailed descriptions copied from the Prolog help files. .
On April 27, 2001, Hardin and CMIC entered into a Master Software Acquisition Agreement for CMIC's software package. (RUF ¶ 42). This agreement contained several attachments, including an attachment named Schedule H. (RUF ¶ 57). Schedule H is the schedule attached to the CMIC that contains the project management specifications and is also referred to as the project management requirements document. . Wright produced the specifications that were incorporated into Schedule H. (Bensley Dep. At 83:4-7). The Schedule H document was signed by Jeffrey Traeger, Senior Vice President for Hardin, and by Jeff Weiss. Meridian asserts that a large portions of the Schedule H document was copied from Prolog's help files text. (See Supp. McManus Decl. ¶ 4).
Meridian filed claims against defendant Hardin for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, interference with contractual relations, intentional interference with prospective economic advantage, unfair competition, and copyright infringement. Meridian's claims for breach of contract and copyright infringement against defendant Hardin are based upon Hardin's alleged copying of Prolog help file language into the e-mail attachments and the Schedule H document. On December 23, 2005, Meridian filed a motion for partial summary judgement. Meridian seeks summary adjudication regarding Hardin's liability for breach of the EULA and for copyright infringement. Meridian does not seek determination of damages for the breach of contract claim, nor determination of the applicability of affirmative defenses available to Hardin for the copyright infringement claim. Hardin opposes the motion.
Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment is appropriate when "there is no genuine issue as to any material fact and . . . the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Under this standard, an issue is "genuine" if there is sufficient evidence for a reasonable jury to find for the nonmoving party and a fact is "material" when it may affect the outcome of the case under the substantive law that provides the claim or defense. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The determination is made based solely upon admissible evidence. Orr v. Bank of America, 285 F.3d 764, 773 (9th Cir.2002). Furthermore, the court must view inferences made from the underlying facts in the light most favorable to the nonmoving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).
The moving party has the initial burden to demonstrate the absence of a genuine issue of material fact. Celotex Corp. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party is without the ultimate burden of persuasion at trial, it may either produce evidence negating an essential element of the opposing party's claim, or demonstrate that the nonmoving party does not have enough evidence to carry its ultimate burden of persuasion at trial. Nissan Fire & Marine Insurance Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1106 (9th Cir.2000). If the moving party meets this initial requirement, the burden then shifts to the opposing party to go beyond the pleadings and set forth specific facts that establish a genuine issue of material fact remains for trial. Matsushita Elec. Indust. Co. V. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Summary judgment should not be granted where "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250, 106 S.Ct. 2505.
Following this same rubric, a court may grant summary adjudication on part of a claim or defense, based on the standards applicable to a motion for summary judgment. See Fed.R.Civ.P. 56(a), (b); State of California v. Campbell, 138 F.3d 772, 780 (9th Cir.1998).
Plaintiff Meridian moves for partial summary judgment on its claim of breach of contract against defendant Hardin. Meridian seeks to establish only liability through this motion.3 Hardin argues that summary judgment is inappropriate because (1) the Ninth Circuit has not decided whether an End User Licence Agreement ("EULA") of the type used by Meridian is valid and enforceable; (2) plaintiffs contract claims are preempted by the federal Copyright Act; and (3) the terms of the contract are ambiguous and cannot be resolved on a motion for summary judgment.
Hardin argues that plaintiffs motion for partial summary judgment should be denied because the validity of "shrinkwrap licenses"4 has not been decided by the Ninth Circuit. However, the validity of "shrinkwrap licenses" is a question of law, not a question of fact for the jury. Therefore, this question may properly be resolved on plaintiffs motion for summary judgment. See Local Motion, Inc. v. Niescher, 105 F.3d 1278, 1280 (9th Cir. 1997) (citing Hanagami v. China Airlines, Ltd., 67 Haw. 357, 688 P.2d 1139, 1145 (1984)).
Whether contracts such as Meridian's EULA are valid is a much-disputed question. See ProCD, Inc., 86 F.3d 1447; Step-Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d 91 (3d Cir.1991); SoftMan Products Co., LLC., v. Adobe Sys., Inc., 171 F.Supp.2d 1075, 1088 (C.D.Cal.2001). Courts that have found these types of licenses invalid characterize them as contracts of adhesion that are unacceptable pursuant to the Uniform Commercial Code. SoftMan Products, 171 F.Supp.2d at 1088 (citing Step-Saver, 939 F.2d 91; Vault Corp. v....
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