Unix System Laboratories v. Berkeley Software

Decision Date08 September 1993
Docket NumberCiv. No. 92-1667.
Citation832 F. Supp. 790
PartiesUNIX SYSTEM LABORATORIES, INC., Plaintiff, v. BERKELEY SOFTWARE DESIGN, INC.; The Regents of the University of California; and the Following Persons in their Individual and Official Capacity as Members of the Board of the Regents of The University of California: Pete Wilson, Leo T. McCarthy, Willie L. Brown, Jr., Bill Honig, David P. Gardner, Ralph M. Ochoa, Gail G. Anderson, William T. Bagley, Roy T. Brophy, Clair W. Burgener, Yvonne Braithwaite Burke, Glenn Campbell, Frank W. Clark, Jr., Diana Darnell, Tirso Del Junco, Alice J. Gonzales, Jeremiah F. Hallisey, S. Sue Johnson, Meredith J. Khachigian, Leo S. Kolligian, Howard H. Leach, S. Stephen Nakashima, Yori Wada, Dean A. Watkins, Harold M. Williams, Jacques S. Yeager, Carl J. Stoney, Jr., Paul Hall, Martin A. Trow and W. Elliot Browniee, Defendants.
CourtU.S. District Court — District of New Jersey


Paul, Hastings, Janofsky & Walker, New York City, George L. Graff, James W. Kennedy, Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C., Newark, NJ, Michael D. Loprete, Gary F. Werner, Unix System Laboratories, Inc., Summit, NJ, Sanford Tannenbaum, Gen. Counsel, Theodore Weitz, Sr. Corporate Counsel, for plaintiff.

Crosby, Heafey, Roach & May, Oakland, CA, Joel Linzner, Carla J. Shapreau, University of California, Oakland, CA, James E. Holst, John F. Lundberg, Mary E. MacDonald, Post, Polak & Goodsel, Roseland, NJ, Frederick B. Polak, for defendant Regents of the University of California.

Heller, Ehrman, White & McAuliffe, Palo Alto, CA, Leslie A. Fithian, Saiber Schlesinger Satz & Goldstein, Newark, NJ, James H. Forte, for defendant Berkeley Software Design, Inc.


DEBEVOISE, District Judge.

Plaintiff Unix System Laboratories, Inc. ("USL") instituted this action seeking relief from Defendants' past and prospective distribution of computer software in alleged violation of Plaintiff's proprietary rights in the UNIX operating system. Defendants now move to dismiss all of Plaintiff's claims against the Regents in their individual and official capacities ("the Regents"), and four of Plaintiff's five claims against the Regents in their corporate capacity as the Board of Regents of the University of California ("the University").1 For the reasons given below, Defendants' motions are granted in part and denied in part.


Plaintiff Unix System Laboratories ("USL") is a Delaware corporation with its principal place of business in Summit, New Jersey. Plaintiff develops, manufactures, licenses, and sells computer operating systems and related products and services. Plaintiff is also the present assignee of AT & T's rights to UNIX, the computer software at the heart of this dispute. Defendant Berkeley Software Designs, Inc. ("BSDI") is a recently-formed Delaware corporation with its principal place of business in Richmond Falls, Virginia. BSDI intends to develop, manufacture, and sell computer operating systems like those of Plaintiff. Defendant officials are members of the Board of Regents (the "Regents") of the University. The Regents are a non-profit public corporation organized to administer the University pursuant to the California constitution, art. 9 § 9, and California state law.

A. Background

The central issue in the case as a whole is whether Defendants appropriated pieces of Plaintiff's allegedly proprietary program "UNIX," and then used and distributed these pieces without authorization in violation of Plaintiff's copyrights and trade secrets. UNIX is a computer operating system — a software program that oversees a computer's internal and external activities, including processing, resource allocation, communications, and applications use. AT & T's Bell Laboratories registered the name UNIX as Trademark No. 1,392,203 on May 6, 1986. (1st Am.Compl. Ex. B.) In addition, AT & T has received copyright certificates of registration on various versions of UNIX software and documentation. (Id., Exs. C-F.)

Before exploring the details of Plaintiff's allegations, it is important to step back and appreciate the importance of UNIX in the world of computing. All parties agree that UNIX is one of the most highly-regarded operating systems in the world. Numerous treatises, courses, graduate student theses, and research projects have investigated, expounded, and improved upon UNIX. In addition, programmers at Microsoft, Sun Microsystems, Digital, IBM, and elsewhere have all developed their own UNIX-like, UNIX-compatible operating systems (some under license by Plaintiff). (Carson Reply Aff. at ¶¶ 11-12.)

AT & T developed UNIX in the late 1960s and early 1970s, and then quickly began licensing UNIX to educational, government, and commercial users, including the University of California at Berkeley ("Berkeley"). Berkeley and AT & T apparently collaborated on UNIX's development at least in the early years, with AT & T personnel often visiting Berkeley for consultations. The parties executed their first UNIX licensing agreement in 1973, and by 1979 the parties had executed their first agreement covering the software that Plaintiff now seeks to protect, UNIX version 32V. The 32V agreement permits the Regents to create derivatives of UNIX and, to the extent that the derivatives are free of proprietary information, to distribute them without restriction.

Berkeley exercised its contractual right to derivatize 32V to the hilt. It began to create its own embellishments and additions, called Berkeley Software Distributions ("BSD") releases, and distributed them via the Regents' Computer Sciences Research Group ("CSRG"). In the early 1980s, Berkeley only distributed the releases to other licensees (which now number in the thousands) because the releases contained proprietary code governed by Berkeley's license with AT & T. But demand for the releases from unlicensed users grew, so Berkeley began distributing redacted releases with the proprietary material allegedly removed. These releases included the operating system at the heart of the present dispute, Net2, which Plaintiff has alleged violates its proprietary rights in 32V.

Net2 apparently began as a project to develop a UNIX-like product devoid of AT & T proprietary code. This product was to contain both non-proprietary software from the BSD releases and software written specifically for Net2, sometimes by volunteers. (Kennedy Aff., Ex. 6.) To guarantee that no proprietary code remained, CSRG screened and eliminated overlapping code sections in accordance with criteria developed together with Berkeley's legal counsel. In addition, Berkeley "repeatedly contacted the USL licensing office, in an attempt to have them review software we intended to distribute." (McKusick Decl. at 8.) Plaintiff allegedly refused to cooperate, although it had performed similar services for others.

Berkeley's decision to excise AT & T's code was motivated by several related concerns. First, the University of California received substantial benefits by being the center of UNIX software development, benefits that would increase if it could expand the family of UNIX users by extending UNIX to non-licensees (Ibid.); second, the cost of an AT & T UNIX license had increased to around $200,000, excluding all but the largest users (Ibid.); third, the Net2 version of UNIX would offer new and improved services (Keith Bostic, Marshall K. McKusick, & Michael J. Karels, Berkeley UNIX Yesterday, Today and Tomorrow, in Kennedy Aff. Ex. 8); and finally, the CSRG programmers, at least those who founded BSDI (Karels, McKusick, and Bostic), presumably saw in Net2 an opportunity to profit from the widespread interest in UNIX-like systems.

The end result of Berkeley's efforts was a product that, by all accounts, contains a very small proportion of 32V code. But this is not to say that Net2 fails to display its 32V roots. Plaintiff hired Professor John Carson to unearth these roots and, after over 400 hours of digging, Professor Carson has now identified a number of instances where 32V code is embedded in the Net2 system. (Carson Aff. at ¶ 13.) The legal significance of this code is, of course, the central issue in the present dispute.

Berkeley began licensing and distributing Net2 in June 1991. Plaintiff has alleged that the "highest levels," meaning persons reporting directly to the Regents, approved Net2's release. (E.g. Proposed 2d Am.Compl. at ¶¶ 2, 9, 38, 64, 72, 89, 103.) Indeed, Plaintiff has alleged that the University Chancellor himself approved Net2's release. (Kennedy Aff. ¶ 16.)

An early Net2 licensee was UUNET, an electronic information exchange for people interested in UNIX. (Adams Dep. at 149, Kennedy Aff. Ex. 12.) UUNET added Net2 to its standard archives, enabling any subscriber to UUNET to freely and anonymously copy Net2 to their own computer system. When asked the number of people who had copied Net2 from UUNET, Mr. Bostic replied that "I've been told it's in the tens of thousands." (Bostic Dep. at 81, Id.). UUNET is available to hundreds of thousands of users worldwide, including users in New Jersey. (Rorke Aff. ¶¶ 1-4.)

One organization that obtained Net2 from UUNET was BSDI. (Adams Dep. at 149, Kennedy Aff. Ex. 12.) BSDI, which is not licensed by AT & T to use UNIX, used Net2 to create its sole product, the operating system BSD/386 Source. (Ans. & Countercl. at ¶¶ 5-6.) BSDI is now close to bringing BSD/386 to market, having distributed preliminary "alpha," "beta," and "gamma" versions of BSD/386 as well as promotional literature. This literature states that BSD/386 Source "contains no AT & T licensed code" and "does not require a license from AT & T." (1st Am.Compl. Ex. I.) Unless Plaintiff is successful in this suit, it will soon have another competitor in the field of UNIX-like operating systems.

B. The Present Motions To Dismiss

The central issue in the present motions to dismiss is whether the University is tantamount to...

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