Design Data Corp. v. Unigate Enterprise, Inc.
63 F. Supp. 3d 1062
N.D. Cal.2014Background
- Design Data Corporation owns SDS/2, a copyrighted structural steel detailing CAD program and its outputs (drawings, images, job files).
- Defendants Louis Liu and Helen Zhang operate UE and UG (Deluxe 3D), acting as intermediaries between Chinese contractors and US clients.
- Defendants allegedly used SDS/2 to create drawings for UE projects, but they claim work was done in China and they did not themselves use SDS/2.
- Zhang downloaded SDS/2 to an external hard drive; disputes exist over whether it was a cracked copy or a legitimate free demonstration copy and whether it was installed or used.
- DDC conducted extensive discovery; forensic evidence showed a copy on an external drive but no evidence of installation or use; a cracked file was reportedly quarantined.
- Court granted summary judgment for defendants on several theories, finding de minimis copying and lack of evidence of actual use, and granted dismissal of contributory infringement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Direct infringement from downloading SDS/2 | DDC contends copying constitutes infringement even without installation or use. | Downloading without installation or use is de minimis and not actionable. | Downloading without installation or use is de minimis; no liability. |
| Contributory infringement by UE | UE’s involvement and facilitation of SDS/2 usage supports contributory infringement, including in the US. | No US-based infringement by UE; alleged uses by China-based contractors are outside US infringement liability. | Contributory infringement claim granted in favor of defendants. |
| Whether SDS/2 output files are protected by its copyright | Job files, drawings, and images generated by SDS/2 are protected as output of the program under the SDS/2 registration. | Output data are not protected by the program’s copyright; only the program itself is protected. | Output files and images are not automatically protected as SDS/2 copyright. |
| UG’s liability for UE’s infringement | UG should be liable by virtue of being UE’s affiliate in the infringement scheme. | UG plays no role in the detailing work and cannot be liable. | UG not liable; linked through UE as to the same claims, but summary judgment granted against UE extends to UG. |
Key Cases Cited
- Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204 (9th Cir. 1988) (program outputs may be protectable separately from the program itself)
- MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) (loading software creates a copy under the Copyright Act)
- Ringgold v. Black Entertainment TV, 126 F.3d 70 (2d Cir. 1997) (de minimis use insulates from liability for minor infringements)
- Newton v. Diamond, 388 F.3d 1189 (9th Cir. 2004) (de minimis copying requires substantiality for actionable use)
- Johnson Controls, Inc. v. Phoenix Control Systems, Inc., 886 F.2d 1173 (9th Cir. 1989) (look and feel distinctions in software protection)
- Computer Assocs. Int’l v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992) (output displays may be protected as audiovisual works separate from the program)
- AtPac, Inc. v. Aptitude Solutions, Inc., 787 F. Supp. 2d 1108 (E.D. Cal. 2011) (copyright protection extends to both literal and non-literal components of software (district court case))