Manufacturing Automation and Software Systems, Inc. v. Kristopher Hughes
2:16-cv-08962
C.D. Cal.May 8, 2017Background
- MASS Group, a California corporation, alleges former employees Hughes and Huysentruyt copied its copyrighted software (the "MASS Software") and used it to launch InformaTrac to compete and sell to MASS customers. Hughes and Huysentruyt resigned March 2016 after allegedly preparing InformaTrac and registering its domain prior to resignation.
- Edward Nugent, formerly a MASS salesperson, is now an officer of PcVue (Massachusetts). Plaintiff alleges Nugent and PcVue financed, supervised, and jointly marketed InformaTrac’s allegedly infringing software, including press releases, trade-show marketing, and joint materials targeting California customers.
- Plaintiff asserts eight copyright-infringement claims (for eight identified works), a trade-secret claim under California UTSA, and other derivative claims (accounting), alleging willful copying of literal (source/object code) and nonliteral elements (UI, structure, sequencing).
- PcVue and Nugent moved to dismiss for lack of personal jurisdiction and for failure to state claims. The court considered (and resolved in plaintiff’s favor) factual disputes regarding the defendants’ role in marketing and financing the allegedly infringing product.
- The court held it had specific personal jurisdiction over PcVue and Nugent based on purposeful direction toward California (effects test), and denied the motion to dismiss on Rule 12(b)(6) grounds as to copyright and trade-secret claims; it also permitted Nugent to be sued individually based on alleged personal participation ("guiding spirit" theory).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over PcVue and Nugent | Defendants purposely directed infringing acts at California (MASS is resident copyright holder; defendants marketed and sold infringing product to Californians) | Lack of sufficient forum contacts; PcVue is Massachusetts-based and Nugent would be unduly burdened | Court: Specific jurisdiction exists under the Calder effects test; purposeful direction, foreseeability, and "but-for" causation met; reasonableness factors do not overcome jurisdiction. |
| Nugent's individual liability | Nugent authorized, supervised, financed, and participated in infringing activity, acting as the "guiding spirit" | Nugent cannot be personally liable absent alter-ego pleading or veil piercing | Court: Nugent plausibly alleged to be personally liable as a participating officer (guiding spirit); denial of dismissal as to Nugent. |
| Sufficiency of copyright pleadings | FAC identifies eight works, alleges ownership/registration, access, and copying of literal and nonliteral protectable elements | Complaint fails to identify specific copied elements or provide side-by-side comparisons | Court: Pleadings meet Rule 8; particularity not required for copyright claims at pleading stage; copyright counts survive. |
| Trade secrets (UTSA) claim specificity and conflict with copyright claims | Trade secrets are described (procedures, methods, customer lists, etc.), and defendants misappropriated them | Allegations are too generic; trade-secret claim conflicts with copyright claims (codes publicly registered) | Court: Description is sufficient to give notice and scope for discovery; trade-secret claim not inconsistent with copyright claims; claim survives. |
Key Cases Cited
- International Shoe Co. v. Washington, 326 U.S. 310 (establishes minimum contacts standard for personal jurisdiction)
- Calder v. Jones, 465 U.S. 783 (effects test for purposeful direction in torts)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful availment and reasonableness factors in specific jurisdiction)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (general jurisdiction standard)
- Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668 (copyright infringement as a tort; purposeful direction requirement)
- Funky Films, Inc. v. Time Warner Entm't Co., L.P., 462 F.3d 1072 (elements of copyright infringement claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standards and distinction between conclusions and factual allegations)
- Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001 (corporate officers can be personally liable for torts they authorize or participate in)