Synopsys, Inc v. AzurEngine Technologies, Inc
401 F.Supp.3d 1068
S.D. Cal.2019Background
- Synopsys develops proprietary Electronic Design Automation (EDA) software and controls access via encrypted license keys tied to license servers; it does not sell ownership of the code.
- Synopsys’ monitoring detected “call-home” activity indicating AzurEngine accessed Synopsys software without a license using counterfeit license keys thousands of times.
- AzurEngine is a San Diego startup working on custom chip designs and contends a Chinese partner had purportedly provided licensed access.
- Synopsys sued under the Digital Millennium Copyright Act (DMCA), sought a temporary restraining order (TRO), an order to show cause re: preliminary injunction, and expedited discovery.
- The court treated the TRO as a motion for preliminary injunction (because AzurEngine had notice and opposed), granted a preliminary injunction enjoining AzurEngine from accessing or using Synopsys software, and ordered preservation of evidence.
- The court denied Synopsys’ motion for expedited discovery, finding no good cause given the injunction, existing litigation hold, and the parties’ incentives to proceed with normal discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Synopsys is likely to succeed on DMCA anti-circumvention claim | Synopsys: software employs technological access control (license keys); AzurEngine circumvented it via counterfeit keys; Synopsys owns copyrights | AzurEngine: access occurred via Chinese servers so U.S. law is extraterritorial; believed access was authorized by partner | Held for Synopsys: controls "effectively control" access; call-home data shows circumvention; copyright ownership likely; extraterritoriality defense rejected |
| Whether Synopsys will suffer irreparable harm without injunction | Synopsys: circumvention undermines negotiating position, business model, goodwill, market share, and causes unquantifiable harm | AzurEngine: injunction would devastate active chip project and cause major delays/costs | Held for Synopsys: harms are irreparable and balance of equities favors Synopsys |
| Whether an injunction is in the public interest | Synopsys: enforcement of copyright/DMCA serves public interest | AzurEngine: public interest does not override its project harms | Held for Synopsys: public interest favors enforcement where plaintiff likely to succeed |
| Whether expedited discovery should be allowed pre-Rule 26(f) | Synopsys: forensic imaging of AzurEngine devices is necessary to preserve evidence | AzurEngine: holds evidence on Chinese servers; imaging disruptive; already implemented litigation hold | Held against Synopsys: expedited discovery denied due to litigation hold, injunction in place, and lack of spoliation risk |
Key Cases Cited
- Stormans, Inc. v. Selecky, 586 F.3d 1109 (9th Cir. 2009) (articulating preliminary injunction standard)
- Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008) (standard requiring likelihood of success, irreparable harm, balance of equities, public interest)
- MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928 (9th Cir. 2010) (DMCA §1201 anti-circumvention elements)
- Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848 (9th Cir. 2017) (lawful purchasers still need authorization to circumvent to avoid DMCA liability)
- RJR Nabisco, Inc. v. European Community, 136 S. Ct. 2090 (2016) (test for extraterritorial application of U.S. statutes)
- Spanski Enterprises, Inc. v. Telewizja Polska, S.A., 883 F.3d 904 (D.C. Cir. 2018) (rejecting extraterritorial escape for foreign-server piracy)
- Litecubes, LLC v. Northern Light Products, Inc., 523 F.3d 1353 (Fed. Cir. 2008) (applying domestic-focus test for extraterritoriality)
- Johnson v. Couturier, 572 F.3d 1067 (9th Cir. 2009) (discussing discretion on bond amount for injunctions)