UNIX SYSTEM LABORATORIES, INC., Plaintiff, v. BERKELEY SOFTWARE DESIGN, INC., and certain named individuals in their collective capacity as The Regents of the University of California, Defendants.
Civ. No. 92-1667
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY
1993 U.S. Dist. LEXIS 19505; 27 U.S.P.Q.2D (BNA) 1721; Copy. L. Rep. (CCH) P27,075
March 3, 1993, Decided
NOTICE: [*1] NOT FOR PUBLICATION
COUNSEL: For Plaintiff: Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C., Newark, NJ, By: Gary F. Werner, Esq. Paul, Hastings, Janofsky & Walker, NY, NY, By: George L. Graff, Esq., James W. Kennedy, Esq.
For Regents of the University of California, Defendant: Crosby, Heafey, Roach & May, Oakland, CA, By: Joel Linzner, Esq. Post, Polak & Goodsel, Roseland, New Jersey, By: Frederick B. Polak, Esq. For Berkeley Software Design, Inc., Defendant: Saiber Schlesinger Satz & Goldstein, Newark, NJ, By: James H. Forte, Esq.
OPINIONBY: DICKINSON R. DEBEVOISE
Debevoise, District Judge.
Plaintiff Unix System Laboratories, Inc. instituted this action to seek relief from Defendants' ongoing distribution of computer software in alleged violation of USL's proprietary rights in the UNIX operating system. Plaintiff pleads eleven claims for relief, including federal copyright and trademark claims, and state contract, tort, and trademark dilution claims. Defendants now move (i) to dismiss, for lack of personal jurisdiction because Defendant Regents lack capacity to be sued and because of improper venue; (ii) to transfer because of improper venue and inconvenience; and (iii) [*2] to strike parts of the pleadings. Plaintiff cross-moves to amend its complaint and for a preliminary injunction. This court has subject matter jurisdiction pursuant to 15 U.S.C. § 1121(a) (jurisdiction over actions under Chapter 22 (Trademarks) of Title 15); 28 U.S.C. §§ 1331 (federal question), 1332 (diversity), and 1338 (copyrights and trademarks); and supplemental jurisdiction over Plaintiff's state law claims, 28 U.S.C. § 1367(a).
I. STATEMENT OF FACTS
Plaintiff Unix System Laboratories ("USL") is a Delaware corporation and majority-owned subsidiary of American Telephone and Telegraph Company ("AT&T"), 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 someday plans to develop, [*3] manufacture, and sell computer operating systems like Plaintiff. Defendant individuals are members of the Board of Regents (the "Regents") of the University of California ("Berkeley"). The Regents are a non-profit public corporation organized to administer the University of California pursuant to the California constitution, art. 9 § 9, and California state law.
The central issue here is whether Defendants BSDI and Regents appropriated parts of Plaintiff's allegedly proprietary program "UNIX," and then used and distributed these parts without authorization in violation of Plaintiff's copyrights and trade secrets. UNIX is a computer operating system; that is, it is 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 developed UNIX in the 1970s, and 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 UNIX software and documentation for the Fifth through Seventh Editions and for version 32V. (Id., Exs. C-F.)
Before exploring the details of Plaintiff's [*4] 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 PP 11-12.)
After developing UNIX in late 1960s and early 1970s, AT&T quickly began licensing UNIX to educational, government, and commercial users, including 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 parties' most recent 32V agreement is the Educational Software License Agreement, or E-SOFT-00089, executed in 1985 ("the [*5] 00089 agreement"). (Forte Aff., Ex. F.) n1 The 00089 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.
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n1 The 00089 agreement granted Berkeley:
2.01(a) a right to use . . . for educational use . . . [including] a right to modify such SOFTWARE PRODUCT and to prepare derivative works based on such SOFTWARE PRODUCT, providing that any such modification or derivative work that contains any part of a SOFTWARE PRODUCT subject to the Agreement is treated hereunder the same as such SOFTWARE PRODUCT. AT&T-IS claims no ownership interest in any portion of such a modification or derivative work that is not part of a SOFTWARE PRODUCT.
(b) Educational use is limited to uses directly related to teaching and degree-granting programs and uses in noncommercial research by students and faculty members, including any uses made in connection with the development of enhancements or modifications to SOFTWARE PRODUCTS. Such uses are permitted only provided that (i) neither the results of such research nor any enhancement or modification so developed is intended primarily for the benefit of a third party, (ii) such results, enhancements and modifications (all to the extent that they do not include any portion of SOFTWARE PRODUCTS are made available to anyone . . . without restriction on use, occupying or further distribution . . . and (iii) any copy of any such result, enhancement or modification furnished by LICENSEE is furnished for no more than the cost of reproduction and shipping.
In addition, the license imposes no restrictions on materials in the public domain:
7.05 (a) . . . If information relating to a SOFTWARE PRODUCT subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, students or faculty members, LICENSEE'S obligations under this section shall not apply to such information after such time.
(Shapreau Decl., Ex. G.)
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In addition to its source code, AT&T also prepared and distributed copies of 32V object code beginning in 1984. Object code is simply the source code translated into the form recognized by computer hardware, a binary sequence of 0s and 1s. Although readable by computers, sequences of 0s and 1s are generally inscrutable to humans. Relying on this inscrutability for protection from disclosure, AT&T has distributed 32V object code publicly subject to notice of copyright but without redistribution restrictions (Pfeffer Reply Decl. at P 4).
Berkeley, a recipient of 32V source code, exercised its contractual right to derivatize 32V to the hilt. It began to create its own embellishments and additions, which it 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 [*7] 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 contained 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, [*8] 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 P 13.) The legal significance of this code is, of course, a matter of dispute.
To begin with, it is important to compare Net2 side-by-side with 32V. Net2 has far outgrown 32V and now weighs in at nearly ten times the size of its parent. The alleged overlaps between parent and child [*9] probably amount to less than a percent of the total. (Joint Decl. at PP 12, 13.) Indeed, ignoring header files and comments (see below), the overlap in the critical "kernel" region is but 56 lines out of 230,9995, and the overlap elsewhere is 130 lines out of 1.3 million. However, as both sides argue (but to different effect), the nature of the overlap is more significant than its size.
According to Professor Carson, eighty of the 8,000 Net2 files are "littered with textual references which are or [sic] identical or substantially similar to corresponding textual matter in the UNIX/32V source code." (Ibid.) These textual overlaps include variable and parameter names, function names, the text of noncoding comments, and the actual sequence of the instruction code itself. (Id. at P 23.) Most of these textual references are concentrated in files in the "kernel" of Net2, "which forms the central core of the operating system." (Id. at P 14.)
To understand the functional importance of this overlap, it is necessary to understand its nature. Overlap in items such as variable, file, and function names is functionally irrelevant to the program insofar as the program is wholly self-referential. [*10] That is, a programmer could name a variable or function anything at all without disabling the program, as long as the program did not interface with other programs. n2 But once a program interfaces with another program, the file, function, or variable names can become significant. The two programs may have certain files, functions, or variables in common, and these must have the same names in order for the programs to interface. Programs written to run with a UNIX-like operating system have now become so common that industry standards govern the requirements of UNIX interfaces.
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n2 Professor Carson notes that 30% of the internal functions "not published in SVID or intended for use by programs outside the operating system itself" have identical names in Net2 and 32V. It would appear that these are the sorts of names that Defendants could have readily changed without affecting compatibility with other programs.
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For example, the UNIX operating systems contain files called "header" files. Header files are repositories [*11] of common definitions and declarations. If a programmer knows that an operating system contains a certain header file, then the programmer can simply refer to the header file and avoid reproducing all of the definitions and declarations. Of course, such a program can only run with an operating system having the proper header files. Therefore, Defendants have included 32V's header files in Net2 as a matter of necessity, to insure that the many programs written for UNIX-like systems will be compatible with Net2.
Another type of overlap identified by Professor Carson is overlap in code instructions. Code instructions embody and implement the programmer's solution to a programming problem -- a solution that directly determines how well or how poorly the program runs. Professor Carson has found several sections of instructions that BSDI appears to have copied from 32V. Again, BSDI argues that these instructions are widespread and well-documented, and that their structure is substantially dictated by the need to preserve compatibility with other programs (Joint Decl. at PP 53-61.)
The final type of overlap identified by Professor Carson is "comment" overlap. All computer programs contain [*12] short explanatory comments annotating the code in which they are embedded. The function of these comments is simply to inform programmers of the purpose and operation of particular sections of code. Comments have no role whatsoever in software performance.
In summary, Professor Carson has examined the traits shared by Net2, BSD/386, and 32V, and detected a common lineage. Defendants argue that virtually all of these traits reflect publicly available code, copied comments, or overlap dictated by compatibility with industry standards. Professor Carson disagrees, and has allegedly identified at least some overlapping files that are irrelevant to program interfacing. (Carson Reply Aff. at PP 6(d), 8-15.)
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 PP 2, 9, 38, 64, 72, 89, 103.) Indeed, Plaintiff has alleged that the University Chancellor himself approved Net2's release. (Kennedy Aff. P 16.)
In soliciting new licensees, Berkeley distributed promotional materials stating that Net2 "may be freely redistributed. It is [*13] available to anyone and requires no previous license, either from AT&T or The Regents of the University of California." (Bostic Dep. at 76, Kennedy Aff. Ex. 3K.) According to Mr. Bostic, a member of CSRG, promotional materials were mailed to firms in New Jersey, although no New Jersey firms were among the approximately 120 firms that signed a licensing agreement to use Net2.
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. PP 1-4.)
One organization that obtained Net2 from UUNET was BSDI. (Adams Dep. at 149, Kennedy Aft. 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 PP 5-6.) BSDI [*14] 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.)
II. PROCEDURAL HISTORY
Plaintiff filed its complaint in this action on April 20, 1992. On April 29, the parties agreed to a court-ordered stipulation that BSDI would cease using the phone number "1-800-ITS-UNIX". Plaintiff filed its First Amended Complaint on July 24, and on the same date Defendants' motion to dismiss Counts Ten and Eleven were denied. Defendants answered on September 3 and counterclaimed for declarations of noninfringement, unenforceability, and invalidity of Plaintiff's trademark and copyrights in the UNIX name and materials. Plaintiff replied on September 25, and subsequently moved for a preliminary injunction. The motion for an injunction was adjourned and consolidated with the present motions.
Defendants move for relief on three separate grounds: this complaint should be dismissed against the individual Regents pursuant to Rules 12(b) and 12(f) of [*15] the Federal Rules of Civil Procedure, because the individual Regents lack the capacity to be sued; Plaintiff has no personal jurisdiction over the University of California; and venue in New Jersey is improper under 28 U.S.C. § 1391. Plaintiff cross-moves to amend its complaint, in part to correct some of the defects asserted by Defendants, and for a preliminary injunction.
A. Plaintiff's Motion To Amend
Plaintiff cross-moves to amend its complaint pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. Rule 15(a) states that, in cases where the adverse party has served a responsive pleading, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires."
The Supreme Court has held that
in the absence of any apparent or declared reason -- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. -- the leave sought should, as the rules [*16] require, be "freely given."
Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962).
Plaintiff seeks to amend its complaint to add allegations of wrongdoing on the part of the individual Plaintiffs (e.g. Proposed 2d Am. Compl. at PP 2, 9, 38, 64, 72, 89, 103); factual allegations concerning the University's distribution of its Net2 code to persons in New Jersey (e.g. Id. at PP 41, 43, 44); and allegations of willfulness on the part of the University and BSDI (e.g. Id. at PP 50, 63-66). In addition, Plaintiff wishes to change the named Defendants from "the Following Individuals in their Collective Capacity as The Regents etc." to "The Regents of the University of California and the Following Persons in their Individual and Official Capacity etc."
There is no evidence that Plaintiff is seeking a second amendment of its complaint for reasons of bad faith and delay. Plaintiff is simply trying to meet Defendant's objections to the present complaint, to insert new factual matters learned through discovery, and to clarify the nature of its claims. Moreover, the proposed amendments cause no prejudice to Defendants. The amendments do not eliminate claims which the [*17] Defendants have expended time and resources to rebut, nor do the amendments drastically alter the expected costs of defense, length of the action, or nature of the complaint. Consequently, I grant Plaintiff's motion for leave to amend.
B. Defendant Regents Lack The Capacity To Be Sued
Defendants argue that Plaintiff "has chosen to incorrectly name individual Regents of the University of California, 'in their collective capacity,' rather than the legal entity known as the [sic] 'The Regents of the University of California' as required by federal and state law." (Defs.'s Supp'g Br. at 5.) In addition, Defendants argue that "Plaintiff has not stated any facts which would support a claim against individual Regents," and that "claims against individuals acting in their official governmental capacities may be barred by qualified immunities." (Defs.'s Supp'g Br. at 6-8.) Defendants base these arguments in the Federal Rules of Civil Procedure and the California constitution. n3
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n3 Defendants argue that Rule 17(b) of the Federal Rules of Civil Procedure mandates that "the capacity of a corporation to sue or be sued shall be determined by the law under which it was organized." According to the California constitution, article IX, § 9, the University of California is a public trust administered by the corporation "The Regents of the University of California". Among its other powers, the Regents corporation "shall also have . . . the power to sue and to be sued." (See MacDonald Decl. Ex. A.) Consequently, Defendants conclude, Plaintiff can only sue the Regents by their corporate name, and not "in their collective capacity" or otherwise.
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Plaintiff's Second Amended Complaint answers Defendants' "collective capacity" objection by expressly naming the Regents of the University of California as Defendants. Defendants' other objection, that Plaintiff has improperly named the individual Regents, needs no answer. Defendants have not elaborated on their one-sentence suggestion that Plaintiff has failed to state a claim against these Defendants.
Accordingly, I must deny Defendants' motions to dismiss all claims against the individual Regents and to strike the related matters from the pleadings.
C. Personal Jurisdiction Over The Regents
Defendants also allege that this action must be dismissed for lack of jurisdiction over "the University." The Second Amended Complaint no longer names "the University" per se, instead naming the Regents in their corporate, official, and individual capacities. Consequently, this motion will be treated as a motion to dismiss for lack of jurisdiction over the Regents as named in the Second Amended Complaint.
This court has personal jurisdiction over a defendant if the exercise of personal jurisdiction complies with the laws of New Jersey, Fed. R. Civ. P. 4(e), and does not violate due process. [*19] International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945) (the fourteenth amendment limits state long-arm statutes); Provident National Bank v. California Federal Savings & Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987) (citing Rule 4(e) and International Shoe). The due process clause permits a court to exercise jurisdiction over a party whenever the party has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316.
The dual considerations of state law and Constitutional limits coincide in New Jersey because New Jersey's long-arm statute reaches as far as the due process clause of the Fourteenth Amendment permits. Carteret Savings Bank, FA v. Shushan, 954 F.2d 141 (3d Cir.), cert. denied, 121 L. Ed. 2d 29, U.S. , 113 S. Ct. 61 (1992) (citing New Jersey Court Rule 4:4-4, which permits service "consistent with due process of law"); Charles Gendler & Co., Inc. v. Telecom Equip. Corp., 102 N.J. 460, 469, 508 A.2d 1127 (1986) [*20] (Rule 4:4-4 allows "'out-of-state service to the uttermost limits permitted by the United States Constitution'", citing Avdel Corp. v. Mecure, 58 N.J. 264, 268, 277 A.2d 207 (1971)); Giangola v. Walt Disney World Co., 753 F. Supp. 148, 154 (D.N.J. 1990) (New Jersey's long-arm statute extends to the limits of the U.S. Constitution).
If a defendant raises the issue of personal jurisdiction, the plaintiff bears the burden of establishing that the defendant's contacts with the forum state comport with the requirements of due process. "To carry this burden, plaintiff must show 'with reasonable particularity' that the forum, and thus the court, has either: (1) specific jurisdiction (where the cause of action arose from the defendant's activities within the forum state), or (2) general jurisdiction (derived from defendant's continuous and systematic conduct in the forum state)." Giangola, 753 F. Supp. at 154 (citing Provident National Bank, 819 F.2d at 437).
Once a court has found that a defendant's contacts with the forum state are significant enough to confer jurisdiction on the [*21] forum, "in appropriate cases" the court may evaluate other factors. Burger King, 471 U.S. at 476-77. These include the "'burden on defendant,' 'the forum State's interest in adjudicating the dispute,' 'the plaintiff's interest in obtaining convenient and effective relief,' 'the interstate judicial system's interest in obtaining the most efficient resolution of controversies,' and the 'shared interest of the several States in furthering fundamental substantive social policies.'" Id. at 477, citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980).
To apply these principles in the present case, it is first necessary to briefly review the connections between the various defendants and the alleged wrongdoing. Plaintiff's allegations against the Regents, in their various capacities, stem from the release of Net2 by the CSRG, a group affiliated with the University of California. The Regents, in their corporate capacity, are apparently liable under a theory of respondeat superior for the activities of CSRG. In their official and individual capacities, the Regents are apparently liable [*22] in so far as they authorized, knew of, or reasonably should have known of Net2's release. Thus Plaintiff can satisfy the burden of proving jurisdiction by showing with "reasonable particularity" that CSRG's acts bring it within this court's jurisdictional ambit, and that the Regents approved those acts.
Plaintiff points to several different activities by the University of California that give this court specific jurisdiction over the Regents' alleged misdeeds. The first of these activities was the negotiation and execution of licensing agreements between Plaintiff and the University: "the University 'reached out beyond' California and knowingly contracted to obtain and use . . . software developed in New Jersey." (Pl.'s Opp'g Br. at 19, citing Burger King v. Rudzewicz, 471 U.S. 462, 476, 85 L. Ed. 2d 528, 105 S. Ct. 2174 (1985).)
The Supreme Court analyzed a similar issue of personal jurisdiction in the seminal case Burger King v. Rudzewicz. In Burger King, the Michigan defendant Rudzewicz had contracted with the Florida corporation Burger King for a restaurant franchise near Detroit. Business lagged at the restaurant, and when Rudzewicz was unable to meet the lease payments, [*23] Burger King brought an action for eviction in the Southern District of Florida. Although Rudzewicz's manager had trained at Burger King headquarters in Florida, Rudzewicz himself had apparently never even visited there. None the less, the Court found that the Southern District of Florida had personal jurisdiction over Rudzewicz because the contract had substantial connections with Florida and because Rudzewicz had purposefully reached out and availed himself of the benefits of a continuing relationship with a citizen of Florida.
The Third Circuit has also found personal jurisdiction in cases where a contract provided the defendant's only contacts with the forum state. In Associated Business Telephone Systems v. Greater Capital Corp., 861 F.2d 793 (3d Cir. 1988), the court found jurisdiction in New Jersey over a California company that had contracted with a New Jersey company for telephone services for an Illinois hotel. Following the methodology prescribed in Burger King, the court examined the connections between the contract and New Jersey: (1) the defendant had created long-term (ten-year) obligations between itself and the New Jersey plaintiff; [*24] (2) the plaintiff would be the exclusive contractor and manager of the phone system, with 24-hour access to it; (3) all communications with the plaintiff were with its New Jersey office; (4) the plaintiff continually monitored phone usage in New Jersey; (5) the plaintiff had the power to unilaterally disconnect the defendant; (6) the plaintiff sent its personnel to the defendant's offices; and (7) the defendant knew that its acts would cause injury in New Jersey.
The contractual contacts here arise out of Count One, a count that names the Regents in all their capacities. The contacts are less substantial than those in Burger King and Associated Business, but a side-by-side comparison between the contacts here and those in Associated Business listed above shows that the contacts here are not insignificant. (1) Defendants knowingly entered into a relationship with a New Jersey facility that has now lasted nineteen years, compared to a ten-year contract in Associated Business. It is true that Defendants signed the initial contract with AT&T in New York, but they maintained their operational relationships with Plaintiff in New Jersey at all times. (2), (4), (5) The New [*25] Jersey facility continued to develop, distribute, and service the software licensed to Defendants. In addition, Defendants also participated in the development and distribution of UNIX to Plaintiff's licensees, to such an extent that Defendants' development efforts now apparently outstrip those of Plaintiff. (3) Most communications concerning UNIX were presumably with Plaintiff's New Jersey office. (6) Plaintiff sent technical people to meet with Defendants in California "on quite a large number of occasions." (McKusick Dep. at 318, Kennedy Aff. Ex. 5.) (7) Defendants knew its acts would cause injury in New Jersey.
In sum, Defendants and Plaintiff have worked together for nearly two decades to develop, expand, and distribute UNIX software to Plaintiff's licensees. Defendants and Plaintiff are not two organizations whose only contact is an agreement cemented by fax and phone to engage in a single transaction. See Colmen Financial Services v. Charter Equip. Leasing, 708 F. Supp. 664 (E.D. Pa. 1989) (no jurisdiction arising out of Plaintiff's contract with out-of-state Defendant to give financial advise in sale of business). Plaintiff and Defendants are [*26] long-term business associates, and Defendants should reasonably have expected to be subject to suit in New Jersey.
Plaintiff asserts a second ground for jurisdiction in that it has alleged that Defendants committed unlawful acts that inflicted foreseeable harm on New Jersey residents. Again, this jurisdiction involves the Regents in both their collective and individual capacities because it arises out of counts alleging unlawful acts in these capacities. (2d Am. Compl., Counts 3, 4, 6, 8). The U.S. Supreme Court has upheld such jurisdiction in several cases. In Calder v. Jones, 465 U.S. 783, 79 L. Ed. 2d 804, 104 S. Ct. 1482 (1984), the Supreme Court held that parties who intentionally aim their tortious acts at victims in other states must expect to be haled into court in those states. Id. at 790 (California had jurisdiction over Florida defendants who allegedly libelled a California plaintiff in a magazine whose primary market is in California). In Hustler v. Keeton, 465 U.S. 770, 79 L. Ed. 2d 790, 104 S. Ct. 1473 (1984), the Court held that New Hampshire had jurisdiction in a libel action against Hustler magazine even though only a fraction of Hustler's sales [*27] occurred in New Hampshire.
Plaintiff relies especially on the case Horne v. Adolph Coors Co., 684 F.2d 255 (3d Cir. 1982). In Horne, the plaintiff alleged that defendant Coors, a Colorado corporation, manufactured its beer using a device that infringed one of the plaintiff's patents. Even though Coors had made every effort to prevent the sales of its beer in New Jersey, the beer remained available in the bootleg market. Coors also knew that selling its beer anywhere would injure the plaintiff regardless of whether he resided in a state selling the beer. Moreover, Coors had allegedly devalued intellectual property, which has a fictional situs at the residence of the owner. Considering all of these factors, the court found that Coors was subject to jurisdiction in New Jersey. See also Paolino v. Channel Home Centers, 668 F.2d 721 (3d Cir. 1981) (out-of-state manufacturer produced device in violation of agreement with plaintiff to protect plaintiff's trade secrets, and sold the device to defendant who resold it in-state).
Plaintiff argues "unlawful act" jurisdiction, as explained in Calder, Hustler, and Home, is [*28] proper for several of Defendants' acts. First, jurisdiction is proper because Defendants mailed an offer to prospective Net2 licensees in June 1991, allegedly in violation of the Lanham Act. Unlike Coors in Home, Defendants here targeted UNIX users in New Jersey, offered them the allegedly proprietary Net2, and encouraged them to distribute it freely to other parties.
Defendants contend that this single offer, which apparently no New Jersey residents accepted, cannot create personal jurisdiction, especially since Defendants lacked an "express intention to injure" Plaintiff. (Defs.'s Reply Br. at 18.) Defendant might be correct if the offers were innocuous absent an acceptance. But Plaintiff has alleged that the offers themselves create a violation of the Lanham Act by the Regents in both their individual and corporate capacities. See, e.g. Calder, 465 U.S. 783, 79 L. Ed. 2d 804, 104 S. Ct. 1482 (parties who intentionally aim their tortious acts at victims in other states must expect to be haled into court in those states). In addition, Defendants had an "express intention to injure" in the sense that they must have known that their acts could injure Plaintiff.
Second, Plaintiff argues [*29] that "unlawful act" jurisdiction is proper because Defendants have misappropriated trade secrets and infringed Plaintiff's copyright by licensing Net2 to UUNET. This act inevitably and foreseeably led to the downloading of Net2 by tens of thousands of users, whose use of Net2 foreseeably eroded the value of Plaintiff's trade secrets. Plaintiff has not submitted an estimate of the number of Net2 programs actually downloaded in New Jersey, but with tens of thousands of copies distributed, the odds are that at least several hundred reside on disks and tape within this state (in addition to the copy downloaded by Plaintiff's personnel).
These acts are analogous to acts that gave rise to jurisdiction in Paolino v. Channel Home Centers, 668 F.2d 721 (3d Cir. 1981). In Paolino, a Pennsylvania plaintiff confided trade secrets to a Tennessee defendant, who abused plaintiff's confidences and used the secrets to manufacture its products. The defendant then sold these products to a third party in New Jersey, who in turn distributed the goods to customers at its Pennsylvania stores. The court found jurisdiction even though the defendant was not the party selling [*30] the goods in Pennsylvania. "[The Defendant], knowing that Paolino had an interest in intellectual property recognized by the law of Pennsylvania where he resided, obtained his property in confidence and set out on a course of action which would destroy it." This behavior sufficed to create jurisdiction in Paolino, and it suffices to create jurisdiction here as well.
In summary, Plaintiff has pleaded a number of grounds sufficient to create jurisdiction over Defendant Regents and University. None the less, the Regents argue that "the presence of some other considerations would render jurisdiction unreasonable." Burger King, 471 U.S. at 477. Such considerations are usually handled by means other than denying jurisdiction, such as choice of law rules, transfer, and change of venue. Ibid. In this case, as discussed below, the Regents' contentions of improper and inconvenient venue are insufficient to "render jurisdiction unreasonable." Consequently, I deny the Regents' motion to dismiss the Second Amended Complaint for lack of personal jurisdiction.
D. Dismissal For Improper Venue Or Transfer
Defendants also move to dismiss for improper venue. [*31] This motion must be denied as well. Venue is proper under 28 U.S.C. § 1391(b)(2), which applies to suits where subject matter jurisdiction is based on a federal cause of action. Section 1391(b)(2) states that venue is proper in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated . . . ."
In the present case, Plaintiff's claims are based at least in part on alleged misrepresentations and trademark violations made in New Jersey, and on alleged unlawful distributions to individuals in New Jersey. At this early stage of discovery, it is impossible to know exactly how large a part of the alleged actions occurred elsewhere, but the record offers no evidence that any state received substantially more solicitations or distributions than New Jersey. Furthermore, Plaintiff's trade secrets and, presumably, UNIX trademark are located at its home in New Jersey. Consequently, Plaintiff's claim involves both property and acts in New Jersey. See Cottman Transmission v. Metro Distributing, 796 F. Supp. 838 (E.D. Pa. 1992) [*32] (franchisees' unlawful use of trademarks out-of-state created venue in-state).
Even if venue is proper in New Jersey, Defendants argue that this case must be transferred to a California district court under 28 U.S.C. § 1404(a), "for the convenience of parties and witnesses, in the interest of justice". Defendants bear the burden of persuasion on this issue. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970), cert. denied, 401 U.S. 910, 27 L. Ed. 2d 808, 91 S. Ct. 871 (1971). Section 1404(a) leaves transfer decisions to the discretion of the court, but a court should not lightly disturb Plaintiff's choice of forum. "'Unless the balance of convenience of the parties is strongly in favor of defendant, the plaintiff's choice of forum should prevail.'" Ibid. (citing Owatonna Manufacturing Co. v. Melroe Co., 301 F. Supp. 1296, 1307 (D. Minn. 1969)) (emphasis added in Shutte).
Defendants assert that "virtually all the witnesses and all the defendants reside a considerable distance from New Jersey's state borders," and that California has a considerable interest in the litigation. [*33] (Def.'s Supp'g Br. at 15.) Defendants are surely correct with regard to the issue of whether the Regents individually committed unlawful acts.
However, as shown by the briefs arguing Plaintiff's motion for a preliminary injunction against BSDI, the threshold issues here are not issues of who did what, but rather issues of similarity among source codes, of contract interpretation, and of law. How closely does Net2 or BSD/386 resemble 32V? Was 32V published without notice of copyright? What sorts of publications do Berkeley's licenses permit? Can any part of 32V possibly be considered a trade secret, given that much of it is industry standard and known to a generation of users and programmers? These are all issues without a particular geographical situs.
Consequently, I will not disturb Plaintiff's decision to bring this action in New Jersey. Considering the various issues that must be tried in this case, a New Jersey forum is not so burdensome for Defendants as to require transfer or dismissal in the interests of convenience and justice.
E. Preliminary Injunction
Plaintiff moves for a preliminary injunction against further distribution of the source code by BSDI (the Regents have [*34] voluntarily ceased distributing the source code at issue here). Federal district courts have the power to grant preliminary injunctions pursuant to Rule 65(a) of the Federal Rules of Civil Procedure. Preliminary injunctions allow a court to "prevent the judicial process from being rendered futile by defendant's action or refusal to act." Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure § 2947 (1973). In other words, a preliminary injunction allows a court to maintain the status quo until trial. To obtain a preliminary injunction, the movant must establish:
(1) the reasonable probability of eventual success in the litigation and (2) that the movent will be irreparably injured pendente lite if relief is not granted. Moreover, while the burden rests upon the moving party to make these two requisite showing[s], the district court "should take into account, when they are relevant, (3) the possibility of harm to other interested persons from the grant or denial of the injunction, and (4) the public interest."
Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797 (3d Cir. 1989). n4
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n4 The standards for preliminary injunctions are determined by federal law, even though they provide interim relief for state-law claims. Rule 65(a) "'may be read as a codification of the traditional federal equity practice . . . .'" Instant Air Freight, 882 F.2d at 799 n. 4 (quoting 11 C. Wright and A. Miller, Federal Practice and Procedure, § 2943).
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1. Copyright Infringement
Plaintiff claims that BSDI has violated Plaintiff's copyright in the UNIX source code and, unless I enjoin further violations, BSDI's continuing violations will irreparably harm Plaintiff. The first factor to be considered is whether Plaintiff has a reasonable probability of prevailing on the merits of this claim.
In order to prevail, Plaintiff must prove that it has a valid copyright in the UNIX code. Plaintiff's chief difficulty here is the "publication doctrine." The publication doctrine denies copyright protection to works which the copyright owner "publishes," unless the owner has properly affixed a notice of copyright to the published work. This doctrine has suffered steady erosion over the years, and it now applies in full force only for works published prior to January 1, 1978. For works such as 32V (published in 1978), which were published after that date but before March 1, 1989, the doctrine is subject to the escape provisions of 17 U.S.C. § 405(a) and the common-law "limited publication rule." For works published after March 1, 1989, the publication doctrine has been eliminated by the Berne Convention Implementation [*36] Act, 102 Stat. 2857 (1988).
Because Plaintiff copyrighted 32V in 1992, Plaintiff benefits from a statutory presumption of validity and BSDI has the burden of proving otherwise. Williams Electronics, Inc. v. Artic International, Inc., 685 F.2d 870, 873 (3rd Cir. 1982). BSDI seeks to carry this burden by proving that AT&T and Plaintiff have widely published 32V without proper notice. Publication is defined as
the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental lease or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication.
17 U.S.C. § 101. Version 32V source code has now been distributed, without notice, to literally thousands of licensees. n5 Consequently, Plaintiff can have no valid copyright on 32V unless it can fit within one of the statutory or common-law escape provisions.
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n5 Version 32V object code has also been distributed, but this code was apparently accompanied by appropriate copyright notices. (Pl.'s Supp'g Br. at 11.) See Sega Enterprises, Ltd. v. Accolade, Inc., 977 F.2d 1510, 1526 n. 8 (9th Cir. 1992).
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The three statutory escape provisions are listed in section 405(a). These provisions relieve a copyright owner from the harsh consequences of noticeless publication if the owner (i) omitted the notice from a "relatively small number of copies;" (ii) registers the work within five years of publication, and then makes a "reasonable effort" to add notices to the noticeless copies already distributed; or (iii) proves that a third party omitted notice in violation of an express agreement in writing. 17 U.S.C. § 405(a)(1)-(3).
Plaintiff cannot avail itself of any of these provisions. Notice was omitted from thousands of copies of 32V; no contractual agreements require the licensees to affix notice; Plaintiff failed to copyright 32V until 1992, well over five years after 32V was published; and Plaintiff has not yet made reasonable efforts to add notices to the many notice less publications of 32V. Consequently, Plaintiff must try to fit within the common-law doctrine of limited publication.
Under the common-law doctrine of limited publication, a publication will not divest an author of copyright protection if the author "'communicates the contents of [*38] a manuscript to a definitely selected group and for a limited purpose, and without the right of diffusion, reproduction, distribution or sale . . . .'" Rexnord, Inc. v. Modern Handling Systems, Inc., 379 F. Supp. 1190, 1197 (D. Del. 1974) (quoting White v. Kimmell, 193 F.2d 744, 746-47 (9th Cir. 1952), cert. denied, 343 U.S. 957, 96 L. Ed. 1357, 72 S. Ct. 1052 (1952); see also American Visuals Corp. v. Holland, 239 F.2d 740, 744 (2d Cir. 1956) (quoting White v. Kimmell). There is some question as to whether the doctrine of limited publication survived the 1976 amendments to federal copyright law, but the weight of authority holds that its has. See Nimmer on Copyrights, § 4.13[B] (1992), and the cases cited therein ("the doctrine of limited publication continues under the current Act").
For the present dispute, the key criterion is that the alleged copyright owner must only have distributed the works to a "selected group." To qualify as a "selected group," those receiving the work must be more than just customers self-selected by their desire to purchase the work. Otherwise, "all the [*39] purchasers of the work" would qualify as a "selected group," and all publications would be limited publications. For example, if a programmer sells software to anyone willing to meet the asking price, then the programmer can hardly be said to have communicated the work to a selected group. See Brown v. Tabb, 714 F.2d 1088, 1092 (11th Cir. 1983) (the group containing all of the potential purchasers of a jingle was not a "selected group"); Academy of Motion Picture Arts v. Creative House Promotions, 944 F.2d 1446 (9th Cir. 1991) (Oscar winners are not a selected group because Plaintiff did not distribute its Oscars generally to the public). Situations where courts have found selected groups include distribution of manuscripts by authors to a small collection of friends; of floor plans to contractors so they can prepare bids; of advance copies of works to colleagues for criticism or review; of samples to potential customers; and of promotional material to dealers. Nimmer on Copyright, § 4.13[A] (1992).
As the above examples suggest, the traditional scope of the limited publication doctrine is narrow. But courts have shown [*40] a tendency to expand the scope of this doctrine when applying it to computer products. See Nimmer on Copyright, § 4.13[A], . For example, several courts have declined to find a publication where a copyright owner has communicated support materials to customers buying computers. One such case is Hubco Data Products Corp. v. Management Assistance Inc., 219 U.S.P.Q. 450 (D. Idaho 1983), where the court faced the issue of whether the plaintiff computer manufacturer had published the operating system distributed with its computers. The computers (complete with operating systems) apparently were available to anyone willing to pay their price, but the court none the less found only a limited publication of the operating system. The court reasoned that the "operating systems were only offered to owners of [plaintiff's] computers." Id. at 455. See also Data General Corp. v. Digital Computer Controls, Inc., 188 U.S.P.Q. 276 (Del. Ch. 1975) (schematic drawings were the subject of a limited publication because they were only distributed to those who bought computers).
The limited-publication [*41] variations endorsed in Hubco and Data General, even if valid, are of no help to Plaintiff here. Version 32V was not distributed as an ancillary communication supporting the sale of a computer -- 32V was the actual product itself. Consequently, the only question is whether AT&T and Plaintiff limited 32V's distribution or offered it to whomever could pay.
Plaintiff argues that it has only distributed 32V to three select groups of licensees: educational organizations, U.S. government agencies, and carefully-screened corporate entities. Although the former two groups could conceivably qualify as "selected," the latter can qualify only if the screening process is suitably restrictive. According to depositions of Plaintiff's personnel, the screening includes investigating the kind of code a potential customer seeks (source or binary); detailed information about the nature of the customer's business; the customer's financial ability to pay; and whether the customer is in a country that protects trade secrets. Plaintiff needs all of this information to assess three features of its prospective customers: which product is best for the customer, whether the customer can pay, and whether [*42] the customer will take good care of Plaintiff's intellectual property. (Kennedy Decl., Ex. C at 16-22, Ex. D at 111-12; Pl.'s Reply Br. at 10.)
Even accepting this description of Plaintiff's screening process as true, it is hard to see how the screening would yield a selected group of corporations within the meaning of the doctrine of limited publication. Plaintiff essentially seeks what any lessor of property seeks: someone who will take good care of the property and pay the bills as they fall due. If this were enough to create a selected group, then practically anyone who leased property would belong to a selected group.
The copyright laws in effect prior to 1989 do not allow such expansive protection against the consequences of noticeless publication. As quoted above, publication includes distributing copies by "renting, leasing, or lending." 17 U.S.C. § 101. Under Plaintiff's construction of the doctrine of limited publication, "renting, leasing, or lending" would not constitute publication whenever the owner of the copyright screened out irresponsible customers. It seems unlikely that Congress drafted this section with this purpose in mind. [*43]
Consequently, I find that Plaintiff has failed to demonstrate a likelihood that it can successfully defend its copyright in 32V. Plaintiff's claims of copyright violations are not a basis for injunctive relief.
2. Trade Secret Misappropriation
Plaintiff also claims that BSDI misappropriated trade secrets when, via Net2, BSDI incorporated parts of 32V into BSD/356. This claim raises two key issue. First, is Plaintiff's claim preempted by federal copyright law? And second, after a generation of scrutiny and imitation as a highly-regarded computer operating system, does any part of 32V remain secret?
Section 301 of Title 17 expressly preempts state laws protecting illegal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106." Section 301 explains the scope of this preemption by listing the exceptions:
(1) subject matter that does not come within the subject matter of copyright as specified by sections 102 and 103, including works of authorship not fixed in any tangible medium of expression; or
(2) any cause of action arising from undertakings commenced before January 1, 1978; or
(3) activities [*44] violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106.
Section 106 lists the rights protected by copyright law, including the right to "reproduce the copyrighted work . . . ; to prepare derivative works . . . ; [and] to distribute copies."
Net2 fails to meet the first preemption exception, because computer programs fall "within the subject matter of copyright." Accordingly, the key issue is whether state misappropriation laws protect activities that are equivalent to those protected by the copyright laws.
To test whether a particular state law is preempted, courts have generally adopted an "extra element" test:
If, under state law, the act of reproduction, performance, distribution or display . . . will in itself infringe the state created right, then such right is preempted. But if other elements are required, in addition to or instead of, the acts of reproduction, performance, distribution or display, in order to constitute a state created cause of action, then the right does not lie "within the general scope of copyright," and there is no preemption.
SBK Catalogue Partnership v. Orion Pictures, 723 F. Supp. 1053, 1066 (D.N.J. 1989) [*45] (quoting Nimmer on Copyright, § 1.01[B]); see also Harper & Row Publs., Inc. v. Nation Enter., 723 F.2d 195, 199-200 (2d Cir. 1983) (if the elements of a state-law cause of action also state a claim under the copyright laws, the state-law cause of action is preempted).
In the present case, the state law in question is either that of New York or New Jersey. Plaintiff assumes that New Jersey law should apply, and Defendants note that the licenses require the application of New York law. I need not decide this issue now, however, because both New York and New Jersey have adopted laws substantially similar to section 757 of the Restatement of Torts. See Elnicky Enterprises, Inc. v. Spotlight Presents, Inc., 213 U.S.P.Q. 955 (S.D.N.Y. 1981); Rohm and Haas Co. v. Adco Chemical Co., 689 F.2d 424 (3d Cir. 1982).
According to section 757, "[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." Restatement of Torts § 757 cmt. [*46] b (1939). n6 Thus, by definition, a trade secret claim requires Plaintiff to prove an element not present in a copyright claim: the existence of a trade secret. Because of this extra element, section 757 does not protect rights equivalent to those protected by the copyright laws, and hence is not preempted. See Brignoli v. Balch Hardy and Scheinman, Inc., 645 F. Supp. 1201, 1205 (S.D.N.Y. 1986) (allegations that computer programs are trade secrets protects them from preemption); Nimmer on Copyright, § 1.01[B][h] (1992) ("actions for disclosure and exploitation of trade secrets require a status of secrecy, not required for copyright, and hence are not preempted.")
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n6 Section 757 sets forth the elements of Plaintiff's cause of action as follows:
One who discloses or uses another's trade secret, without a privilege to do so, is liable to the other if
(a) he discovered the secret by improper means, or
(b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or
(c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person discovered it by improper means or that the third person's disclosure of it was otherwise a breach of his duty to the other, or
(d) he learned the secret with notice of the facts that it was a secret and that its disclosure was made to him by mistake.
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Given that Plaintiff's trade secret claims are not preempted, the next question is whether Plaintiff still has any trade secrets to protect. Plaintiff argues that these programs contain a variety of materials that Defendants could have obtained only from proprietary sources, sources subject to contractual guarantees against redistribution. If so, then Plaintiff has not lost its secrets. Trade secrets need not actually be secret, as long as the owner of the secrets controls their dissemination. For example, the owner may disclose it to employees or to others pledged to secrecy. In addition, the components of the secrets may all lie in the public domain as long as their combination does not. "The fact that every ingredient is known to the industry is not controlling for the secret may consist of the method of combining them which produces a product superior to that of competitors." Sun Dial Corp. v. Rideout, 16 N.J. 252, 257, 108 A.2d 442 (1954).
Plaintiff's first argument is that Defendants have copied the filenames and header files from 32V. Defendants insist that filenames and the contents of header files can be readily printed from Plaintiff's binary code (Joint [*48] Decl. at P 28.1.1.), which Plaintiff has apparently distributed without restriction on redistribution. In addition, some of this code is available in reference manuals distributed by Plaintiff. (Carson Reply Aff. at P 9.)
Plaintiff also argues that Defendants have copied certain non-operational aspects of the code, such as allocation of functions to files and the exact wording of comments. Even though these matters might be "secret," they have only small significance to Net2's value as an operating system. As such, Defendants would not seem to have obtained an "advantage over competitors" by their use.
Finally, Plaintiff argues that Defendants have copied 32V in writing the instructions and organizing the logical structure of Net2. Defendants counter that even if Plaintiff does retain trade secrets in Unix, Defendants carefully plucked these secrets out of Net2 and BSD/386. This argument is an argument over facts, and Plaintiff and Defendants have joined it with their experts. At the present state of the record, it seems that the side who gets in the last word wins. In an affidavit accompanying Plaintiff's supporting brief, Professor Carson identified two sets of instructions as examples [*49] of copying: the functions "bread" and "biodone." In an affidavit accompanying the opposing brief, Defendants' experts rebutted these arguments by explaining how they could have replicated "bread" and "biodone" from publicly-available information. (Joint Decl. at PP 53-56.) n7 In an affidavit accompanying the reply brief, Professor Carson identified further examples of copying. (Carson Reply Aff.) Defendants have now submitted a surreply and rebutted these examples. (2nd Joint Decl.) n8
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n7 Professor Carson also argues that Plaintiff has used its knowledge of proprietary code to write nonproprietary programs that integrated more efficiently with the 32V proprietary kernel. (Carson Aft. at P 60.) Such nonproprietary programs would seem to be expressly authorized by the licensing agreement as derivative works.
n8 One example of direct copying that Defendants do not dispute is the copying of the CPIO file. However, the parties do dispute whether Defendants copied CPIO on their own initiative or at AT&T's behest. (2nd Joint Decl. at P 6.3; Tr. at 40-41.)
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After reviewing the affidavits of Plaintiff's and Defendants' experts, a great deal of uncertainty remains as to what trade secrets Net2 might contain. One fact does seem clear: the header files, filenames, and function names used by Defendants are not trade secrets. Defendants could have printed these off of any of the thousands of unrestricted copies of Plaintiff's binary object code. (Kashtan Aff. at PP 9-11.) Moreover, the nonfunctional elements of the code, such as comments, cannot be trade secrets because these elements are minimal and confer no competitive advantage on Defendants. The copied elements that contain instructions, such as BREAD and CPIO, might perhaps be trade secrets, but Defendants' experts have argued persuasively that these instructions are either in the public domain or otherwise exempt. As Defendants have repeatedly emphasized, much of 32V seems to be publicly available.
On the other hand, even if Defendants are correct, it is not clear whether 32V is publicly available in a form suitable to BSDI's purposes. There is an enormous difference between an expert programmer sitting down with a pile of textbooks and disjointed segments of code to write out an operating [*51] system from scratch, and that same programmer downloading the operating system intact from a public network. In the first case, the programmer could expend large amounts of time writing, testing, and debugging the newly-created system, with an uncertain prospect of immediate success. But in the second case, immediate success would be virtually assured. Thus, even if all of the pieces of the 32V code had been thoroughly revealed in publicly-available literature, the overall organization of the code might remain a trade secret unless it too had been disclosed.
On the present record, however, it is impossible to determine whether the overall organization of Net2 has been disclosed. The record itself contains little information directly pertinent to this issue. Moreover, the parties' submissions hint that some of 32V's organization may already be publicly available. Berkeley has apparently released nonproprietary programs such as Net1 n9 since 1987 (Regents Am. Opp'g Br. at 13), programs that presumably have divulged at least some information about 32V's organization.
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n9 Plaintiff apparently does not believe that Net1 discloses proprietary information.
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A further consideration is that 32V's overall organization may not even be protectable in the first place. Berkeley's license to use 32V protects 32V derivatives only to the extent that they contain certain proprietary information. If Berkeley excises the proprietary information (as it attempted to do with Net2), Berkely is free to distribute derivatives without restriction. Berkeley has utilized this freedom in the past to distribute a number of non-proprietary systems and portions of systems, all apparently without objections from AT&T. These distributions, to some degree, must have disclosed the overall organization of 32V. Thus, Berkeley's activities under the licensing agreement, and AT&T's acceptance of those activities, are evidence that Berkeley and AT&T interpreted the agreement to allow the disclosure of at least some of 32V's organization.
In summary, I find that I am unable to ascertain whether any aspect of Net2 or BSD/386, be it an individual line of code or the overall system organization, deserves protection as Plaintiff's trade secret. Since Plaintiff has failed to provide enough evidence to establish a "reasonable probability" that Net2 or BSD/386 contain trade [*53] secrets, I find that Plaintiff has failed to demonstrate a likelihood of success on the merits of its claim for misappropriation of trade secrets. No preliminary injunction will issue.
I grant Plaintiff's motion to amend, and deny Plaintiff's motion for a preliminary injunction. I deny Defendants' motion to dismiss for lack of jurisdiction and venue, and I deny Defendants' motion to transfer.
Dickinson R. Debevoise U.S.D.J.
Date: March 3, 1993