Knowledgeplex, Inc. v Placebase, Inc.

The district court denied defendant’s motion to dismiss plaintiff’s copyright infringement claim for filing a defective registration with the Copyright Office, stating that the Ninth Circuit’s standard on this issue is “broad and deferential” and, “absent intent to defraud and prejudice, inaccuracies in copyright registrations do not bar actions for infringement.”

Plaintiff Knowledgeplex, Inc. alleged that defendant Placebase breached a contract, misappropriated trade secrets, and infringed certain copyrights by using plaintiff’s proprietary computer code (“DataPlace”) for a web-based geospatial database to build its own rival system. Defendant was engaged as a subcontractor in developing DataPlace, and allegedly was paid $3.4 million over the course of three years for its role in the development process. When defendant produced and began marketing what plaintiff alleged is a virtually identical system that defendant developed in considerably less time and with considerably fewer resources, plaintiff investigated the matter, determined that defendant had misused the proprietary DataPlace code in creating its rival system, and filed suit.

Defendant moved to dismiss for lack of subject matter jurisdiction, claiming, inter alia, that plaintiff’s copyright registration was defective because plaintiff failed to provide the first 25 pages of the computer source code. Registration deposits of computer code generally require “one copy of identifying portions of the program,” the precise form of which depends upon whether the program contains trade secrets, whether it is more than fifty pages in length, and whether it is a “revision” or an original work. 37 C.F.R. § 202.20(c)(vii).

The court denied the motion, stating that the Ninth Circuit’s standard on this issue is “broad and deferential” and, “absent intent to defraud and prejudice, inaccuracies in copyright registrations do not bar actions for infringement.”

The court also rejected defendant’s argument that the scope of the court’s subject matter jurisdiction is limited to allegations based on portions of the computer code properly deposited with the Copyright Office. According to the court, in Three Boys Music Corp. v. Bolton, 212 F.3d 477 (9th Cir. 2000), the Ninth Circuit explicitly rejected an argument that the district court lacked subject matter jurisdiction over a copyright infringement claim where the plaintiff had “failed to register a complete copy of the song upon which the lawsuit was based,” in that “the deposit copy d[id] not include the majority of the musical elements that were part of the infringement claim.” The court reiterated that the standard with respect to the adequacy of deposits is “broad and deferential” and, accordingly, plaintiff’s incomplete deposit in the instant case did not deprive the court of subject matter jurisdiction over the computer code. The court also declined to dismiss breach of contract and misappropriation of trade secret claims, determining that they were adequately pleaded.