Computer Sciences Corporation v. Cognizant Technology Solutions U.S. Corporation

Brief/Memorandum in Support

N.D. Tex.November 28, 2016

1 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION COMPUTER SCIENCES CORPORATION, § § Plaintiff, § § v. § No. 3:16-cv-001447-D § COGNIZANT TECHNOLOGY SOLUTIONS § U.S. CORPORATION, § § Defendant. § PLAINTIFF’S MEMORANDUM IN SUPPORT OF ITS OPPOSITION TO DEFENDANT’S MOTION TO DISMISS PORTIONS OF PLAINTIFF’S SECOND AMENDED COMPLAINT Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 1 of 24 PageID 546 2 TABLE OF CONTENTS Page I. INTRODUCTION …………………………………………………………………..5 II. RELEVANT FACTS ……………………………………………………………….5 III. STANDARD OF REVIEW …………………………………………………………6 IV. ARGUMENT ………………………………………………………………………..8 A. CSC’s Claims Regarding the Mass Mutual Bid Are Not Barred by Res Judicata ………………………………………………………………….8 B. CSC’s Copyright Infringement Claims Are Sufficiently Pleaded ……………..10 1. CSC Has Adequately Pleaded Ownership of Its Copyrighted Software Programs ………………………………………………….....11 2. CSC Has Adequately Pleaded Defendant’s Violation of CSC’s Rights Under the Copyright Act ………………………………………13 C. CSC’s Breach of Contract Claims Properly State a Claim For Which Relief Should Be Granted ……………………………………………………..16 1. CSC’s Claim for Breach of the Mass Mutual NDA is Not Barred By the Statute of Limitations ……………………………….….17 2. CSC Alleges Facts Sufficient to State a Claim for Breach of Contract with Regard to Sammons and Other Contracts ………………19 D. CSC’s Tortious Interference with Prospective Contract Relations Properly States a Claim for Which Relief Should Be Granted …………………22 V. PRAYER FOR RELIEF ………………………………………………………..…..23 Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 2 of 24 PageID 547 3 TABLE OF AUTHORITIES Cases Page Anderson v. Sara Lee Corp., 508 F.3d 181, 2007 U.S. App. LEXIS 26723 (4th Cir. N.C. 2007) ……………………………..6 Arista Records LLC v. Greubel, 453 F. Supp. 2d 961, 964 (N.D. Tex. 2006) ……………………………………10, 11, 12, 15, 16 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ……………………………………………………………………………6, 7 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) …………………………………… …………………………………...6. 7, 8 Broadcast Music, Inc. v. Bootlegger’s 4, L.L.C., No. 2:14-CV-04201-NKL, 2014 WL 6879059, at *2 (W.D. Mo. Dec. 5, 2014) ……...14, 15 Central Point Software, Inc. v. Nugent, 903 F. Supp. 1057, 1060 (E.D. Tex. 1995) …………………………………………………12, 13 Chao v. Rivendell Woods, Inc., 415 F.3d 342 (4th Cir.2005) ……………………………………………………………………...7 The Compliance Source, Inc. v. Greenpoint Mortgage Funding Inc., 624 F.3d 252 (5th Cir. 2010) ………………………………………………………………..14, 15 DocMagic, Inc. v. Ellie Mae, Inc., 745 F. Supp. 2d 1119, 1148 (N.D. Cal. 2010) …………………………………………………..13 Energy Intelligence Group, Inc. v. Tudor, Pickering, Holt & Co. Securities Inc., Civ. Action No. H-12-1945, 2013 WL 321668 (S.D. Tex. Jan. 28, 2013) ………………13, 14 Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361 (1991) ……………………………………………………………………….10 Fonovisa, Inc. v. Alvarez, No. 1:06-CV-011-C ECF, 2006 WL 5865272, at *3 (N.D. Tex. July 24, 2006) ……………….16 Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 3 of 24 PageID 548 4 756 F.2d 230, 236 (2d Cir. 1985) ……………………………………………………………….22 GoDaddy.com, LLC v. Hollie Toups, 429 S.W.3d 752, , 2014 Tex. App. LEXIS 3891, 2014 WL 1389776 (Tex. App.-Beaumont 2014) ……………………………………………………………………7 Hogan Sys. v. Cybersource, 159 F.3d 319 (5th Cir. 1998) ……………………………………………………………………15 Jacobson v. Katzer, 535 F.3d 1373 (Fed. Cir. 2008) ………………..……………………………………………..… 13 Lohr v. McCurdy, 52 Va. Cir. 352 (2000) ....................................................................................10 Morgan v. Hanna Holdings, Inc., 635 F. Supp. 2d 404, 413 (W.D. Pa. 2009) ……………………………………………………..16 Salinas v. Meaux Surface Prot., Inc., No. 01-11-00096-CV, 2012 Tex. App. LEXIS 3483 (App. May 3, 2012) ………………………9 SimplexGrinnel LP v. Integrated Systems & Power, Inc., 642 F. Supp. 2d 206 (S.D.N.Y. 2009) …………………………………………………………..12 Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002)…………………………………………………………………………….7, 8 United Indep. Sch. Dist. v. Vitro Asset Corp. (In re Vitro Asset Corp.), No. 15-11056, 2016 U.S. App. LEXIS 14407, at *13-14 (5th Cir. Aug. 5, 2016). ……………...9 Vasquez v. Legend Natural Gas III, LP, 2016 Tex. App. LEXIS 4480, 2016 WL 1729390 (Tex. App. San Antonio-Apr. 29, 2016) .….7 Wooley v. Schaffer, 447 S.W.3d 71(Tex.App-Houston [14th Dist.] 2014, pet. Denied)……………………………..7 Other Authorities Am. Compl. ……………………………………………………………………………….…….14 Nimmer on Copyright § 12.09[A][2] (Matthew Bender Rev. Ed.) ……………………........13, 15 Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 4 of 24 PageID 549 5 Plaintiff Computer Sciences Corporation (“CSC” or “Plaintiff’) hereby files its Memorandum in Opposition (“Opposition”) to Defendant Cognizant Technology Solutions U.S. Corporation’s (“Cognizant” or “Defendant”) Motion to Dismiss Portions of Plaintiff’s Second Amended Complaint (“Motion to Dismiss”). This Opposition is based upon the pleadings and evidence properly before this Court, any oral and/or written evidence that may come before this Court, and the grounds in the following Memorandum in Opposition. I. INTRODUCTION CSC served a lawsuit against Cognizant on May 27, 2016 for (i) copyright infringement; (ii) breach of contract; (iii) tortious interference with existing and prospective contract relations; and (iv) preliminary and permanent injunctive relief. CSC filed its Second Amended Complaint on July 18, 2016. On August 15, 2016, Cognizant filed a Motion to Dismiss Portions of CSC’s Second Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6). In response, CSC filed an Opposition, but also requested that the Court grant it leave to file a Second Amended Complaint; the Court granted leave to CSC to file its Second Amended Complaint, which was deemed to be filed on October 20, 2016. On November 8, 2016, Cognizant answered CSC’s Second Amended Complaint, but filed yet another motion to dismiss portions of it. CSC’s respectfully requests that this Court deny Defendant’s Motion to Dismiss in its entirety. II. RELEVANT FACTS This is an action for copyright infringement, as well as all related state causes of action against Cognizant for its actions taken against CSC and its intellectual property and proprietary information. CSC is the sole and exclusive owner of all copyrights and other intellectual property rights to a number of software programs that are used to process data related to the life insurance Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 5 of 24 PageID 550 6 business. Those programs include: Life70, LIFE-COMM, Vantage-One, CyberLife, WMA, RSP, csA, and PreformancePlus. CSC licenses these software programs to insurance companies who use the programs to process business data. In addition to licensing, CSC also utilizes the software to provide Business Process Outsourcing (“BPO”) services to insurance companies. Cognizant, without the proper authorization or consent, has been accessing CSC’s software, source code, and related data from CSC’s licensees. Further, Cognizant has been actively soliciting CSC’s software licensees for services related to CSC’s software and misrepresenting that it has a “partnership” with CSC to access and use the software. Despite Cognizant’s continued misrepresentations, no such partnership exists and any access or use of CSC’s software without a valid Non-Disclosure Agreement (“NDA”) is an infringement on CSC’s rights. In an effort to conceal its own wrongdoing, Cognizant has used its Motion to Dismiss as a vehicle to argue the merits of an unrelated state court action pending between both CSC and Cognizant. Cognizant’s blatant attempts to bias this Court against CSC should be ignored. The state court action to which Cognizant so readily relies has nothing to do with this litigation, and any further attempts by Cognizant to mislead this Court should be recognized for what it is really is-a smokescreen to conceal its own deficiencies in this lawsuit. III. STANDARD OF REVIEW When considering a motion to dismiss under Rule 12(b)(6), the court must “accept as true all of the factual allegations contained in the complaint.” Anderson v. Sara Lee Corp., 508 F.3d 181, 188, 2007 U.S. App. LEXIS 26723 (4th Cir. N.C. 2007). In order to “survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 6 of 24 PageID 551 7 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “[A] complaint need not ‘make a case’ against a defendant or ‘forecast evidence sufficient to prove an element’ of the claim. It need only ‘allege facts sufficient to state elements’ of the claim. Thus, the sufficiency of a complaint does not depend on whether it provides enough information to enable the defendant ‘to prepare a defense,’ but merely ‘whether the document’s allegations are detailed and informative enough to enable the defendant to respond,” but rather must plead only enough facts to state a claim for relief that is plausible on its face. Chao v. Rivendell Woods, Inc., 415 F.3d 342, 349 (4th Cir.2005); Twombly, 550 U.S. at 570. When conducting a review, a court must liberally construe the pleadings in favor of the plaintiff, look to the plaintiff’s intent, and accept as true the factual allegations in the pleadings. Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex.App-Houston [14th Dist.] 2014, pet. Denied). The court can draw reasonable inferences (in favor of the plaintiff) from the factual allegations to determine if the cause of action has a basis in law or fact. Vasquez v. Legend Natural Gas III, LP, 2016 Tex. App. LEXIS 4480, *1, 2016 WL 1729390 (Tex. App. San Antonio Apr. 29, 2016). Essentially, under the federal rules, the complaint is liberally construed in favor of the plaintiff, and all well- pleaded facts are taken as true. Ashcroft, 556 U.S. at 678-79; GoDaddy.com, LLC v. Hollie Toups, 429 S.W.3d 752, 754, 2014 Tex. App. LEXIS 3891, *5-6, 2014 WL 1389776 (Tex. App. Beaumont 2014). Federal courts simply require a liberal standard of notice pleading, with which CSC has fully complied. See Twombly, 550 U.S. at 569-70; Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002) (The Supreme Court overturned the Appellate Court’s dismissal of the plaintiff’s Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 7 of 24 PageID 552 8 pleadings, because the plaintiff gave the defendant fair notice of its claims; the Appellate Court applied a heightened pleadings standard contrary to Fed. R. Civ. P. 8). CSC has pled valid causes of action against Cognizant for which it is entitled to remedies under the law. Rule 8 does not require a party asserting a claim to allege specific facts beyond those necessary to state a claim and grounds for relief. Twombly, 550 U.S. at 570 (citing Swierkiewicz, 534 U.S. at 508). Assuming all facts are true, as is the standard for addressing a motion to dismiss, Plaintiff has properly pled sufficient facts to support each and every cause of action contained in its Second Amended Complaint. IV. ARGUMENT A. CSC’s Claims Regarding the Mass Mutual Bid Are Not Barred by Res Judicata On March 9, 2016, CSC filed a lawsuit against John Maguire (“Maguire”) individually in the Eastern District of Virginia for breach of contract and breach of fiduciary duty. CSC’s complaint was subsequently amended to included causes of action for fraud, tortious interference with existing contract, tortious interference with contract expectancy, prospective business relationship or economic advantage, and trade secret misappropriation. On October 28, 2016, CSC filed a Joint Stipulation for voluntary dismissal of its tortious interference and trade secret misappropriation claims. See Exhibit A. A final order was rendered on November 3, 2016 dismissing these claims. See Exhibit B. Cognizant is under the mistaken belief that the dismissal of CSC’s claims against Maguire (the defendant in the Virginia litigation) somehow bars it from pursuing its claims against Cognizant (the defendant in this case). Under federal law, res judicata will apply if: (1) the parties are identical in both suits; (2) the prior judgment is rendered by a court of competent jurisdiction; (3) there is a final judgment on the merits; and (4) the same cause of action is Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 8 of 24 PageID 553 9 involved in both cases. Salinas v. Meaux Surface Prot., Inc., No. 01-11-00096-CV, 2012 Tex. App. LEXIS 3483, at *15 (App. May 3, 2012). The 5th Circuit Court also held this year, res judicata will bar a claim where the following elements are met: (1) "the parties must be identical in both suits," (2) "the prior judgment must have been rendered by a court of competent jurisdiction," (3) "there must have been a final judgment on the merits" and, (4) "the same cause of action must be involved in both cases. United Indep. Sch. Dist. v. Vitro Asset Corp. (In re Vitro Asset Corp.), No. 15-11056, 2016 U.S. App. LEXIS 14407, at *13-14 (5th Cir. Aug. 5, 2016). Cognizant’s res judicata argument fails for several reasons. First, the parties are not identical in both suits. Rather, Cognizant was not even a party in the Virginia litigation, which involved only CSC and Maguire; whereas the case before this Court involves CSC and Cognizant. Second, there has not been a final judgment on the merits, because CSC and Maguire agreed to a Joint Stipulation of Dismissal, whereby CSC voluntarily dismissed three (3) of its claims against Maguire. Exhibit A. No final judgment was rendered, and no determination of the merits of those claims was made by the Virginia court. Pursuant to the order rendered in the Virginia litigation as well as the Joint Stipulation of Partial Dismissal-agreed to by CSC and Maguire-the dismissal of CSC’s claims only addressed “claims asserted by CSC against Maguire (and not any other person or entity) . . . .” (emphasis added; see Exhibits A and B). Cognizant was well aware that the dismissal would have no effect on CSC’s right to pursue claims against Cognizant. Cognizant’s baseless res judicata argument is an attempt to seek the best of both worlds by preventing CSC from pursuing its causes of actions against two wholly independent defendants. Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 9 of 24 PageID 554 10 Cognizant also makes an over-reaching agency/principal argument by citing to a Virginia case, Lohr v. McCurdy, 52 Va. Cir. 352 (2000). (Defendant’s Memorandum in Support at 8.) Cognizant asserts that because Maguire was an employee of Cognizant, CSC is barred from asserting similar claims against the Cognizant. This argument misses the mark, as the present matter is distinguishable from the Lohr case. In Lohr, a jury trial occurred, and a final judgment was entered against the Lohrs. In the current matter before the Court, there was a voluntary dismissal against Maguire only. Again, Cognizant was not a party to the Virginia litigation, and therefore no trial has occurred; there was no “final judgment entered by a court of competent jurisdiction on the merits” against Maguire, and certainly not against Cognizant. Id. at 353. Cognizant’s defensive collateral estoppel claim is also misguided, as the court in Lohr held that “[d]efensive collateral estoppel is estoppel which prevents relitigation by plaintiff of issues previously lost against another defendant.” Id. In the current matter, there was no previous loss as certain claims against Maguire were voluntarily dismissed in the Virginia case. As a result, there was no litigation of those claims to form the basis of Cognizant’s argument that the claims here are a “re-litigation”. The dismissal of CSC’s claims against Maguire have no bearing on CSC’s right to pursue its claims against other parties, namely Cognizant. B. CSC’s Copyright Infringement Claims Are Sufficiently Pleaded CSC’s Second Amended Complaint more than adequately pleads the facts and law related to Defendant’s copyright infringement of CSC’s copyrighted software programs. To prevail on a copyright claim, CSC must show that it owns a valid copyright and that Defendant copied constituent original elements of CSC’s work. Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361 (1991). Copyright infringement claims must satisfy only the minimal notice-pleading requirement of Rule 8 of the Federal Rules of Civil Procedure. Arista Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 10 of 24 PageID 555 11 Records LLC v. Greubel, 453 F. Supp. 2d 961, 964 (N.D. Tex. 2006). This Court has rejected any heightened pleading burden for copyright actions. See id. at 964. CSC’s Second Amended Complaint details the scope of Defendant’s authorization to use CSC’s copyrighted software (Second Amended Complaint, hereinafter “SAC” in cites, ¶¶ 13, 16- 17, 19, 21), Defendant’s violation of that authorization in two representative instances (Id. ¶¶ 12, 18, 20), Defendant’s similar infringing conduct in fourteen (14) additional instances (Id. ¶¶ 22- 24), and Defendant’s unauthorized copying of CSC’s copyrighted software for the training of Defendant’s employees. (Id. ¶ 36.) These allegations at minimum give a short and plain statement alleging CSC’s copyright ownership of the software at issue and Cognizant’s violation of CSC’s exclusive reproduction right enumerated in 17 U.S.C. § 106. CSC’s Second Amended Complaint thus gives Defendant the requisite fair notice of CSC’s copyright infringement claims and the grounds on which they rest. See Arista Records LLC, 453 F. Supp. 2d at 964-65. 1. CSC Has Adequately Pleaded Ownership of Its Copyrighted Software Programs CSC’s copyrighted software programs are specifically named in the Second Amended Complaint, and CSC alleges Defendant’s infringement of these specific programs in two representative instances. These allegations sufficiently plead ownership of the copyrighted software programs at issue. The software programs alleged to be infringed in CSC’s Second Amended Complaint are programs and documentation comprised of or are derivative works of the registered copyrighted works, in whole or in part, attached to the Second Amended Complaint. (SAC ¶ 6, Exs. A-D.) CSC’s claims of copyright infringement in the registered works extends to the derivative works based on the original registered works, and CSC’s allegations are sufficient to maintain a copyright infringement suit based on Defendant’s unauthorized use of later versions of the Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 11 of 24 PageID 556 12 registered software programs. See SimplexGrinnel LP v. Integrated Systems & Power, Inc., 642 F. Supp. 2d 206 (S.D.N.Y. 2009) (“since a derivative work by definition consists of matter that would be infringing if it had been derived from the pre-existing work without the copyright proprietor’s consent, it follows analytically that the owner of a registered underlying work, in that capacity alone, should be able to maintain a suit for copying an unregistered derivative work”) (internal quotations and citation omitted); see also Central Point Software, Inc. v. Nugent, 903 F. Supp. 1057, 1060 (E.D. Tex. 1995) (extending copyright protection to derivative software programs based on plaintiffs’ copyright ownership of original software programs). Therefore CSC’s registration of the four copyrighted software programs adequately encompasses the software titles alleged in the Second Amended Complaint and any infringement of later versions of these programs that are comprised of or are derivative works of those four registered works. CSC is not required to punctiliously identify each version of each copyrighted work at issue and its corresponding copyright registration for its claims to proceed. CSC has adequately apprised Defendant of the copyrighted works at issue and CSC’s predicate copyright registrations. The more specific information of which Defendant complains “to narrow the issues and copyrights at stake” can be obtained through discovery. See Arista Records LLC, 543 F. Supp. 2d at 965 (overruling defendant’s complaint that plaintiffs had not sufficiently identified the copyright works that had been allegedly infringed or properly alleged plaintiffs’ copyright ownership of the copyright for each work because the identification of the works at issue provided sufficient notice of the basis of plaintiffs’ complaint for copyright infringement). Although CSC’s allegations meet the minimum pleading standards, in an abundance of caution Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 12 of 24 PageID 557 13 CSC has moved for leave to file a Second Amended Complaint concurrently with this response, which obviates Defendant’s specificity complaints. 2. CSC Has Adequately Pleaded Defendant’s Violation of CSC’s Rights Under the Copyright Act CSC’s allegations of unauthorized use and copying of its software establish the quintessential case for infringement of copyrighted software and give Defendant sufficient notice of CSC’s infringement claims. “Unauthorized use of a copyrighted computer program constitutes copyright infringement.” DocMagic, Inc. v. Ellie Mae, Inc., 745 F. Supp. 2d 1119, 1148 (N.D. Cal. 2010); see also Central Point Software, Inc., 903 F. Supp. 1057 (“Plaintiffs may establish copying if they can demonstrate that the software has been reproduced in a computer’s memory without permission.”); 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.09[A][2] (Matthew Bender Rev. Ed.) (“To ‘use’ software, it is necessary to copy it Second in RAM - an activity that itself implicates the copyright owner’s rights.”). CSC’s allegations of Defendant “making,” “removing,” and “establishing” unlicensed copies of CSC’s software are adequately substantiated by CSC’s factual allegations of unauthorized use of specific software programs and making unauthorized copies of those programs, which constitute a violation of CSC’s exclusive right of reproduction under 17 U.S.C. § 106 of those programs that are comprised in whole or in part of CSC registered copyrighted works. See id. (SAC ¶¶ 12, 18, 20, 22, 36, 42.) CSC’s allegations that Defendant has violated the contractual terms for use of CSC’s copyrighted software constitute actionable unauthorized use. Jacobson v. Katzer, 535 F.3d 1373, 1380 (Fed. Cir. 2008) (“If . . . a license is limited in scope and the licensee acts outside the scope, the licensor can bring an action for copyright infringement.”); see also Energy Intelligence Group, Inc. v. Tudor, Pickering, Holt & Co. Securities Inc., Civ. Action No. H-12-1945, 2013 Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 13 of 24 PageID 558 14 WL 321668, at *2 (S.D. Tex. Jan. 28, 2013) (holding that allegations of using copyrighted publications beyond the scope of the license was sufficient to state a copyright infringement claim).1 CSC substantiates these violations with two specific instances, setting forth the limitations to Defendant’s use of CSC’s specific software in the MassMutual and Sammons NDAs and alleging that Defendant violated the scope of that authorization by (1) exceeding the limited purpose for the use, (2) exceeding the term of the use, and (3) failing to disclose the nature of its use to CSC. (Am. Compl. ¶¶ 10-13, 16-21.) Understandably, CSC did not attach the NDA agreements to avoid disclosure of confidential terms involving third parties, nor is it required to do so to sufficiently plead a copyright infringement claim. See Broadcast Music, Inc. v. Bootlegger’s 4, L.L.C., No. 2:14-CV-04201-NKL, 2014 WL 6879059, at *2 (W.D. Mo. Dec. 5, 2014) (holding that copyright licensor was not required to attach a copy of its license agreement, noting that “Rule 8 does not require a complaint to contain evidentiary proof of the allegations in contained in it.”). Furthermore, Defendant’s assertion that its use of CSC’s software to provide services for CSC’s licensees negates any cognizable infringement is a patent mischaracterization of CSC’s allegations. (Def. Mot. to Dismiss at 10.) CSC is clear in its Second Amended Complaint that Defendant’s use of CSC’s software was subject to certain contractual limitations and that Defendant exceeded the scope of those limitations. (SAC. ¶¶ 10-13, 16-21.) The limited authorization for Defendant’s use of CSC’s software does not give Defendant free rein to use the software for licensees’ benefit however Defendant sees fit and certainly does not negate claims for copyright infringement for use beyond the scope of that authorization. See The Compliance 1 CSC’s authorization of Defendant’s use through the NDAs rather than through formally titled “licenses” is of no import. “The word license means permission, or authority; and a license to do any particular thing, is a permission or authority to do that thing. No magic words must be included in a document to create a copyright license.” Ticketmaster L.L.C. v. RMG Technologies, Inc., 507 F. Supp. 2d 1096, 1107 (C.D. Cal. 2007). Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 14 of 24 PageID 559 15 Source, Inc. v. Greenpoint Mortgage Funding Inc., 624 F.3d 252 (5th Cir. 2010) (distinguishing Hogan Sys. v. Cybersource, 159 F.3d 319 (5th Cir. 1998), and holding that a licensing agreement withholding rights not expressly given did not allow third-party access to software technology for the benefit of the owner’s licensee). CSC’s allegations that Defendant violated its terms of use of the software are sufficient regardless of the collateral documents Defendant mistakenly claims are required for sufficient pleadings. CSC’s authorization for Defendant’s use of the software is governed by the NDAs, not the licensing agreements with CSC’s customers. CSC has alleged in the Second Amended Complaint that Defendant was only allowed to use CSC’s software under the terms of an NDA, and that CSC’s licensees MassMutual and Sammons agreed that Defendant’s use of the software was limited to the terms of the NDAs. (SAC ¶¶ 8, 11, 17.) Any impact these licenses may have on the scope of CSC’s authorization as set forth in the NDAs is an issue properly reserved for discovery, and copies of these licenses are not required at this preliminary stage of the proceedings. See, e.g., Broadcast Music, Inc., 2014 WL 6879059, at *2. CSC permissibly uses the instances of infringement regarding the MassMutual and Sammons NDAs as representative of infringing conduct alleged against Defendant relating to other of CSC’s licensees. “Plaintiffs need not list each and every individual act of infringement of their exclusive rights at th[e] preliminary stage of the proceedings.” Arista Records LLC, 543 F. Supp. 2d at 966; see also Nimmer § 12.09[A][2] (“To avoid unwieldiness, courts have approved a complaint that simply alleges representative acts of infringement, rather than a comprehensive listing”) (internal citations omitted). CSC’s reference to the fourteen (14) other licensees and eight (8) total software titles - which encompass software and documentation comprised in whole or in part of CSC’s registered copyrighted works -- for which it alleges Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 15 of 24 PageID 560 16 similar forms of infringement, as well as Defendant’s copying of these software titles and related documentation for training purposes, gives Defendant adequate notice of CSC’s claims and provides “enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s].” Morgan v. Hanna Holdings, Inc., 635 F. Supp. 2d 404, 413 (W.D. Pa. 2009) (sustaining copyright infringement complaint where plaintiff alleged that the scope of defendant’s infringement was “not known without further discovery”). To dismiss CSC’s copyright claims would simply penalize CSC when the lack of specificity complained of by Defendant is the result of the breadth of its infringement. The specific time and nature of Defendant’s infringement with regard to each of the licensees and copyrighted works enumerated in the Second Amended Complaint is properly within the province of discovery and need not be clarified at this preliminary stage. See Arista Records LLC, 543 F. Supp. 2d at 965 (overruling defendant’s complaints that plaintiffs’ allegations of ongoing and continuous conduct were ineffective because “specific dates and times for the alleged instances of copyright infringement are matters that can be clarified during discovery”); Fonovisa, Inc. v. Alvarez, No. 1:06-CV-011-C ECF, 2006 WL 5865272, at *3 (N.D. Tex. July 24, 2006) (Cummings, J.) (denying motion to dismiss, leaving clarification of dates and times to the discovery process).2 In summary, CSC’s copyright infringement claims pleaded in its Second Amended Complaint meet the minimum pleading standards of Rule 8 of the Federal Rules of Civil Procedure, and therefore Defendant’ s motion should be overruled. C. CSC’s Breach of Contract Claims Properly State a Claim For Which Relief Should Be Granted 2 To the extent Defendant argues dismissal is warranted because it contends CSC’s claims are time-barred, CSC alleges that Defendant’s infringement is ongoing, and therefore regardless of the date of original accrual of CSC’s copyright infringement claims, the statute of limitations is not grounds for dismissal at this preliminary stage. See Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct 1962, 1969-70 (2014). Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 16 of 24 PageID 561 17 1. CSC’s Claim for Breach of the Mass Mutual NDA is Not Barred By the Statute of Limitations CSC licenses its software programs to insurance companies who use the programs to process their business data. CSC provides software implementation, support, and modification services to its licensees. Additionally, CSC uses its software programs to provide Business Process Outsourcing (“BPO”) services to insurance companies. Unlike a licensing transaction (where the customer uses CSC’s software to process its own data), a BPO transaction provides for CSC to use the software to process the data for the customer. (SAC ¶¶ 6-7.) The Massachusetts Mutual Life Insurance Company (“Mass Mutual”) licenses a number of software programs from CSC, including CSC’s Vantage-One and LIFE-COMM software programs (the “Software”). The licenses granted to Mass Mutual permit it to use the Software solely for purposes of processing business data. Mass Mutual was not permitted to allow third- party consultants to access or use the Software unless a Non-Disclosure Agreement (NDA) was in place. (Id. at ¶ 8.) In 2006, Mass Mutual requested that CSC allow Cognizant third-party access to Vantage-One in order for Cognizant to perform certain software testing services to Mass Mutual. CSC agreed, and on November 17, 2006, CSC, Mass Mutual, and Cognizant executed an NDA (“Mass Mutual NDA”). Section 1 of the NDA specifically authorized Cognizant to have access to Vantage-One only for the purposes of model office testing. Cognizant was expressly prohibited from all other uses and/or access to any other CSC software. (Id. at ¶ 10.) Cognizant was not granted any right to access or use the LIFE-COMM software or any other CSC software programs licensed by Mass Mutual, and Cognizant was not granted any right to access or use the source code to the Vantage-One software. Under Sections 1 and 10 of Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 17 of 24 PageID 562 18 the Mass Mutual NDA, the term over which Cognizant was permitted to provide those limited services was a maximum of twelve (12) months. Id.. The Mass Mutual NDA expired on November 17, 2007. However, Cognizant continued (without any authorization) to use CSC’s Vantage-One software. (Id. at ¶ 12.) Upon information and belief, Cognizant further continued to perform services for Mass Mutual that exceed even the restrictions of the original NDA. Id.. In its Motion to Dismiss, Cognizant asserts that CSC’s claims for breach of the Mass Mutual NDA are barred by the statute of limitations. However, Cognizant’s reliance on the statute of limitations fails. Second, since the expiration of the Mass Mutual NDA, Cognizant has no rights whatsoever to use CSC’s Software. Yet, Cognizant repeatedly has done just that: it has engaged in the wholly unlicensed use of CSC’s Vantage-One and Life-Comm software. (Id. at ¶¶ 11, 13, 17-24.) In addition to Cognizant’s raw unlicensed use, under the terms of the Mass Mutual NDA, certain of Cognizant’s obligations survive the expiration of the NDA. Specifically, Section 10 of the Mass Mutual NDA provides that “[c]onsultant’s obligations under this Agreement shall survive termination of this Agreement and shall continue as long as any Confidential Information disclosed to Consultant remains confidential…” The NDA defines “Confidential Information” as “Software Products (including the program code, specifications, logic, design, ideas, techniques, know-how, and procedures contained or revealed), all related documentation, any information about the Software Products (tangible or intangible, machine or human readable) and all terms of this Agreement…” Section 1 of Mass Mutual NDA. Cognizant questions in its Motion to Dismiss “(1) what particular contractual obligation CSC believes is surviving after so many years post termination, (2) what particular act Cognizant Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 18 of 24 PageID 563 19 did to violate the unidentified obligation, and (3) when that act allegedly took place.” There is no dispute that CSC’s software remains confidential. And, it is clear that Cognizant’s obligations under the NDA included not using the Confidential Information outside the terms of the NDA. Since the NDA has expired under its terms, but Cognizant’s obligations as to the use of Confidential Information survives, any use by Cognizant of the software is outside the terms of the NDA and is prohibited by Cognizant’s ongoing obligations. So every use, every access by Cognizant constitutes a new breach each and every time CSC’s software is accessed. Cognizant continues to breach the contract each and every day it continues to access CSC’s software. Section 10 of Mass Mutual NDA. CSC has pled facts in its Second Amended Complaint that demonstrate Cognizant has violated its obligations and continues to violate them. (SAC ¶ 10-13.) Based on this analysis alone, Cognizant’s Motion to Dismiss should be denied on this point. At the very least, Cognizant’s Motion to Dismiss on statute of limitations grounds should denied, because the issue requires a legal and factual analysis that is not appropriate for a Motion to Dismiss. 2. CSC Alleges Facts Sufficient to State a Claim for Breach of Contract with Regard to Sammons and Other Contracts Sammons Financial Corporation (“Sammons”) also licenses CSC software, including LIFE-COMM, CyberLife, Life70, csA, and PreformancePlus. (Id. at ¶ 14.) In 2011, Sammons requested that CSC provide consent for Cognizant to act as a third-party consultant. On January 16, 2012, CSC, Sammons, and Cognizant executed an NDA (“Sammons NDA I”). The Sammons NDA specifically provided that Cognizant was only authorized access to CSC software for the purposes of providing modifications to and interfaces from the software products. The Sammons NDA expired on January 13, 2013, and once again Cognizant continued to access and use CSC’s software without authorization from CSC. (SAC ¶ 18.) When Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 19 of 24 PageID 564 20 confronted by CSC about its unlicensed use of CSC’s software, Cognizant attempted to characterize it as a simple oversight and requested a renewal. Id. CSC ultimately agreed to extend the NDA for a three (3) year term, provided that Cognizant (i) fully disclose the scope of its prior use of the software; and (ii) agree that at the end of the term, Cognizant would cease providing and services for Sammons with CSC software. A new NDA was executed on February 10, 2016 (“Sammons NDA II”). (Id. at ¶ 19.) However, CSC soon learned that Cognizant’s use of the software far exceeded the limited scope of preparing modifications and interfaces. Instead, Cognizant had engaged in unlicensed use of CSC’s software to provide a far greater scope of services to Sammons, including Business Process Outsourcing (“BPO”) services for which it had never been authorized. (Id. at ¶ 20.) Sammons and Mass Mutual are two concrete examples of situations in which Cognizant is accessing CSC source code, software, and data without proper authorization. CSC has many other licenses in place similar to those of Sammons and Mass Mutual. Upon information and belief, Cognizant is providing services to other CSC licensees using CSC’s software without a valid license or an NDA in place. Such conduct constitutes an infringement of CSC’s copyrights and other intellectual property rights in the software. Specifically, CSC executed an NDA with Cognizant with regard to and including the following licensees, as identified in the Second Amended Complaint: • HBOS Financial Services; • CNO Services; • ACE International Management Company; • AXA Equitable; • ING; • UNUM; • Kaiser; • PEMCO Mutual Insurance Company; • Barclays Bank; • Swiss Re America Holding Corp; Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 20 of 24 PageID 565 21 • Lincoln National Corporation; • Thrivent Financial for Lutherans; • Guardian Life Insurance Company of America; • CNO Services; • Comerica Bank; • Sammons Financial; • PMIC; • PCCS; • MetLife; • Alfa Mutual Insurance; • Conseco Services; • PIMCO; • St. Paul Travelers; • Geico; Despite Cognizant’s statements in its Motion to Dismiss, CSC’s allegations are concrete and far exceed the pleading requirements. Additionally, upon information and belief, Cognizant has breached some, if not all, of the above-mentioned NDAs in some capacity. Cognizant has now been caught twice using CSC’s software without the proper authorizations. CSC has no reason to believe that Cognizant is not doing the same thing with other licensees. Cognizant continues to rely upon the argument that CSC has failed to supply sufficient detail, specifically arguing that “CSC does not specify what software and related documentation Cognizant supposedly copied and removed from Sammons’ premise, what ‘information’ was supposedly used to provide unlicensed services, which CSC employees were supposedly solicited, or when any of this purportedly occurred.” In its Second Amended Complaint, CSC specifically names the software licensed by Sammons which Cognizant was allowed access to under the Sammons NDAs and the actions that Cognizant took that were in breach of those agreements. (SAC ¶¶ 14-21.) These pleadings are clearly sufficient to satisfy the notice pleading requirement of Rule 8. Cognizant also argues that CSC’s pleadings fail to allege sufficient facts regarding the contracts CSC has with other licensees to whom Cognizant is also providing services. CSC has Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 21 of 24 PageID 566 22 specifically identified in its Second Amended Petition the licensees for whom CSC has executed an NDA with Cognizant. (Id. at ¶23.) CSC has further alleged that Cognizant is providing services to these licensees using CSC’s software without a valid license or NDA. These pleadings are clearly sufficient to state a claim and put Cognizant on notice. Any further requirements or burdens that Cognizant attempts to place on CSC to gather information is clearly against the liberal pleading standard of Rule 8. CSC has far exceeded its requirements under the pleading standards, and the discovery process will allow CSC the ability to further develop the facts and uncover Cognizant’s continued wrongdoing. Notably, “discovery serves important purposes, such as avoiding surprise, fully disclosing the nature and scope of the controversy, narrowing, simplifying, and framing the issues involved, and enabling parties to obtain the factual information needed to prepare for trial. 8 C. Wright & A. Miller, Federal Practice and Procedure § 2001 (1970). Rules governing discovery should be interpreted broadly to achieve those purposes.” Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 756 F.2d 230, 236 (2d Cir. 1985). The discovery process will expose the full extent of Cognizant’s breaches, and CSC will amend its pleadings as necessary to reflect the outcome of further inquiry into Cognizant’s pattern of nefarious behavior. D. CSC’s Tortious Interference with Prospective Contract Relations Properly States a Claim for Which Relief Should Be Granted CSC has learned from several sources that Cognizant is actively soliciting CSC’s software licensees for services related to CSC’s software products, and is misrepresenting to those licensees that Cognizant has a “partnership” with CSC that enables it to offer services using CSC’s software without any authorization to do so. There is no such “partnership” in place, and any representations as such as patently false. Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 22 of 24 PageID 567 23 Upon information and belief, Cognizant made such representations to Mass Mutual, Sammons, and other CSC licensees to induce those licensees to permit Cognizant to perform services using CSC software. However, Cognizant did not have any authorization to make such representations. By allowing Cognizant to have unlicensed access to CSC’s software, Mass Mutual, Sammons, and other CSC licensees have breached their respective agreements with CSC. Cognizant has repeatedly used CSC’s software without the proper consent and without a valid NDA in place. Over the course of this litigation and prior to filing, Cognizant has refused to provide assurances that it is no longer improperly accessing CSC’s software. As a result, CSC has every reason to believe Cognizant will continue to do so until it is forced to stop. For these reasons, and those stated herein, Cognizant’s Motion to Dismiss should be denied in its entirety. VI. PRAYER FOR RELIEF WHEREFORE, CSC respectfully requests that the Court deny Defendant’s Motion to Dismiss in its entirety, or in the alternative, prior to dismissal of any cause(s) of action, CSC respectfully asks that it be provided the opportunity to re-plead as may be directed by this Court. CSC also requests that it be granted all further relief to which it is entitled. Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 23 of 24 PageID 568 24 Respectfully submitted, _/s/ Steve Sumner__________________ Steve Sumner State Bar No. 19508500 E-Mail: ssumner@sumnerschick.com David Schick State Bar No. 17745700 E-Mail: dschick@sumnerschick.com Gayle A. Boone State Bar No. 02628500 E-mail: gboone@sumnerschick.com Justin V. Sumner State Bar No. 19508500 E-Mail: jsumner@sumnerschick.com Sumner, Schick & Pace, LLP. 3811 Turtle Creek Boulevard, Suite 600 Dallas, Texas 75219 (214) 965-9229 Telephone (214) 965-9215 Facsimile ATTORNEYS FOR PLAINTIFF CERTIFICATE OF SERVICE I hereby certify that this Opposition to Cognizant’s Motion to Dismiss has been served upon all counsel of record in this cause by e-mail in accordance with the Federal Rules of Civil Procedure and the agreement of the parties, on this the 28th day of November, 2016. _/s/ Steve Sumner__________________ Case 3:16-cv-01447-D Document 50 Filed 11/28/16 Page 24 of 24 PageID 569 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 1 of 9 PageID 570 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 2 of 9 PageID 571 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 3 of 9 PageID 572 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 4 of 9 PageID 573 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 5 of 9 PageID 574 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 6 of 9 PageID 575 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 7 of 9 PageID 576 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 8 of 9 PageID 577 Case 3:16-cv-01447-D Document 50-1 Filed 11/28/16 Page 9 of 9 PageID 578