Ford Motor Co. v. Autel U.S. Inc.

FORD MOTOR COMPANY, and FORD GLOBAL TECHNOLOGIES, L.L.C., Plaintiffs, v. AUTEL US INC., and AUTEL INTELLIGENT TECHNOLOGY CO., LTD., Defendants.

Case No. 14-13760

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

September 30, 2015

HON. TERRENCE G. BERG

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS (DKT. 14)

Before the Court is Defendants Autel US Inc.'s ("Autel US's") and Autel Intelligent Technology's ("Autel ITC's") joint motion to dismiss (Dkt. 14) filed on January 30, 2015. The parties have fully briefed this motion and the Court took it under advisement without oral argument pursuant to E.D. Mich. L. R. 7.1(f)(2) on March 27, 2015. For the reasons that follow, Defendants' motion to dismiss IS GRANTED IN PART and DENIED IN PART.

I. FACTUAL AND PROCEDURAL HISTORY

Plaintiff Ford Motor Company ("Ford") is a leading automobile manufacturer. (Dkt. 1, p. 3). It is incorporated in Delaware and has its principal place of business in Dearborn, Michigan. (Id.) Plaintiff Ford Global Technologies is a wholly-owned subsidiary of Ford and is also a Delaware corporation. (Id.) Plaintiffs shall be referred to jointly as "Ford" or "Plaintiffs."

Apart from cars and trucks, Ford sells automotive repair products. (Id. at pp. 3-4). Among them is Ford's Integrated Diagnostic System (the "IDS System") which diagnoses potential problems with Ford vehicles and guides their service and repair. (Id. at 4). The IDS system consists of hardware and software. (Id. at 5). The hardware components (the "Diagnostic Tools") include a 16-pin diagnostic link which sends information from the vehicle to the on-board computer system. (Id.) The software component (the "IDS software") receives information from the Diagnostic Tools and produces diagnoses and recommends repairs based on the information it receives. (Id.)

The IDS software contains various data compilations. (Id.) Ford alleges that some of the compilations within the IDS software are trade secrets while others are generally available to the public. (Id.) The "FFData file" is a data compilation within the IDS software. (Id.) Ford claims that the data compilation that makes up the FFData file is a trade secret protected through encryption and obfuscation technology.¹ (Id.)

Ford alleges that Autel² created a program called PARSEALL.EXE to circumvent Ford's security measures and access the FFData file without authorization. (Dkt. 1, p. 5). After breaching Ford's security measures, Fordcontends that Autel inserted the FFData file into its Autel DS708 product, a vehicle diagnoses and repair product that competes with Ford's IDS System. (Id. at p. 6). Ford asserts that it has conclusively established that Autel copied the entire FFData file onto its DS708 product because the product contains identical test or dummy codes³ as Ford's IDS system. (Id. at pp. 6-7). Furthermore, Ford claims that it conducted a detailed technical analysis on Autel's DS708 product which revealed that Autel "duplicated" the FFData file in the DS708.

Following Autel's alleged copying of the FFData file, Ford contends that it obtained a copyright "for data from the FFData" file. (Id. at p. 7). As proof, Ford points to a Certificate of Registration from the United States Copyright Office which states that Ford Global Technologies possesses a copyright for a "compilation of data." (Dkt. 1, Ex. A). The copyright registration lists the effective date of registration as May 20, 2014. (Id.)

In addition to infringing on its copyrighted information, Ford alleges that Autel infringed upon its trademarks, including its world-famous corporate logo, the "Ford Oval." (Id. at p. 7). A screenshot of the Autel DS708's electronic menu screen shows the Ford Oval alongside the logos of Chrysler and General Motors on the "USA" menu option. (Id. at p. 8). The screenshot also includes options for European and Asian carmakers. (Id.)

On September 29, 2014, Ford and Ford Global Technologies filed this suit against Defendants. (Dkt. 1). Plaintiffs seek relief on various counts, several of which are misnumbered in the complaint. For clarity, the counts are now numbered as follows:

• Count 1: Copyright Infringement under 17 U.S.C. § 101;

• Count 2: Circumvention of Copyright Protection under 17 U.S.C. § 1201;

• Count 3: Federal Trademark Infringement under 15 U.S.C. § 1114;

• Count 4: False Designation of Origin under 15 U.S.C. § 1125(a);

• Count 5: Unfair Competition under Michigan Law;

• Count 6: Violation of Michigan Uniform Trade Practices Act, under Mich. Comp. Laws § 445.903;

• Count 7: Misappropriation of Trade Secrets under Mich. Comp. Laws § 445.1903;

• Count 8: Unjust Enrichment.

On January 30, 2015, Defendants filed a motion to dismiss pursuant for Fed. R. Civ. Proc. 12(b)(6) for failure to state a claim. (Dkt. 14). In addition, Defendant Autel ITC seeks dismissal under Fed. R. Civ. Proc. 12(b)(2) for lack of personal jurisdiction. The motion is fully briefed.⁴ On March 27, 2015, the Court took these motions under advisement without oral argument pursuant to E.D. Mich. Local Rule 7.2(f)(2). (Dkt. 22).

II. ANALYSIS

A. Standard of Review

"The purpose of Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief if all the facts and allegations in the complaint are taken as true." Rippy ex rel. Rippy v. Hattaway, 270 F.3d 416, 419 (6th Cir. 2001) (citing Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993)). Under Rule 12(b)(6), the complaint is viewed in the light most favorable to the plaintiff, the allegations in the complaint are accepted as true, and all reasonable inferences are drawn in favor of the plaintiff. See Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). "[A] judge may not grant a Rule 12(b)(6) motion based on a disbelief of a complaint's factual allegations." Saglioccolo v. Eagle Ins. Co., 112 F.3d 226, 228-29 (6th Cir. 1997) (quoting Columbia Nat'l Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir. 1995)).

"However, while liberal, this standard of review does require more than the bare assertion of legal conclusions." Tatum, 58 F.3d at 1109; Tackett v. M & G Polymers, USA, L.L.C., 561 F.3d 478, 488 (6th Cir. 2009). "To survive a motion to dismiss, [a plaintiff] must plead enough factual matter that, when taken as true, state[s] a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (internal quotations omitted). Plausibility requires showing more than the "sheer possibility of relief but less than a probab[le] entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations omitted); Fabian v. Fulmer Helmets, Inc., 628 F.3d 278, 280 (6th Cir.2010). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). Consideration of a motion to dismiss under Rule 12(b)(6) is confined to the pleadings. See Jones v. City of Cincinnati, 521 F.3d 555, 562 (6th Cir. 2008). Assessment of the facial sufficiency of the complaint ordinarily must be undertaken without resort to matters outside the pleadings. See Wysocki v. Int'l Bus. Mach. Corp., 607 F.3d 1102, 1104 (6th Cir. 2010). However, "documents attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss." Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007) (citing Fed. R. Civ.P. 10(c)); see also Koubriti v. Convertino, 593 F.3d 459, 463 n.1 (6th Cir. 2010).

In the Sixth Circuit, copyright infringement claims are subject to a higher pleading requirement. "Copyright infringement, like anti-trust actions, lends itself readily to abusive litigation, since the high cost of trying such a case can force a defendant who might otherwise be successful in trial to settle in order to avoid the time and expenditure of a resource intensive case." Nat'l Bus. Dev. Servs., Inc. v. Am. Credit Educ. & Consulting, Inc., 299 Fed. App'x 509, 512 (6th Cir. 2008) (affirming district court dismissal of copyright infringement case on 12(b)(6) grounds for failure to state a claim); Dorchen/Martin Assocs., Inc. v. Brook of Cheboygan, Inc., 838 F. Supp. 2d 607 (E.D. Mich. 2012). As such, copyrightinfringement claims require "greater particularity in pleading through showing plausible grounds" for infringement. National Business, 299 Fed. App'x at 512. Showing plausible grounds means pleading "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [copyright infringement]." Id. (internal citation omitted).

On a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff has the burden of proving the court's jurisdiction over the defendant. See Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir. 2002); see also Children's Legal Services, PLLC v. Shor Levin and Derita, PC, 850 F. Supp. 2d 673, 679 (E.D. Mich. 2012). In ruling upon a motion to dismiss for lack of personal jurisdiction, the district court has three procedural alternatives: "[it] may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion." Serras v. First Tenn. Bank Nat'l Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989).

B. Discussion

1. The Complaint Fails to Plead a Copyright Infringement Claim.

"To establish infringement, two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publ'n Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991); seealso Lexmark Int'l, Inc. v. Static Control Components, Inc., 387 F.3d 522, 534 (6th Cir. 2004).

"The first prong tests the originality and non-functionality of...