Oracle Am., Inc. v. Hewlett Packard Enter. Co.

971 F.3d 1042

ORACLE AMERICA, INC., a Delaware Corporation; Oracle International Corporation, a California Corporation, Plaintiffs-Appellants,

v.HEWLETT PACKARD ENTERPRISE COMPANY, a Delaware Corporation, Defendant-Appellee.

No. 19-15506

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 8, 2020 San Francisco, California

Filed August 20, 2020

Gregory G. Garre (argued), Elana Nightingale Dawson, and Charles S. Dameron, Latham & Watkins LLP, Washington, D.C.; Christopher S. Yates, Christopher B. Campbell, and Brittany N. Lovejoy, Latham & Watkins LLP, San Francisco, California; Dorian Estelle Daley and Deborah Kay Miller, Oracle America Inc., Redwood City, California; Jeffrey S. Ross, Oracle America Inc., Burlington, California; Dale M. Cendali and Joshua L. Simmons, Kirkland & Ellis LLP, New York, New York; for Plaintiffs-Appellants.

Mark A. Perry (argued), Gibson Dunn & Crutcher LLP, Washington, D.C.; Samuel G. Liverside, Joseph A. Gorman, and Ilissa S. Samplin, Gibson Dunn & Crutcher LLP, Los Angeles, California; Jeffrey T. Thomas and Blaine H. Evanson, Gibson Dunn & Crutcher LLP, Irvine, California; Vaishali Udupa, Hewlett Packard Enterprise Company, Reston, Virginia; Deanna L. Kwong, Hewlett Packard Enterprise Company, San Jose, California; for Defendant-Appellee.

William A. Isaacson and Samuel S. Ungar, Boies Schiller Flexner LLP, Washington, D.C.; Keith Kupferschmid and Terry Hart, Copyright Alliance, Washington, D.C.; for Amicus Curiae Copyright Alliance.

Mark E. Ferguson, Bartlit Beck LLP, Chicago, Illinois; Abigail M. Hinchcliff, Bartlit Beck LLP, Denver, Colorado; for Amici Curiae Repair Association and Electronic Frontier Foundation.

Before: MILAN D. SMITH, JR. and ANDREW D. HURWITZ, Circuit Judges, and C. ASHLEY ROYAL,^* District Judge.

M. SMITH, Circuit Judge:

Oracle America, Inc. and Oracle International Corporation (together, Oracle) own the proprietary Solaris software operating system. Oracle periodically releases patches for this software to address functionality, improve performance, and resolve security issues. As is relevant here, Oracle restricts use of the Solaris software, including software patches. It grants a customer a limited use license, and it requires a customer to have a prepaid annual support contract to access patches for a server.

Oracle brought copyright infringement claims, California state law intentional interference claims, and a California Unfair Competition Law (UCL) claim against Hewlett Packard Enterprise Company (HPE), alleging that HPE and nonparty Terix Computer Company, Inc. (Terix) improperly accessed, downloaded, copied, and installed Solaris patches on servers not under an Oracle support contract. On cross motions, the district court granted summary judgment for HPE. We affirm the district court's partial summary judgment for HPE on the infringement and intentional interference claims based upon the statute of limitations. We affirm in part and reverse in part the summary judgment on what remains of the infringement claims. We address all other issues in a concurrently filed memorandum disposition.

FACTUAL AND PROCEDURAL BACKGROUND

I. The Solaris Software

Oracle has owned federally registered copyrights for the Solaris software since it purchased Sun Microsystems (Sun) in January 2010. Various Solaris patches also have code registered with the United States Copyright Office. Oracle licenses use of the Solaris software to a customer when the customer purchases a server with preinstalled software. The Solaris versions at issue here are Solaris 8, 9, 10 and 11. The Binary Code License Agreement applies to Solaris 8 and 9. The Software License Agreement (SLA) applies to Solaris 10.¹

Customers with a prepaid annual Oracle support contract can access Solaris patches through the password protected My Oracle Support (MOS) website.² A customer must place every server for which it desires support on an active support contract. A support contract is subject to policies that also define a customer's right to access patches. With an active support contract, a customer can create an MOS username and password. Upon accessing the MOS, the customer must agree to additional terms of use concerning the software on the site.

II. Third-Party Support of Solaris Software by HPE and Terix

As is relevant here, HPE has a multi-vendor support business that serves as a "one-stop-shop" to support all servers an HPE customer has, including servers running Solaris software. HPE provides such support directly and indirectly. HPE subcontracted indirect support to Terix, a company which specialized in supporting Oracle software. For joint HPE-Terix customers, Terix arranged for a server to have Oracle support in the customer's name with a prepaid Terix-supplied credit card and created an MOS credential for the single-server Oracle support contract. Terix also provided customers with a form email to send to Oracle. Terix downloaded patches using the credentials to make copies for use on off-contract servers as part of the so-called "one-to-many" scheme. When a customer was not yet supported, Terix created credentials by using fictitious names, emails addresses, and credit cards.

Oracle sued Terix in July 2013, alleging copyright infringement concerning the Solaris patches, among other claims. Oracle Am., Inc. v. Terix Comp. Co., Inc. , No. 5:13-cv-03385-PSG, Dkt No. 1, 2013 WL 3976353 (N.D. Cal. July 19, 2013). Following summary judgment for Oracle on Terix's license affirmative defense there, Oracle Am., Inc. v. Terix Comp. Co. , 2015 WL 2090191 (N.D. Cal. May 5, 2015), Terix stipulated to a judgment for Oracle on the infringement and fraud claims without admitting liability. Thereafter, Oracle and HPE entered into an agreement, effective May 6, 2015, to toll the statute of limitations for any claims that Oracle might assert against HPE.

III. This Litigation

Oracle brought this suit against HPE in March 2016 for copyright infringement pursuant to 17 U.S.C. §§ 101, et seq. , intentional interference with contractual relations (IICR), intentional interference with prospective economic advantage (IIPEA), and violations of the UCL, Cal. Bus. & Prof. Code § 17200. Among other affirmative defenses, HPE asserted express and implied license. Following discovery, Oracle moved for partial summary judgment on the infringement claims and some affirmative defenses, including the license defense. HPE cross moved on all claims. The district court granted summary judgment for HPE. Oracle timely appealed.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review a grant of summary judgment de novo. Shelley v. Geren , 666 F.3d 599, 604 (9th Cir. 2012). "We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the substantive law." Zabriskie v. Fed. Nat'l Mortg. Ass'n , 940 F.3d 1022, 1026 (9th Cir. 2019) (citation and quotations omitted).

ANALYSIS

I. The Statute of Limitations

It is undisputed that the May 6, 2015 effective date of the parties’ tolling agreement applies in this case. Thus, we consider whether the copyright infringement claims are barred for conduct before May 6, 2012 and the IIPEA claim is barred for conduct before May 6, 2013.³

A. The Copyright Infringement Claims

A copyright infringement claim is subject to a three-year statute of limitations, which runs separately for each violation. 17 U.S.C. § 507(b) ; Petrella v. Metro-Goldwyn-Mayer, Inc. , 572 U.S. 663, 671, 134 S.Ct. 1962, 188 L.Ed.2d 979 (2014). "[A] copyright infringement claim accrues—and the statute of limitations begins to run—when a party discovers, or reasonably should have discovered, the alleged infringement." Media Rights Techs., Inc. v. Microsoft Corp. , 922 F.3d 1014, 1022 (9th Cir. 2019).⁴

Although Oracle repeatedly argues that it lacked actual knowledge of all the wrongdoing by HPE and Terix, constructive knowledge triggers the statute of limitations. "The plaintiff is deemed to have had constructive knowledge if it had enough information to warrant an investigation which, if reasonably diligent, would have led to discovery of the [claim]." Pincay v. Andrews , 238 F.3d 1106, 1110 (9th Cir. 2001) (citation omitted). We have previously explained that "suspicion" of copyright infringement "place[s] upon [the plaintiff] a duty to investigate further into possible infringements of [its] copyrights." Wood v. Santa Barbara Chamber of Commerce, Inc. , 705 F.2d 1515, 1521 (9th Cir. 1983).⁵ Even if the plaintiff "may not actually have conducted this further investigation, equity will impute to [the plaintiff] knowledge of facts that would have been revealed by reasonably required further investigation." Id . ; see also Bibeau v. Pac. Nw. Res. Found. Inc. , 188 F.3d 1105, 1108 (9th Cir. 1999) (citation omitted), as amended , 208 F.3d 831 (9th Cir. 2000) (explaining that the "twist" of the discovery rule is that it requires "[t]he plaintiff [to] be diligent in discovering the critical facts," i.e. , "that he has been hurt and who has inflicted the injury" (citation omitted)).

Oracle concedes that it "had concerns" in November 2010 that Terix might purchase support for one system and reuse the patches for all other systems. Oracle also had suspicions about HPE as early as 2010 and certainly by October 2011. Critically, Oracle concedes that "it made inquiries of Terix and HPE after receiving reports of potential infringement." In relevant part, Oracle relies on inquiries that occurred in 2008 and September 2011. Oracle, thus, had a duty to conduct a reasonable investigation. Bibeau , 188 F.3d at 1108 ; Wood , 705 F.2d at 1521.

The doctrine of fraudulent concealment does not help Oracle in this case. A plaintiff relying on this doctrine to toll the limitations period must show "both that the defendant used fraudulent means to keep the plaintiff unaware of...