Timmins Software Corp. v. EMC Corp.

502 F.Supp.3d 595

TIMMINS SOFTWARE CORPORATION d/b/a Mitrend, Plaintiff,

v.EMC CORPORATION, Dell Technologies Inc., and Dell Inc., Defendants.

Civil Action No. 19-cv-12053-IT

United States District Court, D. Massachusetts.

Signed November 24, 2020

Benjamin M. Stern, Robert L. Hover, Sara E. Hirshon, Verrill Dana, LLP, Boston, MA, for Plaintiff.

Christopher G. Clark, Kurt Wm. Hemr, Skadden, Arps, Slate, Meagher & Flom LLP, Boston, MA, Douglas R. Nemec, Pro Hac Vice, P. Anthony Sammi, Pro Hac Vice, Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, Thomas A. Brown, Dell Inc., Hopkinton, MA, for Defendants.

MEMORANDUM & ORDER

TALWANI, D.J.

Plaintiff Timmins Software Corporation's Amended Complaint [#5] brings seven counts against Defendants EMC Corporation, Dell Technologies Inc., and Dell Inc. based on allegations that Defendants infringed on Plaintiff's copyrighted software and engaged in other unscrupulous business practices. Plaintiff's claims include: alteration or removal of copyright management information (Count III); unjust enrichment (Count IV); unfair competition under the Lanham Act, 15 U.S.C. § 1125(a) (Count VI); and unfair trade practices under Mass. Gen. Laws ch. 93A ("93A") (Count VII). Defendants have moved to dismiss these four counts for failure to state a claim pursuant to Fed. R. Civ. P. 8(a)(2) and 9(b).¹ For the reasons explained below, Defendants’ Motion to Dismiss Counts III, IV, VI, and VII of the Amended Complaint [#22] is DENIED.

I. Facts Alleged in the Amended Complaint

Timmins Software Corporation ("TSC" or Plaintiff), also known as Mitrend, is a small Massachusetts-based company that develops software. Am. Compl. ¶¶ 1, 9, 10 [#5]. TSC's products and services were developed over more than ten years and have two parts: TSC provides its Mitrend Collection Tools ("the Mitrend Tools") to IT departments so those departments can acquire information about their IT systems, and TSC's cloud-based SaaS platform was developed to receive and analyze the output of the Mitrend Tools and generate reports about the target IT infrastructure. Id. ¶¶ 11–12; 19–20. To protect these products and services, TSC has, "among other things, obtained copyright and trademark protection." Id. ¶ 12.

Defendants are EMC Corporation ("EMC"), Dell Technologies Inc., and Dell Inc. (collectively "Dell" or "Defendants"). Id. ¶¶ 2–4. EMC began using TSC's analysis services in 2006 and entered into a Master Services Partner Agreement on or about March 2, 2006 (the "Agreement"), as well as various subsequent amendments and statements of work relating to the TSC products provided to EMC. Id. ¶ 13. Despite this long history, TSC alleges that its "vision and approach" was conceived independently from EMC, id. ¶ 17, and the Mitrend Tools were developed and marketed independently from EMC, id. ¶ 22. Moreover, Plaintiff claims that "[a]ll of the [Mitrend Tools], and written procedures, rules, and instructions that were provided to EMC contained or pointed to a copyright protection notice, identifying TSC as the owner of such material." Id. ¶ 36; see also id. ¶ 98.²

Initially EMC declined to use the Mitrend Tools, opting to use EMC's own software instead. Id. ¶ 22. However, Plaintiff alleges that once EMC did begin to use them, the Mitrend Tools became the "best, and primary, data collection and analysis solution that EMC's ... [employees] used as a sales aid to sell (or upsell) products and services to customer IT departments." Id. ¶ 24. Plaintiff further alleges that the Mitrend Tools "became an integral part of EMC's sales strategy," id. ¶ 25, and within three years of EMC using the Mitrend Tools, its business units abandoned EMC's old collection software in favor of the Mitrend Tools to support their sales efforts. Id. ¶ 26.

As relevant here, Plaintiff alleges that its relationship with EMC was strong until 2016, but that shortly after Dell acquired EMC, things began to change. Id. ¶¶ 37–38. In early 2017, EMC "unexpectedly" informed TSC it would require new—and disfavorable to TSC—contract terms. Id. ¶ 40. Plaintiff alleges the timing of these demands was a tactic to pressure TSC to acquiesce, id. ¶ 41, but TSC did not capitulate, and instead terminated the parties’ agreements, id. ¶ 42. EMC responded by "demand[ing] TSC agree to an extension of the parties’ agreements ... us[ing] the unequal bargaining power of the parties, and aggressively—and falsely—stat[ing] that TSC was in breach of its legal obligations." Id. ¶ 44. Indeed, Plaintiff alleges "Defendants improperly pressured TSC to agree to unreasonable contract terms, used knowingly false accusations and leveraged the parties’ unequal bargaining power to force TSC to agree to an extension of the parties’ agreement and then used that extension to buy time and retain access to the [Mitrend] platform ..." Id. ¶ 131.

Plaintiff alleges that with the access and time provided by the extension, Defendants built their own product—Live Optics—to compete with TSC's Mitrend Tools. Id. ¶ 51. Plaintiff alleges that Live Optics was built by EMC unlawfully. Namely, Plaintiff alleges that Defendants copied large portions of the copyrighted Mitrend Tools, id. ¶ 64, that earlier versions of Live Optics products contained the copyrighted Mitrend Tools, id. ¶ 65, and that EMC removed TSC's copyright notices and replaced them with their own, id. ¶¶ 65–66. Plaintiff further alleges that Defendants unlawfully received benefits from their infringement of not only the copyrighted Mitrend Tools, but also from other software, scripts, written instructions and procedures, and other material that Plaintiff provided to Defendants. Id. ¶ 106. Moreover, Plaintiffs allege that Defendants made to their customers "false statements about Live Optics (e.g. , that it is ‘100% Dell IP’ and ‘[n]othing is going away. It's actually just a rebranded experience’)." Id. ¶¶ 122–24.

II. Legal Standard

To survive a motion to dismiss, the well-pleaded facts in Plaintiff's complaint must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In reviewing a complaint under a Fed. R. Civ. P. 12 motion to dismiss, the court "must distinguish ‘the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited).’ " Garcia-Catalan v. United States, 734 F.3d 100, 103 (1st Cir. 2013) (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012) ). The plausible factual allegations, taken as true, must ultimately be able to support the legal conclusion that underlies each claim for relief. See Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011).

III. Discussion

Defendants’ motion to dismiss is based on three grounds. First, Defendants allege Counts IV, VI, and VII are duplicative of and / or preempted by remedies provided in the federal Copyright Act; second, they allege Counts III and VII sound in fraud and thus should be dismissed for failing to meet the heightened pleading requirements of Fed. R. Civ. P. 9(b) ; and third, they make an oblique reference to Count III potentially failing to meet the pleading standards of Rule 8(a). The three arguments are discussed in turn.

A. Duplicative / Preemption Challenges (Counts IV, VI, and VII)

Defendants assert that Counts IV, VI, and VII are subject to dismissal as a matter of law because the Copyright Act establishes itself as the sole basis for copyright protection. Mem. Supp. Mot. Dismiss 1 [#23] (citing 17 U.S.C. § 301(a) (setting forth that all legal or equitable rights within the general scope of copyright "are governed exclusively by this title" and that "no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State")). Specifically, Defendants assert Plaintiff's unjust enrichment claim (Count IV), its Lanham Act claim (Count VI), and its 93A claim (Count VII) are all repackaged copyright claims insofar as they—as required to avoid being duplicative of, or preempted by, the federal Copyright Act—do not contain an extra element beyond the copyright claim. Id. at 4; see also id. at 5–6. Plaintiff counters that Defendants’ argument mischaracterizes the factual bases for these claims and that Plaintiff is alleging causes of action that stand independent of the alleged underlying copyright violation. Opp'n Mot. Dismiss 9 [#30]. Because the relevant inquiry is fact-specific for each claim, the court addresses Defendants’ challenges as they relate to the three claims in turn.

i. Unfair Competition Under 15 U.S.C. § 1125(a) (Lanham Act Claim) (Count VI)

Defendants argue that Plaintiff's Lanham Act claim relies upon "merely recycled and repackaged copyright allegations" and thus it is duplicative of the copyright claim. Mem. Supp. Mot. Dismiss 5 [#23]. Plaintiff counters that its Lanham Act claim is not duplicative because it is "also premised on Defendants’ false statements ... its ongoing references to Mitrend in its public-facing documentation, and its copying of basic (and non-federally-registered copyright) elements of Mitrend." Opp'n Mot. Dismiss 9 [#30] (emphasis in original). As discussed further below, because Plaintiff's Lanham Act claim relies on allegations independent of the issue of infringement, the court concludes that the claim is not duplicative as a matter of law.

"The test to determine whether a cause of action includes an extra element that changes the nature of the action to make it qualitatively different from a copyright infringement claim is functional and fact-specific." Real View, LLC v. 20-20 Techs., Inc., 789 F. Supp. 2d 268, 273 (D. Mass. 2011). "Where a plaintiff's Lanham Act claim merely alleges that the defendant made unauthorized use of a copyrighted work, the Lanham Act claim will be dismissed as duplicative of the copyright claim." Mitchell Int'l, Inc. v. Fraticelli, No. CIV. 03-1031 GAG/BJM, 2007 WL 4197583, at *12 (D.P...