Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 1 of 8
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`GLASS EGG DIGITAL MEDIA,
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`Plaintiff,
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`v.
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`GAMELOFT, INC., et al.,
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`Case No. 17-cv-04165-MMC
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`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANT
`GAMELOFT, INC.'S MOTION TO
`DISMISS
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`Defendants.
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`Re: Dkt. No. 40
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`Before the Court is defendant Gameloft, Inc.’s (“Gameloft USA”) motion, filed
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`November 8, 2017, to dismiss plaintiff Glass Egg Digital Media’s (“Glass Egg”) amended
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`Complaint (“FAC”), filed October 2, 2017. Glass Egg has filed opposition, to which
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`Gameloft USA has replied. Having read and considered the papers filed in support of
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`and in opposition to the motion, the Court deems the matter appropriate for determination
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`on the parties’ respective written submissions, hereby VACATES the hearing scheduled
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`for February 9, 2018, and rules as follows.
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`FACTUAL AND PROCEDURAL BACKGROUND
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`The following factual allegations are taken from the FAC.
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`Glass Egg, a British Virgin Island corporation with its principal place of business in
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`Ho Chi Minh, Vietnam, is a “3D art production studio servicing the electronic game
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`industry.” (See FAC ¶¶ 6, 16.) Gameloft USA, a Delaware corporation with its “principal
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`business office” located in San Francisco, California, is a wholly owned subsidiary of
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`Gameloft SE (“Gameloft France”), a French corporation with its “principal business office”
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`in Paris, France. (See id. ¶¶ 7-8, 11.) Defendants Gameloft France and its subsidiaries,
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`Gameloft USA and Gameloft Iberica S.A.U. (“Gameloft Spain”), a Spanish corporation
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`Northern District of California
`United States District Court
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`Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 2 of 8
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`with its “principal business office” in Barcelona, Spain, are in the business of
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`“develop[ing]” and “publish[ing]” mobile games.1 (See id. ¶ 27, 28, 31.)
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`Gameloft2 “outsourced” to two companies, Alive Interactive Limited (“AIL”) and
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`Hung Thinh 3D (“HT3D”), the production of 3D digital car models for Gameloft’s “Asphalt”
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`game series. (See id. ¶¶ 76, 93.) AIL and HT3D, through a Glass Egg employee,
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`“recruit[ed] Glass Egg personnel to work on [3D] digital car models for the Asphalt” game
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`series (see id. ¶ 99), after which, those Glass Egg personnel, without Glass Egg’s
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`knowledge or approval, “creat[ed] and produc[ed]” the 3D digital car models using Glass
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`Egg’s “equipment,” including computers, server network, licensed software, “know-how[,]
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`and trade secrets.” (See id. ¶¶ 101, 105.) “AIL and/or HT3D delivered” the 3D digital car
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`models to Gameloft, which “published, reproduced and distributed” the 3D digital car
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`models in its Asphalt game series. (See id. ¶¶ 128-29.)
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`Based on the above allegations, Glass Egg asserts the following seven Claims for
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`Relief: (1) “Copyright Infringement”; (2) “Conversion”; (3) “Unfair Competition,” pursuant
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`to Cal. Bus. & Prof. Code § 17200 et seq.; (4) “Misappropriation of Trade Secrets,”
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`pursuant to 18 U.S.C. § 1836 et seq.; (5) “Misappropriation of Trade Secrets,” pursuant to
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`Cal. Civ. Code § 3426 et seq.; (6) “Intentional Interference with Contractual Relations”;
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`and (7) “Negligence.”
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`By the instant motion, Gameloft USA moves to dismiss the FAC, as alleged
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`against Gameloft USA, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
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`LEGAL STANDARD
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`Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure “can be
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`based on the lack of a cognizable legal theory or the absence of sufficient facts alleged
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`1 Gameloft France is a “wholly owned subsidiary” of a fourth defendant, Vivendi SA
`(“Vivendi”), a French corporation with its “principal business office” in Paris, France. (See
`¶¶ 14-15, 43.)
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`2 In the FAC, “Gameloft” is used to collectively refer to Gameloft France and its
`subsidiaries.
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`Northern District of California
`United States District Court
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`Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 3 of 8
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`under a cognizable legal theory.” See Balistreri v. Pacifica Police Dep’t, 901 F.2d 696,
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`699 (9th Cir. 1990). Rule 8(a)(2), however, “requires only ‘a short and plain statement of
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`the claim showing that the pleader is entitled to relief.’” See Bell Atlantic Corp. v.
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`Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2)). Consequently, “a
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`complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual
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`allegations.” See id. Nonetheless, “a plaintiff’s obligation to provide the grounds of his
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`entitlement to relief requires more than labels and conclusions, and a formulaic recitation
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`of the elements of a cause of action will not do.” See id. (internal quotation, citation, and
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`alteration omitted).
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`In analyzing a motion to dismiss, a district court must accept as true all material
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`allegations in the complaint, and construe them in the light most favorable to the
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`nonmoving party. See NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). “To
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`survive a motion to dismiss, a complaint must contain sufficient factual material, accepted
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`as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
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`662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “Factual allegations must be
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`enough to raise a right to relief above the speculative level[.]” Twombly, 550 U.S. at 555.
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`Courts “are not bound to accept as true a legal conclusion couched as a factual
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`allegation.” See Iqbal, 556 U.S. at 678 (internal quotation and citation omitted).
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`DISCUSSION
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`Gameloft USA’s sole argument in support of dismissal is that the FAC improperly
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`“lumps” the four defendants together, without establishing a theory of joint liability, and
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`fails to “allege any conduct, let alone wrongful or unlawful conduct, by” Gameloft USA.
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`(See Mot. at 5:8-10 (emphasis omitted).) In response, Glass Egg argues that the FAC
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`sufficiently alleges (1) Gameloft USA’s direct liability for copyright infringement and
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`conversion, and, (2) for the remaining claims, Gameloft USA’s joint liability with Gameloft
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`France and Gameloft Spain, under theories of civil conspiracy, alter ego, and agency. 3
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`3 Additionally, to the extent Gameloft USA seeks dismissal of the copyright
`infringement claim, Glass Egg contends the instant motion is “untimely” because its claim
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`Northern District of California
`United States District Court
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`Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 4 of 8
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`A. Direct Liability for Copyright Infringement and Conversion
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` “Copyright owners have the exclusive right ‘to reproduce the copyrighted work in
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`copies,’ or to authorize another to do so.” See Disney Enterprises, Inc. v. VidAngel, Inc.,
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`869 F.3d 848, 856 (9th Cir. 2017) (quoting 17 U.S.C. § 106(1)). To plead a claim for
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`copyright infringement, a plaintiff must allege (1) its “ownership of the allegedly infringed
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`material,” and (2) the alleged infringer’s “violat[ion] [of] at least one exclusive right
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`granted to copyright holders.” See id.
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`“Conversion is the wrongful exercise of dominion over the property of another.”
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`See Lee v. Hanley, 61 Cal. 4th 1225, 1240 (Cal. 2015) (internal quotation and citation
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`omitted). Under California law, to plead a claim for conversion, a plaintiff must allege “(1)
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`the plaintiff’s ownership or right to possession of the property; (2) the defendant’s
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`conversion by a wrongful act or disposition of property rights; and (3) damages.” See id.
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`(internal quotation and citation omitted).
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`Here, Gameloft USA contends the FAC, by failing to “specify which defendant was
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`responsible for which alleged wrongful act” (see Reply at 4:10-11), “does not allege that
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`Gameloft USA actually engaged in any conduct whatsoever, including any acts that might
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`plausibly establish copyright infringement or conversion” (see id. at 4:16-17). The FAC
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`alleges, for example, that “[d]efendants . . . have reproduced, without permission, the [3D
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`digital car models at issue] in several car racing mobile games successfully published,
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`marketed and distributed globally under the names Asphalt 8: Airborne (“A8”), Asphalt
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`Xtreme (“AX”), and Asphalt Streetstorm.” (See FAC ¶ 3.) Although not a model
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`pleading, the FAC does, however, go on to allege facts sufficient to give Gameloft USA
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`notice of the wrongful acts Gameloft USA allegedly comitted. In particular, Glass Egg
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`for copyright infringement was alleged in Glass Egg’s original complaint, to which
`Gameloft USA filed an answer. (See Opp. at 5:10-20.) An amended complaint,
`however, “supersedes the original, the latter being treated thereafter as non-existent,”
`see Valadez-Lopez v. Chertoff, 656 F.3d 851, 857 (9th Cir. 2011) (internal quotation and
`citation omitted), and, consequently, Gameloft USA’s motion to dismiss the copyright
`infringement claim is timely.
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`Northern District of California
`United States District Court
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`alleges that “[m]uch of Gameloft’s global revenue generating activities such as marketing,
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`sales and public relations . . . are performed from its US offices” (see id. ¶ 34), that those
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`activities encompass the “marketing and sales . . . of games for the US, including A8 and
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`AX[,]” and that Gameloft France “directly controls the marketing and sales [of said
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`games] through its San Francisco office" (see id. ¶ 38), which, as alleged earlier in the
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`FAC, is Gameloft USA’s “principal business office” (see id. ¶ 7). Taken together, and
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`read in the light most favorable to the nonmoving party,” see NL Indus., Inc., 792 F.2d at
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`898, these additional allegations are sufficient to allege, as to copyright infringement and
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`conversion, Gameloft USA’s direct liability for its role in marketing and selling the
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`infringing games in the United States.4
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`The Court next turns to the remaining claims.
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`B.
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`Joint Liability for Remaining Claims
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`As noted, for the remaining claims, Glass Egg bases Gameloft USA’s liability on
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`theories of civil conspiracy, alter ego, and agency.
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`1.
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`Civil Conspiracy
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`Under California law, to plead a civil conspiracy, a plaintiff must allege: “‘(1) the
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`formation and operation of the conspiracy, (2) the wrongful act or acts done pursuant
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`thereto, and (3) the damage resulting from such act or acts.’” See Wasco Prod., Inc. v.
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`Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir. 2006) (quoting Cellular Plus, Inc. v.
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`Superior Court, 14 Cal. App. 4th 1224, 1236 (Cal. Ct. App. 1993)). To plead the
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`“formation and operation” of a conspiracy, a plaintiff must allege an “agree[ment] to
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`commit wrongful acts.” See id.
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`Here, Glass Egg alleges, “Gameloft and/or its senior management acting on behalf
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`of [d]efendants concocted a scheme in agreement with [ALI and HT3D] . . . , resulting in
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`harm to Glass Egg,” and that, in “mid-2014, Gameloft signed a tripartite agreement to
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`4 Given such finding, the Court does not address herein Glass Egg’s alternative
`theory of liability based on contributory infringement.
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`Northern District of California
`United States District Court
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`Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 6 of 8
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`purportedly outsource production work to [ALI and HT3D] to carry out the [s]cheme.”
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`(See FAC ¶ 69, 76.) Such conclusory and collectively pleaded allegations are insufficient
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`to show Gameloft USA’s involvement in a conspiracy. See Twombly, 550 U.S. at 556–57
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`(2007) (holding “a conclusory allegation of agreement at some unidentified point does not
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`supply facts adequate to show” conspiracy); Horton v. NeoStrata Company Inc., No. 16-
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`CV-02189-AJB (JLB), 2017 WL 932178, at *6 (S.D. Cal. Mar. 8, 2017) (holding plaintiff
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`“may not group” defendants together “without distinguishing between the allegedly
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`unlawful conduct of each”).
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`2.
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`Alter Ego
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`“To satisfy the alter ego exception to the general rule that a subsidiary and the
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`parent are separate entities,” a plaintiff must allege facts showing both: (1) “there is such
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`unity of interest and ownership that the separate personalities [of the two entities] no
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`longer exist,” and (2) a “failure to disregard [their separate identities] would result in fraud
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`or injustice.” See Harris Rutsky & Co. Ins. Servs. v. Bell & Clements Ltd., 328 F.3d 1122,
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`1134 (9th Cir. 2003) (internal quotation and citation omitted) (alterations in original).
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`Under the first prong of the alter ego test, a plaintiff must allege that “the parent
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`exercised such control over the subsidiary so as to render the latter the mere
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`instrumentality of the former.” See id. at 1135 (internal quotation and citation omitted). In
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`that regard, Glass Egg alleges, Gameloft USA “is controlled by, shares consolidated
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`financial statements with, shares overlapping management and board members with, and
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`is a wholly owned subsidiary of” Gameloft France (see FAC ¶ 8), and that Gameloft USA
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`uses the same trade name, company logo, and website as Gameloft France.5 (See id.
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`¶¶ 27, 30.) As set forth below, such allegations are insufficient to show the requisite
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`unity of interest.
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`5 The Court hereby GRANTS Glass Egg’s unopposed request for judicial notice of
`the U.S. Patent and Trademark Office’s (“USPTO”) website registration record of the
`standard character mark, “Gameloft”. See SunEarth, Inc. v. Sun Earth Solar Power Co.,
`846 F. Supp. 2d 1063, 1071 n.3 (N.D. Cal. 2012) (taking judicial notice of USPTO
`trademark registration record).
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`Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 7 of 8
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`At the outset, the Court notes that “[t]otal ownership and shared management
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`personnel are,” standing alone, “insufficient to establish the requisite level of control.”
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`See Ranza v. Nike, Inc., 793 F.3d 1059, 1073 (9th Cir. 2015). Here, Glass Egg’s wholly
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`conclusory allegation that Gameloft USA is “controlled by” Gameloft France adds nothing
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`to the equation, see Iqbal, 556 U.S. at 678 (holding courts “are not bound to accept as
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`true a legal conclusion couched as a factual allegation”), and the addition of an allegation
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`of shared use of trade names, logos, and websites, all “characteristic of the typical
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`corporate structure of many companies,” see Eagle Canyon Owners’ Ass’n v. Waste
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`Mgmt., Inc., No. 16-CV-2811-LAB (WVG), 2017 WL 3017501, at *2 (S.D. Cal. July 13,
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`2017), likewise is unavailing. See id. (finding allegations insufficient where parent and
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`wholly owned subsidiary had overlapping officers and directors, and “us[ed] the same
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`website and email addresses”); see also Corcoran v. CVS Health Corp., 169 F. Supp. 3d
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`970, 984 (N.D. Cal. 2016) (finding allegations insufficient where parent and wholly owned
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`subsidiary “had overlapping officers and directors,” and were presented as “one
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`integrated company on [parent’s] website and in government filings for marketing
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`purposes”).
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`Further, even assuming, arguendo, the FAC had sufficiently alleged the requisite
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`unity of interest, Glass Egg has failed to address, let alone plead any facts to support a
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`finding as to, the second element of the alter ego test, namely, that an inequitable result
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`would follow if the entities’ separate corporate forms were recognized. See Johnson v.
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`Serenity Transportation, Inc., 141 F. Supp. 3d 974, 984 (N.D. Cal. Nov. 2, 2015) (holding
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`plaintiff “must allege specifically both of the elements of alter ego liability, as well as facts
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`supporting each”) (collecting cases) (internal quotation and citation omitted).
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`3.
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`Agency
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`Lastly, Glass Egg argues that Gameloft USA had “apparent authority to act [as the
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`agent] for” Gameloft France because Gameloft USA is permitted to “use the parent’s
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`name and logo.” (See Opp. at 10:13-21.) As Gameloft USA points out, however, agency
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`Case 3:17-cv-04165-MMC Document 81 Filed 01/22/18 Page 8 of 8
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`law imputes the acts of the agent to the principal; the acts of the principal are not imputed
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`to the agent. See Horiike v. Coldwell Banker Residential Brokerage Co., 383 P.3d 1094,
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`1101 (Cal. 2016) (recognizing “general rule that an agent cannot be vicariously liable for
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`the wrongful acts of the principal”) (internal quotation and citation omitted).
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`Consequently, as “[o]nly an agent’s own tortious conduct subjects the agent to liability,”
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`see id. (quoting Restatement (Third) of Agency § 7.01 (Am. Law Inst. 2006)), Glass Egg
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`has failed to plead Gameloft USA’s liability based on the conduct of its alleged principal,
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`Gameloft France.
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`CONCLUSION
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`For the reasons stated above:
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`1. As to Glass Egg’s First and Second Claims for Relief, as well as its Third Claim
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`for Relief, to the extent based on violations alleged in the First and Second Claims,
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`Gameloft USA’s motion to dismiss is hereby DENIED.
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`2. As to the remaining claims, Glass Egg’s motion to dismiss is hereby GRANTED
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`and said Claims are DISMISSED with leave to amend.
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`The Court will set a deadline for the filing of a Second Amended Complaint after it
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`has ruled on the other three defendants’ motions to dismiss.
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`IT IS SO ORDERED.
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`Dated: January 22, 2018
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`MAXINE M. CHESNEY
`United States District Judge
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