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`*E-Filed 04/19/2010*
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
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`No. C 09-05988 RS
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`ORDER GRANTING IN PART AND
`DENYING IN PART DEFENDANTS’
`MOTION TO DISMISS
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`MB TECHNOLOGIES, INC., a Georgia
`Corporation,
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`Plaintiff,
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`v.
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`ORACLE CORPORATION, a Delaware
`Corporation; and ORACLE USA, INC., a
`Colorado Corporation,
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`
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`Defendants.
`
`
`____________________________________/
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`Defendants Oracle Corporation and Oracle USA, Inc. (collectively, “Oracle) have filed a
`motion to dismiss the second, fourth, and sixth claims of the first amended complaint (“FAC”) filed
`by plaintiff MB Technologies, Inc. (“MB”). The parties presented argument on April 15, 2010, and,
`for the reasons stated below, the motion is granted in part and denied in part.
`I. BACKGROUND
`MB filed its initial complaint on December 22, 2009, and an FAC on February 19, 2010.
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`The FAC alleges claims for relief based on fraud, common law misappropriation (“CLM”),
`misappropriation of trade secrets, unjust enrichment, copyright infringement, and unfair business
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`NO. C 09-05988 RS
`ORDER
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`practices in connection with MB’s “Bindows” technology. According to the FAC, the technology is
`“a Graphical User Interface (“GUI”) software framework” which enables software developers to
`“generate the exact look and exact feel (standard shortcut keys, mnemonics, etc) of a Windows GUI
`in any web application.” FAC at 5, ¶16.
`The FAC alleges that MB licensed the Bindows technology to Hyperion Solutions
`Corporation (“Hyperion”) in July 2004, as reflected in a Marketing and Distribution Agreement (the
`“Agreement”) executed by the parties. In 2007, according to the FAC, Oracle bought Hyperion, and
`MB and Oracle negotiated an addendum to the Agreement (“Addendum Two”). In the course of the
`negotiations, MB alleges, Oracle represented to MB that it only wished to use Bindows technology
`in Hyperion products that existed at the time Oracle acquired Hyperion. Allegedly, however, Oracle
`later proposed a draft addendum that included a clause allowing Oracle to include Bindows
`technology in Oracle’s own Fusion line of products,1 which seemed to run counter to its earlier
`representations that the technology would only be used in Hyperion products. MB claims that it
`objected and offered to negotiate separately for the use of Bindows technology in Fusion products,
`and in response, Oracle removed the clause. The final version of Addendum Two, the FAC claims,
`does not mention Fusion. Nonetheless, according to MB, Oracle began using Bindows technology
`in Fusion products, as well as in other Oracle products that did not exist at the time of Oracle’s
`acquisition of Hyperion. The instant lawsuit was prompted by this allegedly unauthorized use.
`Oracle has now moved to dismiss the FAC’s second claim (CLM), fourth claim (unjust enrichment),
`and sixth claim (unfair business practices).
`II. LEGAL STANDARD
`Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a claim may be dismissed
`because of a “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A
`dismissal under Rule 12(b)(6) may be based on the lack of a cognizable legal theory or on the
`absence of sufficient facts alleged under a cognizable legal theory. Johnson v. Riverside Healthcare
`Sys., 534 F.3d 1116, 1121 (9th Cir. 2008); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).
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`1 The FAC alleges that Fusion products in fact bundle both Oracle and Hyperion products.
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`NO. C 09-05988 RS
`ORDER
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`In reviewing a complaint under Rule 12(b)(6), all allegations of material fact are taken as
`true and construed in the light most favorable to the non-moving party. Marceau v. Blackfeet Hous.
`Auth., 540 F.3d 916, 919 (9th Cir. 2008); Vignolo v. Miller, 120 F.3d 1075, 1077 (9th Cir.1 999).
`The Court, however, is not required “to accept as true allegations that are merely conclusory,
`unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Sci. Sec. Litig., 536 F.3d
`1049, 1056-57 (9th Cir. 2008); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.
`2001). Although they may provide the framework for a complaint, legal conclusions need not be
`accepted as true and “[t]hreadbare recitals of elements of a cause of action, supported by mere
`conclusory statements, do not suffice.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009); see also
`Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). Furthermore, courts
`will not assume that plaintiffs “can prove facts which [they have] not alleged, or that the defendants
`have violated ... laws in ways that have not been alleged.” Assoc. Gen. Contractors of Calif., Inc. v.
`Calif. State Council of Carpenters, 459 U.S. 519, 526 (1983).
`III. ANALYSIS
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`A.
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`CLM and Section 17200 Claims
`The first argument in Oracle’s motion is that the FAC’s CLM claim is pre-empted by the
`federal Copyright Act, specifically 17 U.S.C. § 301. For the same reason, Oracle also contends
`MB’s unfair business practices claim is pre-empted insofar as it is grounded in copyright
`infringement and CLM.
`A state law claim is pre-empted by § 301 “if two elements are present. First, the rights that a
`plaintiff asserts under state law must be ‘rights that are equivalent’ to those protected by the
`Copyright Act. Second, the work involved must fall within the ‘subject matter’ of the Copyright
`Act as set forth in 17 U.S.C. §§ 102 and 103.” Kodadek v. MTV Networks, Inc., 152 F.3d 1209,
`1212 (9th Cir. 1998) (internal citations omitted); see also 17 U.S.C. § 301(a) (setting forth this test).
`The Ninth Circuit has explained that a state law claim will be pre-empted under the first prong of the
`test unless it contains “an element which changes the nature of the action ‘so that it is qualitatively
`different from a copyright . . . infringement claim.’” Summit Mach. Tool Mfg. Corp. v. Victor CNC
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`NO. C 09-05988 RS
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`Sys., Inc., 7 F.3d 1434, 1440 (9th Cir. 1993) (quoting Balboa Ins. Co. v. Trans Global Equities, 218
`Cal. App. 3d 1327, 1340 (1990)).
`Oracle contends the FAC’s CLM claim can survive neither prong of the test. First,
`according to Oracle, the CLM claim does not contain extra elements or assert rights that are
`“qualitatively different” from those protected by the Copyright Act. MB counters that its CLM
`claim is based on Oracle’s allegedly unauthorized use of the Bindows technology, and that the
`Copyright Act itself does not focus on such use. Thus, MB claims, the rights it is asserting in the
`CLM claim are “qualitatively different” from the rights it is asserting under the Copyright Act.
`The Copyright Act confers upon the owner of a copyright “the exclusive rights to do and to
`authorize any of the following: (1) to reproduce the copyrighted work in copies . . . ;
`(2) to prepare derivative works based upon the copyrighted work; [and] (3) to distribute copies . . .
`of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or
`lending[.]” 17 U.S.C. § 106. California’s common law tort of misappropriation, on the other hand,
`requires the plaintiff to show that (1) he has invested substantial time and money in development of
`his property; (2) the defendant has appropriated the property at little or no cost; and (3) he has been
`injured by the defendant’s conduct. Self Directed Placement Corp. v. Control Data Corp., 908 F.2d
`462, 467 (9th Cir. 1990). The Ninth Circuit has observed that these CLM elements suffer from
`“vagueness,” which has “engendered various preemption analyses.” Summit Mach. Tool Mfg. Corp.
`v. Victor CNC Systems, Inc., 7 F.3d 1434, 1441 (9th Cir. 1993). The Summit case attempted to
`harmonize the existing case law in this area, explaining:
`If [the plaintiff] was simply complaining that [the defendant] has misappropriated the time
`and effort expended in the development and production of its idea, its claim would be
`preempted by copyright . . . law. Such a claim lacks the “extra element” which changes the
`nature of the action. On the other hand, . . . an unfair competition action for
`misappropriation of time and effort is cognizable if the claim contains an extra element
`which changes its nature. Id. at 978. The fundamental question, then, is whether [the
`plaintiff’s] claim for misappropriation adds the requisite extra element.
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`Id. at 1441. The Court noted that, “[i]n the cases that indicate that a claim for misappropriation is
`still tenable, the extra element tends to be apparent.” Id.(emphasis added). It listed, by way of
`example, cases where the extra element was an alleged breach of fiduciary duty; an alleged breach
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`NO. C 09-05988 RS
`ORDER
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`of a confidential relationship; and an alleged palming off of the defendant’s products as those of its
`competitor. Similarly, the extra element alleged in Summit itself was so-called “reverse palming
`off,” that is, the defendant was accused of marketing its competitor’s goods under its own name. Id.
`Here, the essence of MB’s CLM claim is that Oracle has allegedly exceeded the scope of its
`license by using Bindows technology in its Fusion products (and possibly in other non-Hyperion
`products). MB claims this alleged “use” is what differentiates the CLM claim from the copyright
`claim. This is also the view taken by the Ninth Circuit in Altera Corp. v. Clear Logic, Inc., which
`held that “[a] state law tort claim concerning the unauthorized use of the software’s end-product is
`not within the rights protected by the federal Copyright Act[.]”). 424 F.3d 1079, 1089-90 (9th Cir.
`2005). Altera was factually similar to the present case: the defendant was alleged to have induced
`the plaintiff’s customers to use the plaintiff’s software in violation of its licensing agreement.
`Oracle attempts to distinguish Altera on the grounds that no CLM claim was at issue, but this
`argument is unpersuasive: both cases involved “state law tort claim[s] concerning the unauthorized
`use of the software’s end-product.” Accordingly, based on Altera, the first element of Kodadek’s
`two-part pre-emption analysis is not met, and as a result MB’s CLM claim is not subject to
`dismissal based on pre-emption.2 Oracle’s motion to dismiss is therefore denied with respect to this
`claim.
`Oracle also moves to dismiss the FAC’s sixth claim for unfair business practices, which
`alleges that Oracle violated California Business and Professions Code § 17200, et seq., “[b]y reason
`of [its] fraudulent, deceptive, unfair, and other wrongful conduct.” Oracle requests specifically that
`the claim be dismissed only insofar as the claim (through its phrase “other wrongful conduct”)
`incorporates elements of CLM and copyright infringement. MB appears to concede that copyright
`infringement is not intended to be a part of its § 17200 claim, stating in its opposition brief that the
`claim only extends to “fraud, trade secret misappropriation, and common law misappropriation.”
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`2 The Court need not reach the second prong of the Kodadek test, namely whether MB’s CLM
`claim “fall[s] within the ‘subject matter’ of the Copyright Act as set forth in 17 U.S.C. §§ 102 and
`103.” Kodadek, 152 F.3d at 1212.
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`NO. C 09-05988 RS
`ORDER
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`As explained above, CLM is not pre-empted in this case; therefore to the extent Oracle is
`moving to dismiss any part of the § 17200 claim that is grounded in CLM, the motion will be
`denied. MB has conceded, however, copyright infringement is not a basis for its § 17200 claim, so
`to the extent that Oracle is moving to dismiss any part of that claim which is grounded on that legal
`theory, the motion will be granted.
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`B. Unjust Enrichment
`Finally, Oracle requests that MB’s fourth claim for unjust enrichment be dismissed because
`it is not an actual claim but only a remedy. California courts, as well as the courts in this District,
`are squarely divided on this point. Compare, e.g., Nordberg v. Trilegiant Corp., 445 F. Supp. 2d
`1082, 1099-1100 (N.D. Cal. 2006) (rejecting motion to dismiss unjust enrichment claim because
`“for the most part, courts finding that California does not allow an ‘unjust enrichment’ cause of
`action have made essentially semantic arguments”), and Hirsch v. Bank of America, 107 Cal. App.
`4th 708, 722 (2003) (reversing lower court’s dismissal of plaintiff’s unjust enrichment claim upon
`finding that appellants stated a valid cause of action for unjust enrichment), with Hovsepian v.
`Apple, Inc., No. 08-5788 JF (PVT), 2009 WL 5069144 at *5 (N.D. Cal. Dec. 17, 2009), and Jogani
`v. Superior Court, 165 Cal. App. 4th 901, 911(2008) (explaining that unjust enrichment is “not a
`cause of action” but rather “a principle underlying various doctrines and remedies, including quasi-
`contract”).
`Of these conflicting interpretations, the better view is that unjust enrichment represents a
`form of relief rather than an independent claim. To plead a claim for unjust enrichment, a plaintiff
`must allege a receipt of a benefit and unjust retention of it at the expense of another. Lectrodryer v.
`SeoulBank, 77 Cal. App. 4th 723, 726 (2000). A dismissal of the fourth “claim” will not, in fact,
`preclude MB’s ability to recover on a theory of unjust enrichment, because it could potentially show
`the existence of these elements in connection with several of its other claims, such as copyright
`infringement or fraud. Moreover, dismissal of a separate claim for unjust enrichment at the pleading
`stage will serve the felicitous purpose of narrowing the action, by eliminating superfluous or
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`NO. C 09-05988 RS
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`unnecessary claims and concentrating the parties’ (and the Court’s) energies on the essence of the
`underlying dispute. For this reason, Oracle’s motion to dismiss MB’s fourth claim will be granted
`without leave to amend.
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`IV. CONCLUSION
`For the reasons stated above, Oracle’s motion to dismiss is denied with respect to the FAC’s
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`second claim grounded in CLM. With respect to the FAC’s sixth claim involving unfair business
`practices, the motion to dismiss is granted insofar as the sixth claim relies on copyright
`infringement, but denied insofar as it relies on CLM. Finally, the motion is granted without leave to
`amend with respect to the fourth claim involving unjust enrichment.
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`IT IS SO ORDERED.
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`Dated: 04/19/2010
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`RICHARD SEEBORG
`UNITED STATES DISTRICT JUDGE
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`NO. C 09-05988 RS
`ORDER
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