Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page1 of 10
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`SAN JOSE DIVISION
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`AUTODESK, INC.,
`Plaintiff,
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`v.
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`ZWCAD SOFTWARE CO., LTD., et al.,
`Defendants.
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`Case No. 5:14-cv-01409-EJD
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`ORDER DENYING MOTION TO
`DISMISS
`Re: Dkt. No. 48
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`Plaintiff Autodesk, Inc. (“Autodesk” or the “Plaintiff”) brings this action for copyright
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`infringement and trade secret misappropriation against Defendants Global Force Direct, LLC
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`(“Global Force Direct”), ZWCAD Software Co., Ltd., ZWCAD Design Co., Ltd., and HK
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`ZWCAD Software Ltd. (collectively, “ZWSoft” or the “Defendants”). Presently before the Court
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`is Defendants’ Motion to Dismiss Plaintiff’s Complaint for failure to identify the specific
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`copyrights or trade secrets Plaintiff alleges were copied. Docket Item No. 48. Plaintiff opposes
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`the motion. Dkt. No. 61.
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`The Court has subject matter jurisdiction over Autodesk’s copyright and trade secret
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`misappropriation claims under 28 U.S.C. §§ 1331, 1338(a) and (b), and 1367(a). The Court has
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`considered the briefing and the oral argument presented at the hearing on April 30, 2015. For the
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`reasons discussed below, the Motion to Dismiss is DENIED.
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page2 of 10
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`I.
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`FACTUAL BACKGROUND
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`Autodesk provides computer-aided design software which “create[s] digital models and
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`workflows that allow visualization, simulation and analysis of designs before implementation.”
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`Dkt. No. 62 at ¶ 1. AutoCAD is Autodesk’s “flagship product” and largest revenue-generating
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`product. See id. at ¶¶ 12, 15. Over one hundred registered U.S. copyrights cover AutoCAD,
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`including Registration Nos. TX0006576172, TX0006586280, and TX0006589381, which
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`specifically cover AutoCAD 2008’s source code and other protectable elements. See Dkt. No. 1 at
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`¶ 15; see also Dkt. No. 75 at 3.
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`Based in Guangzhou, China, ZWSoft released their first CAD products in 2002,
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`approximately 20 years after AutoCAD was released. See Dkt. No. 1 at ¶¶ 10, 16. Until 2012,
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`ZWSoft based its relevant products on the IntelliCAD software platform, licensing code from a
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`third party. Id. at ¶ 18. In 2012, however, Autodesk alleges that ZWSoft announced a “new”
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`direction with an internally designed codebase called “ZWCAD+.” Id. at ¶ 19.
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`Autodesk alleges that despite ZWSoft’s claim that its software was developed internally,
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`ZWCAD+ shares not only the same interfaces and commands as AutoCAD, but also performs
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`identically to prior versions of Autodesk’s software in unmistakable ways. Id. at ¶ 22.
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`Specifically, Autodesk alleges that ZWSoft engaged in wholesale copying of “large portions of
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`Autodesk source code” in order to create its software program ZWCAD+. See Dkt. No. 62 at ¶¶
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`21-24.
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`Autodesk further alleges that ZWSoft emphasized their copying in marketing materials as a
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`way to entice customers to purchase their products. See Dkt. No. 1 at ¶¶ 17, 21. For example, in
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`product brochures and press releases, ZWSoft touted their products as “offer[ing] a working
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`environment almost identical to AutoCAD.” Id. at ¶ 17.
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`Autodesk also alleges that ZWCAD+ products display identical idiosyncrasies and bugs
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`that could have been introduced only through the wholesale copying of significant portions of
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`misappropriated Autodesk code. Id. at ¶¶ 22, 23, 24. As one example, ZWCAD+ products
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`display the same software bug as AutoCAD 2007 and 2008 when “coloring in” or “shading”
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page3 of 10
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`certain geometries. Id. at ¶ 24.
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`The screenshots below show an unusual error that occurs when a user selects a
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`“pick point” (i.e., a specific point within the drawing) away from the clover and flower petals. Id.
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`Instead of properly coloring in both the clover and the petals, both AutoCAD 2007 and
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`ZWCAD+ 2012 color in only the petals – not the clover:
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`Autodesk alleges that ZWCAD+ 2012 and 2014 also display an identical error to
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`AutoCAD 2007 and 2008 when “trimming” certain shapes, i.e., deleting a portion of the shape that
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`falls on one side of an “edge.” Id. As shown in the screenshots below, a user of AutoCAD 2007
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`and 2008 was not able to trim away certain lines where two overlapping shapes had relatively
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`close radiuses. ZWCAD+ 2012 and 2014 contain the same bug:
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`Autodesk further alleges that ZWCAD+ “share[s] similar interfaces and commands,” and
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`“performs identically to prior versions of AutoCAD” in “crucial and unmistakable ways.” Id. at ¶
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`22. In sum, based on these similarities, Autodesk alleges that Defendants have committed
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`copyright infringement and trade secret misappropriation. Id. at ¶ 31.
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page4 of 10
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`II.
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`PROCEDURAL BACKGROUND
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`In 2014, Autodesk filed suit against ZWSoft and its United States-based distributor GFD in
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`the Northern District of California, San Francisco Division for copyright infringement and trade
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`secret misappropriation. See Dkt. No. 1 at ¶¶ 4, 32-48. Autodesk later amended its complaint to
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`add Hong Kong-based corporation HK ZWCAD Software Ltd. as a defendant. See Dkt. No. 62 at
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`¶ 4.
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`Autodesk also initiated summary proceedings against ZWSoft before the Hague District
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`Court in the Netherlands. See Dkt. No. 68-3 at ¶ 9. ZWSoft opposed discovery of its source code
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`outside of China, and the parties ultimately agreed that ZWSoft could produce its source code in
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`China for the purposes of the Dutch action. See id. at ¶ 10. The Dutch court then ordered ZWSoft
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`to produce its source code to a custodian in China. See Docket No. 68-7 at §§ 4.15, 4.16; Docket
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`No. 68-8 at §§ 3.2, 3.3.
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`Meanwhile, in the Northern District of California, GFD answered the complaint, and the
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`parties entered into a stipulated protective order. See Dkt. Nos. 22, 34. After ZWSoft appeared in
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`the case, the case was reassigned to the San Jose division for all further proceedings. See Dkt.
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`Nos. 40, 44. ZWSoft then moved to dismiss the case and also asked Autodesk to stipulate to
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`follow Hague Convention procedures with regard to the data being sought from China or to amend
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`the protective order to allow for examination of ZWSoft’s data in China. See Dkt. No. 52-1 at ¶¶
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`6-9.
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`On December 19, 2014, ZWSoft moved the Court to require Autodesk to conduct all
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`discovery against ZWSoft solely pursuant to the Hague Convention rather than the Federal Rules
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`to mitigate the risk that discovery of its data and documents outside of China may subject it to
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`liability under Chinese state secret and privacy laws. Dkt. No. 52. The motion was then referred
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`to Magistrate Judge Grewal. Dkt. No. 53. The court denied ZWSoft’s motion because it agreed
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`with Autodesk that ZWSoft has not shown that a genuine risk of liability under Chinese law or
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`other factors justify the additional protective measures it seeks. Dkt. No. 81. Further, because
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`ZWSoft has not shown that good cause exists for the additional procedures outlined in its amended
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page5 of 10
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`protective order, the court also denied ZWSoft’s request that the court amend the protective order
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`and require examination of its source code and related documents in China. See id.
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`On March 27, 2015, ZWSoft moved the Court to appoint an expert for the limited purpose
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`of source code review and comparison, or in the alternative, motion for a protective order. Dkt.
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`No. 82. That motion is set for hearing on May 5, 2015 before Magistrate Judge Grewal.
`III. LEGAL STANDARD
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`On a Rule 12(b)(6) motion to dismiss for failure to state a claim, the complaint is construed
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`in the light most favorable to the non-moving party, and all material allegations in the complaint
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`are taken to be true. Sanders v. Kennedy, 794 F.2d 478, 481 (9th Cir. 1986); see Fed. R. Civ. P.
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`12(b)(6). This rule does not apply to legal conclusions - “[t]hreadbare recitals of the elements of a
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`cause of action, supported by mere conclusory statements, do not suffice” to state a claim.
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`Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). While a complaint does not need detailed factual
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`allegations to survive a 12(b)(6) motion, plaintiffs must provide grounds demonstrating their
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`entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the plaintiff
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`must allege sufficient factual allegations “to raise a right to relief above the speculative level.” Id.
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`This threshold is reached when the complaint contains sufficient facts to allow the court to draw a
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`reasonable inference that the defendant is liable for the alleged misconduct. Iqbal, 556 U.S. at
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`678. Finally, even if a court should find that an operative complaint is lacking in specificity, leave
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`to amend to cure any such deficiencies should be freely granted. Fed. R. Civ. P. 15(a); see also
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`Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000).
`IV. DISCUSSION
`A. Whether Autodesk Adequately Pled A Claim For Copyright Infringement
`ZWSoft moves to dismiss Autodesk’s Complaint for failure to identify the specific
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`copyrights or trade secrets Autodesk alleges were copied. Dkt. No. 48. Specifically, ZWSoft
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`asserts that Autodesk has failed to specify which portions of its source code it alleges the
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`Defendants copied. See Dkt. No. 75 at 7. Further, ZWSoft argues that Autodesk’s allegations
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`appear to concern only surface similarities between the ZWSOFT and AutoCAD interfaces, yet
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Autodesk does not allege that those visual aspects of AutoCAD are copyrighted, or protected as
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`trade secrets. See id. The Court disagrees that these arguments require dismissal.
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`A plaintiff seeking to establish copyright infringement must prove “(1) ownership of a
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`valid copyright, and (2) copying of constituent elements of the work that are original.”1 Thus, to
`state a claim, Plaintiff must set forth sufficient facts alleging that Plaintiff owned a valid copyright
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`for AutoCAD, and that Defendants violated Plaintiff’s exclusive rights under the Copyright Act by
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`copying original elements of the work.
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`For the first element, the Complaint states that Autodesk “owns well over a hundred
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`registered U.S. copyrights relating to its AutoCAD products,” and gave three illustrative
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`registration numbers, which cover AutoCAD 2008’s source code and other protectable elements.
`See Dkt. No. 1. at ¶ 15. Here, Plaintiff has sufficiently alleged ownership of valid copyrights.2
`Autodesk further alleged that ZWSoft committed copyright infringement via its incorporation of
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`“significant portions of Autodesk’s proprietary source code” from AutoCAD 2007 and 2008 into
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`Defendants’ ZWCAD+ 2012 and 2014 products. See id. at ¶¶ 22, 24-30.
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`However, ZWSoft argues that it has no way of knowing which of “well over a hundred
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`copyrights are at issue.” See Dkt. No. 48 at 8:10-11. ZWSoft further argues that “the titles,
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`contents, and relationship of these three copyrights remain unspecified.” See id. at 8:8. Therefore,
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`ZWSoft contends that “Autodesk’s infringement should be dismissed” because “Autodesk has
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`failed to identify a single aspect of source code or a specifically infringed registered copyright.”
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`See id. at 6:25-28.
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`Despite ZWSoft’s argument that Autodesk must identify specific copyright registrations at
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`issue, the Court is unable to find any case requiring that a plaintiff produce that information or
`face dismissal under 12(b)(6).3 Moreover, Autodesk has specifically alleged that it “owns well
`over a hundred registered U.S. copyrights relating to its AutoCAD products,” including the three
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`1 Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361 (1991).
`2 U.S. Copyright Registration Nos. TX0006576172, TX0006586280, and TX0006589381
`3 Imageline, Inc. v. CafePress.com. Inc., No. CV 10-9794 PSG, 2011 U.S. Dist. LEXIS 39828, at
`*7-8 (C.D. Cal. Apr. 6, 2011); see also Adobe Systems v. My Choice Software LLC, No. 14-cv-
`02150-BLF, 2014 U.S. Dist. LEXIS 161059, at *7 (N.D. Cal. Nov. 14, 2014).
`6
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Northern District of California
`United States District Court
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page7 of 10
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`registration numbers. See Dkt. No. 1 at ¶ 15. To the extent that Defendants contend that not all of
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`the identified registration numbers actually relate to AutoCAD, that is a factual challenge to the
`Complaint that is not appropriately raised in the context of a Rule 12(b)(6) motion.4
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`For the second element, ZWSoft’s marketing of the similarities between the two product
`lines is relevant and circumstantial evidence of copying.5 Moreover, “the determination of
`whether a work is sufficiently original to be protected is ‘a factual issue that is inappropriate for
`determination on a motion to dismiss.’”6 The fact that the precise scope of Defendants’
`misconduct - if any - remains to be fleshed out in discovery does not render the Complaint
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`inadequate.
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`“In reviewing the sufficiency of a complaint, ‘[t]he issue is not whether the plaintiff will
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`ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.’”
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`Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 248 (9th Cir. 1997) (quoting Scheuer v. Rhodes, 416
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`U.S. 232, 236 (1974)). Further, the plausibility standard “does not impose a probability
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`requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation
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`that discovery will reveal evidence supporting the allegation.” Twombly, 550 U.S. 544, 556
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`(2007). Accordingly, taking Plaintiff’s allegations of material fact as true and construing them in
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`the light most favorable to Plaintiff, the court finds that the claim of copyright infringement is
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`plausible. Thus, Plaintiff’s Complaint sufficiently states a claim upon which relief may be
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`granted. Defendants’ Motion to Dismiss Plaintiff’s cause of action for copyright infringement is
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`DENIED.
`B. Whether Autodesk Adequately Pled A Claim For Trade Secret
`Misappropriation
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`The California Uniform Trade Secrets Act prohibits misappropriation of trade secrets,
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`4 See Adobe Systems, No. 14-cv-02150-BLF, 2014 U.S. Dist. LEXIS 161059, at *3 (N.D. Cal.
`Nov. 14, 2014).
`5 See JBJ Fabrics, Inc. v. Mark Indus., Inc., No. 86-4881 FFF, 1987 U.S. Dist. LEXIS 13445, at
`*33 (C.D. Cal. Nov. 4, 1987) (defendant’s admission of similarity weighed in favor of finding of
`infringement)
`6 See FragranceNet.com, Inc. v. FragranceX.com, Inc., 679 F. Supp. 2d 312, 320 (E.D.N.Y. 2010);
`see also Dkt. No. 61 at 11.
`7
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Northern District of California
`United States District Court
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`which it defines as:
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`(1) Acquisition of a trade secret of another by a person who knows
`or has reason to know that the trade secret was acquired by improper
`means; or
`(2) Disclosure or use of a trade secret of another without express or
`implied consent by a person who:
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`(A) Used improper means to acquire knowledge of the trade
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`secret; or
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`(B) At the time of disclosure or use, knew or had reason to
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`know that his or her knowledge of the trade secret was:
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`(i) Derived from or through a person who had utilized
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`improper means to acquire it;
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`(ii) Acquired under circumstances giving rise to a duty to
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`maintain its secrecy or limit its use; or
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`(iii) Derived from or through a person who owed a duty to
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`the person seeking relief to maintain its secrecy or limit its
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`use; or
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`(C) Before a material change of his or her position, knew or
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`had reason to know that it was a trade secret and that
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`knowledge of it had been acquired by accident or mistake.
`Cal. Civ. Code § 3426.1(b). “Improper means” include the “breach or inducement of a breach of a
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`duty to maintain secrecy.” Cal. Civ. Code § 3426.1(a).
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`To state a claim for misappropriation of trade secrets under the California Uniform Trade
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`Secrets Act, a plaintiff must allege that: (1) the plaintiff owned a trade secret; (2) the defendant
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`misappropriated the trade secret; and (3) the defendant’s actions damaged the plaintiff. Nexsales
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`Corp. v. Salebuild, Inc., 11–CV–3195, 2012 WL 216260 at *2 (N.D. Cal. Jan. 24, 2012). ZWSoft
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`moves to dismiss the Complaint on the grounds that Autodesk fails to sufficiently allege the first
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`and second elements – ownership and misappropriation.
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`i. Trade Secret Ownership
`ZWSoft argues that Autodesk’s allegation that the “plaintiff has a secret process is a bare
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`legal conclusion” and that Autodesk “should describe the subject matter of the trade secret with
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`sufficient particularity.” See Dkt. No. 48 at 11.
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`A plaintiff need not “spell out the details of the trade secret,” but must minimally provide
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`“reasonable notice of the issues which must be at the time of trial and […] provide reasonable
`guidance in ascertaining the scope of appropriate discovery.”7
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`7 Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 251 (1968); see also Brocade Commc’ns Sys.,
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Northern District of California
`United States District Court
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page9 of 10
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`Here, Autodesk alleged that the “source code which comprises AutoCAD 2007 and 2008 is
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`a trade secret, including those portions of code that underlie the commands, interfaces and
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`program files associated with the dozens of specific features which were wrongfully acquired and
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`used in Defendants’ ZWCAD+ 2012 and 2014 programs.” See Dkt. No. 1 at ¶¶ 14, 22-31, 42.
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`Autodesk further alleged that “its source code is not publicly known, and that Autodesk goes to
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`great lengths to keep its most valuable asset protected, including depositing the code only in
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`secure source code repositories, and restricting access to only a few select individuals, all of whom
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`are required to sign iron-clad non-disclosure agreements.” Id. at ¶¶ 14, 42.
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`Moreover, courts are “in general agreement that trade secrets need not be disclosed in
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`detail in a complaint alleging misappropriation for the simple reason that such a requirement
`would result in public disclosure of the purported trade secrets.”8 As such, Autodesk has
`identified its alleged trade secrets with sufficient particularity to survive a Rule 12 motion.
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`ii. Misappropriation
`ZWSoft argues that Autodesk has not identified “the impermissible manner in which
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`ZWSoft acquired” the AutoCAD trade secrets to support a misappropriation claim. See Dkt. No.
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`48 at 14.
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`Under the California Uniform Trade Secret Act, misappropriation can be established
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`through wrongful acquisition or use without consent. Cal. Civ. Code § 3426.1. Here, Autodesk
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`has adequately alleged that ZWCAD+ was “built by someone with improper and illegal access to
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`AutoCAD source code,” that its code had been “stolen,” and that, without Autodesk’s consent,
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`“Defendants acquired, disclosed and/or used” Autodesk’s trade secret information “through
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`improper means.” See Dkt. No. 1 at ¶¶ 22, 24, 29, 43.
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`Moreover, there is no requirement that Autodesk plead exactly how Defendants
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`Inc. v. A10 Networks, Inc., 873 F. Supp. 2d 1192 (N.D. Cal. 2012) (finding software optimization,
`hardware optimization and customer contact list all sufficiently identified and cognizable as trade
`secrets).
`8 Leucadia, Inc. v. Applied Extrusion Techs., Inc., 755 F. Supp. 635, 636 (D. Del. 1991); see also
`SD Prot., Inc. v. Del Rio, 498 F. Supp. 2d 576, 576 (E.D.N.Y. 2007).
`9
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`Case No.: 5:14-cv-01409-EJD
`ORDER DENYING MOTION TO DISMISS
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`Case5:14-cv-01409-EJD Document107 Filed05/13/15 Page10 of 10
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`“improperly obtained [or used] the alleged trade secret.”9 Again, as “discovery has not yet
`commenced,” “it would be unreasonable to require” a plaintiff to demonstrate “the precise ways in
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`which Defendants may have used [their] trade secrets, given that Defendants are the only ones
`who possess such information.”10
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`In sum, Autodesk identified its trade secrets (such as the AutoCAD 2007 and 2008 source
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`code, the code’s associated algorithms, and its architecture) and adequately alleged the wrongful
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`acquisition or use necessary to support a misappropriation claim with sufficient particularity to
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`survive a Rule 12 motion. Therefore, the Court DENIES Defendants’ Motion to Dismiss
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`Plaintiff’s cause of action for trade secret misappropriation.
`V. CONCLUSION
`For the foregoing reasons, the Court DENIES Defendants’ Motion to Dismiss Autodesk’s
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`first and second cause of action in its Complaint.
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`IT IS SO ORDERED.
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`Dated: May 13, 2015
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`______________________________________
`EDWARD J. DAVILA
`United States District Judge
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`9 Gaetano Assocs., Ltd. v. Artee Collections, Inc., No. 05 CIV. 3329 (DLC), 2006 U.S. Dist.
`LEXIS 77144, at *7 (S.D.N.Y. Oct. 25, 2006).
`10 Vinyl Interactive, LLC v. Guarino, No. C 09-0987 CW, 2009 U.S. Dist. LEXIS 41498, at *21-
`22 (N.D. Cal. May 1, 2009).
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