`
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF NEW MEXICO
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`
`
`JEFFREY DAVID BETHEL,
`individually, and as the sole
`member of Santa Performance, LLC
`and SANDIA PERFORMANCE, LLC,
`
`
`
`v.
`
`SANDIA AEROSPACE CORPORATION,
`a New Mexico corporation, DENNIS
`SCHMIDT, and HONEYWELL
`INTERNATIONAL, INC.,
`(BENDIXKING division),
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`
`
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`20-cv-596 MV/JHR
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`Plaintiffs,
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`
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`Defendants.
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`MEMORANDUM OPINION AND ORDER
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`THIS MATTER comes before the Court on Defendant Honeywell International, Inc.’s
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`Motion to Dismiss Plaintiff’s Amended Complaint for Failure to State a Claim [Doc. 40]. The
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`Court, having considered the Motion and relevant law, finds that the Motion is well-taken in part
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`and will be granted in part and denied in part.
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`BACKGROUND
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`
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`Plaintiff Jeffrey David Bethel independently developed substantial portions of an
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`innovative new display product for the general aviation marketplace. Doc. 38 ¶ 16. On May 22,
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`2015, Mr. Bethel entered into an Independent Contractor and Intellectual Property Agreement
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`(“the Contract”) with Defendant Sandia Aerospace Corporation (“Sandia”) for the purpose of
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`bringing this newly developed technology to the market. Id. ¶ 19. The new product, described
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`Case 1:20-cv-00596-MV-JHR Document 53 Filed 02/16/23 Page 2 of 24
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`in the Contract as “an aircraft instrument. . . capable of displaying aircraft roll, pitch, airspeed,
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`and attitude,” was, at the time the Contract was executed, designated “SAI340.” Doc. 1-1 at 1.
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`Mr. Bethel and Sandia intended for “the remaining required engineering work” on SAI340, or
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`the “Instrument,” “to be completed under a cooperative effort between Sandia and [Mr.] Bethel.”
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`Doc. 38 ¶ 20.
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`The Contract indicates that development of the Instrument included two components:
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`“Mechanical Design,” defined to include but not be limited to “mechanical, electrical, and
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`graphic design”; and “Software,” defined to include but not be limited to “source code, object
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`code, configuration files, calibration code, and production test code.” Doc. 1-1 at 1. “The
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`unique and innovative user interface design incorporated into the SAI-340 . . . was fully
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`implemented in the [S]oftware.” Doc. 38 ¶ 33.
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`Pursuant to an “Assignment” provision in the Contract, Mr. Bethel assigned, transferred,
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`and conveyed to Sandia “all his right, title and interest in the Mechanical Design.” Doc. 1-1 at 2.
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`Pursuant to a “Software Ownership” provision in the Contract, Mr. Bethel retained “all his right,
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`title, and interest in the Software, including the associated intellectual property rights (e.g.,
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`copyright and patent).” Id. at 2. Mr. Bethel registered a copyright for “SAI-340,” effective as of
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`October 2, 2017. Doc. 1-1 at 10. The Certificate of Registration indicates that SAI-340 is a
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`“computer program,” and was completed in 2015. Id.
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`The Contract also contains a “Software License” provision, which states as follows:
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`Subject to the payment of royalties, Bethel hereby grants to Sandia an exclusive
`license in the Software. Bethel retains no right to use or license the Software in
`any aviation related application. Further, in the event that ownership of the
`Software is to be transferred to a third party, to the extent permitted by law Bethel
`shall insure that such transfer will be subject to the terms of this Agreement.
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`Id. Pursuant to a “Royalties” provision, Sandia agreed to pay Mr. Bethel “a royalty of $1,000 . . .
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`[f]or each Instrument sold by Sandia.” Id. at 3. Pursuant to the Contract, “Sandia would be free
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`to utilize the conveyed intellectual property for newly developed products but would be required
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`to make the $1,000 per-unit royalty payment if any product they produced directly incorporated
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`the same basic feature set as the SAI-340.” Doc. 38 ¶ 24.
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`In October 2015, Sandia determined that the SAI-340 was complete and ready for
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`commercial production. Id. ¶¶ 44-45. Sandia thus began to fulfill pre-orders, which were “in the
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`hundreds of units.” Id. ¶ 45. Sandia “initially complied with their contractual obligation to pay
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`the $1,000 per unit royalty for each Instrument sold.” Id. ¶ 46.
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`In March 2017, representatives of Defendant Honeywell International, Inc. (BendixKing
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`division) (“Bendix”) approached Sandia about the possibility of creating a Bendix-branded
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`product variant of the SAI-340, to be named the KI-300. Id. ¶ 47. “Bendix’s own internal
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`documents, including a Statement of Work, copies of which were sent to Bethel, acknowledged
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`the technical nature of the desired product and evidenced a clear intent that the product would be
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`derivative of Bethel’s intellectual property.” Id. ¶ 49. Upon learning that Mr. Bethel, rather than
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`Sandia, “retained the copyright in major portions of the operational software” of the Instrument,
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`and “that Sandia was legally bound to pay Bethel a $1,000 per-unit royalty, Bendix approached
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`Bethel directly in an attempt to negotiate more attractive licensing terms.” Id. ¶ 50. Essentially,
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`Bendix wanted to pay less money in royalties to Mr. Bethel than the $1,000 per unit as required
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`by Mr. Bethel’s contract with Sandia. Id. ¶ 51. During the negotiation process, Mr. Bethel
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`“supplied [to Bendix] copies of the existing Sandia/Bethel licensing agreement.” Id. ¶ 53.
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`Negotiations between Mr. Bethel and Bendix ultimately failed. Id. ¶ 67.
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`In July 2017, Bendix launched a marketing campaign at an avionics trade show in
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`Oshkosh, Wisconsin to promote the KI-300, which was the product of work jointly undertaken
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`by Bendix and Sandia. Id. ¶¶ 68, 75. The KI-300 units displayed there “were simply reworked
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`SAI-340 units of Bethel’s design, with a slightly modified bezel and the Bendix corporate logo
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`painted on the product’s faceplate.” Id. ¶ 70. At the show, Mr. Bethel “personally observed that
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`the innovative techniques and features of the SAI-340 user interface generated by Bethel’s
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`software were being directly utilized in the KI-300, with only minor color variations being
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`applied.” Id. ¶ 71.
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`After the launch of the KI-300, Bendix and Sandia entered into an agreement whereby
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`“Sandia would manufacture the branded KI-300 for Bendix, directly utilizing Bethel’s
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`intellectual property,” but no royalties would be paid to Mr. Bethel. Id. ¶ 92. Thereafter, Bendix
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`forbade certain of its staff and third-party contractors from communicating with Mr. Bethel, and
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`Sandia likewise instructed its employees not to talk to Mr. Bethel or allow him to enter the
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`Sandia facilities. Id. ¶¶ 95-100.
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`For a period of a year or more, Sandia and Bendix “reverse-engineer[ed] Bethel’s
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`software,” without taking any steps to protect Mr. Bethel’s copyrights therein. Id. ¶¶ 103-04.
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`Specifically, “Sandia hired a third-party software engineer who was tasked explicitly with
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`copying Bethel’s user interface, verbatim.” Id. ¶ 105. “Persons at Sandia who were intimately
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`familiar with Bethel’s source code and who had direct access to Bethel’s source code undertook
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`the effort to rewrite Bethel’s code, and to remove Bethel’s copyright notifications, and made no
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`effort whatsoever to ‘clean-room’ or properly attempt to reverse-engineer the design.” Id. ¶ 106.
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`In November 2018, “Sandia and Bendix started the full production, manufacture, and sale
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`of the KI-300,” and paid no royalties to Mr. Bethel. Id. ¶ 110. Mr. Bethel purchased a KI-300;
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`Sandia did not report the sale to him or pay him any royalty based on that purchase. Id. ¶¶ 111-
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`12. Sandia also stopped making royalty payments to Mr. Bethel on sales of the SAI-340. Id. ¶
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`114. Although Sandia “has continued to manufacture and sell hundreds of both the SAI-340 and
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`KI-300 instruments that directly utilize Bethel’s licensed intellectual property,” no royalties have
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`been paid to Mr. Bethel. Id. ¶ 115.
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`
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`As a result, on June 22, 2020, Mr. Bethel commenced the instant action, filing a
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`complaint against Sandia, Dennis Schmidt, who is the owner of Sandia, and Bendix. Doc. 1.
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`Subsequently, on November 23, 2020, Mr. Bethel filed his First Amended Complaint (“FAC”)
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`for Copyright Infringement, Breach of Contract, Breach of the Covenant of Good Faith and Fair
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`Dealing, Intentional Interference with Contract and Interference with Prospective Contractual
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`Relations, Civil Conspiracy, Alter Ego, Fraudulent Misrepresentation, Conversion, Unjust
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`Enrichment, Constructive Trust, Prima Facie Tort and Punitive Damages [Doc. 38]. Bendix filed
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`a motion to dismiss all counts of the FAC asserted against it, which Mr. Bethel opposes.
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`Bendix’s motion is now before the Court.
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`STANDARD
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`Under Rule 12(b)(6), the Court may dismiss a complaint for “failure to state a claim upon
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`which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “The nature of a Rule 12(b)(6) motion
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`tests the sufficiency of the allegations within the four corners of the complaint.” Mobley v.
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`McCormick, 40 F.3d 337, 340 (10th Cir. 1994). When considering a Rule 12(b)(6) motion, the
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`Court must accept as true all well-pleaded factual allegations in the complaint, view those
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`allegations in the light most favorable to the plaintiff, and draw all reasonable inferences in the
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`plaintiff’s favor. Smith v. United States, 561 F.3d 1090, 1097 (10th Cir. 2009), cert. denied, 130
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`S. Ct. 1142 (2010).
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`“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
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`accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556
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`U.S. 662, 678 (2009) (citations omitted). “A claim has facial plausibility when the plaintiff
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`pleads factual content that allows the court to draw the reasonable inference that the defendant is
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`liable for the misconduct alleged.” Id. “Where a complaint pleads facts that are ‘merely
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`consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and
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`plausibility of entitlement to relief.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557
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`(2007)).
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`The Court in Iqbal identified “two working principles” in the context of a motion to
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`dismiss. Id. First, “the tenet that a court must accept as true all of the allegations contained in a
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`complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of
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`action, supported by mere conclusory statements, do not suffice.” Id. Accordingly, Rule 8 “does
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`not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id.
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`at 678-79. “Second, only a complaint that states a plausible claim for relief survives a motion to
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`dismiss.” Id. at 679; see Twombly, 550 U.S. at 570 (holding that a plaintiff must “nudge” her
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`claims “across the line from conceivable to plausible”). Accordingly, “where the well-pleaded
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`facts do not permit the court to infer more than the mere possibility of misconduct, the complaint
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`has alleged – but it has not shown – that the pleader is entitled to relief.” Id. (citation omitted).
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`In keeping with these two principles, the Court explained,
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`a court considering a motion to dismiss can choose to begin by identifying
`pleadings that, because they are no more than conclusions, are not entitled to the
`assumption of truth. When there are well-pleaded factual allegations, a court
`should assume their veracity and then determine whether they plausibly give rise
`to an entitlement to relief.”
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`Id. at 679.
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`DISCUSSION
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`
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`In the FAC, Mr. Bethel asserts the following claims against Bendix: copyright
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`infringement, contributory copyright infringement, intentional interference with contract and
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`prospective contractual relations, civil conspiracy, unjust enrichment, constructive trust, prima
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`facie tort, and punitive damages. On the instant motion to dismiss, Bendix argues that Mr.
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`Bethel has failed to state a claim upon which relief can be granted as to each of these counts.
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`The Court addresses each count in turn.
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`I.
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`Copyright Claims
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`A.
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`Direct Copyright Infringement
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`
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`In Count I, Mr. Bethel asserts that, based on the facts as outlined above, Sandia and
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`Bendix used his copyrighted material without authorization, directly or contributorily infringed
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`on his rights to his copyrighted software, and made “derivative works based on his copyrighted
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`material . . . by reverse engineering [his] copyrighted source code and by grossly exceeding their
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`authority conveyed under the parties’ licensing agreement,” all in violation of 17 U.S.C. §§ 106
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`and 501. Doc. 38 ¶¶ 137-139. To state a claim of copyright infringement, a plaintiff must allege
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`two elements: “(1) “ownership of a valid copyright, and (2) copying of constituent elements of
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`the work that are original.” Craft Smith, LLC v. EC Design, LLC, 969 F.3d 1092, 1099 (10th Cir.
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`2020) (citation omitted). To adequately allege the first element, a plaintiff must allege facts that,
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`if proven, would “demonstrate ownership of a valid copyright in the allegedly infringed work.”
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`Id. “Often, a party accomplishes this by producing a certificate of registration from the
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`Copyright Office.” Id. The second element “consists of two components.” Id. at 1101. First,
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`the plaintiff must allege “factual copying,” and second, the plaintiff must allege “substantial
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`similarity between the allegedly infringing work and the elements of the copyrighted work that
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`are legally protected.” Id. “Factual copying” includes the reproduction of the copyrighted work,
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`the preparation of derivative works based on the copyrighted work, and the distribution of copies
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`of the copyrighted work to the public. 17 U.S.C. § 106. Further, to adequately allege “factual
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`copying,” a plaintiff may allege facts that, if proven, would demonstrate either “that the
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`defendant copied his program” or that “the defendant had access to the copyrighted program and
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`there are probative similarities between the copyrighted material and the allegedly copied
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`material.” Gates Robber Co. v. Bando Chem. Indus., 9 F.3d 823 (10th Cir. 1993).
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`As to the first element of his copyright claim, namely, ownership of a valid copyright,
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`Mr. Bethel alleges that he registered a copyright for SAI-340. Mr. Bethel has also submitted a
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`copy of that registration to the Court. As noted above, this is sufficient to satisfy Mr. Bethel’s
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`pleading requirement as to the first element of his copyright claim.
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`While Bendix does not dispute Mr. Bethel’s allegation or the existence of his copyright in
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`SAI-340, it nonetheless argues that Mr. Bethel has not adequately alleged ownership of a valid
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`copyright. In support of that argument, Bendix notes that Mr. Bethel’s copyright extends only to
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`“a computer program that is supposedly the source code for the SAI-340 device.” Doc. 40 at 5.
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`And, pointing to Mr. Bethel’s allegation that he “observed that the techniques and features of the
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`SAI-340 user interface generated by [his] software were being directly utilized in the KI-300,”
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`Bendix concludes that Mr. Bethel’s assertions of copying apply only to elements of the KI-300
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`that are not source code, and thus are not within the scope of Mr. Bethel’s copyright protection.
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`Id.
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`This argument, however, “misapplie[s] copyright infringement’s first element, which
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`requires only the existence of a valid copyright in the allegedly infringed [] work as a whole.”
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`Craft Smith, 969 F.3d at 1100. “[B]ecause element one concerns only the existence of a valid
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`copyright in the allegedly infringed work, [this Court] concludes that it is satisfied.” Id. at 1101.
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`This conclusion “takes us to the next step, that is, examining the scope of this valid copyright,”
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`which is resolved “in element two.” Id.
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`As to the first component of the second element, namely, factual copying, Mr. Bethel
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`alleges that Bendix and Sandia’s KI-300 units, which they displayed and promoted at an avionics
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`trade show, “were simply reworked SAI-340 units of Bethel’s design,” with only slight
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`modifications, and that Mr. Bethel “personally observed that the innovated techniques and
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`features of the SAI-340 user interface generated by Bethel’s software were being directly utilized
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`in the KI-300,” again with only minor variations. These allegations, if proven, would establish
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`that Sandia and Bendix reproduced Mr. Bethel’s design and software. Further, Mr. Bethel
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`alleges that Sandia and Bendix “reverse-engineer[ed] Bethel’s software,” which involved hiring
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`a third-party software engineer to copy Mr. Bethel’s “user interface” and having Sandia staff,
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`who were familiar with and had direct access to Mr. Bethel’s source code, “rewrite Bethel’s
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`code.” These allegations, if proven, would establish that Sandia and Bendix prepared derivative
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`works based on his copyrighted work. Finally, Mr. Bethel alleges that Sandia and Bendix
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`manufactured and sold the KI-300. This allegation, if proven, would establish that Sandia and
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`Bendix distributed copies of Mr. Bethel’s copyrighted work to the public. These allegations thus
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`plausibly allege “factual copying.”
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`Bendix nonetheless argues that Mr. Bethel fails to adequately plead factual copying.
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`According to Bendix, the FAC fails to allege how it “either directly copied or had access to [Mr.
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`Bethel’s] copyrighted work or “any facts that would support a finding of factual copying . . . by
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`[Bendix].” Doc. 40 at 6. These contentions are belied by the allegations described above, which
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`detail the ways in which Sandia and Bendix, together, accessed Mr. Bethel’s copyrighted code,
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`copied that code, reworked it, and used it to create, manufacture, and sell the KI-300.
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`As to the second component of the second element, namely, substantial similarity
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`between the allegedly infringing work and the elements of the copyrighted work that are legally
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`protected, Mr. Bethel alleges that the “user interface” of the KI-300 was a “verbatim” copy of
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`Mr. Bethel’s “user interface.” Mr. Bethel further alleges that the KI-300, as promoted at the July
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`2017 avionics trade show, was simply a “reworked” SAI-340 “of Bethel’s design,” with slight
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`modifications. Mr. Bethel also alleges that he “personally observed that the innovative
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`techniques and features of the SAI-340 user interface generated by Bethel’s software were being
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`directly utilized in the KI-300,” with only minor variations.
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`In contesting the sufficiency of these allegations, Bendix asserts that Mr. Bethel would
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`not have been “able to deduce infringement of copyrighted software code when he ‘observed’ the
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`SAI-340 user interface,” because none “of the graphical features or interface for the SAI-340”
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`were covered by Mr. Bethels’ copyright, which applied only to “the source code of the SAI-340
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`device.” Doc. 40 at 5. In other words, Bendix argues that, even if Mr. Bethel noted similarities
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`between the KI-300 and the SAI-340, those similarities did not relate to any of the legally
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`protected elements of the SAI-340. This argument, however, raises a fact issue rather than a
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`pleading issue. Whether Mr. Bethel ultimately can prove his allegations or whether, as Bendix
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`argues, the similarities between the SAI-340 and the KI-300 are elements outside the scope of
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`Mr. Bethel’s copyright protections is a question of fact not properly before the Court on the
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`instant motion to dismiss.
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`Bendix also contends that Mr. Bethel fails “to identify the protectable elements that have
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`been copied contentions.” Doc. 40 at 6. This contention is unavailing, as Mr. Bethel does
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`identify which elements of his copyright are similar to the KI-300, namely, the “user interface”
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`and “design,” and states that these elements are protected by his copyright, as they were
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`manifestations of the utilization of his software in the KI-300. Accordingly, Mr. Bethel’s
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`allegations are sufficient to plausibly plead that his copyrighted software code was infringed.
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`Further, Bendix denies the accuracy of Mr. Bethel’s well-pleaded factual allegations,
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`arguing that it did not “incorporate[e] any of the copyrighted software into any Honeywell or
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`BendixKing product.” Doc. 47 at 3. But denying the substance of Mr. Bethel’s allegations is
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`misplaced on the instant motion to dismiss. “[A] Rule 12(b)(6) motion tests [only] the
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`sufficiency of the allegations within the four corners of the complaint.” Mobley, 40 F.3d at 340.
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`Finally, Bendix argues that Mr. Bethel is foreclosed from bringing a copyright
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`infringement claim because, pursuant to the Software License Provision of the Contract, he
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`granted Sandia an exclusive license in the Software of the SAI-340. Doc. 40 at 6. As Bendix
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`appears to acknowledge, a copyright owner is not foreclosed from bringing a copyright
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`infringement claim in the face of an exclusive license; rather, she may bring such a claim where
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`“the licensee exceeds the scope of the copyright license.” Evolution, Inc. v. SunTrust Bank, 342
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`F. Supp. 3d 943, 953 (D. Kan. 2004) (emphasis in original); see also Yamashita v. Scholastic
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`Inc., 936 F.3d 98, 105 (2d Cir. 2019) (“[W]hen the existence of a license is not in question, a
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`copyright holder must plausibly allege that the defendant exceeded particular terms of the
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`license.”) (emphasis in original). Bendix contends that Mr. Bethel cannot plausibly allege that
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`Sandia exceeded the scope or terms of the license because the Software License Provision
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`“allowed for transfer of ownership of the Software to a third party,” and the grant of an exclusive
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`license to Sandia “qualifies” as such a contemplated “transfer of the ownership rights granted
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`under the Copyright Act. Doc. 40 at 7. Based on these contentions, Bendix concludes that “any
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`use of the copyright by Bendix[] is proper under the sublicensing rights that Sandia was clearly
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`granted under the license.” Id.
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`Bendix’s argument reflects a misreading the Software License provision. This provision
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`does not transfer ownership of Mr. Bethel’s copyrighted software to Sandia; indeed, it would be
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`nonsensical if it did, as elsewhere the Contract specifically provides that Mr. Bethel retains “all
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`his right, title, and interest in the Software, including the associated intellectual property rights.”
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`To the contrary, the Software License provision states that “in the event that ownership of the
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`Software is to be transferred to a third party” – ostensibly by Mr. Bethel, who explicitly retained
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`ownership of the Software – “Bethel shall insure that such transfer will be subject to the terms of
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`this Agreement.” In other words, the Software License provision directs Mr. Bethel to ensure
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`that, if he decides to transfer his ownership rights in the Software to a third party, any such
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`transfer protects Sandia’s license to the Software.
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`Accordingly, nothing in the Software License provision transfers Mr. Bethel’s ownership
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`in the Software to Sandia, gives Sandia “sublicensing rights” to the Software, or otherwise
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`allows for “use of the copyright” by Bendix. Doc. 40 at 6-7. It follows that Bendix cannot point
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`to the Software License provision as foreclosing Mr. Bethel’s claim that, together with Bendix,
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`Sandia exceeded the scope or terms of its license in the Software by copying that Software and
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`using it for the KI-300. Mr. Bethel’s copyright infringement claim thus is not subject to
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`dismissal on the basis that he granted Sandia an exclusive license in the Software.
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`B.
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`Contributory Infringement
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`In Count IV, Mr. Bethel asserts a claim of contributory copyright infringement, alleging
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`that Bendix induced the infringement of his copyrights. Doc. 38 ¶ 164. A defendant can be
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`“secondarily liable for another’s copyright infringement under principles of vicarious and
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`contributory liability.” Diversey v. Schmidly, 738 F.3d 1196, 1204 (10th Cir. 2013).
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`“[C]ontributory liability attaches when the defendant causes or materially contributes to
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`another’s infringing activities and knows of the infringement.” Id.
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`Bendix argues that this claim must be dismissed, because it presupposes “that someone
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`directly infringe the asserted copyright.” Doc. 40 at 8. According to Bendix, Mr. Bethel “cannot
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`prove direct infringement,” and thus “there can be no claim against [Bendix] for contributory
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`infringement.” Id. As discussed above, however, the Court finds that Mr. Bethel has stated a
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`(direct) copyright infringement claim. Accordingly, Bendix has proposed no valid basis for
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`dismissal of Mr. Bethel’s contributory infringement claim.
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`II.
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`State Law Claims
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`A.
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`Intentional Interference with Contract and Prospective Contractual Relations
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`In Count IV, Mr. Bethel asserts claims of intentional interference with contract and
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`interference with prospective contractual relations. In support of those claims, Mr. Bethel
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`alleges that “[p]erformance of the contract Bethel had with the parties involved herein has been
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`impaired or refused, materially and intentionally, through the actions of the Defendants”
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`(including Bendix). Doc. 38 ¶ 162. Further, Mr. Bethel alleges that the Defendants (including
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`Bendix), “have played an active and substantial part in causing Bethel to lose the benefits of his
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`contract and/or potential future contracts with various parties involved herein and possibly with
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`others in the market space related to his intellectual property.” Id. ¶ 163.
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`Under New Mexico law, to adequately allege intentional interference with an existing
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`contract against Bendix, Mr. Bethel must state facts that, if proven, would demonstrate that (1)
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`Bendix had knowledge of a contract between Mr. Bethel and Sandia, (2) performance of the
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`contract was refused, (3) Bendix played an active and substantial part in causing Mr. Bethel to
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`lose the benefits of the contract, (4) damages flowed from the breached contract, and (5) Bendix
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`induced the breach without justification and privilege. Guest v. Berardinelli, 195 P.3d 353, 363
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`(N.M. Ct. App. 2008). Similarly, to adequately allege intentional interference with prospective
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`contractual relations against Bendix, Mr. Bethel must show that Bendix damaged him by either
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`(1) inducing or otherwise causing Sandia not to enter into or continue a prospective relation with
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`Mr. Bethel or (2) preventing Mr. Bethel from acquiring or continuing a prospective relation with
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`Sandia. Id. “To prove either cause of action, [Mr. Bethel] must demonstrate that [Bendix]
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`interfered either through improper means or improper motive.” Id. (citation omitted).
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`Mr. Bethel alleges that he supplied to Bendix copies of the contract between Mr. Bethel
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`and Sandia, that Sandia stopped making royalty payments as required by the contract, and that
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`damages flowed to Mr. Bethel from the loss of royalties. Accordingly, three of the elements of
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`his interference with existing contract claim are adequately alleged. As Bendix argues, however,
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`Mr. Bethel does not allege facts that, if proven, would demonstrate that Bendix played an active
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`and substantial part in causing Sandia to cease paying royalties to Mr. Bethel under their
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`contract. Doc. 40 at 8. In response to Bendix’s motion, Mr. Bethel argues that Sandia refused to
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`perform its agreement with Bethel “as a direct consequence of [Bendix’s] actions.” Doc. 45 at
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`15. But nowhere in the FAC does Mr. Bethel tie Bendix’s actions, namely collusion with Sandia
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`to use Mr. Bethel’s software “as its own” and cutting Mr. Bethel out of its agreement with
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`Sandia, to Sandia’s decision to cease making royalty payments to Mr. Bethel on sales of the SAI-
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`340.
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`Without any allegations that, if proven, would establish that Sandia’s treatment of Mr.
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`Bethel vis-à-vis the contract between them was actually “the direct consequence” of Bendix’s
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`actions, there is inadequate factual support for Mr. Bethel’s conclusory allegation that Bendix
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`played an active and substantial part in causing Bethel to lose the benefits of his contract with
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`Case 1:20-cv-00596-MV-JHR Document 53 Filed 02/16/23 Page 15 of 24
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`Sandia. And because the FAC does not adequately allege that Bendix induced Sandia’s breach
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`in the first instance, it follows that the FAC does not adequately allege that it did so without
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`justification and privilege. According, Mr. Bethel does not adequately allege against Bendix
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`either the third element or the fifth element of his interference with existing contract claim. That
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`claim thus must be dismissed as against Bendix.
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`For the same reasons, Mr. Bethel’s allegations are insufficient to support his claim of
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`intentional interference with prospective contractual relations. The FAC is devoid of factual
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`allegations that, if proven, would show that Bendix’s conduct induced or otherwise caused
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`Sandia to discontinue its relationship with Mr. Bethel or decline to commence any unidentified
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`new relationship with Mr. Bethel, or prevented Mr. Bethel from acquiring or continuing any
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`unidentified prospective relationship with Sandia. Accordingly, his interference with prospective
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`contractual relations claim also must be dismissed as against Bendix.
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`B.
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`Prima Facie Tort
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`In Count XI, Mr. Bethel asserts a claim of prima facie tort. In support of that claim, he
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`alleges that “Defendants have intentionally and maliciously refused to abide by the terms of their
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`contract with Bethel for pretextual and baseless reasons.” Doc. 38 ¶ 205. To adequately allege a
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`prima facie tort claim, a plaintiff must state facts that, if proven, would demonstrate “(1) an
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`intentional and lawful act; (2) an intent to injure the plaintiff; (3) injury to the plaintiff as a result
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`of the intentional act; (4) and the absence of sufficient justification for the injurious act.”
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`Beaudry v. Farmers Ins. Exch., 412 P.3d 1100, 1104 (N.M. 2018) (citation omitted). A prima
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`facie tort claim is “used to address wrongs that otherwise escape categorization, but should not
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`be used to evade stringent requirements of other established doctrines of law.” Bogle v. Summit
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`Inv. Co., LLC, 107 P.3d 520, 529 (N.M. Ct. App. 2005) (emphasis added) (citation omitted).
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`Case 1:20-cv-00596-MV-JHR Document 53 Filed 02/16/23 Page 16 of 24
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`Bendix argues that because Mr. Bethel’s allegations address only the failure to abide by
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`the contract between Sandia and Mr. Bethel, and because Bendix was not a party to that contract
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`and therefore had no obligation to abide by that contract, those allegations are insufficient to
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`allege an intentional and lawful act by Bendix. Doc. 40 at 11. In his response, Mr. Bethel
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`contends that “all of the preceding paragraphs of the Amended Complaint were also incorporated
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`into the prima facie tort claim,” and that those paragraphs describe “unjustified intentional acts
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`by [Bendix] that were designed to and did injure [him].” Doc. 45 at 23.
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`A claim for prima facie tort, however, is not adequately pleaded where it is “supported by
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`identical facts [] used to support the other causes of action within the plaintiff’s complaint.”
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`Healthsource, Inc. v. X-Ray Assoc. of N.M., 116 P.3d 861, 872 (N.M. Ct. App. 2005); Hill v.
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`Cray Research, 864 F. Supp. 1070, 1080 (D.N.M. 1991) (dismissing prima facie tort claim
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`where, in support of that claim, the plain