Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 1 of 16
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF CALIFORNIA
`
`)
`)
`
`))
`
`THERAPEUTIC RESEARCH FACULTY,
`Plaintiff,
`)
`v.
`)
`NBTY, INC., REXALL SUNDOWN, INC., )
`)
`and LE NATURISTE J.M.B. INC.,
`
`)
`Defendants.
`)
` )
`Defendants NBTY, Inc. (“NBTY”) and Rexall Sundown, Inc.
`(“Rexall Sundown”) (collectively “Defendants”) move to dismiss eight
`of the thirteen claims alleged in Plaintiff’s Second Amended Complaint
`(“Complaint”) under Federal Rule of Civil Procedure 12(b)(6).1
`Plaintiff opposes the motion. For the following reasons, Defendants’
`motion is denied.
`
`2:05-cv-2322-GEB-DAD
`
`ORDER*
`
`BACKGROUND
`Plaintiff is an organization that provides analysis of drug
`therapy information and advice for professionals in the medical
`
`This case was determined to be suitable for decision without
` *
`oral argument. L.R. 78-230(h).
`Defendant Le Naturiste has not joined in this Motion.
` 1
`
`1
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 2 of 16
`
`community. (Compl. ¶ 12.) Plaintiff owns copyrights in the Natural
`Medicines Comprehensive Database (the “Publication”) which “includes
`over 1,100 pharmacist-prepared monographs containing detailed
`evidence-based information.” (Id. ¶¶ 2, 12.) The Publication is
`available both annually, in a hard copy print edition, and through
`subscription, in a continually updated online version contained in a
`passcode-protected area of Plaintiff’s website. (Id. ¶ 2.) There are
`two different types of subscriptions: “[a]n annual single user
`limited-purpose subscription for Internet access . . . which was made
`available in April and May 2002 for under $100” and “site licenses for
`organizations or corporations with higher usage patterns [which] are
`sold for many thousand dollars.” (Id. ¶ 15.)
`NBTY purchased a single user subscription to the Publication
`and thereby entered into a single user license agreement with
`Plaintiff. (Id. ¶ 3.) The single user license agreement “limits
`access to ‘one and only one person,’ either ‘accessing information for
`personal use’ or ‘for the benefit of an individual patient or as part
`of an educational exercise.’” (Id. ¶ 5.) In addition,
`[e]ach . . . [s]ingle [u]ser [l]icense
`specifically provides that access is limited to
`the individual employee and that ‘under no
`circumstances may [the employee] permit any person
`or entity, including [] fellow employees or
`employer, to use [the employee’s] passcodes for
`the purpose of accessing the site, nor may [the
`employee] use [his/her] passcodes to access the
`site for anyone else.’
`
`(Id.) Nonetheless, Plaintiff claims that NBTY “shared the
`confidential username and passcode among many [of its employees] for
`two-and-a-half years, thereby infringing on [Plaintiff’s] rights in
`the Publication.” (Id. ¶ 3.)
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`2
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 3 of 16
`
`Plaintiff also alleges that NBTY and Rexall Sundown
`infringed on its rights in the Publication when Rexall Sundown used
`the confidential username and passcode from NBTY’s single user
`subscription without authorization. (Id.) Finally, Plaintiff claims
`that NBTY “improperly and deceptively obtained access to the
`Publication for Le Naturiste employees” under a group license
`agreement entered into between Plaintiff and NBTY to address the
`previously alleged violations of the single user license agreement.
`(Id. ¶¶ 3, 40.) Under the group license agreement, only twelve
`designated researchers employed by NBTY or Rexall Sundown were
`permitted to access the Publication. (Id. ¶ 3.)
`Defendants move to dismiss eight claims: copyright
`infringement, contributory copyright infringement, vicarious copyright
`infringement, violation of the Computer Fraud and Abuse Act (“CFAA”)
`(under 18 U.S.C. § 1030), violation of Title II of the Electronic
`Communications Privacy Act (“ECPA”) (under 18 U.S.C. § 2701),
`violation of the California Comprehensive Data Access and Fraud Act
`(under section 502 of the California Penal Code), trespass and
`misappropriation of trade secret. (Mot. at 2.)
`DISCUSSION
`Dismissal is appropriate under Rule 12(b)(6) if Plaintiff
`failed to (1) present a cognizable legal theory, or (2) plead
`sufficient facts to support a cognizable legal theory. Robertson v.
`Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir. 1984).
`When considering a motion to dismiss, all material allegations in the
`Complaint must be accepted as true and construed in the light most
`favorable to Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974);
`Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996).
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`3
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 4 of 16
`
`In addition, Plaintiff is given the benefit of every reasonable
`inference that can be drawn from the allegations in the Complaint.
`Retail Clerks Int’l Ass’n v. Shermahorn, 373 U.S. 746, 753 n.6 (1963).
`Accordingly, a motion to dismiss must be denied “unless it appears
`beyond doubt that [Plaintiff] can prove no set of facts in support of
`[its] claim which would entitle [it] to relief.” Conley v. Gibson,
`355 U.S. 41, 45-46 (1957).
`I. Copyright Infringement
`“A plaintiff must meet two requirements to establish a prima
`facie case of copyright infringement: (1) ownership of the allegedly
`infringed material and (2) violation by the alleged infringer of at
`least one of the exclusive rights granted to copyright holders.” LGS
`Architects, Inc. v. Concordia Homes of Nev., 434 F.3d 1150, 1156 (9th
`Cir. 1996). Under § 106 of the Copyright Act:
`[T]he owner of copyright . . . has the exclusive
`rights to do and to authorize any of the
`following: (1) to reproduce the copyrighted works
`in copies or phonorecords;(2) prepare derivative
`works based on the copyrighted words; (3) to
`distribute copies or phonorecords of the
`copyrighted work to the public by sale or other
`transfer of ownership, or by rental, lease, or
`lending; (4) in the case of literary, musical,
`dramatic, and choreographic works, pantomimes, and
`motion pictures and other audiovisual works, to
`perform the copyrighted work publicly; (5) in the
`case of literary, musical, dramatic, and
`choreographic works, pantomines, and pictorial,
`graphic or sculptural works, including the
`individual images of a motion picture or other
`audiovisual work, to display the copyrighted work
`publicly; (6) in the case of sound recordings, to
`perform the copyrighted work publicly, by means of
`a digital audio transmission.
`17 U.S.C. § 106.
`The parties dispute whether Plaintiff has sufficiently
`alleged a violation of any of its exclusive rights under § 106 of the
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`4
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 5 of 16
`
`Copyright Act. Defendants argue that Plaintiff’s contention that its
`copyrights have been infringed by unauthorized access to the
`Publication “is not the type of conduct subject to protection by the
`copyright laws--the allegation simply has nothing to do with
`Defendants copying Plaintiff’s work.” (Mot. at 3.) Plaintiff
`responds that the term “copying” is used to describe a violation of
`any one of the copyright holder’s exclusive rights, such as the right
`to reproduce, display and distribute, and Plaintiff has adequately
`alleged that Defendant has violated these rights. (Opp’n at 9-10.)
`Plaintiff alleges in its Complaint that Defendants “have
`willfully and without [Plaintiff’s] permission infringed [its]
`copyrights by engaging in the systematic, regular and repeated
`unauthorized access to the Publication” and that Plaintiff “has been
`irreparably harmed by [D]efendants’ unauthorized access to and
`reproduction of its copyrighted works.” (Compl. ¶¶ 48, 49.) In
`particular, Plaintiff alleges that an “employee pasted text from the
`Publication into an email and forwarded it to three other employees”
`who were unauthorized users and that “NBTY employees improperly
`accessed the Publication for the purpose of preparing [] FDA
`notifications and maintaining files evidencing support for product
`labeling . . . .” (Id. ¶¶ 31, 26.)
`“The word ‘copying’ is shorthand for the infringing of any
`of the copyright owner’s exclusive rights, described [in § 106 of the
`Copyright Act].” S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085,
`n.3 (9th Cir. 1989). “‘[C]opying’ for purposes of copyright law
`occurs when [copyrighted material] is transferred from [the memory of
`one computer to the other].” MAI Sys. Corp. v. Peak Computer, Inc.,
`991 F.2d 511, 519 (9th Cir. 1993). Plaintiff’s claim of “unauthorized
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`5
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 6 of 16
`
`access,” including allegations regarding pasting of text from the
`copyrighted work into an email, sending of emails to unauthorized
`users and improperly accessing the Publication for purposes of
`preparing FDA notifications, sufficiently alleges a violation of
`Plaintiff’s exclusive rights to display, reproduce and distribute its
`work protected by the Copyright Act. (Id. ¶¶ 48, 31, 26.)
`Defendants also argue that “Plaintiff fails to allege that
`Defendants’ allegedly infringing conduct involved Plaintiff’s original
`work” since “[p]urely factual information . . . may not be
`copyrighted.” (Mot. at 4.) Plaintiff alleges in its Complaint that
`the Publication “includes over 1,100 pharmacist-prepared monographs
`containing detailed evidence-based information” and that it
`“constitutes original material authored by Therapeutic Research
`pursuant to the Copyright Act.” (Compl. ¶¶ 12, 16.)
`“Addressing the threshold of copyrightability . . ., the
`Supreme Court [has] held that ‘[t]he sine quanon of copyright[ability]
`is originality’ and that ‘[o]riginal, as the term is used in
`copyright, means only that the work was independently created by the
`author (as opposed to copied from other works), and that it possesses
`at least some minimal degree of creativity.’” Ets-Hokin v. Skyy
`Spirits, Inc., 225 F.3d 1068, 1076 (9th Cir. 2000) (quoting Feist
`Pub’lns, Inc. v. Rural Tel. Servs. Co., 499 U.S. 340, 345 (1991)).
`“Feist . . . described the requisite degree of creativity as
`‘extremely low, even a slight amount will suffice. The vast majority
`of works make the grade quite easily, as they possess some creative
`spark . . . .’” Id. Accordingly, given the low threshold of
`creativity required to create an “original work” and accepting the
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`6
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 7 of 16
`
`allegations in the Complaint as true, Plaintiff has adequately pled
`that Defendants’ conduct infringed its “original work.”
`For the stated reasons, Defendants’ Motion to dismiss
`Plaintiff’s copyright infringement claim is denied. Further, since
`Defendants’ move to dismiss Plaintiff’s claims for contributory and
`vicarious copyright infringement for the same reasons discussed above,
`Defendants’ motion to dismiss those claims are also denied. (Mot. at
`4-5.)
`II. The CFAA
`Defendants also seek dismissal of Plaintiff’s CFAA claim,
`arguing that Plaintiff “has not plead the requisite type of economic
`damages . . . under [the CFAA]” since Plaintiff has not “allege[d]
`that it has incurred a ‘loss’ of $5,000, as contemplated by
`[subsection (a)(5)(B)(i) of the CFAA, 18 U.S.C. § 1030(a)(5)(B)(i)]”
`where “loss” refers to damage to a computer. (Id. at 5, 6.)
`Plaintiff alleges in its Complaint that it “has suffered damage and
`loss by reason of [Defendants’ violations of 18 U.S.C. § 1030(a)(2),
`(5) and (6)]” and thus it “is entitled to damages, injunctive relief
`and other equitable relief as provided by 18 U.S.C. § 1030(g).”2
`
`18 U.S.C. § 1030 (a)(2), (5) and (6) provide for relief in
` 2
`accordance with § 1030(g) when one:
`[I]ntentionally accesses a computer without authorization or
`exceeds such authorized access, and thereby obtains . . .
`information from any protected computer if the conduct
`involved an interstate or foreign communication [;]
`knowingly causes the transmission of a . . . code . . . and
`as a result of such conduct, intentionally causes damage
`without authorization, to a protected computer [;] and
`knowingly, and with intent to defraud traffics . . . in any
`password or similar information through which a computer may
`be accessed without authorization, if . . . such trafficking
`affects interstate or foreign commerce . . . .
`(continued...)
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`7
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 8 of 16
`
`(Compl. ¶ 74.) Plaintiff further contends that the access unlawfully
`obtained by [] Defendants was valued at materially more than $5,000
`per year” and that given the statutory definitions of “loss” and
`“damage,” “courts have . . . routinely applied the [CFAA] to losses
`that do not involve impairment to a computer, including those arising
`from unauthorized access or the infringement of intellectual
`property.” (Opp’n at 15, 16.)
`Section 1030(g) states, in relevant part:
`Any person who suffers damages or loss by reason
`of this section may maintain a civil action
`against the violator to obtain compensatory
`damages and injunctive relief or other equitable
`relief. A civil action for violation of this
`section may be brought only if the conduct
`involves 1 of the factors set forth in clause (i),
`(ii), (iii), (iv) or (v) of subsection (a)(5)(B).
`Damages for a violation involving any conduct
`described in subsection (a)(5)(b)(i) are limited
`to economic damages.
`18 U.S.C. § 1030(g). Subsection (a)(5)(B)(i) allows recovery of
`damages.3 Id. § 1030(a)(5)(B)(i). Section 1030(e)(8) defines
`“damage” as “any impairment to the integrity or availability of data,
`a program, a system or information.” Id. § 1030(e)(8). See generally
`Shurgard Storage Ctrs., Inc. v. Safeguard Self Storage, Inc., 119 F.
`Supp. 2d 1121, 1126 (W.D. Wash. 2000) (stating “the alleged access and
`disclosure of trade secrets” constituted an “impairment to the
`integrity of data . . . or information.”). The alleged unauthorized
`
` 2(...continued)
`18 U.S.C. § 1030(a)(2)(c); (a)(5)(A)(i); (a)(6)(A).
`
`18 U.S.C. § 1030 (a)(5)(B)(i) provides that “by conduct
` 3
`described in clause (i), (ii), or (iii) of subparagraph (A), [whoever]
`caused . . . (i) loss to 1 or more persons during any 1-year period .
`. .aggregating at least $5,000 in value . . . shall be punished as
`provided in subsection (c) of this section.”
`
`8
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 9 of 16
`
`access to the Publication and the disclosure of its information may
`constitute an impairment to the integrity of data or information even
`though “no data was physically changed or erased.” Id.
`Section 1030(e)(11) defines “loss” as “any reasonable cost
`to any victim, including the cost of responding to an offense,
`conducting a damage assessment, and restoring the data, program,
`system or information to its condition prior to the offense, and any
`revenue lost, cost incurred, or other consequential damages incurred
`because of interruption of service.” 18 U.S.C. § 1030(e)(11).
`Plaintiff’s loss allegation includes the claim that it suffered loss
`as a result of Defendants’ breach of the single user license
`agreement. (Compl. ¶¶ 37, 15.) Plaintiff argues “a full corporate
`license for NBTY and its subsidiaries would cost approximately forty
`thousand dollars . . . per year,” as opposed to under $100 for “an
`annual single user limited-purpose subscription for Internet
`access . . . .” (Id. ¶ 15.)
`
`Plaintiff’s allegations sufficiently state a claim under the
`CFAA. See generally Charles Schwab & Co. v. Carter, 2005 WL 351929,
`at *3 (N.D. Ill. Feb. 11, 2005) (stating “several district courts have
`recognized that damage caused by unauthorized access or access in
`excess of authorization to a computer system may be redressed under
`the CFAA.”) (internal citations omitted). Therefore, Defendants’
`motion to dismiss the CFAA claim is denied.
`III. Electronic Communications Privacy Act (“ECPA”)
`Defendants seek dismissal of Plaintiff’s claim under the
`ECPA. (Mot. at 7.) Plaintiff alleges that Defendants violated Title
`II of the ECPA, which states in pertinent part:
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`9
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 10 of 16
`
`[W]hoever . . . intentionally accesses without
`authorization a facility through which an
`electronic communication service is provided; or .
`. . intentionally exceeds an authorization to
`access that facility; and thereby obtains, alters,
`or prevents authorized access to a wire or
`electronic communication while it is in electronic
`storage in such system shall be punished . . . .
`18 U.S.C. § 2702.
`Specifically, Plaintiff alleges that Defendants
`“intentionally access[ed] without authorization, or [] intentionally
`exceed[ed] an authorization to access, the password-protected areas of
`[its] Internet web site[;]” obtained “access to electronic
`communications while such communications were in electronic storage on
`that web site . . . [;and,] disclos[ed] such communications to third
`parties [who were] not authorized to receive them [] and []
`conspir[ed], encourag[ed], aid[ed], abett[ed], and participat[ed] in
`efforts to do so.” (Compl. ¶ 76.)
` Defendants argue dismissal is appropriate because the
`claims are barred by an exception prescribed in § 2701(c). Section
`2701(c) of the ECPA provides, in relevant part, that an exception
`exists “with respect to conduct authorized (1) by the person or entity
`providing a wire or electronic communications service; [or] (2) by a
`user of that service with respect to a communication of or intended
`for that user.” 18 U.S.C. § 2701(c)(1), (2). Defendants argue
`“[b]ecause [they] were authorized to access the [Publication], the
`authorization exception to the ECPA is triggered . . . .” (Mot. at
`7.) Plaintiff counters that “the vast majority of [Defendants’]
`access was not authorized, as repeatedly alleged in the Complaint.”
`(Opp’n at 17.) Defendants neither show how they satisfy the first
`exception nor that they come within the ambit of the second exception.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`10
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 11 of 16
`
`Defendants also argue that Plaintiff does not state an ECPA
`claim because even though “Plaintiff contends that [] Defendants used
`the [Publication] in excess of the usage permitted under the relevant
`license agreements, such conduct does not trigger a claim under the
`ECPA.” (Id.) But it is “‘evident that the sort of trespasses to
`which the [ECPA] applies are those in which the trespasser gains
`access to information . . . which he is not entitled to see . . . .’”
`Int’l Ass’n of Machinists & Aerospace Workers v. Werner-Masuda, 390 F.
`Supp. 2d 479, 497 (D. Md. 2005) (quoting Educ. Testing Serv. v.
`Stanley H. Kaplan, Educ. Ctr., Ltd., 965 F. Supp. 731, 740 (D. Md.
`1997)); see also Crowley v. CyberSource Corp., 166 F. Supp. 2d 1263,
`1271 (N.D. Cal. 2001) (“[F]or [Plaintiff] to be liable for
`unauthorized access under the ECPA, it must have gained unauthorized
`access to a facility through which electronic communications services
`are provided, (or its access must have exceeded the scope of authority
`given), it must thereby have accessed electronic communications in
`storage, and its access must not fall within the exception of
`subsection (c).”) Since Defendants’ have not shown that Plaintiff
`fails to state a claim under the ECPA, this portion of the motion is
`denied.
`IV. California Penal Code Section 502 (Comprehensive Computer Data
`Access and Fraud Act)
`Defendants seek dismissal of Plaintiff’s claim that
`Defendants violated California Penal Code section 502(c)(2), (3), (6),
`(7), which provides:
`[A]ny person who commits any of the following acts
`is guilty of a public offense: (2) [k]nowingly
`accesses and without permission takes, copies, or
`makes use of any data from a computer, computer
`system, or computer network, or takes or copies
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`11
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 12 of 16
`
`any supporting documentation, whether existing or
`residing internal or external a computer, computer
`system, or computer network[;] (3) [k]nowingly and
`without permission uses or causes to be used
`computer services[;] (6) [k]nowingly and without
`permission provides or assists in providing a
`means of accessing a computer, computer system, or
`computer network[;] (7) [k]nowingly and without
`permission accesses or causes to be accessed any
`computer, computer system, or computer network.
`Cal. Penal Code § 502(c)(2), (3), (6) and (7).
`Plaintiff claims that it “has been injured by these violations . . .
`and is entitled to damages and attorneys’ fees pursuant to California
`Penal Code § 502(e).” (Compl. ¶ 83).
`Defendants argue that Plaintiff fails to state a claim under
`this provision because “Plaintiff’s allegations themselves . . .
`directly refute any claim that Defendant acted ‘knowingly and without
`permission[,]’” since “Plaintiff alleged that Defendants ‘purchased’
`various Site Licenses to access the [Publication], such that any
`access to [it] by Defendants was with permission, not without.” (Mot.
`at 8.) Plaintiff replies that “[a]s numerous employees of
`[D]efendants accessed the Publication without any authorization
`whatsoever, their conduct falls well within the ambit of this statute,
`and [Plaintiff] has therefore properly stated a claim.” (Opp’n at
`18.) Since the focus of Plaintiff’s allegations is on the
`unauthorized access to the Publication and not the authorized access
`provided under the license agreements, Defendants’ arguments are
`unavailing.
`Defendants shift focus in their Reply from an emphasis on
`their permission to access the Publication to whether Plaintiff has
`adequately specified the nature of its “injury.” (Reply at 8.)
`Defendants rely on California Penal Code section 502(e)(1) and
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`12
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 13 of 16
`
`(b)(8),4 arguing that “[g]iven the statutory requirements [at]
`issue . . . , [Plaintiff’s] bald representation that an injury has
`occurred . . . is insufficient to state a claim under Penal Code §
`502.” (Id.) However, nothing in those statutes supports Defendants’
`position that Plaintiff’s allegation of “injury” is insufficient.
`Therefore, Defendants motion to dismiss Plaintiff’s claims under
`California Penal Code section 502 is denied.
`V. Common Law Claims
`A. Trespass
`Defendants argue that Plaintiff’s trespass claim should be
`dismissed because it “has not alleged the required damage or
`impairment to state a legally cognizable cause of action for
`trespass.” (Opp’n at 9.) Plaintiff alleges in its Complaint that it
`has suffered “irreparable damages” because “Defendants, without
`permission . . . or exceeding the scope of such permission, willfully
`and maliciously entered upon [its] passcode-protected web site.”
`
`California Penal Code section 502(e)(1) provides in
` 4
`pertinent part:
`[T]he owner . . . of the computer, computer system, computer
`network, computer program, or data who suffers damage or
`loss by reason of a violation of any of the provisions of
`subdivision (c) may bring a civil action against the
`violator for compensatory damages and injunctive relief or
`other equitable relief. Compensatory damages shall include
`any expenditures reasonably and necessarily incurred by the
`owner or lessee to verify that a computer, computer system,
`computer network, computer program, or data was or was not
`altered, damaged, or deleted by the access.
`Section 502(b)(8) defines injury as “any alteration, deletion,
`damage, or destruction of a computer system, computer network,
`computer program or, data caused by the access, or the denial of
`access to the legitimate users of a computer system, network, or
`program.”
`
`13
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 14 of 16
`
`(Compl. ¶¶ 96, 95.) Since Defendants fail to show Plaintiff’s
`allegations are insufficient to state a trespass claim, this portion
`of their motion is denied.
`B. Misappropriation of Trade Secret
`Defendants also seek dismissal of Plaintiff’s
`misappropriation of trade secret claim. Plaintiff alleges that
`“[w]ithout authorization . . . [D]efendants misappropriated the
`usernames and passwords and used them for [their] benefit.” (Compl.
`¶ 102.) Defendants argue that “Plaintiff fails to allege that the
`information, which Defendants allegedly misappropriated, constitutes a
`trade secret.” (Opp’n at 10.) The Uniform Trade Secrets Act
`(“UTSA”), adopted by California with minor modifications, “codifies a
`cause of action for misappropriation of trade secrets.” Fas Techs,
`Ltd. v. Dainippon Screen MFG., Co., Ltd., 2001 WL 637451, at *3 (N.D.
`Cal. May 31, 2001); Cal. Civ. Code §§ 3426.2, 3426.3. “To prevail on
`[this] claim . . . plaintiff must show that (1) the misappropriated
`information constitutes a trade secret, (2) the defendant “used” the
`trade secret, and (3) the plaintiff was actually damaged by the
`misappropriation or the defendant was unjustly enriched by such
`misappropriation and use.” Fas Techs. Ltd., 2001 WL 637451, at *3
`(internal citations omitted).
`A “trade secret” is defined as “information, including a
`formula, pattern, compilation, program, device, method, technique or
`process, that: (1) [d]erives independent economic value, actual or
`potential, from not being generally known to the public or to other
`persons who can obtain economic value from its disclosure or use; and
`(2) [i]s subject to efforts that are reasonable under the
`circumstances to maintain its secrecy.” Cal. Civ. Code § 3426.1(d).
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`14
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 15 of 16
`
`Defendants argue Plaintiff does not allege “that the username and
`passcode combination constituted a trade secret” and that even had
`Plaintiff made such an allegation, “its claim would nevertheless fail
`because the username-passcode combination ‘does not derive independent
`economic value’–it only provides access to the [Publication], and
`Defendants had access in print form.” (Mot. at 10.)
`However, Plaintiff has adequately alleged that its username
`and passcode constitute a “trade secret” under the definition provided
`in California Civil Code section 3426.1(d). Plaintiff alleges in its
`Complaint that it “issued a confidential username and passcode [to
`Defendants under its various license agreements,] and that username
`and passcode combination was an item of independent economic value”.
`(Compl. ¶¶ 98-100.) Plaintiff also alleges that “[t]he confidential
`username and passcodes’ value is derived from not being generally
`known to, and not being readily ascertainable by, other persons who
`can obtain economic value from disclosure or use of the username and
`passcode.” (Id. ¶ 101.) Defendants have not shown the insufficiency
`of these allegations.
`Defendants also argue that “Plaintiff . . . fails to allege
`that Defendants were unjustly enriched by any misappropriation of the
`combination.” But Plaintiff could prevail on its claim of
`misappropriation of trade secrets by showing either damage as a result
`of the misappropriation or unjust enrichment. See Fas Techs. Ltd.,
`2001 WL 637451, at *3, (“To prevail on [this] claim . . . plaintiff
`must that . . . [it] was actually damaged by the misappropriation or
`the defendant was unjustly enriched . . . .”). Plaintiff adequately
`alleges in its Complaint that it has been damaged by the alleged
`misappropriation. “Defendants’ misappropriation of [Plaintiff’s]
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`15
`
`

`
`Case 2:05-cv-02322-GEB-DAD Document 93 Filed 01/25/07 Page 16 of 16
`
`confidential usernames and passcodes was willful and malicious and
`caused irreparable damage to [Plaintiff].” (Compl. ¶ 103.)
`Accordingly, Defendants’ motion to dismiss Plaintiff’s claim for
`misappropriation of trade secret is denied.
`CONCLUSION
`For the stated reasons, Defendants’ motion to dismiss is
`
`denied.
`
`IT IS SO ORDERED.
`Dated: January 25, 2007
`
`
`GARLAND E. BURRELL, JR.
`United States District Judge
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`16