Case 3:10-cv-01855-SCC Document 412 Filed 01/30/14 Page 1 of 31
`
`IN THE UNITED STATES COURT
`FOR THE DISTRICT OF PUERTO RICO
`
`UPDATECOM, INC.,
`
` Plaintiff,
`
`v.
`
` CIV. NO.: 10-1855(SCC)
`
`FIRSTBANK P.R., INC.,
`
` Defendant.
`
`OPINION AND ORDER
`
`We have reviewed the motions for summary judgment filed
`in this case, Docket Nos. 374, 376, and, as we explain below,
`conclude that they must be denied in large part. As such, this
`case will proceed to trial on February 3, 2014. Nonetheless, the
`motions allow us to circumscribe the scope of that trial in
`certain regards. We explain below.
`
`
`
`IN THE UNITED STATES COURT
`FOR THE DISTRICT OF PUERTO RICO
`
`UPDATECOM, INC.,
`
` Plaintiff,
`
`v.
`
` CIV. NO.: 10-1855(SCC)
`
`FIRSTBANK P.R., INC.,
`
` Defendant.
`
`OPINION AND ORDER
`
`We have reviewed the motions for summary judgment filed
`in this case, Docket Nos. 374, 376, and, as we explain below,
`conclude that they must be denied in large part. As such, this
`case will proceed to trial on February 3, 2014. Nonetheless, the
`motions allow us to circumscribe the scope of that trial in
`certain regards. We explain below.
`
`
`
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`UPDATECOM v. FIRSTBANK
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`Page 2
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`Infringement1
`I.
`A. Background
`At the heart of this case is Plaintiff UpdateCom’s allegation
`that a piece of software created by Defendant FirstBank called
`ATM Transaction Broker (“AAB”) infringed on the copyright
`for a piece of software owned by UpdateCom called End2End.
`We note, first of all, that there is an issue of material fact as to
`the actual ownership of End2End. According to UpdateCom,
`End2End was created exclusively by UpdateCom employees
`and was licensed to FirstBank; according to FirstBank, how-
`ever, UpdateCom only acted on a consultative basis, and the
`software that became End2End was created for FirstBank,
`which jointly or solely authored it. As this matter is contested,
`it can only be decided by a trial after weighing the parties’
`evidence.
`A second matter of dispute is the date on which AAB went
`into effect. According to FirstBank, End2End was removed
`from use, and version 1.0 of AAB was installed, on September
`15, 2010. UpdateCom’s expert, however, states that according
`to his investigation, version 1.0 of AAB was not compiled until
`
`1. Assuming the parties’ counsels familiarity with the law, we omit a
`discussion of the basic summary judgment standards.
`
`
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`October 10, 2012, and therefore it could not have been in use
`before that date. See Docket No. 379, at 28. Thus, UpdateCom
`implies, from September 15, 2010, until at least October 10,
`2012, either End2End or an End2End-like software predating
`the AAB version 1.0 was being used. Given this dispute, we
`2
`cannot, without a trial, conclude when AAB version 1.0 was
`put into use.
`But UpdateCom did inspect AAB version 1.0, as well as its
`subsequent versions, and its expert produced a report regard-
`ing whether that copied End2End. After reviewing that report,
`we are convinced that no reasonable factfinder could conclude
`that AAB versions 1.0 and later infringe upon End2End’s
`copyright, if that copyright is indeed owned by UpdateCom.
`B. The Law of Software Copyright
`There are two essential elements to a claim of copyright
`infringement. First, the plaintiff must show “ownership of a
`valid copyright”; second, he must show “copying of constitu-
`ent elements of the work that are original.” Feist Publ’ns, Inc. v.
`Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The copying
`
`2. This is in part the basis for UpdateCom’s related spoliation motion.
`
`
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`inquiry has, in turn, two components. First, the plaintiff must
`3
`show that his work was “actually copied,” either by “direct
`evidence of copying or by indirect evidence, including access
`to the copyrighted work, similarities that are probative of
`copying between the works, and expert testimony.” Laureyssens
`v. Idea Grp., Inc., 964 F.2d 131, 140 (2d Cir. 1992). Once actual
`copying is shown, the plaintiff must also demonstrate that the
`copying was actionable, “by showing that the second work
`bears ‘substantial similarity’ to protected expression in the
`earlier work.” Castle Rock Entm’t v. Carol Publ’g Grp., 150 F.3d
`132, 137 (2d Cir. 1998).
`In the context of software cases, “access is either conceded
`or easily proved,” and so the most important question is
`whether the two works are “substantially similar.” 4 NIMMER
`ON COPYRIGHT § 13.03[F]. This is because even where copying
`is admitted, “no legal consequences will follow from that fact
`unless the copying is substantial.” Newton v. Diamond, 388 F.3d
`1189, 1193 (9th Cir. 2004). In analyzing whether two software
`works are substantially similar, we must also distinguish
`between the literal and nonliteral elements of those works. The
`
`3. As we’ve said, the first of the ownership element is in dispute, and so
`we will focus here only on copying.
`
`
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`term “literal elements” refers to a program’s “source and object
`codes,” that is, the text, in various programming or machine
`languages, in which the program is written by programmers or
`read by a computer. See Computer Assocs. Int’l, Inc. v. Altai, Inc.,
`982 F.2d 693, 702 (2d Cir. 1991). The term “nonliteral ele-
`ments,” by contrast, refers to the program’s architecture and
`organization, including, for example, “general flow charts as
`well as the more specific organization of inter-modular
`relationships, parameter lists, and macros.” Id.
`We must also distinguish between literal and nonliteral
`copying. Literal copying is the exact copying of elements from
`an original work to the derivative work, and in analyzing this
`sort of copying we are guided by the First Circuit’s opinion in
`Lotus Dev. Corp. v. Borland Int’l, Inc., 49 F.3d 807 (1995). Nonlit-
`eral copying, by contrast, “is copying that is paraphrased or
`loosely paraphrased rather than word for word.” Id. at 814. We
`analyze nonliteral according to Altai’s Abstraction-Filtration-
`Comparison analysis.
`Regardless of the type of element or the type of copying
`alleged, however, we are guided by a few basic principles.
`Chief among these is that “copyright does not protect an idea,
`but only the expression of the idea.” Altai, 982 F.2d at 703
`
`
`
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`(citing Baker v. Selden, 101 U.S. 99 (1879)); see also 17 U.S.C.
`¶ 102(b). In this vein, we must confront the fact that computer
`programs are “essentially utilitarian” works that “combine[]
`creative and technical expression.” Altai, 982 F.2d at 704
`(internal quotations omitted). This matters because the
`processes described by a utilitarian work cannot be copy-
`righted. Id. Moreover, “those aspects of a work, which ‘must
`necessarily be used as incident to’ the idea, system or process
`that the work describes, are also not copyrightable.” Id.
`(quoting Baker, 101 U.S. at 104); see also id. at 705 (“[T]hose
`elements of a computer proram that are necessarily incidental
`to its function are . . . unprotectable.”). Essentially, this is an
`application of the merger doctrine, which holds that “[w]hen
`there is . . . only one way to express an idea, the idea and its
`expression are inseparable.” Concrete Machinery Co. v. Classic
`Lawn Ornaments, Inc., 843 F.2d 600, 606 (1st Cir. 1988). This is
`important in the software context because “[w]hile, hypotheti-
`cally there might be a myriad of ways in which a programmer
`may effectuate certain functions within a program . . . effi-
`ciency concerns may so narrow the practical range of choice as
`to make only one or two forms of expression workable op-
`tions.” Altai, 982 F.2d at 708. Thus, “the fact that two programs
`
`
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`contain the same efficient structure may as likely lead to an
`inference of independent creation as it does to one of copying.”
`Id. Following these principles, courts have concluded that
`software algorithms cannot be copyrighted because they only
`describe uncopyrightable methods of operation. See, e.g., Torah
`Soft Ltd. v. Drosnin, 136 F. Supp. 2d 276, 291 (S.D.N.Y. 2001)
`(“An algorithm, however, is clearly a method of operation
`which cannot be protected.”).
`Software cases also apply the scenes a faire doctrine, which
`“denies copyright protection to elements of a work that are for
`all practical purposes indispensable, or at least customary, in
`the treatment of a given subject matter.” Coquico, Inc. v.
`Rodriguez-Miranda, 562 F.3d 62, 68 (1st Cir. 2009). In the
`computer science arena, this doctrine is used to account for the
`fact that “in many instances, it is virtually impossible to write
`a program to perform particular functions in a specific comput-
`ing environment without employing standard techniques.” 4
`NIMMER § 13.03[F][3]. These external factors include hardware
`and software standards, design standards, the practices of the
`target industry, and general programming practices. Id.; see also
`Altai, 982 F.2d at 709–10 (noting that “a programmer’s freedom
`of choice is often circumscribed by extrinsic considerations”).
`
`
`
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`Where features are necessitated by such considerations, they
`cannot be copyrighted.
`C. UpdateCom’s Analysis of AAB
`UpdateCom’s expert analyzed the source code of four
`4
`versions of AAB, and he produced a report concluding that
`they were copied from End2End. See Docket No. 379. Update-
`Com’s expert alleges literal and nonliteral copying of literal
`and nonliteral elements. In essence, though, UpdateCom’s
`expert makes two claims: first, that AAB copies End2End’s
`general architecture; and second, that AAB copies specific
`portions of End2End’s source code. We will deal with these
`two claims separately.
`1. Alleged Copying of Source Code
`UpdateCom’s expert’s report gives four examples of short
`sections of code (totaling 11 or 13 lines depending on how one
`counts) found in AAB version 1.0 that it says are “identical” to
`sections of code found in End2End. See Docket No. 379, at
`
`4. We note that UpdateCom’s expert, Angel Figueroa-Cruz, who identifies
`himself in his report as a “senior software developer” at “Update
`Computer Solutions,” Docket No. 379, at 3, is in fact UpdateCom’s
`“[p]resident and stockholder,” VERIFIED COMPLAINT, Docket No. 1, ¶ 11.
`We find this oversight in his curriculum vitae curious and potentially
`problematic.
`
`
`
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`36–40. FirstBank focuses on this small amount of alleged
`copying, arguing that even if those lines were directly copied,
`it would be de minimis and not actionable. UpdateCom re-
`sponds by claiming that its expert did not say that these were
`the only lines of code that were copied. Docket No. 386, at 2
`(“Contrary to defendant’s allegations, FirstBank illegally
`copied or used thousands of lines from End2End’s source code,
`not just 11 lines.”). The problem for UpdateCom, however, is
`that its expert report gives no support whatsoever to the claim
`that AAB copied more than, at most, the short sections of code
`listed at pages 36 through 40 of its expert report. These
`5
`supposed thousands of lines of copied code are completely
`unmentioned, and therefore we will not consider any claims
`regarding them. And even if it were established that these lines
`had been directly—and “identically”—copied, we would
`conclude
`that
`they—11
`lines of 5,000, or about
`0.22%—constituted de minimis copying in the absence of other
`
`5.
`
`Seeking application of Rule 26, FirstBank pointed out this failing.
`See Docket No. 391, at 2. UpdateCom responded that “[c]learly, Plaintiff
`Expert’s Report specifically identified where to find the rest of the
`source code lines that were ‘copied or used without’ authorization.”
`Docket No. 403-1, at 2. But it did not cite to that portion of the expert
`report, nor can we find it.
`
`
`
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`evidence. See On Davis v. The Gap, Inc., 246 F.3d 152, 172 (2d
`Cir. 2001) (“[W]here unauthorized copying is sufficiently
`trivial, ‘the law will not impose legal consequences.’” (quoting
`Ringgold v. Black Entm’t Television, Inc., 126 F.3d 70, 74 (2d Cir.
`1997))); cf. MiTek Holdings, Inc. v. Arce Eng’g Co., Inc., 864 F.
`Supp. 2d 1568, 1575, 1585 (S.D. Fla. 1994) (finding a similarity
`of, at most, 2% to be de minimis), aff’d, 89 F.3d 1548 (11th Cir.
`1996).
`But UpdateCom’s problems do not stop here. The few
`examples of “identical” source code that it has identified are
`not, in fact, identical; at best, they are merely similar. This is
`not itself a problem, as UpdateCom is entitled to allege the
`nonliterael copying of its source code. However, its expert
`report fails to make any such a showing. Figure 23, on page 37
`of the expert report, and its accompanying explanation, is a
`representative example. In the figure, some five lines of what
`is said to be AAB code are compared with five lines of End2E-
`nd code. There are superficial similarities between the com-
`pared lines (e.g., the first line of each code uses the phrase
`“byte[] RawData = new byte”), but there are also differences
`(e.g., after “new byte,” the first line of the AAB code says
`“[messageLength],” while
`the End2End code says
`
`
`
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`“[state.length]”). What the report fails to do is explain the
`significance of the similarities and differences. Instead, it gives
`a cursory explanation of what the code does (but no explana-
`tion of the specific lines) and concludes that the sections are
`“identical.” Nothing in the report, with regard to this or the
`other examples, attempts to explain why the similarities are
`significant, and not, for example, similarities required by
`efficiency or external constraints. In this sense, the report
`determines that the AAB code infringes End2End in a purely
`conclusory manner. Consequently, we cannot help but find
`that the report’s comparison of the programs’ source code at
`pages 36 through 40 fails to meet the requirements of Federal
`Rule of Civil Procedure 26(a)(2)(B), which requires expert
`reports to state the basis and reasoning behind their opinions.
`Moreover, because trial is set to begin in mere days, the only
`available remedy is striking this portion of the expert report.6
`See Santiago-Diaz v. Laboratorio Clinico y de Referencia del Este,
`456 F.3d 272, 276 (1st Cir. 2006) (affirming district court’s
`striking of a conclusory expert report, and holding that the
`“baseline” sanction for such a failure is preclusion of the
`
`6. Necessarily, then, UpdateCom’s expert will be precluded from
`testifying on these matters at trial.
`
`
`
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`evidence); Salgado v. Gen. Motors Corp., 150 F.3d 735, 742 n.6
`(7th Cir. 1998) (“Expert reports must not be sketchy, vague, or
`preliminary in nature.”); Kerlinisky v. Sandoz Inc., 783 F.
`Supp. 2d 236, 242 (D. Mass. 2011) (striking expert report that
`failed to “provide with any reasonable degree of specificity the
`basis and reasons for [the expert’s] opinions”); Elder v. Tanner,
`205 F.R.D. 190 (E.D. Tex. 2001) (striking report under Rule 26
`for failing to discuss the expert’s reasoning and thought
`process, and under Daubert for making “conclusory state-
`ments” that lacked “any elaboration or reasoning”); Fidelity
`Nat’l Title Ins. Co. of N.Y. v. Intercounty Nat’l Title Ins. Co., Civ.
`No. 00-5658, 2001 WL 789218, at *3 (N.D. Ill. July 12, 2001)
`(“Rule 26(a) requires that the expert report contain the basis for
`each opinion.”). l7
`For all of these reasons, we find that no issue of material
`fact exists with regard to FirstBank’s AAB version 1.0's alleged
`copying of literal elements from End2End.
`
`7. A final problem with these examples is that, even according to the
`expert report and the expert’s own deposition testimony, the relevant
`sections of code each seem to accomplish rather specific tasks (such as
`communicating with another vendor’s software), and, as such, are
`likely uncopyrightable under the merger doctrine or as mere
`algorithms.
`
`
`
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`2. Alleged Copying of Architectural Elements
`UpdateCom also alleges that AAB version 1.0 copies
`End2End’s architecture. It does this in two ways. First, the
`report provides a diagram of AAB’s architecture. Docket No.
`379, at 25. This diagram, which notably is completely unexpla-
`ined in the report’s text, shows, in an extremely general way,
`what AAB does. AAB, which is identified by a single box,
`seems to communicate with various other pieces of software,
`including Evertec’s ATH network and the bank’s financial
`software. See id. Though the report fails to actually make this
`comparison, the diagram is similar (though not identical) to a
`basic diagram of End2End’s functions elsewhere in the report.
`See id. at 9. In both instances, there is only a single box repre-
`senting the software at issue. No detail is provided as to how
`the software accomplishes any task; instead, the diagrams
`merely show that End2End and AAB allow interactions
`between other, disparate pieces of software. Given that the
`programs are not described at all, beyond their function, it
`hardly even seems right to refer to these diagrams as “architec-
`tural.” More to the point, UpdateCom cannot possibly be
`claiming to have a copyright of this highly generalized
`architecture, which is really nothing more than an idea for a
`
`
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`piece of software, and therefore uncopyrightable. The diagram,
`then, is neither evidence nor explanation for the report’s claim
`that the AAB architecture “follows the same path as the
`End2End Software Architecture.” Id. at 25.
`Second, UpdateCom’s expert relies on a table, supported by
`three confusing and non-contextualized images, see id. at 26–27,
`which it says shows that the AAB “architecture is identical to
`the End2End Architecture,” id. at 26. The table shows eight
`items under the heading “Description” that it says are identical
`between End2End and AAB. See id. Or at least that’s what we
`think it shows; in fact, the table goes unelaborated upon. To
`show why this matters, we will give one example. Under
`“Description,” one item is “Mainframe Queue Name,” and, for
`both End2End and AAB, it is said to be “FB.LX.QMI.” But
`without knowing what “Mainframe Queue Name” refers to,
`we cannot determine whether it is an important or relevant
`piece of the software’s architecture (or a part of the architecture
`at all). And, of course, the meaning of “FB.LX.QMI” is far from
`apparent; the report makes it impossible to determine whether
`such a name is, for example, required by the tasks that the
`software both perform. Ultimately, the report’s discussion of
`the programs’ architecture is nothing more than unexplained,
`
`
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`unsupported conclusions. As such, we must strike the section
`of the report dealing with the architecture comparison, and we
`must conclude that no issue of fact exists as to whether version
`1.0 of AAB’s architecture is substantially similar to End2End’s.
`Moreover, because these are the only sections of the report
`that deal with whether AAB versions 1.0 and later are substan-
`tially similar to End2End, we must conclude that no material
`issue of fact exists with regard to those programs’ substantial
`similarity. We therefore conclude, as a matter of law, that the
`programs are not substantially similar. As such, and without
`regard to whether any actual copying occurred, we conclude
`that AAB versions 1.0 and later do not infringe any copyright
`that UpdateCom has in End2End.
`3. When did AAB Version 1.0 Go Into Effect?
`To determine the effect of our conclusion that AAB version
`1.0 does not infringe End2End, it is necessary to know when,
`exactly, AAB version 1.0 went into production. According to
`FirstBank’s statement of uncontested material facts, that date
`was September 15, 2010. See Docket No. 375, ¶¶ 25 (version 1.0
`was the first version of AAB), 19 (AAB installed on September
`15, 2010). Relying on its expert’s report and its most recent
`spoliation motion, Docket No. 378, UpdateCom disputes this
`
`
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`date. Docket No. 387, ¶¶ 19, 25. To determine whether
`UpdateCom has successfully opposed FirstBank’s proposed
`fact, we must look at the treatment of AAB’s production date
`in UpdateCom’s expert report and spoliation motion.
`a. UpdateCom’s Fourth Motion Regarding Spoliation
`For some time now, UpdateCom has been arguing that
`FirstBank has willfully destroyed the evidence that would
`prove its liability to UpdateCom. In June 2013, we denied
`UpdateCom’s first spoliation motion, which we found to lack
`support, but ordered FirstBank to produce to UpdateCom all
`versions of the AAB source code. Docket No. 276. UpdateCom
`then sought reconsideration of our Order. Docket No. 279. We
`denied reconsideration because we found that it requested
`relief that should have been requested in the first motion, but
`which was not. Docket No. 282. UpdateCom then filed a
`purported “second” motion regarding spoliation, Docket No.
`290; it, too, was denied, because it repeated the arguments of
`the first motion and the reconsideration of that motion’s denial,
`and it was, in that sense, a motion for reconsideration of our
`denial of reconsideration. Docket No. 306. UpdateCom raised
`spoliation issues again during a status conference held on
`August 7, 2013; at that time, the Court made clear that it would
`
`
`
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`only consider arguments based on evidence that was not
`available when the previous several motions were filed. Docket
`No. 325, at 5.
`With that background in mind, we take up UpdateCom’s
`most recent spoliation motion. Docket No. 378. As stated in the
`motion, UpdateCom’s belief is that on September 15, 2010,
`FirstBank did not implement AAB; instead, it implemented a
`slightly modified version of End2End that incorporated certain
`changes required by federal regulations. See id. at 3. UpdateC-
`om contends that this modified software infringed on its
`copyright. See id. What prompted its motion, though, was
`newly-acquired evidence suggesting that early versions of
`AAB either still exist or were destroyed very late in this
`litigation.
`The basis for this belief is UpdateCom’s deposition, on
`September 4, 2013, of Omar Cruz-Salgado, formerly the project
`manager in charge of developing AAB for FirstBank. See
`Docket No. 378-1. After testifying that AAB began production
`in April 2010 and first went into production on September 15
`of that year, id. at 33, Cruz testified that he would save pre-
`production drafts of the software onto his work laptop as well
`as on FirstBank’s version control system, id. at 34. Furthermore,
`
`
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`he testified that those drafts might still exist on FirstBank’s
`computers—and that he believed that they existed at least
`through when he left the Bank, in October 2012, two years after
`this litigation began. Id. at 43–44. After these revelations,
`FirstBank’s counsel promised to look into whether these pre-
`productions drafts still existed, but none, apparently, were
`ever turned over.
`To be sure, these facts call into question whether FirstBank
`has diligently and fully complied with its discovery obligations
`in this case. Their potential for impact on this portion of the
`8
`case’s substance, however, is much smaller. This is because the
`new evidence relates solely to the existence pre-production
`copies of AAB. Cruz’s deposition testimony does not suggest
`that any of these pre-production versions were ever imple-
`mented, and, to the contrary, it fully supports FirstBank’s
`position that AAB version 1.0 was implemented on September
`15, 2010. And given our conclusion that the production version
`of AAB did not actionably infringe any copyright that might be
`held by UpdateCom, we do not see how this new evidence can
`support the remedies that UpdateCom seeks. To the contrary,
`
`8. We take up this matter in more detail below.
`
`
`
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`these pre-production versions—essentially,
`if
`even
`drafts—contained substantial, literal copying of End2End’s
`source code, that would only be evidence of actual copying.9
`UpdateCom’s claim would still fail the substantial similarity
`prong for the reasons explained above, and, accordingly, so
`would its infringement claim. Therefore, we find that no
`spoliation remedies are warranted with respect to this claim,10
`
`9. See, e.g., Walker v. Time Life Films, Inc., 784 F.2d 44, 52 (2d Cir. 1986)
`(“[E]arly drafts might be useful to show that defendants had gained
`access to plaintiff’s work, borrowed from it, and later made changes in
`order to conceal that borrowing. . . . However, since we conclude as a
`matter of law that . . . no substantial similarity exists between the
`protectible portions of the final versions the works, any error in the
`exclusion of the early drafts was harmless.”); Quirk v. Sony Pictures
`Entm’t Inc., Civ. No. 11-3773, 2013 WL 1345075 (N.D. Cal. Apr. 2, 2013)
`(finding early drafts irrelevant where only issue was substantial
`similarity); Flaherty v. Filardi, Civ. No. 03-2167, 2009 WL 749570, 11*
`(S.D.N.Y. Mar. 20, 2009) (“[T]he contents of screenplay drafts that are
`not reflected in the finished motion picture are not relevant to the
`substantial similarity analysis . . . .”), aff’d, 460 F. App’x 66 (2d Cir.
`2012); Flaherty v. Filardi, Civ. No. 03-2167, 2007 WL 2734633, *4
`(S.D.N.Y. Sept. 19, 2011) (holding that because the defendant’s ultimate
`work was not substantially similar to the plaintiff’s, “the drafts
`prepared in the course of . . . development and production constitute
`interim drafts of a published non-infringing work, and are not
`actionable under the Copyright Act”).
`
`10. As another piece of evidence in support of its motion, UpdateCom
`alleges that another FirstBank employee, Eric Lopez, testified during his
`
`
`
`Case 3:10-cv-01855-SCC Document 412 Filed 01/30/14 Page 20 of 31
`
`UPDATECOM v. FIRSTBANK
`
`Page 20
`
`and we deny UpdateCom’s motion in this regard.11
`b. The Expert Report
`Apart from an inference based on spoliation, the only basis
`for UpdateCom’s denial that AAB was implemented on
`September 15, 2010, is found in its expert report. Specifically,
`UpdateCom refers to a two-page passage in the report that
`discusses a “Software Design Document” dated September 20,
`2010. See Docket No. 379, at 44–45. According to UpdateCom,
`this passage supports the proposition that “[o]n September 15,
`2010, FirstBank started the Design of [AAB] and was finished
`on September 20, 2010.” Docket No. 387, ¶ 19 (emphasis
`added). This is, in fact, quite contrary to what the report
`actually states. In fact, the report says simply that software
`
`deposition that he was not sure whether AAB was placed into
`production on September 15, 2010. Docket No. 378, at 19. However, in
`the very portion of the deposition that UpdateCom cites for this
`proposition, Lopez testified that he personally installed AAB on that
`date. Docket No. 378-3, at 30. As a last piece of evidence, the motion
`cites the portion of expert report that we discuss in the next section.
`
`11. A large portion of the motion concerns purported new evidence that
`FirstBank did not inform its employees of their duty to preserve
`evidence. Again, this could be the proper subject of sanctions, but given
`the evidence that is missing, we do not think it would warrant the
`remedies that UpdateCom requests.
`
`
`
`Case 3:10-cv-01855-SCC Document 412 Filed 01/30/14 Page 21 of 31
`
`UPDATECOM v. FIRSTBANK
`
`Page 21
`
`design documents generally provide “guidance for the
`development team,” but that in this case, the document “was
`not used as guidance” because “it was created after” Septem-
`ber 15, 2010. Docket No. 379, at 44. The report does not purport
`to conclude, based on this document, that the development of
`AAB began on September 15, 2010. Indeed, elsewhere the report
`concludes that work on AAB began at least as early as March
`2010. See id. at 31 (“The FirstBank development of [AAB]
`source code started at least on March 25 2010 . . . .”).12
`For this reason alone, we should deem admitted FirstBank’s
`proposed fact that AAB was implemented on September 15,
`2010. However, for the sake of completeness we will deal
`briefly with the expert report’s other suggestion that AAB was
`not implemented on September 15, 2010. At two different
`points, the report suggests that AAB version 1.0 could not have
`been implemented on September 15, 2010, because it was not
`compiled until October 10, 2012. See Docket No. 379, at 28, 35.
`Compiling is the process of turning source code, which is
`
`12. UpdateCom’s also claims that Cruz’s deposition testimony supports the
`fact that development of AAB began on September 15, 2010. See Docket
`No. 387, ¶ 19. In reality, Cruz testified to exactly the opposite point: that
`the design document was created after AAB was implemented. Docket
`No. 378-1, at 86.
`
`
`
`Case 3:10-cv-01855-SCC Document 412 Filed 01/30/14 Page 22 of 31
`
`UPDATECOM v. FIRSTBANK
`
`Page 22
`
`written by a human, to another language, like object code, that
`can be read by a computer. To support his contention that AAB
`version 1.0 was not compiled until October 10, 2012, UpdateC-
`om’s expert relies completely on two figures. Each figure
`seems to be an image of a Windows file manager. On the left
`side of each figure is an extensive hierarchy of file folders; on
`the right are the contents of a specific folder, showing other
`files and file folders. In each case, certain specific files are
`surrounded by a drawn box, and these files have, according to
`the file manager, a modified and created date of October 10,
`2012, or later. See id. at 29–30, 35. The problem, though, is that
`the report fails to explain why these file folders and these files
`are significant in any respect. Moreover, it fails to explain why
`the creation date, as registered by the Windows file manager,
`matters—or even whether it is an appropriate basis on which
`to determine the date that AAB was compiled. In short, this
`section of the report suffers from precisely the same failing that
`do the sections we’ve previously discussed: it reaches conclu-
`sions without giving any real description of the expert’s
`thought process or reasoning. And as with the other sections,
`not only can these conclusions not create an issue of fact as to
`the date that AAB was implemented, the entire section must be
`
`
`
`Case 3:10-cv-01855-SCC Document 412 Filed 01/30/14 Page 23 of 31
`
`UPDATECOM v. FIRSTBANK
`
`Page 23
`
`struck as in violation of Rule 26.
` 4. Wrapping Up: Does AAB Infringe End2End?
`For all of these reasons we conclude that AAB version 1.0
`was implemented on September 15, 2010, and that it does not
`infringe any copyright that UpdateCom has in End2End. For
`all of the same reasons, we deem unopposed the fact that up
`until September 15, 2010, FirstBank was running an unmodi-
`fied version of End2End. See Docket No. 375, ¶ 17 (proposed
`fact); Docket No. 387, ¶ 17 (repeating the substance of the
`objection to fact number 19).
`D. Other Infringement Claims
`UpdateCom alleges that it is the sole author of End2End, in
`which it granted a non-exclusive license to FirstBank. We find
`that there is a genuine issue of material fact as to authorship
`and, therefore, also as to the existence of such a license. For this
`reason, summary judgment is not possible regarding Update-
`Com’s claims that FirstBank infringed its copyright by using
`End2End inconsistently with the license agreement. We note,
`however, that contrary to FirstBank’s arguments that such
`claims sound only in contract, we find such use, if proved at
`trial, might constitute infringement. We are not convinced,
`though, that all violations of a licensing agreement constitute
`
`
`
`Case 3:10-cv-01855-SCC Document 412 Filed 01/30/14 Page 24 of 31
`
`UPDATECOM v. FIRSTBANK
`
`Page 24
`
`actionable infringement. For example, while use of the product
`after the cancellation of the license, and perhaps certain
`copying in violation of the agreement is actionable, reverse
`engineering may not be. See, e.g., Davidson & Assocs., Inc. v.
`Internet Gateway, Inc., 334 F. Supp. 2d 1164, 1180 (E.D. Mo.
`2004)
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