ftp.ee.pdx.edu/2014.02.ftp.ee.pdx.edu.tar/ftp.ee.pdx.edu/pub/lpf/att-bsdi/920526.dismiss

Text File | 1992-11-03 | 16KB | 316 lines

JAMES H. FORTE (JF 2248)
SAIBER, SCHLESINGER, SATZ & GOLDSTEIN
1 Gateway Center
Newark, New Jersey 07102-5311
[phone]

ROBERT T. HASLAM
VANESSA WELLS
LESLIE A. FITHIAN
MICHAEL A. BUCCI
HELLER, EHRMAN, WHITE & McAULIFFE
525 University Avenue, 9th Floor
Palo Alto, California   94301
Telephone: [phone]


Attorneys for Defendant
Berkeley Software Design, Inc.



                   UNITED STATES DISTRICT COURT

                      DISTRICT OF NEW JERSEY

                                )  Civil Action No. 92-1667 (DRD)
                                )
UNIX SYSTEM LABORATORIES, INC., )  DEFENDANT'S MEMORANDUM OF LAW
                                )  IN SUPPORT OF ITS MOTION TO
               Plaintiff,       )  DISMISS PLAINTIFF'S SECOND
                                )  THROUGH FOURTH CLAIMS UNDER
        v.                      )  RULE 12(b)(6)
                                )
BERKELEY SOFTWARE DESIGN, INC., )  Date:  July 13, 1992
                                )  Time:  10 a.m.
               Defendant.       )  Hon. Dickinson R. Debevoise
________________________________)


                         I.  INTRODUCTION
          In its Complaint, plaintiff UNIX System Laboratories,
Inc. ("USL") has asserted four claims, three of which purport to
set out claims for false advertising, dilution and unfair
competition against Berkeley Software Design, Inc. ("BSDI").  All
of these claims are based upon BSDI's advertising that certain of
its software -- which is copyrighted by the Regents of the
University of California (the "Regents") -- is free of AT&T code
and does not require a license from USL.
          Notably absent from USL's complaint is any allegation
that USL's proprietary rights have been violated by BSDI, or any
allegation describing or defining USL's claimed proprietary rights,
issues at the very heart of USL's false advertising claim.
Apparently, USL believes it can avoid these core issues by dressing
its claim for copyright or trade secret infringement in Lanham Act
clothing.  However, USL's failure to allege such a violation makes
it impossible for its second claim for relief -- for false
advertising under Section 43(a) of the Lanham Act -- to withstand a
motion to dismiss.
          Moreover, USL's conclusory allegations based upon
dilution, and upon unidentified "unfair competition" and "deceptive
trade practices," fail to state any claim upon which relief could
be granted.  Instead of alleging any facts that could support its
claim, or citing any particular statute or body of law under which
it claims rights, USL recites mere legal conclusions, making it
impossible for BSDI to adequately respond.  Accordingly, BSDI
moves, under Rule 12(b)(6) of the Federal Rules of Civil Procedure,
to dismiss USL's second through fourth claims for relief.


                          II.  BACKGROUND
          In mid-1991, BSDI obtained the Regents' copyrighted
software -- the BSD Networking Release 2 -- from UUNET
Technologies, Inc. -- a well-known public archives site.  UUNET
Technologies licensed the software from the Regents.  After
obtaining the software, BSDI devoted considerable time and effort
developing and improving the Networking Release 2 program.  These
efforts culminated last year in the completion of the BSD/386
operating system.
          As part of its marketing of the BSD/386 system, BSDI
produced and distributed promotional brochures describing its
BSD/386 system.  One brochure states:
          BSD/386 is a "Berkeley UNIX" compatible
          operating system for the 386 and 486 PC
          architectures.  It is based on the most recent
          release from the Computer Systems Research
          Group of the University of California, Berkeley
          -- the Networking Release 2.  The NET2 tape
          contained no AT&T licensed code, but was not a
          complete system.  BSDI has completed the system
          and added additional drivers.  The resulting
          system does not require a license from AT&T,
          and so is available in source form at a
          fraction of AT&T's price.
Complaint at  24.
          As stated in the advertisement, BSDI's improvements to
the Networking Release 2 system have provided consumers with a
lower-cost alternative to the system marketed by AT&T.  Now,
without any legal or factual support, USL claims that the software
licensed from the Regents does contain AT&T code and that BSDI's
advertising violates not only federal law, but also unidentified
and unknown state statutory and/or common law.  However, USL fails
to assert any action alleging infringement of its proprietary
rights.
                          III.  ARGUMENT
     A.   USL'S Second Through Fourth Claims For Relief
          Must Be Dismissed Under Rule 12(b)(6).
          In order to avoid a motion to dismiss under Rule 12(b)(6)
of the Federal Rules of Civil Procedure, USL must set forth "`a
short and plain statement of the claim' that will give the
defendant fair notice of what the plaintiff's claim is and the
grounds upon which it rests."  Conley v. Gibson, 355 U.S. 41, 47
(1957).  At a minimum, "the pleader is required `to disclose
adequate information as to the basis of his claim for relief.'"
Universe Tankships, Inc v. United States, 528 F.2d 73, 75 (3d Cir.
1975) (citation omitted).  Because USL's second through fourth
claims fail to satisfy even this liberal pleading standard, these
claims must be dismissed.  See Conley, 355 U.S. at 48.
     B.   USL's Second Claim -- For False Advertising
          Under Section 43(a) Of The Lanham Act -- Fails
          To Adequately Allege Falsity.

          USL's claim under Section 43(a) of the Lanham Act fails
to adequately allege the most essential element of a false
advertising claim -- falsity.  See Skil Corp. v. Rockwell Int'l
Corp., 375 F. Supp. 777, 782-83 (N.D. Ill. 1974) (plaintiff must
allege that defendant made false statements of fact in order to
state a claim under Section 43(a)).  USL does cite the published
materials upon which it bases its claim.  Complaint at  24, 26.
Beyond this, however, USL offers only the conclusory assertion that
BSDI's published statements are
          materially false and misleading in that, among
          other things, the `Networking Release 2'
          referred to therein contains software code that
          was copied from, based upon, or derived from,
          code licensed to the Regents by AT&T, such that
          any operating system derived from `Networking
          Release 2' requires a license from AT&T or its
          successor, USL.

Complaint at  25; see also, Complaint at  27 (setting forth
similar allegations regarding a statement in BSDI's License
Agreement).
          In so alleging, USL merely lumps legal conclusion upon
legal conclusion, conveniently ignoring an essential component of
its false advertising claim -- unlawful copying.  See Xerox Corp.
v. Apple Computer, Inc., 734 F. Supp. 1542, 1543 (N.D. Cal 1990)
(where plaintiff failed to assert copyright infringement, it could
not adequately state a Lanham Act claim which itself depended upon
unlawful copying).
          USL's omission cannot be permitted.  To maintain its
falsity claim, USL must allege and eventually prove that the
BSD/386 operating system infringes USL's proprietary rights.  If
BSDI's operating system does not infringe USL's proprietary rights,
then the BSD/386 requires no license from AT&T, and there can be
nothing false about BSDI's statements.
          Astoundingly, though, USL has not even asserted a claim
alleging infringement of its proprietary rights.  Rather, USL has
"reserved its right" to later bring a claim for infringement of
proprietary rights, apparently conceding that it does not have a
good faith basis for such a claim at this time.  Complaint at  14.
However, if plaintiff's false advertising claim is based, as it
appears, on copyright infringement, it necessarily must include
allegations of copyright infringement on the part of BSDI.  See
Klinger v. Weekly World News, Inc., 747 F. Supp. 1477 (S.D. Fla.
1990); Gee v. CBS, Inc., 471 F. Supp. 600, 643 (1979), aff'd,
612 F.2d 572 (3rd Cir. 1979).  Because a Lanham Act false
advertising claim requires the plaintiff to plead and prove
falsity, USL cannot evade the requirements of a copyright
infringement claim by couching it as a claim under Section 43(a).
          At least one other court has rejected a similar attempt
to use the Lanham Act as a way of circumventing the Copyright Act.
In Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. at 1543, Xerox
sought damages for claimed violations of Section 43(a), premised on
an assertion that Apple unlawfully copied portions of Xerox'
copyrighted work.  Id. at 1551-53.  Similar to USL's claim in this
case, Xerox' Lanham Act claim was based on the contention that
Apple's copyright notice and claim were a "false designation of
origin" because Apple's work allegedly was based on Xerox'
proprietary technology, and thus violated Section 43(a).  Id. at
1551-52.  However, Xerox did not even assert a claim for copyright
infringement.  Id. at 1545.
          The court granted judgment on the pleadings as to the
Section 43(a) claim.  As the court stated, Xerox failed to allege
that Apple's Lisa or Macintosh Finder copyright registrations were
false, or that Apple engaged in false advertising:  Id. at 1552:
          At most, by reading between the lines of the
          complaint, it appears that Xerox' position is
          that because Apple's copyrights ought to be
          invalidated, any use by Apple of such
          copyrights constitutes a violation of  43(a)
          of the Lanham Act. . . . Xerox is putting the
          cart before the horse.  The invalidity of
          Apple's copyrights needs to be proven before
          their use can be deemed false and misleading.
          What Xerox would like, to paraphrase the Red
          Queen, is its `Verdict first, proof
          afterward!.'

Id. at 1552.
           In making its ruling, the court specifically noted
Xerox's failure to assert a claim for copyright infringement.  Id.
at 1545, 1552-53.  Indeed, it acknowledged that
          [i]f Apple were found to infringe Xerox'
          copyright, there might be some basis for Xerox
          to claim that advertising statements by Apple
          to the effect that Apple was the originator of
          the infringed ideas are actionable under the
          Lanham Act.
Xerox, 734 F. Supp. at 1552 n.18.  However, without alleging
copyright infringement, Xerox was in no position to raise a false
advertising claim that itself required a showing of unlawful
copying.  Id. at 1552-53.  As the court concluded, "[i]f Apple
copied material that Xerox created, Xerox should bring a copyright
infringement action."  Id. at 1553 (emphasis added); see also,
Hartman v. Hallmark Cards, Inc., 639 F. Supp. 816, 824 (W.D. Mo.
1986), aff'd, 833 F.2d 117 (8th Cir. 1987) (defendant who
advertised that it was "`sole and exclusive'" owner of allegedly
infringing property could not be found liable where plaintiff
failed to prove infringement).
          Likewise, if BSDI copied material for which USL owns a
copyright, USL should bring a copyright infringement action.  What
it should not -- and cannot -- do is to attempt to evade its burden
of proving infringement by disguising its infringement claim in
Lanham Act clothing.  Because USL has failed to allege copyright
infringement -- or any other violation of its proprietary rights --
it has not adequately alleged falsity and cannot state a claim for
false advertising.
     C.   USL'S Third and Fourth Claims For Relief Are
          Hopelessly Vague, And Therefore Fail To State A
          Claim Upon Which Relief Could be Granted.
          In its third and fourth claims for relief, USL has thrown
in a series of conclusory and cryptic allegations asserting a
violation of completely unidentified statutes.  Complaint at  32-
35.  Even under the liberal pleading requirements of Rule 8 of the
Federal Rules of Civil Procedure, a complaint must set forth "a
short and plain statement of the claim showing that the pleader is
entitled to relief."  Fed. R. Civ. P. 8(a)(2).  As one court has
stated:
          The purpose of the Rule 8(a) requirement of a
          plain and simple statement of the claim is to
          give the defendant fair notice of the charges
          so that a meaningful response to the pleading
          may be filed.

U.S. ex. rel. Dattola v. National Treasury Employees Union, 86
F.R.D. 496, 499 (W.D. Pa. 1980); see also, U.S. E.E.O.C. v. City
Colleges of Chicago, 740 F. Supp. 508 (N.D. Ill. 1990), aff'd, 944
F.2d 339 (7th Cir. 1991) (plaintiff "must allege sufficient facts
to outline the cause of action").  However, in its Complaint, USL
speaks in such broad-based and vague language that BSDI could not
possibly file a meaningful response.
          USL's fourth claim for relief is especially puzzling.  In
that claim, USL alleges that "BSDI's conduct constitutes unfair
competition and deceptive trade practices in violation of
applicable statutory and common law."  Complaint at  35.  Beyond
these bald legal conclusions, USL alleges nothing that would
indicate any actual claim for relief.  USL does not even tell us
what statute or statutes and what state's law it believes is
"applicable."  Nor does USL supply the particular facts upon which
it purports to base its claim.  This is significant because under
New Jersey law, "unfair competition" is not a cause of action.  It
is merely a general term encompassing a wide range of possible
causes of action.  C.R. Bard, Inc. v. Wordtronics Corp., 235 N.J.
Super. 168, 172, 561 A.2d 694, 696 (1989).
          Consequently, BSDI cannot even begin to evaluate -- never
mind respond to -- these vague assertions.  Instead of providing
"fair notice,"  see Conley, 355 U.S. at 41, USL's fourth claim for
relief merely hints at some unidentified unfair competition claim
based upon statutory or common law from one or more of the 50
states.  Plainly, these conclusory allegations fail to state any
claim upon which relief could be granted.  Therefore, the fourth
claim must be dismissed under Rule 12(b)(6).  See Duncan v. AT&T
Communications, Inc., 668 F. Supp. 232, 234 (S.D.N.Y. 1987)
(conclusory allegations which fail to give notice of the basic
events and circumstances of which plaintiff claims injury fail to
state a claim under Rule 8).
          USL's third claim for relief at least asserts a
distinguishable cause of action -- for dilution.  Yet, it too fails
to state any specific facts indicating that USL is entitled to
relief.  Nor does it declare what state's law it claims applies to
this case.  Not all states recognize a claim for dilution.  Indeed,
New Jersey has no anti-dilution statute, and no New Jersey cases
have expressly recognized the cause of action.  Without knowing
what law USL claims applies, it is impossible to evaluate whether a
dilution claim even exists, or if it does, what the elements of the
claim are and whether they are met.
          Thus, USL's conclusory allegations that "BSDI's conduct
threatens to and does impair the distinctive significance of the
UNIX mark, in violation of USL's statutory and common law rights"
is insufficient notice of USL's claim.  Complaint at  33.  Because
it would not be possible to respond to this claim, USL's third
claim for relief must be dismissed.
                          IV.  CONCLUSION
          For all of the foregoing reasons, BSDI respectfully
requests that this Court grant its motion dismissing USL's second
through fourth claims for relief pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure.

Dated:  May 26, 1992

                              SAIBER, SCHLESINGER, SATZ & GOLDSTEIN



                              By: ________________________________
                                  James H. Forte (2248)
                              1 Gateway Center
                              Newark, New Jersey  07102-5311
                              [phone]

                              Attorneys for Defendant
                              Berkeley Software Design, Inc.