Ninth Circuit Copyright Appeal Concering Non-Party Peclusion Post Taylor v. Sturgell

No. 08-15927

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DONGXIAO YUE,

Plaintiff - Appellant,

v.

STORAGE TECHNOLOGY CORPORATION; SUN MICROSYSTEMS INC.; MICHAEL MELNICK; JULIE DECECCO; MICHAEL P. ABRAMOVITZ; LISA K. RADY; JONATHAN SCHWARTZ,

Defendants - Appellees.

On Appeal from the United States District Court
for the Northern District of California
(District Case No. 5:07-CV-05850-MJJ)

REPLY BRIEF OF APPELLANT DONGXIAO YUE

Dongxiao Yue

2777 Alvarado Street, Suite C

San Leandro, CA 94577

Phone: (510) 396-0012
Fax: (510) 291-2237

Self-represented

TABLE OF CONTENTS

I. INTRODUCTION.. 1

II. SUN’S SHAM ARGUMENTS. 2

III. ARGUMENT. 3

1. The Standard of Review Should be De Novo. 3

2. Yue is Entitled to His Copyright Claims. 3

3. Yue and Netbula Are Different Persons. 5

4. Yue has an Independent Interest in Pursuing Copyright Claims Based on the Yue PWRPC Copyright 5

5. Defendants Asserted that Yue and Netbula had Conflicting Claims on the 1996 Copyright 7

6. The District Court’s Erroneously Characterized the Assignment of the 1996 Copyright as “a bit of a shell game”. 8

7. Yue Made Timely Requests to Join Netbula-Sun. 9

8. The Yue-Sun Complaint was Based on Yue’s October 22, 2007 Motion to Intervene 11

9. The Netbula-Sun Court Specifically Excluded Yue and the 00-SDK, 2K4 and YUE PWRPC Copyrights from Netbula-Sun. 12

10. The Yue-Sun Case Had Different Nucleus of Facts. 17

11. The Catch-22 Scheme is Impermissible. 21

12. Yue was Even Prohibited to Speak about His Pro Se Yue-Sun Case. 23

13. Virtual Representation Theory Had Been Disapproved. 24

14. The Privity Argument was Circular Logic. 26

15. Judge Jenkins Had No Jurisdiction to Grant Wakefield’s Oral Motion for Enlargement of Time in Yue-Sun. 28

16. Defense Counsel’s Misconduct Had Been a Major Issue Throughout the Litigations Below 29

17. Jenkins was Disqualified. 30

IV. CONCLUSION.. 32

TABLE OF AUTHORITIES

Cases

Adams v. Cal. Dep’t of Health Servs.,
487 F.3d 684 (9th Cir. 2007)....................................................... 3, 26

Chase Manhattan Bank, N.A. v. Celotex Corp.,
56 F.3d 343, 346 (2nd Cir. 1995)............................................. 26, 27

Davis v. Blige,
505 F.3d 90, 98 (2nd Cir. 2007)....................................................... 9

Effects Assocs. Inc. v. Cohen,
352 908 F.2d 555, 557–58 (9th Cir.1990)........................................ 5

Konigsberg Intern. Inc. v. Rice,
16 F.3d 355, 356–57 (9th Cir.1994)................................................. 5

Kourtis v. Cameron,
419 F.3d 989 (9th Cir. 2005)............................................................. 3

Kourtis v. Cameron,
419 F.3d 989, 999 (9th Cir.2005)................................................... 21

McBryde v. COMM. TO REV. CIR. COUNCIL CONDUCT,
264 F.3d 52, 66 (D.C. Cir. 2001).................................................... 31

Meza v. General Battery Corp.,
908 F.2d 1262 (5th Cir. 1990)........................................................ 26

Montgomery v. Noga,
168 F.3d 1282, 1291-92 (11th Cir. 1999)......................................... 6

Netbula, Llc v. Bindview Development Corporation,
516 F. Supp.2d 1137 (N.D.Cal. 9-10-2007)................................... 19

Oddo v. Ries,
743 F.2d 630 (9th Cir. 1984)............................................................ 4

Pacific Mutual Life Insurance Co. v. Haslip,
499 U.S. 1 (1991)........................................................................... 31

Polar Bear Prods., Inc. v. Timex Corp.,
384 F.3d 700, 708-09 (9^th Cir.2004)................................................. 6

Polar Bear Productions, Inc. v. Timex Corp.,
384 F.3d 700, 709 (9th Cir. 2004).................................................. 20

Rhodes v. Robinson,
380 F.3d 1123, 1129 (9th Cir. 2004)................................................ 23

Silvers v. Sony Pictures Entertainment, Inc.,
402 F.3d 881, 886 (9th Cir. 2005).............................................. 5, 16

Stewart v. Abend,
495 U.S. 207, 223 (1990)................................................................. 4

Taylor v. Sturgell,
128 S. Ct. 2161 (June 12, 2008)................................................. 3, 25

Triple Tee Golf, Inc. v. Nike, Inc.,
NO. 4:04-CV-302-A. (N.D.Tex. 8-10-2007)..................................... 5

United States v. Balistrieri,
779 F.2d 1191, 1199 (7th Cir. 1985)................................................ 30

Statutes

17 U.S.C. § 103(b)............................................................................ 4

17 U.S.C. § 201(a)............................................................................. 3

17 U.S.C. § 201(d)(1)........................................................................ 9

I. INTRODUCTION

Plaintiff-Appellant Dongxiao Yue authored the “YUE PWRPC” software (Reg. No. TXu 1-576-987)[1] before he founded Netbula. As a derivative work of YUE PWRPC, the “1996 Copyright” litigated in Netbula-Sun only protects the additional code that Netbula added from July 1996 to September 1996. Yue is entitled to bring infringement claims on his own copyrights.

The key question in this appeal is whether Yue and his copyrights were adequately represented in the Netbula-Sun action. The answer is no. At the district court, Defendants asserted that Yue and Netbula had conflicting claims on the copyrights. This conflict alone precludes a privity relationship between the two. In addition, the Netbula-Sun court specifically excluded Yue and explicitly excluded the YUE PWRPC, “00-SDK” and “2K4” copyrights. Therefore, Yue, a non-party to Netbula-Sun, was not represented in Netbula-Sun as to his copyright claims.

The Adams case the district court relied on dealt with the situation where a party filed a second suit. In this case, Yue is a non-party to Netbula-Sun. Non-party preclusion by virtual representation has been recently disapproved by the Supreme Court.

The rest of Sun’s arguments will be also addressed in more detail below.

II. SUN’S SHAM ARGUMENTS

In Defendants’ Answer Brief (“DAB”), Sun claims that Netbula assigned the copyrights to Yue “after the close of discovery” in Netbula-Sun. DAB 2. This is false. The “00-SDK” and “2K4” copyrights were assigned to Yue on September 26, 2007. ER.3:17-20. Netbula deposed Sun’s FRCP 30(b) (6) witness Michael Abramovitz on October 23, 2007. ER.31:27-28; See also, Exhibits to Appellees’ Supplemental Request for Judicial Notice, SRJN071. There had been very little discovery in Netbula-Sun[2]. On January 10, 2008, the Netbula-Sun court ordered that the “[d]iscovery issues shall be discussed at next status conference hearing” set for January 22, 2008. See, Civil Minutes (Document 136), Exhibit E to Appellant’s Request for Judicial Notice (“RFJN”).

Defendants also contend that Yue’s action was a “parallel lawsuit to circumvent” the Netbula-Sun summary judgment order. This is false. Yue filed this lawsuit on November 19, 2007. The Netbula-Sun court issued its summary judge order on January 18, 2008. Yue could not have predicted the outcome of Yue-Sun when he filed the suit. In fact, the Yue-Sun complaint was directly derived from the Yue’s October 22, 2007 motion to intervene and join Netbula-Sun. That motion was before Sun’s motion for summary judgment in Netbula-Sun.

Falsus in uno, falsus in omnibus. The above are just two examples.

III. ARGUMENT

1. The Standard of Review Should be De Novo

Sun contends that the Court should follow Adams v. Cal. Dep’t of Health Servs., 487 F.3d 684 (9th Cir. 2007) and apply abuse of discretion standard on dismissing duplicative actions. As stated in Appellant’s Opening Brief (“AOB”), the Adams case is inapplicable to this lawsuit. In Adams, the same party-plaintiff filed a second suit against the same defendants. In this lawsuit, a non-party to Netbula-Sun filed the second case. The controlling authority for the instant situation should be the copyright case Kourtis v. Cameron, 419 F.3d 989 (9th Cir. 2005) (no privity relationship between an employer and an employee who filed successive copyright lawsuits against the same defendant). This appeal has mixed questions of law and fact. De novo review is the proper standard on the dismissal order.

2. Yue is Entitled to His Copyright Claims

Copyright in a work “vests initially in the author or authors” of a work. 17 U.S.C. § 201(a). Yue authored the “YUE PWRPC” software from 1994 to July 1996, he has always been the owner of the YUE PWRPC.

Netbula, LLC was founded in July 1996. Its PowerRPC software was a derivative work of YUE PWRPC. First Amended Complaint of Yue-Sun (“FAC”) at ¶ 15; ER.3:14-17. The 1996 version of PowerRPC has Registration No. TX 6-211-063 (the “1996 Copyright”). Netbula also registered other versions of PowerRPC, including the “00-SDK” (Reg. No. TX 6-437-847) and “2K4” (Reg. No TX 6-491-697) copyrights.

“The copyright in a . . . derivative work extends only to the material contributed by the author of such work.” 17 U.S.C. § 103(b) (emphasis added). Elements drawn from a pre-existing work remain the property of the owner of the pre-existing work and “[i]t is irrelevant whether the pre-existing work is inseparably intertwined with the derivative work.” Stewart v. Abend, 495 U.S. 207, 223 (1990).

In Oddo v. Ries, 743 F.2d 630 (9th Cir. 1984), Oddo and Ries formed a partnership to create a book partially based on magazine articles Oddo previously wrote. Dissatisfied with Oddo’s progress, Ries hired another writer to complete the manuscript Oddo was writing and published the finished book. The Ninth Circuit found that Ries did not infringe the partnership’s copyright in the manuscript but infringed Oddo’s copyrights in the magazine articles. Here, like Oddo, Yue retained the copyrights in the YUE PWRPC software, from which PowerRPC was derived.

Defendants point out that Yue granted Netbula an “oral license” for creating derivative work. DAB 40. This fact shows that Yue retained the ownership of YUE PWRPC copyrights, because an exclusive copyright license or transfer of copyright ownership must be in writing. Konigsberg Intern. Inc. v. Rice, 16 F.3d 355, 356–57 (9th Cir.1994). See also Effects Assocs. Inc. v. Cohen, 352 908 F.2d 555, 557–58 (9th Cir.1990).

3. Yue and Netbula Are Different Persons

Yue is a natural person; Netbula is an artificial entity founded in July 1996. Netbula never owned the YUE PWRPC copyright and never had standing to bring suit based on Yue’s copyrights, because “only owners of an exclusive right in the copyright could bring suit.” Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881, 886 (9th Cir. 2005) (individual cannot sue on copyrights owned by a company). See also, Triple Tee Golf, Inc. v. Nike, Inc., NO. 4:04-CV-302-A. (N.D.Tex. 8-10-2007) (the corporation had no standing to sue on copyrights owned by its founder).

4. Yue has an Independent Interest in Pursuing Copyright Claims Based on the Yue PWRPC Copyright

YUE PWRPC was registered on November 27, 2007 with Registration Number TXu 1-576-987. Yue timely informed this Court and the court below about the status of registration[3] in July 2008.

Sun claims that the “pre-July 1996” YUE PWRPC copyright protected the same thing: “the right to control copying of PowerRPC software”. DAB 36. This is incorrect. The “Netbula registrations” only cover the software code added by Netbula in those particular versions. The pre-Netbula elements Yue authored remain the property of Yue. Only Yue can assert copyrights claims based on his copyrights[4]. See, Silvers.

Under the copyright law, Yue is entitled to recover damages and defendants’ profits attributed to the infringement of Yue’s copyrights; and Netbula is entitled to recover damages and profits attributed to the infringement of Netbula’s copyrights. “Actual damages are usually determined by the loss in the fair market value of the copyright.” Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 708-09 (9^th Cir.2004). In determining the damages, the features and functionality of the software are factors to be considered. See Montgomery v. Noga, 168 F.3d 1282, 1291-92 (11th Cir. 1999) (discussing the software features, speed, percentage of source code changes in the context of assessing damages). With respect to Defendants’ profits, the factors such as software features and even number of lines of code may be used as apportionment measures. For instance, in the Netbula v. BindView case, defense counsel Laurence Pulgram and Jedediah Wakefield attempted to use the lines of code to determine the apportionment of BindView’s profits.

Defendants contend that “Netbula claimed to hold all such exclusive rights in the PowerRPC product.” DAB 34-35 (emphasis added). Defendants add the word “all” themselves. In Netbula-Sun, Netbula alleged exclusive rights under the Copyright Act with respect to “the only copyright at issue” -- the 1996 Copyright – in that case. Netbula had no exclusive rights with respect to the pre-Netbula YUE PWRPC code. Yue has the exclusive rights in the pre-Netbula software he wrote.

5. Defendants Asserted that Yue and Netbula had Conflicting Claims on the 1996 Copyright

As discussed at AOB 20, Defense counsel Laurence Pulgram wrote in one of the motions below:

there is a common question of whether Yue or Netbula holds the copyrights in the software, and what parts are owned by each.

ER.30:22-26. The word “or” in the “whether … or” construct leads to the question: does Yue hold the copyrights, or does Netbula hold the copyrights? Defendants elaborated their point further: for each part of the software, they would question who owns the copyrights of that part. Basically, they would pit Yue against Netbula in terms of copyright ownership. Two persons claiming the same copyrights are making conflicting claims.

Defendants’ game plan was fully revealed in the related litigation. See, ER.52:7-18, Declaration of Yue at ¶¶5-6 (“Laurence Pulgram pointed out that [Yue] owned the copyright”). This gambit prompted Netbula to assign its “1996 Copyright” to Yue, in an effort to streamline the litigation. Netbula also assigned the other copyrights, including the “00-SDK” and “2K4” copyrights to Yue.

6. The District Court’s Erroneously Characterized the Assignment of the 1996 Copyright as “a bit of a shell game”

Because of the transfer of the 1996 Copyright, Netbula filed a motion to substitute Yue as the plaintiff as to the copyright claim in Netbula-Sun. The following was an exchange between Netbula’s former counsel Vonnah M. Brillet and former presiding judge on the reason of the assignment:

Ms. Brillet: Because of the fact that there are two portions of the code that have been involved. One set is the set that was created before the advent of Netbula, and the other set is after. So by making him a party in this action now, there would just be one owner.

THE COURT: It’s a bit of a shell game, isn’t it? Isn’t that what it is? They are one in the same… The only thing that’s accomplished there is that he gets to stand before the Court and makes arguments.

Transcript of the November 20, 2007 hearing of Netbula’s Motion to Substitute Party as to the Copyright Claim, pp.11:23-12:15; ER.39; SRNJ016-17 (emphasis added).

The former judge’s characterization of the transfer as “a shell game” was unfounded. “An author or proprietor of a literary work or manuscript [or other work protected by the Copyright Act] possesses such a right of sale as fully and to the same extent as does the owner of any other piece of personal property. It is an incident of ownership.” Davis v. Blige, 505 F.3d 90, 98 (2nd Cir. 2007). See also, 17 U.S.C. § 201(d)(1). As the owner of the “1996”, “00-SDK” and “2K4” copyrights, Netbula had every right to transfer them to whoever it liked.

Defendants’ allegation that Netbula transferred the copyright for the purpose of allowing Yue to act pro se is unfounded. Yue always owned the YUE PWRPC copyright, he did not need additional copyrights to bring his action, pro se or not.

7. Yue Made Timely Requests to Join Netbula-Sun

On October 22, 2007, Yue filed a motion to intervene and join Netbula-Sun. For the timeliness of the intervention, Yue argued:

The parties are still engaged in discovery of the first phase of the case. There has been no dispositive motion filed. Therefore, Dr. Yue’s application to intervene is timely.

SRJN207 (emphasis added).

Defendants characterize Yue’s effort to join Netbula-Sun as “untimely motion to intervene.” DAB 48. The Netbula-Sun court made no findings on the timeliness of Yue’s motion; it simply granted Sun’s motion to vacate Yue’s motion in an ex parte proceeding.

The Netbula-Sun court set discovery cut-off for the “license/contract” issues of August 31, 2007. But, the parties agreed to extend the discovery period. Sun took the deposition of Yue on September 12, 2007. Netbula deposed Sun’s first witness Michael Melnick on September 19, 2007. One month later, on October 23, 2007[5], Netbula deposed Sun’s “30(b)(6)” witness -- Mr. Michael Abramovitz. See SRJN071 for the dates of the depositions.

The timing of Netbula-Sun discovery explains why Yue filed the motion to intervene and for injunctive relief in October 2007. At the December 6, 2006 TRO hearing, Magistrate Judge Bernard Zimmerman stated that plaintiff could come back for a preliminary injunction at “any time” after it had more evidence. SRJN285. Since Sun and StorageTek did not produce any witness for deposition until September 19, 2007, Yue’s October 22, 2007 motion to intervene and for injunctive relief was made without delay.

Yue recognized that it was far more efficient for him to join Netbula-Sun than to file a separate lawsuit. On October 25, 2007, he wrote to Sun’s defense counsel to seek a stipulation that would allow him to join Netbula-Sun. ER.54:13-17. Yue also informed the Netbula-Sun court that he needed to assert additional claims. Yue delayed his lawsuit to make additional effort to work out a reasonable stipulation with Sun. Sun refused to stipulate to Yue’s participation in Netbula-Sun. ER.55-56.

8. The Yue-Sun Complaint was Based on Yue’s October 22, 2007 Motion to Intervene

After the Netbula-Sun court vacated the hearing of Yue’s motion to intervene-join and after Sun refused to stipulate to Yue’s participation in Netbula-Sun, Yue filed the instant Yue-Sun case.

The Yue-Sun complaint was directly based on Yue’s October 22, 2007 motion to intervene and for injunctive relief. One can compare the October 22, 2007 motion (SRJN191-216) and the FAC of Yue-Sun and see that they are very similar. For instance, in the October 22, 2007 motion, Yue stated that “StorageTek had no licenses after it was acquired by SUN in August 2005” and any distribution after the acquisition “is infringement.” SRJN212. This claim based on the termination of the agreement was not in the Netbula-Sun complaint; it was first introduced in Yue’s October 22, 2007 motion.

FRCP 24(c) requires that a motion to intervene “be accompanied by a pleading that sets out the claim or defense.” The motion for injunctive relief also requires a showing of likelihood of success on the merits of the copyright claims. The Yue-Sun complaint was a continuation of the October 22, 2007 motion.

9. The Netbula-Sun Court Specifically Excluded Yue and the 00-SDK, 2K4 and YUE PWRPC Copyrights from Netbula-Sun

In the October 31, 2007 ex parte hearing[6], the Netbula-Sun court vacated Yue’s FRCP 24(a) motion to intervene and join Netbula-Sun, upon Sun’s motion for administrative relief. So, the FRCP 24(a) route for Yue to join Netbula-Sun had been closed.

On November 20, 2007, the Netbula-Sun court heard Netbula’s motion to substitute Yue as the copyright plaintiff as to the 1996 Copyright. Netbula’s former counsel, Ms. Brillet, was to argue this motion. The judge started out like this (quoting from transcript, see SRJN008):

THE COURT: OKAY. SO WE HAVE TWO MATTERS ON THIS MORNING. ONE IS THE … REQUEST TO SUBSTITUTE MR. YUE AS A PARTY IN THIS MATTER, DR. YUE, RATHER.

The judge then asked Dr. Yue: “Are you Mr. Yue?” After confirming that Dr. Yue was Mr. Yue, the judge told Yue to “listen and hear me clearly” and then stated that Yue “should cease and desist” from filing papers. And even if the district court would grant Netbula’s motion to replace Yue as the copyright plaintiff, “it still would not give [Yue] authority to do so…” ER.40; SRJN009.

The subsequent exchange was the following:

MR. YUE: WHAT'S THE COURT'S LEGAL RATIONALE FOR THAT?

THE COURT: THAT IS THE RATIONALE, AND THAT'S THE STATEMENT.

MR. YUE: FOLLOWING RULES OF CIVIL PROCEDURE --

THE COURT: MR. YUE, I AM GOING TO HAVE YOU TAKEN OUT IF YOU DON'T BE QUIET.

Id. The Netbula-Sun court was unambiguous: it would not allow Yue to file pleadings, one way or the other.

The Netbula-Sun court understood that there was a question about copyright ownership, and that Yue wanted to join Netbula-Sun to amend the complaint based on Yue PWRPC copyrights.

THE COURT: I KNOW SOMETHING TRANSPIRED IN THE COURSE OF A DEPOSITION AND THERE WAS SOME QUESTION ABOUT OWNERSHIP. I CAN READ THIS RECORD, AND IT SAYS FAIRLY CLEARLY THAT NETBULA WAS CREATED IN JULY OF 1996...

THE COURT: BUT WHAT I UNDERSTAND IS THE SOFTWARE AT ISSUE MIGHT BE ITERATIONS DOWNSTREAM OF THE PWRPC AND THE ONC RPC DEVELOPED IN THE '94/'95 TIMEFRAME.

THE COURT: DOWNSTREAM HE [Yue] WANTS TO FILE A MOTION TO AMEND.

2007/11/20, Tr. pages 5 and 7; SRJN010, SRJN012 (emphasis added).

At that point of the hearing, Defense counsel presented the 1996 Copyright certificate to the Netbula-Sun court:

MR. PULGRAM: WOULD IT BE HELPFUL TO LOOK AT THE COPYRIGHT REGISTRATION?

THE COURT: OF COURSE.

MR. PULGRAM: YOUR HONOR, THERE IS ONE COPYRIGHT THAT'S SUBJECT TO THIS CLAIM. IT IS IN THE NAME OF THE AUTHOR --

THE COURT: THAT'S SUBJECT TO?

MR. PULGRAM: EXCUSE ME?

THE COURT: SUBJECT TO?

MR. PULGRAM: THAT IS SUBJECT TO A CLAIM HERE. AS YOU KNOW, ANY COPYRIGHT REQUIRES ACTION, REQUIRE IT BE BROUGHT ON A REGISTERED COPYRIGHT. THERE'S ONE REGISTRATION. THIS IS IT... MR. YUE IS NOT LISTED ON THIS COPYRIGHT ANYWHERE. THE CLAIMANT ON THE COPYRIGHT IS NETBULA, LLC. THE COPYRIGHT HAS BEEN PURSUED BY NETBULA, LLC IN THIS ACTION FOR 10 MONTHS.

THE COURT: LET ME JUST STOP YOU.

MR. PULGRAM: YES, YOUR HONOR.

THE COURT: IS THIS THE ONLY COPYRIGHT AT ISSUE --

MR. PULGRAM: YES.

Tr. pp.8:10-9:6; SRJN013-14. By specifically constraining the Netbula-Sun action to the 1996 Copyright, the Netbula-Sun court and Sun excluded the other copyrights and Yue’s participation. The Netbula-Sun court’s effort to exclude Yue was also evident from the following exchange in that hearing:

THE COURT: BUT YOU DON'T ARGUE THAT THE ASSIGNMENT IS NOT VALID, RIGHT?

MR. PULGRAM: EXCUSE ME?

THE COURT: YOU DON'T ARGUE THE ASSIGNMENT IS NOT VALID?

MR. PULGRAM: THERE IS SOME LAW TO THAT EFFECT, YOUR HONOR.

THE COURT: BUT IT'S NOT BEFORE ME. I HAVEN'T SEEN THAT IN YOUR PAPERS.

MR. PULGRAM: I BELIEVE THERE'S A PARAGRAPH, THE LAST PARAGRAPH OF OUR ARGUMENT. BUT I DON'T THINK YOU HAVE TO REACH THAT.

THE COURT: THAT'S WHAT I AM SUGGESTING TO YOU. SO TO DENY THE MOTION MEANS THAT HE'S NOT SUBSTITUTED IN AS A PARTY?

Tr. p.15:5-19; ER.58; SRJN020. Based on the above, Yue alleged that the Netbula-Sun court coached defense counsel Pulgram.

Defendants disagree. In their answer brief, they say the following:

There is similarly no merit to Yue's assertion... What the district court "suggested" was that, in ruling on the motion to substitute, it need not reach the question whether the assignment was valid. SRJN 20,11/20/07 Transcript at 15:5-17..

DAB 47, fn.9 (emphasis original). Essentially, Defendants think that the word “THAT” in “THAT’S WHAT I AM SUGGESTING TO YOU” was referring to Pulgram’s “BUT I DON'T THINK YOU HAVE TO REACH THAT.”

Defendants now claim that “Netbula had the right to continue pursuing the [Netbula-Sun] case even after the alleged assignment, and could have timely sought leave to amend to identify its other alleged copyrights.” DAB 45. But, Netbula could only continue its action on the copyright originally pled in the complaint – the 1996 Copyright. After the assignment, Yue became the sole owner of the 00-SDK and 2K4 Copyrights. Under Silvers v. Sony Pictures Entertainment, Inc., 402 F.3d 881, 886 (9th Cir. 2005), only Yue had the standing to bring suit on these two copyrights.

10. The Yue-Sun Case Had Different Nucleus of Facts

Defendants allege that “Yue fixates on a comment by Judge Jenkins that the [Netbula-Sun] case was not ‘completely overlapping’ with [Yue-Sun]” in his nonparty preclusion analysis. DAB 28. This is untrue. Yue only mentioned the “not overlapping” statement when discussing the retroactive disqualification of the judge. See page 42 of Yue’s opening brief.

Instead, Issues 1-4 of Yue’s appeal ask a very simple question: whether non-party Yue had had his day in court to vindicate his copyright claims on the merits. The answer to that question is undeniably no.

Defendants claim that “Yue has alleged infringement of different registrations allegedly protecting the same software.” DAB 30. This statement confuses the issues. Yue alleged that defendants infringed his YUE PWRPC, 00-SDK and 2K4 copyrights. A specific copyright protects the specific work[s] of authorship fixed in a tangible medium of expression. These three copyrights are distinct intellectual property rights, each protecting specific and distinct software code -- statements of instructions written in computer programming languages. Therefore, Yue-Sun involves intellectual property rights that are disjoint from what is at issue in Netbula-Sun.

Defendants claim that the facts concerning defendant Abramovitz “were all identified as a basis for the infringement claims in [Netbula-Sun].” However, “Abramovitz” did not appear in the Netbula-Sun complaint and Yue only learnt about Abramovitz’s activities in October 2007. Similarly, Yue only came to know about Lisa K. Rady around October 2007 and learnt that she participated in the unlimited licensing of PowerRPC to third parties even after she wrote in her email that “we have exceeded the 1,000 distributions that we had right to”… Yue wanted to join Netbula-Sun and pursue these claims, but he was rejected.

The district court’s half-page analysis of the transactional nucleus of facts focused on the “transactions” in which StorageTek bought the licenses, and led to the following conclusion:

It is clear, therefore, that the two actions arise out of the same transactional nucleus of facts - Defendants’ license agreements with Netbula and Defendants’ use of Netbula’s PowerRPC software.

ER.46:3-12. Defendants are now essentially repeating the same. But the most relevant facts are the ones that give rise to a claim of infringement, not the purchase transaction that provided defendant a copy.

The district court noted that “much of the Yue-Sun Complaint is a verbatim restatement of Mr. Yue’s declaration presented to the Court in opposition to the Netbula-Sun defendants’ motion for summary judgment.” ER.46:8-10. Notwithstanding the fact that the Yue-Sun complaint was based on the October 22, 2007 motion, one simply cannot state a claim in a declaration that only states facts. The Netbula-Sun court’s legal standard was clear: “a plaintiff may not amend its complaint through argument in a brief opposing summary judgment, the Court will not address Plaintiff's new claim.” Netbula, Llc v. Bindview Development Corporation, 516 F. Supp.2d 1137 (N.D.Cal. 9-10-2007) (Jenkins, J.). Therefore, even assuming that a plaintiff can add new claims in an opposition to a summary judgment, Judge Jenkins would not allow it, and he certainly did not.

In the January 18, 2008 summary judgment order in Netbula-Sun, Judge Jenkins decided the following three issues on the merits:

(1) The User Count for the SDK license

The SDK agreement stated one user “for each of the licenses purchased” may “use the PowerRPC SDK Product under Windows NT and 95/98 platforms; each user can only use the software on one computer….” On this issue, Judge Jenkins wrote:

both the 2000 and 2004 Agreements state that one user may use each of the licenses purchased. This provision does not limit how the software may be used… the limitation on the number of users … does not limit or condition the use of the license. Therefore, because this provision is not a limitation on the scope of the license, Plaintiff is not entitled to a copyright infringement claim on this issue.

The Netbula-Sun court didn’t cite any authority which held that a “one user on one computer’ restriction “does not limit or condition the use of the license.” Even so, its holding was a narrow one.

The Yue-Sun action, filed two months before that order, alleged different infringing activities with respect to the SDK, such as exceeding both the number of users and the number of computers. Counts I, II, III, V and VII of the FAC.

(2) The Excess Distribution of PowerRPC

The 2000 agreement stated that StorageTek “shall pay Netbula …for the right to distribute up to 1000 units of software containing the Supporting Programs." The Netbula-Sun court admitted that the agreement was a “prepayment” agreement. The licenses were countable. Mr. Melnick wrote in an internal email: “We have only made 2 purchases for the rights to distribute a total of 2000 licenses.”

On exceeding the number of licenses, the Netbula-Sun court again concluded that the “prepayment” term is merely a contract covenant.

Yue-Sun involved claims that are different, such as distributing infringing derivative works, issuing floating licenses, fail to comply with the limited distribution clause, inducing infringement by others… See Counts IV, V, VIII and IX of the FAC.

(3) The Termination of the Netbula-StorageTek Agreement

The Netbula-StorageTek agreement was allegedly terminated upon Sun’s acquisition of StorageTek. The Netbula-Sun court held that “this [termination] provision does not limit the scope of the license.” The Yue-Sun action filed in 2007 alleged that whatever license ceased to exist because it was terminated. This case was about the existence of the license, not the scope. See Count X of the FAC.

In summary, the January 18, 2008 Netbula-Sun order only resolved three narrow issues. The Yue-Sun case filed in 2007 had 10 counts of infringement against seven defendants that were different from the claims in Netbula-Sun.

11. The Catch-22 Scheme is Impermissible

Defendants also say “[a]ny alleged infringement of the ‘additional copyrights’ could have and should have been brought, if at all, in the [Netbula-Sun] litigation.” DAB 35. See also, DAB 27-28, 35, 47 and 59.

Because Defendants made the judicial admission that Netbula and Yue had conflicting claims on the copyrights, “[t]he onus therefore rested with [defendant] to join the [plaintiff] to the [first] litigation. The [plaintiff] themselves were under no obligation to intervene...” Kourtis v. Cameron, 419 F.3d 989, 999 (9th Cir.2005).

But, Yue did make every effort to join Netbula-Sun. In addition to his October 22, 2007 motion to intervene and join Netbula-Sun, Yue also wrote to Sun’s defense counsel on October 26, 2007:

I am about to assert additional claims against StorageTek… For judicial economy, I think it’s far efficient for you to stipulate to the substitution of party by replacing Dongxiao Yue as the copyright plaintiff in the C06-07391-MJJ case.

ER.54:14-19; SRJN128-129 (emphasis added). Sun’s response was outright refusal. Sun’s counsel also authored the following court order:

Defendants’ Motion for Administrative Relief to Vacate Hearing on Non-Party Dongxiao Yue’s Request for Injunctive Relief and Impoundment [Docket Nos. 80-81] is hereby GRANTED.

SRJN132 (Doc. No. 94, Netbula-Sun) (emphasis added).

On November 19, 2007, as he had previously informed Sun and the Netbula-Sun court, Yue filed the Yue-Sun action. At the hearing next day, the Netbula-Sun court considered allowing Yue to join that case as co-plainitff[7], the following was the exchange:

THE COURT: [ALLOWING YUE] COMING IN AS A PARTY BUT RETAINING NETBULA AND THE REQUIREMENT THAT NETBULA BE REPRESENTED BY COUNSEL, HOW DOES THAT UPSET THE HEARING OF THOSE MOTIONS?

MR. PULGRAM: WELL, YOUR HONOR, IT'S NOT CLEAR TO ME WHAT… WOULD BE THE BENEFIT OF ALLOWING HIM TO APPEAR ON THOSE MOTIONS.

Tr. p.14:6-12; SRJN019. Again, Sun succeeded in excluding Yue from Netbula-Sun.

So, Defense counsel is playing this game: when Yue requests to join Netbula-Sun, they say no; when Yue files a separate lawsuit, they say Yue should have joined Netbula-Sun. This scheme is similar to a classic trap called Catch-22.

There was only one catch and that was Catch-22 ... Orr would be crazy to fly more missions and sane if he didn't, but if he was sane he had to fly them. If he flew them he was crazy and didn't have to; but if he didn't want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.

"That's some catch, that Catch-22," he observed.

"It's the best there is," Doc Daneeka agreed.

Rhodes v. Robinson, 380 F.3d 1123, 1129 (9th Cir. 2004) (quoting Joseph Heller, Catch-22, at 47 (6th ed. 1976)). No matter what he does, Yue can not have his day in court to litigate his copyright claims on the merits. Such scheme is impermissible, and must fail as a matter of law.

12. Yue was Even Prohibited to Speak about His Pro Se Yue-Sun Case

Defendants filed a motion to relate Yue-Sun to Netbula-Sun, which would cause Yue-Sun to be assigned to Martin J. Jenkins. Under Local Rule 3-12 (b) of the Northern District of California, the parties in Yue-Sun must file “related cases” motion papers in the Netbula-Sun case. Because the Netbula-Sun court had prohibited Yue from filing papers, Yue could not file any response[8]. Instead, Yue wrote letters to the court to seek clarification. Yue stated that if permitted he would file a response[9]. But the Netbula-Sun court did not grant Yue the permission to respond.

On December 14, 2007, Netbula-Sun court held a hearing on Sun’s motion for summary judgment. At the end of the hearing, Jedediah Wakefield, a defense attorney of the Netbula-Sun case, said to Judge Jenkins: “We propose some scheduling –-”. ER.26:2-3. When Yue, the pro se Plaintiff in Yue-Sun, tried to seek clarification, Jenkins forbade Yue to speak. Jenkins then stated that Defendants could delay answering the Yue-Sun complaint.

On February 8, 2008, Jenkins stated the following in an order:

During the November 20, 2007 hearing, the Court instructed Yue that he could not file motions, notice hearing dates, or speak in court unless he had leave of court or until he was given permission to represent himself. During the December 14, 2007 hearing, the Court again admonished Yue for attempting to speak without leave of Court.

ER.62:11-14; SRJN004 (emphasis added).

13. Virtual Representation Theory Had Been Disapproved

The district court reasoned that because “four of the five provided declarations in support of summary judgment in the Netbula-Sun case,” all five defendants were “virtually represented” in Netbula-Sun. As for plaintiff Yue, the district court stated that “Yue is the founder and president of Netbula, LLC and thus may be seen as virtually represented in the Netbula-Sun action.” ER.47-48 (emphasis added). The district court’s “analysis” was conclusory as it failed to apply the five-factor test.

The district court’s dismissal of the Yue-Sun action was based on the so called “virtual representation” doctrine stated in Adams v. Cal. Dep’t of Health Servs., 487 F.3d 684 (9th Cir. 2007). Adams is inapplicable to this case, because this case deals with non-party preclusion. Even if Adams applies, the “virtual representation” theory relied by Adams has been disapproved in Taylor v. Sturgell, 128 S. Ct. 2161 (June 12, 2008)[10].

In Taylor v. Sturgell, Greg Herrick asked his friend and “close associate” Brent Taylor to help restore a vintage airplane. Herrick filed an FOIA lawsuit to obtain technical documents for the airplane. Herrick and Taylor shared documents obtained in the discovery of Herrick’s suit. After Herrick lost the lawsuit, Taylor hired Herrick’s lawyer and filed a second FOIA lawsuit seeking exactly the same documents. Applying a five-factor test for “virtual representation”, the D.C. Circuit affirmed a dismissal by claim preclusion. The Supreme Court disapproved “virtual representation” and vacated the judgment of the D.C. Circuit.

Defendants now claim that Yue had assumed control of the Netbula-Sun litigation and Yue wholly owned 100% of Netbula. There is nothing in the record to support their assertions. Moreover, Netbula cannot, as a matter of law, sue on Yue’s copyrights.

14. The Privity Argument was Circular Logic

In Kourtis v. Cameron, the Court explained the concept of “privity”:

Privity "is a legal conclusion designating a person so identified in interest with a party to former litigation that he represents precisely the same right in respect to the subject matter involved."

Kourtis v. Cameron, 419 F.3d at 996 (emphasis added). Under federal law, “concepts summarized by the term privity are looked to as a means of determining whether the interests of the party against whom claim preclusion is asserted were represented in prior litigation.” Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 346 (2nd Cir. 1995).

Since privity is just a word to express a legal conclusion of preclusion, using privity as basis of preclusion is prone to circular logic, which is a false form of reasoning of putting the conclusion into the premises. Thus, if in any part of the preclusion analysis, the word privity is used in the argument, the result is a logical fallacy of circular argument. Indeed, courts have noted that “privity has shown itself to be an elusive and manipulable concept” and should be only used as “a convenient means of expressing conclusions that are supported by independent analysis.” Meza v. General Battery Corp., 908 F.2d 1262 (5th Cir. 1990). “Privity may exist for the purpose of determining one legal question but not another depending on the circumstances and legal doctrines at issue.” Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 346 (2nd Cir. 1995) (finding the transferee of a building not in privity with the prior owner in successive lawsuits on the same damages to the building). “[D]ue process considerations make adequacy of representation a prerequisite to privity.” Kourtis, 419 F.3d at 996 (emphasis added).

The district court’s privity analysis, in its entirety, was the following:

In addition, Netbula assigned all of its copyrights prior to January 1, 2007 to Yue. Therefore, Yue is an assignee and is in privity with Netbula. Yue and Netbula are, therefore, in privity.

ER.48:18-22 (internal citations omitted).

First, the district court ignored the pre-Netbula YUE PWRPC copyright that Yue always owned; there was no assignment with respect to that copyright. Second, the 00-SDK and 2K4 Copyrights were not represented in Netbula-Sun. The Netbula-Sun court excluded the YUE PWRPC, 00-SDK and 2K4 copyrights from Netbula-Sun. There was no privity between Netbula and Yue with respect to the claims associated with these copyrights.

Also, like the Chase Manhattan Bank case, the Yue-Sun and Netbula-Sun cases were before the same judge. Instead of consolidating the cases as Yue had proposed back in October 2007[11], the district court dismissed Yue-Sun with prejudice. “Given that the two cases were in the same court and assigned to the same judge, the use of res judicata was something of an ambush.” Id. at 347. There had been no final judgment in Netbula-Sun, yet the district court precluded Yue and dismissed the case with prejudice.

15. Judge Jenkins Had No Jurisdiction to Grant Wakefield’s Oral Motion for Enlargement of Time in Yue-Sun

Yue’s December 17, 2007 letter to Judge Jenkins (copied to Judge Illston) clearly stated that the Yue-Sun case was then presided by Judge Illston, indicating that Judge Jenkins lacked jurisdiction to grant the extension. The letter also noted the lack of due process[12] in the proceedings. ER.23-24. Thus, the letter put Defendants on notice that there was no lawful court order granting them extension in answering the complaint. The Executive Committee of the Northern District of California (acting as the Assignment Committee) did not reassign the case to Jenkins until January 10, 2008. The denial of entry of default was based on the false assumption that the there was a valid court order granting Defendants enlargement of time. Since “the clerk must enter the party's default,” FRCP 55(a), the judge had no discretion to deny the request for entry of default, and the order denying entry of default judgment was also null and invalid.

Defendants, represented by a large law firm, have conducted all sorts of tactical maneuvers in order to avoid liability under the copyright law, but the facts against them are undeniable. Congress has set rigorous time limits for answering a complaint, default judgment against Sun is proper.

16. Defense Counsel’s Misconduct Had Been a Major Issue Throughout the Litigations Below

Since October 2007, Yue had complained about Defense counsel’s unprofessional conduct. See, ER.55:3-5 (“I … asked the Court to disqualify Pulgram for his unprofessional conduct.”). See also, ER.60:19.

Defendants now claim that Yue failed to preserve the issue for appeal. DAB 55-56. However, Yue did put Defendants on notice about Defense counsel’s unethical conduct. The fact that Defendants used those communications in their motion to dismiss is plainly on the record. Whether Defendants prejudicially utilized those direct communications against Yue is thus a pure question of law and is not waived.

Pulgram communicated with Yue on Netbula matters. For instance, in an October 31, 2007 email to Yue, Pulgram stated that “Netbula is represented by counsel.” Then he proceeded to discuss Netbula’s prior settlement negotiations with Sun. See, SRJN117.

Defendants cited Yue’s emails to Pulgram to support their key argument in their motion to dismiss. ER.33, 35-37. But for Pulgram’s prior communications[13] to Yue on Netbula matters, Defendants would not have had the opportunity to use these communications to Yue’s detriment.

Yue planned to make the attorney misconduct argument at the motion to dismiss hearing scheduled for March 4, 2008. However, the district court vacated the hearing on March 3, 2008, and dismissed the case with prejudice on March 4, 2008.

17. Jenkins was Disqualified

Yue filed judicial misconduct complaints against Jenkins at the Ninth Circuit. Jenkins received the first complaint in December 2007. Yue’s December 17, 2007 letter to the judge re-stated the basis of the complaint: Jenkins might have retaliated against Yue due a blog article Yue wrote.

The facts alleged in Yue’s allegation were fully capable of proof by discovery. In the complaint Yue filed against Jenkins, Yue gave the names of the magistrate judge and the attorneys who heard the story of Jenkins’s retaliatory intent. Jenkins’s denial in his ruling was not evidence. In evaluating the allegation of bias, "the judge must assume that the factual averments . . . are true, even if he knows them to be false." United States v. Balistrieri, 779 F.2d 1191, 1199 (7th Cir. 1985).

Jenkins would not even allow Yue to speak about his pro se case. “[N]o procedure firmly rooted in the practices of our people can be so ‘fundamentally unfair’ as to deny due process of law.” Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1 (1991) (concurring opinion by Justice Scalia). The bias was total.

When Yue tried to make an argument against the “cease and desist” order, Jenkins’s reaction was: “Mr. Yue, I am going to have you taken out if you don’t be quiet.” This is not a situation where judicial temperament occasionally turns into judicial temper. “Arrogance and bullying by individual judges expose the judicial branch to the citizens' justifiable contempt.” McBryde v. COMM. TO REV. CIR. COUNCIL CONDUCT, 264 F.3d 52, 66 (D.C. Cir. 2001). When a federal judge threatens force instead of resorting to reasoning in a civil litigation involving due process concerns, he fails to maintain the appearance of justice and his judgment is inherently flawed.

Sun is a large corporation. In the district court, it spares no effort emphasizing that Yue is just one-man. That may have been a factor in the decision below. However, comparing to the interest of United States and its rule of law, Sun and its CEO are negligible and utterly insignificant. The Court must reverse the district court’s erroneous ruling poisoned by apparent personal animus to restore justice and fundamental fairness in federal district court.

IV. CONCLUSION

For the reasons stated in Plaintiff-Appellant’s opening brief and this reply brief, Yue never had his day in court to vindicate his copyrights on the merits. Plaintiff-Appellant asks the Court to vacate the district court’s March 4, 2008 order of dismissal with prejudice, enter default judgment against Sun and StorageTek on the issue of liability and remand the case for further proceedings.

Respectfully submitted,

DATED: October 3, 2008

______/S/_______

DONGXIAO YUE

Plaintiff-Appellant

SELF-REPRESENTED

2777 ALVARADO STREET

SUITE C

SAN LEANDRO, CA 94577

Tel. (510) 396-0012

Fax. (510) 291-2237

CERTIFICATE OF COMPLIANCE
PURSUANT TO CIRCUIT RULE 32-1 FOR CASE No. 08-15927

I certify that the appeal brief is proportionately spaced, has a typeface of 14 points, and contains no more than 7,000 words (including footnotes).

Dated: October 3, 2008

___________/S/__________

Dongxiao Yue

CERTIFICATE OF SERVICE

I certify that I served the Appellant’s brief, the Excerpt of Records and Request for Judicial Notice on the following persons on October 3, 2008:

The Defendants – Appellees (STORAGE TECHNOLOGY CORPORATION; SUN MICROSYSTEMS INC.; MICHAEL MELNICK; JULIE DECECCO; MICHAEL P. ABRAMOVITZ; LISA K. RADY; JONATHAN SCHWARTZ), by emailing a true copy to their attorneys of record, Mr. Laurence Pulgram, Mr. Jedediah Wakefield and Mr. Liwen Mah in accordance to an agreement on service by email, and by mailing a hard copy via U.S. mail to their address at 555 California Street, San Francisco, CA.

Defense counsel will also receive notification of the filing from the ECF system.

_________/S/____________

Dongxiao Yue

---

[1] Registered November 27, 2007

[2] The attorneys were planning for a jury trial in the Netbula v. BindView case scheduled for October 2007.

[3] “[I]n early September 2007, Netbula submitted a Form CA to the Copyright Office, stating that the 1996 Copyright was a derivative work of unpublished work written by [Yue] before July 1996.” ER.52:13-15.

[4] The FAC alleges that Defendants had no licenses for those unauthorized copies. See Counts I-X of the FAC.

[5] Mr. Abramovitz answered “I don’t know” to basic questions in his deposition.

Q What kind of -- well, was there any kind of control in terms of the inside copying? Was there some kind of a list that was maintained at StorageTek of who actually made a copy of the program for their computer?

A I don't know.

Q Who would know that?

A I don't know.

…

Q Did ISVs have the right to further distribute the LibAttach programs to their customers?

A I don't know.

…

Q Okay. Who were the StorageTek people responsible for monitoring and accounting for LibAttach licenses?

A I don't know.

See, SRJN097-99 (Netbula’s opposition to summary judgment motion).

[6] Defendants claim that “the hearing was not ‘ex parte,’ as Netbula's counsel did participate, and raised no objection when the hearing was vacated.” DAB 47. But, Yue did not hire Netbula’s counsel to represent him on his copyright claims.

[7] Yue never attempted to represent Netbula on the state law claims in Netbula-Sun, and the Netbula-Sun court “recognized that.” SRJN021.

[8] Defendants state that “Netbula did not oppose or otherwise respond to that [related cases] motion.” DAB 17. But, under the Local Rule of court below, it was Yue – a party in the newer case who should oppose or respond to that motion. See Pulgram’s email to Yue on this issue. ER.59:17-23.

[9] Plaintiff-Appellant never stated that he would file an opposition to the motion to relate the cases.

[10] The Supreme Court noted that “[t]he Ninth Circuit applies a five-factor test similar to the D. C. Circuit's.” Taylor v. Sturgell, 128 S. Ct. 2161, fn.3.

[11] See, ER.54:15-17 (quoting Yue’s October 26, 2007 email to Pulgram suggesting relate/consolidate prospective new action). See also, SRJN119.

[12] Defendants point out that the grant of extension was done in open court. DAB 55. That only means Jenkins denied Yue’s due process rights in open court.

[13] See, SRJN104, Pulgram’s initiating email to Yue on substantive issues. See also, SRJN108-130, for over twenty pages of emails between Pulgram and Yue.

Original Appeal Document at Here.

Objection to Magistrate Judge Elizabeth D. Laporte's Award of Attorney's Fees to Prevailing Defendants -- Arguments

LINK TO ORIGINAL ARTICLE

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DONGXIAO YUE, Plaintiff, v. STORAGE TECHNOLOGY CORPORATION, a Delaware corporation; SUN MICROSYSTEMS Inc., a Delaware corporation; Michael Melnick, an individual; Julie DeCecco, an individual; Michael P. Abramovitz, an individual; Lisa K. Rady, an individual; Jonathan Schwartz, an individual; and DOES 1-1000, inclusive, Defendants.

Case Nos. C07-05850-JW-EDL NOTICE OF MOTION AND MOTION FOR DE NOVO DETERMINATION OF DEFENDANTS’ MOTION FOR ATTORNEY’S FEES AND OBJECTIONS TO THE RECOMMENDATION AND REPORT OF THE MAGISTRATE JUDGE ON THE AWARD OF ATTORNEY’S FEES AND COSTS Time: 9:00 AM Date: November 3, 2008 Dept: 8, 4th Floor Judge: The Honorable James Ware

TABLE OF CONTENTS

In December 2006, Netbula filed a civil action against StorageTek and Sun, alleging infringement of the `063 Copyright, fraud, breach of contract and unfair competition (Case No. C-06-07391, N.D. Cal, the “Netbula-Sun” case). Sun counter-claimed Yue personally for allegedly infringing the Java trademark. 3

TABLE OF AUTHORITIES

Cases

Adams v. Cal. Dep’t of Health Servs.,
487 F.3d 684 (9th Cir. 2007) 16

Berkla v. Corel Corp.,
302 F.3d 909 (9th Cir. 2002) 8

Blum v. Stenson,
465 U.S. 886, 895 n. 11 (1984) 10

Brayton Purcell Llp v. Recordon & Recordon,
487 F. Supp.2d 1124 (N.D.Cal. 2007) 10

Buckhannon Bd. & Care Home, Inc. v. W. Vir. Dep't of Health & Human Res.,
532 U.S. 598, 603-04 (2001) 7

Cancio v. Financial Credit Network, Inc,
2005 US DIST LEXIS 13626 at 16 (N D Cal 2005) 24

Chalmers v. City of Los Angeles,
796 F.2d 1205, 1210-11 (9th Cir. 1985) 10

Chase Manhattan Bank, N.A. v. Celotex Corp.,
56 F.3d 343, 346 (2nd Cir. 1995) 20

Cho v. Superior Court,
39 Cal.App.4th 113 (1995) 22

Erickson v. Pardus,
127 S. Ct. 2197, 2200 (2007) 21

Fantasy, Inc. v. Fogerty,
94 F.3d 553, 558 (9th Cir. 1996) 8

Fields-D'arpino v. Restaurant Associates,
39 F.Supp.2d 412(S.D.N.Y. 1999) 22

Hensley v. Eckerhart,
461 U.S. 424, 436 (1983) 10

Hewitt v. Helms,
482 U.S. 755, 760 (1987) 7

Identity Arts v. Best Buy Enterprise Services Inc.,
No. C 05-4656 PJH. (N.D.Cal. 3-26-2008) 10

In Re McBryde,
117 F.3d 208, 225 (fn.11) (5th Cir. 1997) 12

International Union of Petroleum & Indus. Workers v. Western Indus. Maint., Inc.,
707 F.2d 425, 428 (9th Cir. 1983) 9

Jacobsen v. Katzer,
2008-1001 (Fed. Cir. 8-13-2008) 19

Jacobsen v. Katzer,
No. 06-CV-01905 JSW, 2007 WL 2358628 (N.D. Cal. Aug. 17, 2007) 19

Jordan v. Multnomah County,
815 F.2d 1258, 1262 (9^th Cir. 1987) 10

Kourtis v. Cameron,
419 F.3d 989 (9th Cir. 2005) 16, 20

Liljeberg v. Health Services Acquisition Corp.,
486 U.S. 847, 100 L. Ed. 2d 855, 108 S. Ct. 2194 (1988) 22

McKenzie Const. v. St. Croix Storage Corp.,
961 F.Supp. 857 (V.I. 1997) 22

MDY Industries, Llc v. Blizzard Entertainment, Inc.,
No. CV-06-2555-PHX-DGC (Ariz. 7-14-2008) 19

Meza v. General Battery Corp.,
908 F.2d 1262 (5th Cir. 1990) 20

Molski v. Evergreen Dynasty,
500 F.3d 1047, 1059 (9th Cir. 2007) 14

Molski v. Evergreen Dynasty.,
521 F.3d 1215, 1220-22 (9th Cir. 2008) 15

Perfect 10 v. Ccbill LLC.,
488 F.3d 1102 (9th Cir. 2007) 7

Petroleum Sales, Inc. v. Valero Refining Co. — Calif. ,
No. C 05-3526 SBA. (N.D.Cal. 9-11-2007) 11

Polar Bear Productions, Inc. v. Timex Corp.,
384 F.3d 700, 709 (9th Cir. 2004) 19

Poly Software Intern., Inc. v. Su,
880 F. Supp. 1487(Utah 1995) 22

Rhodes v. Robinson,
380 F.3d 1123, 1129 (9th Cir. 2004) 7

Screenlife Establishment v. Tower Video, Inc.,
868 F. Supp. 47, 50 (S.D.N.Y. 1994) 7

Taylor v. Sturgell,
128 S. Ct. 2161 (June 12, 2008) 17

Torres-Negrón v. J & N Records,
504 F.3d 151, 164 (1st Cir. 2007) 7

Triple Tee Golf, Inc. v. Nike, Inc.,
NO. 4:04-CV-302-A. (N.D.Tex. 8-10-2007) 14

U.S. v. City and County of San Francisco,
699 F. Supp. 762 (N.D. Cal. 1988) 11

United States v. Heath,
103 F. Supp. 1, 2 (D. Haw. 1952) 12

NOTICE OF MOTION & MOTION FOR DE NOVO DETERMINATION & OBJECTIONS

TO ALL PARTIES AND THEIR COUNSEL:

Please take notice that at 9:00AM, on November 3, 2008 before U.S. District Judge the Honorable James Ware at the San Jose Division of the Northern District of California, pursuant to FRCP 72(b), 28 U.S.C. 636(b)(1), Civ. L.R. 72-3 and Civ. L.R. 7-2, copyright owner, pro sede novo determination of Defendants’ motion for attorneys’ fees and costs [Docket No. 53], which the court referred to Magistrate Judge Laporte. Plaintiff respectfully objects to the Magistrate Judge’s Report and Recommendation to award $219,949.90 to copyright Defendants Sun Microsystems, Inc. and StorageTek et al. under Section 505 of the Copyright Act [Docket No. 142]. Yue’s motion for de novo determination of Defendants’ motion for attorneys’ fees and costs is based upon the this notice, the 29 objections presented below, the Court’s record and the Declaration of Dongxiao Yue (“Yue Decl.”), filed concurrently. plaintiff Dongxiao Yue (“Dr. Yue” or “Yue”), will move the Court for

FACTUAL BACKGROUND

Since 1994, Yue, a Chinese software developer, had been developing software named “PowerRPC.” In July 1996, Yue founded the company “Netbula, LLC” (“Netbula”). This case involves the copyright of the code Yue wrote before Netbula came to exist, with U.S. registration number TXu 1-576-987 (“the `987 Copyright)¹. Yue always owned this copyright².

In 2000, StorageTek purchased eight (8) PowerRPC SDK licenses and 1000 runtime licenses. Yue delivered PowerRPC to StorageTek on a CD with license information printed on it: “8 Developers 1000 runtime”. This information was also embedded in the software and would be displayed on the computer screen when a user ran the software.

Soon afterward, StorageTek falsely claimed that it stopped using or distributing PowerRPC. In fact, it developed many products with PowerRPC and far exceeded the number of licenses. One StorageTek product that incorporated PowerRPC is the “LibAttach” software. Lisa K. Rady, the StorageTek program manager for the LibAttach software, wrote in an internal email:

As you can see, we have exceeded the 1,000 distributions that we had right to with Netbula…. I think it is obvious that engineering has not and did not monitor the distributions on this product.

In the responding email, Michael Melnick, another StorageTek manager, wrote:

The agreement is specific to platform (Win NT and 95/98 platforms) types of Netbula software (PowerRPC SDK). This concerns me greatly...

At the time of these emails, StorageTek already developed LibAttach by using PowerRPC on Windows 2000 – an unlicensed platform. StorageTek also sold unlimited licenses which allowed StorageTek customers to make unlimited copies of PowerRPC for unlimited concurrent use. StorageTek also granted its customers “floating” licenses, which limited the number of concurrent users but permitted unlimited number of copies of PowerRPC. StorageTek only purchased eight (8) SDK licenses in 2000. But more than eight users had used PowerRPC SDK on multiple computers. See, Counts I-V of the First Amended Complaint (“FAC”).

In 2004, StorageTek decided to upgrade PowerRPC. Concealing the fact that it had exceeded the licenses, StorageTek purchased one (1) PowerRPC SDK license and 1000 runtime licenses for a newer version of PowerRPC. Again, StorageTek distributed more than 1000 copies of the newer version of the PowerRPC, sold unlimited licenses and “floating” licenses. See, Counts V-IX of the FAC.

In mid 2005, Yue started to suspect that StorageTek might have made unauthorized copying of PowerRPC. In mid 2005, right before it was acquired by Sun, StorageTek finally admitted that it had distributed at least 7455 copies of PowerRPC. Yue later discovered evidence of infringement on a far larger scale and continuing infringement as recent as late 2007.

In December 2006, Netbula filed a civil action against StorageTek and Sun, alleging infringement of the `063 Copyright, fraud, breach of contract and unfair competition (Case No. C-06-07391, N.D. Cal, the “Netbula-Sun” case). Sun counter-claimed Yue personally for allegedly infringing the Java trademark.

RELEVANT PROCEDURAL BACKGROUND

On October 22, 2007, acting pro se, Yue filed a FRCP 24(a) motion to intervene and join as a party in Netbula-Sun, requesting injunctive relief due to ongoing infringement of Yue’s personally owned copyrights. Netbula-Sun was then presided over by Judge Jenkins and no dispositive motion was pending. Yue’s motion was set for hearing on November 27, 2007.

The next day, on October 23, 2007, Netbula deposed Michael Abramovitz, a FRCP 30(b)(6) witness offered by Sun. After the deposition, Sun filed a motion for summary judgment.

Netbula and Yue informed the District Court that Yue would have to assert his own claims against Sun, multiple times³. They suggested that the most efficient approach was for Yue to join Netbula-Sun; the alternative would be for him to file a separate action.

Yue sought a stipulation from Sun for him to join Netbula-Sun. Sun refused. Instead, Sun filed an “administrative” request to vacate the hearing of Yue’s rule 24(a) motion to join Netbula-Sun and Yue’s motion for injunctive relief. On October 31, 2007, in a hearing without Yue’s participation, Judge Jenkins granted Sun’s request and vacated the hearing of “Non-Party Dongxiao Yue’s” motions. After his effort to join Netbula-Sun blocked, on November 19, 2007, Yue filed the instant Yue v. Sun case (“Yue-Sun” or “Yue”, Case No. C07-05850), alleging ten (10) counts of willful copyright infringement. The case was assigned to District Judge the Honorable Susan Illston.

The following day, November 20, 2007, at a hearing in Netbula-Sun, Judge Jenkins ordered Yue to “cease and desist” from filing pleadings or speaking in court. The Judge and the parties also made it clear that “the only copyright at issue” in Netbula-Sun was the `063 copyright. Judge Jenkins also suggested Sun to question the validity of the assignment of the `063 copyright, so “he is not substituted in as a party” in Netbula-Sun. See Doc. No. 64. Sun then filed a motion to relate Yue-Sun to Netbula-Sun⁴. Because motion papers for relating the cases must be filed in the earlier case ---Netbula-Sun, Yue did not file any response to Sun’s motion to relate the cases in light of the “cease and desist” order. On December 10, 2007, Yue filed the First Amended Complaint (“FAC”), alleging willful direct and/or secondary infringement by five individual defendants.

Sun’s motion for summary judgment in the Netbula-Sun case was heard on December 14, 2007. At the hearing, Judge Jenkins re-iterated that Yue – the pro se plaintiff in Yue-Sun -- may not speak to him. As to Yue-Sun, the Judge stated that “it’s not completely overlapping with the present [Netbula-Sun] claim.” As to Netbula’s copyright claim in Netbula-Sun, Judge Jenkins stated: “this claim may survive.” See, Exhibit B to the Declaration of Yue (transcript).

On December 17, 2007, Yue wrote a letter to Judge Jenkins, again seeking clarification on whether he was allowed to file papers before the Judge. Yue wrote, if permitted, he would file a “response” to Sun’s motion to relate Yue-Sun to Netbula-Sun.

On January 2, 2008, Yue moved before Judge Illston for default judgment against Sun and StorageTek. Sun filed an opposition. Yue filed a reply brief on January 8, 2008. The next day, on January 9, 2008, a backdated order was entered to relate Yue-Sun to Netbula-Sun. On January 10, 2008, the Executive Committee of the Court reassigned Yue-Sun to Judge Jenkins. On January 18, 2008, Judge Jenkins granted Sun’s motion for summary judgment as to the copyright claim in Netbula-Sun.

On January 28, 2008, attorney Elena Rivkin noticed her appearance as counsel for Yue in Yue-Sun. On February 21, 2008, Yue filed a motion to proceed as a pro se plaintiff again.

On March 4, 2008, Judge Jenkins dismissed the instant case with prejudice and entered final judgment against Yue. Judge Jenkins also denied Yue’s request to proceed pro se.

On March 10, 2008, Yue filed a motion to disqualify Fenwick & West, LLP (“Fenwick”) in the related Yue v. CSI case (Case No. C08-0019-JW). Yue had complained about Fenwick’s apparent conflict of interest and unprofessional conduct since 2007. This disqualification motion was later consolidated with a motion to disqualify Fenwick in Yue-Sun.

On March 18, 2008, Yue filed a motion in the Yue v. CSI case and Yue-Sun to disqualify Judge Jenkins under 28 U.S.C. §144 etc. Pursuant to Civ. L.R. 3-15, Yue requested the Clerk to refer the motion to a randomly assigned judge for determination. On the same day, Sun filed a motion for attorney’s fees, seeking $92,000 in fees and costs. On March 21, 2008, Judge Jenkins referred the attorney’s fees motion to Magistrate Judge Elizabeth D. Laporte.

On March 26, 2008, Yue filed a motion for relief from judgment under FRCP 60(b). On April 1, 2008, Yue filed an opposition to Sun’s motion for attorney’s fees and a notice of appeal. On April 8, 2008, Sun filed a reply brief to Yue’s opposition to the motion for attorney’s fees, seeking $134,000 in fees and costs.

On April 9, 2008, this case was reassigned to U.S. District Judge the Honorable James Ware.

On June 16, 2008, Yue filed a motion to strike Sun’s motion for attorney’s fees for its counsel’s failure to comply with Civil Local Rule 54-6, which states that Counsel must meet and confer to resolve fee disputes. Sun never attempted to discuss its fee demand with Yue before filing the motion.

On July 22, 2008, the hearing of Sun’s fee motion and Yue’s motion to strike was held before Judge Laporte. Yue argued the motions himself. On July 23, 2008, the Court signed an order that “allows Elena Rivkin Franz to withdraw as counsel of record” for Yue and “[s]ubstituting Dongxiao Yue as new counsel of record, in propria persona” in this case. Doc. No. 136.

On July 23, 2008, Sun filed a declaration stating that an additional $87,000 in fees had been incurred. On July 24, 2008, Judge Ware denied the motion to disqualify Judge Jenkins as moot; denied the rule 60(b) motion for lack of jurisdiction; denied the motion to disqualify Fenwick.

On August 6, 2008, Magistrate Judge Laporte recommended that Sun be awarded $219,949.90 in attorney’s fees and costs under §505 of the Copyright Act.

OBJECTIONS TO THE MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION

For the following reasons, Plaintiff respectfully objects to the Magistrate Judge’s report and recommendation.

GENERAL OBJECTIONS

Objection 1: Catch-22 is Impermissible

To protect his copyrights, Yue first attempted to join Netbula-Sun; Sun opposed Yue’s joinder request and the Court vacated Yue’s request to join; since he could not join Netbula-Sun, Yue filed a separate action; then Sun alleged that Yue was virtually represented in Netbula-Sun, therefore Yue-Sun was duplicative and must be dismissed. No matter what he did, Yue could not have his day in court to protect his copyrights. This is a classic trap:

There was only one catch and that was Catch-22, which specified that a concern for one's own safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn't, but if he was sane he had to fly them. If he flew them he was crazy and didn't have to; but if he didn't want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.

"That's some catch, that Catch-22," he observed.

"It's the best there is," Doc Daneeka agreed.

Rhodes v. Robinson, 380 F.3d 1123, 1129 (9th Cir. 2004) (quoting Joseph Heller, Catch-22, at 47 (6th ed. 1976)). Catch-22 is a trap with no way out. In this case, Yue could not have his day in court to litigate the merits of his copyright claims no matter what he did. Such Catch-22 scheme is impermissible, and Sun’s tactics must fail.

Objection 2: Defendants are not Prevailing Parties for the Purpose of Section 505 of the Copyright Act

A defendant may be deemed the "prevailing party" under the Copyright Act when it successfully defends against the significant claims “actually litigated” in the action. Screenlife Establishment v. Tower Video, Inc., 868 F. Supp. 47, 50 (S.D.N.Y. 1994). See also, Torres-Negrón v. J & N Records, 504 F.3d 151, 164 (1st Cir. 2007) (“We have made no ruling on [plainitff’s] claims of infringement. Therefore, [defendant] has not prevailed on the merits of the copyright infringement allegations and is not entitled to a fee award under the statute.”). See also, Buckhannon Bd. & Care Home, Inc. v. W. Vir. Dep't of Health & Human Res., 532 U.S. 598, 603-04 (2001) (“Our ‘[r]espect for ordinary language requires that a plaintiff receive at least some relief on the merits of his claim before he can be said to prevail.’” (citing Hewitt v. Helms, 482 U.S. 755, 760 (1987)).

This makes sense. Without a ruling on the merits of the copyright claims, it would be impossible to apply the Fogerty factors (such as frivolousness and objective unreasonableness) and to determine whether awarding fees would be faithful to the purpose of the Copyright Act. See, Perfect 10 v. Ccbill LLC., 488 F.3d 1102 (9th Cir. 2007) (denying attorney’s fees and costs because “Perfect 10's legal claims are not frivolous or objectively unreasonable.”).

Defendants obtained final judgment in their favor solely on “virtual representation” theories that were recently disapproved by the U.S. Supreme Court in Taylor v. Sturgell. In this case and the related Netbula-Sun case, Sun and StorageTek have not obtained finaljudgment on the merits of any of the copyright claims. The factual allegations and merits of the ten (10) claims in the instant Yue-Sun case were not analyzed in the dismissal order. Therefore, Defendants were not prevailing parties for the purpose of Section 505 of the Copyright Act.

Objection 3: The Magistrate Judge Did Not Consider the Pivotal Criterion Required by the Ninth Circuit for Awarding Fees under the Copyright Act

In Berkla v. Corel Corp., 302 F.3d 909 (9th Cir. 2002), Corel Corp successfully defended a copyright infringement claim. On whether Corel should be awarded attorney’s fees under the Copyright Act, the Ninth Circuit held:

courts may not rely on the Lieb factors if they are not `faithful to the purposes of the Copyright Act.' Faithfulness to the purposes of the Copyright Act is, therefore, the pivotal criterion." Fantasy, Inc. v. Fogerty, 94 F.3d 553, 558 (9th Cir. 1996).

Berkla, 302 F.3d at 922-923. In denying fees award to the prevailing defendant, the Ninth Circuit held that while the defendant did not technically infringe copyright, its conduct “nevertheless constituted a highly questionable business practice” and “[i]t would be inconsistent with the Copyright Act's purposes to endorse [defendant’s] improper appropriation of [plaintiff’s] product by awarding fees.” Berkla, 302 F.3d at 923 (emphasis added).

Berkla is unambiguous in holding that awarding fees to a prevailing defendant who engaged in questionable business practice would be inconsistent with the purpose of the Copyright Act. The facts alleged in the FAC include deceptive, fraudulent and oppressive conduct, destruction of evidence and misappropriation of Plaintiff’s software. Awarding fees to Defendants would thus be endorsing highly questionable business practice.

Objection 4: The Court Lacked Jurisdiction to Adjudge the Reasonableness of the Copyright Claims Post-Judgment because Judge Jenkins Did Not Make Such Findings

In the dismissal order, Judge Jenkins did not make a finding of fact or law on the merits of 10 infringement claims in Yue-Sun. The instant Yue-Sun case was dismissed solely on the ground of non-party preclusion by virtual representation.

In their motion for attorney’s fees, Sun argued extensively on the merits of the copyright claims. For instance, citing Michael Abramovitz’s declaration made in Netbula-Sun, they claimed that Sun ceased the alleged infringement in late 2005; they say therefore Yue’s claims were objectively unreasonable. Yue refuted Abramovitz’s declaration with Abramovitz’s own deposition testimony. Sun then switched to the allegations against Schwartz, knowing that Yue had no chance to respond further.

But, in any case, Judge Jenkins’s dismissal order did not reach the substantive issues of the copyright claims. The 10 infringement claims accused Defendants of very specific unlawful acts. There was no ruling that decided that any of the 10 claims failed to state a claim for copyright infringement. There was no discovery, no adversarial process taken to determine validity of the claims and truthfulness of the facts.

Because the case is on appeal, the District Court does not have jurisdiction to decide any substantive issues (such as objective unreasonableness of the claims) that had not been resolved before judgment. As stated above, the dismissal order was solely grounded on the theory of virtual representation. No determination on the merits of the 10-count infringement claims was ever made. Plaintiff will be glad to have a chance to litigate the merits of these claims, if he is allowed to do so following proper procedures.

Objection 5: Legal Fees on Collateral Matters are not Awardable under the Copyright Act

"Under the American rule, absent contractual or statutory authorization, a prevailing litigant ordinarily may not collect attorneys' fees". International Union of Petroleum & Indus. Workers v. Western Indus. Maint., Inc., 707 F.2d 425, 428 (9th Cir. 1983). Defendants requested fees for the work related to the motion to disqualify Judge Jenkins and the motion to disqualify Fenwick & West. The motion to disqualify the judge was made pursuant to 28 U.S.C. §§ 144 and 455. The motion to disqualify Fenwick was based on the rules of professional conduct and Fenwick’s apparent conflict of interest and direct communications to Yue on Netbula matters. These collateral matters were separate from and independent of the merits of the case. In fact, both disqualification motions were originally filed in the Yue v. CSI case and were later cross-filed in Yue-Sun. Defendants cited no authority to show that the fees arising under the rules of professional conduct and 28 U.S.C. 144 and 455 are awardable under the Copyright Act⁵.

Objection 6: Post-Judgment Legal Fees are not Awardable under the Copyright Act

Final judgment in the case was entered on March 4, 2008. The action had been terminated. Therefore, there had been no longer a “civil action” under the Copyright Act pending before the District Court. Brayton Purcell Llp v. Recordon & Recordon, 487 F. Supp.2d 1124 (N.D.Cal. 2007). The post-judgment matters did not arise under the Copyright Act and related fees are not awardable under the Copyright Act. Yue did not even have a chance to contest these additional fees --- defendants simply submitted supplemental declarations with additional fees demands.

Objection 7: “Fees upon fees” are not Awardable under the Copyright Act

Over $60,000 of the Defendants’ fees was for preparing and filing their motion for attorney’s fees. Such “fees upon fees” were not authorized by the Copyright Act. See, e.g., Identity Arts v. Best Buy Enterprise Services Inc., No. C 05-4656 PJH. (N.D.Cal. 3-26-2008) (Doc.167) (“defendants have not submitted any controlling authority regarding the availability of fees upon fees vis-a-vis the Copyright Act specifically. Accordingly, the court declines to award such fees.”)

Objection 8: The Magistrate Did Not Make a Detailed Lodestar Analysis

Defendants requested over $220,000.00 in attorneys fees. About $150,000.00 of which was incurred after the case was terminated. In computing an award, the Court should provide a "detailed account of how it arrives at appropriate figures for `the number of hours reasonably expended' and `a reasonable hourly rate.'" Hensley v. Eckerhart, 461 U.S. 424, 436 (1983). Determining a reasonable hourly rate is a critical inquiry. Jordan v. Multnomah County, 815 F.2d 1258, 1262 (9^th Cir. 1987) (citing Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984)). The Court may not merely refer to the rates actually charged to the prevailing party. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210-11 (9th Cir. 1985). As for the number of hours, only hours found to have been reasonably expended may be allowed. Hensley, 461 U.S. at 434. The fee applicant must justify her claim by submitting detailed time records. U.S. v. City and County of San Francisco, 699 F. Supp. 762 (N.D. Cal. 1988). The documentation submitted should be sufficient to satisfy the Court that the hours expended were actual, non-duplicative and reasonable, and to apprise the Court of the nature of the activity and the claim on which the hours were spent. See Hensley, 461 U.S. at 437. The Magistrate Judge made no lodestar analysis to determine the reasonable rates of and reasonable hours spent by the attorneys. For instance, Pulgram’s rate increased from $625 per hour in December 2007 to $690 per hour in January 2008. Why the two different rates were reasonable were not analyzed. Also, as Yue pointed out at the hearing before Magistrate Judge Laporte, many of the fee entries did not make sense, such as an entry for negotiating a protective order and entries about conferring with “counsel for Plaintiff” while Plaintiff was a pro se. See, Yue Decl., Ex.C (transcript).

Objection 9: Block Billing Made it Impossible to Determine the Reasonableness of Fees

In Defendants’ fee schedule, there were numerous entries where an attorney billed many hours (up to 11.30 hours a day) in a single time slot, without providing the details. See Objection 28 below for some examples. “[B]lock billing — the lumping together of multiple tasks in a single time entry — makes it impossible to determine the reasonableness of the time spent on each task.” Petroleum Sales, Inc. v. Valero Refining Co. — Calif. , No. C 05-3526 SBA. (N.D.Cal. 9-11-2007) (Doc. No. 143). In Petroleum Sales, Judge Armstrong ruled:

five problematic instances of block billing are the entries by Esmaili for 4.3 hours on May 1, 2006; 4.5 hours on June 15, 2006; 2.4 hours on August 8, 2006; 5 hours on August 9, 2006; and 6.9 hours on August 10, 2006. The Court will therefore exclude the total of this time (23.1 hours) from the lodestar.

Id. at p.12. Accordingly, Sun’s block billing entries should be excluded.

SPECIFIC OBJECTIONS (Nos. 10 to 29)

In addition to the general objections above, Plaintiff raises the following specific objections to the Recommendation of the Magistrate Judge (“RMJ”).

RMJ at p.1:20-22: “On December 14, 2007, the Court ordered that no responsive pleadings would be due until such time as the Court set a date at the upcoming status conference. Despite this order, Plaintiff filed a motion for default judgment, which the Court denied.”

Objection 10: On December 14, 2007, Yue-Sun had not yet been reassigned to Judge Jenkins. The Executive Committee reassigned the case to Judge Jenkins after the completion of the briefing of the motion for default. "[T]he structure of the federal courts does not allow one judge of a district court to rule directly on the legality of another district judge's judicial acts or to deny another district judge his or her lawful jurisdiction." In Re McBryde, 117 F.3d 208, 225 (fn.11) (5th Cir. 1997). "No express or implied power is granted a chief judge to affect administratively, directly or indirectly, litigation assigned to and pending before another judge of the court." United States v. Heath, 103 F. Supp. 1, 2 (D. Haw. 1952). The situation was at least confusing to Yue.

RMJ at p.2:3-5: “In that case, the Court granted Defendants’ motion for summary judgment based on its determination that Defendants’ use of Netbula’s software was within the scope of the 2000 and 2004 license agreements between Netbula and StorageTek.”

Objection 11: The summary judgment order in Netbula-Sun only addressed three narrow issues: (1) the number of users of the SDK; (2) the excess distribution of the PowerRPC runtime; (3) the non-assignment clause of the agreement. That order did not address other infringement claims. For more detailed analysis of the Netbula-Sun order, see Objection 22 below. In addition, the fraud, contract and unfair competition claims are ongoing in Netbula-Sun.

RMJ at p.2:6-7: “In determining that this action was duplicative of Netbula-Sun, the District Court found that this case presented the same claims already asserted.”

Objection 12: Plaintiff created a large table showing the differences between the two cases. These differences were not analyzed in the RMJ.

RMJ at p.2:7-10: “In fact, many of the allegations in the complaint that Plaintiff claimed constituted additional facts in this case were a verbatim restatement of Yue’s declaration presented in opposition to the Netbula-Sun defendants’ motion for summary judgment.”

Objection 13: Yue’s declaration in Netbula-Sun was not a complaint. The declaration could not be used to assert additional claims. Yue’s declaration had 88 paragraphs, with 45 exhibits, providing a lot of detail about Sun’s infringing activities and fraudulent conduct. The Netbula-Sun court only made reference to paragraphs 35, 40, 49 and Exhibit 13 (a release note of LibAttach Software) of Yue’s declaration⁶. The only references to Yue’s declaration in the Netbula-Sun summary judgment order were made in the following context:

StorageTek purchased at least one more license. (See Yue Decl., ¶¶ 35, 49; Defs.' Mem. of P. & A. at 23.)

Plaintiff's evidence consists of "release notes" regarding StorageTek's LibAttach 1.1 software, which state that this software supports Windows 2000 systems, purportedly showing that it was developed for Windows 2000. (Yue Decl. ¶ 40; Exh. 13)

RMJ at p.2:10-11: “In addition, the Court granted summary judgment on the merits of claims in Netbula-Sun that were now presented in this case.”

Objection 14: The Yue-Sun case had 10 counts of infringement claims. The comparison table in Yue’s opposition brief showed that most of the claims were not in the Netbula-Sun case. In addition, the Yue-Sun case is about infringement of different intellectual property rights owned by Yue and not in Netbula-Sun. On December 14, 2007, Judge Jenkins clearly stated that Yue-Sun “is not completely overlapping with [Netbula-Sun].” Although Judge Jenkins granted summary judgment as to the copyright claim in Netbula-Sun on January 18, 2008, he made no decision on the merits of the 10 infringement claims in Yue-Sun.

RMJ at p.2:10-15: “Finally, the Court found that the two actions involved infringement of the same rights. Even though Plaintiff claimed that Defendants’ use of software impacted additional copyrights, Netbula should have asserted violations of those copyrights in Netbula-Sun, rather than filing this subsequent lawsuit.”

Objection 15: Yue-Sun involved the infringement of the `987, `847 and `697 copyrights by different types of infringing activities. The Magistrate Judge overlooked the following:

(1) The `987 Copyright was always owned by Yue. Netbula never had any standing to sue for this copyright. See, e.g., Triple Tee Golf, Inc. v. Nike, Inc., NO. 4:04-CV-302-A. (N.D.Tex. 8-10-2007) (the corporation plaintiff had no standing to sue on copyright owned by its founder Jack Gillig).

(2) After Netbula transferred the `847 and `697 copyrights to Yue in September 2007, it lost standing on these two copyrights. So Yue sought to join Netbula-Sun.

(3) Judge Jenkins and Sun specifically constrained the Netbula-Sun case to the `063 Copyright. The `063 Copyright was “the only copyright at issue” in the Netbula-Sun case. The `987, `847 and `697 copyrights were precluded from Netbula-Sun after Yue-Sun was filed.

(4) Yue was excluded from Netbula-Sun before and after Yue-Sun was filed (Catch-22).

RMJ at p.2:19-20: “The Court further found that Plaintiff entered into this assignment at least in part due to his desire to bring Netbula’s then pending copyright claims in his own name, on a pro se basis.”

Objection 16: There is no evidence that the purpose of the assignment of the `847 and `697 copyrights to Yue was for the purpose of bringing the action pro se. Yue had original ownership of the `987 Copyright. That copyright alone gave him the standing to prosecute his own copyright claims without any assignment, pro se⁷ or otherwise.

RMJ at p.2:21-23: “In dismissing the action, the Court noted that Plaintiff’s tactics have ranged from duplicative to nearly vexatious.”

Objection 17: The range of “from duplicative to nearly vexatious” was not precisely defined. There is a qualitative difference between “litigious” and “vexatious.” The heart of the vexatious litigant analysis is to inquire whether the district court made "`substantive findings as to the frivolous or harassing nature of the litigant's actions.'" Molski v. Evergreen Dynasty, 500 F.3d 1047, 1059 (9th Cir. 2007) (per curium) (imposing pre-filing requirement for filing 400 lawsuits on near identical injuries). But, see also, Molski v. Evergreen Dynasty., 521 F.3d 1215, 1220-22 (9th Cir. 2008), for the dissenting opinion by Judge Kozinski and four circuit judges. At every step, Yue followed the court orders, the rules and the controlling authorities. The Court has not identified a single incident where Yue filed a frivolous paper or acted in a harassing manner.

RMJ at p.3:3-5: “This was not the first time Plaintiff attempted to avoid Judge Jenkins in this case, as he also sought leave to oppose Sun’s earlier motion to relate this case to Netbula-Sun.”

Objection 18: A litigant should not care who the judge is, but what the law is. But, when a judge orders a litigant to “cease and desist” from filing papers, it was impossible for that litigant to meaningfully proceed before the judge. Judge Jenkins “instructed Yue that he could not file motions, notice hearing dates, or speak in court unless he had leave of court or until he was given permission to represent himself.” Doc. No. 142, Netbula-Sun (Feb 8, 2008). How can a litigant present his case when the judge refuses to accept his papers or listen to his arguments?

Yue did not oppose relating Yue-Sun to Netbula-Sun and he never indicated that he would oppose relating Yue-Sun to Netbula-Sun. In all his papers, he stated that he would file a “response” if he was permitted to do so. A response is not necessarily an opposition. This distinction is important: all Yue wanted was to make sure that he could have his day in court once the case was reassigned to Judge Jenkins.

RMJ at p.4:26-28: “In addition, Plaintiff’s complaint did not raise a novel issue of law or fact or an objectively reasonable claim, as the same basic claims had already been previously rejected by the District Court.”

Objection 19: The Yue-Sun case was filed on November 19, 2008. The summary judgment in Netbula-Sun was issued on January 18, 2008, two months later. Yue could not possibly predict the outcome of Sun’s summary judgment motion back in 2007. All facts and known caselaws pointed to the conclusion that Sun’s conduct was plain software piracy. Yue could not be charged with the duty to predict the Court’s ruling from the parties’ papers either. After the completion of the briefing on the summary judgment motion in Netbula-Sun, on December 14, 2007, Judge Jenkins specifically stated that the Netbula-Sun copyright claim “may survive.” Even after the summary judgment order in Netbula-Sun, Yue had no reason to believe that Yue-Sun would be dismissed because Judge Jenkins stated that Yue-Sun is not completely overlapping with Netbula-Sun.

There were 10 copyright infringement claims in this case. Judge Jenkins had not made a finding on whether Plaintiff’s complaint raised novel issue of law or fact or an objectively reasonable claim. Yue didn’t have the chance to litigate the claims on the merits. The Court does not have jurisdiction to make such conclusions on the merits now when the case is on appeal.

RMJ at p.5:1-5: “Defendants’ degree of success in the action was total, as they established that Plaintiff could not assert new copyrights against Defendants for their use of Netbula’s software pursuant to licenses, the subject of the prior suit.”

Objection 20: The summary judgment order in Netbula-Sun was not final and it only covered certain narrow issues. To permanently extinguish Yue’s copyright claims and declare Sun’s conduct protected by the copyright law, there must be judgment on the merits. The Yue-Sun dismissal order did not make any finding on the merits of the 10 infringement claims.

RMJ at p.5:7-15: “Plaintiff’s lawsuit was also objectively unreasonable. In granting the motion to dismiss, the District Court recognized that the caselaw clearly prevented a party or those in privity from bringing a separate action involving the same subject matter against the same defendants in a different action. See March 4, 2008 Order at 3-6 (quoting relevant case law including Adams v. Cal. Dep’t of Health Servs., 487 F.3d 684 (9th Cir. 2007)).”

Objection 21: The Adams case was distinguishable from this case. In Adams, the same party-plaintiff filed a second suit against the same defendants while the first case is pending. In this case, a non-party to Netbula-Sun filed the second suit. Moreover, the Adams case was not a copyright case. As cited in Plaintiff’s briefs, the controlling authority for this situation is Kourtis v. Cameron, 419 F.3d 989 (9th Cir. 2005) (no privity relationship between an employer and an employee who filed successive copyright lawsuits). In Kourtis, a second copyright owner sued the same defendants on the same copyright years after the first suit adjudicated that the defendants did not infringe that copyright. Even though the Kourtis plaintiff was closely involved in the first suit and was deposed as a witness in the first suit, the Ninth Circuit found the second suit not precluded by the first one. In addition, the U.S. Supreme Court has recently disapproved the “virtual representation” grounds of non-party preclusion in Taylor v. Sturgell, 128 S. Ct. 2161 (June 12, 2008).

RMJ at p.5:16-22: “In addition, the District Court’s previous order in Netbula-Sun granting Defendants’ motion for summary judgment established that Defendants’ use of Netbula’s PowerRPC software was licensed and did not constitute infringement. See Jan. 18, 2008 Summary Judgment Order. The Court had already determined as a matter of law that the license between Netbula and StorageTek foreclosed a claim of copyright infringement.”

Objection 22: Judge Jenkins did not make a broad holding that “the license between Netbula and StorageTek foreclosed a claim of copyright infringement.” A licensee infringes when its copying exceeds the scope of a license. Whether defendants copied the PowerRPC software without a license or the copying exceeded the scope of a license is a factual inquiry. In the January 18, 2008 summary judgment order, Judge Jenkins decided the following issues:

1. The User Count for the SDK license

The SDK licenses were purchased pursuant to a written purchase agreement drafted by defendant Michael Melnick. The agreement stated in part:

NETBULA grants STORAGETEK, a … license for use by STORAGETEK’s employees, consultants and subsidiaries for up to ONE user(s), for each of the licenses purchased, to use the PowerRPC SDK Product under Windows NT and 95/98 platforms; each user can only use the software on one computer….

The license is not transferable without written permission of Nebula…

Payment. You agree to pay NETBULA the amounts set forth in Exhibit C in full payment for the rights and licenses granted…

On the number of users, Judge Jenkins wrote:

First, turning to the number of users, both the 2000 and 2004 Agreements state that one user may use each of the licenses purchased. This provision does not limit how the software may be used… the limitation on the number of users is a separate contractual promise, or covenant, that does not limit or condition the use of the license. Therefore, because this provision is not a limitation on the scope of the license, Plaintiff is not entitled to a copyright infringement claim on this issue.

Plaintiff could not find any prior authority which held that a “one user on one computer’ restriction “does not limit or condition the use of the license.” Thus, Judge Jenkins’s January 18, 2008 order established a new precedent unknown to Yue when he filed the instant action in 2007. Even so, Judge Jenkins’s conclusion was a narrow one. In fact, in the same section of the order, Judge Jenkins recognized that the platform restrictions "to use the PowerRPC SDK Product under Windows NT and 95/98 platforms" did “limit the scope of the license itself.” Regarding the StorageTek’s emails indicating they developed software for Windows 2000, Judge Jenkins wrote that “Plaintiff offers these communications… to show that StorageTek distributed software for users on unlicensed platforms,” leaving such acts open for infringement claims.

The Yue-Sun action, filed two months before that order, alleged different infringing activities. On the infringement of the SDK, the Yue-SunYue-Sun complaint alleged that Sun/StorageTek destroyed evidence of the infringement by erasing the contents of computers. Counts I, II, III, V and VII of the FAC. complaint alleged that Sun/StorageTek infringed the SDK copyright by exceeding both the number of users and the number of computers. Moreover, the

2. The Excess Distribution of PowerRPC

The 2000 agreement stated that StorageTek “shall pay Netbula …for the right to distribute up to 1000 units of software containing the Supporting Programs." Netbula offered StorageTek to purchase additional licenses. Sun and StorageTek admitted that the agreement was a “prepayment” agreement. The licenses were not unlimited but counted. Mr. Melnick wrote in an internal email: “The number that Holly has provided and thought it may be low causes quite a problem for you. We have only made 2 purchases for the rights to distribute a total of 2000 licenses.” The situation is no different from a bookstore (Netbula) offering customers (StorageTek) to buy books (licenses). One who pays for one copy of a book but takes home two copies commits theft. “Having taken the copyrighted material, [defendant] is in no better position … than an ordinary thief.” Polar Bear Productions, Inc. v. Timex Corp., 384 F.3d 700, 709 (9th Cir. 2004).

On exceeding the number of licenses, Judge Jenkins entered summary judgment for Sun in Netbula-Sun on the ground that the “prepayment” term is merely a contract covenant. Again, the order established a precedent in copyright law. Recently, the Federal Circuit reversed similar readings of a license agreement in Jacobsen v. Katzer, No. 06-CV-01905 JSW, 2007 WL 2358628 (N.D. Cal. Aug. 17, 2007). See, Jacobsen v. Katzer, 2008-1001 (Fed. Cir. 8-13-2008) (attribution clause in Artistic License is not an independent contractual covenant). See also, MDY Industries, Llc v. Blizzard Entertainment, Inc., No. CV-06-2555-PHX-DGC (Ariz. 7-14-2008) (using an automated program to play a licensed computer game constitutes copyright infringement). In any case, Yue-Sun involved claims that are different, such as distributing infringing derivative works, issuing floating licenses, fail to comply with the limited distribution clause, inducing infringement by others… See Counts IV, V, VIII and IX of the FAC.

(3) The Termination of the License Agreement upon Sun’s Acquisition of StorageTek

The Netbula-StorageTek agreement was not transferable and was terminated upon Sun’s acquisition of StorageTek. In the January 18, 2008 order, Judge Jenkins ruled that “this provision does not limit the scope of the license.” However, in the instant Yue-Sun action filed in 2007, Plaintiff contends that the license ceased to exist because it was terminated. A non-existent license does not have a scope. Therefore, the instant action was about the existence of the license, not the scope. The claim was thus different. See Count X of the FAC.

In summary, the January 18, 2008 order only resolved three narrow issues. The Yue-Sun case filed in 2007 had 10 counts of infringement that were distinctive from the claims in Netbula-Sun.

RMJ at p.5:20-23: “In addition, defense counsel warned Plaintiff that before filing an entirely new and separate infringement action, he should meet and confer with counsel because the action was duplicative, advising that Sun would seek to recover attorney’s fees.”

Objection 23: Yue requested Sun to stipulate to Yue’s joinder in Netbula-Sun. Sun refused to stipulate. Instead, Sun filed a motion to vacate Yue’s motion to join Netbula-Sun, forcing Yue to file a separate lawsuit. Judge Jenkins later concluded that new lawsuit -- Yue-Sun -- was not completely overlapping with Netbula-Sun. Yue Decl., at ¶10, Ex. B. Yue had no reason to believe that defense counsel knew better than the judge. Ninth Circuit’s controlling authority on successive copyright suits by a non-party seemed to be the case of Kourtis v. Cameron, 419 F.3d 989 (9th Cir. 2005). Yue had the right to bring the additional claims on his personally owned `987, `847 and `697 copyrights that were excluded from Netbula-Sun.

RMJ at p.5:25-28: “While the Supreme Court recently disapproved of the doctrine of preclusion by virtual representation, see Taylor v. Sturgell, 128 S. Ct. 2161, 2173 (June 12, 2008), it noted that non-parties to the prior litigation may be precluded under certain recognized exceptions... Here, the District Court found privity based on assignment. In addition, Yue appears to have assumed control over the earlier litigation.”

Objection 24: “[P]rivity has shown itself to be an elusive and manipulable concept” and should be only used as “a convenient means of expressing conclusions that are supported by independent analysis.” Meza v. General Battery Corp., 908 F.2d 1262 (5th Cir. 1990) (internal quotes and citations removed). Under federal law, “concepts summarized by the term privity are looked to as a means of determining whether the interests of the party against whom claim preclusion is asserted were represented in prior litigation.” Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343, 346 (2nd Cir. 1995). “Privity may exist for the purpose of determining one legal question but not another depending on the circumstances and legal doctrines at issue.” Id. Such inquiry avoids the fallacy of circular logic. Yue sued on the `987 Copyright, which he always owned, Netbula had no standing on sue on it. Though the `847 and `697 Copyrights were assigned, they were not litigated in Netbula-Sun – they were excluded. The `063 copyright was the only one at issue in Netbula-Sun. Judge Jenkins made no finding that Yue assumed control of Netbula-Sun.

RMJ at p.6:1-9: “As to factual reasonableness, Plaintiff alleged claims against Sun’s officers based on communications between them and Plaintiff in 2006. However, Plaintiff knew from the factual record in Netbula-Sun that the allegedly infringing acts stopped in late 2005. For example, he was present at the deposition where Sun’s Rule 30(b)6) witness testified that it removed the allegedly infringing Netbula software in late 2005. See Netbula-Sun Docket No. 107, Ex. 44 at 3. While Yue argues that the evidence shows ongoing infringement as recently as 2007, he does not state how the individual defendants are connected to such alleged ongoing infringement. While Yue attacks Abramovitz’s credibility, he does not offer any factual basis for naming the particular two high level officers in this action, revealing that the allegations against them are speculative.”

Objection 25: On October 23, 2007, Abramovitz testified about his personal acts of erasing the PowerRPC software from computers⁸. As cited in Yue’s opposition to the fees motion, Abramovitz admitted having no knowledge about the control and monitoring of the distribution of PowerRPC within or outside Sun/StorageTek. He did not even know who had that knowledge. He was a test engineer. Abramovitz only talked about his own actions of removing the software. Sun’s managers, such as DeCecco and Melnick, submitted declarations in Netbula-Sun, but none of them was willing to state that Sun stopped the alleged infringement at any time. Therefore, the allegation that Sun stopped the alleged infringement in late 2005 was unfounded. The Netbula-Sun Court made no finding of fact that Sun or its customers stopped the alleged infringement anywhere.

The Magistrate Judge stated that although Yue presented evidence that there was infringement as recent as 2007, his claims against two high-level Sun executives were “speculative.” In the FAC, Yue alleged specific facts that support Schwartz, Melnnick and DeCecco’s liabilities under the copyright law. Moreover, judgment in the case was entered at the “motion to dismiss” stage. Under Federal Rule of Civil Procedure 8(a), as long as Yue gave defendants a fair notice of the claim and the ground upon which it rests, “[s]pecific facts are not necessary.” Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007). Thus, the FAC satisfied the notice pleading standard.

In any case, Judge Jenkins did not rule on any of such substantive issues regarding the sufficiency of the infringement claims or whether they are speculative. The district court did not have jurisdiction to resolve these issues as the case was on appeal.

RMJ at p.6:12-14: “In particular, the number of unsuccessful motions for recusal and for relief from judgment indicates that Plaintiff filed repetitive motions that lacked merit, which only served to increase fees.”

Objection 26: The Court has not identified any of Yue’s motions to be frivolous. Yue did not file repetitive motions. The rule 60(b) motion was re-filed because the Court had ordered Yue to do so.

As for Plaintiff’s motion to disqualify counsel, the Court had narrowed the issues to whether a former Fenwick attorney presumably shared confidences within Fenwick on a prior case involving PowerRPC. In similar situations, a law firm is disqualified. See, e.g., Cho v. Superior Court, 39 Cal.App.4th 113 (1995) (former settlement judge in a related case was hired by the law firm, the law firm was disqualified); McKenzie Const. v. St. Croix Storage Corp., 961 F.Supp. 857 (V.I. 1997); Fields-D'arpino v. Restaurant Associates, 39 F.Supp.2d 412(S.D.N.Y. 1999); Poly Software Intern., Inc. v. Su, 880 F. Supp. 1487(Utah 1995).

As for the disqualification of the former judge, it was filed on March 18, 2008, under the authority of Liljeberg v. Health Services Acquisition Corp., 486 U.S. 847, 108 S. Ct. 2194 (1988). Judge Ware’s finding that the issue was moot due to intervening events does not make the motion frivolous or lacking merit.

RMJ at p.6:15-19: “In addition, Plaintiff’s pro se status does not warrant leniency here, where Plaintiff has received much education throughout the multiple cases that he and Netbula have litigated. He also has had counsel at times in this litigation and Netbula is still represented by counsel in Netbula-Sun. As to Plaintiff’s allegations of bias on the part of Judge Jenkins, Yue sets forth no factual basis for them.”

Objection 27: Yue-Sun was the first copyright case Yue litigated himself. On March 18, 2008, defense counsel contacted Yue by email stating that Yue was a pro se again. Yue Decl. at ¶¶ 3-8. However, as Judge Ware noted in a recent order,

In the Court’s Order Granting Defendants’ Motion to Dismiss the STK II [Yue-Sun] action, the Court found that the rights of Netbula and Yue are deeply intertwined,” and that Dr. Yue could not represent Netbula pro se.

Docket entry 51 states that “The Court DID NOT GRANT plaintiff REQUEST to proceed pro se.” Under Civil Local Rule 11-5, an attorney may not withdraw until relieved by court order. It was not until July 23, 2008 that the Court granted attorney Elena Rivkin’s motion to withdraw.

As for the allegation of bias of the former judge, Yue supplied certain evidence and indicated that he could provide more confidential documents. Plaintiff does have a constitutional right to have an impartial decision maker to decide his property rights. However, the Court has ruled that issue is moot now. To show that he did not file a baseless disqualification motion under 28 U.S.C. § 144 would require Plaintiff to reopen the issue.

RMJ at p.7: 10-13: “Defendants seek fees and costs in excess of $92,000 as of their opening brief, and over $134,000 as of the reply brief. On July 24, 2008, Defendants submitted a supplemental declaration stating that over $87,000 in additional fees had been incurred since April 8, 2008, when the reply brief was filed. The first amended complaint in this case lists ten claims, all for copyright infringement. Therefore, there is no need to apportion copyright versus non-copyright claims. The hourly rates charged by Fenwick range from $245 per hour to $690 per hour. These rates are comparable to other full service Bay Area law firms, Wakefield Decl. ¶ 4, and are reasonable.”

Objection 28: “Plaintiff’s complaint did not raise a novel issue of law or fact.” RMJ at p.4:27-28. The Court ruled that the instant action was duplicative of Netbula-Sun. No analysis of the merits of the 10-count infringement claims was made. The case was quickly dismissed. No discovery was done. These factors would reasonably suggest that this case should consume very little attorney time.

About 30% of the fees requested were the so called “fees upon fees” -- the attorney fees spent on the motion for attorneys’ fees. Defense counsel’s “fees upon fees” was over $60,000.00 (sixty thousand dollars). For instance, on March 4, 2008, Laurence Pulgram spent 1.8 hour conferring with his colleagues and clients on “strategies on potential motion for attorney’s fees”; March 15 and 16, 2008, Albert Sieber billed $5453 for 13.3 hours of work on drafting motion for attorney’s fees; On March 17 and 18, 2008, Wakefield billed $8409.5 for 13.9 hours of work to “draft arguments for fee motion”; April 5 and 6, Sieber billed $4428 for 10.8 hours of work drafting the reply brief for the fee motion; April 7, 2008, Wakefield billed $6292 for 10.4 hours of work for fee motion related work; April 8, 2008, Wakefield, $5082 for 8.4 hours on reply brief for the fee motion and Sieber billed for another 7 hours on the same task the same day. There are many block billing entries with fewer hours, and they add up.

The opening brief of Sun’s fee motion totaled 19 pages. The argument portion was about 9 pages and 4000 words. Of that, about three (3) pages were dedicated to the analysis of two emails between Pulgram and Yue on Netbula-Sun matters and one paragraph of the complaint. Defense counsel have previously quoted and analyzed these communications in their motion to dismiss. The rest of the six pages of argument consist of standard arguments for asking fees, mostly repeating their arguments in the motion to dismiss. Defense counsel billed over $22,000.00 for preparing and filing the opening brief.

In Cancio v. Financial Credit Network, Inc, 2005 US DIST LEXIS 13626 at 16 (N D Cal 2005) (Henderson, J), the plaintiff asked $9312.00 for spending 22.65 hours in preparing and filing the fee motion. Because “[t]he issues raised by this fee application are neither novel nor complex” and “[t]he litigation was limited in time and complexity”, the court found the “fees on fees” to be too excessive and reduced the amount to about $3000.

Unlike Cancio, this case was terminated without any ruling on the merits of the 10-count infringement claims, and there was no discovery or planning of discovery. In the more involved and more complex Cancio, $9312 of “fees on fees” was excessive and the proper amount should be $3000. Here, the “fees on fees” was over $60,000, twenty (20) times more excessive.

Cancio was an FDCPA case, “fees upon fees” was allowed. There is no similar allowance of “fees upon fees” under the Copyright Act. Nevertheless, the amount of hours spent on “fees on fees” shows that defense counsel’s hourly rate and hours are unreasonable. In addition, Plaintiff re-states Objections 2-9 above, including “block billing” on other tasks.

RMJ at p.8:19-20: “The prevailing party in a copyright infringement action is also entitled to recover out of pocket expenses incurred by the attorney and passed on to the client.”

Objection 29: Under the Copyright Act, the decision to award costs is also discretionary and should be made only after the same analysis of the fees award, for which the pivotal criterion is faithfulness to the purposes of the Copyright Act.

MOTION FOR DE NOVO DETERMINATION AND CONCLUSION

Based on Objections 1-29 above and authorities cited, Plaintiff respectfully disagrees with the Magistrate Judge’s report and recommendation. Plaintiff requests the District Court to make a de novo determination of Defendants’ motion for attorneys’ fees.

Respectfully submitted,

Dated: August 20, 2008

___/S/__________________

By: DONGXIAO YUE

SELF-REPRESENTED

1 This copyright has effective date of November 27, 2007. Yue Decl. at ¶12, Ex.D. However, when Yue filed the First Amended Complaint (“FAC”) on December 10, 2007, he had not yet received the certificate of registration.

2 The other two copyrights litigated in this case were assigned to Yue in September 2007, with registration numbers TX 6-437-847 (the “`847 Copyright”) and TX 6-491-697 (the “`697 Copyright”). None of the `987, `847 and `697 copyrights was involved in related Netbula-Sun case (Case No. C06-07391), where “the only copyright at issue” was the one with Registration No. TX 6-211-063 (the “`063 Copyright”). Defendants question whether Yue or Netbula owns the rights of the `063 Copyright.

3 See, e.g., Document No. 91, p.4:10-18 (filed on October 30, 2007); Document No. 98, p.3:11-19 and Document No. 99, pp.4:23-5-18 (filed on November 5, 2007) of Netbula-Sun.

4 Sun’s counsel asked Yue to file a motion in Netbula-Sun to relate the cases. Yue declined to do so because of the “cease and desist” order.

5 If Defendants allege these motions were frivolous, fees were available under FRCP 11 or 28 U.S.C. § 1927.

6 Paragraph 35 was about the 2000 purchase order with which StorageTek purchased 8 developer licenses and 1000 runtime licenses. Paragraph 40 was about the release notes for LibAttach. Paragraph 49 was about Lisa Rady’s email sating she had PowerRPC software on a CD.

7 Proceeding pro se is a statutory right granted by the judiciary act of 1789, and “is a right of high standing, not simply a practice to be honored or dishonored by a court depending on its assessment of the desiderata of a particular case..” O'reilly v. New York Times Co., 692 F.2d 863, 867 (2nd Cir. 1982).

8 Yue did not attend most part of the Abramovitz deposition. When Yue came into the room to discuss Sun’s use of certain confidential documents, the deposition was completed. As alleged in the FAC of Yue-Sun, Yue found evidence of continuing infringement as recent as late 2007.

Objections to Magistrate Judge Elizabeth D. Laporte's Recommendation on 54-6 Non-Compliance

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DONGXIAO YUE, Plaintiff, v. STORAGE TECHNOLOGY CORPORATION, a Delaware corporation; SUN MICROSYSTEMS Inc., a Delaware corporation; Michael Melnick, an individual; Julie DeCecco, an individual; Michael P. Abramovitz, an individual; Lisa K. Rady, an individual; Jonathan Schwartz, an individual; and DOES 1-1000, inclusive, Defendants.

Case Nos. C07-05850-JW PLAINTIFF’S OBJECTIONS TO THE RECOMMENDATION OF THE MAGISTRATE JUDGE ON PLAINTIFF’S MOTION TO STRIKE DEFENDANTS’ MOTION FOR ATTORNEY’S FEES FOR FAILURE TO COMPLY WITH CIVIL LOCAL RULE 54-6 AND NOTICE OF MOTION AND MOTION FOR DE NOVO DETERMINATION OF PLAINTIFF’S MOTION TO STRIKE [DOCKET NO. 113] Time: 9:00 AM Date: November 3, 2008 Dept: 8, 4th Floor Judge: The Honorable James Ware

NOTICE OF MOTION & MOTION FOR DE NOVO DETERMINATION & OBJECTIONS

TO ALL PARTIES AND THEIR COUNSEL:

Please take notice that pursuant to FRCP 72(b), 28 U.S.C. 636(b)(1) and Civ. L.R. 72-3 and Civ. L.R. 7-2, pro se plaintiff Dongxiao Yue (“Dr. Yue” or “Yue”), respectfully objects to the Magistrate Judge’s Report and Recommendation [Docket No. 142] on Plaintiff’s motion to strike [Docket No. 113] defendants’ fee motion for their failure to comply with Civil Local Rule 54-6, on the ground that (1) rule 54-6 is applicable; (2) the rule is mandatory and enforceable; (3) to permit non-compliance would render the rule meaningless; (4) defendants’ purported meet-and-confer request was untimely and futile; and other grounds. Yue moves the Court for de novo determination of his motion to strike defendants’ motion for attorneys’ fees based upon the objections and arguments presented below. The motion for de novo determination is set for hearing at 9:00AM, on November 3, 2008 before U.S. District Judge James Ware at the San Jose Division of the Northern District of California. The motion is based on by this notice, the objections and arguments presented below, the Court’s record and Declaration of Dongxiao Yue (“Yue Decl.”), filed concurrently.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND

This case involves the copyright of the PowerRPC code Yue authored and allegedly infringed by Defendants StorageTek, Sun Microsystems, et al. In 2000, StorageTek purchased eight (8) PowerRPC SDK licenses and 1000 runtime licenses. StorageTek developed many products with PowerRPC and far exceeded the number of licenses, but falsely claimed that it stopped using or distributing PowerRPC.

On November 19, 2007, acting pro se, Yue commenced this action with 10 infringement claims. On January 28, 2008, attorney Elena Rivkin noticed her appearance as counsel for Yue. On February 21, 2008, Yue filed a motion to proceed as a pro se plaintiff again. At the time, the parties were discussing mediation options. Plaintiff offered three mediators for defendants to choose.

On March 4, 2008, Judge Jenkins dismissed the instant case with prejudice and entered final judgment against Yue. Judge Jenkins also denied Yue’s request to proceed pro se. On March 12, 2008, defendants filed a letter with the Court, accepting one of the mediators Netbula and Yue offered. On March 18, 2008, Sun filed a motion for attorney’s fees, seeking $92,000 in fees and costs.

On April 1, 2008, Yue filed an opposition to Sun’s motion for attorney’s fees and a notice of appeal. On April 8, 2008, Sun filed a reply brief to Yue’s opposition to the motion for attorney’s fees, seeking $134,000 in fees and costs.

On April 24, 2008, Yue informed defense counsel that they did not follow Civil Local Rule 54-6 in their motion for attorney’s fees because they never attempted to confer with Yue “for the purpose of attempting to resolve any disputes with respect to the motion.” On June 16, 2008, Yue filed a motion to strike Defendants’ motion for attorney’s fees for their failure to comply with Civil Local Rule 54-6.

On July 22, 2008, the hearing of Defendants’ fee motion and Yue’s motion to strike was held before Magistrate Judge Laporte. Yue argued the motions pro se.

On July 23, 2008, the Court signed an order that “allows Elena Rivkin Franz to withdraw as counsel of record” for Yue and “[s]ubstituting Dongxiao Yue as new counsel of record, in propria persona” in this case. On August 6, 2008, Magistrate Judge Laporte recommended that Sun be awarded $219,949.90 in attorney’s fees and costs under §505 of the Copyright Act. Magistrate Judge Laporte also stated that Plaintiff’s motion to strike “lacks merit for several reasons” and recommended that striking Defendants’ fee motion was unwarranted.

OBJECTIONS TO THE MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION

For the following reasons, Plaintiff respectfully objects to the Report and Recommendation of the Magistrate Judge (“RMJ”).

GENERAL ARGUMENTS AND OBJECTIONS

1. The Word “Counsel” in the Local Rules Includes a Self-represented Party

"Litigants in federal court have a statutory right to choose to act as their own counsel," Machadio v. Apfel, 276 F.3d 103, 106 (2d Cir. 2002). “Basic rules of courtroom protocol and procedure impose an obligation, both on counsel and on individuals acting as their own counsel, to comply with court rules…” U.S. v. GOMEZ-ROSARIO, 418 F.3d 90, 101 (1st Cir. 2005). See also , JONES v. WALKER, 496 F.3d 1216, 1220 (11th Cir. 2007) (“Jones was ordered to proceed as his own counsel.”). The Court’s July 23, 2008 substitution of counsel order referred to Yue as “new counsel of record.” The word “counsel” by definition encompasses a self-represented party.

The word “counsel” is used throughout the Local Rules to mean a self-represented party. See, e.g, Civil Local Rules 30-2(b) (1), 37-1(a), 16-3, 16-9(a), 16-10(a), 16-10(b)(5), 16-10(c), 65-1(b). Defendants failed to cite a single case where a self-represented party must be treated differently, nor did they provide any rationale for treating a self-represented¹ party differently in the context of Local Rule 54-6 or otherwise. Rule 30-1 is unhelpful to Defendants, because it treated represented parties and self-represented parties equally.

Defendants provided no authority for the position that Local Rule 54-6 is not applicable when one of the parties is a pro se. Rule 54-6 itself provides no exceptions.

2. The Word “Must” in Local Rule 54-6 Must Be Respected

Civil Local Rule 54-6 (b) of the Northern District of California states that “the motion for attorney fees must be supported by declarations or affidavits containing the following information”:

A statement that counsel have met and conferred for the purpose of attempting to resolve any disputes with respect to the motion or a statement that no conference was held, with certification that the applying attorney made a good faith effort to arrange such a conference, setting forth the reason the conference was not held.

Local Rules are the "laws of the United States." United States v. Hvass, 355 U.S. 570, 575-76 (1958). They are not something that should be taken lightly. Failure to comply with Local Rules may be subject to sanctions. The word “must” in local rule 54-6 is so imperative that it leaves the court with no discretion. Strict compliance of the rule must be enforced. Furthermore, the rule itself does not provide any exceptions. Interpreting the rule otherwise would make it meaningless.

3. Defendants Have No Valid Excuses

FRCP 54(d) (2) (D) requires a fee motion “be filed no later than 14 days after the entry of judgment.” The 14-day limit is a hard deadline. Strict compliance is expected. See, e.g., Kyle v. Campbell Soup Co., 28 F.3d 928, 932 (9th Cir. 1994) (filing a motion for attorneys' fees two days late was not excusable). Civil Local Rule 54-6 states that counsel “must” meet and confer to resolve the disputes about fees before filing a motion for attorney’s fees.

Defense attorneys billed their clients over $60,000 on researching and preparing the attorney’s fee motion. Despite the large number of hours defense counsel allegedly spent on the research and drafting of the attorney’s fees motion, they failed to make any effort to comply with local rule 54-6. Defense counsel admitted that the failure was “oversight on counsel’s part.” Doc. No. 127, p.8:10-11. But a rule is a rule. Sun is a multi-billion company², Yue is just one man. Sun has many lawyers, Yue is a pro se. The Magistrate has no “leniency” for Yue because he “has had counsel at times in this litigation.” (RMJ at p.6:15-17). The same strict standard must be applied to Defendants, who are represented by a large law firm.

4. Defendants’ Failure to Confer with Plaintiff was Highly Prejudicial

By failing to comply with the 54-6 local rule, defense counsel increased their fees substantially. As stated above, defense counsel billed over $60,000 for their motion for fees related work alone – these fees could be completely eliminated if the parties conferred.

Moreover, many of the billing entries were block billing entries, such as 3.8 hours, 9.5 hours, 4.2 hours, 8.9 hours, 5 hours … 11.30 hours... And many of the fee entries are very questionable, such as time for conferring with Plaintiff’s counsel while Plaintiff was his own counsel, and time for negotiating a protective order when this case never had any discovery. These issues and disputes could be discussed and resolved in a meet and confer session. But defense counsel avoided this process.

Even after Plaintiff informed defendants about their failure to confer, they simply submitted additional fee schedules to the court without ever attempting to resolve any disputes with Plaintiff, leaving all the issues for the Court. Plaintiff never had any chance to even oppose defendants’ post-judgment fees. Considering the fact that most of defendants’ fees are incurred after the case was terminated, the prejudice to Plaintiff due to defendants’ failure to comply with Local Rule 54-6 is severe.

5. The Only Remedy Was to Strike Defendants’ Fee Motion

Defendants’ fee motion was defective. “[O]verlooking the defect of this document would only serve to whittle away at the rules and ultimately render them meaningless and unenforceable.” Riley v. Northwestern Bell Telephone Co., 1 F.3d 725, 729 (8th Cir. 1993).

Defense counsel claimed that on April 24, 2008 they asked to meet and confer with Yue, but Yue refused³. Local Rule 54-6 requires that counsel to meet and confer before filing the fee motion with the Court, not afterward. Moreover, any effort to salvage the defective motion would be futile, because the deadline for filing a properly formed fee motion had already passed over a month before. Any effort that could have corrected the “oversight on counsel’s part” would be out of the fourteen day period for fee motions and would be untimely. And an untimely fee motion must be denied. Cf. Kyle v. Campbell Soup Co., 28 F.3d 928, 932 (9th Cir. 1994) (vacating order granting a fee motion that was two days late).

If a party was allowed to file a defective motion then fix it out of the time limit, “the purpose of the time limitation would be defeated." Riley v. Northwestern Bell Telephone Co., 1 F.3d 725, 727 (8th Cir. 1993) (citing Martinez v. Trainor, 556 F.2d 818 (7th Cir. 1977)). In Riley, the party filed a defective post-judgment motion within the 10-day period, and soon afterward filed a proper version, the district court denied the motion as untimely, then the court of appeal dismissed the appeal for lack of jurisdiction --- since the defective post-judgment motion could not toll the time to file appeal, the notice of appeal was not filed within 30 days of judgment.

The Magistrate Judge cited May v. Metropolitan Life Ins. Co, No. C 03-5056CW, 2005 WL 839291, at *1 (N.D. Cal., April 7, 2005). In that case, “the plaintiff’s counsel had expected the meet-and-confer process to take place at a later date within the deadline.” It is debatable whether a deficient motion should be considered. But, that case can also be distinguished from the instant case, because in that case, the plaintiff expected the meet-and-confer to take place within the deadline. Here, defendants never made any effort to confer with Plaintiff within the deadline. The May court also noted that the parties “do not cite any authority suggesting that a subsequent failure to comply with the proper motion form justifies denying a plaintiff fees to which she would otherwise be entitled.” Here, Yue cited Kyle v. Campbell Soup Co., 28 F.3d 928, 932 (9th Cir. 1994) in his motion to strike: assuming a party would be allowed to cure a defective motion, that motion would be untimely because of the time limitation.

The Kyle case is instructive. There, the plaintiff filed a motion for attorney’s fees two days after the deadline. After the opposing counsel expressed intent to oppose the fee motion on the basis that the motion was untimely, the plaintiff filed a motion to enlarge time. The district court found that there was no prejudice to the opposing party, granted the enlargement of time and eventually awarded fees. The Ninth Circuit reversed and vacated the award of attorney’s fees.

The Magistrate Judge also cited Thomas v. Baca, 231 F.R.D. 397, 404 (C.D. Cal. 2005), where the court excused the failure of counsel to meet and confer prior to the filing of motion for class certification. But that case was not about post-judgment motion with strict deadlines. The time limitation for an attorney’s fees motion is akin to a jurisdictional requirement.

6. The Magistrate Judge’s Conclusion that “Plaintiff’s argument lacks merit” was not based on objective analysis

In her recommendation, the Magistrate wrote: “Defendants also note that Plaintiff generally refused to discuss what issues might be resolved at a meet and confer.” RMJ at p.9:23-24. Even assuming defendants’ allegation was true, this statement omitted the time of the alleged refusal to confer – it was on April 24, 2008. As Yue stated in his declaration, defense counsel did not even know what local rules Yue were talking about until April 24, 2008, when Yue asked Jedediah Wakefield to check local rule 54-6. Yue Decl. at ¶9. April 24, 2008 was fifty (50) days after judgment and after the parties completed the briefing of the fee motion. Thus, any purported effort by defense counsel to confer with Yue on April 24, 2008 would be untimely and futile. Instead of concluding that defense counsel’s purported effort to confer after the time limit was futile, the Magistrate Judge concluded any “meet and confer” would have been futile in general.

Even assuming defense counsel made a sincere request⁴ to confer on April 24, 2008 and Yue refused to confer on the ground that it was untimely, one cannot show that “meet-and-confer” would have been futile back between March 4, 2008 and March 18, 2008 – the last day for defendants to file their fee motions. Most of defendants’ fees were generated after March 4, 2008.

Defendants’ fees even included the fees for opposing Plaintiff’s motion to strike the fee motion due to their non-compliance with Civil L.R. 54-6. For instance, Kimberly Culp billed $1058.50 for 2.9 hours drafting the opposition to the motion to strike on June 23, 2008; Culp billed another $1,131.50 for 3.10 hours on “preparing additional points for opposition to motion to strike” on June 24, 2008; Jed Wakefield billed $5,989.50 for 9.9 hours (a single entry) for revising the opposition to the motion to strike on July 1, 2008… The total fees for opposing Plaintiff’s motion to strike for failure to comply with Civ. L.R. 54-6 were over $10,000. The Magistrate Judge recommended that all these fees to be awarded to defendants. Thus, if the Magistrate Judge’s recommendation was adopted, defense counsel would be awarded large amount of fees for their failure to meet-and-confer pursuant to Civ. L.R. 54-6 due to “oversight on counsel’s part.”

MOTION FOR DE NOVO DETERMINATION

Based on the objections above, Plaintiff respectfully disagrees with the Magistrate Judge’s report and recommendation. Plaintiff requests the District Court to make a de novo determination of the findings and conclusions of the Magistrate Judge and a make a de novo determination of Plaintiff’s motion to strike [Docket No. 113] defendants’ motion for attorney’s fees.

Respectfully submitted,

Dated: August 20, 2008

/S/ _____________________

By: DONGXIAO YUE

SELF-REPRESENTED

1 A pro se can be a licensed attorney.

2 See, e.g., http://finance.yahoo.com/q?s=JAVA (Sun’s market capitalization is greater than $7 billion).

3 Yue also dispute whether defendants’ April 24 request to confer was sincere. See, Yue Decl. at ¶9 and Yue’s Declaration on July 8, 2008 (Doc.No. 132) describing the April 24, 2008 conference.

4 See, Yue Decl. at ¶9 and Yue’s Declaration on July 8, 2008 (Doc.No. 132) describing the April 24, 2008 conference, where defense counsel threatened to cause serious “personal financial stability” issues for Yue.

Chinese Hacker Claims Innocence under U.S. Law

A Chinese hacker named Hong Lei was arrested by Chinese authorities on August 20, 2008 after Microsoft complained about his distribution of a pirated version of Microsoft Windows XP called “Tomato Garden” edition. The “Tomato Garden” Windows removes the registration requirement and adds enhancements, such as a Vista look and feel. Lei had been developing “Tomato Garden” since 2003. Some reports say he had distributed over ten million copies of “Tomato Garden” Windows to the Chinese and Japanese markets via a web site at Tomatolei.com .

Lei’s arrest generated a lot of controversy in the online community. Some say he could face up to seven years in prison. But experts claim that Microsoft did not even have a civil case against Lei, much less a criminal one. First, Microsoft’s claims are out of statute of limitations. Lei started distributing “Tomato Garden” in 2003. Now it’s 2008, some five years later. A copyright claim must be filed within three years of the alleged infringement. Microsoft slept on its rights, and is no longer protected by the copyright law. Second, according to a recent federal court decision in a software piracy case against Symantec, Lei’s actions were perfectly legal. In that case, Symantec bought one copy of certain software, but distributed millions of copies around the world. The copied software even displayed a message: “one user license, not distributable”. But U.S. federal judge Martin J. Jenkins threw out the copyright suit. The judge reasoned: the copyright owner could not prove that Symantec saw the “one user” message; even if it could prove that Symantec saw the message, it could not prove that Symantec agreed to the “one user” restriction. Lei’s situation was just like Symantec’s. He based his “Tomato Garden” Windows on licensed copies of Microsoft Windows. Therefore, he had valid licenses to start with. To prove infringement, Microsoft must prove that he exceeded the scope of license. Lei’s method of creating the Tomato Garden Windows was automated, and did not require him to read any of Microsoft’s licensing terms. Even if he did, Microsoft could not show he understood or agreed to those terms. On the contrary, the fact he made Tomato Garden proved that he did not agree to Microsoft’s terms. This forecloses any copyright claim against him. NETBULA, LLC v. SYMANTEC CORPORATION, 516 F. Supp.2d 1137, 1152 (N.D.Cal. 2007) (citing Specht v. Netscape Communications Corp., 150 F.Supp.2d 585, 596 (S.D.N.Y. 2001), aff'd, 306 F.3d 17 (2d Cir. 2002) ("The case law on software licensing has not eroded the importance of assent")).

Some readers comment since American copyright law is more developed, if Lei was innocent under American law, he must be innocent under Chinese law. Many of Lei’s supporters call for his immediate release.

California Judges Confused about Contractual Right and Property Right -- Federal Circuit Reverses

JACOBSEN v. KATZER, 2008-1001 (Fed. Cir. 8-13-2008)
United States Court of Appeals, Federal Circuit.
Decided August 13, 2008.

Appeal from the United States District Court for the Northern District
of California in case no. 06-CV-1905, Judge Jeffrey S. White.

HOCHBERG, District Judge.
...

The heart of the argument on appeal concerns whether the terms of the
Artistic License are conditions of, or merely covenants to, the copyright
license. Generally, a "copyright owner who grants a nonexclusive license
to use his copyrighted material waives his right to sue the licensee for
copyright infringement" and can sue only for breach of contract...

Thus, if the terms of the Artistic License allegedly violated are both
covenants and conditions, they may serve to limit the scope of the
license and are governed by copyright law. If they are merely covenants,
by contrast, they are governed by contract law... The District Court did not expressly state
whether the limitations in the Artistic License are independent covenants
or, rather, conditions to the scope; its analysis, however, clearly
treated the license limitations as contractual covenants rather than
conditions of the copyright license.[fn4]

...

The conditions set forth in the Artistic License are vital to enable
the copyright holder to retain the ability to benefit from the work of
downstream users. By requiring that users who modify or distribute the
copyrighted material retain the reference to the original source files,
downstream users are directed to Jacobsen's website...

The District Court interpreted the Artistic License to permit a user to
"modify the material in any way" and did not find that any of the
"provided that" limitations in the Artistic License served to limit this
grant. The District Court's interpretation of the conditions of the
Artistic License does not credit the explicit restrictions in the license
that govern a downloader's right to modify and distribute the copyrighted
work. The copyright holder here expressly stated the terms upon which the
right to modify and distribute the material depended and invited direct
contact if a downloader wished to negotiate other terms. These
restrictions were both clear and necessary to accomplish the objectives
of the open source licensing collaboration, including economic benefit.
Moreover, the District Court did not address the other restrictions of
the license, such as the requirement that all modification from the
original be clearly shown with a new name and a separate page for any
such modification that shows how it differs from the original.

...

For the aforementioned reasons, we vacate and remand. ...

The judgment of the District Court is vacated and the case is remanded
for further proceedings consistent with this opinion.

VACATED and REMANDED