JAMES H. FORTE (JF 2248) SAIBER, SCHLESINGER, SATZ & GOLDSTEIN 1 Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 ROBERT T. HASLAM VANESSA WELLS LESLIE A. FITHIAN MICHAEL A. BUCCI HELLER, EHRMAN, WHITE & McAULIFFE 525 University Avenue, 9th Floor Palo Alto, California 94301 Telephone: (415) 326-7600 Attorneys for Defendant Berkeley Software Design, Inc. UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ) Civil Action No. 92-1667 (DRD) ) UNIX SYSTEM LABORATORIES, INC., ) DEFENDANT'S MEMORANDUM OF LAW ) IN SUPPORT OF ITS MOTION TO Plaintiff, ) DISMISS PLAINTIFF'S SECOND ) THROUGH FOURTH CLAIMS UNDER v. ) RULE 12(b)(6) ) BERKELEY SOFTWARE DESIGN, INC., ) Date: July 13, 1992 ) Time: 10 a.m. Defendant. ) Hon. Dickinson R. Debevoise ________________________________) I. INTRODUCTION In its Complaint, plaintiff UNIX System Laboratories, Inc. ("USL") has asserted four claims, three of which purport to set out claims for false advertising, dilution and unfair competition against Berkeley Software Design, Inc. ("BSDI"). All of these claims are based upon BSDI's advertising that certain of its software -- which is copyrighted by the Regents of the University of California (the "Regents") -- is free of AT&T code and does not require a license from USL. Notably absent from USL's complaint is any allegation that USL's proprietary rights have been violated by BSDI, or any allegation describing or defining USL's claimed proprietary rights, issues at the very heart of USL's false advertising claim. Apparently, USL believes it can avoid these core issues by dressing its claim for copyright or trade secret infringement in Lanham Act clothing. However, USL's failure to allege such a violation makes it impossible for its second claim for relief -- for false advertising under Section 43(a) of the Lanham Act -- to withstand a motion to dismiss. Moreover, USL's conclusory allegations based upon dilution, and upon unidentified "unfair competition" and "deceptive trade practices," fail to state any claim upon which relief could be granted. Instead of alleging any facts that could support its claim, or citing any particular statute or body of law under which it claims rights, USL recites mere legal conclusions, making it impossible for BSDI to adequately respond. Accordingly, BSDI moves, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss USL's second through fourth claims for relief. II. BACKGROUND In mid-1991, BSDI obtained the Regents' copyrighted software -- the BSD Networking Release 2 -- from UUNET Technologies, Inc. -- a well-known public archives site. UUNET Technologies licensed the software from the Regents. After obtaining the software, BSDI devoted considerable time and effort developing and improving the Networking Release 2 program. These efforts culminated last year in the completion of the BSD/386 operating system. As part of its marketing of the BSD/386 system, BSDI produced and distributed promotional brochures describing its BSD/386 system. One brochure states: BSD/386 is a "Berkeley UNIX" compatible operating system for the 386 and 486 PC architectures. It is based on the most recent release from the Computer Systems Research Group of the University of California, Berkeley -- the Networking Release 2. The NET2 tape contained no AT&T licensed code, but was not a complete system. BSDI has completed the system and added additional drivers. The resulting system does not require a license from AT&T, and so is available in source form at a fraction of AT&T's price. Complaint at  24. As stated in the advertisement, BSDI's improvements to the Networking Release 2 system have provided consumers with a lower-cost alternative to the system marketed by AT&T. Now, without any legal or factual support, USL claims that the software licensed from the Regents does contain AT&T code and that BSDI's advertising violates not only federal law, but also unidentified and unknown state statutory and/or common law. However, USL fails to assert any action alleging infringement of its proprietary rights. III. ARGUMENT A. USL'S Second Through Fourth Claims For Relief Must Be Dismissed Under Rule 12(b)(6). In order to avoid a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, USL must set forth "`a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). At a minimum, "the pleader is required `to disclose adequate information as to the basis of his claim for relief.'" Universe Tankships, Inc v. United States, 528 F.2d 73, 75 (3d Cir. 1975) (citation omitted). Because USL's second through fourth claims fail to satisfy even this liberal pleading standard, these claims must be dismissed. See Conley, 355 U.S. at 48. B. USL's Second Claim -- For False Advertising Under Section 43(a) Of The Lanham Act -- Fails To Adequately Allege Falsity. USL's claim under Section 43(a) of the Lanham Act fails to adequately allege the most essential element of a false advertising claim -- falsity. See Skil Corp. v. Rockwell Int'l Corp., 375 F. Supp. 777, 782-83 (N.D. Ill. 1974) (plaintiff must allege that defendant made false statements of fact in order to state a claim under Section 43(a)). USL does cite the published materials upon which it bases its claim. Complaint at  24, 26. Beyond this, however, USL offers only the conclusory assertion that BSDI's published statements are materially false and misleading in that, among other things, the `Networking Release 2' referred to therein contains software code that was copied from, based upon, or derived from, code licensed to the Regents by AT&T, such that any operating system derived from `Networking Release 2' requires a license from AT&T or its successor, USL. Complaint at  25; see also, Complaint at  27 (setting forth similar allegations regarding a statement in BSDI's License Agreement). In so alleging, USL merely lumps legal conclusion upon legal conclusion, conveniently ignoring an essential component of its false advertising claim -- unlawful copying. See Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. 1542, 1543 (N.D. Cal 1990) (where plaintiff failed to assert copyright infringement, it could not adequately state a Lanham Act claim which itself depended upon unlawful copying). USL's omission cannot be permitted. To maintain its falsity claim, USL must allege and eventually prove that the BSD/386 operating system infringes USL's proprietary rights. If BSDI's operating system does not infringe USL's proprietary rights, then the BSD/386 requires no license from AT&T, and there can be nothing false about BSDI's statements. Astoundingly, though, USL has not even asserted a claim alleging infringement of its proprietary rights. Rather, USL has "reserved its right" to later bring a claim for infringement of proprietary rights, apparently conceding that it does not have a good faith basis for such a claim at this time. Complaint at  14. However, if plaintiff's false advertising claim is based, as it appears, on copyright infringement, it necessarily must include allegations of copyright infringement on the part of BSDI. See Klinger v. Weekly World News, Inc., 747 F. Supp. 1477 (S.D. Fla. 1990); Gee v. CBS, Inc., 471 F. Supp. 600, 643 (1979), aff'd, 612 F.2d 572 (3rd Cir. 1979). Because a Lanham Act false advertising claim requires the plaintiff to plead and prove falsity, USL cannot evade the requirements of a copyright infringement claim by couching it as a claim under Section 43(a). At least one other court has rejected a similar attempt to use the Lanham Act as a way of circumventing the Copyright Act. In Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. at 1543, Xerox sought damages for claimed violations of Section 43(a), premised on an assertion that Apple unlawfully copied portions of Xerox' copyrighted work. Id. at 1551-53. Similar to USL's claim in this case, Xerox' Lanham Act claim was based on the contention that Apple's copyright notice and claim were a "false designation of origin" because Apple's work allegedly was based on Xerox' proprietary technology, and thus violated Section 43(a). Id. at 1551-52. However, Xerox did not even assert a claim for copyright infringement. Id. at 1545. The court granted judgment on the pleadings as to the Section 43(a) claim. As the court stated, Xerox failed to allege that Apple's Lisa or Macintosh Finder copyright registrations were false, or that Apple engaged in false advertising: Id. at 1552: At most, by reading between the lines of the complaint, it appears that Xerox' position is that because Apple's copyrights ought to be invalidated, any use by Apple of such copyrights constitutes a violation of  43(a) of the Lanham Act. . . . Xerox is putting the cart before the horse. The invalidity of Apple's copyrights needs to be proven before their use can be deemed false and misleading. What Xerox would like, to paraphrase the Red Queen, is its `Verdict first, proof afterward!.' Id. at 1552. In making its ruling, the court specifically noted Xerox's failure to assert a claim for copyright infringement. Id. at 1545, 1552-53. Indeed, it acknowledged that [i]f Apple were found to infringe Xerox' copyright, there might be some basis for Xerox to claim that advertising statements by Apple to the effect that Apple was the originator of the infringed ideas are actionable under the Lanham Act. Xerox, 734 F. Supp. at 1552 n.18. However, without alleging copyright infringement, Xerox was in no position to raise a false advertising claim that itself required a showing of unlawful copying. Id. at 1552-53. As the court concluded, "[i]f Apple copied material that Xerox created, Xerox should bring a copyright infringement action." Id. at 1553 (emphasis added); see also, Hartman v. Hallmark Cards, Inc., 639 F. Supp. 816, 824 (W.D. Mo. 1986), aff'd, 833 F.2d 117 (8th Cir. 1987) (defendant who advertised that it was "`sole and exclusive'" owner of allegedly infringing property could not be found liable where plaintiff failed to prove infringement). Likewise, if BSDI copied material for which USL owns a copyright, USL should bring a copyright infringement action. What it should not -- and cannot -- do is to attempt to evade its burden of proving infringement by disguising its infringement claim in Lanham Act clothing. Because USL has failed to allege copyright infringement -- or any other violation of its proprietary rights -- it has not adequately alleged falsity and cannot state a claim for false advertising. C. USL'S Third and Fourth Claims For Relief Are Hopelessly Vague, And Therefore Fail To State A Claim Upon Which Relief Could be Granted. In its third and fourth claims for relief, USL has thrown in a series of conclusory and cryptic allegations asserting a violation of completely unidentified statutes. Complaint at  32- 35. Even under the liberal pleading requirements of Rule 8 of the Federal Rules of Civil Procedure, a complaint must set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). As one court has stated: The purpose of the Rule 8(a) requirement of a plain and simple statement of the claim is to give the defendant fair notice of the charges so that a meaningful response to the pleading may be filed. U.S. ex. rel. Dattola v. National Treasury Employees Union, 86 F.R.D. 496, 499 (W.D. Pa. 1980); see also, U.S. E.E.O.C. v. City Colleges of Chicago, 740 F. Supp. 508 (N.D. Ill. 1990), aff'd, 944 F.2d 339 (7th Cir. 1991) (plaintiff "must allege sufficient facts to outline the cause of action"). However, in its Complaint, USL speaks in such broad-based and vague language that BSDI could not possibly file a meaningful response. USL's fourth claim for relief is especially puzzling. In that claim, USL alleges that "BSDI's conduct constitutes unfair competition and deceptive trade practices in violation of applicable statutory and common law." Complaint at  35. Beyond these bald legal conclusions, USL alleges nothing that would indicate any actual claim for relief. USL does not even tell us what statute or statutes and what state's law it believes is "applicable." Nor does USL supply the particular facts upon which it purports to base its claim. This is significant because under New Jersey law, "unfair competition" is not a cause of action. It is merely a general term encompassing a wide range of possible causes of action. C.R. Bard, Inc. v. Wordtronics Corp., 235 N.J. Super. 168, 172, 561 A.2d 694, 696 (1989). Consequently, BSDI cannot even begin to evaluate -- never mind respond to -- these vague assertions. Instead of providing "fair notice," see Conley, 355 U.S. at 41, USL's fourth claim for relief merely hints at some unidentified unfair competition claim based upon statutory or common law from one or more of the 50 states. Plainly, these conclusory allegations fail to state any claim upon which relief could be granted. Therefore, the fourth claim must be dismissed under Rule 12(b)(6). See Duncan v. AT&T Communications, Inc., 668 F. Supp. 232, 234 (S.D.N.Y. 1987) (conclusory allegations which fail to give notice of the basic events and circumstances of which plaintiff claims injury fail to state a claim under Rule 8). USL's third claim for relief at least asserts a distinguishable cause of action -- for dilution. Yet, it too fails to state any specific facts indicating that USL is entitled to relief. Nor does it declare what state's law it claims applies to this case. Not all states recognize a claim for dilution. Indeed, New Jersey has no anti-dilution statute, and no New Jersey cases have expressly recognized the cause of action. Without knowing what law USL claims applies, it is impossible to evaluate whether a dilution claim even exists, or if it does, what the elements of the claim are and whether they are met. Thus, USL's conclusory allegations that "BSDI's conduct threatens to and does impair the distinctive significance of the UNIX mark, in violation of USL's statutory and common law rights" is insufficient notice of USL's claim. Complaint at  33. Because it would not be possible to respond to this claim, USL's third claim for relief must be dismissed. IV. CONCLUSION For all of the foregoing reasons, BSDI respectfully requests that this Court grant its motion dismissing USL's second through fourth claims for relief pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dated: May 26, 1992 SAIBER, SCHLESINGER, SATZ & GOLDSTEIN By: ________________________________ James H. Forte (2248) 1 Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 Attorneys for Defendant Berkeley Software Design, Inc.