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Open Text Corp. v. SAS C6

United States District Court, D. Massachusetts

January 7, 2020

OPEN TEXT CORPORATION and OPEN TEXT, INC., Plaintiff,
v.
SAS C6, Defendant.

          MEMORANDUM AND ORDER

          Honorable Patti B. Saris United States District Judge

         INTRODUCTION

         On June 29, 2018, the Plaintiffs, Open Text Corporation and Open Text, Inc. (“Open Text”) brought suit against the defendant, SAS C6 (“C6”), in Massachusetts Superior Court alleging, among other things, breach of contract based on an Exclusive License Agreement (“ELA”) signed by the parties and breach of the associated covenant of good faith and fair dealing. Under the ELA, C6 conveyed to EMC Corporation (“EMC”) an irrevocable exclusive, worldwide and perpetual license to certain software and any derivative works thereof and described additional services and software development work to be provided by C6. EMC subsequently assigned its rights under the ELA to Open Text.

         On August 13, 2018, C6 removed the case to the United States District Court for the District of Massachusetts. C6 contended that this Court had jurisdiction due to diversity of citizenship pursuant to 28 U.S.C. § 1332 and jurisdiction because the case raised a question arising under federal copyright law pursuant to 28 U.S.C. § 1331. The parties now agree that there is no diversity of citizenship, so the only remaining ground for jurisdiction is if the case arises under federal law.

         Pending before the Court is Open Text's motion to remand. Open Text contends that its complaint raises only a contract claim under state law. C6 argues that Open Text's contract claim is simply a copyright claim in disguise.

         STATEMENT OF FACTS

         On October 25, 2011, EMC and C6 executed the ELA by which C6 conveyed to EMC all rights to a software product known as “D2.” Dkt. No. 1, Ex. A ¶ 1. D2 is a web-based application and interface designed for enterprise content management that allows users to quickly and easily customize functionality for various business needs, including content creation, publishing and workflow. Id. ¶ 9. Subsequently, EMC conveyed its rights under the ELA to Open Text. Id. ¶ 1.[1]

         Open Text alleges that C6 has developed, made, marketed and sold three products in violation of the ELA: C6 Mobile for D2 (“D2 Mobile”), C6 Office for D2 (“D2 Office”) and C6 Any. Id. ¶ 15.

         LEGAL STANDARD

         Civil actions are removable from state court to federal court if the federal court has original jurisdiction over the action. 28 U.S.C. § 1441. United States district courts have original jurisdiction of civil actions “arising under” the laws of the United States, 28 U.S.C. § 1331, as well as of any civil action arising under any act of Congress relating to copyrights. 28 U.S.C. § 1338. Whether the claim arises under federal law is determined by reference to the complaint alone; the existence of a potential defense based on federal law does not confer a right to remove. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 399 (1987) (“[A] defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated.”)

         Moreover, the plaintiff is the master of his claim. Caterpillar, 482 U.S. at 392; see also The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25 (1913) (“Of course, the party who brings a suit is master to decide what law he will rely upon....”). “The presence or absence of federal-question jurisdiction is governed by the ‘well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar, 482 U.S. at 392 (citing Gully v. First Nat'l Bank, 299 U.S. 109, 112-13 (1936)).

         The First Circuit has cautioned that “Federal courts, as courts of limited jurisdiction, should implement federal preemption doctrines as narrowly as possible....[T]he Copyright Act does not encompass all claims simply because the parties' dispute happens to involve a copyrighted work.” Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co. KG., 510 F.3d 77, 99-100 (1st Cir. 2007). See also Venegas-Hernández v. Association De Compositores Editores De Música Latinoamericana, 424 F.3d 50, 58 (1st Cir. 2005) (“The Copyright Act does not draw into federal court all matters that pertain to copyright.”).

         DISCUSSION

         Open Text urges the court to find that the ELA is not preempted by the Copyright Act, arguing that the contract promise and the conditions underlying the contract constitute extra elements which distinguish state contract law from federal copyright law. C6 contends that the exclusive license at issue in ...


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