Direct Technologies, LLC, a California limited liability company, Plaintiff-Appellant,
Electronic Arts, Inc., a Delaware corporation, Defendant-Appellee.
and Submitted June 8, 2016 Pasadena, California
from the United States District Court No.
8:10-cv-01336-AG-PJW, for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Tehranian (argued), Christopher W. Arledge, and Peter R.
Afrasiabi, One LLP, Newport Beach, California, for
N. Klieger (argued), Hueston Hennigan LLP, Los Angeles,
California, for Defendant-Appellee.
Before: Alex Kozinski, Ronald M. Gould, and Andrew D.
Hurwitz, Circuit Judges.
/ Trade Secrets
panel affirmed in part and reversed in part the district
court's summary judgment in favor of defendant Electronic
Arts, Inc., in a copyright infringement and trade secrets
Arts, maker of The Sims, a computer game, contracted with a
production company to produce a USB flash drive shaped like a
"PlumbBob, " a gem-shaped icon from the game. That
company contracted with Direct Technologies, LLC, to produce
a prototype. Electronic Arts approved the prototype but had
the flash drives produced by a company in China. Direct
Technologies sued under the Copyright Act and the California
Uniform Trade Secrets Act.
as to the copyright infringement claim, the panel held that
the district court erred in ruling as a matter of law that
the flash drive was not sufficiently original when compared
to the PlumbBob icon to qualify for copyright protection as a
derivative work. The panel held that there was a genuine
issue of material fact as to whether Direct Technologies'
cut-away design for removing the flash drive from the
PlumbBob object was sufficiently non-functional and
non-trivial to warrant copyright protection. There was also a
genuine issue of material fact as to whether Direct
Technologies was sufficiently in control of its artistic
contribution to qualify as a joint author in the flash drive
as to the trade secrets claim, although relying on different
grounds than the district court, the panel held that Direct
Technologies' contribution to the PlumbBob USB drive, a
design for the flash drive's removal from the PlumbBob
object, did not derive independent economic value from not
being generally known to the public. The panel also held that
the district court did not clearly err or otherwise abuse its
discretion in denying Electronic Arts attorneys' fees for
the trade secrets claim.
Arts (EA) is the creator of The Sims, a popular computer
game. EA contracted with a production company called
Lithomania to produce a USB flash drive shaped like a
"PlumbBob, " a gem-shaped icon from the computer
game, to promote a "Collector's Edition" of The
Sims. Lithomania in turn contracted with Direct Technologies
(DT) to produce a prototype of the PlumbBob-shaped flash
drive. EA approved the prototype, but DT's prototype was
shipped to a company in China to make essentially the same
flash drives for $0.50 cheaper per unit than DT proposed.
DT settled breach of contract claims with Lithomania, DT sued
EA under the federal Copyright Act and the California Uniform
Trade Secrets Act (CUTSA). The district court granted summary
judgment to EA. The district court held that the flash drive
was not sufficiently "original" when compared to
the PlumbBob icon to qualify for copyright protection. The
court also held that DT had not taken "reasonable
efforts" to keep the flash drive design secret because
DT had voluntarily given the prototype to Lithomania without
explicit confidentiality restrictions. EA then moved for
attorneys' fees under each statute, but the district
court denied fees on both claims, concluding that DT's
claims were neither objectively specious nor brought in bad
regard to the copyright claim, we hold that the district
court erred by concluding as a matter of law that the flash
drive was not copyrightable. There is a genuine issue of
material fact as to whether DT's cut-away design for
removing the USB flash drive from the PlumbBob object is
sufficiently non-functional and non-trivial to warrant
copyright protection. A reasonable jury could decide these
questions in either party's favor.
CUTSA claim, we affirm the district court's grant of
summary judgment to EA, although we rely on different grounds
than did the district court. We hold that DT's
contribution to the PlumbBob USB drive-that is, DT's
design for the flash drive's removal from the PlumbBob
object-does not "derive independent economic value,
actual or potential, from not being generally known to the
public." Cal. Civ. Code § 3426.1(d)(1). Rejecting
EA's cross-appeal, we further hold that the district
court did not clearly err or otherwise abuse its discretion
in denying attorneys' fees for this claim.
Sims is a popular video game in which players "create
virtual people called 'Sims, ' customize the homes
and neighborhoods in which [the Sims] live, and help direct
them in their relationships, careers, and social lives as
they progress through various life stages." When a
player controls a specific character, a green icon called a
"PlumbBob" appears over the character's head.
logo is "an iconic symbol of The Sims." EA
holds a copyright in the PlumbBob icon.
release of The Sims 3, EA decided to order USB flash drives
shaped like a PlumbBob as a promotional trinket to be sold
with the game. In May 2008, EA turned to Lithomania, a print
production company, to find a manufacturer for the PlumbBob
flash drives. Lithomania president Gina Long contacted DT and
sent pictures of the PlumbBob. DT was asked to produce
prototype samples of a PlumbBob-shaped flash drive for
EA's approval. EA approved DT's prototype, and the
parties began negotiating over a Vendor Agreement in August
than two weeks later, Lithomania sent DT's prototype to
TREK2000, a Chinese company, without telling
TREK2000 offered to make identical PlumbBob USB drives for
$0.50 less per unit. EA asked Lithomania whether TREK2000
"swear[s] they can match what we already had" from
DT, and Lithomania assured EA that "they don't think
they will have a problem matching it at all." In the
end, the only difference between TREK2000's product and
DT's prototype was that the corners were "a little
less sharp than the corners of the prototype."
than tell DT that it had been cut out of the deal, Lithomania
lied, first telling DT that the project was on hold and
"who knows???" why. Then, just one day after
Lithomania told EA that it was "ready to start the
preproduction sample [with TREK2000] as soon as you confirm
an order for the manufacturing tool, " Lithomania sent
DT a vendor agreement stating that Lithomania would purchase
the USB flash drives from DT. The agreement also purported to
transfer all intellectual property rights from DT to EA. DT
signed the agreement, thinking that it had sealed the deal.
Lithomania, on the other hand, told EA that it had received a
vendor agreement from DT, "so IP's are all
protected." EA responded, "Great. . . . Protect us
next few weeks, Lithomania had DT sign other agreements and
assignments of IP interests. DT was never actually told that
it had lost the project. DT suspected its loss, but it did
not know for sure until DT's owner and CEO saw the
PlumbBob drive available in stores.
first sued Lithomania in California state court for fraud,
breach of contract, and breach of the implied covenant of
good faith and fair dealing. That suit settled.
brought this case against EA, seeking a declaratory judgment
that DT was "joint author of a copyrighted work" in
the PlumbBob drive and was "entitled to an equal share
of the profits related to the PlumbBob USB." The
district court dismissed for failure to state a claim,
holding that DT did not "sufficiently allege that it
is a joint owner of the USB Drive" because it had signed
a vendor agreement transferring all rights in the USB drive
to EA. On appeal, we vacated and remanded, holding that DT
could prevail "if the contract was ...