United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND OPINION
ROSENTHAL, CHIEF UNITED STATES DISTRICT JUDGE
Technologies, Inc. has sued NCR Corporation, alleging
copyright infringement. (Docket Entry No. 1). On July 2,
2019, soon after the deadline for NCR to answer or to file a
responsive motion, Embarcadero requested entry of default.
(Docket Entry No. 9). The next day, NCR moved to dismiss for
lack of subject-matter jurisdiction or, alternatively, for
failure to state a claim. (Docket Entry No. 11). NCR later
responded to the motion for entry of default. (Docket Entry
No. 13). Embarcadero replied, moved to strike, and responded
to the motion to dismiss. (Docket Entry Nos. 13, 14, 15).
on the motions, responses, and replies and the applicable
law, the court denies the motion to enter default because NCR
has shown good cause for its failure to answer, file a
responsive motion, or appear before the deadline. (Docket
Entry No. 9). The court denies Embarcadero's motion to
strike the motion to dismiss, but also denies NCR's
motion to dismiss on this record, without prejudice to
raising the arguments at a later stage of the litigation.
(Docket Entry Nos. 11, 14). The reasons are stated below.
Technologies, Inc., holds United States copyrights for
software programs it calls Delphi, Cꊕ, RAD Studio,
and Interbase. (Docket Entry No. 1 at ¶ 7).
Embarcadero's licenses for these software programs
require registering with Embarcadero and complying with the
service and license agreements. (Id. at ¶ 13).
Embarcadero sells one-year license subscriptions, allowing
purchasers to download the software with a license key for
the year. The key expires and cuts off the purchaser's
access to the software after the year ends. (Id. at
¶¶ 14- 16). Embarcadero offers some free versions
of C Builder and Delphi, but those users are required to
attest that they are (1) an individual, small business, or
organization, (2) with less than $5, 000 per year in revenue,
and (3) “with fewer than five developers.”
(Id. at ¶¶ 17, 19).
alleges-on information and belief-that NCR is a Maryland
corporation with its principal place of business in Atlanta,
Georgia and an office in College Station, Texas.
(Id. at ¶ 2). NCR is involved in digital
banking software and “makes self-service kiosks,
point-of-sale terminals, automated teller machines, check
processing systems, barcode scanners, and business
consumables.” (Id. at ¶ 25).
alleges that in May 2018, it discovered that three machines
with an NCR domain had “cracked” license keys for
the RAD Studio software. (Id. at ¶¶ 28,
29). A “cracked” key is allegedly a license
software key that is modified to remove copyright features
and avoid paying for the software. (Id. at
¶¶ 22, 23). Embarcadero notified NCR of the illegal
use on May 7, 2018. (Id. at ¶ 30). NCR
allegedly denied liability because “the use was one
employee in Serbia.” (Id. at ¶ 31;
see Id. at ¶¶ 32-34). Embarcadero alleges
that the illegal use of the RAD Studio software happened at
least six more times, and that it also found evidence of
illegal use of Delphi and C Builder. (Id. at
The Legal Standard
court is ‘duty-bound to examine the basis of
subject[-]matter jurisdiction' in all cases before it,
whether or not the parties raise the issue.” Tetra
Techs., Inc. v. Cont'l Ins. Co., 755 F.3d 222, 228
(5th Cir. 2014) (quoting Union Planters Bank Nat'l
Ass'n v. Salih, 396 F.3d 457, 460 (5th Cir. 2004)).
Rule 12(b)(1) governs challenges to a federal court's
subject-matter jurisdiction. “Under Rule 12(b)(1), a
claim is ‘properly dismissed for lack of subject-matter
jurisdiction when the court lacks the statutory or
constitutional power to adjudicate' the claim.”
In re FEMA Trailer Formaldehyde Prods. Liab. Litig.
(Miss. Plaintiffs), 668 F.3d 281, 286 (5th Cir. 2012)
(quoting Home Builders Ass'n, Inc. v. City of
Madison, 143 F.3d 1006, 1010 (5th Cir. 1998)). Courts
may dismiss for lack of subject-matter jurisdiction based on:
“(1) the complaint alone; (2) the complaint
supplemented by undisputed facts in the record; or (3) the
complaint supplemented by undisputed facts plus the
court's resolution of disputed facts.” Clark v.
Tarrant Cty., 798 F.2d 736, 741 (5th Cir. 1986).
plaintiff has the burden to demonstrate that subject-matter
jurisdiction exists. See Ramming v. United States,
281 F.3d 158, 161 (5th Cir. 2001). When examining a factual
challenge to subject-matter jurisdiction under Rule 12(b)(1),
which does not implicate the merits of a plaintiff's
cause of action, the district court has substantial authority
“to weigh the evidence and satisfy itself as to the
existence of its power to hear the case.” Garcia v.
Copenhaver, Bell & Assocs., 104 F.3d 1256, 1261
(11th Cir. 1997) (quoting Lawrence v. Dunbar, 919
F.2d 1525, 1529 (11th Cir. 1986)); see Clark, 798
F.2d at 741. The court may consider matters outside the
pleadings, such as testimony and affidavits, to resolve a
factual challenge to subject-matter jurisdiction, without
converting the motion to dismiss to one for summary judgment.
Garcia, 104 F.3d at 1261.
courts have jurisdiction over federal copyright claims. 28
U.S.C. § 1338. Embarcadero sued under the federal
Copyright Act, 17 U.S.C. § 501 et seq. However,
NCR argues that this court lacks subject-matter jurisdiction
because the alleged copyright violation occurred outside the
United States and the Copyright Act does not have
extraterritorial effect. (Docket Entry No. 11 at 1 (citing
Palmer v. Braun, 376 F.3d 1254 (11th Cir. 2004);
Update Art, Inc. v. Modiin Publ'g, Ltd., 843
F.2d 67 (2nd Cir. 1988); Subafilms Ltd. v. MGM-Pathe
Commc'ns, Co., 24 F.3d 1088 (9th Cir. 1994);
NDK, Inc. v. Pandora Jewelry, LLC, No. 3:07-cv-0457,
2008 WL 11350019 (N.D. Tex. July 24, 2008); Illustro Sys.
Int'l, LLC v. Int'l Bus. Machs. Corp., No.
3:06-cv-1969, 2007 WL 1321825 (N.D. Tex. May 4, 2007))).
as to where the infringement took place are not
jurisdictional. “[T]he Copyright Act's insistence
that infringing conduct be domestic offers an essential
element of a copyright infringement plaintiff's claim,
not of jurisdiction.” Geophysical Serv., Inc. v.
TGS-NOPEC Geophysical Co., 850 F.3d 785, 791 (5th Cir.
2017). “Because the domestic boundary is not
‘clearly state[d]' to ‘count as
jurisdictional,' we ‘treat the ...