TrackMan, Inc. v. GSP Golf AB

Background

TrackMan, Inc. makes the Perfect Golf simulator game and related software, including Course Forge, which lets users design virtual golf courses, and an application programming interface that allows outside tournament sites to connect with Perfect Golf. The First Amended Complaint alleged that Davor Bogavac, GSP Golf AB doing business as GSPro, Chad Cooke, and SimulatorGolfTour LLC developed competing golf-simulator and tournament products by copying or studying parts of TrackMan’s software and course platform.

TrackMan also alleged that Cooke and SimulatorGolfTour promoted branded courses, including St. Andrews and PGA Tour courses, even though they lacked the necessary licenses. TrackMan asserted direct and secondary copyright infringement claims, a breach-of-contract claim based on Perfect Golf’s end-user license agreement, and a false-advertising claim under the Lanham Act.

The GSP Defendants moved to dismiss only the contract claim. The SGT Defendants moved to dismiss all claims against them. The court evaluated the motions under Rule 12(b)(6), which asks whether the complaint contains enough factual allegations to state a plausible claim.

Direct Copyright Infringement

The court denied the SGT Defendants’ motion to dismiss the direct copyright claim. The SGT Defendants argued that TrackMan’s application programming interface structures were not copyrightable, that license and estoppel defenses defeated the claim, and that the claim was untimely.

The court held that TrackMan plausibly alleged that the interface structures were original. It also held that whether the structures were protected expression rather than an unprotected process or method of operation required a factual record and could not be resolved at the pleading stage. The court declined to consider the asserted license and estoppel defenses because they depended on facts outside the complaint and declined to convert the motion into one for summary judgment. It also found that the complaint did not clearly establish that the copyright claim was barred by the three-year limitations period.

Secondary Copyright Infringement

The court denied the SGT Defendants’ motion to dismiss the secondary copyright-infringement claim against Cooke. Secondary infringement can include contributory infringement, which requires allegations of knowledge of another party’s infringement and substantial assistance in that infringement.

The court found that TrackMan alleged more than Cooke’s ownership of SimulatorGolfTour. TrackMan alleged that Cooke directed and coordinated the company’s conduct, personally used TrackMan’s software and interface, helped copy and distribute protected software, and received a financial benefit. Those allegations were sufficient to state a claim.

Breach of Contract

The court granted the GSP Defendants’ motion and the SGT Defendants’ motion as to TrackMan’s breach-of-contract claim. TrackMan relied on a license provision prohibiting users from decompiling, disassembling, reverse engineering, or trying to derive the source code, underlying ideas, or algorithms of Perfect Golf and related software.

The court held that the claim was expressly preempted by the Copyright Act. Express preemption prevents a state-law claim from enforcing rights equivalent to the exclusive rights protected by federal copyright law. The court found that the software fell within copyright’s subject matter and that TrackMan’s contract allegations, viewed as a whole, sought to protect rights equivalent to copying, adapting, and distributing software.

Although TrackMan described the alleged contract violation as studying and analyzing the software, the court concluded that those activities were alleged to have been steps toward developing, producing, and distributing competing software. The court therefore characterized the contract claim as essentially a copyright claim. It did not reach implied preemption or the SGT Defendants’ alternative grounds for dismissal. The opinion states that the contract claim was dismissed without prejudice to TrackMan filing a second amended complaint or seeking reconsideration if the law substantially changed while the case was pending.

False Advertising

The court denied the SGT Defendants’ motion to dismiss TrackMan’s false-advertising claim under Section 1125(a)(1)(B) of the Lanham Act. TrackMan alleged that the defendants’ promotions implied that branded golf courses were genuine and authorized by the courses, even though the defendants lacked the required licenses.

The court held that the statements were not literally false because the courses were actually available for play on the SGT platform, although allegedly without authorization. But the court found that TrackMan plausibly alleged implied falsity: consumers could have been misled into believing that the courses endorsed or authorized SGT. TrackMan also plausibly alleged materiality because licensing and affiliation with well-known courses could influence purchasing decisions, and it alleged injury through diverted sales to a competing product.

The court rejected the argument that the Supreme Court’s decision in Dastar and related cases barred the claim. It distinguished claims about authorship or copyright ownership from TrackMan’s claim that the defendants misrepresented the licensing and authorization status of trademarked courses.

Disposition

Judge Naomi Reice Buchwald granted the GSP Defendants’ motion to dismiss in full. She granted the SGT Defendants’ motion as to the breach-of-contract claim and denied it as to all other claims. The contract claim was the only claim dismissed; the direct copyright claim, two secondary copyright claims, and false-advertising claim survived the motions to dismiss.