Synopsys, Inc. v. Sunlune Corporation

Background

Synopsys sued Sunlune under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1201, and for breach of contract. Synopsys alleged that Sunlune used counterfeit license keys to exceed its license for Synopsys software and to access IC Compiler II, which was not covered by the license. The complaint alleged more than 11,000 instances of unauthorized access; supporting forensic evidence identified more than 15,000 circumventions.

The court had previously issued a temporary restraining order and a preliminary injunction prohibiting unauthorized access to Synopsys software. Sunlune filed an answer and later a response without a lawyer. The court struck those filings because a corporation may proceed in federal court only through licensed counsel. After Sunlune failed to appear through counsel, the Clerk entered default.

Ruling on Default Judgment

Synopsys sought relief only under the DMCA, stating that any contract damages were included in its requested statutory damages. The court therefore evaluated the default-judgment motion only as to Claim 1 and dismissed Claim 2, the breach-of-contract claim, without prejudice.

The court concluded that it had federal-question jurisdiction over the DMCA claim and personal jurisdiction over Sunlune. It also found that Synopsys properly served Sunlune’s agent for service of process. Applying the factors used to decide whether default judgment is appropriate, the court found that the factors concerning prejudice, the merits and sufficiency of the claim, the amount at stake, the possibility of a factual dispute, and excusable neglect favored default judgment. The policy favoring decisions on the merits weighed against default judgment, but the court found that the other factors outweighed it.

For the DMCA claim, the court applied the requirements that the work be copyright-protected, protected by a technological measure, and accessed by circumventing that measure. Accepting the complaint’s liability allegations as true, the court found those requirements satisfied by Synopsys’s allegations concerning its License Key System and Sunlune’s counterfeit keys. The court also relied on supporting forensic evidence.

Relief and Disposition

The DMCA allows statutory damages of $200 to $2,500 for each act of circumvention. Synopsys requested $2,500 for each of the 11,000 acts alleged in the complaint, for a total of $27,500,000. The court found that Sunlune’s conduct was willful and egregious and awarded the maximum statutory damages of $27,500,000.

The court also found a permanent injunction appropriate. The injunction is limited to prohibiting Sunlune’s unauthorized access to Synopsys products. The order granted Synopsys’s motion for default judgment, directed that a separate default judgment be entered on Claim 1 for DMCA violations with the $27,500,000 award and permanent injunction, and dismissed Claim 2 without prejudice. Judge Beth Labson Freeman signed the order.