Synopsys, Inc. v. Real Intent, Inc.

Background

Synopsys sued Real Intent for copyright infringement, breach of contract, and other claims concerning Real Intent’s use of Synopsys’ proprietary command-set elements for electronic design automation tools. The parties had entered into several agreements that gave Real Intent limited licenses to access certain Synopsys products and offerings.

Before trial, the court granted Synopsys summary judgment on two alleged contract breaches: Real Intent’s incorporation of commands and attributes from Synopsys’ Design Vision product into its own products, and Real Intent’s access to and use of Synopsys’ DesignWare Library. The court denied summary judgment concerning an alleged breach involving competitive use of licensed products. The court also ruled that Real Intent’s use of the copyrighted command sets was fair use as a matter of law, removing the copyright claim from the case. Synopsys proceeded to trial on damages for the two breaches on which it had won summary judgment and abandoned the competitive-use breach.

The jury awarded Synopsys $248,776 in lost profits for the incorporation breach and $297,500 in unjust enrichment for the DesignWare breach. After trial, Synopsys moved for a permanent injunction and a new trial. Real Intent moved for judgment as a matter of law, a post-verdict request for the court to overturn a jury result when the evidence legally could not support it. Real Intent also presented an equitable-estoppel defense.

Incorporation Breach and Copyright Preemption

The court allowed Real Intent to raise its copyright-preemption argument after trial. Copyright preemption prevents state-law rights from duplicating rights protected by the Copyright Act. The court explained that a contract claim can avoid preemption when it includes an additional element that makes the contractual right qualitatively different from a copyright owner’s exclusive rights.

The court found that the incorporation breach, as presented at trial, was based solely on Real Intent’s copying and incorporation of Synopsys’ commands into Real Intent’s products. The contractual provision at issue barred modifying, incorporating into or with other software, or creating a derivative work from Design Vision. The court held that this contractual right was equivalent to Synopsys’ exclusive copyright rights, including the rights to reproduce and create derivative works. The court rejected Synopsys’ argument that testing Design Vision and modeling its behavior supplied an additional element, noting that the jury had been instructed that uses other than copying were not a basis for damages.

The court therefore held that the Copyright Act preempted the incorporation-breach theory. It vacated the jury’s $248,776 lost-profits award and granted Real Intent’s motion for judgment as a matter of law on that issue. The court did not reach Real Intent’s separate argument that the lost profits were unforeseeable because the lost-profits award had already been vacated on preemption grounds.

DesignWare Breach and Unjust Enrichment

Real Intent argued that unjust enrichment was not an available remedy for the DesignWare breach and that Synopsys had not proven the damages awarded by the jury. The court rejected both arguments. It relied on its earlier ruling that Synopsys could seek the costs Real Intent avoided by accessing and using the DesignWare Library instead of developing or directly purchasing the technology.

The court found substantial evidence supporting the $297,500 award. The trial evidence included testimony that developing one DesignWare model required more than a year of full-time work, testimony about the extensive testing required for each component, expert testimony that Real Intent’s access to the library likely saved years of effort, and testimony from Synopsys’ damages expert that Real Intent avoided approximately $1.875 million in research-and-development costs. The court denied Real Intent’s motion for judgment as a matter of law on the DesignWare issue.

Remaining Motions and Disposition

The court held that Synopsys’ motion for a permanent injunction and motion for a new trial concerned only the vacated lost-profits award. It also held that Real Intent’s equitable-estoppel defense concerned that award and was not asserted against the $297,500 DesignWare unjust-enrichment award. Because the lost-profits award was vacated, the court denied Synopsys’ motions for a permanent injunction and a new trial, and found Real Intent’s equitable-estoppel argument, moot.

The final disposition was that Real Intent’s motion for judgment as a matter of law was granted in part: the lost-profits award based on the incorporation breach was vacated as preempted by the Copyright Act. The motion was otherwise denied. Synopsys’ motion for a permanent injunction and motion for a new trial, and Real Intent’s equitable-estoppel defense, were denied as moot.