Synopsys, Inc. v. Sunlune Corporation
- Beth Freeman
- 5:24-cv-00220
- U.S. District Court · Northern District of California
- 10
In Synopsys v. Sunlune, Judge Freeman denied Sunlune’s motion to vacate the default judgment because its conduct was culpable and reopening would prejudice Synopsys.
Sunlune Corporation remains subject to the default judgment, including the $27,500,000 statutory-damages award and permanent injunction described in the opinion; Synopsys, Inc. retains that judgment.
What happened
In Synopsys, Inc. v. Sunlune Corporation, Synopsys accused Sunlune of using counterfeit license keys to access software without authorization. The court entered a default judgment awarding Synopsys $27,500,000 and permanently barring unauthorized access to Synopsys’ software.
Sunlune later hired a lawyer and asked the court to undo the default judgment, arguing that it had not violated the Digital Millennium Copyright Act, had paid for its software use, and had not understood the requirement that a corporation appear through a licensed attorney. Synopsys opposed the request, pointing to Sunlune’s repeated failure to follow the court’s orders and the deletion of potentially relevant evidence.
Judge Freeman denied Sunlune’s motion. The court found that Sunlune deliberately failed to respond after being told to obtain a lawyer and that reopening the case would substantially prejudice Synopsys because evidence had been deleted. The court accepted, for purposes of analysis, that Sunlune had described a possible defense but found that this did not overcome the other factors.
The detailed version
- Synopsys, Inc. v. Sunlune Corporation · No. 5:24-cv-00220
- Beth Freeman
- May 21, 2025
Background
Synopsys sued Sunlune under the Digital Millennium Copyright Act (DMCA) and for breach of contract. Synopsys alleged that Sunlune used counterfeit license keys to obtain unauthorized access to more than 11,000 instances of Synopsys electronic design automation software, including software not covered by Sunlune’s license.
The court issued a temporary restraining order in January 2024 and a preliminary injunction in February 2024. Sunlune’s director and chief executive officer, Fuquan Wang, filed an answer for the corporation without a lawyer. The court struck that answer and ordered Sunlune to appear through a licensed attorney within 30 days. Sunlune instead filed another response without counsel, acknowledging the court’s requirement but stating that it did not believe hiring a lawyer was necessary. The court struck that response, the clerk entered default, and Sunlune did not seek to set aside the default or obtain counsel at that time.
In November 2024, the court granted Synopsys’ unopposed motion for default judgment on the DMCA claim, awarded $27,500,000 in statutory damages, and entered a permanent injunction barring Sunlune from accessing or using Synopsys’ software without authorization. The court dismissed Synopsys’ contract claim without prejudice. After a writ of execution issued in January 2025, Sunlune appeared through counsel and moved to vacate the default judgment.
Legal standard
Under Federal Rule of Civil Procedure 60(b), a court may provide relief from a final default judgment. The Ninth Circuit applies three factors: whether the defendant engaged in culpable conduct that caused the default, whether the defendant has a meritorious defense, and whether reopening the judgment would prejudice the plaintiff. A finding of any one factor may be enough to deny relief, and the defendant bears the burden of showing that relief is warranted.
Court’s analysis
The court found that Sunlune engaged in culpable conduct. Even if Sunlune’s officers initially misunderstood the company’s obligations, the court’s order clearly stated that Sunlune could appear only through a licensed attorney and gave it 30 days to obtain counsel. Sunlune acknowledged that requirement but intentionally continued to proceed without a lawyer. It then waited until January 2025—eight months after the answer was struck, seven months after default was entered, and two months after default judgment was entered—to appear through counsel.
The court separately considered Sunlune’s proposed defense. Sunlune asserted that it had purchased sufficient licenses, had not altered or created counterfeit license keys, had not circumvented Synopsys’ license system, and had substantially complied with its licensing agreements. It also argued that Synopsys had suffered no damages because Sunlune had paid for each use. The court stated that these assertions, if proved, would constitute a meritorious defense, and that Sunlune did not have to prove the defense at the motion stage. The court therefore accepted, for purposes of analysis, that Sunlune had alleged a meritorious defense without deciding whether the defense was true.
The court also found that reopening the judgment would substantially prejudice Synopsys. Synopsys presented evidence that scripts on seven Sunlune servers repeatedly deleted command history beginning the day after the temporary restraining order and expedited discovery order. The deleted information could have helped show how Sunlune accessed and used Synopsys’ software. The court found that Sunlune’s evidence spoliation—the destruction or loss of potentially relevant evidence—left Synopsys unable to litigate its claim with evidence that had been available earlier.
Disposition
The court found that Sunlune’s culpable conduct and the prejudice to Synopsys independently supported denying relief, even assuming Sunlune had alleged a meritorious defense. It held that this was one of the rare cases in which the defendant’s conduct warranted maintaining the default judgment.
The court DENIED Sunlune’s motion to vacate the default judgment and terminated ECF 55.
Read the full 10-page opinion on CourtListener, the free public archive maintained by the Free Law Project.