CNC Software, LLC v. Global Engineering Limited Liability Company

Background

CNC Software, LLC brought copyright-infringement and breach-of-contract claims against Global Engineering Limited Liability Company and its president, Edwin Escobar. CNC alleged that the defendants pirated its Mastercam software, a suite of computer-aided design and manufacturing applications. The court previously granted CNC’s motion for default judgment after the defendants did not oppose the action or appear. That earlier order awarded CNC $870,000 in actual damages, a permanent injunction, destruction of infringing software, $19,671.20 in attorney’s fees, $400 in costs, and interest accruing from the date of the default judgment.

Proposed seizure order

CNC proposed an order directing the U.S. Marshals Service to impound the defendants’ computers, servers, hard drives, compact discs, USB devices, and other portable storage devices. CNC also requested a limited search of the defendants’ business records for purchases, shipments, and software downloads involving CNC’s products or pirated versions. Finally, CNC asked to seize usernames and passwords that would provide access to the defendants’ computers, storage devices, Google Drive, Dropbox, and other cloud-based storage where CNC software might be installed.

The court stated that 17 U.S.C. § 503 generally provides a basis for impounding and destroying infringing materials. But it explained that the Fourth Amendment requires a seizure writ to identify the premises to be searched and the items to be seized with particularity. The search must be limited by the object of the search and by places where that object is shown likely to be found.

Ruling

The court found the proposed order’s subject and scope problematic. It said that entering an entire cloud-storage platform or computer through seized passwords would be more intrusive than impounding physical computers or hard drives. CNC had not provided authority supporting seizure of passwords or explained why the copyrighted software was likely stored in cloud systems rather than only on local computers. The court also found the proposed search of “business records” deficient because CNC had not identified which records could be searched or explained how the “limited search” would proceed.

Judge Edward M. Chen therefore DENIED Plaintiff’s proposed order, without prejudice to CNC filing a modified proposed order that specifies the method for searching the defendants’ business records and submitting an additional filing supporting seizure of passwords. The court directed that any revised order include clear protocols for the U.S. Marshals Service to follow.