Shande v. Zoox, Inc.

Background

Tavershima Shande sued Zoox, Inc., his former employer, over the parties’ competing rights to digital content. Shande worked for Zoox as a technical artist and created digital street scenery for training Zoox’s self-driving vehicles. During the same period, he created digital scenery for videogames using his own time, equipment, and software. He sold that content through Epic Games, Inc.’s online marketplace.

Zoox claimed that the content infringed its rights. After Shande refused to stop selling it, Zoox terminated his employment. In April 2022, Zoox sent Epic a takedown notice under the Digital Millennium Copyright Act (DMCA), and Epic temporarily removed the content. Shande submitted a counter-notice, after which Zoox did not file a copyright-infringement lawsuit and Epic restored the content. In May 2022, Zoox sent Epic another communication, after which Epic again removed the content, refunded customers, and withheld an equivalent amount from proceeds from Shande’s other sales.

Shande’s second amended complaint asserted claims for declaratory relief, knowing misrepresentation under the DMCA, interference with contractual relations, interference with prospective economic advantage, and unfair competition under California law.

DMCA Claim

Zoox moved to dismiss Claim 2 under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court explained that a claim under 17 U.S.C. § 512(f) requires allegations that: (1) the copyright owner materially misrepresented that material was infringing, and the service provider relied on that misrepresentation to remove the material; and (2) the copyright owner acted with subjective bad faith, meaning it actually knew the representation was false or lacked a good-faith belief in it.

The court found that Shande sufficiently alleged both elements. He alleged that Zoox knowingly misrepresented that his content infringed images in Zoox’s vehicle software and that Epic removed the content in response. He also alleged that Zoox knew its asserted rights lacked a basis, knew Epic would respond more readily to a simple copying allegation than to a work-for-hire argument, and had received comments from company officials indicating that the content differed from Shande’s work at Zoox.

The court rejected Zoox’s argument that the allegations were implausible or contradicted by the April 2022 takedown notice. The court concluded that the notice primarily focused on alleged copying and did not contradict Shande’s allegations. The court therefore DENIED Zoox’s motion to dismiss the DMCA claim.

State-Law Claims and Anti-SLAPP Motion

Zoox moved under California’s anti-SLAPP statute to strike Claims 5, 6, and 7: interference with contractual relations, interference with prospective economic advantage, and unfair competition. An anti-SLAPP motion is a procedure for challenging claims based on protected speech or petitioning activity.

The court applied the statute’s two-step test. First, Zoox had to make a preliminary showing that the conduct underlying the claims was protected activity. The court found that the May 9, 2022 letter to Epic could be treated as a DMCA takedown notice or as part of the DMCA takedown process. The court also stated that communications seeking to enforce intellectual-property rights are protected activity. Zoox therefore satisfied the first step.

Second, Shande had to show that each challenged claim was legally sufficient and supported by facts. The court stated that state-law claims based on a DMCA takedown notice appeared to be preempted by the federal DMCA scheme. Alternatively, the court concluded that the May 9 letter appeared to be protected by California’s litigation privilege because it was connected to seriously contemplated litigation, even if the statements were allegedly false. The court found that Shande had not alleged or provided evidence that Zoox was not seriously considering litigation.

The court therefore GRANTED Zoox’s motion to strike Claims 5, 6, and 7 under California’s anti-SLAPP statute. The order terminated ECF 71.