Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_17-cv-06930/USCOURTS-cand-3_17-cv-06930-5/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

VENDAVO, INC.,

Plaintiff,

v.

PRICE F(X) AG, et al.

Defendants.

Case No. 17-cv-06930-RS (KAW)

ORDER GRANTS IN PART AND 

DENIES IN PART

DEFENDANTS’ MOTION FOR 

SANCTIONS

Dkt. No. 113

On December 5, 2017, Plaintiff Vendavo, Inc. filed the instant case against Defendants 

Price f(x) AG and Price f(x), Inc. Plaintiff brings claims for misappropriation of trade secrets,

patent infringement, copyright infringement, and unfair competition. (See First Amended Compl. 

(“FAC”) ¶¶ 4-5, Dkt. No. 43.)

On March 8, 2019, Defendants filed a motion for sanctions based on Plaintiff’s alleged 

failure to comply with the Court’s February 12, 2019 order. (Defs.’ Mot. for Sanctions, Dkt. No. 

113.) Having considered the parties’ filings, the relevant legal authority, and the arguments made 

in the March 21, 2019 hearing, the Court GRANTS IN PART AND DENIES Defendants’ motion 

for sanctions.

I. BACKGROUND

On February 15, 2018, Defendants served Interrogatory No. 4, which states: “For each 

Asserted Copyright identify and describe (i) the original portions, (ii) any material constituting 

pre-existing material, as identified in the copyright application or registration, and (iii) the portions 

that are ‘substantially similar’ to any Price f(x) product.” (Berkowitz Decl. ¶ 3, Dkt. No. 113-1.) 

Plaintiff originally objected that the Interrogatory sought a legal conclusion or expert opinion and 

was premature, as Defendants had yet to produce its source code. (See Oliver Decl., Exh A at 3, 

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Dkt. No. 121-3.) 

On April 5, 2018, Plaintiff filed the operative complaint, alleging that Michal Imrisek and 

Michal Rychtar, left Plaintiff’s employment to join Defendants. (FAC ¶ 47.) Plaintiff further 

alleges that while still employed by Plaintiff, Mr. Imrisek and Mr. Rychtar began working for 

Defendants. (FAC ¶ 47.) Plaintiff also asserts that Mr. Imrisek copied Plaintiff’s trade secrets, 

and then provided that information to Defendants. (FAC ¶ 47.) Thus, Plaintiff believes that 

Defendants use Plaintiff’s trade secrets for its products. (FAC ¶ 54.) With respect to its copyright 

claim, Plaintiff alleges that Defendants created “the PFX PriceBuilder and PFX PriceAnalyzer 

products, which have source code that is substantially similar to those of [Plaintiff]’s Price 

Manager and Profit Analyzer software . . . .” (FAC ¶ 159.)

On May 14, 2018, Plaintiff provided supplemental responses to Defendants’ Interrogatory 

No. 4. (Oliver Decl., Exh. A at 4.) Plaintiff stated that it would make its copyrighted source code 

available, but that “the burden to ‘identify and describe’ its source code is substantially the same 

for either party.” (Id.) Plaintiff also identified the free and open source projects in its code base. 

(Id. at 4-11.)

On August 27, 2018, Defendants sent a letter to Plaintiff, stating that their expert had 

performed a comparative analysis between Plaintiff’s and Defendants’ source code. (Berkowitz 

Decl. ¶ 3, Exh. A.) Defendants explained that their expert found no basis for the copyright 

infringement claim, as his analysis found “1,000 matches of logical equivalence.” (Berkowitz 

Decl., Exh. A at 1.) Of those 1,000 matches, there were “only four instances of matching syntax 

between” the source files, but that those identical matches “consist entirely of well-known 

boilerplate Java code that is not copyrightable to [Plaintiff].” Id. On September 27, 2018, 

Defendants made its source code analysis available to Plaintiff. (Berkowitz Decl. ¶ 3.)

Defendants state they then followed up several times, requesting that Plaintiff supplement 

its response to Interrogatory No. 4. (Berkowitz Decl. ¶ 3.) On February 11, 2019, Defendants 

requested a teleconference with the undersigned to address their request for supplementation. 

(Dkt. No. 110.) In support of their request, Defendants’ counsel stated that Plaintiff had 

“indicated that it would eventually supplement the interrogatory, and would address this in greater 

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detail after serving its supplemental patent infringement contentions on January 10, 2019.” 

(2/11/19 Berkowitz Decl. ¶ 11, Dkt. No. 110-1.) Throughout January 2019, Defendants followed 

up with Plaintiff regarding the supplementation. (2/11/19 Berkowitz Decl. ¶ 12.) On January 22, 

2019, Defendants were informed Plaintiff’s lead counsel had changed firms. (2/11/19 Berkowitz 

Decl. ¶ 12.) Between January 22, 2019 and February 7, 2019, Defendants reached out to Plaintiff 

regarding the supplementation and offering to give more time in exchange for continuing other 

deadlines, but Plaintiff’s lead counsel did not respond. (2/11/19 Berkowitz Decl. ¶¶ 12-15.) 

Defendants then filed their request for a teleconference. (2/11/19 Berkowitz Decl. ¶ 16.)

On February 12, 2019, the Court issued an order on Defendants’ request. (Order, Dkt. No. 

111.) The Court found that in light of Plaintiff’s agreement to supplement, a teleconference was 

unnecessary. (Id. at 2.) The Court ordered Plaintiff to supplement its responses within ten days

unless the parties stipulated otherwise, and warned that failure to comply could result in the 

imposition of sanctions. (Id.) Plaintiff did not appeal the Court’s order.

Plaintiff states that on receipt of the Court’s order, it incorrectly docketed the due date for 

responses. (Oliver Decl. ¶ 6.) On February 27, 2019, Defendants contacted Plaintiff regarding the 

failure to supplement. (Berkowitz Decl. ¶ 6.) Plaintiff provided the supplemental responses that 

same day. (Berkowitz Decl. ¶ 8; Oliver Decl. ¶ 7.) With respect to Interrogatory No. 4, Plaintiff 

responded:

Vendavo does not have access to its files at this time given its 

counsel’s recent change of firms. Therefore, Vendavo does not have 

access to its prior response to this Interrogatory. That Response and 

the Objections therein are incorporated in their entirety in this 

supplemental response. Vendavo further provides as follows:

The computer programs embodied in Vendavo’s Profit Analyzer, 

Business Risk Alerts, Price Manager, Segmentation Manager, Price 

Optimization Manager, Deal Guide and Deal Manager software are

original literary works within the meaning of 17 U.S.C. § 101, and 

were developed by it after a significant expenditure of time and 

money. Vendavo has produced its copyrighted software to Price 

F(x), and it incorporates its software in its entirety in its Response. 

Vendavo also incorporates its response summarizing key trade 

secret information regarding its source code as detailed above in 

Response to Interrogatory No. 1.

The copyright that subsists in Vendavo’s Profit Analyzer, Business 

Risk Alerts, Price Manager, Segmentation Manager, Price 

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Optimization Manager, Deal Guide and Deal Manager software 

belongs exclusively to Vendavo. Vendavo filed for and received 

United States copyright registrations in these works.

No pre-existing material was identified on the copyright registration.

Discovery is ongoing, and Vendavo will supplement this response as 

additional information becomes available. At present, Vendavo 

contends that the portions of PFX source code identified in 

Vendavo’s Second Updated Infringement Contentions, and the 

portions of PFX source code embodying the technical trade secrets 

identified in the amended response to Interrogatory No. 1, are 

substantially similar to Vendavo’s copyrighted code.

(Oliver Decl., Exh. A at 12.)

On March 5, 2019, Plaintiff contacted Defendants and informed them that Plaintiff’s 

consultant, Alan Purdy, planned to go to Defendants’ office to review the code on March 6, 2019, 

stating that Mr. Purdy would require “a machine onto which he can load both code bases and 

additional review tools.” (Oliver Decl. ¶ 11.) On March 6, 2019, Mr. Purdy performed the initial 

review of Defendants’ code with Plaintiff’s code. (Oliver Decl. ¶ 12.) Plaintiff requested that 

Defendants allow Mr. Purdy to retain a text file of information based on his review, but 

Defendants refused and stated they would review the results and e-mail them to Plaintiff. (Oliver 

Decl. ¶ 13.) On March 8, 2019, Defendants e-mailed Plaintiff the information Mr. Purdy 

requested to review. (Oliver Decl. ¶ 14.) That same day, Defendants filed the instant motion for 

sanctions.

On March 22, 2019, Plaintiff filed its opposition. (Plf.’s Opp’n, Dkt. No. 116.) Plaintiff 

also supplemented its response, which added:

[T]he source code copyright abstraction, filtration and comparison 

analysis, originally adopted developed by the Second Circuit in 

Computer Associates v. Altai, and adopted nationwide, will be 

dispositive of the substantial similarity between Vendavo’s original 

copyrighted code and PFX’s infringing code. That test is solely the 

province of expert testimony; it calls, inter alia, for expert opinion 

on merger, scenes a faire, external considerations including 

computer hardware constraints, and an analysis of material that 

exists in the public domain. No trial date has been set, fact 

discovery is ongoing, and no expert report dates have been set in this 

case. Vendavo believes that in an AFC analysis at least the portions 

of PFX source code embodying the technical trade secrets identified 

in the amended response to Interrogatory No. 1, will be shown to be 

substantially similar to Vendavo’s copyrighted code. Vendavo has 

conducted a mechanical comparison of only the latest version of the 

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parties’ source code. This is an analysis of literal copying or cloning 

of source code, and not the AFC analysis that will be performed as 

part of expert discovery. And following the mechanical review of 

the code, Vendavo identifies PFXSC_00362 through 

PFXSC_00367, which were generated as part of Vendavo’s 

consultant’s review and produced to Vendavo by PFX on March 8, 

2019.

(Oliver Decl., Exh. A at 13-14.) PFXSC_00362 through PFXSC_00367 is the text file of 

information compiled by Mr. Purdy, which Defendants had e-mailed to Plaintiff on March 8, 

2019. (Oliver Decl. ¶ 14.) These documents identify 1,400 matching run lines. (Oliver Decl. ¶ 

17.) An excerpt of PFXSC_00363 is attached as Exhibit C to Mr. Oliver’s declaration.

On March 29, 2019, Defendants filed their reply. (Defs.’ Reply, Dkt. No. 120.) 

Defendants also attached a declaration by Firas Abuzaid, which states that the character matches 

identified by Plaintiff in PFXSC_00362 through PFXSC_00367 are “material that is entirely 

generic or open source.” (Id. at 1; see also Abuzaid Decl. ¶ 6-8.)

II. LEGAL STANDARD

Defendants seek sanctions based on Plaintiff’s asserted violations of the February 12, 2019 

discovery order. “Federal Rule of Civil procedure 37 provides for sanctions available for failure 

to make disclosures or cooperate in discovery.” Gordon v. Cty. of Alameda, No. CV-06-2997-

SBA, 2007 WL 1750207, at *2 (N.D. Cal. June 15, 2007). Specifically, Rule 37(2)(A) states that 

if a party “fails to obey an order to provide or permit discovery . . . the court where the action is 

pending may issue further just orders,” including “directing that the matters embraced in the order 

or other designated facts be taken as established for purposes of the action” and “prohibiting the 

disobedient party form supporting or opposing designated claims or defenses, or from introducing 

designated matters in evidence.”

Additionally, “[c]ourts are invested with inherent powers that are governed not by rule or 

statute but by the control necessarily vested in courts to manage their own affairs so as to achieve 

the orderly and expeditious disposition of cases.” Unigard Sec. Ins. Co. v. Lakewood Eng’g & 

Mfg. Corp., 982 F. 2d 363, 368 (9th Cir. 1992) (internal quotation omitted). Those inherent 

powers include “the broad discretion to make discovery and evidentiary rulings conducive to the 

conduct of a fair and orderly trial.” Id. (internal quotation and modification omitted).

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III. DISCUSSION

Defendants request that: (1) the Court order Plaintiff to provide a complete response to 

Interrogatory No. 4 with a sworn certification by Plaintiff’s lead counsel that the response is 

complete and that there is a good faith basis to continue with the copyright claim, (2) the Court 

issue a formal warning that further noncompliance may lead to dismissal of the copyright claim, 

and (3) the Court order Plaintiff to pay monetary sanctions. (Defs.’ Mot. at 1.) 

Plaintiff contends that its response is sufficient, such that additional supplementation 

and/or sanctions is not warranted. As an initial matter, Plaintiff argues that the interrogatory is an 

improper contention interrogatory. (Plf.’s Opp’n at 6-7.) The Court disagrees. As Defendants

correctly point out, Plaintiff never objected to the interrogatory as being an improper contention 

interrogatory. (See Oliver Decl., Exh. A at 3-4, 12-14.) As this specific objection was never 

raised, Plaintiff waived the objection.

Plaintiff primarily contends that its response is adequate at this stage of the litigation. 

Importantly, in so arguing, Plaintiff distinguishes between its literal copyright infringement claim 

and its non-literal copyright infringement claim.

A. Literal Infringement Copyright Claim

Plaintiff contends it has sufficiently responded to Defendants’ interrogatory with respect to 

literal infringement. First, Plaintiff argues that it has adequately identified “the original portions” 

of the asserted copyright at issue because Defendants have had access to Plaintiff’s source code 

since August 2018. (Plf.’s Opp’n at 7.) Plaintiff “maintains that its entire source code, including 

the structure, sequence and organization, is its original work, notwithstanding that portions of that 

work use open-source packages—which of course are not covered by [Plaintiff]’s copyright.” (Id.

at 7 n.3.) Defendants respond that Plaintiff’s source code is not a copyright, and that Plaintiff “has 

not even produced the electronic deposit on file with the US copyright office that is supposedly 

registered.” (Defs.’ Reply at 5.) The Court finds that Plaintiff cannot rely on its production of the 

source code to satisfy Defendants’ interrogatory request that Plaintiff identify “the original 

portions” of the copyright. As Plaintiff itself concedes, portions of the source code are not 

covered by the copyright. Thus, pointing to the entire source code is insufficient. Plaintiff shall 

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identify “the original portions” of the copyright. With respect to Plaintiff’s alleged failure to 

produce the electronic deposit on file with the U.S. Copyright Office, however, this appears to be a 

separate issue from the interrogatory, as this concerns document production. The Court orders the 

parties to meet and confer on this issue. 

Second, Plaintiff contends that it has identified “any material constituting pre-existing 

material, as identified in the copyright application or registration” because it provided a list of the 

open source projects used in its source code. (Plf.’s Opp’n at 7; see Oliver Decl., Exh. A at 4-11.) 

Defendants reply that this is likewise insufficient, as Plaintiff may have licensed other code from 

third-parties, and that the code may also include generic commands and computer-generated files 

such as .git files. (Defs.’ Reply at 5.) Moreover, Defendants argue that Plaintiff did not identify 

the open source portions of the copyright or what code was used from those open source projects. 

The Court agrees with Defendants. A list of open source projects used in the source code is 

insufficient, as this fails to identify portions of the copyrighted code itself that constitutes preexisting material. Instead, it requires that Defendants compare the open source projects with the 

copyrighted code to determine which portions match. Plaintiff must specifically identify the preexisting material, which includes both code used from open source projects and any other preexisting material.

Finally, Plaintiff argues that it has identified “the portions that are ‘substantially similar’ to 

any Price f(x) product” because it provided a listing of Defendants’ code that literally copies 

Plaintiff’s code. (Plf.’s Opp’n at 9.) At the hearing, the parties clarified that this listing is 

PFXSC_0362-367, which is a 460 megabyte output of a software program that runs a mechanical 

comparison for character matches in two code bases. (See also Defs.’ Reply at 6.) This 

comparison includes any matches, even if the code is not copyrightable or original. The Court 

finds the production of this output insufficient to satisfy Defendants’ interrogatory. At the 

hearing, Plaintiff stated that it could go through the matches identified in this output and identify

the specific portions that consist of original work, while stripping out the pre-existing material. 

The Court orders Plaintiff to supplement its response regarding the portions that are “substantially 

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similar” by doing so.1 

B. Non-Literal Infringement Copyright Claim

“The Ninth Circuit has recognized three elements of software that can be eligible for 

copyright protection: (1) the software’s ‘literal elements’ such as the actual source and object 

codes; (2) the software’s ‘individual non-literal elements’ such as discrete visual and audible 

components; and (3) the software’s ‘dynamic non-literal elements’ such as the real time 

experience and operation of the software.” El-Sedfy v. WhatsApp Inc., Case No. 16-cv-4056-JCS,

2016 U.S. Dist. LEXIS 150760, at *14 (N.D. Cal. Oct. 31, 2016) (internal quotation omitted). To 

determine whether non-literal elements of two or more computer programs are substantially 

similar, some courts apply the three-part Abstraction-Filtration-Comparison test. The first step, 

abstraction, requires that the court “dissect the allegedly copied program’s structure and isolate 

each level of abstraction contained within it. This process begins with the code and ends with an 

articulation of the program’s ultimate function.” Computer Assocs. Int’l v. Altai, 982 F.2d 693, 

707 (2d Cir. 1992), cited in Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1085 (9th Cir. 2005). 

The second step requires “separating protectable expression from non-protectable material,” thus 

helping define the scope of the plaintiff’s copyright. Id. The final step concerns “whether the 

defendant copied any aspect of this protected expression, as well as an assessment of the copied 

portion’s relative importance with respect to the plaintiff’s overall program.” Id. at 710.

Plaintiff argues that as to its non-literal copyright infringement claim, any further response 

would require expert testimony to determine if the Abstraction-Filtration-Comparison test is 

satisfied. (Plf.’s Opp’n at 9-10.) At the hearing, Defendants pointed out that Plaintiff could, at a 

minimum, identify the non-literal elements that Plaintiff asserts are infringing, such as the look, 

feel, and features of the user interface. For example, this may include the locations of menus or 

how the click-through menus work. Plaintiff agreed that it could do so. Accordingly, the Court 

 

1 Defendants also argue that the matches are insufficient because all of the verbatim matches 

picked up by Plaintiff’s code-matching program are “either a .git, Apache Ant or Checkstyle file,” 

all of which cannot be part of the asserted copyright. (Defs.’ Reply at 6.) This, however, is a 

dispute on the merits regarding whether the matches are legally sufficient to support a literal 

copyright infringement claim, not whether the discovery response is sufficient.

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orders Plaintiff to identify the allegedly infringing non-literal elements, including the look and feel 

of the user interface, the features of using the software, and any other elements related to the

“discrete visual and audible components” or “the real time experience and operation of the 

software.” See El-Sedfy, 2016 U.S. Dist. LEXIS 150760, at *14.

The Court, however, finds that Plaintiff is not required at this time to identify the code 

underlying these non-literal elements. As Plaintiff explained, the code goes to why the non-literal 

elements are infringing, which appears to require expert opinion and the application of the 

Abstraction-Filtration-Comparison test. 

C. Sanctions

The Court finds that sanctions are not warranted. While Plaintiff was late in providing its 

required responses, Plaintiff did ultimately provide supplemental responses on February 27, 2019. 

(See Oliver Decl. ¶ 9.) Moreover, prior to Defendants’ filing of the motion on March 8, 2019, 

Plaintiff’s expert, Mr. Purdy, went to Defendants’ office to review the code on March 6, 2019. 

(Oliver Decl. ¶ 11.) Defendants contend that it did not know what Mr. Purdy was working on, but 

it appears Plaintiff had informed Defendants that Mr. Purdy “will need access to a machine that 

has the PFX code, as well as a machine onto which he can load both code bases and additional 

review tools.” (See Defs.’ Reply at 3; Oliver Decl. ¶ 11.) Defendants then had the opportunity to 

review Mr. Purdy’s results before Defendants e-mailed the information -- including 

PFXSC_00362 through PFXSC_00367, which identifies 1,400 matching run lines between 

Plaintiff’s software and Defendants’ source code, to Plaintiff on March 8, 2019. (Oliver Decl. ¶ 

14.) Thus, it appears Defendants’ had notice that Plaintiff was in the process of reviewing the 

code, and had access to the responsive information prior to the filing of its motion for sanctions. 

To the extent Defendants had concerns about the substance of Plaintiff’s interrogatory response, 

the parties should have met and conferred before submitting a joint letter. Under these 

circumstances, the Court finds that Defendants’ motion for sanctions is premature and that 

sanctions are not warranted.2

 

2 The Court also notes that while it is ordering Plaintiff to provide supplemental responses, the 

substantive merits of Plaintiff’s prior responses were not previously addressed. Rather, the 

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That said, the Court also notes that in the future, Plaintiff must be mindful of the deadlines 

imposed by the Court. 

IV. CONCLUSION

For the reasons stated above, the Court GRANTS IN PART AND DENIES IN PART 

Defendants’ motion. Plaintiff is ordered to provide supplemental responses by:

(1) identifying the original portions of the code and any material constituting pre-existing 

material;

(2) reviewing the output in PFXSC_0362-367 and identifying which matches are original

material or open source, and stripping out the pre-existing material; and

(3) identifying the allegedly infringing non-literal elements, including the look, feel, and 

features of the user interface, as well as any other elements related to the discrete visual

and audible components or real time experience and operation of the software. 

Plaintiff’s responses are due within 30 days of the date of this order. If Plaintiff needs 

additional time, the parties shall meet and confer on an appropriate extension. The Court denies 

Defendants’ request for additional sanctions.

IT IS SO ORDERED.

Dated: May 6, 2019

__________________________________

KANDIS A. WESTMORE

United States Magistrate Judge

 

Court’s prior order was based on Plaintiff’s agreement to supplement. (See Order at 2.)

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