Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_17-cv-04732/USCOURTS-cand-4_17-cv-04732-13/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:501 Copyright Infringement

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CADENCE DESIGN SYSTEMS, INC.,

Plaintiff,

v.

POUNCE CONSULTING, INC., et al.,

Defendants.

Case No. 17-cv-04732-PJH (SK)

AMENDED REPORT AND 

RECOMMENDATION REGARDING 

DEFAULT JUDGMENT AGAINST 

POUNCE CONSULTING, INC.

Regarding Docket No. 209

On January 23, 2019, this Court issued its Amended Report and Recommendation that the 

District Court enter a default judgment against Defendant Pounce Consulting, S.A. de C.V. 

(“Pounce SA”). (Dkt. 205.) In the Report and Recommendation, the Court did not address the 

issue of whether Pounce SA and its co-Defendant Pounce Consulting, Inc. (“Pounce USA”) share 

liability under an alter ego theory. (Id.) On January 30, 2019, the District Court entered default 

against Pounce USA for failure to comply with its order to retain counsel within 30 days after its 

previous counsel withdrew from representation. (Dkt. 206.) On February 22, 2019, Plaintiff 

Cadence Design Systems, Inc. (“Cadence”) brought a motion for default judgment against Pounce 

USA. (Dkt. 209.) The District Court referred that motion to this Court for a report and 

recommendation pursuant to Local Rule 72-1. (Dkt. 210.)

Having considered the alter ego allegations against Pounce USA in conjunction with the 

record in the case and the default judgment entered against Pounce SA, and for the reasons stated 

below, the Court RECOMMENDS that the District Court GRANT and certify Plaintiff’s request 

for default judgment pursuant to Federal Rule of Civil Procedure 54(b). The Court further 

RECOMMENDS that damages and injunctive relief be awarded as provided below.

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BACKGROUND

A. The Parties

Cadence Design Systems, Inc. (“Cadence”) is a Delaware corporation with its principal 

place of business in San Jose, California. (First Amended Complaint at Dkt. 26 (“FAC”), ¶¶ 2, 

16.) Cadence provides electronic design automation software, engineering services, and 

semiconductor intellectual property which “help engineers design transistors, standard cells, and 

IP blocks that make up systems on chips, as well as integrated circuits and printed circuit boards.” 

(Id., ¶ 16.) Cadence’s relevant design platforms include Allegro®, OrCAD®, and PSpice® 

products. (Id., ¶ 17.)1 

Defendant Pounce SA is a Mexican Sociedad Anónima de Capital Variable with its 

principal place of business in Mexico. (FAC, ¶ 4.) Pounce SA “provides custom solutions in 

embedded design, electronics manufacturing, IT and staffing services.” (Id., ¶¶ 25, 38.) Pounce 

SA “offers services related to electronic design and requires certain engineers on its staff to be 

skilled in the use of Cadence’s software and design suites.” (Id., ¶¶ 25, 40-43.) 

Defendant Pounce USA is a California corporation with its principal place of business in 

San Diego, California. (Id., ¶ 3.) Cadence alleges that Pounce USA is an alter ego of Pounce SA, 

but Pounce USA maintains that it is a small staffing agency that hires engineers and other 

professionals for projects in the United States. (Id., ¶¶ 5-10; Answer at Dkt. 41, ¶ 11.) 

B. The Default Judgment Against Pounce S.A.

In its prior report and recommendation, this Court evaluated Cadence’s motion for default 

judgment against Pounce SA under the Eitel factors. (Dkt. 205); Eitel v. McCool, 782 F.2d 1470, 

 

1 Cadence’s software program Allegro allows users to design and test the physical layout 

(“floorplan”) of circuit boards. (Alfaro Declaration at Dkt. 54-7, ¶ 5.) Cadence’s PSpice software allows 

engineers to simulate and verify circuitry designs. (Id., ¶ 7.) Cadence’s OrCAD software enables the user 

to floorplan electronic components on a printed circuit board. (Id., ¶ 8.) Once the design is finalized, the 

OrCAD software can export manufacturing data instructions in a variety of formats to fabricate the printed 

circuit board. (Id.) 

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1471-72 (9th Cir. 1986) (in determining whether default judgment is appropriate, the court weighs 

seven factors: (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s 

substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, 

(5) the possibility of a dispute concerning material facts, (6) whether the default was due to 

excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure 

favoring decisions on the merits).

The Court first evaluated the merits of the substantive claims and the sufficiency of the 

Complaint. (Dkt. 205 at 10-13.) The Complaint alleges that Pounce SA relies on Cadence’s

software programs to conduct its business, yet Pounce SA owns no legal copies of Cadence’s

software. (FAC, ¶¶ 44, 69.) According to Cadence’s tracking mechanisms, Pounce SA used 

Cadence’s software without authorization thousands of times on at least twenty-five different 

machines identified as affiliated with Pounce SA. (Id., ¶¶ 62-63.) The domains 

“corp.pounceconsulting.com” and “pounceconsulting.com” and email addresses 

“@corp.pounceconsulting.com” and “@pounceconsulting.com” are linked to machines using 

unauthorized reproductions of Cadence’s software. (Id.,¶¶ 64-66; Dkt. 54-7, ¶ 22.) 

There were also other uses that revealed computers with machine names, such as “pouncepc,” “pounce-59fdb41d,” and machines with names of Pounce SA’s employees, such as 

“vnavarro” (Victor Navarro) and “Nicolas-i7PC” (Nicolas Izquierdo). (FAC, ¶ 68; see also Dkt. 

182-4 (Viera Deposition Transcript at 179:6-180:3; 181:12-182:15). In addition, Cadence detected 

IP addresses associated with Pounce SA. (FAC, ¶ 67.) Cadence likewise presented evidence 

confirming Pounce SA’s use of Cadence’s software to perform its contracts with third parties. 

(Ruttenberg Dec., Dkt. 182-2, ¶¶ 7, 9-11, 15, Exs. F, H-J, N (181-10, 181-12 through 181-14, 181-

18); Choudhary Dec., Dkt. 181-7, ¶¶ 15-39 (the schematics produced by third parties contain 

aspects unique to Cadence’s software.)) On January 28, 2016, Cadence advised Roger Viera, the 

President and CEO of Pounce SA, that Pounce SA was using counterfeit (“cracked”) and 

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unauthorized versions of Cadence’s software and that Cadence sought to resolve the matter 

without litigation. (Id., ¶¶ 70-72.) Pounce SA ignored additional communications and refused to 

pay for any past software use. (Id., ¶¶ 72, 73.)

Based on the allegations in the Complaint, the Court concluded that Cadence had 

adequately asserted claims for copyright infringement under 17 U.S.C. § 501, circumvention of 

copyright protection systems in violation of the Digital Millennium Copyright Act, 17 U.S.C. § 

1201(the “DMCA”), and breach of the Software License Agreement contract governing use of 

Cadence’s software. (Dkt. 205 at 10-13.) Evaluating the remaining Eitel factors, the Court 

concluded that default judgment was warranted because Plaintiff Cadence would have been 

prejudiced by an inability to enforce its intellectual property rights absent a default judgment, there 

was no dispute of material fact presented by the parties about the alleged infringement, Pounce 

SA’s failure to defend the action did not appear to arise from excusable neglect, the amount of 

money at stake was proportional to the egregious conduct alleged, and litigation on the merits was 

precluded by Pounce SA’s refusal to litigate the case. (Id. at 13-14.)

The Court awarded actual damages for breach of contract in the amount of $783,310 plus 

prejudgment interest accrued at the rate of 1.5% per month through the date of final judgment;

disgorgement of profits for copyright infringement in the amount of $2,973,065.73, as permitted 

by 17 U.S.C. § 504(b); and statutory damages in the amount of $2,079,900, or $300 for each of 

the 6,933 infringing incidents, in accordance with the DMCA, 17 U.S.C. § 1203(c)(3)(A). (Id. at 

15-17.) The Court also awarded Cadence attorneys’ fees and costs and permanently enjoined 

Pounce SA from any future use of Cadence’s software. (Id. at 17-18.)

C. Cadence’s Motion for Default Judgment Against Pounce USA

Cadence now seeks a default judgment against Pounce USA awarding the same remedies it 

obtained against Pounce SA, including identical damages, fees and costs, and injunctive relief. 

(Dkt. 209.) Cadence argues that such relief is justified because Pounce SA and Pounce USA are 

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in fact alter egos of one another. (Id.)

D. Service and Jurisdiction

1. Service

Pounce USA was served with process in this action on August 18, 2017. (Dkt. 9.) Pounce 

USA filed its answer to the Complaint on September 28, 2017. (Dkt. 15.) Pounce USA has not 

contested the propriety of service in this action.

2. Subject Matter Jurisdiction

This Court has subject matter jurisdiction over Cadence’s action. Specifically, Cadence’s 

allegations pursuant to 17 U.S.C. § 501, et seq. (copyright infringement) and 17 U.S.C. § 1201, et 

seq. (circumvention of copyright protection systems under the DMCA) give rise to federal 

question jurisdiction under 28 U.S.C. §§ 1331, 1338. The Court has supplemental jurisdiction 

over Cadence’s breach of contract claim. 28 U.S.C. § 1367(a).

Cadence is a Delaware corporation with its principal place of business in this district. 

Pounce USA is a California corporation with its principal place of business in San Diego, 

California. (FAC, ¶ 3.) Given the diversity of the parties and the fact that a sum greater than 

$75,000 is at issue, the Court also has diversity jurisdiction in accordance with 28 U.S.C. § 1332.

3. Personal Jurisdiction

Before entering default judgment, a court must determine whether it has jurisdiction over 

defendants. See In Re Tuli v. Rep. of Iraq, 172 F.3d 707, 712 (9th Cir. 1999). In Tuli, the Ninth 

Circuit explained that, where a plaintiff seeks default judgment, the court may not assume the 

existence of personal jurisdiction, because a judgment in the absence of personal jurisdiction is 

void. Tuli, 172 F.3d 712. Where there are questions about the existence of personal jurisdiction in 

a default, the court should provide the plaintiff with the opportunity to establish the existence of 

personal jurisdiction. Id. 

Here, the Court’s personal jurisdiction over Pounce USA is clear. A resident of the forum 

state is presumptively subject to personal jurisdiction there. See, e.g., Brayton Purcell LLP v. 

Recordon & Recordon, 606 F.3d 1124, 1127 n.3 (9th Cir. 2010) (noting that a resident of 

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California is unquestionably subject to personal jurisdiction in California) (abrogation other 

grounds recognized by Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064, 1069 (9th Cir. 

2017)). A corporation is resident in the state where it is incorporated or has its principal place of 

business. Contractors Bonding & Ins. Co. v. Am. Lighting Indus., Inc., No. 

EDCV08813VAPJWJX, 2008 WL 4447680, at *3 (C.D. Cal. Oct. 1, 2008) (“A corporation is a 

citizen and therefore subject to personal jurisdiction in both its state of incorporation and the state 

of its principal place of business. 28 U.S.C. § 1332(a).”). Pounce USA is a citizen of California 

because it is incorporated and has its principle place of business in the state. (FAC, ¶ 3.) 

Accordingly, Pounce USA is unquestionably subject to this Court’s personal jurisdiction.

ANALYSIS

A. Standard Governing Default Judgment

Under Federal Rule of Civil Procedure 55(b)(2), the court may enter a default judgment 

following entry of the party’s default based upon a failure to plead or otherwise defend the action. 

A district court’s decision to enter a default judgment involves some discretion. Lau Ah Yew v. 

Dulles, 236 F.2d 415, 416 (9th Cir. 1956) (affirming district court’s denial of default judgment). 

As discussed above, in determining whether default judgment is appropriate, the Ninth Circuit has 

enumerated the following factors for considerations:

(1) The possibility of prejudice to the plaintiff, (2) the merits of 

plaintiff’s substantive claim, (3) the sufficiency of the complaint, (4) 

the sum of money at stake in the action, (5) the possibility of a dispute 

concerning material facts, (6) whether the default was due to 

excusable neglect, and (7) the strong policy underlying the Federal 

Rules of Civil Procedure favoring decisions on the merits.

Eitel, 782 F.2d at 1471-72.

After default is entered, the well-pleaded allegations in the complaint regarding liability 

are deemed true, except as to damages. Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th 

Cir. 2002). The court is not required to make detailed findings of fact. Id. Moreover, default 

judgment cannot exceed the amount demanded in the pleadings. Fed. R. Civ. P. 54 (c). Upon 

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review of the well-pleaded allegations in this case, the Court finds that the Eitel factors weigh in 

favor of default judgment against Pounce USA under an alter ego theory of liability.

B. Standard Governing Alter Ego Liability

Ordinarily, a legal fiction separates the identity of a corporation from that of its officers 

and owners for purposes of determining liability. Sonora Diamond Corp. v. Superior Court, 83 

Cal. App. 4th 523, 538, 99 Cal. Rptr. 2d 824, 836 (2000). However, courts may disregard the 

fiction and pierce the corporate veil “where an abuse of the corporate privilege justifies” doing so. 

Id. “Under the alter ego doctrine, then, when the corporate form is used to perpetrate a fraud, 

circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will 

ignore the corporate entity and deem the corporation’s acts to be those of the persons or 

organizations actually controlling the corporation.” Id. In California, there are two general 

requirements for a finding of alter ego liability: “(1) such a unity of interest and ownership 

between the corporation and its equitable owner that no separation actually exists, and (2) an 

inequitable result if the acts in question are treated as those of the corporation alone.” Leek v. 

Cooper, 194 Cal. App. 4th 399, 417, 125 Cal. Rptr. 3d 56, 69 (2011). 

Courts consider several factors in undertaking the alter ego analysis, including: 

commingling of funds and other assets; unauthorized diversion of corporate funds or assets to 

other than corporate uses; treatment by an individual of the assets of the corporation as his own; 

failure to maintain minutes or corporate records; sole ownership of all the stock in a corporation 

by one individual; failure to adequately capitalize a corporation; use of a corporation as a mere 

shell, instrumentality, or conduit for a single venture or the business of an individual or another 

corporation; disregard of legal formalities; diversion of assets from a corporation by or to a 

stockholder or other person or entity, to the detriment of creditors; use of a corporation as a 

subterfuge for illegal transactions. Pac. Bell Tel. Co. v. 88 Connection Corp., No. 15-CV-04554-

LB, 2016 WL 3257656, at *2-3 (N.D. Cal. June 14, 2016) (citing Leek, 194 Cal. App. 4th at 417). 

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A plaintiff need not establish every factor to establish alter ego liability. Updateme, Inc. v. Axel 

Springer SE, No. 17-cv-05054-SI, 2018 WL 1184797, at *10 (N.D. Cal. Mar. 7, 2018).

C. Pounce USA is the alter ego of Pounce SA.

In its Complaint and throughout this litigation, Cadence has alleged facts sufficient to 

support the existence of several alter ego factors. 

Cadence has established that Pounce USA and Pounce SA share common ownership. 

Pounce USA, through communications of its counsel and in its Answers, denies any relationship 

to Pounce SA and claims it was sued purely on the basis of mistaken identity because of the 

similar names of the two companies. (Dkt. 66-2; Dkt. 15 ¶¶ 5-7; Dkt. 41 ¶¶ 9-11.) However, 

Roger Viera, who is the CEO of Pounce SA, has testified that he personally owns 70 percent of 

Pounce USA and that Pounce USA is the “sister company” of Pounce SA. (Dkt. 209-3 

(Ruttenberg Dec. Ex. A at 23:5); Dkt. 69-2 (Viera Dec. ¶ 4, 11).) Tax records demonstrate that 

Pounce SA owns 70 percent of Pounce USA. (Dkt. 208-15 (Eshaghian Dec. Ex. L).) Juan Llera, 

who claims to own the remaining 30 percent of Pounce USA, receives a salary as an employee of 

Pounce USA, but does not take profits and has not contributed to the company’s capitalization.

(Dkt. 157-2 at 3; Dkt. 208-7 (Eshaghian Dec. Ex. B at 135:8-12); Dkt. 208-5 (Eshaghian Dec. Ex. 

A at 235:19-24).)

Cadence has also established that Pounce USA and Pounce SA do not in practice maintain 

separate operations or observe corporate formalities. The same individuals have served as officers 

and directors of both entities simultaneously. Roger Viera serves as CEO of Pounce SA, (Dkt. 

208-5 (Eshaghian Dec. Ex. A at 23:5)), and as CFO of Pounce USA (Dkt. 208-5 (Eshaghian Dec. 

Ex. A at 86:18-23)). Roger Viera claims to perform no roles as CFO, yet states on Pounce USA’s 

tax return that he devotes 100 percent of his time to the business. (Dkt. 208-5 (Eshaghian Dec. 

Ex. A at 86:24-25); Dkt. 208-15 (Eshaghian Dec. Ex. L).) Juan Llera claims that he is “CTO, 

CIO, CEO, managing partner, and any other role” at Pounce USA. (Dkt. 208-7 (Eshaghian Dec. 

Ex. B at 31:2-5).) Yet Roger Viera routinely executes contracts as CEO of Pounce USA. (Dkt. 

101-10 (Papazian Dec. Ex. P (October 2016 Settlement Agreement with TableSafe, Inc.)); Dkt. 

208-14 (Eshaghian Dec. Ex. K at 14 (August 2015 contract with TableSafe, Inc.)); Dkt. 208-16 

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(Eshaghian Dec. Ex. M at 8 (March 2015 contract with Mygnar, Inc.)). Roger Viera has also 

represented himself as CEO of Pounce USA in email correspondence. (Dkt. 208-17 (Eshaghian 

Dec. Ex. N).) Llera also represents himself as CTO of Pounce SA, though he claims to have 

stopped working there around 2012. (Dkt. 208-7 (Eshaghian Dec. Ex. B at 25:8-18); Dkt. 66-4 

(Llera LinkedIn profile as of March 22, 2018 describing his occupation as “CTO at Pounce 

Consulting” from 2009 to present); Dkt. 102-7 (Ruttenberg Dec. Ex. F) (email from Viera to 

Cadence describing Llera as “my CTO”).)

Cadence has alleged facts that illustrate how Pounce SA and Pounce USA commingle 

resources and operate as a single enterprise. Pounce SA and Pounce USA share an email server. 

(Dkt. 157-16 (Ruttenberg Dec. Ex. R at 77:17-79:23).) Though the two entities are used 

interchangeably for business operations, no written agreement governs their relationship. (Dkt. 

208-7 (Eshaghian Dec. Ex. B at 165:12-166:18) (Pounce USA collects invoices on behalf of 

Pounce SA and no written agreement governs the process); Id. at 169:16-170:25 (same); Id. at 

47:4-17 (Pounce USA pays legal bills for Pounce SA in this litigation, without related written 

arrangement); Dkt. 209-8 (Ruttenberg Dec. Ex. J ¶¶ 2-4) (Roger Viera correcting his deposition 

testimony to clarify that there are no written agreements between Pounce USA and Pounce SA 

related to the MyGnar contract, the TableSafe contract, or package consolidation); Dkt. 208-7 

(Eshaghian Dec. Ex. B at 110:5-7) (no written agreement installing Llera as CEO of Pounce 

USA); Id. at 235:3-21 (Pounce USA pays Roger Viera around $10,000 per month, but no written 

agreement governs the transactions). Despite Defendants’ protestations that the two entities are 

unrelated, Pounce USA and Pounce SA commingle funds (Dkt. 208-19 (Eshaghian Dec. Ex. P) 

(financial statements showing net transfers of over $716,000 from Pounce USA to Pounce SA in 

2015 and over $513,000 from Pounce USA to Pounce SA in 2016).) Pounce USA did not produce 

tax documentation related to these transactions. (Dkt. 208-9 (Eshaghian Dec. Ex. D at 82:16-

84:14; 91:16-23).)

Plaintiffs have demonstrated that Pounce USA and Pounce SA represent themselves 

publicly as a single entity. (Dkt. 29-2 (Proof of Service, Ex. B) (Pounce USA website 

characterizing Pounce USA’s San Diego address as “US Corporate” and Pounce Mexico’s 

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Guadalajara address as “Global Delivery Center); Dkt. 208-20 (Eshaghian Dec. Ex. R) (email 

from Roger Viera describing “Pounce” as “a tech-firm headquartered in Guadalajara, Mexico, 

with offices in San Diego, CA”).) The two companies also share employees. Thania Herrera is 

paid by Pounce USA, but works on Pounce SA matters, including coordinating shipping, 

depositing checks, and acting as Roger Viera’s assistant. (Dkt. 208-8 (Eshaghian Dec. Ex. C at 

59:12-21; 137:9-138:6; 65:9-16).) Another employee, Georgina (last name not identified), was 

paid by Pounce USA while working for Pounce SA. (Dkt. 208-5 (Eshaghian Dec. Ex. A at 251:3-

15; 254:1-8).) And Hector (last name not identified), another employee, worked for Pounce USA 

and Pounce SA simultaneously. (Dkt. 208-5 (Eshaghian Dec. Ex. A at 269:1-16).)

Cadence has adduced ample evidence that Viera treats Pounce USA as a personal piggy 

bank. Viera uses Pounce USA funds to pay Pounce SA expenses. (Dkt. 209-10 (Ruttenberg Dec. 

Ex. Q).) Viera keeps an account in Pounce USA’s name for his personal use. (Dkt. 208-7 

(Eshaghian Dec. Ex. B at 149:13-150:23).) And Pounce USA routinely funds Viera’s personal 

expenses, including renting an apartment for his ex-wife at the Ritz-Carleton in Los Angeles and

bespoke tailoring. (Dkt. 208-5 (Eshaghian Dec. Ex. A at 17:13-20, 143:13-15); Dkt. 208-7 

(Eshaghian Dec. Ex. B at 139:8-140:2, 143:24-145:10).) Herrera personally traveled from San 

Diego to Los Angeles in the course of her employment by Pounce USA to take care of a parking 

ticket Viera had received on his Los Angeles Ferrari while he was in Mexico. (Dkt. 208-8 

(Eshaghian Dec. Ex. C at 179:12-25).) 

Finally, Cadence has demonstrated that Pounce USA is intentionally undercapitalized. 

From the beginning of 2016 to the end of 2017, Pounce SA funneled over $1.2 million out of 

Pounce USA. (Dkt. 208-19 (Eshaghian Dec. Ex. P).) Meanwhile, Viera keeps Pounce USA afloat 

with small distributions from his own and Pounce SA’s accounts. (Dkt. 208-5 (Eshaghian Dec. 

Ex. A at 134:22-135:23, 319:24-321:16, 322:19-324:8).) Viera sold his Ferrari and channeled the 

funds into Pounce USA. (Dkt. 208-5 (Eshaghian Dec. Ex. A at 255:10-14, 256:8-14).) And 

Pounce SA pays Pounce USA’s legal bills. (Dkt. 208-5 (Eshaghian Dec. Ex. A at 325:16-21); 

Dkt. 208-7 (Eshaghian Dec. Ex. B at 46:13-47:3).) When asked why Pounce USA, rather than 

Pounce SA, would be the entity to sign a licensing agreement with a third party, Viera replied: 

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“Because it is the one that has no ASSETS !!! [sic]” (Dkt. 208-11 (Eshaghian Dec. Ex. F).) This 

is clear evidence of use of Pounce USA and Pounce SA’s abuse of the corporate form to shield 

assets.

Many of the Pacific Bell factors supporting an alter ego finding are present in this case. 

Pounce USA is the alter ego of Pounce SA because the two entities are commonly owned, do not 

observe corporate formalities, commingle funds and function as a single enterprise, and represent 

themselves publicly as a single entity. To further these purposes, Pounce USA is deliberately 

undercapitalized, and Viera alternatively raids and funds it as though it were a personal account. 

The presence of these factors confirms that there is “such a unity of interest and ownership 

between” Pounce USA and Pounce SA “that no separation actually exists.” Leek, 194 Cal. App. 

4th at 417. Further, treating the two entities separately would lead to “an inequitable result.” Id. 

As the facts Cadence has adduced and the course of this litigation demonstrate, Pounce USA 

strategically denies its relationship to Pounce SA to obfuscate reality and avoid consequences for 

both entities. Denial of alter ego liability in this case would enable that shell game to continue, 

allowing Pounce SA to avoid paying the default judgment owed to Cadence. The Court 

accordingly finds that Pounce USA is the alter ego of Pounce SA.

D. Default Judgment is warranted against Pounce USA.

Default Judgment was warranted against Pounce SA based on Cadence’s allegations; 

therefore, it is also warranted against Pounce USA because Pounce USA has defaulted and is 

Pounce SA’s alter ego. Pounce USA failed to defend this case, and the Court entered default 

against it for failure to retain counsel and noncompliance with court order on January 30, 2019. 

(Dkt. 206.) Applying the Eitel factors, the Court concludes that entry of default judgment is 

warranted against Pounce USA. Eitel, 782 F.2d at 1471-72.

1. Plaintiff Cadence would be prejudiced absent the entry of a default judgment 

against Pounce USA.

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As demonstrated above, Pounce SA and Pounce USA are engaged in the same enterprise. 

And much of that enterprise appears to depend on illegal use of Cadence’s software, as this Court 

found in its previous recommendation. (Dkt. 205.) Courts have held that plaintiffs are prejudiced 

where defendants continue to profit from products that infringe their intellectual property. Dr. 

JKL Ltd. v. HPC IT Educ. Ctr., 749 F. Supp. 2d 1038, 1048-49 (N.D. Cal. 2010). As was true 

with Pounce SA, Cadence lacks recourse against Pounce USA insofar as that entity refuses to 

defend Cadence’s claims against it on the merits in court. And absent the opportunity to litigate 

and receive a judgment, Pounce USA may continue its infringing behavior with impunity. 

Moreover, Cadence would be doubly prejudiced by a failure to hold Pounce USA accountable 

here because of the alter ego relationship between the two entities. It seems likely that, absent a 

default judgment against both entities, Pounce USA will be used as a conduit for Pounce SA to 

shield its assets from Cadence’s efforts to collect its judgment. Accordingly, this factor supports 

entry of a default judgment against Pounce USA.

2. Cadence has sufficiently alleged facts to demonstrate that its substantive claims 

against Pounce USA are meritorious.

As discussed above, this Court has held that Cadence has adequately asserted claims 

against Pounce SA for copyright infringement, violation of the DMCA, and breach of contract. 

And Cadence has sufficiently established that Pounce USA is the alter ego of Pounce SA. See Li 

v. A Perfect Day Franchise, Inc., No. 5:10-CV-01189-LHK, 2012 WL 2236752, at *10 (alter ego

allegations taken as true in entering default judgment). It therefore stands to reason that Pounce 

USA is engaged in the same course of conduct that gave rise to the Court’s prior finding against 

Pounce SA. Accordingly, Cadence has adequately asserted its substantive claims against Pounce 

USA, justifying default judgment.

3. The egregiousness of Pounce USA’s conduct justifies entry of default judgment in 

the amount Cadence seeks.

In deciding a motion for default judgment, a court must consider the amount of money at 

stake in relation to the seriousness of the defendant’s conduct. Pepsico, Inc v. California Security 

Cans, 238 F. Supp. 2d 1172, 1176 (C.D. Cal. 2002). When the money at stake in the litigation is 

substantial or unreasonable, default judgment is discouraged. Eitel, 782 F.2d at 1472 (three 

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million dollar judgment supported decision not to enter default judgment).

In its motion for default judgment against Pounce USA, Cadence seeks actual damages 

(license fees plus interest), disgorgement of profits, and statutory fees. Cadence asks that the same 

remedies awarded against Pounce SA be awarded against Pounce USA, for a total monetary award 

of $6,834,950. The Court finds that, as the alter ego of Pounce SA, Pounce USA is liable for 

damages in the same amount. Thus, the amount of money at issue is significant. However, 

Pounce USA’s conduct, in conjunction with Pounce SA, was serious and egregious. There were a 

significant number of infringing incidents – at least 6,933. (Phan Dec. at Dkt. 55-3, ¶ 7.) Further, 

Pounce USA’s infringing conduct and alter ego collusion with Pounce SA was intentional. 

Pounce USA also refused to participate in or cooperate with the current litigation. Although the 

sum at stake is a significant sum, the circumstances warrant such an award. 

4. There is no dispute of material fact at issue here.

There is no information regarding a dispute of material facts. The Court was careful to 

ensure that there is sufficient evidence establishing that Pounce USA is the alter ego of Pounce 

SA. And in its prior recommendation, the Court carefully established that there was sufficient 

evidence showing that Pounce SA infringed upon Cadence’s copyrighted software, circumvented 

the protections that Cadence put in place to control access to its intellectual property, and violated 

the terms of the software license agreement before calculating damages and granting injunctive 

relief. The alter ego issue, Cadence’s substantive claims, and the related calculation of damages 

pose no material issue of fact that precludes granting Cadence’s motion against Pounce USA.

5. There is no evidence of excusable neglect in this case.

There is no indication that Pounce USA’s failure to defend this litigation or participate in 

the present proceeding is the result of excusable neglect. Pounce USA previously appeared in the 

litigation and yet refused to continue with new counsel. Thus, Pounce USA’s failure to defend the 

litigation appears intentional rather than the product of neglect. 

6. Decision on the merits is not possible given Pounce USA’s conduct.

Despite the policy of favoring decisions on the merits, default judgment is appropriate 

when a defendant refuses to litigate a case. Fed. R. Civ. P. 55(b); see Bd. of Trustees v. RBS 

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Washington, LLC, 2010 WL 1450897 at *4 (N.D. Cal. Jan. 8, 2010.) Here, Pounce USA refused 

to litigate, and Cadence had no option other than to pursue a default judgment.

In light of the foregoing, the undersigned RECOMMENDS that default judgment be 

entered against Pounce USA. Further, having considered the Pounce USA’s awareness and prior 

involvement in the current litigation, the Court sees no just reason to delay the entry of judgment 

and further RECOMMENDS that judgment be entered pursuant to Rule 54(b).

REMEDIES

Pounce SA and Pounce USA are jointly and severally liable to Cadence for breach of 

contract, copyright infringement, and DMCA violations. This Court awards the following 

remedies against Pounce USA both directly and as an alter ego of Pounce SA.

The damages the Court previously awarded to Cadence against Pounce SA are attributable 

to Pounce USA as well. To recover damages after securing a default judgment, the plaintiff must 

prove entitlement to relief by testimony or written affidavit. PepsiCo., Inc., 238 F.Supp.2d at 

1175 (citing TeleVideo Systems, Inc., 826 F.2d at 917-18.) Here, Cadence seeks $783,310 in lost 

licensing revenue plus $998,675 in interest under the claim for breach of contract. Cadence seeks 

disgorgement of Pounce SA’s profits ($2,973,065.73) for copyright infringement, as permitted by 

17 U.S.C. § 504(b). For the DMCA claim, Cadence requests statutory damages of $2,079,900 in 

accordance with 17 U.S.C. § 1203(c)(3)(A). Finally, Cadence seeks injunctive relief pursuant to 

17 U.S.C. § 502.

A. Breach of Contract – Actual Damages

Cadence seeks its actual damages, or license fees, for unauthorized use by Pounce USA as 

alter ego of Pounce SA. Cadence’s tracking measures detected 6,933 unauthorized uses of 

Cadence Allegro, OrCad, and PSpice software by Pounce SA on twenty-six different computers. 

(Phan Dec. at Dkt. 55-3, ¶ 7.) Cadence maintains that these are only a fraction of the actual uses 

because offline use of Cadence’s software may not be detected. (Dkt. 54-7, ¶ 25.) Nevertheless, 

Cadence uses the 6,933 uses as the basis for calculating its damages. 

Based on the number of offending machines, the programs used, and the number of 

detected unauthorized uses, Pounce USA and Pounce SA would need 31 annual licenses for 

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Allegro, 34 annual licenses for OrCad, 15 annual licenses for PSpice, and 36 annual licenses for 

product options not available in the base license prices. (Dkt. 55-3, ¶ 8.) The cost of these 

licenses is $783,310. (Dkt. 55-3, ¶ 10.) 

Further, under the Software Licensing Agreement, Cadence is entitled to interest at the 

monthly rate of 1.5%. (FAC, Ex. G, ¶ 5.) As of November 14, 2018, Pounce SA and Pounce 

USA owed Cadence $998,675 in prejudgment interest. (Dkt. 181-8, ¶ 75-80.) The Court finds 

that a damages award including both the cost of the licenses and the prejudgment interest rate of 

1.5% per month, accruing through the entry of final judgment, is reasonable. 

B. Copyright Violations – Disgorgement of Profits

Pounce USA is liable for Pounce SA’s acts of copyright infringement, and, given the alter 

ego relationship between the two companies, disgorgement of the same profits is appropriate as to 

both entities. According to 17 U.S.C. § 504(b), a plaintiff may recover “profits of the infringer 

that are attributable to the infringement,” in addition to actual damages. Cadence already seeks 

actual damages for its breach of contract claim, as described above. “In establishing the 

infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross 

revenue, and the infringer is required to prove his or her deductible expenses and the elements of 

profit attributable to factors other than the copyrighted work.” Id. 

Because Pounce SA refused to provide discovery as to its customers or profits from the use 

of Cadence’s software during the litigation, Cadence subpoenaed three Pounce SA customers: 

TableSafe (formerly known as Viableware), MyGnar, and Capstone Turbine. (Dkt. 182, p. 19.) 

Review of the schematics produced by these three customers indicates that Cadence’s software 

was used in the schematics designed by Pounce SA. (Choudhary Dec. at Dkt. 181-7, ¶¶ 15-39.) 

Cadence retained Sidney Blum, who is a certified public accountant, a royalty auditor, an 

internal auditor, and an expert in damages. (Blum Dec. 182-9, ¶ 5; Report, Dkt. 181-8, Ex. 1, ¶¶ 

90-117.) Blum calculated that Pounce SA derived a total revenue of $2,973,065 from the use of 

Cadence’s software in providing services to all three customers. (Id.) 

Blum’s opinion that Pounce SA received revenues of $2,078,314 from TableSafe was 

based on the deposition of TableSafe’s Rule 30(b)(6) designee, Christopher Conley; a settlement 

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agreement between Pounce SA and TableSafe; and TableSafe’s documentation of the payments 

made to Pounce Consulting, United Capital Funding Corp., and Hernandez Marym, S.C. at the 

instruction of Pounce SA. (Dkt. 181-8, ¶¶ 90-99.) Conley testified that Pounce SA created the 

schematics purchased by TableSafe using Cadence’s Allegro software. (Dkt. 181-10 at 44:19-23, 

102:18-22, 137:1-4.) The basis for Blum’s opinion that Pounce SA received $799,488 from 

Capstone Turbine includes a scheduling agreement created by Capstone Turbine, Capstone 

Turbine’s accounts payable ledger, and copies of checks and invoices involving Pounce 

Consulting Inc. or United Capital Funding Corp. (Dkt. 181-8., ¶¶ 100-106.) 

In Blum’s opinion, Pounce SA received $95,263 in gross revenue from MyGar. (Dkt. 181-

8, ¶ 116.) Of this sum, $25,263 from MyGnar is based on payments for Master Design Services 

Agreement, a wire transfer made on April 1, 2015 in response to an invoice dated March 31, 2015 

for work on the “Gnarbox.” (Dkt. 181-8, ¶¶ 107-116.) MyGnar stock worth approximately 

$70,000 was also issued to Pounce Capital, Inc. (Dkt. 181-8, ¶¶ 112, 113.) The custodian of 

records at MyGnar authenticated the documents produced by MyGnar. (Dkt. 181-24.) 

Because Pounce USA did not oppose the motion for default judgment, there is no evidence 

that would reduce the gross revenue to a sum more representative of the actual profits received. 

However, since the disgorgement of profits is based solely on three of Pounce SA’s customers and 

Pounce SA has an annual revenue of roughly $70 million (Vieira Dep at Dkt. 182-4, 193:4-15), 

the Court finds that the evidence supports the profits Blum calculated. Therefore, the finds that an 

award of $2,973,065 for Cadence’s copyright infringement claim is appropriate.

C. DMCA Statutory Damages 

Statutory damages for circumvention of the DMCA is $200 to $2,500 per act of 

circumvention. 17 U.S.C. § 1203(c)(3)(A). Cadence argues that its tracking measures have 

detected 6,933 unauthorized uses of Cadence Allegro, OrCad, and PSpice software by Pounce SA 

on twenty-six different computers. (Phan Dec. at Dkt. 55-3, ¶ 7.) Cadence notes that Pounce 

USA has willfully avoided paying significant licensing fees, and its default and obstructionist 

litigation tactics have prevented Cadence from learning the true scope of the damages. Thus, 

Cadence requests $300 per act of circumvention given the willfulness of Pounce USA’s conduct 

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for a total of $2,079,900. In keeping with its previous recommendation, the Court finds that such 

an award is reasonable.

D. Injunctive Relief

Cadence seeks a permanent injunction enjoining Pounce USA’s unlawful conduct pursuant 

to 17 U.S.C. §§ 502, 1203(b)(1). Section 502(a) provides “[a]ny court having jurisdiction...to 

grant temporary or final injunctions on such terms as it may deem reasonable to prevent or restrain 

infringement of a copyright.” Section 1203(b)(1) of the DMCA authorizes a court to “grant . . . 

permanent injunctions on such terms as it deems reasonable to prevent or restrain a violation.” 

Permanent injunctive relief is appropriate where a plaintiff demonstrates: (1) it has already 

suffered irreparable injury; (2) there is no adequate remedy at law; (3) the balance of hardships 

favors an equitable remedy; and (4) an issuance of an injunction is in the public’s interest. eBay, 

Inc. v. MercExchange, LLC, 547 U.S. 388, 391-92 (2006).

The Court finds that under the facts of this case, Cadence is entitled to a permanent 

injunction. Pounce USA, in conjunction with Pounce SA, has repeatedly used unauthorized 

versions of Cadence’s software in designing schematics for Pounce SA customers, bypassing 

Cadence’s protections and profiting at Cadence’s expense. Given Pounce USA’s knowledge of its 

violations and continued use of Cadence’s software, there is no adequate remedy at law to address 

the ongoing damage and irreparable harm. Further, the balance of hardships weighs in favor of 

Cadence, since an injunction will merely prohibit Pounce USA from ongoing unlawful activity. 

Finally, the public interest is served when copyright protections are enforced. Therefore, the 

Court recommends permanent injunctive relief.

CONCLUSION

For the reasons stated above, the undersigned RECOMMENDS that the District Court 

GRANT Cadence’s motion and RECOMMENDS the following relief: 

(1) entry of Default Judgment in favor of Cadence pursuant to Federal Rule of Civil 

Procedure 54(b); 

(2) an award for actual damages for Cadence’s breach of contract claim in the sum of 

$783,310 in lost licensing revenue plus prejudgment interest accrued at the rate of 1.5% per month 

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through the date of final judgment; 

(3) an award of disgorgement of Pounce USA and Pounce SA’s profits in the sum of 

$2,973,065.73 for copyright infringement, as permitted by 17 U.S.C. § 504(b);

(4) statutory damages of $2,079,900 or $300 for each of the 6,933 infringing incidents in 

accordance with 17 U.S.C. § 1203(c)(3)(A); 

(5) an order that Pounce USA and Pounce SA and their agents, employees, affiliates, 

distributors, successors, assigns, and any other person or entity acting in concert or participation 

with Pounce USA and Pounce SA be now and forever enjoined from using or downloading, or 

otherwise accessing the Cadence’s Software or any other Cadence’s software, including without 

limitation any and all versions of Allegro, PSpice, and OrCad;

(6) an order that Cadence be awarded its attorneys’ fees and costs against Pounce USA and 

Pounce SA based on section 28 of the Software License Agreement; and

(7) a final judgment in the case, in accordance with Rule 58.

A party may serve and file specific written objections to this recommendation within 

fourteen days after being served with a copy. See 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b); 

Civil L.R. 72-3.

IT IS SO ORDERED.

Dated: April 1, 2019

______________________________________

SALLIE KIM

United States Magistrate Judge

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