Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-07-55217/USCOURTS-ca9-07-55217-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ASSET MARKETING SYSTEMS, INC., 

Plaintiff-counterdefendant-Appellee, No. 07-55217

v. D.C. No.  CV-03-02234-B KEVIN GAGNON, d/b/a MISTER

COMPUTER, OPINION

Defendant-counterclaimant-Appellant. 

Appeal from the United States District Court

for the Southern District of California

Rudi M. Brewster, District Judge, Presiding

Argued and Submitted

July 18, 2008—Pasadena, California

Filed September 9, 2008

Before: Barry G. Silverman, Johnnie B. Rawlinson, and

Milan D. Smith, Jr., Circuit Judges.

Opinion by Judge Milan D. Smith, Jr.

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COUNSEL

Todd A. Moore, San Diego, California, for the defendantcounter-claimant-appellant.

John Morris and Phillip C. Samouris, Higgs, Fletcher & Mack

LLP, San Diego, California, for the plaintiff-counterdefendant-appellee.

OPINION

MILAN D. SMITH, JR., Circuit Judge: 

Kevin Gagnon, doing business as Mister Computer

(Gagnon), appeals from a grant of summary judgment in favor

of Asset Marketing Systems, Inc. (AMS). Gagnon contends

that AMS infringed his copyright in six computer programs

that he wrote for AMS by continuing to use and modify them

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without his consent, and that AMS misappropriated trade

secrets contained in the programs’ source code. Gagnon also

challenges the denial of his ex parte application for an order

denying or continuing summary judgment. The district court

concluded that Gagnon had granted AMS an unlimited, nonexclusive, implied license to use, modify, and retain the

source code of the programs that defeated his copyright

infringement and trade secret misappropriation claims. The

district court also denied Gagnon’s ex parte application. We

have jurisdiction under 28 U.S.C. § 1291, and we affirm the

district court.

FACTUAL AND PROCEDURAL BACKGROUND

A. AMS and Gagnon’s Relationship 

AMS is a field marketing organization offering sales and

marketing support to insurance marketing entities. From May

1999 to September 2003, Gagnon was an at-will, independent

contractor for AMS, hired to assist with its information technology needs. Subsequently, Gagnon was asked to develop

custom software for AMS. AMS was Gagnon’s largest client,

accounting for 98% of his business. Jay Akerstein, a partner

at AMS who later became the Chief Operating Officer, was

Gagnon’s primary contact. Over the course of their four-year

relationship, AMS paid Gagnon over $2 million, $250,000 of

which was for custom software development and computer

classes. Gagnon developed six computer programs for AMS.

In May 2000, AMS and Gagnon entered a Technical Services Agreement (TSA), which was scheduled to expire on

April 30, 2001. The TSA, printed on Mister Computer letterhead, set forth Gagnon’s fees and the services to be provided.

The services included “Custom Application Programming—

Consultant will provide Contractor with specific add-on products to enhance Contractor’s current in-house database application,” and mentioned nothing about a license. The TSA was

not renewed, though the relationship continued. 

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AMS claims that on June 12, 2002, Gagnon signed a Vendor Nondisclosure Agreement (NDA).1

 The NDA would have

given AMS ownership of all intellectual property developed

for AMS by Gagnon. Gagnon claims that the document is a

forgery and that his signature cannot be authenticated. 

In June 2003, Gagnon proposed that AMS execute an Outside Vendor Agreement (OVA). The OVA included a Proprietary Rights clause providing:

Client agrees that all designs, plans, specifications,

drawings, inventions, processes, and other information or items produced by Contractor while performing services under this agreement will be the

property of Contractor and will be licensed to Client

on a non-exclusive basis as will any copyrights, patents, or trademarks obtained by Contractor while

performing services under this agreement. On

request and at Contractor’s expense, Client agrees to

help Contractor obtain patents and copyrights for

any new developments. This includes providing data,

plans, specifications, descriptions, documentation,

and other information, as well as assisting Contractor

in completing any required application or registration. Any source code or intellectual property will

remain the property of Contractor. Trademarks, service marks, or any items identifying said Company

shall remain the Company’s said property. Contractor will allow Company non exclusive, unlimited

licensing of software developed for Company. 

Akerstein declined to execute the OVA, but countered with

a redlined version of the OVA, which substantially rewrote

the Proprietary Rights clause to read: 

1The NDA was located and produced six months into the litigation. 

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Contractor agrees that all designs, plans, specifications, drawings, inventions, processes, and other

information or items produced by Contractor while

performing services under this agreement will be the

sole property of Client. Any source code or intellectual property agreed to and documented as Contractor’s will remain the property of Contractor. 

By the end of June 2003, AMS had decided to terminate

Gagnon’s services. AMS extended an employment offer to

Gagnon, but he declined to accept the offer. AMS and

Gagnon then discussed an exit strategy, and by late July, the

parties had set a target exit date of September 15, 2003. 

In August 2003, Gagnon responded to Akerstein’s redlined

OVA draft with a letter asserting that his “position has always

been that Asset Marketing Systems shall be entitled to unlimited software licensing as long as my company had a business

relationship with Asset Marketing Systems.” The parties

never executed the OVA. 

In a letter to AMS dated September 18, 2003, Gagnon

demanded $1.75 million for AMS to have the right to continue to use the programs and $2 million for Gagnon’s agreement not to sell or disclose the programs to AMS’s

competitors. 

In a letter dated September 23, 2003, AMS terminated its

relationship with Gagnon. According to AMS, a consultant

identified numerous problems with Gagnon’s work. It also

stated:

Recently, we had discussed employee and intellectual property issues which have yet to be resolved.

Despite the foregoing, I learned that we did not have

copies of the source code for the software we developed and that copies of our SalesLogix software and

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our entire database may be maintained by you and

your agents offsite. 

The letter then demanded: 

In connection with that separation, you must

immediately provide any and all copies of the source

code for all software developed by and on behalf of

Asset Marketing Systems immediately. You are not

authorized to utilize that software which we believe

is owned and all copyrights belong to Asset Marketing Systems. Furthermore, despite your claimed

ownership in that copyright, we believe that Asset

Marketing Systems’ trade secrets are embedded and

utilized throughout that software which would preclude use by you as well. 

We also demand that you return to us any copies

of the SalesLogix software or Asset Marketing databases, programs or other materials that may have

come into your possession during our relationship. 

Also on September 23, seven of Gagnon’s twelve employees resigned and were hired by AMS to provide directly to

AMS the same services they previously provided to AMS

through Gagnon. According to AMS, Gagnon’s former

employees approached AMS for jobs, and AMS never solicited them. Gagnon disputes this. Each employee had signed

an “Employee’s Work Agreement” with Gagnon. The agreement specified that the intellectual property arising out of or

related to work performed for Gagnon was his property. The

employment agreement also stated that “all information relating to [AMS] disclosed to Employee by Employer, and all

information generated by Employee in the performance of the

above Work is a valuable trade secret of Employer” to be

treated as confidential and safeguarded. Finally, the employees agreed not to “engage in any employment or personal conASSET MARKETING v. GAGNON 12519

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tractual agreement” with AMS for twenty-four months

without written consent from Gagnon. 

In October 2003, Gagnon sent AMS a cease and desist letter, asserting that the use of the programs was unauthorized.

It also asserted that the hiring of Gagnon’s prior employees

violated their Employment Agreement with him. Gagnon

demanded that AMS certify that it had undertaken to remove

“all original and derivative source code” and all related files

for the programs from AMS computers. 

AMS responded by asserting that Gagnon could not unilaterally stop AMS from continuing to use and update the programs because it had an irrevocable license to use, copy, and

modify the programs based on the course of conduct of the

parties over the past two-and-a-half years. AMS also asserted

that Gagnon could not use the programs because it contained

AMS’s trade secrets. AMS also declined to pay Gagnon the

$1.75 to $2 million he had requested in September. 

B. The Programs 

Specifically at issue are the six programs that Gagnon created for AMS. He included a copyright notice, “copyright

Mister Computer,” in the splash screens for each program. 

According to a declaration by one of Gagnon’s former

employees, the programs were designed to work with AMS’s

databases and included “detailed information concerning

AMS’ network of sales persons, including information related

to AMS’ agent lists, their territories, and the criteria used by

AMS to qualify an agent or create a territory.” The source

code for these programs was installed on several of AMS’s

development computers, which were located at AMS’s facilities.2

 The employee was not instructed by Gagnon to maintain

2Gagnon disputes that the source code was ever stored on the AMS

server. 

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the source code at any location other than AMS, and Gagnon

made no attempt to hide the source code from AMS employees. 

In his deposition, Gagnon admitted that after he hired

employees, the source code was stored on AMS computers in

the development room. The room could not be accessed without a pass that Gagnon’s software developers and a few key

AMS personnel, including Akerstein, possessed. Gagnon

never received any promises of confidentiality with respect to

his trade secrets from the AMS personnel who had passes to

the development room nor did he discuss terms of a potential

license or royalty agreement with them. 

A week prior to his termination, Gagnon registered the

copyright for these six programs with the United States Copyright Office. 

C. Procedural History 

This case has a convoluted procedural history. The case

began when AMS filed a complaint in California Superior

Court against Kevin Gagnon, d/b/a Mister Computer, two of

his employees3 and Gagnon’s new company, National Marketing Technologies alleging, among other things, misappropriation of trade secrets and conversion. Gagnon removed the

case to federal court. Gagnon then filed counterclaims, alleging copyright infringement, unfair competition under California law, misappropriation of trade secrets, interference with

contractual relations, intentional interference with prospective

business advantage, negligent interference with prospective

business advantage, and sought accounting and declaratory

relief declaring Gagnon the copyright owner of the programs.

The district court (then Judge Jones) remanded AMS’s claims

back to the state court. AMS then filed its remanded state law

3The two employees were dismissed from the suit with prejudice. 

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claims as counter-counterclaims to Gagnon’s federal counterclaims. 

The district court subsequently granted AMS’s motion for

summary judgment as to Gagnon’s counterclaims. The court

found that Gagnon had granted AMS an implied, nonexclusive license to use, modify, and retain the source code of the

programs. Consequently, Gagnon’s trade secret misappropriation claim was also defeated, and because no trade secret

existed as between Gagnon and AMS with respect to the

source code, Gagnon’s noncompetition agreements were

deemed invalid under California law. For the same reasons,

Gagnon’s remaining state law claims failed. 

The court also denied Gagnon’s ex parte applications for an

order denying or continuing summary judgment and to file

written objections to evidence. Gagnon’s ex parte application

requested a continuance to obtain the backup tapes of AMS’s

computers because they might contain emails establishing

AMS’s allegedly unlawful solicitation of Gagnon’s employees, and would establish the location of the source code at all

relevant times. 

The magistrate judge recommended that the motion be

denied because it was untimely, and the district court judge

adopted that recommendation. The district court first reasoned

that because the non-competition clause in Gagnon’s employment agreements was unenforceable under California law, any

emails evidencing solicitation were irrelevant. Second,

because Gagnon had already admitted that the source code

was located on AMS’s computers, computer backup tapes

conclusively locating the source code on AMS computers

were unnecessary. Third, the motion was untimely because

Gagnon did not request the continuance until after the motion

for summary judgment was fully briefed by both parties.

Gagnon was able to file his opposition to summary judgment

without raising any discovery objections, and several days

later, counsel for both parties requested a stay of pending dis12522 ASSET MARKETING v. GAGNON

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covery issues until summary judgment. Gagnon filed his ex

parte motion a week after the district court ordered the case

submitted, causing “undue delay in the resolution of both the

summary judgment motion and the discovery motion.” 

Gagnon next filed a motion for reconsideration, which was

denied. The case was then reassigned from Judge Jones to

Judge Brewster. At that point, the parties stipulated to a dismissal of all counter-counterclaims, and AMS moved for

attorneys fees and costs. Gagnon appealed the grant of summary judgment. The district court then indicated that it wished

to reconsider its order granting summary judgment and stayed

the proceedings regarding the attorney fees. Gagnon successfully moved this court for a limited remand so that Judge

Brewster could reconsider Judge Jones’s grant of summary

judgment. After remand, the district court denied the motion

for reconsideration, deferred resolution of attorneys fees until

the resolution of the appeal, and returned the case to this

court. 

STANDARD OF REVIEW

We review the district court’s grant of summary judgment

de novo. Giles v. Gen. Motors Acceptance Corp., 494 F.3d

865, 872 (9th Cir. 2007). We view the facts in the light most

favorable to the non-moving party and determine whether

there exists a genuine issue of material fact and whether the

district court correctly applied the law. Id. 

We review the district court’s decision to deny an application to continue a ruling on a summary judgment motion to

permit discovery for abuse of discretion. Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1417 (9th Cir. 1987). “A district

court has wide latitude in controlling discovery.” Id. at 1416

(internal quotation marks omitted). “The district court should

permit discovery if it appears from the affidavits filed that the

party opposing the summary judgment motion could not, for

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reasons stated, present facts essential to justify his opposition.” Id. (citing Fed. R. Civ. P. 56(f)).

DISCUSSION

A. Copyright Infringement Claim 

Gagnon alleges that AMS’s continued use of the six programs constitutes copyright infringement because the programs were used by AMS without its obtaining a license or

Gagnon’s permission. AMS asserts three defenses to

Gagnon’s copyright infringement claim: an implied license, a

transfer of copyright ownership via the NDA, and 17 U.S.C.

§ 117. We hold that AMS has an implied unlimited license for

the programs, and we do not reach the other defenses asserted

by AMS. 

[1] Though exclusive licenses must be in writing, 17 U.S.C.

§ 204, grants of nonexclusive licenses need not be in writing,

and may be granted orally or by implication. Foad Consulting

Group, Inc. v. Azzalino, 270 F.3d 821, 825-26 (9th Cir. 2001).

We have previously considered the grant of an implied license

in the context of movie footage and architectural drawings.

Id.; Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 558 (9th Cir.

1990). 

In Effects Associates, a movie producer hired Effects Associates to create certain special effects for a movie. Effects, 908

F.2d at 555-556. Though the film footage containing the special effects was used without the producer’s obtaining a written license from Effects Associates, we found that an implied

license had been granted because the footage was created at

the producer’s request with the intent that it be used in the

film with no warning that use of the footage would constitute

infringement. Id. at 558-59 & n.6. We determined that “[t]o

hold that Effects did not at the same time convey a license to

use the footage . . . would mean that plaintiff’s contribution

to the film was ‘of minimal value,’ a conclusion that can’t be

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squared with the fact that Cohen paid Effects almost $56,000

for this footage.” Id. at 559. 

[2] Thus, we have held that an implied license is granted

when “(1) a person (the licensee) requests the creation of a

work, (2) the creator (the licensor) makes that particular work

and delivers it to the licensee who requested it,4 and (3) the

licensor intends that the licensee-requestor copy and distribute

his work.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 776 (7th Cir.

1996) (citing Effects, 908 F.2d at 558-59) (footnote added).

We apply the same analysis we did in Effects to implied

licenses for computer programs. The last prong of the Effects

test, however, is not limited to copying and distribution;

instead we look at the protected right at issue—here, whether

Gagnon intended that AMS use, retain, and modify the programs. 

1. AMS Requested the Creation of the Programs 

[3] Gagnon argues that AMS never specifically requested

that he create the programs, but “rather relayed its needs to

Mr. Gagnon and he satisfied them by providing either computer hardware or computer software at his discretion.” We

find this interpretation of “request” to be strained. Gagnon did

not create the programs on his own initiative and market them

to AMS; rather, he created them in response to AMS’s

requests. Moreover, after prototype software was developed,

he made changes to the programs in response to Akerstein and

other AMS employees’ requests. No genuine issue of material

fact remains as to whether AMS requested the programs. 

4Though delivery of a copy of software does not compel the conclusion

that Gagnon granted AMS a license, it is a relevant factor that we may

consider. See 17 U.S.C. § 202; Effects, 908 F.2d at 558 n.6 (recognizing

that delivery is not dispositive, but “one factor that may be relied upon in

determining that an implied license has been granted”). 

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2. Gagnon Created the Software for AMS and

Delivered It

Though Gagnon argues that the programs could be converted for use by another company, Gagnon admitted that the

programs were created specifically for AMS and that AMS

paid for the work related to drafting of the programs as well

as some related costs. It is, therefore, undisputed that Gagnon

created these programs for AMS. 

[4] The remaining question is whether Gagnon delivered

the programs to AMS. We agree with the district court that

Gagnon delivered them when he installed them onto the AMS

computers and stored the source code on-site at AMS.

Gagnon argues that even if he had installed the programs onto

the AMS computers, he never delivered the source code so

that AMS could modify the code.5 If AMS did not have the

right to modify the code, it may have infringed Gagnon’s

copyright by exceeding the scope of its license. See S.O.S.,

Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989).

Gagnon primarily points to AMS’s inability to locate the code

on its own computer systems after his services were terminated to show that AMS did not possess the code. But, as we

explain below, Gagnon’s conduct manifested an objective

intent to give AMS an unlimited license at the time of cre5When programmers write code, they write in “source code,” which is

written in a programming language that humans can understand. Apple

Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1243 (3d Cir.

1983) (describing source code and object code). See also Michael J. Madison, Reconstructing the Software License, 35 Loy. U. Chi. L.J. 275, 280-

81 (2003) (same). This source code is then compiled into object code

which is essentially a translation of source code into something the computer can understand and execute. Id. at 280. Generally, when software is

distributed, only the compiled object code is distributed and the programmer retains the source code. Id. at 280-81. Regardless of whether the computer program is in object code or source code form, it is copyrightable

and protectable. Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1519-

20 (9th Cir. 1993). 

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ation; thus, when he stored the source code at AMS, the code

was delivered. 

3. Gagnon’s Intent as Manifested by His Conduct 

[5] Gagnon argues that he never intended that AMS would

retain and modify the programs he delivered. Gagnon misunderstands the inquiry into intent, and we conclude that his

conduct did manifest an intent to grant a license. The relevant

intent is the licensor’s objective intent at the time of the creation and delivery of the software as manifested by the parties’ conduct. See Effects, 908 F.2d at 559 n.6 (noting that

“every objective fact concerning the transaction” supported

the finding that an implied license existed); see also John G.

Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d

26, 42 (1st Cir. 2003); I.A.E., 74 F.3d at 777. The First and

Fourth Circuits consider the following factors to determine

such an intent:

(1) whether the parties were engaged in a short-term

discrete transaction as opposed to an ongoing relationship; (2) whether the creator utilized written contracts . . . providing that copyrighted materials could

only be used with the creator’s future involvement or

express permission; and (3) whether the creator’s

conduct during the creation or delivery of the copyrighted material indicated that use of the material

without the creator’s involvement or consent was

permissible. 

Danielson, 322 F.3d at 41 (quoting Nelson-Salabes, Inc. v.

Morningside Dev., LLC, 284 F.3d 505, 516 (4th Cir. 2002)).

We find this approach to be persuasive. 

Gagnon and AMS had an ongoing service relationship in

which Gagnon provided technical support for all computerrelated problems at AMS; he also created certain custom software applications at AMS’s request. The relationship of the

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parties indicates neither an intent to grant nor deny a license

without Gagnon’s future involvement. 

[6] Several documents exist, however, that reflect the parties’ objective intent: the TSA, signed by both parties, the

OVA submitted by Gagnon, and Gagnon’s letter objecting to

Akerstein’s proposed changes to the OVA.6 Courts have

looked to contracts, even if unexecuted, as evidence of the

intent of the party submitting the contract. See Johnson v.

Jones, 149 F.3d 494, 501 (6th Cir. 1998) (finding no license

where architect submitted contracts containing express provision that drawings could not be used by others except with

agreement and compensation); Nelson-Salabes, 284 F.3d at

516 (same); cf. I.A.E., 74 F.3d at 776-77 (architect submitted

no language indicating an intent to retain control); see also

Foad Consulting, 270 F.3d at 835-36 (Kozinski, J., concurring) (comparing Johnson and I.A.E.). 

[7] The TSA, signed by both parties in 2000 and printed on

Mister Computer letterhead, stated only that Gagnon “will

provide” AMS “specific add-on products.” Nothing in the

TSA indicates Gagnon’s understanding or intent that continued use of the custom application programming undertaken

by Gagnon would be prohibited after the TSA terminated. The

TSA also provided that AMS would be billed for Gagnon’s

services at an hourly rate. Like the special effects creators in

Effects Associates, Gagnon was well paid for his services.

Under the circumstances, it defies logic that AMS would have

paid Gagnon for his programming services if AMS could not

have used the programs without further payment pursuant to

a separate licensing arrangement that was never mentioned in

the TSA, and never otherwise requested at the time. This is

especially so because custom software is far less valuable

without the ability to modify it and because the TSA was set

6We do not consider the NDA, allegedly signed by Gagnon, because

Gagnon contests its validity and argues that his signature was forged, creating a factual dispute inappropriate for resolution on summary judgment.

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to expire in one year; one would expect some indication of the

need for future licensing if the custom programs were to

become unusable after the TSA expired. 

[8] The OVA submitted by Gagnon, but never executed,

did not evidence any intent by Gagnon to limit AMS’s use of

the programs. Gagnon argues that the clause, “Client agrees

that [intellectual property] produced by Contractor while performing services under this agreement will be the property of

Contractor and will be licensed to Client on a non-exclusive

basis as will any copyrights, patents, or trademarks obtained

by Contractor while performing services under this agreement

. . . ,” means that his license was conditioned on a continuing

relationship with AMS. We disagree. The clause “while performing services under this agreement” modifies the production of the intellectual property and the obtainment of

copyrights. Furthermore, the contract then expressly stated,

“Contractor will allow Company non-exclusive, unlimited

licensing of software developed for Company,” eliminating

any ambiguity. 

[9] Moreover, Gagnon and AMS did not discuss a licensing

agreement until their relationship was ending. Gagnon delivered the software without any caveats or limitations on

AMS’s use of the programs. Even if Gagnon and his employees maintained the software and had primary control over the

code, they programmed on-site at AMS on AMS computers

to which key AMS personnel had access—conduct that does

not demonstrate an intent to retain sole control. The first time

Gagnon expressed a contrary intent was in his letter to Akerstein, sent after AMS had decided to terminate Gagnon’s services. 

Finally, the splash screens containing the copyright notice

do not negate AMS’s license to use the product. The splash

screens speak to Gagnon’s intent to retain copyright ownership over the programs, not to his intent to grant or not grant

a license as would be his right as the copyright owner. 

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[10] Gagnon had to express an intent to retain control over

the programs and limit AMS’s license if he intended to do so.

A belated statement that the programs could not be used after

Gagnon’s departure, made after the termination decision and

well after the creation and delivery of the programs for which

substantial sums were paid, was not sufficient to negate all

other objective manifestations of intent to grant AMS an

unlimited license. 

4. Scope and Irrevocability of Implied License

[11] For the reasons outlined, we hold that Gagnon granted

AMS an unlimited, nonexclusive license to retain, use, and

modify the software. Furthermore, because AMS paid consideration, this license is irrevocable. See Lulirama Ltd., Inc. v.

Axcess Broad. Servs., Inc., 128 F.3d 872, 882 (5th Cir. 1997);

3-10 Melville B. Nimmer & David Nimmer, Nimmer on

Copyright § 10.02[B][5] (2008). “[A] nonexclusive license

supported by consideration is a contract.” Lulirama, 128 F.3d

at 882; see also Effects, 908 F.2d at 559 n.7 (an implied

license is a “creature of law, much like any other implied-infact contract”). If an implied license accompanied by consideration were revocable at will, the contract would be illusory.

Lulirama, 128 F.3d at 882-83. 

[12] We affirm the district court’s grant of summary judgment on the copyright infringement claim. 

B. Trade Secret Misappropriation Claim 

[13] Gagnon contends that even if AMS obtained an

implied license, it still misappropriated his trade secrets that

were contained in the programs’ source code by hiring away

his employees in violation of their employment agreements.

Gagnon correctly asserts that source code may contain protected trade secrets even when the software is licensed for use

to another party. See, e.g., S.O.S, 886 F.2d at 1090. Even

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assuming a trade secret exists, however, Gagnon’s argument

fails. 

Gagnon relies on S.O.S., Inc. v. Payday, Inc., which

explained that a licensee of a computer program may misappropriate a trade secret if the trade secret was unlawfully

acquired. Id. His reliance on this case is misplaced. In S.O.S.,

the licensor, S.O.S., granted to Payday, its licensee, a limited

license for use only and “neither party expected Payday to be

able to gain access to the source code itself.” Id. at 1088.

Thus, the existence of this limited license failed to settle

S.O.S.’s trade secret misappropriation claim because an issue

of fact remained as to whether Payday was entitled to possess

an unprotected copy of the code that gave it access to the

source code. Id. at 1090. 

[14] Here, however, having concluded that Gagnon granted

AMS an implied, unlimited license to the programs software,

we conclude that AMS could not have misappropriated

Gagnon’s trade secret. Unlike Payday in S.O.S., AMS was

legally entitled to use and modify the source code; the license

included access to any trade secret embodied therein. 

Furthermore, having concluded that AMS was entitled

access to this trade secret, we also conclude that the district

court did not err in holding that the non-competition agreements with Gagnon’s employees were invalid. Under California law, non-competition agreements are unenforceable unless

necessary to protect an employer’s trade secret. See Cal. Bus.

& Prof. Code § 16600 (voiding any contract that restrains

anyone from engaging in a lawful profession, trade, or business); Edwards v. Arthur Andersen LLP, 189 P.3d 285, 288

(Cal. 2008) (Cal. Bus. & Prof. Code § 16600 invalidates noncompete contracts unless they are necessary to protect an

employer’s trade secrets); Application Group, Inc. v. Hunter

Group, Inc., 72 Cal. Rptr. 2d 73, 85 (Ct. App. 1998) (same).

Because the non-competition agreements were no longer necASSET MARKETING v. GAGNON 12531

Case: 07-55217 09/09/2008 ID: 6639106 DktEntry: 36-1 Page: 18 of 19
essary to protect Gagnon’s trade secrets against AMS, they

were no longer enforceable in this case. 

[15] We affirm the district court’s grant of summary judgment on the trade secret misappropriation claim. 

C. Ex Parte Application 

Finally, the district court did not abuse its discretion in

denying Gagnon’s motion for an order denying or continuing

summary judgment and to file written objection to evidence.

As the district court properly reasoned, the additional evidence was not necessary for Gagnon to oppose the summary

judgment motion. In fact, Gagnon was apparently able to craft

an opposition to summary judgment without this discovery

two weeks prior to his motion, and failed to raise an objection

at that time.

CONCLUSION

For the foregoing reasons, the district court’s grant of summary judgment is 

AFFIRMED. 

12532 ASSET MARKETING v. GAGNON

Case: 07-55217 09/09/2008 ID: 6639106 DktEntry: 36-1 Page: 19 of 19