Case 4:17-cv-07025-SBA Document 102 Filed 12/27/18 Page 1 of 20 1 2 UNITED STATES DISTRICT COURT 3 FOR THE NORTHERN DISTRICT OF CALIFORNIA 4 OAKLAND DIVISION 5 6 STARDOCK SYSTEMS, INC., Case No: C 17-07025 SBA 7 Plaintiff, ORDER DENYING MOTION FOR 8 PRELIMINARY INJUNCTION vs. 9 Dkt. 56 PAUL REICHE III and ROBERT 10 FREDERICK FORD, 11 Defendants. 12 AND RELATED COUNTERCLAIM. 13 14 This is a copyright action between Plaintiff and Counter-Defendant Stardock 15 Systems, Inc. (“Stardock” or “Plaintiff”), Defendants and Counter-Claimants Paul Reiche 16 III (“Reiche”) and Robert Frederick Ford (“Ford”) (collectively “Defendants”), and 17 Counter-Defendants GOG Limited and GOG Poland sp. z.o.o (“GOG”) and Valve 18 Corporation d/b/a Steam (“Valve”) (collectively “Counter-Defendants”), regarding a 19 videogame franchise known as “Star Control.” 20 Reiche and Ford created the concept for Star Control, and, in partnership with 21 Accolade, Inc. (“Accolade”), developed and published a trilogy of videogames under that 22 name in the 1990s. Pursuant to the written agreement of those parties, the intellectual 23 property (“IP”) rights in Star Control were divided, such that Reiche and Ford held some of 24 the rights and Accolade held others. In 2013, Stardock acquired Accolade’s rights in the 25 Star Control IP and began developing a new game titled Star Control: Origins (“Origins”). 26 Reiche and Ford contend that Origins (as well as promotional content associated therewith) 27 infringes upon their rights in the Star Control IP. Stardock disputes the validity of Reiche 28 and Ford’s claim to ownership of any Star Control IP. Case 4:17-cv-07025-SBA Document 102 Filed 12/27/18 Page 2 of 20 1 GOG and Valve operate online distribution platforms where videogames are 2 purchased and played. Upon the release of promotional content for Origins, Reiche and 3 Ford sent GOG and Valve notifications of infringement pursuant to the Digital Millennium 4 Copyright Act (“DMCA”), 17 U.S.C. § 512(c). The DMCA shields online service 5 providers from liability for copyright infringement, provided that they comply with the 6 statute’s “notice and takedown” process. Specifically, if a copyright holder sends a 7 notification of infringement, a service provider must remove allegedly infringing content. 8 If the affected subscriber files a counter-notification, the service provider must replace the 9 content, unless the copyright holder files an action seeking a court order to restrain the 10 subscriber. In response to Reiche and Ford’s DMCA notifications, GOG and Valve 11 removed Stardock’s promotional content from their platforms. Stardock filed a two 12 counter-notifications. Given the pendency of this action, however, the content was not 13 replaced by GOG or Valve. 14 Stardock recently announced the release of Origins. Stardock anticipates that 15 Reiche and Ford will send DMCA notices to GOG and Valve regarding Origins, resulting 16 in its removal from those distribution platforms. Consequently, Stardock filed the instant 17 motion for preliminary injunction to enjoin Reiche and Ford from sending further DMCA 18 notices directed to material that is the subject of the present ligation and, in particular, 19 Origins. Having read and considered the papers filed in connection with this matter and 20 being fully informed, the Court hereby DENIES the motion, for the reasons stated below. 21 The Court, in its discretion, finds this matter suitable for resolution without oral argument. 22 See Fed. R. Civ. P. 78(b); N.D. Cal. Civ. L.R. 7-1(b). 23 I. BACKGROUND 24 A. FACTUAL BACKGROUND1 25 1. The Classic Star Control Games 26 In 1988, Reiche created the concept for Star Control, a space exploration video game 27 1 The factual background of this action is expansive. Only those facts essential to 28 the resolution of the instant motion are set forth. - 2 - Case 4:17-cv-07025-SBA Document 102 Filed 12/27/18 Page 3 of 20 1 franchise that involves various alien species with unique names, appearances, ships, 2 weapons and backstories. Reiche Decl. ¶¶ 2, 5, 7, 8, 9, Dkt. 64-1. In October of that year, 3 Reiche and Accolade executed a License Agreement whereby they agreed to develop and 4 publish three Star Control video games. Id. ¶ 3 & Ex. 1. Accolade was granted an 5 exclusive license to publish the games in exchange for the payment of an advance and 6 royalties. Id., Ex. 1 § 3.12 Under the License Agreement, Reiche retained ownership of the 7 copyright and all other proprietary rights in the work, while Accolade owned the title and 8 any trademarks adopted and used in the marketing of the work. Id. §§ 11.4, 11.5. 9 Reiche and his long-time business partner, Ford, created and developed Star Control 10 (“Star Control I”), which Accolade published in 1990. Id. ¶ 4. They then created and 11 developed Star Control II: The Ur-Quan Masters (“Star Control II”), which Accolade 12 published in 1992. Id. ¶ 6. Reiche and Ford were the “primary authors of most of the 13 creative materials incorporated into both Star Control I and II, including the game design, 14 story art, sound effects, software code, and other materials.” Id. ¶ 11. Specifically, Reiche 15 “created the names, initial concepts, written descriptions, and sketches of every character in 16 the game, as well as their history, physical and cultural details, and conversation design and 17 text specification.” Id. ¶ 12.3 As far as Defendants recall, Ford “wrote all of the code for 18 both Star Control I and II.” Id. ¶ 13. Star Control I was printed with “© 1990 Paul Reiche 19 III & Fred Ford,” and Star Control II was printed with “© 1992 Paul Reiche III & Fred 20 Ford.” Id. ¶ 16. Later, in December 2017 and April 2018, Reiche and Ford obtained U.S. 21 Copyright Registration No. PA 2-071-496 and No. PA-2-107-340, respectively, for the 22 computer program code and audiovisual content of Star Control II. Id. ¶ 19. 23 24 2 The License Agreement conferred a perpetual license to Accolade for as long as 25 each work or derivative work continued to generate royalties in an amount of $1,000 per year. Reiche Decl., Ex. 1 § 2.2. 26 3 Reiche and Ford hired other individuals to assist in the development of Star 27 Control I and II. Reiche Decl. ¶ 14. Defendants aver that “everyone who contributed creative content to the games agreed to assign any copyrights to their material to [Reiche 28 and Ford] at that time, and have since signed written agreements confirming this.” Id. - 3 - Case 4:17-cv-07025-SBA Document 102 Filed 12/27/18 Page 4 of 20 1 In 1995, Reiche and Accolade executed Addendum No. 2 to the License Agreement 2 to allow Accolade to develop a third Star Control game without Reiche and Ford’s 3 involvement. Id. ¶ 20 & Ex. 5. Pursuant to Addendum No. 2, Reiche granted Accolade the 4 right to use and modify “all characters, names, likenesses, characteristics, and other 5 intellectual property rights pertaining to Star Control I and Star Control II in which [he] 6 has an ownership interest” in exchange for the payment of an advance and royalties. Id., 7 Ex. 5 § 2. Accolade published Star Control III: The Kessari Quadrant (“Star Control III”) 8 in 1996. Id. ¶ 20. Pursuant to the License Agreement, Accolade owned the copyright and 9 all other proprietary rights in Star Control III, subject to Reiche’s copyrights in Star 10 Control I and II. Id., Ex. 1 § 11.4. In 1997, Accolade obtained U.S. Copyright Registration 11 No. PA 799-000 for Star Control III, covering its computer code and audiovisual content. 12 Weikert Decl. ¶ 3, Ex. A at ¶ 42 & Ex. H, Dkt. 56-7. It also obtained U.S. Trademark 13 Registration No. 2,046,036 for the “Star Control” mark. Id. ¶ 31 & Ex. E. 14 Reiche, Ford, and Accolade entered into further negotiations and agreements, but no 15 other Star Control sequels were released. Id. ¶¶ 22-27. By 2000, Accolade (and its 16 successors) stopped paying Reiche and Ford royalties for the classic Star Control games 17 (i.e., Star Control I, II, and III). Id. ¶ 27. Thus, according to Reiche and Ford, the License 18 Agreement and all subsequent addenda expired and terminated by April 1, 2001. Id. 19 2. Reiche and Ford’s New Game 20 In 2002, Reiche and Ford released an open source edition of Star Control II, which 21 was free to use in a non-commercial context. Reiche Decl. ¶ 29. Because Reiche and Ford 22 could not obtain the right to use the Star Control mark, the game was released as The Ur- 23 Quan Masters. Id. According to Reiche and Ford, they had long planned to develop a 24 sequel to The Ur-Quan Masters. Id. ¶ 61. On October 9, 2017, Reich and Ford publicly 25 announced their plan to develop a sequel, titled Ghosts of the Precursors. Id. ¶ 62. 26 3. Stardock’s Acquisition and New Game 27 In 1999, Atari, Inc. (“Atari”) acquired Accolade. Wardell Decl. ¶ 3, Dkt. 56-1. In or 28 about 2013, Atari filed for bankruptcy and put up for sale its assets, including the “Star - 4 - Case 4:17-cv-07025-SBA Document 102 Filed 12/27/18 Page 5 of 20 1 Control Franchise,” described as Star Control III. Steinberg Decl. ¶ 2, Ex. 17 at 49, Dkt. 2 64-18. In July 2013, Stardock and Atari executed an asset purchase agreement, whereby 3 Stardock paid $300,000 for Atari’s rights in the Star Control IP.