Ford Motor Co. v. Autel US Inc., No.14-13760 (E.D. Mich. Sept. 30, 3015)
Apart from cars and trucks, Ford sells automotive repair products. Among them is Ford’s Integrated Diagnostic System (IDS system) which diagnoses potential problems with Ford vehicles and guides their service and repair. The hardware components of the IDS system include a 16-pin diagnostic link which sends information from the vehicle to the on-board computer system. The software component receives information from the hardware and produces diagnoses and recommends repairs based on the information it receives.
The IDS software contains various data compilations. Ford alleged that some of the compilations within the IDS software were trade secrets. One compilation was the “FFData file,” allegedly a trade secret protected through encryption and obfuscation technology (the latter being designed to defeat reverse engineering by making the code obscure to any unauthorized attempted reverse engineer). Autel allegedly created a program to circumvent Ford’s security measures and access the FFData file without authorization, then inserted the FFData file into a vehicle diagnosis and repair product that competes with Ford’s IDS System.
Ford also alleged trademark infringement, because a screenshot of the Autel DS708’s electronic menu screen shows the Ford Oval alongside the logos of Chrysler and General Motors on the “USA” menu option.
Copyright: In the Sixth Circuit, pleading copyright infringement requires greater particularity than usual because of the potential for harassment suits. Ford’s copyright registration for a data compilation, CALID_VIDQID_REC, presumptively established its originality. But Ford didn’t adequately plead copying of protectable elements—the copyright in a factual compilation is thin. Ford alleged that “detailed technical analysis of data files stored on Autel’s DS708 device shows that the FFData file is duplicated on Autel’s DS708 device.” This didn’t necessarily mean that the selection, coordination, and arrangement of the data, which was all that Ford could protect, were copied on Autel’s device. General allegations of infringement that don’t identify specific infringing materials are insufficient to state a claim under Rule 12(b)(6), and the plaintiff needs to describe the manner in which the defendant’s work infringes.
Ford’s § 1201 claim was also inadequately pled. Ford apparently alleged violations of §§ 1201(a)(1) and 1201(a)(2): circumvention of access controls and trafficking in access control circumvention devices.
The court first, mistakenly, accepted Autel’s argument that Ford failed to allege that it owned a valid copyright at the time of the alleged circumvention, because Ford’s registration of its compilation was post-circumvention. Registration, of course, is not a condition of validity, though Ford apparently didn’t offer any argument on this point. Lexmark said that §1201 requires a plaintiff “to show that the ‘technological measure’ at issue “controls access to a work protected under this title,” which means the claimed work has to be original enough to protect (but not registered).
Second, Autel argued that Ford failed to allege that Autel’s circumvention was for an improper purpose. The Sixth Circuit has stated that “the DMCA's anti-circumvention provision was designed to support the efforts of copyright owners to protect their works from piracy behind digital walls such as encryption codes or password protections by banning the use, manufacture, or sale of technologies that circumvent digital copyright controls,” and adopted Judge Merritt’s concurrence in Lexmark finding that
The legislative history of the DMCA makes clear that the anti- circumvention provision is not intended to function as a comprehensive ban on all circumvention technologies; rather, its purpose is to prevent those technologies from being used as a tool for copyright infringement and to provide remedies for copyright holders against individuals and entities who facilitate the widespread unauthorized reproduction of copyrighted works by making such technologies available to the public.
That means plaintiffs must plead and prove “a purpose to pirate on the part of defendants.” This the complaint did not allege. Thus the court didn’t reach Autel’s third argument, which was that its circumvention was permissible reverse engineering.
The trademark infringement claims, however, survived (they didn’t need particularity, though the abusive litigation concern seems just as large with trademark as with copyright). Ford argued that Autel’s use of its logos and listing of the program “Ford V2.10” under the Ford Oval in Autel’s DS708 device. Autel argued that source confusion was unlikely because it was only using the Ford Oval, along with the GM Logo and the Chrysler Logo, so that the DS708’s users could choose the correct diagnostic program that will be compatible with their respective vehicle manufacturer. The court found the allegations sufficient: Autel’s use of Ford’s allegedly world-famous logo was “on its menu screen,” and it used the actual logo with distinctive shape, color and lettering. Plus, post-sale confusion is actionable in the Sixth Circuit. Nor could fair use be evaluated on a motion to dismiss. (The court mashed up descriptive and nominative fair use, quoting the descriptive fair use test but apparently understanding that the use was, according to Autel, referential/nominative, citing Volkswagen AG v. Dorling Kindersley Pub., Inc., 614 F. Supp. 2d 793, 800 (E.D. Mich. 2009) (“the Court finds that the VW EMBLEM is used only to describe the actual vehicle. Accordingly, the claim is barred by the fair use defense as a matter of law.”).)
Ford’s state law trademark claim survived, as did its claim under the Michigan Uniform Trade Secrets Act. I would have assumed that reverse engineering was a lawful means of acquiring the relevant information even if Ford tried to block the reverse engineering. Thus, though Ford didn’t need to plead with particularity what about its program was a trade secret, I don’t understand how it pled an improper method of acquisition. Ford’s state law unjust enrichment claim was, however, based solely on Autel’s alleged misappropriation of Ford’s trade secrets and thus was preempted by the state trade secrets statute.