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Tartan Software, Inc. v. DRS Sensors & Targeting Systems

October 11, 2007

TARTAN SOFTWARE, INC., PLAINTIFF,
v.
DRS SENSORS & TARGETING SYSTEMS, INC., FORMERLY KNOWN AS DRS OPTRONICS, INC., DEFENDANT.



The opinion of the court was delivered by: Judge Nora Barry Fischer

MEMORANDUM OPINION

I. INTRODUCTION

The present case is a breach of contract action arising out of a two licensing agreements. The first agreement, dated July 10, 2000, is between Defendant DRS Sensors & Targeting Systems, Inc. (the "Defendant") and Texas Instruments Incorporated ("Texas Instruments") ("the DRS Agreement").*fn1 (Document No. 15-1, "Complaint" at ¶ 17). Under the DRS Agreement, Tartan Software, Inc. (the "Plaintiff") alleges that the Defendant was granted a non-exclusive license to sublicense certain technology ("Tartan Ada Runtime Objects") in exchange for a sublicense fee (the "Runtime Object Sub-License Fee"). Id. at ¶ 22. The Plaintiff alleges that the license included a version of the Tartan Ada Development System ("TADS"). Id. at ¶ 21. The DRS Agreement also included a one-year maintenance and support plan, which the Plaintiff alleges the Defendant has renewed on an annual basis since 2000. Id. at ¶¶ 19-20.

The second agreement, dated September 3, 2003, is a product license and transfer agreement between Texas Instruments and Jeffrey Farbacher ("Farbacher") t/d/b/a/ Tartan Software, Inc. ("the Farbacher Agreement"). Id. at ¶ 24. The Plaintiff alleges that Farbacher subsequently assigned his rights under the Farbacher Agreement to the Plaintiff. Id. at ¶ 25. Accordingly, pursuant to the Farbacher Agreement, the Plaintiff claims that it obtained the worldwide license to use, support, maintain and modify TADS and to market, distribute and sublicense TADS products. Id. at ¶ 26. The Plaintiff also claims that pursuant to the Farbacher Agreement, Texas Instruments transferred to the Plaintiff all of the rights and claims that Texas Instruments had against third parties based on TADS licensing and/or maintenance fees owed to Texas Instruments. Id. at ¶ 27. Additionally, the Plaintiff claims that under the Farbacher Agreement, the Plaintiff is now responsible for collecting licensing and maintenance fees owed to Texas Instruments by third parties under prior and existing contracts for TADS-related products. Id. at ¶ 28.

Pending before this Court is the Defendant's Motion to Dismiss Plaintiff's First Amended Complaint ("Defendant's Motion"). [DE 16]. The Defendant moves to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1) because, the Defendant argues, the Plaintiff lacks standing to bring this claim. The Defendant argues that there is no privity of contract between the Defendant and the Plaintiff under the DRS Agreement, and that the Plaintiff has no enforceable or binding assignment from Texas Instruments that would allow the Plaintiff to stand in the place of Texas Instruments under the DRS Agreement. The Defendant also claims the Plaintiff lacks standing because the Plaintiff has failed to show that the Farbacher Agreement was assigned to the Plaintiff or that the Plaintiff has any right to pursue contract claims for unpaid fees allegedly owed by the Defendant to Texas Instruments.

In addition, the Defendant moves to dismiss the allegations set forth in the Plaintiff's complaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted, because the Plaintiff's causes of action are preempted by the Copyright Act.

For the reasons set forth below, the Defendant's Motion [DE 16] is DENIED.

II. PROCEDURAL HISTORY

The Plaintiff initially filed its complaint in this action on August 29, 2006. (Document No. 1). Subsequently, on November 8, 2006, the Defendant moved to dismiss the Plaintiff's complaint in its entirety. (Document No. 4). On November 28, 2006, the Plaintiff filed its First Amended Complaint (Document No. 15) and consequently, on December 13, 2006, the Court entered a text-only order denying the Defendant's Motion to Dismiss as moot. On December 15, 2006, the Defendant filed a Motion to Dismiss Plaintiff's First Amended Complaint (Document No. 16) which was fully briefed as of February 2, 2007. (See Document No. 21). On April 6, 2007, this case, which was first assigned to Judge Hardiman, was transferred to Judge Fischer following Judge Hardiman's elevation to the Court of Appeals for the Third Circuit. On June 19, 2007, this Court held a case management conference during which the parties discussed their agreement to enter into mediation. On August 29, 2007, the parties mediated this case, however, settlement was not reached. (See Document No. 34). Accordingly, the Court requested that the parties file with the Court briefs discussing any changes in the case law since Defendant's Motion and subsequent briefs were filed. (Text Only Order of September 4, 2007). On September 18 and 19, 2007, the parties notified the Court that the case law with respect to Defendant's Motion and the Plaintiff's response thereto remained current. (Document Nos. 35 & 37). Having received such statements from the parties, the Court now considers the Defendant's Motion.

III. LEGAL ANALYSIS

As set forth above, the Defendant moves to dismiss the Plaintiff's complaint pursuant to Rule 12(b)(1), challenging this court's subject matter jurisdiction over this action by claiming the Plaintiff lacks standing to sue, and pursuant to Rule 12(b)(6), arguing that the Plaintiff fails to state a claim upon which relief can be granted, because the Plaintiff's claims are preempted by the Copyright Act. When a movant invokes multiples bases for a motion to dismiss, the court should consider the Rule 12(b)(1) challenge first because all other defenses will become moot if the court must dismiss the complaint for lack of subject matter jurisdiction. Hoyoung Song v. Klapakas, 2007 WL 1101283, *2 (E.D. Pa. 2007); (citing In re Corestates Trust Fee Litig., 837 F. Supp. 104, 105 (E.D. Pa. 1993)). Accordingly, the Court will first consider the Defendant's challenge to this Court's subject matter jurisdiction pursuant to Rule 12(b)(1).

A. Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(1)

In reviewing a motion to dismiss pursuant to Rule 12(b)(1), the court must distinguish between facial attacks and factual attacks. Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). A facial attack challenges the sufficiency of the pleadings, and the court must accept the Plaintiff's allegations as true. Turicentro v. Am. Airlines, 303 F.3d 293, 300 (3d Cir. 2002). In contrast, when considering a factual attack, the court does not accord a plaintiff's allegations any presumption of truth. In a factual attack, the court must weigh the evidence relating to jurisdiction, with discretion to allow affidavits, documents, and even limited evidentiary hearings. United States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007).

In this case, there is disagreement among the parties as to the nature of the motion to dismiss; the Defendant characterizes the motion as a factual attack while the Plaintiff maintains that the attack is facial. In its motion to dismiss, the Defendant does not challenge the sufficiency of the pleadings; rather, the Defendant claims that because there is no evidence of a valid assignment from Farbacher to the Plaintiff and because the language of the Farbacher Agreement does not entitle Farbacher or the Plaintiff to seek damages from the Defendant, the Plaintiff lacks standing. Accordingly, the Court finds that the Defendant ...


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