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Cincom Systems, Inc. v. Novelis Corp.

January 12, 2007

CINCOM SYSTEMS, INC., PLAINTIFF,
v.
NOVELIS CORPORATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: District Judge Susan J. Dlott

Order Denying Defendants' Motion for Summary Judgment and Granting in Part Plaintiff's

Motion for Summary Judgment

This matter is before the Court on the parties' cross-motions for summary judgment.*fn1

For the reasons that follow, the Court denies Defendants' motion for summary judgment and grants in part Plaintiff's motion for summary judgment.

I. BACKGROUND

The issue in this lawsuit is whether the direct merger of Alcan Aluminum Corporation ("Alcan Ohio") into Alcan Corporation, which then merged into its subsidiaries, resulted in an impermissible transfer of a non-transferable computer software license agreement (the "License Agreement") granted to Alcan Ohio by Cincom Systems ("Cincom"). Cincom granted Alcan Ohio a license to use Cincom's SUPRA(c) and MANTIS(c) software products in July 1989. Alcan Ohio, d/b/a Alcan Rolled Products Co., used the software on computers located at its rolled products manufacturing plant in Oswego, New York. ("Software License Agreement Schedules 8, 9," Ex. B to Doc. 37 Ex. 2.) The License Agreement prohibits the transfer of rights under the agreement without Cincom's express written approval.

In July 2003, Alcan Ohio merged into its corporate affiliate, Alcan Corporation.*fn2 (Defendants' Stipulation of Facts ("Stipulation"), Doc. 37 Ex. 3 p. 1 ¶ 5; Declaration of C. Aley, Doc. 29 Ex. B ¶ 9.) Alcan Ohio, the licensee of the Cincom software, did not survive the merger. (Stipulation p. 1 ¶ 6; Aley Dec. ¶ 8.) Alcan Corporation subsequently merged into its three Texas subsidiaries: Alcan Products Corp., Alcan Primary Products Corp., and Alcan Fabrication Corp. (Stipulation p. 1 ¶ 3; p. 2 ¶ 2.)*fn3 The aluminum rolled products business of the former Alcan Ohio was assumed by the Alcan Fabrication Corp. subsidiary. (Aley Dec. ¶ 9.) In January 2005, Alcan Fabrication Corp. changed its name to Novelis Corporation ("Novelis"). (Stipulation p. 1 ¶ 3; p. 2 ¶¶ 2-4.) Novelis continues to use Cincom's SUPRA(c) and MANTIS(c) software on computers at the Oswego manufacturing plant. At no time did Alcan Ohio, Alcan Corporation, or Novelis seek or obtain Cincom's express written approval to transfer the License Agreement prior to these mergers.

Cincom contends that the above-described series of events resulted in an impermissible transfer and, accordingly, brought this lawsuit alleging federal copyright infringement claims against Novelis and Alcan (hereafter "Defendants").*fn4 Cincom moves the Court for summary judgment in its favor on liability and actual damages. Defendants argue that the mergers did not result in a transfer of the license and, thus, did not violate the license agreement's prohibition against transfers. They also move for summary judgment in their favor.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). On a motion for summary judgment, the movant has the burden of showing that no genuine issues of material fact are in dispute, and the evidence, together with all inferences that can permissibly be drawn therefrom, must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87 (1986). The moving party may support the motion for summary judgment with affidavits or other proof or by exposing the lack of evidence on an issue for which the nonmoving party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).

In responding to a summary judgment motion, the nonmoving party may not rest upon the pleadings but must go beyond the pleadings and "present affirmative evidence in order to defeat a properly supported motion for summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986). The nonmoving party "must set forth specific facts showing there is a genuine issue for trial." Fed. R. Civ. P. 56(e). The task of the Court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Liberty Lobby, 477 U.S. at 249.

III. ANALYSIS

A. Applicable Law

As a preliminary matter, the Court must resolve whether state or federal law governs the issue of whether the series of mergers resulted in a transfer of the License Agreement from the licensee to Novelis. Cincom asserts that because the issue is one concerning copyright, federal law applies. Defendants, conversely, contend that the issue is one of contract interpretation and that Ohio law should ...


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