IP Law Daily, COPYRIGHT—D. N.J.: Software infringement claim pleads conclusions, not facts to support infringment, (May 16, 2025)

By Matthew Hersh, J.D.

A breach of contract claim fails for the same reason.

A software company’s allegations that one of its licensees exceed the scope of its license by installing its software on computers with multiple CPUs would fail because the complaint lacked specific factual allegations to back up its “naked assertions,” the federal court for New Jersey has held. The court, in granting the licensee’s motion to dismiss, tossed out both a copyright infringement claim as well as a breach of contract claim as a result of the pleading failure (Envoy Technologies, Inc. v. Cubic Corp., No. 2:24-cv-00220-SRC-CLW (D.N.J. May 15, 2025)).

The lawsuit was brought by Envoy Technologies, a software company and owner by assignment of a set of computer programs, known as XIPC, that gives users a toolset for the development of multitasking and distributed enterprise applications. The lawsuit takes aim at Cubic Corporation, a company that develops technology solutions in the field of transportation. Beginning in 2002, the complaint alleges, Cubic licensed the software from Envoy under terms that limited it to use on single-CPU computers and that required Cubic’s approval before sublicensing it to customers. After coming to believe in 2021 that Cubic was exceeding the terms of its license, however, Envoy sued Cubic for copyright infringement and breach of contract.

The lawsuit has already been through one initial round in the court. Envoy filed its initial complaint, which it later amended, in January of 2024. In November of that year, the court dismissed the complaint on the grounds that it made only “conclusory statements” to support its claims. Envoy filed a second amended complaint a month later. Cubic moved to dismiss that claim as well, leading to this opinion.

Breach of contract. The court began by dismissing the breach of contract claims. Envoy alleged that Cubic breached its contract—and various amendments and extensions to it over the years—by using the software on multi-CPU computers. But the company “simply ha[d] not plead facts to support” its breach claim, the court found. Rather, the court noted, the complaint was “replete with conclusory allegations” that Cubic installed and used the XIPC software on multi-CPU computers in its development environment. But the company pled no facts to support such a conclusion, the court observed. For example, the court noted, the company alleged no facts to describe the computers that Cubic used, what computers constituted single-CPU versus multi-CPU systems, or when any alleged breach occurred. The company’s “bare assertions,” the court concluded, “amount to nothing more than a formulaic recitation of the elements of a breach of contract claim.” The claim would fail.

The same fate would befall the claim about unauthorized sublicenses. The complaint alleged that Cubic delivered XIPC software to customers that then used the software on unlicensed computers. But the complaint contained no facts supporting the “naked assertion” that Cubic did so—nor did it contain facts supporting the conclusion that Cubic “knew” its customers would use XIPC beyond the scope of the license. Thus, the Second Amended Complaint, like the first, the court concluded, “still fail[ed] to set forth a plausible claim that [Cubic] breached this section” of its agreements.

Copyright infringement. The copyright infringement claim failed for the same reasons. Envoy’s claim was based, as with its contract claim, on the allegation that Cubic installed the XIPC software on computers with multiple CPUs. But here, as with the contract claim, the court found, the complaint did not describe the computers Cubic used that allegedly infringed the copyright, “nor explain[ed] when or how the allegedly infringing computers were used other than through vague and conclusory statements.” This claim, too, would fail.

Claims for secondary liability failed for the same reasons. Envoy claimed that Cubic was vicariously liable for the alleged infringement of its customers because it profited from, and had a right to control, that infringement. But Envoy did not allege sufficient facts to allege that any customers had infringed at all, the court found. Envoy’s claim that Cubic induced its customers to infringe failed for the same reason.

The Case is No. 2:24-cv-00220-SRC-CLW.

Judge: Chesler, S.

Attorneys: Jeffrey I. Kaplan (Kaplan Breyer Schwarz, LLP) for Envoy Technologies, Inc. Kathleen N. Fennelly (Carpenter LLP) for Cubic Corp.

Companies: Envoy Technologies, Inc.; Cubic Corp.

Cases: Copyright TechnologyInternet NewJerseyNews