IP Law Daily, COPYRIGHT—N.D. Cal.: Class action plaintiffs interlocutory appeal greenlighted in AI case, (Sep 30, 2024)

By Linda Panszczyk, J.D.

Here, to the court’s knowledge, no court of appeal has ruled on the issue of whether DMCA Section 1202(b) imposes an identicality requirement, and district courts have reached differing conclusions on this issue.

In a case involving a class action lawsuit by the owners of copyright interests against Defendants GitHub, Inc., Microsoft, and others involving AI technology, after the court considered Plaintiffs’ motion to certify the court’s June 24, 2024, order dismissing their Section 1202(b) claims, the court granted Plaintiffs’ motion to seek interlocutory appeal. The court also granted Plaintiffs’ request for a stay of trial court proceedings while the order certifying interlocutory appeal is reviewed by the Ninth Circuit (Doe v. Github, Inc., No. 4:22-cv-06823-JST (N.D. Cal. Sept. 27, 2024)).

Background. On November 3, 2022, Plaintiffs brought a class action complaint on behalf of themselves, and all others similarly situated, against Defendants GitHub, Inc. and others for violation of the Digital Millennium Copyright Act (DMCA); violation of the Lanham Act; as well as state law claims, breach of contract, and others.

Plaintiffs and the proposed class are owners of copyright interests in materials made available publicly on GitHub that are subject to various licenses containing conditions for use of those works. GitHub is a company founded in 2008 by a team of open-source enthusiasts. At the time, GitHub’s stated goal was to support open-source development, especially by hosting open-source source code on the website github.com. Over the next 10 years, GitHub, based on these representations succeeded wildly, attracting nearly 25 million developers. On October 26, 2018, Microsoft acquired GitHub for $7.5 billion. Microsoft invested $1 billion in OpenAI LP in July 2019 at a $20 billion valuation. In 2020, Microsoft became exclusive licensee of OpenAI’s GPT-3 language model, and, in 2021, Microsoft began offering GPT-3 through its Azure cloud-computing platform. Microsoft obtained a partial ownership interest in OpenAI in exchange for its $1 billion investment. As OpenAI’s largest investor and largest service provider—specifically in connection with Microsoft’s Azure product—Microsoft exerted considerable control over OpenAI. On August 10, 2021, OpenAI debuted its Codex product, which converts natural language into code and is integrated into Copilot.

Among other things, the Plaintiffs' complaint alleged that Defendants stripped Plaintiffs’ and the Class’s attribution, copyright notice, and license terms from their code in violation of the Licenses and Plaintiffs’ and the Class’s rights. Defendants used Copilot to distribute the now-anonymized code to Copilot users as if it were created by Copilot.

In a January 22, 2024 order, the U.S. District Court for the Northern District of California granted in part and denied in part, both Plaintiffs' and Defendants' Motions to Dismiss. In particular, Plaintiffs’ state law claims for intentional and negligent interference with prospective economic relations, unjust enrichment, negligence, and unfair competition are dismissed with prejudice. Plaintiffs then filed a Second Amended Complaint and, in an April 15, 2024 order, the court denied the Plaintiffs' motion for reconsideration.

On June 24, 2024, the court's order granted in part and denied in part Defendants' motion to dismiss. In particular, the court granted Defendants' motion to dismiss Plaintiffs' DMCA 1202(b) claim, ruling that Plaintiffs again failed DMCA Section 1202(b)’s identicality requirement. The court also noted that Plaintiffs’ opposition spent much time arguing that identicality is not an element of a Section 1202(b) claim and that, having twice addressed this identicality issue already, the court said it would not revisit it at length. The Plaintiffs then filed a motion to seek interlocutory appeal of this June 24, 2024, order.

DMCA Sec. 1292 (b). Under the final judgment rule, the courts of appeal ordinarily have jurisdiction only over final decisions of the U.S. district courts. However, under 28 U.S.C. § 1292(b), if a U.S. district judge court judge, in making an order in a civil action that is not otherwise appealable, is of the opinion that the order (1) involves a controlling question of law as to which there is substantial ground for difference of opinion and that (2) an immediate appeal from the order may materially advance the ultimate termination of the litigation, the judge will indicate in writing in the order. The appellate court which would have jurisdiction of an appeal of such action may then, in its discretion, permit an appeal to be taken from such order. Section 1292(b) certification requires the district court to expressly find in writing that all of the Section 1292(b) requirements are met. Because Section 1292(b) is a departure from the normal rule that only final judgments are appealable, it must be construed narrowly, applied sparingly, and only in exceptional cases.

Here, the Plaintiffs met the 1292(b) requirements, said the court, which granted the Plaintiffs' motion.

First, the dismissal of the Plaintiffs’ Section 1202(b) claims involves a “controlling question of law,” which may be found in “exceptional situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation.” Generally, a controlling question of law is a purely legal one that can be resolved quickly without delving into a particular case’s facts. Here, the question of law raised by Plaintiffs is whether Sections 1202(b)(1) and (b)(3) of the Digital Millennium Copyright Act (DMCA) impose an identicality requirement, which is a purely legal question of statutory interpretation. Also, if this issue were to be decided in Plaintiffs’ favor, they would be able to proceed with their DMCA claims, which counsel claims are the “heart of their class case.”

Second, the court finds there are substantial grounds for difference of opinion on the question at issue. To determine whether there is a substantial ground for difference of opinion, courts examine “to what extent the controlling law is unclear.” Typically, a substantial ground for difference of opinion may exist where the circuits are in dispute on the question and the court of appeals for the circuit has not spoken on the point or if novel and difficult questions of first impression are presented.

Here, to the court’s knowledge, no court of appeal has ruled on the issue of whether Sections 1202(b)(1) and (b)(3) of the DMCA impose an identicality requirement, and district courts have reached differing conclusions on this issue. "Given this split in authority the Court finds there are substantial grounds for disagreement on this issue."

Finally, here, the immediate appeal from the order is likely to materially advance the ultimate outcome of the litigation, said the court. The Ninth Circuit resolving this issue would materially advance not only this particular case, but others in the Circuit raising the same issue. The court and the parties would benefit from definitive guidance from the Ninth Circuit at the outset, before time and resources are invested.

Stay pending appeal. Having concluded that it was appropriate to certify the order for interlocutory appeal, the court then addressed Plaintiffs’ request for a stay pending appeal. When determining if a stay is appropriate, courts apply a three-factor test derived from Landis v. North American Co. and consider (1) the possible damage which may result from the granting of a stay; (2) the hardship or inequity which a party may suffer if the case is allowed to go forward; and (3) the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.

With respect to the first Landis factor, Defendants did not contend any damage will result from granting a stay or that they will face any hardship, said the court. The parties are still in the early stages of discovery. Turning to the second factor, if the court declines to issue a stay and the Ninth Circuit revives Plaintiffs’ DCMA claims, Plaintiffs may have to redo fact discovery, expert testimony, and/or class certification. Accordingly, if the case were to proceed while Ninth Circuit review was pending, significant and potentially unnecessary resources might be invested by both parties. Finally, the court believed that “judicial economy will be best served” by staying this case because “the Ninth Circuit’s decision is likely to provide substantial guidance” that may “materially alter” the court’s decisions in this case.

The Case is No. 4:22-cv-06823-JST.

Judge: Tigar, J.

Attorneys: Cadio R. Zirpoli (Joseph Saveri Law Firm, LLP) for J. Doe 1. Alyssa M. Caridis (Orrick, Herrington & Sutcliffe LLP) for GitHub, Inc.

Companies: GitHub, Inc.

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