IP Law Daily, COPYRIGHT—N.D. Cal.: Database software provider’s copyright infringement claim against Best Western hotel chain survives dismissal, (Apr 15, 2026)

By Justin Marcus Smith, J.D.

Actian Corporation’s license agreements presented a mixture of covenants and conditions, but the alleged practice of mass copying and redistribution of the licensed software went beyond the scope of its license agreements.

Actian Corporation (Actian), a database software provider, adequately alleged a cause of action for direct copyright infringement against AutoClerk, Inc. (AutoClerk) and Best Western International, Inc. (collectively, Best Western), held the federal district court in San Francisco. The court distinguished between contract breach and breach of condition in violation of the Copyright Act, citing MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928, 939–942 (9th Cir. 2010). Copyright law differentiated “contractual covenants” from “license conditions” as determined according to state law, in this case, California law, to the extent consistent with federal copyright law and policy. Accordingly, the court found the instant complaint described a breach under California law; therefore, Actian’s copyright infringement claim survived the Best Western motion to dismiss for failure to state a claim. Actian’s derivative claims survived. The court denied dismissal of Actian’s breach of contract claim because questions about mutual assent were premature at the dismissal stage. A Best Western argument about the statute of limitations made little sense because the limitations period only begins to run from breach of contract, not execution of an agreement. The court denied the Best Western motion to dismiss in all respects. The jurisdictional challenge was moot because Actian adequately alleged a copyright infringement cause of action (Actian Corp. v. AutoClerk, Inc., No. 3:25-cv-09136-WHO (N.D. Cal. Apr. 10, 2026)).

Background. Actian Corp., a software company focused on data management and technology integration, sued AutoClerk, Inc. (AutoClerk) and Best Western International, Inc. (Best Western). Actian pleaded that it developed and owned the copyright for Actian Software, a structured query language (SQL) database management system that companies can embed in other computer programs to support data management. AutoClerk is a software company that specializes in providing property management solutions to hotel chains, including the Best Western hotels.

The Actian License Agreements provided users with “a nonexclusive, non-transferable, non-sublicensable right to install and use the Actian Software.” The licenses forbade reproduction entirely and restricted users from distribution in any way the licenses did not specify, for example, based on the number of permitted installation users or seats. The licenses contained various other restrictions, including against “pooling” or “multiplexing” the number of users over a network. Performing disallowed acts could void the license agreements.

Actian said it learned that Best Western acquired AutoClerk in 2024 and that AutoClerk had assigned its Actian Software license rights to Best Western as a result of that acquisition, without Actian’s consent, in purported violation of the license agreements. Actian alleged that the Best Western acquisition of AutoClerk was a concerted effort to access and use the Actian Software to improve Best Western control over its hotel operations. According to Actian, Best Western now mandates that each of its hotels use AutoClerk as the exclusive form of property management software.

Actian said it did not succeed in attempting to enforce its audit rights pursuant to the license agreements. In any event, Actian alleged it discovered that AutoClerk and Best Western repeatedly reproduced and distributed the Actian Software in violation of the license agreements, including by pooling or multiplexing, having more than the permitted number of hotel-users, and by providing services to third parties using the Actian Software. Actian said such uses of the Actian software were unlicensed, infringing, and the result of willful and intentional unauthorized reproduction, distribution, redistribution, or use of the Actian Software.

Actian’s 2025 complaint alleged four causes of action: (1) copyright infringement in violation of 17 U.S.C. § 505; (2) contributory copyright infringement in violation of 17 U.S.C. § 505; (3) vicarious copyright infringement in violation of 17 U.S.C. § 505; and (4) common law breach of contract. Actian sought injunctive and declaratory relief, as well as actual, statutory, and enhanced damages.

In early 2026, AutoClerk and Best Western filed their motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to state a claim and under R. 12(b)(1) for lack of jurisdiction. They mainly contended that Actian raised claims that only sounded in contract law and not copyright law. They also contended the court did not have jurisdiction because Actian failed to plead a federal claim.

Analysis. The court denied the motion to dismiss because it lacked merit. The court found Actian adequately alleged copyright claims alleging violations of 17 U.S.C. § 505 as well as a breach of contract claim over which the court could exercise supplemental jurisdiction.

Actian recognized that a copyright holder who has granted a license ordinarily waives its right to sue for copyright infringement; however, it argued the copyright claim was nonetheless proper because Best Western conduct exceeded the scope of the license. Best Western argued that the complaint only alleged breaches of covenant or contract, for example, that AutoClerk allowed more than one Actian Software user on a single machine; provided the software to third parties; marketed products containing the software beyond internal use and permitted concurrent users; and improperly assigned its rights under the license agreements. Actian viewed these and other allegations as breaches of conditions in violation of the Copyright Act.

The court said the Ninth Circuit has “addressed the somewhat murky distinction” between contract breach and breaches of conditions in violation of the Copyright Act in MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928, 939–942 (9th Cir. 2010). Terms of the license agreement in that matter prohibited the use of software “bots” for automatic user play of the online game World of Warcraft (WoW). The district court found MDY’s software contributorily and vicariously infringed Blizzard’s copyrights, but the Ninth Circuit reversed on the basis that copyright law differentiated “contractual covenants” from “license conditions” as determined according to state law to the extent consistent with federal copyright law and policy.

The instant court, in applying California law, distinguished that a covenant is a promise to do or refrain from doing a specific act, whereas a condition is a qualification to the parties’ obligations specifying potential termination or enlargement. Mutual assent forms a condition, whereas a covenant is binding only on the covenantor.

The MDY court held that the antibot provisions in that matter were covenants, not conditions, but Actian’s case required the opposite outcome based on the same reasoning. There was a clear nexus between a license condition and Actian’s exclusive copyright. Actian at least alleged that Best Western exceeded the scope of the license agreements by reproduction and distribution of the Actian Software throughout the Best Western network of hundreds of hotels. Breach of the condition limiting a user’s ability to copy and redistribute, by alleging breach of that condition, was an actionable infringement claim under the Copyright Act.

The court also denied dismissal of the fourth cause of action, the breach of contract claim. Best Western argued that Actian failed to adequately plead breach of contract and that the limitations period had expired.

The court concluded Best Western asked the court to dismiss on a basis that was beyond the four corners of the complaint. Best Western posited, without evidence, that the license agreements were merely “browsewrap” that never conspicuously disclosed the terms to the user. The court noted here that Actian alleged the license agreements were “clickwrap” agreements that required anyone downloading or installing the Actian software to affirmatively consent to the terms before downloading and installing each version of the Actian Software, including upgrades. Best Western could challenge mutual assent after discovery.

Second, Best Western argued that Actian failed to state a breach of contract claim because it did not plead damages, but the court found Actian pleaded damages in the form of lost licensing revenue and fees based on ongoing breaches. Actian did not have to estimate a specific dollar value for damages. Discovery would show the amount of damages sustained, if any, but the court found it more than plausible that the conduct Actian alleged could have caused damages.

As for the four-year limitations period, Actian alleged it acted well within it. The court said the Best Western argument made little sense because the limitations period only begins to run from breach of contract, not execution of an agreement. Moreover, the clock does not start until breach discovery, and Actian plausibly repeated throughout its complaint that it had no reason to suspect breach until 2024.

The court’s decision that Actian adequately alleged copyright claims mooted the Best Western jurisdictional challenge. For all of the foregoing reasons, the court denied the Best Western motion to dismiss.

The Case is No. 3:25-cv-09136-WHO.

Judge: Orrick, W.

Attorneys: Ryan Ephraim Hatch (Hatch Law PC) for Actian Corp. Tricia Deleon (Holland & Knight LLP) for AutoClerk, Inc.

Companies: Actian Corp.; AutoClerk, Inc.

MainStory: TopStory Copyright CaliforniaNews TechnologyInternet GCNNews