Asset Marketing v. Gagnon ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ASSET MARKETING SYSTEMS, INC., 
Plaintiff-counter-
defendant-Appellee, No. 07-55217
v.
 D.C. No.
CV-03-02234-B
KEVIN GAGNON, d/b/a MISTER
COMPUTER, OPINION
Defendant-counter-
claimant-Appellant.

Appeal from the United States District Court
for the Southern District of California
Rudi M. Brewster, District Judge, Presiding
Argued and Submitted
July 18, 2008—Pasadena, California
Filed September 9, 2008
Before: Barry G. Silverman, Johnnie B. Rawlinson, and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
12511
ASSET MARKETING v. GAGNON 12515
COUNSEL
Todd A. Moore, San Diego, California, for the defendant-
counter-claimant-appellant.
John Morris and Phillip C. Samouris, Higgs, Fletcher & Mack
LLP, San Diego, California, for the plaintiff-counter-
defendant-appellee.
OPINION
MILAN D. SMITH, JR., Circuit Judge:
Kevin Gagnon, doing business as Mister Computer
(Gagnon), appeals from a grant of summary judgment in favor
of Asset Marketing Systems, Inc. (AMS). Gagnon contends
that AMS infringed his copyright in six computer programs
that he wrote for AMS by continuing to use and modify them
12516 ASSET MARKETING v. GAGNON
without his consent, and that AMS misappropriated trade
secrets contained in the programs’ source code. Gagnon also
challenges the denial of his ex parte application for an order
denying or continuing summary judgment. The district court
concluded that Gagnon had granted AMS an unlimited, non-
exclusive, implied license to use, modify, and retain the
source code of the programs that defeated his copyright
infringement and trade secret misappropriation claims. The
district court also denied Gagnon’s ex parte application. We
have jurisdiction under 28 U.S.C. § 1291, and we affirm the
district court.
FACTUAL AND PROCEDURAL BACKGROUND
A. AMS and Gagnon’s Relationship
AMS is a field marketing organization offering sales and
marketing support to insurance marketing entities. From May
1999 to September 2003, Gagnon was an at-will, independent
contractor for AMS, hired to assist with its information tech-
nology needs. Subsequently, Gagnon was asked to develop
custom software for AMS. AMS was Gagnon’s largest client,
accounting for 98% of his business. Jay Akerstein, a partner
at AMS who later became the Chief Operating Officer, was
Gagnon’s primary contact. Over the course of their four-year
relationship, AMS paid Gagnon over $2 million, $250,000 of
which was for custom software development and computer
classes. Gagnon developed six computer programs for AMS.
In May 2000, AMS and Gagnon entered a Technical Ser-
vices Agreement (TSA), which was scheduled to expire on
April 30, 2001. The TSA, printed on Mister Computer letter-
head, set forth Gagnon’s fees and the services to be provided.
The services included “Custom Application Programming—
Consultant will provide Contractor with specific add-on prod-
ucts to enhance Contractor’s current in-house database appli-
cation,” and mentioned nothing about a license. The TSA was
not renewed, though the relationship continued.
ASSET MARKETING v. GAGNON 12517
AMS claims that on June 12, 2002, Gagnon signed a Ven-
dor Nondisclosure Agreement (NDA).1 The NDA would have
given AMS ownership of all intellectual property developed
for AMS by Gagnon. Gagnon claims that the document is a
forgery and that his signature cannot be authenticated.
In June 2003, Gagnon proposed that AMS execute an Out-
side Vendor Agreement (OVA). The OVA included a Propri-
etary Rights clause providing:
Client agrees that all designs, plans, specifications,
drawings, inventions, processes, and other informa-
tion or items produced by Contractor while perform-
ing services under this agreement will be the
property of Contractor and will be licensed to Client
on a non-exclusive basis as will any copyrights, pat-
ents, or trademarks obtained by Contractor while
performing services under this agreement. On
request and at Contractor’s expense, Client agrees to
help Contractor obtain patents and copyrights for
any new developments. This includes providing data,
plans, specifications, descriptions, documentation,
and other information, as well as assisting Contractor
in completing any required application or registra-
tion. Any source code or intellectual property will
remain the property of Contractor. Trademarks, ser-
vice marks, or any items identifying said Company
shall remain the Company’s said property. Contrac-
tor will allow Company non exclusive, unlimited
licensing of software developed for Company.
Akerstein declined to execute the OVA, but countered with
a redlined version of the OVA, which substantially rewrote
the Proprietary Rights clause to read:
1
The NDA was located and produced six months into the litigation.
12518 ASSET MARKETING v. GAGNON
Contractor agrees that all designs, plans, specifica-
tions, drawings, inventions, processes, and other
information or items produced by Contractor while
performing services under this agreement will be the
sole property of Client. Any source code or intellec-
tual property agreed to and documented as Contrac-
tor’s will remain the property of Contractor.
By the end of June 2003, AMS had decided to terminate
Gagnon’s services. AMS extended an employment offer to
Gagnon, but he declined to accept the offer. AMS and
Gagnon then discussed an exit strategy, and by late July, the
parties had set a target exit date of September 15, 2003.
In August 2003, Gagnon responded to Akerstein’s redlined
OVA draft with a letter asserting that his “position has always
been that Asset Marketing Systems shall be entitled to unlim-
ited software licensing as long as my company had a business
relationship with Asset Marketing Systems.” The parties
never executed the OVA.
In a letter to AMS dated September 18, 2003, Gagnon
demanded $1.75 million for AMS to have the right to con-
tinue to use the programs and $2 million for Gagnon’s agree-
ment not to sell or disclose the programs to AMS’s
competitors.
In a letter dated September 23, 2003, AMS terminated its
relationship with Gagnon. According to AMS, a consultant
identified numerous problems with Gagnon’s work. It also
stated:
Recently, we had discussed employee and intellec-
tual property issues which have yet to be resolved.
Despite the foregoing, I learned that we did not have
copies of the source code for the software we devel-
oped and that copies of our SalesLogix software and
ASSET MARKETING v. GAGNON 12519
our entire database may be maintained by you and
your agents offsite.
The letter then demanded:
In connection with that separation, you must
immediately provide any and all copies of the source
code for all software developed by and on behalf of
Asset Marketing Systems immediately. You are not
authorized to utilize that software which we believe
is owned and all copyrights belong to Asset Market-
ing Systems. Furthermore, despite your claimed
ownership in that copyright, we believe that Asset
Marketing Systems’ trade secrets are embedded and
utilized throughout that software which would pre-
clude use by you as well.
We also demand that you return to us any copies
of the SalesLogix software or Asset Marketing data-
bases, programs or other materials that may have
come into your possession during our relationship.
Also on September 23, seven of Gagnon’s twelve employ-
ees resigned and were hired by AMS to provide directly to
AMS the same services they previously provided to AMS
through Gagnon. According to AMS, Gagnon’s former
employees approached AMS for jobs, and AMS never solic-
ited them. Gagnon disputes this. Each employee had signed
an “Employee’s Work Agreement” with Gagnon. The agree-
ment specified that the intellectual property arising out of or
related to work performed for Gagnon was his property. The
employment agreement also stated that “all information relat-
ing to [AMS] disclosed to Employee by Employer, and all
information generated by Employee in the performance of the
above Work is a valuable trade secret of Employer” to be
treated as confidential and safeguarded. Finally, the employ-
ees agreed not to “engage in any employment or personal con-
12520 ASSET MARKETING v. GAGNON
tractual agreement” with AMS for twenty-four months
without written consent from Gagnon.
In October 2003, Gagnon sent AMS a cease and desist let-
ter, asserting that the use of the programs was unauthorized.
It also asserted that the hiring of Gagnon’s prior employees
violated their Employment Agreement with him. Gagnon
demanded that AMS certify that it had undertaken to remove
“all original and derivative source code” and all related files
for the programs from AMS computers.
AMS responded by asserting that Gagnon could not unilat-
erally stop AMS from continuing to use and update the pro-
grams because it had an irrevocable license to use, copy, and
modify the programs based on the course of conduct of the
parties over the past two-and-a-half years. AMS also asserted
that Gagnon could not use the programs because it contained
AMS’s trade secrets. AMS also declined to pay Gagnon the
$1.75 to $2 million he had requested in September.
B. The Programs
Specifically at issue are the six programs that Gagnon cre-
ated for AMS. He included a copyright notice, “copyright
Mister Computer,” in the splash screens for each program.
According to a declaration by one of Gagnon’s former
employees, the programs were designed to work with AMS’s
databases and included “detailed information concerning
AMS’ network of sales persons, including information related
to AMS’ agent lists, their territories, and the criteria used by
AMS to qualify an agent or create a territory.” The source
code for these programs was installed on several of AMS’s
development computers, which were located at AMS’s facili-
ties.2 The employee was not instructed by Gagnon to maintain
2
Gagnon disputes that the source code was ever stored on the AMS
server.
ASSET MARKETING v. GAGNON 12521
the source code at any location other than AMS, and Gagnon
made no attempt to hide the source code from AMS employ-
ees.
In his deposition, Gagnon admitted that after he hired
employees, the source code was stored on AMS computers in
the development room. The room could not be accessed with-
out a pass that Gagnon’s software developers and a few key
AMS personnel, including Akerstein, possessed. Gagnon
never received any promises of confidentiality with respect to
his trade secrets from the AMS personnel who had passes to
the development room nor did he discuss terms of a potential
license or royalty agreement with them.
A week prior to his termination, Gagnon registered the
copyright for these six programs with the United States Copy-
right Office.
C. Procedural History
This case has a convoluted procedural history. The case
began when AMS filed a complaint in California Superior
Court against Kevin Gagnon, d/b/a Mister Computer, two of
his employees3 and Gagnon’s new company, National Mar-
keting Technologies alleging, among other things, misappro-
priation of trade secrets and conversion. Gagnon removed the
case to federal court. Gagnon then filed counterclaims, alleg-
ing copyright infringement, unfair competition under Califor-
nia law, misappropriation of trade secrets, interference with
contractual relations, intentional interference with prospective
business advantage, negligent interference with prospective
business advantage, and sought accounting and declaratory
relief declaring Gagnon the copyright owner of the programs.
The district court (then Judge Jones) remanded AMS’s claims
back to the state court. AMS then filed its remanded state law
3
The two employees were dismissed from the suit with prejudice.
12522 ASSET MARKETING v. GAGNON
claims as counter-counterclaims to Gagnon’s federal counter-
claims.
The district court subsequently granted AMS’s motion for
summary judgment as to Gagnon’s counterclaims. The court
found that Gagnon had granted AMS an implied, nonexclu-
sive license to use, modify, and retain the source code of the
programs. Consequently, Gagnon’s trade secret misappropria-
tion claim was also defeated, and because no trade secret
existed as between Gagnon and AMS with respect to the
source code, Gagnon’s noncompetition agreements were
deemed invalid under California law. For the same reasons,
Gagnon’s remaining state law claims failed.
The court also denied Gagnon’s ex parte applications for an
order denying or continuing summary judgment and to file
written objections to evidence. Gagnon’s ex parte application
requested a continuance to obtain the backup tapes of AMS’s
computers because they might contain emails establishing
AMS’s allegedly unlawful solicitation of Gagnon’s employ-
ees, and would establish the location of the source code at all
relevant times.
The magistrate judge recommended that the motion be
denied because it was untimely, and the district court judge
adopted that recommendation. The district court first reasoned
that because the non-competition clause in Gagnon’s employ-
ment agreements was unenforceable under California law, any
emails evidencing solicitation were irrelevant. Second,
because Gagnon had already admitted that the source code
was located on AMS’s computers, computer backup tapes
conclusively locating the source code on AMS computers
were unnecessary. Third, the motion was untimely because
Gagnon did not request the continuance until after the motion
for summary judgment was fully briefed by both parties.
Gagnon was able to file his opposition to summary judgment
without raising any discovery objections, and several days
later, counsel for both parties requested a stay of pending dis-
ASSET MARKETING v. GAGNON 12523
covery issues until summary judgment. Gagnon filed his ex
parte motion a week after the district court ordered the case
submitted, causing “undue delay in the resolution of both the
summary judgment motion and the discovery motion.”
Gagnon next filed a motion for reconsideration, which was
denied. The case was then reassigned from Judge Jones to
Judge Brewster. At that point, the parties stipulated to a dis-
missal of all counter-counterclaims, and AMS moved for
attorneys fees and costs. Gagnon appealed the grant of sum-
mary judgment. The district court then indicated that it wished
to reconsider its order granting summary judgment and stayed
the proceedings regarding the attorney fees. Gagnon success-
fully moved this court for a limited remand so that Judge
Brewster could reconsider Judge Jones’s grant of summary
judgment. After remand, the district court denied the motion
for reconsideration, deferred resolution of attorneys fees until
the resolution of the appeal, and returned the case to this
court.
STANDARD OF REVIEW
We review the district court’s grant of summary judgment
de novo. Giles v. Gen. Motors Acceptance Corp., 494 F.3d
865, 872 (9th Cir. 2007). We view the facts in the light most
favorable to the non-moving party and determine whether
there exists a genuine issue of material fact and whether the
district court correctly applied the law. Id.We review the district court’s decision to deny an applica-
tion to continue a ruling on a summary judgment motion to
permit discovery for abuse of discretion. Volk v. D.A. David-
son & Co., 816 F.2d 1406, 1417 (9th Cir. 1987). “A district
court has wide latitude in controlling discovery.” Id. at 1416(internal quotation marks omitted). “The district court should
permit discovery if it appears from the affidavits filed that the
party opposing the summary judgment motion could not, for
12524 ASSET MARKETING v. GAGNON
reasons stated, present facts essential to justify his opposi-
tion.” Id. (citing Fed. R. Civ. P. 56(f)).
DISCUSSION
A. Copyright Infringement Claim
Gagnon alleges that AMS’s continued use of the six pro-
grams constitutes copyright infringement because the pro-
grams were used by AMS without its obtaining a license or
Gagnon’s permission. AMS asserts three defenses to
Gagnon’s copyright infringement claim: an implied license, a
transfer of copyright ownership via the NDA, and 17 U.S.C.
§ 117. We hold that AMS has an implied unlimited license for
the programs, and we do not reach the other defenses asserted
by AMS.
[1] Though exclusive licenses must be in writing, 17 U.S.C.
§ 204, grants of nonexclusive licenses need not be in writing,
and may be granted orally or by implication. Foad Consulting
Group, Inc. v. Azzalino, 270 F.3d 821, 825-26 (9th Cir. 2001).
We have previously considered the grant of an implied license
in the context of movie footage and architectural drawings.
Id.; Effects Assocs., Inc. v. Cohen, 908 F.2d 555, 558 (9th Cir.
1990).
In Effects Associates, a movie producer hired Effects Asso-
ciates to create certain special effects for a movie. Effects, 908
F.2d at 555-556. Though the film footage containing the spe-
cial effects was used without the producer’s obtaining a writ-
ten license from Effects Associates, we found that an implied
license had been granted because the footage was created at
the producer’s request with the intent that it be used in the
film with no warning that use of the footage would constitute
infringement. Id. at 558-59 & n.6. We determined that “[t]o
hold that Effects did not at the same time convey a license to
use the footage . . . would mean that plaintiff’s contribution
to the film was ‘of minimal value,’ a conclusion that can’t be
ASSET MARKETING v. GAGNON 12525
squared with the fact that Cohen paid Effects almost $56,000
for this footage.” Id. at 559.
[2] Thus, we have held that an implied license is granted
when “(1) a person (the licensee) requests the creation of a
work, (2) the creator (the licensor) makes that particular work
and delivers it to the licensee who requested it,4 and (3) the
licensor intends that the licensee-requestor copy and distribute
his work.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 776 (7th Cir.
1996) (citing Effects, 908 F.2d at 558-59) (footnote added).
We apply the same analysis we did in Effects to implied
licenses for computer programs. The last prong of the Effects
test, however, is not limited to copying and distribution;
instead we look at the protected right at issue—here, whether
Gagnon intended that AMS use, retain, and modify the pro-
grams.
1. AMS Requested the Creation of the Programs
[3] Gagnon argues that AMS never specifically requested
that he create the programs, but “rather relayed its needs to
Mr. Gagnon and he satisfied them by providing either com-
puter hardware or computer software at his discretion.” We
find this interpretation of “request” to be strained. Gagnon did
not create the programs on his own initiative and market them
to AMS; rather, he created them in response to AMS’s
requests. Moreover, after prototype software was developed,
he made changes to the programs in response to Akerstein and
other AMS employees’ requests. No genuine issue of material
fact remains as to whether AMS requested the programs.
4
Though delivery of a copy of software does not compel the conclusion
that Gagnon granted AMS a license, it is a relevant factor that we may
consider. See 17 U.S.C. § 202; Effects, 908 F.2d at 558 n.6 (recognizing
that delivery is not dispositive, but “one factor that may be relied upon in
determining that an implied license has been granted”).
12526 ASSET MARKETING v. GAGNON
2. Gagnon Created the Software for AMS and
Delivered It
Though Gagnon argues that the programs could be con-
verted for use by another company, Gagnon admitted that the
programs were created specifically for AMS and that AMS
paid for the work related to drafting of the programs as well
as some related costs. It is, therefore, undisputed that Gagnon
created these programs for AMS.
[4] The remaining question is whether Gagnon delivered
the programs to AMS. We agree with the district court that
Gagnon delivered them when he installed them onto the AMS
computers and stored the source code on-site at AMS.
Gagnon argues that even if he had installed the programs onto
the AMS computers, he never delivered the source code so
that AMS could modify the code.5 If AMS did not have the
right to modify the code, it may have infringed Gagnon’s
copyright by exceeding the scope of its license. See S.O.S.,
Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989).
Gagnon primarily points to AMS’s inability to locate the code
on its own computer systems after his services were termi-
nated to show that AMS did not possess the code. But, as we
explain below, Gagnon’s conduct manifested an objective
intent to give AMS an unlimited license at the time of cre-
5
When programmers write code, they write in “source code,” which is
written in a programming language that humans can understand. Apple
Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1243 (3d Cir.
1983) (describing source code and object code). See also Michael J. Madi-
son, Reconstructing the Software License, 35 Loy. U. Chi. L.J. 275, 280-
81 (2003) (same). This source code is then compiled into object code
which is essentially a translation of source code into something the com-
puter can understand and execute. Id. at 280. Generally, when software is
distributed, only the compiled object code is distributed and the program-
mer retains the source code. Id. at 280-81. Regardless of whether the com-
puter program is in object code or source code form, it is copyrightable
and protectable. Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1519-
20 (9th Cir. 1993).
ASSET MARKETING v. GAGNON 12527
ation; thus, when he stored the source code at AMS, the code
was delivered.
3. Gagnon’s Intent as Manifested by His Conduct
[5] Gagnon argues that he never intended that AMS would
retain and modify the programs he delivered. Gagnon misun-
derstands the inquiry into intent, and we conclude that his
conduct did manifest an intent to grant a license. The relevant
intent is the licensor’s objective intent at the time of the cre-
ation and delivery of the software as manifested by the par-
ties’ conduct. See Effects, 908 F.2d at 559 n.6 (noting that
“every objective fact concerning the transaction” supported
the finding that an implied license existed); see also John G.
Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d
26, 42 (1st Cir. 2003); I.A.E., 74 F.3d at 777. The First and
Fourth Circuits consider the following factors to determine
such an intent:
(1) whether the parties were engaged in a short-term
discrete transaction as opposed to an ongoing rela-
tionship; (2) whether the creator utilized written con-
tracts . . . providing that copyrighted materials could
only be used with the creator’s future involvement or
express permission; and (3) whether the creator’s
conduct during the creation or delivery of the copy-
righted material indicated that use of the material
without the creator’s involvement or consent was
permissible.
Danielson, 322 F.3d at 41 (quoting Nelson-Salabes, Inc. v.
Morningside Dev., LLC, 284 F.3d 505, 516 (4th Cir. 2002)).
We find this approach to be persuasive.
Gagnon and AMS had an ongoing service relationship in
which Gagnon provided technical support for all computer-
related problems at AMS; he also created certain custom soft-
ware applications at AMS’s request. The relationship of the
12528 ASSET MARKETING v. GAGNON
parties indicates neither an intent to grant nor deny a license
without Gagnon’s future involvement.
[6] Several documents exist, however, that reflect the par-
ties’ objective intent: the TSA, signed by both parties, the
OVA submitted by Gagnon, and Gagnon’s letter objecting to
Akerstein’s proposed changes to the OVA.6 Courts have
looked to contracts, even if unexecuted, as evidence of the
intent of the party submitting the contract. See Johnson v.
Jones, 149 F.3d 494, 501 (6th Cir. 1998) (finding no license
where architect submitted contracts containing express provi-
sion that drawings could not be used by others except with
agreement and compensation); Nelson-Salabes, 284 F.3d at
516 (same); cf. I.A.E., 74 F.3d at 776-77 (architect submitted
no language indicating an intent to retain control); see also
Foad Consulting, 270 F.3d at 835-36 (Kozinski, J., concur-
ring) (comparing Johnson and I.A.E.).
[7] The TSA, signed by both parties in 2000 and printed on
Mister Computer letterhead, stated only that Gagnon “will
provide” AMS “specific add-on products.” Nothing in the
TSA indicates Gagnon’s understanding or intent that contin-
ued use of the custom application programming undertaken
by Gagnon would be prohibited after the TSA terminated. The
TSA also provided that AMS would be billed for Gagnon’s
services at an hourly rate. Like the special effects creators in
Effects Associates, Gagnon was well paid for his services.
Under the circumstances, it defies logic that AMS would have
paid Gagnon for his programming services if AMS could not
have used the programs without further payment pursuant to
a separate licensing arrangement that was never mentioned in
the TSA, and never otherwise requested at the time. This is
especially so because custom software is far less valuable
without the ability to modify it and because the TSA was set
6
We do not consider the NDA, allegedly signed by Gagnon, because
Gagnon contests its validity and argues that his signature was forged, cre-
ating a factual dispute inappropriate for resolution on summary judgment.
ASSET MARKETING v. GAGNON 12529
to expire in one year; one would expect some indication of the
need for future licensing if the custom programs were to
become unusable after the TSA expired.
[8] The OVA submitted by Gagnon, but never executed,
did not evidence any intent by Gagnon to limit AMS’s use of
the programs. Gagnon argues that the clause, “Client agrees
that [intellectual property] produced by Contractor while per-
forming services under this agreement will be the property of
Contractor and will be licensed to Client on a non-exclusive
basis as will any copyrights, patents, or trademarks obtained
by Contractor while performing services under this agreement
. . . ,” means that his license was conditioned on a continuing
relationship with AMS. We disagree. The clause “while per-
forming services under this agreement” modifies the produc-
tion of the intellectual property and the obtainment of
copyrights. Furthermore, the contract then expressly stated,
“Contractor will allow Company non-exclusive, unlimited
licensing of software developed for Company,” eliminating
any ambiguity.
[9] Moreover, Gagnon and AMS did not discuss a licensing
agreement until their relationship was ending. Gagnon deliv-
ered the software without any caveats or limitations on
AMS’s use of the programs. Even if Gagnon and his employ-
ees maintained the software and had primary control over the
code, they programmed on-site at AMS on AMS computers
to which key AMS personnel had access—conduct that does
not demonstrate an intent to retain sole control. The first time
Gagnon expressed a contrary intent was in his letter to Aker-
stein, sent after AMS had decided to terminate Gagnon’s ser-
vices.
Finally, the splash screens containing the copyright notice
do not negate AMS’s license to use the product. The splash
screens speak to Gagnon’s intent to retain copyright owner-
ship over the programs, not to his intent to grant or not grant
a license as would be his right as the copyright owner.
12530 ASSET MARKETING v. GAGNON
[10] Gagnon had to express an intent to retain control over
the programs and limit AMS’s license if he intended to do so.
A belated statement that the programs could not be used after
Gagnon’s departure, made after the termination decision and
well after the creation and delivery of the programs for which
substantial sums were paid, was not sufficient to negate all
other objective manifestations of intent to grant AMS an
unlimited license.
4. Scope and Irrevocability of Implied License
[11] For the reasons outlined, we hold that Gagnon granted
AMS an unlimited, nonexclusive license to retain, use, and
modify the software. Furthermore, because AMS paid consid-
eration, this license is irrevocable. See Lulirama Ltd., Inc. v.
Axcess Broad. Servs., Inc., 128 F.3d 872, 882 (5th Cir. 1997);
3-10 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 10.02[B][5] (2008). “[A] nonexclusive license
supported by consideration is a contract.” Lulirama, 128 F.3d
at 882; see also Effects, 908 F.2d at 559 n.7 (an implied
license is a “creature of law, much like any other implied-in-
fact contract”). If an implied license accompanied by consid-
eration were revocable at will, the contract would be illusory.
Lulirama, 128 F.3d at 882-83.
[12] We affirm the district court’s grant of summary judg-
ment on the copyright infringement claim.
B. Trade Secret Misappropriation Claim
[13] Gagnon contends that even if AMS obtained an
implied license, it still misappropriated his trade secrets that
were contained in the programs’ source code by hiring away
his employees in violation of their employment agreements.
Gagnon correctly asserts that source code may contain pro-
tected trade secrets even when the software is licensed for use
to another party. See, e.g., S.O.S, 886 F.2d at 1090. Even
ASSET MARKETING v. GAGNON 12531
assuming a trade secret exists, however, Gagnon’s argument
fails.
Gagnon relies on S.O.S., Inc. v. Payday, Inc., which
explained that a licensee of a computer program may misap-
propriate a trade secret if the trade secret was unlawfully
acquired. Id. His reliance on this case is misplaced. In S.O.S.,
the licensor, S.O.S., granted to Payday, its licensee, a limited
license for use only and “neither party expected Payday to be
able to gain access to the source code itself.” Id. at 1088.
Thus, the existence of this limited license failed to settle
S.O.S.’s trade secret misappropriation claim because an issue
of fact remained as to whether Payday was entitled to possess
an unprotected copy of the code that gave it access to the
source code. Id. at 1090.
[14] Here, however, having concluded that Gagnon granted
AMS an implied, unlimited license to the programs software,
we conclude that AMS could not have misappropriated
Gagnon’s trade secret. Unlike Payday in S.O.S., AMS was
legally entitled to use and modify the source code; the license
included access to any trade secret embodied therein.
Furthermore, having concluded that AMS was entitled
access to this trade secret, we also conclude that the district
court did not err in holding that the non-competition agree-
ments with Gagnon’s employees were invalid. Under Califor-
nia law, non-competition agreements are unenforceable unless
necessary to protect an employer’s trade secret. See Cal. Bus.
& Prof. Code § 16600 (voiding any contract that restrains
anyone from engaging in a lawful profession, trade, or busi-
ness); Edwards v. Arthur Andersen LLP, 189 P.3d 285, 288
(Cal. 2008) (Cal. Bus. & Prof. Code § 16600 invalidates non-
compete contracts unless they are necessary to protect an
employer’s trade secrets); Application Group, Inc. v. Hunter
Group, Inc., 72 Cal. Rptr. 2d 73, 85 (Ct. App. 1998) (same).
Because the non-competition agreements were no longer nec-
12532 ASSET MARKETING v. GAGNON
essary to protect Gagnon’s trade secrets against AMS, they
were no longer enforceable in this case.
[15] We affirm the district court’s grant of summary judg-
ment on the trade secret misappropriation claim.
C. Ex Parte Application
Finally, the district court did not abuse its discretion in
denying Gagnon’s motion for an order denying or continuing
summary judgment and to file written objection to evidence.
As the district court properly reasoned, the additional evi-
dence was not necessary for Gagnon to oppose the summary
judgment motion. In fact, Gagnon was apparently able to craft
an opposition to summary judgment without this discovery
two weeks prior to his motion, and failed to raise an objection
at that time.
CONCLUSION
For the foregoing reasons, the district court’s grant of sum-
mary judgment is
AFFIRMED.