Direct Technologies, Llc v. Electronic Arts, Inc.

MEMORANDUM

Direct Technologies, LLC sued Electronic Arts, Inc. for a declaration of its joint authorship of the PlumbBob USB drive and an accounting of profits owing from its share of the copyright. DT assigned its copyright interest in the USB drives to Lithomania, Inc. Alleging fraud and breach of contract, DT sued Lithoma-nia in California state court; the parties settled. The district court decided that the state court case barred this action and granted EA’s motion to dismiss. We vacate and remand for further proceedings.

DT can pursue a copyright claim against EA only if the contract between DT and Lithomania in which DT assigned its rights to Lithomania is held to be unenforceable. See Marder v. Lopez, 450 F.3d 445, 448 (9th Cir.2006). DT argues that the contract is unenforceable because it lacked consideration and because it was fraudulently induced.

DT’s first argument fails. Lithomania contractually promised to purchase the manufactured USB drives from DT. A commitment to perform is sufficient consideration as long as the promisee would be justified in understanding that a commitment has been made. Restatement (Second) of Contracts §§ 2, 75. DT does not allege that it…