OpenAI Did Not Breach Any Contract: The Company Alleges There Was No Contract to Begin With

MEMORANDUM OF POINTS AND AUTHORITIES

IV. ARGUMENT

C. Plaintiffs’ Claims Fail for Reasons Specific to Each Claim.

2. Plaintiffs’ Breach of Contract Claim Fails.

To state a claim for breach of contract under California law, a plaintiff must “plead the contract, plaintiff’s performance (or excuse for nonperformance), defendant’s breach, and damage to plaintiff therefrom.” Low v. LinkedIn Corp., 900 F. Supp. 2d 1010, 1028 (N.D. Cal. 2012) (cleaned up).

When asserting written contract claims, a plaintiff must “allege the specific provisions in the contract creating the obligation the defendant is said to have breached.” Young v. Facebook, Inc., 790 F. Supp. 2d 1110, 1117 (N.D. Cal. 2011).

Here, Plaintiffs have not adequately pled the existence of a contract between themselves and any of the OpenAI Entities or sufficient factual detail supporting that OpenAI Entities allegedly breached any such agreement.

a. Plaintiffs Have Not Sufficiently Pled Existence of a Contract.

Plaintiffs have not adequately pled facts demonstrating the existence of a contract between Plaintiffs and any OpenAI Entity. See CSI Elec. Contractors, Inc. v. Zimmer Am. Corp., No. CV 12-10876-CAS (AJWx), 2013 WL 1249021, at *3 (C.D. Cal. Mar. 25, 2013) (granting motion to dismiss breach of contract claim because complaint failed to adequately allege existence of a contract).

Here, the complaint merely alleges that “Plaintiffs . . . offer code under various [unspecified] Licenses” and attaches a sampling of the most common licenses in an appendix. (Compl. ¶ 173, App. A.) The complaint then alleges that contracts have been formed with Defendants, collectively, based on their use of code subject to certain licenses. (Id. ¶ 175.)

However, the complaint does not indicate which licenses are at issue or which provisions the OpenAI Entities allegedly breached. These vague and conclusory allegations are insufficient to establish the existence of a contract.

See Ramirez v. GMAC Mortg., No. CV 09-8189 PSG (FFMx), 2010 WL 148167, at *2 (C.D. Cal. Jan. 12, 2010) (holding plaintiff failed to plead existence of a contract where it did not “set forth [the] terms of the contract that Defendants’ conduct is alleged to have breached”).

b. Plaintiffs Fail to Allege Facts Demonstrating the Contractual Provisions OpenAI Entities Allegedly Breached.

While Plaintiffs allege generally that OpenAI breached open source licenses by failing to (i) provide attribution, (ii) include copyright notices, and (iii) identify the license applicable to the work (Compl. ¶¶ 181-183), the complaint fails to identify the particular terms of the alleged agreements that the OpenAI Entities purportedly violated.

See, e.g., Zepeda v. PayPal, Inc., 777 F. Supp. 2d 1215, 1220 (N.D. Cal. 2011) (dismissing contract claim in part because plaintiffs failed to identify any provision in PayPal’s user agreement which prohibited PayPal’s conduct).

“Facts alleging a breach, like all essential elements of a breach of contract cause of action, must be pleaded with specificity.” Rubio v. U.S. Bank N.A., No. C 13-05752 LB, 2014 WL 1318631, at *9 (N.D. Cal. Apr. 1, 2014) (cleaned up); see also Sutherland v. Francis, No. 12-CV-05110-LHK, 2014 WL 879697, at *4 (N.D. Cal. Mar. 3, 2014) (dismissing contract claim that did not include “the essential terms of the agreement and more specific allegations as to breach”). Plaintiffs’ generic allegations fail to satisfy this requirement.