Bridgmon v. Array Systems Corp. , 325 F.3d 572 ( 2003 )

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED APRIL 10, 2003
March 20, 2003
UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk
_______________________
No. 01-10367, 01-10703
_______________________
GEORGE A. BRIDGMON,
Plaintiff-Appellant,
versus
ARRAY SYSTEMS CORPORATION, KENNA BRIDGMON,
Defendants-Appellees.
_________________________________________________________________
Appeals from the United States District Court
for the Northern District of Texas, Dallas Division
_________________________________________________________________
Before KING, Chief Judge, JONES and EMILIO M. GARZA, Circuit
Judges.
EDITH H. JONES, Circuit Judge:
Appellant George A. Bridgmon (George) sued Appellee Array
Systems Corporation (Array) for copyright infringement and breach
of contract. These claims relate to two computer programs known as
Application Development Systems (“ADS”) and ICUS Technology
(“ICUS”). George also sought a declaratory judgment that his wife
Kenna Bridgmon (Kenna) has no rights in a copyright registered in
George’s name.1 The district court entered judgment in favor of
Array and Kenna dismissing George’s claims.2 George appeals the
dismissal of his claims. We affirm the district court’s judgment
with respect to the copyright infringement and breach of contract
claims, dismiss as moot the declaratory judgment claim, and vacate
and remand the district court’s award of attorneys’ fees to Array.
BACKGROUND
In 1984 George authored the ADS computer program, for
which he obtained a copyright registration. In December 1999,
George sued Array for copyright infringement and breach of contract
and his wife Kenna for a declaratory judgment regarding their
respective interests in the ADS copyright. George alleges that
Array was licensed to use and sublicense certain software known as
1
Divorce proceedings between George and Kenna were pending in
Texas state court when the district court granted summary judgment.
While this case has been on appeal, the divorce action has been
tried and the state court has divided the community estate,
including George’s and Kenna’s respective rights in any
intellectual property.
2
The district court in its judgment also dismissed without
prejudice Array’s counterclaims against George. The judgment
entered by the district court states that George’s claims were
against “Defendant.” However, there are two defendants in this
action, Array and Kenna. If the district court did not enter a
final judgment disposing of all parties and claims (or certify
claims upon which judgment was granted as a partial final judgment
under Rule 54(b)) then this court would not have jurisdiction over
this appeal. 28 U.S.C. § 1291 (2000). The judgment, however,
refers to Defendants’ Motion for Partial Summary Judgment, filed on
September 19, 2000. This motion was filed jointly by Kenna and
Array. Therefore, we treat the statement in the judgment
dismissing George’s claims against only “Defendant” as a
scrivener’s error and the judgment entered by the district court as
a final judgment as to all parties and claims.
-2-
“ICUS” under a license agreement between ICUS Technology
Corporation and Array executed on June 6, 1993.3 On August 5,
1998 George notified Array of nonpayment of royalties under the
license agreement. Contemporaneous with his filing of this suit,
George terminated the license agreement. George thus further
alleges that Array’s unlicensed use and distribution of ICUS
constitutes copyright infringement.
DISCUSSION
I.
Neither party nor the district court questioned the
district court’s jurisdiction over this case. However, even where
the parties have not raised the issue “it is our duty to raise this
issue sua sponte.” Gaar v. Quirk, 86 F.3d 451, 453 (5th Cir. 1996).
The “parties cannot waive a want of subject matter jurisdiction.”
Hospitality House, Inc. v. Gilbert, 298 F.3d 424, 429 (5th Cir.
2002) (quoting Ziegler v. Champion Mortgage Co., 913 F.2d 228, 229
(5th Cir. 1990)). Of course, the district court had jurisdiction
over George’s copyright infringement claim under 28 U.S.C. §
1338(a) (2000), and it could properly exercise supplemental
jurisdiction over George’s breach of contract claim under 28 U.S.C.
§ 1367(a) (2000). A jurisdictional problem may have existed with
3
George concedes that there is no corporation named “ICUS
Technology Corporation” and that this was simply a name he used for
business purposes. We do not address what effect, if any, this has
on his rights under the contract at issue.
-3-
respect to George’s claim against his wife for a declaration that
his wife owned no rights in the copyright. The district court’s
jurisdiction over this claim, which asserted the superiority or
preemption of George’s statutory right under the Copyright Act over
Kenna’s asserted Texas community property interest, is not directly
controlled by our previous decision in Rodrigue v. Rodrigue, 218
F.3d 432 (5th Cir. 2000), and raises difficult questions.4
Nevertheless, this claim became moot with the rendition of the
Bridgmons’ divorce decree dividing their marital property during
the pendency of this appeal.
II.
4
If the declaratory judgment claim arose under the Copyright
Act the district court would have jurisdiction under 28 U.S.C. §
1338(a). If it arose out of the same case or controversy as the
copyright infringement claim the court could properly exercise its
discretion to exercise supplemental jurisdiction over the claim
under 28 U.S.C. § 1367. In this case, however, it is not clear if
either of these statutes provides a basis for the district court’s
jurisdiction. George’s declaratory judgment claim might have
violated the well-pleaded complaint rule by raising his ownership
under federal law as a defense to Kenna’s state law claims. In
such a case, federal courts would lack jurisdiction. Metro. Life
Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S. Ct. 1542, 1546 (1987).
If George’s declaratory judgment claim did arise under the
Copyright Act, then the federal courts would have exclusive
jurisdiction over such claims pursuant to 28 U.S.C. § 1338(a), and
the state courts would be without jurisdiction to dispose of
copyrights held by a party to a divorce action. Rodrigue did not
have to address the jurisdictional issue because there was another
basis for the assertion of jurisdiction in that case. It is also
unclear whether the dispute between George and Kenna arose out of
the same nucleus of operative facts as George’s copyright
infringement claim against Array. However, we need not address
this complicated jurisdictional issue in light of the declaratory
judgment claim’s mootness.
-4-
We now turn to the district court’s grant of summary
judgment on the copyright infringement and breach of contract
claims. A district court's grant of summary judgment is reviewed
de novo. Hodges v. Delta Airlines, Inc., 44 F.3d 334, 335 (5th Cir.
1995) (en banc). Summary judgment is appropriate when, viewing the
evidence and all justifiable inferences in the light most favorable
to the non-moving party, there is no genuine issue of material fact
and the moving party is entitled to judgment as a matter of law.
Hunt v. Cromartie, 526 U.S. 541, 552, 119 S. Ct. 1545, 1551-52, 143
L. Ed. 2d 731 (1999); see also Fed. R. Civ. P. 56(c). If the
moving party meets its burden, the non-movant must designate
specific facts showing there is a genuine issue for trial. Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).
III.
George contends that Array’s use and sale of the ICUS
software infringes his copyright in ADS. George was, however,
unable to produce a copy of the ADS software; the only evidence of
its content consisted of his oral testimony and a reconstruction of
ADS created by Array’s expert witness.5 This evidence was
5
George does not appeal the district court’s ruling that the
reconstruction of ADS was inadmissible as proof of ADS’s content
under the best evidence rule. Thus, we do not reach the question
whether a reconstruction can serve as evidence of the original.
-5-
insufficient to create a genuine issue of material fact as to
whether ADS and ICUS are “substantially similar”.6
A copyright infringement claim requires proof of (1)
ownership of a valid copyright and (2) actionable copying, which is
the copying of constituent elements of the work that are
copyrightable. Eng’g Dynamics, Inc. v. Structural Software, Inc.,
26 F.3d 1335, 1340 (5th Cir. 1994) (citing Feist Publ’ns, Inc. v.
Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 113 L.
Ed. 2d 358 (1991)). Two separate inquiries must be made to
determine whether actionable copying has occurred. The first
question is whether the alleged infringer copied, or “actually used
the copyrighted material in his own work.” Id. Copying can be
proven by direct or circumstantial evidence. Arnstein v. Porter,
154 F.2d 464, 468 (2d Cir. 1946) (Frank, J.). Circumstantial
evidence may support an inference of copying if the defendant had
access to the copyrighted work and there is “probative similarity”
between the copyrighted work and the allegedly infringing work.
Eng’g Dynamics, Inc., 26 F.3d at 1340.
The second question is whether “substantial similarity”
exists between the copyrighted work and the allegedly infringing
6
The district court and the parties on appeal also address
whether George owns a valid copyright in ADS. We need not reach
this issue and will assume arguendo that his copyright was valid.
-6-
work.7 Id. at 1341. To answer this question, “a side-by-side
comparison must be made between the original and the copy to
determine whether a layman would view the two works as
‘substantially similar.’” Creations Unlimited v. McCain, 112 F.3d
814, 816 (5th Cir. 1997) (per curiam).
George contends that he need not produce evidence of
substantial similarity between the copyrighted software and the
software used by Array because there is evidence of direct copying.
This argument simply misperceives that “not all ‘factual’ copying
constitutes legally actionable copyright infringement.”8 Creations
Unlimited v. McCain, 112 F.3d at 816; Attia v. Soc’y of the New
7
“Probative similarity” and “substantial similarity” are
analytically distinct inquiries. Latman, Probative Similarity as
Proof of Copying: Toward Dispelling Some Myths in Copyright
Infringement, 90 Colum. L. Rev. 1187, 1214 (1990) (noting that
evidence of probative similarity may or may not constitute
substantial similarity); 3 M. Nimmer & D. Nimmer, Nimmer on
Copyright 13.03[A], at 13-23 (1991) (“[T]he question of
‘substantial similarity’ arises analytically only [after proof of
factual copying].”) (quoted in Laureyssens v. Idea Group, Inc., 964
F.2d 131, 140 (2d Cir. 1992)).
8
George’s brief cites several cases from other jurisdictions
where the phrase substantial similarity is used interchangeably in
the two different inquiries. We note that this court stated in
Eng’g Dynamics, Inc., 26 F.3d at 1340-1341, and again in King v.
Ames, 179 F.3d 370, 375-76 (5th Cir. 1999), that with respect to
factual copying the test is “probative similarity” (if relying on
circumstantial evidence of copying) and that the test for
actionable copying is “substantial similarity.” See also Peel &
Co. v. Rug Mkt., 238 F.3d 391, 397-98 (5th Cir. 2001) (analyzing
probative similarity and substantial similarity separately). While
it is possible that the same evidence will satisfy both tests, the
tests are not the same.
-7-
York Hosp., 201 F.3d 50, 53-54 (2d Cir. 1999). Further, the law of
this circuit prohibits finding copyright infringement without a
side-by-side comparison of the two works:
While a determination of substantial similarity should
typically be left to the fact-finder, the Creations
Unlimited decision contemplates that a fact-finder will
have the opportunity to view the two works side-by-side.
Indeed, . . . copying is an issue to be determined by
comparison of works, not credibility. [The plaintiff’s]
failure to adduce evidence for such a comparison vitiates
her claim.
King, 179 F.3d at 376 (internal citations omitted). Following
King, George’s failure to adduce evidence to allow a comparison
between the ADS and the allegedly infringing program vitiates his
claim.
IV.
George also sued Array for breach of contract based upon
a software license agreement between Array and ICUS Technology
Corporation. Under Texas law, “[t]he essential elements in a
breach of contract claim are as follows: (1) the existence of a
valid contract; (2) that the plaintiff performed or tendered
performance; (3) that the defendant breached the contract; and (4)
that the plaintiff was damaged as a result of the breach.” Frost
Nat'l Bank v. Burge, 29 S.W.3d 580, 593 (Tex. App. -- Houston [14th
Dist.] 2000, no pet.). Apart from his uncorroborated and
conclusory testimony, George has offered no evidence to show that
the software used by Array is the same software that was licensed
-8-
to Array. Such unsubstantiated or conclusory assertions are
incompetent summary judgment evidence and cannot defeat a motion
for summary judgment. Hugh Symons Group, PLC v. Motorola, Inc.,
292 F.3d 466, 470 (5th Cir.), cert. denied, 123 S. Ct. 386 (2002).
V.
Array cross-appeals the district court’s award of $50,000
in attorneys’ fees, an award substantially smaller than Array’s
lodestar amount of $177,507. Array asserts that the district court
legally erred and abused its discretion by failing to articulate
reasons for its decision. Although appellate review would have
been easier with a written statement of reasons, the court did not
err or abuse its discretion under the circumstances of this case.
Hogan Sys. v. Cybresource Int'l, Inc., 158 F.3d 319, 325 (5th Cir.
1998).
The Copyright Act authorizes an award of attorneys’ fees
to a prevailing party. 17 U.S.C. § 505 (2000). On appeal, we
review the district court’s award of attorneys’ fees for an abuse
of discretion.
In this case the district court stated,
that the Court finds that (1) Array is the prevailing
party in an action under the Copyright Act, 17 U.S.C. §
505; (2) the claims in this case were inextricably
intertwined with the counterclaims; (3) the services
provided Array’s attorneys were necessary and the fees as
awarded herein were reasonable; (4) awarding attorneys’
fees would promote the purposes of the Copyright Act; (5)
in consideration of Fogerty v. Fantasy, Inc., 510 U.S.
-9-
517, 534 (1994); Hogan Sys., Inc. v. Cybersource Int’l,
Inc., 158 F.3d 319 (5th Cir. 1998) and Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), the
reasonable fee for Array’s defense of the copyright
claims which the Court believes should be imposed against
Plaintiff is $50,000.
The court cited and, we are confident, applied the relevant
authorities, and it explicitly stated that its award promotes the
purposes of the Copyright Act9 and is reasonable. By necessary
inference, the higher amount sought by Array was unreasonable. As
the foregoing discussion of the merits demonstrates, summary
judgment was readily granted in this case notwithstanding that
Array may have fought hard to achieve its result. The district
court acted within its discretion in determining the amount of the
fee award. See Hogan, supra.
Array correctly asserts, however, that it may recover
additional attorneys’ fees as a successful appellee. Maljack
Prods. v. Goodtimes Home Video Corp., 81 F.3d 881, 890-91 (9th Cir.
1996). George founded this appeal on unreasonable positions. He
9
In Fogerty, supra, the Supreme Court quoted with approval
certain factors (albeit a nonexclusive list) identified by the
Third Circuit as particularly relevant to the purposes of a fee
award under the Copyright Act:
‘. . . frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal
components of the case) and the need in particular
circumstances to advance considerations of compensation
and deterrence.’ Lieb v. Topstone Indus., Inc., 788 F.2d
151, 156 (3d Cir. 1986) (quoted in Fogerty, 510 U.S. at
534 n.19).
-10-
failed to distinguish or even cite King v. Ames, supra, a case
precisely on point. He argued that he need not prove substantial
similarity where there is evidence of direct copying despite this
court’s express holdings to the contrary. Rather than argue that
these cases were wrongly decided, he ignored them and cited cases
from other jurisdictions. We remand to the district court for a
determination of Array’s reasonable fees incurred for responding to
George’s appeal.
CONCLUSION
Since George Bridgmon was unable to raise a genuine issue
of material fact with respect to his claims for copyright
infringement and breach of contract, we affirm the district court’s
grant of summary judgment in favor of Array on these claims. We
dismiss as moot George’s declaratory judgment action against Kenna.
Finally, we vacate and remand the district court’s award of
attorneys’ fees to determine the amount of fees that Array should
be awarded for its costs arising out of this appeal.
AFFIRMED IN PART, DISMISSED IN PART, VACATED IN PART, AND
REMANDED.
-11-