Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 1 of 8 PageID #:10812
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`UIRC-GSA HOLDINGS, INC.,
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`Plaintiff,
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`WILLIAM BLAIR & COMPANY, LLC.,
`and MICHAEL KALT,
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` Defendants.
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` Case No. 15 CV 9518
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`Judge Robert W. Gettleman
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`MEMORANDUM OPINION AND ORDER
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`Plaintiff UIRC-GSA Holdings, Inc. sued William Blair & Company (“Blair”) and
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`Michael Kalt (collectively, “defendants”), alleging violations of the Copyright Act, 17 U.S.C.
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`§ 101 et seq. Both defendants have moved for summary judgment (Doc. 365; Doc. 368), and
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`plaintiff has moved for partial summary judgment (Doc. 382). For the reasons stated below,
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`defendants’ motions are granted, and plaintiff’s motion is denied.
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`BACKGROUND
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`Plaintiff acquires and operates properties leased to the U.S. General Services
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`Administration (“GSA”) to be financed by the sale of bonds through its subsidiaries. Defendant
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`Blair was plaintiff’s investment banker and placement agent for certain bond offerings, the
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`proceeds of which were used to acquire a portfolio of real estate properties. Defendant Kalt was
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`plaintiff’s relationship manager at Blair.
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`Between 2012 and the close of discovery, plaintiff executed a total of six bond
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`offerings—"UIRC I” through “UIRC VI.” To market a bond offering successfully, plaintiff
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`created and used a Private Placement Memorandum (“PPM”) and an Indenture of Trust.
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 2 of 8 PageID #:10813
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`Plaintiff registered copyrights in the PPM for the UIRC I transaction (“PPM I”), as well as the
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`preliminary and final versions of the PPM and the Indenture of Trust for the UIRC IV transaction
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`(the “PPM IV,” the “FPPM IV,” and the “Indenture IV,” respectively). To be clear, plaintiff
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`could not copyright the entire document, and the Copyright Office required plaintiff to disclaim
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`“standard legal language.” At issue, then, are several paragraphs within these documents.1
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`Defendants note that plaintiff’s documents appear to be revised versions of offering
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`documents from an earlier deal involving third parties unrelated to plaintiff, namely the Idaho
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`Housing and Finance Association. Plaintiff concedes that its attorneys provided the Idaho deal
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`documents as a template, but claims that its top executives “spent about six months painstakingly
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`writing and re-writing the critical sections of the [PPM],” and “did almost all of the work
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`themselves.” Defendant contests this assertion, noting that plaintiff’s documents have
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`substantial overlap with the Idaho deal documents, such that they are verbatim or near verbatim.
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`It is undisputed that plaintiff did not receive permission to use the Idaho deal documents. It is
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`also undisputed that Blair and Kalt played no meaningful role in the drafting process for
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`plaintiff’s documents.
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`At some point in late 2014, a competitor of plaintiffs, Rainier, completed a bond offering
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`very similar to plaintiff’s. Blair acted as the investment banker and placement agent for Rainier,
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`and Kalt was Rainier’s relationship manager. Plaintiff asserts that Blair approached Rainier and
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`helped Rainier “mimic” plaintiff’s successful bond offerings, using plaintiff’s copyrighted
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`1 Plaintiff highlighted the portions of its documents that it asserts to be the copyrightable material at issue here. A
`review of the highlighted portions shows that plaintiff claims a copyright in the general description of the type of GSA
`revenue bonds, the application of proceeds generated by the GSA revenue bonds, many of the particular terms
`governing the GSA revenue bonds, and many of the definitions contained in the bonds.
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` 2
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 3 of 8 PageID #:10814
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`documents.2 Rainier’s confidential placement memorandum and indenture of trust appears to
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`have striking similarities to PPM I. Plaintiff further claims that this overlap is intentional, and
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`that Kalt actively encouraged and personally directed Blair’s employees and Blair’s outside
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`counsel to use the infringing materials to solicit other clients, including Rainier.3
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`Defendants dispute plaintiff’s characterization, arguing that only 5% of the Rainer
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`confidential placement memorandum is alleged to be copied from plaintiff’s documents, and
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`even less for Rainier’s indenture of trust. Defendants also note that they did not draft Rainier’s
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`documents, rather the law firm Mayer Brown did. Relevant for the vicarious copyright
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`infringement and contributory copyright infringement claims, Kalt disputes his authority to
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`control or supervise other employees and claims he had no financial interest in the alleged
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`infringement.
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`DISCUSSION
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`Summary judgement is appropriate when “the movant shows that there is no genuine
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`dispute as to any material fact and the movant is entitled to judgement as a matter of law.” Fed.
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`R. Civ. P. 56(a). “A genuine issue of material fact arises only if sufficient evidence favoring the
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`nonmoving party exists to permit a jury to return a verdict for that party.” Brummett v. Sinclair
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`Broadcast Group, Inc., 414 F.3d 686, 692 (7th Cir. 2005). When considering a motion for
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`summary judgment, the court must construe the evidence and make all reasonable inferences in
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`favor of the non-moving party. Hutchinson v. Fitzgerald Equip. Co., Inc., 910 F.3d 1016, 1021
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`(7th Cir. 2018).
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`2 Defendants note that investment bankers and investment banking firms are not bound by conflict rules similar to
`attorneys.
`3 Plaintiff originally sued Rainier, but after settling (Doc. 61), plaintiff substituted Blair and Kalt as defendants.
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` 3
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 4 of 8 PageID #:10815
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`Whether a particular work is copyrightable is an issue of law for the court. Schrock v.
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`Learning Curve Int’l, Inc., 586 F.3d 513, 517 (7th Cir. 2009). In a copyright infringement case,
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`summary judgment should be granted “when there is no genuine issue of material fact regarding
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`public domain and the lack of originality required for a work to be entitled to copyright
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`protection.” Marobie-Fl., Inc. v. National Ass’n of Fire Equipment Distributors, 2000 WL
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`1053957, at *3 (N.D. Ill. July 31, 2000).
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`Blair moves for summary judgment, arguing that plaintiff’s documents are not entitled to
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`copyright protection because they are unauthorized derivative works and lack originality. Blair
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`also makes arguments regarding damages. Kalt adopts Blair’s arguments, and moves for
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`summary judgment on the remaining contributory infringement and vicarious infringement
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`claims against him. Finally, plaintiff moves for partial summary judgment on the issue of
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`Blair’s liability found in Counts I, III, and VI of the Fifth Amended Complaint.
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`A claim for copyright infringement has two elements: “(1) ownership of a valid
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`copyright[;] and (2) copying of constituent elements of the work that are original.” Feist
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`Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991); Schrock, 586 F.3d at 517.
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`�ere is no dispute that only the first element is at issue here.
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`As a constitutional and statutory matter, “[t]he sine qua non of copyright is originality.”
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`Feist, 499 U.S. at 345; Schrock, 586 F.3d at 518-19; 17 U.S.C. § 102. Originality in this context
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`“means only that the work was independently created by the author…and that it possesses at
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`least some minimal degree of creativity. Schrock, 586 F.3d at 519. �e Supreme Court has
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`emphasized that “the requisite level of creativity is extremely low; even a slight amount will
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`suffice.” Feist, 499 U.S. at 345. �e Court also explained that “[o]riginality does not signify
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`novelty; a work may be original even though it closely resembles other works.” Id. What is
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 5 of 8 PageID #:10816
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`required is “independent creation plus a modicum of creativity.” Id. at 346. However, the
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`Copyright Act does not protect facts, fragmented phrases, expressions dictated solely by
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`function, or subjects that can be expressed only in certain ways. See Harper & Row Publishers,
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`Inc. v. Nation Enterprises, 471 U.S. 539, 547 (1985) (facts); Alberto-Culver Co. v. Andrea
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`Dumon, Inc., 466 F.2d 705, 710–11 (7th Cir. 1972) (fragmented phrases); Incredible Techs., Inc.
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`v. Virtual Techs., Inc., 400 F.3d 1007, 1012 (7th Cir. 2005) (expressions dictated solely by
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`function); Seng-Tiong Ho v. Taflove, 648 F.3d 489, 499 (7th Cir. 2011) (subjects that can be
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`expressed only in certain ways).4
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`Defendants argue that the copyrighted portions of plaintiff’s documents lack the requisite
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`modicum of creativity and originality, are unauthorized derivative works based on the Idaho deal
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`documents, and are largely unprotectable facts, ideas, or fragmented or functional phrases, such
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`as definitions of terms. Plaintiff responds that their executives painstakingly rewrote their
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`documents such that they are unique and original. Citing Cohen v. United States, 105 Fed. Cl.
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`733, 741 (2012), plaintiff further argues that the works cannot be derivative unless the underlying
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`work is also subject to copyright protection, and there is no indication that the Idaho documents
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`were copyrighted.
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`�e court has carefully reviewed all of the exhibits and demonstratives provided by the
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`parties, including the redline comparisons of the Idaho deal documents, plaintiff’s copyrighted
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`documents, and Rainier’s allegedly infringing documents. After careful review, the court
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`4 To benefit from copyright protections, “the author must register the design with the United States Copyright office,”
`Design Ideas, Ltd. v. Yankee Candle Co., Inc., 889 F.Supp.2d 1119, 1126 (C.D. Ill. 2012), and registration is a
`prerequisite to a suit to enforce a copyright. �at prerequisite has been satisfied here, and plaintiff registered its
`trademarks before filing this suit. However, even if the Copyright Office granted registration, a copyright
`infringement lawsuit permits the court to determine whether the work is entitled to copyright protection. As noted
`previously, this determination is an issue of law for the court and is appropriate for resolution on summary judgment.
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 6 of 8 PageID #:10817
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`concludes that plaintiff’s documents lack originality and are not sufficiently creative to warrant
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`copyright protection. A few comparisons suffice (tabulation added by the court):
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`Idaho Indenture of Trust
`“Additional Payments” means the payments so
`designated and required to be made by the Borrower
`pursuant to Section 4.2 of the Loan Agreement. […]
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`“Loan Agreement” means
`that certain Loan
`Agreement by and between the Issuer and Borrower,
`dated as of July 1, 2011, as originally executed and as
`it may from time to time be supplemented, modified or
`amended in accordance with the terms thereof and of
`this Indenture.
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`Plaintiff’s Copyrighted Indenture of Trust
`“Additional Payments” means the payments so
`designated and required to be made by each
`Borrower pursuant to the applicable provisions of its
`Loan Agreement. […]
`“Loan Agreement” means
`that certain Loan
`Agreement by and between the Issuer and each
`Borrower, dated as of the Acquisition Date, as
`originally executed and as it may from time to time
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`supplemented, modified or amended
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`accordance with the terms thereof and of this
`Indenture, and the “Loan Agreements” shall mean
`the sum of all Loan Agreements or such lesser
`amount as applicable in context.
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`Idaho PPM
`No Right to Accelerate Rental Consideration
`to
`Although
`the Indenture permits
`the Trustee
`accelerate the maturity of the Series 2011 Bonds
`following an Event of Default thereunder, the Lease
`does not provide for acceleration of the rentals in the
`event of a payment default by the Battelle. However,
`in the event of such a default, the Trustee would be
`entitled to bring an action to enforce the payment of
`rentals under the Lease. […]
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`Plaintiff’s Copyrighted FPPM IV
`No Right to Accelerate Rental Consideration
`Although the Indenture permits the Trustee to
`accelerate the maturity of the Bonds following an
`Even of Default thereunder, the Leases do not
`provide for acceleration of the rentals in the event of
`a payment default by the applicable lessee. However,
`in the event of such a default, the Trustee would be
`entitled to bring an action to enforce the payment of
`rentals under the Leases. […]
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`Plaintiff cannot “show the requisite incremental originality, slight as it need be.” Pickett
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`v. Prince, 207 F.3d 402, 405 (7th Cir. 2000). Plaintiff’s copyrighted paragraphs are incredibly
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`similar to those in the Idaho deal documents, such that they cannot be original. Indeed, whole
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`sentences and paragraphs are verbatim or near verbatim. And any changes plaintiff made to the
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`Idaho deal documents are “merely trivial variation,” Wilson v. Electro Marine Sysms., 1986 WL
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`12604, at *8 (N.D. Ill. Aug. 18, 1997), such as tinkering with prepositions and punctuation,
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 7 of 8 PageID #:10818
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`changing singular nouns to plural ones, and reworking short phrases. None of these changes are
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`original enough to warrant protection.
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`For the more substantial phrases and paragraphs, even if they include a modicum of
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`originality, they are not entitled to copyright protection because they consist of unprotectable
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`facts, functional phrases akin to instructions, fragmented phrases, or subjects that can be
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`expressed only in certain ways, such as definitions of terms.5
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`Finally, the parties dispute whether plaintiff’s documents are unauthorized derivatives of
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`the Idaho deal documents. Defendants argue that plaintiff’s copyrights are invalid because
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`plaintiff’s documents are wholly based off the Idaho deal documents, and because the copying
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`was done without permission (a fact plaintiff does not dispute). See Schrock, 586 F.3d at 522-
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`23 (noting that § 106(2) “means the author of a derivative work must have permission to make
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`the work from the owner of the copyright in the underlying work”); see also Pickett v. Prince,
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`207 F.3d 402, 405-07 (7th Cir. 2000). Citing one case from the federal Court of Claims (Cohen,
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`105 Fed. Cl. 733 (2012)), plaintiff argues that this doctrine does not apply because defendants
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`have not shown that the Idaho deal documents were copyrighted. Defendants respond with a
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`single citation of their own, Pickett, 207 F.3d at 405, arguing that the underlying work need not
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`have a registered copyright for the work in question to be considered a derivative. Ultimately,
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`the court need not resolve that question, because plaintiff’s documents lack the requisite
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`originality for copyright protection, and otherwise consist of unprotectable material.
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`5 Indeed, it is clear to the court that standardization across bond offerings is required and is the industry norm, which
`is why investment bankers and attorneys use template documents in the first place.
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`Case: 1:15-cv-09518 Document #: 414 Filed: 09/29/21 Page 8 of 8 PageID #:10819
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`Because the works are not subject to copyright protection, there can be no infringement.
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`Consequently, plaintiff’s claims against Kalt for contributory infringement and vicarious
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`infringement fail, and the court need not reach defendants’ arguments regarding damages.
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`CONCLUSION
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`For these reasons, defendants’ motions for summary judgment (Doc; 365; Doc. 368) are
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`granted, and plaintiff’s motion for summary judgment is denied (Doc. 382). Civil case
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`terminated.
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` ENTER:
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`__________________________________________
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`Robert W. Gettleman
`United States District Judge
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`DATE: September 29, 2021
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