Case: 4:06-cv-00697-JCH Doc. #: 34 Filed: 09/29/06 Page: 1 of 10 PageID #: 330
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
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`Case No. 4:06cv00697JCH
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`TVI, INC.,
`d/b/a Savers or Value Village,
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` Plaintiff,
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` vs.
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`INFOSOFT TECHNOLOGIES, INC.
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` Defendant.
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`MEMORANDUM AND ORDER
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`Theses matters are before the Court on Plaintiff TVI, Inc.’s (“TVI”) Motion to Dismiss, filed
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`June 05, 2006. (Doc. No. 16). Also pending is Defendant InfoSoft Technologies, Inc.’s (“InfoSoft”)
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`Motion for Preliminary Injunction, filed May 25, 2006. (Doc. No. 14). The matters are fully brief and
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`ready for a decision.
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`BACKGROUND
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`By way of background, TVI is a Washington corporation that operates thrift stores
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`throughout the United States. (Compl., Doc. No. 1 ¶ 2). InfoSoft, a Missouri corporation, is a
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`distributor of computer hardware and software programs as well as the author and developer of
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`several computer software programs. (Memo. Supp. Mot. Prelim. Inj., Doc. No. 15). At issue are a
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`group of InfoSoft programs designed to work together to aid companies in their inventory and sales
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`needs. These programs are INFOSoft LP software, INFOSoft CAPTURE software, INFOSoft
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`INFOPAK software, and INFOSoft INFOTEC software (“the Software”). (Countercl., Doc. No.
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`10 ¶ 10-13). TVI and InfoSoft both agree that the Software is InfoSoft’s intellectual property and
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`1
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`that InfoSoft’s copyright applications on the Software are currently pending before the United States
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`Copyright Office.1 (Id. at ¶ 10-14).
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`In October, 2004 InfoSoft and TVI entered into an agreement where InfoSoft would provide
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`TVI with computer hardware and use of the Software. (Memo. Supp., Doc. No. 15 ¶ 19-20). During
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`the following year, TVI bought hardware such as barcode printers and cash registers from InfoSoft.
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`(Id. at ¶ 24, 29).During this relationship, TVI also leased use of the Software from InfoSoft. (Id. at
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`¶ 31-40). Although the lease on the Software was supposed to run until October, 2006, InfoSoft
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`terminated the agreement on March 20, 2006, citing TVI’s non-payment of leasing fees. (Id. at ¶ 45).
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`InfoSoft alleges that this termination required TVI to discontinue use of the Software. (Id. at ¶ 46).
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`TVI, however, continued to use the Software, and intends to keep using it until October, 2006.
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`(Memo. Supp. Mot. Prelim. Inj., Doc. No. 15).
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`On April 28, 2006, TVI brought suit against InfoSoft alleging breach of contract.2 (Compl.,
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`Doc. No. 1). On May 18, 2006, InfoSoft brought counterclaims against TVI alleging copyright
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`infringement under the Copyright Act, 17 U.S.C. §§ 101 et seq. ( the “Act”). (Countercl., Doc. No.
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`10 ¶ 1-2).3 On May, 26, 2006, InfoSoft filed a Motion for Preliminary Injunction to stop TVI from
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`using the Software. (Doc. No. 14). On June 5, 2006, TVI filed its motion to dismiss all of InfoSoft’s
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`Copyright Act claims for lack of subject matter jurisdiction. (Doc. No. 16).
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`1Additionally, InfoSoft has taken all necessary steps to ensure the validity of its pending
`copyrights and has never acted in a way that is contrary to it maintaining exclusive rights to the
`pending copyrights. (Memo. Support, Doc. No. 15).
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`2The Court has diversity jurisdiction over this cause of action. 28 U.S.C. § 1332.
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`3InfoSoft claims jurisdiction under 28 U.S.C. § 1331. InfoSoft also counterclaimed for breach
`of contract. These breach of contract claims are irrelevant for purposes of this motion to dismiss.
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`2
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`MOTION TO DISMISS STANDARDS
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`Federal Rule of Civil Procedure 12(b)(1) requires a court to dismiss a claim if the court lacks
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`subject matter jurisdiction over it; however, dismissal for lack of subject matter jurisdiction will not
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`be granted lightly. Wheeler v. St. Louis Southwestern Ry. Co. , 90 F.3d 327, 329 (8th Cir. 1996).
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`Dismissal is proper when a facial attack on the Plaintiff’s Complaint’s alleged basis for subject matter
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`jurisdiction shows there is no basis for jurisdiction. Id.
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`The standards applied to a Rule 12(b)(1) motion to dismiss are the same as those that apply
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`to a Rule 12(b)(6) motion to dismiss. Vankempen v. McDonnell Douglas Corp., 923 F. Supp. 146,
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`147 (E.D. Mo. 1996) (citing Satz v. ITT Fin. Corp., 619 F.2d 738, 742 (8th Cir. 1980). In ruling on
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`a motion to dismiss, the Court must view the allegations in the Complaint in the light most favorable
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`to Plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). A cause of action should not be
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`dismissed for failure to state a claim unless, from the face of the Complaint, it appears beyond a
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`reasonable doubt that Plaintiff can prove no set of facts in support of his claim which would entitle
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`him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Jackson Sawmill Co., Inc. v. United
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`States, 580 F.2d 302, 306 (8th Cir. 1978). Thus, a motion to dismiss is likely to be granted “only in
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`the unusual case in which a plaintiff includes allegations that show on the face of the complaint that
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`there is some insuperable bar to relief.” Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir. 1982)
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`(internal quotations and citation omitted).
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`DISCUSSION
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`17 U.S.C. § 411(a) addresses when the Court has jurisdiction over a copyright infringement
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`action. It states that “no action for infringement of the copyright in any United States work shall be
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`instituted until preregistration or registration of the copyright claim has been made in accordance with
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`3
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`this title.”4 17 U.S.C. § 411(a). It is clear that “registration is required under section 411 of the
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`Copyright Act in order to bring suit for infringement.” Olan Mills, Inc. v. Linn Photo Co., 23 F.3d
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`1345, 1349 (8th Cir. 1994); see also Mays & Assocs., Inc. v. Euler, 370 F. Supp. 2d 362, 366 (D.
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`Md. 2005). TVI’s motion to dismiss raises one issue: can InfoSoft bring a copyright infringement
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`suit while its copyright applications are pending before the Copyright Office.
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`When interpreting statutory law, a federal court’s objective “is to give effect to the intent of
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`Congress.” United States v. McAllister, 225 F.3d 982, 986 (8th Cir. 2000). Analysis of a statute must
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`begin with the plain language, and if it is unambiguous, “that language is conclusive absent legislative
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`intent to the contrary.” In re M & S Grading, Inc., 457 F.3d 898, 901 (8th Cir. 2006). Therefore, if
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`the intent of Congress can be clearly discerned from the statute’s language, the judicial inquiry must
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`end. United States v. S.A., 129 F.3d 995, 998 (8th Cir. 1997). Absent an express definition provided
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`in the statute,5 words are given their ordinary, common meanings. United States v. Hansl, 439 F.3d
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`850, 853 (8th Cir. 2006). When looking at a single statute, individual sections should be construed
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`4§ 411(a), in its entirety, states:
`Except for an action brought for a violation of the rights of the author under section
`106A(a), and subject to the provision of subsection (b), no action for infringement of
`the copyright in any United States work shall be instituted until preregistration or
`registration of the copyright claim has been made in accordance with this title. In any
`case, however, where the deposit, application, and fee required for registration have
`been delivered to the Copyright Office in proper form and registration has been
`refused, the applicant is entitled to institute an action for infringement if notice
`thereof, with a copy of the complaint, is served on the Register of Copyrights. The
`Register may, at his or her option, become a party to the action with respect to the
`issue of registrability of the copyright claim by entering an appearance within sixty
`days of such service, but the Register’s failure to become a party shall not deprive the
`court of jurisdiction to determine that issue.
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`5The definition of registration in the statute is unhelpful. See 17 U.S.C. § 101 (definitions)
`(“registration ... means a registration of a claim in the original or the renewed and extended term of
`the copyright.”).
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`4
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`together. See Erlenbaugh v. United States, 409 U.S. 239, 244 (1972). Finally, a statute ought to be
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`construed in a way that “no clause, sentence, or word shall be superfluous, void, or
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`insignificant.”Duncan v. Walker, 533 U.S. 167, 174 (2001); see also Cody v. Hillard, 304 F.3d 767,
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`776 (8th Cir. 2002) (a statute should be construed as a whole and a court should not interpret one
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`provision “in a manner that renders other sections of the same statute inconsistent.”).
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`The Eighth Circuit6 has not interpreted the meaning of registration. Other courts, however,
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`have reached two distinct conclusions about when a copyright is “registered” for purposes of §
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`411(a). See La Resolana Architects PA v. Clay Relators Angel Fire, 416 F.3d 1195, 1202-06 (10th
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`Cir. 2005) (discussing split); see also Iconobazaar, L.L.C. v. Am. Online, Inc., 308 F. Supp. 2d 630,
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`633 (M.D.N.C. 2004) (identifying split and collecting cases). The first interpretation, generally
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`referred to as the “Registration Approach” holds that a copyright application must be registered, i.e.
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`granted, or denied by the Copyright Office before jurisdiction for an infringement action exists. 7
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`LaResolana Architects, 416 F.3d at 1201-02. Conversely, other courts follow the “Application
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`Approach” and hold that the registration requirement of § 411(a) is fulfilled when a copyright
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`6Both parties contend that Olan Mills, an Eighth Circuit copyright decision, supports their
`position; however, this case only addresses the narrow issue of whether injunctive relief is available
`to protect a copyright holder’s unregistered copyrights when the copyright holder is in court
`protecting its registered copyrights and has shown an existing threat of continued infringement. 23
`F.3d at 1349.
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`7,Other cases adopting this interpretation include: M.G.B. Homes, Inc. v. Ameron Homes,
`Inc., 903 F.2d 1486, 1488 (11th Cir. 1990) (collecting cases and adopting standard); Corbis Corp.
`v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1111-12 (W.D. Wash. 2004); Loree Rodkin Mgmt.
`Corp. v. Ross-Simons, Inc., 315 F. Supp. 2d 1053, 1055-57 (C.D. Cal. 2004); Goebel v. Mantis, 39
`F. Supp. 2d 1318, 1320 (D. Kan. 1999).
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`5
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`application is properly filed with the Copyright Office.8 Apple Barrel Prod., Inc. v. Beard, 730 F.2d
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`384, 386-87 (5th Cir. 1984) (adopting standard without discussion).
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`The Registration Approach posits that the plain language of § 411(a) requires the Copyright
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`Office must actually grant or deny a copyright application before an infringement suit can be brought
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`and that this interpretation is supported by §§ 408, 410(a), and 501(b) of the Copyright Act. The crux
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`of the argument is that the plain language of § 411(a) treats the acts of application and registration
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`as distinct. As pointed out by the Tenth Circuit, the plain language of § 411(a) requires affirmative
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`action by both the Copyright Office and the applicant, meaning an application alone cannot fulfill the
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`registration requirement. LaResolana Architects, 416 F.3d at 1201. The second sentence of § 411(a)
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`supports this contention. It states:
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`In any case, however, where the deposit, application, and fee required for registration
`have been delivered to the Copyright Office in proper form and registration has been
`refused, the applicant is entitled to institute an action for infringement if notice
`thereof, with a copy of the complaint, is served on the Register of Copyrights.
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` 17 U.S.C. of § 411(a). The existence of this sentence was seen by one court as “driv[ing] an iron
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`wedge between the act of delivering the deposit, application, and fee to the Copyright Office and the
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`determination of refusal of copyright registration by the Register of Copyrights” because it shows
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`delivery of the application can occur, but registration can be refused. Loree Rodkin Mgmt. Corp. v.
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`Ross-Simons, Inc., 315 F. Supp. 2d 1053, 1056 (C.D. Cal. 2004). Thus, the argument goes, the idea
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`that registration is complete upon application is undermined. Id. ; Mays & Assocs., Inc., 370 F. Supp.
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`8Other cases adopting the application approach include: Iconbazaar, L.L.C. v. Am. Online,
`Inc., 308 F. Supp. 2d 630, 6334 (M.D.N.C. 2004); Well-Made Toy Mfg. Corp. v. Goffa Int’l. Corp.,
`210 F. Supp. 2d 147, 157 (E.D.N.Y. 2002); Int’l Kitchen Exhaust Cleaning Ass’n v. Power Washers
`of N. Am., 81 F. Supp. 2d 70, 72 (D.D.C. 2000). A leading copyright treatise has adopted this
`approach as well. 2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 7.16[B] [1][a]
`(1999).
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`2d at 368 (noting that the terms application and registration are both used in § 411(a) and clearly have
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`distinct meanings); Ripple Junction Design Co. v. Olaes Enters., Inc., No. 1:05-cv-43, 2005 WL
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`2206220, at *4 (S.D. Ohio Sept. 8, 2005) (unpublished decision) (noting that if Congress intended
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`for registration to be complete on application, why is provision conferring jurisdiction upon refusal
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`included).
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`Aside from the language of § 411(a), other provisions of the Copyright Act support the
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`Registration Approach. First, § 410(a) states that the Register of Copyrights shall register a claim
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`“[w]hen, after examination, the Register of Copyrights determines that ... the material deposited
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`constitutes copyrightable subject matter and that the other legal and formal requirements of this title
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`have been met.” 17 U.S.C. § 410(a) (emphasis added). Because the Register of Copyrights must first
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`examine an application before issuing a registration, the idea that application and registration are
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`synonymous events is undermined. See Loree Rodkin Mgmt. Corp, 315 F. Supp. 2d at 1056. § 408(a)
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`also supports this argument because it states that the owner of a copyright “may obtain registration”
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`by delivering an application. If an application and registration were synonymous, the Act would state
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`“shall obtain.” See LaResolana Architects, 416 F.3d at 1201. Finally, 17 U.S.C. § 501(b) states that
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`the owner a copyright is entitled, “subject to the provisions of Section 411, to institute an action for
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`infringement...” This language clearly instructs that registration or refusal must occur before a
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`copyright holder can sue for infringement. Id.
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`Conversely, the Application Approach is more of a policy based argument. Courts following
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`this approach believe that it best effectuates the interest of justice and promotes judicial economy.
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`Int’l Kitchen Exhaust Cleaning Ass’n , 81 F. Supp. 2d at 72. This argument is based on the idea that
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`because the federal court will ultimately have jurisdiction--because § 411(a) allows suit once an
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`application is either registered (granted) or rejected--delaying the suit is nothing more than a senseless
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`judicial formality. See LaResolana Architects, 416 F.3d at 1203 (explaining argument); Foraste v.
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`Brown Univ., 248 F. Supp. 2d 71, 77 (D.R.I. 2003); Int’l Kitchen Exhaust Cleaning Ass’n, 81 F.
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`Supp. 2d at 72. Additionally, courts applying the Application Approach have looked to § 408(a)'s
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`language, that “registration is not a condition of copyright protection,” and § 410(d)’s language, that
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`“the effective day of a copyright registration is the day on which an application, deposit, and fee, ...
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`have all been received by the Copyright Office,” to support this interpretation. See LaResolana
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`Architects, 416 F.3d at 1203. Finally, these courts, relying on the statutory language recounted above,
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`believe that an application is the only precondition for bringing an infringement action, but registration
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`is a precondition for the recovery of certain kinds of damages.
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`Id. at 1204 (citing Nimmer, §
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`7.16[B][1][a][I]).
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`The Court, however, finds that the Application Approach has significant flaws. As the Tenth
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`Circuit correctly pointed out, the Application Approach requires “a topsy-turvy reading” of the Act.
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`See LaResolana Architects, 416 F.3d at 1204-05. Specifically, it makes the whole second sentence
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`of § 411(a) superfluous because a provision conferring jurisdiction upon refusal would be unnecessary
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`if jurisdiction were already conferred upon application. See Duncan, 533 U.S. at 174 (courts should
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`not construe statutes to make portions superfluous). Additionally, the Application Approach fails to
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`address why Congress, if it intended for registration and application to refer to the same event, used
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`two different terms in the Act. See Mays & Assocs., Inc., 370 F. Supp. 2d at 368. As shown above,
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`application and registration are distinct events that have distinct meanings; thus, the rules of statutory
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`interpretation require the Court to give these terms distinct meanings. Duncan, 533 U.S. at 174
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`(stating that if possible, a court must give effect to every word in a statute).Even if a sound policy
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`reason exists to merge their meanings, the Court must effectuate Congress’ intent, not its own. The
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`Application Approach also misreads § 408(a) and § 410(d) by thinking that they address the timing
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`of enforcement; these sections merely address the timing of protection. Enforcement and protection
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`are mutually exclusive concepts under the Act. Finally, the Application Approach incorrectly
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`discounts the idea that Congress wisely used the right to enforce a copyright as an incentive for
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`people to register a copyright. See LaResolana Architects, 416 F.3d at 1204-05. In conclusion, the
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`Court rejects the Application Approach and adopts the well-reasoned Registration Approach.
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`Here, neither side disputes that InfoSoft’s copyrights are not registered. Accordingly, it fails
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`the requirements of 17 U.S.C § 411(a). Thus, its claims based on the Act must be dismissed for lack
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`of subject matter jurisdiction. Additionally, 17 U.S.C. § 502(a) requires that only a “court having
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`jurisdiction of a civil action arising under this title may ... grant temporary and final injunctions.”
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`Because this Court does not have jurisdiction under the Act, It must deny InfoSoft’s motion for a
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`preliminary injunction based on a lack of subject matter jurisdiction.
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`CONCLUSION
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`Accordingly,
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`IT IS HEREBY ORDERED that Plaintiff TVI’s Motion for Dismiss (Doc. No. 16) is
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`GRANTED as to Counts I-IV of Defendant InfoSoft’s Counterclaims, and Defendant’s claims
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`against Plaintiff are dismissed without prejudice.
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`IT IS FURTHER ORDERED that Defendant InfoSoft’s Motion for Preliminary Injunction
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`(Doc. No. 14) is DENIED.
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`An appropriate judgment will accompany this order and memorandum.
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`Case: 4:06-cv-00697-JCH Doc. #: 34 Filed: 09/29/06 Page: 10 of 10 PageID #: 339
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`Dated this 29th day of September, 2006
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`/s/ Jean C. Hamilton
`UNITED STATES DISTRICT JUDGE
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