Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 1 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 1 of 7
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE WESTERN DISTRICT OF PENNSYLVANIA
`
`Civil Action No. 03- 1 5 12
`
`Judge Thomas M. Hardiman
`
`) ) ) ) ) ) ) ) ) )
`
`) ) ) ) ) ) ) ) )
`
`FEDEX GROUND PACKAGE SYSTEMS,
`
`INC.,
`
`Plaintiff/Counter-Defendant,
`
`V.
`
`APPLICATIONS INTERNATIONAL
`
`CORPORATION,
`
`Defendant/Counter—Plaintiff,
`
`v.
`
`COMPUTER AID, lNC.,
`
`Additional Counter-Defendant.
`
`MEMORANDUM OPINION
`
`This matter comes before the Court on FedEx Ground Package System, Inc.’s (FedEx)
`
`motion for judgment on the pleadings and Computer Aid, Inc.’s (CAI) motion to dismiss. Both
`
`FedEx and CAI seek dismissal of various claims asserted in the counterclaim of Applications
`
`International Corporation (AIC), arguing that the claims are preempted by §30l of the
`
`Copyright Act, 17 U.S.C. §30l. For the reasons that follow, both motions will be denied.
`
`1.
`
`Facts
`
`Plaintiff FedEx originally filed this action against AIC asserting claims for breach of
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`contract, unjust enrichment, conversion, and a declaratory judgment that it owns certain
`
`software source code. FedEx alleges that AIC failed to perform on a contract to develop and
`
`maintain a computer software program that would have automated reporting functions of
`
`
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 1 of 7
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE WESTERN DISTRICT OF PENNSYLVANIA
`
`Civil Action No. 03- 1 5 12
`
`Judge Thomas M. Hardiman
`
`) ) ) ) ) ) ) ) ) )
`
`) ) ) ) ) ) ) ) )
`
`FEDEX GROUND PACKAGE SYSTEMS,
`
`INC.,
`
`Plaintiff/Counter-Defendant,
`
`V.
`
`APPLICATIONS INTERNATIONAL
`
`CORPORATION,
`
`Defendant/Counter—Plaintiff,
`
`v.
`
`COMPUTER AID, lNC.,
`
`Additional Counter-Defendant.
`
`MEMORANDUM OPINION
`
`This matter comes before the Court on FedEx Ground Package System, Inc.’s (FedEx)
`
`motion for judgment on the pleadings and Computer Aid, Inc.’s (CAI) motion to dismiss. Both
`
`FedEx and CAI seek dismissal of various claims asserted in the counterclaim of Applications
`
`International Corporation (AIC), arguing that the claims are preempted by §30l of the
`
`Copyright Act, 17 U.S.C. §30l. For the reasons that follow, both motions will be denied.
`
`1.
`
`Facts
`
`Plaintiff FedEx originally filed this action against AIC asserting claims for breach of
`
`contract, unjust enrichment, conversion, and a declaratory judgment that it owns certain
`
`software source code. FedEx alleges that AIC failed to perform on a contract to develop and
`
`maintain a computer software program that would have automated reporting functions of
`
`
`
`Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 2 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 2 of 7
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`FedEx’s human resources department. As a result, FedEx claims that it was required to utilize
`
`the services of another company, Third-Party Defendant CAI, to complete performance of the
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`contract with AIC.
`
`AIC responded by answering the complaint and filing a counterclaim. The fourth and
`
`most recent version of this counterclaim (the third amended counterclaim) includes claims by
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`AIC against FedEx and CAI as a third-party defendant in which AIC alleges: copyright
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`infringement (Count I); misappropriation of trade secrets (Count II); conversion (Count IV);
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`unjust enrichment (Count V); and seeks a declaratory judgment regarding ownership of
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`intellectual property (Count VI). Additionally, AIC asserts a counterclaim for breach of
`
`contract against FedEx alone (Count III).
`
`FedEx answered the third amended counterclaim, and CAI responded by filing a motion
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`to dismiss Counts II, IV, V, and VI pursuant to Fed. R. Civ. P. 12(b)(6). FedEx then filed a
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`motion for judgment on the pleadings pursuant to Fed. R. Civ. P. l2(c), seeking dismissal of
`
`Counts III, IV, V, and VI. FedEx and CAI assert nearly identical arguments in support of their
`
`respective motions, namely that the specified causes of action pled by AIC in the third amended
`
`counterclaim are preempted by operation of §30l of the Copyright Act, 17 U.S.C. §30l. AIC
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`argues that the state law claims avoid preemption because they do not seek to duplicate the
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`subject matter of the cause of action for copyright infringement, but rather address the alleged
`
`misappropriation of other elements of the computer program which are excluded from copyright
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`protection.
`
`
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`Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 3 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 3 of 7
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`II.
`
`Legal Standards
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`Rule 12(b)(6) motions challenge the legal sufficiency of the complaint. See Kost v.
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`Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). Plaintiff is required to “set forth sufficient
`
`information to outline the elements of his claim or to permit inferences to be drawn that these
`
`elements exist.” Id. “A motion to dismiss pursuant to Rule 12(b)(6) may be granted only if,
`
`accepting all well pleaded allegations in the complaint as true, and viewing them in the light
`
`most favorable to plaintiff, plaintiff is not entitled to relief .’” In re Rockefeller Center
`
`Properties Inc., 311 F.3d 198 (3d Cir. 2002). While a court will accept well-pleaded
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`allegations as true for the purposes of the motion, it will not accept legal or unsupported
`
`conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual
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`allegations. See In re Burlington Coat Factory Sec. Lit., 114 F .3d 1410, 1429 (3d Cir. 1997);
`
`Miree v. DeKalb County, Ga., 433 U.S. 25, 27 n. 2 (1977).
`
`A motion for judgment on the pleadings pursuant to Rule 12(c) is analyzed using the
`
`same standard as a motion to dismiss for failure to state a claim under Rule l2(b)(6). Turbe v.
`
`Gov’! ofthe Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991); Regalbuto v. City of
`
`Philadelphia, 937 F. Supp. 374, 376-77 (E.D. Pa. 1995).
`
`III.
`
`Discussion
`
`Section 301(a) of the Copyright Act provides:
`
`[A]1l legal or equitable rights that are equivalent to any of the
`exclusive rights within the general scope of copyright as specified by
`section 106 in works of authorship that are fixed in a tangible medium
`of expression and come within the subject matter of copyright as
`specified by sections 102 and 103 .
`.
`. are governed exclusively by this
`title. Thereafter, no person is entitled to any such right or equivalent
`right in any such work under the common law or statutes of any State.
`
`
`
`Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 4 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 4 of 7
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`17 U.S.C. §301(a). In determining whether a state law cause of action is preempted by the
`
`Copyright Act, a "functional test" is utilized. See Dun & Bradstreet Software Services, Inc. v.
`
`Grace Consulting, Inc., 307 F.3d 197, 216 (3d Cir. 2002).
`
`This “functional test” requires two related inquiries: (1) does the subject matter of the
`
`claim fall within the subject matter of copyright law, and (2) are the rights to be vindicated by
`
`the common law claim equivalent to any rights granted under the Copyright Act? See Long v.
`
`Quality Computers and Applications, Inc., 860 F. Supp. 191, 197 (M.D. Pa. 1994)(citing Del
`
`Madera Properties v. Rhodes & Gardner, Inc., 820 F.2d 973, 976 (9th Cir. 1987)).
`
`Application of the first prong of this standard is difficult in this case because of the
`
`unique characteristics of computer programs. AIC argues that its state law claims are not
`
`preempted because they seek to protect the elements of the computer program and other
`
`intellectual property that are not subject to copyright protection.
`
`The United States Court of Appeals for the Third Circuit has determined that the literal
`
`elements of computer programs, i.e., the source and object codes, are subject to federal
`
`copyright protection. Whelan Assoc., Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222,
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`1233 (3d Cir. 1986). Moreover, many courts of appeals have agreed that “the scope of the
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`Copyright Act’s subject matter is broader than the scope of the Act’s protections.” Wrench
`
`LLC v. Taco Bell Corp., 256 F.3d 446, 455 (6‘“ Cir. 2001); see also National Basketball Ass ’n
`
`v. Motorola Inc., 105 F.3d 841, 848 (2d Cir. 1997)(subject matter of copyright for purposes of
`
`§30l includes both copyrightable and non-copyrightable elements); United States ex rel.
`
`Pamela Birge v. Board of Trustees ofthe University ofAlabama, 104 F.3d 1453, 1463 (4”‘ Cir.
`
`
`
`Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 5 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 5 of 7
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`l997)(scope and protection of Copyright Act not synonymous); ProCD, Inc. V. Zeidenberg, 86
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`F.3d 1447, 1453 (7"‘ Cir. 1996)(uncopyrightable idea underlying copyrightable computer
`
`program within the subject matter of copyright). But see Dunlap v. G&L Holding Group, Inc.,
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`381 F.3d 1285, 1296 (ll”‘ Cir. 2004)(finding “ideas” to be outside subject matter of Copyright
`
`Act because substantively excluded from copyright protection). The foregoing cases
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`demonstrate that a mere showing that copyright protection is unavailable for certain elements
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`of the computer program will not necessarily decide the issue of whether those elements are
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`within the “subject matter” of the Copyright Act.
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`In light of the foregoing, this Court first must examine the subject matter of AIC’s
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`cliams before determining that the Copyright Act preempts any of them. AIC has asserted that
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`the claims in Counts II-VI of the third amended counterclaim seek vindication of their non-
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`copyright intellectual property rights in, inter alia, the menus, written materials, procedures and
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`ideas associated with the computer program at issue. Because the factual record remains
`
`undeveloped, the Court lacks a sufficient basis upon which to decide the preemption question.
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`Accordingly, the Court cannot conclude at this juncture that no facts exist that would allow the
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`non-moving party to recover. On a more developed factual record, AIC may be able to
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`demonstrate cognizable intellectual property interests in elements of the computer program that
`
`are outside the subject matter of the Copyright Act. However, to the extent that these
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`intellectual property interests fall within the subject matter of the Copyright Act, the claims
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`will be preempted to the extent that they seek redress for “mere copying, preparation of
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`derivative works, performance, distribution or display.” Dun & Bradstreet, 307 F.3d at 217
`
`(citation omitted).
`
`
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`Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 6 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 6 of 7
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`IV. Conclusion
`
`For the foregoing reasons FedEx’s Motion for Judgment on the Pleadings and CAI’s
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`Motion to Dismiss will be denied.
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`An appropriate Order follows.
`
`Dated: November 4, 2005
`
`cc: Counsel and parties
`
`az2,m.2e.~ar.;
`
`Thomas M. Hardiman
`
`United States District Judge
`
`
`
`Case 2:03-cv-01512-GLL Document 82 Filed 11/04/05 Page 7 of 7
`Case 2:O3—cv—O1512—GLL Document 82 Filed 11/04/05 Page 7 of 7
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE WESTERN DISTRICT OF PENNSYLVANIA
`
`Civil Action No. 03-1512
`Judge Thomas M. Hardiman
`
`) ) ) ) ) ) ) ) ) )
`
`) ) ) ) ) ) ) ) )
`
`FEDEX GROUND PACKAGE SYSTEMS,
`
`INC.,
`
`Plaintiff/Counter-Defendant,
`
`v.
`
`APPLICATIONS INTERNATIONAL
`
`CORPORATION,
`
`Defendant/Counter-Plaintiff,
`
`V.
`
`COMPUTER AID, INC.,
`
`Additional Counter- Defendant.
`
`ORDER
`
`AND NOW, upon consideration of FedEx Ground Package Systems, Inc.’s Motion for
`
`Judgment on the Pleadings as to Counts III-VI of Application International Corporation, Inc.’s
`
`Third Amended Counterclaim and Computer Aid, Inc.’s Motion to Dismiss Counts 11, IV, V,
`
`and VI of Application International Corporation, Inc.’s Third Amended Counterclaim, it is
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`HEREBY ORDERED that BOTH motions are DENIED.
`
`Dated: November 4, 2005
`
`cc: Counsel and parties
`
`Z
`
`Thomas M. Hardiman
`
`United States District Judge
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