Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 1 of 26
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`§
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`§§
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`§§
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`§ CIVIL ACTION NO. 14-1368
`§
`§
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`§§
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`§
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`GEOPHYSICAL SERVICES,
`INCORPORATED,
`
`Plaintiff,
`
`VS.
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`TGS-NOPEC GEOPHYSICAL
`SERVICES,
`
`Defendant.
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`MEMORANDUM AND OPINION
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`Canadian laws regulating offshore petroleum exploration and extraction require
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`geophysical surveyors performing seismic studies in waters offshore Newfoundland and
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`Labrador to submit copies of the data the surveyors collect and compile to a government
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`regulatory board. The plaintiff, Geophysical Services Incorporated, performed seismic surveys
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`in those offshore waters in 1982 and gave the regulatory board copies of its data. Geophysical
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`asserts a copyright interest in that data under Canadian law. In 1999, the defendant, TGS-Nopec
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`Geophysical Services (“TGS”), asked the regulatory board for a copy of the seismic data
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`Geophysical had filed years earlier. The board made copies and sent them to TGS’s Houston
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`address. TGS then did its own seismic surveys at the same location where Geophysical had
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`surveyed in 1982. TGS licensed the data it collected through those surveys to oil and gas
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`companies. Geophysical has sued for copyright infringement, alleging that TGS contributorily
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`infringed Geophysical’s copyrighted seismic survey data by asking the Canadian regulatory
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`board to copy the data and send it to TGS. Geophysical also alleges that the TGS surveys made
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`at the locations disclosed in the Geophysical surveys obtained from the Canadian regulatory
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`board were derivative works. Geophysical alleges that TGS infringed its copyrights by
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`providing licenses to oil and gas companies to use the data collected in the TGS surveys made
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`using Geophysical’s locations, and by distributing the survey results without attaching
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`Geophysical’s copyright-management information.
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`This memorandum and opinion addresses TGS’s motion to dismiss. TGS argues that
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`Geophysical’s complaint fails to state a claim and is barred by the act-of-state doctrine and by
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`international comity. (Docket Entry No. 10). Geophysical responded, TGS replied, and
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`Geophysical surreplied, (Docket Entry Nos. 13, 16, 20), and counsel presented oral argument.
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`Based on the pleadings; the motion, response, reply, and surreply; counsels’ arguments;
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`and the applicable law, the court grants the motion to dismiss. The claims arising from TGS’s
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`request that the Canadian regulatory board copy and send the Geophysical survey data filed with
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`the board years earlier are dismissed, with prejudice and without leave to amend. The claims
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`related to TGS’s subsequent use of the data it received from the board are dismissed, but without
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`prejudice. No later than April 24, 2015, Geophysical may file an amended complaint that
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`repleads these allegations in compliance with Rule 8(a) of the Federal Rules of Civil Procedure.
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`The reasons for these rulings are explained below.
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`I.
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`Background
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`Geophysical is a Canadian company that collects, prepares, and licenses seismic data,
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`including seismic lines. (Docket Entry No. 1 at p. 2).1 Geophysical licenses its seismic lines to
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`1 A seismic line is taken in offshore waters and is a two-dimensional depiction of the earth’s structure
`below the ocean floor, revealing a cross-section picture of the earth’s rock layers. (Docket Entry No. 1 at p.
`3). The picture is intended to be an accurate depiction of the earth’s structure. Two seismic lines taken at
`the same location may vary, however, depending on the acquisition parameters selected by the surveyor,
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`2
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 3 of 26
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`oil and gas companies to use in exploring for oil, gas, and other hydrocarbons.
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`Various Canadian laws govern seismic surveying in Canada’s offshore waters. The
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`federal government of Canada and the provincial government of Newfoundland and Labrador
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`enacted the Canada-Newfoundland Atlantic Accord in 1985. The Accord’s objectives were “to
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`provide for the development of oil and gas resources offshore Newfoundland for the benefit of
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`Canada as a whole and Newfoundland in particular” and “to protect, preserve and advance the
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`attainment of national self-sufficiency and security of supply.” (Docket Entry No. 10, Ex. A).
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`The federal and provincial governments enacted mirror legislation, the Canada-Newfoundland
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`Offshore Petroleum Resources Accord Implementation Act, (the “Implementation Act”), to
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`implement the Accord. S.C. 1988, c. 28; R.S.N.L. 1990 c. C-2, (Docket Entry No. 10, Ex. B).
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`The Implementation Act authorized the adoption of the Newfoundland Offshore Area
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`Petroleum Geophysical Operations Regulations (the “Operations Regulations”). SOR-95-334,
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`(Docket Entry No. 10, Ex. C). The Implementation Act also established the Canada-
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`Newfoundland Offshore Petroleum Board (the “Petroleum Board”). The Petroleum Board is a
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`government agency that oversees regulatory compliance with the Accord, the Implementation
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`Act, and the Operations Regulations. The Implementation Act and the Operations Regulations
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`apply to all exploration and extraction activities in Newfoundland’s offshore waters. A surveyor
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`intending to conduct seismic studies in those waters must first apply to the Petroleum Board for
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`authorization and agree to follow the safety and reporting requirements established by the Board
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`and by Canadian law. Operations Regulations §§ 3, 4.
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`The Operations Regulations require geophysical surveyors to give the Petroleum Board a
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`proprietary processing technology, and decisions about how to process and assemble the data. (Id.).
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 4 of 26
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`copy of the data they compile from their surveys, including a copy of any seismic lines they
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`prepare. Operations Regulations, § 25. Surveyors must also keep their own copy of the
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`compiled data and seismic lines inside Canada. For 15 years after collecting the data, surveyors
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`may not destroy their copies or move them outside the country without the Petroleum Board’s
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`permission. Operations Regulations, § 26.
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`The Implementation Act originally required the Board to keep the seismic line and other
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`data surveyors filed confidential for five years. See Implementation Act, § 119. In practice, the
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`Petroleum Board observes a 10-year confidentiality period before it will copy and disclose the
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`data to third parties. (Docket Entry No. 10, Ex. G). The Act states that the information “may be
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`disclosed” after the confidentiality period expires.” Implementation Act, § 119.
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`The Petroleum Board regularly receives requests for information that it has obtained from
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`operators and surveyors. If the confidentiality period has expired, the Petroleum Board provides
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`the requested copies. On multiple occasions, the Petroleum Board has sent the Geophysical
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`seismic lines to third parties who followed the Board’s procedure for requesting copies. (Docket
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`Entry No. 14-1, Ex. 4).
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`In addition to these disclosure provisions, and without regard to the 10-year
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`confidentiality period, the Implementation Act gives the Petroleum Board the right to give the
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`Federal Minister and the Provincial Minister access to the information the Board maintains.
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`Implementation Act, § 18. The Board may also disclose “documentation relating to a significant
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`discovery” to any offshore-interest owner who needs the information to comply with a drilling
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`order from the Petroleum Board. Implementation Act, § 77.
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`Geophysical applied for and obtained a work authorization from the Petroleum Board to
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 5 of 26
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`conduct offshore seismic surveys. In 1982, Geophysical completed the NF-82 Survey, covering
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`7,309 kilometers in the offshore waters of Newfoundland and Labrador. Geophysical created
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`seismic lines from the data it gathered and submitted copies of each to the Petroleum Board.
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`(Docket Entry No. 1 at p. 8; Docket Entry No. 10, Ex. D, at pp. 3–4).
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`In 1999, long after the 10-year confidentiality period ended, TGS sent the Petroleum
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`Board an e-mail from its Houston office, asking for copies of certain seismic lines Geophysical
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`had prepared and filed after completing its NF-82 survey. TGS filled out the Petroleum Board’s
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`“Disclosure Agreement — Information Requests” form, which included the following statement:
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`The applicant understands and agrees that information and data
`contained in these materials are being disclosed in accordance with
`the Accord Acts and that such disclosure could be challenged
`under the intellectual property laws of Canada. The applicant
`agrees to use these materials in a manner consistent with those
`laws.
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`(Docket Entry No. 14, Ex. 3). The form also stated that “[t]he [Petroleum Board] makes no
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`representation or warranty as to the existence or absence of any trademark, copyright, or other
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`ownership rights in respect to the disclosed information and data.” (Id.).
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`The Petroleum Board made the copies of the Geophysical seismic lines TGS requested.
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`The Board sent the copies to TGS’s Houston address and charged TGS $97.75. (Docket Entry
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`No. 1, Ex. A).
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`Geophysical alleges that in 2002 to 2003 and again in 2012 to 2013, TGS took the copies
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`of the Geophysical seismic lines it had received from the Petroleum Board, went to the same
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`locations Geophysical had surveyed, and took its own seismic-line measurements at those
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`locations. TGS then used this data to prepare its own seismic lines, labeled as OB-102, OB-
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`107,2 and NE Newfoundland Flemish Pass. (Docket Entry No. 1 at p. 10). TGS sold licenses to
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`these lines, without referring to Geophysical or its copyrights. (Id.).
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`Geophysical filed this suit against TGS in May 2014. Geophysical alleges that TGS
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`contributorily infringed its copyrights in the 1982 seismic lines on file with the Canadian
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`Petroleum Board by requesting copies. Geophysical alleges that TGS also infringed by giving
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`copies of what it received from the Board to third parties and by creating derivative works from
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`the copyrighted seismic lines and licensing them to third parties. According to Geophysical,
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`TGS created derivative works by using the locations disclosed in the Geophysical seismic lines
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`to survey, collect its own data, and make its own seismic lines. Geophysical alleges that TGS
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`infringed by licensing these seismic lines and distributing copies without including
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`Geophysical’s copyright-management information.
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`Earlier in 2014, Geophysical had filed suit against TGS in Canada, alleging that it
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`violated Canadian copyright laws. (Docket Entry No. 10, Ex. D, Geophysical v. TGS, No. 2014
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`O1G 0067, filed in the Supreme Court of Newfoundland and Labrador, Trial Division). In June
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`2014, Geophysical stopped prosecuting that case, informing the Canadian court that it intended
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`instead to pursue its copyright claims in the United States courts. (Docket Entry No. 15, Ex. D).
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`TGS has moved to dismiss Geophysical’s suit, arguing that the complaint fails to state a
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`claim and that the act-of-state doctrine and international comity preclude relief.3 The court heard
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`argument on the motion. At argument, counsel focused on TGS’s position that Geophysical
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`2 Geophysical refers to this seismic line as “OB JOT.” TGS has indicated that it is called “OB-107.”
`(Docket Entry No. 10, p. 21 n. 15; Ex. D at ¶ 16).
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`3 TGS also moved to abstain under Colorado River in favor of the then-pending Canadian court suit.
`Geophysical’s decision not to prosecute that suit makes the motion to abstain moot.
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 7 of 26
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`consented to the Petroleum Board copying the seismic lines and distributing them to third parties
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`on request.
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`The arguments for and against dismissal are analyzed below.
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`II.
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`The Motion to Dismiss for Lack of Subject-Matter Jurisdiction
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`TGS has moved to dismiss Geophysical’s Copyright Act allegations under Rule 12(b)(6).
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`The motion is based in part on the argument that the complaint does not allege an act of
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`infringement within the United States, and the Copyright Act does not cover extraterritorial acts
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`of infringement. Because this argument challenges the court’s subject-matter jurisdiction, it is
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`appropriately considered under Rule 12(b)(1), not 12(b)(6).
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`A.
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`Rule 12(b)(1)
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`“Under Rule 12(b)(1), a claim is properly dismissed for lack of subject-matter
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`jurisdiction when the court lacks the statutory or constitutional power to adjudicate the claim.”
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`In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 668 F.3d 281, 286 (5th Cir. 2012)
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`(quotation omitted). Challenges to subject-matter jurisdiction may be facial or factual attacks.
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`Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981)). A facial attack is made by filing a
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`Rule 12(b)(1) motion without supporting evidence, challenging the court’s jurisdiction based
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`solely on the pleadings. Paterson, 644 F.2d at 523). The factual allegations are presumed true.
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`“If those allegations sufficiently allege a claim for recovery the complaint stands and the federal
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`court must entertain the suit.” Jones v. SuperMedia Inc., 281 F.R.D. 282, 286 (N.D. Tex. 2012)
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`(citing Paterson, 644 F.2d at 523). To the extent TGS’s motion to dismiss is based on a lack of
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`subject-matter jurisdiction, the challenge is a facial attack, based on the pleadings, with no
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`additional evidence.
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`B.
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`The Copyright Act Applies to TGS’s Conduct in the United States
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`Federal courts have subject-matter jurisdiction under the Copyright Act only over
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`infringing acts that occur within the United States. See Palmer v. Braun, 376 F.3d 1254, 1258
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`(11th Cir. 2004); 28 U.S.C. § 1338(a). The Act has no extraterritorial reach. See Litecubes, LLC
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`v. N. Light Prods., Inc., 523 F.3d 1353, 1366 (Fed. Cir. 2008); Liberty Toy Co., Inc. v. Fred
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`Silber Co., 149 F.3d 1183 (6th Cir. 1998) (unpublished). Although some of the alleged
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`infringing acts may occur outside the United States, at least one must take place within this
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`country. See Palmer, 376 F.3d at 1258 (the court had subject-matter jurisdiction under the
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`Copyright Act because the complaint alleged that the defendant imported infringing goods for
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`resale in the United States); Liberty Toy, 149 F.3d 1183 (although the allegedly infringing
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`merchandise was from outside the United States, the defendant paid for, received, and distributed
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`that merchandise in the United States); Yesh Music v. Lakewood Church, No. 4:11-cv-3095,
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`2012 WL 524187, at *3 (S.D. Tex. Feb. 14, 2012) (the defendants communicated from inside the
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`United States with television stations located outside the United States to induce the stations to
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`broadcast the copyrighted work).
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`Geophysical alleges that TGS initiated copyright infringement in Houston when it
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`emailed the Petroleum Board asking for copies of Geophysical’s seismic lines. Geophysical also
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`alleges that TGS committed a domestic copyright violation by importing infringing copies of the
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`seismic lines into the United States and by selling copies of, as well as works derivative from,
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`the copyrighted lines out of the TGS Houston office. These allegations show subject-matter
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`jurisdiction over the copyright infringement claims. To the extent the motion to dismiss is based
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`on a lack of subject-matter jurisdiction, it is denied.
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`III.
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`The Motion to Dismiss for Failure to State a Claim
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`TGS also moves to dismiss on the basis that the complaint fails to state a claim, for
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`reasons separate from the lack of subject-matter jurisdiction. The analysis is under Rule
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`12(b)(6).
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`A.
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`The Legal Standard under Rule 12(b)(6)
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`A pleading is deficient and may be dismissed under Rule 12(b)(6) if a plaintiff fails “to
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`state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). Rule 12(b)(6) is read
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`in conjunction with Rule 8(a), which requires “a short and plain statement of the claim showing
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`that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). A complaint must contain “enough
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`facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corporation v.
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`Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009). Rule 8 “does not
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`require ‘detailed factual allegations,’ but it demands more than an unadorned,
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`the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (citing Twombly, 550
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`U.S. at 555). “A claim has facial plausibility when the plaintiff pleads factual content that
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`allows the court to draw the reasonable inference that the defendant is liable for the misconduct
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`alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a
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`‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
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`unlawfully.” Id. (citing Twombly, 550 U.S. at 556).
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`To withstand a Rule 12(b)(6) motion, a “complaint must allege ‘more than labels and
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`conclusions,’” and “‘a formulaic recitation of the elements of a cause of action will not do.’”
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`Norris v. Hearst Trust, 500 F.3d 454, 464 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555).
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`“Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 10 of 26
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`enhancement.’” Iqbal, 556 U.S. at 678 (alteration in original) (quoting Twombly, 550 U.S. at
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`557). “To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed factual
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`allegations,’ but must provide the plaintiff’s grounds for entitlement to relief — including factual
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`allegations that when assumed to be true ‘raise a right to relief above the speculative level.’”
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`Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (footnote omitted) (quoting Twombly, 550
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`U.S. at 555). “Conversely, ‘when the allegations in a complaint, however true, could not raise a
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`claim of entitlement to relief, this basic deficiency should . . . be exposed at the point of
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`minimum expenditure of time and money by the parties and the court.’” Id. (quoting Twombly,
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`550 U.S. at 558).
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`When a plaintiff’s complaint fails to state a claim, the court should generally give the
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`plaintiff a chance to amend the complaint under Rule 15(a) before dismissing the action with
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`prejudice, unless it is clear that to do so would be futile. See Great Plains Trust Co. v. Morgan
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`Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002) (“[D]istrict courts often afford
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`plaintiffs at least one opportunity to cure pleading deficiencies before dismissing a case, unless it
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`is clear that the defects are incurable or the plaintiffs advise the court that they are unwilling or
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`unable to amend in a manner that will avoid dismissal.”). However, a plaintiff should be denied
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`leave to amend a complaint if the court determines that “the proposed change clearly is frivolous
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`or advances a claim or defense that is legally insufficient on its face.” 6 CHARLES A. WRIGHT,
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`ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1487 (2d ed.
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`1990); see also Ayers v. Johnson, 247 Fed. App’x 534, 535 (5th Cir. 2007) (“‘[A] district court
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`acts within its discretion when dismissing a motion to amend that is frivolous or futile.’”
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`(quoting Martin’s Herend Imports, Inc. v. Diamond & Gem Trading U.S. of Am. Co., 195 F.3d
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 11 of 26
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`765, 771 (5th Cir. 1999))).
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`In considering a Rule 12(b)(6) motion to dismiss, a court limits itself to the contents of
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`the pleadings, with an exception. In Collins v. Morgan Stanley Dean Witter, 224 F.3d 496,
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`498–99 (5th Cir. 2000), the Fifth Circuit approved the district court’s consideration of
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`documents the defendant attached to a motion to dismiss. The Fifth Circuit made it clear that
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`“such consideration is limited to documents that are referred to in the plaintiff’s complaint and
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`are central to the plaintiff’s claim.” Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir.
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`2003) (citing Collins, 224 F.3d at 498–99). Other courts approve the same practice. See Venture
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`Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993) (“Documents that a
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`defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred
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`to in the plaintiff's complaint and are central to her claim.” (citations omitted)); see also Field v.
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`Trump, 850 F.2d 938, 949 (2d Cir. 1988) (citation omitted); Branch v. Tunnell, 14 F.3d 449,
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`453–54 (9th Cir. 1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307
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`F.3d 1119 (9th Cir. 2002).
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`When “matters outside the pleadings” are submitted in support of or in opposition to a
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`Rule 12(b)(6) motion to dismiss, Rule 12(b) grants courts discretion to accept and consider those
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`materials, but does not require them to do so. See Prager v. LaFaver, 180 F.3d 1185, 1188–89
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`(10th Cir. 1999); Isquith v. Middle S. Utils., Inc., 847 F.2d 186, 193 n. 3 (5th Cir. 1988) (quoting
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`5C WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 1366). A court exercises this
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`discretion by determining whether the proffered material, and the resulting conversion from the
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`Rule 12(b)(6) to the Rule 56 procedure, is likely to facilitate disposing of the action. Isquith,
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`847 F.2d at 193 n. 3. If the court decides to consider such extraneous material, then the court
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`must treat the Rule 12(b)(6) motion as a motion for summary judgment under Rule 56. FED. R.
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`CIV. P. 12(d). If the court refuses to consider those materials outside the pleadings, then the Rule
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`12(b)(6) motion remains intact and may be decided on its merits under the appropriate standard
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`of review.
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`B.
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`Analysis
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`“To prove copyright infringement a party must show that ‘(1) he owns a valid copyright
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`and (2) the defendant copied constituent elements of the plaintiff’s work that are original.’”
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`Baisden v. I’m Ready Prods., Inc., 693 F.3d 491, 499 (5th Cir. 2012) (quoting Positive Black
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`Talk Inc. v. Cash Money Records, Inc., 394 F.3d 357, 367 (5th Cir. 2004), abrogated on other
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`grounds by Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010)). To establish the ownership
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`element, the plaintiff must show that the material is original and can be copyrighted, and that the
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`plaintiff has complied with all statutory formalities. Id. The copying element is met by proving
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`“(1) factual copying and (2) substantial similarity.” Id. at 393 (quoting Lakedreams v. Taylor,
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`932 F.2d 1103, 1107 (5th Cir. 1991)).
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`It is undisputed that Geophysical’s seismic lines are copyrighted under Canadian law.
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`Factual copying is also undisputed. The first critical dispute is over whether the Petroleum
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`Board was authorized to copy the seismic lines Geophysical had filed and to distribute the copies
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`to third parties. The second critical dispute is over whether TGS’s subsequent use of the copies
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`it received was infringing. Both disputes are analyzed below.
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`1.
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`The Petroleum Board Was Authorized to Copy Geophysical’s Seismic
`Lines
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`“‘A copyright owner may grant a license in his work, thereby waiving his right to sue the
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`licensee for copyright infringement.’” Recursion Software, Inc. v. Interactive Intelligence, Inc.,
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`425 F. Supp. 2d 756, 771 (N.D. Tex. 2006) (quoting Pavlica v. Behr, 397 F. Supp. 2d 519, 526
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`(S.D.N.Y. 2005)). “[T]he existence of a license authorizing the use of copyrighted material is an
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`affirmative defense to an allegation of infringement.” Carson v. Dynegy, Inc., 344 F.3d 446, 451
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`n. 5 (5th Cir. 2003). The defendant has the burden of proving that a license exists. Id.; see also
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`Ramirez v. Nichols, No. 10-20806, 496 Fed. App’x 383, 2012 WL 5377683, at *1 (5th Cir. 2012)
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`(unpublished); Lulirama Ltd. v. Axcess Broad. Servs., Inc., 128 F.3d 872, 884 (5th Cir. 1997)
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`(citing CMS Software Design Sys., Inc. v. Info Designs, Inc., 785 F.2d 1246, 1248 (5th Cir.
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`1986)).
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`Geophysical argues that TGS caused the Canadian government to infringe its copyrights
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`by requesting copies of certain seismic lines from the Petroleum Board. According to
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`Geophysical, the Petroleum Board also infringed because it made the copies without
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`Geophysical’s authorization. (Docket Entry No. 1 at p. 12). For TGS to have contributed to
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`infringement as alleged, the Petroleum Board must have lacked authorization to make the copies
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`and send them to TGS.
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`In its surreply, Geophysical admits that when it applied for authorization to survey in the
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`Newfoundland offshore waters and agreed to obey the Operations Regulations, it agreed to the
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`Regulations allowing the Petroleum Board to show the copyrighted Geophysical seismic lines to
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`third parties. Geophysical argues that the Operations Regulations only allow the Petroleum
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`Board to make the information it requires and retains available to the public for on-site
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`inspection at the Board’s location in Canada, not to copy the information and send it elsewhere.
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`(Docket Entry No. 20 at pp. 3–4) (“Had a TGS[] employee traveled to Canada to view
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`[Geophysical’s] Works and made no copies then no Copyright violation could be pled.”).
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 14 of 26
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`Geophysical argues that the Regulations did not give the Petroleum Board authority to make
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`copies or distribute the information it retained to TGS, even after the confidentiality period
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`expired.
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`The statutory and regulatory language and context shows that the Petroleum Board’s
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`rights in the data are not so limited. Under the Implementation Act, no geophysical and seismic
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`surveys may be conducted in Newfoundland’s offshore waters unless the surveyor applies for
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`and receives permission from the Petroleum Board and agrees to obey the Operations
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`Regulations. Implementation Act, § 137. A condition of conducting seismic surveys in those
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`waters is that the surveyor must submit a copy of all the resulting seismic data to the Chief
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`Conservation Officer of the Petroleum Board in an approved format. Operations Regulations, §§
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`25(i)(j), 26. Under § 122 of the Implementation Act, the Petroleum Board must treat the data as
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`confidential for a set number of years. After the confidentiality period ends, the information
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`“may be disclosed” in response to requests. Section 18 of the Implementation Act allows the
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`Board to disclose any information it receives to the Federal Minister and the Provincial Minister
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`on request, without obtaining the consent of any interested person. Implementation Act, § 18.
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`The Board may also disclose “documentation relating to a significant discovery” to any offshore-
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`interest owner who needs the information to comply with a drilling order from the Petroleum
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`Board. Implementation Act, § 77. These disclosures are not subject to the confidentiality
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`period.
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`In addition, each surveyor must keep a copy of its own data and may not destroy it or
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`remove it from Canada without the Petroleum Board’s permission. Id., § 26. The Implementing
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`Act and Operations Regulations do not impose limits on the Petroleum Board’s authorization or
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 15 of 26
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`right to copy and distribute the surveys it collects and retains, other than the 10-year
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`confidentiality period that applies to most disclosures.
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`Neither the Act nor the Regulations contain language limiting the Petroleum Board’s
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`authority to copy and distribute the seismic line and other data it requires surveyors to submit.
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`To the contrary, the language shows that the Board’s authority is broad. The Board is authorized
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`to require surveyors to submit copies of the seismic lines and to refrain from destroying or
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`removing their own copies without the Board’s permission for 15 years. The Board is required
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`to keep the data confidential for 5 years, which it has in practice extended to 10. After that
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`period ends, the data “may be disclosed.” The language shows an intent to give the Board
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`extensive control over the data, including the right to copy and distribute it after the
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`confidentiality period ends. The intent to give the Board authority to copy and share the
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`information it receives after confidentiality is no longer protected is consistent with the stated
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`purposes of the Implementation Act. Those purposes are to encourage both the exploitation and
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`conservation of Canada’s petroleum resources, and to promote joint production agreements. The
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`Board’s ability to share the information it receives with third parties is consistent with the
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`legislative intent to promote and encourage efficient exploration and extraction activities. The
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`statutory and regulatory language and purpose offer no support for Geophysical’s argument that
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`the Board’s rights in the data it receives are limited to making that data available for on-site
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`inspection. Instead, the Implementation Act and Operations Regulations limit the surveyors’
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`rights in the data, not the Board’s.
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`A Canadian court has reached the same conclusion. In 2002, Geophysical filed suit in
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`Canadian federal court challenging the validity of the Implementation Act and Operations
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 16 of 26
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`Regulations at issue here. In 2003, the Federal Court of Canada ruled that the Regulations
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`authorized the Petroleum Board to retain surveyors’ data and provide it to third parties, “putting
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`it essentially in the public domain.” The Federal Court also ruled that these Regulations were
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`not ultra vires. (Docket Entry No. 10, Ex. 5, at p. 9 (Geophysical Serv. Inc. v. CNOPB et al.,
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`2003 FCT 507 (Fed. Ct. Canada 2003)).
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`Geophysical agreed to comply with the Implementation Act and the Operations
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`Regulations when, as a condition of surveying, it agreed to file the resulting seismic data with
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`the Petroleum Board. By filing the data with Petroleum Board, Geophysical authorized the
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`Petroleum Board to copy and distribute the data. Geophysical’s authorization undermines its
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`claim against TGS for contributory copyright infringement.
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`Even if Geophysical’s agreement to follow and be subject to the Implementation Act and
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`related Regulations did not expressly give the Board authorization to copy and distribute the
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`seismic lines, Geophysical’s complaint allegations show that it granted the Petroleum Board an
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`implied license to use and copy its seismic lines. Geophysical’s allegations, and the 2003
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`Canadian court ruling denying Geophysical’s challenge to the Regulations permitting copying
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`and disclosure, establish that Geophysical has known, for many years, that after the
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`confidentiality period, the Petroleum Board gives third parties copies of the seismic lines
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`surveyors had filed. The allegations show that, at a minimum, Geophysical knew of and allowed
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`itself to be subject to this practice. Courts have held that such knowledge and acquiescence
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`show an encouragement of the allegedly infringing practice.
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`Under § 204 of the Copyright Act, a grant of an exclusive license must be in writing. A
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`nonexclusive license, by contract, “may be granted orally, or may even be implied from
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`Case 4:14-cv-01368 Document 28 Filed in TXSD on 03/30/15 Page 17 of 26
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`conduct.” Lulirama, 128 F.3d at 879 (quoting 3 MELVILLE B. NIMMER & DAVID NIMMER ON
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`COPYRIGHT § 10.03[A], at 10-40, 10-41 (1997) (“When the totality of the parties’ conduct
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`indicates an intent to grant such permission, the result is a legal nonexclusive license. . . .”)); see
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`also Psihoyos v. Pearson Educ., Inc., 885 F. Supp. 2d 103, 119 (S.D.N.Y. 2012) (quoting Keane
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`Dealer Servs., Inc. v. Harts, 968 F. Supp. 944, 947 (S.D.N.Y. 1997)). “[C]onsent given in the
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`form of mere permission or lack of objection is also equivalent to a nonexclusive license and is
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`not required to be in writing” Keane, 968 F. Supp. at 947 (internal quotation omitted).
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`The typical implied-license case involves three factors: “(1) a person (the licensee)
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`requests the creation of a wor