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