Case 4:19-cv-03520 Document 212 Filed on 09/28/22 in TXSD Page 1 of 9
`United States District Court
`Southern District of Texas
`ENTERED
`September 28, 2022
`Nathan Ochsner, Clerk
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`CIVIL ACTION NO.
`4:19-cv-03520
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`JUDGE CHARLES ESKRIDGE
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`vs.
`
`ENERGY
`INTELLIGENCE
`GROUP INC and
`ENERGY
`INTELLIGENCE
`GROUP (UK) LIMITED,
`
`
`Plaintiffs,
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`KIRBY INLAND
`MARINE LP,
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`Defendant.
`
`OPINION AND ORDER ON
`MOTIONS FOR PARTIAL SUMMARY JUDGMENT
`The parties have each moved for partial summary
`judgment. Plaintiffs’ motion is granted in part and denied
`in part. Dkt 169. Defendant’s motion is denied. Dkt 168.
`1. Background
`Plaintiffs Energy Intelligence Group Inc and Energy
`Intelligence Group (UK) Limited are referred to together
`as EIG. They publish Oil Daily, a daily newsletter, and are
`the exclusive copyright owner of the various editions at
`issue here. Dkt 62 at ¶¶ 19, 21, 24, 38–40; see also
`Dkts 62-3 & 62-4.
`Defendant Kirby Inland Marine LP maintained a
`single “one user” subscription to Oil Daily from August
`2003 through July 2019. Under that subscription, a single
`designated recipient at Kirby received each edition of Oil
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`Daily via email. The designated recipient then routinely
`forwarded those emails to company executives and
`administrators. See Dkt 169-3 at 3.
`EIG contends that the “one user” subscription only
`permitted the designated recipient to view the publication
`because its subscription agreement and copyright notices
`“forbid copying, forwarding copies, and/or distributing” the
`publication “without express written permission from
`Plaintiffs.” Dkt 62 at ¶ 46. It alleges that Kirby unlawfully
`copied and distributed Oil Daily, thus violating EIG’s
`copyright from June 2004 to July 2019. Id at ¶¶ 47–58.
`EIG brought this action in the United States District
`Court for the District of Delaware in April 2019, alleging
`copyright infringement under Section 106 of the Copyright
`Act. Dkt 1. The action was transferred to the Southern
`District of Texas by agreement of the parties in September
`2019, and it was subsequently reassigned to this Court.
`Dkts 21 & 47. The action was then consolidated with a
`second action EIG had brought against Kirby in the
`Southern District of Texas. Dkt 49 & Minute Entry of
`12/06/2019.
`The parties each moved for partial summary judgment
`at the close of discovery. Dkts 168 & 169.
`2. Legal Standard
`Rule 56(a) of the Federal Rules of Civil Procedure
`requires a court to enter summary judgment when the
`movant establishes that “there is no genuine dispute as to
`any material fact and the movant is entitled to judgment
`as a matter of law.” A fact is material if it “might affect the
`outcome of the suit under the governing law.” Sulzer
`Carbomedics Inc v Oregon Cardio-Devices Inc, 257 F3d 449,
`456 (5th Cir 2001), quoting Anderson v Liberty Lobby Inc,
`477 US 242, 248 (1986). And a dispute is genuine if the
`“evidence is such that a reasonable jury could return a
`verdict for the nonmoving party.” Royal v CCC & R Tres
`Arboles LLC, 736 F3d 396, 400
`(5th Cir 2013),
`quoting Anderson, 477 US at 248.
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`The summary judgment stage doesn’t involve weighing
`the evidence or determining the truth of the matter. The
`task is solely to determine whether a genuine issue exists
`that would allow a reasonable jury to return a verdict for
`the nonmoving party. Smith v Harris County, 956 F3d 311,
`316 (5th Cir 2020). Disputed factual issues must be
`resolved in favor of the nonmoving party. Little v Liquid
`Air Corp, 37 F3d 1069, 1075 (5th Cir 1994). All reasonable
`inferences must also be drawn in the light most favorable
`to the nonmoving party. Connors v Graves, 538 F3d 373,
`376 (5th Cir 2008).
`The moving party typically bears the entire burden to
`demonstrate the absence of a genuine issue of material
`fact. Nola Spice Designs LLC v Haydel Enterprises Inc,
`783 F3d 527, 536 (5th Cir 2015); see also Celotex Corp v
`Catrett, 477 US 317, 322–23 (1986). But when a motion for
`summary judgment by a defendant presents a question on
`which the plaintiff bears the burden of proof at trial, the
`burden shifts to the plaintiff to proffer summary judgment
`proof establishing an issue of material fact warranting
`trial. Nola Spice, 783 F3d at 536. To meet this burden of
`proof, the evidence must be both “competent and
`admissible at trial.” Bellard v Gautreaux, 675 F3d 454, 460
`(5th Cir 2012).
`When parties file opposing motions for summary
`judgment on the same issue, the court reviews each motion
`independently, each time viewing the evidence and
`inferences in the light most favorable to the nonmoving
`party. Amerisure Insurance Co v Navigators Insurance Co,
`611 F3d 299, 304 (5th Cir 2010). Each movant must
`establish that no genuine dispute of material fact exists,
`such that judgment as a matter of law is in order. Ibid; see
`also Tidewater Inc v United States, 565 F3d 299, 302
`(5th Cir 2009).
`3. Analysis
`Kirby and EIG each move for summary judgment on
`the issue of limitations. Dkts 168 at 5 & 169 at 13. EIG also
`moves for summary judgment on Kirby’s other affirmative
`defenses. Dkt 169 at 6.
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`a. Limitations
`Kirby moves for summary judgment on all claims
`involving copyright infringement that occurred prior to
`April 25, 2016. Dkt 168. It generally contends that 17 USC
`§ 507(b) provides a strict three-year limitations period from
`the date a copyright infringement occurs—by which it
`means that usual tolling principles don’t apply. Kirby also
`argues that, even if tolling does apply, EIG knew or should
`have known of Kirby’s alleged infringements more than
`three years prior to bringing this action.
`EIG argues that the Fifth Circuit recognizes the
`discovery rule in copyright actions—that is, a copyright
`claim doesn’t accrue until the plaintiff knew or should have
`known of the injury upon which the claim was based.
`Dkt 181 at 7. It seeks summary judgment as to Kirby’s
`limitations defense because “Kirby cannot show that EIG
`knew or should have known of Kirby’s infringement more
`than three years prior to filing suit.” Dkt 169 at 13.
`i. Tolling principles, considered
`The Copyright Act of 1976 provides that “no civil action
`shall be maintained under the provisions of this title unless
`it is commenced within three years after the claim
`accrued.” 17 USC § 507(b). EIG is correct about Fifth
`Circuit precedent allowing for the discovery rule as to such
`claims, for it plainly holds that a copyright claim accrues
`“when [the party] knew or had reason to know of the injury
`upon which the claim is based.” Jordan v Sony BMG Music
`Entertainment Inc, 354 F Appx 942, 945 (5th Cir 2009),
`citing Pritchett v Pound, 473 F3d 217, 220 (5th Cir 2006);
`see also Graper v Mid-Continent Casualty Co, 756 F3d 388,
`393 (5th Cir 2014), DynaStudy Inc v Houston Independent
`School District, 325 F Supp 3d 767, 775 (SD Tex 2017).
`Kirby argues that the Supreme Court effectively
`overturned this precedent in Rotkiske v Klemm, 140 S Ct
`355 (2019). The Supreme Court there found that the
`discovery rule didn’t apply to claims brought under the
`Fair Debt Collection Practices Act because the applicable
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`limitations provision didn’t include express language
`authorizing such tolling. Id at 361.
`Rotkiske doesn’t abrogate the cited Fifth Circuit
`precedent. The provision there at issue derived from the
`FDCPA and states that an action must be brought “within
`one year from the date on which the violation occurs.” 15
`USC § 1692k(d) (emphasis added). By contrast, the
`Copyright Act here requires an action to be commenced
`“within three years after the claim accrued.” 17 USC
`§ 507(b) (emphasis added). The stark conceptual difference
`between when a violation occurs and when a claim accrues
`is familiar even to law students. And certainly, other
`Supreme Court precedent treats the latter concept
`differently. For example, in Gabelli v SEC, it noted that “a
`claim accrues when the plaintiff has a complete and
`present cause of action.” 568 US 442 (2013) (cleaned up).
`Whenever the Fifth Circuit reaches the issue of the
`applicability of Rotkiske to the Copyright Act, it will likely
`maintain
`its precedent based on that distinction.
`Regardless, that precedent remains binding until the Fifth
`Circuit says otherwise. To date, and not surprisingly, other
`district courts in this circuit have continued to apply the
`discovery rule to copyright claims after Rotkiske. For
`example, see Stross v Hearst Communications Inc, 2020
`WL 5250579, *8 (WD Tex); Garza v Edinburg Consolidated
`Independent School District, 2020 WL 6470197, *2 (SD
`Tex), memorandum and recommendation adopted by 2020
`WL 6447906, *1 (SD Tex).
`Kirby also argues that while the claims might be saved
`by the discovery rule, damages relating to those claims are
`barred by a strict three-year limitations provision. Dkt 168
`at 14, citing Sohm v Scholastic Inc, 959 F3d 39, 52 (2nd Cir
`2020). The distinction largely eludes conceptual grasp but
`must be rejected in any event. The text of the statute
`contains no hint that the limitations period of a copyright
`claim and the resulting damages should be bifurcated.
`See 17 USC § 507(b). And Fifth Circuit precedent casts
`significant doubt on the conjecture. See Energy Intelligence
`Group Inc v Kayne Anderson Capital Advisors LP, 948 F3d
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`261, 265 (5th Cir 2020) (remanding for calculation of
`Copyright Act damages dating back over ten years from
`initiation of action).
`The discovery rule pertains to copyright claims and
`will be applied to those brought by EIG (and any respective
`damages).
`
`ii. Tolling principles, applied
`Kirby cites various internal EIG emails from 2008 and
`2010 to argue that EIG knew or should have known of
`Kirby’s copyright infringement before April 25, 2016.
`Dkt 168 at 15–18, citing Dkts 168-5 (February 2010 EIG
`internal email) & 168-6 (July 2010 EIG internal email). It
`also submits evidence regarding tracking data that EIG’s
`email delivery service partner (called SendGrid) began
`supplying EIG in 2015. Dkt 168-18 at 9, 10, 12.
`EIG argues that there’s “no evidence to show that EIG
`had actual knowledge or any reasonable basis to have
`known of Kirby’s infringement earlier than April 25, 2016.”
`Dkt 169 at 9. It submits evidence that SendGrid didn’t
`provide the necessary information to detect copyright
`infringement until July 2018, and that only in December
`2018 did EIG have sufficient data to bring action against
`Kirby. Dkts 169-8 at 3–4, 169-11 at 3, 169-15, 169-16,
`169-17 at 3–4, 169-18 at 3, 169-19 at 3–4, 169-20 at 3–4 &
`169-21 at 3–4; see also Dkts 181-4 at 6, 181-5 at 3–4 &
`181-6 at 3–4.
`Genuine disputes of material fact exist as to when EIG
`knew or should have known that Kirby was violating its
`Oil Daily copyright. It’s thus a question for the jury. See
`Energy Intelligence Group Inc v Kayne Anderson Capital
`Advisors LP, 2016 WL 1203763, *7 (SD Tex).
`The motions by both EIG and Kirby for partial
`summary judgment on limitations will be denied. Dkts 168
`at 18 & 169 at13.
`b. Other affirmative defenses
`As to failure to mitigate, EIG argues that a duty to
`mitigate didn’t arise because “every act of infringement of
`an issue of [Oil Daily] is an independently actionable legal
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`wrong giving rise to a separate harm.” Dkt 169 at 14. This
`is in line with Fifth Circuit precedent squarely holding that
`“mitigation is not an absolute defense to statutory damages
`under the Copyright Act.” Energy Intelligence, 948 F3d
`at 275.
`Kirby concedes this but maintains that the failure by
`EIG to prevent Kirby’s ongoing infringement can be
`considered when assessing statutory damages. Dkt 182
`at 19–21. This is largely foreclosed by the decision in
`Energy Intelligence. The Fifth Circuit there held that
`failure to prevent ongoing infringement can’t properly be
`characterized as a mitigation defense, thus rejecting
`argument that the “harm” the plaintiff failed to mitigate
`was the defendant’s continuing infringement because
`“every act of copyright infringement is an independently
`actionable legal wrong.” 948 F3d at 274–75. But it also
`there determined that courts may consider “the conduct of
`parties when setting the amount of statutory damages”—
`including whether the defendant failed to prevent ongoing
`infringements. Id at 275, citing Bryant v Media Right
`Products Inc, 603 F3d 135, 144 (2d Cir 2010).
`Summary judgment as to the affirmative defense of
`mitigation of damages will therefore granted. But this
`ruling doesn’t preclude Kirby from arguing that EIG’s
`failure (if any) to prevent Kirby’s ongoing infringement
`may be considered when assessing the amount of statutory
`damages.
`As to copyright misuse, EIG contends that no evidence
`suggests that it has sought to extend its monopoly beyond
`the scope of its copyright. Dkt 169 at 16. Kirby responds
`that EIG has indeed extended its monopoly by seeking to
`protect the disclosure of discrete information within Oil
`Daily that’s not copyrighted or copyrightable. Dkt 182
`at 21–22. It also complains that EIG maintains a
`“litigation-dependent business model” by which it sues
`“unsuspecting subscribers” for profit. Id at 22.
`The doctrine of copyright misuse “forbids the use of the
`copyright to secure an exclusive right or limited monopoly
`not granted by the Copyright Office and which it is
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`contrary to public policy to grant.” Alcatel USA Inc v DGI
`Technologies Inc, 166 F3d 772, 792 (5th Cir 1999) (cleaned
`up). Where applicable, it provides an affirmative defense
`that “bars a culpable plaintiff from prevailing on an action
`for the infringement of the misused copyright.” DSC
`Communications Corporation v DGI Technologies Inc,
`81 F 3d 597, 601 (5th Cir 1996) (citations omitted).
`EIG doesn’t base its claim for relief on Kirby’s use of
`information not subject to its copyright, such as industry-
`related information published in Oil Daily. It instead
`alleges that Kirby infringed its Oil Daily copyright when
`Kirby internally distributed Oil Daily, which in effect
`reproduced the entire copyrighted work. Dkt 62 at 20–23;
`see also Dkt 169-3 at 3. EIG thus seeks to secure its duly
`granted monopoly rights over its copyrighted works—not
`to extend its monopoly over uncopyrighted information.
`See Philpot v WOS Inc, 2019 WL 1767208, *12 n 15
`(WD Tex).
`Summary judgment as to the affirmative defense of
`copyright misuse will be granted.
`As to innocent and/or non-willful infringement, EIG
`argues that copyright infringement is a strict liability
`offense, thus putting to one side questions of good faith and
`willfulness. And in any event, the copyright notices
`contained in Oil Daily preclude a Section 504(c)(2)
`innocent-infringement defense. Kirby doesn’t contest these
`assertions but believes it’s a meaningful clarification that
`“evidence at trial will show that Kirby’s alleged
`infringement was non-willful.” Dkt 182 at 23. That appears
`to miss the point entirely.
`Summary judgment as to the affirmative defenses of
`innocent and non-willful infringement will be granted
`insofar as Kirby contends such defenses preclude liability
`or reduce damages pursuant to 17 USC § 504(c)(2).
`As to unclean hands, failure to state a claim, and
`factual denial, Kirby has withdrawn these defenses.
`Dkt 182 at 22 n 4, 23. Summary judgment will be granted
`on those affirmative defenses.
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`4. Conclusion
`The motion by Defendant Kirby Inland Marine LP for
`partial summary judgment is DENIED. Dkt 168.
`The motion by Plaintiff Energy Intelligence Group Inc
`for partial summary judgment is GRANTED IN PART.
`Dkt 169. It is GRANTED as to the affirmative defenses of
`failure to mitigate, copyright misuse, innocent and non-
`willful infringement, unclean hands, failure to state a
`claim, and factual denial. The motion is otherwise DENIED.
`SO ORDERED.
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`Signed on September 28, 2022, at Houston, Texas.
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`__________________________
`Hon. Charles Eskridge
`United States District Judge
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