Case 3:07-cv-00699-JRS Document 55 Filed 08/28/08 Page 1 of 20 PageID# 688
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`RICHMOND DIVISION
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`THOMAS M. GILBERT ARCHITECTS, P.C.,
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` Plaintiff,
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`v.
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`Civil Action Number 3:07CV699
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`ACCENT BUILDERS AND DEVELOPERS,
`LLC, et al.,
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`Defendants.
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`MEMORANDUM OPINION
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`THIS MATTER comes before the Court on Plaintiff’s Motion for Summary Judgment of
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`Infringement and Motion to Exclude Expert Testimony. For the reasons expressed below and per
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`the Court’s Order of June 4, 2008, the Court GRANTED in part and DENIED in part Plaintiff’s
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`Motion for Summary Judgment (Dkt. No. 14) and Plaintiff’s Motion to Exclude Expert Testimony
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`(Dkt. No. 16).
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`I. BACKGROUND
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`This is an action for copyright infringement. Plaintiff Thomas M. Gilbert Architect,1 P.C.
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`(“Gilbert”) is an architecture firm located in Richmond, Virginia. Defendants Accent Builders and
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`Developers, LLC; Design Custom Builders, Inc.; and Michael Tummillo (collectively,
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`“Defendants”) are involved in the development, construction, and sale of a townhome development
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`project - the Mayland Townes Project - in Henrico County, Virginia.
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`1The Court notes that the although this case was filed under Thomas M. Gilbert
`Architects, P.C., plaintiff’s contractual documents and letterhead state Thomas M. Gilbert
`Architect, P.C.
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`1
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`Tummillo states that he entered an oral agreement in 2002 with the owners of Aspect
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`Properties, LLC, Kevin Spector and Richard Vass, to construct the townhouses for the Mayland
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`Townes Project. On July 26, 2002, Aspect retained Gilbert to provide schematic drawings and
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`architectural plans (“Gilbert Plans”) to be used to construct forty-two townhouses in connection with
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`the Mayland Townes Project. The agreement between Aspect and Gilbert contemplated two phases
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`for the project. During phase one, Gilbert was to provide schematic drawings for three models for
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`a fee of $7,500. The contract required the remaining contract documents, including three floor plans,
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`front and rear elevations, H.V.A.C. plans, and three foundation plans, to be provided in the second
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`phase at a cost of $17,700. Finally, the agreement stated that: “The fee for reuse of the documents
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`will be two hundred fifty dollars (250.00) per unit and any changes requested will be on an hourly
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`basis.” (Pl.’s Mem. Supp. Mot. Summ. J., Ex. A at 2.) The agreement further provided that the
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`“documents remain the property of Thomas M. Gilbert, Architect, P.C.” (Pl.’s Mem. Supp. Mot.
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`Summ. J., Ex. A at 3.) Gilbert delivered the plans to Aspect with the following copyright notice:
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`THOMAS M. GILBERT, ARCHITECT, P.C. EXPRESSLY RESERVES ITS
`COMMON LAW COPYRIGHT OR OTHER PROPERTY RIGHTS IN THESE
`PLANS. THESE PLANS ARE NOT TO BE REPRODUCED, CHANGED, OR
`COPIED IN ANY FORM OR MANNER WHATSOEVER, NOR ARE THEY TO
`BE ASSIGNED TO ANY THIRD PARTY, WITHOUT FIRST OBTAINING THE
`EXPRESS WRITTEN PERMISSION AND CONSENT OF THOMAS M.
`GILBERT, ARCHITECT, P.C.
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`(Pl.’s Mem. Supp. Mot. Summ. J., Ex. C .) Aspect paid Gilbert the full amount under the agreement.
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`On May 29, 2003, Vass and Spector formed Accent Builders and Developers, LLC.
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`Tummillo acquired an ownership interest in Accent in 2003 and eventually obtained complete
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`ownership in 2004. Tummillo asserts that when he purchased Accent, Vass and Spector required
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`him to reimburse them for the money paid to Gilbert under the 2002 agreement for the Gilbert Plans.
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`2
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`Case 3:07-cv-00699-JRS Document 55 Filed 08/28/08 Page 3 of 20 PageID# 690
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`After taking ownership of the project, Tummillo decided that the usable square footage in the family
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`room of the townhouse units needed to be increased by moving the rear wall back three feet, and by
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`moving the fireplace from the corner to the rear wall. When Tummillo asked Gilbert to make the
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`changes, Gilbert sent a proposal on September 11, 2006 offering to make the requested
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`modifications for $14,000 (“2006 Proposal”). Because Tummillo considered the $14,000 fee
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`unreasonable, Tummillo subsequently made two modifications, by hand, to the Gilbert Plans.
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`Tummillo also removed all references to the architects on the Gilbert Plans, including the copyright
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`notice.
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`Once the county approved the plans with the two modifications, the Defendants began
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`construction on the Mayland Townes Project. During the course of construction, Defendants made
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`copies of the modified plans for use in the completion of the Mayland Townes Project, including
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`copies provided to certain suppliers and subcontractors. Upon learning that Tummillo modified the
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`Gilbert Plans in June 2007, Gilbert registered the plans with the United States Copyright Office on
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`August 16, 20072 and sent a cease and desist letter to the Defendants on September 14, 2007.
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`Because the Defendants continued with the Mayland Townes Project, Gilbert filed suit on
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`November 9, 2007, alleging that the Defendants infringed on its copyright by copying and modifying
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`its plans, distributing copies of the modified plans to subcontractors, and using the modified plans
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`to construct townhouses in connection with the Mayland Townes Project. Presently, Gilbert seeks
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`summary judgment on the issue of copyright infringement and to exclude the testimony of the
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`Defendants’ expert witness. Each motion is discussed in turn.
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`2The Certificate of Registration shows that the Gilbert Plans were authored by another
`architectural firm, Charpentier & Chen, P.C.
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`3
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`II. PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
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`A.
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`STANDARD OF REVIEW
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`A motion for summary judgment may be granted only where “there is no genuine issue as
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`to any material fact” and where “the moving party is entitled to judgment as a matter of law.” Fed.
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`R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986). Where a party will
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`have the burden of proof on an essential element of a claim or defense at trial and does not, after
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`adequate time for discovery, make a showing sufficient to establish the existence of that essential
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`element, there can be no genuine issue as to any material fact. See Celotex, 477 U.S. at 322-23.
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`Courts must view the facts and the inferences drawn therefrom in the light most favorable to the
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`non-moving party. Ballinger v. N.C. Agric. Extension Serv., 815 F.2d 1001, 1004 (4th Cir. 1987).
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`While viewing the facts in such a manner, courts examine the pleadings, depositions, answers to
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`interrogatories, and admissions on file, together with the affidavits, to determine whether a triable
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`issue of fact exists. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
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`(1986). But, the Court “may not make credibility determinations or weigh the evidence.” Edell &
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`Assocs., P.C. v. Law Offices of Peter G. Angelos, 264 F.3d 424, 435 (4th Cir. 2001). “That is,
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`[courts] should give credence to the evidence favoring the non-movant as well as that evidence
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`supporting the moving party that is uncontradicted and unimpeached, at least to the extent that the
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`evidence comes from disinterested witnesses.” Id. at 436 (quoting Reeves v. Sanderson Plumbing
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`Prods., Inc., 530 U.S. 133, 149-50 (2000)). Summary judgment is not “a disfavored procedural
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`shortcut,” but an important mechanism for preventing “claims and defenses [that] have no factual
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`basis” from proceeding to trial. Celotex, 477 U.S. at 327; accord Bouchat v. Baltimore Ravens
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`Football Club, 346 F.3d 514, 526 (4th Cir. 2003).
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`B.
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`DISCUSSION
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`To establish a prima facie case of copyright infringement, a plaintiff must demonstrate that
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`(1) “he owned the copyright to the work that was allegedly copied,” and (2) “the defendant copied
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`protected elements of the work.” Bouchat, 241 F.3d at 353. The first element requires an analysis
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`of whether the plaintiff has a registration certificate, and whether the copyrighted work is
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`sufficiently original to warrant copyright protection. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499
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`U.S. 340, 361 (1991). The plaintiff may prove the second element through direct or circumstantial
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`evidence “in the form of proof that the alleged infringer had access to the work and that the
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`supposed copy is substantially similar to the author’s original work.” Bouchat, 241 F.3d at 353-54.
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`Here, Gilbert has submitted a Certificate of Registration showing an effective date of
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`registration of August 16, 2007. Defendants do not contest the validity of the registration certificate
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`and, therefore, the first element is met. Additionally, the Defendants do not dispute that they copied
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`and modified the Gilbert Plans. Instead, Defendants rely on three affirmative defenses: (1) implied
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`nonexclusive license, (2) fair use pursuant to 17 U.S.C. § 107 of the Copyright Act, and (3) misuse
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`of copyright. The Defendants also assert a general defense to the elements of Gilbert’s copyright
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`infringement claim under the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. §§ 1201, et
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`seq.
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`1.
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`Implied Nonexclusive License
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`“[A]n implied nonexclusive license for use of an otherwise copyright protected work is
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`created when (1) a person (the licensee) requests the creation of a work, (2) the creator (the licensor)
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`makes that particular work and delivers it to the licensee who requested it, and (3) the licensor
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`intends that the licensee copy and distribute his work.” Nelson-Salabes, Inc. v. Morningside Dev.,
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`LLC, 284 F.3d 505, 514 (4th Cir. 2002) (internal quotation marks omitted). “Such an implied
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`license, a species of contract implied in fact, does not transfer ownership of the copyright;3 rather,
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`it simply permits the use of the copyrighted work in a particular manner.” Lowry’s Reports, Inc. v.
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`Legg Mason, Inc., 271 F. Supp. 2d 737, 749-50 (citing Nelson-Salabes, 284 F.3d at 514). An
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`implied nonexclusive license can be given either orally or implied from conduct. Nelson-Salabes,
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`284 F.3d at 514. If the Court determines that such an implied nonexclusive license exists, then it
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`constitutes an affirmative defense to copyright infringement. Id.
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`In this instance, it is clear that Aspect - not the Defendants - requested Gilbert, the creator,
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`to develop architectural plans for the Mayland Townes Project, and that Gilbert developed and
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`delivered the plans to Aspect; thereby, satisfying the first two prongs of the test. The issue here is
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`whether Gilbert intended that the Defendants utilize the Gilbert Plans in constructing the Mayland
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`Townes Project, independent of any future involvement by Gilbert in light of the Defendants’
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`business relationship with Aspect.
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`The copyright owner’s intent is the touchstone for determining whether an implied license
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`exists. John G. Danielson, Inc. v. Winchester-Conant Props., 322 F.3d 26, 40 (1st Cir. 2003).
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`Although courts apply a broad totality-of-the-circumstances standard when evaluating the copyright
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`owner’s intent, the Fourth Circuit has recognized that the question of intent generally turns on at
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`least three factors:
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`(1) whether the parties were engaged in a short-term discrete transaction as opposed
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`3 To transfer copyright ownership, “an instrument of conveyance, or a note or
`memorandum of the transfer, . . .in writing and signed by the owner of the rights conveyed or
`such owner’s duly authorized agent” is required. 17 U.S.C. § 204.
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`to an ongoing relationship; (2) whether the creator utilized written contracts, such as
`the standard AIA contract, providing that copyrighted materials could only be used
`with the creator’s future involvement or express permission; and (3) whether the
`creator’s conduct during the creation or delivery of the copyrighted material
`indicated that use of the material without the creator’s involvement or consent was
`permissible.4
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`Nelson-Salabes, 284 F.3d at 515-16.5
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`Even assuming that the contract between Aspect and Gilbert was short-term, it is undisputed
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`that the 2002 agreement between Gilbert and Aspect expressly provided that the “documents remain
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`the property of Thomas M. Gilbert, Architect, P.C.” (Pl.’s Mem. Supp. Mot. Summ. J., Ex. A at 3.)
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`Moreover, the Gilbert Plans themselves state that no rights are “to be assigned to any third parties
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`without first obtaining the express written permission and consent of Thomas M. Gilbert, Architect,
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`P.C.” (Pl.’s Mem. Supp. Mot. Summ. J., Ex. C .) Thus, when Gilbert delivered the plans to Aspect,
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`all documents stated Gilbert’s intent to retain ownership and that licensing would require Gilbert’s
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`express permission.
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`4The Court notes that in evaluating the third factor courts “look to whether the supposed
`infringer obtained the plans directly from the supposed licensor, which would suggest
`permission to use them.” John G. Danielson, 322 F.3d at 42. Here, Gilbert delivered the plans to
`Aspect only - not the Defendants.
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`5Applying these factors in Nelson-Salabes, the Fourth Circuit found that the plaintiff did
`not grant the defendants a nonexclusive license to use the plaintiff’s architectural drawings. 284
`F.3d at 516. The court concluded that the plaintiff did not intend to permit the defendants to use
`the drawings in the future without its involvement even though the plaintiff was not hired to
`develop plans for the entire project, created drawings pursuant to task-specific contracts
`performed in component parts, and none of the contracts containing language regarding future
`use were executed. Id. In reaching its conclusion, the Fourth Circuit reasoned that the parties
`intended for the plaintiff to serve in a long-term capacity, engaged in ongoing discussions
`concerning the plaintiff’s development of the project, and that the plaintiff submitted contracts,
`albeit never executed, providing for future control, and specifically informed the defendants of
`the same. Id. Thus, evaluating the facts in their totality, the Fourth Circuit affirmed the district
`court’s finding that the architect did not grant the defendants an implied nonexclusive license.
`Id. at 516-17.
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`When Gilbert learned that the Defendants were utilizing his plans without his permission,
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`he sent a cease and desist letter advising them of the copyright violation. (Defs.’ Mem. Opp’n Mot.
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`Summ. J., Ex. H.) Defendants attempt to overcome these fatal facts by pointing out that when
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`Gilbert met with Tummillo in 2006 to discuss modifying the plans, Gilbert knew that Tummillo had
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`taken over the project and never demanded that Tummillo needed to pay a licensing fee to use the
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`Gilbert Plans. But, the Defendants’ argument fails to recognize that the parties were in the midst
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`of negotiations. When Gilbert was not retained and learned that the Defendants had continued the
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`Mayland Townes Project, utilizing the Gilbert Plans, Gilbert sent a cease and desist letter. Thus,
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`Gilbert’s single instance of inaction prior to a breakdown in negotiations does not outweigh Gilbert’s
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`expressed intent to retain ownership of the plans as expressly stated in the 2002 agreement and on
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`the Gilbert Plans. See Johnson v. Jones, 149 F.3d 494, 500 (6th Cir. 1998) (concluding that the
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`architect’s “isolated instance of inaction, coming as it did just before the breakdown of negotiations,
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`is not enough to outweigh [the architect’s] repeated expressions of intent that he retain ownership
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`of his drawings” where the architect’s contracts contained express provisions that he would retain
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`ownership of his drawings, and that those drawings would not be used for completion of the project
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`except by written agreement and with appropriate compensation).
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`Accordingly, the Court concludes that the Defendants have not presented sufficient evidence
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`to create a jury issue on the affirmative defense of implied license as almost every objective fact
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`points away from an intent to create an implied nonexclusive license, particularly the terms of the
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`2002 agreement and the copyright notice on the plans. See id.; Nelson-Salabes, 284 F.3d at 515-16;
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`see also Lowry’s Reports, 271 F. Supp. 2d at 750-51 (holding that the defendant’s defense of
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`implied license failed as a matter of law where the plaintiff’s reports contained a copyright notice
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`and defendant continued to copy and distribute plaintiff’s work over plaintiff’s objections and,
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`therefore, no rational jury could conclude that the parties mutually assented to a licensing
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`arrangement) (applying federal and Maryland law); N.A.D.A. Servs. Corp. v. Bus. Data of Va., Inc.,
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`651 F. Supp. 44, 49 (E.D. Va. 1986) (holding that the creation of an implied license, as in the
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`creation of any implied contract, requires a meeting of the minds).
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`2.
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`The Fair Use Doctrine
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`Defendants next contend that they were entitled to use and modify the Gilbert Plans pursuant
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`to the fair use doctrine. Fair use is an explicit limitation on the copyright owner’s exclusive rights
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`under the Copyright Act: “the fair use of a copyrighted work . . . is not an infringement of
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`copyright.” 17 U.S.C. § 107. It permits the unauthorized use or reproduction of copyrighted work
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`“for purposes such as criticism, comment, news reporting, teaching (including multiple copies for
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`classroom use), scholarship, or research.” § 107. “The rationale for the fair use doctrine is that,
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`when the free flow of information is sufficiently vital, it should override the copyright holder’s
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`interest in the exclusive control of the work.” Advanced Computer Serv. of Mich., Inc. v. MAI Sys.
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`Corp., 845 F. Supp. 356, 364 (E.D. Va. 1994). Although fair use requires a case-by-case analysis
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`to determine whether a particular use is fair, Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577
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`(1994), the statute sets forth four factors to guide courts:
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`(1)
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`(2)
`(3)
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`(4)
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`The purpose and character of the use, including whether such use is of a
`commercial nature or for nonprofit educational purposes;
`The nature of the copyrighted work;
`The amount and substantiality of the portion used in relation to the
`copyrighted work as a whole; and
`The effect of the use upon the potential market for or value of the
`copyrighted work.
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`17 U.S.C. § 107. These statutory factors should not be examined in isolation; instead, “[a]ll are to
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`be explored, and the results weighed together, in light of the purposes of copyright. Campbell, 510
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`U.S. at 578.
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`a.
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`Purpose and Character of the Use
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`The purpose of the first factor in a fair use inquiry is to investigate “whether the new work
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`merely supersedes the objects of the original creation, . . . or instead adds something new, with a
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`further purpose or different character, . . . in other words, whether and to what extent the new work
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`is transformative.” Id. at 579. Because the goal of copyright, promotion of the science and the arts,
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`is generally furthered by the creation of transformative works, “the more transformative the new
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`work, the less will be the significance of other factors, like commercialism, that may weigh against
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`a finding of fair use.” Id. But, where the primary use of the copyrighted work is for a commercial
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`purpose, the use is “presumptively an unfair exploitation of the monopoly privilege that belongs to
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`the owner of the copyright,” Sony Corp. of Am. v. Univ. City Studios, Inc., 464 U.S. 417, 451
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`(1984), and the central question is “whether the user stands to profit from the exploitation of the
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`copyrighted material without paying the customary price.” Harper & Row, Publrs., Inc., v. Nation
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`Enters., 471 U.S. 539, 562 (1985).
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`Here, Gilbert maintains that because the Defendants modified, copied, and used the Gilbert
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`Plans precisely for their original use - to build Mayland Townes Project, the changes made by
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`Tummillo did not transform the nature, character, or use of the work. The Defendants argue that the
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`issue is not one of transformation, but whether the Defendants paid the customary price. Because
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`Aspect paid Gilbert the full contract price for the unmodified Gilbert Plans, and the Defendants fully
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`reimbursed Aspect for that cost, the Defendants contend that Gilbert was paid the customary price
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`and, thus, the first factor weighs in favor of fair use.
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`The Court disagrees and finds that the first factor weighs in Gilbert’s favor. The Defendants
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`used the Gilbert Plans for the commercial purpose of building and selling townhomes and, therefore,
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`the Defendants’ use is presumptively unfair. Further, as discussed previously, the Defendants
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`payment to Aspect does not authorize the Defendants to copy and modify Gilbert’s copyrights.
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`Instead, Gilbert, as the owner of the copyright, would have had to authorize or license the
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`Defendants to modify and copy the Gilbert Plans as explicitly stated on Gilbert’s copyright notice.
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`b. Nature of the copyrighted work
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`The second statutory consideration calls for the recognition that “some works are closer to
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`the core of intended protection than others, with the consequence that fair use is more difficult to
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`establish when the former works are copied.” Campbell, 510 U.S. at 586. The more creative a
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`work, the more protection it should be accorded because it is closer to the core of works protected
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`by the Copyright Act. See 17 U.S.C. 102(a)(8); Sundeman v. The Seajay Soc’y, Inc., 142 F.3d 194,
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`204 (4th Cir. 1998). Architectural works are generally considered creative works. See id.
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`Accordingly, as the Gilbert Plans are architectural drawings, this factor also weighs against a finding
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`of fair use.
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`c.
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` Amount and Substantiality of the Copied Portion
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`This factor favors copyright owners “where a significant percentage of the copyrighted work
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`was copied, or where the percentage was not great, but the copied portion essentially was the ‘heart’
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`of the copyrighted work.” Sundeman, 142 F.3d at 205. Here, although the Defendants concede that
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`they have made use of substantially all of the Gilbert Plans, they note that, in the context of
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`architectural plans, this factor is in no way dispositive of the fair use analysis. Because the
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`Defendants concede that this factor weighs in Gilbert’s favor, no further discussion is necessary.
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`d.
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`Market Effect
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`The final statutory factor “considers the effect the allegedly infringing use has upon the
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`market for, or value of, the copyrighted work.” Id. at 206. This factor is “undoubtedly the single
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`most important element of fair use,” Harper & Row, 471 U.S. at 566, because it touches on the
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`copyright owner’s ability to “capture the fruits of his labor and hence his incentive to create.” Bond
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`v. Blum, 317 F.3d 385, 396 (4th Cir. 2003). Further,
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`[i]t requires courts to consider not only the extent of market harm caused by the
`particular actions of the alleged infringer, but also whether unrestricted and
`widespread conduct of the sort engaged in by the defendant would result in a
`substantially adverse impact on the potential market for the original.
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` Campbell, 510 U.S. at 590 (internal quotation marks omitted).
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`Gilbert argues that the Defendants’ infringement deprived Gilbert of revenue for his
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`proposed plan revisions and review of the impact of code changes on the project. Gilbert points out
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`that the Defendants’ use, when considered in the aggregate, would adversely impact the market for
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`the plans. Relying on McGowan v. Cross, 901 F.2d 790, 1993 WL 125416 (4th Cir. 1993)
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`(unpublished table decision),6 Defendants rejoin that an adverse effect occurs where the parties
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`6Plaintiff, Timothy McGowan purchased a copyrighted house plan, made twenty
`modifications to the plan, and began construction of a house on the land. McGowan,1993 WL
`125416, at *1. The property was conveyed to the Allens, who retained an architect to complete
`construction of the house. Id. The plaintiff sued the architect claiming he obtained a valid
`copyright for original works based on his modifications to the original house plan and that the
`architect retained by the Allens infringed his copyright. Id. The Fourth Circuit agreed with the
`district court that the fair use doctrine entitled the defendants to use the plan without violating
`the copyright laws. Id. Applying the four statutory factors, the Fourth Circuit found that (1) the
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`compete or where a defendant’s use is of a manner and type which the plaintiff has previously
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`licensed. Defendants assert that they have not competed with Gilbert, and because Gilbert was paid
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`in full for the unmodified Gilbert Plans, a reasonable jury could conclude that Gilbert received all
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`of the payments that he expected to receive for use of the Gilbert Plans.
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`Defendants’ reliance on McGowan is misplaced. McGowan involved the construction of one
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`house for personal use and, therefore, the Fourth Circuit found that the defendants “did not intend
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`the modified plan to be used for commercial purposes.” 1993 WL 125416, at *2. In contrast, the
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`Defendants in this case modified and copied Gilbert’s plans for the construction of forty-two
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`townhomes, which is clearly a commercial purpose. Further, the Defendants’ argument that Gilbert
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`received all the payments he expected to receive is undermined by the 2002 agreement and the
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`Gilbert Plans indicating that Gilbert retains ownership and any assignment to third parties require
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`Gilbert’s express written permission. The Defendants freely admit that they (1) contacted and met
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`with Gilbert to discuss modification of the plans; (2) modified and copied the plans because
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`Gilbert’s services were too expensive; and (3) removed Gilbert’s copyright notice from the plans
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`prior to submitting them to the county for approval. These admissions - coupled with the copyright
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`language on the 2002 agreement and the plans - indicate that not only did Gilbert expect payment
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`for the modification and use of the Gilbert Plans, but that the Defendants, themselves, thought that
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`some form of payment was necessary.
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`defendants reproduced the plan solely so that the house could be completed - not for commercial
`use; (2) the plaintiff made twenty insignificant changes to the original plan and, therefore, the
`modified plan lacked originality or inventiveness; (3) defendants used the modified plan in its
`entirety, and thus only this factor weighed in plaintiff’s favor; and (4) the copying of the plan
`was for the sole purpose of completing the house - not to compete with the plaintiff - and, as
`such, the defendants’ use of the plans did not materially impair the marketability of the work. Id.
`at 2.
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`Thus, as all four factors weigh in Gilbert’s favor, the Court concludes that the Defendants’
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`modification and use of the Gilbert Plans is not protected by the fair use doctrine.
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`3.
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`Copyright Misuse
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`The misuse of copyright defense applies when the copyright is used “in a manner violative
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`of the public policy embodied in the grant of a copyright.” Lasercomb Am., Inc. v. Reynolds, 911
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`F.2d 970, 978 (4th Cir. 1990). The court in Lasercomb observed that the misuse of copyright
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`defense is closely related to the misuse of patent defense, which generally lies where a plaintiff has
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`used the patent in question unduly to restrain competition (e.g., “price fixing, tie-ins, territorial
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`restrictions, and so forth,” id. at 976). As such, the Fourth Circuit found that the copyright owner
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`misused its copyright by including a provision in its licensing agreements that prohibiting the
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`licensee company from developing competing goods for the term of the agreement - ninety-nine
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`years. Id. at 978-79. The court concluded that the need for the copyright owner “to protect its
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`investment does not outweigh the public’s right under our system to expect competition and the
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`benefits which flow therefrom.” Id. at 979; see also PRC Realty Sys., Inc. v. Nat’l Ass’n of
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`Realtors, 1992 WL 183682, at *12 (4th Cir. 1992) (unpublished table decision) (finding that the
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`plaintiff improperly used its copyright to impede all future development of an independent idea by
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`the defendant or any other licensee).
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`Defendants maintain that the defense applies in this case because, by requiring Defendants
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`to pay $14,000 for minor changes to the Gilbert Plans, which had an original cost of $17,700, a
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`reasonable jury could find that Gilbert was attempting to unfairly and impermissibly leverage its
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`copyright in a manner that is contrary to public policy under copyright law. Gilbert rejoins that it
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`has not stifled competition and Defendants’ argument suggests that if buying rights from a copyright
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`Case 3:07-cv-00699-JRS Document 55 Filed 08/28/08 Page 15 of 20 PageID# 702
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`owner seems too expensive, then infringers have free rein to infringe. Further, Gilbert points out
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`that its $14,000 quote in the 2006 Proposal included a code review, not just the two modifications
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`requested.
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`Even assuming, as the Defendants argue, that the $14,000 price was unreasonable, the
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`question presented here is whether an overpriced copyright supports a defense of copyright misuse.
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`The purpose of the misuse of copyright defense is to prevent abuse of the public policy embodied
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`in the grant of a copyright. Lasercomb, 911 F.2d at 978. The underlying public policy of a copyright
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`is set out in the Constitution’s Copyright and Patent Clause: “to promote the Progress of Science and
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`useful Arts.” Const. art. I, § 8, cl. 8; see also Sony, 464 U.S. at 431-32 (explaining that “[t]he
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`limited scope of the copyright holder’s statutory monopoly . . . reflects a balance of competing
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`claims upon the public interest: Creative work is to be encouraged and rewarded, but private
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`motivation must ultimately serve the cause of promoting broad public availability of literature,
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`music, and the other arts,” and therefore, the “ultimate aim” of copyright law is “to stimulate artistic
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`creativity for the general public good”).
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`Accordingly, misuse of copyright law is generally found in cases where the copyright owner
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`has engaged in some form of anti-competitive behavior. See, e.g., Lasercomb, 911 F.2d at 979;
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`Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 793 (5th Cir. 1999) (finding that a reasonable
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`jury could conclude, based on the licensing agreement, that the copyright owner had used its
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`copyrights “to indirectly gain commercial control over products [the owner] does not have
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`copyrighted”); Practice Mgmt. Info. Corp. v. Am. Med. Ass’n, 121 F.3d 516, 520 (9th Cir. 1997)
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`(concluding that the copyright owner misused its copyright when it prohibited the licensee from
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`using a competing coding system) opinion amended on other grounds, 133 F.3d 1140 (9th Cir.
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`1998). Copyright misuse has also arisen where the plaintiff attempted to attempted to restrain the
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`defendant from using material over which the plaintiff itself had no rights. See qad. inc. v. ALN
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`Assocs., Inc., 770 F. Supp. 1261, 1267 (N.D. Ill. 1991).
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`No court, however, has found, as the Defendants here urge, copyright misuse based on a
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`copyright being overpriced or too expensive. While it is true that a misuse of copyright defense is
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`viable outside of anti-trust violations, the notion that a defendant may infringe a copyright because
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`it finds the owner’s price too expensive is terribly misguided, if not absurd. Thus, the Court finds
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`that the Defendants’ copyright misuse defense lacks merit.
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`4.
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`Digital Millennium Copyright Act
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`Count IV of the Complaint alleges that the Defendants violated the DMCA by intentionally
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`removing and altering copyright management information from the Gilbert Plans, knowing that they
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`did no