Two Palms Software v. Worldwide Freight Management
780 F. Supp. 2d 916
E.D. Mo.2011Background
- Plaintiffs developed Management Software for freight/storage management (2001–2004 licensing).
- Defendants licensed and used the software for subscription/enhancement fees.
- Plaintiffs discovered copying/modifications, unauthorized security changes, and sale of a modified version (Feb. 2007).
- Plaintiffs filed a ten-count amended complaint alleging copyright infringement and state-law claims (Aug. 6, 2010).
- Defendants moved to dismiss (copyright time-bar) and to dismiss several state-law claims as preempted by the Copyright Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the copyright claim time-barred by statute of limitations? | Tomlinson claim within 3-year period due to continuing infringements. | Infringements outside three years; time-bar applies. | No; continuing infringements bring claims within 3-year window. |
| Are state-law claims preempted by the Copyright Act? | Counts III, IV, V, VI arise from copyright-like conduct. | These claims are derivative and should be preempted. | Counts III, IV, V, VI preempted; Count X not preempted. |
| Is conversion preempted as a copyright claim? | Conversion seeks damages for reproduction/unauthorized use. | Conversion overlaps with copyright infringement. | Preempted; damages for reproduction fall within copyright. |
| Is civil conspiracy preempted as a copyright claim? | Conspiracy adds an 'extra element' distinct from copyright. | Preempted because no qualitative difference. | Preempted; not qualitatively different. |
| Is unjust enrichment preempted as a copyright claim? | Enrichment tied to unauthorized use of software. | May rely on contract; may avoid preemption. | Preempted; based on unauthorized use of software. |
Key Cases Cited
- National Car Rental System, Inc. v. Computer Associates International, Inc., 991 F.2d 426 (8th Cir. 1993) (preemption framework for copyright vs. state claims)
- Roley v. New World Pictures, 19 F.3d 481 (9th Cir. 1994) (continuing infringements toll within 3-year window)
- Bridgeport Music, Inc. v. Rhyme Syndicate Music, 376 F.3d 615 (6th Cir. 2004) (continuing infringement accrual within 3-year period)
- Huckshold v. HSSL, L.L.C., 344 F. Supp. 2d 1203 (E.D. Mo. 2004) (examines qualitative vs. scope preemption analysis)
- Tegg Corp. v. Beckstrom Electric Co., 650 F. Supp. 2d 413 (W.D. Pa. 2008) (confluence of conspiracy and copyright preemption)
- American Movie Classics Co. v. Turner Entertainment Co., 922 F. Supp. 926 (S.D.N.Y. 1996) (unjust enrichment preemption context under copyright)