Ultraflo Corporation v. Pelican Tank Parts, Inc.
845 F.3d 652
5th Cir.2017Background
- Ultraflo redesigned its Model 390 butterfly valve and recorded the redesign in detailed technical drawings; an employee, Mueller, later left and joined competitor Pelican.
- Ultraflo sued in state court for conversion, civil conspiracy, unfair competition by misappropriation, and trade-secret misappropriation, alleging Pelican used Ultraflo’s drawings to make competing valves.
- Mueller registered the valve drawings with the Copyright Office and filed (then dismissed) a federal declaratory action about copyright ownership.
- Pelican removed/preempted issues arose: the state court dismissed some claims; in federal court the district court dismissed Ultraflo’s unfair-competition-by-misappropriation claim as preempted by the Copyright Act but allowed the trade-secret claim to proceed.
- Ultraflo added a copyright claim; at trial the jury rejected Ultraflo’s copyright and trade-secret claims. Ultraflo appealed only the pretrial dismissal of the unfair-competition claim on preemption grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ultraflo’s unfair-competition-by-misappropriation claim is preempted by the Copyright Act | Ultraflo contends the misappropriated subject is the valve design (a useful article/idea) not the copyrighted drawings, so copyright does not preempt the state claim | Pelican argues the drawings and the fixed ideas they contain fall within the subject matter of copyright and the state claim seeks rights equivalent to federal copyright (derivative-use protection) | Affirmed: claim preempted — the valve design falls within copyright’s subject-matter scope even if unprotectable, and the state claim seeks rights equivalent to federal copyright |
Key Cases Cited
- Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999) (articulates two-part preemption test and holds Texas misappropriation claim preempted)
- Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586 (5th Cir. 2015) (scope of copyright preemption includes ideas fixed in a tangible medium even if uncopyrightable)
- Digital Equipment Corp. v. Desktop Direct, Inc., 511 U.S. 863 (1994) (final-judgment rule governs timing of appeals from pretrial dismissals)
- GlobeRanger Corp. v. Software AG U.S. of Am., Inc., 691 F.3d 702 (5th Cir. 2012) (preemption question reviewed de novo and trade-secret claims may avoid preemption)
- Mazer v. Stein, 347 U.S. 201 (1954) (distinguishes artistic expression from utilitarian aspects for copyright)
- Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964) (federal policy preempts state law that would undermine federal intellectual-property regime)
- Baker v. Selden, 101 U.S. 99 (1880) (limits of copyright vs. patent for functional systems)