941 F. Supp. 2d 688
E.D.N.C.2013Background
- Removed from Wake County Superior Court; defendant Farrell contends federal question; WJ Global and LookingGlass IP involved; LookingGlass software transferred then returned; Farrell allegedly copied LookingGlass code and other IP; claims include breach of fiduciary duty, North Carolina U&DTPA, computer trespass, conversion; requests injunctive relief and declaratory judgment on IP ownership; J.S. Farrell moved to dismiss; plaintiffs moved to remand asserting not preempted by the Copyright Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal was proper under preemption doctrine | Remand if no federal question; claims not fully preempted. | Copyright Act completely preempts state claims; removal proper. | Removal proper due to complete preemption of some claims. |
| Whether state law claims are completely preempted by the Copyright Act | Claims related to LookingGlass/IP should be preempted. | Complete preemption applies to the asserted claims. | Conversion, constructive trust, and permanent injunction are completely preempted; remanded/preempted claims dismissed. |
| Whether remaining state law claims are within federal-question preemption or jurisdictional basis | Non-preempted claims can be remanded; jurisdiction under supplemental rules considered. | Remaining claims not within independent basis for federal jurisdiction. | Remaining state law claims are remanded to state court. |
| Whether permanent injunction is preempted as a remedy | Injunction sought to protect IP rights. | Remedy encompassed by Copyright Act protections. | Permanent injunction claim completely preempted; dismissed as standalone claim. |
Key Cases Cited
- In re Bear River Drainage Dist., 267 F.2d 849 (10th Cir.1959) (removal jurisdiction disposition guided by federalism)
- Dixon v. Coburg Dairy, Inc., 369 F.3d 811 (4th Cir.2004) (burden on removing party to show jurisdiction)
- Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148 (4th Cir.1994) (strict construction of removal jurisdiction)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (well-pleaded complaint rule; federal question must be on face of complaint)
- Rivet v. Regions Bank of Louisiana, 522 U.S. 470 (1998) (artful pleading doctrine potential removal despite no facial federal question)
- Arthur Young & Co. v. City of Richmond, 895 F.2d 967 (4th Cir.1990) (copyright preemption may affect jurisdiction where state claims relate to copyright)
- Tire Eng’g & Distrib., LLC v. Shandong Linglong Rubber Co., Ltd., 682 F.3d 292 (4th Cir.2012) (preemption test: subject matter and equivalent rights; extra element test)
- Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225 (4th Cir.1993) (complete preemption framework for state claims under Copyright Act)
- Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655 (4th Cir.1993) (copyright clearly within subject matter for preemption analysis)
- U.S. ex rel. Berge v. Bd. of Tr. of the Univ. of Ala., 104 F.3d 1453 (4th Cir.1997) (shadow of copyright Act broadens preemption scope)
- Pan-Am. Prods. & Holdings, LLC v. R.T.G. Furniture Corp., 825 F.Supp.2d 664 (M.D.N.C.2011) (unjust enrichment preemption when only copyright material involved)
- Microstrategy, Inc. v. Netsolve, Inc., 368 F.Supp.2d 533 (E.D.Va.2005) (unjust enrichment requires material beyond copyright)
- Costar Grp. Inc. v. Loopnet, Inc., 164 F.Supp.2d 688 (D.Md.2001) (constructive trust preemption rationale)
- Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296 (2nd Cir.2004) (removal when state claims preempted; sua sponte dismissal rules)