Marshall & Swift v. BS & a SOFTWARE

871 F. Supp. 952 | W.D. Mich. | 1994

871 F. Supp. 952 (1994)

MARSHALL & SWIFT, Plaintiff,
v.
BS & A SOFTWARE, a partnership; Bellefeuil, Szur & Associates, Inc., a corporation; Bellefeuil, Szur & Associates, a partnership; JRB Microsystems, a corporation; James R. Bellefeuil, an individual; and Thomas Szur, an individual, Defendants.

No. 1:93-cv-265.

United States District Court, W.D. Michigan, Southern Division.

June 9, 1994.

Stephen S. Muhich, Dykema, Gossett, Grand Rapids, MI, Lawrence Allen Cox, Julie M. Ward, Quinn, Kully & Morrow, Los Angeles, CA, for plaintiff.

Gregory L. McClelland, Dickinson, Wright, Moon, Van Dusen, and Freeman, Lansing, MI, for defendants.

OPINION AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

MILES, Senior District Judge.

This is an action for copyright infringement. Plaintiff Marshall and Swift ("Marshall"), which publishes materials used by appraisers and state and local taxing authorities, alleges that the defendants copied certain tables — to which Marshall owns the rights — from versions of the Michigan Assessor's Manual. Marshall further alleges that the defendants then used those tables in a computer software program which they sold to Michigan assessors.

Marshall has moved for summary judgment on its copyright infringement claim. The defendants have opposed the motion. For the reasons to follow, the court GRANTS the motion in part and enters partial summary judgment in favor of Marshall in the amount of $9,450. The court also awards attorneys' fees to Marshall in the amount of $38,713.

FACTS

Marshall is a California limited partnership having its principal place of business in Los Angeles. Since 1932, Marshall has provided what it deems to be "unique" valuation services and products to those in the business of estimating the cost of constructing residential, agricultural, commercial, and industrial properties. Marshall contends that its cost estimating works are widely used throughout the world by governmental taxation and assessment authorities, appraisers, architects, builders, insurance underwriters, adjusters, and other related professionals.

Defendant Joseph R. Bellefeuil is a Lansing, Michigan resident. Defendant Thomas Szur also resides in Ingham County, Michigan. Defendant Bellefeuil, Szur & Associates, Inc. ("BS & A") is a corporation having its principal place of business in Okemos, Michigan. Defendant BS & A Software ("Software") is alleged in the complaint to be a partnership having its principal place of business in Okemos, Michigan. Defendant Bellefeuil, Szur & Associates ("Associates") is also alleged in the complaint to be a partnership having its principal place of business in Okemos, Michigan. Finally, defendant JRB Microsystems ("JRB") is alleged in the complaint to be a corporation having its principal place of business in Lansing, Michigan.^[1]

In 1972, the Michigan State Tax Commission ("the Commission") published an Assessor's Manual for valuing real property ("the 1972 Manual").^[2] In 1985, the Commission decided to update the 1972 Manual. It sent a request for proposal to prospective bidders, generally describing the State's requirements and providing specifications for the manuals. On September 17, 1985, the Commission announced that Marshall was the successful bidder, and Marshall was awarded a contract to provide cost schedules for residential, agricultural, commercial, and industrial buildings, together with instructions for their use.^[3] The version of Marshall's proposal which the Commission accepted included only a printed version of the cost schedules; the price did not include computerization of the schedules. Marshall apparently hoped to generate additional revenues by selling the right to use the schedules to third-party vendors who could provide the computerized version.

In 1986, a two volume Assessor's Manual for Michigan was published — one volume for residential and agricultural properties ("the Residential Manual") and the other for commercial and industrial structures ("the Commercial Manual") (collectively, "the Manual"). An updated edition of the Manual, for which Marshall also provided the cost schedules, was published in 1991.

Although the documents which comprise their contract did not mention any copyright issues, Marshall and the Commission ultimately negotiated the issue and developed a joint statement of copyright protection for inclusion in the Manual. This full-page notice, which was included in each Manual^[4] immediately following its title page, states in pertinent part as follows:

The Michigan Assessor's Manual is published by the State Tax Commission, State of Michigan. It is intended solely for use for appraisals for the assessment of Michigan properties for taxation. The cost schedules have been provided by Marshall and Swift and are protected by copyright. An assessing officer employed in the State of Michigan shall be required to use this manual as provided by section 211.10e of the Michigan Compiled Laws and may use the cost schedules for manual calculations or input the schedules for electronic computations for the sole purpose of using the copyrighted information for assessment work in the State of Michigan. Any other publication, reproduction, electronic storage, transmission or other use or alteration of the word descriptions, tables, or numbers in this manual without the express written consent of Marshall and Swift and the State of Michigan, State Tax Commission, is prohibited.

Vendors of assessment software packages specifically designed for use with these cost schedules must sign a written Reseller Agreement with Marshall and Swift. Such agreements may be obtained by writing to Marshall and Swift, 1617 Beverly Blvd., Los Angeles, California, 90026.

The copyright for the 1986 Manual was registered effective October 27, 1986. Marshall contends that registration of the 1991 Manual was effective July 19, 1993, when the application was received by the Copyright Office.^[5]

On March 2, 1988, Bellefeuil wrote to Marshall, indicating that he wished to enter into a license agreement because he planned to design a computer program based on the cost schedules which Marshall had developed for the Commission. On March 15, 1988, Marshall forwarded a proposed license agreement to Bellefeuil. Bellefeuil, however, never executed the agreement.

BS & A did develop a computerized version of the Michigan appraisal system generally known as the "Equalization Appraisal Program" ("EAP"). Like the Manuals, the EAP was developed in conformity with Michigan statutory requirements and guidelines established by the Commission. Indeed, any computer-assisted appraisal programs must provide values that are compatible with the values produced through manual applications of the Assessor's Manual cost schedules. The EAP, which uses Marshall's cost schedules published in the Manuals, meets this requirement and the Commission therefore approved the EAP for use by assessors in the State of Michigan. The defendants have admitted that they copied cost and depreciation schedules from the Manuals and input the data into their computer program.

Marshall has alleged that sometime in 1992, it learned that the defendants had been making and selling the EAP, which incorporates Marshall's copyrighted material. After discovering the defendants' alleged infringement of its copyrights but before commencing this action, Marshall demanded that Bellefeuil execute a licensing agreement. Needless to say, he did not do so. The defendants have admitted that since 1989, they have sold at least 241 copies of the EAP, generating income of at least $386,648. According to Marshall, had the defendants entered into a licensing agreement before selling the EAP, sales of the EAP would have generated license fees of at least $95,255.

Marshall filed its complaint in this action on April 1, 1993, alleging that the defendants violated the Copyright Act by using portions of the manuals in designing and marketing their software program. Marshall's complaint also includes a state law claim of unfair competition.

ANALYSIS

Marshall has filed a motion for summary judgment on Count I of the complaint, the copyright infringement claim.^[6] In its motion, Marshall basically argues that because the defendants have admitted to copying portions of Marshall's copyrighted material, and because the defendants have no defense to the claim of infringement, Marshall is entitled partial summary judgment in the amount of at least $95,255. Marshall also argues that it is entitled to attorneys' fees, pursuant to 17 U.S.C. § 505, in the amount of at least $101,508.89.

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 601 (6th Cir.1988). The party moving for summary judgment bears the burden of establishing the nonexistence of any genuine issue of material fact and may satisfy this burden by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986). In determining whether a genuine issue of material fact exists, the court must view the underlying facts in the light most favorable to the nonmoving party. Sem-Torq, Inc. v. K Mart Corp., 936 F.2d 851, 853 (6th Cir. 1991). Only factual disputes which may have an effect on the outcome of a lawsuit under the applicable substantive law are "material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986).

"Copyrightability is often resolved on summary judgment ... because `[v]ery often no issues of material fact are in dispute and the only task for the court is to analyze the allegedly copyrightable item in light of applicable copyright law.'" Sem-Torq, 936 F.2d at 853 (citations omitted). To establish a claim of copyright infringement, the plaintiff must prove two elements: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work which are original. Feist Publications, Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361, 111 S. Ct. 1282, 1296, 113 L. Ed. 2d 358 (1991); Wickham v. Knoxville Int'l Energy Exposition, Inc., 739 F.2d 1094, 1097 (6th Cir.1984).

"A certification of registration `made before or within five years after first publication of the work shall constitute prima facie evidence of the validity of the copyright and of the facts stated in the certification.'" Sem-Torq, 936 F.2d at 854 (quoting 17 U.S.C. § 410(c)). The defendants contend that Marshall has presented only one certificate of registration, that being for the 1986 Manual.^[7] The court concludes that Marshall has presented prima facie evidence of the validity of the copyright for the tables contained in the 1986 Manual. However, Marshall has not provided a certificate of copyright registration for the 1991 Manual. Instead, it has provided only a copy of a July 19, 1993 receipt from the Copyright Office for what Marshall contends is an application for the registration of the entire 1991 Manual. See Exhibit G and Affidavit of Robert Dowdell, ¶ 10. As previously noted, this action was filed on April 1, 1993, and therefore Marshall apparently did not even attempt to seek registration of the 1991 Manual until over three months after filing this action.

Marshall contends that pursuant to 17 U.S.C. § 410(d), its registration of the 1991 Manual was effective on July 19, 1993, the date on which the application was received by the Copyright Office. Section 410(d) provides as follows:

The effective date of a copyright registration is the day on which an application, deposit, and fee, which are later determined by the Register of Copyrights or by a court of competent jurisdiction to be acceptable for registration, have all been received in the Copyright Office.

Under this section, if Marshall's application for registration is ultimately approved by the Copyright Office, then the registration will be deemed effective on the date of receipt. However, to this, Marshall appears to add the suggestion that a mere application for registration entitles a work to § 410(c)'s presumption of validity afforded to works accepted for registration. The court does not read the Copyright Act this way.

Section 410(c) of the Act must be read in conjunction with section 411(a), which provides in pertinent part as follows:

... no action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title. In any case, however, where the deposit, application, and fee required for registration have been delivered to the Copyright Office in proper form and registration has been refused, the applicant is entitled to institute an action for infringement if notice thereof, with a copy of the complaint, is served on the Register of Copyrights. The Register may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register's failure to become a party shall not deprive the court of jurisdiction to determine that issue.

Under this section, registration is a jurisdictional prerequisite to the initiation of an infringement action in federal court. E.g., M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488 (11th Cir.1990); Dodd v. Fort Smith Special School Dist. No. 100, 666 F. Supp. 1278, 1282 (W.D.Ark.1987); see International Trade Management, Inc. v. United States, 553 F. Supp. 402, 403 (Cl.Ct. 1982) ("A suit for copyright infringement is conditioned on obtaining (or being denied) a certificate of registration"); cf. Haan Crafts Corp. Craft Masters, Inc., 683 F. Supp. 1234, 1242 (N.D.Ind.1988) (accepting jurisdiction over infringement claim where plaintiff amended complaint to reference certificates of registration obtained after suit was filed).^[8] Accordingly, although the defendants have not specifically raised the jurisdictional issue, the court has examined the question and concludes that it lacks jurisdiction over Marshall's claim of infringement with respect to the 1991 Manual. The court will therefore deny Marshall's motion for summary judgment insofar as it seeks a ruling that the defendants infringed Marshall's alleged copyright to that Manual, and the remainder of this opinion will address only the claim of copying of the 1986 Manual.^[9]

Before the court addresses the second required element — copying of original elements of the work — the court must first address an argument made by the defendants that there exists a factual dispute as to who "authored" portions of the Manual. The defendants argue that "authorship" must be shown as a necessary element of infringement. See Superhype Publishing, Inc. v. Vasiliou, 838 F. Supp. 1220, 1224 (S.D.Ohio 1993) (certificates of registration "constitute prima facie evidence of originality, authorship, and compliance with statutory formalities"). The defendants contend that authorship is genuinely in dispute because they have presented evidence suggesting that Commission employees helped to write the Manuals.

The Manuals do have more than one author. However, this fact does not negate Marshall's claim of infringement. It is undisputed that the State and Marshall negotiated who would own the copyright to the Manual and that they agreed that Marshall would own the copyright to the cost tables. Under the circumstances, the Manual is a "work made for hire" under 17 U.S.C. §§ 101 and 201(b) and Marshall is the owner of the rights to the cost tables.^[10]

The court must now address the second required element of copyright infringement, which requires Marshall to show that the defendants copied elements of its work which are "original." This element is composed of two sub-elements: (1) whether there is protectible expression, and (2) whether the defendants copied that expression. Budish v. Gordon, 784 F. Supp. 1320, 1332 (N.D.Ohio 1992).

This case is somewhat unusual in that the second sub-element — copying of the plaintiff's expression — is not at issue. The defendants have admitted to virtually verbatim copying of the bulk of the cost tables, consisting of hundreds if not thousands of figures. Therefore, the real crux of this case is whether Marshall's tables constitute protectible expression.

Are the tables copyrightable? Marshall has registered the tables which it provided for the 1986 Manual as a compilation, pursuant to 17 U.S.C. § 103(a). See Complaint, Exhibit 1, § 6(b). A compilation is defined by the Copyright Act of 1976 as "a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship." 17 U.S.C. § 101.

The "sine qua non of copyright is originality." Feist, 499 U.S. at 344, 111 S.Ct. at 1287. Moreover,

Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity.... To be sure, the requisite level of creativity is extremely low; even a slight amount will suffice. The vast majority of works make the grade quite easily, as they possess some creative spark `no matter how crude, humble or obvious' it might be.

Id. (citations omitted). "Facts, whether alone or as a part of a compilation, are not original and therefore may not be copyrighted." Id., 111 S.Ct. at 1290. However, factual compilations which possess the requisite originality are copyrightable, id., 111 S.Ct. at 1289, although the copyright for such a work is necessarily "thin." Id. The Copyright Act imposes three requirements in order to copyright a compilation:

(1) the collection and assembly of pre-existing material, facts, or data; (2) the selection, coordination, or arrangement of those materials; and (3) the creation, by virtue of the particular selection, coordination, or arrangement, of an `original' work of authorship.

Id., 111 S.Ct. at 1293; Sem-Torq, 936 F.2d at 854.

Although Marshall has registered its tables as a compilation, it does not concede that the tables contain "facts" nor does it claim copyrightability in the format of the tables, which for all intents and purposes appears to have been dictated by either the Commission or by Michigan law.^[11] Instead, Marshall argues that the content of the tables is protectible expression because it is opinion; that the numbers in the tables represent an appraisal or estimate of value. According to Marshall, because its figures represent the composite opinion of its personnel, the content of its tables is unique and cannot be obtained elsewhere.

The defendants, however, argue that a factual dispute exists as to whether the contents of the tables are indeed "facts." More specifically, the defendants contend that what is truly in dispute is the creative process which Marshall claims results in its figures. According to the defendants, Marshall's creative process consists of nothing more than simply plugging numbers into a mathematical formula. Moreover, they contend, Marshall has not sold its product to the Commission as containing opinions, but as containing facts. In this regard, the defendants stress that Michigan law requires assessors, who are required to use the Manuals, to make their assessments based on the "true cash value" of property. M.C.L. § 211.27a(1). "Cash value" is defined by Michigan law as "the usual selling price at the place where the property to which the term is applied is at the time of assessment[.]" M.C.L. § 211.27(1).

Marshall has, through the affidavit of its manager, Richard Vishanoff, provided an exhaustive description of the complexity and scope of its efforts to produce the values which go into its cost schedules. Because this information has been provided subject to a protective order, the court will not repeat that description here. For purposes of resolving the present motion, it suffices to say that Marshall has more than adequately supported its contention that judgment and selection are components of its creative process.

The defendants argue that a factual dispute exists as to the true nature of Marshall's creative process. In support of this argument, they asserted at oral argument on this motion that Mr. Vishanoff has, in deposition testimony, described Marshall's valuation process as resulting in something other than an appraisal of value. However, the defendants have not provided Mr. Vishanoff's deposition to the court for consideration and the court declines to accept on faith their characterization of what it contains. Moreover, regardless of the definition placed on the term "cash value" by Michigan law, an assessment remains by its very definition an appraisal or estimate — a product of judgment. Even if Marshall's creative process consists in part of "plugging" numbers into a formula and tabulating the results, an element of original selection — from a virtual universe of information — is inherently a part of this process. That Michigan assessors are required by law to use the Manuals in their work, presumably for purposes of uniformity, does not alter this conclusion.^[12]

One analytical problem which the court has encountered in reviewing this case is an apparent lack of case precedent affording copyright protection to the same type of material. The white pages denied protection in Feist cannot reasonably be compared to Marshall's tables. In Victor Lalli Enterprises, Inc. v. Big Red Apple, Inc., 936 F.2d 671 (2d Cir. 1991), the court held that a betting chart which compiled horse racing statistics was not entitled to copyright protection. The court noted that all publishers of this type of chart used precisely the same format in reporting the racing statistics, and that the information in the charts did not vary in the slightest between publishers because it was derived from "commonly ascertainable external sources." Id. at 672.

The racing charts in Lalli are distinguishable from Marshall's publication, however. First, the figures in Marshall's cost tables are indeed unique to Marshall. Secondly, as previously noted, Marshall's description of how it gathers the information demonstrates that its sources are not "commonly ascertainable" — Marshall uses some creativity in determining what to report.

In Financial Information, Inc. v. Moody's Investors Service, Inc., 751 F.2d 501 (2d Cir. 1984) ("Moody's I"), on remand, 808 F.2d 204 (1986) (Moody's II), cert. denied, 484 U.S. 820, 108 S. Ct. 79, 98 L. Ed. 2d 42 (1987), the court addressed a claim that the defendant infringed the plaintiff's copyright by copying information on municipal bonds which the plaintiff had published daily on cards. The cards sought to report all municipal bond redemptions and relevant information about the bonds (issuer, the series being called, the date and price of the redemption, and the name of the trustee or paying agent). On remand, the court ultimately held that the reporting of these five facts involved no "independent creation." Moody's II, 808 F.2d at 208. The court noted that the plaintiff's researchers described merely having reviewed newspapers to gather the information, occasionally telephoning the issuers or agents. Under the circumstances, the court held that the card service was not a copyrightable compilation.

The most analogous authority is provided by another Second Circuit case, Eckes v. Card Prices Update, 736 F.2d 859 (2d Cir. 1984). Eckes involved copying of a baseball card collectors' price guide. In the guide, the publisher reported market prices for 18,000 different baseball cards. However, it also varied the prices based on the condition of the card, and labelled the cards as either "premium" or "common." The court held that because of this element of selectivity, the guide merited copyright protection:

We have no doubt that appellants exercised selection, creativity and judgment in choosing among the 18,000 or so different baseball cards in order to determine which were the 5,000 premium cards.

Id. at 863.

The defendants have relied on the court's unpublished decision in Sinai v. California Bureau of Automotive Repair, 25 U.S.P.Q.2d 1809, 1992 WL 470699 (N.D.Cal.1992) In Sinai, the court held that the plaintiffs' Corvette emission system manual was not copyrightable. The manual apparently listed, in chart format, the required equipment necessary for a Chevy Corvette to comply with California emission control laws. The court found that this arrangement did not meet the "low threshold of originality." The court rejected plaintiffs' arguments that they displayed originality in selecting and arranging the information:

... The universe of information of equipment necessary for a Corvette to comply with the California emission laws is limited, and all manuals on this topic are sure to include this information. Also, there are a limited number of ways to arrange this information so that it is useful to the reader, the chart format making the most sense.

25 U.S.P.Q.2d at 1811 n. 1. The defendants argue that Marshall's arrangement of its cost tables is similarly purely functional, like the emissions manual in Sinai or the telephone book in Feist, and therefore the tables should not merit protection.

The defendants' reliance on Sinai addresses only the nonissue of Marshall's unoriginal arrangement of the tables. In this case, as the court has already stated, originality in arrangement has not been asserted. Even if Sinai was of controlling precedential value to this court, that case simply does not adequately address Marshall's creativity used in selecting the data for its tables. Like the baseball card guide in Eckes, Marshall used judgment in selecting what figures or values to plug into its tables. The court concludes that Marshall's selection displays the "minimal creative spark" which is all that is necessary to warrant copyright protection. Feist, 499 U.S. at 363, 111 S.Ct. at 1297. The court therefore concludes that the defendants simply have not, as a matter of law, rebutted the presumption that the tables in the 1986 Manual contain original, protectible expression.

The defendants have also raised the "merger" doctrine in defense to Marshall's claim of infringement. Although the Copyright Act extends protection to the original expression of ideas,

In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.

17 U.S.C. § 102(b). Nimmer explains the merger doctrine as follows:

In some' circumstances ... there is a `merger' of idea and expression, such that a given idea is inseparably tied to a particular expression. In such instances, rigorously protecting the expression would confer a monopoly over the idea itself, in contravention of the statutory command.

Nimmer on Copyright, § 13.03[B][3], p. 13-74 (1993) (footnotes omitted). The defendants argue that because each cost table number has only one practical form of expression, each number — which represents the "idea" or fact as to how much something is valued — and its expression are inseparable.

The defendants argue that this case is similar to Gates Rubber Co. v. Bando Chemical Ind., Ltd., 9 F.3d 823 (10th Cir.1993). In that case, the court considered the merger doctrine as a defense to a claim of copyright infringement involving copying of a computer program which was designed to determine the proper rubber belt needed to fit a particular machine. One aspect of the program at issue was "constants," defined as "the invariable integers that comprise part of the formulas used to perform the calculations in the programs." Id. at 842. The court held that these "constants" were unprotectible because they "represent scientific observations of physical relationships" which "are not invented or created; they already exist and are merely observed, discovered and recorded." Id. at 842-43. The court also noted that

Gates claims that the constants should be protected because it spent thousands of hours testing the relationships and because engineers ultimately had to determine the best figure to represent the test results. However, this argument amounts to an assertion of the `sweat of the brow' doctrine which has been rejected by the Supreme Court. Feist, 499 U.S. at 353-54, 111 S.Ct. at 1291-92.

Gates, 9 F.3d at 843 (footnote omitted).

The Copyright Act does, however, afford protection to original "literary works," which include "works, other than audiovisual works, expressed in words, numbers, or other verbal or numerical symbols or indicia[.]" 17 U.S.C. § 101 (emphasis supplied). If, as the defendants argue, Marshall's numbers are unprotectible "ideas," it is difficult to comprehend under what circumstances a number may be protected. Marshall's numbers, unlike the numbers in Gates, do not represent facts such as the actual price at which property has sold or the amount of pressure to inflict on a rubber belt before it will break. The court therefore concludes that the defendants have raised no genuine issue of material fact in their assertion of the merger doctrine.

The defendants also argue that Marshall has waived its claim of copyright infringement. More specifically, they contend that Marshall waived its copyright claims against Michigan assessors by specifically allowing them the right to input the data from the cost tables into their own computer appraisal programs. The defendants reason that because individual assessors could have hired them to "keypunch" the data into their systems, and because the sale of computer programs to them with the numbers already in place is "a distinction without a difference," Marshall has waived any infringement claim.

The court rejects this waiver defense as a matter of law. The individual assessors did not hire the defendants to keypunch Marshall's cost schedules into their computer systems. The grant of a limited license to certain individuals to use the copyrighted information simply does not translate into a license to third parties such as the defendants. Little more need be said about this meritless defense.

The defendants have also asserted the defense of fair use. This fair use doctrine "permits the limited use of copyrighted material without the author's consent for purposes `such as criticism, comment, news, reporting, teaching ..., scholarship or research....'" Moody's I, 751 F.2d at 508. The defendants argue that because the portions of the Manual claimed to be authored by Marshall are de minimis when compared to the Manuals as a whole, the defendants' use of virtually all of those portions is a fair use and non-infringing. 17 U.S.C. § 107.

17 U.S.C. § 107 requires consideration of the following factors in determining whether a particular use of a work is a fair use: (1) the purpose and character of the use, including whether the use is commercial or for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. "Fair use is a mixed question of law and fact." Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 560, 105 S. Ct. 2218, 2230, 85 L. Ed. 2d 588 (1985).

The defendants' fair use argument addresses only one of the relevant factors — the amount and substantiality of the portion of the work used in relation to the work as a whole. Moreover, even this factor does not weigh in the defendants' favor. If the "work" at issue is defined not as the entire Manual, but only the cost tables, then the defendants copied the work virtually verbatim in its entirety. More importantly, however, commercial use of copyrighted material results in a presumption of unfair use. See Moody's I, 751 F.2d at 508.^[13] The court concludes as a matter of law that the defendants' use of the tables — which is without question a for-profit use — is not a fair use.

Marshall argues that it is entitled to lost license fees of at least $95,255 for the defendants' alleged infringement, pursuant to 17 U.S.C. § 504(b) (authorizing "actual damages ... as a result of the infringement, and any profits of the infringer that are attributable to the infringement"). At oral argument on this motion, the defendants conceded that this amount represents the license fees which would have been due to Marshall had the defendants obtained a license, as the court has concluded they should have done. However, because the court has concluded that it has no jurisdiction over Marshall's claim with respect to the 1991 Manual, the court cannot award the full amount of damages requested by Marshall.

Marshall's calculation of its damages is set forth in the affidavit of its attorney, Michael Walizer. Based on the court's reading of Mr. Walizer's affidavit, Marshall's lost license fees for the defendants' use of the 1986 Manual cost tables amount to $9,450.^[14] Accordingly, the court will enter partial summary judgment in this amount.

Marshall argues that it is entitled to attorneys' fees and costs in the amount of at least $101,508.89. The relevant statute authorizing recovery of attorneys' fees, 17 U.S.C. § 505, provides that the court "may") award a "reasonable attorney's fee" to the "prevailing party." An award of attorneys' fees to a successful claimant is discretionary. See Walt Disney Co. v. Powell, 897 F.2d 565, 568 (D.C.Cir.1990) (reviewing award of attorneys' fees in copyright action under abuse of discretion standard).

The case law is conflicting on what standard governs an award of attorneys fees. Some courts have required a finding of "deliberate infringement" or bad faith before awarding attorneys' fees, while others have not required that the infringement be deliberate. See id. (discussing conflict among circuits). The Sixth Circuit does not appear to have determined which standard must be applied. See MCA, Inc. v. Parks, 796 F.2d 200, 205 (6th Cir.1986) (noting the conflict but declining to decide the applicable standard). Because 17 U.S.C. § 505 simply does not require bad faith or deliberate infringement to be shown, the court concludes that Marshall need not show bad faith, deliberate infringement, or willful conduct in order to justify its request for attorneys' fees. See Lieb v. Topstone Indus., Inc., 788 F.2d 151, 155 (3d Cir.1986) (finding "no indication either in statutory language or legislative history that bad faith should be a prerequisite to a fee award"); see also Micromanipulator Co., Inc. v. Bough, 779 F.2d 255, 259 (5th Cir.1985) ("Although attorney's fees are awarded in the trial court's discretion, they are the rule rather than the exception and should be awarded routinely").

The defendants appear to suggest that Marshall should not receive an award of attorneys' fees because they (the defendants) believe their legal position to be a valid one. The court does not agree. The court notes that the defendants at least at one point before their infringing activity considered entering into a license agreement with Marshall. They have not supplied the court with any explanation or evidence as to why they subsequently failed to do so, such as whether they were acting upon the advice of counsel. Their avoidance of this issue raises the inference that they simply sought to reap more profits from sales of the EAP and hoped that they would not be caught in their infringement. The court further notes that Marshall has presented uncontroverted evidence showing that it offered the defendants another opportunity to enter into a license agreement after it discovered the infringement. Finally, the court notes that Marshall has presented uncontroverted evidence showing that defendant Bellefeuil refused to sign the agreement because he was "calling [Marshall's] bluff" and because he had been advised that Marshall would not sue because "it would be to [sic] expensive for [Marshall]." Supplemental Affidavit of Matthew Stawicki, ¶ 3. Given these circumstances, the court concludes that an award of fees is justified in this action.

The lodestar method of fee calculation is the method which must be used to determine reasonable attorneys' fees under federal fee-shifting statutes such as 17 U.S.C. § 505. In re Boddy, 950 F.2d 334, 337 (6th Cir.1991) (addressing award of fees under Bankruptcy Code); see Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S. Ct. 3078, 97 L. Ed. 2d 585 (1987) (lodestar method used to calculate fees under Clean Air Act); Hensley v. Eckerhart, 461 U.S. 424, 433-34, 103 S. Ct. 1933, 1939-40, 76 L. Ed. 2d 40 (1983) (lodestar method used to calculate fees under 42 U.S.C. § 1988). The lodestar amount is calculated by multiplying the attorney's reasonable hourly rate by the number of hours reasonably expended. In re Boddy, 950 F.2d at 337 (citation omitted).

In support of its fee request, Marshall has submitted the supplemental affidavit of Michael Walizer, together with a summary of the services provided by attorneys in his firm, the number of hours billed by each attorney, and the respective attorneys' hourly rates. The hourly rates for the attorneys range from $180 per hour for Mr. Walizer's services to $240 per hour for the services of attorney Lawrence Cox. Mr. Walizer's affidavit attests that the rates are reasonable for the Los Angeles legal market. However, the qualifications of the respective attorneys have not been provided to justify the difference in hourly rates. The court finds that Mr. Walizer's hourly rate of $180 is a reasonably hourly rate for all of Marshall's attorneys.

Marshall's attorneys expended a total of 428.3 hours on the case between February 28, 1993 (approximately one month before the filing of the complaint) to the present. Although the documentation of the hours is adequate, the court finds that the number of hours spent on the case appears to be excessive and that some of these hours must necessarily have been spent on Marshall's remaining state law claim, for which fees are not presently being awarded. The court concludes that 321 hours were reasonably expended on Marshall's copyright claim. The lodestar amount is therefore $57,780.

"`The most critical factor' in determining the reasonableness of a fee award `is the degree of success obtained.'" Farrar v. Hobby, ___ U.S. ___, ___, 113 S. Ct. 566, 574, 121 L. Ed. 2d 494 (1992) (quoting Hensley, 461 U.S. at 436, 103 S.Ct. at 1941). Where a plaintiff "`has achieved only partial or limited success, the product of hours reasonably expended on the litigation as a whole times a reasonably hourly rate may be an excessive amount.'" Farrar, ___ U.S. at ___, 113 S.Ct. at 574 (again quoting Hensley, 461 U.S. at 436, 103 S.Ct. at 1941). While Marshall's victory in this case is not merely a hollow one and will undoubtedly resound to their benefit insofar as other potential infringers of its publications are concerned, its present victory results in a monetary recovery far less than what it sought. The court has awarded Marshall only approximately one-tenth of the damages it has requested, based on the court's rejection of jurisdiction over the claim concerning the 1991 Manual. Under the circumstances, the court concludes that the lodestar amount should be reduced by one-third to reflect this limited success.^[15] The court therefore awards Marshall attorneys' fees in the amount of $38,713.

The total amount which Marshall has requested is inclusive of both attorneys' fees and costs. Although Marshall has requested costs in the amount of $11,068.39, no documentation of these costs has been provided. Therefore, the court awards no costs at this time.

CONCLUSION

For the foregoing reasons, the court hereby GRANTS plaintiff Marshall's motion for summary judgment on the issue of infringement of its copyright to the 1986 Manual. The court declines to exercise jurisdiction over Marshall's copyright claim with respect to the 1991 Manual and dismisses that claim without prejudice to its ability to file a new or amended complaint raising this claim after the jurisdictional prerequisites are satisfied. The court will enter partial summary judgment for Marshall in the amount of $9,450. The court also GRANTS Marshall's motion for attorneys' fees, and will add to the judgment attorneys' fees in the amount of $38,713.

So ordered.

APPENDIX

NOTES

[1] In their answer, the defendants contend that Software, Associates, and JRB do not exist. The court will not resolve this fact question, and therefore all references to the defendants herein shall include only Mr. Bellefeuil, Mr. Szur, and BS & A.

[2] The 1972 Manual was derived from an earlier version published by the State of Michigan in 1958.

[3] Certain narrative text which the Commission had also requested be provided was excluded from Marshall's proposal.

[4] The language of the notice is identical in both the 1986 and 1991 Manuals.

[5] The front of each page of the Commercial Manual carries the copyright symbol and Marshall's name. Similarly, each page of the Residential Manual carries the copyright symbol, the year of the copyright, and the name of the copyright owner. The pages of this latter Manual containing the cost tables and accompanying instructional materials furnished by Marshall state that the copyright is held by Marshall. The narrative pages, furnished by the Commission, indicate that the copyright is held by the State of Michigan.

Copies of Marshall's certificate of registration for the 1986 Manual and of representative pages of that Manual are attached as an Appendix to this opinion.

[6] The complaint is not divided into separate "counts." However, in its motion Marshall has specifically stated that it is seeking summary judgment as to "Count I" (Copyright Infringement). The legal issues presented by its unfair competition claim have therefore not been briefed by the parties, and the court has construed Marshall's motion as seeking only partial summary judgment on its complaint.

[7] A copy of this certificate, no. TX 1 931 664, is attached as Exhibit 1 to the complaint. Marshall has attached other certificates of registration to the complaint; however, these pertain only to another Marshall publication, the Marshall Valuation Service, and not to the Michigan Assessor's Manuals.

[8] Although registration is a prerequisite to filing suit, it is not, however, a condition of copyright protection. 17 U.S.C. § 408(a).

[9] Even if the court were to accept jurisdiction over Marshall's claim for infringement of the copyright to the 1991 Manual, the court is uncertain as to whether Marshall would be entitled to the attorneys' fees which it has requested for litigating that issue. See 17 U.S.C. § 412 (prohibiting an award of attorneys' fee "for any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work").

[10] 17 U.S.C. § 201(b) provides as follows:

In the case of a work made for hire the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

Under this statute, the Manual can be viewed as a work made for hire in a number of respects: (1) in the sense that Marshall was hired by the Commission to perform work on it, and (2) in the sense that both Marshall and the Commission had employees working on it. However, under § 201(b) although the Commission is deemed the author, the parties do not dispute that it agreed to give Marshall the rights to the cost tables.

[11] The defendants point out that the Commission's bid specifications provided that the property classes and types to be used in the Manuals are those required by M.C.L. § 211.34c and those described in the then-existing Manual. Feist does suggest that a selection of data in a manner dictated by state law does not satisfy the originality requirement. 111 S.Ct. at 1296-97 (phone book publisher did not "select" to publish names and telephone numbers of subscribers because it was required by the state to do so as part of its monopoly franchise). In addition, Marshall's arrangement of the tables in the 1986 Manual so closely follows the format of the 1972 Manual that the arrangement simply cannot be described as original.

[12] The defendants argue that Marshall's exhaustive description of how it formulates the tables suggests that it is attempting to claim copyright protection for its efforts based upon the now eradicated "sweat of the brow" theory, see Feist, 111 S.Ct. at 1291. The court is unpersuaded by this argument. Marshall's cost tables are a far cry from the white page listings at issue in Feist. The content of the Feist white pages — consisting of names, addresses, and telephone nembers of its subscribers — could be discovered and reported by anyone. In contrast, Marshall's figures are not discoverable but are unique to it. The defendants have emphasized that they could not have obtained approval from the state of Michigan to sell their computer program to assessors if they had not used Marshall's tables. Their emphasis on the fact that Michigan assessors must use the figures contained in the Manuals in their work supports Marshall's contention that its figures are truly unique.

[13] The court has considered the nature of the work, but concludes that its governmental nature alone does not justify the defendants' blatant copying as "fair use." The Commission, apparently desiring to save the State some money, chose not to pay Marshall to computerize the cost tables. The Commission could do whatever it wishes with the tables, but it has apparently not computerized them.

The court has also considered the fourth and final required factor in the fair use analysis — that the defendants' use of the tables could obliterate Marshall's ability to market them.

[14] Marshall determined that the defendants sold 42 programs during 1989 and 1990. Although Mr. Walizer's affidavit does noto state, these programs presumably used the 1986 Manual tables because the 1991 Manual had not yet been published. Licensing fees for the use of the cost tables from the 1986 Residential Manual total $4,200 (42 programs at $100). Fees for the use of the tables from the 1986 Commercial Manual total $5,250 (42 programs at $125). Walizer Affidavit, ¶ 9. The vast difference between the court's award of $9,450 and the $95,255 requested reflects the fact that the vast majority of the EAP programs were sold after 1990. Id.

[15] The court further notes that 17 U.S.C. § 412 appears to prohibit an award of attorneys' fees for Marshall's litigation of the infringement of the copyright to the 1991 Manual. See note 9, supra.

Case Details

Case Name: Marshall & Swift v. BS & a SOFTWARE

Court Name: District Court, W.D. Michigan

Date Published: Jun 9, 1994

Citation: 871 F. Supp. 952

Docket Number: 1:93-cv-00265

Court Abbreviation: W.D. Mich.