Opinion
No. CV 01-0507650S
March 8, 2004
MEMORANDUM OF DECISION
On June 15, 1997, the plaintiff, R.D. Wolf, Inc. (RDW), a Connecticut corporation in the business of designing and building custom homes entered into a contract with John and Cheryl Russo (Russos) to design a new home for them in Manchester, Connecticut. The Russos agreed to pay $5,000 for the architectural plans (Plans) which were to remain the sole property of RDW and to be built only by RDW. The Plans were created and delivered to the Russos, and stamped "Property of R.D. Wolf, Inc." The Russos paid only $1,000 as a deposit for the plans. Subsequently, the Russos decided not to build the new home with RDW and hired the defendant, Don Brancard (Brancard) to build their home using the plans created by RDW.
On March 2, 2000 the Russos lost a decision ( Wolf v. Russo, New Britain, Superior Court, Docket No. 970483384) and were ordered to pay the balance of $4,000 and attorneys fees.
Brancard submitted the Plans to the Town of Manchester to receive a building permit, and listed himself as both the contractor and architect or engineer of the Plans. Brancard then built the home for the Russos.
RDW brought this action on March 17, 2001, alleging four counts in its complaint.
1. Brancard converted and misappropriated the Plans, in that RDW was deprived of the income and profits of the building of the Home and/or the income and profits from the subsequent sale of the Home.
2. Brancard was unjustly enriched by failing to compensate RDW for the benefit of the Plans and the constructing of the Home.
3. Brancard by being aware that RDW had a reasonable and legitimate expectation of doing business with the Russos, and that RDW had the exclusive right to build the home as described by the Plans, tortiously interfered with the business expectancy of RDW.
4. Brancard's actions constitute unfair or deceptive acts within the meaning of General Statutes § 42-110a (CUTPA), all to the plaintiff's loss and damage.
RDW seeks monetary damages, interest, attorneys fees and such other relief as deemed necessary by the court.
Brancard moves to dismiss on the grounds that RDW's state law claims are preempted by the Federal Copyright Act ( 17 U.S.C. § 301(a)).
On November 11, 2003, Presiding Judge Richard Robinson determined that the court must resolve the subject matter jurisdictional issue before the case proceeds further. On January 14, 2004, Brancard filed a memorandum in support of a motion for dismissal.
The manner in which a court shall examine a motion to dismiss based on a lack of subject matter jurisdiction is well defined: "A motion to dismiss is appropriate when it is asserted that the court lacks subject matter jurisdiction. Practice Book § 10-31(a). Ferreira v. Pringle, 255 Conn. 330, 346 (2001). Subject matter jurisdiction is the power of the court to hear and determine cases of the general class to which the proceedings in question belong. Applegreen v. LaFlam, CV 980330135S (Conn.Super.Ct., Jan. 7, 1999) ( 23 Conn. L. Rptr. 577); citing Lauer v. Zoning Commission, 220 Conn. 455, 460 (1991); Gurliacci v. Mayer, 218 Conn. 531, 542 (1991); LeConche v. Elligers, 215 Conn. 701, 709 (1990). Unlike a claim of lack of jurisdiction over the person, improper venue, insufficiency of process, or insufficiency of service of process, a claim involving lack of jurisdiction over the subject matter can be raised at any time. Practice Book § 10-33. Subject matter jurisdiction is a question of law and cannot be waived or conferred by consent of the parties. Practice Book §§ 143, 145; Cahill v. Board of Education, 198 Conn. 229, 238 (1985): Reed v. Reincke, 155 Conn. 591, 598 (1967). Thus, the court must examine the statutory provisions relied upon by the defendant to determine whether jurisdiction exists in this matter.
On a motion to dismiss, the parties may submit either affidavits or other material under seal that amplify the pleadings. See Barde v. Board of Trustees, 207 Conn. 59 (1988).
When analyzing whether a state law claim is preempted by Copyright law a review of the language of the federal statute is appropriate. Section 301 of the Copyright Act provides that:
(a) all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 . . . whether created before or after that date and whether published or unpublished, are governed exclusively by this title.
(b) Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to —
(1) subject matter that does not come within the subject matter of copyright as specified by sections 102 and 103, including works of authorship not fixed in any tangible medium of expression; or
(3) activities violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106;
17 U.S.C. § 301 (emphasis added).
"Architectural designs unquestionably fall within the `subject matter' of copyright." Sturdza v. United Arab Emitrates, 281 F.3d 1287, 1304 (D.C. Cir. 2002). The act specifically states:
Subject matter of copyright: In general:
(a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:
(8) architectura] works.
As architectural plans are included in § 102, the next standard to examine is § 106, the provision detailing the exclusive rights in copyrighted works.
Subject to §§ 107 through 121, the owner of a copyright under this title has the exclusive rights to do and to authorize any of the following.
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and,
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
There is no question that under 17 U.S.C. § 102(a)(8) architectural plans fall within the ambit of the Copyright Act. However the issue in the instant case is whether Brancard's alleged use of the copyrightable material is or is not equivalent to reproduction ( 17 U.S.C. § 106(1)), preparation of derivative works (§ 106(2)), or distribution to the public, (§ 106(3)) of the copyrighted work in question.
As mentioned in oral argument by Brancard the copyright system is a permissive one. Therefore, registration is not a condition of copyright protection. 17 U.S.C. § 408(a). Accordingly, that RDW failed to register the plans does not remove it from the ambit of the Copyright Act.
As one district court in the Second Circuit explained the state law claim is preempted if the work falls under § 102 or § 103, (which it does here) and, "the state law seeks to vindicate "legal or equitable rights that are equivalent" to one of the bundle of exclusive rights already protected by copyright law . . ." Video Pipeline, Inc. v. Buena Vista Home Entertainment, Inc., 210 F. Sup.2d 552, 563 (D.N.J. 2002). As one scholar has written:
[I]f under state law the act of reproduction, performance, distribution, or display, no matter whether the law includes all such acts or only some, will in itself infringe the state-created right, then such right is pre-empted. But if qualitatively other elements are required, instead of, or in addition to, the acts of reproduction, performance, distribution, or display, in order to constitute a state-created cause of action, then the right does not lie "within the general scope of copyright," and there is no pre-emption. Thus, the "extra element" test generally furnishes the touchstone here.
1 Nimmer, The Law of Copyright § 1.01(B)(1).
Therefore the first question is whether RDW's claims, combined with Brancard's alleged actions meet the "extra element" test. Several courts have defined the "extra element" test as conduct that is "qualitatively different" from the conduct governed by the federal copyright claim. See Data General v. Grumman, 36 F.3d 1147, 1164-65 (1st Cir. 1994); Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 659 (4th Cir. 1993); Video Pipeline at 564. Accordingly, the question is whether for each of RDW's four claims, is the action that caused the alleged tort "qualitatively different" from conduct that arises under the Copyright Act. If such action is qualitatively different, this court will have subject matter jurisdiction. If not, the claim in question is preempted.
As to the first count, conversion and misappropriation, the Connecticut Supreme Court has defined conversion as:
[A]n unauthorized assumption and exercise of the right of ownership over goods belonging to another, to the exclusion of the owner's rights . . . It is some unauthorized act which deprives another of his property permanently or for an indefinite time; some unauthorized assumption and exercise of the powers of the owner to his harm. The essence of the wrong is that the property rights of the plaintiff have been dealt with in a manner adverse to him, inconsistent with his right of dominion and to his harm.
Macomber v. Travelers Prop. Cas. Corp., 261 Conn. 620, 649 (2002) (emphasis added).
In regards to copyright preemption, the Second Circuit has held conversion "qualitatively different from those [acts] proscribed by copyright law and . . . therefore [is] not subject to preemption." Harper Row Publishers, Inc. v. Nation Enterprises, 723 F.2d 195, 201 (2d Cir. 1983), rev'd on other grounds, 471 U.S. 539 (U.S. 1985). In Harper Row however, the court found that the plaintiff's claim did not actually sound in conversion. "Conversion requires not merely temporary interference with property rights, but the exercise of unauthorized dominion and control to the complete exclusion of the rightful possessor." Id. The court held that Nation's simply copying the manuscript "with or without permission" and then returning it undamaged constitutes "far too insubstantial an interference with property rights to demonstrate conversion." Id. The court held for Nation on the conversion claim, as Harper Row failed to allege a "true conversion" involving dominion and control of personal property.
Harper Row revolved around the prospective publishers of Gerald Ford's autobiography bringing action against Nation for publishing excerpts of a stolen copy of Ford's manuscript.
The District Court of New Jersey, in a 2002 decision concerning conversion and copyright preemption allowed the state law claim to stand as the plaintiff's claim "involve[d] tangible, physical property, the rights to which are distinctly different from those rights involved in defendant's copyright counterclaims." Video Pipeline, 210 F. Supp.2d at 569. Video Pipeline involved the use of previews of films for home video products and claims ranging from conversion to copyright infringement. The district court held that "to the extent that [defendant] seeks the return of [its property] and alleges that plaintiff continues to wrongly hold such items, the right it asserts under its state law conversion . . . claims are not equivalent to those protected by the federal copyright laws . . ." Id. The Court held there was no preemption.
However, a series of out of circuit decisions appear more directly on point with the instant issue and facts and lean towards Brancard's claim of preemption as to conversion. The Nebraska Supreme Court in a 1993 case where the defendant architect physically removed plans from the plaintiff's work site, removed the names of the plaintiff architects from the plans and made copies of the plans to solicit subcontractors, held that the conversion claim was preempted by Copyright. Richdale Development Co. v. McNeil Co., Inc., 508 N.W.2d 853 (Neb. 1993). Finding that the heart of the plaintiff's claim was not "being physically deprived of the plans, but rather . . . [the] damage resulting from the reproduction and distribution [of the plans]." Id. at 858. The Court held the claim was preempted.
Similarly, the Eastern District of Texas has held conversion claims preempted in a case involving the alleged theft and copying of architectural plans, and the subsequent building of a home based on those plans. Gemcraft Homes, Inc. v. Sumurdy, 688 F. Sup. 289 (E.D.Tex. 1988). Reasoning that as "plaintiff does not seek to recover for the physical deprivation of the architectural plans . . . [r]ather, plaintiff seeks to recover for damages from their reproduction and use," the claim falls within the ambit of § 106. Id. at 295., n. 12. The court held that because "[a]ll indications are that plaintiff's claims are attacking defendant's copying and subsequent use of plaintiff's plans and not physical deprivations of the plans," the state claim was preempted.
Finally, in an Alabama appellate decision where architectural plans being used without consent or authorization of their creator was again the issue, the court held a conversion claim preempted. Bush v. Laggo Properties, L.L.C. 784 So.2d 1063 (Ala.Civ.App. 2000). The decision, echoed the Gemcraft, in holding that as the "plaintiffs did not seek the return of the allegedly converted property, but rather sought damages for the alleged conversion," the claim was preempted. Id. at 1066.
In the instant case, RDW is seeking remedy for the deprivation of "income and profits from the building of the Home and/or the income and profits from the subsequent sale of the Home." Complaint, ¶ 16. Accordingly, as RDW has not sought relief for the actual physical deprivation of the Plans (the property), but for the subsequent actions taken with the Plans by Brancard, the conversion claim is preempted by § 106 as it fails to meet the "extra element" test and lies within the ambit of the Copyright Act.
As to the misappropriation element of the first count of RDW's claim, RDW cites a District Court of Connecticut decision which held for a defendant on a motion for summary judgment. The court held the defendant had not misappropriated the plaintiff's idea but had in fact independently created the idea in question. Ball v. Hershey Foods Corp., 842 F. Sup. 44 (D.Conn 1993). In Ball, the plaintiff, a consultant for the defendant, alleged that his idea had been misappropriated without remuneration. The court noted that "Connecticut courts have not yet decided a case concerning the misappropriation of an idea." Id. at 47. However, after examining decisions from outside the state it determined that there are two elements to a claim of misappropriation of an idea. The elements are, "a legal relationship must exist between the parties and (2) the idea must be novel and concrete." Id. Judge Covello found that the plaintiff had "failed to establish a legal relationship between himself and the defendant." Id. Accordingly, the district court granted the motion for summary judgment as there was no legal relationship.
In a First Circuit action involving both state law misappropriation of trade secrets and copyright claims, the panel in explaining the "extra element" test wrote that "a state law misappropriation claim will not escape preemption under § 301(a) simply because a plaintiff must prove that copying was not only unauthorized but also "commercially immoral," a mere "label attached to the same odious business conduct." Data General, 36 F.3d at 1165, quoting Mayer v. Wedgewood Sons, Ltd., 601 F. Sup. 1523, 1535 (S.D.N.Y. 1985). The court held the plaintiff had demonstrated that the defendant fulfilled the elements of the Massachusetts misappropriation of trade secrets test as the district court had held that the defendant had "wrongfully acquired" the trade secret, meeting the third element. Accordingly, as the "Copyright Act does not prevent the states from imposing liability for such conduct, the district court was correct to spare [plaintiff's] trade secrets claim from preemption under 301(a)." Id. at 1165.
The three elements are: 1) Item is a trade secret; 2) Plaintiff took reasonable steps to preserve the secrecy of the item; 3) Defendant used improper means in breach of a confidential relationship, to acquire and use the trade secret. Data General at 1165.
Nonetheless, a misappropriation claim was preempted in an architectural case in a district court in Georgia where the defendant allegedly copied the plaintiff's plans and used the plans to "construct and sell a house." Intown Ent., Inc. v. Barnes, 721 F. Sup. 1263, 1264 (N.D.Ga. 1989). In Intown the plaintiff alleged copyright infringement, misappropriation, conversion, intentional interference with business relations and unfair competition. Id. The plaintiff moved for summary judgment on the copyright claim, and the defendant moved for summary judgment on the state law torts, claiming they were preempted by the copyright claim. The court held that the defendant had made unauthorized copies of the architectural plans, which were to be held to the standard of "limited publication." Accordingly, because the copying was held to infringe copyright law, the "plaintiff concede[d] that its . . . claims for misappropriation, conversion and intentional interference with business relations [were] preempted." Intown at 1267.
Id. at 1265. Section 101 delineates the variety of ways a copyrightable item can be "published." See 17 U.S.C. #101. However the list does not include publications of a limited nature. Publications of a limited nature has been defined as those publications that "communicate the contents of a work to a definitely selected group and for a limited purpose, without the right of diffusion, reproduction, distribution or sale." 1 Nimmer on Copyright, § 4.13[A]. The defendant in Intown claimed his appropriation was innocent because the plans did not have a copyright mark on them. Intown at 1265.
There is no discussion by the court as to `the specifics of why each claim was specifically preempted.
RDW has not shown a sufficient "extra element" to avoid copyright preemption on its misappropriation claim. Though it cites Ball, RDW has alleged no "legal relationship" between itself and Brancard. In addition it has not alleged a trade secret misappropriation claim (though it cites Data General), but merely that RDW was "damaged by the Defendant Brancard's misappropriation and conversion of the Plans . . ." Complaint, ¶ 16. Though the Plaintiff uses the term "commercially immoral," as the First Circuit did in Data General, this allegation is more appropriately addressed within the plaintiff's CUPTA claim (the fourth count) and does not satisfy enough of an "extra element" for the first count to avoid preemption. Finally, Intown presents a similar fact pattern to the instant case and RDW has made no allegation to persuade this court to hold any differently as to the conversion and misappropriation claims before it than the district court in Intown.
Connecticut's statute for such claims is General Statutes § 35-51(b) (2003). As Plaintiff does not cite or allege a violation of the statute I will not elaborate upon it here.
Turning to RDW's second count, that of unjust enrichment, the Connecticut Supreme Court has recently noted that "quantum meruit and unjust enrichment are common-law principles of restitution; both are noncontractual means of recovery without valid contract." Gagne v. Vaccaro, 255 Conn. 390, 401 (2001). The Court further explained that "[n]ot unlike quantum meruit, [unjust enrichment] is a doctrine based on the postulate that it is contrary to equity and fairness for a defendant to retain a benefit at the expense of the plaintiff." Id. However, the burden is on the "plaintiff seeking damages under . . . unjust enrichment . . . [to] establish that the defendant received a benefit . . ." Morgan Buildings Spas, Inc. v. Dean's Stoves Spas, Inc., 58 Conn. App. 560, 563 (Conn.App.Ct. 2000).
One authority on copyright law has written that a "state law action for unjust enrichment should be regarded as an `equivalent right' and hence, preempted insofar as it applies to copyright subject matter." 1-1 Nimmer on Copyright § 1.01(B)(g). The Ninth Circuit has held that where the question is "whether the theory of unjust enrichment involves state-created rights that are qualitatively different from the federal rights protected by the Copyright Act . . . [v]irtually without exception, courts have concluded that they are not. Del Madera Properties v. Rhodes and Gardner, Inc., 820 F.2d 973, 977 (9th Cir. 1987); Ronald Litoff, Ltd. v. American Express Co., 621 F. Sup. 981, 986 (S.D.N.Y. 1985); Universal City Studios, Inc. v. Nintendo Co., 615 F. Sup. 838, 856-57 (S.D.N.Y. 1985), aff'd, 797 F.2d 70 (2d Cir. 1986), cert. denied, 479 U.S. 987 (1986). There is no on point case law in Connecticut that deals directly with the copying of architectural plans and a subsequent building from said plans, resulting in a claim of unjust enrichment being levied. However, the majority of out of state case law favors Brancard.
The District Court of New Jersey in Video Pipeline wrote that "Courts have generally concluded that the theory of unjust enrichment protects rights that are essentially `equivalent' to rights protected by the Copyright Act; thus, unjust enrichment claims relating to the use of copyrighted material are generally preempted." Video Pipeline, 210 F. Supp.2d at 567. In an action involving a claim by a licensed architect that his work was being copied and used in an unauthorized fashion by a former employer, the district court held the unjust enrichment claim preempted. Kunycia v. Melville Realty Co., 755 F. Sup. 566, 568-69 (S.D.N.Y. 1990). The plaintiff/architect's claims included copyright infringement and a state law claim of unjust enrichment. The court held for the plaintiff on the infringement claim, but ruled the unjust enrichment count was preempted: "Because [plaintiff's] claim of unjust enrichment is that [defendant] reproduced and used his copyrighted work to prepare derivative works without properly compensating him, the claim is preempted as a state law right equivalent to exclusive rights within the general scope of copyright." Id. at 577.
Another district court preempted an unjust enrichment claim under copyright law in Stephen Hayes Construction, Inc. v. Meadowbrook Homes, Inc., 988 F. Sup. 1994 (N.D.Ill. 1998). The plaintiff alleged in its Motion to Dismiss that without permission the defendant copied the plaintiff's architectural plans, and "built, promoted and sold homes substantially similar" to the plaintiff's and even "directed potential home buyers interested in particular homes" to look at homes built by the plaintiff because they were virtually identical to the ones the defendant was building. Id. at 1196. The Court focused on the second element of the tort, which under Illinois law is whether retaining the benefit in question is a violation of the "fundamental principles of justice, equity and good conscience." Id. at 1200. While the court recognized that simply showing the plaintiff's homes to potential customers was not a "reproduction, distribution or display" of copyrightable material, it held that the "utilization" of the homes in this manner is not too far removed from the protected rights within § 106 of the Copyright Act. Id. The court further explained that by showing the plaintiff's copyrighted material for his own gain the defendant's actions were too close to those acts proscribed by § 106, and were "essentially the equivalent of such conduct" Id. at 1201.
However, while the view that unjust enrichment claims are to be preempted is certainly the majority view it is not a universal one. The Western District Court of Texas has held that an unjust enrichment action can survive copyright preemption. Schuchart Assoc. v. Solo Serve Corp., 540 F. Sup. 928, 945 (W.D.Tex. 1982). In an action by a professional engineering firm for the copying and use of architectural plans it had drawn for the defendant operator of department stores, the plaintiff alleged copyright infringement, unfair competition and unjust enrichment. Id. at 933-34.
In Schuchart, the plaintiff was contracted by defendants to design a store, and the plaintiff's plans were subsequently used without permission by another architectural firm, hired by the defendant. Id. at 934-36. Though the court held that the plaintiff's claim for unfair competition was preempted as no additional element was shown, it simultaneously held that the unjust enrichment claim involved "rights that do not fall within the scope of copyright." Id. at 944-45. The court defines the theory of unjust enrichment and quantum meruit under Texas law as the refusal to "pay for benefits received or work performed and accepted with . . . knowledge and consent by a person who should expect remuneration . . ." Id. at 945. The court's finding that the plaintiff is seeking only to recover "the value of the architectural and mechanical services rendered" removes the claim from the ambit of copyright law. Id. By distinguishing the claim between the exclusive rights in copyright and a claim to be paid for the "value of the services rendered by Defendant's use of the plans and specifications prepared by Plaintiff . . ." the court is able to hold that the unjust enrichment claim is not preempted. Id.
"[T]o reproduce a copyrighted work, to prepare a derivative of a copyrighted work or to distribute copies of a copyrighted work." Schuchart at 945.
Nevertheless, the district court held that the plaintiff had not demonstrated the defendants had "received valuable services under such circumstances as would reasonably notify Defendants that Plaintiffs were expecting to be paid." Id. at 948. In other words, while the court held the unjust enrichment claim was not preempted, it held that it was not established either and held for the defendants on the issue. A district court that cited Schuchart for the proposition that unjust enrichment is not preempted by copyright law, questioned whether a plaintiff could "maintain an action for unjust enrichment absent some relationship (contractual, employment or otherwise) between the parties." Weigel Broadcasting Co. v. Topel, 1985 U.S. Dist. LEXIS 23862 at *15-16 (N.D.Ill. Aug. 21, 1985).
It should be noted that Schuchart appears to be a minority decision, a distinct outlier if you will. Nimmer, commenting on the Schuchart decision wrote that the decision was in "error." 1-1 Nimmer on Copyright, § 1.01[1][g].
In the instant case, RDW has only alleged that the defendant "received a benefit from plaintiffs for which they have not been compensated." Complaint, paragraph 17. The alleged benefit however is the use of the Plans, which, as discussed supra, fall within the ambit of the Copyright Act. RDW is alleging that Brancard did not have the authority to use the Plans and design. Complaint, ¶¶ 17, 18. While these allegations, absent the possible copyright preemption, would surely sound in unjust enrichment based on the benefit received by Brancard, the extra element is absent here. There is no qualitative difference between the use of the Plans by Brancard to build the Home and the "preparation of a derivative work" from a document that falls within the ambit of copyright. 17 U.S.C. § 106(2). Accordingly, RDW's second count, that of unjust enrichment, is preempted.
RDW's third count alleges tortious interference with business expectations between RDW and the Russos on the part of Brancard. The Connecticut Supreme Court has stated that in order for a plaintiff to recover on a claim of tortious interference with business expectations "the claimant must plead and prove that (1) a business relationship between the plaintiff and another party; (2) the defendant's intentional interference with the business relationship while knowing of the relationship; and (3) as a result of the interference, the plaintiff suffers actual loss." Hi-Ho Tower, Inc. v. Com-Tronics, Inc. et al., 255 Conn. 20, 32-33 (2000).
Based on the pleadings, and in the absence of the issue of copyright preemption, RDW has met the elements listed in Hi-Ho, cited above. RDW did have a business relationship with the Russos, satisfying the first element of the test. Brancard was aware of the existing contractual relationship, (element two) and RDW clearly lost out on the revenue it would have received had it built the house for the Russos.
However, the existence of the copyright preemption issue leaves this count of RDW's case subject to dismissal. Though there is no controlling Connecticut precedent, the Second Circuit's decision in Harper Row dictates that RDW's claim be preempted. In Harper Row the plaintiffs made a claim of tortious interference with contractual relations after the defendants "scooped" the publication of President Ford's autobiography. Harper Row Publishers, Inc. v. Nation Enterprises, 723 F.2d 195, 197-99 (2d Cir. 1983), rev'd on other grounds, 471 U.S. 539 (U.S. 1985).
The plaintiff in Harper Row alleged the tort was qualitatively different than that of preparing derivative works based on the copyrighted work, but the court disagreed: "it is the act of unauthorized publication which causes the violation. The enjoyment of benefits from derivative use is so intimately bound up with the right itself that it could not possibly be deemed a separate element." Id. at 201. The panel then addressed the plaintiff's claim that because the defendants were aware of the preexisting relationship between the author and the plaintiff, the actions of the defendant fell beyond the ambit of copyright. Again, the court disagreed.
[T]he fact that the additional elements of awareness and intentional interference [were pleaded as] not part of a copyright claim, goes merely to the scope of the right; it does not establish qualitatively different conduct on the part of the infringing party, nor a fundamental non-equivalence between the state and federal rights implicated.
Id. at 201.
The District Court of Connecticut relied on Harper Row when holding that a tortious interference with contractual relations claim was preempted by the Copyright Act. Titan Sports, Inc. v. Turner Broadcasting Systems, Inc., 981 F. Sup. 65 (D.Conn. 1997). In Titan, the plaintiff held a copyright in two wrestling characters and alleged the defendant had tortiously interfered with the plaintiff's contractual relationship with the two licensees by "causing [the licensees] to portray the copyrighted characters for defendants." Id. at 74. Judge Dorsey cited Harper Row's reasoning that "extra elements of awareness and intentional interference did not establish the requisite qualitatively different conduct . . ." Id. at 73 (internal quotations omitted). In Titan the court held that it was the "act of inducing, encouraging or forcing" the licensees to breach an "express promise" that "constitute[ed] the interference." Id. This distinction did not prevent the claim from preemption. Explaining that to avoid preemption the claimed interference must "in no way involve a violation of the Copyright Act," the court found that claims alleged fell within the general scope of copyright. Id. at 73-74.
Melville Nimmer, discussing breach of contract cases and copyright preemption has written: "the tort of tortious interference with contractual relations attempts to regulate the same subject matter as does copyright law . . ." 1 Nimmer, The Law of Copyright § 1.01(B)(1)(a).
Yet, RDW relies on a recent DC Circuit decision in contesting Brancard's preemption argument. In Sturdza, the plaintiff, an architect brought a claim against a second architect for "stealing her design for the United Arab Emirates' new embassy." Sturdza v. United Arab Emirates, 281 F.3d 1287, 1291 (D.C. Cir. 2002). In addition to claims against the UAE, the plaintiff claimed the second defendant architect committed fraud, tortiously interfered with the plaintiff's contract with the UAE and intentionally inflicted emotional distress. The district court held the state law claims to be preempted by copyright, but the court of appeals reversed. Id.
The plaintiff alleged that the defendant architect had "knowledge of the contract between [the plaintiff] and the UAE and intentionally interfered with the contract." Id. at 1304. The panel recognized that most case law (and Nimmer) find these types of cases are normally preempted, but held that "a different result is warranted where the defendant interferes with the plaintiff's contractual rights through conduct other than reproduction, preparation, distribution, performance or display of the copyrighted work." Id. at 1305. The court found the conduct that was different was that the second architect despite "knowing the UAE had agreed to award the embassy contract to Sturdza, entered into his own contract with the UAE to build the embassy," the court held there was no preemption. Id. Significantly, the court writes that "even if [the second architect's] design were entirely his own, [plaintiff] could proceed on her tortious interference with contract claim based on her other allegations." Id.
D.C. law defines tortious interference with a contract with a slightly different test than Connecticut, consisting of four parts: 1. existence of a contract; 2. knowledge of the contract; 3. intentional procurement of its breach by the defendant; and 4. damages resulting from the breach. Id. at 1305.
In Gemcraft, the district court preempted a plaintiff architect's tortious interference with contract complaint because "it was the unauthorized act of copying that caused the violation." Gemcraft Homes, Inc. v. Sumurdy, 688 F. Sup. 289, 295 (E.D.Tex. 1988). The plaintiff alleged the defendant had stolen and copied his architectural plans, and subsequently built a home based on those plans. Similar to the instant case it was the defendant that raised the preemption issue in response to the plaintiff's state claims. And similarly to Harper Row and Titan Sports, the court held the state actions preempted. The court cited the Second Circuit's reasoning in Harper Row, and then held the "fact that intentional interference with contract requires elements of knowledge of the existing contract and intentional interference with contract in addition to copying the plans merely means that the tortious interference claim is narrower than a copyright infringement claim." Id. at 295. Yet the court adds in a footnote language that is directly relevant to the instant action: "To the extent plaintiff's tortious interference claims relate to matters other than plaintiff's exclusive right to the use of the architectural plans, it would not be preempted." Id. at 295 n. 13.
In the instant case, RDW provides few details in its pleadings as to the exact actions taken by Brancard to assist the court in making a determination of whether Brancard's alleged actions exceeded the ambit of copyright. RDW alleges that Brancard was "hired" by the Russos to build the Home for the Russos. Complaint, ¶ 9. RDW alleges that the "Brancard knew that he did not have plaintiffs' authority to use the Plans in constructing the Home." Complaint, ¶ 15. RDW also alleges that Brancard took the plans and built the Home based on the "design described therein." Complaint, second count, ¶ 17. Additionally, RDW alleges Brancard "knew that the Plans bore a stamp clearly marked `Property of R.D. Wolf, Inc.' and defendant knew that he did not have authority to use the plans in constructing the home." Complaint, second count, ¶ 18. Lastly, RDW alleges that "[a]t all relevant times, Defendant Brancard knew that the plaintiffs had a reasonable and legitimate expectation of doing business with `the Russos' . . ." Complaint, third count, ¶ 19.
Were the court to follow the DC Circuit's decision in Sturdza, RDW's allegations avoid preemption, if Brancard was aware that the only builder that could fulfill the dontract with the Russos was RDW. However, existing Second Circuit authority does not hold that "awareness" or "intentional interference" is enough to establish the elements of tortious interference with business expectations separate and beyond the Copyright Act. Accordingly, RDW's third count as to tortious interference with business expectations is preempted by the Copyright Act.
RDW's fourth count is that Brancard's actions constitute "unfair or deceptive acts or practices within the meaning of General Statutes § 42-110a, et seq." Complaint, fourth count, ¶ 22. Section 42-110a et seq., is commonly referred to as the Connecticut Unfair Trade Practices Act (CUTPA). Under § 42-110b(a) "No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." § 42-110b(a). The Supreme Court of Connecticut has established a test for determining if a practice is in violation of CUTPA.
1. Whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise "whether in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness"; 2. whether it is immoral, unethical, oppressive, or unscrupulous; 3. whether it causes substantial injury to consumers, competitors or other businessmen . . . All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.
Fink v. Golenbock, 238 Conn. 183, 215 (1996).
The pleadings here allege that Brancard knowingly entered into a contractual relationship with the Russos to build them a home based on plans created by RDW, while being aware that a similar contractual relationship already existed between RDW and the Russos. Complaint, ¶ 4-10. The pleadings also allege Brancard was aware RDW had reserved an exclusive right to build a home from the plans created for the Russos, yet Brancard submitted to the Town of Manchester building department the said plans "listing himself as both `contractor' and `architect or engineer.'" Complaint, ¶¶ 11-12. Additionally, "the Plans used by defendant Brancard bore a stamp clearly marked `Property of R.D. Wolf, Inc.,' and defendant Brancard knew that he did not have plaintiff's authority to use the Plans in constructing the Home." Complaint, ¶ 15.
Under the above-described test there is little question that Brancard may well have violated CUTPA. Brancard's actions at the very least were unscrupulous and unethical, seemingly unfair, and without question caused a substantial injury to a competitor. Yet, Brancard claims that just as the previous three counts are preempted by copyright, the CUTPA claim should be as well. The defendant is in error.
The Supreme Court of Connecticut recently ruled that a CUTPA claim would not be preempted by the exclusivity provision of the Connecticut Product Liability Act (General Statutes § 52-572m et seq.) in Gerrity v. R.J. Reynolds Tobacco Co., 263 Conn. 120 (2003). The exclusivity provision of the Product Liability Act provides that all claims for product liability shall be inclusive and "in lieu of all other claims against product sellers, including actions of negligence, strict liability and warranty, for harm caused by a product." General Statutes 52-572n(a)2. Accordingly, the Supreme Court was asked to determine if the provision would exclude a CUTPA claim based on "the product seller's alleged scheme to misrepresent and conceal the defect." Gerrity v. R.J. Reynolds Tobacco Co., Docket No. 3:99CV1329 (D.Conn. April 19, 2001).
This action was a certified question of law from the District Court of Connecticut, in an wrongful death action as a result of the allegedly negligent design, manufacture and distribution of defective cigarette products by the defendants. Gerrity v. R.J. Reynolds Tobacco Co., Docket No. 3:99CV1329 (D.Conn. April 19, 2001).
Despite product liability claims being defined broadly, the Supreme Court held that exclusivity clause was not designed to "eliminate claims that [are] understood to be outside the traditional scope of a claim for liability based on a defective product." Gerrity v. R.J. Reynolds Tobacco Co., 263 Conn. at 128. In examining the legislative history of the exclusion, the Court determined it was intended to prevent product liability claims from being brought under CUTPA, not vice versa. Id. at 129. As the CUTPA claim in Gerrity was brought based on allegations of "deliberate misrepresentations" by the defendant and the plaintiff was seeking redress for financial injuries suffered by the decedent, "of a kind that has never been regarded as part of the tradition tort remedy for harm caused by a defective product," the CUTPA claim was allowed. Id. at 129-30 n. 10.
In 2002, the District Court of New Jersey in Video Pipeline held that a state unfair competition claim was not preempted due to the plaintiff "passing off" the defendants' merchandise as its own. Video Pipeline, 210 F. Supp.2d at 565. Video Pipeline involved the use of previews of films for home video products by the plaintiff without permission from the defendant. The court found that because it could be construed from the allegations that the plaintiff was "distributing its own products . . . and representing to the public that they are those of the defendant," and such allegations "necessarily involve the extra element of misrepresentation or deception which is not an element for copyright preemption," the unfair competition claim was not preempted. Id. at 566.
The action was initiated by the plaintiff seeking a declaratory judgment as to its use not infringing any copyright of the defendant. Video Pipeline, 210 F. Supp.2d at 555.
Although the facts alleged in the instant case be directly distinguished from the fact pattern in Video Pipeline, it is the court's definition of misrepresentation and deception as falling outside the ambit of copyright that is vital.
In another Second Circuit district court decision, the court explained that under New York's unfair competition standard, "the essential distinction is between a deliberate attempt to compete and a deliberate attempt to deceive." Gemveto Jewelry Company, Inc. v. Cooper, 613 F. Sup. 1052, 1064 (1985). The issue in Gemveto was whether the defendant's sales of "knockoffs" of Gemveto jewelry were copyright infringement, trademark infringement and unfair competition in violation of § 43 of the Lanham Act and unfair competition under New York common and statutory law. Id. at 1055. The court found there was evidence of a "deliberate attempt by [the defendant] to deceive the consuming public as to the source of its `knockoffs' and thereby to appropriate the goodwill or reputation of [the plaintiff] a rival seller." Id. at 1065. Hence, the court held the unfair competition claim not to be preempted.
Jewelry designs fall within the ambit of copyrightable material. Id. at 1063-64.
Nimmer in his treatise on copyright discusses what state law claims should be preempted by copyright. In the section titled: "Deceptive Trade Practices," he writes "there is no preemption of the state law of fraud, nor of the state law of unfair competition of the `passing off' variety." 1 Nimmer, The Law of Copyright, § 1.01(B)(1)(e).
In the instant case, RDW has alleged enough facts to maintain a CUTPA claim against Brancard. The claims sound in "deliberate misrepresentations" of the type referenced in Gerrity, as when Brancard used RDW's plans as his own when registering them with the town of Manchester. As the court held in Video Pipeline, such misrepresentation and deceptive practices are extra elements and fall outside the ambit of the Copyright Act. The actions alleged are significantly more serious than mere competition on the part of Brancard and verge on being a deliberate attempt to deceive. Brancard's act of "passing off" the plans as his own demonstrate what may well be an unfair trade practice as conceived by CUTPA and interpreted by the Connecticut Supreme Court. Accordingly, the fourth count is not preempted by the Copyright Act.
In summary, the plaintiff's first three counts are held by this court to be preempted by the Federal Copyright Act, while the fourth count will stand The motion to dismiss is granted in part as to the first three counts and denied as to the fourth count.
Henry S. Cohn, J.