Thursday, July 24, 2008

Sovereign immunity strikes down another copyright claim

Marketing Information Masters, Inc. v. Board of Trustees of California State University System, 552 F.Supp.2d 1088 (S.D. Cal. 2008)

Plaintiff does marketing research studies. It sued defendants for copyright infringement, conversion, misappropriation, and unfair business practices, alleging that it performed studies on the economic impact of the Holiday Bowl on San Diego, which were memorialized in written reports provided to the Holiday Bowl organization at below-market rates. When plaintiff told the Holiday Bowl organization that it would need to pay market rates for futher studies, the organization allegedly copied and “plagiarized” plaintiff’s 2003 report to prepare its 2004 report.

The state defendants argued they were entitled to sovereign immunity from the copyright claims. The district court, unsurprisingly, agreed despite the existence of the Copyright Remedy Clarification Act, which indicates that state entities are liable for copyright infringement. Under the Florida Prepaid cases, this wasn’t good enough, because there was no Fourteenth Amendment violation to correct, so Congress couldn’t abrogate sovereign immunity. Plaintiff could still pursue the named plaintiff insofar as it alleged that he acted in his individual capacity, however.

The state law claims, likewise, had to be dismissed against the state defendants due to sovereign immunity. Defendants also argued that the state law claims were preempted by copyright law. On conversion, plaintiff alleged that defendants interfered with its ownership of “tangible materials and intangible ideas.” On misappropriation, plaintiff alleged that material not expressly incorporated into its reports was “confidential, proprietary, and trade secret information” that was used in preparing the 2004 report. And on unfair business practices, plaintiff alleged that defendants were unjustly enriched.

Because defendants didn’t make arguments specific to unfair business practices, the court refused to dismiss that claim. (This seems like a pure technical error: unjust enrichment is regularly preempted when the allegations are like this—the claim is that the defendants failed to pay for something within the subject matter of copyright.)

Plaintiff argued that it was seeking protection for “the methodologies for evaluation, the questionnaires developed by Plaintiff, work papers generated while conducting the impact studies and ‘other intangible property and ideas’ not contained in the 2003 survey.” Since the methodologies were turned into results, and the questionnaires and work papers were fixed, I can’t figure out how this possibly averts preemption. And indeed, the court noted that ideas are regularly considered within the scope of the Copyright Act for preemption purposes, though copyright does not protect ideas. Moreover, the allegations made clear that the rights asserted were equivalent to rights protected under the Copyright Act. The conversion claim wasn’t really for return of tangible property, but for damages caused by reproduction. The misappropriation claim didn’t work because there was no allegation of disclosure of confidential information in breach of a specific duty. Plaintiff was, however, given the opportunity to amend.

My take: a business that thinks that “plagiarism” is actionable, and that it can defeat sovereign immunity, is unlikely to succeed in its next bite at the apple.

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