United States: "Wanton Disregard Of Duty" Tort Claim Pre-Empted By Copyright Act

Richard Raysman is a Parnter and Elliot Magruder is an Attorney both in our New York office.

The purview of federal preemption in the context of copyright law is broad. Among many other causes of action rooted in state common law or statutory liability, courts have found unfair competition, misappropriation, breach of contract and tortious interference claims to be wholly preempted by the Copyright Act. To circumvent dismissal on preemption grounds, a plaintiff must show an "extra element" that does not pertain to rights intrinsic to those protected by the Copyright Act. In a recent case in a federal court sitting in the Eleventh Circuit, a plaintiff attempted to plead around a pre-emption defense on grounds that the state has an interest in enforcing an alleged "wanton" indifference to abiding by a negotiated but not executed software license agreement.  Fedoseyev v. CFD Research Corp., No. 5:15-cv-02321-HGD, 2016 WL 6699312 (N.D. Ala. Nov. 15, 2016).  For the reasons discussed below, the plaintiff failed.

Facts

In 2000, Alexandre Fedoseyev (Plaintiff) created a software program called CNSPACK to solve issues related to engineering and math problems concerning fluid dynamics. Since creating CNSPACK, the Plaintiff averred that he had granted non-exclusive licenses and sublicenses in return for fees of roughly $16,000 per license. The Plaintiff submitted an application in 2015 to register CNSPACK with the Copyright Office.

The Plaintiff had worked at CFD (Defendant) since 2001. During his tenure, officials at the Defendant approached the Plaintiff to request use for CNSPACK for internal testing purposes. The Plaintiff claimed he agreed to do so, but only if CFD paid a license fee.  CFD later incorporated CNSPACK into its own software library, without a license, according to the Plaintiff.

The Plaintiff sued in federal court, alleging that by using CNSPACK without a license nor any other compensation, the Defendant knowingly and willfully committed copyright infringement with "wanton disregard for [the Plaintiff's] right to license" and breach of contract. Only the amended complaint included the "wanton disregard of known duty" cause of action. This cause of action was not rooted in any specific Alabama statute, but rather, a seeming common law duty of good faith and fair dealing. Defendant moved to dismiss the copyright "wanton disregard of known duty" claim under the preemption provision of the Copyright Act, 17 U.S.C. § 301. Section 301 of the Copyright Act "preempts all state causes of action based on a right found in the Act or equivalent to such a right."

Legal Analysis/Conclusions

The two-pronged test for preemption under the Copyright Act first inquires as to whether the rights at issue fall within the "subject matter of copyright." See Crow v. Wainwright, 720 F.2d 1224 (11th Cir. 19983) (citation omitted). Software programs fall within such subject matter.

The second prong required the court to determine whether the Plaintiff's claims fell within a right found in the Copyright Act or an equivalent. The Eleventh Circuit's method of analysis to make such a finding involves "whether the elements of a cause of action for the tort of copyright infringement are equivalent to the elements of the crime of dealing with stolen property, as it applied to [CNSPACK] in this case."  Crow, 720 F.2d at 1226.

If so, the Plaintiff's state law causes of action are preempted.  In contrast, if the cause of action includes an "extra element is required or in addition to the acts of reproduction, performance, distribution or display [of the copyrighted work], then the right does not fall within the general scope of copyright and there is no preemption." Foley v. Luster, 249 F.3d 1281 (11th Cir. 2001) (citation omitted). The "extra element" analysis evaluates whether the claim is qualitatively different than a copyright infringement allegation. Certain exceptions to the preemption provision are listed in 17 U.S.C. § 301(b).

The Plaintiff argued that, while his claim of the Defendant's "wanton disregard of a known duty" was in part conditioned on CFD's reproduction and distribution of CNSPACK in copies of CFD's software, this cause of action also was premised on an additional right of a State to "enforce the State's policy against wanton acts," a right which arose because the Plaintiff needed a mechanism to enforce an obligation that CFD purportedly took to compensate him for use of CNSPACK.  According to the Plaintiff, such enforcement right, couched in the notion of a State's police power, constituted an "extra element," thereby avoiding preemption under 17 U.S.C. § 301.

The court disagreed. It found that the "extra element" cited by the Plaintiff was "nothing more than a claim that CFD failed to compensate plaintiff for the use of his software." The Defendant's "wanton disregard" for his right to license CNSPACK was an allegation of "mental status" that does not add any concrete actions by the Defendant that do not pertain to alleged acts of infringement. See Crow, 720 F.2d at 1226-27 (additional elements evincing mental status such as "knowledge," "intent" and "scienter" do not add additional rights different from those protected by copyright law).  Further, the court concluded that there is "no Eleventh Circuit case law which supports differentiating plaintiff's wantonness claim from these other cases involving mental status."

Accordingly, the Plaintiff's "wanton disregard of a known duty" claim was preempted and the Defendant's motion to dismiss was granted with leave to amend for the Plaintiff.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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