Rhapsody alleged that defendants infringed the copyright inits business management software. Rhapsody allegedly granted defendant CVA a nontransferable license touse its product, Exceed MRP, but that CVA and its parent company, INOX IndiaLimited, developed an infringing work and used it to manage theirbusinesses. The software assistsbusinesses in tracking orders and managing business operations, and wasallegedly tailored to suit CVA’s specific needs. Though the exact details of the contract aredisputed, Rhapsody alleged that it specified that the software couldn’t bemodified or reverse engineered and could be loaded onto a maximum of one computeror server.
In 2009, INOX bought a 70% interest in CVA; they make thesame things and represent on their combined website that “INOX India and CVAare ONE” and refer to themselves as a “joint entity” called “INOXCVA.” Afterlearning of the acquisition, Rhapsody sent INOX a letter, copied to CVA,reminding them that the software couldn’t be transferred to any other party ormodified. INOX hired a company calledVCAN India (against which a default judgment was entered here) to develop newbusiness management software for CVA. Rhapsody alleged that the new software, INOVA, infringed Rhapsody’ssoftware; that INOX regularly accesses the infringing software on CVA’s Texasserver, and that INOX (in concert with VCAN and CVA) removed Rhapsody’scopyright management information embedded in Rhapsody’s software andfraudulently placed its own indicia of ownership on the infringing software, inviolation of the DMCA. (If this softwareisn’t sold, can the removal have aided copyright infringement in any way? If not, does §1202 apply at all?)
Rhapsody sued for copyright infringement, violations of 17USC §1202(a) and (b) (removal of CMI and provision of false CMI), and violationsof the Lanham Act.
The court first found personal jurisdiction over INOX,though INOX argued that it didn’t transact business in Texas, had no place ofbusiness in Texas, didn’t employ Texas residents, and was merely CVA’s parentcompany. But the evidence suggested thatINOX hired VCAN to prepare INOVA for CVA, whose server is in Texas; it directlyparticipated in the development of INOVA; and it regularly logged into CVA’sTexas server to use Rhapsody’s software and INOVA to view data. Plus, it allegedly sold products made anddesigned with the use of INOVA. (Notsure why that last makes any difference at all; that doesn’t even mention thoseproducts being sold into the US, but even if they were, that can’t be relevantto personal jurisdiction over copyright infringement.)
INOX argued that logging into and viewing a program on aTexas server wasn’t infringement, citing Cartoon Network LP v. CSC Holdings,Inc., 536 F.3d 121 (2d Cir. 2008), and claiming that its acts weren’tfixation. But MAI v. Peak held that copying occurs when a program is loaded intoRAM, and other courts have held that loading software into RAM can create aninfringing copy. Rhapsody’s evidencesuggested that INOX accessed the two programs long enough for an INOX employeeto view the copyrighted content and evaluate the data “displayed thereon” (isthe work an audiovisual work or a software program?). At this stage, Rhapsody had made out itsprima facie case. The causes of actionarose out of or related to INOX’s forum contacts; there was evidence that INOXknew the software was on CVA’s Texas server and regularly logged into it to usethe software. “Numerous courts haveexercised personal jurisdiction over nonresident defendants where the minimumcontacts with the forum consisted of committing a tort through accessing aserver located in the forum state.” Thus, the burden was INOX to show that theexercise of jurisdiction would be unfair, which it did not do, given Texas’sstrong interest in protecting its citizens from copyright infringement and DMCAviolations, and INOX’s past practice of sending principals and employees toTexas to manage its subsidiary.
INOX then argued that American copyright law doesn’t applyto extraterritorial acts of infringement, but the court found that at leastpart of an act of infringement was alleged in the US. Logging onto the Texas server and engaging ininfringing acts would suffice (though Rhapsody needed to amend its complaint toclearly allege this).
The Lanham Act claim presented a Dastar problem: Rhapsody alleged that INOX “deceived bothprospective and current customers regarding the origin of the Exceed MRPSoftware and the derivative work, the INOVA Software,” and “[a]ny statementsmade regarding ownership of the INOVA software and/or Exceed MRP Software toprospective and/or current customers … are likely to cause confusion, mistake,or deception as to origin, sponsorship, or approval of their goods by Plaintiffwhen none exists.” The complaint was “rather vague” as to whether it allegedthat INOX copied Rhapsody’s copyrighted work or that INOX took tangible copiesof Rhapsody’s software, removed Rhapsody’s marks, and sold them as INOX’sown. If only the former, then the claimmight fail as a matter of law. Thepleadings were currently insufficient; if Rhapsody chose to replead a LanhamAct claim, it would need to attend to precedent.
View the Original article
No comments:
Post a Comment