Cambridge Literary v. W. Goebel Porzellanfabrik

• Decision Date: 09 July 2002
• Docket Number: No. 01-1043.,01-1043.
• Citation: 295 F.3d 59
• Parties: CAMBRIDGE LITERARY PROPERTIES, Ltd., Plaintiff, Appellant, v. W. GOEBEL PORZELLANFABRIK G.m.b.H & Co. Kg., Goebel Verwaltungs —und Beteiligungsgesellschaft m.b.H., the General Partner of Goebel Porzellanfabrik G.m.b.H. & Co. Kg., and its former General Partners, Wilhelm Goebel And Ulrich Stocke, and Goebel Art G.m.b.H., d/b/a Goebel of North America, Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 59

295 F.3d 59

CAMBRIDGE LITERARY PROPERTIES, Ltd., Plaintiff, Appellant, v. W. GOEBEL PORZELLANFABRIK G.m.b.H & Co. Kg., Goebel Verwaltungs —und Beteiligungsgesellschaft m.b.H., the General Partner of Goebel Porzellanfabrik G.m.b.H. & Co. Kg., and its former General Partners, Wilhelm Goebel And Ulrich Stocke, and Goebel Art G.m.b.H., d/b/a Goebel of North America, Defendants, Appellees.

No. 01-1043.

United States Court of Appeals, First Circuit.

Heard April 3, 2002.

Decided July 9, 2002.

COPYRIGHT MATERIAL OMITTED

Henry Hermann for appellant.

David P. Shouvlin with whom Porter, Wright, Morris & Arthur LLP, Joseph D. Steinfield, Kirsten Nelson Callahan and Hill & Barlow were on brief for appellees.

Before BOUDIN, Chief Judge, BOWNES, Senior Circuit Judge, and LIPEZ, Circuit Judge.

BOUDIN, Chief Judge.

Cambridge Literary Properties Ltd. ("Cambridge") brought this suit against W. Goebel Porzellanfabrik G.m.b.H & Co. Kg. ("Goebel"), a German limited partnership, and others associated with it.¹ The complaint sought a share in the profits gained by defendants from the use of images taken from the Hummel Book in which Cambridge claims a copyright interest. The district court granted defendants' Rule 12(b) motion and dismissed the case for lack of personal jurisdiction. We describe the underlying events in the light most favorable to Cambridge as the non-moving party. Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir.1994).

The Hummel Book contains images of children drawn by a German nun, Sister Berta Maria Innocentia Hummel, accompanied by the verse of an Austrian poet, Margarete Seemann. Emil Fink Verlag, a German citizen, first published the book in German in 1934 under contract with Hummel and Seemann. Fink registered the book as a foreign publication under U.S. copyright law in 1936 and later introduced an English language version of the book into the United States.

Cambridge claims that for purposes of U.S. copyright law the Hummel Book is a work of joint authorship by Hummel, Seemann, and Fink (who apparently contributed some illustrations). See 17 U.S.C. § 101 (2000); see generally 1 Goldstein, Copyright § 4.2 (2d ed. Supp. 2000). Thus, Cambridge says, the original authors each held an ownership interest as a tenant in common in the original U.S. copyright. In 1962, Fink renewed the U.S. copyright. Under the then applicable Copyright Act of 1909, Pub. L. No. 60-349, 35 Stat. 1075 (repealed 1976), the renewal interests belonged to the original owners, or to their heirs, regardless of any intervening assignments under the original copyright. Miller Music Corp. v. Charles N. Daniels, Inc., 362 U.S. 373, 374-75, 80 S.Ct. 792, 4 L.Ed.2d 804 (1960).

Cambridge claims an ownership interest in the renewal copyright by purchase from the heirs of Seemann, who died in Austria in 1949. Cambridge says Goebel and Goebel Art have at various times owned the other interests in the renewal copyright. Goebel, according to Cambridge, purchased Fink's interest in 1971, before assigning it to a Swiss Company, ARS AG, allegedly half owned and controlled by Goebel Art, in 1991. Goebel Art allegedly acquired the other share, tracing back to Sister Hummel, from Goebel's former U.S. distributor, Schmid Brothers, Inc., in 1994.

Illustrations in the Hummel Book allegedly served as models for a continuing series of porcelain figurines, called Hummels. These figurines have proved popular with collectors in America. Goebel, or one or more related predecessor partnerships, have apparently been manufacturing the figurines since 1935. Individual Hummel figurines sell for several hundred dollars apiece and the direct revenues from American sales are alleged to be in the millions.

Cambridge asserts that the figurines comprise derivative works and their sale in the United States is governed by the renewal copyright in the Hummel Book. Each co-owner of the renewal copyright, says Cambridge, is free to exercise rights under the copyright but owes a share of the profits to each other co-owner. See 1 Goldstein, supra, § 4.2.2. On this basis, Cambridge claims a share of the profits garnered by Goebel from U.S. sales of the figurines and certain indirect profits reaped by Goebel Art; allegedly, Goebel Art markets the figurines and operates a lucrative club for Hummel collectors in the United States using images derived from the book.

In February 2000, Cambridge brought the present suit in federal district court in Massachusetts, seeking an accounting and imposition of a constructive trust to recover its alleged share of the profits. The defendants responded by filing a motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction.² Cambridge's main response was that the district court had specific jurisdiction under the Massachusetts long-arm statute, which provides (most pertinently) that

[a] court [in Massachusetts] may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's (a) transacting any business in this commonwealth....

Mass. Gen. Laws chap. 223A, § 3 (2000).

After the filing of memoranda, documents, and affidavits, the district court dismissed for lack of personal jurisdiction. The district court assumed, at least for purposes of argument, that Goebel had "transacted business" in Massachusetts by shipping all of its U.S.-bound Hummel figurines from its factory in Germany F.O.B. to its independent distributor, Schmid Brothers, in Massachusetts, at least from 1988 to 1994. At their peak, these shipments totaled over $20 million annually. (After 1994, Goebel shipped the Hummels to a New Jersey company that was a wholly owned subsidiary of Goebel Art.)

However, the district court held that Cambridge had not satisfied the further requirement of showing that its claims "arose from" these shipments. The court said that accounting and constructive trust are merely remedies and Cambridge's claim to a share of profits depended on its establishing a series of propositions (e.g., that Seemann was a joint author and that Cambridge held a valid ownership interest through her heirs). These in turn depended, said the court, on events in Europe dating back many years and had no connection with sales or distribution in Massachusetts. The district court then dismissed as to all defendants. Cambridge now appeals.

The issues on appeal are largely legal ones subject to de novo review. Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675 (1st Cir.1992). Because the court did not hold an evidentiary hearing, we must look to the pleadings and supplemental filings to determine whether Cambridge has alleged facts sufficient to support the exercise of jurisdiction under both the long-arm statute and the Constitution. Lyle Richards Int'l, Ltd. v. Ashworth, Inc., 132 F.3d 111, 112 n. 1 (1st Cir.1997).

To begin with what is undisputed, Cambridge does not rely on any special federal statute providing for nationwide or otherwise expanded service. See Janmark, Inc. v. Reidy, 132 F.3d 1200, 1201 (7th Cir. 1997). Indeed, it is unlikely that any federal cause of action is asserted, even though federal law is the source of the Hummel Book copyright itself. In all events, the district court properly considered whether a Massachusetts state court could exercise personal jurisdiction over the defendants. See id.; Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir.1995).

However, the jurisdictional inquiry is largely a federal constitutional one. Massachusetts courts construe section 3(a)'s "transacting business" requisite as extending jurisdiction as far as permitted by the due process clause of the Fourteenth Amendment. Tatro v. Manor Care, Inc., 416 Mass. 763, 625 N.E.2d 549, 553 (1994); see also "Automatic" Sprinkler Corp. of Am. v. Seneca Foods Corp., 361 Mass. 441, 280 N.E.2d 423, 424 (Mass.1972). We have on occasion held jurisdiction to be barred on due process grounds where the literal terms of the statute might seem to permit it. Bond Leather Co., Inc. v. Q.T. Show Mfg. Co., Inc., 764 F.2d 928, 932-35 (1st Cir.1985). So, in the ordinary case, we can proceed directly to the constitutional due process test. See Sawtelle, 70 F.3d at 1388.

The due process cases impose three requirements on the exercise of specific personal jurisdiction over out-of-state defendants. United Elec., Radio and Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir.1992). (By contrast, if a defendant has continuous and systematic contacts with the state, courts in the state may exercise general jurisdiction over any cause of action against the defendant. Id. at 1088.) To begin, the defendant must have purposeful "minimum contacts" with the state. Further, the exercise of jurisdiction must be "reasonable" under the circumstances. The third requirement, on which this case turns, is that the plaintiff's claims be related to the defendant's contacts. 960 F.2d at 1089.

Section 3(a) expresses this relatedness requirement by addressing itself only to claims "arising from" the transaction of business in Massachusetts. However, "relatedness" may be a broader concept, and we assume Massachusetts courts would again construe the statute as extending to its constitutional limit. Tatro, 625 N.E.2d at 553-54. In sum, under section 3(a) and the Constitution, specific jurisdiction requires a nexus between the claim and defendant's in-state activities; thus the district court quite properly focused at the outset on the relationship between Goebel's Massachusetts contacts and Cambridge's claims.

As previously noted, Goebel's direct sales to Massachusetts were substantial for a period ending in 1994.³ The shipment of large quantities of goods into a state, even F.O.B., can satisfy the minimum contacts prong of the due process inquiry. See Vencedor Mfg. Co., Inc. v. Gougler Indus., Inc., 557 F.2d 886, 890-91 (1st Cir.1977); Buckeye Assocs., Ltd. v. Fila...