Stuart Weitzman, LLC v. Microcomputer Resources

• Citation: 542 F.3d 859
• Decision Date: 12 September 2008
• Docket Number: No. 07-12998.,07-12998.
• Parties: STUART WEITZMAN, LLC, Plaintiff-Counter-Defendant-Appellee, v. MICROCOMPUTER RESOURCES, INC., Defendant-Counter-Claimant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

542 F.3d 859

STUART WEITZMAN, LLC, Plaintiff-Counter-Defendant-Appellee, v. MICROCOMPUTER RESOURCES, INC., Defendant-Counter-Claimant-Appellant.

No. 07-12998.

United States Court of Appeals, Eleventh Circuit.

September 12, 2008.

Patricia Zimmerman-Keenan, Theresa M.B. Van Vliet, Genovese, Joblove & Battista, Thomas M. Messana, Messana, Weinstein & Stern, P.A., Ft. Lauderdale, FL, for Appellant.

Gary Thomas Stiphany, Garbett, Bronstein, Stiphany & Allen, P.A., Miami, FL, Chester Rothstein, Amster, Rothstein & Ebenstein, New York City, for Appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before ANDERSON, HULL and

SILER,^* Circuit Judges.

ANDERSON, Circuit Judge:

Microcomputer Resources, Inc. ("MCR") appeals the district court's grant of summary judgment in favor of Stuart Weitzman, LLC ("Weitzman") in this declaratory judgment action, arguing both that the district court lacked subject matter jurisdiction, and that summary judgment was inappropriate due to the existence of genuine issues of material fact. We do not reach the merits of MCR's appeal because we conclude that the district court was without subject matter jurisdiction to entertain Weitzman's suit. Accordingly, we vacate the district court's order and remand this case with instructions to dismiss it for lack of subject matter jurisdiction.

I. BACKGROUND

Weitzman is a designer, manufacturer, and seller of women's shoes and related fashion items. MCR is a company that provides computer software, software programming, and related services. Weitzman hired MCR in the 1990s to provide computer support and to design and create computer software. At first, MCR performed services on Weitzman's existing computer order management system, but eventually Weitzman engaged MCR to replace that system. MCR then created a new piece of order management software, modified Weitzman's existing order fulfillment software, and integrated the two systems, resulting in the piece of custom software that is at issue in this case. Both parties agree that MCR owns the copyright in this custom software, and both parties also agree that MCR has never registered its copyright.

For years, the parties operated pursuant to an oral agreement without incident, but eventually the relationship deteriorated. On December 6, 2005, MCR sent a letter to Weitzman, asserting, among other things, that

[Weitzman] is not entitled to the use or possession of MCR's source code, explicitly or impliedly. Weitzman has the right to use the software but it cannot be modified, changed or reverse engineered by anyone. MCR must agree and consent, in writing, to any changes in this regard.

MCR retains and reserves 100% of the intellectual property rights to all software developed by MCR.

A few months later, Weitzman filed this suit in federal court pursuant to the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, seeking a declaration that, pursuant to 17 U.S.C. § 117 of the United States Copyright Act, "Weitzman is the rightful owner of a copy of custom computer software," and that the company may therefore "use, maintain, and/or modify its custom computer software" without infringing MCR's copyrights. (Compl.¶ 19.)

II. DISCUSSION

Turning to the jurisdictional issue, we first discuss the appropriate analysis of jurisdiction in the context of a declaratory judgment action. We then turn to jurisdiction of a copyright infringement claim. Finally, we discuss whether completely preempted state law claims can provide jurisdiction.

A. Jurisdiction Analysis in the Context of Declaratory Judgment

Of course, it is well established that the Declaratory Judgment Act does not, of itself, confer jurisdiction upon federal courts. See, e.g., Household Bank v. JFS Group, 320 F.3d 1249, 1253 (11th Cir.2003); see also Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 463, 81 L.Ed. 617 (1937) ("[T]he operation of the Declaratory Judgment Act is procedural only."). Rather, in the context of a declaratory judgment action, "the normal position of the parties is reversed; therefore, we do not look to the face of the declaratory judgment complaint in order to determine the presence of a federal question." Hudson Ins. Co. v. Am. Elec. Corp., 957 F.2d 826, 828 (11th Cir.1992). "Instead, this court must determine whether or not the cause of action anticipated by the declaratory judgment plaintiff arises under federal law." Id. Our inquiry is thus "whether, absent the availability of declaratory relief, the instant case could nonetheless have been brought in federal court. To do this, we must analyze the assumed coercive action by the declaratory judgment defendant." Gulf States Paper Corp. v. Ingram, 811 F.2d 1464, 1467 (11th Cir.1987), abrogated on other grounds by King v. St. Vincent's Hosp., 502 U.S. 215, 217, 112 S.Ct. 570, 572, 116 L.Ed.2d 578 (1991); see also 22A Am.Jur.2d Declaratory Judgments § 202 (2003). Federal question jurisdiction "exists in a declaratory judgment action if the plaintiff has alleged facts in a well-pleaded complaint which demonstrate that the defendant could file a coercive action arising under federal law." Household Bank, 320 F.3d at 1251 (emphasis added).¹

In its complaint, Weitzman asserted that the district court possessed subject matter jurisdiction because the action pertains to copyright and requires an interpretation of 17 U.S.C. § 117(a),² a provision of the Copyright Act. On appeal, Weitzman advances two types of coercive actions that MCR could bring that would potentially support federal subject matter jurisdiction. First, Weitzman argues that MCR could bring a copyright infringement suit. Second, Weitzman argues that MCR could bring state law claims for breach of contract or conversion that would be completely preempted by the Copyright Act. We address each type of claim in turn.

B. Whether a Copyright Infringement Claim Can Provide Jurisdiction

The most logical reading of Weitzman's declaratory complaint, which seeks a declaration that Weitzman enjoys rights under § 117(a) as an "owner of a copy of a computer program," suggests that Weitzman anticipates a copyright infringement suit by MCR. After all, § 117(a) specifically defines conditions under which "it is not an infringement" to make a copy or adaptation of a computer program. § 117(a) (emphasis added).

Normally, of course, the district court would certainly have subject matter jurisdiction over a copyright infringement claim. However, the Copyright Act makes clear that "no action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title." 17 U.S.C. § 411(a) (noting also that an infringement action may be brought if application for a copyright has been made and denied). "The consensus among federal appellate courts is that the provisions of 17 U.S.C. § 411(a) are jurisdictional." Walton v. United States, 80 Fed.Cl. 251, 260 (2008) (collecting cases). More importantly, this circuit has held that § 411(a)'s "registration requirement is a jurisdictional prerequisite to an infringement suit." M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488 & n. 4 (11th Cir.1990). Thus, although courts have split over whether it is enough to have applied for registration or whether registration must have been approved/denied before an infringement suit may be maintained, see Walton, 80 Fed.Cl. at 260; La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1197 (10th Cir.2005), and although "a copyright exists the moment an original idea leaves the mind and finds expression in a tangible medium," La Resolana, 416 F.3d at 1198, the case law is clear that only those copyright holders that at least apply to register their copyrights may invoke the subject matter jurisdiction of the federal courts in an infringement suit, id. at 1199.

Because MCR has not applied for a copyright on the disputed software program, much less received one or been denied one, the district court would lack subject matter jurisdiction if MCR brought an infringement suit against Weitzman. Accordingly, because the Declaratory Judgment Act cannot, of itself, confer jurisdiction upon the federal courts, and because MCR could not sustain an infringement action in federal court, we hold that such a hypothetical coercive action cannot provide the district court with subject matter jurisdiction over Weitzman's declaratory suit.³

C. Whether Completely Preempted State Law Claims Can Provide Jurisdiction

Weitzman posits that in addition to a possible infringement claim, MCR might bring state law causes of action that would be completely preempted by the Copyright Act, thus supporting federal subject matter jurisdiction. At the outset, we note that pursuant to the well-pleaded complaint rule, any state law claim brought by MCR would not support federal subject matter jurisdiction unless the claim is completely preempted, even if § 117(a) provides an affirmative defense that arises under federal law, and even if federal law governs MCR's hypothetical state law claims pursuant to "ordinary preemption."⁴

Although our circuit has not decided whether the Copyright Act has such complete preemptive effect, four other circuits have held that at least some state law claims are preempted by the Copyright Act such that federal subject matter jurisdiction exists over the claim under the complete preemption doctrine. See Santa-Rosa v. Combo Records, 471 F.3d 224, 226-27 (1st Cir.2006); Ritchie v. Williams, 395 F.3d 283, 285-87 (6th Cir.2005); Briarpatch Ltd., L.P., v. Phoenix Pictures, Inc., 373 F.3d 296, 303-05 (2d Cir.2004); Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 230-33 (4th Cir.1993); see also Dunlap v. G&L Holding Group, Inc., 381 F.3d 1285, 1289-91, 1293-98 (11th Cir.2004) (suggesting that the Copyright Act might have complete preemptive effect under some circumstances); ...