Kwan v. Schlein

• Decision Date: 25 January 2011
• Docket Number: Docket No. 09–5205–cv.
• Citation: 634 F.3d 224
• Parties: Shirley Y. KWAN, Plaintiff–Counter–Defendant–Appellant,v.Alan M. SCHLEIN, Business Resource Bureau, Inc., Defendants–Counter–Claimants–Appellees,Facts on Demand Press, Michael Sankey, BRB Publications, Jane/John Doe, Carl R. Ernst, J.J. Newby, Schlein News Bureau, Peter J. Weber, Defendants–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

634 F.3d 224

2011 Copr.L.Dec. P 30,032

97 U.S.P.Q.2d 1609

Shirley Y. KWAN, Plaintiff–Counter–Defendant–Appellant,

v.Alan M. SCHLEIN, Business Resource Bureau, Inc., Defendants–Counter–Claimants–Appellees,Facts on Demand Press, Michael Sankey, BRB Publications, Jane/John Doe, Carl R. Ernst, J.J. Newby, Schlein News Bureau, Peter J. Weber, Defendants–Appellees.

Docket No. 09–5205–cv.

United States Court of Appeals, Second Circuit.

Argued: Oct. 14, 2010.Decided: Jan. 25, 2011.

Jeffrey Sonnabend, SonnabendLaw, Brooklyn, NY, for Plaintiff–Counter–Defendant–Appellant.Lawrence D. Bernfeld, Graubard Miller, New York, NY, Scott Christopher Patton, McNamee, Lochnew, Titus & Williams, P.C., Albany, NY, for Defendants–Counter–Claimants–Appellees and Defendants–Appellees.Before: KEARSE, POOLER, and WESLEY, Circuit Judges.POOLER, Circuit Judge:

Appeal from two orders of the United States District Court for the Southern District of New York (Stein, J.). One order, entered on July 16, 2009, granted summary judgment on Appellant's claim for copyright infringement on the ground that the claim was time-barred. The other, entered on November 23, 2009, dismissed without prejudice Appellees' counterclaims. We hold that a time-barred ownership claim will bar a claim for copyright infringement where, as here, the infringement claim cannot be decided without adjudication of a genuine dispute as to the plaintiff's ownership of the copyright. Accordingly, the district court did not err in granting summary judgment on this ground, and because we find Appellant's remaining claims to be without merit, we affirm.

BACKGROUND

In early 1998, Business Resources Bureau, Inc. (d/b/a BRB Publications and Facts On Demand Press, hereinafter “BRB”)—a publisher of books and websites used for locating public records—approached Alan M. Schlein regarding a concept for a book on the use of the internet. Schlein agreed to author the book, which was to be called Find It Online (“FIOL”).

In August 1998, BRB hired Shirley Y. Kwan, at Schlein's request, to perform 100 hours of editing. An email sent from Michael L. Sankey, CEO of BRB, to Kwan, on August 18, 1998, confirmed the arrangement and noted that Kwan would “be given a credit or byline on the title page as editor on the project.” When Kwan had billed the 100 hours for which BRB had agreed to pay, Schlein advised BRB that he wanted Kwan to continue to provide editorial assistance for FIOL. BRB, Schlein and Kwan agreed that Kwan would continue editing the book, and would be compensated based upon a percentage of Schlein's royalties. The rate amounted to 2.5% of the book's royalties for the first 5000 copies sold, and 3% thereafter.

Pursuant to their editing agreement, Schlein would prepare first drafts of FIOL chapters and send them to Kwan for editing. Kwan would comment on these chapters and then return them to Schlein for further work. After Schlein had revised the chapters based upon Kwan's comments, he would return them to her for a second round of editing.

On December 14, 1998, as they approached the publication day for FIOL, Sankey sent an email to Kwan and Schlein about cover billing, which stated in relevant part:

* * On cover, we were planning to put both names—AMS [Schlein] and SKK [Kwan] ... Alan has brought it up that he may want something different. Need to have the two of you to agree on how you want your names listed

AMS and SKK

AMS with SKK

? ? ? ? need to know this week

That same day, Schlein responded to Sankey, but not Kwan, with the following:

As we discussed, I want the authorship to read as follows

By Alan M. Schlein Edited by Shirley....

If this is not the way you plan to do the book I would like to talk to you about it immediately!!

Please contact me ASAP Tuesday if you have any plans otherwise. your offering a co-authorship to Shirley has put me in an awkward position. She was brought in as a contract editor, and while I appreciate all her significant efforts, it was her and my agreement to have her listed as an editor.

On December 15, Kwan responded to Sankey's email, explaining that: “After due consideration, I've decided to request the following title credit: by Alan Schlein with Shirley Kwan Kisaichi,” because “[e]ssentially, I have ghostwritten this book.” Two days later, an attorney sent Sankey a letter on Kwan's behalf demanding that she be credited as requested—“by Alan Schlein with Shirley Kwan Kisaichi,” not “edited by Shirley Kwan Kisaichi.”

Notwithstanding the above communications from Kwan and her attorney, the first edition of FIOL was published in January 1999, with Schlein listed as author and Kwan listed as editor. Schlein and BRB jointly registered their copyright in FIOL on January 15, 1999. Kwan received royalties from the publication of FIOL in several installments beginning in May 1999. She cashed the first of these checks in September 1999.

BRB published a second edition of FIOL in December 1999, a third edition in July 2002, and a fourth edition in August 2004. BRB and Schlein registered their copyrights to these later editions in the ordinary course.

Between December 1998 and January 2005, there appear to have been no communications from Kwan to Sankey or Schlein regarding her FIOL cover credit. In a May 23, 2002 letter, BRB notified Kwan that BRB was in the process of finalizing the Third Edition of FIOL and that BRB would not be paying Kwan royalties for any edition after the Second Edition, which had “been completely re-written.” Then, on January 14, 2005, Kwan filed this lawsuit alleging, inter alia, that BRB infringed her copyright in FIOL. The next month, Kwan filed a copyright registration for FIOL, identifying herself as a co-author with Schlein, a filing she later “corrected,” when she amended the registration to identify herself as sole author.

BRB and Schlein filed certain counterclaims in response to Kwan's complaint, requesting, inter alia: (1) declaratory judgment finding that Kwan's copyright registrations were invalid and that she had no ownership interest in FIOL, and (2) a permanent injunction preventing Kwan from making any future claims of copyright or ownership in the book.

On January 30, 2009, Schlein moved for summary judgment on his counterclaims, and on February 2, 2009, BRB also moved for summary judgment. BRB's motion requested judgment on Kwan's claims as well as its own counterclaims. The district court granted summary judgment to BRB on Kwan's copyright claim, but denied judgment on the above counterclaims. The district court reasoned that Kwan's copyright claims were time-barred because “the core issue [was] ownership,” not infringement, and therefore, the statute of limitations began to run “when the plaintiff first knew the defendant disputed ownership or used the material at issue.”

In concluding that her claim was time-barred, the district court first noted that Kwan, through her then-counsel, sent BRB a letter in December 1998 in which she “clearly claimed co-authorship of [FIOL].” In that letter, the court explained, Kwan referenced prior discussions with BRB on the issue and specifically objected to being identified as an editor in the upcoming publication. The first edition of FIOL, which identified Kwan as only an editor, was then published in January 1999. BRB first issued Kwan a check for royalties from this edition in May 1999, which Kwan cashed in September 1999. From these facts, the district court concluded that Kwan knew that BRB and Schlein disputed her rights in FIOL no later than September 1999, and therefore, her claims were time-barred by a term of years when she filed suit.

On November 3, 2009, BRB and Schlein moved pursuant to Federal Rule of Civil Procedure 41(a) for an order permitting them to dismiss their counterclaims voluntarily, without prejudice to reinstatement or reassertion “in the event ... Kwan ... were to (a) prevail on an appeal” from the district court's grant of summary judgment against her, “(b) commence a new action against Schlein or [BRB]” relating to FIOL, or (c) take actions in violation of BRB's and Schlein's copyright interests in FIOL. The court granted the motion, finding that it would cause Kwan no legal prejudice.

For the reasons set forth below, we affirm the grant of summary judgment to BRB on Kwan's copyright claim and the order permitting the voluntary dismissal of defendants' counterclaims.

DISCUSSION

I. Standard of Review

We review the grant of summary judgment de novo, drawing all factual inferences in favor of the party against whom summary judgment is sought. Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 107 (2d Cir.2008). Summary judgment is appropriate only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); accord Wright v. Goord, 554 F.3d 255, 266 (2d Cir.2009).

II. Copyright Statute of Limitations

Civil actions under the Copyright Act must be brought “within three years after the claim has accrued.” 17 U.S.C. § 507(b). An ownership claim accrues only once, when “a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right.” Stone v. Williams, 970 F.2d 1043, 1048 (2d Cir.1992). Under this rubric, any number of events can trigger the accrual of an ownership claim, including “[a]n express assertion of sole authorship or ownership.” Netzer v. Continuity Graphic Assocs., Inc., 963 F.Supp. 1308, 1315 (S.D.N.Y.1997) (citing Zuill v. Shanahan, 80 F.3d 1366, 1370 (9th Cir.1996)); accord Merchant v. Levy, 92 F.3d 51, 56 (2d Cir.1996) (citing Stone, 970 F.2d at 1048). By contrast, an infringement action may be commenced within three years of any infringing act, regardless of any prior acts of infringement; we have applied the three-year limitations period to bar only recovery for infringing acts occurring outside the three-year period. See Merchant, 92 F.3d at 57 n. 8.

Here, BRB and Schlein rejected...