Marshall & Swift v. BS & A SOFTWARE

• Decision Date: 09 June 1994
• Docket Number: No. 1:93-cv-265.,1:93-cv-265.
• Citation: 871 F. Supp. 952
• Parties: MARSHALL & SWIFT, Plaintiff, v. BS & A SOFTWARE, a partnership; Bellefeuil, Szur & Associates, Inc., a corporation; Bellefeuil, Szur & Associates, a partnership; JRB Microsystems, a corporation; James R. Bellefeuil, an individual; and Thomas Szur, an individual, Defendants.
• Court: U.S. District Court — Western District of Michigan

871 F. Supp. 952

MARSHALL & SWIFT, Plaintiff, v. BS & A SOFTWARE, a partnership; Bellefeuil, Szur & Associates, Inc., a corporation; Bellefeuil, Szur & Associates, a partnership; JRB Microsystems, a corporation; James R. Bellefeuil, an individual; and Thomas Szur, an individual, Defendants.

No. 1:93-cv-265.

United States District Court, W.D. Michigan, Southern Division.

June 9, 1994.

COPYRIGHT MATERIAL OMITTED

Stephen S. Muhich, Dykema, Gossett, Grand Rapids, MI, Lawrence Allen Cox, Julie M. Ward, Quinn, Kully & Morrow, Los Angeles, CA, for plaintiff.

Gregory L. McClelland, Dickinson, Wright, Moon, Van Dusen, and Freeman, Lansing, MI, for defendants.

OPINION AND ORDER ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

MILES, Senior District Judge.

This is an action for copyright infringement. Plaintiff Marshall and Swift ("Marshall"), which publishes materials used by appraisers and state and local taxing authorities, alleges that the defendants copied certain tables — to which Marshall owns the rights — from versions of the Michigan Assessor's Manual. Marshall further alleges that the defendants then used those tables in a computer software program which they sold to Michigan assessors.

Marshall has moved for summary judgment on its copyright infringement claim. The defendants have opposed the motion. For the reasons to follow, the court GRANTS the motion in part and enters partial summary judgment in favor of Marshall in the amount of $9,450. The court also awards attorneys' fees to Marshall in the amount of $38,713.

FACTS

Marshall is a California limited partnership having its principal place of business in Los Angeles. Since 1932, Marshall has provided what it deems to be "unique" valuation services and products to those in the business of estimating the cost of constructing residential, agricultural, commercial, and industrial properties. Marshall contends that its cost estimating works are widely used throughout the world by governmental taxation and assessment authorities, appraisers, architects, builders, insurance underwriters, adjusters, and other related professionals.

Defendant Joseph R. Bellefeuil is a Lansing, Michigan resident. Defendant Thomas Szur also resides in Ingham County, Michigan. Defendant Bellefeuil, Szur & Associates, Inc. ("BS & A") is a corporation having its principal place of business in Okemos, Michigan. Defendant BS & A Software ("Software") is alleged in the complaint to be a partnership having its principal place of business in Okemos, Michigan. Defendant Bellefeuil, Szur & Associates ("Associates") is also alleged in the complaint to be a partnership having its principal place of business in Okemos, Michigan. Finally, defendant JRB Microsystems ("JRB") is alleged in the complaint to be a corporation having its principal place of business in Lansing, Michigan.¹

In 1972, the Michigan State Tax Commission ("the Commission") published an Assessor's Manual for valuing real property ("the 1972 Manual").² In 1985, the Commission decided to update the 1972 Manual. It sent a request for proposal to prospective bidders, generally describing the State's requirements and providing specifications for the manuals. On September 17, 1985, the Commission announced that Marshall was the successful bidder, and Marshall was awarded a contract to provide cost schedules for residential, agricultural, commercial, and industrial buildings, together with instructions for their use.³ The version of Marshall's proposal which the Commission accepted included only a printed version of the cost schedules; the price did not include computerization of the schedules. Marshall apparently hoped to generate additional revenues by selling the right to use the schedules to third-party vendors who could provide the computerized version.

In 1986, a two volume Assessor's Manual for Michigan was published — one volume for residential and agricultural properties ("the Residential Manual") and the other for commercial and industrial structures ("the Commercial Manual") (collectively, "the Manual"). An updated edition of the Manual, for which Marshall also provided the cost schedules, was published in 1991.

Although the documents which comprise their contract did not mention any copyright issues, Marshall and the Commission ultimately negotiated the issue and developed a joint statement of copyright protection for inclusion in the Manual. This full-page notice, which was included in each Manual⁴ immediately following its title page, states in pertinent part as follows:

The Michigan Assessor's Manual is published by the State Tax Commission, State of Michigan. It is intended solely for use for appraisals for the assessment of Michigan properties for taxation. The cost schedules have been provided by Marshall and Swift and are protected by copyright. An assessing officer employed in the State of Michigan shall be required to use this manual as provided by section 211.10e of the Michigan Compiled Laws and may use the cost schedules for manual calculations or input the schedules for electronic computations for the sole purpose of using the copyrighted information for assessment work in the State of Michigan. Any other publication, reproduction, electronic storage, transmission or other use or alteration of the word descriptions, tables, or numbers in this manual without the express written consent of Marshall and Swift and the State of Michigan, State Tax Commission, is prohibited.

Vendors of assessment software packages specifically designed for use with these cost schedules must sign a written Reseller Agreement with Marshall and Swift. Such agreements may be obtained by writing to Marshall and Swift, 1617 Beverly Blvd., Los Angeles, California, 90026.

The copyright for the 1986 Manual was registered effective October 27, 1986. Marshall contends that registration of the 1991 Manual was effective July 19, 1993, when the application was received by the Copyright Office.⁵

On March 2, 1988, Bellefeuil wrote to Marshall, indicating that he wished to enter into a license agreement because he planned to design a computer program based on the cost schedules which Marshall had developed for the Commission. On March 15, 1988, Marshall forwarded a proposed license agreement to Bellefeuil. Bellefeuil, however, never executed the agreement.

BS & A did develop a computerized version of the Michigan appraisal system generally known as the "Equalization Appraisal Program" ("EAP"). Like the Manuals, the EAP was developed in conformity with Michigan statutory requirements and guidelines established by the Commission. Indeed, any computer-assisted appraisal programs must provide values that are compatible with the values produced through manual applications of the Assessor's Manual cost schedules. The EAP, which uses Marshall's cost schedules published in the Manuals, meets this requirement and the Commission therefore approved the EAP for use by assessors in the State of Michigan. The defendants have admitted that they copied cost and depreciation schedules from the Manuals and input the data into their computer program.

Marshall has alleged that sometime in 1992, it learned that the defendants had been making and selling the EAP, which incorporates Marshall's copyrighted material. After discovering the defendants' alleged infringement of its copyrights but before commencing this action, Marshall demanded that Bellefeuil execute a licensing agreement. Needless to say, he did not do so. The defendants have admitted that since 1989, they have sold at least 241 copies of the EAP, generating income of at least $386,648. According to Marshall, had the defendants entered into a licensing agreement before selling the EAP, sales of the EAP would have generated license fees of at least $95,255.

Marshall filed its complaint in this action on April 1, 1993, alleging that the defendants violated the Copyright Act by using portions of the manuals in designing and marketing their software program. Marshall's complaint also includes a state law claim of unfair competition.

ANALYSIS

Marshall has filed a motion for summary judgment on Count I of the complaint, the copyright infringement claim.⁶ In its motion, Marshall basically argues that because the defendants have admitted to copying portions of Marshall's copyrighted material, and because the defendants have no defense to the claim of infringement, Marshall is entitled partial summary judgment in the amount of at least $95,255. Marshall also argues that it is entitled to attorneys' fees, pursuant to 17 U.S.C. § 505, in the amount of at least $101,508.89.

Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Canderm Pharmacal, Ltd. v. Elder Pharmaceuticals, Inc., 862 F.2d 597, 601 (6th Cir.1988). The party moving for summary judgment bears the burden of establishing the nonexistence of any genuine issue of material fact and may satisfy this burden by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). In determining whether a genuine issue of material fact exists, the court must view the underlying facts in the light most favorable to the nonmoving party. Sem-Torq, Inc. v. K Mart Corp., 936 F.2d 851, 853 (6th Cir. 1991). Only factual disputes which may have an effect on the outcome of a lawsuit under the applicable substantive law are "material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

"Copyrightability is often resolved on summary judgment ... because `very often no issues of material fact are in dispute and...