Harris Market Research v. Marshall Marketing and Communications, Inc.

• Decision Date: 07 November 1991
• Docket Number: Nos. 90-3144,90-3274,s. 90-3144
• Citation: 948 F.2d 1518
• Parties: 1992 Copr.L.Dec. P 26,821, 21 U.S.P.Q.2d 1580 HARRIS MARKET RESEARCH, Plaintiff & Counterclaim Defendant-Appellee, v. MARSHALL MARKETING AND COMMUNICATIONS, INC., Defendant & Third-party Plaintiff-Appellant, v. Larry R. HARRIS, Third-party Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1518

948 F.2d 1518

1992 Copr.L.Dec. P 26,821, 21 U.S.P.Q.2d 1580

HARRIS MARKET RESEARCH, Plaintiff & Counterclaim Defendant-Appellee, v. MARSHALL MARKETING AND COMMUNICATIONS, INC., Defendant & Third-party Plaintiff-Appellant, v. Larry R. HARRIS, Third-party Defendant-Appellee.

Nos. 90-3144, 90-3274.

United States Court of Appeals Tenth Circuit.

Nov. 7, 1991.

Anthony F. Jeselnik of Laubach, Fulton, Jeselnik & Delaney, Pittsburgh, Pa. (James F. Davis of Lewis, Rice & Fingersh, Overland Park, Kan., with him on the briefs), for defendant & third-party plaintiff-appellant.

David M. Harding (Jeffrey S. Bay with him on the briefs) of Van Osdol, Magruder, Erickson & Redmond, Kansas City, Mo., for plaintiff & counterclaim defendant-appellee.

Before HOLLOWAY, BARRETT and BRORBY, Circuit Judges.

BRORBY, Circuit Judge.

In this contracts case Harris Market Research, Inc. (hereinafter "Harris Market") sued Marshall Marketing & Communications, Inc. (hereinafter "Marshall") for breach of a license agreement and copyright infringement. Marshall counterclaimed for breach of the same agreement, misappropriation of proprietary information, interference with sublicense agreements and malicious prosecution of the copyright infringement claim. The jury returned verdicts for both parties. Marshall appeals asserting irreconcilable verdicts, evidentiary errors, improper instructions, and error in awarding attorneys' fees and expenses. We affirm.

BACKGROUND

Marshall gathers marketing information for television and radio stations. Harris Market developed a customized software program for Marshall to assimilate this information for easier analysis. Marshall and Harris Market entered into a License and Operating Agreement (License Agreement) which allowed Marshall to enter into sublicense agreements for the computer program with television and radio stations. Marshall was to pay licensing and processing fees for the use of the computer program and Harris Market would allow use of the software and would also process information.

Marshall failed to make all payments so Harris Market sent Marshall notice of its intent to terminate. After Marshall orally agreed to cure its payment default, Harris Market sent a letter on July 15, 1986, agreeing to hold termination in abeyance if certain conditions set forth in the letter were met. Harris Market contended the conditions were not met and contacted the television stations directly for payment. Harris Market asked Marshall to return the software disks in September 1986 and received only twenty-four of seventy-five disks in November 1987. Harris Market was concerned because it was not immediately receiving a copy of the sublicense agreements and the payment schedule was based upon the information contained in those agreements. When it finally received the agreements, Harris Market concluded it had not billed Marshall the correct amount, sent another notice of termination and refused to undertake any new performance under the agreement.

Marshall contends Harris Market's notice of termination was inadequate. It presented evidence Harris Market breached the License Agreement by contacting the stations directly and by refusing to process information as agreed. Marshall introduced testimony Harris Market did not present any evidence at a preliminary injunction hearing on the copyright infringement claim. Marshall asserted it never agreed to the conditions Harris Market imposed in its July 15 letter. Marshall sent Harris Market a revised agreement which Harris Market refused to execute. Thereafter, Marshall sent Harris Market its own notice of termination.

Following a trial, the jury returned a special verdict finding Marshall liable for breach of the License Agreement and for copyright infringement, and Harris Market liable for breach of the License Agreement, interference with the sublicense agreements, misappropriation of proprietary information, and malicious prosecution of the copyright infringement claim.

I. IRRECONCILABLE VERDICTS

Marshall contends the verdicts are irreconcilable and the trial court should have granted its motion for a new trial. The trial court submitted a special verdict form to the jury at Marshall's request. The jury found both parties liable for breach of the License Agreement and also found Marshall liable for copyright infringement and Harris Market liable for malicious prosecution of the copyright infringement claim. ¹ The district court found evidence supporting the jury's verdicts and further found no inconsistency with the verdicts that would warrant a new trial. "We review the trial court's denial of [a] Motion for a New Trial under an abuse of discretion standard." Harvey ex rel. Harvey v. General Motors Corp., 873 F.2d 1343, 1346 (10th Cir.1989). We grant the district court broad discretion and limit our review only to whether "the district court's refusal to set aside the jury's verdict constituted a manifest abuse of its discretion." Id. A new trial will only be granted upon "a 'showing of a clear abuse of discretion.' " Trujillo v. Goodman, 825 F.2d 1453, 1461 (10th Cir.1987) (citation omitted).

If any view of the case makes the jury's answers to special interrogatories consistent, they must be resolved that way. Atlantic & Gulf Stevedores, Inc. v. Ellerman Lines, Ltd., 369 U.S. 355, 364, 82 S.Ct. 780, 786, 7 L.Ed.2d 798 (1962). The trial court has a duty to try to reconcile the jury's verdicts to avoid a retrial. Harvey, 873 F.2d at 1347. A verdict that resolves separate and distinct causes of action in favor of both parties is not inconsistent on its face. Diamond Shamrock Corp. v. Zinke & Trumbo, Ltd., 791 F.2d 1416, 1424 (10th Cir.), cert. denied, 479 U.S. 1007, 107 S.Ct. 647, 93 L.Ed.2d 702 (1986).

The trial court did not abuse its discretion by finding the jury verdicts are not inconsistent. Upon the facts presented, a jury could reasonably find both Marshall and Harris Market breached the License Agreement. Likewise, a jury could find the letter from Harris Market to Marshall dated July 15, 1986 constituted a second agreement implied from the conduct of The copyright infringement liability and malicious prosecution claims can also be reconciled. Each was presented to the jury as a distinct claim. Jury Instruction 12 states: "If you find that the plaintiff had a valid copyright and you find that the copyright was infringed by the defendant, then you should find for the plaintiff." Jury Instruction 5 states: "Marshall has also filed a counterclaim against Harris Market and Larry R. Harris for malicious prosecution for their failure to present any evidence of copyright infringement at the preliminary injunction hearing conducted on November 14, 1986." Whether evidence was presented at the preliminary injunction hearing is a different question than whether Harris Market's copyright was infringed. These two verdicts are not inconsistent.

                the parties.   Even though Marshall denied accepting the conditions of the letter, it nonetheless made payments under the schedule outlined in the letter.   A jury, therefore, could find Marshall breached the terms of the letter and Harris Market breached the terms of the original agreement.   Alternatively, a jury could reasonably conclude both parties breached the same agreement.   Marshall breached the agreement first, but Harris Market held its termination in abeyance and continued to perform because under the agreement either party could delay enforcement of a provision in the agreement without waiving that party's right.   Subsequently, Harris Market could have breached the agreement
                

We find a view of the case which supports the verdicts; therefore, the trial court did not abuse its discretion by denying Marshall's motion for a new trial.

II. ERRORS IN ADMISSION OF EVIDENCE

Harris Market presented damage evidence for two theories of recovery: contract breach and copyright infringement. Harris Market prepared a summary of the costs it incurred developing its computer program. Marshall objected to this evidence as irrelevant because the damages could not be recovered under either contract or copyright law. The court overruled the objection without discussion.

Harris Market also prepared two summaries of licensing and processing fees due under the sublicense agreements in effect when the License Agreement was terminated. Harris Market prepared these summaries using Marshall's own documents which detailed payments Marshall received under the sublicense agreements. Marshall objected to this evidence as speculative and without foundation. The court admitted both exhibits without comment.

Harris Market offered a letter it sent Marshall on July 15, 1986, restating a telephone conversation held the previous day. Marshall moved in limine to exclude evidence of the letter as a new contract between the parties. Marshall claims the existence of a second contract was not set out in the pleadings or the pretrial order. The trial court denied the motion in limine. At trial, Marshall renewed its objection to admission of the letter. The trial judge received the letter into evidence.

Marshall asserts: (1) development costs were not recoverable and therefore inadmissible; (2) licensing and processing fees were too speculative and therefore inadmissible; (3) the summaries were inadmissible hearsay; and (4) the letter of July 15 was unfairly prejudicial and should not have been admitted.

To be admissible, damage evidence must be recoverable as contract or copyright damages. By its own terms, the License Agreement is governed by Kansas law. We look to Kansas law to determine what damages are available for a breach of contract claim. Federal law governs recoverable damages for copyright claims. See 17 U.S.C. § 504.

"Damage awards in contract cases attempt to place the parties in the same financial position they would have occupied had the contract terms been fulfilled." Republic Nat'l Life Ins. Co. v. Red...