Brownstein v. Lindsay
| Citation | 742 F.3d 55 |
| Decision Date | 29 January 2014 |
| Docket Number | Nos. 12–2506,12–4471.,s. 12–2506 |
| Parties | Peter BROWNSTEIN, Appellant v. Tina LINDSAY; Ethnic Technologies. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
OPINION TEXT STARTS HERE
Jay R. McDaniel, Esq. [argued], McDaniel Law Firm, Hackensack, NJ, for Appellant.
Thomas S. Howard, Esq. [argued], Kirsch, Gartenberg & Howard, Hackensack, NJ, for Appellees.
Before: GREENAWAY, JR., SLOVITER, and BARRY, Circuit Judges.
This case concerns Appellant Peter Brownstein's claim under the Copyright Act seeking a declaratory judgment of joint authorship of an ethnic identification system that he created with Appellee Tina Lindsay, the Lindsay Cultural Identification Determinate (“LCID”). Lindsay purports to have conveyed the copyrights to the LCID to Appellee Ethnic Technologies (“E–Tech”). The contested work is a computer program that implements rules for identifying the ethnicity of proper names for the purposes of direct marketing. In addition to a declaration of his joint authorship, Brownstein sought an accounting of the profits from the ethnic identification system. In response, Appellees counterclaimed to cancel the copyright registrations that Brownstein had received for the system's computer code, which was his contribution to the work.
After the District Court denied summary judgment, the case went to trial. At the end of Brownstein's case, the District Court granted Appellees judgment as a matter of law under Rule 50(a) on Brownstein's joint authorship claim. Fed.R.Civ.P. 50(a). The District Court found that Brownstein's claim was time-barred and that he could not succeed on the merits of his claim based on the evidence adduced at trial. The District Court severed Appellees' counterclaim and later issued an opinion granting summary judgment to Appellees on their counterclaim.
This appeal presents two issues of first impression for our Circuit. The first is when a joint authorship claim under the Copyright Act arises and accrues and the second is whether courts have the authority to cancel copyright registrations. For the following reasons, we hold that an authorship claim arises and accrues when a plaintiff's authorship has been “expressly repudiated”. We also hold that courts have no authority to cancel copyright registrations. We will reverse both the District Court's grant of judgment as a matter of law to Appellees and its grant of summary judgment to Appellees on their counterclaim. Also, we will remand the case for a new trial.
I. BACKGROUNDA. Brownstein's Relationship with Lindsay and E–Tech
Brownstein and Lindsay worked together at Future Prospective Clients, Inc. (“FPCI”), a direct mailing list company, when they began developing the ethnic identification system. FPCI later assumed a new corporate identity, List Services Direct, Inc. (“LSDI”).1 Beginning around December 1993, Lindsay began devising the idea and developing the rules for categorizing names by ethnicity (e.g., by looking at first names, last names, suffixes, prefixes, and geographic location). These rules became known as the Ethnic Determinate System (“EDS”)—they could be written out in text, just as one might write out a recipe or driving directions. The system would use this set of rules to run a computer program that would predict the ethnicity of a random list of names from a direct mailing database.
In January 1994, Lindsay enlisted Brownstein to turn her rules into computer code. This required Brownstein to code a number of computer programs that did everything from rewriting a list of names into the proper data format for processing to turning Lindsay's rules into computer code. These programs became known as the ETHN programs.2 Over the years, Brownstein improved and updated the ETHN programs, with each new generation of programs being a distinct work from the previous generation. The combined system of Lindsay's rules and Brownstein's computer code was named the LCID. The result was that Lindsay was the sole author of the EDS, as an independent work of the LCID, Brownstein was the sole author of the ETHN programs, as another independent work of the LCID, and they both had an equal authorship interest in the LCID as a joint work of the EDS and the ETHN programs.
Lindsay and Brownstein did much of their work on the LCID during company time. In June 1996, they incorporated TAP Systems, Inc. (“TAP”) to commercialize the LCID. Lindsay and Brownstein were equal owners of TAP and the LCID became known as the TAP system.
Lindsay and Brownstein also decided to register the copyrights to their work for extra security. Lindsay received her first copyright registration for the EDS in February 1996, entitled “An Ethnic Determinant System—Knowledge and Rule/Exception Basis”. Copyright Registration No. TXu 730–872 (the “'872 registration”). Later that year, in December 1996, Lindsay received a second copyright registration to protect her improved version of the EDS, which carried the same title. Copyright Registration No. TXu 778–127 (the “'127 registration”). As such, the second registration was for a “derivative work” of the first registration.3 The difference with the second registration is that she included a copy of Brownstein's ETHN programs as a “deposit copy” for the '127 registration and several fields of the registration application referenced a “computer process” and “codes” associated with the copyright.4 Lindsay applied for and secured both copyright registrations on her own, without the involvement of Brownstein, and listed herself as the only author. She then gave Brownstein a copy of the copyright registrations to hold for safekeeping—he claims that he never reviewed the registrations until many years later, shortly before trial.
In the fall of 1996, Lindsay and Tom Raskin, an executive at LSDI, had a confrontation over the copyright registration she had filed earlier that year for the EDS, which Brownstein overheard and recounted in a 1997 affidavit. Raskin demanded that she turn over the copyright registration to him because he believed that LSDI was the rightful owner of her system. Lindsay refused, which infuriated Raskin to no end (and would cause Raskin to later sue Lindsay and Brownstein). Eventually, with tension building between the LSDI management and the duo, and their venture gaining steam, they both left LSDI in June 1997.
Throughout this whole time, Brownstein let Lindsay handle TAP's business affairs. He was so focused on programming code for the LCID that he claims that he did not know of a 1997 software license purportedly granting TAP ownership of the LCID until 2009.
Over the course of several years, Lindsay executed a number of agreements to form new business entities to promote the LCID and to transfer ownership of the LCID to those entities.
On June 1, 1997, Lindsay unilaterally attempted to grant TAP ownership of the LCID (the combined system of her rules and Brownstein's ETHN programs). (App. 663 (Software License Agreement, June 1, 1997).) By doing so, Lindsay had hoped that TAP would own the LCID and be able to exploit it freely. Lindsay was the only signatory to that 1997 Software License—she signed both as the “Copyright Holder” of the LCID and the agent of TAP. Brownstein was not a signatory to the license, nor was he asked to be one.
Later that year, Lindsay and Brownstein decided to partner with one of their former employers, Consumers Marketing Research, Inc. (“CMR”), to create E–Tech, a joint venture between the two companies. A September 26, 1997 License Agreement (the “1997 Agreement”) was signed only by Lindsay and CMR's executive, Ginger Nelson. The 1997 Agreement listed Lindsay and Brownstein as executive officers of the new venture (which was just called the “LLC” until a superseding agreement in 2000 formally named the venture “Ethnic Technologies, LLC”). (App.631.) The parties agreed to combine CMR's technology with the LCID (which was referred to as the “TAP SYSTEM”), the combination of which would be called the E–Tech system. The agreement also acknowledged that TAP owned the LCID. The superseding December 28, 2000 Agreement (the “2000 Agreement”) largely mirrored the 1997 Agreement, except that it formally called the joint venture “Ethnic Technologies, LLC” and the combined system “E–Tech”. (App.639.) Lindsay and Nelson were also the only signatories to the 2000 Agreement, although Brownstein initialed three corrections made to the agreement. (App.640–41.) Thus, while Brownstein can be imputed with knowledge of these agreements as a 50% owner of TAP and an executive of E–Tech, he never signed the agreements.
As an E–Tech executive, Brownstein executed five licensing agreements to E–Tech customers between 2000 and 2005. (App. 695–702 (2001 Agreement with Edith Roman Associates); App. 702–06 (2002 Agreement with Wells Fargo); App. 707–13 (2002 Agreement with Penn Media); App. 714–20 (2003 Agreement with Merkle Data Technologies); App. 721–27 (2005 Agreement with Central Address Systems, Inc.).) One of these agreements acknowledged that the E–Tech system was the “exclusive property” of E–Tech, while the four others acknowledged that E–Tech “owns all rights, including copyrights” to the E–Tech system.
The remainder of Brownstein's relationship with E–Tech was marred by three lawsuits: the first initiated by LSDI in federal court, the second initiated by him in New Jersey state court, and the third initiated by him in federal court. Although Brownstein did not sign any of the aforementioned licensing agreements (including the 1997 Software License, 1997 Agreement, and 2000 Agreement), he did sign the two settlement agreements related to litigation with LSDI in 1998 and the New Jersey state court oppressed shareholder lawsuit in 2009.
In 1998, LSDI and Raskin (Lindsay and Brownstein's former employer) sued TAP in the District of New Jersey over its use of the LCID. That...
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