Burns v. Rockwood Distributing Co.

Decision Date18 December 1979
Docket NumberNo. 78 C 3509.,78 C 3509.
Citation481 F. Supp. 841
CourtU.S. District Court — Northern District of Illinois
PartiesBarbara BURNS d/b/a Barbie's Plaster & Gifts, Plaintiff, v. ROCKWOOD DISTRIBUTING COMPANY, White Art Studios, Inc., Joseph Paluso, Defendants.



Ronald C. Woodruff, Pearson & Woodruff, Fayetteville, Ark., Philip T. Reinstein, Ross, Reinstein, Block & Sherman, Chicago, Ill., for plaintiff.

Michael G. Berkman and Esther O. Kegan, Kegan, Kegan & Berkman, Chicago, Ill., for defendants.


BUA, District Judge.

This cause comes before the court on the defendants' motion for judgment on the pleadings, Rule 12(c), Fed.R.Civ.P., or in the alternative for summary judgment. Rule 56, Fed.R.Civ.P.

In that the defendants' motion is founded in part upon the contention that this court lacks jurisdiction over the subject matter of the plaintiff's complaint, said motion will be treated as one for dismissal, pursuant to Rule 12(h)(2), Fed.R.Civ.P. Although in her pleading she fails to make any clear statement with respect to federal jurisdiction, the plaintiff does purport to state a federal claim for copyright infringement.1 Also contained in her complaint are state common law claims for breach of contract, false representation, slander and interference with business relationships.

As the plaintiff has attempted to state a claim for copyright infringement, the first question this court must resolve is whether federal jurisdiction properly lies pursuant to 28 U.S.C. § 1338(a). § 1338(a) vests the federal courts with subject matter jurisdiction to hear claims "arising under any Act of Congress relating to . . . copyrights." If the case at bar involves claims of infringement or requires construction of the copyright at issue, moreover, the right to hear the action rests exclusively with the federal courts. See 17 U.S.C. § 301.

Central to the plaintiff's infringement claims are certain licensing agreements that pertain to the manufacture, sale, and distribution of the copyrighted art works at issue. The plaintiff, Barbara Burns, and defendant Rockwood Distributing Company appear to hold nearly identical licenses applicable to the manufacture and sale of said art works. These licenses, however, relate to different states.

Both parties obtained their licenses from Apsit Brothers of California, the original owner of the alleged copyrights. The plaintiff contends that these licensing agreements granted her the exclusive right to produce and sell the art works in certain states, including Illinois. She alleges that defendants Rockwood and Paluso, Rockwood's president, have violated the licensing agreements by selling the copyrighted art works in Illinois, with full knowledge of plaintiff's exclusive territorial rights. She further alleges that the defendant White Art Studios has infringed upon her copyright privileges by selling and manufacturing the art works in Illinois.

The provisions of the Copyright Act of 1976 require that certain conditions be fulfilled before an infringement action may be brought. One such prerequisite to the filing of a copyright infringement action is copyright registration. § 411(a) of the Act provides that "no action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title." It is, moreover, well settled that copyright registration is a condition precedent to filing suit. E. g., Roth Greeting Cards v. United Card Co., 429 F.2d 1106 (9th Cir. 1970); Frederick Fell Publishers v. Lorayne, 422 F.Supp. 808 (S.D.N.Y.1976); Algonquin Music, Inc. v. Mills Music, Inc., 93 F.Supp. 268 (S.D.N.Y.1950).2

The complaint in the present case does not include a copy of the registration certificate, nor has compliance with the registration provisions of the Copyright Act otherwise been indicated.3 Said complaint, therefore, is defective and must be dismissed. The plaintiff, however, may cure this defect by affirmatively demonstrating that Apsit Brothers had procured a valid registration of the initial copyrights. This is so because, through 17 U.S.C. § 201(d), the Copyright Act of 1976 embodies the concept of divisibility of copyright ownership.4 Assuming that Apsit Brothers was the "initial owner" of the copyrights, as defined in § 201(a),5 and that the plaintiff's license constituted the transfer of an exclusive right,6 under § 408(a) either party would be able to register, as both would be copyright "owners" under the new Act.7

The concept of copyright divisibility thus bears importantly on the plaintiff's rights. Since any of the exclusive rights that comprise a copyright can be transferred and owned separately under 17 U.S.C. § 201(d)(2), all the remedies accorded to the "copyright owner" are available to the owner of any particular "exclusive right". That being so, careful consideration must be given to the parties' licensing agreements with Apsit.

Reading the complaint most favorably to her, the court assumes for purposes of this motion that the plaintiff's written agreement with Apsit Brothers is the equivalent of an exclusive license under the Act. Since defendant Rockwood appears to have a similar license agreement with Apsit, Rockwood also may be the owner of an exclusive right in Apsit's initial copyrights. The chief distinction in the plaintiff's and defendant's rights, thus, is geographical. Under this analysis, if Rockwood in fact sold the copyrighted art works in Illinois, plaintiff's territory, it would be guilty of copyright infringement. Similarly, defendant White Art Studios would be in violation of the plaintiff's rights if it manufactured or sold the art works in Illinois.8

Assuming that the plaintiff can amend her complaint to incorporate the necessary registration requirements, however, there remains a further statutory bar to the maintenance of her infringement action. As the defendants point out, the complaint does not allege recordation of plaintiff's license, as is required by 17 U.S.C. § 205(d). § 205(d) provides that:

no person claiming by virtue of a transfer to be the owner of a copyright or of any exclusive right under a copyright is entitled to institute an infringement action under this title until the instrument of transfer . . . has been recorded in the Copyright Office, but suit may be instituted after such recordation on a cause of action that arose before recordation.

This recordation requirement represents a change from the former law.9 The previous recordation provision did not make recordation a condition precedent to bringing an infringement action. In fact, because recordation was not mandatory, its scope and effect often was unclear.10 The words of § 205(d), on the other hand, explicitly mandate recordation of the transfer of rights in a copyright as a prerequisite for filing suit. From the plain language of Section 205(d), it is clear that an allegation of recordation is a jurisdictional prerequisite to the institution of a copyright infringement action. The plaintiff's failure to allege recordation, thus, also is fatal to her right to bring the present action.

The foregoing analysis, of course, is premised upon the exclusive nature of plaintiff's interest in the licensing agreements involving the art works. If, however, the agreements are characterized as non-exclusive licenses, the recordation requirement of § 205(d) would not be applicable, because nonexclusive licenses do not have to be recorded.11 In such a case, though, the plaintiff would not be a "copyright owner" under 17 U.S.C. § 101, and accordingly would not have an actionable claim under the Copyright Act. To recover, she instead would have to pursue her potential contract remedies. Also, by having failed to state a claim arising under the Copyright Act, the plaintiff cannot properly seek to have her other claims heard in this court pursuant to 28 U.S.C. § 1338(a).

Although it is not at all clear from the face of the complaint, the plaintiff may be attempting to invoke the jurisdiction of this court based upon diversity of citizenship. 28 U.S.C. § 1332(a). She alleges in her complaint that she is a citizen of Missouri, and lists the principle places of business of the defendant corporations as Wisconsin and Illinois. These allegations, however, are not sufficient to allow this court to hear the present matter based upon diversity jurisdiction.

Under 28 U.S.C. § 1332, the citizenship of each party must be distinctly and affirmatively averred. McGlynn v. Employers Commercial Union Ins. Co. of America, 386 F.Supp. 774 (D.P.R.1974), citing Robertson v. Cease, 97 U.S. 646, 24 L.Ed. 1057 (1878). Corporate citizenship is evidenced both by the state of incorporation and by the corporation's principle place of business. Dining Car Employees Local No. 385 v. Chicago, M. & St. P. & P. R. Co., 323 F.2d 224 (7th Cir. 1963); Oskierko v. Southwestern Horizons, Inc., 60 F.R.D. 365 (N.D. Ill.1973). For federal jurisdiction to properly lie under § 1332, moreover, the citizenship of each plaintiff also must be shown to be diverse from that of each defendant. See Strawbridge v. Curtiss, 7 U.S. 267, 2 L.Ed. 435 (1806); Harker v. Kopp, 172 F.Supp. 180 (N.D.Ill.1959).

In the present case it cannot be determined from the face of the plaintiff's complaint whether such complete diversity exists. Missing are the defendants' states of incorporation. The complaint merely alleges that Rockwood and White Art Studios are corporations, "organized and existing pursuant to the laws of a state within the United States." In that said state clearly could be Missouri, the state of plaintiff's residence and citizenship, federal jurisdiction well may not lie.

The burden of establishing federal jurisdiction is on the party asserting such jurisdiction, and the jurisdictional basis must be clear from the face of the complaint itself. If diversity of citizenship is shown to exist...

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