Continental Casualty Company v. Beardsley, 174

• Decision Date: 24 March 1958
• Docket Number: No. 174,Docket 24752.,174
• Parties: CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellee-Appellant, v. Hulbert T. E. BEARDSLEY and H. T. E. Beardsley, Inc., Defendants-Appellants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

253 F.2d 702 (1958)

CONTINENTAL CASUALTY COMPANY, Plaintiff-Appellee-Appellant, v. Hulbert T. E. BEARDSLEY and H. T. E. Beardsley, Inc., Defendants-Appellants-Appellees.

No. 174, Docket 24752.

United States Court of Appeals Second Circuit.

Argued February 13, 1958.

Decided March 24, 1958.

Leslie D. Taggart, of Watson, Leavenworth, Kelton & Taggart, New York City (Watson, Leavenworth, Kelton & Taggart, New York City, John Rex Allen, Chicago, Ill., Paul L. Latham, Chicago, Ill., and Robert C. Nicander, New York City, on the brief), for plaintiff-appellee-appellant.

Benjamin Busch, New York City (Sprague & Peck, Otto C. Sommerich, and Stuart Sprague, New York City, on the brief), for defendants-appellants-appellees.

Before HINCKS and LUMBARD, Circuit Judges, and DIMOCK, District Judge.

HINCKS, Circuit Judge.

These are cross-appeals arising out of a suit brought by Continental Casualty Company (Continental) which sought a declaratory judgment that defendants' copyrights were invalid together with an injunction, an accounting, and counsel fees. Continental also demanded damages for unfair competition and violation of the antitrust laws. The defendant, Beardsley,¹ counterclaimed alleging infringement by Continental of his valid copyrights and that Continental was liable for unfair competition. The District Court held that the material in question was not properly copyrightable; that, even if it were, the copyright had been lost; and, further, that there was no infringement. The District Court granted the declaratory relief sought by Continental and an injunction. It rejected the unfair competition claims of both parties and Continental's antitrust claim and its request for an accounting and counsel fees. Each party has appealed from every adverse ruling below. In addition, Beardsley contends that in any event the injunction is too broad.

Copyrightability

This controversy had its inception in the late 1930's. Defendant Beardsley was an insurance broker (also a member of the bar) who allegedly developed a blanket bond to cover replacement of lost securities which would operate in futuro. In September 1939, he published his "plan" in a six-page pamphlet. The entire pamphlet carried a copyright notice and Continental admits that the introductory three pages of narrative are validly copyrighted. As to these three pages, however, there is no claim of infringement. Continental contended below, and the court agreed, that the remaining three pages of forms to carry out the "plan" were not copyrightable. The forms included a proposed bond, an affidavit of loss and indemnity agreement, and drafts of an instruction letter and board resolutions. Beardsley had also devised various insurance instruments, some but not all of which he had copyrighted.

We find nothing which, as a matter of law, prevents the copyrighting of forms and insurance instruments such as those now before us. Article I, Section 8, Cl. 8 of the United States Constitution grants Congress power to "promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Congress in 17 U.S.C.A. § 4 has provided that "The works for which copyright may be secured under this title shall include all the works of an author."² See also Brightley v. Littleton, C.C.E.D.Pa., 37 F. 103.

Notwithstanding this general authority in support of the copyrightability of forms, Continental relies upon Baker v. Selden, 101 U.S. 99, 25 L.Ed. 841. In that case Selden had written a book explaining a simplified system of bookkeeping. This system used the so-called "T accounts," familiar to any student of accounting or bookkeeping, which had the usual headings. The court held that though the explanation of the system was copyrightable, the system itself — as evidenced by the account forms — was not copyrightable. A distinction was drawn between "explanation" and "use," the court stating that material relating to "use" could be protected, if at all, only by patent. Mazer v. Stein, 347 U.S. 201, 74 S.Ct. 460, 98 L.Ed. 630, does not weaken Selden in any way. Mazer was concerned with electric lamp bases which had been copyrighted as works of art. The court held that the fact that these bases were also put to practical use did not destroy their copyrightability.

In Baker v. Selden, supra, the subject-matter was such that the explanation of the system could be treated as separable from account books prepared and arranged for the practice of the system. But not so here. For inseparably included in Beardsley's bonds and affidavits, which constitute the means for the practice of his Plan, is language explanatory of the Plan. Consequently, the holding of Baker v. Selden is not applicable here. See also Taylor Instrument Companies v. Fawley-Brost Co., 7 Cir., 139 F.2d 98, certiorari denied 321 U.S. 785, 64 S.Ct. 782, 88 L.Ed. 1076, chart for recording temperatures; Aldrich v. Remington-Rand, D.C.N.D. Texas, 52 F.Supp. 732, sheets for keeping tax records; Page v. Wisden, 20 L.T.R. (n. s.) 435, cricket scoring sheet. And since the Constitution and Copyright Act read directly upon all the forms here involved, we hold them to be copyrightable.

This resolution of the question of copyrightability raises several very serious questions as to the scope of the protection granted which we now come to consider.

Infringement

We agree completely with the conclusion of the trial court that Beardsley did not succeed in proving infringement. This he attempted by an indirect method. He offered forms which had been used by the Pullman Company contending that these Pullman forms infringed his forms. He then asserted that Continental had infringed Pullman and, indirectly therefore, Beardsley.

After proving some similarity between the Continental and Pullman forms, Beardsley went no further. He asserted that the burden then shifted to Continental to show that Pullman did not infringe Beardsley. For this proposition Amdur, Copyright Law & Practice, 688-692 and cases there cited are relied upon. Whether this be sound law it is not necessary for us now to decide. For irrespective of the burden of proof or of going forward, the proofs here showed that as to the affidavit of loss, although the Continental and Pullman forms are very similar, the Beardsley form is sufficiently different from both to negate infringement. And as to the other documents none are close enough to the Beardsley forms to require the reversal of the trial court's holding of non-infringement.

There have been several cases dealing with the copyrighting of insurance and similar forms. Significantly, they uniformly are decided by holdings of non-infringement and leave undecided the copyrightability point.³ These cases have set a stiff standard for proof of infringement.

In Dorsey v. Old Surety Life Ins. Co., 10 Cir., 98 F.2d 872, 874, 119 A.L.R. 1250 the court found non-infringement declaring, "To constitute infringement in such cases a showing of appropriation in the exact form or substantially so of the copyrighted material should be required."

In Crume v. Pacific Mut. Life Ins. Co., 7 Cir., 140 F.2d 182, certiorari denied 322 U.S. 755, 64 S.Ct. 1265, 88 L.Ed. 1584, the court found non-infringement of plaintiff's pamphlet describing a method for reorganizing insurance companies. As in all of these cases, the court was keenly aware that to prohibit similarity of language would have the effect of giving the copyright owner a monopoly on his idea — which the cases uniformly deny to copyright owners. Thus, the court stated, 140 F.2d at pages 184-185:

"* * * In the instant situation there is no room for the skill of the mechanic or artisan in utilizing the plan or the method disclosed. Its use, to which the public is entitled, can be effected solely by the employment of words descriptive thereof. In our view, where the use can be effected only in such manner, there can be no infringement even though the plan or method be copied. We realize that such a view leaves little, if any, protection to the copyright owners; in fact, it comes near to invalidating the copyright. This situation, however, results from the fact that the practical use of the art explained by the copyright and lodged in the public domain can be attained solely by the employment of language which gives expression to that which is disclosed."

Further,

"We also observe that such comparison of the documents adds strength to the view heretofore expressed that defendant\'s rightful use of the art disclosed could only be accomplished by the employment of words which describe plaintiff\'s method. To hold that an idea, plan, method or art described in a copyright is open to the public but that it can be used only by the employment of different words and phrases which mean the same thing, borders on the preposterous. It is to exalt the accomplishment of a result by indirect means which could not be done directly. It places a premium upon evasion and makes this the test of infringement. Notwithstanding some authorities which support a theory permitting such a result, we think it is wrong and disapprove it."

Most recently, in Miner v. Employers Mutual Liability Co. of Wisconsin, 97 U.S.App.D.C. 152, 229 F.2d 35, the court approved the District Court holding that "there is no similarity in the arrangement of words of plaintiff's policies and the arrangement of words in defendant's policy and that defendant has not appropriated in the exact form or substantially so plaintiff's copyright material."

These cases indicate that in the fields of insurance and commerce the use of specific language in forms and documents may be so essential to accomplish a desired result and so integrated with the use of a legal or commercial conception that the proper standard of infringement is one which will protect as far as possible the copyrighted language and yet allow free use of the thought beneath...