Energy Intelligence Grp., Inc. v. CHS McPherson Refinery, Inc.

• Decision Date: 17 January 2018
• Docket Number: Case No. 16–01015–EFM–GLR
• Citation: 304 F.Supp.3d 1051
• Parties: ENERGY INTELLIGENCE GROUP, INC. and Energy Intelligence Group (UK) Limited, Plaintiffs, v. CHS MCPHERSON REFINERY, INC. (f/k/a National Cooperative Refinery Association), Defendant.
• Court: U.S. District Court — District of Kansas

304 F.Supp.3d 1051

ENERGY INTELLIGENCE GROUP, INC. and Energy Intelligence Group (UK) Limited, Plaintiffs,

v.CHS MCPHERSON REFINERY, INC. (f/k/a National Cooperative Refinery Association), Defendant.

Case No. 16–01015–EFM–GLR

United States District Court, D. Kansas.

Signed January 17, 2018

Keith E. Sharkin, Robert L. Powley, Stephen M. Ankrom, Powley & Gibson, PC, New York, NY, Kimberly D. Farha, Richard L. Honeyman, Hite, Fanning & Honeyman, LLP, Wichita, KS, for Plaintiffs.

Christopher A. McElgunn, Michelle L. Brenwald–Johnson, Klenda Austerman LLC, Wichita, KS, Dean C. Eyler, Loren L. Hansen, Molly R. Littman, Gray, Plant, Mooty & Bennett, PA, Minneapolis, MN, for Defendant.

MEMORANDUM AND ORDER

ERIC F. MELGREN, UNITED STATES DISTRICT JUDGE

Plaintiffs Energy Intelligence Group, Inc., and Energy Intelligence Group (UK) Limited (together, Plaintiffs or "EIG") have sued Defendant CHS McPherson Refinery, Inc. (the "Refinery") for copyright infringement. This matter comes before the Court on the Refinery's Motion for Referral to the Register of Copyrights Pursuant to 17 U.S.C. § 411(b) and a Concurrent Stay (Doc. 98). For the reasons stated below, the Court denies the Refinery's motion.

I. Factual and Procedural Background

EIG has been publishing newsletters and other publications for the global energy industry for over sixty years. It sells subscriptions to a number of publications, two of which include Oil Daily and Petroleum Intelligence Weekly. From June 2004 to about 2016, EIG sought to register Oil Daily with the United States Copyright Office using Form G/DN. This form allows an applicant to register multiple newspapers and newsletters in a single application. From 2004 to 2016, EIG sought to register Petroleum Intelligence Weekly with the Copyright Office using Form SE. This form allows an applicant to register an individual issue of a serial, e.g. , a newsletter, periodical, magazine, annual, or journal.

The Refinery maintained a single subscription to Oil Daily from 1992 through May 15, 2015, and a single subscription to Petroleum Intelligence Weekly from 1982 through June 13, 2016. Originally, the Refinery received the publications in print and would route each printed publication through its office for several executives to read. In the late 1990s, EIG began distributing the publications electronically. EIG alleges that the Refinery continued to distribute Oil Daily and Petroleum Intelligence Weekly to its employees by making a copy of the publication and distributing the copy in .pdf attachments via email. According to EIG, the Refinery's actions of copying and distributing the publications violate the subscription agreements.

EIG commenced this action on January 18, 2016, and filed an Amended Complaint on August 16, 2016, alleging that the Refinery willfully infringed the copyrights of its Oil Daily and Petroleum Intelligence Weekly publications. The Refinery denies the infringement and the validity of EIG's copyright registrations. The parties have filed cross motions for summary judgment, which are currently pending before the Court. In addition, the Refinery has filed the current motion, which relates to the validity of EIG's copyright registrations. The Refinery contends that EIG made knowing misrepresentations when preparing Form G/DN for the Oil Daily publications and asks the Court to refer this matter to the Register of Copyrights to determine whether it would have refused registration if it had known of these misrepresentations.¹ In addition, the Refinery asks for a concurrent stay of the proceedings.

II. Legal Standard

Section 411(b)(1) of the Copyright Act states:

A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, unless—

(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and

(B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration.²

Section 411(b)(2) requires that "[i]n any case in which inaccurate information described under paragraph (1) is alleged, the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration."³

The Refinery brings this motion under § 411(b)(2) —a procedural mechanism that has rarely been invoked in the federal courts and never reviewed or interpreted by the Tenth Circuit.⁴ Those courts that have interpreted § 411(b)(2) have determined that the provision is mandatory, meaning that it requires district courts to solicit the advice of the Register of Copyrights if the statutory conditions set forth in § 411(b)(1)(A) are satisfied.⁵ For example, in DeliverMed , the Seventh Circuit held that the district court committed reversible error when it invalidated a copyright registration without first consulting the Register of Copyrights as required by § 411(b)(2) even though the parties had not requested the court to do so.⁶

The language of § 411(b)(2) requires the court to consult the Copyright Office when a party simply alleges the inclusion of knowingly inaccurate information in the copyright application.⁷ But, federal courts have recognized that this procedure creates a serious potential for abuse because it allows infringers to delay proceedings by simply alleging technical violations of the underlying copyright registrations.⁸ Thus, the courts have concluded that before seeking the Register's advice on materiality, the party seeking invalidation of the copyright must first establish the preconditions to invalidity—(1) that the application contained a misstatement of fact and (2) that the misrepresentation was knowingly included on the application.⁹ This method "appropriately balances the Copyright Office's statutory right to weigh in on the materiality of a knowing misrepresentation ... against the district court's ‘inherent power to control its own docket and to prevent abuse in its proceedings.’ "¹⁰ Therefore, before this Court refers the matter to the Register of Copyrights, the Refinery must demonstrate (1) that EIG's Oil Daily registration applications included inaccurate information and (2) that EIG knowingly included this inaccurate information in the applications.

III. Analysis

The Refinery argues that EIG knowingly included inaccurate information when seeking to register Oil Daily using Form G/DN with the Copyright Office. Form G/DN may be used for group registration of daily newspapers and newsletters, provided that the applicant meets the following requirements:

(1) [The daily newsletter is published] at least two days each week and the newsletter must contain news or information of interest chiefly to a special group ...;

(2) The works must be essentially all new collective works or all new issues that have not been published before;

(3) Each issue must be a work made for hire;

(4) The author(s) and claimant(s) must be the same person(s) or organization(s) for all the issues;

(5) All the items in the group must bear issue dates within a single calendar month under the same continuing title;

(6) The deposit for newsletters registered under this section is one complete copy of each issue included in the group ...;

(7) Registration is sought within three months after the publication date of the last issue included in the group.¹¹

If all of these requirements are met, an applicant may register the newsletters published during that time period in a single application and with a single deposit fee. If the applicant cannot meet all of the requirements, it is required to submit individual copyright application for each publication.

The top of Form G/DN contains instructions for filling out the application. They state that the conditions "must be met" to use the form and that "if any one of the conditions does not apply, [the applicant] must use Form SE." Form G/DN requires, among other things, that the applicant provide "the name and address of the author/copyright claimant in these works made for hire," and to provide the "author's contribution," which is to be indicated by checking the box(es) that apply—editing, text, compilation,¹² or other. For those applications dated June 2004 through October 2007, EIG claimed contribution in the compilation, editing, and text in Oil Daily. After 2007, EIG no longer claimed contribution in the compilation of Oil Daily but it did claim contribution in the text and editing.

The Refinery claims that EIG has not met the second, third, and fourth requirements set forth above to register Oil Daily with Form G/DN. Specifically, the Refinery asserts that (1) EIG is not the author or exclusive licensee of all content within Oil Daily ; (2) Oil Daily is not essentially an all-new collective work;¹³ and (3) the editing and text of Oil Daily is not a work made for hire. EIG disputes these claims arguing that it properly registered Oil Daily using Form G/DN. It further argues that even assuming EIG included inaccurate information on Form G/DN, the Refinery has not demonstrated that the information was included on the application with the knowledge that it was inaccurate.

A. Declaration of Ralph Oman

Before the Court examines whether EIG's use of Form G/DN was appropriate, the Court must address the Declaration of Ralph Oman. This Declaration was offered by the Refinery in support of its argument that the Court must refer EIG's copyright registrations to the Register of Copyrights. Although the Declaration discusses EIG's copyright registrations for Oil Daily , it was originally prepared and offered in another case in the United States District Court for the Southern District of Texas— Energy Intelligence Group v. Kayne Anderson Capital Advisors.¹⁴ EIG has not moved for the Court to strike the Declaration. However, it has asked the Court to disregard it on the basis that it is impermissible...