General Universal Systems, Inc. v. Lee

Decision Date20 July 2004
Docket NumberNo. 02-21002.,No. 01-21114.,No. 03-20076.,No. 03-20092.,No. 02-21311.,No. 02-20312.,01-21114.,02-20312.,02-21002.,02-21311.,03-20076.,03-20092.
Citation379 F.3d 131
PartiesGENERAL UNIVERSAL SYSTEMS, INC.; World Trade Systems, Inc., Plaintiffs-Appellants, Jose S. Lopez; Plaintiff-Intervenor Defendant-Appellant, Eli Nassar, Third Party Defendant-Appellant, v. Larry Mason LEE; Larry Mason Lee & Associates, Intervenor Plaintiffs-Appellees, v. HAL, Inc.; et al., Defendants, HAL, Inc.; Joe R. Herrin; Ernest Allen Parkin, Defendants-Third Party Plaintiffs-Appellees, Panalpina, Inc.; Fritz Companies, Inc.; U.S. Crating, Inc.; Transworld Logistics, Inc., Defendants-Appellees. General Universal Systems, Inc., Plaintiff-Appellant, v. Boaz Export Crating Company; Cargo Crating Company; Dixie Box and Crating of Texas, Inc., Defendants-Appellees. General Universal Systems, Inc.; World Trade Systems, Inc.; Jose S. Lopez, Plaintiffs-Counter Defendants-Appellants, v. HAL, Inc.; Joe R. Herrin; Ernest Allen Parkin, Defendants-Counter Claimants-Third Party Plaintiffs-Appellees, v. Eli Nassar, Third Party Defendant-Appellant. General Universal Systems, Inc., Plaintiff-Appellant, v. Boaz Export Crating Company; Cargo Crating Company; Dixie Box and Crating of Texas, Inc., Defendants-Appellees. General Universal Systems, Inc.; World Trade Systems, Inc.; Jose S. Lopez, Plaintiffs-Appellants, Eli Nassar, Third Party Defendant-Appellant, v. HAL, Inc.; et al., Defendants, HAL, Inc.; Jose R. Herrin; Ernest Allen Parkin, Defendants-Third Party Plaintiffs-Appellees, Panalpina, Inc.; Fritz Companies, Inc.; U.S. Crating, Inc.; Transworld Logistics, Inc., Defendant-Appellee. General Universal Systems, Inc.; World Trade Systems, Inc., Plaintiffs-Appellants, Jose S. Lopez, Plaintiff-Intervenor Defendant-Appellant, Eli Nassar, Third Party Defendant-Appellant, v. HAL, Inc.; et al., Defendants, HAL, Inc.; Joe R. Herrin; Ernest Allen Parkin, Defendants-Third Party Plaintiffs-Appellees, Panalpina, Inc.; Fritz Companies, Inc.; U.S. Crating, Inc.; Transworld Logistics, Inc., Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Claudia Wilson Frost (argued), Mayer, Brown, Rowe & Maw, Anita Kawaja, J. Ken Johnson, Fleming & Associates, Paul Lee Mitchell, Patrick Andrew Zummo, Zummo, Mitchell & Perry, Keith D. Jaasma, Slusser, Wilson & Partridge, Houston, TX, for General Universal Systems, Inc., World Trade Systems, Inc., Lopez and Nassar.

William Samuel Chesney, III, Frank, Elmore, Lievens, Chesney & Turet, Houston, TX, for Lee and Larry Mason Lee & Associates.

Daryl G. Dursum (argued), Adams & Reese, Houston, TX, Joseph W. Looney, Robert N. Markle, Adams & Reese, New Orleans, LA, for HAL, Inc., Herrin, Parkin, Panalpina, Inc., Fritz Companies, Inc., U.S. Crating, Inc. and Transworld Logistics, Inc.

Russell T. Lloyd, Joseph Michael Gourrier, O'Quinn, Laminack & Pirtle, Houston, TX, for General Universal Systems, Inc. Mark C. Harwell, Cotham, Harwell & Evans, Houston, TX, for Boaz Export Crating Co., Cargo Crating Co., Dixie Box and Crating of Texas, Inc., Herrin and Parkin.

Appeals from the United States District Court for the Southern District of Texas.

Before HIGGINBOTHAM, STEWART and PRADO, Circuit Judges.

PER CURIAM:

These consolidated cases arise from a copyright dispute between General Universal Systems, Inc. ("GUS") and HAL, Inc. GUS sued HAL, two of its officers, and several of HAL's customers claiming that HAL infringed its copyright in a freight packaging software system, misappropriated related trade secrets, violated the Lanham Act, and breached a contract with Joe Lopez. The district court dismissed GUS's copyright, Lanham Act, and trade secret claims on summary judgment and, following a jury trial, granted HAL judgment as a matter of law on the contract claim. GUS subsequently filed a second suit against several of HAL's customers, which the district court dismissed on the basis of collateral estoppel. The district court also awarded costs and attorneys' fees to HAL as the prevailing party on the copyright claim. GUS has appealed each of the district court's determinations.

For the reasons we will explain, we AFFIRM in part, REVERSE in part, and REMAND to the district court for proceedings consistent with this opinion.

I

The facts and procedural history of this nine-year-old dispute are long and, in some instances, in sharp dispute. With the exception of the contract claim, the underlying claims were each dismissed on summary judgment, and we view those facts in the light most favorable to GUS, the non-movant.1 GUS's contract claim comes to us in a slightly different posture — HAL was awarded judgment as a matter of law after GUS prevailed in a jury trial — and we present the facts related to the contract issue in the light most favorable to GUS.2

A

In 1979, GUS developed a software system — the CHAMPION PACKER Computer Software Program — for one of its clients, Joe Lopez. The CHAMPION PACKER program was a tracking system designed for use in the freight forwarding and shipping industry. GUS licensed the software to Lopez, retaining all rights to any improvements to the program, and eventually obtained a copyright registration in 1981.

Sometime later, Lopez created a derivative version of CHAMPION PACKER by converting it from the BASIC 4 programming language to the COBOL language, and began selling his version, LOPEZ COBOL, as a replacement for CHAMPION PACKER.3 In 1992, he formed a venture called HAL, Inc. with Ernest Parkin and Joe Herrin to develop and market a new freight software system that incorporated bar coding technology. Under their agreement, Lopez was to contribute LOPEZ COBOL for use in developing the new system; Parkin was to provide the system design and programming expertise; and Herrin was to supply industry expertise. Lopez, however, was detained in a Mexican jail for seven months during the initial stages of the software development project, and he was ousted from the company without recompense in March 1993. HAL continued to work on the software system and eventually began selling a freight tracking software system called "MEPAW."

Lopez claimed that MEPAW was an unauthorized copy of LOPEZ COBOL and that Parkin and Herrin had breached their obligation to compensate him for providing the LOPEZ COBOL system. Under threat of litigation from GUS, Lopez assigned his contract claim to GUS and agreed to assist GUS with a copyright infringement suit against HAL, Parkin, and Herrin. GUS filed its first suit against HAL on May 23, 1995 ("GUS 1"), raising various claims under federal and state law. The focus of the case, however, was GUS's claim that HAL had infringed its copyright in the CHAMPION PACKER system by copying the LOPEZ COBOL system. GUS sought damages, injunctive relief, and attorneys' fees.

On November 17, 1997, HAL filed a motion for partial summary judgment on the issue of copyright infringement, arguing that GUS could not establish that MEPAW copied the nonliteral elements of either LOPEZ COBOL or CHAMPION PACKER. In particular, HAL faulted GUS for failing to conduct an Altai analysis, the methodology used to analyze claims of nonliteral copying of software, asserting that without this analysis, GUS could not show that the MEPAW source code copied protectable elements of either CHAMPION PACKER or LOPEZ COBOL. In response, GUS argued that Altai did not apply to all of its infringement claims, such as its claims that HAL copied source code. GUS asserted that Altai applied only to claims that nonliteral elements of the software were copied. HAL in turn challenged GUS's source code infringement claim, arguing both that GUS had agreed that Altai analysis would be used to analyze the infringement claims and that GUS had never before put forth a theory of literal infringement.

A few months later, on February 13, 1998, HAL filed a second motion for partial summary judgment, this time focusing on the issue of copyrightability. HAL argued that GUS could not prove that it owned a valid copyright in the software because its copyright registration covered only data entry screens and record layout samples and not the software as a whole. HAL also noted that GUS had produced no evidence describing their software system as it existed in 1983, the date when Lopez allegedly copied it, because there was no extant copy of the 1983 version of GUS's CHAMPION PACKER software.4 Without such evidence, GUS could not prove that MEPAW copied its software system. GUS responded by pointing to its copyright registration for the freight forwarding software, which, it asserted, was prima facie evidence of its ownership of a copyright in the software. GUS also reminded the court that it owned LOPEZ COBOL, the system that HAL's MEPAW software copied.

On February 18, 1998, GUS filed its own motion for partial summary judgment in which it argued that it could prove as a matter of law that HAL had infringed its copyright in the freight forwarding software. Specifically, GUS claimed that it could prove that HAL had directly or literally copied portions of LOPEZ COBOL, noting in particular that the MEPAW system used fields, record layouts, and actual executable code taken directly from LOPEZ COBOL. As proof, GUS attached four exhibits which it asserted were examples of direct copying: (1) a database layout listing the layout of fields used by the MEPAW and LOPEZ COBOL systems; (2) a directory list comparing data entry fields used by the two software systems; (3) a print-out of a program from the MEPAW system indicating that it was created on October 25, 1983, by Lopez; and (4) invoices generated by the two systems. HAL challenged each of these exhibits, arguing that none established improper copying, and renewed its claim that GUS could not prevail under the Altai analysis.

A Magistrate Judge recommended granting HAL's first motion and dismissing the claims of nonliteral copyright...

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