In re Independent Serv. Organ. Antitrust Lit.

• Citation: 964 F.Supp. 1469
• Decision Date: 21 March 1997
• Docket Number: Civil Action No. MDL-1021.
• Parties: In re INDEPENDENT SERVICE ORGANIZATIONS ANTITRUST LITIGATION. This Document Applies To: CSU Holdings, Inc., et al. v. Xerox Corp. (D.Kan. No. 94-2102-EEO)
• Court: U.S. District Court — District of Kansas

Page 1469

964 F.Supp. 1469

In re INDEPENDENT SERVICE ORGANIZATIONS ANTITRUST LITIGATION.

This Document Applies To:

CSU Holdings, Inc., et al. v. Xerox Corp. (D.Kan. No. 94-2102-EEO)

Civil Action No. MDL-1021.

United States District Court, D. Kansas.

March 21, 1997.

Eric D. Braverman, Employers Reinsurance Corp., Overland Park, KS, P. John Owen, Lori R. Schultz, Morrison & Hecker, Kansas City, MO, Michael C. Manning, Morrison & Hecker, Phoenix, AZ, for CSU Holdings

Inc., Copier Services Unlimited Inc., Copier Service Unlimited of St. Louis, Inc.

James A. Hennefer, San Francisco, CA, Maxwell M. Blecher, Los Angeles, CA, for Acquisition Specialists, Inc., Tecspec, Inc., Consolidated Photo Copy, Inc., Copier Rebuild Center, Inc., CPO Ltd., Creative Copier Services, Inc., Gradwell Co., Inc., Graphic Corp. of Alabama, Northern District of Cal., Intern. Bus. Equip., Inc., Laser Resources Inc., Laser Resources of Minn., Laser Solutions, Inc., Laser Support and Engineering, Inc., Marathon Copier Service, Inc., Nationwide Technologies, Inc., Reprographics Resources Systems, Inc., Resources Systems, Inc., Suntone Indus., Inc., Technical Duplication Services, Inc., X-Tech Systems Inc., Xer-Dox Inc., Xerographic Copies Services, Inc.

Peter K. Bleakley, Arnold & Porter, Washington, DC, Peter W. Marshall, Xerox Corp., Stamford, CT, Michael G. Norris, Norris, Keplinger & Logan, L.L.C., Overland Park, KS, C. Larry O'Rourke, E. Robert Yoches, Vincent P. Kovalick, Leslie I. Bookoff, Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, DC, for Xerox Corp.

MEMORANDUM AND ORDER

Earl E. O'CONNOR, Senior District Judge.

This matter is before the court on defendant's motion for summary judgment on its copyright infringement and conversion counterclaims (Doc. 1374) and plaintiff's cross-motion for summary judgment on Xerox's copyright infringement and conversion counterclaims (Doc. 1441). After careful consideration of the parties' briefs and evidentiary material, the court is prepared to rule. For the reasons set forth below, both motions are denied.

Xerox moves for summary judgment on its copyright infringement counterclaims arguing that (1) CSU has infringed on Xerox's copyrights for diagnostic software and service manuals, and (2) CSU's defenses are insufficient as a matter of law. CSU has filed a cross-motion for summary judgment on Xerox's copyright infringement counterclaims, arguing that (1) Xerox has not established that its diagnostic software and service manuals are protected material under the copyright laws, and (2) Xerox's copyright infringement claims are barred by its misuse, statute of limitations, and laches defenses.

Factual Background

Xerox publishes operator and service manuals for use by those who service its copiers and printers. Xerox is the owner of the copyrights for these manuals and has registered a large number of these copyrights pursuant to the Copyright Act. Xerox also has developed diagnostic software to detect and repair machine failures on the Xerox model 5090 copier. The Xerox 5390 copier is an upgraded version of the 5090 copier and can use the same software as the 5090. The 5090 diagnostic software is published by Xerox on a set of floppy disks called "software upgrade disks." At the time a new 5090 copier is installed at a customer's site, the software upgrade disks are used to install the diagnostic software on a hard disk located inside the 5090 copier. Software upgrade disks are also used to install improved versions of Xerox diagnostic software.

Xerox laser printers, including the models 4050, 4090, and 4650, also utilize diagnostic software. This software is distributed by Xerox on floppy disks or on magnetic tapes. At the time the laser printer is installed, these disks or tapes are used to load the diagnostic software onto the printer's hard disk. Xerox is the owner of the copyrights in all versions of the software for the Xerox 5090 copier. The copyrights for upgrade levels K, L, and M of the 5090 software have been registered pursuant to the Copyright Act. Xerox also is the owner of the copyrights for all versions of the diagnostic software for the 4050, 4090, and 4650 printers. The copyright for version 3.5 of the software has been registered pursuant to the Copyright Act.

CSU has produced evidence of Xerox's parts policy and Xerox's alleged efforts to restrict ISO access to Xerox patented and copyrighted products in an effort to drive ISOs out of the copier and printer service markets. This evidence is nearly identical to the evidence CSU presented regarding Xerox's motion for summary judgment on patent infringement, described in this court's March 19, 1997, Memorandum and Order. With respect to copyrighted software specifically, CSU has presented evidence that prior to 1991 Xerox sold its equipment with diagnostic and operating software already installed. Later, Xerox attempted to unbundle its diagnostic and operating software and enforce its separate intellectual property rights in diagnostic software in what CSU characterizes as a tool to defeat ISO competition.

Summary Judgment Standards

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir.1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.

The moving party bears the initial burden of showing that there is an absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Hicks v. City of Watonga, 942 F.2d 737, 743 (10th Cir.1991). Essentially, the inquiry as to whether an issue is genuine is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52, 106 S.Ct. at 2512. An issue of fact is genuine if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party. Id. at 248, 106 S.Ct. at 2510. This inquiry necessarily implicates the substantive evidentiary standard of proof that would apply at trial. Id. at 252, 106 S.Ct. at 2512.

Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial "as to those dispositive matters for which it carries the burden of proof." Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir.1991). The nonmoving party may not rest on his pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.

"[W]e must view the record in the light most favorable to the parties opposing the motion for summary judgment." Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir.1991). "In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial." Conaway v. Smith, 853 F.2d 789, 793 (10th Cir. 1988). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Where the nonmoving party fails to properly respond to the motion for summary judgment, the facts as set forth by the moving party are deemed admitted for purposes of the summary judgment motion. D. Kan. Rule 56.1.

Analysis

I. Xerox's Affirmative Case Of Copyright Infringement.

Xerox asserts in its counterclaims that CSU has infringed on its copyrights for diagnostic software (count II) and manuals (count V). Both CSU and Xerox have filed motions for summary judgment on Xerox's copyright infringement counterclaims. To prevail on its claim of copyright infringement, Xerox must establish (1) ownership of a valid copyright and (2) copying by CSU of protected components of the copyrighted material. Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 831 (10th Cir.1993) (citing Feist Publications, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282, 1295-96, 113 L.Ed.2d 358 (1991), and Autoskill, Inc. v. National Educ. Support Sys., Inc., 994 F.2d 1476, 1487 (10th Cir.), cert. denied, 510 U.S. 916, 114 S.Ct. 307, 126 L.Ed.2d 254 (1993)).

A. Xerox's Registration Of Its Copyrights.

Registration of a copyright is a prerequisite to the filing of an infringement action. See 17 U.S.C. § 411(a) ("no action for infringement of the copyright of any work shall be instituted until registration of the copyright claim has been made"); see also M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488 (11th Cir.1990) (registration is a jurisdictional prerequisite). The copyright registrations at issue pertain to "derivative works." A "derivative work" is defined as "a work based upon one or more preexisting works" to which original materials are newly added. 17 U.S.C. § 101. The copyright statute provides that

[t]he copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or...