Infogroup, Inc. v. Databaseusa.Com LLC

• Decision Date: 18 December 2018
• Docket Number: 8:14-CV-49
• Parties: Infogroup, Inc., Delaware corporation, Plaintiff, v. DatabaseUSA.com LLC, a Nevada limited-liability company, and Vinod Gupta, Defendants.
• Court: U.S. District Court — District of Nebraska

Infogroup, Inc., Delaware corporation, Plaintiff, v. DatabaseUSA.com LLC, a Nevada limited-liability company, and Vinod Gupta, Defendants.

8:14-CV-49

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEBRASKA

December 18, 2018

MEMORANDUM AND ORDER

This matter is before the Court on the parties' post-trial motions. DatabaseUSA.com and Vinod Gupta (collectively, DatabaseUSA) move for renewed judgment as a matter of law (filing 507) and alternatively, for a new trial (filing 510). Both parties have also filed motions to amend the judgment (filing 473, filing 498, filing 510), and Infogroup has moved for attorney's fees (filing 495). The Court will grant those motions in part, and deny those motions in part as set forth below.

I. BACKGROUND

The seeds of this litigation were planted nearly five years ago when Infogroup found nine of its own seeds in a sample of DatabaseUSA's database. Since then, there have been numerous substantive disputes, various written and oral decisions by this Court, and a seven-day jury trial where the parties zealously presented their best evidence and arguments to a jury of their peers. After careful deliberation, the jury returned a verdict in favor of Infogroup on all seven of its claims: (1) False Advertising; (2) Copyright Infringement; (3) Mark Infringement; (4) Unfair Competition; (5) Breach of the 2008 Separation Agreement; (6) Breach of the 2012 Settlement Agreement; and (7) Unjust Enrichment. See generally filing 464. The jury awarded Infogroup $53,600,000.00 in damages. Filing 464.

Now, DatabaseUSA argues that the jury's verdict cannot stand as a matter of law. Filing 508 at 4. Alternatively, DatabaseUSA moves for a new trial arguing various errors by the Court—including instructional errors and improper admissions. See filing 511 at 2. Infogroup opposes both motions, arguing that the Court's instructions were correct and that the jury's verdict is sound. See filing 518 at 6; filing 520 at 1.

II. STANDARD OF REVIEW

1. RULE 50

When considering a motion for judgment as a matter of law, a court must determine whether or not the evidence was sufficient to create an issue of fact for the jury. Lane v. Chowning, 610 F.2d 1385, 1388 (8th Cir. 1979). The Court will grant a motion for judgment as a matter of law when all the evidence points one way and is susceptible of no reasonable inferences sustaining the position of the nonmoving party. Ehrhardt v. Penn. Mut. Life Ins. Co., 21 F.3d 266, 269 (8th Cir. 1994). In considering the motion, the Court views the record in the light most favorable to the prevailing party. Wash Solutions, Inc. v. PDQ Mfg., Inc., 395 F.3d 888, 892 (8th Cir. 2005). The Court must also assume that all conflicts in the evidence were resolved in favor of the prevailing party, and the Court must assume as proved all facts that the prevailing party's evidence tended to prove. E.E.O.C. v. Kohler Co., 335 F.3d 766, 772 (8th Cir. 2003). The motion should be denied unless the Court concludes that no reasonable juror could have returned a verdict for the nonmoving party. Billingsley v. City of Omaha, 277 F.3d 990, 995 (8th Cir. 2002).

2. RULE 59

A motion for new trial is governed by Federal Rule of Civil Procedure 59. The standard for granting a new trial is whether the verdict is against the great weight of the evidence. Butler v. French, 83 F.3d 942, 944 (8th Cir. 1996). In evaluating a motion for a new trial pursuant to Rule 59(a), the key question is whether a new trial should have been granted to avoid a miscarriage of justice. McKnight By & Through Ludwig v. Johnson Controls, Inc., 36 F.3d 1396, 1400 (8th Cir. 1994).

III. DISCUSSION

Before reaching the merits of the parties' arguments, the Court must briefly address three underlying contentions that form the foundation for DatabaseUSA's post-trial briefing: (1) copyright preemption; (2) exclusion of testimony; and (3) the spoliation instruction given by the Court. See filing 508 at 29-30; see also filing 511 at 14-15; 21-25. The Court will consider those arguments in turn below.

1. UNDERLYING CONTENTIONS

(a) Preemption

According to DatabaseUSA, two of Infogroup's state law claims—unfair competition and unjust enrichment—are preempted by Infogroup's copyright claim. That argument is based on a core principle of federal copyright law: that the Copyright Act preempts "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright . . . in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright." 17 U.S.C. § 301(a); Dryer v. Nat'l Football League, 814 F.3d 938, 942 (8th Cir. 2016).

In determining whether federal copyright law preempts a cause of action under state law, the Court's analysis is twofold: (1) whether the work at issue is within the subject matter of copyright as defined in §§ 102 and 103 of the Copyright Act; and (2) whether the state-law-created right is equivalent to any of the exclusive rights within the general scope of copyright as specified in § 106. Id. But section 301 preempts only those state law rights that "may be abridged by an act which, in and of itself, would infringe one of the exclusive rights provided by federal copyright law." Nat'l Car Rental Sys., Inc. v. Computer Assocs. Int'l, Inc., 991 F.2d 426, 431 (8th Cir. 1993) (quoting Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992)). So, if an extra element is required to constitute a state-created cause of action—instead of or in addition to the acts of reproduction, performance, distribution or display protected by the Copyright Act—then the claim does not lie within the general scope of copyright and there is no preemption. Id. (citing 1 Nimmer on Copyright § 1.01[B], at 1-14-15)). Stated differently, the state law claims must be qualitatively different from Infogroup's copyright claim. See generally id.

To establish a claim of unfair competition, Infogroup is required to demonstrate that DatabaseUSA attempted to pass off its goods or services (i.e., its database) as Infogroup's product. See Restatement (Third) of Unfair Competition, §§ 2-4 (1995); John Markel Ford, Inc. v. Auto-Owners Ins. Co., 543 N.W.2d 173, 178 (Neb. 1996) (using the Restatement). It is well-established that a state law unfair competition claim that alleges the tort of passing off is not preempted because such a claim alleges an extra element of deception or misrepresentation that is not necessary for copyright infringement. Donald Frederick Evans & Assocs., Inc. v. Cont'l Homes, Inc., 785 F.2d 897, 914 (11th Cir. 1986); Warner Bros. Inc. v. Am. Broad. Cos., Inc.,720 F.2d 231, 247 (2nd Cir. 1983); Nicassio v. Viacom Int'l, Inc., 309 F. Supp. 3d 381, 397 (W.D. Pa. 2018); Kitchen & Bath Concepts of Pittsburgh, LLC v. Eddy Homes, Inc., 2016 WL 7404559, *5 (W.D. Pa. 2016); Kindergartners Count, Inc. v. Demoulin, 171 F. Supp. 2d 1183, 1191 (D. Kan. 2001); cf. Take-Two Interactive Software, Inc. v. Zipperer, No. 18-CV-2608, 2018 WL 4347796, at *7 (S.D.N.Y. Aug. 16, 2018).

For similar reasons, Infogroup's unjust enrichment claim is not preempted by the Copyright Act. To prove an unjust enrichment claim, Infogroup must show that DatabaseUSA obtained and benefitted from something of value that it was not entitled to. Kalkowski v. Neb. Nat'l Trails Museum Found., Inc., 862 N.W.2d 294, 301-02 (Neb. 2015) (emphasis added) (quoting Restatement (Third) of Restitution and Unjust Enrichment § 2, comment a. (2011)). That "something of value," the jury could determine, was obtained through DatabaseUSA's deception or misrepresentation. And as discussed above, the element of deception or misrepresentation is not necessary for a copyright cause of action. Accordingly, the Court concludes that neither Infogroup's unfair competition or unjust enrichment claim is preempted by its copyright claim—and as such, DatabaseUSA's Rule 50 motion will be denied on those grounds. See filing 508 at 29-31.

(b) Motion to Exclude Testimony

DatabaseUSA also claims the testimony of two witnesses should have been excluded. See filing 511 at 14. Specifically, DatabaseUSA claims that John Hofmann and Amit Khanna were allowed to testify over several foundational objections on topics upon which they were not qualified to render an opinion. See Filing 511 at 14.

First, DatabaseUSA claims that John Hofmann's testimony was erroneously admitted. In support of that contention, DatabaseUSA makes twoarguments: (1) DatabaseUSA claims that Hofmann's damage model was "unreliable, illogical, inconsistent with the evidence, and otherwise flawed;" and (2) DatabaseUSA claims that because there was no way for the jury to disaggregate what portion of damages was attributable to what claims, his testimony was inherently speculative. Filing 511 at 14.

With respect to DatabaseUSA's latter contention, DatabaseUSA's specifically claims that because the jury had no way to "disaggregate damages" between Infogroup's copyright claim and the remaining causes of action, Hofmann's testimony should have been excluded. See filing 511 at 15-18. This argument is based, in large part, on various antitrust decisions. See Concord Boat Corp. v. Brunswick Corp., 207 F.3d 1039, 1057 (8th Cir. 2000); Amerinet, Inc. v. Xerox Corp., 972 F.2d 1483, 1494 (8th Cir. 1992); Farley Transp. Co. v. Santa Fe Trail Transp. Co., 786 F.2d 1342, 1352 (9th Cir. 1985). Those decisions, very generally, require a damage expert to separate lawful from unlawful conduct to ensure the expert's testimony is not speculative or based on conjecture. Concord Boat Corp., 207 F.3d at 1057 (emphasis supplied).

But in those cases, the problem is not, as DatabaseUSA suggests, that the jury was unable to parse out the amount of damage associated with each allegation of unlawful conduct. Rather, the problem is that there was "no evidence on the amount of damages attributable only to the unlawful conduct." Farley Transp. Co., 786 F.2d at 1352 (9th...