Micro Data Base Systems v. State Bank of India
| Decision Date | 05 December 2001 |
| Docket Number | No. 4:00CV 0047AS.,4:00CV 0047AS. |
| Citation | 177 F.Supp.2d 881 |
| Parties | MICRO DATA BASE SYSTEMS, INC., Plaintiff, v. STATE BANK OF INDIA, Defendant. |
| Court | U.S. District Court — Northern District of Indiana |
Elizabeth B. Searle, William P. Kealey, Lafayette, IN, for Plaintiff.
James R. Schrier, Lafayette, IN, John W. Moore, Chicago, IL, for Defendant.
This is a civil action seeking damages for breach of contract and for copyright infringement pursuant to 17 U.S.C. § 501. Originally, this action was filed in Tippecanoe Superior Court II. That action consisted of two separate counts: 1) breach of contract and 2) accounting. The case was then removed by the Defendant, State Bank of India ("State Bank"), to this court based upon diversity of citizenship. 28 U.S.C. § 1332. Subsequently, the Plaintiff, Micro Data Base Systems, Inc. ("MDBS"), amended its complaint to reflect the above stated causes of action. On October 22-23, 2001, the court conducted a bench trial in the above entitled action. The court now issues its findings of fact and conclusions of law in accordance with Rule 52 of the Federal Rules of Civil Procedure.
Jurisdiction and venue are proper in this Court. Micro Data Base Systems, Inc. is an Indiana corporation having its principal office and place of business in West Lafayette, Indiana. State Bank of India is a corporation, organized and existing under the laws of India, with its principal office and place of business in Mumbai, India. This Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1332, 1338(a); and principles of supplemental jurisdiction. State Bank continues to contest personal jurisdiction as asserted in its First and Second Affirmative Defense. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(a).
MDBS filed its complaint against State Bank in the Tippecanoe Superior Court II, and State Bank removed it to this court on grounds of diversity and federal question jurisdiction. State Bank has a long-standing, major office in Chicago that conducts banking activity in a broad region that includes Indiana. Ex. 105. On February 13, 2001, State Bank raised an affirmative defense as to this court's personal jurisdiction over it with regard to MDBS's copyright claims in accordance with Rule 12(h)(1) of the Federal Rules of Civil Procedure. However, State Bank did not actively contest this issue until the submission of its post trial brief despite its initial objection to personal jurisdiction on November 14, 2001, almost nine months after raising this defense. With respect to Count II, State Bank has agreed by contract that any dispute between State Bank and MDBS shall be adjudicated in Tippecanoe County, Indiana under Indiana law. Ex. 94 ).
MDBS and State Bank have stipulated to a number of facts and exhibits in this case as reflected in their pre-trial order and joint stipulation of exhibits presented to the court before trial. (See Stipulation to Admission of Exhibits and Pre-Trial Order).
MDBS, a citizen of the United States, created and wrote the MDBS Database Management System, which is an original computer software program (hereinafter referred to as the "MDBS Software"). The MDBS Software contains a large amount of material wholly original with MDBS, and is copyrightable subject matter under the laws of the United States, and is copyrighted.
MDBS has complied in all respects with the Copyright Act of July 30, 1947 (c. 391, 61 Stat. 652; 17 U.S.C. §§ 101 et seq. — hereinafter referred to as "the Act") and all other laws governing copyright, and secured the exclusive rights and privileges in and to the copyright of said MDBS Software, and received from the Register of Copyrights Certificates of Copyright Registration. On December 26, 1979, MDBS registered the first version of its Software with the Copyright Office, registration no. TX387-711. On June 6, 1985, MDBS registered another version of the MDBS Software (known as MDBS III) with the Copyright Office, registration no. TXU201-290. On July 3, 1997, MDBS registered the MDBS IV version of the MDBS Software with the Copyright Office, registration nos. TX4-469-613 and TX4-560-929. The copies of certificates of those registrations attached as Exhibit "A" to Plaintiff's First Amended Complaint are true and accurate and admissible.
At all times pertinent hereto, said MDBS Software has been published by Plaintiff, and all copies and reproductions of it made by Plaintiff or under its authority or license have been printed, bound, published and otherwise reproduced in conformity with the provisions of the Act and all other laws governing copyright.
At all times pertinent hereto, Plaintiff has been and still is the sole and exclusive proprietor of all rights, title, and interest in and to the copyright in said MDBS Software. Plaintiff has at no time transferred ownership of, parted with title to, or divested itself of the exclusive right to vend such copyrighted MDBS Software.
State Bank of India (hereinafter "State Bank") has used, duplicated and distributed MDBS Software that is incorporated into and/or used in conjunction with banking software applications that are deployed in State Bank's banking operations; to wit, IBSnet.
In March of 1998, State Bank and MDBS entered into an End User License Agreement for MDBS IV serial number 34003457. The copy of the 1998 MDBS IV End User License Agreement attached as Exhibit "B" to Plaintiff's First Amended Complaint is true and accurate and admissible.
Also in March of 1998, State Bank and MDBS entered into a second contract, an MDBS IV Runtime Distribution License Agreement for serial number 34003457. The copy of the 1998 MDBS IV Runtime Distribution Agreement attached as Exhibit "C" to Plaintiff's First Amended Complaint is true, accurate and admissible.
The MDBS IV Runtime Distribution License Agreement permitted State Bank to copy and distribute specified runtime modules of MDBS IV software under certain conditions for specified environments and purposes, subject to contract terms and conditions. The contract obligated State Bank, prior to distributing MDBS software, to purchase appropriate "tokens" from MDBS and attach the tokens to the software to be distributed. The tokens are integral to the authorization process for distribution of MDBS computer code and contribute to a tracking system which allows MDBS to monitor and control the copying, distribution and use of its software.
Under the MDBS IV Runtime Distribution License Agreement, State Bank agreed to maintain, and make available, those records necessary for MDBS to verify State Bank's compliance with the contract. State Bank also agreed to submit to MDBS calendar quarterly reports, accounting for all of State Bank's distributions of MDBS software and State Bank's purchases of tokens. Furthermore, under the MDBS IV Runtime Distribution License Agreement, State Bank agreed to provide good faith cooperation and best efforts to assist MDBS in enforcing MDBS' rights.
All foundational information referenced in MDBS' damage spreadsheet, as provided to State Bank on September 20, 2001 and previous dates, is admitted as true and accurate without need for record proof. The parties also stipulated to the admission of 108 joint exhibits. (See Stipulation of Exhibits).
Plaintiff MDBS licenses database management software to power sophisticated, data-intensive software programs.
The MDBS software is licensed in parts called "modules." MDBS charges a royalty for each copy of each MDBS module. MDBS customers typically agree to track and account for the shipment of MDBS modules by prepurchasing module-specific "tokens" (which resemble postage stamps) for each copy of each module.
Beginning in the early 1990's, State Bank installed MDBS software in more than 130 State Bank offices around the world. State Bank installed MDBS software to drive a third-party banking program known as IBSnet.
A firm known as Morgan Laboratories created IBSnet and sold it to State Bank through an intermediary Irish firm known as Kindle Banking Systems. In 1991, State Bank signed the first of several agreements with Kindle for IBSnet. Ex. 23. There is no evidence that State Bank ever signed any agreement directly with Morgan, and there is no evidence that MDBS ever signed any agreement with Kindle.
In May 1991, Morgan and MDBS entered into a software distribution agreement, and on December 31, 1991, Morgan and MDBS supplemented their distribution agreement with an Amendment that permitted the installation of two MDBS modules known as DMS and RCV for IBSnet installations in "branches of the State Bank of India located within the geographical land boundaries of the country of India." Morgan never licensed any modules other than DMS and RCV from MDBS for State Bank. Ex. 2. State Bank was not a party to the Morgan MDBS agreement. Ex. 1, 2.
In 1996, MDBS and Morgan sued each other. As part of their settlement, Morgan and MDBS expressly terminated their distribution agreement, including the contract amendment between Morgan and MDBS that authorized distributions of DMS and RCV modules for IBSnet installations in India. The settlement had an effective date of June 18, 1997. Ex. 18. Because of the termination of the MDBS Morgan license agreement, Morgan announced to State Bank that it could no longer distribute MDBS software to State Bank. On July 22, 1997, Morgan sent State Bank a letter that stated:
Morgan Labs has recently ceased its relationship with MDBS preventing us from distributing any further MDBS software modules (including the data-base engine). Thus, any software that runs on such modules (such as IBSnet Classic, ISP and Remote Site) unfortunately cannot be licensed, distributed, or implemented, effective as of 18 June 1997, as it assumes the existence of those MDBS modules. Understandably,...
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...cannot carry precedential weight in this instance. Indeed, other courts have said as much. See, Micro Data Base Systems, Inc, v. State Bank of India, 177 F.Supp.2d 881, 894 (N.D.Ind. 2001). ("[T]o the extent that Schmizzi awarded prejudgment interest based upon federal law, 'that decision i......