Ross, Brovins & Oehmke, P.C. v. Lexis Nexis Group

• Decision Date: 15 September 2006
• Docket Number: No. 05-1513.,05-1513.
• Citation: 463 F.3d 478
• Parties: ROSS, BROVINS & OEHMKE, P.C., doing business as LawMode, Plaintiff-Appellant, v. LEXIS NEXIS GROUP, a DIVISION OF REED ELSEVIER GROUP, PLC, and Owner of Matthew Bender and Company, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 478

463 F.3d 478

ROSS, BROVINS & OEHMKE, P.C., doing business as LawMode, Plaintiff-Appellant, v. LEXIS NEXIS GROUP, a DIVISION OF REED ELSEVIER GROUP, PLC, and Owner of Matthew Bender and Company, Inc., Defendant-Appellee.

No. 05-1513.

United States Court of Appeals, Sixth Circuit.

Argued: April 25, 2006.

Decided and Filed: September 15, 2006.

ARGUED: Thomas H. Oehmke, Ross, Brovins & Oehmke, Northport, Michigan, for Appellant. Charles S. Sims, Proskauer Rose, New York, New York, for Appellee. ON BRIEF: Thomas H. Oehmke, Ross, Brovins & Oehmke, Northport, Michigan, for Appellant. Charles S. Sims, Frank Scibilia, Proskauer Rose, New York, New York, for Appellee.

Before: SUHRHEINRICH, GILMAN, and ROGERS, Circuit Judges.

OPINION

ROGERS, Circuit Judge.

This is a copyright dispute regarding software for filling out legal forms. LawMode compiled and organized a number of Michigan legal forms and, using a Lexis-owned program, created templates for filling out the forms. After marketing LawMode's product for five years, Lexis terminated its contract with LawMode and proceeded to compile, create, and market its own set of Michigan form templates. LawMode sued Lexis for copyright violation and contract breach. We affirm the district court's judgment dismissing LawMode's copyright claims against Lexis. First, while LawMode has a valid copyright in both the selection of forms in its compilation and the organization of those forms, the copyrighted work is not substantially similar to the allegedly infringing Lexis product. Second, LawMode's selection and placement of input items for its form templates involves too little creativity to warrant copyright protection, and Lexis consequently did not commit copyright infringement in this regard. However, we reverse the district court's dismissal of LawMode's breach-of-contract claim pursuant to a motion for judgment on the pleadings because LawMode stated a claim for breach of contract.

I. Background

Doing business as LawMode, the firm of Ross, Brovins & Oehmke, P.C., entered an agreement with Lexis to create and market a system of automated Michigan legal forms. LawMode entered a contract with Lexis in 1997, later modified in 1999, which required LawMode to create various templates for filling in the required information for selected Michigan legal forms. LawMode also organized those templates into a user-friendly software program. This program allowed users to keyboard case-specific data into a series of on-screen dialog boxes. Users save the information entered into the dialog boxes into a data file, and the program automatically inserts the information into corresponding data fields on signature-ready legal forms. Most of the actual forms were forms approved by the Michigan State Court Administrative Office (SCAO), and therefore in the public domain.

The advantage of LawMode's templates was that case-specific information from one form could be easily transferred to another form as the case progressed. This eliminated the need for retyping. The product contained 576 individual forms. While most of the forms were SCAO forms, LawMode independently created some of its own forms. This case pertains only to the automation of the SCAO forms because LawMode does not allege that Lexis copied any of its independently created forms.

Under the 1999 agreement, LawMode promised to supply and update "form templates" using Lexis's proprietary software called HotDocs Pro. These templates were defined in the 1999 agreement as "Content." Lexis would then publish those templates in the finished product, which was a CD or software available for download over the internet. The 1999 agreement defined the packaged CD or download as "Product." During 1997-2002, Lexis paid LawMode $77,273 in royalties for sales of Product.

Pursuant to the terms of the 1999 agreement, Lexis terminated its contract with LawMode in February of 2002. After the contract was terminated, LawMode was to retain all ownership of "Content," defined as "HotDocs templates created by [LawMode]." On June 17, 2003, LawMode registered a copyright for its templates. Starting in July 2002, Lexis published its own version of the Product called Lexis-Nexis Automated SCAO Forms (the "2002 Lexis Product"). The 2002 Lexis Product contained 406 SCAO forms. Three hundred fifty of the forms that LawMode had selected also appear in Lexis's work.

Lexis claims that the templates contained in the 2002 Lexis Product were created independently of LawMode. LawMode argues that Lexis copied their templates, defined as "Content" in the 1999 agreement. It is undisputed that Lexis had access to Content, and LawMode argues that an internal memorandum encouraged Lexis programmers to look at the LawMode Content when creating templates in the 2002 Lexis Product. The memo said, "Ignore any and all markup and/or automation from former Michigan projects [i.e., LawMode's Content] unless you are really confused about something." LawMode also submitted a PowerPoint-style presentation that details similarities between LawMode's templates and those in the 2002 Lexis Product. LawMode argues that the appearance of the LawMode templates and the appearance of the templates in the Lexis Product are nearly identical.

LawMode filed a seven-count complaint against Lexis, alleging claims for copyright infringement, state-law claims for breach of contract, and various state-law claims alleging business torts. After filing the complaint, LawMode voluntarily dismissed its claims for unjust enrichment, unfair competition, breach of the duty of good faith and fair dealing, and most of its breach-of-contract claims. The remaining claims included a copyright claim and a breach-of-contract claim. LawMode alleges that Lexis infringed a compilation copyright (i.e., a copyright in the organization and selection of forms) and a copyright in the automating of the forms (i.e., creative choices in how the screen looks and how the variables are inter-related). The contract claim was for an alleged breach of Lexis's promise not to misappropriate LawMode's Content and not to continue to distribute Content after the termination of the agreement.

After discovery, Lexis moved for summary judgment. Lexis argued that the templates were not protected by copyright, and, in the alternative, that Lexis did not copy them. In addition, Lexis argued that the contract claim did not meet the jurisdictional amount-in-controversy requirement, that the claim was preempted by copyright law, and that the complaint did not state that Lexis breached the agreement. In a December 9, 2004, order, the district court granted summary judgment for Lexis on the copyright claim but denied summary judgment on the contract claim. The district court reasoned that LawMode's compilation of forms was copyrightable but that Lexis did not copy the compilation. The district court held that the organization of the forms, the look of the screen, and the interrelationship of the variables were not copyrightable. The district court denied all three of Lexis's grounds for dismissing the contract claims. First, the district court held that the contract claim exceeded the jurisdictional minimum and that there was supplemental jurisdiction over it. Second, the district court held that the state-law contract claim was not preempted by the Copyright Act because the existence of a contract is an additional element not required for a copyright claim. Third, the district court found that the contract supported LawMode's assertion that Lexis breached the contract, as stated in paragraph 48.b of the complaint, by "misappropriat[ing] LawMode's Content." Thus, one contract claim survived summary judgment.

Lexis then filed a motion for reconsideration of the order denying summary judgment on the contract claim in paragraph 48.b of the complaint, arguing that the district court did not specify any contractual promise that would support a finding of breach of contract. On December 22, 2004, the district court denied the motion for reconsideration on the ground that a party is not permitted to raise, in a motion for reconsideration, new legal arguments that could have been raised in the initial summary judgment motion. Lexis does not challenge that order on appeal.

Lexis then made the same argument in a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). The district court applied the standard for judgment on the pleadings, which is the same as the standard for a motion under Rule 12(b)(6). The district court reasoned that, on its face, the agreement does not contain a promise that Lexis will not misappropriate LawMode's templates. Thus, the district court dismissed LawMode's remaining contract claim and dismissed the case.

LawMode filed a timely notice of appeal.

II. Copyright

LawMode's templates are a compilation protected by copyright, but, even taking the facts in the light most favorable to LawMode, Lexis did not infringe that copyright. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (describing the summary judgment standard). A compilation is a "work formed by the collection and assembling of preexisting materials . . . that are selected, coordinated or arranged in such a way that the resulting work as a whole constitutes an original work of authorship." 17 U.S.C. § 101. The selection and categorization of the forms are protectable elements of the work. Although the collection and categorization of the forms are protected by copyright, the district court properly dismissed those claims because Lexis's product is not substantially similar to LawMode's collection and categorization. LawMode also claims that the computer programming that created the interrelation of the variables in the templates is protected. On the facts of this case, however, these items are not copyrightable because they exhibit too little creativity.

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