Rutledge v. High Point Regional Health System

• Decision Date: 06 May 2008
• Docket Number: Civil Action No. 1:07cv00539.
• Citation: 558 F.Supp.2d 611
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Robert RUTLEDGE, M.D., Plaintiff, v. HIGH POINT REGIONAL HEALTH SYSTEM, James Dasher, M.D., and Thomas Walsh, M.D., Defendants.

558 F.Supp.2d 611

Robert RUTLEDGE, M.D., Plaintiff, v. HIGH POINT REGIONAL HEALTH SYSTEM, James Dasher, M.D., and Thomas Walsh, M.D., Defendants.

Civil Action No. 1:07cv00539.

United States District Court, M.D. North Carolina.

May 6, 2008.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Brandon S. Neuman, John E. Branch, III, Shanahan Law Group, Raleigh, NC, Raleigh, NC, for Plaintiff.

Stephen D. Martin, David Alden Harlow, Reed J. Hollander, Nelson Mullins Riley & Scarborough, L.L.P., James Dasher MD, George L. Simpson, IV, William W. Pollock, George L. Simpson, IV, Cranfill Sumner & Hartzog, LLP, Raleigh, NC, for Defendants.

MEMORANDUM OPINION AND ORDER

SCHROEDER, District Judge.

This action is before the court on Defendants' respective motions to dismiss (Docs. 17 & 20), pursuant to Rule 12(b)(6), Fed. R.Civ.P. The sole basis of the motions is that Count II of Plaintiffs Amended Complaint, alleging a claim under the North Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen.Stat. § 75-1.1 (2007),¹ is preempted by the Copyright Act of 1976 ("Copyright Act"), 17 U.S.C. §§ 101-1332 (2005). For the reasons set forth herein, the motions will be granted.

I. FACTUAL AND PROCEDURAL BACKGROUND

The allegations of the Amended Complaint are construed in the light most favorable to Plaintiff, the non-moving party.

Robert Rutledge, M.D. ("Plaintiff), is a physician who resides in Clark County, Nevada. (Doc. 15 ¶ 8) In the late 1990s, he developed a surgical weight loss procedure, known as the Mini Gastric Bypass ("MGB"), as well as materials to be used in conjunction with the MGB procedure. (Id. ¶¶ 8, 12, 13-14) Subsequently, Plaintiff obtained copyrights for these materials, including documents he identifies as a "Patient Information Form," an "MGB Information Manual" (which, in turn, includes a "Patient Consent Form") and a "Patient Manual." (Id, ¶¶ 8, 14, 22, 23, 31, 40, Exs. F-H, K) Through a management services organization, the Center of Excellence for Laparoscopic Obesity Surgery ("CELOS"), Plaintiff contractually authorizes other physicians to use the copyrighted materials. (Id. ¶¶ 8, 15-16)

Defendants James Dasher, M.D., and Thomas Walsh, M.D., are physicians who reside in Guilford County, North Carolina, and worked for Cornerstone Health Care at all times relevant to this lawsuit. (Id. ¶¶ 10-11, 15) Pursuant to an agreement between CELOS and Cornerstone Health Care, Drs. Dasher and Walsh had access to the copyrighted materials and performed the MGB procedure at Defendant High Point Regional Health System ("High Point Regional") from 2004 until 2006. (Id. ¶¶ 10, 11, 15-16) Although the agreement terminated in May 2006, at which time Plaintiff alleges the authorization to use the copyrighted materials ended, Drs. Dasher and Walsh continue to use them and perform the surgery. (Id. ¶¶ 10, 11, 17-19)

Plaintiff alleges that Dr. Dasher, Dr. Walsh and High Point Regional (collectively, "Defendants") are infringing upon the copyrights by reproducing, distributing and displaying Plaintiffs copyrighted materials for commercial purposes on High Point Regional's Internet website. (Id. ¶¶ 1, 6, 22, 23) In specific, Plaintiff claims that Defendants' "Overview of the Mini Gastric Bypass," "Mini Gastric Bypass — Patient Information Form" and "Operative Treatment Consent Agreement," which Defendants hold out as their own, constitute nearly identical copies of Plaintiffs copyrighted materials, with trivial changes. (Id. ¶¶ 23-25, 31-32, Exs. C-E) Plaintiff also claims that Defendants are displaying, reproducing and distributing Plaintiffs Patient Manual in its original, unaltered form without permission. (Id. ¶ 40) The copyrighted materials are also allegedly being downloaded from the Internet and used by Defendants, other physicians, staff and patients. (Id. ¶ 22)

Plaintiff sent cease and desist letters to Defendants on January 10, 2007, although the copyrighted materials allegedly remain available on the website. (Id. ¶¶ 27, 28) Plaintiff claims that the availability of these materials will cause confusion, deceive consumers and the public, and dilute and adversely affect his goodwill and reputation. (Id. ¶ 29)

Plaintiffs Amended Complaint alleges two causes of action: copyright infringement under the Copyright Act; and unfair and deceptive trade practices under the UDTPA. (Id. ¶¶ 30-41) Plaintiff sought, but withdrew, a request for a preliminary injunction against Defendants' reproduction, distribution and display of the copyrighted materials. (Compare Doc. 1 with Doc. 15) Defendants deny all material allegations. (Docs. 16 & 19) Defendant High Point Regional also counterclaims against Plaintiff, alleging the materials are not protected under the Copyright Act and requesting relief under several theories. (Doc. 47, Ex. A, at 41-46)

II. DISCUSSION

A. Standard of Review

Defendants move to dismiss Count II of the Amended Complaint, which alleges unfair and deceptive trade practices under North Carolina's UDTPA, on the grounds that this state law claim is preempted by the Copyright Act, 17 U.S.C. § 301(a). (Docs. 17 & 20) The purpose of a Rule 12(b)(6) motion is to "test[ ] the sufficiency of a complaint" and not to "resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992). In considering a Rule 12(b)(6) motion, a court "must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, ___ U.S. ___, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007). Although the complaint "need only give the defendant fair notice of what the claim is and the grounds upon which it rests," id., "a plaintiffs obligation ... requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007).

B. Preemption

Through its authority under the Supremacy Clause, U.S. Const. art. VI, cl. 2, Congress has preempted all state law rights that are equivalent to those protected under federal copyright law. 17 U.S.C. § 301(a). Section 301(a) of the Copyright Act provides that

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 ... are governed exclusively by this title.... [N]o person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

Id. Thus, a state law claim is preempted if (1) the work is "within the subject matter of copyright;" and (2) the state law creates "legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright." Id.; see United States ex rel. Berge v. Bd. of Trustees of the Univ. of Ala., 104 F.3d 1453, 1463 (4th Cir.1997); Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 229 (4th Cir.1993) (preempting Virginia Computer Crimes Act claim). The scope of section 301(a) is extensive, such that the "shadow actually cast by the [Copyright] Act's preemption is notably broader than the wing of its protection." Berge, 104 F.3d at 1463.

1. Subject Matter of Copyright

For purposes of these motions, the parties agree that the copyrighted materials satisfy the first requirement. (Doc. 15 ¶ 8; Doc. 18 at 3; Doc. 21 at 1) In the Amended Complaint, Plaintiff claims to have a valid copyright in the materials used in conjunction with the MGB procedure. (Doc. 15 ¶¶ 8, 14, 22, 23, 31, 40, Exs. F-H) Thus, the copyrighted materials fall "within the subject matter of copyright."

2. Equivalent Rights

The parties dispute — and the question to be answered is — whether the UDTPA satisfies the second requirement by creating legal or equitable rights that are not "equivalent to" the rights protected under federal copyright law. The Copyright Act, 17 U.S.C. § 106, grants a copyright owner the exclusive right to "(1) reproduce the work, (2) prepare derivative works based on the work, (3) distribute copies of the work, (4) perform the work publicly, and (5) display the work publicly." Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 659 (4th Cir.1993).

To ascertain if this second requirement is satisfied, the Fourth Circuit applies the "extra element" test:

State-law claims that infringe one of the exclusive rights contained in § 106 are preempted by § 301(a) if the right defined by state law "`may be abridged by an act which, in and of itself, would infringe one of the exclusive rights.'" ... However, "if an `extra element' is `required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action, ... there is no preemption,'" provided that "`the extra element' changes the `nature of the action so that it is qualitatively different from a copyright infringement claim.'"

Rosciszewski, 1 F.3d at 229-30 (internal citations omitted). This test comports with congressional intent. H.R.Rep. No. 94-1476, at 132, reprinted in 1976 U.S.C.C.A.N. 5659, 5748 ("[T]he general laws of defamation and fraud[ ] would remain unaffected as long as the causes of action contain elements . . . that are different in kind from copyright infringement."). In short, the Copyright Act preempts state law claims that lack an extra element making them "`qualitatively different from a copyright infringement claim." Rosciszewski. 1 F.3d at 230 (internal quotation marks and citation omitted).

Common examples of extra elements in unfair competition claims that typically avoid preemption include "breach of fiduciary duty, breach of a confidential relationship, and palming off of the defendant's products as those of the plaintiffs." Old South Home Co. v. Keystone Realty...