Technicon Medical Information Systems Corp. v. Green Bay Packaging Inc.

• Decision Date: 30 August 1982
• Docket Number: No. 81-1469,81-1469
• Parties: , 1982 Copr.L.Dec. P 25,438 TECHNICON MEDICAL INFORMATION SYSTEMS CORP., Plaintiff-Appellee, v. GREEN BAY PACKAGING INC., St. Vincent Hospital, and Leo N. Crowley, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1032

687 F.2d 1032

215 U.S.P.Q. 1001, 1982 Copr.L.Dec. P 25,438

TECHNICON MEDICAL INFORMATION SYSTEMS CORP., Plaintiff-Appellee, v. GREEN BAY PACKAGING INC., St. Vincent Hospital, and Leo N Crowley, Defendants-Appellants.

No. 81-1469.

United States Court of Appeals Seventh Circuit.

Argued Oct. 26, 1981.

Decided Aug. 30, 1982.

James B. Blanchard, Chicago, Ill., for defendants-appellants.

Henry C. Bunsow, Townsend & Townsend, San Francisco, Cal., for plaintiff-appellee.

Before PELL and CUDAHY, Circuit Judges, and CAMPBELL, Senior District Judge. ^*

WILLIAM J. CAMPBELL, Senior District Judge.

This cause is before the Court on an interlocutory appeal which presents the following certified question:

"Whether the acts of (1) affixing to certain documents a statutory notice of copyright including the prescribed year date of first publication, pursuant to the 1909 Copyright Act and the Universal Copyright Convention, and (2) publishing the documents, estop the party who affixed the notice and published the documents from subsequently asserting that such documents have not been generally published as represented by the copyright notice, but instead contain subject matter which is 'trade secret.' "

The plaintiff-appellee filed this suit alleging, inter alia, that defendants had misappropriated certain trade secrets relating to plaintiff's computer software. The plaintiff had provided computerized business office services to certain hospitals (including defendant St. Vincent Hospital) and defendant Green Bay Packaging Incorporated had contracted with plaintiff to provide data processing services for those customers. Plaintiff prepared and disseminated to its customers a System Reference Manual to enable them to properly use its computerized system. The complaint alleged that defendant St. Vincent Hospital improperly provided defendant Green Bay with the manual and that Green Bay misappropriated trade secrets contained therein.

The manual contained a proprietary legend ¹ and a copyright notice: "(c) Technicon Medical Information Systems Corp. 1974." Defendants contend that by placing the copyright notice in the manual, the plaintiff represented that the contents had been published in the year stated. That representation, defendants argue, is inconsistent with the assertion that the material in the manual includes trade secrets and therefore the plaintiff should be estopped from proceeding on a theory of misappropriation of trade secrets. The plaintiff's position is that the manual was never published within the meaning of the Copyright Act of 1909, ² and that the copyright notice was only included for protection in the event that an inadvertent publication occurred. Thus, plaintiff contends, the manual can contain trade secrets and it should be permitted to present evidence on that factual issue.

The defendants presented their estoppel argument to the district court in a Motion for Summary Judgment but did not prevail. ³ However, the District Judge noted that this was a question of first impression ⁴ and subsequently authorized this interlocutory appeal.

Appellants contend that the certified question should be answered in the affirmative, based on the statutory estoppel doctrine utilized in Exchange Trust Co. v. Drainage Dist. No. 7, 278 U.S. 421, 49 S.Ct. 181, 73 L.Ed. 436 (1929); Magee v. United States, 282 U.S. 432, 51 S.Ct. 195, 75 L.Ed. 442 (1931); Littleton v. Mardigan, 458 F.2d 251 (7th Cir. 1972); Wheelock v. Commissioner of Internal Revenue, 77 F.2d 474 (5th Cir. 1935); United States v. Kassan, 208 F.Supp. 858 (S.D.Cal.1962). In their initial brief appellants summarize this estoppel principle as "one who invokes statutory benefits by the making of representations will be estopped to deny such representations," Appellants' br. p. 10. However, in their reply brief they characterize it as "where a person has affirmatively claimed and received the benefit of a statute, that person will be estopped from subsequently denying or repudiating the effects or consequences of such claim, regardless of personal reliance," Appellants' Reply br. p. 6. Our analysis of the cases cited indicates that the application of statutory estoppel requires the presence of three elements:

1) assertion by a party of entitlement to statutory right or privilege;

2) the receipt by that party of an actual benefit pursuant to the statute;

3) subsequent assertion by that party which is inconsistent with entitlement to the statutory benefit previously received.

For example, in Littleton, the plaintiff was a truck driver who was injured by another driver while on his job. He filed a claim against his employer, Calumet Trucking Company, under Indiana's Workmen's Compensation Act and received monetary benefits. In filing that claim, the plaintiff had to assert, of course, that he was an employee of Calumet. Subsequently, he brought a civil action against the other driver. Under the Indiana Workmen's Compensation Act, one who had received compensation could still sue a potentially liable party for damages unless it was the employer or a fellow employee. The District Court granted summary judgment for the defendant. This court affirmed, finding that the undisputed facts revealed that the defendant was an employee of Calumet and holding that the plaintiff was estopped, by his conduct in claiming and receiving benefits under the Indiana Workmen's Compensation Act, from denying that he was an employee of the same company. Thus, having claimed entitlement to a statutory right and accepted a benefit thereby, the plaintiff was estopped from making an assertion inconsistent with that entitlement.

Appellant argues that under the 1909 Copyright Act one who has affixed a copyright notice to a work and published it has affirmatively claimed and received the benefit of the Act and should be estopped from claiming that trade secrets are contained therein. The alleged inconsistency in the latter assertion arises from the principle that "information disclosed (in a copyrighted work) is lodged in the public domain, where its use is unrestricted," Crume v. Pacific Mutual Life Insurance Co., 140 F.2d 182, 183 (7th Cir.), cert. den., 322 U.S. 755, 64 S.Ct. 1265, 88 L.Ed. 1584 (1944). Additionally, appellants contend that it is inconsistent to represent that certain material has been published for purposes of the Copyright Act and to claim that the information contained therein is also secret.

There does not appear to be any dispute that the affixing of a copyright notice consists of an assertion of a statutory right, Goodis v. United Artists Television, Inc., 425 F.2d 397, 403 (2nd Cir. 1970). Therefore, the first element of statutory estoppel is present.

We must then determine whether a person who has published a work with notice has received an actual benefit under the 1909 Copyright Act. In order to perfect its copyright under the 1909 Act, a party must "generally publish" the work with a proper notice affixed, 17 U.S.C. § 10 (1976), The Washingtonian Publishing Co. v. Pearson, 306 U.S. 30, 59 S.Ct. 397, 83 L.Ed. 470 (1939); Bell v. Combined Registry Company, 397 F.Supp. 1241 (N.D.Ill.), aff'd 536 F.2d 164 (7th Cir.), cert. den., 429 U.S. 1001, 97 S.Ct. 530, 50 L.Ed.2d 612 (1976). A general publication

"occurs when by consent of the copyright owner the original or tangible copies of a work are sold, leased, loaned, given away or otherwise made available to the general public, or when an authorized offer is made to dispose of the work in any such manner even if a sale or other such disposition does not, in fact, occur." 1 Nimmer on Copyright § 4.04 (1981).

The publication requirement of 17 U.S.C. § 10 (1976) is not satisfied when the distribution of the work is only a "limited publication," White v. Kimmel, 193 F.2d 744 (9th Cir.), cert. den., 343 U.S. 957, 72 S.Ct. 1052, 96 L.Ed. 1357 (1952); Data Cash Systems, Inc. v. JS&A Group, Inc., 628 F.2d 1038 (7th Cir. 1980); Hub Floral Corporation v. Royal Brass Corporation, 454 F.2d 1226 (2d Cir. 1972).

"(A) limited publication (is one) which communicates the contents of a manuscript to a definitely selected group and for a limited purpose, and without the right of diffusion, reproduction, distribution or sale, ..." White, supra, quoted in Data Cash, 628 F.2d at 1042.

The certified question in this case does not specify which type of publication is in issue and therefore we must address both situations. ⁵

Under the 1909 Act, a limited publication is, for legal purposes, no publication at all, and therefore does not result in the divestiture of common law copyright protection or the investiture of statutory copyright protection, see White, supra, Data Cash, supra, William A. Meier Glass Co. v. Anchor Hocking Glass Corp., 95 F.Supp. 264 (W.D.Pa.1951); Schellberg v. Empringham, 36 F.2d 991 (S.D.N.Y.1929). However, a limited publication with a notice stating the year of the limited publication would affect the potential duration of the statutory copyright protection. This is based on the rule that an antedated notice, i.e., one which states a date prior to the actual investiture of statutory copyright protection, will cause the copyright term to be computed from the date stated therein, ⁶ National Comics Publications, Inc. v. Fawcett Publications Inc., 191 F.2d 594 (2d Cir. 1951); Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 161 F.2d 406 (2d Cir.), cert. den., 331 U.S. 820, 67 S.Ct. 1310, 91 L.Ed. 1837 (1947); Southern Music Pub. Co., Inc. v. Bibo-Lang, Inc., 10 F.Supp. 972 (S.D.N.Y.1935). Despite the fact that the copyright term would be running, no statutory rights would be enforceable until a general publication actually occurred, Basevi v. Edward O'Toole Co., 26 F.Supp. 41 (S.D.N.Y.1939), see also 2 Nimmer on Copyright § 7.08(c)(2) (1981). For this reason, no benefit inures to the owner of a work which is the subject of a limited publication with notice. In fact, due to the...