Toffler Associates, Inc. v. Hartford Fire Ins. Co.

• Decision Date: 29 July 2009
• Docket Number: Civil Action No. 08-1167.
• Citation: Toffler Associates, Inc. v. Hartford Fire Ins. Co., 651 F.Supp.2d 332 (E.D. Pa. 2009)
• Parties: TOFFLER ASSOCIATES, INC., Plaintiff, v. HARTFORD FIRE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

651 F.Supp.2d 332

TOFFLER ASSOCIATES, INC., Plaintiff, v.HARTFORD FIRE INSURANCE COMPANY, Defendant.

Civil Action No. 08-1167.

United States District Court, E.D. Pennsylvania.

July 29, 2009.

COPYRIGHT MATERIAL OMITTED

Timothy C. Russell, Spector Gadon & Rosen PC, Philadelphia, PA, for Plaintiff.

Ronald P. Schiller, Nicole J. Rosenblum, DLA Piper Rudnick Gray Cary U.S LLP, Philadelphia, PA, for Defendant.

MEMORANDUM

JONES, District Judge.

Before the Court are the parties' cross-motions for summary judgment and the various responses and replies thereto.For the following reasons, Hartford Insurance Company's ("Hartford")Motion for Summary Judgment will be granted in part and denied in part and Toffler Associates, Inc.'s ("Toffler")Cross-Motion for Summary Judgment will be granted in part and denied in part.

I.Factual Background

A.The Parties and Their Insurance Policy

Toffler is a strategic consulting and advisory firm that provides consulting services to corporations, the United States intelligence community, and United States military services.(Hartford Mot. for Summ. J., Ex. 1, Jeffery Barnett Dep. ("Barnett Dep.")at 17;Hartford Mot. for Summ. J., Ex. 4, Scott McLauthlin Dep.at 12;Toffler Mot. for Summ. J., Ex. 1, Thomas H. Johnson Dep.at 19-20.)In 2006, Toffler purchased an insurance policy ("Policy") from Hartford.(SeeHartford Mot. forSumm. J., Ex. 33, Business Liability Coverage Form, PolicyNo. 08 SBA PR0042("Policy").)The Policy was effective from August 10, 2006, through August 10, 2007, and included Business Liability Coverage against damages because of "personal or advertising injury."(Policy¶ A(1)(a).)According to the Policy, advertising injury includes "[i]infringement of copyright, slogan, or title of any literary or artistic work, in your `advertisement.'"(Policy¶ G(17)(g).)The Policy defines advertisement as the following:

"Advertisement" means the widespread public dissemination of information or images that has the purpose of inducing the sale of goods, products or services through:

a.(1) Radio;

(2) Television;

(3) Billboard;

(4) Magazine;

(5) Newspaper;

b. The Internet, but only that part of a web site that is about goods, products or services for the purposes of inducing the sale of goods, products or services; or

c. Any other publication that is given widespread public distribution.

However, "advertisement" does not include:

a. The design, printed material, information or images contained in, on or upon the packaging or labeling of any goods or products; or

b. An interactive conversation between or among persons through a computer network.

(Policy¶ G(1).)

B.The Underlying Copyright Action

In May 2007, Inside Washington Publishers, LLC("IWP") informed Toffler of its belief that Toffler had violated certain of IWP's copyrights by reproducing IWP's articles in a Publication titled Toffler Associates' Morning Brew("the Publication").(SeeHartford Mot. forSumm. J., Ex. 13, Letter from Gregory to Westphal, May 7, 2007.)IWP demanded that Toffler immediately cease and desist from any further reproduction of IWP's articles.(Id.)Toffler immediately ceased including any IWP publications in the Publication.(SeeHartford Mot. forSumm. J., Ex. 14, Letter from McLauthlin to Gregory, May 15, 2007.)On August 16, 2007, IWP initiated a copyright infringement action against Toffler and Jeffrey R. Barnett, senior consultant at Toffler, in the United States District Court for the Eastern District of Virginia.(Hartford Mot. forSumm. J., Ex. 7, IWP Compl.)In its Complaint, IWP alleged that that "Toffler and/or Barnett selected and reproduced articles from [IWP's] Copyrighted Works and distributed the articles to many recipients in issues of a series entitled Morning Brew."(IWP Compl. ¶ 12.)IWP alleged that the May 2, May 7, and May 14, 2007, and "many other issues" of the Publication contained copyrighted articles.(IWP Compl. ¶¶ 13-14.)IWP alleged that Barnett prepared and distributed the infringing issues of the Publication within the scope of his employment by Toffler and that the infringing issues were distributed through a Toffler e-mail server.(IWP Compl. ¶¶ 15-16.)IWP also alleged that Barnett's toffler.com e-mail address appeared at the footer of the infringing issues of the Publication, and that recipients of those issues were instructed to contact Barnett via his toffler.com e-mail address.(IWP Compl. ¶ 16.)IWP sought injunctive relief and damages from Toffler.(IWP Compl. 5.)

C.The Publication

The Publication at issue in IWP's lawsuit was a twenty-page "compilation of newspaper journal articles, plus transcripts of hearings and maybe a television news show that was related to the defense industry, the intelligence industry and corporations."(Barnett Dep.at 25.)It was a free service, compiled and distributed by Barnett via e-mail every weekday morning.(Barnett Dep.at 24-26, 34.)Barnett started the Publication, then titled Booz News, in 1999, when he worked as a consultant for Booz Allen, and distributed it while working for Booz Allen through early 2003.(Barnett Dep.at 10, 14, 75-76, 79;Hartford Mot. forSumm. J., Ex. 6, E-mail from McLauthlin to Serritella, May 31, 2007("McLauthlin 5/31/07 E-mail").)Barnett left Booz Allen and began working for Toffler in February 2003, and he re-commenced distribution of the Publication shortly thereafter.(Barnett Dep.at 10, 24-25.)Distribution of the Publication ceased in May 2007.(Barnett Dep.at 22.)

When Barnett first joined Toffler, the Publication contained no reference to Toffler other than Barnett's Toffler email address in the footnote.(McLauthlin 5/31/07 E-mail.)At that time, the Publication was called Morning News.(McLauthlin 5/31/07 E-mail;Barnett Dep.at 34.)About eighteen months before Barnett stopped distributing the Publication, the name changed from Morning News to Morning Brew because someone thought the new name would be catchier.(Barnett Dep.at 34.)

Toffler has only been associated with the Publication since May 24, 2006, when Barnett added the byline "Compiled by Jeff Barnett, Toffler Associates."(McLauthlin 5/31/07 E-mail;Barnett Dep.at 35;Hartford Mot. for Summ. J., Ex. 10, McLauthlin E-mail to Serritella, June 22, 2007 ("McLauthlin 6/22/07 E-mail")at 1-2(quoting a June 22, 2007, e-mail from Serritella to Gregory).)Since the summer of 2006, the Publication also contained a "Toffler Associates" watermark on every page.(BarnettDep. 46;Toffler Cross-Mot. for Summ. J., Ex. 2, Jeffrey Barnett Dep ("Barnett Dep. II")at 41.)Beginning on November 7, 2006, Barnett added "Toffler Associates' Morning Brew" to the e-mail subject line when he sent out the Publication.(McLauthlin 5/31/07 E-mail.)On January 26, 2007, Barnett changed the title of the Publication from Morning Brew to Toffler Associates' Morning Brew.(McLauthlin 5/31/07 E-mail;Barnett Dep.at 34-35.But seeMcLauthlin 6/22/07 E-mailat 2(quoting a June 22, 2007, e-mail from Serritella to Gregory which states that this name change occurred in November 2006).)From that point forward, the full title Toffler Associates Morning Brew appeared on the banner at the top of the first page.(Barnett Dep.at 35.)This change was intended to promote brand recognition for the firm and to indicate that the Publication was not something that Barnett was doing on his own.(Barnett Dep.at 35;Johnson Dep.at 45.)Barnett made the title and banner changes after consulting with Toffler's managing partner, Dick Szfranski, and Toffler's attorney, Scott McLauthlin.(Barnett Dep.at 35;Johnson Dep.at 47.)These changes were intended to link the Toffler name with articles the news.(Johnson Dep.at 47-48.)

Beginning at some point prior to April 2007, the following text appeared in small print at the bottom of each page of the Publication:

Published daily, the Morning Brew is a free service presenting open source articles of interest to leaders in national security and related fields.All articles are subject to the copyright protections associated with the original sources.Please provide questions and comments to Jeff Barnett at jbarnett@toffler.com

(Barnett Dep.at 43-44;Toffler Cross-Mot. forSumm. J., Ex. 5, Morning Brew,April 13, 2007.)

Articles in the Publication were organized according to titles of books written by Alvin Toffler, co-founder of Toffler Associates.(Barnett Dep. II.at 80-81;Toffler Cross-Mot. forSumm. J., Ex. 3, Toffler Associates Web Site printout, "Our Founders.";Johnson Dep.at 44.)This method of organization was intended to promote the Toffler brand and to promote Toffler's business by indicating to readers of the Publication that Toffler has been "ahead of the game."(Johnson Dep.at 44-47.)

By May 2007, Barnett was sending the Publication to the e-mail addresses of 38 other Toffler employees and about 300 persons in the defense industry, the intelligence community, and corporate America.(Barnett Dep.at 26;Barnett Dep. IIat 31;McLauthlin 6/22/07 E-mailat 2(quoting a June 22, 2007, e-mail from Serritella to Gregory).)The e-mail list consisted current and former Toffler clients, including former clients "who could circle back into government jobs or into any jobs that could become clients."(Barnett Dep.at 52-53;Barnett Dep. IIat 69.)When Barnett joined Toffler in February 2003, he kept some recipients of the Booz News on the Publication's email list, but he removed some recipients from whom he was never going to get any business.(Barnett Dep.at 77-78;McLauthlin 6/22/07 E-mailat 2(quoting a June 22, 2007, e-mail from Serritella to Gregory).)Partners at Toffler would ask Barnett to add certain names to the Publication distribution list.(McLauthlin Dep.at 18-19.)In Barnett's words, someone could also get on the Publication distribution list in one of the following ways:

[E]ither myself or a colleague would do an office call on a client or potential client...