William A. Graham Co. v. Haughey
| Decision Date | 04 May 2006 |
| Docket Number | Civil Action No. 05-612. |
| Citation | 430 F.Supp.2d 458 |
| Parties | WILLIAM A. GRAHAM COMPANY, v. Thomas P. HAUGHEY, et al. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
David J. Wolfsohn, Chad E. Ziegler, Woodcock Washburn, LLP, Philadelphia, PA, for William A. Graham Company.
Thomas E. Zemaitis, Matthew R. Skolnik, Pepper, Hamilton & Scheetz, Philadelphia, PA, for Thomas P. Haughey and USI MidAtlantic, Inc.
Plaintiff William A. Graham Company ("Graham") alleges copyright infringement and breach of contract against defendants Thomas P. Haughey ("Haughey") and USI MidAtlantic, Inc. ("USI"). Before the court are two motions: (1) the motion of the defendants for summary judgment on both claims; and (2) the motion of the plaintiff for summary judgment on liability for copyright infringement. We may grant summary judgment only if there is no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The following facts are undisputed. Graham is an insurance brokerage firm that provides property and casualty insurance services to businesses. From January, 1985 through September, 1991, Haughey worked for Graham as a broker. At the time he was hired, Haughey signed an employment agreement (the "1985 Employment Agreement") that contained certain restrictive covenants. In 1989, Haughey signed a new employment agreement (the "1989 Employment Agreement"), which superseded the one signed in 1985. It contained restrictive covenants as well as a liquidated damages clause.
When soliciting a prospective client, Graham typically prepares a risk management study, called a survey and analysis, which evaluates the prospective client's insurance coverage deficiencies. If after receiving the individualized survey and analysis a potential client wishes to proceed further, a proposal is prepared. The proposal contains coverage recommendations for the needs of the client outlined in the individualized survey and analysis. It also provides price quotes.
In the 1980's, Graham developed a document called the Standard Paragraphs from which it extracted language to prepare survey and analyses and proposals (herein-after "proposals") for clients. At this time, Graham typically prepared one to two proposals each month for new clients. The proposals created from the Standard Paragraphs and delivered to clients did not contain any copyright notice. Moreover, there was no contractual limitation placed on the client's use of the documents.
In 1990, some of the language in the Standard Paragraphs was combined with new materials to create the Standard Survey and Analysis and the Standard Proposal (collectively the "Works"). Graham affixed copyright notices to the Works at this time. Graham also began to place copyright notices on individualized proposals prepared for and distributed to clients.
On September 11, 1991, Graham and Haughey entered into an agreement to terminate Haughey's employment (the "1991 Termination Agreement"). It provided that Haughey "reaffirms his continuing obligation, to abide by the terms, conditions and restrictions of the provisions of Paragraphs 3, 4 and 5 of the [1989 Employment Agreement]." These paragraphs prohibited Haughey from disclosing company information and retaining company documents after termination. That same day, Graham and Haughey executed an agreement (the "1991 Consulting Agreement") whereby Haughey promised to provide consulting services to Graham from October 11, 1991 until January 11, 1992. Again, in that agreement, Haughey reaffirmed his obligation to abide by the terms and conditions of paragraphs 3, 4, and 5 of the 1989 Employment Agreement.
On November 25, 1991, Graham, Haughey, and Haughey's new employer, Flanigan, O'Hara, Gentry & Associates ("FOG") entered into an agreement which "contains the entire understanding between the parties hereto." FOG purchased certain of Graham's accounts (the "1991 Purchase Agreement"), and Graham agreed to provide FOG with photocopies of current and prior year client proposals for those accounts. While the recitals of the 1991 Purchase Agreement noted that "Graham and Haughey are parties to a certain Employment Agreement dated as of January 1, 1989," neither the 1989 Employment Agreement nor any of its terms was incorporated by reference. Rather, the 1991 Purchase Agreement set forth restrictive covenants applicable to Haughey in words almost verbatim to those found in paragraphs 3, 4, and 5 of the 1989 Employment Agreement, except that it did not contain a liquidated damages provision.
On February 21, 1995, Graham filed two applications with the United States Copyright Office to register the copyrights in certain portions of the Works. While the entire Works were attached to the applications, Graham stated that it did not claim a copyright in that part of the material which it highlighted in green. The material highlighted in green was described by Graham as "created and published prior to March 1, 1989, without notice of copyright, and is therefore in the public domain." Graham only claimed a copyright in revisions of each Work which were made in the years 1990 through 1994 and which were published, it said, on December 13, 1994. Such revisions were highlighted in purple, pink, blue, yellow, and brown, each color representing the specific year in which the revision was made. In both applications Graham described the color-coded versions of the Works in which it was claiming copyright as "consist[ing] of editorial revisions and modifications to the original work of authorship (highlighted in green)."
On March 30, 1995, the copyright examiner informed Graham's counsel that registration of the Standard Proposal was being delayed because it was unclear in which versions Graham wished to register copyrights. Graham submitted a revised application on December 19, 1995, stating that it desired to register a copyright in the "new and revised text."
Subsequently, the United States Copyright Office issued two certificates of registration for those portions of the Works in which copyright was claimed, effective February 21, 1995.
On October 23, 2000, Graham filed two applications for supplementary registration of the Works with the United States Copyright Office. In these applications, Graham identified what it characterized as errors in the original 1995 registration applications. First, in section 3 of the original 1995 registration applications for each Work, Graham listed a publication date of December 13, 1994 for the "non-green" material in which it claimed a copyright. In its supplementary applications for each Work, Graham stated that the "non-green" material had never been published. It wrote, Graham also stated in its supplementary applications that line 2a of the original registration applications, titled "Nature of Authorship," was inadvertently left blank and should have read "[t]he nature of authorship claimed by The Graham Company in the above-identified work is in the entire text."
Graham also pointed to errors unique to the original registration application of each Work. Line 6a of the revised registration application for the Standard Proposal, dated December 21, 1995, asked Graham to identify "any preexisting work or works that this work is based on or incorporates." Graham, referring to the material highlighted in green, responded, "previously published material." Line 6b asked Graham to "[g]ive a brief, general statement of the material that has been added to this work and in which copyright is claimed." Graham responded, "new and revised text." In the supplementary registration application dated October 23, 2000, Graham wrote that the material highlighted in green it had originally identified as having been published had not in fact ever been published. It wrote that lines 6a and 6b should have been blank because
The original application for basic registration of the above-identified work erroneously identified it as a derivative work based on previously published material. The material the above-identified work is based upon has never been published or registered and did not fall into the public domain. Therefore, the above-identified work is not a derivative work and the statement of preexisting work was unnecessary.
Line 6a of the original registration application for the Standard Survey and Analysis, dated February 21, 1995, listed the "Standard Survey and Analysis (without revisions, highlighted in green)" as preexisting work. "All text and material highlighted in purple (1990 revisions), pink (1991 revisions), blue (1992 revisions), yellow (1993 revisions) and brown (1994 revisions)" were listed on line 6b as material that had been added to the preexisting material. It was only this added material for which copyright was claimed in 1995. Moreover, on line 6c Graham wrote: "[t]his work consists of editorial revisions and modifications to the original work of authorship (highlighted in green) which was created and published prior to March 1, 1998, without notice of copyright, and is therefore in the public domain." In the supplementary registration application dated October 23, 2000, Graham wrote that lines 6a, 6b, and 6c should have been blank because the material highlighted in green had never been published. It cited the same explanation it gave in the supplementary registration application for the Standard Proposal. The United States Copyright Office issued two supplementary certificates of registration for the Works, effective October 25, 2000, based upon Graham's...
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