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Eleventh Circuit: No DJ jurisdiction in copyright case when copyright unregistered
September 24, 2008
In a recent decision, the Eleventh Circuit vacated a district court's grant of summary judgment in a copyright infringement declaratory judgment action. The court determined that the district court was without subject matter jurisdiction to entertain the alleged infringer's declaratory judgment action. This was because the district court would have lacked jurisdiction to hear the "reverse" claim, namely the copyright owner's claim for copyright infringement, because the copyright holder had not applied for a copyright registration on the computer programs at issue. Because there would be no jurisdiction over the infringement claim if brought, there was likewise no jurisdiction over the declaratory judgment claim seeking a declaration of no infringement.More concerning Stuart Weitzman, LLC v. Microcomputer Res., Inc. after the jump.Weitzman is a designer, manufacturer, and seller of women's shoes and related fashion items. Microcomputer Resources (MCR) is a company that provides computer software, software programming, and related services. Weitzman hired MCR in the 1990s to provide computer support and to design and create computer software relating to order management and fulfillment. During this time period, MCR created a piece of custom software for Weitzman's use. Both parties agreed MCR owns the copyright in this software. Both parties also agreed that MCR never applied to register its copyright in the software.Upon deterioration of the parties' relationship, MCR demanded that Weitzman cease use or possession of MCR's source code in the custom software. While MCR agreed that Weitzman had the right to use the software, MCR asserted that Weitzman did not have right to modify, change, or reverse engineer the software. A few months later, Weitzman filed suit seeking a declaration that, "Weitzman is the rightful owner of a copy of custom computer software" and the company may therefore "use, maintain, and/or modify its custom computer software" without infringing MCR's copyrights. The district court eventually granted summary judgment to Weitzman. MCR appealed, arguing both that a genuine issue of fact existed that should have precluded summary judgment, and that the district court lacked subject matter jurisdiction to hear the case.The Eleventh Circuit reversed. The court noted the standard for determining subject matter jurisdiction for a declaratory judgment action is whether or not the cause of action anticipated by the declaratory judgment plaintiff arises under federal law. More particularly, the proper inquiry is, "whether, absent the availability of declaratory relief, the instant case could nonetheless have been brought in federal court."In its complaint, Weitzman asserted that the district court possessed subject matter jurisdiction because the action pertained to copyright and required an interpretation of 17 U.S.C. § 117(a). On appeal, Weitzman advanced two types of coercive actions that MCR could have brought that would have potentially supported federal subject matter jurisdiction.First, Weitzman argued that MCR could have brought a copyright infringement suit. The court acknowledged that a district court normally would have subject matter jurisdiction over a copyright infringement claim. However, the Copyright Act also makes clear that "no action for infringement of the copyright in any United States work shall be instituted until . . . Registration of the copyright claim has been made in accordance with this title." 17 U.S.C. § 411(a). While the circuits are split as to whether the copyright registration must be received or applied for for a district court to have jurisdiction, here MCR had not even applied for a copyright on the disputed software program. As a result, the court noted that the district court would have lacked subject matter jurisdiction if MCR had brought an infringement suit against Weitzman. Accordingly, because the Declaratory Judgment Act cannot, of itself, confer jurisdiction upon the federal courts, and because MCR could not have sustained an infringement action in federal court, the Eleventh Circuit held that such a hypothetical coercive action could not provide the district court with subject matter jurisdiction over Weitzman's declaratory suit.Weitzman further asserted that, in addition to a possible infringement claim, MCR might have brought state law causes of action that would have been completely preempted by the Copyright Act, thus supporting subject matter jurisdiction. In this regard, the court noted that pursuant to the well-pleaded complaint rule, any state law claim brought by MCR would not have supported federal subject matter jurisdiction unless the claim was completely preempted. Here, however, the inherent problem with Weitzman's preemption argument was that it relied upon the existence of a valid preemptive federal claim. The preempted state law claims only provide jurisdiction to the extent the federal claim that preempts them provide jurisdiction. As already noted by the court, however, the district court would have been required to dismiss MCR's federal copyright infringement claim for lack of jurisdiction since MCR had never applied for registration of its copyright. As a result, the preempted state law claims likewise could not provide jurisdiction, and the court therefore vacated the district court's summary judgment and remanded with instructions to dismiss the case.To read the full decision in Stuart Weitzman, LLC v. Microcomputer Res., Inc., click here.
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