Sunday, July 07, 2013

Copyright Law - Tenth Circuit: Is It Infringement To Repair Hardware That Includes Copyrighted Software?

Breach of Contract, Contractual Damages, Conversion, Post-Contract Damages From Conversion, Preemption of Utah Theft Statute by the Copyright Act, Jury Instructions, Verdict Forms, Expert Testimony, Prejudgment Interest

BC Technical Inc. v. Ensil International Corp., 464 Fed. Appx. 689 (10th Cir. February 7, 2012)(unpublished).  NY company agrees to repair circuit boards.  Utah company sends circuit boards to be repaired.  NY company does not repair and keeps them for three years following the Utah company’s cancellation of the contract and demand for return.  After litigation commenced NY company claims that the repair required illegal copying of copyright-protected software and thus the repair contract was unenforceable.   NY company moved for judgment as a matter of law before and after trial.   Jury found NY company liable for breach of contract and conversion.  Damages award not limited by economic loss rule governing contracts because NY company converted circuit boards for three years after contract cancelled, supporting additional damages.  Utah’s theft statute preempted by the Copyright Act.   Even if repairing circuit boards required engaging in copyright infringement, contract not proven to be illegal and thus was enforceable.  Trial court’s refusal to include jury instruction on finding a contract requiring copyright infringement to be illegal affirmed.  Legality of contract question for court, not the jury.  Expert’s testimony regarding damages flowing from failure to repair circuit boards was sufficiently reliable to be admissible under Rule 702 of the Federal Rule of Evidence.  Weaknesses in testimony due to omissions in applying methodology were properly attacked on cross-examination.  Since jury was free to use its “best judgment” after listening to conflicting testimony on damages and the amount of damages was not sufficiently “measurable or calculable” under Utah law, prejudgment interest was not appropriate.
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