Copyright Law - Second Circuit: Is It Plausible To Work For the New York Yankees?

Copyright Infringement, Assignment of Copyright, Federal Question Jurisdiction, Plausibility of Copyright Ownership Claim, Oral Assignment, Standing to Pursue Copyright Infringement Claim

Buday v. New York Yankees Partnership, 2012 WL 2383308 (2d Circuit June 26, 2012)(unpublished).   Daughter of man who designed NY Yankees logo in 1930’s and revised it in 1947 claimed copyright infringement and non-payment.  The court held that she failed to establish federal question jurisdiction and thus the court lacked subject matter jurisdiction.  Even if jurisdiction existed, the complaint failed to state a claim because, according to complaint, Yankees logo was published with the consent of the author, not “unpublished” as conclusory allegation asserted.   Because 1976 Copyright Act preempted common law in unpublished works, the only possible copyright could be under federal law.  Since the complaint’s facts alleged what the court found to be the only plausible interpretation was a work for hire relationship and proffered no evidence to contradict the work-for-hire relationship, the daughter had no standing.

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Copyright Law - Fifth Circuit:

Software, Preemption, Complete Preemption Doctrine, Removal from State Court,  Remand from Federal to State Court, Misappropriation of Trade Secrets, Conversion, Unfair Competition, Tortious Interference

Globeranger Corp. v. Software A.G., 691 F.3d 702 (Fifth Circuit August 17, 2012).  Plaintiff developer of passive radio frequency identification (RFID) system including software for a method of tracking objects like the EZ-Pass system for cars at toll booths sued over losing a Navy contract due to underhanded practices including improper relationship with the Navy and stealing Plaintiffs technology.   Defendant removed the action to federal court, alleging that the claims set forth in the complaint were preempted by the Copyright Act.  The district court denied a motion to remand to state court and dismissed the claims.   On appeal, the Fifth Circuit reversed the dismissal and remanded to the federal district court, not the state court.  This decision is important because for the first time the Fifth Circuit joins the Second, Fourth and Sixth Circuits’ approach and  adopts the “complete preemption” doctrine.  Under the complete preemption doctrine, state law actions preempted by Section 301(a) of the Copyright Act are deemed to “arise under” federal law.   The practical significance is that if a plaintiff files a complaint in state court alleging only state law claims, if the defendant can show a federal court that any of the state law claims have been preempted, the defendant may properly remove the action from state to federal court.   Ordinarily, a plaintiff is entitled to be master of the complaint and may choose the state forum by choosing not to plead federal claims.  This is known as the “well-pleaded complaint rule” – unless federal claims appear on the complaint’s face, the action stays in state court.   In Globeranger, the Fifth Circuit found that the state law conversion claim was probably just a copyright infringement claim and thus probably preempted and permitted the action to stay in federal court.  Although the complaint referenced “tangible property” it did not do so specifically, so at this jurisdictional stage the Fifth Circuit left the question for a federal factfinder, without prejudice to a later finding that no such tangible property exists, thus depriving the federal court of subject matter jurisdiction.   However the Fifth Circuit also found that other claims based on “procedures, processes, systems and methods of operation” are excluded from the protection of the Copyright Act and thus claims based on those factual allegations, if proven true, would not be preempted.  An important case for business processes and applications involving software, important to read for those pleading such claims and trying to navigate the removal/remand process.

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