UIRC-GSA Holdings, LLC v. Rainier GSA Portfolio I, LLC

Filing 414

MEMORANDUM Opinion and Order signed by the Honorable Robert W. Gettleman on 9/29/2021: For the reasons set forth in the attached Opinion and Order, defendants' motions for summary judgment 365 368 are granted, and plaintiff's motion for summary judgment is denied 382 . Civil case terminated. Mailed notice (cn).

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UIRC-GSA HOLDINGS, INC.,
v.

Plaintiff,

WILLIAM BLAIR & COMPANY, LLC.,
and MICHAEL KALT,
Defendants.

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Case No. 15 CV 9518
Judge Robert W. Gettleman

MEMORANDUM OPINION AND ORDER
Plaintiff UIRC-GSA Holdings, Inc. sued William Blair & Company (“Blair”) and
Michael Kalt (collectively, “defendants”), alleging violations of the Copyright Act, 17 U.S.C.
§ 101 et seq. Both defendants have moved for summary judgment (Doc. 365; Doc. 368), and
plaintiff has moved for partial summary judgment (Doc. 382). For the reasons stated below,
defendants’ motions are granted, and plaintiff’s motion is denied.
BACKGROUND
Plaintiff acquires and operates properties leased to the U.S. General Services
Administration (“GSA”) to be financed by the sale of bonds through its subsidiaries. Defendant
Blair was plaintiff’s investment banker and placement agent for certain bond offerings, the
proceeds of which were used to acquire a portfolio of real estate properties. Defendant Kalt was
plaintiff’s relationship manager at Blair.
Between 2012 and the close of discovery, plaintiff executed a total of six bond
offerings—"UIRC I” through “UIRC VI.” To market a bond offering successfully, plaintiff
created and used a Private Placement Memorandum (“PPM”) and an Indenture of Trust.

Plaintiff registered copyrights in the PPM for the UIRC I transaction (“PPM I”), as well as the
preliminary and final versions of the PPM and the Indenture of Trust for the UIRC IV transaction
(the “PPM IV,” the “FPPM IV,” and the “Indenture IV,” respectively). To be clear, plaintiff
could not copyright the entire document, and the Copyright Office required plaintiff to disclaim
“standard legal language.” At issue, then, are several paragraphs within these documents. 1
Defendants note that plaintiff’s documents appear to be revised versions of offering
documents from an earlier deal involving third parties unrelated to plaintiff, namely the Idaho
Housing and Finance Association. Plaintiff concedes that its attorneys provided the Idaho deal
documents as a template, but claims that its top executives “spent about six months painstakingly
writing and re-writing the critical sections of the [PPM],” and “did almost all of the work
themselves.” Defendant contests this assertion, noting that plaintiff’s documents have
substantial overlap with the Idaho deal documents, such that they are verbatim or near verbatim.
It is undisputed that plaintiff did not receive permission to use the Idaho deal documents. It is
also undisputed that Blair and Kalt played no meaningful role in the drafting process for
plaintiff’s documents.
At some point in late 2014, a competitor of plaintiffs, Rainier, completed a bond offering
very similar to plaintiff’s. Blair acted as the investment banker and placement agent for Rainier,
and Kalt was Rainier’s relationship manager. Plaintiff asserts that Blair approached Rainier and
helped Rainier “mimic” plaintiff’s successful bond offerings, using plaintiff’s copyrighted

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Plaintiff highlighted the portions of its documents that it asserts to be the copyrightable material at issue here. A
review of the highlighted portions shows that plaintiff claims a copyright in the general description of the type of GSA
revenue bonds, the application of proceeds generated by the GSA revenue bonds, many of the particular terms
governing the GSA revenue bonds, and many of the definitions contained in the bonds.

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documents. 2 Rainier’s confidential placement memorandum and indenture of trust appears to
have striking similarities to PPM I. Plaintiff further claims that this overlap is intentional, and
that Kalt actively encouraged and personally directed Blair’s employees and Blair’s outside
counsel to use the infringing materials to solicit other clients, including Rainier. 3
Defendants dispute plaintiff’s characterization, arguing that only 5% of the Rainer
confidential placement memorandum is alleged to be copied from plaintiff’s documents, and
even less for Rainier’s indenture of trust. Defendants also note that they did not draft Rainier’s
documents, rather the law firm Mayer Brown did. Relevant for the vicarious copyright
infringement and contributory copyright infringement claims, Kalt disputes his authority to
control or supervise other employees and claims he had no financial interest in the alleged
infringement.
DISCUSSION
Summary judgement is appropriate when “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgement as a matter of law.” Fed.
R. Civ. P. 56(a). “A genuine issue of material fact arises only if sufficient evidence favoring the
nonmoving party exists to permit a jury to return a verdict for that party.” Brummett v. Sinclair
Broadcast Group, Inc., 414 F.3d 686, 692 (7th Cir. 2005). When considering a motion for
summary judgment, the court must construe the evidence and make all reasonable inferences in
favor of the non-moving party. Hutchinson v. Fitzgerald Equip. Co., Inc., 910 F.3d 1016, 1021
(7th Cir. 2018).

Defendants note that investment bankers and investment banking firms are not bound by conflict rules similar to
attorneys.

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Plaintiff originally sued Rainier, but after settling (Doc. 61), plaintiff substituted Blair and Kalt as defendants.

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Whether a particular work is copyrightable is an issue of law for the court. Schrock v.
Learning Curve Int’l, Inc., 586 F.3d 513, 517 (7th Cir. 2009). In a copyright infringement case,
summary judgment should be granted “when there is no genuine issue of material fact regarding
public domain and the lack of originality required for a work to be entitled to copyright
protection.” Marobie-Fl., Inc. v. National Ass’n of Fire Equipment Distributors, 2000 WL
1053957, at *3 (N.D. Ill. July 31, 2000).
Blair moves for summary judgment, arguing that plaintiff’s documents are not entitled to
copyright protection because they are unauthorized derivative works and lack originality. Blair
also makes arguments regarding damages. Kalt adopts Blair’s arguments, and moves for
summary judgment on the remaining contributory infringement and vicarious infringement
claims against him. Finally, plaintiff moves for partial summary judgment on the issue of
Blair’s liability found in Counts I, III, and VI of the Fifth Amended Complaint.
A claim for copyright infringement has two elements: “(1) ownership of a valid
copyright[;] and (2) copying of constituent elements of the work that are original.” Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991); Schrock, 586 F.3d at 517.
�ere is no dispute that only the first element is at issue here.
As a constitutional and statutory matter, “[t]he sine qua non of copyright is originality.”
Feist, 499 U.S. at 345; Schrock, 586 F.3d at 518-19; 17 U.S.C. § 102. Originality in this context
“means only that the work was independently created by the author…and that it possesses at
least some minimal degree of creativity. Schrock, 586 F.3d at 519. �e Supreme Court has
emphasized that “the requisite level of creativity is extremely low; even a slight amount will
suffice.” Feist, 499 U.S. at 345. �e Court also explained that “[o]riginality does not signify
novelty; a work may be original even though it closely resembles other works.” Id. What is
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required is “independent creation plus a modicum of creativity.” Id. at 346. However, the
Copyright Act does not protect facts, fragmented phrases, expressions dictated solely by
function, or subjects that can be expressed only in certain ways. See Harper & Row Publishers,
Inc. v. Nation Enterprises, 471 U.S. 539, 547 (1985) (facts); Alberto-Culver Co. v. Andrea
Dumon, Inc., 466 F.2d 705, 710–11 (7th Cir. 1972) (fragmented phrases); Incredible Techs., Inc.
v. Virtual Techs., Inc., 400 F.3d 1007, 1012 (7th Cir. 2005) (expressions dictated solely by
function); Seng-Tiong Ho v. Taflove, 648 F.3d 489, 499 (7th Cir. 2011) (subjects that can be
expressed only in certain ways). 4
Defendants argue that the copyrighted portions of plaintiff’s documents lack the requisite
modicum of creativity and originality, are unauthorized derivative works based on the Idaho deal
documents, and are largely unprotectable facts, ideas, or fragmented or functional phrases, such
as definitions of terms. Plaintiff responds that their executives painstakingly rewrote their
documents such that they are unique and original. Citing Cohen v. United States, 105 Fed. Cl.
733, 741 (2012), plaintiff further argues that the works cannot be derivative unless the underlying
work is also subject to copyright protection, and there is no indication that the Idaho documents
were copyrighted.
�e court has carefully reviewed all of the exhibits and demonstratives provided by the
parties, including the redline comparisons of the Idaho deal documents, plaintiff’s copyrighted
documents, and Rainier’s allegedly infringing documents. After careful review, the court

To benefit from copyright protections, “the author must register the design with the United States Copyright office,”
Design Ideas, Ltd. v. Yankee Candle Co., Inc., 889 F.Supp.2d 1119, 1126 (C.D. Ill. 2012), and registration is a
prerequisite to a suit to enforce a copyright. �at prerequisite has been satisfied here, and plaintiff registered its
trademarks before filing this suit. However, even if the Copyright Office granted registration, a copyright
infringement lawsuit permits the court to determine whether the work is entitled to copyright protection. As noted
previously, this determination is an issue of law for the court and is appropriate for resolution on summary judgment.
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concludes that plaintiff’s documents lack originality and are not sufficiently creative to warrant
copyright protection. A few comparisons suffice (tabulation added by the court):
Idaho Indenture of Trust

Plaintiff’s Copyrighted Indenture of Trust

“Additional Payments” means the payments so
designated and required to be made by the Borrower
pursuant to Section 4.2 of the Loan Agreement. […]

“Additional Payments” means the payments so
designated and required to be made by each
Borrower pursuant to the applicable provisions of its
Loan Agreement. […]

“Loan Agreement” means that certain Loan
Agreement by and between the Issuer and Borrower,
dated as of July 1, 2011, as originally executed and as
it may from time to time be supplemented, modified or
amended in accordance with the terms thereof and of
this Indenture.

“Loan Agreement” means that certain Loan
Agreement by and between the Issuer and each
Borrower, dated as of the Acquisition Date, as
originally executed and as it may from time to time
be supplemented, modified or amended in
accordance with the terms thereof and of this
Indenture, and the “Loan Agreements” shall mean
the sum of all Loan Agreements or such lesser
amount as applicable in context.

Idaho PPM

Plaintiff’s Copyrighted FPPM IV

No Right to Accelerate Rental Consideration

No Right to Accelerate Rental Consideration

Although the Indenture permits the Trustee to
accelerate the maturity of the Series 2011 Bonds
following an Event of Default thereunder, the Lease
does not provide for acceleration of the rentals in the
event of a payment default by the Battelle. However,
in the event of such a default, the Trustee would be
entitled to bring an action to enforce the payment of
rentals under the Lease. […]

Although the Indenture permits the Trustee to
accelerate the maturity of the Bonds following an
Even of Default thereunder, the Leases do not
provide for acceleration of the rentals in the event of
a payment default by the applicable lessee. However,
in the event of such a default, the Trustee would be
entitled to bring an action to enforce the payment of
rentals under the Leases. […]

Plaintiff cannot “show the requisite incremental originality, slight as it need be.” Pickett
v. Prince, 207 F.3d 402, 405 (7th Cir. 2000). Plaintiff’s copyrighted paragraphs are incredibly
similar to those in the Idaho deal documents, such that they cannot be original. Indeed, whole
sentences and paragraphs are verbatim or near verbatim. And any changes plaintiff made to the
Idaho deal documents are “merely trivial variation,” Wilson v. Electro Marine Sysms., 1986 WL
12604, at *8 (N.D. Ill. Aug. 18, 1997), such as tinkering with prepositions and punctuation,
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changing singular nouns to plural ones, and reworking short phrases. None of these changes are
original enough to warrant protection.
For the more substantial phrases and paragraphs, even if they include a modicum of
originality, they are not entitled to copyright protection because they consist of unprotectable
facts, functional phrases akin to instructions, fragmented phrases, or subjects that can be
expressed only in certain ways, such as definitions of terms. 5
Finally, the parties dispute whether plaintiff’s documents are unauthorized derivatives of
the Idaho deal documents. Defendants argue that plaintiff’s copyrights are invalid because
plaintiff’s documents are wholly based off the Idaho deal documents, and because the copying
was done without permission (a fact plaintiff does not dispute). See Schrock, 586 F.3d at 52223 (noting that § 106(2) “means the author of a derivative work must have permission to make
the work from the owner of the copyright in the underlying work”); see also Pickett v. Prince,
207 F.3d 402, 405-07 (7th Cir. 2000). Citing one case from the federal Court of Claims (Cohen,
105 Fed. Cl. 733 (2012)), plaintiff argues that this doctrine does not apply because defendants
have not shown that the Idaho deal documents were copyrighted. Defendants respond with a
single citation of their own, Pickett, 207 F.3d at 405, arguing that the underlying work need not
have a registered copyright for the work in question to be considered a derivative. Ultimately,
the court need not resolve that question, because plaintiff’s documents lack the requisite
originality for copyright protection, and otherwise consist of unprotectable material.

Indeed, it is clear to the court that standardization across bond offerings is required and is the industry norm, which
is why investment bankers and attorneys use template documents in the first place.

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Because the works are not subject to copyright protection, there can be no infringement.
Consequently, plaintiff’s claims against Kalt for contributory infringement and vicarious
infringement fail, and the court need not reach defendants’ arguments regarding damages.
CONCLUSION
For these reasons, defendants’ motions for summary judgment (Doc; 365; Doc. 368) are
granted, and plaintiff’s motion for summary judgment is denied (Doc. 382). Civil case
terminated.
ENTER:

__________________________________________
Robert W. Gettleman
United States District Judge
DATE: September 29, 2021

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