Axxiom Manufacturing, Inc. v. McCoy Investments, Inc. et al
Filing
102
MEMORANDUM AND OPINION entered DENYING 62 MOTION for Partial Summary Judgment, GRANTING IN PART 95 MOTION to Designate Responsible Third Party, GRANTING 94 MOTION for Partial Summary Judgment Pursuant to Court's Docket Entry No. 92, DENYING 49 MOTION for Partial Summary Judgment, DENYING 67 MOTION to Strike 61 Reply in Support of Motion and Objections, GRANTING 76 MOTION to Withdraw 68 MOTION for Partial Summary Judgment.(Signed by Judge Lee H Rosenthal) Parties notified.(leddins, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
AXXIOM MANUFACTURING, INC.,
Plaintiff,
v.
MCCOY INVESTMENTS, INC. d/b/a
FORECAST SALES,
Defendant.
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CIVIL ACTION NO. H-09-3735
MEMORANDUM AND OPINION
Axxiom Manufacturing, Inc. has sued McCoy Investments, Inc. d/b/a Forecast Sales
(“Forecast”), alleging copyright infringement, in violation of 18 U.S.C. § 501; unfair competition,
in violation of the Lanham Act, 15 U.S.C. § 1125; and unfair business practices under Texas law.1
(Docket Entry No. 27). The parties have cross-moved for partial summary judgment on the
copyright-infringement claims, (Docket Entry Nos. 49, 94), and Forecast has moved for partial
summary judgment on the Lanham Act and state-law claims, (Docket Entry No. 62).2 Forecast also
has moved to strike certain evidence, (Docket Entry No. 67), for leave to designate responsible third
parties, (Docket Entry No. 95), and to exclude the expert testimony of certain Axxiom witnesses,
(Docket Entry Nos. 98–100).
1
Axxiom also sued Ronald S. Rogeou, Jr., a former Axxiom employee. Axxiom has since settled its claims against
him. (Docket Entry No. 91).
2
Forecast also moved for partial summary judgment on a trade-dress claim that, as Axxiom points out, is not asserted.
(Docket Entry No. 68). Forecast has since moved to withdraw that motion. (Docket Entry No. 76). The motion is
granted. Forecast’s motion for partial summary judgment on this nonexisting claim, (Docket Entry No. 68), is terminated
as moot.
Based on the motions and numerous related filings, the record, and the applicable law, this
court orders as follows:
•
Forecast’s motion for partial summary judgment on the copyrightinfringement claims, (Docket Entry No. 94), is granted. Axxiom’s crossmotion, (Docket Entry No. 49), is denied.
•
Forecast’s motion for partial summary judgment on the Lanham Act and
state-law claims, (Docket Entry No. 62), is denied.
•
Forecast’s motion to strike certain evidence, (Docket Entry No. 67), is
denied.
•
Forecast’s motion for leave to designate responsible third parties, (Docket
Entry No. 95), is granted in part.
•
The court reserves ruling on Forecast’s motions to exclude expert-witness
testimony, (Docket Entry Nos. 98–100), until the discovery hearing to be
held on February 1, 2012.
The reasons for these rulings are explained below.
I.
Background
A.
Axxiom
Axxiom designs, manufactures, and markets abrasive-blasting products under the Schmidt
brand name. These products include the Schmidt Thompson Valve, the Schmidt Micro Valve, and
the Schmidt Combo Valve. (Docket Entry No. 49, ¶ 1.2). The Schmidt brand originated with
Schmidt Manufacturing, Inc., a predecessor company that also designed, manufactured, and
marketed abrasive-blasting products, including the Thompson Valve and the Micro Valve. In 1997,
U.S. Filter, Inc. acquired Schmidt. Six years later, in 2003, U.S. Filter sold Schmidt’s intellectual
property to International Surface Preparation Group. That same year, Axxiom was formed. Axxiom
purchased certain Schmidt assets and licensed Schmidt’s intellectual property from International
2
Surface. In 2006, Axxiom purchased Schmidt’s intellectual property. (Docket Entry No. 61, Ex.
L, ¶ 2).3
In 1987, Schmidt published an Operating and Maintenance Manual for its 1.5, 3.5, 6.5, 10
& 20 Cu. Ft. Portable Pressure Blasters. (Docket Entry No. 94, Ex. A). This manual included
exploded-parts hand drawings of the components comprising the Thompson Valve, the Micro Valve,
and the Combo Valve. Each drawing had component-part descriptions and numbers. (Id., at 16–18).
According to Steven Ambriz, Axxiom’s engineering supervisor, (Docket Entry No. 49, Ex. B, ¶ 2),
earlier versions of this 1987 manual dated back to approximately 1980, (Docket Entry No. 94, Ex.
B, at 27–28). Only the 1987 manual, however, is in the record. For this manual, Axxiom has
conceded that Schmidt did not attach the required copyright notice under the then-applicable 1976
Copyright Act. (Docket Entry No. 96, at 4); see generally 2 MELVILLE B. NIMMER & DAVID
NIMMER, NIMMER ON COPYRIGHT §§ 7.02[A]–[B] (2011).
Ten years later, in 1997, U.S. Filter published an Owner’s Manual for its 1.5, 3.5, 6.5, 8, 10
& 20 Cu. Ft Abrasive Blasters. (Docket Entry No. 56, Ex. A). Although this manual differs from
3
Forecast has moved to strike the underlying declaration from which these facts are drawn. (Docket Entry No. 67).
According to Forecast, the declarant, Phuong Taylor Nguyen, lacks personal knowledge of this chain of events leading
from Schmidt to Axxiom. (Id., ¶ 7). The objection is unpersuasive. Nguyen states that he currently serves as Axxiom’s
Vice President and General Manager. He began working for Schmidt in 1991, and then worked for “the intervening
successor companies,” and finally worked for Axxiom. (Docket Entry No. 61, Ex. L, ¶ 1). Nguyen has personal
knowledge of the history of the companies with which he has been associated for over two decades, the current one of
which he serves as an executive officer. The declaration does not contain legal conclusions and, to the extent it does,
they are disregarded.
In this same filing, Forecast also has moved to strike pages from what is identified as a 2004 Forecast manual on
authentication grounds. (Docket Entry No. 67, ¶ 9). Axxiom responds that Forecast’s president identified the pages as
from Forecast’s 2004 manual. (Docket Entry No. 77, at 3–4). This deposition testimony is in the summary-judgment
record. (Docket Entry No. 83, Ex. 2, at 93–97). Forecast has moved to strike Axxiom’s response as untimely. (Docket
Entry No. 78). The court will construe Axxiom’s response as a motion for leave to file an untimely response, and that
motion is granted. Each party has made numerous filings outside the motion, response, and reply, and the court will
consider each filing. Forecast’s motion to strike, (Docket Entry No. 67), is denied.
3
its 1987 predecessor in some respects—there are numerous textual differences, for example4—the
exploded-parts drawings and accompanying legends are extremely similar. This is true for the
Thompson Valve, Micro Valve, and Combo Valve. The 1997 manual’s component-part descriptions
were, according to Ambriz, “pretty much the same” as the older manuals’ descriptions. (Docket
Entry No. 94, Ex. B, at 30). The valve drawings, on the other hand, were somewhat different.
Unlike the 1987 manual’s drawings, which were created by hand, the 1997 manual’s drawings were
created by computer. (Id., at 31). Ambriz explained that U.S. Filter used the hand drawings in
creating the computer drawings. (Id., at 40–42; see also id., at 35–38 (discussing three methods of
using the hand drawings to create the computer drawings, but admitting he was unsure which
method was used)). The 1997 exploded-parts computer drawing of the Thompson Valve, (Docket
Entry No. 56, Ex. A, at 20), looks very similar to the 1987 hand drawing, (Docket Entry No. 94, Ex.
A, at 17). The same is true for the Micro Valve, (compare Docket Entry No. 56, Ex. A, at 14; with
Docket Entry No. 94, Ex. A, at 16), and the Combo Valve (compare Docket Entry No. 56, Ex. A,
at 15; with Docket Entry No. 94, Ex. A, at 18).
Axxiom, claiming a written transfer agreement from U.S. Filter, registered the copyright on
the 1997 manual effective July 7, 2010. The 1997 manual’s listed date of first publication was
December 31, 1997. (Docket Entry No. 61, Ex. I).
After Axxiom took over the Schmidt product line, it published at least two additional
manuals after the 1997 manual. The first, published in 2004, also was an Owner’s Manual for 1.5,
3.5, 6.5, 8, 10 & 20 Cu. Ft. Abrasive Blasters. (Docket Entry No. 56, Ex. B). The 1997 and 2004
4
(Compare Docket Entry No. 56, Ex. A, at ii, 1–2; with Docket Entry No. 94, Ex. A, at 2–4).
4
manuals are similar. The covers reflect the different companies5; one of the warnings is reworded6;
and the 2004 manual contains a drawing for a new valve, the Thompson Valve II, that the 1997
manual lacks.7 But the pages on the Micro Valve, Combo Valve, and Thompson Valve are
extremely similar. The drawings appear to be identical, although there are slight variations in the
descriptions. (Compare Docket Entry No. 56, Ex. A, at 14–15, 20; with Docket Entry No. 56, Ex.
B, at 14–15, 20). Axxiom claims to be the author of the manual text and artwork. It registered the
copyright on the 2004 manual effective July 7, 2010. The 2004 manual’s listed date of first
publication was December 31, 2004. (Docket Entry No. 61, Ex. K).
Axxiom published another manual in 2008. (Docket Entry No. 49, Ex. E). This manual
differs significantly from its predecessors. It is 86 pages long; the 2004 manual, by contrast, is 26
pages. The 2008 manual contains substantially more information than its predecessors, including
a step-by-step assembly guide. The drawings and descriptions of the Micro Valve, Combo Valve,
and Thompson Valve are little changed from the 1997 and 2004 manuals. (Id., at 66, 68–69). The
2008 manual’s exploded-parts drawing of the Micro Valve, and accompanying text, appear to be
identical to the 2004 manual’s drawing. (Compare id., at 66; with Docket Entry No. 56, Ex. B, at
14). The same is true for the 2008 manual’s and 2004 manual’s exploded-parts drawings for the
Combo Valve, although the 2008 manual contains two additional pictures enlarging items 4 and 10.
(Compare Docket Entry No. 49, Ex. E, at 68; with Docket Entry No. 56, Ex. B, at 15). And the same
is true for the 2008 manual’s and the 2004 manual’s Thompson Valve, although the 2008 manual
5
(Compare Docket Entry No. 56, Ex. A; with Docket Entry No. 56, Ex. B).
6
(Compare Docket Entry No. 56, Ex. A, at ii (second warning); with Docket Entry No. 56, Ex. B, at ii (first warning)).
7
(Docket Entry No. 56, Ex. B, at 21).
5
rotates the assembled valve slightly in the drawing and points out the location of the valve’s “Air
Signal Port.” (Compare Docket Entry No. 49, Ex. E, at 69; with Docket Entry No. 56, Ex. B, at 20).
Ambriz confirmed that the exploded-parts drawings of the Thompson Valve, Micro Valve,
and Combo Valve in the 2008 and 2004 manuals are identical to the ones in the 1997 manual.
(Docket Entry No. 94, Ex. B, at 53). Forecast’s counsel asked Ambriz which pages in older Schmidt
manuals Axxiom “incorporated” into its 1997 manual.8 Ambriz responded: “The general design of
the cover and the—the warning notes and the safe procedures.” (Docket Entry No. 94, Ex. B, at 28).
Forecast’s counsel then attempted to go page-by-page through the 1997 manual and ask whether that
page was incorporated from the 1980 manual. (Id., at 28–29). Ambriz responded, “Well, just to
keep it short, I would say that all these pages . . . . because you—you’re carrying on and developing
year after year.” (Id., at 29). In a postdeposition declaration submitted after Forecast’s most recent
motion for summary judgment, however, Ambriz denied that the exploded-parts drawings in the
1997, 2004, and 2008 manual were “based on the Schmidt Manufacturing Inc. 1987 manual or any
other manual[.]” (Docket Entry No. 96, Ex. 1, ¶ 6).
B.
Forecast
Forecast has been in the abrasive-blasting business for over 35 years.
It designs,
manufactures, and markets abrasive-blasting products under the name “Pirate Brand.” Forecast
admits that “[t]he origin of the name [] comes from the fact that we got our start by manufacturing
aftermarket (commonly referred to as ‘pirated’) replacement parts as an alternative to other
manufacturers[’] OEM parts.” (Docket Entry No. 83, Ex. 1, at 1). “OEM” is an acronym for
8
Although U.S. Filter created the 1997 manual—and Axxiom thereafter assumed the rights to it—for ease, the court
refers to this manual simply as Axxiom’s 1997 manual.
6
“[o]riginal equipment manufacturer.” (Docket Entry No. 83, Ex. 3, at 34). In this case, OEM refers
to Schmidt brand products manufactured by Axxiom. (Id., at 35).
In May 2009, Forecast published a User’s Manual for its Pirate Brand 3.5 / 6.5 – SPH / SPR
Series Blasters. (Docket Entry No. 29, Ex. 2, at 1). The Pirate Brand valves correspond to the
Axxiom Schmidt valves. The Pirate Brand Combination Valve9 corresponds to the Schmidt Combo
Valve.10 (Docket Entry No. 83, Ex. 2, at 35). The Pirate Brand APV (Automatic Plunger Valve)11
corresponds to the Schmidt Thompson Valve.12 (Id., at 33). Forecast originally called this valve the
Thomas Valve but then changed the name to APV because the first name was “[p]otentially
misleading[.]” (Id., at 33, 51). Finally, the Pirate Brand MPV (Manual Plunger Valve)13
corresponds to the Schmidt Micro Valve.14 (Id., at 35). Forecast originally called this valve the
Mikro Valve but then changed the name to MPV out of concern that the first name might be
misleading. (Id., at 35, 50).
The Forecast manual pages for these three valves are similar to the corresponding Axxiom
manual pages. The Pirate Brand part numbers are identical to the Schmidt part numbers. The
exploded-parts drawings and descriptions are extremely similar. Sally Andis, Forecast’s General
Manager, testified in her deposition that the artist responsible for creating the Pirate Brand drawings
9
(Docket Entry No. 29, Ex. 2, at 37).
10
(E.g., Docket Entry No. 56, Ex. B, at 15).
11
(Docket Entry No. 29, Ex. 2, at 39).
12
(E.g., Docket Entry No. 56, Ex. B, at 20).
13
(Docket Entry No. 29, Ex. 2, at 40).
14
(E.g., Docket Entry No. 56, Ex. B, at 14).
7
looked at the Axxiom manuals. (Docket Entry No. 101, Ex. C, at 41). Andis emphasized, however,
that the artist drew the Pirate Brand drawings by hand. (Id., at 41–42).
There are some differences between the pages containing the Axxiom drawings and the
Pirate Brand drawings. The Pirate Brand drawings are not at an angle and the component parts are
shaded differently. While the Axxiom manuals contain two-dimensional computer drawings of the
assembled valves, the Forecast manual contains three-dimensional, realistic renderings of the
assembled valves. (Compare Docket Entry No. 29, Ex. 2, at 37, 39–40; with, e.g., Docket Entry No.
56, Ex. B, at 14–15, 20).
Discovery revealed additional exploded-parts drawings of the Pirate Brand valves, then
known under the general Forecast name. These drawings of the Mikro Valve, Thomas Valve, and
Combination Valve are dated July 6, 2004. (Docket Entry No. 61, Exs. K-1, K-2, K-3). Brian
McCoy, Forecast’s president, confirmed in his deposition that these drawings came from a Forecast
“cut sheet.” McCoy explained that a cut sheet was a flier that distributors could print from
Forecast’s website and modify for sales purposes. A plan to publish these cut sheets online “never
came to fruition.” (Docket Entry No. 83, Ex. 2, at 94). The exploded-parts drawings of the Forecast
valves are seemingly identical to their counterpart drawings in the 2004 Axxiom manual. (Compare
Docket Entry No. 61, Exs. K-1, K-2, K-3; with Docket Entry No. 56, Ex. B, at 14–15, 20). McCoy
admitted that it appeared as if Forecast’s artist had physically cut the drawings out of the Axxiom
manual and pasted them into the Forecast cut sheets. He did not know whether such cutting and
pasting had actually occurred. (Docket Entry No. 83, Ex. 2, at 95, 97).
One other Pirate Brand valve is at issue: the Pirate Brand APVII (Automatic Plunger Valve
II). (Docket Entry No. 29, Ex. 2, at 38). McCoy denied that the Pirate Brand APVII corresponds
8
to the Schmidt Thompson II Valve.15 McCoy explained that the APVII performed better, and cost
less, than the Thompson II Valve. (Docket Entry No. 83, Ex. 2, at 68–69). He also testified that the
APVII and Thompson II Valve were not interchangeable. (Id., at 70).
Forecast’s marketing materials state that Pirate Brand aftermarket replacement parts “are
100% compatible and equal or better in quality to the original part.” (Docket Entry No. 83, Ex. 1,
at 2, 3). Jim Burns, who works at Forecast as its assembly manager and as a returned-products
examiner, (Docket Entry No. 83, Ex. 3, at 12), explained the basis for this statement. He conducted
tests to confirm the Pirate Brand parts’ compatibility with Axxiom products. (Id., at 35, 44). To test
compatibility, he did an initial test of both the Schmidt valve and the Pirate Brand valve, then
interchanged the two valves’ parts to test for functionality, and then did another test. (Id., at 35–39).
For the Pirate Brand APV and Combination Valves, and their respective Schmidt Thompson and
Combo Valves, initial testing meant pressure testing to see if the valve “opens and closes properly
as it should” for “[s]mooth operation.” (Id., at 36–39). Burns did not write down the test results.
(Id., at 37–38). Instead, he conveyed the results verbally to McCoy. (Id., at 42). For the Pirate
Brand MPV Valve and its respective Schmidt Micro Valve, initial testing consisted simply of
“[o]pening the valve all of the way and then closing it all of the way.” (Id., at 41). Burns did not
weigh the valves to compare their weights, test to see whether the valves were made of the same
materials, conduct destructive testing, or test flow capabilities. (Id., at 44).
Forecast’s marketing materials also state that “[a]ll Pirate Brand aftermarket replacement
parts meet or exceed OEM specifications.” (Docket Entry No. 83, Ex. 1, at 1). When asked in his
deposition about this statement, Burns deferred to McCoy. (Docket Entry No. 83, Ex. 3, at 34).
15
(E.g., Docket Entry No. 56, Ex. B, at 21).
9
McCoy acknowledged that Forecast made that statement. (Docket Entry No. 83, Ex. 2, at 54–55).
When asked what testing procedures were used to confirm this statement, McCoy responded that
Forecast used the testing procedure that Burns described for testing the Pirate Brand valves’
compatibility. (Id., at 57).
At some point, Axxiom began to investigate Forecast’s actions in the marketplace. Phuong
Taylor Nguyen, Axxiom’s executive vice president and general manager and an employee with
Axxiom’s predecessor companies dating back to 1991 with Schmidt, and William Patrick Nelson,
Axxiom’s vice-president of sales and an employee with Axxiom’s predecessor companies dating
back to 1989 with Schmidt, led the investigation. Nguyen stated that “Axxiom has received
complaints from customers who ordered valves by part numbers and contacted Axxiom when the
valves failed. Axxiom determined that the valves were manufactured by Forecast.” (Docket Entry
No. 83, Ex. 4, at 4).
Nelson did a more thorough investigation. He learned that “customers have sought to
purchase Schmidt brand valves manufactured by Axxiom, and ordered such valves by part number,
and instead of receiving genuine Schmidt valves, were shipped Forecast substitute valves of the
same part number without any notice of the substitution.” (Docket Entry No. 83, Ex. 8, at 1).
Nelson had three people—a consumer of blasting products, a personal acquaintance, and an Axxiom
employee—order Schmidt valves from Forecast distributors using Axxiom part numbers and
forward the unopened boxes to him. When Nelson opened the boxes and inspected the valves and
component parts, he determined that he had not been shipped Axxiom products, but rather Forecast
products. (Id., at 1–2). Most of the purchase orders and packing slips indicated that what had been
purchased and shipped were Axxiom products. (See Docket Entry No. 83, Exs. 8-A, 8-B, 8-C, 8-D,
8-E, 8-H). The remaining orders and slips merely described the generic product; no brand was
10
listed. (See Docket Entry No. 83, Exs. 8-F, 8-G, 8-I, 8-J).
McCoy admitted in his deposition that Forecast used Axxiom’s part numbers as the Pirate
Brand part numbers for “a large number” of Pirate Brand valves. (Docket Entry No. 83, Ex. 2, at
36). When asked why, McCoy answered that the numbers “are the same or similar for the purpose
of comparison.” (Id., at 37). He later said that having identical part numbers shows distributors that
Pirate Brand component parts “[are] compatible with their [Axxiom’s] part number.” (Id., at 41).
McCoy was asked how Forecast’s affiliate company, which until 2006 sold Axxiom products, would
respond when a customer called to order a valve but only gave the part number. McCoy responded
that “[i]n most cases we would offer them both. We tell them we have the Pirate Brand or we have
the OEM [Axxiom]. Which would you prefer?” (Id., at 43). McCoy stated that he verbally
instructed his salespersons to give this response. (Id., at 44). McCoy was asked how Forecast’s
distributors would respond if faced with a similar question. He responded that he did not know how
they handled such questions, but explained that Forecast would send each distributor “a mandatory
acknowledgment that they understand they are selling after-market products.” (Id., at 48).
Nguyen also investigated Forecast’s statements about the Forecast products’ quality. In
October 2009, Nguyen instructed Burton Lacour, Axxiom’s quality-control manager, to order a
metallurgy analysis of the Schmidt Thompson Valve as compared to the Pirate Brand APV. (Docket
Entry No. 83, Ex. 4, at 1). Lacour had Precision PMI do this analysis. (Docket Entry No. 83, Ex.
5, at 1). Precision PMI reported “that the quality of the tungsten carbide in the Forecast valve was
of a lower quality than the tungsten carbide in the Axxiom products.” (Id., at 2). As a result, the
Pirate Brand valve would show more wear, or deteriorate, more quickly than its Schmidt
counterpart. (Id., at 2). Lacour conducted life-cycle tests on the Schmidt Thompson and Thompson
II Valves as compared to the Pirate Brand APVII. (Id.; see also Docket Entry No. 83, Exs. 5-A–511
Q). His tests demonstrated that “the Forecast valve had excessive wear on the tungsten carbide
components of the valve, high deformity of a seal, and binding of the moving components causing
the valve not to open and close properly.” (Docket Entry No. 83, Ex. 5, at 2). The Schmidt valves
had no such performance issues. (Id.).
Nguyen summarized the test results, as follows:
[T]he tests performed show that Forecast valves are clearly neither
equivalent to nor superior in design or materials. The Forecast valve
has a lower grade of tungsten carbide, has a more fragile sleeve
design, requires a higher pressure to operate, has a design that leads
to premature seat or seal failure, and has lower urethrane quality.
(Docket Entry No. 83, Ex. 4, at 4). According to Nguyen, these qualities cut against the industry
preference of purchasing “more durable valves that do not have to be replaced as often.” (Id.). But
because consumers have relied on Forecast’s false representations that its Pirate Brand valves are
equal to or better than Axxiom’s Schmidt valves, Nguyen explains, Axxiom has lost business. (Id.).
Despite these claims of inferior quality, Burns claimed that, since he began examining returned
products, he has examined “maybe” five Pirate Brand valves that were returned. His examinations
revealed no defects. (Docket Entry No. 83, Ex. 3, at 25–26).
In a December 11, 2006 letter to Forecast, an attorney for Axxiom stated in part:
It has come to our attention that you, either personally or through
your companies, are promoting and selling products that are not
genuine products of Axxiom under one or more of these trademarks
or in a manner that incorrectly implies to the purchaser that he is
purchasing genuine Axxiom products. We also understand that you,
either personally or through your companies, are improperly using
copyrighted Schmidt part descriptions and Schmidt part numbers in
your product literature so as to potentially mislead customers. We
further understand that such activities may be carried out under the
IDS Blast Finishing Name or the Forecast name and that these
companies are both owned or controlled by you.
(Docket Entry No. 56, Ex. E, at 1). The letter stated that these actions violated the Lanham Act.
12
(Id.).
Axxiom filed this lawsuit on November 17, 2009. (Docket Entry No. 1). Forecast moved
to dismiss. (Docket Entry No. 5). This court granted the motion in part with leave to amend and
converted in part to a motion for summary judgment. (Docket Entry No. 26). Axxiom amended its
complaint. (Docket Entry No. 27). The parties’ cross-motions for summary judgment and related
filings followed.
II.
The Summary Judgment Standard
Summary judgment is appropriate if no genuine issue of material fact exists and the moving
party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a). “The movant bears the
burden of identifying those portions of the record it believes demonstrate the absence of a genuine
issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing
Celotex Corp. v. Catrett, 477 U.S. 317, 322–25 (1986)).
If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial
burden “by ‘showing’—that is, pointing out to the district court—that there is an absence of
evidence to support the nonmoving party’s case.” Celotex, 477 U.S. at 325. Although the party
moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it
does not need to negate the elements of the nonmovant’s case. Boudreaux v. Swift Transp. Co., 402
F.3d 536, 540 (5th Cir. 2005). “A fact is ‘material’ if its resolution in favor of one party might affect
the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Texas, 560 F.3d
316, 326 (5th Cir. 2009) (internal quotation marks omitted). “‘If the moving party fails to meet [its]
initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant’s
response.’” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir. 2008)
(quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam)).
13
When the moving party has met its Rule 56(a) burden, the nonmoving party cannot survive
a summary judgment motion by resting on its pleading allegations. The nonmovant must identify
specific evidence in the record and explain how that evidence supports that party’s claim.
Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007). “This burden will not be satisfied by ‘some
metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions,
or by only a scintilla of evidence.’” Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075).
In deciding a summary-judgment motion, the court draws all reasonable inferences in the light most
favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir. 2008). When
the parties cross-move for summary judgment, the court must review “each motion independently,
viewing the evidence and inferences in the light most favorable to the nonmoving party.” MidContinent Cas. Co. v. Bay Rock Operating Co., 614 F.3d 105, 110 (5th Cir. 2010) (internal quotation
marks and alteration omitted). “If a party fails to properly support an assertion of fact or fails to
properly address another party’s assertion of fact as required by Rule 56(c), the court may . . .
consider the fact undisputed for purposes of the motion.” FED. R. CIV. P. 56(e)(2).
III.
Analysis
Both Axxiom and Forecast seek summary judgment on Axxiom’s copyright-infringement
claims. Forecast also seeks summary judgment on Axxiom’s Lanham Act and state-law claims. The
motions are analyzed below.
A.
Copyright Infringement
1.
The Applicable Law
“Civil actions under the Copyright Act must be brought ‘within three years after the claim
has accrued.’” Kwan v. Schlein, 634 F.3d 224, 228 (2d Cir. 2011) (quoting 17 U.S.C. § 507(b));
accord, e.g., Jaso v. The Coca Cola Co., 435 F. App’x 346, 352 (5th Cir. 2011) (per curiam). In the
14
Fifth Circuit, “a copyright claim accrues ‘when [the party] knew or had reason to know of the injury
upon which the claim is based.’” Jordan v. Sony BMG Music Entm’t Inc., 354 F. App’x 942, 945
(5th Cir. 2009) (per curiam) (quoting Pritchett v. Pound, 473 F.3d 217, 220 (5th Cir. 2006)).
If the claim is timely, “[t]o prove copyright infringement, a plaintiff must establish (1)
ownership of a valid copyright; (2) factual copying; and (3) substantial similarity.” Armour v.
Knowles, 512 F.3d 147, 152 (5th Cir. 2007) (per curiam). “Copyright ownership is shown by (1)
proof of originality and copyrightability and (2) compliance with the applicable statutory
requirements.” Compaq Computer Corp. v. Ergonome Inc., 387 F.3d 403, 408 (5th Cir. 2004). The
Copyright Act presumes the validity of copyrights registered within five years of the work’s first
publication. 17 U.S.C. § 410(c). For copyrights registered outside of that five-year period, “[t]he
evidentiary weight to be accorded the certificate of registration . . . shall be within the discretion of
the court.” Id. “[C]ertificates create only a rebuttable presumption that the copyrights are valid.”
Norma Ribbon & Trimming, Inc. v. Little, 51 F.3d 45, 47 (5th Cir. 1995); accord, e.g., United
Fabrics Int’l, Inc. v. C&J Wear, Inc., 630 F.3d 1255, 1257 (9th Cir. 2011).
“A notice requirement has formed a part of every U.S. copyright statute since the original
act of 1790.” 2 NIMMER ON COPYRIGHT § 7.02[A]. The requirement “has been relaxed over time,
however, and it is important to determine the date a work was first generally published in order to
ascertain the precise consequences of the publication.” ROGER E. SCHECHTER & JOHN R. THOMAS,
INTELLECTUAL PROPERTY: THE LAW OF COPYRIGHTS, PATENTS AND TRADEMARKS § 5.2 (2003).
Professor Nimmer organizes works into three categories: 1909 Act publications, decennial
publications, and Berne Era publications. 2 NIMMER ON COPYRIGHT § 7.02[C].
1909 Act publications include works published before January 1, 1978, when the 1909
Copyright Act governed. Id. § 7.02[C][1]. “[T]he general rule under the 1909 Copyright Act is that
15
a work published in the United States without the statutorily required copyright notice fell into the
public domain, ‘precluding forever any subsequent copyright protection of the published work.’”
Warner Bros. Entm’t, Inc. v. X One X Productions, 644 F.3d 584, 593 (8th Cir. 2011) (quoting Twin
Books Corp. v. Walt Disney Co., 83 F.3d 1162, 1165–66 (9th Cir. 1996)).
Decennial publications include works published between January 1, 1978, the effective date
of the 1976 Copyright Act, and March 1, 1989, the effective date of the Berne Convention in the
United States. 2 NIMMER ON COPYRIGHT 7.02[C][2]. Works published in this decennial era without
the then-applicable statutorily required copyright notice, see Pub. L. No. 94-553, § 401 (1976)
(codified as amended at 17 U.S.C. § 401 (1978)), also fall into the public domain, see Norma Ribbon
& Trimming, 51 F.3d at 48; Bell v. E. Davis Int’l, Inc., 197 F. Supp. 2d 449, 460–61 (W.D.N.C.
2002) (also describing methods by which claimed copyright holder can cure lack of notice).
Finally, Berne Era publications include works published after March 1, 1989, the Berne
Convention’s effective date. 2 NIMMER ON COPYRIGHT § 7.02[C][3]. For these works, “notice is
no longer required at publication.” Maverick Recording Co. v. Harper, 598 F.3d 193, 199 (5th Cir.
2010) (quoting 2 NIMMER
ON
COPYRIGHT § 7.02[C][3]). As the Maverick Recording court
summarized, “[b]efore the Berne Convention was adopted, publishers ran the risk of placing their
work into the public domain by failing to include a notice of copyright.” 598 F.3d at 199.
“The significance of the copyright sequence, combined with the principle that no individual
may copyright a work in the public domain, is that ordinarily works in the public domain stay there.”
Golan v. Gonzales, 501 F.3d 1179, 1189 (10th Cir. 2007). Nevertheless, “a work may be protected
by copyright even though it is based on a prior copyrighted work or something already in the public
domain if the author, through his skill and effort, has contributed a distinguishable variation from
the older works.” Donald v. Zack Meyer’s T. V. Sales & Serv., 426 F.2d 1027, 1029 (5th Cir. 1970).
16
That is because copyright law protects “derivative works.” The Copyright Act defines a derivative
work as:
a work based upon one or more preexisting works, such as a
translation, musical arrangement, dramatization, fictionalization,
motion picture version, sound recording, art reproduction,
abridgment, condensation, or any other form in which a work may be
recast, transformed, or adapted. A work consisting of editorial
revisions, annotations, elaborations, or other modifications which, as
a whole, represent an original work of authorship, is a “derivative
work”.
17 U.S.C. § 101. As indicated in Donald, this definition encompasses “a new version of a work in
the public domain[.]” 1 NIMMER ON COPYRIGHT § 3.03[A].
The Seventh Circuit has set out two principles helpful in judging derivative works: “(1) the
originality requirements for derivative works is not more demanding than the originality requirement
for other works; and (2) the key inquiry is whether there is sufficient nontrivial expressive variation
in the derivative work to make it distinguishable in some meaningful way.” Schrock v. Learning
Curve Int’l, Inc., 586 F.3d 513, 521 (7th Cir. 2009); see also Mass. Museum of Contemporary Art
Found., Inc. v. Büchel, 593 F.3d 38, 64–65 (1st Cir. 2010) (explaining that, to qualify as a derivative
work, “the variation from the original must be ‘sufficient to render the derivative work
distinguishable from its prior work in any meaningful manner’” (quoting 1 NIMMER ON COPYRIGHT
§ 3.03[A])).
As to the first principle, “[i]n order to be copyrightable, a work must contain a certain
modicum of originality. Originality’s relatively low hurdle may be cleared when the ‘selection and
arrangement’ of sometimes uncopyrightable facts evinces a ‘minimal degree of creativity.’”
Compaq Computer, 387 F.3d at 410 (quoting Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S.
340, 345 (1991)). As one court stated:
17
The Copyright Office established a regulation providing examples of
the types of works that fall into the category of works that lack a
minimum level of creativity and do not and do not qualify for
copyright protection, including “[w]ords and short phrases such as
names, titles, and slogans; familiar symbols or designs; mere
variations of typographic ornamentation, lettering or coloring; mere
listing of ingredients or contents.” 37 C.F.R. § 202.1(a).
Darden v. Peters, 488 F.3d 277, 286 (4th Cir. 2007). This regulation, though lacking the force of
law, “is a fair summary of the law.” CMM Cable Rep, Inc. v. Ocean Coast Props., Inc., 97 F.3d
1504, 1520 n.21 (1st Cir. 1996) (quoting Kitchens of Sara Lee, Inc. v. Nifty Foods Corp., 266 F.2d
541, 544 (2d Cir. 1959)); see also, e.g., Taylor v. IBM, No. 02-10391, 2002 WL 31845220, at *1
(5th Cir. Dec. 10, 2002) (per curiam) (citing regulation to hold that a work is not copyrightable).
The second principle—the requirement that the derivative work be sufficiently
distinguishable from the original work—is more demanding. The variation must be more than
“merely trivial.” 1 NIMMER ON COPYRIGHT § 3.03[A]. For example, “[c]hanging the medium in
which a copyrightable work is displayed is not a sufficient change to give rise to a derivative work.”
CRC Press LLC v. Wolfram Research Inc., 149 F. Supp. 2d 500, 509 (C.D. Ill. 2000); accord L.
Batlin & Son, Inc. v. Snyder, 536 F.2d 486, 491 (2d Cir. 1976) (en banc) (“to support a copyright
there must be at least some substantial variation, not merely a trivial variation such as might occur
in the translation to a different medium”).16 The Copyright Office’s regulation listing items that lack
a minimum level of creativity applies equally to derivative works and the accompanying requirement
16
See also Bridgeman Art Library, Ltd. v. Corel Corp., 36 F. Supp. 2d 191, 196 (S.D.N.Y. 1999) (“The requisite
‘distinguishable variation,’ moreover, is not supplied by a change of medium, as ‘production of a work of art in a
different medium cannot by itself constitute the originality required for copyright protection.’” (quoting Past Pluto
Productions v. Dana, 627 F. Supp. 1435, 1441 (S.D.N.Y. 1986)); Modern Publ’g v. Landoll, Inc., 849 F. Supp. 22, 24
(S.D.N.Y. 1994) (“in copyright law the medium is not the message, and a change in medium does not preclude
infringement” (internal alteration and quotation marks omitted)); Moore Publ’g, Inc. v. Big Sky Mktg., Inc., 756 F. Supp.
1371, 1376 (D. Idaho 1990) (“changing the medium of an item from metal to plastic” does not “constitute[] more than
a trivial contribution for copyright purposes”); Sargent v. Am. Greetings Corp., 588 F. Supp. 912, 919 (N.D. Ohio 1984)
(“changes from a preexisting work inherent to construction in a new medium, i.e. changes that are not attributable to
independent artistic skill and endeavor, are trivial variations and are not copyrightable”).
18
that the variation from the underlying work be nontrivial. See Darden, 488 F.3d at 286–87 (person’s
contributions to previous works “resemble the list of examples of uncopyrightable works set forth
in 37 C.F.R. § 202.1(a)”).
A derivative work’s copyright “is thin, extending only to the incremental original expression
contributed by the author of the derivative work.” Schrock, 586 F.3d at 521; accord, e.g., Waldman
Pub’g Corp. v. Landoll, Inc., 43 F.3d 775, 782 (2d Cir. 1994) (“In the case of a derivative work
based on an underlying work that is in the public domain, only the material added to the underlying
work is protected by copyright.” (citing 1 NIMMER ON COPYRIGHT § 3.07[C])). This principle comes
directly from the Copyright Act: “The copyright in a compilation or derivative work extends only
to the material contributed by the author of such work, as distinguished from the preexisting material
employed in the work[.]” 17 U.S.C. § 103(b).
2.
Limitations
Forecast argues at the outset that two of Axxiom’s copyright-infringement claims are timebarred. (Docket Entry No. 56, ¶ 41). Forecast has submitted a letter dated December 11, 2006 from
an Axxiom attorney stating that Axxiom was aware that Forecast is “improperly using copyrighted
Schmidt part descriptions and Schmidt part numbers in your product literature so as to potentially
mislead customers.” (Docket Entry No. 56, Ex. E, at 1). Axxiom filed suit in this court on
November 17, 2009. (Docket Entry No. 1). In its original complaint, Axxiom asserted only one
copyright-infringement claim, based on the alleged infringement of the 2008 manual. (Id., ¶¶ 10,
13). The amended complaint, filed on July 9, 2010, added two new copyright-infringement claims:
one for the 1997 manual, and one for the 2004 manual. (Docket Entry No. 27, ¶¶ 23–28). Because
these claims were not added until more than three years after Axxiom’s December 2006 letter
identifying the potential copyright injury, Forecast concludes that Axxiom’s copyright-infringement
19
claims based on the 1997 and 2004 manuals are time-barred. (Docket Entry No. 56, ¶ 41). Axxiom
responds that the letter discusses only trademark infringement, not copyright infringement and that,
in any event, the new claims relate back to the original complaint under Federal Rule of Civil
Procedure 15(c). (Docket Entry No. 61, at 19).
Axxiom’s contention that its December 2006 letter does not discuss copyright infringement
is unpersuasive. In the Fifth Circuit, “a copyright claim accrues ‘when [the party] knew or had
reason to know of the injury upon which the claim is based.’” Jordan, 354 F. App’x at 945 (quoting
Pritchett, 473 F.3d at 220). The letter expressly sets forth Axxiom’s belief that Forecast is
improperly using an Axxiom copyright. Although the letter specifically cites only the Lanham Act
in referring to statutory violations, it shows that Axxiom had reason to know that Forecast might be
infringing on any copyright Axxiom had in the manuals. At the latest, Axxiom’s copyrightinfringement claim accrued when its attorney mailed the cease-and-desist letter.
On the other hand, Axxiom is correct that its copyright-infringement claims based on the
1997 and 2004 manuals relate back to its original complaint. “An amended complaint may ‘relate
back’ to an original complaint for statute of limitations purposes.” Sanders-Burns v. City of Plano,
594 F.3d 366, 372 (5th Cir. 2010). Federal Rule of Civil Procedure 15(c) states in relevant part that
“[a]n amendment to a pleading dates back to the date of the original pleading when . . . (B) the
amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set
out—or attempted to be set out—in the original pleading[.]” FED. R. CIV. P. 15(c)(1). Axxiom’s
original complaint, as the basis of its copyright-infringement claims, alleged that Forecast’s manual
copied directly from Axxiom’s copyrighted 2008 manual. (See Docket Entry No. 1, ¶¶ 24–25).
Axxiom’s amended complaint, as the basis of its additional claims, alleged that the same Forecast
manual copied directly not only from Axxiom’s 2008 copyrighted manual, but also from its 1997
20
and 2004 copyrighted manuals. (See Docket Entry No. 27, ¶¶ 20–28). These new claims arise out
of the same alleged conduct: Forecast’s copying of Axxiom’s copyrighted materials. Axxiom’s
additional copyright-infringement claims are not time-barred.
3.
Valid Copyrights
To succeed on its claims, Axxiom must first establish that it owns valid copyrights in the
three manuals. See Armour, 512 F.3d at 152. Axxiom relies heavily on the Copyright Act’s
presumption of validity. Because the 2008 manual is the only one of the three registered with the
Copyright Office within five years of its first publication, it is the only manual entitled to the
statutory presumption of validity. See 17 U.S.C. § 410(c). Even if all three manuals carried the
presumption, however, it is rebuttable. See Norma Ribbon & Trimming, 51 F.3d at 47.
An initial question is whether Axxiom could copyright its manuals. If the answer is yes,
another question arises: whether Axxiom could copyright the drawings within its manuals.
Copyright law protects a “compilation,” see 18 U.S.C. § 103, defined as “a work formed by the
collection and assembling of preexisting materials or of data that are selected, coordinated, or
arranged in such a way that the resulting work as a whole constitutes an original work of
authorship,” id. § 101. In Feist, the Supreme Court explained that
[f]actual compilations . . . may possess the requisite originality. The
compilation author typically chooses which facts to include, in what
order to place them, and how to arrange the collected data so that
they are used effectively by readers. These choices as to selection
and arrangement, so long as they are made independently by the
compiler and entail a minimal degree of creativity, are sufficiently
original that Congress may protect such compilations through the
copyright laws.
499 U.S. at 347. “Most compilations, merely by exercising some independent choice in the
coordination, selection, or arrangement of data, will pass the test.” CCC Info. Servs., Inc. v.
21
Maclean Hunter Market Reports, Inc., 44 F.3d 61, 65 (2d Cir. 1994) (interpreting Feist).
Courts have found manuals organizing factual information in a useful manner to be
copyrightable compilations. See B2B CFO Partners, LLC v. Kaufman, 787 F. Supp. 2d 1002, 1007
(D. Ariz. 2011) (employee training manual); Portionpac Chem. Corp. v. Sanitech Sys., 217 F. Supp.
2d 1237, 1246 (M.D. Fla. 2002) (reference manual); Greaver v. Nat’l Ass’n of Corporate Directors,
No. C. A. 94-2127 (WBB), 1997 WL 34605245, at *3–4 (D.D.C. Nov. 19, 1997) (seminar manual);
see also Eagle Servs. Corp. v. H20 Indus. Servs., Inc., 532 F.3d 620, 622–23 (7th Cir. 2008) (Posner,
J.) (assuming that a safety manual is a copyrightable compilation). The owner’s manuals in this case
pass Feist’s minimal threshold for originality so as to be copyrightable as compilations. Although
the manuals contain only factual information, the way in which Axxiom (and its predecessor
companies, Schmidt and U.S. Filter) chose to arrange the information and drawings to assist product
users entails the “minimal degree of creativity” required for a copyrightable compilation. Feist, 499
U.S. at 347.
The next question is whether the exploded-parts drawings are themselves copyrightable.
Forecast relies on the merger doctrine to argue that they are not.17 (Docket Entry No. 56, ¶¶ 35–38).
“If an idea is susceptible to only one form of expression, the merger doctrine applies and § 102(b)
excludes the expression from the Copyright Act.” Veeck v. S. Bldg. Code Congress Int’l, Inc., 293
F.3d 791, 801 (5th Cir. 2002) (en banc). This doctrine applies “when there is only one feasible way
of expressing an idea[.]” Seng-Tiong Ho v. Taflove, 648 F.3d 489, 497 (7th Cir. 2011); accord, e.g.,
Naghi v. Europe’s Finest, Inc., 114 F. App’x 606, 607 (5th Cir. 2004) (per curiam) (“The merger
17
The court also notes Forecast’s argument that because Axxiom’s alleged copyright is in the manual, not the drawings
themselves on which the infringement claims rest, Axxiom’s claims must fail. (Docket Entry No. 56, ¶ 11). The
argument lacks merit. A copyrightholder does not need to register each page within a work as copyrighted to ensure each
page’s copyright; copyrighting the work as a whole suffices. The issue, instead, is whether the specific part of the work
alleged to have been infringed—in this case, the exploded-parts drawings—are properly copyrightable.
22
doctrine provides that if an idea is capable of only one manner of expression, the idea and the
expression ‘merge’ and are exempted from copyright protection.”). Forecast contends that the
merger doctrine applies because there is only one way to draw the valves. (See Docket Entry No.
56, ¶¶ 36–37). Ambriz testified, however, that the way in which the valves were drawn is “up to the
discretion of the artist as he determines will be best suited for the circumstances.” (Docket Entry
No. 49, Ex. B, ¶ 8). Axxiom has introduced the exploded-parts drawings of another company that,
like Forecast, designs, manufactures, and markets aftermarket replacement parts for Axxiom
products. This company’s versions of the Micro and Thompson Valves are drawn differently from
Axxiom’s drawings. (See Docket Entry No. 49, Exs. B-1, B-5). Because more than one way exists
in which to create an exploded-parts drawing of the Schmidt valves (or an aftermarket version of
the valves), the merger doctrine does not apply. Cf. Kern River Gas Transmission Co. v. Coastal
Corp., 899 F.2d 1458, 1464 (5th Cir. 1990) (applying merger doctrine to drawing of maps where the
company’s “principal planning engineer testified that he could think of no other way to portray the
idea of the pipeline’s proposed location”). Axxiom’s exploded-parts drawings are copyrightable.
See Goss Int’l Americas, Inc. v. A-American Mach. & Assembly Co., No. 07 C 3248, 2007 WL
4294744, at *2 (N.D. Ill. Nov. 30, 2007) (holding that exploded-parts drawing of printing-press parts
is copyrightable).
The main issue raised in this case is not whether the Axxiom manuals and drawings are
copyrightable in the abstract, but whether Axxiom could properly copyright them when, as Forecast
argues, they previously had fallen into the public domain. Forecast has introduced a belatedly
produced 1987 Schmidt manual that served as the predecessor to Axxiom’s 1997 manual, and in turn
its 2004 manual, and in turn its 2008 manual. The 1987 manual is a “decennial publication.”
Schmidt was required to attach notice of the copyright for it to be valid. See 2 NIMMER
23
ON
COPYRIGHT § 7.02[C][2]. Axxiom has conceded that Schmidt, its predecessor company, failed to
attach such notice. (Docket Entry No. 96, at 4). Schmidt’s failure to comply with the thenapplicable notice requirement results in the 1987 manual, and all of the drawings and accompanying
legends contained within the manual, falling into the public domain.18 See Norma Ribbon &
Trimming, 51 F.3d at 47.
Axxiom makes two arguments that its copyright is valid. First, Axxiom argues that Ambriz,
its engineering supervisor, stated in a declaration that the 1997 manual’s drawings “were
independently created” and “were not based on the Schmidt Manufacturing Inc. 1987 manual or any
other manual.” (Docket Entry No. 96, Ex.1, ¶ 6). Second, Axxiom argues that Forecast copied from
the 1997 manual, not the 1987 manual. (Docket Entry No. 96, at 4–5). As to Ambriz’s declaration,
Forecast responds that it is a “sham affidavit” and, as such, should be disregarded. (Docket Entry
No. 101, ¶ 7 n.16). The court agrees.
This circuit recognizes the sham-affidavit rule. See Doe ex rel. Doe v. Dallas Indep. Sch.
Dist., 220 F.3d 380, 386 (5th Cir. 2000).19 “This authority stands for the proposition that a
nonmoving party may not manufacture a dispute of fact merely to defeat a motion for summary
judgment.” Id. “If a party who has been examined at length on deposition could raise an issue of
fact simply by submitting the affidavit contradicting his own prior testimony, this would greatly
18
Under the 1976 Copyright Act, a copyrightholder’s failure to attach the required notice “could be cured by subsequent
reasonable efforts to affix notice and registration within five years.” 2 NIMMER ON COPYRIGHT § 7.02[C][2]. Axxiom
has not argued, however, that Schmidt took action to cure its failure.
19
Almost every circuit recognizes the sham-affidavit rule. See McCann v. Iroquois Memorial Hosp., 622 F.3d 745,
750–51 (7th Cir. 2010); EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253, 268–69 (3d Cir. 2010); Latimer v. Roaring
Toyz, Inc., 601 F.3d 1224, 1237 (11th Cir. 2010); Del. Valley Floral Grp., Inc. v. Shaw Rose Nets, LLC, 597 F.3d 1374,
1382 (Fed. Cir. 2010); Gorzynski v. JetBlue Airways Corp., 596 F.3d 93, 104 (2d Cir. 2010); Law Co. v. Mohawk Constr.
& Supply Co., 577 F.3d 1164, 1169 (10th Cir. 2009); Van Asdale v. Int’l Game Tech., 577 F.3d 989, 998–99 (9th Cir.
2009); O’Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 593 (6th Cir. 2009); Galvin v. Eli Lilly & Co., 488 F.3d 1026,
1030 (D.C. Cir. 2007); City of St. Joseph, Mo. v. Sw. Bell Tel., 439 F.3d 468, 475–76 (8th Cir. 2006); Rohrbough v.
Wyeth Labs., Inc., 916 F.2d 970, 975–96 (4th Cir. 1990).
24
diminish the utility of summary judgment as a procedure for screening out sham issues of fact.” Id.
(quoting Perma Research & Dev. Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969)). As a recent
case explains:
A sham affidavit is a contradictory affidavit that indicates only that
the affiant cannot maintain a consistent story or is willing to offer a
statement solely for the purpose of defeating summary judgment. A
sham affidavit cannot raise a genuine issue of fact because it is
merely a variance from earlier deposition testimony, and therefore no
reasonable jury could rely on it to find for the nonmovant. . . . [I]f it
is clear that an affidavit is offered solely for the purpose of defeating
summary judgment, it is proper for the trial judge to conclude that no
reasonable jury could accord that affidavit evidentiary weight and
that summary judgment is appropriate.
EBC, 618 F.3d at 269 (quoting Jiminez v. All Am. Rathskeller, Inc., 503 F.3d 247, 253 (3d Cir
2007)).
An affidavit or declaration that contradicts prior deposition testimony should not
automatically be disregarded. Rather, the court should consider “if sufficiently persuasive reasons
are given [for the change in testimony], if the proposed amendments truly reflect the original
deponent’s original testimony, or if other circumstances satisfy the court that amendment should be
permitted.” EBC, 618 F.3d at 270; see also, e.g., Latimer, 601 F.3d at 1237 (explaining that the
sham-affidavit rule “is applied sparingly because of the harsh effect it may have on a party’s case,”
but that courts nevertheless may apply it when there is “some inherent inconsistency between an
affidavit and a deposition” (internal quotation marks omitted)).
Forecast’s counsel asked Ambriz in his deposition “what parts of the 1980 manual”—a
predecessor version of the 1987 Schmidt manual not in evidence—“were incorporated into this 1997
manual[.]” Ambriz responded: “The general design of the cover and the—the warning notes and
the safe procedures.” (Docket Entry No. 94, Ex. B, at 28). Forecast’s counsel then attempted to go
25
page-by-page through the 1997 manual to ask whether each page was incorporated from the 1980
manual. (Id., at 28–29). Ambriz responded, “Well, just to keep it short, I would say that all these
pages . . . . because you—you’re carrying on and developing year after year.” (Id., at 29 (emphasis
added)). Ambriz admitted that the component-part descriptions accompanying the exploded-parts
drawings in the older manuals were “pretty much the same” as the drawings in the 1997 manual.
(Id., at 30). And Ambriz admitted that the computer drawings of the Micro, Combo, and Thompson
Valves all “came from hand drawings that were digitally produced[.]” (Id., at 40–41). He clearly
testified that the computer drawings of these valves all came from the hand drawings of those valves
in the 1980s manuals. (Id., at 42–43). Despite this detailed deposition testimony, Ambriz’s
declaration—dated after Forecast’s most recent motion for summary judgment—states that “[t]hese
drawings were not based on the Schmidt Manufacturing Inc. 1987 manual or any other manual, but
they were independently created.” (Docket Entry No. 96, Ex. 1, ¶ 6).
The inconsistency between Ambriz’s deposition testimony and subsequent declaration is
clear. In admitting that the 1997 manual’s computer drawings of the valves came from the 1980s
manuals’ hand drawings of these valves, Ambriz effectively stated that the 1997 drawings were
“based on” the earlier drawings. The court, taking the facts in the light most favorable to Axxiom,
agrees with Axxiom that it expended independent effort to convert the hand drawings in the 1987
manual to computer drawings in the 1997 manual. Forecast does not dispute this. But, as Ambriz’s
testimony recognizes, the computer drawings were “based on” the earlier hand drawings. Just as
Axxiom vigorously has argued that Forecast must have copied from Axxiom’s manuals given that
the spacing between the component parts in the Forecast manual is identical to that in the Axxiom
manuals, the same is true for Axxiom’s 1987 and 1997 manuals. (Compare, e.g., Docket Entry No.
94, Ex. 1, at 16; with Docket Entry No. 56, Ex. A, at 14). That the 1997 manual would employ the
26
identical spacing, and nearly identical angles, in displaying the component parts as the 1987 manual
is not a coincidence. And Ambriz’s deposition testimony confirms that the 1997 drawings were
based on the 1987 drawings.
Axxiom has provided no explanation for the contradiction between Ambriz’s deposition
testimony and his post-summary-judgment declaration. Based on Ambriz’s detailed deposition
testimony and a comparison of the two manuals, no reasonable factfinder could find that the
drawings in the 1997 manual—and, as a result, the drawings in the 2004 and 2008 manuals—were
not “based on” the drawings in the 1987 manual. To the extent Ambriz’s declaration asserts that the
1997 drawings were not based on the 1987 drawings, such assertions cannot create a fact issue
sufficient to defeat summary judgment. These assertions are disregarded. But to the extent that
Ambriz’s declaration points out how the drawings in the 1987 manual differ from the drawings in
the 1997, 2004, and 2008 manuals, the court will consider those statements. (See Docket Entry No.
96, Ex. 1, ¶¶ 7, 9, 11).
Axxiom’s alternative argument against summary judgment is that the evidence shows that
Forecast copied from the 1997, 2004, and 2008 manuals, which Ambriz admitted contained the same
computer drawings of the valves in his deposition, (see Docket Entry No. 94, Ex. B, at 40–43;
Docket Entry No. 96, Ex. 1, ¶¶ 8, 10, 12 (referring to “Axxiom’s 1997–2008 copyrighted”
drawings)), and not the 1987 manual. Taking all the inferences in the light most favorable to
Axxiom, this court agrees. Whether Forecast copied from the 1997, 2004, or 2008 manual, as
opposed to the 1987 manual, however, is irrelevant to whether Axxiom owns a valid copyright for
the 1997, 2004, and 2008 manuals and specifically whether the copyright protection extends to the
drawings on which Axxiom’s copyright-infringement claims rest.
As previously discussed, Schmidt failed to attach the then-required copyright notice to its
27
1987 manual. That failure resulted in the 1987 manual, and all of the drawings that appeared within
it, falling into the public domain. The evidence in the record—specifically, Ambriz’s deposition
testimony—conclusively demonstrates that Axxiom based its 1997 manual on Schmidt’s 1987
manual, that Axxiom based its 2004 manual on its 1997 manual, and that Axxiom based its 2008
manual on its 2004 manual. (Docket Entry No. 94, Ex. B, at 28–30, 40–43). As Ambriz testified,
each manual builds on the last one. (Id., at 29).
That the Axxiom 1997, 2004, and 2008 manuals were based on the 1987 public-domain
manual, however, does not mean that Axxiom could not copyright the later manuals. The definition
of a derivative work encompasses “[a] work consisting of editorial revisions, annotations,
elaborations, or other modifications which, as a whole, represent an original work of authorship[.]”
17 U.S.C. § 101. The 1997 manual revises and elaborates on the 1987 manual, as does the 2004
manual when compared to the 1997 manual, and as does the 2008 when compared to the 2004
manual. The manner in which Axxiom expresses the facts contained within each manual, whether
in pictorial, textual, or organizational form, “evinces a ‘minimal degree of creativity.’” Compaq
Computer, 387 F.3d at 410 (quoting Feist, 499 U.S. at 345). Each manual qualifies as a
copyrightable derivative work of the 1987 public-domain manual. But a derivative work’s copyright
“extend[s] only to the incremental original expression contributed by the author of the derivative
work.” Schrock, 586 F.3d at 521; see also 17 U.S.C. § 103(b).
Because Axxiom alleges that Forecast infringed its copyright when Forecast copied the
drawings of the Micro, Combo, and Thompson valves, “the key inquiry is whether there is sufficient
nontrivial expressive variation in the derivative work”—in this case, the Axxiom manuals’
exploded-parts drawings—“to make it distinguishable in some meaningful way.” Schrock, 586 F.3d
at 521. Axxiom argues that its drawings meet this standard in several ways. First, Axxiom
28
repeatedly points out that its drawings are created by computer, while the 1987 manual drawings
were created by hand. As summarized above, the case law holds that simply changing the medium
of expression constitutes a trivial variation. See, e.g., CRC Press, 149 F. Supp. 2d at 509. Even
assuming, as the court does at this summary-judgment stage, that Axxiom (or its predecessor U.S.
Filter) expended substantial effort in translating the hand drawings to digital form in its 1997
manual, that effort is not meaningfully different from the effort it takes to convert expression from
metal to plastic, see Batlin, 536 F.2d at 491–92, expression in a painting to a color transparency, see
Bridgeman Art Library, 36 F. Supp. 2d at 196–97, or text in an encyclopedia to text on a website
using HTML programming, see CRC Press, 149 F. Supp. 2d at 509–10. Although converting the
hand drawings to computer drawings may have “required both skill and effort, there was no spark
of orginality[.]” Bridgeman Art Library, 36 F. Supp. 2d at 197. Axxiom’s conversion to digital
format constitutes a trivial variation.
Alternatively, Axxiom directs the court to numerous minor differences between the 1987
drawings and the 1997, 2004, and 2008 drawings. Ambriz individually describes each difference
in his most recent declaration. (Docket Entry No. 96, Ex. 1, ¶¶ 7, 9, 11). Some of these differences
are differences in shading, which are trivial variations. See Darden, 488 F.3d at 287 (referencing
37 C.F.R. § 202.1(a)). Others are differences in the numbers used to identify the component parts,
similar to “mere variations . . . of lettering” and trivial. 37 C.F.R. § 202.1(a).
Above all, Axxiom points to design differences between the 1987 manual’s drawings and
the 1997, 2004, 2008 manuals’ drawings. A few examples suffice: the “[k]nob shape is different,”
(Docket Entry No. 96, Ex. 1, ¶ 7(2)); “[t]he alignment angles of the exploded views are different,”
(id., ¶ 7(11)); the “[u]pper rod guide cut-out positions are different by 45°,” (id., ¶ 9(4)); the “[c]ross
section view hatching is different in angle and spacing,” (id., ¶ 9(11)); “[t]he shapes of the knob
29
finger grooves are different,” (id., ¶ 11(3)); and “[t]he gasket in the 1987 work shows an edge
profile, while the 1997/2004/2008 works do not,” (id., ¶ 11(7)). The alleged copyrightholder in
Batlin made a similar argument about design differences in a case involving the copyrightability of
a plastic “Uncle Sam” bank. A metal version of the Uncle Sam bank, created originally by neither
party to the suit, had long been in the public domain. Jeffrey Snyder produced a plastic version
based on the public-domain metal version. He then registered a copyright for his plastic Uncle Sam
bank. When L. Batlin and Son discovered Snyder’s plastic bank, it produced an identical plastic
Uncle Sam bank based on the metal version. Batlin sued for a preliminary injunction invalidating
Snyder’s copyright. 536 F.2d at 488. The district court granted the injunction, and the Second
Circuit—sitting en banc—agreed that the copyright was invalid because the differences between the
plastic bank and the public-domain bank were trivial.
Before the Second Circuit, Snyder pointed out the differences between his plastic bank and
the public-domain metal bank:
Appellant Snyder claims differences not only of size but also in a
number of other very minute details: the carpetbag shape of the
plastic bank is smooth, the iron bank rough; the metal bank bag is
fatter at its base; the eagle on the front of the platform in the metal
bank is holding arrows in his talons while in the plastic bank he
clutches leaves, this change concededly having been made, however,
because “the arrows did not reproduce well in plastic on a smaller
size.” The shape of Uncle Sam’s face is supposedly different, as is
the shape and texture of the hats, according to the Snyder affidavit.
In the metal version the umbrella is hanging loose while in the plastic
item it is included in the single mold. The texture of the clothing, the
hairline, shape of the bow ties and of the shirt collar and left arm as
well as the flag carrying the name on the base of the statue are all
claimed to be different, along with the shape and texture of the eagles
on the side.
Id. at 489. Despite these numerous differences, the Second Circuit concluded that they were
insufficient to confer derivative-work status. “Many of these differences are not perceptible to the
30
casual observer.” Id. The court agreed with the district court that “the variations found in
appellants’ plastic bank were merely ‘trivial’ and that it was a reproduction of the metal bank made
as simply as possible for the purposes of manufacture.” Id.
As in Batlin, Axxiom has pointed out differences of a “very minute” level. Id. Although the
design changes are not necessarily due to the conversion from hand drawings to computer drawings,
that does not make these changes any less trivial. The casual observer would not be able to see the
vast majority of the differences Axxiom identifies.
Taken as a whole, the modifications to the exploded-parts drawings of the Micro, Combo,
and Thompson valves in the 1997, 2004, and 2008 manuals lack the “minimal degree of creativity”
when compared to their counterparts in the 1987 manual, all of which are in the public domain.
Feist, 499 U.S. at 345. To the extent that Axxiom owns valid copyrights in the 1997, 2004, and
2008 manuals, that protection does not extend to those drawings. See 17 U.S.C. § 103(b); Schrock,
586 F.3d at 521. And because Axxiom’s copyright-infringement claims rest on copyright protection
extending to these drawings, Axxiom’s claims must fail. Forecast is entitled to partial summary
judgment on the copyright-infringement claims.
B.
The Remaining Claims
Forecast has moved for partial summary judgment on Axxiom’s Lanham Act and state-law
claims. “[I]t is not enough for the moving party to merely make a conclusory statement that the
other party has no evidence to prove his case.” St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d
425, 440 (5th Cir. 2000) (internal quotation marks and alteration omitted); accord Celotex, 477 U.S.
at 328 (White, J., concurring) (“It is not enough to move for summary judgment without supporting
the motion in any way or with a conclusory assertion that the plaintiff has no evidence to prove his
case.”). It equally “is not sufficient to merely list the elements of the claim and state that there is
31
no evidence to support the elements.” Seastrunk v. Darwell Integrated Tech., Inc., Civ. A. No. 3:05CV-0531-BF ECF, 2008 WL 190316, at *3 (N.D. Tex. Jan. 22, 2008). “If the moving party fails
to meet its initial burden, the motion for summary judgment must be denied, regardless of the
nonmovant’s response.” Duffie v. United States, 600 F.3d 362, 371 (5th Cir. 2010) (internal
quotation marks omitted).
Forecast has failed to meet its initial burden for summary judgment. In seeking partial
summary judgment on Axxiom’s remaining claims, Forecast’s discussion for each claim is limited
to one paragraph. Each paragraph lists the elements of the claim. Forecast then concludes the
paragraph with this one sentence, or a variation of this sentence, of argument: “Because Plaintiff
cannot show evidence to support all, or alternatively any of the essential elements of this claim,
summary judgment is proper.” (Docket Entry No. 62, ¶¶ 3, 6, 7; see also id., ¶¶ 4 (“Summary
Judgment is proper because Plaintiff cannot show evidence to support all, or alternatively any of
these essential elements”), 5 (“However, as plaintiff cannot establish evidence to support all, or
alternatively any of the essential elements for unjust enrichment summary judgment is proper.”)).
These conclusory sentences, unsupported by any reference to the record (or specifically what the
record lacks), cannot discharge Forecast’s initial burden in seeking summary judgment.20 See FED.
R. CIV. 56(c)(1) (“A party asserting that a fact cannot be or is genuinely disputed must support the
assertion by . . . (B) showing that the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.”).
Forecast’s motion for summary judgment on the Lanham Act and state-law claims is denied.
20
Because of Forecast’s failure to meet its initial burden, it is unnecessary to analyze Axxiom’s response to the motion.
(Docket Entry No. 83). But Axxiom’s response is supported by competent evidence that, because of the lack of opposing
evidence, would make summary judgment improper on the current record, at least as to the Lanham Act claim.
32
IV.
The Motion for Leave to Designate Responsible Third Parties
On December 22, 2011, Forecast moved for leave to designate responsible third parties under
TEX. CIV. PRAC. & REM. CODE § 33.004. (Docket Entry No. 95). Forecast argues that Axxiom
repeatedly has refused to disclose the names of the distributors that Axxiom alleges shipped Forecast
products in response to orders for Axxiom products, contrary to this court’s instruction to disclose.
(Id., ¶ 2). Forecast explains that it recently learned the names of two distributors—T-Tex
Equipment, Inc. and Midwest Surface Prep, LLC—based on Axxiom’s latest disclosures. According
to Forecast, designation of these distributors as responsible third parties is necessary because they,
not Forecast, may have been responsible for this conduct that damaged Axxiom. (Id., ¶ 4). Axxiom
has not responded.
Section 33.004 provides in part:
(a) A defendant may seek to designate a person as a responsible third
party by filing a motion for leave to designate that person as a
responsible third party. The motion must be filed on or before the
60th day before the trial date unless the court finds good cause to
allow the motion to be filed at a later date.
....
(f) A court shall grant leave to designate the named person as a
responsible third party unless another party files an objection to the
motion for leave on or before the 15th day after the date the motion
is served.
TEX. CIV. PRAC. & REM. CODE § 33.004 (emphasis added). Axxiom’s failure to object requires the
court to grant the motion. Id. § 33.004(f). But this statute only applies to claims brought under
Texas law; it does not apply to federal-law claims, such as the remaining Lanham Act claim in this
case. The motion is granted only as to the state-law claims.21
21
The court notes that Axxiom may later move to strike this designation. TEX. CIV. PRAC. & REM. CODE § 33.004(l).
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V.
The Motion to Exclude Expert Opinion Testimony
Forecast recently filed motions to exclude the expert testimony of Nguyen, (Docket Entry
No. 98), John Pirotte and Alton Davis, (Docket Entry No. 99), and Ambriz, (Docket Entry No. 100).
Axxiom has not responded, though its time for response has not yet expired. The court will consider
the motions at the discovery hearing scheduled for 10:00 a.m. on February 1, 2012 in Courtroom 11B.
VI.
Conclusion
Forecast’s motion for partial summary judgment on the copyright-infringement claims,
(Docket Entry No. 94), is granted. Axxiom’s cross-motion, (Docket Entry No. 49), is denied.
Forecast’s motion for partial summary judgment on the Lanham Act and state-law claims, (Docket
Entry No. 62), is denied. Forecast’s motion to strike certain evidence, (Docket Entry No. 67), is
denied. Forecast’s motion for leave to designate responsible third parties, (Docket Entry No. 95),
is granted in part. The pending motions to exclude expert testimony, (Docket Entry Nos. 98–100),
will be addressed at the discovery hearing scheduled for 10:00 a.m. on February 1, 2012 in
Courtroom 11-B.
SIGNED on January 31, 2012, at Houston, Texas.
______________________________________
Lee H. Rosenthal
United States District Judge
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