Energy Intelligence Group, Inc. et al v. Kayne Anderson Capital Advisors, LP et al
Filing
248
MEMORANDUM OPINION AND ORDER granting #236 MOTION to Strike #232 Reply in Support of Motion and Declaration of Ralph Oman, denying #204 Sealed Motion for Referral to the Register of Copyrights and a Concurrent Stay (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
July 26, 2017
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ENERGY INTELLIGENCE GROUP, INC.
and ENERGY INTELLIGENCE GROUP
(UK) LIMITED,
§
§
§
§
§
§
§
§
§
§
§
§
Plaintiffs,
v.
KAYNE ANDERSON CAPITAL
ADVISORS, LP and KA FUND
ADVISORS, LLC,
Defendants.
David J. Bradley, Clerk
CIVIL ACTION NO. H-14-1903
§
MEMORANDUM OPINION AND ORDER
Energy Intelligence Group, Inc. and Energy Intelligence Group
(UK)
Limited
(together,
"Plaintiffs"
or "EIG")
have sued Kayne
Anderson Capital Advisors, LP and KA Fund Advisors, LLC (together,
"Defendants"
before
the
Register
of
or
court
"Kayne")
are
for
copyright
Defendants'
Copyrights
Pursuant
infringement.
Motion
to
17
Concurrent Stay ("Motion for Referral")
for
U.S. C.
Referral
§
411 (b)
Pending
to
the
and
a
(Docket Entry No. 204) and
Plaintiffs' Motion to Strike the Expert Declaration of Ralph Oman
("Motion to Strike")
(Docket Entry No.
23 6) .
For the reasons
stated below, Kayne's Motion for Referral will be denied and EIG's
Motion to Strike will be granted.
I.
Background
A detailed history of the parties' business relationship as it
relates to the present litigation is provided in a prior opinion. 1
In short, EIG alleges that Kayne copied and distributed Oil Daily,
a subscription newsletter published by EIG, in violation of EIG's
subscription
agreements. 2
From
at
least
2004
to
2013
Kayne
purchased a single annual subscription to Oil Daily for a Kayne
employee, Jim Baker.
That subscription was routinely forwarded to
Kayne employees and others who were not subscribers.
In 2013 Kayne
entered into a multi-user license agreement with EIG, paying for
five Kayne employees to receive Oil Daily.
But EIG alleges that
Kayne continued to distribute unauthorized copies of Oil Daily
until at least May 21, 2014.
EIG filed this action against Kayne
for copyright infringement on July 8, 2014.
Docket call was held on April 14, 2017, and a trial date was
then set.
month,
On May 3,
Kayne
2017, with trial set to begin the following
challenged
registrations for the first
validity
the
of
EIG's
copyright
time and moved for referral to the
Register of Copyrights and for a
stay of proceedings.
Despite
Kayne's tardiness, the court postponed trial in order to consider
1
Memorandum Opinion and Order, Docket Entry No. 68.
2
Factual allegations are taken from Plaintiffs' Second Amended
Complaint for Copyright Infringement,
Contributory Copyright
Infringement, Vicarious Copyright Infringement, and Violation of
the Integrity of Copyright Management Information, Docket Entry
No. 38.
-2-
the motion and ordered EIG to respond.
In Defendants'
Reply in
Support of Their Motion for Referral to the Register of Copyrights
Pursuant to 17 U.S. C.
(Docket
Entry No.
411 (b)
§
232),
Kayne
and a
Concurrent Stay
introduced a
("Reply")
declaration
from a
previously undisclosed expert in support of its Motion for Referral.
EIG moves to strike Kayne's expert's declaration as untimely.
II.
EIG's Motion to Strike
Because Kayne's Reply incorporates the Declaration of Ralph
Oman ("Oman Declaration")
(Docket Entry No. 232-1), the court will
address the admissibility of the Declaration before turning to the
merits of Kayne's arguments in favor of its Motion for Referral.
EIG moves to strike the Declaration as an untimely expert report.
EIG
bases
its
arguments
Procedure 26(a) (2)
primarily
on
Federal
Rule
of
Civil
regarding the mandatory disclosure of expert
witnesses a party "may use at trial."
Kayne argues that Oman is
not subject to Rule 26 because his Declaration is only for the
benefit of the court, and his testimony will not be used at trial.
Kayne also argues that Oman's expert opinion is necessary to rebut
arguments made in Plaintiffs' Opposition to Defendants' Motion for
Referral
§
411 (b)
No. 229).
to
the
and
a
Register
of
Concurrent
Copyrights
Stay
Pursuant
("Opposition")
to
17
(Docket
U.S. C.
Entry
Kayne's arguments are unavailing, and Kayne's untimely
designation of an expert in its Reply to a late motion will not be
permitted.
-3-
The court has broad discretion in scheduling and managing its
docket.
McClain v.
(5th Cir. 2008).
Lufkin Industries,
Inc.,
519 F. 3d 264,
282
"A schedule may be modified only for good cause
and with the judge's consent."
Fed. R. Civ. P. 16{b) (4).
The most
recent scheduling order regarding experts in this case called for
identification of the parties'
reports by August
5,
2016,
experts and production of their
and identification of
the parties'
rebuttal experts and production of their reports by September 9,
2016. 3
Kayne's designation of an expert for the first time in a
reply filed on June 9, 2017, is untimely.
Kayne has known about the issues raised in its Motion for
Referral for years. 4
decade,
Kayne subscribed to Oil Daily for over a
and EIG attached
its
original complaint in 2014.
registration certificates
to
its
Kayne had everything it needed to
investigate and identify any defects in EIG's registrations from
the inception of this action.
But Kayne only now challenges the
validity of EIG's copyright registrations.
delayed an already overdue trial.
In doing so, Kayne has
The court initially agreed to
consider the Motion for Referral out of an abundance of caution.
But Kayne now asks the court to rely on the legal analysis of an
expert first identified in its Reply.
3
0rder, Docket Entry No. 81, p. 2.
4
Kayne's failure to discover the alleged deficiencies until
April of 2017 is not an excuse. Kayne has offered no explanation
for its failure to investigate this issue during discovery.
-4-
Kayne's explanation for the delayed disclosure of its expert
is that Oman's testimony only became necessary as a result of EIG's
"unsupported arguments"
in
its
Opposition.
Kayne
argues
that
Oman's testimony is needed to rebut EIG's arguments concerning the
materiality of any registration inaccuracies and the purpose and
implementation of group copyright registrations.
is not persuasive. 5
Opposition;
entitled
Kayne's argument
EIG did not rely on expert testimony in its
but if Oman's Declaration is admitted,
to
a
rebuttal
expert,
which
will
EIG will be
further
delay
the
resolution of this matter at additional expense to the parties.
Kayne argues that its delay is harmless because the focus of
the Rule 26 prejudice
inquiry is on whether failure
to timely
disclose its expert prejudiced EIG's ability to prepare for trial,
not on whether EIG will be prejudiced by use of the evidence at
trial.
See Savant v. APM Terminals, Civil Action No. 4:11-1980,
2013 WL 12099874, at *7 (S.D. Tex. Aug. 27, 2013).
But admitting
Oman's testimony will prejudice EIG's ability to prepare for trial.
On the eve of trial Kayne has already diverted EIG's attention and
resources
by
raising
new
issues
5
and
would
further
do
so
by
Notwithstanding Kayne's argument that Rule 26(a) (2) does not
apply, the court considers the factors applied by the Fifth Circuit
in such cases a helpful aid in deciding whether to strike the Oman
Declaration. See Hamburger v. State Farm Mut. Auto. Ins. Co., 361
F.3d 875, 883 (5th Cir. 2004) (considering four factors when
reviewing a trial court's exercise of discretion to exclude experts
not properly designated:
"(1) the explanation for the failure to
identify the witness;
(2)
the importance of the testimony;
(3) potential prejudice in allowing the testimony; and (4) the
availability of a continuance to cure such prejudice").
-5-
designating a new expert.
EIG would be prejudiced whether or not
it were given the opportunity to rebut Oman's testimony.
Neither Kayne's explanation for its delay nor its argument
that
Oman's
further
testimony
concludes
is
that
necessary
admitting
is
the
persuasive.
court
Declaration
Oman
The
would
prejudice EIG by interfering with its trial preparation, adding to
its expenses, and delaying its day in court. 6
not be cured by a continuance.
its
analysis
without
the
The court will therefore conduct
benefit
Declaration and any reference
These effects could
to
of
it
Oman's
testimony.
in Kayne's
Reply will
The
be
disregarded.
III.
Kayne
alleges
Kayne's Motion for Referral
that
EIG
knowingly
included
inaccurate
information in all of its registration applications for the works
at issue in this case.
follows:
using
(1)
Kayne's arguments can be summarized as
Oil Daily was not eligible for group registration
Form G/DN because
EIG did not
6
either author or possess
In anticipation of Kayne's objection to the striking of the
Oman Declaration, the court notes that Kayne offers the Declaration
"not to assist the trier of fact at trial, but to aid the Court's
purely legal analysis." Defendants' Response to Plaintiffs' Motion
to Strike Declaration, Docket Entry No. 238, p. 1.
Because the
court is capable of conducting its legal analysis and drawing its
conclusions about the practices of the Copyright Office using
materials previously available to both parties (e.g., undisputed
facts in the record, case law, learned treatises, and published
guidance from the Copyright Office) , Kayne will not be prejudiced
by the exclusion of the Oman Declaration. The court does not rely
on any "unsupported arguments" in EIG's Opposition.
-6-
exclusive rights to all of the content contained in the registered
issues; or (2) if Oil Daily did qualify for group registration, EIG
provided inaccurate information by failing to identify the Oil
Daily issues as "compilations."
A.
Standard of Review
Section 411 (b) (1) states:
A certificate of registration satisfies the requirements
of this section and section 412, regardless of whether
the certificate contains any inaccurate information,
unless(A) the inaccurate information was included on the
application
for
copyright
registration
with
knowledge that it was inaccurate; and
(B) the inaccuracy of the information, if known,
would have caused the Register of Copyrights to
refuse registration.
Section 411(b) (2) requires that "[i]n any case in which inaccurate
is alleged, the court shall request the Register
information . .
of
Copyrights
to
advise
the
court
whether
the
inaccurate
information, if known, would have caused the Register of Copyrights
to refuse registration"
The
Seventh
potential
for
litigants
to
(emphasis added)
Circuit,
abuse,"
"be
wary
has
of
recognizing
strongly
using
the
statute's
cautioned
this
device
both
in
"obvious
courts
the
and
future."
DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616, 625 (7th
Cir. 2013) .
that
(1)
Courts may therefore require litigants to "demonstrate
the
registration
application
-7-
included
inaccurate
information;
inaccuracy
and
in
his
requesting review.
(2)
the
registrant
submission
to
the
knowingly
Copyright
included
Office"
the
before
Id. (noting that the Register of Copyrights had
endorsed such an approach) .
B.
Form G/DN
Form G/DN may be used for the group registration of daily
newspapers and newsletters.
In order for a newsletter to qualify
for group registration it must meet the conditions prescribed by
37 C.F.R.
202.3(b) (9).
Kayne argues that Oil Daily does not meet
two of those conditions:
(1) that "[t]he works must be essentially
§
all new collective works or all new issues that have not been
published before" and (2) that "[e]ach issue must be a work made
for hire."
37 C.F.R.
§
202.3 (b) (9) (ii), (iii)
Kayne alleges that the issues of Oil Daily EIG submitted for
group registration contain articles authored by Singaporean and
Russian authors and republished Reuters articles for which EIG did
not
have
exclusive
rights.
Kayne
argues
that
the
content
in
question could not have been work made for hire due to foreign
copyright laws and that the issues were not all new because they
contained preexisting content.
EIG responds that Kayne's focus on
the individual contributions within each issue instead of the issue
as a whole is misguided.
EIG contends that each "work" being
registered is an entire issue of Oil Daily and that each issue is
an essentially all new work made for hire.
-8-
The court agrees.
Kayne's
arguments
fatally
misapply
the
term
"work"
to
the
contributions within each issue rather than the issues themselves.
The instructions contained in the registration application
forms resolve the argument as to what "work" was being registered.
Form G/DN defines
a
newsletter as
a
"serial."
(Docket Entry
No. 204-22, p. 1)
Form SE defines a serial as "a work issued or
intended to be issued in successive parts bearing numerical or
chronological
designations
indefinitely."
and
to
intended
(Docket Entry No.
204-23,
be
1)
The form also
p.
continued
instructs registrants not to use it to register "an individual
contribution to a serial."
Id.
regarding
the
authorship:
"In
Form SE states the following
case
of
a
serial
issue,
the
organization that directs the creation of the serial issue as a
whole
is
generally
work'
considered
the
author
of
the
'collective
whether it employs a staff or uses the efforts of
volunteers."
Id.
(emphasis
added) .
Form
G/DN
defines
a
"collective work" as "a work, such as a periodical issue, in which
a number of contributions, constituting separate and independent
works
in
themselves,
are
assembled
(Docket Entry No. 204-22, p. 1)
'collective
work'
means
that
into
a
collective
whole."
Form SE states that "[t]he term
the
author
is
responsible
for
compilation and editorial revision and may also be responsible for
certain individual contributions to the serial issue."
Entry No. 204-23, p. 2)
(Emphasis added.)
-9-
(Docket
When read together, the language cited above support EIG's use
of
Form G/DN to
register
issues
of
Oil
Daily as
long as
directed the creation of each issue as a collective whole.
independent authorship of,
or nonexclusive rights to,
EIG
The
component
parts such as articles or editorial content does not preclude the
use of serial or group registration.
Kayne's argument that in
order to use Form G/DN a registrant must have authored all of the
content of a newspaper or newsletter conflicts with the relevant
statute:
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, and does not imply any exclusive
right in the preexisting material. The copyright in such
work is independent of, and does not affect or enlarge
the scope, duration, ownership, or subsistence of, any
copyright protection in the preexisting material.
17 U.S.C.A.
§
103(b).
As one treatise puts it:
Pursuant to this section, ownership of the collective
work does not, by itself, result in any ownership in the
individual contributions. Accordingly, registration of
the collective work does not imply that the individual
contributions are covered by the collective work
registration.
5
Patry
on
Copyright
§
17:91.
Nor
does
the
inclusion
of
preexisting material affect whether or not a particular issue is
essentially all new, since it is the novelty of the collective work
as a whole that matters.
Having concluded that the
complete issue of Oil Daily,
"work"
being registered is each
the court turns to the question of
whether each issue of Oil Daily was a work made for hire.
-10-
The
definition of a
"work made for hire"
is "a work prepared by an
employee within the scope of his or her employment."
(Docket Entry No. 204-22, p. 1).
Form G/DN
Kayne does not dispute that EIG
directed, controlled, and supervised the creation of each issue as
a whole or that an EIG employee ultimately prepared each issue. 7
Each issue of Oil Daily, in its entirety, therefore qualifies as a
work made for hire.
The court finds no authority supporting Kayne's positions that
Form G/DN cannot be used to register works containing independently
authored contributions or that the contributions of EIG' s employees
working abroad render the issues ineligible for group registration.
The
court
Form G/DN
therefore
to
concludes
register
Oil
that
Daily
EIG was
issues
and
authorized
that
it
to use
provided
accurate information in its registration applications by doing so.
C.
"Compilation"
In its Reply Kayne effectively concedes that EIG was permitted
to utilize group registration for Oil Daily,
could
have
copyrights." 8
used
Form
G/DN
if
it
Kayne argues, however,
claimed
stating that
only
"EIG
compilation
that by checking the boxes
7
The reasoning applied above to the distinct contributions
contained within an issue is likewise applicable to the editorial
content and contributions of EIG's Singaporean editor. The works
in which EIG claimed authorship are the completed issues of Oil
Daily. If EIG was ultimately responsible for the finished product,
it is the author for registration purposes.
8
Reply, Docket Entry No. 232, p. 5 (emphasis in original).
-11-
for "Text" and "Editing" under "Author's Contribution" on Form G/DN
and failing to check the box marked "Compilation," EIG knowingly
provided inaccurate information and attempted to assert a copyright
for content that EIG did not author.
The court is not persuaded by
this argument.
The
Compendium of
U.S.
Copyright
Office
Practices,
Third
Edition, the administrative manual of the Register of Copyrights,
offers guidance to claimants regarding the nature of authorship
they may claim. 9
It states that "[a] s a general rule,
Copyright Office may accept a
the U.S.
claim in text or editing if the
author contributed a sufficient amount of written expression to
each issue."
PRACTICES§
U. S . COPYRIGHT OFFICE, COMPENDIUM OF U. S . COPYRIGHT OFFICE
1112.2
(3d
ed.
2014)
(providing
instructions
for
It further states that "[t]he Office may
completing Form G/DN) .
accept a claim in compilation if there is a sufficient amount of
creative
expression
in
the
selection,
coordination,
arrangement of material that appears in each issue."
9
and/or
Id.
Courts may consider the interpretations set forth in
administrative manuals, policy statements, and similar materials
"to the extent that those interpretations have 'the power to
persuade.'"
Christensen v. Harris County, 120 S. Ct. 1655, 1663
(2000) (internal citations omitted) . Such materials "may constitute a 'body of experience and informed judgment' to which [courts]
may resort for guidance." Clackamas Gastroenterology Associates,
P. C. v. Wells, 123 S. Ct. 1673, 1680 n.9 (2003) (citations
omitted).
"The weight of [the agency's] judgment in a particular
case
will
depend
upon
the
thoroughness
evident
in
its
consideration, the validity of its reasoning, its consistency with
earlier and later pronouncements, and all those factors which give
it power to persuade
" Skidmore v. Swift & Co., 65 S. Ct.
161, 164 (1944).
-12-
EIG contends, and Kayne does not dispute, that "the majority
of the content contained in OD consists of previously unpublished
articles created by reporters and editors employed by Plaintiffs. " 10
The majority of EIG's contribution as the author of each issue is
therefore not in selecting, coordinating, and/or arranging, but in
text and editing.
The court concludes
that EIG contributed a
sufficient amount of written expression to each issue to support
claims in the "Text" and "Editing" of each issue of Oil Daily. 11
The court is not persuaded that EIG's content selection showed
sufficient creative expression to require, or even entitle, EIG to
a claim in "Compilation."
that
EIG
provided
Kayne has therefore not demonstrated
inaccurate
information
by
leaving
the
"Compilation" box unchecked on its registration.
D.
Knowledge
Assuming
arguendo
that
EIG's
registration
applications
contained inaccurate information, Kayne has not demonstrated that
EIG
knew
of
the
inaccuracies.
EIG
might
reasonably
have
interpreted the Copyright Office's guidance in the same way that
the court has .
10
Kayne relies on two facts to demonstrate EIG's
0pposition, Docket Entry No. 229, p. 23.
11
The Compendium notably uses the phrase "sufficient amount,"
which implies, contrary to Kayne's argument, that a claimant need
not author the entirety of an issue in order to support claims for
text and editing.
-13-
knowledge that its registration applications contained inaccurate
information.
Kayne points out
that
(1)
although EIG asserted
claims in "Compilation" from December 2004 through October 2007, it
subsequently declined to do so and (2) the Copyright Office amended
EIG's registration application for the January 2009 issues of Oil
Daily to remove a claim for "graphical content" and to include a
claim in "Compilation."
facts
Kayne asks the court to infer from those
that EIG knew it was providing inaccurate information in
subsequent registrations.
That inference is unwarranted.
The change in EIG's applications subsequent to October of 2007
does
not
establish
that
EIG
knowingly
information to the Copyright Office.
provided
inaccurate
A change in EIG's claimed
contribution could instead indicate that EIG was correcting what it
perceived to be an existing inaccuracy.
The change in applications
alone does not support an inference that EIG knowingly provided
inaccurate information in subsequent applications.
Nor does the
amendment to the January 2009 issue of Oil Daily show that EIG knew
its
subsequent
registration
applications
were
inaccurate.
Beginning with the first application submitted after the amendment
was made following the April 29, 2009, conversation referenced in
the
amended application, 12 EIG no
"Pictorial
12
and
graphical
longer claimed authorship of
content,"
which
could
reflect
EIG's
Certificate of Registration, Docket Entry No. 38-4, p. 14.
-14-
attempt
to
provide
applications
therefore
alone
failed
more
do
to
not
information. 13
accurate
the
Kayne
has
knowledge. 14
demonstrate
demonstrate
Again
that,
assuming
EIG
provided
inaccurate information on its registration applications, EIG did so
knowingly.
IV.
Conclusions and Order
For the reasons discussed above,
the court concludes that
Kayne's designation of an expert in its Reply is untimely and
unnecessary.
Accordingly, Plaintiffs' Motion to Strike the Expert
Declaration of Ralph Oman (Docket Entry No. 236) is GRANTED.
The
court also concludes that Kayne has failed to demonstrate that EIG
knowingly
provided
inaccurate
information
to
the
Register
of
Copyrights.
Accordingly, Defendants' Motion for Referral to the
Register
Copyrights
of
Pursuant
to
17
U.S.C.
§
4ll(b)
and
a
Concurrent Stay (Docket Entry No. 204) is DENIED.
SIGNED at Houston, Texas, on this the 26th day of July, 2017.
SIM LAKE
UNITED STATES DISTRICT JUDGE
13
Id. at 17.
14
Although the court does not reach the issue of materiality,
the amendment shows that the Copyright Office did not refuse the
registration due to EIG's apparent mistake.
-15-
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