Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

INNOVATIVE NETWORKS, INC. v. SATELLITE AIRLINES TI

January 4, 1995

INNOVATIVE NETWORKS, INC., Plaintiff, against SATELLITE AIRLINES TICKETING CENTERS, INC., AL YOUNG, WILLIAM YOUNG and BERNARD BARTON, JR., Defendants.


The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 In this action for copyright and trade dress infringement, tortious interference with contract and unfair competition, defendants Satellite Airlines Ticketing Centers, Inc., *fn1" Al Young and William Young (collectively, the "Satellite Defendants") move, pursuant to Federal Rules of Civil Procedure 12(c) and 56, for (1) judgment on the pleadings dismissing Counts III through VI of the Complaint; *fn2" and (2) summary judgment dismissing Count II of the Complaint. *fn3" Plaintiff Innovative Networks, Inc. ("INI") opposes the Satellite Defendants' motion and cross-moves for partial summary judgment on liability as to Counts I, II, III and V of the Complaint. For the reasons set forth below, the parties' motions are granted in part and denied in part.

 BACKGROUND *fn4"

 I. Barton's Employment With INI

 From 1989 until 1991, INI was engaged in the business of designing, constructing and leasing airline business centers (the "INI Centers"). *fn5" In February 1991, INI opened an INI Center in Manhattan (the "INI New York Center") and, in August 1991, INI, through a wholly-owned subsidiary, opened an INI Center in San Francisco, California (the "INI San Francisco Center"). Leonard, David and Steven Kleiman were directors and shareholders of INI during the relevant time period.

 INI's largest competitor consisted of a group of companies and proprietorships known as the Satellite Companies, owned and operated by defendant Al Young. Defendant William Young, Al Young's son, works for the Satellite Companies. The Satellite Companies currently operate sixteen airline business centers in six states.

 From August 1989 until July 1991, defendant Barton was an officer, director and shareholder of INI. Barton was responsible for procuring occupants for the INI Centers, negotiating leases with landlords and designing the INI Centers. On August 14, 1989, INI entered into an employment contract (the "Employment Contract") with Barton. Paragraph four of the Employment Contract provided, in relevant part, that Barton

 
acknowledges and agrees that all of the business leads developed during the course of employment . . . shall be the property of the Employer and all of the foregoing is designated and agreed to be "Privileged Information." In the event that employment is terminated for any reason, or should this Employment Agreement not be renewed upon the expiration of its stated term, [Barton] agrees that he shall not directly or indirectly utilize any of the Privileged Information and will not directly or indirectly engage in any similar or competing business in the continental United States for a period of 12 months from the date of termination of employment.

 See the Employment Contract, annexed to the Tersigni Aff. as Exh. "4," at P 4. That same day, INI also entered into a shareholder's agreement with Barton (the "Shareholder's Agreement"). Paragraph 3.7 of the Shareholder's Agreement provided that:

 
In the event that the Employment Agreement[] . . . is not extended, then all of Barton's . . . shares shall be deemed offered to the Corporation . . . which offer shall be deemed immediately accepted by the Corporation as of the date that the Corporation delivers written notice of its intention not to extend the Employment Agreement[] or Barton . . . delivers written notice of his refusal to accept an extension offer. In such event, the terminated employee shall have the option to defer the purchase of his shares by notice given to the Corporation and the other Shareholders within 10 days from the termination date of the Employment Contract and the following shall occur: . . . (e) The term of the restrictive covenant contained in Paragraph 4 of the Employment Agreement shall be extended until one year after the date of purchase of the shares.

 See the Shareholder's Agreement, annexed to the Exhibits to Plaintiff's Statement of Material Facts Not in Dispute (the "Exhibits") as Exh. "2," at P 3.7.

 The Employment Contract expired, by its terms, on January 31, 1990. Notwithstanding the expiration of the Employment Contract, however, Barton continued to work at INI until July 24, 1991, when he left the company.

 In 1990, the Youngs, the Kleimans and Barton met to discuss a possible joint venture agreement between INI and the Satellite Companies. According to Al Young:

 
During the course of this meeting, and at one or more follow up meetings with the Kleimans and/or Barton, plaintiff's representatives, in the context of a potential business combination, discussed their plans for new locations and generally their concepts of how the business should be operated.

 In the beginning of 1991, INI developed plans for an INI Center in Orlando, Florida (the "INI Orlando Center"). As part of this development, INI negotiated with JMB Properties Company ("JMB"), the managing agent for the owner of the building, on all of the material terms of the lease for the INI Orlando Center. INI also developed a set of plans for the construction of the INI Orlando Center, including a floor plan, see blueprint for the construction of the INI Orlando Center, annexed to the Complaint as Exh. "A" (the "INI Orlando Floor Plan"), *fn6" and designs for counter facilities, see blueprints, designs and drawings for the construction of INI's 32mm modular work stations, annexed to the Complaint as Exh. "B" (the "INI Work Station Designs"). In addition, INI solicited several airlines, including United Airlines, US Air and Continental Airlines, to occupy the INI Orlando Center and subsequently received a verbal commitment of occupancy from United Airlines.

 In July 1991, Barton left employment with INI. *fn7" At the time of his departure, INI contends that Barton took with him copies of numerous documents belonging to INI, including: (1) the INI Orlando Floor Plan; (2) the INI Work Station Designs; (3) the proposed lease between INI and JMB for the INI Orlando Center (the "Draft Lease Agreement"); (4) INI's standard license agreement (the "Standard License Agreement"); (5) INI contract proposals with United Airlines, US Air, Continental Airlines and other companies (the "Contract Proposals"); and (6) a rolodex with the names, addresses, and telephone numbers of INI's contacts (the "Rolodex"). *fn8" After Barton's departure, INI continued to own and operate its airline business centers in New York and San Francisco until early 1992.

 II. Barton's Employment With Satellite

 On August 1, 1991, Barton entered into a consulting agreement (the "Consulting Agreement") with Port Aviation Centers, Inc. ("Port Aviation"), a company owned by the Satellite Companies. The Consulting Agreement provided that Barton would be paid $ 15,000 for each location that Port Aviation successfully developed. See Consulting Agreement, annexed to the Exhibits as Exh. "29," at P 4. Barton represented that his execution of the Consulting Agreement and his performance thereunder would not constitute a violation or breach of any other agreement to which he was a party. Id. at P 7. Barton also agreed to indemnify Port Aviation against all claims resulting from a breach of his representation.

 After Barton commenced employment with Port Aviation, Port Aviation developed plans to implement an airline business center at the same site in Orlando that INI was planning to use for the INI Orlando Center (the "Satellite Orlando Center"). According to INI, Barton negotiated a lease with JMB for the development of the Satellite Orlando Center. INI contends that Barton also placed United Airlines and US Air in the Satellite Orlando Center, using the Standard License Agreement to draft final lease agreements between the Satellite Companies and the airlines. In addition, the Satellite Companies placed a "Satellite" sticker over the INI name on the INI Orlando Floor Plan and distributed copies of the Plan to numerous airlines. *fn9" Without revealing his change of employer, Barton also obtained from INI's architect a complete set of blueprints used to construct the INI New York Center (the "INI New York Blueprints") for use in developing the Satellite Orlando Center. The Satellite Orlando Center was opened in November 1991.

 The next month, INI learned that the Satellite Orlando Center had been completed utilizing Barton's services and expertise. *fn10" As a result, INI sent a letter to the Youngs demanding that the Youngs cease using Barton's services in violation of his contract with INI. The Satellite Defendants responded that INI's allegations were "without foundation." Subsequently, INI obtained a copyright registration for the INI Orlando Floor Plan and the INI Work Station Designs.

 III. The complaint

 On March 30, 1992, INI commenced this action for copyright and trade dress infringement (Counts I and II), tortious interference with contract (Count III), breach of contract (Count IV), unfair competition and misappropriation (Count V) and conspiracy and punitive damages (Count VI). Subsequently, on May 4, 1992, the Satellite Defendants answered the Complaint and asserted a cross-claim for indemnity and/or contribution against defendant Barton.

 Barton has neither appeared in this action nor answered the Complaint. In March 1993, Barton filed a voluntary Chapter Seven bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York. The Satellite Defendants commenced an adversary proceeding in the Bankruptcy Court to determine the dischargeability of their cross-claims against Barton in this action. The Satellite Defendants also moved in the Bankruptcy Court for an order vacating the automatic stay to permit them to proceed against Barton on their cross-claims. That motion was granted and the automatic stay was vacated. INI did not commence an adversary proceeding in the Bankruptcy Court, however, and its claims against Barton were discharged.

 The Satellite Defendants now move, pursuant to Federal Rules of Civil Procedure 12(c) and 56, for (1) judgment on the pleadings dismissing Counts III through VI of the Complaint; and (2) summary judgment dismissing Count II of the Complaint. INI cross-moves for partial summary judgment on liability as to Counts I, II, III and V of the Complaint. The Court will consider each of the parties' motions in turn.

 DISCUSSION

 I. Standard for Summary Judgment

 Under Rule 56(c) of the Federal Rules of Civil Procedure, a motion for summary judgment must be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party must initially satisfy a burden of demonstrating the absence of a genuine issue of material fact, which can be done merely by pointing out that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The nonmoving party then must meet a burden of coming forward with "specific facts showing that there is a genuine issue for trial," Fed. R. Civ. P. 56(e), by "a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. at 322.

 The court "must resolve all ambiguities and draw all reasonable inferences in favor of the party defending against the motion." Eastway Constr. Corp. v. New York, 762 F.2d 243, 249 (2d Cir. 1985); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970); Hathaway v. Coughlin, 841 F.2d 48, 50 (2d Cir. 1988); Knight v. United States Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987). But the court is to inquire whether "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for the party," Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986), and to grant summary judgment where the nonmovant's evidence is merely colorable, conclusory, speculative or not significantly probative. Id. at 249-50; Knight v. United States Fire Ins. Co., 804 F.2d at 12, 15; Argus Inc. v. Eastman Kodak Co., 801 F.2d 38, 45 (2d Cir. 1986), cert. denied, 479 U.S. 1088, 94 L. Ed. 2d 151, 107 S. Ct. 1295 (1987). To determine whether the nonmoving party has met his or her burden, the court must focus on both the materiality and the genuineness of the factual issues raised by the nonmovant. As to materiality, "it is the substantive law's identification of which facts are critical and which facts are irrelevant that governs." Anderson v. Liberty Lobby, Inc., 477 U.S. at 248. A dispute over irrelevant or unnecessary facts will not preclude summary judgment, id., but the presence of unresolved factual issues that are material to the outcome of the litigation mandates a denial of the summary judgment motion. See, e.g., Knight v. United States Fire Ins. Co., 804 F.2d at 11-12.

 Once the nonmoving party has successfully met the burden of establishing the existence of a genuine dispute as to an issue of material fact, summary judgment must be denied unless the moving party comes forward with additional evidence sufficient to satisfy his or her ultimate burden under Rule 56. See Celotex Corp. v. Catrett, 477 U.S. at 330, n.2 (Brennan, J., dissenting). In sum, if the court determines that "the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986) (quoting First Nat'l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289, 20 L. Ed. 2d 569, 88 S. Ct. 1575 (1969)).

 II. Copyright Infringement

 Count I of the Complaint alleges that the Satellite Defendants infringed INI's copyright in the "Plans," which are defined in the Complaint as the INI Orlando Floor Plan and the INI Workstation Designs. See Complaint at PP 10, 45. INI moves for summary judgment on liability against the Satellite Defendants pursuant to this Count. In response, the Satellite Defendants argue that material issues of fact exist as to (1) the validity of INI's copyright; and (2) whether INI abandoned its copyright when it distributed copies of its work to prospective tenants of the INI Orlando Center. For the reasons that follow, plaintiff's summary judgment motion is granted in part and denied in part.

 A. The Validity of INI's Copyright

 
1. The INI Orlando Floor Plan

 It is well-settled that, to establish a claim for copyright infringement, a plaintiff "'must show ownership of a valid copyright and copying by the defendant.'" Eden Toys, Inc. v. Marshall Field & Co., 675 F.2d 498, 499 (2d Cir. 1982) (quoting Warner Bros., Inc. v. American Broadcasting Cos., 654 F.2d 204, 207 (2d Cir. 1981)); see also Laureyssens v. Idea Group, Inc., 964 F.2d 131, 139 (2d Cir. 1992) (same). A certificate of copyright registration is prima facie evidence of the validity of a copyright, shifting the burden to the defendants to prove the contrary. 17 U.S.C. § 410(c); Gund, Inc. v. Applause, Inc., 809 F. Supp. 304, 307 (S.D.N.Y. 1993).

 INI has provided the Court with a copy of the certificate of copyright registration for the INI Orlando Floor Plan, which indicates that Martin drafted the INI Orlando Floor Plan on behalf of INI as a work for hire. See Certificate of Copyright Registration, annexed to the Exhibits as Exh. "25." This certificate is prima facie evidence of the validity of INI's copyright in the INI Orlando Floor Plan, thereby shifting the burden to the Satellite Defendants to prove the contrary. Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir. 1985); Gund, Inc. v. Applause, Inc., 809 F. Supp. at 307. The Satellite Defendants attempt to meet this burden with several lines of argument, each of which will be addressed below.

 The Satellite Defendants first contend that an issue of fact exists as to what entity owns the copyright in the INI Orlando Floor Plan. Copyright ownership "vests initially in the author or authors of the work." 17 U.S.C. § 201. "As a general rule, the author is the party who actually creates the work, that is, the person who translates an idea into a fixed, tangible expression entitled to copyright protection." Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737, 104 L. Ed. 2d 811, 109 S. Ct. 2166 (1989) (citing 17 U.S.C. § 102). Where a work is made for hire within the meaning of the Copyright Act, however, "the employer or other person for whom the work was prepared is considered the author . . ., and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright." 17 U.S.C. § 201(b). The Copyright Act defines a work made for hire as:

 
(1) a work prepared by an employee within the scope of his or her employment; or
 
(2) a work specially ordered or commissioned for use if the parties shall expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

 17 U.S.C. § 101.

 In the case at hand, the certificate of copyright registration states that the INI Orlando Floor Plan was created by Martin as a work for hire. In order for the INI Orlando Floor Plan to be considered a work for hire, however, Martin must have prepared the plan within the scope of his employment pursuant to Section 101(1). See Merchant v. Lymon, 828 F. Supp. 1048, 1058 (S.D.N.Y. 1993) ("Generally, courts have applied the work for hire doctrine only to works made by employees in the regular course of their employment.") *fn11"

 The term "employee" is defined in accordance with the general common law of agency. Community For Creative Non-Violence v. Reid, 490 U.S. at 740-41. Paramount to this definition is whether the hiring party has the right to control the manner and means by which the product is accomplished. See M. Nimmer & D. Nimmer, Copyright § 5.03[B] (1994). Factors to consider in making this determination include the (1) skill required; (2) source of the instrumentalities and tools; (3) location of the work; (4) duration of the relationship between the parties; (5) extent of the hired party's discretion over when and how long to work; (6) method of payment; (7) hired party's role in hiring and paying assistants; (8) tax treatment of the hired party; and (9) provision of employee benefits. Community For Creative Non-Violence v. Reid, 490 U.S. at 751-52. The Court should also consider whether the (1) work is part of the regular business of the hiring party; (2) hiring party is in business; and (3) hiring party has the right to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.