this contention, Masudaya asserts two alternative trust theories. The first is that OSP held legal title for Masudaya on an express trust. Masudaya contends that OSP breached this trust in assigning the copyright to SK&I, that SK&I took only legal title subject to the Masudaya-OSP trust, and that Masudaya's equitable interest now prevails over any interest SK&I may have gained from OSP. Masudaya's second trust theory is that even if an express trust was not created by the Masudaya-OSP assignment, SK&I nevertheless holds its interest in the copyright subject to a constructive trust.
In response, SK&I first disputes that an oral agreement to reassign was ever reached. Moreover, it contends that any such oral agreement is invalid under the Copyright Act, which requires transfers of copyright ownership to be in writing. Second, it contends that Masudaya's asserted trust-based rights in the copyright are preempted by the Copyright Act. Third, even assuming no preemption, SK&I contends that there is no legal basis for finding that the legal and equitable interests in the copyright had been separated. Alternatively, as an evidentiary matter SK&I points to the language in the 1993 Assignment and to representations made by Masudaya/OSP during the GAF litigation as proof that Masudaya assigned away its entire interest -- both legal and equitable -- in the copyright. Finally, SK&I argues that the equitable doctrine of laches bars Masudaya from claiming an interest in the copyright.
II. Standard of Review
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the 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). A genuine issue for trial exists if, based on the record as a whole, a reasonable jury could find in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). On a motion for summary judgment, all evidence must be viewed and all inferences must be drawn in the light most favorable to the non-moving party. City of Yonkers v. Otis Elevator Co., 844 F.2d 42, 45 (2nd Cir. 1988).
The party seeking summary judgment bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). If the movant satisfies that burden, the onus then shifts to the non-moving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 250. At this stage, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). Bald assertions or conjecture unsupported by evidence are insufficient to overcome a motion for summary judgment. Carey v. Crescenzi, 923 F.2d 18, 21 (2nd Cir. 1991); Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2nd Cir. 1990).
In this case, motions for summary judgment were filed by both Masudaya and SK&I. "When both sides move for summary judgment, neither side is barred from asserting that there are issues of fact, sufficient to prevent the entry of judgment, as a matter of law, against it." Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2nd Cir. 1993). When faced with cross-motions for summary judgment, the court must consider each motion independently of the other, must in each instance view the facts and draw all reasonable inferences in favor of the non-moving party, and is not required to grant summary judgment for either side. Id.
III. The Oral Agreement
Masudaya contends that notwithstanding the written 1993 Assignment, it had an enforceable agreement with OSP/Top Banana that the copyright would be reassigned to Masudaya upon completion of the GAF litigation. At issue in these motions, however, is not whether Masudaya has an enforceable agreement against OSP, but whether SK&I can be bound to this agreement if it existed between Masudaya and OSP. Under New York law, "the assignee of rights under a bilateral contract is not bound to perform the assignor's duties under the contract unless [it] expressly assumes to do so." Lachmar v. Trunkline LNG Co., 753 F.2d 8, 9-10 (2nd Cir. 1985) (per curiam); accord 805 Third Ave. Co. v. Excel Mktg. Enter. Corp., 1987 U.S. Dist. LEXIS 5281, No. 85-5205, 1987 WL 12822, at *3 (S.D.N.Y. June 18, 1987), aff'd, 847 F.2d 834 (2nd Cir. 1988); Hudson Eng'g Assocs., P.C. v. Ames Dev. Corp., 643 N.Y.S.2d 677, 678, 228 A.D.2d 477, 477-78 (2nd Dep't 1996). Masudaya offers no evidence -- indeed, it does not even suggest -- that SK&I, as OSP's assignee, expressly assumed OSP's obligations under the Masudaya/OSP reassignment agreement. Simply put, contract theory does not enable Masudaya to hold SK&I accountable for any promises made by OSP.
As an alternative to its contract-based theory, however, Masudaya puts forth a trust-based theory under which it contends that SK&I assumed OSP's obligations. The Court now addresses whether SK&I can be bound to OSP's agreement with Masudaya under a trust theory.
IV. The Trust Theory
Masudaya argues that the circumstances surrounding the 1993 Assignment either gave rise to an express trust, with OSP/Top Banana holding legal title to the copyright in trust for Masudaya, or require the imposition of a constructive trust in its favor. This trust theory differs from the contract theory in the following respect. The contract theory takes the 1993 Assignment as having done exactly what it says: transferring "the entire right, title, and interest" in the copyright. It presumes that OSP received all rights, both legal and equitable, in the copyright, and considers whether OSP made a separate oral promise to reassign those rights. By contrast, in advancing its trust theory Masudaya asserts that notwithstanding the unequivocal contract language, it assigned only legal title to OSP and retained equitable title for itself. According to Masudaya, OSP breached this trust by attempting to assign all legal and equitable rights in the copyright to SK&I. Masudaya contends that because SK&I was not a bona fide purchaser, it took the copyright from OSP also subject to the trust.
SK&I's initial objection to Masudaya's trust theory is that the Copyright Act preempts state trust law. The Court disagrees.
Section 301(a) of the Copyright Act preempts "all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 . . . ." 17 U.S.C. § 301(a). The Act makes clear, however, that "nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to . . . activities violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 . . . ." Id. § 301(b)(3).
Although Congress did not define "equivalence," the courts have given it meaning. In the Second Circuit, the Copyright Act preempts only those state law rights that "may be abridged by an act which, in and of itself, would infringe one of the exclusive rights" provided by federal copyright law. Computer Assocs. Int'l v. Altai, Inc., 982 F.2d 693, 716 (2nd Cir. 1992) (quoting Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 200 (2nd Cir. 1983), rev'd on other grounds, 471 U.S. 539, 85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985)). If a state law violation involves an "extra element" -- i.e., if it is predicated upon an act beyond mere reproduction or the like -- then the right is not "equivalent" to any of the rights within the general scope of the Act. Id.; see also National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 850 (2nd Cir. 1997); Kregos v. Associated Press, 3 F.3d 656, 666 (2nd Cir. 1993); Harper & Row, 723 F.2d at 200; 1 Nimmer § 1.01[B], at 1-12 to 1-13.
Under this so-called "extra element" test, "[a] state law claim is not preempted if the extra element changes the nature of the action so that it is qualitatively different from a copyright infringement claim." Computer Assocs., 982 F.2d at 716 (citation and internal quotation marks omitted).
In determining whether a claim meets this standard, courts must consider "what the [party] seeks to protect, the theories in which the matter is thought to be protected and the rights sought to be enforced." Id. Although the extra element test "should not be applied so as to allow state claims to survive preemption easily," National Basketball Ass'n, 105 F.3d at 851, "many state law rights that can arise in connection with instances of copyright infringement satisfy the extra element test, and thus are not preempted by section 301." Computer Assocs., 982 F.2d at 717.
With respect to Masudaya's trust theory, two sources indicate that the Copyright Act does not preempt such state law rights: legislative history and case law.
1. Legislative History
As enacted, § 301 describes only generally those state law rights that it preempts -- i.e., those rights that are "equivalent" to copyright. As originally drafted, however, § 301(b)(3) included an illustrative list of examples of non-equivalent state law rights:
Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to . . . activities violating rights which are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106, including breaches of contract, breaches of trust, invasion of privacy, defamation, and deceptive trade practices such as passing off and false representation.