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Archie MD, Inc. v. Elsevier, Inc.

United States District Court, S.D. New York

March 13, 2017

ARCHIE MD, INC., Plaintiff,
ELSEVIER, INC., Defendant.


          JED S. RAKOFF, U.S.D.J.

         In this action, plaintiff Archie MD, Inc. ("Archie") brings suit against defendant Elsevier, Inc. ("Elsevier") alleging infringement of its copyright in hundreds of 3-D medical animations that it had previously licensed to Elsevier, breach of the parties' license agreement, and misappropriation of its trade secrets. Both parties move for summary judgment on the copyright infringement and breach of contract claims, and defendant also moves for summary judgment on plaintiff's trade secrets claim. In addition, defendant moves to strike as untimely plaintiff s inclusion of 18 previously unspecified animations in its copyright claim shortly before the close of discovery. The Court now denies plaintiff's motion for summary judgment in its entirety; grants defendant's motion for summary judgment on plaintiff's contract claim and trade secrets claim; grants defendant's motion for summary judgment on plaintiff's infringement claim as to all animations except defendant's allegedly derivative animations entitled "Blood Cell Formation" and "Types of Blood Cells"; denies defendant's motion for summary judgment on plaintiff's infringement claim as to those two allegedly derivative animations, but, as required, refers to the Copyright Office the __ determination whether the copyright registration covering plaintiff s animation that those two animations allegedly infringe is valid; and denies as moot defendant's motion to strike.

         The pertinent facts, undisputed except where indicated, are as follows:

         Archie was founded in 2002 by Dr. Robert Levine, a board-certified physician, who sought to create 3-D animations that effectively convey complex medical concepts. PI.'s Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 ("Pl.'s Rule 56.1 Stmt.") ¶¶ 1-4, ECF No. 38; Def. Elsevier's Local Rule 56.1 Statement of Material Facts Not in Dispute ("Def.'s Rule 56.1 Stmt.") ¶ 1, ECF No. 32.[1]Over time, Archie built a catalog of animations that depict human anatomy, the occurrence of diseases, and medical treatments. Pl.'s Rule 56.1 Stmt. ¶ 6; Def.'s Rule 56.1 Stmt. ¶ 1. Archie licenses those animations to educational and commercial entities. Def.'s Rule 56.1 Stmt. ¶ 2.

         Elsevier is a publisher of textbooks and other materials in the fields of medicine, health, and nursing. Pl.'s Rule 56.1 Stmt. ¶ 9; Def.'s Rule 56.1 Stmt. ¶ 4. It provides students and instructors with access to digital content, such as animations, through an online "learning management system" called "Evolve." Def.'s Rule 56.1 Stmt. ¶ 6.

         ____ License Agreement ("ALA"), under which Archie granted Elsevier a license to use its library of 3-D medical animations in connection with Elsevier's publications. Pl's Rule 56.1 Stmt. ¶¶ 15-16; Def.'s Rule 56.1 Stmt. ¶¶ 17[2], 35. Over the next ten years, the parties renewed the ALA twice, in 2008 and 2012, and supplemented it with addenda granting Elsevier licenses to use additional animations that Archie had produced. Pl's Rule 56.1 Stmt. ¶¶ 35-37, 39. In all, Archie provided Elsevier with more than 1000 animations. PI.'s Rule 5 6.1 Stmt. ¶ 41.

         Elsevier used the Archie animations in e-books, online courses, and online tests. Id. In addition, certain textbooks published by Elsevier allowed textbook users to view the animations online through Evolve. Id. Evolve, which is located at the web address, provides access to multiple companion sites, each Designed to company particular textbook. Pl. Alencre M.D. Inc.'s Resp. to Def. Elsevier, Inc.'s Local Rule 56.1 Statement of Material Facts Not in Dispute ("Pl.'s Rule 56.1 Resp.") ¶ 12, ECF No. 54; Def.'s Rule 56.1 Stmt. ¶ 12. When a student purchases one of the textbooks for which there are accompanying animations, she receives a code with which she may log in to Evolve and access the textbook's companion site, which features animations and other digital materials corresponding to the textbook. Def.'s Rule 56.1 Stmt. ¶¶ 12, 13.

         On August 15, 2005, shortly after the parties had executed the ALA, Archie submitted its first copyright registration, applying to register the animations it had licensed to Elsevier as a collection of unpublished works. Def.'s Rule 56.1 Stmt. ¶¶ 92, 94. During the term of the ALA, Archie filed four additional registrations for collections of unpublished works comprising animations that it had previously delivered to Elsevier. Def.'s Rule 56.1 Stmt. ¶¶ 97, 99, 102, 104, 108.[3]

         In June 2014, Elsevier notified Archie that it intended not to renew the ALA, and the agreement terminated on July 1, 2015. Pl.'s _______ Elsevier claims that it chose to end the agreement because Archie's animations were no longer a good value, Archie asserts that Elsevier intended to exploit the animations without paying for them.) To replace Archie's animations, Elsevier decided to create its own, and it hired a vendor, Trinity Animations ("Trinity"), to help it do so. Pl.'s Rule 56.1 Stmt. ¶ 66; Def.'s Rule 56.1 Stmt. ¶ 169. Trinity produced animations using multiple "references, " including textbooks, videos, and roughly 80 of Archie's animations that Elsevier provided to it. Pl.'s Rule 56.1 Stmt. ¶ 69-70, 72; Def.'s Rule 56.1 Stmt. ¶¶ 168, 172-73, 175-76. To date, Trinity has produced 150 animations for Elsevier's use. P.'s Rule 56.1 Stmt. ¶ 75. Since the termination of the ALA, Elsevier has removed some Archie animations from Evolve, Pl.'s Rule 56.1 Stmt. ¶ 91, though some such animations remain accessible, Pl.'s Rule 56.1 Stmt. ¶ 63.

         Archie commenced this action on August 22, 2016, asserting claims for: (1) copyright infringement, in violation of 17 U.S.C. §§ 106 and 501; (2) breach of contract; and (3) violation of the Defend Trade Secrets Act, 18 U.S.C. § 1836. See Compl., ECF No. 1. With regard to the first claim, the complaint alleged infringement of "at least 355 of Archie MD's copyrighted works" through Elsevier's use of the works after the ALA expired on July 1, 2015, as well as the_____________ MD's copyrighted animations." Compl. ¶ 35. The complaint did not list the specific animations that it alleged Elsevier was infringing, except by way of example. Rather than move to dismiss the complaint, Elsevier requested that Archie produce a list of the allegedly derivative Elsevier animations and the Archie animations that were allegedly infringed upon. In its disclosures pursuant to Federal Rule of Civil Procedure 26(A)(1) and supplements thereto, Archie ultimately provided a list of 515 Archie animations allegedly still in use by Elsevier, as well as 58 allegedly derivative Elsevier animations. Decl. of David A. Munkittrick in Supp. of Def. Elsevier, Inc.'s Mot. for Summ. J. dated Jan. 11, 2017 ("Munkittrick Decl. dated Jan. 11, 2017"), Ex. 2 at Ex. A, B, ECF No. 33.

         As noted, the parties cross-moved for summary judgment on plaintiff's first two claims, and defendant also moved for summary judgment on plaintiff's third claim. Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate when the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). The movant bears the burden of demonstrating the absence of a genuine dispute of fact, see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986), and, to award summary judgment, the court must be able to find "after drawing all reasonable inferences in favor of a non-movant" that "no reasonable trier of fact could find in favor of that party, " Heublein, Inc. v. United States, ______ considered material "if it might affect the outcome of the suit under the governing law, " and a dispute of fact is deemed "genuine" where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Holtz v. Rockefeller & Co., 258 F.3d 62, 69 (2d Cir. 2001) (internal quotation marks and citations omitted).

         Turning first to Archie's claim for copyright infringement, to prevail on such a claim a plaintiff must demonstrate "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publ'ns, Inc., v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Elsevier argues at the outset that Archie cannot maintain a copyright infringement claim because Archie's copyrights for the animations at issue were not validly registered. See 17 U.S.C. § 411(a); Whimsicality, Inc. v. Rubie's Costume Co., Inc., 891 F.2d 452, 453 (2d Cir. 1989) ("[P]roper registration is a prerequisite to an action for infringement."). In particular, it argues that Archie registered the animations as collections of unpublished works after it had licensed the animations to Elsevier and thereby published them. Archie disputes that licensing its animations amounted to publishing them within the meaning of the Copyright Act, and, even if it did, Archie argues that such an error would not invalidate its registrations.

         As it turns out, the Court need not rule on the validity of the registrations, for two reasons. First, assuming the copyrights are ______________ as to all but two of the many animations at issue. Second, with respect to those two, the Court refers the issue of the validity of applicable registrations to the Copyright Office pursuant to the provisions of the Prioritizing Resources and Organization for Intellectual Property Act of 2008 (the "PRO IP Act"). Each of these points bears elaboration:

         As to the merits of the infringement claim, Archie alleges infringement of its animations based on two theories: that Elsevier continued to use Archie's animations after the termination of the ALA and beyond the scope of the license provided therein, and that Elsevier copied Archie's animations when it created its own animations.

         With respect to the first of these theories, where "the contested issue is the scope of a license, rather than the existence of one, the copyright owner bears the burden of proving that the defendant's copying was unauthorized under the license . . . ." Graham v. James, 144 F.3d 229, 236 (2d Cir. 1998). "Copyright disputes involving only the scope of the alleged infringer's license present the court with a guestion that essentially is one of contract: whether the parties' license agreement encompasses the defendant's activities." Bourne v. Walt Disney Co., 68 F.3d 621, 631 (2d Cir. 1995). Under New York law, which the parties agree governs the ALA, see Pl.'s Rule 56.1 Stmt. ¶ 34, "the best evidence of what parties to a written agreement intend is what they say in their__________ and unambiguous must be enforced according to its terms." Keiler v. Harlequin Enters. Ltd., 751 F.3d 64, 68-69 (2d Cir. 2014) (internal citations omitted). "A contract is unambiguous when the contractual language has a definite and precise meaning about which there is no reasonable basis for a difference of opinion, " whereas "ambiguity exists where a contract's term could objectively suggest more than one meaning to one familiar with the customs and terminology of the particular trade or business." Id. When parties dispute the meaning of a contract clause, the court must consider the clause "in the context of the entire agreement, " and if "consideration of the contract as a whole will remove the ambiguity created by a particular clause, there is no ambiguity." Law Debenture Trust Co. of N.Y. v. Maverick Tube Corp., 595 F.3d 458, 467 (2d Cir. 2010).

         Section 4.3 of the ALA provides that, upon the ALA's termination, Elsevier "shall remove [the animations] from Publications in the form of electronically accessed websites or web pages" upon the earlier of two dates: (i) "the date the content of such website or webpage (or any underlying companion print Publication) is updated or modified (other than de minimus [sic][4]modifications), " and (ii) three years after termination. Decl. of Erin Ranahan in Supp. of Pl.'s Contentions in Mot. for Summ. J. dated Jan. 11, 2017 ("Ranahan Decl. dated Jan. 11, 2017"), Ex. 1 at ___________ provide access to Archie animations through Evolve after the ALA terminated in July 2015. See Pl.'s Rule 56.1 Stmt. ¶ 87. They also agree that some materials accessed through Evolve have undergone changes that are not de minimis since that time. See id. ¶ 89. Thus, what the parties dispute is primarily whether Evolve, as a whole, is a "website" under § 4.3 of the ALA. If Evolve is such a website, then the non-de-minimis changes to some of the materials on that site would have triggered the obligation to remove all Archie animations from Evolve, and Elsevier, by maintaining such animations on Evolve, would have exceeded the bounds of the license agreement. If Evolve is not such a website, then such a global obligation to remove all Archie animations from Evolve would not exist.

         Archie contends that Evolve is a website as that term is commonly defined. See Summit Health, Inc. v. APS Healthcare Bethesda, Inc., 993 F.Supp.2d 379, 390 (S.D.N.Y. 2014) ("Words and phrases are to be given their plain and ordinary meaning, and New York courts will commonly refer to dictionary definitions in order to determine that meaning."). In support of this argument, it relies on several dictionary definitions of a website, such as "[a] collection of thematically related, hyperlinked World Wide Web services, mainly HTML documents, usually located on a specific Web server and reachable through a URL assigned to the site.'" Droplets, Inc. v. E*trade Fin. Corp., 939 F.Supp.2d 336, 355 (S.D.N.Y. 2013) (quoting McGraw-Hill Dictionary of Scientific and Technical _________ (viz., and allows navigation through hyperlinks to other web pages, Archie concludes that Evolve falls within that definition.

         Elsevier, however, argues that "website" here has a special meaning under the ALA, and particularly under § 4.3, which in effect defines Evolve not as a website, but rather as a "web portal" through which textbook purchasers can access the specific companion websites corresponding to their respective books. While Elsevier also cites a dictionary definition, see Merriam-Webster's Collegiate Dictionary (11th ed. 2003) (defining a portal as "a site serving as a guide or point of entry to the World Wide Web and usually including a search engine or a collection of links to other sites arranged especially by topic"), the primary textual basis for this argument is the ALA's reference to "websites" and "web portals" as distinct. Specifically, the preamble to the ALA describes "Publications" as comprising, among many other things, Elsevier's "websites, web portals and other informational products and services." Ranahan Decl. dated Jan. 11, 2017, Ex. 1 at 1. If, therefore, "websites" and "web portals" are distinct, Elsevier argues, the former must refer only to the companion sites. In turn, § 4.3 requires removal of animations from "Publications in the form of electronically accessed websites or web pages" upon "the date the content of such website or webpage (or any underlying companion print Publication)" is substantially modified. Id. at 5. Since ________ publication, Elsevier concludes that considering Evolve a website under § 4.3 would render the phrase "underlying companion print Publication" meaningless. Def. Elsevier, Inc.'s Mem. of Law in Supp. of its Mot. for Summ. J. ("Def.'s Summ. J. Br.") at 16, ECF No. 31.

         This textual argument dovetails with Elsevier's functional analysis of § 4.3's removal requirement. Elsevier argues that the removal requirement only makes sense if a "website" is the companion site to a print publication, since that reading allows Elsevier to provide continued access to Archie animations corresponding to existing Elsevier textbooks so long as those textbooks are in use and are not revised. For example, if Evolve provides access to Archie animations that accompany a nursing textbook, Elsevier should not be required to remove access to those animations upon a revision to a pharmacology textbook, or an update to the materials on Evolve accompanying such a textbook. On this reading, the three-year limit, which applies if no non-de-minimis change has been made to a website or companion print publication, sets an outer bound on continued use that approximates the usual life cycle of a textbook.

         A contrary reading, advanced by Archie, would require the removal of all animations from Evolve as soon as any part of Evolve underwent any non-de-minimis change. Elsevier argues that, given the inevitability of changes to Elsevier's digital resources, Archie's reading would render the three-year clause a nullity, since it is inconceivable that no substantial change to Evolve would occur in a __________ reading is what § 4.3's grant of a continued license appears designed to prevent: the abrupt removal of all Archie animations from Evolve upon termination of the ALA.

         Archie, for its part, contends that Elsevier's reading would effectively eliminate all but the three-year limit in Section 4.3, since Elsevier's books are rarely revised but rather are "static." Archie MD, Inc.'s Opp. to Elsevier, Inc.'s Mot. for Sum J. ("Pl.'s Summ. J. Opp.") at 26, ECF No. 57. Yet, even assuming the truth of that factual assertion (which is disputed, see Def. Elsevier, Inc.'s Resp. to PI. Archie's Statement of Additional Undisputed Material Facts Pursuant to Local Rule 56.1 ¶ 63, ECF No. 61), on Elsevier's reading § 4.3 would still require the removal of Archie animations upon non-de-minimis changes to the companion websites.

         The Court is persuaded that, in the context of the entire ALA, Evolve does not constitute a website subject to the removal requirements of § 4.3. To hold otherwise would, as a practical matter, render extraneous that section's three-year limit and largely diminish the relevance of the explicit connection between websites and companion print works. See LaSalle Bank N.A. v. Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d Cir. 2005) (noting that, under New York law, a "contract should be construed so as to give full meaning and effect to all of its provisions" (internal quotation marks omitted)). Moreover, understanding Evolve as a web portal (rather than a website) is consistent with the cited _______ reference to both websites and web portals.

         Since the Court finds the ALA unambiguous on this point, it need not address extrinsic evidence of the parties' intent, see Keiler, 751 F.3d at 69 ("New York law is well settled that a written agreement that is complete and unambiguous is to be interpreted without the aid of extrinsic evidence"), nor Archie's argument that principles of contra proferentem weigh against Elsevier's reading, cf. McCarthy v. Am. Int'l Grp., 283 F.3d 121, 124 (2d Cir. 2002) (noting that under New York law the contra proferentem principle requires "equivocal contract provisions" to be construed against the drafter"). Thus, because the Court concludes that Evolve is not a website under Section 4.3, Elsevier was not obligated to remove all Archie animations from Evolve upon the ...

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