Complex Sys., Inc. v. Abn Ambro Bank N.V.

979 F.Supp.2d 456

COMPLEX SYSTEMS, INC., Plaintiff,

v.ABN AMBRO BANK N.V., Defendant.

No. 08 Civ. 7497(KBF).

United States District Court, S.D. New York.

Oct. 25, 2013.

Jeffrey Ira Kaplan, Sorin Royercooper LLC, East Brunswick, NJ, Michael Robert Gilman, Gilman & Pergament LLP, Jonathan Michael Doloff, Kaplan Gilman & Pergament LLP, Woodbridge, NJ, Alan Stuart Gruber, Sorinrand LLC, Eleanor Martine Lackman, Cowan, Debaets, Abrahams & Sheppard LLP, Lawrence Bennett Goodwin, Kasowitz, Benson, Torres & Friedman LLP, New York, NY, for Plaintiff.

Howard Schiffman, Dickstein Shapiro LLP, Michael Everett Swartz, Schulte Roth & Zabel LLP, Washington, DC, Katherine Layden Schuerman, John Charles Garces, Schulte Roth & Zabel LLP, New York, NY, Christopher M. McLean, Mark E. Thabet, Chester, NY, for Defendant.

OPINION & ORDER

KATHERINE B. FORREST, District Judge.

This Opinion & Order seeks to provide both clarity and finality on the issue of liability in this long-pending and confused copyright infringement action.¹ For a time, the Court itself was a victim of the confusion that has been rather pervasive in this action. Finally, however, the parties' numerous submissions have provided the Court with much-needed clarity. The proverbial light bulb has finally been illuminated.

For the reasons set forth below, the Court hereby GRANTS summary judgment in favor of plaintiff, Complex Systems, Inc. (“CSI”), as to its claims and as to all defenses raised by defendant, ABN AMRO Bank N.V. (“ABN”).

PROCEDURAL HISTORY

Only a few decisions from this Court are necessary to understand this Court's determination of liability: the instant decision, the Corrected Opinion & Order dated June 21, 2013, 954 F.Supp.2d 199, 2013 WL 3155615 (S.D.N.Y. June 21, 2013) ( see 6/21/13 Order, ECF No. 257), and the Memorandum Decision & Order dated August 9, 2013 ( see 8/9/13 Order, ECF No. 280.)

The copyrighted work at issue in this case is the BankTrade 8.0 software product (“BankTrade” or “the Work”). CSI is the sole claimant in a duly registered copyright in the Work. ( See Amend. Compl. ¶¶ 47, 48, dated Dec. 29, 2008, ECF No. 16).² ABN is a financial institution that has been using the Work. ( Id. ¶ ¶ 25–28.) CSI alleges willful copyright infringement. ( Id. ¶ 28.) In response, ABN asserts, in the alternative, a variety of defenses: (1) that it had an assignment to the Work from a former, licensed subsidiary, ABN IT (“IT”) (the Court granted CSI summary judgment on this claim) ( see 6/21/13 Order); (2) that IT impliedly authorized ABN to use the Work after IT “acquired co-ownership rights;” (3) that ABN received an express license from CSI to use the Work; or (4) that ABN had an implied right to use the Work based on CSI's conduct.³ (See Def.'s Mem. Opp'n to [CSI's] Mot. Summ. J., at 1 (“Def.'s Mem.”), dated May 10, 2013, ECF No. 212.)

Given the co-ownership argument ABN asserts as a predicate fact to IT's alleged authorization of its use of BankTrade, a particularly interesting moment in the procedural history of this matter occurred in November 2008. Fully aware of the August 2008 copyright registration, ABN moved to dismiss the action on the basis that the copyright registration for the Work was invalid. ( See Def.'s Mot. to Dismiss, dated Nov. 17, 2008, ECF No. 10; Def.'s Mem. in Supp. Mot. to Dismiss, dated November 17, 2008, ECF No. 11.) ABN argued that BankTrade 8.0 was, in fact, not a new work, but rather, a combination of prior versions of the BankTrade software “that date back to the early 1990's.” ( See Def.'s Mem. in Supp. Mot. to Dismiss at 4.)

In that motion, ABN articulated a different position than that to which it later pivoted: rather than arguing that ABN had received from IT an assignment of the relevant license agreement between CSI and IT, ABN instead argued that “ABN has operated and continues to operating within the scope of very broad license rights that [CSI] granted to ABN and its related entities.” ( See id. at 1, n. 2 (emphasis added).) ABN argued that CSI's licensing of BankTrade to “many large international banks” was an example of prior publication rendering the copyright invalid and that “[t]he Deposit Materials further demonstrate that the BankTrade software is related to preexisting versions of the BankTrade software.” ( Id. at 9, 10.) “In the Deposit Materials, under the heading ‘WSTRACE.CBL,’ [CSI] identifies versions of the BankTrade software or portions thereof that span between 1994 and 2003.” ( Id. at 10.) ABN argued that: “[t]hose preexisting versions of the BankTrade software are the foundation of [CSI's] allegations of copyright infringement and were not included in the Registration.” ( Id. at 11 (emphasis added).) ⁴

Further, while reserving the right to later change its position, ABN stated that it was not challenging CSI's ownership of the work as set forth in the registration.⁵ ( Id. at 2, n. 4.) As set forth in the recitation of facts below, ABN's litigation position—set forth clearly in its Motion to Dismiss (when the events were closer at hand)—is inconsistent with its current position.⁶ ABN's earlier position is, in fact, consistent with IT as a licensee of the Work owned by CSI—not IT as itself an owner or licensor.

In March of 2013,⁷ this Court granted summary judgment for CSI on the primary defense pursued by ABN: that its former subsidiary, IT, which was CSI's licensee, had assigned its license to ABN prior to ABN's sale of IT to LaSalle Bank on April 22, 2007. ( See 3/20/13 Order.) The Court ruled that no assignment had ever occurred and that ABN's proffered “evidence” of an assignment was a post hoc attempt to fix a rather inconvenient problem of continuing use of the Work when ABN and CSI had been unable to reach acceptable commercial terms post-sale. ( See 6/21/2013 Order.)

This ruling did not, however, fully resolve the case. Procedurally, the parties were in a confused place: ABN had moved for “partial summary judgment” solely on its defense of assignment, and CSI had cross-moved for “summary judgment” on the same issue. (ECF Nos. 159, 172.) ⁸ Left unresolved were ABN's remaining defenses. ABN had not purported to move as to those defenses—and nothing in its papers indicated an intentional relinquishment of them. For its part, CSI's papers read as a direct counter to ABN's (“you don't get summary judgment on that issue, we do”), and similarly did not address ABN's remaining defenses. Theoretically, the Court could have ruled that by failing to raise its remaining defenses in opposition to CSI's motion for summary judgment, ABN waived those defenses. See, e.g., Johnson v. Board of Regents of Univ. of Ga., 263 F.3d 1234 (11th Cir.2001) ( “Intervenors cannot readily complain about the entry of a summary judgment order that did not consider an argument they chose not to develop for the district court at the time of the summary judgment motions.”); Frankel v. ICD Holdings S.A., 930 F.Supp. 54, 64 (S.D.N.Y.1996) (explaining that while defendants were “entitled” to raise a defense, that “does not mean that they have done so in a manner sufficient to defeat plaintiffs' motion for summary judgment”); Dollar Dry Dock Sav. Bank v. Hudson St. Dev. Assocs., No. 92 Civ. 3737, 1995 WL 412572, at *5 (S.D.N.Y. July 12, 1995) (stating that the burden is on the defendant to adduce evidence supporting an affirmative defense, not upon the movant to negate its existence); Harper v. Delaware Valley Broadcasters, Inc., 743 F.Supp. 1076, 1090–91 (D.Del.1990), aff'd,932 F.2d 959 (3d Cir.1991) (same); Security Pac. Mortg. & Real Estate Servs., Inc. v. Canadian Land, 690 F.Supp. 1214, 1219 (S.D.N.Y.1988), aff'd,891 F.2d 447 (2d Cir.1989) (“The requirements of pointing to specific contested facts in opposing a motion for summary judgment are particularly elevated where the nonmoving party would bear the burden of proof at trial on [an] affirmative defense....”). However, the record was sufficiently muddled as to whether anyone intended those defenses to have been at issue in the motions—and ABN argued that it should be provided an opportunity to raise them; hence, the story continued anon.

Following a conference during which ABN stated it sought to pursue its remaining defenses, CSI promptly again moved for summary judgment. ( See ECF No. 202.) That motion is currently pending before this Court and is the subject of this Opinion & Order.

The briefing and argument on CSI's instant motion has a mini-history of its own—with the Court and the parties having to weave their way through the various relationships between the parties, the relationship of CSI to ABN's former subsidiary IT prior to the sale of IT to BAC, the issue of whether IT itself ever asserted any ownership rights to Bank Trade 8.0 (or can do so now), and the issue of whether ABN can assert IT's ownership rights on IT's behalf as a predicate to asserting “authorization” by IT based on those rights. Finally, the Court has had to thread through the tall grass of ABN's changing arguments.

After further briefing and a misunderstanding by this Court as to the possible impact of a Professional Services Agreement (“PSA”) entered into in 2000, ⁹ the applicable statute of limitations as to certain claims, and ABN's standing (or lack thereof) to raise certain claims, the Court initially denied the instant motion for summary judgment. ( See ECF No. 280.) However, following additional briefing, it became clear that CSI was correct in its legal position on summary judgment—and that a ruling granting its motion was appropriate. Hence, the Court vacated its decision denying summary judgment. ( See ECF No. 307.) This Opinion & Order grants CSI summary judgment on liability.

FRAMING THE ISSUE DISPOSITIVE OF LIABILITY

ABN's remaining defenses rely on one of three alternative theories: (1) that IT acquired sufficient ownership rights in the Work to authorize ABN to use the Work, and that it in fact authorized ABN to use the Work; (2) that CSI expressly...