Millennium, Inc. v. Sai Denver M, Inc., Civil Action No. 14-cv-01118-KLM

MILLENNIUM, INC., a Colorado corporation, Plaintiff, v. SAI DENVER M, INC., a Colorado corporation, Defendant.

Civil Action No. 14-cv-01118-KLM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

April 20, 2015

ORDER

ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX

This matter is before the Court on Defendant's Motion and Memorandum Brief in Support of Motion for Summary Judgment [#32]¹ (the "Motion"). Plaintiff filed a Response [#33] in opposition to the Motion, and Defendant filed a Reply [#34]. The Court has reviewed the Motion, the Response, the Reply, the entire case file, and the applicable law and is sufficiently advised in the premises.² For the reasons set forth below, the Motion [#32] is GRANTED in part and DENIED in part.

I. Summary of the Case³

A. Background

This case concerns a copyright infringement and contract dispute between Plaintiff, a video production company, and Defendant, doing business as Mercedes-Benz of Denver, which operates a car dealership. Motion [#32] at 1-2; Response [#33] at 6.

In October or November of 2013, Michael Hupfer ("Hupfer"), Plaintiff's President, and Larry Stanley ("Stanley"), Defendant's general manager from August 2013 until January 2014, met to discuss the production of a television advertisement for Defendant. Response, Attach. 1 [#33-1] at 8-9 (Stanley Dep. at 11-12). Mr. Stanley showed Mr. Hupfer a proposal from another company to make the advertisement, and Mr. Hupfer responded by saying, "Let me just make this sweeter; I'll produce a completely finished spot for you on spec; if you don't like it, you don't pay for it, but if you like it, you pay for it, you can use it." Id. at 18 (Hupfer Dep. at 35). "[Those] were the exact words [Mr. Hupfer] used with [Mr. Stanley]. [They] agreed." Id. at 18 (Hupfer Dep. at 35). Plaintiff maintains that when they met, "Mr. Stanley showed Mr. Hupfer an estimate [from another company] for creation of an ad concept as distinct from a ready-to-air television advertisement." Response [#33] at 6 (citing Response, Attach. 1 [#33-1] at 8 (Stanley Dep. at 11)).

Plaintiff produced a copyrighted work for Defendant titled "Indulge" ("Indulge," the "Ad," or the "Work"). Motion [#32] at 3; Response [#33] at 6. Plaintiff complied with the statutory formalities for the registration of a copyright, and registration of the Work became effective in March 2014. Am. Compl. [#6] at 3; Answer [#17] at 3. The completion of theAd and its delivery to Comcast were time-sensitive, in order to meet the Comcast media purchase made on behalf of Defendant by EMICO, the media buyer for Defendant. Motion [#32] at 3; Response [#33] at 6; Motion, Attach. 4 [#32-4] at 2-3 (emails between Mr. Hupfer and Natalie Mansi ("Mansi") of EMICO); Response, Attach. 1 [#33-1] at 14-15 (Hupfer Dep. at 21-22). In December 2013, Defendant "approved the [W]ork and reiterated its approval of that [W]ork on December 12, 2013," without discussion or agreement regarding how much the Ad would cost. Motion [#32] at 3; Response [#33] at 6; Response, Attach. 1 [#33-1] at 10-11 (Stanley Dep. at 19-20). Plaintiff delivered the copyrighted Work to Comcast for broadcast. Motion [#32] at 3; Response [#33] at 6. Significant technical issues with the Ad required email exchanges between Plaintiff and Comcast, and no employee from Defendant was copied on those emails. Motion [#32] at 4; Response [#33] at 6. The Ad was publicly performed on Comcast networks 592 times between December 12, 2013, and December 31, 2013. Motion [#32] at 4; Response [#33] at 6. Plaintiff first sent an invoice for the Ad to Defendant on March 14, 2014. Motion [#32] at 4; Response [#33] at 6. This invoice expressly stated that the invoice acts as a license agreement and that "payment in full is required in order to receive full clearances on proprietary materials embedded in this work." Motion [#32] at 4-5; Response [#33] at 6. Plaintiff notes that the March 14 "invoice serves as clearance when payment is properly remitted." Id. at 7. Plaintiff also notes that "the courtesy of making a license retroactive was extended to Murray Motors [previous owner of Defendant] many times because Murray Motors timely paid the invoice that granted them a license to use works created by [Plaintiff]." Id. at 7 (citing Response, Attach. 1 [#33-1] at 13 (Hupfer Dep. at 19)).

Before sending the invoice on March 14, 2014, Mr. Hupfer called and emailed MarkHarvey ("Harvey"), the general manager of Defendant, leaving a voicemail on February 21, 2014, and sending an email on February 26, 2014. Scheduling Order [#24] at 5 (undisputed facts). Mr. Harvey called Mr. Hupfer on March 4, 2015, and Mr. Harvey requested a signed copy of any contract before paying Plaintiff for the Ad. Id. In the March 4 conversation, Mr. Hupfer asserted that the Ad was aired without a license agreement and that he would like to resolve the copyright license issue he believed to exist. Id. The March 14 invoice for the Ad had not been paid by April 1, 2014, and Mr. Hupfer again emailed Mr. Harvey. Id. Mr. Harvey responded on April 1 to Mr. Hupfer with an email in which Mr. Harvey reiterated that he "cannot agree to pay an invoice that was not signed or does not have a purchase order issued." Id. Plaintiff asserts that it is unclear whether the amount of the invoice was ever in dispute, based on emails from Mr. Harvey to Mr. Hupfer. Response [#33] at 7 (citing Response, Attach. 1 [#33-1] at 2 (email between Mr. Harvey and Mr. Hupfer)).

On April 18, 2014, Plaintiff filed this action seeking damages, costs, and attorneys' fees, asserting a claim alleging copyright infringement for the public performance of a work subject to copyright, a claim alleging breach of contract, and a claim alleging unjust enrichment. Scheduling Order [#24] at 2. To date, Defendant has not actually made payments to Plaintiff for the Ad, but has offered payment in full for the March 14, 2014 invoice. Id. at 5 (undisputed facts). Defendant admits owing Plaintiff for production of the Ad and has paid Comcast for airing the Ad in December 2013. Id. Defendant made an offer of judgment on June 13, 2014, to which Plaintiff did not respond, which was therefore deemed withdrawn in accordance with Fed. R. Civ. P. 68 on June 27, 2014. Id. Plaintiff asserts that this offer was not an "unconditional tender" but was "conditioned upon[Plaintiff's] termination of its copyright infringement claim," and that Plaintiff requested additional information to determine "whether it was in [Plaintiff's] best interest to accept the offer of judgment or the tendered payment" but never received the requested information. Response [#33] at 7 (citing Response, Attach. 1 [#33-1] at 34 (June 17, 2014 letter from Plaintiff's counsel to Defendant's counsel)). On July 31, 2014, Defendant sent a check to Plaintiff for $10,135 to resolve the March 14 invoice. Response, Attach. 1 [#33-1] at 36-37. Plaintiff has not cashed this check or otherwise accepted payment. Motion, Attach. 2 [#32-2] at 10 (Hupfer Dep. at 149). Plaintiff notes that while there are frequently circumstances where a client such as Defendant will air an advertisement before paying for the license, Mr. Hupfer only extends the courtesy to clients who have established a timely pattern of remitting payments to Plaintiff. Response [#33] at 7.

B. The Motion

In the Motion, Defendant argues that it is entitled to summary judgment because Defendant did not infringe on Plaintiff's copyright for Indulge because Defendant had an implied license to perform the Ad and, in the alternative, because Plaintiff is estopped from claiming infringement. Motion [#32] at 6. Defendant also argues that Plaintiff's breach of contract and unjust enrichment claims are moot, and that Defendant is entitled to an award of attorney's fees. Id. at 10. Overall, Defendant characterizes this case as a dispute regarding payment for the creation of an advertisement and argues that Plaintiff has attempted to "manufacture a copyright violation when none exists." Id. at 1-2.

In the Response, Plaintiff argues that Defendant infringed on Plaintiff's copyright for the Ad because: (1) Defendant concedes that the Ad is a copyrighted work owned by Plaintiff and (2) that Defendant exercised an exclusive right of the copyright owner [i.e.,Plaintiff] without Plaintiff's permission. Response [#33] at 8-9. Plaintiff's argument regarding the second element of a claim for copyright infringement is difficult to follow. Plaintiff asserts that "[i]t is undisputed that [Defendant] does not possess a written license to perform 'Indulge,'" the evidence does not show the existence of a nonexclusive use license for the Ad, and that therefore, the exception to the writing requirement for a transfer of copyright for nonexclusive licenses does not apply in this case. Id. at 9. While Plaintiff accepts that the existence of an implied license is an affirmative defense to copyright infringement, Plaintiff argues that its existence is a "genuine issue of material fact which requires a determination by the Court [at a bench trial] and therefore precludes summary judgment," but cites no law to support this proposition. Id. at 11. Plaintiff also argues that even if a nonexclusive license existed, Defendant's payment for the Ad was a condition of the agreement between Defendant and Plaintiff, "the non-satisfaction of which resulted in ineffective licensure." Response [#33] at 11. Regarding the breach of contract claim, Plaintiff argues that Defendant breached its contract with Plaintiff and that Plaintiff has established (1) the existence of a contract, (2) performance on the part of Plaintiff, and (3) Defendant's breach of contract by nonpayment. Id. at 17. Plaintiff argues that the contract and unjust enrichment claims are not moot because Defendant tendered only a conditional payment to Plaintiff after the filing of the present action and thus did not settle the breach of contract claim. Id. at 18.

In the Reply, Defendant asserts that...