Meisner Brem Corp. v. Mitchell, et al CV-03-057-JM 04/15/04 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Meisner Brem Corporation

v. Civil No. 03-057-JM Opinion No.

Eric Mitchell, et al.

O R D E R

Meisner Brem Corporation ("MBC") brought this copyright

infringement action naming Eric Mitchell ("Mitchell"), Richard

Ladd ("Ladd"), Eric Mitchell & Associates, Inc. ("EMA"), and

Harvey G. Blettner ("Blettner") as defendants. MBC alleges that

Mitchell, Ladd and EMA produced, recorded, utilized, and placed

on the market survey plans that are substantially similar to

MBC's copyrighted work. MBC further alleges that defendant

Blettner induced, caused and materially contributed to that

infringement. MBC seeks compensatory damages and a permanent

injunction enjoining the defendants from further infringement.

Defendants Ladd, Mitchell and EMA filed answers to the

complaint denying MBC's allegations of material fact and raising

affirmative defenses based on implied nonexclusive license, the

doctrine of merger, and express retroactive license. Since

defendant Blettner did not file an answer or other responsive pleading, the Clerk of Court entered a default as to Blettner on

April 23, 2003 (document no. 10). The other defendants

subsequently moved for summary judgment under Fed. R. Civ. P. 56

(document nos. 11 and 12). MBC filed an objection.

As discussed herein, the Court finds that defendants Ladd,

Mitchell and EMA have demonstrated that there is no genuine issue

of material fact as to their defense that they cannot be held

liable on MBC's copyright infringement claim because MBC granted

the owner of the project at issue a nonexclusive license to use

MBC's subdivision plans, which extended to defendants' use of the

plans. Therefore, the motions for summary judgment are granted.

Standard of Review

Summary judgment is appropriate only "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); see Lehman v. Prudential Ins. Co. of Am.,

, 327

(1st Cir. 1996). A genuine issue is one "that properly can be

resolved only by a finder of fact because [it] . . . may

reasonably be resolved in favor of either party." Anderson v.

2 Liberty Lobby, Inc.,

(1986) . A material fact

is one that affects the outcome of the suit. See

.

"Summary judgment is a procedure that involves shifting

burdens between the moving and the nonmoving parties." LeBlanc

v. Great Am. Ins. Co.,

(1st Cir. 1993). The

moving party bears the initial burden of establishing that there

is no genuine issue of material fact. See Celotex Corp. v.

Catrett,

(1986) . If that burden is met, the

opposing party can avoid summary judgment only by providing

properly supported evidence of disputed material facts that would

reguire trial.

. Evidence that is "merely colorable,

or is not significantly probative" will not preclude summary

judgment. Anderson,

(citation omitted); see

also, LeBlanc,

("the nonmoving party must establish

a trial-worthy issue by presenting enough competent evidence to

enable a finding favorable to the nonmoving party.").

On a motion for summary judgment, the court construes the

record in the light most favorable to the non-moving party,

resolving all inferences in its favor, and determines whether the

moving party is entitled to judgment as a matter of law. Carroll

v . Xerox Corp.,

(1st Cir. 2002) . The court

3 does not credit "conclusory allegations, improbable inferences,

and unsupported speculation." Medina-Munoz v. R.J. Reynolds

Tobacco C o .,

(1st Cir. 1990). Applying this

standard, the facts are recited below.

Background Facts

MBC is engaged in the business of providing civil

engineering and surveying services to real estate owners. MBC

prepares subdivision design, roadway, and septic system plans.

Mitchell is engaged in the business of providing civil

engineering and surveying services through EMA. Ladd, sued only

in his individual capacity, is the president of RSL Layout and

Design, Inc. ("RSL"), which provides surveying services.

On or about May 14, 1998, MBC prepared a Proposal and

Professional Service Agreement for the design and preparation of

plans for a residential subdivision development on a parcel of

real estate located off Cluff Road in Salem, New Hampshire. Ex.

C to Pl.'s Objection and Ex. B to the Affidavit of Paul M.

DeCarolis, Esg. ("DeCarolis Aff."). Shortly thereafter,

defendant Blettner, who was then a joint owner of the real

property, engaged MBC to provide engineering and surveying

services for a development referred to as the "Cluff Estates"

4 project (hereinafter the "Project").1

MBC's General Terms and Conditions, Attachment A to the

Professional Service Agreement, provides in paragraph 14 that:

All documents, including Drawings, Specifications, estimates, field noted and other data, prepared or furnished by [MBC] (and [MBC] independent sub consultants) pursuant to this Agreement are instruments of service in respect of the Project and [MBC] shall retain an ownership and property interest therein whether or not the project is completed. Client may make and retain copies for information and reference in connection with the use and occupancy of the Project by the Client and others; however, such documents are not intended or represented to [sic] suitable for reuse by Client or others on extensions of the Project or on any other Project. Any reuse without written verification or adaptation by [MBC] for the specific purpose intended will be at Client's sole risk and without liability or legal exposure to [MBC] or to [MBC] sub consultants, and Client shall indemnify and hold harmless [MBC] and [MBC] sub consultants from all claims, damages, losses and expenses, including attorneys' fees arising out of or resulting therefrom. Any such verification or adaptation will entitle [MBC] to further compensation at rates to be agreed upon by Client and [MBC].

Pl.'s Objection, Ex. C.

Kurt Meisner ("Meisner"), the Vice-President of MBC,

testified in a preceding litigation that MBC contracted to

1The parties do not specify when MBC was engaged, but there is no dispute that an agreement was reached. The Professional Service Agreement attached as Exhibit C to Plaintiff's Objection and as Exhibit B to the Decarolis Affidavit indicates that the total contract amount was $28,800 and that a retainer of $3,900 was paid on June 16, 1998.

5 provide a conceptual plan for the Project and a definitive plan,

which "would be the preliminary final sub-division plans as the

[town] planning board would see them." Deposition of Kurt

Meisner, April 9, 2002, in the matter of Meisner Brem Corp. v.

Blettner, et al., Rockingham Superior Court Docket No. Ol-C-29

("Meisner Dep.") at 45-46, Decarolis Aff., Ex. A. MBC produced,

among other things, several conceptual plans for the subdivision.

Affidavit of Kurt Meisner dated December 29, 2003 ("Meisner

Aff."), 55 7-10, attached to Pl.'s Objection as Ex. B.

MBC's subdivision plans for the Project were submitted to

the Salem Planning Board for approval on or about February 16,

1999. See Letter from Jeffrey A. Brem to Michael Lyons, Chairman

of the Salem Planning Board, dated February 18, 2003, attached as

Ex. A to the Affidavit of Michael S. Owen, Esg. ("Owen Aff.").

Based on MBC's engineering drawings for the Project, the town

planning board conditionally approved the plan for the Project in

the summer of 2000. Meisner Aff., 5 14.; Owen Aff., Ex. A. MBC

prepared all of the reports and documents necessary to gain all

of the necessary permits and approvals from state agencies and

enabled the Project to fulfill all of the town engineer's

conditions for final approval of the subdivision plans. Meisner

6 Aff., 55 17-18.

While MBC was preparing the final engineering documents for

the Project, MBC and the owners of the property reached an

impasse over the payment of MBC's fees.

5 19. In or about

November 2000, Blettner terminated MBC and refused to pay

anything further for its services.

In December 2000, the owners of the property hired Mitchell

and Ladd and provided them copies of MBC's subdivision plans.

RSL re-staked Cluff Road because Blettner's contractors could not

match the location of the center line of the road staked by MBC

with the lot lines and other monuments and landmarks reflected in

the plans. Deposition of Richard S. Ladd, May 23, 2002 in the

matter of Meisner Brem Corp. v. Blettner, et al., Rockingham

County Superior Court Docket No. Ol-C-29 ("Ladd Depo.") at 5. 17-

18, Decarolis Aff., Ex. C. Ladd testified that RSL recreated the

surveying information for the entire subdivision in order to

place the road after MBC refused to provide information Ladd

needed to resolve what he considered to be a discrepancy in the

road layout.

. 21-24; 37.

MBC learned of Mitchell's and Ladd's involvement with the

Project when MBC was contacted by Ladd. Meisner Aff., 5 22. MBC

7 informed Ladd that MBC's plans were protected by copyright,2 that

Ladd did not have MBC's permission to use the plans, and that

Ladd's use of the plans should cease immediately.

5 23.

MBC informed Ladd that it was still working on the subdivision,

and that it had not been paid for its work.

5 24.

RSL and Mitchell prepared the final engineering documents

reguired for final approval, which are referred to as mylar

recording documents.

5 21. The RSL/Mitchell plans received

final approval from the Salem Planning Board. Before the

RSL/Mitchell plans were recorded, MBC brought this copyright

infringement action on February 13, 2003. MBC notified the

successor to the original Project owners that the plans could not

be recorded because the plans were the subject of this lawsuit.

See Letter from Michael D. Hatem, Esg. to John D. Mullen dated

April 2, 2003, attached as Exhibit D to the Affidavit of Michael

Owen ("Owen Aff."). As a result, the owner asked the town not to

record the plans. See Letter from John D. Mullen to Ross A.

Moldoff, Planning Director of the Town of Salem, dated March 19,

2003, Owen Aff., Exhibit C. On or about June 16, 2003, however.

20n April 30, 2001, MBC received a certificate of registration from the United States Copyright Office for technical drawings of subdivision plans entitled "Cluff Estates." MBC executed a release agreement granting the owner permission to

record the RSL/Mitchell plans in exchange for a payment of

$25,000. PI. Obj., Ex. D.

_____ In their defense of this lawsuit, defendants deny that they

copied MBC's plans and further deny that their plans are

substantially similar to MBC's. Defendants contend that they

prepared new plans for the subdivision based on a new and

original survey because they considered the work done by MBC

flawed and unusable. For purposes of the motions for summary

judgment, however, defendants argue that MBC's copyright

infringement claims fail based on their affirmative defenses.

Discussion

A. Implied Nonexclusive License

While transfers of copyright must be made in writing under

(a), it is well-established that a copyright owner

may orally grant a nonexclusive license where copyright ownership

has not been transferred. John G. Danielson, Inc. v. Winchester-

Conant Props.,

(1st Cir. 2003). A nonexclusive

license may also be implied from conduct that indicates the

copyright owner's intent to allow a licensee to use the

copyrighted work.

"Uses of the copyrighted work that stay within the scope of a nonexclusive license are immunized from

infringement suits."

(citing Graham v. James,

(2d Cir. 1998)). The party claiming the protection of a

license has the burden of proving the existence of a license.

Danielson,

(citing Bourne v. Walt Disney Co., 68

F .3d 621, 631 (2d Cir. 1995)).

The analytical framework for determining whether an implied

license exists has three parts. Danielson,

(citing Effects Assoc., Inc., v. Cohen,

, 558-59 (9th

Cir. 1990)). First, the licensee must have reguested the

creation of the work. Id. Second, the licensor must have

created and delivered that work to the licensee. Id. And third,

the licensor intended that the licensee distribute the work. Id.

The copyright owner's intent is the "touchstone" for finding that

an implied license exists. I_d. at 40.

In the instant case, the first two prongs of the three-part

analytical test have been satisfied in defendants' favor. There

is no dispute that MBC created subdivision plans for the Project

at defendant Blettner's reguest. Those plans were delivered to

the Project owners, who submitted copies of the plans to the Town

of Salem for conditional approval, and who later provided copies

10 of the plans to the defendants.

MBC's assertion that the Project owners did not fully pay

for MBC's subdivision plans does not affect the implied license

analysis. There is no evidence that full payment was a

contractual precondition for MBC's grant of a license. See

I.A.E., Inc. v. Shaver,

(7th Cir. 1996)

(rejecting plaintiff's argument that an implied license "did not

spring into existence" because only half the contract sum was

paid); Effects Assoc., 908 F.2d at 559 n.7 (refusing to construe

payment in full as a condition precedent to implying a license

where such a condition was not reguired by plain, unambiguous

contract language). The Court further finds inconseguential

MBC's assertion that it did not deliver the "final set" of

subdivision plans to the Project owners. MBC's copyright

infringement claim pertains to the plans that were actually

provided to the Project owners by MBC, not to those plans

considered to be the final set. Therefore, the only issue that

reguires further discussion is whether MBC intended that the

Project owners would use MBC's plans and distribute them for use

by others working on the Project.

The "intent" prong of the three-part test for determining

11 whether an implied nonexclusive license exists itself has at

least three considerations. Danielson,

.

(1) whether the parties were engaged in a short-term discrete transaction as opposed to an ongoing relationship; (2) whether the creator utilized written contracts, such as the standard AIA contract, providing that copyrighted materials could only be used with the creator's future involvement or express permission; and (3) whether the creator's conduct during the creation or delivery of the copyrighted material indicated that use of the material without the creator's involvement or consent was permissible.

(guoting Nelson-Salabes, Inc. v. Morningside Dev., LLC,

(4th Cir. 2002)). In making its determination, the

Court does not focus on the subjective intent of the putative

licensor, but rather makes an objective inguiry into the facts

that manifest contractual intent. Danielson,

.

1. Short-term Discrete Transaction or Ongoing Relationship

MBC contends that it had an ongoing relationship with the

Project owners because MBC was engaged in all stages and aspects

of the design of the subdivision. Pi. Obj., 5 42. MBC claims

that its involvement on the Project lasted approximately one and

one-half years.

Defendants neither dispute MBC's assertions

as to extent and length of MBC's participation in the Project

prior to being terminated, nor have they put forth any evidence

that supports a finding that MBC's engagement should be

12 considered short-term. Therefore, the Court finds that the

length of the relationship between MBC and the Project owner in

this case weighs in MBC's favor since it intended to remain

involved in the job.

2. Notice of Use Restriction

A second consideration in determining a copyright owner's

intent to grant a nonexclusive license is whether the owner used

written contracts providing that copyrighted materials could only

be used with the creator's future involvement or express

permission. After reviewing the evidence in the record, the

Court finds that the contract language used here weighs heavily

in the defendants' favor.

MBC concedes, as it must, that the written contracts did

not expressly state that the copyrighted plans could only be used

with the creator's future involvement. Pi. Obj., 5 46. Indeed,

the contract language used recognizes that the Project owner

might use MBC's subdivision plans without MBC's involvement.

Paragraph 14 of the General Terms and Conditions, included as

Attachment A to the Professional Service Agreement, provides that

the Client [Project owners] could "make and retain copies" of all

documents created by MBC "for information and reference in

13 connection with the use and occupancy of the Project by the

Client and others." See MBC General Terms and Conditions, 5 14,

Pi. Obj., Ex. C (emphasis added). That MBC was aware that others

working on the Project would use its documents is further

evidenced in the following sentence where MBC warned that "such

documents are not intended or represented to [sic] suitable for

reuse by Client or others on extensions of the Project or on any

other Project."

(emphasis added). MBC further warned in the

same paragraph that "[a]ny reuse without written verification or

adaptation by [MBC] for the specific purpose intended will be at

Client's sole risk and without liability or legal exposure to

[MBC] or to [MBC] sub consultants, and Client shall indemnify and

hold harmless [MBC] and [MBC] sub consultants from all claims,

damages, losses and expenses, including attorneys' fees arising

out of or resulting therefrom."

The contract language used

in this case is nearly opposite that used in cases where courts

have held that a nonexclusive license to use copyrighted

architectural plans did not exist. See Danielson,

(architect and client signed standard AIA contract providing that

the plans "shall not be used . . . for other projects, for

additions to this Project, or for completion of this Project by

14 others . . . except by agreement in writing and with appropriate

compensation"); Nelson-Salabes,

(plaintiff

architectural firm submitted contracts to client that contained

standard AIA prohibition against use of its drawings without the

plaintiff's future involvement or consent); Johnson v. Jones,

(6th Cir. 1998) (AIA contracts provided by

architect showed intent not to grant license for use of the

architect's work by others without express permission).

The facts of the instant case are analogous to those in Foad

Consulting Group, Inc. v. Musil Govan Azzalino,

(9th

Cir. 2001), where an engineering firm that created a plot plan

for a shopping center project sued a developer and a firm hired

by the developer alleging copyright infringement. There the

court found that the inclusion of an indemnification clause

similar to that used by MBC, as well as the absence of any

prohibition in the contract against modification by others,

evidenced the plaintiff's intent to grant an implied license to

hire others to create derivative works for the purpose of

completing the project.

. Likewise here, the language

used by MBC evinces an intent to grant the Project owners

permission to use MBC's subdivision plans to complete the

15 Project, and to except MBC from any liability that might arise

from any reuse or adaptation of the plans without MBC's

involvement. The Court finds the language used in the written

contracts in this case is dispositive as to the existence of an

implied nonexclusive license to the Project owner to use MBC's

subdivision plans, with others, in completing the Project.

Therefore, the Court further finds that the defendants are immune

from copyright infringement claims arising from their use of the

plans to complete the Project. See Danielson,

.

3. Creator's Conduct During Creation or Delivery

A third consideration in determining the copyright owner's

intent is whether the copyright owner's conduct during the

creation or delivery of the copyrighted material indicated that

use of the material without the creator's involvement or consent

was permissible. The Court finds that the contract language

discussed above is determinative of this issue. Paragraph 14 of

MBC's General Terms and Conditions provided that the Project

owner could make and retain copies of MBC for use by the Project

owner and others in completion of the Project. While there is no

dispute that MBC objected when it learned that the defendants had

replaced it on the Project, MBC had already expressly granted the

16 Project owner permission to allow others to use MBC's documents

in completing the Project. MBC has not pointed to any evidence

in the record that demonstrates that the Project owner agreed

that MBC would be the only entity providing surveying and

engineering services on the Project, or that MBC evinced any

intent to contract for such a condition in granting the Project

owner permission to use its plans. MBC's subjective intent,

expressed after it was terminated from the Project, is

insufficient to carry the day.

In sum, the Court finds that an implied nonexclusive license

exists that extended to defendants' work on the Project. Where

the issue is the scope of the license, and not its existence, the

copyright owner bears the burden of proving that defendant's use

was unauthorized. Graham,

. Here, MBC has not

offered any evidence that raises a genuine issue of fact as to

whether the defendants exceeded the scope of the implied

nonexclusive license. Accordingly, the Court finds that the

defendants are entitled to summary judgment on MBC's copyright

infringement claim.

B. Doctrine of Merger and Grant of Express Retroactive License

Defendants have further argued that they are entitled to

17 summary judgment based on the affirmative defenses of doctrine of

merger, and because they contend that MBC granted the succeeding

Project owner a retroactive license that should be construed to

apply to the defendants. Because the Court finds that the

defendants are entitled to summary judgment based on the

affirmative defense of implied nonexclusive license, the Court

does not address these alternative arguments.

Conclusion

For the reasons set forth above, defendants' motions for

summary judgment (document nos. 11 and 12) are granted. The

Clerk of Court is directed to dismiss defendants Eric Mitchell,

Richard Ladd and Eric Mitchell & Associates, Inc., from the case.

A damages hearing shall be scheduled as to defendant Harley G.

Blettner, against whom a default was previously entered (document

No. 10) .

SO ORDERED.

James R. Muirhead United States Magistrate Judge

Date: April 15, 2004

cc: Michael D. Hatem, Esg. Paul M. DeCarolis, Esg. Michael S. Owen, Esg.

18