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Energy Intelligence Group, Inc. v. CHS McPherson Refinery, Inc.

United States District Court, D. Kansas

January 17, 2018

ENERGY INTELLIGENCE GROUP, INC. and ENERGY INTELLIGENCE GROUP UK LIMITED, Plaintiffs,
v.
CHS McPHERSON REFINERY, INC. F/K/A NATIONAL COOPERATIVE REFINERY ASSOCIATION, Defendant.

          MEMORANDUM AND ORDER

          ERIC F. MELGREN UNITED STATES DISTRICT JUDGE

         Plaintiffs Energy Intelligence Group, Inc., and Energy Intelligence Group (UK) Limited (together, Plaintiffs or “EIG”) have sued Defendant CHS McPherson Refinery, Inc. (the “Refinery”) for copyright infringement. This matter comes before the Court on the Refinery's Motion for Referral to the Register of Copyrights Pursuant to 17 U.S.C. § 411(b) and a Concurrent Stay (Doc. 98). For the reasons stated below, the Court denies the Refinery's motion.

         I. Factual and Procedural Background

         EIG has been publishing newsletters and other publications for the global energy industry for over sixty years. It sells subscriptions to a number of publications, two of which include Oil Daily and Petroleum Intelligence Weekly. From June 2004 to about 2016, EIG sought to register Oil Daily with the United States Copyright Office using Form G/DN. This form allows an applicant to register multiple newspapers and newsletters in a single application. From 2004 to 2016, EIG sought to register Petroleum Intelligence Weekly with the Copyright Office using Form SE. This form allows an applicant to register an individual issue of a serial, e.g., a newsletter, periodical, magazine, annual, or journal.

         The Refinery maintained a single subscription to Oil Daily from 1992 through May 15, 2015, and a single subscription to Petroleum Intelligence Weekly from 1982 through June 13, 2016. Originally, the Refinery received the publications in print and would route each printed publication through its office for several executives to read. In the late 1990s, EIG began distributing the publications electronically. EIG alleges that the Refinery continued to distribute Oil Daily and Petroleum Intelligence Weekly to its employees by making a copy of the publication and distributing the copy in .pdf attachments via email. According to EIG, the Refinery's actions of copying and distributing the publications violate the subscription agreements.

         EIG commenced this action on January 18, 2016, and filed an Amended Complaint on August 16, 2016, alleging that the Refinery willfully infringed the copyrights of its Oil Daily and Petroleum Intelligence Weekly publications. The Refinery denies the infringement and the validity of EIG's copyright registrations. The parties have filed cross motions for summary judgment, which are currently pending before the Court. In addition, the Refinery has filed the current motion, which relates to the validity of EIG's copyright registrations. The Refinery contends that EIG made knowing misrepresentations when preparing Form G/DN for the Oil Daily publications and asks the Court to refer this matter to the Register of Copyrights to determine whether it would have refused registration if it had known of these misrepresentations.[1] In addition, the Refinery asks for a concurrent stay of the proceedings.

         II. Legal Standard

         Section 411(b)(1) of the Copyright Act states:

A certificate of registration satisfies the requirements of this section and section 412, regardless of whether the certificate contains any inaccurate information, unless-(A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and
(B) the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse registration.[2]

Section 411(b)(2) requires that “[i]n any case in which inaccurate information described under paragraph (1) is alleged, the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration.”[3]

         The Refinery brings this motion under § 411(b)(2)-a procedural mechanism that has rarely been invoked in the federal courts and never reviewed or interpreted by the Tenth Circuit.[4]Those courts that have interpreted § 411(b)(2) have determined that the provision is mandatory, meaning that it requires district courts to solicit the advice of the Register of Copyrights if the statutory conditions set forth in § 411(b)(1)(A) are satisfied.[5] For example, in DeliverMed, the Seventh Circuit held that the district court committed reversible error when it invalidated a copyright registration without first consulting the Register of Copyrights as required by § 411(b)(2) even though the parties had not requested the court to do so.[6]

         The language of § 411(b)(2) requires the court to consult the Copyright Office when a party simply alleges the inclusion of knowingly inaccurate information in the copyright application.[7] But, federal courts have recognized that this procedure creates a serious potential for abuse because it allows infringers to delay proceedings by simply alleging technical violations of the underlying copyright registrations.[8] Thus, the courts have concluded that before seeking the Register's advice on materiality, the party seeking invalidation of the copyright must first establish the preconditions to validity-(1) that the application contained a misstatement of fact and (2) that the misrepresentation was knowingly included on the application.[9] This method “appropriately balances the Copyright Office's statutory right to weigh in on the materiality of a knowing misrepresentation . . . against the district court's ‘inherent power to control its own docket and to prevent abuse in its proceedings.' ”[10] Therefore, before this Court refers the matter to the Register of Copyrights, the Refinery must demonstrate (1) that EIG's Oil Daily registration applications included inaccurate information and (2) that EIG knowingly included this inaccurate information in the applications.

         III. Analysis

         The Refinery argues that EIG knowingly included inaccurate information when seeking to register Oil Daily using Form G/DN with the Copyright Office. Form G/DN may be used for group registration of daily newspapers and newsletters, provided that the applicant meets the following requirements:

(1) [The daily newsletter is published] at least two days each week and the newsletter must contain news or information of interest chiefly to a special group . . .;
(2) The works must be essentially all new collective works or all new issues that have not been published before;
(3) Each issue must be a work made for hire;
(4) The author(s) and claimant(s) must be the same person(s) or organization(s) for all the issues;
(5) All the items in the group must bear issue dates within a single calendar month under the same continuing title;
(6) The deposit for newsletters registered under this section is one complete copy of each issue included in the group . . .;
(7) Registration is sought within three months after the publication date of the last issue included in the group.[11]

         If all of these requirements are met, an applicant may register the newsletters published during that time period in a single application and with a single deposit fee. If the applicant cannot meet all of the requirements, it is required to submit individual copyright application for each publication.

         The top of Form G/DN contains instructions for filling out the application. They state that the conditions “must be met” to use the form and that “if any one of the conditions does not apply, [the applicant] must use Form SE.” Form G/DN requires, among other things, that the applicant provide “the name and address of the author/copyright claimant in these works made for hire, ” and to provide the “author's contribution, ” which is to be indicated by checking the box(es) that apply-editing, text, compilation, [12] or other. For those applications dated June 2004 through October 2007, EIG claimed contribution in the compilation, editing, and text in Oil Daily. After 2007, EIG no longer claimed contribution in the compilation of Oil Daily but it did claim contribution in the text and editing.

         The Refinery claims that EIG has not met the second, third, and fourth requirements set forth above to register Oil Daily with Form G/DN. Specifically, the Refinery asserts that (1) EIG is not the author or exclusive licensee of all content within Oil Daily; (2) Oil Daily is not essentially an all-new collective work;[13] and (3) the editing and text of Oil Daily is not a work made for hire. EIG disputes these claims arguing that it properly registered Oil Daily using Form G/DN. It further argues that even assuming EIG included inaccurate information on Form G/DN, the Refinery has not demonstrated that the information was included on the application with the knowledge that it was inaccurate.

         A. Declaration of Ralph Oman

         Before the Court examines whether EIG's use of Form G/DN was appropriate, the Court must address the Declaration of Ralph Oman. This Declaration was offered by the Refinery in support of its argument that the Court must refer EIG's copyright registrations to the Register of Copyrights. Although the Declaration discusses EIG's copyright registrations for Oil Daily, it was originally prepared and offered in another case in the United States District Court for the Southern District of Texas-Energy Intelligence Group v. Kayne Anderson Capital Advisors.[14]EIG has not moved for the Court to strike the Declaration. However, it has asked the Court to disregard it on the basis that it is impermissible expert testimony. In the alternative, EIG asks the Court to reopen discovery so that it may retain an expert to rebut Oman's opinions.

         The Court declines to consider the Oman Declaration in its analysis of the motion. First, the submission of the Declaration is untimely. An expert witness is “[a] witness who is qualified as an expert by knowledge, skill, experience, training, or education, ” who testifies “in the form of an opinion.”[15] The Federal Rules of Civil Procedure provide for disclosure and timing requirements for expert witnesses who are “retained or specifically employed to provide expert testimony.”[16] Oman was neither a fact witness nor a party to the other pending litigation in which his report was initially offered. He characterizes his Declaration as setting forth opinions regarding EIC's copyright registrations and opines on how the Copyright Office would have handled the applications if it was aware of the alleged inaccuracy. Oman states that his opinions are based on his knowledge and experience as a former Register of Copyrights. Accordingly, Oman is a retained expert witness and his Declaration is an expert opinion.

         Under the Federal Rules of Civil Procedure, the Refinery was required to disclose all witnesses retained to provide expert testimony “at the times and in the sequence that the court orders.”[17] The Court's Scheduling Order in this case required all experts to be disclosed by January 23, 2017. The Refinery did not disclose Oman or his Declaration until July 17, 2017, six months after the Court's deadline. Thus, the Oman Declaration is an untimely expert report that violates Rule 26 of the Federal Rules of Civil Procedure.

         The Refinery argues that it was not required to disclose Oman as an expert because it does not intend to use him as an expert at trial. The Refinery cites a single district court opinion from New Jersey in support of this argument-In re Mercedes-Benz Anti-Trust Litigation.[18] In that case, the district court refused to exclude an expert affidavit that was used in support of the defendants' motion for summary judgment but who would not be used at trial.[19] The district court relied on the language of Rule 26(a)(2) which requires a party to disclose the identity of any witness it may “use at trial to present evidence under Federal Rule of Evidence 702, 703, or 705.”[20] But, this Court is not bound by that decision, and its applicability is limited to its facts. Unlike this case, the deadline for identifying experts had not yet passed when the defendants filed their motion for summary judgment, and thus there was no violation of Rule 26(a)(2)(A).[21]

         The Court also disregards Oman's opinions on the basis that they contain overreaching and improper legal conclusions.[22] For example, Oman improperly opines regarding EIG's intent while preparing the Oil Daily applications, whether the Oil Daily registrations should be referred to the Copyright Office, and whether the Copyright Office would consider the alleged inaccuracies in the applications to be material. The Refinery argues that the Declaration is “valuable to this Court's determination” and that it provides an “advisory opinion” based on his personal experiences. But this Court is capable of conducting its own legal analysis based on the statutes, case law, and published guidance from the Copyright Office. In addition, although the Declaration presumably concerns the same copyright registrations that are at issue in this case, it was prepared for an entirely different case. Some of the opinions expressed in the Declaration relate to arguments being made in the Kayne Anderson case that are not being made in this case. To the extent the Declaration addresses those arguments, it is irrelevant. Accordingly, the Court declines to consider the Oman Declaration in its analysis of whether EIG's copyrights should be submitted to the Register.

         B. EIG's Use of Form G/DN to Register Oil Daily with the U.S. Copyright Office

         1. Authorship of Oil Daily Oil

         Daily is comprised of articles written by EIG's employees, articles that it has licensed from Reuters, and articles that were previously published in other publications produced by EIG. The Refinery contends that because EIG is not the author of all the content of Oil Daily, then it is not the author for the complete issues of Oil Daily for purposes of group registration. In response, EIG ...


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