Wednesday, July 05, 2006

Gentlemen, Start Your Engines!

A recent very well written and reasoned opinion from the Northern District of Iowa, International Motor Contest Association, Inc. v. Staley , 2006 WL 1667889 (MarkW. Bennett, J), provides an excellent discussion (in a 52 page opinion) for those interested in the copyright misuse and unclean hands defenses.

Plaintiff International Motor Contest Association claims to be the oldest sanctioned (an ambiguous word, and anyway sanctioned by whom?) automobile racing association in the U.S. It claims copyright in its rules. Defendant, an individual, also promotes race events. IMCA claims defendant copied its rules. Defendant asserted a number of affirmative defenses and counterclaims, including misuse and unclean hands. Plaintiff them filed a motion to dismiss based in part on the Noerr-Pennington doctrine. The court rightly held that that doctrine only gives plaintiffs (limited) immunity from tort actions arising from the filing of the suit; it does not knock out affirmative defenses like misuse and unclean hands.

A large part of the opinion is devoted to a survey of the misuse defense in the courts. Plaintiff's argument here was odd: the misuse defense was alleged to fail because it asserted only "antitrust and anticompetitive conduct." Usually it is claimed that the defense extends only to such behavior. As the court noted: "Indeed, the question has more often been whether the defense includes other kinds 'misuse' besides antitrust violations and anti-competitive conduct."

Judge Posner has been a vocal proponent of a misuse defense for such "other kinds" of misuse, such as asserting rights beyond what the Copyright Act grants and using rights for ulterior purposes. I share that view, but there are some conceptual questions that should be addressed, and the IMCA court may ultimately face them too: if it is held that the IMCA does not possess copyright in its rules or that Staley has not infringed them, there is no technical role for a misuse defense since it is an affirmative defense. In other words, where plaintiff overstates its rights, it loses on the merits.

If it is held that IMCA does have a valid copyright and that Staley has infringed it, affirmative defenses do come into play, but might not it be a a difficult row to hoe once defendant's conduct has been found to have violated plaintiff's rights? Where, in other words, is the "mis"use? One possibility is that copyright has been used to influence other, non-copyright behavior, but outside of antitrust and anti-competitive behavior, the types of such behavior that would be so egregious as to be struck down is less clear, hence the logical problem posed by the defense.

6 comments:

Anonymous said...

First, as you know, there is still a big dispute as to whether market power, which is usually required in traditional antitrust claims, is required at all for copyright misuse claims. If it is required for copyright misuse, then copyright misuse claims become antitrust claims and will almost always be dismissed.

On the other hand, if copyright misuse does not require a finding of market power, then it boils down to the unclear rubric of a copyright holder trying to extend the right to exclude under copyright law to another area under which no such rights have been granted.

The 9th Circuit Practice Management case found misuse (out of a thin air, by the way, since the parties hadn't really argued about a misuse theory) for creating a contract with HHS requiring HHS to exclusively use the medicare codes that were the subject of the copyright claim. At issue was not the positive question of what market power did the copyright holder have, but the negative question of whether the copyright holder was intentionally excluding others from competition "substantially beyond" what copyright protection provides through its agreement with HHS.

I believe if you reread Chamberlain and Lexmark you'll find they are also, under the surface, refusals to enforce the DMCA because of the copyright holder's attempt to apply its copyright, and access controls protecting a right of the copyright holder, in order to extend the right to exclude substantially beyond what copyright protects. Market power isn't an issue in these cases; instead, its extension of the copyright holder's right to exclude to non-copyright rights.

It is entirely possible for someone's copyright to be valid, infringed, but unenforceable for copyright misuse.

William Patry said...

Anon:

I believe Judge Posner is encouraging misuse in cases where there is no finding of market power, and that the copyright is being used to gain control over non-copyright issues, like in the Beanie Baby case, editorial control.

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