• The Reason for a Declaratory Judgment Counterclaim

    by  • February 25, 2009 • copyright

    Exclusive Rights blogged on a recent decision from the 11th Circuit. It involves the “Rooker-Feldman” doctrine on the availability of review of state court decisions by a federal court. I promptly mentally filed the decision in the category of “I’ll look it up if I ever need it,” but the brief summary of facts by the 11th Circuit, describing a disagreement between the state and federal courts about whether a copyrighted work was a joint work, provoked a little digging. It’s quite a battle.

    Defendant Shafe hired plaintiff Nicholson to create an “Interest Inventory” as part of a larger work used to help high school students with career choices, which I’ll call “Work 1.” The Interest Inventory contained a table called “What Your Scores Mean.” Nicholson’s work was covered by a written agreement and the parties did not dispute that Nicholson’s contribution was as a work made for hire.

    Nicholson then created another “Interest Inventory” with a modified, 11 column “What Your Score Means” table for Work 2. There was no signed agreement relating to this work. Shafe then took the new table and incorporated it into Work 1. Nicholson filed a copyright registration for columns 4, 5, 6, 7, 9 and 11 of the “What Your Scores Means” table. [ed. note – I think it probably doesn’t bode well for your ownership claim when you register only some columns of a table.] Nicholson sued Shafe in federal court for copyright infringement.

    The court held that the table in Work 2 was a joint work – specifically the court said “In sum, the court finds that [Work 2] is comprised of inseparable and interdependent works, and that Nicholson intended for the new copyrighted columns to be incorporated into the original version of “What Your Scores Mean,” for which Defendants already owned a copyright interest. Accordingly, the court holds that [Work 2] is a joint work.” Therefore, since Shafe was the owner of some of the copyright, he couldn’t be an infringer. The court granted summary judgment in favor of Shafe on the copyright infringement claim.

    Nicholson did the logical next thing, suing in state court for an accounting since she was joint owner of the work. But, as reported in the Georgia state court appeals opinion, the state trial court held that collateral estoppel did not apply because the federal court’s statement that Nicholson was an owner was dicta. The case went to trial and the jury held that Nicholson didn’t have ownership rights and was owed no money.

    “Dicta” that Nicholson was a joint owner, when the case was fundamentally about copyright ownership? The Court of Appeals opinion is short but tantalizes for paragraph after paragraph before getting to the reason – just because Shafe was an owner of the copyright doesn’t necessarily mean that Nicholson was also. All that was necessary to decide the infringement claim was to find that Shafe was an owner, not whether Nicholson was. A parsimonious reading of the federal decision if ever there was one, but technically accurate.

    Back to federal court for Nicholson, this time for a declaration that she also was a joint owner of the work. But she was smacked down again in federal court, sanctions and all, by the same judge who heard the original case. The court sua sponte raised the Rooker-Feldman doctrine to bar the suit and refused to reach the parties’ arguments on res judicata. The smackdown seems particularly cruel given that the court, in the first opinion, commented that there were counterclaims (perhaps for a declaration of ownership?) but strongly suggested settling: “As a practical matter, if Defendants dismiss their counterclaims, this court would no longer have federal question jurisdiction and would not exercise supplemental jurisdiction over the state law clams, so this action in this court would be over. While this court will not mandate mediation of the remaining claims, the court suggests that now may be a good time to discuss settlement of what remains of the dispute.” The case settled less than two months later.

    But most recently the 11th Circuit to Nicholson’s rescue, as explained by Exclusive Rights. The district court was wrong on Rooker-Feldman and Nicholson has another chance in the district court. Still the res judicata to contend with, but not dead in the water yet.

    2003 Northern District of Georgia decision here.
    Georgia state appeals court citation is Nicholson v. Shafe, 294 Ga.App. 478, 669 S.E.2d 474 (2008).
    2008 Northern District of Georgia decision here.
    11th Circuit decision here.

    © 2009 Pamela Chestek