Property, intangible

a blog about ownership of intellectual property rights and its licensing

Missing the Question

Sometimes decisions seem expedient instead of right, albeit perhaps no harm, no foul. VocalSpace, LLC v. Lorenso is one of those decisions.

Defendant Daniel Lorenso is a software developer and former employee of plaintiff VocalSpace, a company that designs web-based internet marketing and streaming media systems. VocalSpace claimed that Lorenso “stole” VocalSpace’s source code and is selling a competing product that infringes the code.  Lorenso counterclaimed on a number of theories, including VocalSpace’s infringement of the same code.

The decision was in the context of a challenge to VocalSpace’s copyright registration, that is, a claim that VocalSpace was not the owner of the code for which it registered the copyright. (Kill the registration and you kill subject matter jurisdiction.) There were two different pieces of code that were in dispute, which is how the kind of squirrelly analysis arises. First, Lorenso had written “Pre-2003 Code” that he incorporated into the work he did for VocalSpace. The second piece of code was written while Lorenso was employed by VocalSpace, but Lorenso nevertheless claimed that he was the copyright owner.

Taking the 2006 code first, an employer will own the copyright in a work created by an employee in the scope of his or her employment. 17 U.S.C. § 201 and 17 U.S.C. § 101. Lorenso had two theories for why he nevertheless owned the copyright – the work wasn’t created within the scope of his employment and, even if it was, he had a signed writing saying that he was the owner as permitted by § 201.

Neither theory worked though. The 2006 code was indeed written in the scope of Lorenso’s employment. His work for VocalSpace included writing code. Although Lorenso sent an email saying that that he intended to “develop[] projects outside [his] employment,” specifically blogging software (which was a functionality VocalSpace did not have at the time), Lorenso also said that the code would be similar “in nature (and code) to those I have already developed for VocalSpace projects” and that there “may be overlapping needs between the 2 projects which could benefit from collaboration.” His boss responded with “[i]f I ask you to write a blog system, you can use the one you’re writing, or rewrite it from scratch, but you need to guarantee me the code is unencumbered” and that “I need to own the code you write for me, 100%.” The court concluded the 2006 software was written in the scope of Lorenso’s employment.

Lorenso didn’t fare any better with the signed writing argument. His fundamental problem was that,  for an employee to retain ownership, the writing has to be signed by both parties. There was no such writing here; Lorenso’s email was only an offer that was not accepted by VocalSpace. Putting VocalSpace on notice that he was writing software on the side wasn’t enough:

Further, Defendants cite the Court to no authority, and the Court is aware of none, stating that an employee can avoid the written instrument requirement under the Copyright Code simply by stating that the work is intended for both his use and the use of his employer. Therefore, the Court concludes that no material questions of fact exist with regard to the non-existence of a signed agreement.

Where it gets squirrelly though is with the Pre-2003 Code. There didn’t seem to be any question that Lorenso was the owner of the copyright in the code, but that didn’t seem to matter to the court. Rather, all the court cared about was that Lorenso added it to the VocalSpace body of code:

Defendants present no evidence showing Lorenso was not a VocalSpace employee when he placed the Pre-2003 Code into the VocalSpace code base. Therefore, the Court concludes Lorenso was acting within the scope of his employment when he inserted the 2006 Lorenso Code and the Pre-2003 Code into the VocalSpace code.

I don’t think the matters that Lorenso was “acting within the scope of his employment” when he inserted the code. The legal question posed was whether the registration was invalid for claiming ownership of code not authored by VocalSpace, so saying that Lorenso put the code in there doesn’t really answer the question.

At the end of the day it didn’t matter though; there was also third-party code that the court found was correctly identified in the application by stating that “material excluded” included “computer program.” No more detailed information than that is required on the application, so the description would have covered the Pre-2003 Code too.

Whether VocalSpace could still use the Pre-2003 Code is a different question that would require examination under the law of licensing, like this situation. But we’ll never know; the case has settled.

VocalSpace, LLC v Lorenso, No. 4:09-cv-350 (E.D. Tex. March 7, 2011).

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