Compaq Computer Corp. v. Ergonome Inc.

387 F.3d 403, 59 Fed. R. Serv. 3d 944, 72 U.S.P.Q. 2d (BNA) 1705, 65 Fed. R. Serv. 582, 2004 U.S. App. LEXIS 20765, 2004 WL 2222385
CourtCourt of Appeals for the Fifth Circuit
DecidedOctober 5, 2004
Docket01-20861
StatusPublished
Cited by71 cases

This text of 387 F.3d 403 (Compaq Computer Corp. v. Ergonome Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Compaq Computer Corp. v. Ergonome Inc., 387 F.3d 403, 59 Fed. R. Serv. 3d 944, 72 U.S.P.Q. 2d (BNA) 1705, 65 Fed. R. Serv. 582, 2004 U.S. App. LEXIS 20765, 2004 WL 2222385 (5th Cir. 2004).

Opinions

EDITH H. JONES, Circuit Judge:

This case arises from Ergonome’s claim that Compaq’s Safety and Comfort Guide (“SCG”) unlawfully infringed on a copyright held by Ergonome in Preventing Computer Injury: The HAND Book (“THB”), a teaching text describing ergonomically correct hand positions for computer users and ways to avoid repetitive stress injuries. On July 11, 2001, after a seven-day trial, the jury concluded that any copying by Compaq was de minimis and constituted fair use according to 17 U.S.C. § 107. The district court subsequently held that the doctrines of laches and equitable estoppel also barred Ergo-nome’s claim. Based on these findings, the district court awarded Compaq its attorneys’ fees of $2.7 million. Additionally, the district court deemed defendant Stephanie Brown to be the alter ego of Ergo-nome as a sanction for repeated discovery violations throughout the litigation process.

Ergonome, Brown, and her husband Mowrey appeal on multiple grounds and argue, inter alia, that (1) the jury’s verdict should be set aside, (2) the district court erred in finding that laches and equitable estoppel bar their suit, (3) the district court erred in shifting attorneys’ fees to Ergonome, and (4) Brown and Mowrey are not the alter egos of Ergonome and should not be held jointly and severally liable for the attorneys’ fee award.

To prevail, Ergonome would have to persuade this court that each of the four independent bases for finding in Compaq’s favor (de minimis, fair use, laches, and equitable estoppel) is legally erroneous. Ergonome has not succeeded in this formidable task, and, focusing exclusively on the jury’s finding of fair use, we affirm the [407]*407finding of no infringement. We reach no other substantive copyright issues raised by the parties. Additionally, we affirm the district court’s decision to shift attorneys’ fees ‘and its discovery sanction against Brown. However, because no such sanction was imposed on Mowrey, we reverse this aspect of the judgment.

I. BACKGROUND

In 1992, Stephanie Brown began writing THB and subsequently registered the manuscript with the U.S. Copyright Office. Brown and Mowrey formed Ergonome in 1993 to publish and market the book. Brown assigned all her rights in THB, including the copyright, to Ergonome. THB was formally published in 1994.

In 1993, Compaq decided to update a booklet entitled Creating a Comfortable Work Environment that was packaged with each Compaq computer. During the revision process, Compaq’s manager of the Human Factors Group, Cynthia Purvis, referenced THB. The finished booklet, renamed the Safety and Comfort Guide, contained four illustrations and seven phrases that were similar to photographs and phrases in THB.1 Like its predecessor, the SCG was packaged and included with every Compaq computer.

Meanwhile, Brown and Mowrey had been attempting to market THB to various computer companies, including Compaq. Mowrey initially spoke to Purvis on the telephone in March 1994 and thereafter sent Purvis a letter detailing volume discount prices for THB. In November 1994, Brown and Mowrey attended a meeting with Compaq personnel in Houston to demonstrate Key Moves, a software derivative of THB. During this meeting, Pur-vis gave Brown a pre-publication copy of the 1994 SCG. According to Brown, while leafing through the SCG, she became aware of the similarities between the above-referenced four illustrations and seven phrases and THB. She said nothing of the alleged infringement, however, choosing instead to pursue the possibility of a software license with Compaq. Brown and Mowrey returned to Compaq again in January 1995 for another Key Moves demonstration.

In December 1996, Mowrey notified Purvis of Ergonome’s infringement claims. In 1997, Compaq filed suit in federal district court in Houston seeking a declaration that the SCG did not infringe on THB. Ergonome subsequently filed an infringement action in federal district court in New York, which was transferred and consolidated with Compaq’s declaratory judgment action in Houston. Both parties filed motions for summary judgment, and the district court concluded as a matter of law that the portions of THB at issue were copyrightable. However, the district court ultimately denied the motions because genuine issues of material fact remained as to Compaq’s affirmative defenses of de min-imis and fair use. See Compaq Computer Corp. v. Ergonome, Inc., 137 F.Supp.2d 768 (S.D.Tex.2001). The jury trial and resulting appeal followed.

II. DISCUSSION

A. Liability

“To establish copyright infringement, a plaintiff must prove ownership of a valid copyright and copying of constituent elements of the work that are copyrightable.” Eng’g Dynamics, Inc. v. Structural [408]*408Software, Inc., 26 F.3d 1335, 1340 (5th Cir.1994) (citing Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1999)). Copyright ownership is shown by (1) proof of originality and copyrightability and (2) compliance with the applicable statutory requirements. Id. Compaq does not dispute that Ergonome possessed a statutorily compliant copyright. In addition, the district court held as a matter of law that the portions of THB allegedly copied by Compaq reflected the necessary originality to qualify as copyrightable.2 Compaq Computer Corp. v. Ergonome Inc., 137 F.Supp.2d 768, 777 (S.D.Tex.2001). The jury found that Compaq actually copied portions of THB.

Not all copying amounts to copyright infringement, however. Eng’g Dynamics, 26 F.3d at 134CM1. Specifically, Congress has excepted from infringement of copyrighted materials copying that amounts to “fair use” under 17 U.S.C. § 107. When determining fair use, Congress has provided a non-exclusive list of factors that must be considered:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use on the potential market for or value of the copyrighted work.

17 U.S.C. § 107 (2000). In the instant case, Compaq pleaded fair use as an affirmative defense, the jury was instructed on the four factors enumerated above, and they ultimately concluded that Compaq’s copying of the four illustrations and seven phrases from THB amounted to fair use. On appeal, Ergonome does not challenge the fair use jury instruction.

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387 F.3d 403, 59 Fed. R. Serv. 3d 944, 72 U.S.P.Q. 2d (BNA) 1705, 65 Fed. R. Serv. 582, 2004 U.S. App. LEXIS 20765, 2004 WL 2222385, Counsel Stack Legal Research, https://law.counselstack.com/opinion/compaq-computer-corp-v-ergonome-inc-ca5-2004.