he Saenger v. Nationwide Insurance
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he Saenger v. Nationwide Insurance, (1st Cir. 1997).
Opinion
USCA1 Opinion
No. 96-2197
THE SAENGER ORGANIZATION, INC.,
Plaintiff, Appellee,
v.
NATIONWIDE INSURANCE LICENSING ASSOCIATES, INC.,
COMMONWEALTH LICENSING GROUP, AND LAWRENCE R. DURKIN,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nancy C. Gertner, U.S. District Judge]
____________________
Before
Selya, Circuit Judge,
Bownes, Senior Circuit Judge,
and Stahl, Circuit Judge.
____________________
Ernest B. Murphy with whom Murphy & O'Connell was on brief for
appellants.
David J. Byer with whom Testa, Hurwitz & Thibeault, LLP, Stephen J.
Kenney, and Kenney & Maciolek, were on brief for appellee.
____________________
July 18, 1997
____________________
STAHL, Circuit Judge. This copyright infringement
case revolves around a dispute over who owns the copyrights in
insurance licensing texts and manuals that were created in
1986. It comes to us on appeal from the district court's grant
of summary judgment in favor of plaintiff-appellee, The Saenger
Organization, Inc. ("Saenger"), and against defendants-
appellants Lawrence R. Durkin, Nationwide Insurance Licensing
Associates, Inc., and Commonwealth Licensing Group
(collectively "Durkin"). Durkin argues that the district court
improperly found that no genuine issue of material fact existed
as to Saenger's ownership of valid copyrights in the manuals
and Durkin's infringement of them. Thus, Durkin contends that
the district court wrongly concluded that Saenger was entitled
to judgment in its favor as a matter of law. Durkin further
argues that the district court incorrectly determined that the
applicable Massachusetts statutes of limitations and frauds
barred his state law counterclaims against Saenger alleging
fraud, breach of agreement, and unfair and deceptive business
practices. For the reasons that follow, we affirm the district
court's rulings.
Standard of Review
We exercise plenary, de novo review of a district
court's entry of summary judgment. See Ortiz-Pinero v. Rivera-
Arroyo, 84 F.3d 7, 11 (1st Cir. 1996). Summary judgment is
appropriate where there are no genuine disputes as to material
-2- 2
facts and the moving party is entitled to judgment as a matter
of law. See Fed. R. Civ. P. 56(c). We review the record
evidence in the light most favorable to the non-moving party,
and thus draw all reasonable inferences and resolve factual
disputes in favor of the party against whom summary judgment
has been entered, in this case, the defendants-appellants. See
Den Norske Bank v. First Nat'l Bank of Boston, 75 F.3d 49, 53
(1st Cir. 1996).
Background and Prior Proceedings
The Saenger Organization has been in the business of
publishing insurance licensing texts and manuals since 1986.
Durkin worked for Saenger from 1986 until 1992, during which
time he was an officer and vice president of the corporation.
Since 1993, Durkin, now the principal of both Nationwide
Insurance Licensing Associates and Commonwealth Licensing
Group, has been independently in the business of publishing
insurance licensing texts and manuals.
According to Durkin, he and Saenger reached an oral
agreement in April 1986 as to work that Durkin would do for
Saenger. Saenger disputes the existence of any unwritten
agreement, but concedes that we must view the record evidence
in the light most favorable to Durkin for purposes of this
appeal and the underlying motion. According to Durkin, the
work responsibilities he undertook in the April 1986 oral
agreement included the development of a property and casualty
-3-
insurance licensing manual, a life and health insurance manual,
and several state law supplements. Durkin maintains that the
alleged oral agreement contained the following terms: Durkin
was to begin immediately to develop, update, and expand these
manuals and supplements for Saenger, which would market them;
he would become Saenger's vice president immediately upon
completion of an existing employment commitment to another
firm; he and Saenger would be co-authors of the materials that
Durkin would write and co-owners of the copyrights in those
materials; and, he would be paid a base salary of $42,000 per
annum plus 50 percent of the net revenues of the materials he
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USCA1 Opinion
No. 96-2197
THE SAENGER ORGANIZATION, INC.,
Plaintiff, Appellee,
v.
NATIONWIDE INSURANCE LICENSING ASSOCIATES, INC.,
COMMONWEALTH LICENSING GROUP, AND LAWRENCE R. DURKIN,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nancy C. Gertner, U.S. District Judge]
____________________
Before
Selya, Circuit Judge,
Bownes, Senior Circuit Judge,
and Stahl, Circuit Judge.
____________________
Ernest B. Murphy with whom Murphy & O'Connell was on brief for
appellants.
David J. Byer with whom Testa, Hurwitz & Thibeault, LLP, Stephen J.
Kenney, and Kenney & Maciolek, were on brief for appellee.
____________________
July 18, 1997
____________________
STAHL, Circuit Judge. This copyright infringement
case revolves around a dispute over who owns the copyrights in
insurance licensing texts and manuals that were created in
1986. It comes to us on appeal from the district court's grant
of summary judgment in favor of plaintiff-appellee, The Saenger
Organization, Inc. ("Saenger"), and against defendants-
appellants Lawrence R. Durkin, Nationwide Insurance Licensing
Associates, Inc., and Commonwealth Licensing Group
(collectively "Durkin"). Durkin argues that the district court
improperly found that no genuine issue of material fact existed
as to Saenger's ownership of valid copyrights in the manuals
and Durkin's infringement of them. Thus, Durkin contends that
the district court wrongly concluded that Saenger was entitled
to judgment in its favor as a matter of law. Durkin further
argues that the district court incorrectly determined that the
applicable Massachusetts statutes of limitations and frauds
barred his state law counterclaims against Saenger alleging
fraud, breach of agreement, and unfair and deceptive business
practices. For the reasons that follow, we affirm the district
court's rulings.
Standard of Review
We exercise plenary, de novo review of a district
court's entry of summary judgment. See Ortiz-Pinero v. Rivera-
Arroyo, 84 F.3d 7, 11 (1st Cir. 1996). Summary judgment is
appropriate where there are no genuine disputes as to material
-2- 2
facts and the moving party is entitled to judgment as a matter
of law. See Fed. R. Civ. P. 56(c). We review the record
evidence in the light most favorable to the non-moving party,
and thus draw all reasonable inferences and resolve factual
disputes in favor of the party against whom summary judgment
has been entered, in this case, the defendants-appellants. See
Den Norske Bank v. First Nat'l Bank of Boston, 75 F.3d 49, 53
(1st Cir. 1996).
Background and Prior Proceedings
The Saenger Organization has been in the business of
publishing insurance licensing texts and manuals since 1986.
Durkin worked for Saenger from 1986 until 1992, during which
time he was an officer and vice president of the corporation.
Since 1993, Durkin, now the principal of both Nationwide
Insurance Licensing Associates and Commonwealth Licensing
Group, has been independently in the business of publishing
insurance licensing texts and manuals.
According to Durkin, he and Saenger reached an oral
agreement in April 1986 as to work that Durkin would do for
Saenger. Saenger disputes the existence of any unwritten
agreement, but concedes that we must view the record evidence
in the light most favorable to Durkin for purposes of this
appeal and the underlying motion. According to Durkin, the
work responsibilities he undertook in the April 1986 oral
agreement included the development of a property and casualty
-3-
insurance licensing manual, a life and health insurance manual,
and several state law supplements. Durkin maintains that the
alleged oral agreement contained the following terms: Durkin
was to begin immediately to develop, update, and expand these
manuals and supplements for Saenger, which would market them;
he would become Saenger's vice president immediately upon
completion of an existing employment commitment to another
firm; he and Saenger would be co-authors of the materials that
Durkin would write and co-owners of the copyrights in those
materials; and, he would be paid a base salary of $42,000 per
annum plus 50 percent of the net revenues of the materials he
worked on, with the computation and sharing of such net revenue
to begin in June 1987 and to continue in each succeeding fiscal
year. Durkin promptly began to work part-time (nights and
weekends) on the manuals -- as he and Saenger had agreed --
even though he was still employed by Educational Training
Systems ("ETS"). Durkin and Saenger continued with this work
arrangement for several months until Durkin assumed full-time
work duties at Saenger's offices in July 1986.
Two of the insurance licensing texts that Durkin
worked on during his relationship with Saenger were manuals
that came to be titled Li fe, Accident and Health Licensing Text
and Property/Casualty Licensing Text (hereinafter "Life" and
"Property" respectively). Durkin claims he authored these
works in their entirety, while Saenger contends that Durkin
-4- 4
merely expanded and updated previously developed Saenger
manuals. In any event, on or about November 26, 1986, Saenger
submitted an application for copyright registration, a Form TX,
for Property with the United States Copyright Office. About
two days later, Saenger submitted a similar application for
Life.1
The Property application listed July 16, 1986 as the
work's first date of publication and indicated that it was a
"work made for hire" by the work's co-authors, which the
application listed as Bruce W. Saenger (The Saenger
Organization's principal) and Lawrence R. Durkin. The
application indicated that The Saenger Organization was the
hiring party for whom the work was made and was the sole
claimant of copyright protection. The Copyright Office
responded to the application with a letter dated January 23,
1987, notifying Saenger that "[i]f an individual contributes to
or creates a work in his or her capacity as either an officer
or employee of a company or organization, the work is
considered a 'work made for hire' and the employer should be
named as the author rather than the individual." In response
to this letter, Saenger completed and submitted a second
application for the same work, i.e., Property, again listing
The Saenger Organization as the sole copyright claimant, but
1. Durkin claims that the Property application, while
submitted to the Copyright Office in November 1986, was
filled out in his presence on or about July 16, 1986.
-5- 5
this time also listing it alone as the work's author. On the
basis of this second application, which the Copyright Office
received on February 24, 1987, the Copyright Office issued
Saenger a copyright for P roperty (registration number TX 2-011-
625), which listed November 26, 1986 as the effective date of
registration.
Like the initial Property application, the first
application that Saenger submitted for Life listed Bruce W.
Saenger and Lawrence R. Durkin as the authors of the work,
indicated that it was a "work made for hire," and stated that
The Saenger Organization, the copyright claimant, was the
hiring party for whom the work had been made. Interestingly,
the Copyright Office responded to this application prior to
responding to the earlier Property application. By a letter
dated December 24, 1986, the Copyright Office notified Saenger
that "[w]here a work is 'made for hire,' the employer is
considered the author and should be [so] named [on the
copyright application.]" In response to this letter, Saenger
completed and submitted a second application for the same work,
i.e., Life , this time listing The Saenger Organization alone as
the work's author. On the basis of this second application,
which the Copyright Office received on January 16, 1987, the
Copyright Office issued Saenger a copyright for Life
(registration number TX 1-983-136), which listed November 28,
1986 as the effective date of registration.
-6- 6
During the period of time when these applications
were pending, Durkin asked Saenger about the applications'
status. Some time after the Copyright Office sent Saenger the
copyright registrations for Property and Life (the record is
not clear precisely when), Saenger informed Durkin that the
copyrights had "come in from the Office." Durkin did not ask
to see, nor did he see, the copyright registrations or any of
the applications submitted to the Copyright Office prior to an
incident which occurred in April 1992. According to Durkin,
while looking through some files in the clerical area at
Saenger, he inadvertently encountered a file entitled
"COPYRIGHT INFO." He looked inside the file and discovered
copies of the applications and the letters described above.
According to Durkin, he brought the file to Bruce Saenger's
office and demanded an explanation for why he was not listed as
a copyright owner, demanded his share of the copyright and
copyright revenues, and expressed his view that the copyright
registrations amounted to a violation of their oral agreement.
Saenger denies that such a confrontation ever took place.
Prior to leaving Saenger in September 1992, Durkin
avers that he had regular and frequent discussions with Bruce
Saenger concerning the copyright and revenue issues, something
Saenger denies. Durkin states that Saenger repeatedly promised
him that he would "get around to" changing the copyright to
name Durkin as a co-author and co-owner and would make an
-7- 7
accounting for monies owed Durkin as a result of revenues
attributable to fiscal years 1989 to 1992.
Durkin admits that after he left Saenger in September
1992 he copied substantial portions of both Life and Property
and used them in his own text, Fundamentals of Life, Accident,
and Health Licensing Text (hereinafter "Fundamentals").
Saenger became aware of Durkin's activities in April 1994. The
following month, Saenger advised Durkin to discontinue copying
and publishing the written material in question, as it was
copyrighted by Saenger. Durkin, however, persisted in
publishing and distributing the material. Shortly thereafter,
Saenger filed suit in federal district court. The district
court preliminarily enjoined publication and distribution of
the Durkin materials and entered summary judgment for Saenger
on both its copyright infringement claims and Durkin's state
law counterclaims. This appeal ensued.
The Copyright Infringement Issue
The plaintiff in a copyright infringement case bears
the burden of proving "'(1) ownership of a valid copyright, and
(2) [unauthorized] copying of constituent elements of the work
that are original.'" Lotus Dev. Corp. v. Borland Int'l, Inc.,
49 F.3d 807, 813 (1st Cir. 1995), aff'd by an equally divided
court , 116 S. Ct. 804 (1996) (quoting Feist Public'ns, Inc. v.
Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)); see also CMM
Cable Rep., Inc. v. Ocean Coast Props., Inc., 97 F.3d 1504,
-8- 8
1513 (1st Cir. 1996). Only the first of these two prongs is at
issue in this case because Durkin does not deny or dispute that
he copied the pertinent material from Property and Life without
any authorization from Saenger. Thus, the only issue before us
is whether Saenger's copyrights for Property and Life are
valid.
To show ownership of a valid copyright, a plaintiff
bears the burden of proving that the work, when viewed as a
whole, is original and that he has complied with the requisite
statutory formalities. See Lotus, 49 F.3d at 813. "'In
judicial proceedings, a certificate of copyright registration
constitutes prima facie evidence of copyrightability and shifts
the burden to the defendant to demonstrate why the copyright is
not valid.'" Id. (quoting Bibbero Sys., Inc. v. Colwell Sys.,
Inc. , 893 F.2d 1104, 1106 (9th Cir. 1990)); see also 17 U.S.C.
S 410(c); CMM Cable, 97 F.3d at 1513.
In this case, Saenger succeeded in shifting the
burden regarding the validity of its copyrights in Life and
Property by producing copyright registration certificates.
Durkin attempted to meet the repositioned burden of proof by
arguing that Saenger's copyrights were obtained by
misrepresentation and are, therefore, invalid. We, like the
district court, do not find this argument persuasive.
The crux of Durkin's theory is that the oral
agreement he allegedly entered into with Saenger in April 1986,
-9- 9
which Durkin characterizes as a partnership agreement,
undermines the validity of Saenger's copyrights in Life and
Property. Specifically, Durkin alleges that he and Saenger
orally agreed in April 1986 that he was to develop written
materials for Saenger and that he and Saenger would be co-
authors and co-owners of the copyrights in those materials,
including those now titled Life and Property. Thus, Durkin
argues that Saenger's copyrights are invalid because they
violate the terms of the April 1986 oral agreement and because
the copyright applications that Saenger submitted contained
information other than that which Saenger agreed they would
contain as to ownership of the copyrights. Saenger contests
the veracity of Durkin's various allegations, but concedes that
they must be assumed to be correct for the purposes of this
appeal. Even so, Durkin's argument encounters several
difficulties.
The Copyright Act of 1976 provides that copyright
protection generally attaches to the person who actually
creates a work. See 17 U.S.C. S 201(a) ("Copyright in a work
. . . vests initially in the author or authors of the work.
The authors of a joint work are coowners of copyright in the
work."). "The Act carves out an important exception, however,
for 'works made for hire.'" Community for Creative Non-
Violence v. R eid, 490 U.S. 730, 737 (1989) [hereinafter CCNV].
Where "a work [is] made for hire," the Act provides that "the
-10- 10
employer or other person for whom the work was prepared is
considered the author" and owns the copyright "unless the
parties have expressly agreed otherwise in a written instrument
signed by them." 17 U.S.C. S 201(b).
As for the scope of this exception to the general
rule regarding copyright ownership, the 1976 Act, in relevant
part, provides that a "work [is] made for hire" if it is
either:
(1) a work prepared by an employee
within the scope of his or her
employment; or
(2) a work specially ordered or
commissioned for use as . . . a
supplementary work, as a compilation, as
an instructional text, as a test, as
answer material for a test, or as an
atlas, if the parties expressly agree in
a written instrument signed by them that
the work shall be considered a work made
for hire. . . .
17 U.S.C. S 101.
In this case, the parties agree that they did not sign
a written instrument stating that the materials that Durkin
prepared for Saenger would be considered works made for hire.
Accordingly, Life and Property can be considered "works made for
hire" only if they satisfy the requirements of section 101(1), that
is, if they were prepared by Durkin within the scope of his
employment with Saenger.
The Copyright Act nowhere defines the key terms
"employee" or "scope of employment." See CCNV, 490 U.S. at 739;
Melville B. Nimmer & David Nimmer, 1 Nimmer on Copyright S
-11- 11
5.03[B][1] at 5-14.2 (1996). In CCNV, the Supreme Court resolved
four conflicting judicial interpretations of these terms, see 490
U.S. at 738-39, by construing them to mean the "conventional
master-servant relationship as understood by common-law agency
doctrine." I d. at 740. The resulting directive from the Court is
unambiguous: "To determine whether a work is [made] for hire under
the Act, a court first should ascertain, using principles of [the]
general common law of agency, whether the work was prepared by an
employee or an independent contractor. After making this
determination , the court can apply the appropriate subsection of S
101." Id. at 750-51. The Court provided a nonexhaustive list of
factors courts should use "[i]n determining whether a hired party
is an employee under the general common law of agency." Id. at
751. This list includes the following:
the hiring party's right to control the manner
and means by which the product is accomplished
. . . . the skill required; the source of the
instrumentalities and tools; the location of
the work; the duration of the relationship
between the parties; whether the hiring party
has the right to assign additional projects to
the hired party; the extent of the hired
party's discretion over when and how long to
work; the method of payment; the hired party's
role in hiring and paying assistants; whether
the work is part of the regular business of
the hiring party; whether the hiring party is
in business; the provision of employee
benefits; and the tax treatment of the hired
party.
Id. at 751-52 (footnotes omitted) (citing Restatement (Second) of
Agency S 220(2) (1958)). The Court completed its discussion of
-12- 12
these factors by cautioning that "[n]o one of these factors is
determinative." Id. at 752.
Under this standard, the appellate record indicates
that Durkin cannot escape the reasonable inference that he prepared
these texts both while he was a Saenger employee and within the
scope of his employment with Saenger. The evidence demonstrates
that the overwhelming majority of the agency factors that the CCNV
Court highlighted point to the existence of an employment
relationship between Durkin and Saenger.
For instance, on Durkin's version of events, he and
Saenger recognized that he had some remaining work obligations to
another organization, ETS, but agreed in April 1986 that he would
begin to work on these texts immediately. Specifically, they
agreed that Durkin would work nights and weekends on developing the
manuals, prior to his being able to assume his full-time position
as Saenger's vice president in July 1986. Thus, a fair reading of
Durkin's own affidavit indicates that the agreement he reached with
Saenger addressed the issues of when and how long he would work on
the manuals even as to the period of time between April and July
1986. In Durkin's words, "Even though I was employed by another
organization at the time [viz., April 1986], Saenger and I agreed
that I would develop these manuscripts . . . in the evenings and on
weekends." Under CCNV, this feature of the Durkin-Saenger
agreement points towards the existence of an employment
relationship.
-13- 13
Furthermore, regardless whether Durkin actually wrote
the manuals from scratch (as he alleges) or merely contributed to
them by modifying and expanding pre-existing material (as Saenger
counters), it is undisputed that Durkin performed this work for
Saenger and at its specific behest. Despite his arguments to the
contrary, Durkin's affidavit in opposition to the preliminary
injunction indicates that Saenger retained a right to control the
manner and means by which the contested works -- Life and Property
-- were produced. This feature of the Durkin-Saenger relationship,
too, militates in favor of a finding of employee status.
Specifically, Durkin swears that, pursuant to the
alleged April 1986 oral agreement, Durkin "would develop" written
material, Saenger "would process" this material, and Durkin would
subsequently "edit and proofread" the text prior to printing.
Indeed, the record indicates that Saenger's office was an important
source of the instrumentalities, tools, and human resources used in
producing the works in question. According to the affidavit of
Nancy Nisil, a word processing clerk at Saenger, Nisil received
handwritten sheets of paper from Durkin during the months of April
and May 1986 "on an almost daily basis . . . which I converted into
Property . . . and Life . . . which were later to my knowledge
published by The Saenger Organization." (emphasis added). Nisil's
affidavit is corroborated by that of another Saenger word
processing clerk, Tina Petitt, which relates that she too received
handwritten sheets of paper from Durkin during April and May 1986
-14- 14
"on an almost daily basis" that she "converted into Property . . .
and Life." (emphasis added). The use of Saenger word processing
equipment and personnel in the production of the works in question,
and the level of Saenger control over the means of their production
that such use entails, suggests the existence of an employer-
employee relationship between Saenger and Durkin.
The understanding of the parties as to the nature of
their relationship is also probative of the existence of a
conventional master-servant relationship as understood by common
law agency doctrine. See Restatement (Second) of Agency S
220(2)(i) (noting that "whether or not the parties believe they are
creating the relation of master and servant" is a matter to be
considered, among others, in determining whether one acting for
another is a servant or an independent contractor). While Durkin
would have us believe that the April 1986 oral agreement was a
partnership agreement, the record evidence fails to substantiate
this theory. On the contrary, the record facts indicate that
Durkin himself understood the April 1986 oral agreement to
constitute an agreement regarding his employment with Saenger.
Turning again to his preliminary injunction affidavit,
Durkin's words on this point are illuminating, albeit not in the
way he would like us to understand them: "Even though I was
employed by another organization at the time [viz., April 1986],
Saenger and I agreed that I would develop these manuscripts . . .
-15- 15
in the evenings and on weekends." (emphasis added). Durkin's use
of the word "another" is pregnant with meaning in the context that
confronts us. The dictionary defines the adjective "another" as
"different or distinct from the one first named or considered," and
as "being one more in addition to one or a number of the same
kind." Webster's Third New International Dictionary 89 (1986).
When Durkin refers to his employment with another organization
(i.e., ETS), it would appear that he understood the April 1986 oral
agreement to have provided him with a new employment relationship
with Saenger, even as to the period of time between the April
agreement and his assumption of full-time duties as Saenger's vice
president in July 1986. Durkin appears to argue that he could not
have been Saenger's employee from April to July because he was an
ETS employee during that period. Durkin's own affidavit, however,
demonstrates that he understood the April agreement with Saenger as
providing him with a part-time job that would entail evening and
weekend work commitments in addition to the responsibilities
associated with his other, full-time position with ETS. Durkin's
affidavit further establishes that both he and Saenger agreed that
this moonlighting arrangement would continue until Durkin
discharged his remaining commitment to ETS and thus became able to
assume full-time work responsibilities as Saenger's vice president.
Importantly, this view of the matter is one to which Durkin himself
subscribes. In his own affidavit as to economic loss, Durkin
-16- 16
describes himself with the following words: "I am a former
employee of The Saenger Organization." (emphasis added).
Durkin's own apparent understanding of his relationship
with Saenger thus suggests a finding of employee status. So, too,
does the duration of his work relationship with Saenger (some six
years); the method of payment used during this six-year period (the
provision of a time-based, biweekly salary following the completion
of his employment with ETS); and, the provision of employee
benefits. Durkin's tax treatment also points to the existence of
employee status. Durkin had both federal and state taxes withheld
from his Saenger paychecks, received W-2 forms for his salary, and
received 1099 miscellaneous forms for any bonuses that he received.
Finally, there is no dispute that Durkin's work for Saenger was
part of Saenger's regular business, a factor that likewise suggests
the existence of an employment relationship. The only CCNV factor
that works in Durkin's favor is the level of skill that was
presumably required to develop these works, but this does not alter
the reality that the overwhelming majority of the agency factors
highlighted by the CCNV Court point to the existence of an
employment relationship between Durkin and Saenger.
On these undisputed facts, the district court was
correct to conclude that no reasonable juror could find in Durkin's
favor either that he was not employed by Saenger or that Life and
Property were not prepared by him within the scope of his
-17- 17
employment with Saenger. Durkin's arguments to the contrary are
unavailing.
First, we cannot agree with Durkin's contention that
the April 1986 oral agreement "essentially moot[s]" the question of
whether Life and Property fall within the statutory definition of
works made "for hire." This view of the matter does not comport
with either 17 U.S.C. S 101 or the Supreme Court's ruling in CCNV.
Second, even if one assumes that Durkin and Saenger
entered into the April 1986 oral agreement that Durkin describes,
Durkin's legal theory that the agreement constituted a partnership
agreement is unsupported by the record evidence. While Durkin's
affidavit as to economic loss characterizes the alleged oral
agreement as a "partnership agreement" between himself and Bruce
Saenger, on closer inspection that conclusory characterization does
not represent additional record evidence on the matter, but only
amounts to Durkin's "spin" on the facts.
Thus, Durkin himself describes the oral agreement in
his preliminary injunction affidavit only as one that delineated
employment responsibilities and payment issues. Nowhere in the
record does Durkin describe the agreement as one that even
mentioned the concept or elements of partnership. Most
significantly, Durkin's own description of the April 1986 agreement
makes no mention of an intent by the alleged principals to form a
partnership. See, e.g., Cardullo v. Landau, 105 N.E.2d 843, 845
(Mass. 1952) (indicating that a partnership under Massachusetts law
-18- 18
is generally held to exist only where such is the intent of the
parties). On the contrary, "[t]he language throughout the
agreement was that of employment and not of partnership." Walsh v.
Atlantic Research Assocs., 71 N.E.2d 580, 584 (Mass. 1947). As
Durkin explains in his affidavit, the agreement provided that "I
would come to work for TSO [i.e., Saenger] as a Vice President."
(emphasis added). Especially where it is undisputed that Durkin
was not a co-owner with Bruce Saenger of The Saenger Organization,
we cannot agree that a finder of fact could reasonably infer from
this manifestation of intent that the parties intended to form a
partnership relationship. See, e.g., Shain Inv. Co. v. Cohen, 443
N.E.2d 126, 129 (Mass. App. Ct. 1982) (indicating that members of
a partnership are co-owners of a business, not just of a work
product, thereby distinguishing them from individuals in other
kinds of joint enterprises).
The core of Durkin's partnership argument would appear
to be his contention that Saenger was to pay him "[f]or his work"
in developing and marketing the manuals by providing him with an
annual $42,000 salary and an equal share of the net revenues from
the manuals he worked on. This net revenue sharing, Durkin argues,
evidences the existence of a partnership between himself and
Saenger. But, even if we assume the allegation about revenue
sharing to be true, such an arrangement about how Durkin would be
paid for his work would do little to substantiate Durkin's
partnership theory because venerable and established law provides
-19- 19
that one who is only interested in the profits of a business as a
means for compensation for services rendered (i.e., for his work)
is not a partner, but rather someone akin to a contractual
creditor. See Phipps v. Little, 100 N.E. 615, 615-16 (Mass. 1913);
Estabrook v. Woods , 78 N.E. 538, 540 (Mass. 1906) (refusing to find
a partnership, despite a profit sharing arrangement, where the
arrangement was essentially compensatory in nature and the party
alleging the existence of a partnership "had no right to take
control of the business . . . or to interfere in the management of
it," even in the event of non-payment); see also Mass. Gen. Laws
ch. 108A, S 7(4)(a)&(b) (providing that "[t]he receipt by a person
of a share of the profits of a business" is not "prima facie
evidence that he is a partner" where "such profits were received in
payment" of, among other things, "a debt by instalments or
otherwise" or "[a]s wages of an employee").
Finally, the "partnership distributions" that Durkin
alleges to have received as his share of the "partnership's"
revenue from the copyrighted works in question were not treated as
royalties on his 1099 miscellaneous federal income tax forms, and
were, in fact, treated as compensation payments -- not as
partnership distribution income on K-2 forms -- for tax purposes.
As Saenger correctly points out, "[a]ll other references relating
to the so-called partnership agreement are lawyer argument."
Without evidence to support it, Durkin's conclusory legal opinion
that the oral agreement was a partnership agreement cannot serve as
-20- 20
a basis for a reasonable trier of fact to find that the agreement,
if it existed, constituted a partnership agreement. In view of the
overwhelming factors present in the record favoring a finding of
employee status, we do not see any reason to view this case, as
Durkin would have us, through the rubric of Oddo v. Ries, 743 F.2d
630 (9th Cir. 1984), a case that deals with the rights of partners
in copyrights held by their partnership.
Therefore, to the extent that Durkin was the actual
author of Life and Property, either in part or in their entirety,
under CCNV and 17 U.S.C. S 101, these works fall within the
category of "works made for hire." Under the work-for-hire
doctrine, as the Copyright Office correctly explained to Saenger,
"[i]f an individual contributes to or creates a work in his or her
capacity as either an officer or employee of a company or
organization, the work is considered a 'work made for hire' and the
employer . . . [is considered] the author rather than the
individual." This scenario fully pertains here.
As indicated, where "a work [is] made for hire,"
federal copyright law provides that "the employer or other person
for whom the work was prepared" owns the copyright "unless the
parties have expressly agreed otherwise in a written instrument
signed by them." 17 U.S.C. S 201(b) (emphasis added). In light of
this statutory language, the fact that there is no written
agreement between the parties regarding ownership of the copyrights
in Life and Property is dispositive regarding the validity of
-21- 21
Saenger's copyrights. Durkin's protestations about the allege
e d oral agreement with Saenger concerning the ownership of thes
copyrights is thus entirely beside the point. On these facts, and
given that Durkin conceded that he copied material from Life and
Property without Saenger's authorization, the district court
correctly concluded that Saenger was entitled as a matter of law to
judgment in its favor on its copyright infringement claim. See
Feist , 499 U.S. at 361; CMM Cable, 97 F.3d at 1513; Lotus, 49 F.3d
at 813.
The State Law Counterclaims
After Saenger brought its copyright infringement suit
in federal court, Durkin filed state law counterclaims against
Saenger alleging breach of agreement, fraud, and unfair and
deceptive business practices (the latter under Mass. Gen. Laws ch.
93A) on the ground that Saenger wrongfully obtained its copyrights
in Life and Property by misrepresenting itself as the author of the
works, and thereafter failed to pay Durkin his share of the
revenues from those works, pursuant to the alleged April 1986 oral
agreement. The district court entered summary judgment for Saenger
on these claims on the basis that they were barred by the
Massachusetts statute of limitations and statute of frauds. Durkin
appeals these determinations. For the reasons that follow, we
agree with the result reached by the district court.2
2. While the Copyright Act expressly preempts all causes of
action that fall within its scope, with a few narrowly drawn
exceptions, see 17 U.S.C. S 301; Data Gen. Corp. v. Grumman
-22- 22
We begin by noting that a six year statute of
li t
See Mass. Gen. Laws ch. 260, S 2. A shorter four year
statute pertains to chapter 93A actions claiming unfair and
deceptive business practices, see Mass. Gen. Laws ch. 260, S 5A,
while an even shorter three year statute of limitations pertains to
causes of action alleging fraud. See Mass. Gen. Laws ch. 260, S
2A.
Under Massachusetts law, an action for breach of
contract mitations applies in Massachusetts for breach of contrac actions. generally accrues at the time of breach, thereby
triggering the statute of limitations for purposes of determining
Sys. Support Corp., 36 F.3d 1147, 1164-65 (1st Cir. 1994),
and while the district court's preliminary injunction ruling
referred to this fact, see Saenger Org., Inc., v. Nationwide
Ins. Licensing Assocs., Inc., 864 F. Supp. 246, 250 n.4 (D.
Mass. 1994), the preemption issue was not briefed or argued
on appeal. We need not reach the question of whether
Durkin's state law theories of recovery -- all of which in
some manner address themselves to the question of who owns
the copyrights in Life and Property -- are equivalent to
protections afforded by federal copyright law, and are thus
preempted, because our analysis today indicates that Durkin's
asserted state claims are not viable in any event. The issue
is not purely academic, however, and we note that at least
one federal court that has addressed a similar situation has
found preemption. See Miller v. CP Chemicals, Inc., 808 F.
Supp. 1238, 1246 (D.S.C. 1992) ("The Copyright Act affords a
presumption to the employer, under the work for hire
doctrine, that the employer shall receive the copyright, and
that such presumption will not be rebutted except by a
writing signed by the employer. If the employee can bring a
lawsuit under state law based upon an alleged oral promise,
then the presumptions created under the Copyright Act would
be substantially, if not, totally undermined. The court
finds that the plaintiff's breach of employment contract is
an artful restructuring of the copyright claim and is,
therefore, preempted.").
-23- 23
whether a claim is time-barred. See International Mobiles Corp. v.
Corroon & Black/Fairfield & Ellis, Inc., 560 N.E.2d 122, 126 (Mass.
App. Ct. 1990) (citing Campanella & Cardi Constr. Co. v.
Commonwealth, 217 N.E.2d 925 (Mass. 1966) and Boston Tow Boat Co.
v. Medford Nat'l Bank, 121 N.E. 491 (Mass. 1919)). Durkin's
counterclaim regarding Saenger's breach of the alleged oral
agreement would be time-barred under this standard rule inasmuch as
the breach, on Durkin's version of events, occurred either in July
1986, when Saenger improperly completed the initial copyright
applications, or November 1986, when Saenger submitted the
applications to the Copyright Office and thus "fraudulently"
secured copyright registrations dated effective as of that month
and date. Se e 17 U.S.C. S 410(d) (governing the effective date of
a copyright registration). On either contingency, Durkin's breach
of contract claim, his chapter 93A action, and his vaguely asserted
fraud cause of action would be time-barred because they were not
filed until August 1994, thereby falling outside the respective
six, four, and three year limitations periods.
Durkin concedes as much and urges us, as he urged the
district court, to accept his theory that the Massachusetts
"discovery rule" applies to his situation. The discovery rule can
operate to delay the accrual of a cause of action because it
provides that "[a] cause of action will accrue when the plaintiff
actually knows of the cause of action or when the plaintiff should
have known of the cause of action." Riley v. Presnell, 565 N.E.2d
-24- 24
780, 785 (Mass. 1991) (emphasis added). Durkin argues that the
district court wrongly granted summary judgment for Saenger
because, as a matter of Massachusetts law, he was entitled to an
opportunity to persuade a jury that he actually knew or should have
known of Saenger's allegedly wrongful conduct on a date that would
make his August 1994 filing timely under the statute of
limitations. In support of this contention, Durkin quotes Riley
for the proposition that "where, as here, the plaintiff has claimed
a trial by jury, any disputed issues relative to the statute of
limitations ought to be decided by the jury." Id. at 787.
Specifically, Durkin's theory is that he did not know
in actual fact of Saenger's wrongful behavior until April 1992
when, one day, he accidentally came across the file labelled
"COPYRIGHT INFO." Moreover, Durkin contends that there was no
reason that he should have known of Saenger's fraud, breach of
agreement, or deceptive and unfair business practices before then
because he reasonably and justifiably relied on Saenger's
representations regarding ownership of the copyrights. On Durkin's
view of the matter, Saenger was his partner and therefore Durkin
had every reason to believe that Saenger would do what he agreed to
do about the copyrights and had no reason to believe that he
(Saenger) would do otherwise.
Durkin's theory lacks merit. "Under the Massachusetts
discovery rule, the running of the statute of limitations is
delayed while 'the facts,' as distinguished from the 'legal theory
-25- 25
for the cause of action,' remain 'inherently unknowable' to the
injured party." Catrone v. Thoroughbred Racing Ass'n of N. Am.,
Inc., 929 F.2d 881, 885 (1st Cir. 1991) (emphasis added) (quoting
Gore v. Daniel O'Connell's Sons, Inc., 461 N.E.2d 256, 259 (Mass.
App. Ct. 1984)); see also Williams v. Ely, 668 N.E.2d 799, 804 n.7
(Mass. 1996) ("Some of our opinions have stated that a plaintiff
seeking to show that the statute of limitations did not begin to
run must demonstrate that the claim was 'inherently unknowable,' a
standard that is no different from, and is used interchangeably
with, the 'knew or should have known' standard.") (emphasis added)
(construing Riley). Durkin does not contend that the facts he
discovered in April 1992 were somehow inherently unknowable to him
so much as he argues that they were unknown to him. Therefore,
despite his protestations to the contrary, Durkin's state law
counterclaims are all time-barred on the basis of the undisputed
facts and the applicable Massachusetts law. This conclusion is
reached no matter how one chooses to view the issue.
First, although there is some dispute as to when in
1986 the initial copyright application was completed, it is
undisputed that sometime in 1986 Durkin was present in the room
when Saenger drafted the application which listed The Saenger
Organization alone as the copyright's owner. Because Durkin was
not listed as a co-owner, as Durkin alleges Saenger had agreed he
would be, Saenger breached the oral agreement in Durkin's presence
-26- 26
in 1986.3 If Durkin saw the document at that time, then he was
aware of the breach and the statute of limitations was duly
triggered. Durkin, however, denies seeing the application and
instead argues that he did not bother to look at it or to examine
whether the information contained therein was correct or not.
Durkin justifies his actions (or rather, inaction) by arguing, in
essence, that he felt fully justified in relying on Saenger, a
partner, to do what they had agreed. As our previous discussion
explains, there is no evidence that Durkin and Saenger entered into
a partnership agreement, and certainly not in the legal sense of
that term. Even if we assume such an agreement, Durkin's
deliberate indifference to what was contained in the copyright
applications -- information that was inherently knowable to him --
cannot serve to toll the running of the statute of limitations.
See El y, 668 N.E.2d at 804 n.7 (describing the Massachusetts
standard for determining when a plaintiff can avail himself of the
discovery rule).
Durkin's reliance on Riley is thus misplaced because
that case does not vitiate the standard rule that a "nonmoving
party can fend off a motion for summary judgment [only] by setting
forth specific facts sufficient to demonstrate that every essential
element of its claim or defense is at least trialworthy." Catrone,
929 F.2d at 884. That standard is not met here. Under
3. We primarily analyze the facts against Durkin's contract
theory of recovery because that cause of action has the most
generous limitations period (viz., six years).
-27- 27
Massachusetts law, "[t]he plaintiff bears the burden of presenting
facts sufficient to take the case outside the statute of
limitations." Id. at 885 (citing Franklin v. Albert, 411 N.E.2d
458, 463 (Mass. 1980)). Here, there is no trialworthy issue as to
the statute of limitations question because there is not "enough
evidence for a jury to return a verdict for the nonmoving party."
Id. at 884-85 (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 249-50 (1986)). No reasonable juror could fail to find that
Durkin should have known the facts underlying his cause of action
for breach of agreement, or that such facts were knowable to him,
see Catrone , 929 F.2d at 885; Ely, 668 N.E.2d at 804 n.7; Gore, 461
N.E.2d at 259, at the time in 1986 that the application was drafted
in his presence with the prejudicial omission of his name.
Second, it is undisputed that Saenger applied for and
received copyright registration certificates for Life and Property
from the Copyright Office. Under federal copyright law,
recordation of a document in the Copyright Office "gives all
persons constructive notice of the facts stated in the recorded
document." 17 U.S.C. S 205(c). A copyright registration
certificate issued by and filed with the Copyright Office thus
serves to put the world on constructive notice as to the ownership
of the copyright and of the facts stated in the registration
certificate. In this way, the Copyright Act's protections are
analogous to the protections that federal law affords patents. See
Wise v. Hubbard , 769 F.2d 1, 2 (1st Cir. 1985) ("The United States
-28- 28
Supreme Court has consistently held that the issuance of a patent
and its recordation in the Patent Office constitutes notice to the
world of its existence.") (citing Sontag Chain Stores Co. Ltd. v.
National Nut Co. of Cal., 310 U.S. 281, 295 (1940); Wine Ry.
Appliance Co. v. Enterprise Ry. Equip. Co., 297 U.S. 387, 393
(1936); Sessions v. Romadka, 145 U.S. 29, 50 (1892); Boyden v.
Burke , 14 How. (55 U.S.) 575, 582 (1852)). On the undisputed facts
of the case, therefore, Durkin had constructive notice of Saenger's
claim of exclusive ownership of the copyrights in Life and Property
as of November 1986, the effective date of registration for both
works.
Third, it is undisputed that all of the manuals that
Saenger published, including those at issue in this case, openly
displayed a United States copyright notice that announced to the
world that Saenger was the copyright owner. Inasmuch as Durkin
concedes that he worked on and with these same materials during the
period that he worked at Saenger (1986-1992), Durkin must be
presumed to have had actual notice that Saenger had breached the
terms of the alleged oral agreement more than six years before he
filed his contract counterclaim in August 1994.
Durkin's argument that the discovery rule tolls the
statutes of limitations on his state law counterclaims until April
1992, when he stumbled upon the "COPYRIGHT INFO." file at Saenger,
is thus unavailing. Durkin was at best deliberately indifferent as
to what was contained in the copyright applications when they were
-29- 29
drafted in his presence and he was constructively, if not actually,
on notice of Saenger's incompatible claim of exclusive copyright
ownership. Saenger's alleged fraud, breach, and deceptive business
practices were thus knowable to him in 1986 had he exercised
minimal and reasonable diligence. By no stretch of the imagination
were the facts of which Durkin complains "inherently unknowable" to
him prior to April 1992. Catrone, 929 F.2d at 885; Ely, 668 N.E.2d
at 804 n.7; Gore , 461 N.E.2d at 259.
In view of these undisputed facts and the applicable
legal standards, no reasonable juror could fail to find that Durkin
knew or, through reasonable diligence, should have known of
Saenger's claim of exclusive ownership of the copyright in Life and
Property more than six years before he filed his counterclaim for
breach of agreement, more than four years before he filed his
chapter 93A action for deceptive and unfair business practices, and
more than three years before he filed his cause of action alleging
fraud. Therefore, Durkin's counterclaims were extinguished by the
limitations period as a matter of law. See Daboub v. Gibbons, 42
F.3d 285, 291 (9th Cir. 1995) (upholding grant of summary judgment
on ground that state law causes of action, raised in context of
copyright infringement case, were time-barred given what and when
the plaintiffs actually knew, or through reasonable diligence,
should have known about allegedly wrongful conduct).
-30- 30
Durkin's fallback position is similarly unpersuasive.
Specifically, Durkin argues that the statutes of limitations
applicable to his counterclaims should be tolled pursuant to Mass.
Gen. Laws ch. 260, S 12 because Saenger fraudulently concealed his
alleged breach of agreement and deceptive business practices. We
need not dwell on this argument. "Where a fiduciary relationship
exists, the failure adequately to disclose the facts that would
give rise to knowledge of a cause of action . . . is equivalent to
fraudulent concealment for purposes of applying S 12." Demoulas v.
Demoulas Super Markets, Inc., 677 N.E.2d 159, 174 (Mass. 1997).
Here, however, as we have discussed, there was no partnership, and
thus no fiduciary relationship, between Durkin and Saenger. In the
absence of a fiduciary relationship, "'the estoppel provision of
Mass. Gen. Laws Ann. ch. 260, S 12 is generally not available where
the plaintiff is capable of discovering the facts allegedly
concealed.'" Wise, 769 F.2d at 4 (quoting Burbridge v. Board of
Assessors, 417 N.E.2d 477, 480 (Mass. App. Ct. 1981)). As
discussed above, Durkin was fully capable of discovering the facts
that Saenger allegedly concealed from him through the expenditure
of but minimal effort. Finally, nothing in the record suggests
fraudulent concealment. Saenger secured valid copyright
registrations and affixed copyright notices to the works in
question, which Durkin worked on over a period of many years. As
Saenger correctly argues: "Public notice is not concealment.
Public display is not deception."
-31- 31
Our resolution of the statute of limitations issue
obviates our need to consider the dispute between the parties
regarding the statute of frauds. In short, the fact that Durkin's
counterclaim for breach of contract was extinguished by the
limitations period essentially moots the question of whether the
April 1986 oral agreement could have been enforced despite the fact
that it was never memorialized in a writing.
Conclusion
The district court properly found that no genuine issue
of material fact existed as to Saenger's ownership of valid
copyrights and Durkin's infringement of them, and thus correctly
concluded that Saenger was entitled to judgment in its favor as a
matter of law. The district court also correctly determined that
the applicable Massachusetts statutes of limitations bar Durkin's
various state law counterclaims against Saenger. For the reasons
discussed above, we therefore ascribe no error to the district
court's rulings.
Affirmed. Costs to appellee.
-32- 32
Related
Daboub v. Gibbons
42 F.3d 285 (Fifth Circuit, 1995)
Sessions v. Romadka
145 U.S. 29 (Supreme Court, 1892)
Wine Railway Appliance Co. v. Enterprise Railway Equipment Co.
297 U.S. 387 (Supreme Court, 1936)
Sontag Chain Stores Co. v. National Nut Co. of Cal.
310 U.S. 281 (Supreme Court, 1940)
Anderson v. Liberty Lobby, Inc.
477 U.S. 242 (Supreme Court, 1986)
Community for Creative Non-Violence v. Reid
490 U.S. 730 (Supreme Court, 1989)
Feist Publications, Inc. v. Rural Telephone Service Co.
499 U.S. 340 (Supreme Court, 1991)
Data General Corp. v. Grumman Systems Support Corp.
36 F.3d 1147 (First Circuit, 1994)
Den Norske Bank As v. First Nat'L of Bost
75 F.3d 49 (First Circuit, 1996)
Ortiz-Pinero v. Rivera-Arroyo
84 F.3d 7 (First Circuit, 1996)
Frank Oddo v. Jack W. Ries, Mme Publications, Mme Publishing Company and Material Movement Enterprises
743 F.2d 630 (Ninth Circuit, 1984)
Walter G. Wise v. Leo James Hubbard, Precision Handling Devices, Inc., and Precision Handling Devices of Puerto Rico
769 F.2d 1 (First Circuit, 1985)
Patrick Catrone v. Thoroughbred Racing Associations of North America, Inc.
929 F.2d 881 (First Circuit, 1991)
Lotus Development Corporation v. Borland International, Inc.
49 F.3d 807 (First Circuit, 1995)
Saenger Organization, Inc. v. Nationwide Insurance Licensing Associates, Inc.
864 F. Supp. 246 (D. Massachusetts, 1994)
Miller v. CP Chemicals, Inc.
808 F. Supp. 1238 (D. South Carolina, 1992)
Shain Investment Co., Inc. v. Cohen
443 N.E.2d 126 (Massachusetts Appeals Court, 1982)
Cardullo v. Landau
105 N.E.2d 843 (Massachusetts Supreme Judicial Court, 1952)
Gore v. Daniel O'Connell's Sons, Inc.
461 N.E.2d 256 (Massachusetts Appeals Court, 1984)
Burbridge v. Board of Assessors of Lexington
417 N.E.2d 477 (Massachusetts Appeals Court, 1981)
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