Opinion issued June 11, 2019
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-18-00534-CV ——————————— UNIVERSITY OF HOUSTON SYSTEM, Appellant V. JIM OLIVE PHOTOGRAPHY, D/B/A PHOTOLIVE, Appellee
On Appeal from the 295th District Court Harris County, Texas Trial Court Case No. 2017-84942
OPINION
In this interlocutory appeal from the trial court’s denial of a plea to the
jurisdiction, we must determine if a viable constitutional takings claim can be
asserted when the State commits copyright infringement. We conclude that a governmental unit’s copyright infringement is not a taking and that the trial court
therefore erred in denying the plea to the jurisdiction.
Background
Jim Olive Photography d/b/a Photolive, Inc. (Olive) sued the University of
Houston System, alleging an unlawful taking and seeking just compensation under
Article I, Section 17 of the Texas Constitution and under the Fifth Amendment of
the United States Constitution. Olive, a professional photographer, alleges that he
took a series of aerial photographs of the City of Houston at dusk in 2005. To take
these photographs, Olive rented a helicopter, hired a pilot, and, utilizing special
photography equipment, suspended himself from the helicopter with a harness.
While suspended in the harness, Olive took photograph SKDT1082—“The
Cityscape”— the subject of this litigation.
Olive registered The Cityscape with the United States Copyright Office on
November 18, 2005 and displayed it for purchase on his website. Olive owned all
rights associated with The Cityscape, and his website had numerous references to
licensing the website’s photographs, including an entire page labeled “Copyrights
and Usage,” which described the applicable copyright protections held in the
photographs and explicitly stated that “[t]he unauthorized use of these images is
strictly prohibited.”
2 Olive alleges that sometime around June of 2012, the University of Houston
downloaded The Cityscape from Olive’s website, removed all identifying
copyright and attribution material, and displayed it on several webpages to
promote the University’s C.T. Bauer College of Business. The University never
contacted Olive about using his photograph and never compensated him for its use.
Over three years later, Olive discovered that his photograph was being
displayed on the University’s Bauer College of Business webpages. Olive
informed the University of its unauthorized use of the photograph and demanded
that it cease and desist this use. The University immediately removed the
photograph from the College’s website. Olive further alleges that the University’s
display of the photograph without attribution allowed private actors such as Forbes
Magazine to republish and display The Cityscape without Olive’s permission and
without compensation.
Upon being sued by Olive, the University filed a plea to the jurisdiction,
asserting, among other things, that because Olive failed to plead a viable takings
claim, the University retains governmental immunity and the trial court lacks
subject-matter jurisdiction. The trial court denied the plea, and this interlocutory
appeal followed.
The University argues in four issues that the trial court erred in denying its
plea. The University first argues that a copyright is not property under the federal
3 or state takings clauses. The University then argues that, if a copyright is property
under the federal or state takings clauses, its copyright infringement of Olive’s
photograph is not a taking, that it lacked capacity to take Olive’s copyright
property, and that Olive did not sufficiently plead an intentional taking.
Standard of Review
The standard of review of a trial court’s ruling on a plea to the jurisdiction
based on governmental immunity is de novo. See Tex. Dep’t of Parks & Wildlife v.
Miranda, 133 S.W.3d 217, 225–26 (Tex. 2004); Tex. So. Univ. v. Gilford, 277
S.W.3d 65, 68 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). The plaintiff
has the burden to allege facts that affirmatively demonstrate the trial court’s
subject-matter jurisdiction. Gilford, 277 S.W.3d at 68 (citing Tex. Ass’n of Bus. v.
Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993)). We construe the
pleadings liberally and accept the plaintiff’s factual allegations as true. See
Miranda, 133 S.W.3d at 226–27; Gilford, 277 S.W.3d at 68.
An inverse-condemnation action is a constitutional claim in which the
property owner asserts that a governmental entity intentionally performed acts that
resulted in a “taking” of the property for public use, without formally condemning
the property. See, e.g., Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 554
(Tex. 2004). The Texas Constitution’s takings clause (Article I, Section 17)
includes personal property. Renault, Inc. v. City of Houston, 415 S.W.2d 948, 952
4 (Tex. Civ. App.—Waco 1967), rev’d on other grounds, 431 S.W.2d 322 (Tex.
1968). It is well settled that the Texas Constitution waives governmental immunity
for an inverse-condemnation (a takings) claim, but in the absence of a properly
pleaded takings claim, the governmental entity retains immunity. City of Houston
v. Carlson, 451 S.W.3d 828, 830 (Tex. 2014).
Whether the pleaded facts constitute a viable takings claim is a question of
law. See Tex. Parks & Wildlife Dep’t v. Sawyer Trust, 354 S.W.3d 384, 390 (Tex.
2011); Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 932–33 (Tex. 1998); City
of Friendswood v. Horn, 489 S.W.3d 515, 525 (Tex. App.—Houston [1st Dist.]
2016, no pet.). When the plaintiff cannot establish a viable takings claim, the trial
court lacks subject-matter jurisdiction and should grant a plea to the jurisdiction.
Tex. Dep’t of Transp. v. A.P.I. Pipe & Supply, LLC, 397 S.W.3d 162, 166 (Tex.
2013).
Analysis
Copyright generally
Federal copyright law provides that “[c]opyright protection subsists . . . in
original works of authorship fixed in any tangible medium of expression, now
known or later developed, from which they can be perceived, reproduced, or
otherwise communicated, either directly or with the aid of a machine or device.”
17 U.S.C. § 102(a).
5 Copyright has been defined as:
The right to copy; specifically, a property right in an original work of authorship (including literary, musical, dramatic, choreographic, pictorial, graphic, sculptural, and architectural works; motion pictures and other audiovisual works; and sound recordings) fixed in any tangible medium of expression, giving the holder the exclusive right to reproduce, adapt, distribute, perform, and display the work.
Copyright, BLACK’S LAW DICTIONARY (10th ed. 2014); see also 17 U.S.C. § 102(a) (1–8)
(providing categories of works of authorship to include literary works; musical
works, including any accompanying words; dramatic works, including any
accompanying music; pantomimes and choreographic works; pictorial, graphic,
and sculptural works; motion pictures and other audiovisual works; sound
recordings; and architectural works).
A copyright in a work subsists from its creation and generally endures for
the life of the author and 70 years after the author’s death. See 17 U.S.C. § 302(a).
Civil remedies for copyright infringement include injunctive relief. 17 U.S.C.
§ 502(a). A copyright owner can also seek money damages from an infringer:
either (1) his actual damages and any additional profits of the infringer, or
(2) statutory damages, including a sum of not more than $150,000 for willful
infringement.1 See 17 U.S.C. § 504. Federal courts have original and exclusive
1 Olive’s petition seeks monetary relief over $100,000 but not more than $200,000. The record does not reflect the basis of this claim for damages or whether it is 6 jurisdiction of copyright claims, 28 U.S.C. § 1338(a), and all state-law claims
arising under federal law relating to copyrights are preempted by federal law.
17 U.S.C. § 301(a); see Butler v. Cont’l Airlines, Inc., 31 S.W.3d 642, 648–52
(Tex. App.—Houston [1st Dist.] 2000, pet. denied).
In the case of copyright infringement by a state actor, states have Eleventh
Amendment immunity from a suit for money damages in federal court. See Chavez
v. Arte Publico Press, 204 F.3d 601, 607–08 (5th Cir. 2000) (Chavez III)
(discussed below) (in copyright-infringement action against University of Houston,
holding that Copyright Remedy Clarification Act (CRCA), 17 U.S.C. § 511, which
purported to abrogate Eleventh Amendment immunity and to provide for state
liability for copyright infringement, was unconstitutional); see also Allen v.
Cooper, 895 F.3d 337, 347–54 (4th Cir. 2018) (same), pet. for cert. filed, (U.S. Jan.
4, 2019) (No. 18-877); Nat’l Ass’n of Bds. of Pharmacy v. Bd. of Regents of Univ.
Sys. of Ga., 633 F.3d 1297, 1312–19 (11th Cir. 2011) (same); Richard Anderson
Photography v. Brown, 852 F.2d 114, 120 (4th Cir. 1988) (holding that state
related to the statutory damages of not more than $150,000 for willful infringement under 17 U.S.C. § 504(c)(2). See generally Thomas F. Cotter, Do Federal Uses of Intellectual Property Implicate the Fifth Amendment?, 50 FLA. L. REV. 529, 562–63 (1998) (asserting that, because copyright is “nonrivalrous,” “[a]ll that the intellectual property owner loses” from the government’s use of a copyright, “except in those rare circumstances in which government use destroys virtually all of the property’s value, is some licensing revenue.”). “Nonrivalrous means that another person can use it without simultaneously depriving anyone else of its use.” Id. at 563. 7 university had Eleventh Amendment immunity against photographer’s copyright-
infringement action). See generally 3 MELVILLE B. NIMMER & DAVID NIMMER,
NIMMER ON COPYRIGHT § 12.01[E][2] (Rev. Ed. 2019); 6 WILLIAM F. PATRY,
PATRY ON COPYRIGHT § 21.88 (Mar. 2019). But a copyright owner can obtain
prospective injunctive relief for copyright infringement by a state actor under the
Ex parte Young doctrine.2 See, e.g., Nat’l Ass’n of Bds. of Pharmacy, 633 F.3d at
1307–12 (addressing claim for injunctive relief under Ex parte Young doctrine
against state university for ongoing copyright infringement); Hairston v. N.C.
Agric. & Tech. State Univ., No. 1:04 CV 1203, 2005 WL 2136923, at *8
(M.D.N.C. Aug. 5, 2005) (“[T]he court finds that Plaintiff sufficiently alleges an
ongoing violation of federal copyright law by Defendants, and the Ex parte Young
doctrine therefore applies to his copyright infringement claim seeking prospective
injunctive relief from Defendants.”).
Copyright infringement, whether common law or statutory, is a tort. Porter
v. United States, 473 F.2d 1329, 1337 (5th Cir. 1973); Ted Browne Music Co. v.
Fowler, 290 F. 751, 754 (2d Cir. 1923) (stating courts “have long recognized that
infringement of a copyright is a tort”). Texas has not waived sovereign
(governmental) immunity in the Texas Tort Claims Act for copyright infringement
2 Ex parte Young, 209 U.S. 123 (1908). 8 by a governmental unit. See TEX. CIV. PRAC. & REM. CODE § 101.021(1)
(providing for limited waiver of governmental immunity for claims of property
damage, personal injury, or death proximately caused by wrongful or negligent
conduct of governmental employee arising out of (1) use of publicly owned motor-
driven equipment or motor vehicle, (2) premises defects, and (3) conditions or uses
of certain property); see also Schneider v. Ne. Hosp. Auth., No. 01-96-01098-CV,
1998 WL 834346, at *2 (Tex. App.—Houston [1st Dist.] 1998, pet. denied) (not
designated for publication) (“It is up to the legislature to add the tort of trademark
infringement to those torts for which immunity is statutorily waived.”). Nor has
Texas waived its Eleventh Amendment immunity by consenting to suit in federal
court for copyright infringement. See generally Seminole Tribe of Fla. v. Florida,
517 U.S. 44, 54–55, 67–72 & n.14 (1996)
Intellectual Property and Takings
In apparent recognition of the above legal landscape that forecloses a
copyright owner’s claim for copyright infringement against a state actor, Olive has
asserted his constitutional takings claims against the University. The Texas
Constitution’s Takings Clause provides: “No person’s property shall be taken,
damaged, or destroyed for or applied to public use without adequate compensation
9 being made.” TEX. CONST. art. I, § 17(a).3
The federal takings clause protects both real property and personal property.
Horne v. Dep’t of Agric., 135 S.Ct. 2419, 2425–26 (2015) (holding that raisins
were subject of government taking: “The Government has a categorical duty to pay
just compensation when it takes your car, just as when it takes your home.”). A
copyright, which is intellectual property,4 is a protected property interest.5 Nat’l
Ass’n of Bds. of Pharmacy, 633 F.3d at 1317; see also 17 U.S.C. § 201(d) (“The
3 The Fifth Amendment prohibits the taking of “private property [] for public use, without just compensation.” U.S. CONST. AMEND. V. Texas courts look to federal takings jurisprudence for guidance. Sheffield Dev. Co. v. City of Glenn Heights, 140 S.W.3d 660, 669 (Tex. 2004). The protections of the Texas Constitution’s Takings Clause are presumed to be coextensive with the federal protections, absent a showing that the Texas provision was intended to apply more broadly. See Mayhew, 964 S.W.2d at 932. 4 Intellectual property is a “category of intangible rights protecting commercially valuable products of the human intellect,” and the “category comprises primarily trademark, copyright, and patent rights, but also includes trade-secret rights, publicity rights, moral rights, and rights against unfair competition.” Intellectual property, BLACK’S LAW DICTIONARY (10th ed. 2014). 5 Other types of intellectual property—patents, trademarks, and trade secrets—are recognized as “property” or a protected “property interest” for due-process purposes. See Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Savs. Bank, 527 U.S. 627, 642 (1999) (“Patents, however, have long been considered a species of property.”); Coll. Savs. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 673 (1999) (“trademarks” are a “constitutionally cognizable property interest[]” and “are the ‘property’ of the owner because he can exclude others from using them”); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984) (holding that trade secrets are property under applicable state law and subject to federal takings clause); see also Schneider, 1998 WL 834346, at *2 (“Clearly, a trademark is property.”). 10 ownership of a copyright may be transferred in whole or in part by any means of
conveyance or by operation of law, and may be bequeathed by will or pass as
personal property by the applicable laws of intestate succession.”). See generally
Pascale Chapdelaine, The Property Attributes of Copyright, 10 BUFF. INTELL.
PROP. L.J. 34 (2014). But while a copyright is “property” or a protected “property
interest” for due-process purposes, that does not necessarily mean that it is
property for purposes of the takings clause. See, e.g., Davida H. Isaacs, Not All
Property Is Created Equal: Why Modern Courts Resist Applying the Takings
Clause to Patents, and Why They Are Right to Do So, 15 GEO. MASON L. REV. 1,
36 (2007) (“Being property is a necessary requirement for Takings Clause
protection, but it is not a sufficient one.”).
In 2008, it was noted that whether copyright is property under the takings
clause is “as yet unlitigated.”6 Tom W. Bell, Copyright as Intellectual Property
6 The Fifth Circuit has also pointed out this dearth of authority:
Copyrights are indeed a species of property, but the extent to which they are protectable against the states raises troubling issues. In Seminole, the Supreme Court noted the absence of caselaw authority over the past 200 years dealing with enforcement of copyrights in federal courts against the states. Surely this dearth implies that there has been no claim against states in the federal courts.
Chavez v. Arte Publico Press, 157 F.3d 282, 288 (5th Cir.) (Chavez II) (citing Seminole Tribe, 517 U.S. at 71 & n.16), reh’g en banc granted and opinion 11 Privilege, 58 SYRACUSE L. REV. 523, 538 (2008). But see Porter, 473 F.2d at 1337
(copyright “infringement is not a ‘taking’ as the term is constitutionally
understood”) (discussed below). Relying on Zoltek Corp. v. United States, 442
F.3d 1345, 1350–53 (Fed. Cir. 2006) (holding that patent infringement by federal
government does not constitute taking under Fifth Amendment), cert. denied, 551
U.S. 1113 (2007), vacated on other grounds on reh’g en banc, 672 F.3d 1309 (Fed.
Cir. 2012), and the Supreme Court’s denial of certiorari in Zoltek, the author
asserts that Zoltek “strongly suggests that the same outcome would obtain for
copyrights.” Bell, 58 SYRACUSE L. REV. at 538; see also Isaacs, 15 GEO. MASON. L.
REV. at 1–2, 6–17 (discussing Zoltek). But see Note, Copyright Reform and the
Takings Clause, 128 HARV. L. REV. 973 (2015) (arguing that copyright should be
protected by takings clause).7 The author further argues that the Supreme Court’s
vacated, 178 F.3d 281 (5th Cir. 1998), remanded to panel for reconsideration, 180 F.3d 674 (5th Cir. 1999), panel op. on reconsideration, Chavez III, 204 F.3d 601. 7 This Note collects, in addition to Cotter and Isaacs, other scholars’ articles on the subject of intellectual property and takings. Note, 128 HARV. L. REV. at 974 nn.12-13 (citing Christina Bohannon, Reclaiming Copyright, 23 CARDOZO ARTS & ENT. L.J. 567 (2006); Shubha Ghosh, Toward a Theory of Regulatory Takings for Intellectual Property: The Path Left Open After College Savings v. Florida Prepaid, 37 SAN DIEGO L. REV. 637 (2000); Roberta Rosenthal Kwall, Governmental Use of Copyrighted Property: The Sovereign’s Prerogative, 67 TEX. L. REV. 685, 755 (1989); Adam Mossoff, Patents as Constitutional Private Property: The Historical Protection of Patents Under the Takings Clause, 87 B.U. L. REV. 689 (2007); and John C. O’Quinn, Protecting Private Intellectual 12 “definition of ‘property’ appears not to shelter copyright” because of its description
of the sources of property interests protected from takings8 and “copyrights exist
only by the grace of the Constitution.”9 Id.
No Texas case appears to have addressed whether a copyright is property for
purposes of the takings clause and whether copyright infringement by a state actor
is a taking. The case closest on point is our unpublished 1998 decision in
Schneider, 1998 WL 834346. There, after recognizing that a trademark is property,
this court squarely held that a governmental entity’s (a hospital authority’s)
“trademark infringement is not a compensable taking; thus, sovereign immunity is
not waived on the basis of an unconstitutional taking.”10 Id. at *2. After noting that
no authority classified trademarks as property for purposes of the takings clause,
Property from Government Intrusion: Revisiting SmithKline and the Case for Just Compensation, 29 PEPP. L. REV. 435 (2002)). 8 “[P]roperty interests . . . are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law.” Ruckelshaus, 467 U.S. at 1001 (quoting Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 156, 161 (1980)) (quoting Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972)). 9 U.S. CONST. art. 1, § 8, cl. 8 (“The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”). 10 A “trademark” is a “word, phrase, logo, or other sensory symbol used by a manufacturer or seller to distinguish its products or services from those of others.” Trademark, BLACK’S LAW DICTIONARY (10th ed. 2014). 13 this court stated that, to the contrary, “there is authority that refutes such a
classification” and cited Porter for the proposition that copyright infringement is
not a taking.11 Id. at *2 (citing Porter, 473 F.2d at 1337). We therefore turn to
Porter and the other federal cases relied on by the parties for their respective
positions.
Porter v. United States
Porter involved in part a claim by Lee Harvey Oswald’s widow for the
diminution in the copyright value of Oswald’s writings because of their publication
in the Warren Commission report. Porter, 473 F.2d at 1336.
We turn finally to the question whether Mrs. Porter can recover for the diminution in value of Oswald’s writings attributable to their publication in the Warren Commission Report. It is, of course, quite plain that the recovery sought here is for infringement by the government of Mrs. Porter’s common law copyright interest in Oswald’s writings. Such infringement is not a “taking” as the term is constitutionally understood. Rather, it has always been held that infringement of copyright, whether common law, Twentieth Century Fox Film Corp. v. Dieckhaus, 153 F.2d 893 (CA 8, 1948), or statutory, Turton v. United States, 212 F.2d 354 (CA 6, 1954) constitutes a tort.
11 This court also cited Garcia v. Peeples, 734 S.W.2d 343 (Tex. 1987) (orig. proceeding) as supporting authority. Schneider, 1998 WL 834346, at *2. In Garcia, a product-liability suit, our supreme court rejected an automaker’s claim that a plaintiff’s shared discovery of the automaker’s trade secrets (which the court recognized as property) with only similarly situated litigants under a properly tailored protective order would be “an unconstitutional deprivation of property” that “rises to the level of a constitutional taking.” Garcia, 734 S.W.2d at 348 n.4. 14 Id. at 1337 (emphasis added). But see Roth v. Pritikin, 710 F.2d 934, 939 (1st Cir.
1983) (“An interest in a copyright is a property right protected by the due process
and just compensation clauses of the Constitution.”).
Olive characterizes Porter as anomalous12 and as superseded by both the
Supreme Court in Horne and the Fifth Circuit in Chavez. Because Horne involved
the taking of raisins—which are tangible personal property, not intangible
intellectual property—it is inapposite; further, it made no attempt to address
intellectual property.
As noted above, Chavez, in part a copyright-infringement action against the
University of Houston, held that Congress, by enacting the CRCA, could not
subject states to suit in federal court for copyright infringement because of
Eleventh Amendment immunity. Chavez III, 204 F.3d at 607–08. In passing on the
constitutionality of the CRCA—Chavez was not a takings case—the court
addressed copyright as property for due-process purposes and considered whether
Congress could abrogate state Eleventh Amendment immunity under section 5 of
the Fourteenth Amendment “to prevent states from depriving copyright holders of
their property without due process of law.” Id. at 604; see id. at 605–07. In its
analysis, the court stated that the “underlying conduct at issue here is state
12 We disagree that Porter is an anomaly, but because of its subject matter, it is undoubtedly sui generis. 15 infringement of copyrights, rather than patents, and the ‘constitutional injury’
consists of possibly unremedied, or uncompensated, violation of copyrights by
states.” Id. at 605. The court then noted:
In Chavez II, we said that whether copyrights were a form of property protectable against the states raised troubling issues. The Supreme Court held in Florida Prepaid that patents are considered property within the meaning of the due process clause. See Florida Prepaid, 119 S.Ct. at 2208. Since patent and copyright are of a similar nature, and patent is a form of property protectable against the states, copyright would seem to be so too.
Id. at 605 & n.6.
We do not view Chavez III as superseding Porter; instead, these comments
concerned due-process protection of property from deprivation, rather than from a
taking, as did the Supreme Court’s due-process description of patents as property
in Florida Prepaid. See Fla. Prepaid, 527 U.S. at 642 (“patents may be considered
‘property’ for purposes of our analysis”); see also Carlos Manuel Vazquez, What is
Eleventh Amendment Immunity?, 106 Yale L.J. 1683, 1745 n.281 (1997) (“the
Court has interpreted the term “property” in the Takings Clause more narrowly
than the same term in the Due Process Clause”).
Chavez II touches on copyright as property for takings purposes, citing and
discussing Roth (which we address below). Chavez II, 157 F.3d at 288. In dicta,
and after distinguishing Roth because it was not a copyright-infringement action
16 against a state and after highlighting Roth’s statement as dicta,13 Chavez II noted—
“[o]nly slightly more apropos of [Roth’s] discussion”—that the Supreme Court
held that trade secrets are property protected by the Fifth Amendment takings
clause in Ruckleshaus v. Monsanto Co. and that, “[b]y analogy, copyrights
constitute intangible property that, for some purposes at least, receives
constitutional protection.” Chavez II, 157 F.3d at 288 (citing Ruckelshaus v.
Monsanto Co., 467 U.S. 986, 1002 (1984) (holding that trade secrets are property
under applicable state law and subject to federal takings clause). Chavez II thus
stops short of stating that copyright is property protected by the takings clause and
does not purport to supersede Porter’s contrary statement.
Roth v. Pritikin
Roth is Olive’s principal authority for his contention that copyright is
property protected by the takings clause, but on close examination, we find Roth’s
statement to be both unsupported and dicta. Moreover, Roth did not involve a
copyright-infringement claim against a state; it involved a dispute over Roth’s
recipes that were used in a bestselling diet book. The 1977 oral contract to use
Roth’s recipes provided for only a flat fee to Roth as a “writer for hire,” with her
having no interest in the book’s copyright and royalties, as found by the district
13 See Chavez II, 157 F.3d at 288 (“In Roth, the Second Circuit was speculating on the entirely different issue of. . . .”). 17 court. Roth, 710 F.2d at 936. Roth argued that if an oral contract for payment for
her recipes had been made in 1977, it was invalidated by the subsequent enactment
of the Copyright Act of 1978, which she contended applied retroactively and which
required a work-for-hire agreement with no ownership interest in a copyright to be
expressly agreed to in a signed and written agreement.14 Id. at 938. The parties and
the Second Circuit agreed that if the oral contract was governed by the law in
effect in 1977, it properly divested Roth of any rights to a share of the book’s
royalties that she might otherwise have possessed. Id. at 937 & n.3.
After affirming the district court’s finding of an enforceable oral contract,
the Second Circuit rejected Roth’s contention that the Copyright Act of 1978
applied retroactively. Id. at 938–39. The court then ventured into admitted dicta,15
14 See 17 U.S.C. § 201(b) (“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.”); 17 U.S.C. § 101 (defining “work made for hire” in part as “a work specially ordered or commissioned for use as a contribution to a collective work, . . . if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire”). 15 Dictum is “[a]n opinion expressed by a court, but which, not being necessarily involved in the case, lacks the force of an adjudication. . . .” Seger v. Yorkshire Ins. Co., 503 S.W.3d 388, 399 (Tex. 2016) (quoting Grigsby v. Reib, 153 S.W. 1124, 1126 (Tex. 1913)). “Obiter dictum [literally, “something said in passing”. Obiter dictum, BLACK’S LAW DICTIONARY (10th ed. 2014).] is not binding as precedent.” Seger, 503 S.W.3d at 399. Judicial dictum is “a statement made deliberately after careful consideration and for future guidance in the conduct of 18 stating that “the language of the Act, its legislative history and rules of statutory
interpretation are sufficient answers to Roth’s [retroactivity] claim,” but then
noting “en passant,”16 that
adoption of her interpretation . . .. would, in addition, raise a serious issue concerning the Act’s constitutionality. See 1 Nimmer on Copyright, supra, at § 1.11. An interest in a copyright is a property right protected by the due process and just compensation clauses of the Constitution. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3194, 73 L.Ed.2d (1982); Pruneyard Shopping Center v. Robins, 447 U.S. 74, 82 n.6, 100 S.Ct. 2035, 2041 n.6, 64 L.Ed.2d 741 (1980). The agreement between Roth and the appellees, pursuant to which Roth surrendered any rights she might otherwise have obtained in the copyright, was valid when it was entered into, and a subsequently enacted statute which purported to divest Pritikin and McGrady of their interest in the copyright by invalidating the 1977 agreement could be viewed as an unconstitutional taking. See, e.g., Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922); Penn Central Transportation Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1922); see also Michelman, Property, Utility, And Fairness: Comments On The Ethical Foundations of “Just
litigation,” and “[i]t is at least persuasive and should be followed unless found to be erroneous.” Id. (citations omitted). 16 Literally, “in passing.” En passant, WEBSTER’S NEW COLLEGIATE DICTIONARY (1981). In Chavez II, the Fifth Circuit pointed out Roth’s dicta, noting that “the Second Circuit was speculating on the entirely different issue of Congress’s inability to retroactively invalidate by statute certain pre-existing copyright contracts between private parties.” Chavez II, 157 F.3d at 288 (emphasis added). Also, we disagree with Chavez II’s likely inadvertent characterization of Roth’s copyright-takings statement as a holding because Roth’s statement is obiter dictum. See Chavez II, 157 F.3d at 288 (“one court of appeals has held that an interest in a copyright is protected by the Due Process and Just Compensation Clauses of the Constitution”) (emphasis added) (citing Roth, 710 F.2d at 939).
19 Compensation” Law, 80 HARV. L. REV. 1165 (1967). Resolution of this issue is not required for our holding, and will have to wait for an appropriate case.17
Id. at 939 (emphases added).
As support for its statement that copyright is a property right protected by
the just compensation clause, Roth cited two Supreme Court cases, neither of
which involved intellectual property and copyright in particular and therefore do
not support Roth’s proposition. See id. (citing Loretto and PruneYard). Loretto
held that a New York law requiring a landlord to permit a cable television
company to install its cable facilities on his property—a permanent physical
occupation—was a “taking.” Loretto, 458 U.S. at 421, 441.
PruneYard upheld a state constitutional requirement that shopping center
owners permit individuals to exercise free speech and petition rights on their
property, rejecting the owner’s contention that it amounted to an unconstitutional
infringement of property rights under the Fifth Amendment’s Takings Clause.
PruneYard, 447 U.S. at 82–84. Because “one of the essential sticks in the bundle
of property rights is the right to exclude others,” the Court stated that there has
literally been a “taking” of that right to the extent that the California Supreme
Court has interpreted its state constitution to entitle its citizens to exercise free-
17 Neither Pennsylvania Coal nor Penn Central concern intellectual property and takings. 20 expression and petition rights on shopping center property. Id. at 82. Roth cited
footnote six in PruneYard, which discusses “property” as used in the Takings
Clause to denote “the group of rights inhering in the citizen’s relation to the
physical thing, as the right to possess, use and dispose of it. . . . The constitutional
provision is addressed to every sort of interest the citizen may possess.” Id. at 82
n.6 (quoting United States v. Gen. Motors Corp., 323 U.S. 373, 377–78 (1945)).18
This weighty quotation also appears in Ruckelshaus, with the Court ascribing it to
intangible property rights, 467 U.S. at 1003, but it does not suffice to compel
takings protection to copyright. See, e.g., PruneYard, 447 U.S. at 82 (“not every
destruction or injury to property by governmental action has been held to be a
‘taking’ in the constitutional sense”) (quoting Armstrong v. United States, 364 U.S.
40, 48 (1960)).
Zoltek v. United States
As mentioned, in Zoltek, the Federal Circuit19 held that a patent holder could
not allege patent infringement as a Fifth Amendment taking against the federal
18 Like PruneYard, General Motors did not involve intellectual property. It concerned the Government’s temporary condemnation of a warehouse held under a long-term lease during World War II. See Gen. Motors, 323 U.S. at 375. 19 The Federal Circuit is a specialized appellate court that has exclusive nationwide jurisdiction of patent appeals and also takes appeals from the United States Court of Federal Claims. See 28 U.S.C. §§ 1292(c), 1295(a)(1), (3). 21 government under the Tucker Act.20 Zoltek, 442 F.3d at 1350–53. The Federal
Circuit relied on Schillinger v. United States, 155 U.S. 163 (1894), in which the
Supreme Court rejected an argument that a patent holder could sue the government
for patent infringement as a Fifth Amendment taking. Zoltek, 442 F.3d at 1350
(citing Schillinger, 155 U.S. at 169); see id. at 1351–52 (explaining that Congress
enacted the Tucker Act in response to Schillinger).
Zoltek, a post-Ruckelshaus decision, stated unequivocally: “Schillinger
remains the law.” Id. at 1350. The court noted that in Ruckelshaus (discussed
below), the Supreme Court concluded that government interference with interests
“cognizable as trade-secret property right[s]” could constitute a taking depending
on the circumstances, but that Ruckelshaus did not overrule Schillinger and that
Schillinger must be followed until it is overruled by the Supreme Court. Zoltek,
442 F.3d at 1352 & n.3 (citing and quoting Ruckelshaus, 467 U.S. at 1003–04).
The Federal Circuit vacated its original decision on other grounds years later, see
Zoltek Corp. v. United States, 672 F.3d 1309, 1322, 1327 (Fed. Cir. 2012), but its
20 28 U.S.C. § 1491(a)(1) (providing limited waiver of sovereign immunity by the United States for certain claims in Court of Federal Claims), § 1498 (providing statutory remedy in Court of Federal Claims for federal government’s unlicensed use of patent or copyright). “Generally, compensation for a taking may be obtained under the Tucker Act, which confers jurisdiction on the United States Court of Claims.” Gordon v. Norton, 322 F.3d 1213, 1216 (10th Cir. 2003) (citing Preseault v. Interstate Commerce Comm’n, 494 U.S. 1, 11–12 (1990)). 22 original decision remains persuasive and has been subsequently cited with
approval and applied by the Federal Circuit. See Gal-Or v. United States, 470
F. App’x 879, 881–83, 2012 WL 882670, at *1–3 (Fed. Cir. Feb. 9, 2012) (holding
Court of Federal Claims correctly concluded that patent-infringement claim against
federal government was not cognizable Fifth Amendment takings claim) (citing
Zoltek, 442 F.3d at 1352–53); see also Bell, 58 SYRACUSE L. REV. at 538 (noting
that Supreme Court’s denial of certiorari in Zoltek “strongly suggests that the same
outcome would obtain for copyrights”).
Zoltek also provides a segue to Olive’s reliance on James v. Campbell, 104
U.S. 356 (1881), which he contends is Supreme Court precedent for his copyright-
takings claim because it purports to protect patents from a government taking
without just compensation. Olive points out that Horne, the raisin-takings case,
states:
Nothing in this [Takings Clause] history suggests that personal property was any less protected against physical appropriation than real property. As this Court summed up in James v. Campbell, 104 U.S. 356, 358, 26 L.Ed. 786 (188[1]), a case concerning the alleged appropriation of a patent by the Government:
“[A patent] confers upon the patentee an exclusive property in the patented invention which cannot be appropriated or used by the government itself, without just compensation, any more than it can appropriate or use without compensation land which has been patented to a private purchaser.”
23 Horne, 135 S.Ct. at 2427. Olive further notes that subsequent Supreme Court cases
have repeated the point in James: Hollister v. Benedict & Burnham Mfg. Co., 113
U.S. 59, 67 (1885); Wm. Cramp & Sons Ship & Engine Bldg. Co. v. Int’l Curtis
Marine Turbine Co., 246 U.S. 28, 39–40 (1918); and Hartford-Empire Co. v.
United States, 323 U.S. 386, 415 (1945). But we agree with the University that the
Supreme Court has never definitively held that a patent holder’s recourse against
the government for infringement is a constitutional takings claim.21 Zoltek noted as
much, for it addressed James in addition to applying Schillinger to conclude that a
patent-infringement claim against the federal government is not a cognizable Fifth
Amendment takings claim: 2 As the Supreme Court recognized at least as long ago as 1881, the patentee’s recourse for infringement by the government is limited by
21 The University asserts that Horne’s quotation from James is dicta, as Horne involved raisins, not patents, and that Horne makes no pretense of deciding any intellectual-property issue. See Horne, 135 S.Ct. at 2427. The University argues persuasively that, had the Court in Horne fully considered the issue, it would have realized that James’s dicta must be discounted because it came from a time when the federal takings clause was not understood to be self-executing and therefore routinely conflated a takings analysis with an implied contract with the government to pay the value of the property. See, e.g., United States v. N. Am. Transp. & Trading Co., 253 U.S. 330, 335 (1920) (“The right to bring this suit against the United States in the Court of Claims is not founded upon the Fifth Amendment, but upon the existence of an implied contract entered into by the United States; and the contract which is implied is to pay the value of property as of the date of the taking.”) (citations omitted)); see also James, 104 U.S. at 358–59 (noting that Court of Claims had been entertaining jurisdiction of claims for unauthorized use of patented inventions “upon the footing of an implied contract”). 24 the scope of the waiver of sovereign immunity established by the Congressional consent to be sued. “If the jurisdiction of the Court of Claims should not be finally sustained [to hear an infringement action against the government], the only remedy against the United States, unless Congress enlarges the jurisdiction of that court, would be to apply to Congress itself.” James v. Campbell, 104 U.S. 356, 359, 26 L.Ed. 786 (1881).
....
In response to Schillinger, Congress provided a specific sovereign immunity waiver for a patentee to recover for infringement by the government. Had Congress intended to clarify the dimensions of the patent rights as property interests under the Fifth Amendment, there would have been no need for the new and limited sovereign immunity waiver. The manner in which Congress responded to Schillinger is significant.
In sum, the trial court erred in finding that Zoltek could allege patent infringement as a Fifth Amendment taking under the Tucker Act, and we reverse.
Zoltek, 442 F.3d at 1349 & n.2, 1352–53; see id. at 1349–50 (“A patentee’s judicial
recourse against the federal government, or its contractors, for patent infringement,
is set forth and limited by the terms of 28 U.S.C. § 1498.”).
The University correctly asserts that the above quote from James is dicta—at
least as to the existence of a viable Fifth Amendment takings claim—and that the
subsequent cases introduced new dicta by parroting James’s dicta. James’s dicta
about patents as property under the federal takings clause is divorced from its
holding that the government was not liable for infringement because there was no
25 valid patent. See James, 104 U.S. at 383. Hollister cited this dicta from James in an
opinion that also found no valid patent and that specifically declined to dispose of
the case on takings grounds.22 Hollister, 113 U.S. at 67, 71–73. In Zoltek, the
Federal Circuit noted that the Supreme Court in Wm. Cramp acknowleged that the
Tucker Act was the sole remedy for the government’s patent infringement. Zoltek,
442 F.3d at 1351 (stating that the 1910 [Tucker] Act “was intended alone to
provide for the discrepancy resulting from the right in one case to sue on the
implied contract and the non-existence of a right to sue” for infringement) (quoting
Wm. Cramp, 246 U.S. at 41). Zoltek further noted that in Wm. Cramp and Crozier
v. Fried. Krupp Aktiengesellschaft, 224 U.S. 290, 304 (1912), the Supreme Court
“acknowledged Congressional recognition that the Court of Claims lacked Tucker
Act jurisdiction over infringement under a takings theory.” Zoltek, 442 F.3d at
1351 (“Moreover, discussing the state of the law before the 1910 [Tucker] Act, the
Crozier court expressly noted that no patent infringement action could be brought
22 Hartford-Empire likewise quoted James in dicta because it did not concern the Fifth Amendment and held only that Congress had chosen not to make forfeitable patents that were involved in an antitrust violation. Hartford-Empire, 323 U.S. at 413–16. Olive also contends that the Supreme Court has held that trademark is protected by the federal takings clause, but that contention not only also relies on dicta but is incorrect. See K Mart Corp. v. Cartier, Inc., 485 U.S. 176, 185–86 (1988) (stating that trademarks provide trademark owner with certain bundle of rights in context of decision not involving Fifth or Fourteenth Amendments); Coll. Savs. Bank, 527 U.S. at 673 (quoting Cartier dicta to note that trademark may constitute property for purposes of due-process clause). 26 against the government unless in the Court of Claims under a contract or implied
contract theory.”) (citing Crozier, 224 U.S. at 304).
In conclusion, and as partially explained by the Federal Circuit in Zoltek, the
litany of Supreme Court decisions relied on by Olive did not recognize a
constitutional takings claim for patent infringement. See Zoltek, 442 F.3d at 1350–
53 & nn.2-3.
Ruckelshaus v. Monsanto Co.
Ruckelshaus, which held that trade secrets23 are property under applicable
state law and can be subject to the federal takings clause, is the only Supreme
Court decision that has afforded takings protection to a form of intellectual
property. See Ruckelshaus, 467 U.S. at 1002. At issue were EPA regulations
requiring applicants for pesticide registration to disclose the applicant’s health,
safety, and environmental data that were trade-secret property rights under state
law, with the disclosure potentially becoming available to the applicant’s
competitors. Id. at 992–98, 1001. The principal basis for this decision was the
23 A trade secret is defined as “any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” Ruckelshaus, 467 U.S. at 1001 (quoting RESTATEMENT (FIRST) OF TORTS § 757 cmt. b (AM. LAW INST. 1939)). 27 economic impact on the trade-secret owner and the impact’s effect on the owner’s
investment-backed expectations. See id. at 1005, 1011–12.
Because of the intangible nature of a trade secret, the extent of the property right therein is defined by the extent to which the owner of the secret protects his interest from disclosure to others.
With respect to a trade secret, the right to exclude others is central to the very definition of the property interest. Once the data that constitute a trade secret are disclosed to others, or others are allowed to use those data, the holder of the trade secret has lost his property interest in the data.[15] [15] We emphasize that the value of a trade secret lies in the competitive advantage it gives its owner over competitors. Thus, it is the fact that operation of the data-consideration or data-disclosure provisions will allow a competitor to register more easily its product or to use the disclosed data to improve its own technology that may constitute a taking.
The economic value of that property right lies in the competitive advantage over others that Monsanto enjoys by virtue of its exclusive access to the data, and disclosure or use by others of the data would destroy that competitive edge.
Id. at 1002, 1011–12 & n.15.
* * *
It is not in dispute that a copyright is property with value to its owner. As we
stated, federal law protects this property interest by providing a statutory
28 infringement cause of action and the recovery of substantial damages. See 17
U.S.C. §§ 501(a), 504.
Copyright protection “subsists . . . in original works of authorship fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). This protection has never accorded the copyright owner complete control over all possible uses of his work. Rather, the Copyright Act grants the copyright holder “exclusive” rights to use and to authorize the use of his work in five qualified ways, including reproduction of the copyrighted work in copies. Id., § 106. All reproductions of the work, however, are not within the exclusive domain of the copyright owner; some are in the public domain. Any individual may reproduce a copyrighted work for a “fair use;” the copyright owner does not possess the exclusive right to such a use. Compare id., § 106 with id., § 107.[24]
“Anyone who violates any of the exclusive rights of the copyright owner,” that is, anyone who trespasses into his exclusive domain by using or authorizing the use of the copyrighted work in one of the five ways set forth in the statute, “is an infringer of the copyright.” Id., § 501(a).
Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 432–33 (1984).
(footnotes omitted).
24 Under current law, the Copyright Act defines fair use as follows:
the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.
17 U.S.C. § 107. 29 Olive does not allege that the University took his copyright interest; the only
reasonable construction of Olive’s claim is that the University committed
infringement. See id. Because copyright is nonrivalrous,25 Olive never lost his right
to use or license his photograph; the University’s infringement cost Olive a
licensing fee. See Cotter, 50 FLA. L. REV. at 562–63; see also Note, 128 HARV. L.
REV. at 985 n.109 (“As Professor Thomas Cotter has insightfully pointed out, the
consequences of government use are very different for intellectual property
because of its nonrivalrous nature: although the government’s use of physical
property excludes the owner, government copyright infringement costs the owner
no more than a licensing fee.”) (citing Cotter, 50 FLA. L. REV. at 562–63.). In these
respects, copyright is distinguishable from a trade secret, which, if disclosed to
others, results in a loss of the property interest and the economic value of the
competitive advantage inherent in the trade secret. See Ruckelshaus, 467 U.S. at
1010.
Copyright infringement as alleged by Olive is “akin to a transitory common
law trespass—a government interference with real property that may not amount to
25 See n.1 supra.
30 a taking at all.”26 Note, 128 HARV. L. REV. at 985 n.109; see id. at 977 n.41 (“[N]ot
every physical invasion amounts to a taking: a merely transitory invasion, akin to a
common law trespass, may not amount to a taking at all.”) (citing Hendler v.
United States, 952 F.2d 1364, 1377 (Fed. Cir. 1991)); see Sony, 464 U.S. at 433
(“anyone who trespasses into his exclusive domain by using or authorizing the use
of the copyrighted work in one of the five ways set forth in the statute, “ ‘is an
infringer of the copyright’ ”); see also Dowling v. United States, 473 U.S. 207, 217
(1985) (“The infringer invades a statutorily defined province guaranteed to the
copyright holder alone. But he does not assume physical control over the
copyright; nor does he wholly deprive its owner of its use.”).
Suppose, for example, that ten copies of a government manual take from a textbook an excerpt that is just too long to be a fair use. The act is an infringement but seems hardly more serious than a “truckdriver parking on someone’s vacant land to eat lunch.” Hendler v. United States, 952 F.2d 1364, 1377 (Fed. Cir. 1991).
Even if the government sets itself up as a competitor by producing a copyrighted work, there probably is not good reason to conclude
26 Similarly, property rights, including copyright, have been described as ownership of a bundle of rights or interests. See Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 546 (1985) (“Section 106 of the Copyright Act confers a bundle of exclusive rights to the owner of the copyright.”); see also Ruckelshaus, 467 U.S. at 1011; Note, 128 HARV. L. REV. at 980; Chapdelaine, 10 BUFF. INTELL. PROP. L.J. at 51–61. “But the denial of one traditional property right does not always amount to a taking. At least where an owner possesses a full ‘bundle’ of property rights, the destruction of one ‘strand’ of the bundle is not a taking, because the aggregate must be viewed in its entirety.” Andrus v. Allard, 444 U.S. 51, 65–66 (1979). 31 automatically that the copyright has been “taken.” The copyright holder can still exclude all private competitors even as the government pirates the entirety of his work.
Note, 128 HARV. L. REV. at 985 n.109 (citing Cotter, 50 FLA. L. REV. at 562–63.);
cf. Vazquez, 106 Yale L.J. at 1745 n.281 (“the Court’s takings cases would appear
to require the conclusion that a state’s infringement of a patent is not a ‘taking,’ as
it does not ‘virtually destroy’ the property’s value”) (citing LAURENCE H. TRIBE,
AMERICAN CONSTITUTIONAL LAW § 9-3, at 593 (2d ed. 1988)).
To summarize, legal scholars are divided on whether copyright should be
protected from government takings, and legal authority is scant. This court’s
unpublished opinion in Schneider held that trademark infringement is not a taking.
Schneider, 1998 WL 834346, at *2. In the unique Porter case, the Fifth Circuit
stated that infringement of a common law copyright was not a taking. Porter, 473
F.2d at 1337. In Ruckelshaus, the Supreme Court held that trade secrets can be
subject to the federal takings clause. Ruckelshaus, 467 U.S. at 1002. But in the
Federal Circuit’s vacated, post-Ruckelshaus Zoltek decision on which the Supreme
Court denied certiorari, it held that patent infringement by the federal government
does not constitute a taking. Zoltek, 442 F.3d at 1350–53. Patents and trademarks,
as species of intellectual property, are more similar to copyrights than trade secrets.
Based on this authority, we hold that the Olive’s takings claim, which is
based on a single act of copyright infringement by the University, is not viable. We
32 sustain in part the University’s first and second issues, and we conclude that the
trial court erred in denying the University’s plea to the jurisdiction. This opinion
should not be construed as an endorsement of the University’s alleged copyright
infringement,27 and as discussed, copyright owners can seek injunctive relief
against a state actor for ongoing and prospective infringement. Instead, in the
absence of authority that copyright infringement by a state actor presents a viable
takings claim, and based on the contrary persuasive authority cited above, we
decline to so hold.
Conclusion
Because Olive has not pleaded a viable takings claim, the trial court should
have granted the University’s plea to the jurisdiction and dismissed Olive’s takings
claims for lack of subject-matter jurisdiction. We vacate the trial court’s order
27 See Harris Cty. Flood Control Dist. v. Kerr, 499 S.W.3d 793, 804–05 (Tex. 2016) (noting that where government action harms an individual, “[o]ne’s normal reaction is that he should be compensated therefor. [But,] [o]n the other hand, the doctrine of the non-suability of the state is grounded upon sound public policy. If the State were suable and liable for every tortious act of its agents, servants, and employees committed in the performance of their official duties, there would result a serious impairment of the public service and the necessary administrative functions of government would be hampered.”) (quoting Tex. Highway Dep’t v. Weber, 219 S.W.2d 70, 71–72 (Tex. 1949)); see also Hillman v. Nueces Cty., ___ S.W.3d ___, ___, 2019 WL 1231341, at *6 (Tex. Mar. 15, 2019) (quoting truism that, “just as immunity is inherent to sovereignty, unfairness is inherent to immunity.”) (quoting City of Galveston v. State, 217 S.W.3d 466, 480 n.38 (Tex. 2007) (Willett, J., dissenting)). 33 denying the University’s plea to the jurisdiction and dismiss this cause for lack of
subject-matter jurisdiction.
Richard Hightower Justice
Panel consists of Chief Justice Radack and Justices Higley and Hightower.