Friday, February 26, 2021

U.S. Court of Appeals for the Fifth Circuit, WICKFIRE, L.L.C. v. WOODRUFF, Docket No. 17-50340

 

Contract Law

Tortious Interference with Contractual Relations

Tortious Interference with Prospective Business Relations

Civil Conspiracy Claim

Lost Profits

Texas Law

 

 

Appeal from the United States District Court for the Western District of Texas USDC No. 1:14-CV-34.

 

(…) The case at bar presents a different situation than that addressed in Dastar. WickFire has alleged that TriMax created false advertisements appearing to have originated with WickFire in order to, inter alia, harm WickFire’s reputational interests in this industry. WickFire is not alleging TriMax wrongfully incorporated WickFire’s ideas or concepts into TriMax’s advertisements. That is, WickFire is not concerned with protecting an original idea or its creative thought, as Fox was attempting to do in Dastar. Instead, WickFire is interested in protecting the genuineness of its brand. We cannot say, based on Dastar, that WickFire’s claim is frivolous.

 

Gensler v. Strabala, 764 F.3d 735, 737 (7th Cir. 2014) (“Dastar held that a copyright can’t be extended by using the Lanham Act.”).

 

Gen. Universal Sys., Inc., 379 F.3d at 149 (concluding Dastar foreclosed the plaintiff’s Lanham Act claim because the plaintiff was alleging the defendant had “copied the ideas, concepts, structures, and sequences embodied in the plaintiff’s copyrighted work”).

 

To prevail at trial on its tortious interference with contractual relations claim, WickFire needed to present sufficient proof of the following: “(1) an existing contract subject to interference, (2) a willful and intentional act of interference with the contract, (3) that proximately caused the plaintiff’s injury, and (4) caused actual damages or loss.”44

 

44 Prudential Ins. Co. of Am. v. Fin. Rev. Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000) (citing ACS Invs, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex. 1997)).

 

Our review of Texas law46 indicates that to prevail on an interference claim, the plaintiff must “present evidence that some obligatory provision of a contract was breached.”47 Intermediate appellate courts in Texas have, on occasion, suggested an actual breach is not required. Relying on those decisions, our own court in Cuba v. Pylant noted the following: “Although it does not appear that an actual breach must occur, the defendant must have intended to induce a breach (even if unsuccessful), thereby making performance more difficult in some way that injured the plaintiff.”48

 

But since Cuba was issued, the Supreme Court of Texas appears to have clarified the law in this area. In El Paso Healthcare System, Ltd. v. Murphy, the Supreme Court of Texas stated the following: “To prevail on a claim for tortious interference with an existing contract, the plaintiff must present evidence that the defendant induced the plaintiff’s cocontracting party to ‘breach the contract,’ and thus interfered with the plaintiff’s ‘legal rights under the . . . contract.’”49 This unequivocal language leaves little doubt that a breach must result from the defendant’s conduct in order for the plaintiff to prevail. To induce commonly connotes not merely attempts at interference, but

46 See El Paso Healthcare Sys., Ltd. v. Murphy, 518 S.W.3d 412, 421-22 (Tex. 2017).

47 Walker v. Beaumont Indep. Sch. Dist., 938 F.3d 724, 749 (5th Cir. 2019) (quoting Better Bus. Bureau of Metro. Houston, Inc. v. John Moore Servs., Inc., 441 S.W.3d 345, 361 (Tex. App.—Houston [1st Dist.] 2013, pet. denied)).

48 814 F.3d 701, 717 (5th Cir. 2016) (citing Fluor Enters., Inc. v. Conex Int’l Corp., 273 S.W.3d 426, 443 (Tex. App.—Beaumont 2008, pet. denied)).

49 518 S.W.3d at 421-22 (first quoting Holloway v. Skinner, 898 S.W.2d 793, 794-95 (Tex. 1995); and then quoting Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 288 (Tex. 1998)).

 

actual interference.50 Accordingly, without sufficient proof that the defendant’s conduct resulted in “some obligatory provision of a contract having been breached,” the plaintiff’s tortious interference claim is infirm as a matter of law.51

 

50 See Induce, MERRIAM–WEBSTER, https://www.merriam-webster.com /dictionary/induce (last visited Feb. 24, 2021) (defining induce to mean either “to move by persuasion or influence” or “to call forth or bring about by influence or stimulation”).

51 Walker, 938 F.3d at 749 (quoting Better Bus. Bureau, 441 S.W.3d at 361); see Duncan v. Hindy, 590 S.W.3d 713, 726-28, 729 (Tex. App.—Eastland 2019, pet. denied) (affirming summary judgment as to a tortious interference claim because the plaintiff offered insufficient proof that a breach resulted from the defendant’s conduct); see also Duradril, L.L.C. v. Dynomax Drilling Tools, Inc., 516 S.W.3d 147, 168 (Tex. App.—Houston [14th Dist.] 2017, no pet.) (“To establish the element of a willful and intentional act of interference, the plaintiff must produce evidence that the defendant was a more-than-willing participant and knowingly induced one of the contracting parties to breach its obligations under the contract. To do so, the plaintiff must present evidence that an obligatory provision of the contract was breached.” (emphasis added) (internal citations omitted)).

 

Next, we consider the evidence offered in support of WickFire’s tortious interference with prospective business relations claim. This claim required proof of the following five elements:

(1) there was a reasonable probability that the plaintiff would have entered into a business relationship with a third party; (2) the defendant either acted with a conscious desire to prevent the relationship from occurring or knew the interference was certain or substantially certain to occur as a result of the conduct; (3) the defendant’s conduct was independently tortious or unlawful; (4) the interference proximately caused the plaintiff injury; and (5) the plaintiff suffered actual damage or loss as a result.66

66 Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 923 (Tex. 2013) (first citing Wal–Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001); and then citing Bradford v. Vento, 48 S.W.3d 749, 757 (Tex. 2001)).

To recover lost profits under Texas law, a party “must do more than show that it suffered some lost profits”—it must show the amount of profits lost “by competent evidence with reasonable certainty.” “What constitutes reasonably certain evidence of lost profits is a fact intensive determination.” “At a minimum, opinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits may be ascertained.” However, “it is not necessary to produce in court the documents supporting the opinions or estimates.” Although there are a number of valid methods for measuring lost profits, “once a party has chosen a particular method for measuring its lost profits, the party must provide a complete calculation.” “Uncertainty as to the fact of legal damages is fatal to recovery, but uncertainty as to the amount will not defeat recovery.”73

73 Phillips v. Carlton Energy Grp., LLC, 475 S.W.3d 265, 280 (Tex. 2015) (quoting Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1099 (Tex. 1938)).

(74 ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 877 (Tex. 2010) (concluding that the plaintiff did not provide sufficient evidence to support “the amount of damages awarded by the trial court” but did proffer adequate evidence to prove a lesser amount).)

 

 

We turn now to the civil conspiracy claim. The elements of a civil conspiracy under Texas law are as follows:

(1) a combination of two or more persons; (2) the persons seek to accomplish an object or course of action; (3) the persons reach a meeting of the minds on the object or course of action; (4) one or more unlawful, overt acts are taken in pursuance of the object or course of action; and (5) damages occur as a proximate result.

(…) But the Supreme Court of Texas has repeatedly emphasized that “civil conspiracy is a ‘derivative tort,’ meaning it depends on some underlying tort or other illegal act.” The court’s “use of the word ‘derivative’ in this context means a civil conspiracy claim is connected to the underlying tort and survives or fails alongside it.”

 

 

(U.S. Court of Appeals for the Fifth Circuit, February 26, 2021, WICKFIRE, L.L.C. v. WOODRUFF, Docket No. 17-50340)

 

Thursday, February 4, 2021

U.S. Court of Appeals for the Sixth Circuit, OVERDRIVE INC. v. OPEN E-BOOK FORUM dba International Digital Publishing Forum, Docket No. 20-3432

 

Copyright

 

17 U.S.C. § 106

 

License

 

Sublicense

 

IP Transfer

 

Contract Drafting

 

Copyright Infringement?

 

 

When International Digital Publishing Forum decided to license and potentially transfer its intellectual property to the World Wide Web Consortium, one of its members sued. OverDrive claimed that the arrangement violated its rights under the Copyright Act. The district court granted summary judgment to International Digital because it validly licensed its intellectual property and because it would be premature to resolve any claim about future transfers. We affirm.

 

A digital reading platform, OverDrive is a member of International Digital Publishing Forum, a nonprofit trade association dedicated to the development of electronic publishing standards. At one point, International Digital’s members worked together to develop EPUB, the leading eBook format.

 

International Digital has an intellectual-property policy. Approved by OverDrive and its other members, the policy says that International Digital’s members retain any copyrights in their separate and independent contributions to EPUB. But it also grants International Digital a license to “reproduce, adapt, distribute, perform, display, and create derivative works” of any copyrighted contributions to EPUB. R.16-2 at 11. And it allows International Digital to sublicense others to do the same.

 

In 2016, by a vote of 88% to 12%, International Digital voted to transfer its assets to the World Wide Web Consortium, an international organization committed to developing Webstandards. International Digital and the Consortium entered into an asset-transfer agreement the next year. The agreement granted the Consortium a “license to use” International Digital’s intellectual property to “carry out the digital publishing activities” of International Digital. R.37-12 at 5. And it provided that International Digital would commence dissolution within nine months, after which its intellectual property rights, including any in EPUB, would be owned by the Consortium.

 

The Consortium began developing improvements to EPUB, with an eye to creating an updated version. Nine months later, International Digital and the Consortium reached a second agreement, “further documenting and affirming aspects of the license” that International Digital had given the Consortium in the first agreement. R.37-13 at 2. The second agreement stated that the Consortium’s license to “use” International Digital’s intellectual property encompassed a broad license to “reproduce, adapt, distribute, perform, display and create derivative works.” Id. at 2–3. And it explained that the license included International Digital’s sublicensable rights to any copyrights its members retained. The agreement also delayed International Digital’s dissolution until it transfers its intellectual property to the Consortium.

 

OverDrive sued, seeking a declaratory judgment that International Digital had violated, and would violate in the future, its copyrights in EPUB. OverDrive claimed that International Digital infringed its EPUB copyrights by giving the Consortium access to EPUB. And it claimed that International Digital would infringe OverDrive’s copyrights once International Digital transferred its intellectual property to the Consortium. OverDrive sought various forms of relief, including damages, a declaratory judgment, and an injunction.

 

Past and Current Infringement. The Copyright Act says that a copyright owner has the exclusive right to “reproduce,” “distribute,” or “prepare derivative works based upon” its protected work. 17 U.S.C. § 106. The owner also can “authorize” others to do the same. Id. That means a licensee “authorized by the copyright owner to use the copyrighted work” does not infringe the copyright “with respect to such use.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 433 (1984).

 

So it happened here when OverDrive granted International Digital the right to use any copyrights OverDrive had in EPUB. By giving International Digital a license to “reproduce, adapt, distribute, perform, display and create derivative works” of its EPUB copyrights (to the extent it had them), OverDrive permitted International Digital to use the copyrighted work in these ways. R.16-2 at 11. Not only that, it also gave International Digital an unrestricted right to grant sublicenses with respect to those same copyrights. International Digital, in turn, permissibly sublicensed EPUB by granting the Consortium a “license to use” International Digital’s intellectual property. R.37-12 at 5. That gave the Consortium a sublicense to use any of OverDrive’s copyrights in EPUB. International Digital did not infringe OverDrive’s copyrights by doing with them what it was authorized to do. See Sony, 464 U.S. at 433. No infringement occurred.

 

In response, OverDrive acknowledges what the Copyright Act says, that International Digital has the right to sublicense OverDrive’s copyrights in EPUB. But it maintains that International Digital did not permissibly invoke this authority through the initial agreement and did not create a valid sublicense that permitted the Consortium to develop a new version of EPUB, a “derivative work.” Not true. The agreement granted the Consortium a “license to use” all of International Digital’s intellectual property. R.37-12 at 5. That intellectual property included a license to “create derivative works” (among other things) of any of OverDrive’s copyrights in EPUB. R.16-2 at 11.

 

Future Infringement. Even if International Digital did not violate the Copyright Act in the past through the initial agreement, OverDrive claims that the second agreement—which could transfer the assets of International Digital to the Consortium—will violate the Act in the future. The hiccup in this argument does not turn on the meaning of the Act; it turns on the meaning of Article III of the United States Constitution.

 

Ripeness, the matter at hand, asks two questions. One: Does the claim “arise in a concrete factual context and concern a dispute that is likely to come to pass?” Id. A claim is not ripe if it turns on “contingent future events that may not occur as anticipated, or indeed may not occur at all.” Trump v. New York, 141 S. Ct. 530, 535 (2020) (per curiam) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)). Two: What is “the hardship to the parties of withholding court consideration”? Warshak, 532 F.3d at 525 (quoting Abbott Lab’ys v. Gardner, 387 U.S. 136, 149 (1967)). “No” and “none” are the answers to these questions. Because even one negative answer creates a ripeness problem, this claim was properly dismissed.

 

 

(U.S. Court of Appeals for the Sixth Circuit, February 5, 2021, OVERDRIVE INC. v. OPEN E-BOOK FORUM dba International Digital Publishing Forum, Docket No. 20-3432, Recommended for Publication)

 

 

 

Tuesday, February 2, 2021

Swiss Customs – Import – False Certificate of Origin – Need of a Contractual Clause

 

Swiss Customs – Import – False Certificate of Origin – Need of a Contractual Clause

 

 

La direction d'arrondissement m'informe plus d'une année après l'importation que la preuve d'origine émanant de mon fournisseur a été établie à tort et que je vais devoir payer des droits de douane a posteriori. Les marchandises sont depuis longtemps vendues. Comment puis-je me défendre?

 

S'il s'avère qu'une taxation préférentielle a été obtenue indûment parce que la preuve d'origine avait été établie à tort, les droits de douane sont en principe dus. Le fait que l'importateur soit ou non «coupable» ne joue en l'occurrence aucun rôle. Une éventuelle action récursoire contre l'exportateur ayant établi la preuve d'origine à tort incombe à l'importateur. Il est recommandé de conclure des dispositions contractuelles à cet égard.

 

Swiss Customs Administration Website

Republication

https://www.ezv.admin.ch/ezv/fr/home/infos-pour-entreprises/exonerations--allegements--preferences-tarifaires-et-contributio/importation-en-suisse/accords-de-libre-echange--origine-preferentielle/questions-frequentes.html