Advertisement

April 18, 2014

§ 301(a) of Copyright Act Creates Complete Preemption

Addressing preemption under the Copyright Act for the first time, the U.S. Court of Appeals for the Fifth Circuit joined the Second, Fourth and Sixth Circuits in holding that the preemptive force of the Copyright Act is so “extraordinary” that it converts an ordinary state common-law complaint into one stating a federal claim for the purpose of the well-pleaded complaint rule.  GlobeRanger Corp. v. Software AG et al., Case No. 11-10939 (5th Cir., Aug. 17, 2012) (Southwick, J.).

GlobeRanger, a Texas-based software company specializing in radio frequency identification systems, brought suit in state court alleging that the defendants misappropriated GlobeRanger’s trade secrets in developing a radio frequency identification solution for the United States Navy.  GlobeRanger asserted only state common-law claims of misappropriation of trade secrets, conversion, unfair competition, conspiracy and tortious interference.  The defendants removed the suit to federal court and moved to dismiss on the basis that all of GlobeRanger’s claims were preempted under the Copyright Act.  The district court granted the motion to dismiss and directed GlobeRanger to amend its complaint to reflect a Federal Copyright Act claim.  GlobeRanger appealed.

Complete Preemption

A case may not normally be removed to federal court based on a preemption defense.  However, where Congress has intended the federal cause of action to be the exclusive cause of action for particular claims, the “complete preemption” doctrine converts the state common-law claims into federal causes of action.  Following the 4th Circuit’s approach, the 5th Circuit determined that the grant of exclusive jurisdiction to the federal district courts over civil actions arising under the Copyright Act, combined with the preemptive force of § 301(a), compelled the conclusion that Congress intended that state-law actions preempted by § 301(a) of the Copyright Act arose under federal law.  As such, state-law claims preempted by § 301(a) are transformed into a federal claim for the purpose of the well-pleaded complaint rule.

Copyright Act May Preempt Some, but Not All, of GlobeRanger’s Claims

On a claim-by-claim basis, the court began to apply the two-factor test discussed in Carson v. Dynegy to determine whether each state-law claim would be preempted by the Copyright Act.  First, each claim is examined to determine whether it falls within the subject matter of copyright as defined by 17 U.S.C. § 102. Second, the cause of action is examined to determine if it protects rights that are ‘equivalent’ to any of the exclusive rights of a federal copyright, as provided in 17 U.S.C. § 106.

The court determined that GlobeRanger alleged facts regarding the copying of business practices not wholly limited to the specific expression of the software.  Those solutions included types of procedures, processes, systems and methods of operations that are excluded from copyright protection and, thus, are not preempted by the Copyright Act.  However, the court also determined that certain clams may be preempted, such as GlobeRanger’s conversion claim.  This claim hinges on whether the claim refers to physical property, as under Texas law, or intangible property that may be protected by copyright. 

Since some of GlobeRanger’s claim may be preempted, the 5th Circuit determined that the district court has sufficient jurisdiction to keep the case in federal court at the motion to dismiss stage.  Due to the limited factual record, the case was remanded for the district court to make a more in-depth analysis of each claim to determine which claims are preempted and whether or not the district court has sufficient jurisdiction.

© 2014 McDermott Will & Emery

About the Author

McDermott Will & Emery is a premier international law firm with a diversified business practice. Numbering more than 1,100 lawyers, we have offices in Boston, Brussels, Chicago, Düsseldorf, Frankfurt, Houston,...

+1 312 372 2000

Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.