In a memorandum opinion denying a motion to remand the case to state court, the District Court for the Northern District of Indiana considered issues relating to the construction of the Copyright Act. Plaintiff GH, LLC develops, markets, and sells products used by people with visual disabilities. The various individual defendants were at one point employed by plaintiff, and allegedly signed confidentiality agreements. When the individual defendants left, they began working for defendant EITAC, apparently a company in the same line of business as plaintiff.
Plaintiff filed a 16-count complaint in Superior Court in Lafayette, Indiana. The District Court summarized the allegations as follows: violation of trade secrets, common law misappropriation, breach of contract, specific performance, unfair competition, unjust enrichment, tortious interference with business relationships, breach of implied duties of good faith and fair dealing, and promissory estoppel. The Defendants filed a Notice of Removal claiming that plaintiff had asserted rights arising under the U.S. Copyright Act.
The Court first discussed the removal standard whereby a defendant may remove a case to federal court "only if the federal court would have had original jurisdiction over the action." Furthermore, "a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint." Original jurisdiction in federal district courts is granted by 28 USC 1338(a) for civil actions "arising under any Act of Congress" relating to copyrights. That section further states that in copyright cases such "jurisdiction shall be exclusive of the courts of the states." In other words, if an action arises under the Copyright Act it must be filed in federal district court. The standard for determining if an action arises under the Copyright Act (referred to by the Court as the Harms test) includes (1) whether the remedy sought is one expressly granted by the Copyright Act or (2) whether the plaintiff asserts a claim requiring construction of the Copyright Act. The instant case deals with the second part of this test. The Court specifically noted that plaintiff's request for one of the defendants to assign to plaintiff "the entire rights to all such Works that under copyright law are not considered works made for hire" requires construction of the Copyright Act. Granting the relief requested by plaintiff, i.e. specific performance, argued the Court, would require the Court to determine which works were "works made for hire." Such a determination, held the Court, "would require construction of the Copyright Act." The Court, concluding that the plaintiff's claim arises under the Copyright Act, denied its motion to remand.
Comment: Beware when alleging state law violations of trade secrets, breach of contracts, and/or conversion as a hidden copyright claim will take jurisdiction away from the state court. The Court in this case made a distinction between a mere collateral reference to some amorphous copyright protection or principle, and an explicit request for relief that, if granted, would require a court to construe the Copyright Act. Unfortunately, there is no real bright-line, and the facts of each case must be analyzed accordingly. However, if it quacks like a duck, or should I say, if it reads like a copyright claim...
GH, LLC v. Curtin, et al.2006 WL 833133 (N.D. Ind., March 28, 2006).
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