Software Copyright Infringement Judgment Appealed

of the canadian parent corporation alcan, inc. on july 30, 2003, alcan ohio merged into alcan ohio, the rightful holder of the cincom license, thus no longer exists as a legal a merger and specifically prohibited a transfer in such an instance. txo, 999 s.w.2d at 143. this is rather than a "disfavored procedural shortcut." celotex, 477 u.s. at 327 (quoting fed. 1093; see also in re cflc, inc., 89 f.3d at 679 (federal law must govern to prevent free interpretation of ohio law. in txo production co. v. m.d. mark inc., 999 s.w.2d 137, entity, and, subject to the limitations specified in section 2307.97 of the novelis advances in turn. summary judgment is appropriate where there are no genuine issues of material fact in further demonstrating that the deletion of the word "[t]ransferred" fromthe ohio 96. alcan ohio no longer owns the plant in oswego, new york, where the designated 3 application development system, i.e., a computer language that allows a corporation's ii, karen e. ross, tucker, ellis & west llp, cleveland, ohio, for appellant. joseph softwareprofessionalstodevelopcomputerprogramsthatallowthecorporation'soperations inc., 489 u.s. 141, 150-51 (1989)). allowing state law to permit the free assignability novelis's argument that we can distinguish our decision in ppg based upon the this was a mandate of federal law, ohio law could not override this presumption. id. at 1 authorization. see ppg, 597 f.2d at 1093. here, however, the express wording of the license itself regarding the assignability of patent licenses are controlled by federal law."). transferable license" to use cincom's software. (license at 1.) the license agreement requires that all property of the constituent corporation "`shall be vested in the novelis corp., no. 1:05cv152, 2007 u.s. dist. lexis 2721, at *19-20 (s.d. ohio jan. 12, of contract. in re cflc, 89 f.3d at 677; see also power lift, inc. v. weatherford nipple- affirm the judgment of the district court. flow of those rights to the surviving corporation," this is exactly the purpose of copyright v. permission to appeal. in re novelis corp., no. 07-0302, slip op. at 2 (6th cir. apr. 20, cincinnati, ohio, for appellee. on brief: irene c. keyse-walker, henry e. billingsley ohio's law provides that upon a merger, "[t]he separate existence of each the surviving or new entity possesses all assets and property of every despite the federal common law rule that copyright licenses are unassignable counsel myers v. fed. deposit ins. corp., 512 u.s. 79, 87 (1994) (internal quotation marks and surviving corporation pay a fee in the event of a merger unnecessarily hinders the free the moving party may meet its burden by "`showing' . . . that there is an absence of no foul." see in re cflc, inc., 89 f.3d at 679. the harm is the breach of the terms of are personal and non-transferrable in the absence of an agreement authorizing licenses that allow its customers to use the two programs for an annual fee. silence. cf. ppg, 597 f.2d at 1093. successor corporation. id. at 1089. we have found just the same. ohio law causes the unhelpful to novelis. there the ohio supreme court held that the contractual property licenses. federal common law governs "questions with respect to the complex interaction of federal and state law that occurs when interpreting intellectual generally have acknowledged the need for a uniform national rule that patent licenses - owned by an entity named novelis. alcan ohio never sought or obtained cincom's written ohio rev. code ann. � 1701.82(a)(3) (2009) (emphasis added). novelis argues that the no. 07-4142 cincom sys., inc. v. novelis corp. page 8 language, permaglass merged withguardianindustries,acorporation that manufactured we review a district court's grant of a summary judgment motion de novo. smith evidence to support the nonmoving party's case." celotex corp. v. catrett, 477 u.s. for the southern district of ohio at cincinnati. from cincom remained on the same computer in oswego, new york, but in a plant now approval to continue to use the supra� and mantis� software before restructuring its - general federal corporate law, state law will also determine whether a merger results in plaintiff-appellee, original inventor or one of the inventor's licensees. absent a federal rule of decision, 2. cflc, inc., 89 f.3d at 679; unarco indus., inc. v. kelley co., 465 f.2d 1303, 1306 (7th entity holding the license changed; therefore, guardian industries infringed ppg's ohio listed the designated computer as one located at its facility in oswego, new york. the of cincom and that the protection of this information is of the highest importance." (license 2007). the parties then agreed to an order stipulating the amount of damages cincom had (1986). summary judgment is "an integral part of the federal rules as a whole, which corporation in a statutory merger acquires patent license rights of the constituent the language of the licensing agreement allowing the prevailing party to have its attorneys' fees paid by contract law will govern the interpretation of a license because a license is merely a type assignability of a patent [or copyright] license." id. at 1093. while the supreme court - federal common law rule prohibiting such unauthorized transfers. ppg, 597 f.2d at a. authority, of a public as well as of a private nature, of each constituent suffered as $459,530.00, equal to the amount of cincom's initial licensing fee. the district analysis. federal common law, and the actual language of the license in this case, is current appellation, novelis. thus, as of january 2005, the software alcan ohio licensed constituent entity other than the surviving entity . . . shall cease." id. � 1701.82(a)(1). 142; see also in re cflc, inc., 89 f.3d at 679. txo is therefore inapposite because it because it takes place by operation of law rather than by a particular act of the parties. competitor's possession, this does not translate into a rule of "no competitor possession, agreement at issue in ppg showed a clear intent to prevent the license from coming into 464 u.s. 417, 439 (1984). design' by granting the inventor the reward of `the exclusive right to practice the the parties specifically listed in a schedule attached to the license. (license at 1.) alcan 143 (tex. app. 1999), a texas court held that a merger of a subsidiary into its parent x before the commencement of alcan ohio's internal reorganization, alcan ohio was for the sixth circuit that because this contract involves a copyright license, such a transfer without had developed a new industrial process for shaping glass for various commercial uses. description, and every interest in the assets and property, wherever alleging that novelis's actions violated the license agreement cincom entered with alcan pursuant to sixth circuit rule 206 in ppg, we addressed the question of "whether the surviving or resultant 1. no. 07-4142 cincom sys., inc. v. novelis corp. page 6 ppg. id. at 1097. vested in the surviving or new corporation without further act or deed.'" ppg, 597 f.2d decided and filed: september 25, 2009 reasons that our holding in ppgthat ohio's merger law effects an impermissible transfer 42. however, as the texas court of appeals noted, our opinion in ppg rested upon the absent express language to the contrary, "[s]tate law is not displaced merely because the id. ppg granted a "non-exclusive, non-transferable" license to the permaglass cincom is an ohio-based corporation that develops, licenses, and services software no. 07-4142 novelis a non-exclusive and non-transferrablelicense. compareppg, 597 f.2d at 1092, a wholly-owned subsidiary of alcan, inc., a canadian corporation. on may 15, 2003, alcan or patent holder to control the use of his creation. the fact that novelis is not a we once again emphasize that even if the license were silent as to the issue of transfers, federal 89 f.3d 673, 679 (9th cir. 1996) (quoting bonito boats, inc. v. thunder craft boats, patent. id. at 1096-97. id. this is because any entity desiring to acquire a license could approach either the corporation changed its name to alcan aluminum corporation. a final name change consequently, novelis has infringed upon cincom's copyright. id. at 1096-97. final judgment. license."). invention for a period of years.'" everex sys., inc. v. cadtrak corp. (in re cflc, inc.), assignment."). that require "judicial creation of a special federal rule" of common law. o'melveny & certified its conclusion as involving a controlling question of law as to which substantial dispute, and one party is entitled to judgment as a matter of law. fed. r. civ. p. 56(c). transfer of a license without authorization is to prevent the license from coming into a potentially more efficient uses of the invention by others. see id.; cf. rhone-poulenc successor corporation, guardian industries. id. at 1095-96. we concluded that in the 257, 262 (1979). the states are thus "free to regulate the use of . . . intellectual property deletion of the prior statute's language explaining that all property shall be deemed the state cases novelis cites in its briefs do not force us to reconsider our of a competitor does not serve to distinguish our holding from the present set of facts. contract is clear, a court may look no further than the writing itself to find the intent of as a result of alcan ohio's merger with alcan texas. we will consider each argument upon learning of the corporate changes alcan ohio underwent, cincom filed suit no. 07-4142 cincom sys., inc. v. novelis corp. page 11 property.5 law remain, this case is especially suited for summary disposition. court approved the order on august 2, 2007. alcan texas simultaneously merged into itself and its three texas subsidiaries. as a result, opinion exists. novelis now owns the plant and has possession of the license under ohio law. known as alcan fabrication corporation. in september 2003, alcan fabrication ohio law are merely cosmetic and still result in an impermissible transfer of the license the license: the violation of the federal policy (or contract term) allowing the copyright cincom had granted to a former novelis subsidiary. finding that our prior decision in ppg while it is true that the primary reason for the federal common law rule prohibiting the with license at 1. both the license at issue in ppg and the license issued to novelis also the fact that the license at issue in ppg ultimately found its way into the hands corporation did not violate a non-assignability clause in a contract. the texas court had ohio automatically vested by operation of law in novelis corporation, alcan ohio's 5 it is undisputed that novelis gave no notification to cincom of its plans to merge alcan ohio judgment to cincom for two reasons. first, novelis asserts that the district court of an internal corporate restructuring resulted in a prohibited transfer of the software license offerings formthe basis of the current dispute. supra� is a database management program solely to alcan ohio transferred to the surviving corporation, now known as novelis. clear: the only legal entity that can hold a license from cincom is alcan ohio. if any up sys., inc., 871 f.2d 1082, 1085-86 (fed. cir. 1989) (noting that "a license agreement common law would serve to fill the gap with its default rule that no transfer is allowed without express cincom's prior written approval, novelis infringed cincom's copyright. we therefore cincom's complaint. if ohio law served to transfer the license from alcan ohio to 597 f.2d at 1091. ppg involved two glass fabrication corporations that further act or deed. title to any real estate or any interest in the real no. 07-4142 cincom sys., inc. v. novelis corp. page 4 317, 325 (1986). a trial is required only when "there are any genuine factual issues that no. 07-4142 cincom sys., inc. v. novelis corp. page 9 - computer licensed to contain cincom's software resides, because alcan ohio no longer 1093. we therefore reversed the district court and ordered judgment entered in favor of recommended for full-text publication rolled products division ("alcan ohio"), an ohio-based corporation that would later occurred under both ohio and delaware law. delaware law, both in 1979 and today, understandably unwilling to license the efforts of his work, thereby preventing no transfers are permissible without express written approval.3 "all property of a constituent corporation shall be `deemed to be [t]ransferred to and of his invention is [sic] a creature of federal common law . . . . [i]t follows that questions when alcan ohio merged with alcan texas, the license granted by cincom defendant-appellant. out of existence as a part of its restructuring. 1 of a patent or copyright license, a transfer occurs any time an entity other than the one _________________ motions for summary judgment. the district court determined that alcan ohio's merger does not address the effect of the ohio merger statute in the context of intellectual agro s.a. v. dekalb genetics corp., 284 f.3d 1323, 1328 (fed. cir. 2002) ("[c]ourts required the express written approval of the grantor prior to any transfer of the license. property because "[t]he fundamental policy of the patent system is to `encourage the are designed `to secure the just, speedy, and inexpensive determination of every action'" the possession of a competitor, cincom's license demonstrates no concern with creation and disclosure of new, useful, and non-obvious advances in technology and clarified that the two software programs "constitute proprietary and confidential information contract relates to intellectual property." aronson v. quick point pencil co., 440 u.s. transferred is if the same legal entity held the license. under either statute, the legal cir. 1972) ("[f]ederal law applies to the question of the assignability of the patent court's order. id. at *20; see 28 u.s.c. � 1292(b). we denied novelis's application for - copyright holder. in such a world, the holder of a patent or copyright would be appeal from the united states district court on july 5, 1989, cincom agreed to license supra� and mantis� to alcan impermissible transfer of the software license and accordingly affirm its judgment. to which the license was expressly granted gains possession of the license. id. at 1095- _________________ concluded that what matters for the purpose of determining whether the license actually novelis argues that ohio's statutory merger law has changed since we first parties' intent as expressed in the licensing agreement. novelis claims that while the except with the consent of ppg first obtained in writing." id. at 1092. despite this the transfer of an intellectual property license. however, where state law would allow division" as the "customer" and granted to alcan ohio "a non-exclusive and non- b. ohio substantive corporate law since our ppg decision, as demonstrated by state cases at 1096 (quoting ohio rev. code ann. � 1701.81(a)(4) (1955)) (emphasis added). the ohio created a separate corporation known as alcan of texas ("alcan texas"), organized the texas contract at issue in txo did not involve intellectual property, id., and 2 novelis as a result of the internal merger, novelis violated the express terms of its non- 2007). because novelis had failed to distinguish our prior holding in ppg, the district court appellant. joseph michael callow, jr., keating, muething & klekamp, pll, which applied to the transaction, and explicitly rejected our opinion in ppg. id. at 141- license agreement closed by noting that ohio law would govern its terms and that alcan novelis argues on appeal that the district court erred in granting summary we have had no occasion to consider our holding in ppg since its original before: boggs, gibbons, and griffin, circuit judges. "strong public policy against the implied assignment of patent licenses." id. at 141 n.4. argued: september 8, 2008 (quoting 8 del. c. � 259(a)). we considered the difference in statutory language and at the time of our decision in ppg, ohio's statutory merger law provided that famously declared in erie railroad co. v. tompkins, 304 u.s. 64, 78 (1938), that transferable in the absence of "express provisions to the contrary." id. at 1095. because occurred on january 1, 2005, when alcan aluminum corporation changed its name to its forfeiture." id. at 140. while the texas court fretted that "a requirement that the license agreement to flow to novelis following alcan ohio's merger. the difference is entered summary judgment as to liability for cincom. id. at *19-20. the district court ii. klekamp, pll, cincinnati, ohio, for appellee. that allows a corporation to manage millions of records. mantis� is a fourth-generation alcan texas, with alcan texas remaining as the surviving corporate entity. the next day, n ground for disagreement existed so that the parties could seek an interlocutory appeal of the in ppg did not hang by so slender a thread. statute does not change our analysis is the fact that the merger at issue in ppg actually preventing internal corporate reorganizations. second, novelis claims that a change in revised code, all obligations belonging to or due to each constituent at 2.) consequently, alcan ohio could only place the software on designated computers that noted that the grant to permaglass was "personal to permaglass and non-assignable resolved in favor of either party." anderson v. liberty lobby, inc., 477 u.s. 242, 250 > iii. impaired by reason of such merger or consolidation. become known as novelis. the license cincom issued listed "alcan rolled products [sic] law � to prevent the "free flow" of information without the author's permission. id. at considered its effect on intellectual property licenses thirty years ago. novelis thus context of intellectual property, a license is presumed to be non-assignable and non- the texas court of appeals further observed that the contracting parties could have foreseen no. 07-4142 cincom sys., inc. v. novelis corp. page 2 successor, after the completion of the corporate restructuring. see id. � 1701.82(a)(3). in copyright cases such as this, we refer to the case law interpreting patent law "because of the novelis corp., "[t]ransferred to" the surviving corporation prevents a finding that alcan ohio's merger ohio. following discovery, the parties agreed upon stipulated facts and filed separate transferable license. it is to that issue to which we now turn. is a significant conflict between some federal policy or interest and the use of state law" industries, inc. v. guardian industries corp., 597 f.2d 1090 (6th cir. 1979), governs infringed cincom's copyright because a transfer has occurred. simply put, in the context julia smith gibbons, circuit judge. novelis corporation appeals from the , for the transfer of a license absent express authorization, state law must yield to the no. 07-4142 cincom sys., inc. v. novelis corp. page 7 prohibited unauthorized transfers so that simple contract construction under state law provides the answer. v. cps holdings, inc., 875 n.e.2d 31, 34 (ohio 2007) ("when the language of a written interpreting the new language, requires us to find that no transfer of the license occurred _________________ it originally granted alcan ohio. corporation to use this new "gas hearth technology." id. at 1091-92. the license further mantis� software. rather thansellthecomputer programs themselves, cincomonly sells no. 07-4142 cincom sys., inc. v. novelis corp. page 5 located, and the rights, privileges, immunities, powers, franchises, and specific intent of the contracting parties is incorrect. as in ppg, cincom granted current statute provides: windshields for automobiles. id. under the laws of delaware and ohio, which governed "[t]here is no federal general common law," there are "limited . . . situations where there on march 11, 2005, in the united states district court for the southern district of ohio, no. 07-4142 cincom sys., inc. v. novelis corp. page 10 no. 07-4142 cincom sys., inc. v. novelis corp. page 3 rolled products division. ("cincom"), on its claim of copyright infringement. see 17 u.s.c. � 501. novelis argues (bankr. w.d. tenn. 1987) (because "[t]he rights of the patent owner to license the use for its corporate customers. the rights to use two of cincom's most popular software no. 05-00152--susan j. dlott, chief district judge. estate vested in any constituent entity shall not revert or in any way be i. assignability and to promote creativity); in re alltech plastics, inc., 71 b.r. 686, 689 corporations."2 michael callow, jr., james eugene burke, jennifer j. morales, keating, muething & novelis timely appealed the district court's corporation surviving or resulting from such merger or consolidation.'" id. at 1096 the former rolled products division of alcan ohio became a subsidiary of alcan texas the vesting of the license in the surviving entity could not occur without being ohio could "not transfer its rights or obligations under this agreement without the prior compare ppg, 597 f.2d at 1092, with license at 3. the plain text of the license is clear. entity under ohio law. ohio law further provides that the license once held by alcan merging." 597 f.2d at 1096. the deletion of the word transferred does not change this competitor of cincom is therefore immaterial. ppg's holding governs the resolution of r. civ. p. 1). because both parties stipulated to the necessary facts and only issues of state law would transform every licensee into a potential competitor with the patent or properly can be resolved only by a finder of fact because they may reasonably be citations omitted). such a special rule clearly is justified in the realm of intellectual therefore instead fell into the general contract law principle that "courts disfavor to function more smoothly. cincom is the sole owner of all rights to both the supra� and of patent or copyright licenses would "underminetherewardthatencouragesinvention." the parties."(citation omitted)).4 novelis and cincom also agreed that each litigant would bear its own attorneys' fees, despite united states court of appeals because novelis did not abide by the express terms of cincom's license and gain the merger, permaglass's licenses would automatically transfer to and vest in the order of the district court granting summary judgment to plaintiff cincom sysems, inc. - entity, all of which are vested in the surviving or new entity without file name: 09a0346p.06 1 obligations under a stock purchase agreement "flowed, by operation of law," to the - wholesale co. v. r.j. reynolds tobacco co., 477 f.3d 854, 861 (6th cir. 2007). _________________ with alcan texas transferred the license. see id. � 1701.81(a)(4) (1955). our holding historic kinship between patent law and copyright law." sony corp. of am. v. universal city studios, inc., novelis's appeal, we agree with the district court that novelis's actions led to an permission is inherently a breach of the contract. ppg, 597 f.3d at 1093; see also in re cincom systems, inc., with alcan texas effected a transfer of the license under ohio law. cincom sys., inc. v. examined the substantially similar texas, ohio, and delaware merger statutes, all of issuance in 1979. consequently, we take this opportunity to explain more fully the the unsuccessful party. misinterpreted our prior holding in ppg by failing to look at the individual contracting transferred by the old entity. as we explained in ppg, "a transfer is no less a transfer under the laws of texas. alcan texas, like alcan ohio, was also a wholly-owned subsidiary written approval of cincom." (license at 3.) asa architects, inc. v. schlegel, 665 n.e.2d 1083 (ohio 1996), is similarly is a contract governed by ordinary principles of state contract law"). as there is no the merger was effected by the parties and the transfer was a result of their act of in any manner not inconsistent with federal law." id. applying these principles, state argued: irene c. keyse-walker, tucker, ellis & west llp, cleveland, ohio, for other legal entity holds the license without cincom's prior approval, that entity has exactly the opposite of federal common law's presumption of non-transferability in the event of a license's 4 see cincinnati ins. co. that the district court erred by concluding that a series of mergers novelis underwent as part of ownership in a license must change, as well. cincom responds that the changes in