As first reported by David Coale, over at www.600camp.com, the Fifth Circuit recently issued an important decision involving copyright preemption in Globeranger Corp. v. Software AG (decision available here). In Globeranger, the plaintiff sued the defendants in Texas state court, alleging five counts under state law (none under federal law). The defendants removed the case to the Northern District of Texas, asserting that the plaintiff’s claims (relating to the alleged theft of its computer software code) were preempted by the Copyright Act.
The defendants then moved to dismiss the plaintiff’s petition (on the basis that although the plaintiff didn’t plead any copyright claims, its claims were nevertheless preempted under the Copyright Act), with the plaintiff opposing the motion to dismiss and seeking a remand to state court. The Northern District of Texas’ Judge Boyle granted the motion to dismiss, and the plaintiff appealed to the Fifth Circuit.
The Fifth Circuit articulated the relevant preemption test as follows:
For a state-law claim to be preempted by the Copyright Act, both prongs of a two-factor test must be satisfied . . . . First, the claim is examined to determine whether it falls within the subject matter of copyright as defined by 17 U.S.C. § 102. And 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. (citations and quotations omitted).
The Fifth Circuit ultimately found that plaintiff “has pled factual allegations that at least in part fall outside of the scope of copyright” (copying of the plaintiff’s business practices) and that “the defendants have argued enough of a basis for preemption on [the plaintiff’s] conversion claim to stay in federal court.” Accordingly, the Fifth Circuit reversed and remanded the case.
Plaintiff Globeranger is represented by Kerry Peterson and Matthew Rinaldi, both of Miller, Egan, Molter & Nelson LLP.
Defendant Software AG is represented by William Sims, Jr., Thomas Leatherbury, and Tyler Bexley, all of Vinson & Elkins.
Defendant Naniq Systems LLC is represented by James Drakeley and Eric Walraven, both of Hiersche Hayward Drakeley & Urbach PC.
Defendant Main Sail LLC is represented by Rodney Acker, Beau Cox, and Karl Dial, all of Fulbright & Jaworski LLP.