Summary
stating that, "[w]hile a copyright registration is a prerequisite under 17 U.S.C. § 411 for an action for copyright infringement, claims under the DMCA, however, are simply not copyright infringement claims and are separate and distinct from the latter"
Summary of this case from Exec. Corp. v. Oisoon, LLCOpinion
CIVIL ACTION NO. 02-8554
November 25, 2003
MEMORANDUM
Plaintiff Medical Broadcasting Company ("MBC") won a jury verdict in its favor against its former employee William C. Flaiz ("Flaiz") for breach of a confidentiality agreement and for violating the Digital Millennium Copyright Act, 17 U.S.C. § 1201, et seq. Flaiz moves for judgment as a matter of law under Rule 50(b) of the Federal Rules of Civil Procedure or, in the alternative, for a new trial under Rule 59 of the Federal Rules of Civil Procedure.
I.
MBC, a provider of various business services and solutions to pharmaceutical and health care companies, alleged that Flaiz had disclosed certain information to his new employer, defendant i-Frontier Corp., in violation of his confidentiality agreement with MBC. The jury awarded MBC $20,000 in damages on this count. Flaiz contends that MBC failed to introduce sufficient evidence of damages. We disagree.
MBC cites to the testimony of Michael F. Maloney, a certified public accountant with expertise in evaluating damages in intellectual property cases. He testified that MBC incurred some $16,600 in expenses in investigating and learning about what information Flaiz had taken with him when he left to work for i-Frontier. Contrary to the contention of Flaiz, Mr. Maloney did not simply parrot a number from MBC's financial records. He had spoken to MBC personnel about this expenditure and learned that MBC designated a separate accounting item for its investigation, consisting of the hours spent by its employees involved in the endeavor times their salary rates. The jury heard a great deal about the conduct of Flaiz in secretly downloading information before moving to his new employer and the efforts made by MBC in response. It was for the jury to accept or reject the $16,600, recognizing that a party does not have to establish damages with mathematical precision. Simply because Mr. Maloney did not have personal knowledge of the summary data from MBC's financial records does not disqualify his testimony. An expert does not have to have first-hand knowledge of the facts on which he opines.See Indian Coffee Corp. v. Procter Gamble Co., 752 F.2d 891, 895-96 (3d Cir. 1985). Rarely would financial records be accepted into evidence if it were otherwise.
In addition, Mr. Maloney testified that i-Frontier had specifically attributed $122,000 of its revenue from the AccuCheck and Pulmicort projects to the use of the confidential MBC methodology Flaiz had provided to it. Mr. Maloney, taking a very conservative position, opined that i-Frontier's profit margin was 19%. Thus, as shown on a chart published to the jury, i-Frontier's profit on these two projects was $23,000. The court instructed the jury that on MBC's breach of contract claim, it would be entitled to "recover damages that puts it in the same position that it would have been in had Mr. Flaiz not breached the agreement." The jury was further told that damages included "any expenses incurred by MBC or profit that it lost as a result of the breach." Clearly, the jury could find that i-Frontier's $23,000 profit from the AccuCheck and Pulmicort projects was profit lost to MBC as a result of Flaiz's violation of his confidentiality agreement.
The evidence of damages was sufficient. Indeed, the jury's verdict was less than what could have been sustained based on the evidence. Flaiz's post-trial motion with respect to damages will be denied.
II.
Flaiz argues that the court erred in its charge with respect to MBC's claim that Flaiz breached his confidentiality agreement with MBC. The confidentiality agreement stated in relevant part:
This will confirm that during the term of your employment and thereafter, you agree to hold inviolate and to otherwise maintain in secrecy all knowledge and information which you may obtain during your employment with the Company, whether prior to or after the date hereof (collectively the "information"), including specifically, by way of example only, client lists, data, reports, repeat formats, records, plans, policies, applications, sales information, correspondence, agreements with customers, products, processes, apparatus, formulae, methods and practices of developing accounts, methods and practices pertaining to the production, sale and/or distribution of videotapes or any other documents, articles or material containing or disclosing any proprietary data or trade secrets, developments or improvements or any manner of doing business or any other matter relating to our business which, of course, would include any such information and/or documentation which you may ascertain during the course of your employment with the Company.
You further agree not to disclose or make known any of the information to any person, firm or entity except in the ordinary course of your employment with the Company. . . . It is recognized that the confidentiality restrictions herein set forth shall not apply to any information, knowledge or data already known to you (not as a result of your employment with the Company) or which prior to the time of disclosure is properly in the public domain.
Flaiz contends that it was error to charge the jury that he could be liable for breach of the confidentiality agreement unless it found that the disclosed information was generally available to the public. Flaiz argues that the court failed to advise the jury explicitly that he was protected from liability if the information was generally known in the trade even if not generally available to the public. We believe the charge was complete and correct.
While employee covenants not to compete are subject to a rule of reason as to time and space, confidentiality restrictions are not subject to such a limitation. Bell Fuel Corp. v. Cattolico, 544 A.2d 450, 458 (Pa.Super. 1988). Plaintiff has cited no case which had voided or modified a confidentiality agreement which prohibited disclosure of business information which was not "properly in the public domain," the language used in the confidentiality agreement before us. If information is generally known in the trade, it necessarily follows that it is in the public domain and thus generally available to the public. Conversely, any information generally available to the public is information generally known in the trade. The terms are in essence synonymous, at least in this case. The jurors heard extensive testimony about the nature of information Flaiz disclosed and about whether it was secret to MBC. No testimony has been referenced that drew any distinction between what was known in the trade and what was available to the public. We emphasize that we did not instruct the jury that the information had to have been generally known (as opposed to generally available) to the public before a breach of the confidentiality agreement could occur.
The jurors had a copy of the confidentiality agreement before them when they deliberated and had an opportunity to study its words. The charge was in conformity with the terms of the agreement. Flaiz's post-trial motion concerning the charge related to breach of the confidentiality agreement will be denied.
III.
The court entered a damage award of $17,500 in favor of MBC and against Flaiz under the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1201, et seq., based on the jury's answers to special interrogatories. The jury found that Flaiz had provided or distributed false copyright management information with intent to induce, enable, facilitate or conceal infringement of MBC's copyright and had intentionally altered or removed copyright management information knowing, or having reasonable grounds to know, that it will induce, enable, facilitate or conceal infringement of MBC's copyright. Flaiz argues that the court erred because the relevant MBC information did not have a copyright registration.
We reiterate our prior ruling that no such registration is required. Nothing in § 1202 of the DMCA suggests that registration is a precondition to a lawsuit. While a copyright registration is a prerequisite under 17 U.S.C. § 411(a) for an action for copyright infringement, claims under the DMCA, however, are simply not copyright infringement claims and are separate and distinct from the latter.See Nimmer on Copyrights, § 12A.18(B).
Finally, Flaiz maintains that the court's charge was wrong in not instructing the jury that it had to find specific intent before he could be found liable under the DMCA. With respect to a violation of § 1202(a), the court charged that MBC must prove that Mr. Flaiz, knowingly and with intent to induce, enable, facilitate, or conceal infringement, provided or distributed copyright management information that was false. This is simply the language of the statute. A person can be found to have violated § 1202(b) who "intentionally remove[s] or alter[s] any copyright management information . . . knowing or . . . having reasonable grounds to know that it will induce, enable, facilitate or conceal an infringement of any right under this title." Again, the court's charge was consistent with the statute.
The post-trial motions of Flaiz with respect to the DMCA will be denied.
ORDER
AND NOW, this ___ day of November, 2003, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that the motion of defendant William C. Flaiz for judgment as a matter of law under Rule 50(b) of the Federal Rules of Civil Procedure or, in the alternative, for a new trial under Rule 59 of the Federal Rules of Civil Procedure is DENIED.