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Thursday, July 22, 2010

Ind. Decisions - Interesting 7th Circuit opinion out of Illinois

The 12-page opinion by CJ Easterbook, in the case of FM Industries v. Citcorp begins:

FM Industries sued Citicorp Credit Services for copyright infringement. The copyrighted work is computer software—“The Ultimate Collection and Network Software” or TUCANS—designed to help lawyers to collect debts and lenders to monitor how its lawyers are doing. The suit also named the Law Offices of Ross Gelfand, LLC, contending that it continued using the software after Citicorp dropped its license and told outside lawyers to stop using TUCANS. (There were still more defendants, whose dismissal, see 2007 U.S. Dist. LEXIS 90129 (N.D. Ill. Dec. 5, 2007), is no longer contested.) The “copying” in question is the transfer of software from a computer’s hard disk to its random access memory, without the permission of the copyright proprietor. Citicorp licensed the TUCANS program, but FM Industries contends that Citicorp did not pay the agreed price and induced its outside debt-collection lawyers to go on using the program (thus making extra copies in computers’ memory) after the license expired.

The district court dismissed FM Industries’ request for damages because it failed to register the copyright until 2007. “Statutory damages” are available only for infringement after registration, and then only if the registration occurred within three months of the work’s publication (2004 for this version of TUCANS). 17 U.S.C. §412; see also Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010). FM Industries never tried to show actual damages. See 2008 U.S. Dist. LEXIS 3575 (N.D. Ill. Jan. 14, 2008). That left questions about prospective relief. Defendants contended that Michael Friedman (FM Industries’ president and principal shareholder) owns the copyright as the recipient of assets from FM. Ware Industries, Inc., when it dissolved in 2004. This would imply that the suit must be dismissed under Fed. R. Civ. P. 17(a), because not filed in the name of the real party in interest. Defendants also maintained that no infringement was ongoing or in prospect. The district judge concluded that material disputes prevented summary judgment on those questions and set the case for trial. 2008 U.S. Dist. LEXIS 20670 (N.D. Ill. Mar. 17, 2008). * * *

Trial never occurred. Local rules require the parties to cooperate to produce a pretrial order. Northern District of Illinois Local Rule 16.1 Appendix (“Standing Order Establishing Pretrial Procedure”) Instruction 6. The plaintiff’s lawyer is supposed to produce a draft, which serves as the basis of discussion and modification. Wayne D. Rhine, the principal counsel for FM Industries, did not complete this task on time. When he finally produced a draft, it was egregiously non-compliant. (The problem here, and in much else that went wrong with the case, is that Rhine allowed Friedman, a non-lawyer, to draft many of the papers that were filed over Rhine’s name. Rhine insists that he did not simply rent out his law license but instead reviewed and edited the documents before filing them. We accept that representation, but it also means that Rhine, who resumed legal practice in 2006 after 24 years as a judge of the Circuit Court of Cook County, Illinois, bears the responsibility for amateurish and absurd filings.)

Posted by Marcia Oddi on July 22, 2010 11:37 AM
Posted to Ind. (7th Cir.) Decisions