Ross, Brovins & Oehmke, P.C., Doing Business as Lawmode v. Lexis Nexis Group, a Division of Reed Elsevier Group, Plc, and Owner of Matthew Bender and Company, Inc.

Citations: 463 F.3d 478; 80 U.S.P.Q. 2d (BNA) 1518; 2006 U.S. App. LEXIS 23457Docket: 05-1513

Court: Court of Appeals for the Sixth Circuit; September 15, 2006; Federal Appellate Court

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In a copyright dispute, LawMode, operated by Ross, Brovins. Oehmke, P.C., sued Lexis Nexis Group for copyright infringement and breach of contract after Lexis terminated their agreement and began marketing its own templates for Michigan legal forms. The U.S. Court of Appeals for the Sixth Circuit affirmed the dismissal of LawMode's copyright claims, finding that while LawMode held valid copyrights in the selection and organization of forms, the works were not substantially similar to Lexis's templates. Furthermore, the court concluded that the creativity involved in LawMode's templates was insufficient for copyright protection. However, the court reversed the dismissal of LawMode's breach-of-contract claim, stating that LawMode had adequately alleged a breach of contract. The agreement required LawMode to create and update templates using Lexis's software, which Lexis then published as part of its product. During the agreement from 1997 to 2002, Lexis paid LawMode $77,273 in royalties for sales of the product. The case primarily involves the automation of forms approved by the Michigan State Court Administrative Office, which are in the public domain, while LawMode did not claim infringement regarding its independently created forms.

Lexis terminated its contract with LawMode in February 2002, after which LawMode retained ownership of 'Content,' specifically HotDocs templates it created. In June 2003, LawMode registered a copyright for these templates. Following the termination, Lexis launched the Lexis-Nexis Automated SCAO Forms (the '2002 Lexis Product') in July 2002, which included 406 SCAO forms, 350 of which were also selected by LawMode. Lexis contends that its templates were created independently, while LawMode claims Lexis copied its templates, supported by an internal memo encouraging programmers to reference LawMode's Content. LawMode presented a comparison highlighting similarities between the two sets of templates.

LawMode filed a seven-count complaint against Lexis, alleging copyright infringement, breach of contract, and various business torts. After withdrawing some claims, LawMode maintained a copyright claim and a breach-of-contract claim, asserting Lexis infringed on its compilation copyright and misappropriated its Content post-termination.

Lexis sought summary judgment, arguing that the templates were not copyrightable and that it did not copy them. Additionally, Lexis claimed the contract dispute did not meet jurisdictional thresholds, was preempted by copyright law, and that the complaint failed to demonstrate a breach of contract. On December 9, 2004, the district court granted summary judgment to Lexis on the copyright claim, finding that while LawMode's compilation was copyrightable, Lexis did not copy it. However, the court denied summary judgment on the contract claim, ruling that it met jurisdictional requirements, was not preempted by copyright law, and supported LawMode's assertion of Lexis's breach by misappropriating its Content. Consequently, one contract claim proceeded past summary judgment.

Lexis filed a motion for reconsideration after the district court denied summary judgment on a contract claim, arguing the court failed to identify any contractual promise supporting a breach of contract finding. The district court denied the motion, stating that new legal arguments cannot be introduced at this stage, a decision Lexis did not appeal. Subsequently, Lexis reiterated its argument in a motion for judgment on the pleadings, where the district court, applying the same standard as for a motion to dismiss, found that the agreement lacked a promise against misappropriation of LawMode's templates, resulting in the dismissal of LawMode's remaining contract claim and the case.

LawMode's templates qualify as a copyright-protected compilation. However, despite viewing the facts favorably for LawMode, the court concluded that Lexis did not infringe copyright. The court stated that while LawMode's selection of forms is creatively protected, the similarities to Lexis's product were insufficient to establish copying. Two elements of copyright infringement were identified: valid copyright ownership and copying of expression. LawMode met the first criterion but failed on the second, as Lexis's work did not substantially resemble the protectable elements of LawMode's compilation.

The court noted that Lexis did not copy any protectable aspects of LawMode's compilation, emphasizing the differences between the two works. Lexis included a smaller percentage of the same forms (61% of LawMode's 576 forms) in its compilation, which demonstrated sufficient originality and creativity to establish that it had created a new work rather than copied LawMode's.

In Feist, the Supreme Court established that a copyright holder cannot prevent others from using the underlying facts in their works, provided that the new work does not replicate the same selection and arrangement of those facts. Subsequent interpretations emphasize that compilation copyright protection is limited and typically requires significant verbatim copying. For instance, in Key Pub'ns v. Chinatown Today, a 61% similarity was not deemed to constitute the same selection, and in Schoolhouse Inc. v. Anderson, a 74% overlap was similarly not substantial. In Eckes v. Card Prices Update, however, a 28% copy of listings was found infringing due to the nature of the specific items copied. The current case illustrates that Lexis did not copy any substantial part of LawMode’s work, as the two works are dissimilar enough that no reasonable person could argue for substantial similarity. Lexis added at least 35 unique forms and chose not to use forms present in LawMode’s compilation, indicating professional judgment in their selections. Furthermore, Lexis's arrangement of forms does not significantly resemble LawMode's, and the similarities noted are due to both parties referencing the public Michigan forms index. Many of LawMode’s classifications are not original, as they follow established public-domain conventions, thus lacking copyright protection. Lexis did not replicate any original or unique classifications from LawMode, establishing that there has been no copyright infringement.

The conclusion drawn aligns with the Second Circuit's ruling in Key Publications, which determined that two directories were not substantially similar, as consumers could easily distinguish between them. Similarly, a reasonable fact finder would conclude that the classification headings of LawMode and Lexis are not substantially similar. Consequently, the district court correctly granted summary judgment on LawMode's compilation-copyright claim due to insufficient evidence of copying of LawMode’s protectable expression.

Regarding LawMode's automation of forms, it lacks the originality required for copyright protection. LawMode contends that Lexis copied the appearance of dialog boxes used for data entry; however, LawMode cannot claim copyright in these appearances since they were based on the default settings of HotDocs, the template authoring tool, which does not meet the creativity threshold for copyright. 

The similarities between the dialog boxes of LawMode and Lexis—with both being rectangular with similar color schemes and icons—stem from their shared use of HotDocs. Despite LawMode's assertion that Lexis could have customized the appearance, the reliance on default settings is deemed too trivial to warrant originality under copyright law. LawMode's decision to use these settings reflects more of a copying of choices made by HotDocs rather than an independent creative effort, as per established copyright principles.

LawMode's use of HotDocs' default settings is deemed non-copyrightable as it merely replicates preselected options that do not reflect original creativity. The district court emphasized that the choice of default settings, being the most efficient, does not constitute an original work. Furthermore, LawMode’s programming choices regarding the interrelation of variables within its templates are also not copyrightable. These interrelations are dictated by the express terms of the underlying forms and do not convey any additional information beyond what is already specified. For example, a user’s selection of a court type deactivates irrelevant options, a design that follows the forms’ instructions rather than demonstrating creative expression. 

The case refers to the precedent set in Ross, Brovins. Oehmke, P.C. v. Lexis Nexis, which confirms that merely following the explicit terms of forms does not qualify for copyright protection. Additionally, LawMode's reliance on Bucklew v. Hawkins, Ash, Baptie, Co. to argue for copyrightability is misplaced, as that case also concluded that the interrelation of variables based on the forms’ requirements does not amount to creative expression. The Seventh Circuit ruled that the functionalities in Bucklew’s program, while similar to LawMode’s, were not copyrightable for the same reasons: the interrelations were dictated by the forms rather than being the result of creative choices.

LawMode cannot copyright its program's ability to allow a user to select only one court because this feature is dictated by the underlying form, which inherently permits only one selection. Previous cases that upheld copyright for interrelated variables differ significantly, as they involved forms that conveyed information not explicitly stated within the form's text. In contrast, LawMode's programming does not provide any new information beyond what the forms present. The argument that LawMode's automation is copyrightable fails since it merely reflects the existing terms of the forms without adding new insights.

Regarding contract claims, LawMode argues that Lexis violated a contractual promise not to sell its content after the agreement's termination. The court erred in dismissing this claim under Federal Rule of Civil Procedure 12(c), as LawMode can establish facts that support its case. Unlike motions for summary judgment, Rule 12(c) motions assume the truth of the allegations in the complaint. Lexis did not contest the claim of misappropriation during its initial summary judgment motion, which is critical to LawMode's position. The contract in question explicitly states that Lexis must cease marketing LawMode's content following termination, and LawMode alleges that Lexis continued to sell such content through its 2002 product. Lexis contends that the contract does not impose such restrictions or that it was not in breach since the 2002 work was independently created. The contract, as modified, clearly prohibits the continued sale of LawMode's content post-termination.

Lexis agreed not to sell the HotDocs templates created by LawMode even after the termination of their contract. LawMode's breach of contract claim should not have been dismissed under Rule 12(c) because it alleged that Lexis misappropriated its content, asserting that Lexis’s 2002 Product was not originally created by them but rather stolen from LawMode. The district court incorrectly concluded that the templates sold by Lexis after contract termination were not LawMode's content, despite recognizing that independently created templates do not constitute LawMode's content under the agreements. The court must assume LawMode's allegations are true for the purposes of Rule 12(c), indicating LawMode could prove its claim that Lexis sold its templates. 

Additionally, LawMode's challenges regarding the district court's decision to strike a reply brief and deny a computer demonstration were deemed meritless as there was no abuse of discretion. The district court's assessment of the case's needs based on existing evidence was reasonable, and LawMode faced no prejudice from these decisions. Consequently, the court affirmed the summary judgment on LawMode's copyright claims but reversed the dismissal of the contract claim, remanding the case for further proceedings. The summary also notes that LawMode's selection of forms is protected by copyright, reaffirming that a compilation can be copyrightable if it demonstrates creative selection.

The Key Publications court emphasized that the relevance of the copied material to the plaintiff's work is crucial for assessing substantial similarity, rather than its importance to the defendant's work. LawMode's collection of choices, both obvious and nonobvious, demonstrates the minimal creativity and originality necessary for copyright protection. Unlike the yellow pages in Feist, LawMode’s system showed sufficient creativity and professional judgment in categorizing forms, justifying copyright protection. The classification system resembles that in Key Publications, where a directory of businesses relevant to the Chinese community was deemed copyrightable due to the author's unique categorization. LawMode’s index, featuring unique categories such as 'concealed weapon license'—absent from the Michigan index—highlights its creative contribution. Additionally, Lexis provided a hypothetical illustrating that an agreement on ownership does not prevent one party from creating a similar work independently. If one party claims infringement based on a previous agreement, it constitutes a valid breach of contract claim.