Conversion of Intangible Intellectual Property and Copyright Preemption

Meridian Project Systems, Inc. v. Hardin Construction Company, LLC (E.D. Cal. April 21, 2006)

(Note: This summary only addresses issues of copyright law present in this case. Other areas of law were presented and discussed in the opinion, but those aspects of the case have been omitted in the summary below for purposes of clarification.)

Defendants filed a motion to dismiss claiming that federal copyright law preempted plaintiff Meridian’s “claim for relief upon the conversion of ‘concepts, logic, processes, features, and functions of [a software program[ to the extent not covered by its copyrights.’” Merdian, however, argued “that those elements of expression within a copyrighted work that are not protected by copyright, do not fall within the ‘general subject matter of copyright’ and that therefore, a claim of conversion as to such elements is not preempted by the Act.”

Since the 9th Circuit has not ruled on this particular issue, the district court considered the holdings of other courts before making its ruling:

[The Seventh Circuit has maintained] that the purpose of copyright preemption is to prevent states from giving works of authorship protection beyond those protections granted by the Copyright Act. The court noted that one of the functions of copyright preemption is to prevent states from giving protection to “works of authorship that Congress has decided should be in the public domain.” The Seventh Circuit found that this goal can only be accomplished if the general subject matter of copyright is interpreted broadly. The court finds the Seventh Circuit's rationale compelling.

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Further, the Northern District of California recently addressed the issue in a similar case involving a claim of conversion of intellectual property in software. In Firoozye, the court found that those noncopyrightable elements that are part of a copyrighted computer software program fall within the general subject matter of copyright because the subject matter of copyright is broader than the scope of copyright protection. The court then went on to address whether the plaintiff's conversion claims were equivalent to the rights protected by copyright. The court noted that, although a claim for the conversion of tangible property adds the extra element of “wrongful possession” sufficient to bring a conversion claim outside the scope of copyright preemption, conversion claims with respect to intellectual property arise from the reproduction, copying and misuse of a work. The court held that such rights are “clearly equivalent to [those of] a copyright claim.”

Holding: “The court agrees with the analysis of the Northern District in Firoozye.” Consequently, the defendants motion to dismiss on Meridian’s claim for the conversion of intangible intellectual property was granted.