Copyright lawsuit barred by failed patent lawsuit. MEDIA RIGHTS TECH v. MICROSOFT

A copyright is a set of exclusive rights granted to the creator of a new work of expression when it is fixed in a tangible medium. Copyright protects works like photographs, sculpture, literature and software. Copyright law grants the owner of a copyright the exclusive right to reproduce, distribute, perform, display transmit or make derivative works based on the original. If someone other than the copyright owner attempts to exercise one of these exclusive rights that can be considered copyright infringement. A copyright owner can file a lawsuit to stop copyright infringement with an injunction and get monetary damages for copyright infringement which has occurred.

Copyright law does not exist in a vacuum. In the United States, like most other jurisdictions, several different sections of law must be complied with when filing a lawsuit. A plaintiff may have a meritorious cause of action and still fail to get a judgement in their favor, if the plaintiff does not properly plead their case. Lawsuits filed in the United States are subject to several standards, some are codified and some are based on court precedent.

An example of a legal doctrine that exists in court precedent is preclusion. The related doctrines of claim and issue preclusion, by precluding parties from contesting matters that they have had a full and fair opportunity to litigate, protect against ‘the expense and vexation attending multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibility of inconsistent decisions.’ Taylor v. Sturgell, 553 U.S. 880, 892 (2008). Claim preclusion bars a party in successive litigation from pursuing claims that were raised or could have been raised in a prior action. It is immaterial whether the claims asserted subsequent to the judgment were actually pursued in the action that led to the judgment; rather, the relevant inquiry is whether they could have been brought. Essentially, if the plaintiff brings a lawsuit which involves a defendant’s conduct and that case reaches a verdict, the plaintiff is barred from filing another lawsuit based on the same conduct.

A case which illustrates how claim preclusion can frustrate the efforts of a plaintiff is MEDIA RIGHTS TECHNOLOGIES, INC., v. MICROSOFT CORP, 17-16509 (9th Cir. 2019). The plaintiff in this case developed software which protects digital files from piracy. The defendant contacted the plaintiff and entered into a contract to license the software. At some point the relationship broke down and the defendant started selling their own version of the software. In 2013, the plaintiff brought a patent infringement suit against the defendant. The court in that case declared one of the patents at issue invalid, the plaintiff voluntarily dismissed that suit with prejudice. When a suit is dismissed with prejudice it means that the plaintiff cannot file the same lawsuit again.

The plaintiff then filed a lawsuit against the defendant, asserting claims for copyright infringement, violation of the Digital Millennium Copyright Act, and breach of contract. The district court found that the second lawsuit was barred based on claim preclusion. The plaintiff had the opportunity to raise the subject of copyright infringement in the first lawsuit and failed to do so. Because both cases involved the same conduct by the defendant, claim preclusion applied. The plaintiff appealed the decision to the Court of Appeals for the Ninth Circuit.

The Ninth Circuit affirmed in part. The Ninth Circuit held that claim preclusion barred the plaintiff from claiming copyright infringement based on the defendant’s actions before the 2013 lawsuit. However, the Ninth Circuit held that claim preclusion did not bar the plaintiff from asserting copyright infringement claims that accrued after the patent-infringement suit: namely, claims arising from the defendant’s sale of infringing software products which occurred after the patent infringement suit.

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