Fair Isaac Corporation v. Federal Insurance Company

Background

Fair Isaac Corporation (FICO) develops predictive-analytics and decision-management software, including the Blaze Advisor business-rules system. FICO and Chubb & Son entered into a software license and maintenance agreement in 2006. The amended agreement gave Chubb & Son a perpetual, enterprise-wide license to use Blaze Advisor.

After a 2016 corporate merger involving Federal Insurance Company, FICO notified Federal that it believed Federal had breached the agreement’s provision governing assignments or transfers. FICO later said it would terminate the agreement. FICO sued Federal and ACE American Insurance Company, alleging breach of contract in Count I and copyright infringement in Count II. The copyright claim alleged that Federal reproduced and distributed Blaze Advisor to third parties without authorization before termination of the license.

The court had previously allowed supplemental summary-judgment motions limited to Federal’s statute-of-limitations defense and the related predicate-act doctrine. A statute of limitations sets a deadline for bringing a claim. The predicate-act doctrine, as discussed in the opinion, can allow recovery for foreign copyright conduct when a defendant committed a qualifying domestic act of infringement that enabled the foreign conduct.

Contract claim

New York law governed the license agreement and generally provides a six-year limitations period for breach-of-contract claims. Federal conceded that FICO’s contract claim was not barred by the statute of limitations and did not oppose FICO’s motion on that issue.

The court therefore granted FICO’s supplemental motion for summary judgment as to Federal’s statute-of-limitations defense concerning Count I. This ruling addressed the limitations defense, not whether Federal ultimately breached the license agreement.

Copyright claim

The Copyright Act generally requires a civil infringement action to be filed within three years after the claim accrued. Each new act of reproduction or distribution can begin a separate limitations period. FICO filed this lawsuit on April 21, 2016, so alleged infringement before April 21, 2013, was outside the three-year period unless FICO could show that it discovered the infringement later.

The court concluded that FICO had effectively conceded that earlier alleged infringement was time-barred and had presented no evidence supporting a later discovery. The court therefore granted Federal’s supplemental motion for summary judgment as to the limitations defense for alleged copyright infringement occurring before April 21, 2013.

For alleged conduct after that date, FICO relied on copying and distribution of Blaze Advisor Version 7.1. FICO argued that Federal copied the software by uploading it to a server in North Carolina and that transmissions from that server to people in Canada and Europe supported liability for the foreign conduct.

The court assumed without deciding that the predicate-act doctrine applied. It nevertheless held that FICO had not shown the required domestic act of infringement during the limitations period. The evidence showed that the upload occurred on October 4, 2012, outside the limitations period. The license also authorized Federal to use Blaze Advisor for internal business purposes on an unlimited number of computers, so the upload to Federal’s own server was authorized under the agreement.

The court further rejected FICO’s argument that Federal’s alleged purpose of enabling unauthorized use transformed an otherwise authorized upload into infringement. It also held that the alleged later access, installation, and use by people in Canada and Europe did not establish a completed domestic infringement attributable to Federal. The court distinguished a case involving transmission of audiovisual works and public performance or display because this case involved software allegedly accessed and used outside the United States.

Because FICO presented no evidence of actionable domestic copyright infringement within the three-year limitations period, the court held that the copyright-infringement claim failed as a matter of law. The court granted defendants’ supplemental motion for summary judgment as to Count II.

Order and effect

The court ordered that FICO’s supplemental motion for summary judgment was granted in part and denied in part: it was granted as to Federal’s statute-of-limitations defense concerning the breach-of-contract claim and denied in all other respects. The court granted Federal and ACE American’s supplemental motion for summary judgment as to FICO’s copyright-infringement claim. The opinion did not resolve the underlying contract-breach question in this order.

Judge Wilhelmina M. Wright issued and signed the order.