Britware Consulting, Inc. v. Con-Tech Manufacturing, Inc.

Background

Britware alleged that it developed proprietary weight-distribution software and owned a registered copyright in the software. In 2008, Britware installed the software on one Con-Tech computer and provided the first copy for free in exchange for Con-Tech’s promise to pay for future upgrades and additional licenses. In 2016, Britware upgraded that copy, installed the software on a second Con-Tech computer, and was paid for its time but not for a software license. Britware later demanded that Con-Tech pay for the licenses or allow Britware to remove the software. Con-Tech did neither.

Britware asserted claims for copyright infringement and unjust enrichment. Con-Tech moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim for relief.

Copyright-Infringement Claim

The court held that Britware did not plausibly allege that Con-Tech made additional copies of the software. The complaint’s allegations were limited to Con-Tech’s retention of the two copies that Britware had installed.

The court also considered whether Britware had given Con-Tech licenses or had transferred ownership of those copies. It relied on the nature of the parties’ transactions, including Britware’s knowing allowance of Con-Tech’s continued use for almost ten years, the 2016 upgrade and installation, the absence of an agreement requiring return of the software, and the absence of programmed use restrictions or a trial period. The court concluded that these allegations led to only one plausible legal conclusion: Britware transferred ownership of the copies to Con-Tech. As a result, Con-Tech was authorized to use those copies, subject to the Copyright Act’s limits, and Britware did not plausibly allege infringement of its exclusive rights.

The court dismissed the copyright-infringement claim without prejudice.

Unjust-Enrichment Claim

The court concluded that Britware’s unjust-enrichment claim was preempted by the Copyright Act. Copyright preemption means that federal copyright law displaces a state-law claim when the claim concerns a copyright-covered work and seeks to enforce rights equivalent to copyright rights.

Britware’s claim rested solely on Con-Tech’s alleged use of the software without compensation. Because the claim was based on an alleged violation of rights protected by copyright, the court held that it was preempted. The court distinguished authority involving an implied-in-fact contract because Britware’s complaint did not include a breach-of-contract claim.

The court dismissed the unjust-enrichment claim without prejudice.

Disposition

The court granted Con-Tech’s motion to dismiss. It dismissed Britware’s complaint without prejudice and ordered judgment entered accordingly.