Energy Intelligence Group, Inc. et al v. Kayne Anderson Capital Advisors, LP et al, No. 4:2014cv01903 - Document 136 (S.D. Tex. 2017)

Court Description: MEMORANDUM OPINION AND ORDER denying 101 MOTION for Summary Judgment Defendants' Motion for Partial Summary Judgment, granting in part and denying in part 105 Sealed Event, granting in part and denying in part 129 MOTION for Protective Order (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

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Energy Intelligence Group, Inc. et al v. Kayne Anderson Capital Advisors, LP et al Doc. 136 United States District Court Southern District of Texas ENTERED January 24, 2017 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ENERGY INTELLIGENCE GROUP, INC. and ENERGY INTELLIGENCE GROUP (UK) LIMITED, § § § § § § § § § § § § § Plaintiffs, v. KAYNE ANDERSON CAPITAL ADVISORS, LP and KA FUND ADVISORS, LLC, Defendants. David J. Bradley, Clerk CIVIL ACTION NO. H-14-1903 MEMORANDUM OPINION AND ORDER Energy Intelligence Group, Inc. and Energy Intelligence Group (UK) Limited (together, "Plaintiffs" or "EIG") have sued Kayne Anderson Capital Advisors, LP and KA Fund Advisors, LLC (together, "Defendants" before the Judgment or "Kayne") court are for copyright Defendants' (Docket Entry No. 101), infringement. Motion for Plaintiffs' Partial Pending Summary Motion for Partial Summary Judgment on Defendants' Affirmative Defenses ("Plaintiffs' MPSJ") (Docket Entry No. 105) , and Plaintiffs' Protective Order (Docket Entry No. 129). below, denied, Defendants' Plaintiffs' Motion for a For the reasons stated Motion for Partial Summary Judgment will be Motion for Partial Summary Judgment on Defendants' Affirmative Defenses will be granted in part and denied in part, and Plaintiffs' Motion for a Protective Order will be granted in part and denied in part. I. Background A detailed history of the parties' business relationship as it relates to the present litigation is provided in a prior opinion. 1 In short, EIG alleges that Kayne copied and distributed Oil Daily, a subscription newsletter published by EIG, in violation of their subscription agreements. Since at least 2004 Kayne purchased a single annual subscription to Oil Daily for an employee, Jim Baker. That subscription was routinely forwarded to Kayne employees and others who were not subscribers. In 2007 an EIG employee received a forwarded email chain from Diana Lerma, Baker's assistant, indicating that someone named "Ron" was unable to access Baker's subscription. account representative with EIG, Peter Buttrick, an then contacted Lerma to discuss purchasing additional subscriptions and alluded to the severity of copyright infringement. that In a subsequent email Lerma advised Baker Buttrick mentioned charging infringement. subscribers retroactively for In the last recorded correspondence resulting from that exchange, Buttrick attempted to set up a meeting with Baker. Around that time Baker switched to receiving Oil Daily solely via email rather than via web-access. 1 Memorandum Opinion and Order, Docket Entry No. 68. -2- In 2013 Kayne entered a multi-user license agreement with EIG, paying for five Kayne employees to receive Oil Daily. that until at least May 21, 2014, EIG alleges Kayne continued to distribute unauthorized copies of Oil Daily. EIG filed this action against Kayne for copyright infringement on July 8, 2014. 2 Kayne filed a motion for partial summary judgment based on the three-year statute of limitations on copyright actions, 3 which the court denied. 4 Kayne renews that motion on the basis of new evidence and also seeks summary judgment allegedly infringed. on the issue of the number of works EIG seeks summary judgment on a number of Kayne's affirmative defenses and a protective order. Each of the motions is considered in turn below. II. Standard of Review Summary judgment is appropriate if the movant establishes that there is no genuine dispute about any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). Disputes about material facts are genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, (1986). The moving party is entitled to judgment as a matter of 2 Inc., Complaint for Copyright Infringement Entry No. 1. 106 S. Ct. 2505, ("Complaint") , 2510 Docket 3 Defendants' Motion for Partial Summary Judgment, Docket Entry No. 39, p. 2. 4 Memorandum Opinion and Order, Docket Entry No. 68, p. 25. -3- law if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2552 (1986) . A party moving for summary judgment "must 'demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant' s case." 37 F.3d 1069, 1075 (5th Cir. 1994) Celotex, 106 S. Ct. at 2553). Little v. Liquid Air Corp. , (en bane) (per curiam) (quoting "If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." this burden, Id. If, however, the moving party meets "the nonmovant must go beyond the pleadings" and produce evidence of specific facts demonstrating there is a genuine issue for trial. Id. nonmovant do "must (citing Celotex, 106 S. Ct. at 2553-54). more than simply show that metaphysical doubt as to the material facts." there is The some Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986). "In order to avoid summary judgment, the nonmovant must identify specific facts within the record that demonstrate the existence of a genuine issue of material fact." Mining Company, party must also L.P., 565 F.3d 268, articulate the 273 precise CO, Inc. v. TXU (5th Cir. manner 2009). which the submitted or identified evidence supports his or her claim." Id. (internal quotation marks and citation omitted). -4- in "The "When evidence exists in the summary judgment record but the nonmovant fails even to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court." Id. (same). In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, credibility determinations or weigh Sanderson Plumbing Products, Inc., the and it may not make evidence." Reeves 120 S. Ct. 2097, 2110 v. (2000). The court resolves factual controversies in favor of the nonmovant, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075. III. Defendants' Motion for Summary Judgment Kayne moves for summary judgment on the issues of the number of works infringed and limitations. For the reasons stated below, summary judgment will be denied. A. Number of Works Kayne argues that (approximately 250 issues) Copyright Act . a 5 annual subscription compilation to Oil Daily constitutes a single "work" under the The collected issues, considered a compilation. of an Kayne argues, should be Under the Copyright Act, "all the parts constitute 5 one work." 17 u.s.c. Plaintiffs' Memorandum in Opposition to Defendants' Motion for Partial Summary Judgment, Docket Entry No. 120, p. 5. -5- § 504 (c) (1). In support of its argument Kayne cites Cullum v. Diamond A Hunting, Inc., 484 F. App'x 1000 (5th Cir. 2012) (per curiam), and Bryant v. Media Right Productions, Inc., 603 F.3d 135 (2d Cir. 2010). In Cullum the Fifth Circuit upheld the district court's judgment summary comprised a compilation. Cullum ( 1) ruling that a series 484 F. App'x at 1002. registered the photographs at copyright registration number, of photographs The plaintiff in issue under a single (2) marked the disc that he filed with the United States Copyright Office as "Set Number 1," and ( 3) referred to "collection." the photographs Id. in the record on appeal as a In Bryant the Second Circuit held that "[a]n album is a collection of preexisting materials -- songs -- that are selected and arranged by the author in a way that results in an original work of authorship -- the album." 603 F.3d at 140-41. The court in Bryant also contrasted the issuance of an album with the episodic release of a season of a television show, which the Second Circuit had previously held was not a compilation. 141 (citing Twin Peaks Productions, Inc. v. Id. at Publications International, Ltd., 996 F.2d 1366, 1381 (2d Cir. 1993)). EIG argues that a daily newspaper purchased by an annual subscription is not a "compilation." EIG states that Oil Daily issues are registered as separate works in batches of approximately twenty issues under registration of newsletters. 6 6 regulations federal See 37 C.F.R. Id. at 8. -6- permitting § group 202.3 (b) (9); see also 17 U.S.C. § 408(c) (2) (authorizing "regulations specifically permitting a single registration for a group of works by the same individual author") . EIG also states that it never created, published, marketed, sold, or distributed a year-end compilation of preexisting issues, a fact that Kayne does not dispute. 7 The court is not persuaded by Kayne's arguments. of a work involves creation, not mere accumulation. Authorship The decision to sell works by subscription does not combine several works into one any more than allowing payment in installments divides one work into several. A compilation is, as the court in Bryant held, the product of selecting and arranging preexisting materials to create an original work; it is not the mere byproduct of choosing a sales or distribution model. An issue of Oil Daily is created by selecting and arranging existing articles into a single work that is then distributed to subscribers. 8 annual subscription, by contrast, The works that comprise an are merely a byproduct of the repeated creation of individual issues. Moreover, EIG' s annual unlike the photographer's subscriptions registration number. are Nor are not collection registered they filed on a similar medium or marked as a distinct set. in Cullum, under a single single disc or Nor has EIG referred to an annual subscription as anything analogous to a collection or 7 Id. at 9-10. -7- album. Kayne has not shown that EIG's annual subscriptions are the product of selection and arrangement resulting in an original work of authorship. Kayne is not entitled to summary judgment on this issue. 9 B. Statute of Limitations Kayne seeks limitations. partial summary judgment on the issue of Although the court previously denied summary judgment on this issue, Kayne moves the court to reconsider on the basis of new evidence. 10 Because the court has already given careful consideration to the evidence presented in Kayne's previous motion for summary judgment, evidence to the court will focus on the newly offered determine whether it satisfies Kayne's independently or sheds new light on existing evidence. burden Kayne has 9 The parties dispute whether the individual issues have "independent economic value." Because the court determines that the issues are distinct works for other reasons, it does not reach that argument. 10 EIG objects to the characterization of recent depositions as "new evidence" because Kayne was aware of the potential witnesses prior to the previous motion and asks that the court deny the motion outright. " [B] ecause the denial of a motion for summary judgment is an interlocutory order, the court is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the law." Smith v. H. E. Butt Grocery Co., 992 F.2d 324 (5th Cir. 1993) (citing Lavespere v. Niagara Mach. & Tool Works, Inc., 910 F.2d 167, 184-85 (5th Cir. 1990); Bon Air Hotel v. Time, Inc., 426 F.2d 858, 862 (5th Cir. 1970); Fed. R. Civ. P. 54(b)). Regardless of the proper characterization of the evidence now before the court, the court will consider the motion in the interests of a "just, speedy, and inexpensive determination" of this action. Fed. R. Civ. P. 1. -8- offered no new infringement. evidence that EIG had actual knowledge of Kayne's new evidence addresses the issue of whether EIG had notice of facts which, in the exercise of due diligence, would have led to actual knowledge. F.2d 600, 606 {5th Cir. 1988) See Jensen v. Snellings, 841 {discussing when limitations periods commence under federal law) . Since filing the prior motion for partial summary judgment, Kayne has conducted depositions of several people employed by EIG at the time of the 2007 email from Lerma and subsequent exchange, including Thomas Wallin, Mark Hoff, and Peter Buttrick. Kayne alleges that Wallin's declaration 11 prompted the depositions on which Kayne now relies. Specifically, Kayne refers to the follow- ing assertion in Wallin's Declaration: In 2007, account representatives had every incentive to pursue the issue where a customer discloses that unauthorized copying of EIG's publications is occurring, as any potential exposure to liability for unauthorized copying creates leverage for EIG's sales staff to sell a multi-copy license to the subscriber, which in turn results in higher commissions for them. 12 Wallin's statement representatives, incentivized in led and cases Kayne to inquire specifically like Kayne's. into Buttrick, Kayne whether were argues account in that fact the deposition testimony shows that Buttrick lacked incentive and, as a result, failed to diligently investigate. 11 Declaration of Thomas Evans Wallin {"Wallin Declaration"), attached to Plaintiffs' Memorandum in Opposition to Defendants' Motion for Partial Summary Judgment, Docket Entry No. 50-3. 12 Id. ~ 16. -9- Kayne cites the following exchanges from Buttrick's deposition: Q. So let's say you caught someone with their hand in the cookie jar - A. Uh-hum. Q. -- and they were -- let's say they're sharing with five people. A. Uh-huh. Q. You followed up with them and had the talk - A. Uh-huh. Q. where you said you didn't have any trouble getting aggressive with people and letting them know that they should buy the additional subscriptions - A. Uh-huh. Q. -- and they said, No thank you. A. Uh-huh. Q. And I said, what was the next step? A. So if -- if it was five subscriptions, I probably wouldn't do anything; because to your earlier point, the cost benefit of chasing down an additional four subscriptions for me, I'd probably move on. If it was a hundred, then I would not let that go. Q. And that's because of your bonus? A. Yeah. And I might as well spend more of my time trying to chase down either new business or a larger deal. Q. So safe to say you were more diligent with larger customers than smaller customers? A. Yes. -10- Q. Is this single user the kind of account that you said you wouldn't press very hard because it wasn't worth it from a commission standpoint? A. Yes. 13 Kayne argues that these exchanges prove that EIG did not exercise reasonable diligence to discover the alleged "Generally, the reasonableness of plaintiffs' infringement. 14 actions, including the reasonableness of inquiring or failing to inquire, is a fact question for the jury." WL 459770, at *8 Dodson v. Hillcrest Securities Corp., 1996 (5th Cir. 1996) (citing Corwin v. Marney, Orton Investments, 843 F.2d 194, 198 (5th Cir. 1988) (discussing federal discovery rule)) . The hypothetical scenario presented to Buttrick does the not resolve reasonable diligence infringement. factual in his There is no question of whether he exercised investigation of dispute that Kayne's Buttrick suspected initiated a dialogue with Lerma about potential infringement, only as to the content of the exchange and what happened afterwards. Assuming arguendo that the deposition testimony showed that EIG was less diligent when investigating smaller cases, summary judgment would still not be appropriate. not relative, reasonableness is the standard. infringement Objective, The evidence before 13 Buttrick Deposition Transcript, Exhibit K to Defendants' Brief in Support of Their Motion for Partial Summary Judgment ("Defendants' Brief"), Docket Entry No. 103-12, pp. 40:15-41:18, 74:10-13. 14 Defendants' Brief, Docket Entry No. 103, pp. 18-19. -11- the court would permit a reasonable fact-finder to infer that Buttrick exercised due diligence in light of the facts known to him at the time, and the court must draw such inferences in favor of the non-movant. 15 IV. Summary judgment will be denied on this issue. Plaintiffs' Motion for Summary Judgment i I EIG moves affirmative for summary defenses . 16 For judgment the on reasons several of Kayne's stated below, summary I I judgment will be granted as to all defenses except for failure to mitigate. I I A. Equitable Estoppel Kayne asserts the affirmative defense of equitable estoppel. EIG argues that Kayne has shown no sufficient evidence on any of I I i ! the elements of equitable estoppel. Kayne responds that Buttrick's admonition to Lerma that other subscribers had been required to pay for retroactive subscriptions as a result of infringement estops EIG from claiming any additional damages. i i I I I I I I I I 15 The parties also dispute whether EIG had the right to audit Kayne and whether Kayne fraudulently concealed their infringement. Because the fact issues identified above are sufficient to preclude summary judgment, the court will not address these arguments. 16 A threshold issue in this case is what body of law should govern equitable defenses. See generally John T. Cross, The Erie Doctrine in Equity, 60 La. L. Rev. 173 (1999). EIG cites to Texas law. Kayne has not argued for the application of any other law. The court will apply Texas law at this stage absent any objection or substantive briefing by the parties. See Sprint Solutions, Inc. v. Precise Wireless International Inc., Civil Action No. H-15-0032, 2015 WL 2359519, at *3 (S.D. Tex. May 15, 2015). I I I I I I ' ~ ~ ~ ~ ~ ~ i " H -12- t [ ~ g I In order to establish the defense of equitable estoppel, copyright defendant must prove that: facts of the defendant's intended that its (1) the plaintiff knew the infringing conduct; conduct be acted on (2) or so the plaintiff acted that defendant had a right to believe that it was so intended; defendant was ignorant of the true facts; and relied on the plaintiff's conduct to its injury. Inc., 344 F.3d 446, Nimmer & 453 David Nimmer, (5th Cir. 2003) a (4) the (3) the the defendant Carson v. Dynegy, (citing 4 Melville B. Nimmer on Copyright § collecting cases applying this four-part test) . 13. 07 ( 2002) and Analysis "focuses on what the defendant has been led to reasonably believe from the plaintiff's conduct." A.C. Aukerman Co. v. R.L. Chaides Construction Co., 960 F.2d 1020, 1034 (Fed. Cir. 1992). Estoppel in patentee the analogous patent context requires that the communicate "that the accused infringer will not be disturbed by the plaintiff patentee in the activities in which the former is currently engaged." entirely, estoppel sparingly." Id. at 1042. is Because it typically bars suit "a drastic Keane Dealer Services, remedy and must Inc. v. Harts, be utilized 968 F. Supp. 944, 948 (S.D.N.Y. 1997). Kayne argues that EIG's warning about what had happened to other infringing subscribers indicates that EIG knew of Kayne's alleged infringement. Kayne then alleges that EIG intended for Kayne to act in response to the warning by purchasing additional subscriptions. Kayne alleges that it was ignorant of the fact that -13- EIG intended to pursue relief beyond retroactive subscription fees. Finally, Kayne allegedly relied upon EIG's representation to continue in its course of conduct to its detriment. In sum, Kayne argues that it continued infringing because EIG led them to believe that it would not pursue damages retroactive subscription fees for prior infringement. beyond Kayne would have the court hold that Buttrick's passing reference to one way of resolving infringement is sufficient to show that EIG effectively abandoned its right to statutory damages or other relief. Kayne cites no cases holding that such conduct would support the drastic remedy of equitable estoppel. Moreover, even assuming that Buttrick's warning was misleading, Kayne offers no evidence that it acted in reliance on the warning, reasonably or otherwise. Summary judgment will be granted as to this defense. B. Implied License Kayne asserts the affirmative defense of Although an exclusive license must be nonexclusive license may arise implied license. in writing, "' [w]hen the an implied, totality of the parties' conduct indicates an intent to grant such permission.'" Lulirama Ltd., 872, 879 Inc. v. Axcess Broadcast Services, Inc., 128 F.3d (5th Cir. 1997) (quoting 3 Melville B. Nimmer, Nimmer on Copyright§ 10.03[A] omitted)). Nimmer & David (1997), at 10-41 (footnotes EIG argues that Kayne has offered no evidence showing that EIG intended to grant an implied license. -14- EIG further argues that the existence of an express contract precludes the formation of an implied contract. Kayne agreement argues that the existence of an implied license "is not in dispute," 17 citing the following deposition testimony from Wallin: Q: Paragraph 18 of the declaration, you reference "EIG's long-standing policy that access by assistants for the purpose of sending a publication to their supervisor is not an unauthorized use, provided that their supervisor is a subscriber." Can you tell me where that policy is recorded? A: I don't believe it is recorded. Q: So would you then? A: Yes. I would say it's an unwritten policy, because I don't know that it's recorded. Q: And how is subscribers? A: I don't think it's communicated to the subscribers, per se. Q: Continuing to read that sentence, it says, "Except as otherwise noted in Section l(c), no content from EIG services may be downloaded, transmitted, broadcast, transferred, assigned, reproduced, or in any other way used or disseminated in any form to any person not specifically identified herein as an" -- excuse me, "as an authorized user without the explicit written consent of Energy Intelligence in each instance." say that that it's policy an unwritten policy communicated to your Did I read that correctly? 17 Defendants' Response to Plaintiffs' Motion for Partial Summary Judgment on Defendants' Affirmative Defenses, Docket Entry No. 118, p. 15. -15- A: I think you did. Q: Is that a statement of subscribers? A: I think that's correct. Q: But that's not a true statement, correct? A: In what sense? Q: Well, earlier you testified about an unwritten policy that allows someone, other than the authorized user, to both download and do other things with the publication. A: Yeah. agent, user. Q: And where does it say that in this agreement that an authorized agent can take - A: I don't think it says it. It doesn't say it. Q: So but this agreement says that nobody can do those things without explicit written consent - A: Right. Q: How is a subscriber supposed to know when it is authorized versus when it's unauthorized to take these actions regarding Oil Daily? A: I think this agreement is stipulates authorized and what's not authorized. Q: But it's in contradiction to the unwritten informal agreement - A: Yeah. Q: that allows certain people that are not authorized users to download and use the Oil Daily? to you, is that a fairly clear the authority granted to your That would be someone who's acting as an assistant, or whatever to the authorized -16- what's Right, right. 18 A: Wallin's testimony merely articulates the common-sense reality of ordinary business practices. such routine tasks as Assistants are often employed for retrieving subscriptions. If Baker's assistant logged in to EIG's website using his credentials for the sole purpose of retrieving his subscription for his use under the terms of the subscription license, no reasonable juror could find that activity infringing, and therefore no license was necessary. Assuming arguendo that the policy could give rise to a nonexclusive license, there is no indication that Kayne's conduct was based upon the supposed existence of such an implied license or that EIG' s policy was communicated to Kayne in any way. "[A] nonexclusive implied license need not be evidenced by a writing" and instead Dynegy, "may be implied 344 F.3d at 451 n.S from conduct or (citing Lulirama, granted orally." 128 F.3d at 879). But there must be some conduct or expression from which a license could be implied. Because Kayne offers no evidence conduct, the defense fails as a matter of law. of such Summary judgment will be granted as to this defense. C. Failure to Mitigate Kayne asserts affirmative defense. EIG's failure to mitigate damages as an The failure to mitigate is an affirmative 18 Wallin Deposition Transcript, Exhibit G to Defendants' Response, Docket Entry No. 118-8, pp. 71:18-72:8, 88:13, 89:23, 91:1-13. -17- defense to infringement. See Interplan Architects, Thomas, Inc., *47-*48 (S.D. Tex. Oct. 27, 2010) that Kayne Civil Action No. offers "no 4:08-3181, Inc. v. C.L. WL 4366990, 2010 (collecting cases) evidence as to when [EIG] at EIG argues should have 'mitigated' damages, what actions should have been taken, how such actions might have mitigated damages or the amount by which [EIG's] damages would have been mitigated." 19 Although Kayne has not proven that EIG knew of the alleged infringement as a matter of law for limitations purposes, Kayne faces a significantly lessened burden as a non-movant under the summary judgment standard. inferences in Kayne's The court must draw all reasonable favor as the non-movant. Because a reasonable fact-finder could infer EIG's actual or constructive knowledge from the available evidence and that the subsequent alleged infringement could have been avoided, Kayne's mitigation defense survives summary judgment. D. Unclean Hands/"Entrapment" Kayne asserts the defense of "unclean hands" and or "entrapment," arguing that "[EIG], by design, set a trap for Kayne in an attempt to augment their purported damages. " 20 defense is recognized only rarely, when the "[S]uch a plaintiff's transgression is of serious proportions and relates directly to the 19 Plaintiffs' MPSJ, Docket Entry No. 105, p. 23. 20 Defendants' Response, Docket Entry No. 118, p. 18. -18- 4 Melville B. Nimmer & subject matter of the infringement action." David Nimmer, Nimmer on Copyright§ 13.09[B] Ed.). (Matthew Bender, Rev. "The maxim of unclean hands is not applied where plaintiff's misconduct is not directly related to the merits of the controversy between the parties," but rather where plaintiff's wrongful acts "in some measure affect the equitable relations between the parties in respect of something brought before the court for adjudication." Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852, 863 (5th Cir. 1979) (internal quotation marks omitted) (quoting Keystone Driller Co. v. General Excavator Co., 54 S. Ct. 146, 148 (1933). Kayne does not argue that its infringement was innocent or that it was enticed into infringing. Instead, it argues that EIG strategically delayed litigation in order to augment damages. 21 Kayne cites no examples, and the court can find none, of strategic delay providing the basis for an unclean hands defense. Whatever increased damages may result from EIG' s alleged litigation strategy are adequately addressed by other defenses, of limitations and failure to mitigate. including the statute The court sees neither need nor basis in the law to limit EIG's damages in this case on the basis of unclean hands. Summary judgment will be granted for EIG as to this defense. E. Comparative Fault Kayne argues that "[a] ny injury suffered by [EIG] was a result of [EIG's] own conduct and/or failure to comply with the terms of 21 Id. at 18-19. -19- any relevant and applicable contract(s) or law(s) II 22 Kayne offers no factual basis for this defense, and does not respond to EIG's arguments. EIG responsibility" characterizes or the "comparative fault" contrary characterization by Kayne, defense is not applicable defense to a "comparative defense. 23 Absent the court concurs. copyright Interplan, 2010 WL 4366990, at *48. as any But that infringement claims. Moreover, however the defense is characterized, summary judgment will be granted for EIG because there is no summary judgment evidence before the court to raise a genuine issue of material fact as to this defense. V. Plaintiffs' Motion for A Protective Order EIG moves for a protective Rule 30(b) (6) deposition notice. order in response to Kayne's EIG objects to several of Kayne's proposed topics. A. Topic No. 1 Kayne seeks testimony relating to the details of settlement agreements from prior litigation ("Topic No. 1") . EIG asks the court to strike the topic as irrelevant and not proportional to the needs of the case. 24 District courts routinely exclude settlement 22 Defendants' Answer to Second Amended Complaint, Docket Entry No. 91, p. 10 ~ 2. 23 24 Plaintiffs' MPSJ, Docket Entry No. 105, p. 27. Plaintiffs' No. 129, pp. 8-9. Motion for a Protective -20- Order, Docket Entry licenses when their probative value is substantially outweighed by the dangers of "unfair prejudice, confusing the issues, misleading the jury, undue delay, cumulative evidence." Ltd. v. have, time, or needlessly presenting Fed. R. Civ. P. 403; see Fenner Investments, Hewlett-Packard WL 1727916, at *2 Courts wasting Co., Civil Action (E.D. Tex. April 28, however, No. 2010) 2010 (collecting cases). relied on settlement provide the most reliable licenses available. 6:08-273, licenses when they, Inc. v. Lansa, Inc., 594 F. 3d 860, 872 (Fed. Cir. 2010) (observing that a settlement the license was the most reliable on record while acknowledging the distorting effect of litigation) . Kayne argues that testimony on Topic No. 1 is needed to calculate damages on the basis of a hypothetical license fee. 25 The court sees no such need given the availability of actual license fees from previous dealings between the parties and comparable licenses that did not arise from litigation. 26 As EIG notes, license fees arising in settlement are the result of a compromise between parties faced with, or in the midst of, costly litigation. 27 25 Defendants' Response to Plaintiffs' Motion for a Protective Order ("Defendants' Response-Protective Order"), Docket Entry No. 131, pp. 4-9. "Moreover, [EIG has] produced a substantial amount of information concerning [EIG' s] licensing practices during the period of alleged infringement, including pricing, discounts and all licensing options for [Oil Daily]. (see, e.g., Abbott Decl., Ex. C - H.)" Plaintiffs' Reply in Support of Their Motion for a Protective Order ("Plaintiffs' Reply in Support"), Docket Entry No. 134, p. 9. 26 27 Id. at 10-11. -21- Courts have recognized the limited value of such agreements when determining what fee the parties would have negotiated in the ordinary course of business and only resort to such evidence when settlements provide the most reliable licenses. See, e.g., LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 77 (Fed. Cir. 2012) ("license environment of fees patent reasonable royalty"). that are litigation are tainted by unsuitable the to coercive prove a EIG has published subscription fees and has negotiated licenses and discounts from which Kayne can calculate a hypothetical license fee for its proposed damages model. Because the court concludes that the prior settlements are not the most reliable licenses available in this case and that any probative value therein is substantially outweighed by the balancing concerns identified in Rule 403, Topic No. 1. the court will grant EIG's motion as to Kayne will not be permitted to seek evidence on the details of prior settlements arising out of litigation including the publications infringed and the duration of infringement. B. Topic No. 12 Kayne seeks testimony on" [EIG's] decisions to take action, or not take action, in response to any suspected infringers of its publications." 28 EIG objects to this topic but concedes that "if questions remain about [EIG's] actual policies and practices regarding copyright enforcement, and the court limits Topic No. 12 28 Notice cited in Plaintiffs' Motion for a Protective Order, Docket Entry No. 129, p. 11. -22- to that subject, [EIG] will designate a corporate witness to testify as to [EIG's] actual policies and practices for enforcing [its] copyrights." 29 EIG's concession is reasonable. Because the court recognizes that testimony on this topic may be relevant to Kayne's mitigation defense, Kayne may inquire into EIG's actual policies and practices for enforcing their copyrights. But the court will not extend the current deadlines to allow for additional depositions or further discovery. date as April soon as 14, The court intends to set a trial possible after docket 2017. The parties are call, advised to which is set prioritize for their schedules in late April and May accordingly. C. Topic Nos. 14 & 15 Kayne seeks testimony Mr. Mark Wellman and Mr. regarding "[t]he compensation of John Hitchcock and any other personnel that are involved in enforcing [EIG's] copyrights" and "[d]etails regarding the expenses [EIG] (Topic No. 14) incur[s] to run its business including without limitation employee and executive and owner compensation" (Topic No. 15). Kayne states that the parties have come to agreement on these topics. 30 an agreement. 31 But EIG denies reaching Kayne's evidence of "agreement" consists of emails I 29 Plaintiffs' Reply in Support, Docket Entry No. 134, p. 14. 30 Defendants' Response-Protective Order, Docket Entry No. 131, 31 I Plaintiffs' Reply in Support, Docket Entry No. 134, p. 15 & p. 3. I < n.S. -23- ' I I from EIG acknowledging Kayne's offer to "limit the scope of their examination" on these topics to questions on documents that have already been produced and EIG's request for Kayne to identify the documents by Bates number. 32 EIG alleges that Kayne never followed through by amending its Notice of Deposition or identifying the documents. 33 Because these topics as presented are neither relevant nor proportional to the needs of the case, Kayne will not be permitted to inquire into them. D. Topic No. 17 Kayne seeks testimony as to "[t] he amount of statutory damages [EIG] demand[s] for all alleged infringements in this case, and if [EIG] refuse[s] to make a specific demand then an amount that [EIG] believe[s] is a fair amount and the facts to support any amount or demand. " 34 The court agrees with EIG that this impermissible request for a settlement demand. amounts to an Kayne will not be permitted to seek testimony on this topic. VI. Conclusions and Order For the reasons discussed above, the court concludes that each issue of Oil Daily constitutes a single work and that annual 32 Emails from Stephen Ankrom, Exhibits A & B to Docket Entry No. 131. 33 Plaintiffs' Reply in Support, Docket Entry No. 134, p. 15 n.8. 34 Rule 30 (b) (6) notice cited in Plaintiffs' Protective Order, Docket Entry No. 129, p. 14. -24- Motion for a subscriptions to a newsletter are not compilations under copyright law. The court further concludes that genuine issues of material fact remain as to when the statute of limitations accrued for EIG's copyright infringement claims arising more than three years before EIG filed this action. Accordingly, Defendants' Motion for Partial Summary Judgment (Docket Entry No. 101) is DENIED. The court concludes that summary judgment is warranted on the defenses of equitable estoppel, implied license, unclean hands, and comparative fault. of the material damages. alleged fact Because the factual question of when EIG knew infringement remain as Accordingly, is unresolved, genuine issues of to whether EIG failed to mitigate its Plaintiffs' Motion for Partial Summary Judgment on Defendants' Affirmative Defenses (Docket Entry No. 105) is GRANTED in part and DENIED in part. Plaintiffs' No. 12 9) Motion for a Protective Order (Docket Entry is GRANTED in part and DENIED in part subject to the limitations stated above. SIGNED at Houston, Texas, on this 24th day of January, 2017. UNITED STATES DISTRICT JUDGE -25-

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