United States District Court, S.D. Indiana, Indianapolis Division
ORDER
JAMES
R. SWEENEY II JUDGE
Under
the Copyright Act, an employer is deemed to be the initial
author of a “work made for hire, ” and thereby
the initial owner of the copyright in the work. In order for
this Court to render a declaration of authorship or
ownership, an independent basis for federal jurisdiction
beyond the Declaratory Judgment Act must exist. The Court now
considers whether, when authorship and ownership in a
copyright under the work made for hire doctrine by virtue of
an employee acting within the scope of the employee's
employment is asserted, the determination of authorship
arises under the Copyright Act; for the reasons stated
herein, it does. Thus, this Court has original subject matter
jurisdiction over the Declaratory Judgment claim, and
supplemental jurisdiction over the Plaintiff's state law
claims and Defendant's motion must be denied.
This
matter is before the Court on Defendant Jonathan Reimer's
Motion for Judgment on the Pleadings pursuant to Federal Rule
of Civil Procedure 12(c). (ECF No. 33.) Plaintiff Round to
Fit, LLC (“R2Fit”) brought this action under the
Copyright Act of 1976, 17 U.S.C. § 101 et seq.
(the “Copyright Act”), the Indiana Uniform Trade
Secrets Act, Ind. Code § 24-2-3-1 et seq., the
Indiana Crime Victims Recovery Act, Ind. Code §
34-24-3-1, and Indiana common law. R2Fit seeks a declaratory
judgment from the Court confirming R2Fit's authorship and
ownership of the copyright at issue, as well as all other
appropriate relief for R2Fit's state law claims. This
Court has jurisdiction over R2Fit's federal-law claim
pursuant to 28 U.S.C. § 1338 and supplemental
jurisdiction over its state-law claims pursuant to 28 U.S.C.
§ 1367. After carefully reviewing the pleadings, motion,
response, and reply, the Court concludes that Reimer's
motion should be DENIED for the following
reasons.
I.
Legal Standard
Federal
Rule of Civil Procedure 12(c) permits a party to move for
judgment after the parties have filed a complaint and an
answer. A challenge to subject matter jurisdiction falls
within the ambit of Rule 12(b)(1). Rule 12(b)(1) and Rule
12(c) motions are analyzed under the same standard as a
motion to dismiss under Rule 12(b)(6). Silha v. ACT,
Inc., 807 F.3d 169, 173-74 (7th Cir. 2015).
Pisciotta v. Old Nat'l Bancorp., 499 F.3d 629,
633 (7th Cir. 2007); Frey v. Bank One, 91 F.3d 45,
46 (7th Cir. 1996). Under Rule 12(b)(6), a complaint must
allege facts that are “enough to raise a right to
relief above the speculative level.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007). Although
“detailed factual allegations” are not required,
mere “labels, ” “conclusions, ” or
“formulaic recitation[s] of the elements of a cause of
action” are insufficient. Id. In other words,
the complaint must include “enough facts to state a
claim to relief that is plausible on its face.”
Hecker v. Deere & Co., 556 F.3d 575, 580 (7th
Cir. 2009) (internal citation and quotation marks omitted).
To be facially plausible, the complaint must allow “the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556).
Like a
Rule 12(b)(6) motion, the court will grant a Rule 12(c)
motion only if “it appears beyond doubt that the
plaintiff cannot prove any facts that would support his claim
for relief.” N. Ind. Gun & Outdoor
Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th
Cir. 1998) (quoting Craigs, Inc. v. Gen. Elec. Capital
Corp., 12 F.3d 686, 688 (7th Cir. 1993)). The factual
allegations in the complaint are viewed in a light most
favorable to the non-moving party; however, the court is
“not obliged to ignore any facts set forth in the
complaint that undermine the plaintiff's claim or to
assign any weight to unsupported conclusions of law.”
Id. (quoting R.J.R. Serv., Inc. v. Aetna Cas.
& Sur. Co., 895 F.2d 279, 281 (7th Cir. 1989)).
“Copyright
. . . vests initially in the author or authors of [a]
work.” 17 U.S.C. § 201(a). “In the case of a
work made for hire, the employer . . . for whom the work was
prepared is considered the author for purposes of this title,
and, unless the parties have expressly agreed otherwise in a
written instrument signed by them, owns all of the rights
comprised in the copyright.” 17 U.S.C. § 201(b).
“[A] work for hire can arise through one of two
mutually exclusive means, one for employees and one for
independent contractors, and . . . the classification of a
particular hired party should be made with reference to
agency law.” Cmty. for Creative Non-Violence v.
Reid, 490 U.S. 730, 743 (1989).
II.
Background
The
following allegations are taken from R2Fit's Complaint
(ECF No. 1.) and are accepted as true for purposes of
deciding the pending motion, consistent with the applicable
standard of review. The Court also considers the documents
(ECF No. 1-1 - 1-6) attached to R2Fit's Complaint, which
are part of the Complaint for all purposes and may be
considered by the Court in ruling on the Motion without
converting it to one for summary judgment. Tierney v.
Vahle, 304 F.3d 734, 738 (7th Cir. 2002) (citing
Fed.R.Civ.P. 10 (c)).
R2Fit
manufactures and sells specialized exercise equipment that
utilizes data from proprietary software to provide the user
with a customized workout. (ECF No. 1 ¶ 6.) In October
2016, R2Fit hired Reimer to work as a personal trainer to
R2Fit clients. (ECF No. 1 ¶ 10.) A few months after
Reimer joined R2Fit, R2Fit contracted with a third-party
software development company, SpaceTech Corporation
(“SpaceTech”), to upgrade its proprietary
software. (ECF No. 1 ¶ 15.) Reimer grew interested in
helping R2Fit further develop and upgrade its software and
expressed his desire to assist R2Fit and SpaceTech with the
software upgrade project (the “project”). (ECF
No. 1 ¶¶ 15-19.) Accordingly, R2Fit expanded the
scope of Reimer's employment to allow Reimer to work on
the project and included Reimer's involvement in the
project in the “Software Development Contract”
R2Fit executed with SpaceTech. (ECF No. 1 ¶ 19; ECF No.
1 ¶ 24.)
R2Fit
promoted Reimer to Chief Technology Officer in January 2017,
despite Reimer's lack of formal training in software
development or any other related subject matter. (ECF No. 1
¶ 16; ECF No. 1 ¶ 26.) In around March 2017, R2Fit
became concerned that SpaceTech may be unable to finish the
project to R2Fit's satisfaction. (ECF No. 1 ¶ 29.)
But, Reimer informed R2Fit's Chief Executive Officer that
he could finish the project without SpaceTech, if R2Fit
provided him “additional training and resources.”
(ECF No. 1 ¶ 30.)
In
March 2017, R2Fit accepted Reimer's proposition and
terminated its business relationship with SpaceTech. (ECF No.
1 ¶ 31.) R2Fit terminated the services contract between
it and SpaceTech and made final payment to SpaceTech to
“obtain the source code for the software [SpaceTech]
had . . . developed up to that point.” (ECF No. 1
¶ 31.) Following R2Fit's final payment to SpaceTech,
SpaceTech sent the source code (“software code”)
to R2Fit's CEO, Ariel Huskins (“Huskins”),
who shared it with Reimer. (ECF No. 1 ¶ 32.) R2Fit then
provided Reimer the requested “paid mentor, [
]educational resources, and [ ]company computer” to
facilitate Reimer's continued work on the project. (ECF
No. 1 ¶ 34.) Reimer worked on the project from April
2017 to October 2017, writing and rewriting the software code
for R2Fit's upgraded software. (ECF No. 1 ¶ 35.)
Other R2Fit employees assisted Reimer in the writing and
rewriting of the code, which proceeded under Huskins'
direction. (ECF N. 1 ¶¶ 36-37.) R2Fit paid Reimer
for his work on the project. (ECF No. 1 ¶¶ 38-39.)
In
August 2017, Reimer “abruptly decided” that
“because of his efforts” he owned the software
code and demanded additional compensation to
“license” the software to R2Fit. (ECF No. 1
¶ 40.) R2Fit's CEO demanded that Reimer return the
software code to R2Fit, but Reimer refused, stating that he
would only return the software code if R2Fit provided him
additional compensation. (ECF No. 1 ¶ 41.) R2Fit refused
to provide Reimer additional compensation, and on November 7,
2017, R2Fit terminated Reimer's employment. (ECF No. 1
¶ 42.) In a letter confirming Reimer's termination,
R2Fit demanded that Reimer return to R2Fit “any and all
confidential information and company property in his
possession.” (ECF No. 1 ¶ 43.) Reimer refused to
return the software code, stating in his reply letter that
“R2Fit believes it owns software that I have written;
It does not.” (ECF No. 1-5.) Rather,
Reimer “alleged he wrote [the software] ‘on [his]
own time and using [his] personal computer.'” (ECF
No. 1 ¶ 44.) R2Fit then filed the present suit seeking a
declaratory judgment confirming R2Fit as the rightful
“author and copyright owner of the software/source code
under the 'works made for hire‘ doctrine of the
Copyright Act, 17 U.S.C § 101” and alleging
several state law violations related to Reimer's
possession of the software code.
III.
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