A Busy ERISA Week in the Ninth Circuit: Moyle v. Liberty Mutual and Rich v. Shrader
Last week, I spoke on a panel with, among others, Trucker Huss’ Joe Faucher, who discussed some aspects of Ninth Circuit ERISA jurisprudence with a mostly East Coast-centric audience. A week later, that circuit has turned out two of the more interesting and potentially significant appellate decisions in ERISA that any court has produced in awhile.
In the first one, Moyle v. Liberty Mutual Retirement Benefits Plan, the Ninth Circuit tackled an old chestnut in ERISA litigation, namely the argument that a plaintiff could not bring an action alleging both the wrongful denial of benefits and seeking equitable relief under ERISA as well. Many courts – and pretty much every defendant ever sued by a plaintiff making both claims – have taken the position over the years that Supreme Court precedent precludes bringing both claims, and that, if a plaintiff pled both claims, the equitable relief claim could and should be dismissed at the outset of the case. As a long-time commercial litigator who has litigated a range of cases from IP disputes to reinsurance cases to everything in-between, this always struck me as an odd proposition, because it ran contrary to the standard rule in the federal court system allowing a plaintiff to plead in the alternative, meaning that a plaintiff could allege multiple claims even if they were sufficiently inconsistent that, at the end of the day, the plaintiff could recover on only one of the claims. In Moyle, the Ninth Circuit, following the lead of an excellent analysis of the issue by the Eighth Circuit, found that, in light of the Supreme Court’s decision in Amara, a plaintiff could pursue denied benefits and equitable relief under ERISA in the same case. You can find what I hope is a cogent explanation of why, after Amara, it is clear that both such claims can be brought in the same action in this reply brief, which I recently filed in the First Circuit (the discussion begins at page 22 of the brief). The Ninth Circuit’s decision now reinforces the Eighth Circuit’s conclusion to this effect.
By the way, even aside from its significance to ERISA litigation, I took note of Moyle for a personal reason. In this profession of specialists – and I am one as well – people are often interested to find out that I have, over the years, maintained an active (sometimes more active, sometimes less active) intellectual property litigation practice, alongside my much larger ERISA practice. I have tried patent infringement cases, done more consumer product copyright infringement cases than I can count, and done a fair amount of software infringement litigation and counseling. It all goes back originally, though, to Golden Eagle Insurance Company, the once defunct California insurer whose employees are at the heart of the Moyle case. Through a client at Golden Eagle, I represented Golden Eagle’s California insureds in IP litigation from the Southern District of New York to Rhode Island and in Massachusetts (I don’t recall any of those cases going further north, and I know they didn’t go further south) starting in the 1990s, and my IP practice grew from there. Its funny to see these different sides of my practice come together in Moyle, with a major ERISA decision stemming from a client that was instrumental in building my IP practice.
The other case decided by the Ninth Circuit is less novel, but still important. In Rich v. Shrader, the Ninth Circuit held that a stock option program for officers was not subject to ERISA, because its intended purpose wasn’t to provide retirement income. Whether ERISA reaches particular stock grant or other compensation plans is often a hotly contested issue in disputes between companies and their former officers, and Rich is a fine example both of that circumstance, and of how to analyze whether ERISA is applicable. You can find an excellent summary of it in this Bloomberg BNA write up of the case.
Copyright Infringement and Architects (Software and Otherwise)
Riddle me this, Riddler: what does the design of a center entrance colonial house have to do with complex computer software?
A lot, it turns out, if you are interested in the borders that should attach to IP rights so as to best balance the need to encourage the creation of new products against the risk of stifling innovation. Anytime one renders a design or technical development exclusive to one owner, such as when an inventor obtains exclusivity by means of a patent or an author obtains it by means of holding the copyright, we encourage the original owner to exploit that product, but preclude others from doing the same. When we do that, it is important to create a structure that gives enough protection to the original inventor to motivate people to create new products, but not so much protection that it discourages others from creating related advancements; if we get that balance wrong, we impede the technological advancement that is the original purpose of granting exclusivity in the first place.
I was thinking of this today because of an odd correlation that popped up in my reading. I have litigated copyright infringement cases both over plans for commercial architecture and over very complex computer code, each time defending someone who had created and sold a new product but was charged with allegedly having infringed upon the prior copyright protected work of a prior author (in one case another architect, in the other a different software company). While I effectively won both cases – to the extent that very favorable settlements count as wins in a world in which 99% of cases never see a trial – the more interesting point is that I prevailed on both cases on essentially the same theory, which was that the similarities between my client’s work (whether the design for the building or the code for the software) and that of the holder of the copyright on the prior work concerned aspects of the prior author’s work that copyright law does not protect. Copyright law, through various means – such as the merger doctrine and others – does not protect common or universal design elements, nor does it protect substance that, in essence, cannot be designed around, such as certain problems in software coding that can only be solved in very limited ways. Copyright law allows later-in-time creators to make use of those types of elements in their work (whether that be the design of a house or the design of high value software) even if they were also used in previous, otherwise copyrightable work. In this way, copyright law successfully draws the line between encouraging innovation through the grant of exclusive ownership and corresponding rights of exploitation, on the one hand, and the risk, on the other, of stifling innovation through that grant of exclusivity; these doctrines keep open for other innovators the use of certain elements, whether lines of software code or aspects of building design or other forms of expression, without which further advancement of the art in question is not possible.
This is one of the great, somewhat hidden achievements of American copyright law, one that is worth bearing in mind, and perhaps emulating to some extent, in the world of patent law, as we try to come to grips with the patent troll phenomenon and the runaway nature of patent infringement litigation in this day and age. The trick to solving those problems in that area of the law right now is figuring out how to find that sweet spot – the one that copyright law has, to a large extent, already found – between granting enough exclusivity to drive innovation but not so much that it simply generates excessive patent infringement litigation and gives rise to mills full of patent trolls.
So the answer to the riddle that commenced this discourse lies in this excellent article on the manner in which doctrines limiting the scope of copyright protection just defeated an architect’s claim of copyright infringement based on the architect’s use of certain historical and consumer driven elements in a design for a classic New England colonial home. These same doctrines were, as I mentioned before, the basis for my prior representations of both architects and computer software programmers, with the doctrines generating good results in both circumstances. I liked how clearly the article articulated the use and role of these doctrines in the context of home design, and was immediately struck by the fact that you could replace the references to architect and houses with references to programmers and software and have an equally accurate article. The same copyright doctrines, in my experience, control the outcome of both litigation over building plans and over computer software. That consistency across the board is one of the things that makes American copyright law great, both intellectually and as a practitioner, and is what makes it possible for competitors to plan ahead and understand when they can, and when they cannot, touch on prior work.
Architects and Copyrights - Who Holds the Rights in the Design of a Building?
Permalink | I have a confession to make: I like houses. I remember an old Arlo and Janis cartoon, in which they respond to a bad day by pulling out the plans for their dream home, which they know they will never build, and add another elaborate room to it: that’s me. And so I greatly enjoy this blog about a couple’s attempts to build their dream home. Now normally, this would not be grist for this blog, for obvious reasons, but for one thing - in a post yesterday, they mirrored reality for me, touching on issues in a case I greatly enjoyed litigating recently, which was a dispute over the right to use plans drawn up by an architect who was subsequently terminated from the project. Given my interest in architecture and copyright law, this case was an absolute ball from where I sit. And in this blog post, the authors are astounded when they learn that the contract forwarded to them by their architect was, first, one sided in that it protected the architect but not the party retaining the architect, and, two, made the plans the property of the architect, even though the authors were paying for them. Their shock falls right in line with what I have always thought of as the three take aways from that recent case I handled. First, that the standard architecture contract, drafted by the architects’ trade group, is completely one sided, was drafted that way intentionally, and should never simply be signed off on, without changes, by anyone retaining an architect to design property for them. Two, that the most egregious part of that standard contract is that it gives all rights in the design of the building to the party designing it, the architect, rather than the person who should hold it, the one paying for that design. And three, that the consumers of the services, unless represented by counsel, don’t know any of this, would be shocked if they did, normally just sign on the bottom line to get the project started, and never learn this unless and until something goes wrong with the project. That standard contract should never be signed off on as is, without changes made to some of these more one sided terms. And at the end of the day, for purposes of this post, it is simply fun to find these truths documented by this couple’s experience, discussed in their blog.
Law Reviews Are Dead, They Just Don't Know It Yet
Permalink | Kevin O’Keefe, the trial lawyer turned legal blogging evangelist who runs LexBlog, the company that provides the technical support - but not any of the copy - for this blog and for the many other blogs listed on the lower left hand corner of this page, has been running a series of posts on the question of the impact of legal blogs on law reviews. I have my own thoughts, based on years of practice and my own stint on a review’s editorial board, on the question of what the growth of legal blogging means for the future of these august but hide bound publications. Now I try to stay away from blogging about blogging - in fact I think I have managed to blog for many months now without ever discussing the subject in a post - because I think it’s essentially navel gazing and it has nothing to do with the reason why people come to this blog, which - I hope not naively - I assume to be to learn about ERISA, intellectual property litigation and the law of insurance coverage. But I couldn’t let the subject raised by Kevin (who, by the way, has no compulsion against blogging about the topic of blogging because, well, that is what his blog is about - blogging) pass without commenting on it from the standpoint of a practicing litigator who focuses on the areas discussed in this blog.
When I came across Kevin’s posts on this topic, the old song lyric that video killed the radio star immediately started sounding in my ears, and no, I wasn’t listening to my ipod at the time. Law blogging is in the early stages of making detailed legal analysis on specific subject areas available to the entire legal community in ways that are both searchable and far more practical and useful than anything that law reviews generally provide. There is little doubt in my mind that practicing lawyers can find far more useful information about specific issues in insurance coverage, for instance, from David Rossmiller’s blog, or on the law of ERISA from Roy Harmon’s blog, or on intellectual property issues from Patently O, and so on and on, then they will ever locate in the published law reviews.
And why is this? There are multiple reasons. First, at the risk of being too negative, law reviews have, over the years, essentially become echo chambers for law faculty to talk to one another or, worse yet, have simply become a place for law professors to publish esoteric work that is absent significance to practicing lawyers or the courts simply because they feel they need to do so if they are to pursue tenure. This is hardly a novel criticism, as I can remember a federal judge - I forget who it was, but he was out of the industrial mid-west - pointing out years ago that published legal scholarship had no merit or relevance to what he did every day. Law blogs are obviously different; the point is to publish useful legal information at a level of legal sophistication sufficient to be relevant to the practicing community, the courts and clients. That is an entirely different audience than the one that law reviews are targeted at, and an entirely different type of information that is intended to be transmitted.
In fact, when I was in law school, a particular near octogenarian law professor, rumored to have been during his earlier days at Harvard the model for Professor Kingsfield in the book and movie The Paper Chase, spoke once about how, many years ago, the writing of treatises that were of practical use to the profession was considered a worthy output for a law professor, but how that was no longer the case. Instead, esoteric topics, the more so the better, were what advanced a career in legal scholarship.
Second, blogs are searchable in a matter of moments. Run a search for ERISA, for instance, over at Google Blog Search, and see how quickly you can find information about the differing approaches to the standard of review in ERISA cases when the administrator is operating under a conflict of interest, a favorite topic of this blog. Then compare that to how quickly you can actually find law review articles on this subject, with the exception of those pieces commented on and linked to in blog posts. I know that those articles are out there, because I have read many of them, but you won’t find them quickly, or without doing traditional types of legal research to locate them.
Third, law reviews have divorced themselves from the practicing lawyer, in multiple ways, only one of which I will comment on here, so as to avoid turning this blog post into, well, the length of a law review article. They make publication too time consuming for many successful lawyers to consider pursuing, thereby limiting the pool of potential author/experts - perhaps intentionally? - to law faculty. I have on my own hard drive, for instance, a nearly finished law review article covering the law of trade dress infringement in the First Circuit that grew out of a summary judgment memorandum in a trade dress infringement case I was litigating. The substance is all there, but finding the time to fix the cites, and dress up some of the transitions, and dot each I and cross each T? Almost impossible, unless I am going to assign it to an associate, which somehow strikes me as cheating. But what I may well do is finish it up to a nearly finished draft status, and put it up on this blog, and just plain bypass the time consuming law review publication system, while still putting the information easily in the hands of those who may have use for it. Blogs make all of this type of information far more readily available to the community than law reviews do or, frankly ever will, unless and until they not only add accompanying blogs but also make all of their text freely available for on-line searching.
So yes, whether you practice in ERISA, insurance coverage, intellectual property, or any of an endless variety of other practice areas, legal blogs are far and away the best source of information, and they are turning law reviews into dinosaurs. The whole subject reminds me of some discussions in Seth Godin’s book small is the new big that can essentially be summed up as, in the age of the internet, businesses can either change or die. As far as I am concerned, that is where law reviews find themselves right now: they can either figure out how to transform themselves into an easily accessible on-line repository of valued information, or they can continue to be marginalized, only at ever increasing speed, into a place where law professors simply go to impress one another.
Insuring and Litigating Design Disputes
What does design, and more particularly the rise of design in modern industrial China, have to do with ERISA and insurance? Little, something and nothing.
A little, because business liability policies often contain advertising injury coverage, which can provide coverage for copyright infringement claims in certain circumstances. You can read my very out of date article on advertising injury coverage - from 1992 - here: Download file. Of note for present purposes, reflecting my lawyerly obsession with footnotes, is footnote one, which details the causes of action covered under advertising injury coverage endorsements.
Something, because one of the areas in which I practice extensively is defending insureds against intellectual property lawsuits in cases where the advertising injury coverage is triggered and the insurer will cover the claim. It is worth noting that this coverage can lead to insurers at least paying for the defense of many types of intellectual property claims, not just copyright infringement actions. I have handled cases in which everything from patent infringement to trade dress infringement actions have been defended by insurers. This comes about because the lawsuits also include a claim for copyright infringement, and the copyright infringement claim triggers the advertising injury coverage, resulting in the insurer having an obligation to defend the insured against the lawsuit. In most jurisdictions an insurer, if it must provide a defense against one count in a lawsuit must also provide a defense against the other counts in the lawsuit (with variations and exceptions not relevant to this discussion, but which can be very important to the particular insured defendant in a particular case). As a result, the other claims made in a copyright infringement lawsuit, such as claims for patent infringement or trademark infringement that are often "bundled" in a lawsuit with a copyright infringement claim, also end up being defended by the insurer. See the following link, which includes an example of a "bundled" case of this nature in which I defended a party charged with patent infringement, trade dress infringement and copyright infringement: http://www.mccormackfirm.com/new.html.
And finally nothing, because the relationship has as much as anything to do with my personal and professional interest in design, and how you protect it. I cannot read an article on architecture, industrial or other design in any setting without immediately thinking about how ownership of it can be protected. There is a fascinating article in today's New York Times on the rise of, for lack of a better term, a commercial design economy in China, that highlights several designers and architects, and their recent work. The article highlights the interplay between traditional Chinese forms and materials, and the country's newest designs and designers. http://www.nytimes.com/2006/04/20/garden/20china.html?_r=1&oref=slogin. In reading it, I immediately jump to the questions of what parts of it can be protected, which owners/designers can limit the rights of others to replicate it, and how that can be done. Issues ranging from claiming trade dress protection in the products, to an architect's copyright in a building design come immediately into play. It fit with a case I am handling, in which the question of the extent of an architect's ownership of and copyright in his design of a building was at issue. You can find a one paragraph discussion about that case here: http://www.mccormackfirm.com/new.html.