Court Tunes Up Auto Parts Copyright Case

     (CN) – The 9th Circuit revived a copyright dispute between U.S. Auto Parts and the web developer behind a popular competing website that it acquired.
     U.S. Auto Parts Network bought the growing website Partsbin for $50 million in 2006. The agreement describes the Partsbin assets at issue as including intellectual property and software, including an order-processing program called Manager.
     Though U.S. Auto Parts hired Partsbin’s founders and other employees after the acquisition, many of them left in July 2008 and developed a similar site called Parts Geek.
     Lucas Thomason, the Partsbin director of eServices who developed Manager, joined Parts Geek and crafted a new ecommerce software called Admin.
     As Parts Geek became a success, U.S. Auto Parts sued it and Thomason for infringing Manager copyright.
     But a federal judge in California found against U.S. Auto Parts on the copyright infringement claim after finding that Manager belonged to Thomason, not Partsbin, and he never transferred those rights to U.S. Auto Parts.
     After granting the defendants summary judgment on that claim, the judge also ordered U.S. Auto Parts to cover the litigation costs on this issue.
     The 9th Circuit turned that verdict on its head Friday.
     “In light of this analysis, we conclude that there is a genuine issue of material fact as to whether Thomason’s work on Manager while at Partsbin and USAP constitutes work made for hire,” Judge Sandra Ikuta wrote for a three-member panel. “Because there is no evidence that Thomason and his employers ‘expressly agreed’ in a ‘written instrument signed by them’ that Thomason would be the author of any work he contributed to Manager during his employment, a jury could reasonably infer that Partsbin and U.S. Auto Parts became the owners of any such work made for hire, and that when U.S. Auto Parts acquired Partsbin, it also acquired the work Thomason did on Manager while employed at Partsbin.”
     Despite claims that enhancements Thomason made to Manager 2000 are not copyrightable derivative works, the court disagreed here as well.
     “While employed by both Partsbin and USAP, Thomason willingly modified and enhanced Manager 2000 and later versions of the software in response to his employer’s requests,” Ikuta wrote. “Thus, a genuine issue of material fact exists as to whether Thomason’s conduct created an implied license to Partsbin, USAP, or both, to use Manager 2000 (or other versions of Manager for which Thomason potentially retained copyright ownership) in developing the subsequent versions of Manager.”
     These issues of material fact preclude the award of summary judgment, according to the ruling.
     “On remand, the parties may develop the record regarding this issue of infringement as well as the threshold issues of copyright ownership, such as the scope of Thomason’s work for hire while employed at Partsbin (including any agreements he may have had with Partsbin regarding his modifications to Manager 2000), the scope of Thomason’s work for hire while employed at USAP, and the relationship between Manager 2000 and the post-2000 versions of Manager,” Ikuta wrote. “The district court should examine these issues in the first instance in light of this decision.”

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