*

 Chief District Judge of the Southern District of Texas, sitting by designation.

1

United States Court of Appeals

Fifth Circuit

FILED

August 27, 2003

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 02-41279

 

WILLIAM C. CARSON,

Plaintiff — Appellant,

versus

DYNEGY, INC.; DYNEGY HOLDINGS, INC.,

formerly doing business as Dynegy, Inc.;

DYNEGY MARKETING AND TRADE;

DYNEGY POWER CORP.; DMT HOLDINGS, INC.;

DYNEGY G.P., INC.; BG HOLDINGS, INC.;

DYNEGY UPPER HOLDING; DYNEGY HOLDING

COMPANY, L.L.C.; DYNEGY POWER MARKET;

DMT L.P., L.L.C.; DMT G.P. L.L.C.; DMT

HOLDINGS, L.P.,

Defendants — Appellees.

--------------------

Appeal from the United States District Court

for the Southern District of Texas

--------------------

Before JONES and BENAVIDES, Circuit Judges, and KAZEN, District Judge.*

BENAVIDES, Circuit Judge:

Before this court is an appeal from the district court’s grant of summary judgment in a

case concerning the federal copyright laws. Appellant argues that the district court erred by (i)

holding that appellees had an irrevocable, nonexclusive implied license, which precluded
1

 There are 13 defendants-appellees in this matter, all of which are companies that are

somehow related and share a common principal place of business in Houston, Texas: (i) Dynegy,

Inc., an Illinois corporation; (ii) Dynegy Holdings, Inc., a Delaware corporation; (iii) Dynegy

Marketing and Trade, a Colorado general partnership; (iv) Dynegy Power Corp., a Delaware

corporation; (v) DMT Holdings, Inc., a Delaware corporation; (vi) Dynegy G.P., Inc., a Delaware

corporation; (vii) BG Holdings, Inc., a Delaware corporation; (viii) Dynegy Upper Holdings, a

Delaware limited liability company; (ix) Dynegy Holding Company, L.L.C., a Delaware limited

liability company; (x) Dynegy Power Market, a Texas corporation; (xi) DMT L.P., L.L.C., a

Delaware limited liability company; (xii) DMT G.P., L.L.C., a Delaware limited liability company;

and (xiii) DMT Holdings, L.P., a Delaware limited partnership.

2

appellant’s claim of copyright infringement; (ii) determining that the doctrine of estoppel also

barred the infringement claim; (iii) holding that appellant’s state-law conversion claims were

preempted by federal copyright law; and (iv) declining to resolve appellant’s prayer for

declaratory relief. Because estoppel bars appellant’s infringement claim, we affirm the district

court’s granting summary judgment. We reverse the district court’s determination that appellant’s

state-law claims are preempted by federal law and remand this issue as well as appellant’s

declaratory judgment claim to the district court for further proceedings consistent with this

opinion.

I.

The dispute in this case involves the ownership of certain copyrightable expressions in the

24HA Worksheet (“24HA” or “the 24HA worksheet”), a worksheet created by plaintiff-appellant

William C. Carson, using Microsoft Excel, a spreadsheet program. Carson, a resident of Texas,

began working for the defendants-appellees (“Dynegy”),1 a group that trades energy, in late 1998

as an analyst in the gas accounting department. In June 1999, Carson assumed the position of

scheduler, a job in which his main duties included scheduling energy trades and handling

scheduling problems for Dynegy. Dynegy characterized employees such as Carson as “jacks-of-
2

 Dynegy argues that all its employees were encouraged to improve processes and that the

24HA program was therefore a work-for-hire belonging to Dynegy. Carson, however, stated

both in an affidavit and in a deposition that he was never told to improve Dynegy’s processes. 

The district court determined that it would not be appropriate to consider Carson’s affidavit,

pursuant to the theory that a party may not create an issue of fact by submitting an affidavit in

opposition to a summary judgment motion that, by omission or addition, contradicts the affiant’s

previous deposition testimony. Nevertheless, Carson’s deposition testimony does indicate that he

was never told to improve processes. Accordingly, the affidavit does not contradict Carson’s

deposition. And, even if Carson’s affidavit should not have been considered, Carson still has

given testimony that he was not told to improve Dynegy’s processes. The district court chose not

to use this testimony because it deemed Carson’s deposition testimony “evasive” and “nearly

incomprehensible.” Despite the deposition’s cryptic nature, Carson did indicate that he was not

told to improve processes. Accordingly, the evidence that Carson was instructed to improve

Dynegy’s processes is not uncontroverted.

3

 There is evidence that 24HA is based on an earlier program made by Dynegy workers

not involved with this litigation.

3

all-trades” whose duties included trading and scheduling.

While working as a scheduler, Carson created 24HA, which allows its users to create a

large amount of “bids,” which are offers to sell electrical power and ancillary services, in an errorfree fashion and causes those bids to be submitted to the appropriate website for processing.2

Carson contends that he created 24HA to impress management and to get promoted to the

position of trader. It is not disputed that Carson created 24HA by himself3 and largely on his own

time away from the office, although uncontroverted record evidence indicates that he altered and

modified the worksheet while at work. Carson also informed his colleagues at Dynegy about the

24HA worksheet and supported its firm-wide application. Carson, furthermore, allowed multiple

individuals to access the password for 24HA. It is also undisputed that Carson encouraged even

those with whom he did not work closely to adopt and modify 24HA, and to prepare a worksheet

derivative of it. And, despite Carson’s claim that his co-workers knew that 24HA was his

program, he admitted that he never explicitly told anyone that his program could not be modified
4

or used unless he was present, and he never appeared to correct the impression among some of

Dynegy’s employees that 24HA was a team-created project.

Because of Carson’s high performance on the job, which was at least in part due to his

role in implementing the 24HA worksheet, Carson was (i) nominated for a company award

consisting of a monetary prize, (ii) earmarked to receive an annual end-of-year bonus, and (iii)

recommended for a promotion. Carson, however, never received these benefits, as he was soon

terminated for violating company policy in a matter unrelated to this litigation. Despite Carson’s

firing, Dynegy continued to use the 24HA worksheet.

Only upon his termination did Carson begin concerning himself with Dynegy’s use of

24HA. More than eight months after his discharge and after allegedly discovering that Dynegy

still was using 24HA, Carson wrote a letter to Dynegy demanding that the company “immediately

discontinue its unauthorized use of my program” and requesting that Dynegy “return all copies”

of the worksheet. Dynegy responded that 24HA was its property, as it was developed by Carson

in the course and within the scope of his employment. A year following his initial letter, Carson

again demanded return of the 24HA worksheet; Dynegy responded to this correspondence by

again asserting its ownership rights of 24HA and refusing to provide hard copy print-outs of the

program.

Carson then initiated the instant lawsuit, seeking the following:

(i) a declaratory judgment stating that Carson owns all copyrights in the 24HA

worksheet and that the program is not a work-for-hire, as identified in 17 U.S.C. §

101;

(ii) a determination that Dynegy’s use of 24HA infringes Carson’s copyrights in

violation of 17 U.S.C. § 101, et seq.;
4

 The district court did not adopt Dynegy’s contention that Carson’s continued

employment constituted sufficient consideration for 24HA. Carson, the district court noted, was

an at-will employee, so consideration based on such employment would be merely illusory.

5

(iii) a determination that the 24HA worksheet is not a “joint work” under 17 U.S.C. §

101;

(iv) a holding that if 24HA is determined to be a joint work, Carson is entitled to an

accounting of his share of the profits relating to its use;

(v) a determination that Dynegy illegally converted (a) tangible copies of the 24HA

program and (b) proceeds earned from use of the worksheet.

At the close of discovery, Dynegy filed a motion for summary judgment, to which Carson

responded. Dynegy filed a reply and Carson sought leave to file a sur-reply. The district court

granted Carson’s motion for leave to file a sur-reply, though it made clear that Carson was not

permitted to add to the summary judgment evidence. Despite this instruction, the district court

determined that Carson’s sur-reply did attempt to add to the summary judgement record. 

Accordingly, the district court refused to consider any offending portions of the sur-reply.

After considering the parties’ memoranda and the summary judgment evidence as a whole,

the district court held that even if Carson owned 24HA, Dynegy had acquired a nonexclusive

implied license to use the worksheet. Furthermore, the district court held that such a license was

irrevocable because it was supported by consideration, namely, Carson’s nomination for the

company award consisting of a monetary prize, selection to receive an annual bonus, and

recommendation for a promotion.4 The district court noted further that it was immaterial that

Carson never received or enjoyed the benefits of the supposed consideration. In the alternative,

the district court held that Carson was estopped from filing his infringement claim against Dynegy

for its use of the 24HA worksheet. Because of its rulings on the licensing and estoppel issues, the
5

 It is well-established in this circuit that a nonexclusive implied license need not be

evidenced by a writing; rather, such a license may be implied from conduct or granted orally. 

Lulirama Ltd., Inc. v. Axcess Broadcast Svs., Inc., 128 F.2d 872, 879 (5th Cir. 1997) (“While the

Copyright Act requires that exclusive licenses be evidence by a writing, no such writing

requirement applies to nonexclusive licenses.”). As the existence of a license authorizing the use

6

district court believed it was unnecessary to address the ownership issue. Furthermore, the

district court held that Carson’s conversion claim was preempted by federal copyright law. 

Carson now appeals these determinations of the district court. 

II.

We review a grant of summary judgment de novo. Young v. Equifax Credit Info. Servs.

Inc., 294 F.3d 631, 635 (5th Cir. 2002). “Summary judgment is proper if, after adequate

opportunity for discovery, the pleadings, depositions, answers to interrogatories, and admissions

on file, together with any affidavits filed in support of the motion, show that there is no genuine

issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” 

Id. The moving party bears the burden of pointing to an absence of evidence to support the

nonmoving party’s case, Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986), and we will uphold

a grant of summary judgment where the nonmovant is unable, in turn, to point to any evidence in

the record that would sustain a finding in the nonmovant’s favor on any issue on which he bears

the burden of proof at trial. Id. at 321-23.

III.

A. Irrevocable nonexclusive implied license

Carson argues that the district court erred in holding that the parties’ conduct created an

irrevocable, nonexclusive implied license. Specifically, he disputes the district court’s holdings

that (i) a nonexclusive implied license was created;5 (ii) the license was unlimited in scope; and
of copyrighted material is an affirmative defense to an allegation of infringement, Dynegy bears

the burden of proving that such a license exists. Lulirama, 128 F.3d at 884 (citing CMS Software

Design Sys., Inc. v. Info Designs, Inc., 785 F.2d 1246, 1248 (5th Cir. 1986)).

6

 This principle finds support both from scholars and among our sister circuits. See 3

Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 10.02[B][5] (2002); I.A.E., Inc. v.

Shaver, 74 F.3d 768, 772 (7th Cir. 1996); Avtec Sys., Inc. v. Peiffer, 21 F.3d 568, 574 n.12 (4th

Cir. 1994); Keane Dealer Services, Inc. v. Harts, 968 F. Supp. 944, 947 (S.D.N.Y. 1997);

Johnson v. Jones, 885 F. Supp. 1008, 1012 n.6 (E.D. Mich. 1995).

7

(iii) the license was irrevocable. Analysis of the last of these three determinations is sufficient to

conclude that the district court erred. 

We turn first to Carson’s argument that even if a nonexclusive implied license to use

24HA had been created, such a license was not irrevocable and, indeed, was revoked by Carson. 

Specifically, Carson asserts that even if Dynegy had a license to use 24HA, that license was

revoked upon Carson’s demanding the return of the 24HA worksheet after his termination. It is

settled that a “nonexclusive license may be irrevocable if supported by consideration.” Lulirama

Ltd., Inc. v. Axcess Broadcast Servs., Inc., 128 F.3d 872, 882 (5th Cir. 1997).6 And, “[t]his is so

because a nonexclusive license supported by consideration is a contract.” Id. (citations omitted). 

Assuming, arguendo, that a nonexclusive license was created, whether such a license was

irrevocable rests solely with whether Carson received consideration.

At summary judgment, the district court rejected Dynegy’s claims that Carson’s continued

at-will employment constituted sufficient consideration, as such employment—which Dynegy was

free to terminate at any time—was merely an illusory promise. The district court, however, was

persuaded that the consideration requirement was satisfied by Dynegy’s (i) nominating Carson for

a company award consisting of a monetary prize, (ii) planning to award Carson with an annual

end-of-year bonus, and (iii) recommending Carson for a promotion. The district court determined
7

 We apply Texas law because “[t]he district court in this case applied Texas law and the

parties do not dispute the propriety of that approach....” Guaranty Nat. Ins. Co. v. Azrock

Industries Inc., 211 F.3d 239, 243 (5th Cir. 2000) (citing N.K. Parrish, Inc. v. Southwest Beef

Indus. Corp., 638 F.2d 1366, 1370 n.3 (5th Cir. 1981)).

8

that it was immaterial that Carson never received the company award payment, annual bonus, or

promotion, because he would have received these benefits had he not been fired due to

circumstances and events unrelated to this litigation.

We decline to adopt the district court’s conclusion that the monetary award, annual bonus,

and promotion, none of which Carson received, were sufficient to establish consideration under

Lulirama. To determine whether such non-received benefits can be deemed consideration in the

context of an employee-at-will relationship, we examine Texas law.7 Under Texas contract law,

[a]t-will employees may contract with their employers on any matter except those which

would limit the ability of either employer or employee to terminate the employment at will. 

Consideration for a promise, by either the employee or the employer in an at-will

employment, cannot be dependent on a period of continued employment. Such a promise

would be illusory because it fails to bind the promisor who always retains the option of

discontinuing employment in lieu of performance. (Citations omitted.) When illusory

promises are all that support a purported bilateral contract, there is no contract. In short,

we hold that “otherwise enforceable agreements” can emanate from at-will employment so

long as the consideration for any promise is not illusory.

Light v. Centel Cellular Co., 883 S.W.2d 642, 644-45 (Tex. 1994); accord Kadco Contract

Design Corp. v. Kelly Servs., 38 F. Supp. 2d 489, 495-96 (S.D. Tex. 1998). Here, the supposed

consideration, eligibility for various cash awards and promotion, were dependent upon Carson’s

continued employment with Dynegy. When Carson was terminated, he was disqualified from

receiving this putative consideration. Dynegy was not bound by any of these supposed promises

because it could—and did—discontinue Carson’s employment at its discretion, thereby
9

unilaterally revoking its promises. And, such illusory promises are, as a matter of law, insufficient

to constitute adequate consideration. See Light, 883 S.W.2d at 644-45.

Accordingly, as consideration was not present, any license ostensibly granted to Dynegy

was revocable by Carson. Carson, of course, did revoke this license by complaining to Dynegy of

its use of 24HA and by filing this lawsuit. See, e.g., Keane Dealer Services, Inc. v. Harts, 968 F.

Supp. 944, 947 (S.D.N.Y. 1997) (holding that issuance of a lawsuit is sufficient to constitute

revocation of a license). As any license obtained by Dynegy was revocable, and clearly revoked

by Carson, we need not address whether a nonexclusive implied license was even created or the

scope of such a license.

2. Estoppel

Even if Dynegy has no irrevocable license to use 24HA, Carson nevertheless is estopped

from the instant infringement claim, as the district court appropriately recognized. Although there

is no on-point circuit authority articulating the elements of estoppel as a defense to a copyright

infringement allegation, a consensus has developed that a copyright defendant must prove four

conjunctive elements to establish estoppel in such cases:

(1) the plaintiff must know the facts of the defendant’s infringing conduct;

(2) the plaintiff must intend that its conduct shall be acted on or must so act that the

defendant has a right to believe that it is so intended;

(3) the defendant must be ignorant of the true facts; and

(4) the defendant must rely on the plaintiff’s conduct to its injury.

See 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.07 (2002) (“Nimmer”). 

Federal courts considering the doctrine of estoppel in copyright cases have adopted and applied
10

this four-part test. See, e.g., Hampton v. Paramount Pictures Corp., 279 F.2d 100, 104 (9th

Cir.), cert. denied, 364 U.S. 882 (1960); Quinn v. City of Detroit, 23 F. Supp. 2d 741, 753 (E.D.

Mich. 1998); National Business Lists, Inc. v. Dun & Bradstreet, Inc., 552 F. Supp. 89, 97 (N.D.

Ill. 1982); Schuchart & Associates, Professional Engineers, Inc. v. Solo Serve Corp., 540 F.

Supp. 928, 941 (W.D. Tex. 1982); Lottie Joplin Thomas Trust v. Crown Publishers, 456 F. Supp.

531, 535 (S.D.N.Y. 1977), aff’d, 592 F.2d 651 (2d Cir. 1978). Furthermore, it is accepted that

estoppel may be accomplished by a plaintiff’s silence and inaction. 4 Nimmer § 13.07 (citing

Quinn, 23 F. Supp. 2d at 753; National Business Lists, 552 F. Supp. at 97).

Carson challenges that elements (i), (iii), and (iv) of the estoppel test have been satisfied

by uncontroverted evidence. Specifically, Carson argues that he did not know that Dynegy

continued to use 24HA after his termination until shortly before he wrote his first letter to

Dynegy, asserting that he owned the worksheet and asking that Dynegy cease using it. In

essence, then, Carson asserts that his knowledge of Dynegy’s use of 24HA prior to his

termination is not relevant; rather, he claims that Dynegy’s conduct only after Carson’s

termination is relevant with respect to the first estoppel element. Furthermore, Carson argues that

there is a factual dispute regarding whether Dynegy knew that Carson created and had rights in

24HA. Finally, Carson argues that Dynegy’s receipt of Carson’s letter precludes the argument

that Dynegy could establish any reasonable detrimental reliance. This final argument is again

dependent upon Carson’s assumption that only the state of affairs after the termination—rather

than the state of affairs before it—are relevant to the estoppel analysis.

As an initial matter, there is no factual dispute that Dynegy was ignorant of the facts as

alleged by Carson. See 4 Nimmer § 13.07. While Carson argues that it was widely known that he
8

 These elements are that the party to be estopped must know the facts of the defendant’s

infringing conduct and that the defendant must rely on the plaintiff’s conduct to his injury. See 4

Nimmer § 13.07. It is clear from the record that both of these elements are satisfied, provided it

is proper to consider events prior to Carson’s termination.

11

owned the 24HA worksheet, the record militates to the contrary. Indeed, there is evidence that

Carson encouraged the adaptation, modification, and preparation of a derivative program for

other Dynegy employees to use. Carson, moreover, permitted multiple persons to access the

password for 24HA. Despite Carson’s claim that his co-workers knew that 24HA was his

property, he admitted that he never explicitly told anyone that the worksheet could not be

modified or used unless he was present and he never appeared to correct the impression among

some of Dynegy’s employees that 24HA was a team-created program.

All that now stands in the way of endorsing the district court’s estoppel determination is

Carson’s argument that it was improper to consider events prior to his termination in the analysis

of estoppel elements (i) and (iv).8 While there is no controlling case on the matter, one district

court, when confronted with similar facts, did not hesitate to consider the parties’ conduct during

the course of the plaintiff’s employment to confront the estoppel issue. See Quinn, 23 F. Supp.

2d at 753. In Quinn, the plaintiff, a staff attorney employed by the City of Detroit, created a

computer program designed to help the office run more efficiently. Id. at 743. Although the

plaintiff consented to the office’s use of the program for a number of years, he attempted to

withdraw such consent after other employees at the office attempted to modify the program

without first obtaining permission. Id. at 743-44. And, this attempt to keep the City from using

the program occurred during the time that the plaintiff was employed by the City. Id. After citing

to the four-factor estoppel test, the district court determined that the plaintiff was estopped from
12

pursuing an infringement claim because the City had, for years, relied on the plaintiff’s permission

to use the program and had become dependent upon it, abandoning its prior system. Id. at 753. 

Thus, the court held that at some point between the time that the City began using the program

and the time that the plaintiff first attempted to assert his rights approximately three years later,

the plaintiff became estopped from withdrawing his consent because of the City’s reliance and the

plaintiff’s past grant of permission. Id. Thus, if Quinn were controlling, Dynegy’s estoppel

argument would prevail, as Quinn clearly contemplates consideration of the parties’ conduct

during the time in which the plaintiff is employed by the defendant. Indeed, all the relevant

conduct in Quinn was “pre-termination,” as the plaintiff there had not been terminated.

Yet, as Quinn is not binding precedent, we are not obliged to accept its reasoning if we

deem it faulty. An analysis of the opinion in Quinn, however, demonstrates its virtues. Indeed,

Quinn permits courts to consider the relationship of employers and workers, such as the plaintiff

in that case and Carson in this matter, during the course of employment to determine whether

estoppel should be an available defense. Id. at 753. It further holds that estoppel can be

established while a putative copyright holder is still employed by the alleged infringer. Id. This

rule is sound, as the theory of estoppel is based on reasonable reliance. See Florida Dept. of Ins.

v. Chase Bank of Texas Nat. Ass’n, 274 F.3d 924, 933 (5th Cir. 2001). And, such reliance can

develop—indeed, did develop—while a putative copyright holder is employed by an alleged

infringer. The rule in Quinn rightly prohibits an alleged copyright owner from maintaining an

infringement claim against his employer, after permitting that employer to use his creation to

adapt existing procedures or systems. Put another way, whether a putative copyright owner

remains with his employer is simply not relevant to the estoppel analysis if the conduct of the
9

 In opposition to a determination of estoppel, Carson relies chiefly on a trio of cases from

the Southern District of New York, Peer Int’l Corp. v. Luna Records, Inc., 887 F. Supp. 560,

567 (S.D.N.Y. 1995), Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F. Supp. 1522, 1540

(S.D.N.Y. 1991), and Steinberg v. Columbia Pictures Indus., Inc., 663 F. Supp. 706, 715-16

(S.D.N.Y. 1987). These three cases, of course, are not controlling and—unlike Quinn—lack

factual similarity with the instant case. Steinberg, the earliest of the three cases, does not

strengthen Carson’s case. There, the district court held that the plaintiff’s supposed silence and

inaction regarding the defendant’s infringing behavior should not give rise to estoppel because

there was no existing relationship between the parties. Steinberg, 663 F. Supp. at 716. In the

instant case, however, there was an clear relationship between Carson and Dynegy, i.e., that of

employer-employee. Thus, Steinberg is not applicable to the instant controversy and does not

help Carson. 

Carson cites to Basic Books, 758 F. Supp. at 1540, for the proposition that in order to

satisfy the first element of estoppel, it would be necessary for Carson to have stated that he knew

that Dynegy’s actions constituted infringement as a matter of law. This argument is belied by the

opinion in Basic Books; indeed, the court there did not require that the plaintiff be aware that the

defendant’s actions constituted infringement as a matter of law. Id. And, even if the court in

Basic Books did hold as Carson asserts it did, we would decline to follow such a holding, as such

a determination would be inconsistent with the bulk of cases on this issue. See, e.g., 4 Nimmer §

13.07. 

Finally, Carson attempts to rely on Peer Int’l, 887 F. Supp. at 567. In that case, which

concerned the alleged infringement of copyrighted material on vinyl phonograph records, the

court held that although the plaintiffs had knowledge of the defendants’ infringing acts, the

defense of estoppel failed, in part because the defendants failed to show detrimental reliance. 

Thus, the court held that defendants “cannot escape the fact that [they] continued to make and

distribute the infringing phonographs for at least six months after suit was filed when any claim of

detrimental reliance should have ended.” Id. Carson argues that because Dynegy continued to

use 24HA and, arguably, introduced a derivative work after this lawsuit was filed, Dynegy cannot

likewise claim estoppel. Yet, Dynegy’s estoppel defense, unlike that of the defendants in Peer

Int’l, matured long before Carson was terminated. See Quinn, 23 F. Supp. 2d at 753. 

Furthermore, Peer Int’l is factually dissimilar to the instant case, as it concerned the manufacture

of vinyl records, Peer Int’l, 887 F. Supp. at 567, not the on-going use of a computer program on

which the user had relied for a substantial period of time. 

13

supposed owner and his employer during the period of employment is sufficient to establish

estoppel. Thus, although we recognize that Carson’s claims of copyright infringement are limited

to the time period after his termination, we nevertheless hold that it is proper to consider Carson’s

conduct during the course of his employment at Dynegy to establish the defense of estoppel. See

Quinn, 23 F. Supp. 2d at 753.9 Given the undisputed facts of this case, the conduct of the parties
10 We apply Texas law to Carson’s conversion claim. See n.7, supra.

11 Section 102 of the Copyright Act provides that

(a) Copyright protection subsists, in accordance with this title, in original works of

authorship fixed in any tangible medium of expression, now known or later

developed, from which they can be perceived, reproduced, or otherwise

communicated, either directly or with the aid of a machine or device. Works of

authorship include the following categories:

(1) literary works;

(2) musical works, including any accompanying words;

14

before Carson’s termination was sufficient to establish estoppel. See n.8, supra. Accordingly, the

district court properly determined that Carson is estopped from pursuing his infringement claim

against Dynegy.

3. Conversion

Carson’s complaint also included a claim of conversion,10 wherein Carson alleged that

Dynegy wrongfully withheld 24HA in its tangible forms and failed to provide Carson with the

proceeds generated from the worksheet’s use. The district court held that Carson’s conversion

claim was preempted by federal copyright law, and speculated that even if it were not preempted,

the claim “would likely fail.” On appeal, Dynegy repeats the district court’s conclusion without

citing to any cases or statutes.

There is well-settled precedent to determine whether a state-law claim is preempted by

federal copyright law. See Daboub v. Gibbons, 42 F.3d 285, 288-89 (5th Cir. 1995); 17 U.S.C. §

301. Indeed, this circuit has held that both prongs of a two-factor test must be satisfied for

preemption to occur. First, the claim is examined to determine whether it falls “within the subject

matter of copyright” as defined by 17 U.S.C. § 102. Daboub, 42 F.3d at 289 (internal quotation

marks omitted).11 And second, “the cause of action is examined to determine if it protects rights
(3) dramatic works, including any accompanying music;

(4) pantomimes and choreographic works;

(5) pictorial, graphic, and sculptural works;

(6) motion pictures and other audiovisual works;

(7) sound recordings; and

(8) architectural works.

(b) In no case does copyright protection for an original work of authorship extend

to any idea, procedure, process, system, method of operation, concept, principle,

or discovery, regardless of the form in which it is described, explained, illustrated,

or embodied in such work.

17 U.S.C. § 102.

15

that are ‘equivalent’ to any of the exclusive rights of a federal copyright, as provided in 17 U.S.C.

§ 106.” Id. (citing Gemcraft Homes, Inc. v. Sumurdy, 688 F. Supp. 289, 294 (E.D. Tex. 1988)).

Carson’s conversion claim consists of two allegations: (i) that Dynegy wrongfully withheld

24HA in its tangible forms and (ii) that Dynegy failed to provide Carson with the proceeds

generated from use of 24HA. Carson’s second allegation involves only intellectual property

rights, i.e., income earned from Dynegy’s alleged copyright infringement, rather than rights

regarding physical property. As such, this allegation is outside the scope of Texas conversion

law, which concerns only physical property. See Waisath v. Lack’s Stores, 474 S.W.2d 444, 447

(Tex. 1971).

We continue, then, to Caron’s allegation that Dynegy wrongfully withheld 24HA in its

tangible forms. This conversion allegation is not preempted because the second Daboub

prong—that of equivalency—is plainly not satisfied. The test for evaluating the equivalency of

rights is commonly referred to as the “extra element” test. Alcatel USA, Inc. v. DGI

Technologies, Inc., 166 F.3d 772, 787 (5th Cir. 1999). This test requires that if “one or more

qualitatively different elements are required to constitute the state-created cause of action being
12 The district court relies solely on Barbour v. Head, 178 F. Supp. 2d 758 (S.D. Tex.

2001), for the proposition that state law claims of conversion are preempted by federal copyright

law. Barbour, however, did not address conversion claims regarding physical, tangible property,

which is in issue here. Barbour, 178 F. Supp. 2d at 759-60. Accordingly, Barbour is not

applicable to Carson’s allegation that Dynegy wrongfully withheld tangible copies of 24HA.

Equally unpersuasive is Dynegy’s similar argument that it cannot be “guilty” of converting

a worksheet that it had a right to use. Indeed, Carson’s first conversion allegation concerns

tangible property, not intellectual property. Even if it is assumed, arguendo, that Dynegy does

own a copyright in 24HA, such intangible rights would not preclude a claim of conversion

16

asserted, then the right granted under state law does not lie within the general scope of copyright,

and preemption does not occur.” Id. (internal quotation marks omitted). Under Texas law,

conversion of physical property requires a showing of an “unauthorized and wrongful assumption

and exercise of dominion and control over the personal property of another, to the exclusion of or

inconsistent with the owner’s rights.” Waisath, 474 S.W.2d at 447. The elements of conversion

of physical property are, therefore, qualitatively different than those of copyright infringement. 

See also Pritikin v. Liberation Publs., Inc., 83 F. Supp. 2d 920, 923 n.1 (N.D. Ill. 1999) (stating

that “§ 301(a) will preempt a conversion claim ‘where the plaintiff alleges only the unlawful

retention of its intellectual property rights and not the unlawful retention of the tangible object

embodying its work.’”) (quoting Paul Goldstein, Copyright, Patent, Trademark and Related

States Doctrines 777 (3d ed. 1993)); 1 Nimmer § 1.01[B][1][i] (noting that conversion is a tort

that relates to interference of tangible rather than intangible property and is not preempted by the

Copyright Act); cf. Daboub, 42 F.3d at 289-90 (holding that a conversion claim was preempted

by the Copyright Act where the claim was that the defendant improperly copied a song, which is

necessarily intangible). Thus, as the second Daboub prong cannot be satisfied, Carson’s

conversion claim that Dynegy wrongfully withheld 24HA in its tangible forms is not preempted by

Section 301 of the copyright act.12 Furthermore, there is no colorable claim that conflict
regarding tangible property. To make an appropriate comparison, even if counter-culture author

Abbie Hoffman owns the copyright to his hippie treatise entitled Steal This Book, such intellectual

property ownership would not clothe the writer with authority to march into the local Barnes &

Noble and take a copy without paying for it. See Abbie Hoffman, Steal This Book (Four Walls

Eight Windows 2002) (1971).

13 In a footnote to the order granting summary judgment, the district court observed that

Carson had now been given a copy of the 24HA worksheet and that Dynegy had ceased using it in

2000, when Carson asserted ownership. Thus that court indicated that Carson’s conversion claim

“would likely fail even if it were not preempted.” However, because the district court did not

make a definitive ruling on this issue, it is not properly before us on this appeal.

17

preemption applies in this matter as Texas’s protecting rights in physical property in this way does

not “obstruct[] the accomplishment of the full purposes and objectives of” the Copyright act. 

Brown v. Ames, 201 F.3d 654, 659 (5th Cir. 2000). We therefore determine that Carson’s

conversion allegation that Dynegy wrongfully withheld tangible copies of 24HA is not preempted. 

Accordingly, this claim must be remanded to the district court for further proceedings not

inconsistent with this opinion.13

4. Declaratory Judgement

By issuing a ruling in favor of Dynegy on the infringement issue, the district court

determined that it was unnecessary to determine ownership of 24HA. Nevertheless, Carson did

ask the district court for declaratory relief on the ownership issue and resolution of the

infringement issue does not resolve Carson’s ownership claim. Thus, it is proper to remand the

ownership question to the district court so that it may determine ownership of 24HA by analyzing

whether 24HA was a work prepared “within the scope of [Carson’s] employment.” 17 U.S.C. §

101; see also Restatement (Second) of Agency § 228 (1958).

IV.
14 After oral argument, Dynegy filed a motion for leave to file a post-argument brief, to

which Carson responded. As the post-argument brief was unnecessary to our rendering this

opinion, we dismiss Dynegy’s motion as moot.

18

Accordingly, we affirm the district court’s grant of summary judgment in favor of Dynegy

and against Carson with respect to Carson’s infringement claim. Yet, we reverse the district

court’s determination that federal copyright law preempts Carson’s conversion claim and remand

this claim for proceedings not inconsistent with this opinion. Finally, we remand the issue of

ownership to the district court.14