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Timestamp: 2019-04-22 11:07:23+00:00

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While recently some jurisdictions have recognized conversion's applicability to intangible property, others have been hesitant to adopt that approach.3 This article will explore the history of conversion, from its origin dating back to 11th century England and through its many transformations to its current form, with the groundbreaking New York case of Shmueli v. Corcoran Group and its effects on conversion in the digital age.
Prior to Shmueli v. Corcoran Group, there had never been a New York decision to rule that intangible property could be converted. The Court of Appeals in Sporn v. MCA Records discussed the topic but failed to expressly rule on the subject.16 In that case, Kae Williams, who discovered the rock and roll band "The Silhouettes," arranged for the band to record the song "Get a Job" in late 1957. That year Williams leased Ember Records the rights to "Get a Job," but maintained a reversionary interest in case the company was ever liquidated. When the company was liquidated in 1965, Williams claimed he reacquired all rights associated with "Get a Job." Over his objection, Ember sold the rights to Bell Records which continued to use the song.
Shmueli is significant for being the first New York State court case to allow a cause of action sounding in conversion for the loss of intangible property. While, as the court noted, intangible property could be converted if it were represented in a tangible form, the law had not expanded conversion to cover property without such representation. The court refused to draw the traditional distinction between documents in digital format and those written on paper. The Shmueli court held that conversion applies to an electronic record as much as it applies to a paper record because of the expedience by which the latter can become the former.21 The court's reasoning is prophetic, yet remains the furthest New York has extended conversion to intangible property.
Three years after Shmueli, the New York Court of Appeals in Thyroff v. Nationwide Mutual Insurance Company ruled that electronic records that were indistinguishable from printed documents were subject to the claim of conversion.22 In that case, an insurance agent who was terminated at will was thereafter unable to retrieve his personal information stored on the company's computers. Those records included customer contacts and related data.
In one such case, the plaintiff alleged that "defendants wrongfully copied and displayed material, including images of handbags, from her website and improperly displayed said material on other locations o[f] the web, without her permission...."26 Plaintiff sued, inter alia, for conversion. The Supreme Court of New York County did not expand the tort to include the taking of pictures from one's website.
Similarly, in MP Innovations v. Atlantic Horizon Intl, plaintiff alleged defendant converted a product, system and formula of which plaintiff was the rightful owner.27 This product included an array of methodologies, strategies and information by which a detox patch could be sold on a mass media market scale. Again, the Supreme Court of New York County held that the scope of conversion had not been expanded to include information which had never been fixed in a digital or virtual form. Plaintiff's argument to read Thyroff broadly failed.
The Court of Appeals has yet to expand the ruling to other forms of information not fixed in digital or virtual form. Shmueli and Thyroff remain the farthest the New York courts have gone in expanding conversion to digital or intangible property.
As it stands, in order to maintain a successful cause of action for the conversion of an intangible item in New York four elements must be met: (1) the plaintiff must have ownership of the converted item; (2) the intangible item must be recorded in digital or virtual format and must be indistinguishable from its printed or physical form; (3) the plaintiff must be unlawfully denied dominion or control of the thing; and (4) there must be resulting damages.
Originating as an appeal in 11th century England, conversion has done away with many of its traditional elements. While some remain, Shmueli and Thyroff have extended conversion's protection to intangible property. Though subsequent cases have limited the holdings in Shmueli and Thyroff, plaintiffs can now recover the full value of their converted item at the time of the tort.
Andrea M. Alonso and Kevin G. Faley are partners of Morris Duffy Alonso & Faley. Harris Peskin, a paralegal, assisted in the preparation of this article.
1. "Conversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel." RESTATEMENT (SECOND) OF UNFAIR COMPETITION § 222A (1977).
2. See Sporn v. MCA Records, 58 N.Y.2d 482, 489 (1983).
3. Texas is one jurisdiction that has yet to depart from the traditional distinction. See Express One Int'l v. Steinbeck, 53 S.W.3d 895, 901 (2001).
4. See J.B Ames, "The History of Trover," 11 HARV. L. REV. 277, 278 (1897).
5. See id. at 278, 283; Lawrence H. Hill, "A New Found Haliday: The Conversion of Intangible Property-Re-Examination of the Action of Trover and Tort of Conversion," 1972 UTAH L. REV. 511, 514-16 (1972) (discussing the differences between trespass and appeal).
6. Hill, supra note 5, at 283; See Val D. Ricks, "The Conversion of Intangible Property: Bursting The Ancient Trover Bottle With New Wine," 1991 BYU L. REV. 1681, 1710 (1991).
7. Hill, supra note 5, at 518. Wrongful detention could be cured by returning the property before the action. Id.
8. Id. at 517-18. Plaintiffs often had difficulty proving detinue because they were unable to identify subtle nuances of the stolen item. Moreover, plaintiff had to prove wrongful detention to recover damages under detinue. If defendant returned the item, in any condition, to the plaintiff, then plaintiff could not recover. Id.
9. RESTATEMENT (SECOND) OF TORTS §242 cmt. d (1965).
10. RESTATEMENT (SECOND) OF TORTS §242 cmt. D (1965). Thyroff v. Nationwide Mut. Ins., 8 N.Y.3d 283, 288 (2007) (quoting RESTATEMENT (SECOND) OF TORTS §222A cmt. b (1965)).
11. RESTATEMENT (SECOND) OF TORTS §222A(1).
12. Republic of Haiti v. Duvalier, 211 A.D.2d 379, 384 (1st Dept. 1995).
13. Express One Int'l., 53 S.W.3d 895, 901; see also Ames, supra note 4, at 278.
15. Ricks, supra note 6, at 1686 (citing Ayers v. French, 41 Conn. 142, 151 (Sup. Ct. of Errors, 1874)).
16. Sporn v. MCA Records, 58 N.Y.2d 482, 489 (1983).
17. "While it is true that an action for conversion will not normally lie, when it involves intangible property, an action involving infringement of property rights by virtue of misappropriating tangible property-in this case the master recording-should properly be considered an action to recover for conversion of that property." Id.
18. See generally 18 U.S.C. §1832 (2012) (outlining the criminal repercussions of conversion); Cal. Civ. Code §3336 (West).
19. Shmueli v. Corcoran Grp., 9 Misc.3d 589, (N.Y. Sup. Ct. N.Y. Cnty. 2005).
21. Id. at 590, 592.
22. Thyroff v. Nationwide Mut. Ins., 8 N.Y.3d 283, 292-93 (2007).
23. The 2003 S.D.N.Y. case held that ideas could not be converted but similar to the Thyroff holding, the tangible expression or implementation of that idea could be. Astroworks v. Astroexhibit, 257 F.Supp.2d 609, 618 (S.D.N.Y. 2003).
25. The notion of dominion stems from the case of Fouldes v. Willoughby which held dominion is the right to "use of [the chattel] at all times and in all places." Ricks, supra note 5, at 1690-91 (citing Fouldes v. Willoughby, 151 Eng.Rep. 1153 (Ex.1841)).
26. Leser v. Karenkooper.com, 18 Misc. 3d 1119(A), (N.Y. Sup. Ct. N.Y. Cnty. 2008).
27. MP Innovations v. Atlantic Horizon Intern., No. 604133/2007, 2008 WL 7729118 (N.Y. Sup. Ct. N.Y. Cnty. 2008).
28. State v. Seventh Regiment Fund, 98 N.Y.2d 249, 259-60 (2002).
29. Independence Disc. v. Bressner, 47 A.D.2d 756, 757 (1st Dept. 1975).

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