Court Opinion

ID: 6337879
Source: CourtListenerOpinion
Date Created: 2022-05-04 21:01:01.875016+00
Date Added: 2024-06-11T09:25:08.974527
License: Public Domain

IN THE UNITED STATES COURT OF FEDERAL CLAIMS
___________________________________
                                    )
HEALTHeSTATE, LLC,                  )
                                    )
                   Plaintiff,       )
                                    )
            v.                      ) No. 18-cv-34C
                                    )
THE UNITED STATES,                  ) Filed Under Seal: April 15, 2022
                                    )
                   Defendant,       )
                                    ) Reissued: May 5, 2022*
and                                 )
                                    )
ASM RESEARCH, LLC,                  )
                                    )
            Third-Party Defendant.  )
___________________________________ )

                                    OPINION AND ORDER
       Chronicling what it contends are knowing inaccuracies in Plaintiff HealtheState’s

applications for copyright registration, Third-Party Defendant ASM Research, LLC (“ASM”)

requests pursuant to 17 U.S.C. § 411(b)(2) that the Court seek the opinion of the Register of

Copyrights (“Register”) on whether it would have refused registration had it known of the

inaccurate information. The Government separately filed a notice joining ASM’s motion.

       A spate of litigation has since ensued. The Government moved for leave to file a reply to

address the judicial estoppel arguments raised in Plaintiff’s opposition brief. Plaintiff later moved

for leave to file attorney-client privileged communications in camera and to file a sur-reply to

rebut arguments raised in ASM’s briefing. These ancillary motions were opposed by Plaintiff and

ASM, respectively. While the parties were briefing Plaintiff’s motion, the Government submitted

a Notice of Supplemental Authority advising the Court of the Supreme Court’s recent decision in

Unicolors, Inc. v. H&M Hennes & Mauritz, LP, 142 S. Ct. 941 (2022)—a case that featured

prominently in Plaintiff’s judicial estoppel claim. Plaintiff, of course, filed a response to the
Government’s notice. All in all, the parties have submitted 13 filings related to ASM’s referral

request, totaling 6,491 pages (including exhibits). 1 Most of the information is not material to the

narrow legal question presently before the Court: that is, whether the Court must refer the matter

to the Register in light of the allegations that Plaintiff provided knowingly inaccurate information

when registering the copyright at issue in this infringement action.

        For the reasons that follow, the Court GRANTS ASM’s Motion to Refer Questions to the

Register of Copyrights and DENIES AS MOOT the ancillary motions filed by the Government

and Plaintiff.

                                         BACKGROUND

        At issue in ASM’s motion are two sets of software source code registered by Plaintiff with

the United States Copyright Office (“USCO”), titled HEALTHeSTATE and HeVEMR (also

referred to as ROVR). ASM’s Mot. at 5, ECF No. 146. Plaintiff submitted applications to register

HEALTHeSTATE on February 28, 2018, and HeVEMR on March 1, 2018. Id. at 8. They were

given registration numbers TX-8-498-425 (“’425 Registration”) and TX-8-498-391 (“’391

Registration”), respectively. Id. at 5, 8. ASM’s motion alleges that Plaintiff provided four types

of knowingly inaccurate information on its applications for the ’425 and ’391 Registrations.

        The first and second types of knowingly inaccurate information concern the date of

publication of the software and its year of completion. On its applications, Plaintiff indicated that

the relevant software was published and completed in 2013 for the ’425 Registration and 2006 for

        1
        ASM also filed a Motion to Exclude Portions of the January 20, 2022, and February 11,
2022, Declarations of Barry R. Greene as Improper Expert Testimony. See ECF No. 161. That
motion is related in part to evidence Plaintiff submitted with its opposition to ASM’s referral
motion but also concerns additional, unrelated evidence submitted in the course of the parties
exchanging expert reports. The Court need not address the substance of these declarations when
determining whether ASM has met its burden to refer questions to the Register. Accordingly, the
Court will rule on that request separately.
                                                 2
the ’391 Registration. Id. at 5. ASM, however, avers that Plaintiff admitted in sworn interrogatory

responses that the only copyrighted software at issue in this litigation is “HEALTHeSTATE

Version 5.2 Iteration 11 (2011)” and that the same was completed and published in 2011. Id. It

argues that Plaintiff’s contemporaneous internal reports and documentation, among other

evidence, show that Plaintiff knew this software was completed and released in 2011 but chose to

list different dates on its applications to the USCO in February and March 2018. ASM’s Reply at

7, 10, ECF No. 151; see ECF No. 146 at 5–6.

       The third type of knowingly inaccurate information involves Plaintiff’s alleged failure to

identify and disclaim previously published works of authorship on which the software at issue was

allegedly based. ASM argues that Plaintiff’s applications indicate that the software was not based

on any pre-existing material; however, testimony and documents received in discovery show

Plaintiff developed and published “numerous versions of its software to Government and

commercial contractual counterparties well before 2011.” ECF No. 146 at 6; see id. at 23–32.

Among other things, ASM points to evidence that Plaintiff repeatedly touted the close relationship

between HEALTHeSTATE and HEALTHeFORCES—an earlier Government software—“in

promotional materials, plainly demonstrating [its] knowledge of the underlying work.” ECF No.

151 at 15.

       The final type of knowingly inaccurate information relates to the deposit copies that

Plaintiff submitted to the Register, which allegedly did not correspond to the software that Plaintiff

attempted to register. According to ASM, “[t]he deposit copies reflect software dated no earlier

than 2016.” ECF No. 146 at 6 (emphasis in original). Further, citing to analysis by its expert and

testimony of Plaintiff’s CEO (Barry Greene), ASM alleges that a comparison of the deposit copies

and the 2011 source code indicates that the deposit copies had lines of code edited to remove

                                                  3
copyright references to third parties. Id. at 7; see ECF No. 151 at 17. Because Plaintiff made the

alterations, ASM suggests that the deposit copies provided were knowingly inaccurate. Id.

       According to ASM, because it has sufficiently alleged (and demonstrated) that Plaintiff

knowingly provided inaccurate information in its registration applications, the Court must refer

this matter to the Register pursuant to § 411(b)(2). It proposes the following questions on which

the Court should seek the Register’s opinion:

               1. Would the Register of Copyrights have rejected the ’425
               Registration had it known any one or any combination of the
               following:
                      a. The claimed software was not first published on February
                      28, 2013;
                      b. The claimed software was not completed in 2013;
                      c. The claimed software is derived from undisclosed other
                      works, including prior published versions of Plaintiff’s own
                      software; and
                      d. The source code submitted as the deposit copy included
                      material added after February 28, 2013, and was altered to
                      remove third-party copyright notices and insert notices
                      attributing rights to Plaintiff.

               2. Would the Register of Copyrights have rejected the ’391
               Registration had it known any one or any combination of the
               following:
                      a. The claimed software was not first published on January
                      1, 2006;
                      b. The claimed software was not completed in 2006;
                      c. The claimed software is derived from undisclosed other
                      works, including prior published versions of Plaintiff’s own
                      software; and
                      d. The source code submitted as the deposit copy included
                      material added after January 1, 2006, and was altered to
                      remove third-party copyright notices and insert notices
                      attributing rights to Plaintiff.

ECF No. 146 at 7–8.

       In response, Plaintiff does not meaningfully dispute that some information in the ’425 and

’391 registration applications at issue in ASM’s motion was, in fact, inaccurate. Instead, Plaintiff

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posits that any such information was not “submitted as knowingly inaccurate.” Pl.’s Resp. to

AMS’s Mot. at 13, ECF 149 (emphasis in original). It submits a declaration by Mr. Greene, among

other evidence, to support its contention that any inaccuracies were attributable to either (1) a good

faith misunderstanding on Mr. Greene’s part as to the information the applications sought, (2)

Plaintiff’s inability to access critical facts about the source code due to ASM blocking it from the

development environment, (3) disputed questions of law at issue in this case, or (4) harmless errors

that occurred when converting the deposit copies to a .docx format. See id. at 13–14, 16–18, 21–

23. It also argues that ASM’s motion is both untimely, as fact discovery has closed, and

ineffectual, given Plaintiff’s ability to cure any inaccuracies. Id. at 24.

                                           DISCUSSION

       The statute at issue is clear. As a prerequisite to bringing a copyright infringement suit, a

copyright holder must register its works. 17 U.S.C. § 411(a). A copyright registration certificate

provides sufficient grounds to bring an infringement action “regardless of whether the certificate

contains any inaccurate information, unless—(A) the inaccurate information was included on the

application for copyright registration with knowledge that it was inaccurate; and (B) the inaccuracy

of the information, if known, would have caused the Register of Copyrights to refuse registration.”

Id. § 411(b)(1). In a case where such inaccurate information “is alleged,” a court “shall request

the [Register] to advise the court whether the inaccurate information, if known, would have caused

the [Register] to refuse registration.” Id. § 411(b)(2). There is not ample case law discussing this

statutory referral procedure, but courts appear to be in consensus that § 411(b)(2) imposes a

mandatory obligation to refer questions if the statutory criteria are met. See, e.g., Palmer/Kane

LLC v. Rosen Book Works LLC, 188 F. Supp. 3d 347, 348 (S.D.N.Y. 2016) (collecting cases);

Tecnoglass, LLC v. RC Home Showcase, Inc., No. 16-24328, 2018 WL 11353287, at *4 (S.D. Fla.

                                                   5
Sept. 18, 2018) (“[T]hat statute provides that a Court ‘shall’ make a referral upon an ‘alleg[ation]’

that ‘inaccurate information’ was included on an ‘application for copyright registration with

knowledge that it was inaccurate.’ The Court finds this language unambiguous and mandatory.”).

       The courts are divided, however, on the appropriate standard for determining whether the

movant has sufficiently alleged knowing inaccuracies. Some courts, emphasizing the purpose of

§ 411(b)(2) and concerns regarding the potential for its abuse, have required the movant to

demonstrate that the information provided was knowingly inaccurate before it will refer questions

to the Register, but this standard ignores the statutory language. See, e.g., DeliverMed Holdings,

LLC v. Schaltenbrand, 734 F.3d 616, 625 (7th Cir. 2013) (“[C]ourts can demand that the party

seeking invalidation first establish that the other preconditions to invalidity are satisfied before

obtaining the Register’s advice on materiality.”). If Congress intended the referral procedure to

be used only where a party first proves the information was inaccurate and the copyright holder

knew the information was inaccurate, it would have said so. See Russello v. United States, 464

U.S. 16, 23 (1983) (“The short answer is that Congress did not write the statute that way.” (internal

citation omitted)); Desert Palace, Inc. v. Costa, 539 U.S. 90, 98 (2003) (“[W]here, as here, the

words of the statute are unambiguous, the judicial inquiry is complete.” (internal marks omitted)).

       Rather, the statute expressly provides that a court’s duty to refer questions to the Register

is triggered when the movant alleges the type of inaccuracy described in § 411(b)(1). 17 U.S.C. §

411(b)(2). The movant’s burden to prove its factual allegations does not arise until the merits stage

of the proceeding, where the court can more appropriately make the findings necessary to

determine § 411(b)’s scienter requirement. See Tecnoglass, 2018 WL 11353287, at *4 (“requiring

a party to establish scienter prior to referral . . . would in many cases render section 411(b)(2)’s

referral procedure meaningless” because “[s]cienter is a fact intensive determination, often

                                                 6
appropriately decided by a jury”); Olem Shoe Corp. v. Wash. Shoe Co., No. 09–23494–CIV, 2010

WL 3505100, at *3 (S.D. Fla. Sept. 3, 2010) (rejecting argument that referral was “only triggered

if Olem Shoe proves the two requirements in § 411(b)(1) (emphasis in original)); see also Bruhn

v. United States, 144 Fed. Cl. 755, 784 (2019) (granting referral motion before trial and then

making findings with respect to knowing inaccuracies based on the trial record).

       That is not to say, however, that a bare, unsubstantiated allegation would be sufficient

under the statute. Even courts that hew closely to the plain language interpretation of § 411(b)(2)

review the movant’s request to determine whether it has provided some basis for its allegation and

presented a proper question for referral to the Register. See, e.g., Olem Shoe Corp., 2010 WL

3505100, at *3. Here, ASM meets that standard. The motion discusses and attaches various

evidence on which its allegations are based. See, e.g., ECF No. 146 at 17 (pointing to admissions

and evidence that the software at issue in the ’425 Registration was published in 2011 rather than

on February 28, 2013); id. at 20 (arguing that the same evidence shows the software was completed

in 2011 rather than 2013); id. at 21 (identifying evidence that alleged inaccurate publication and

completion dates were known to Plaintiff at the time); id. at 23 (pointing to admissions by Plaintiff

that the ’425 Registration was for code that incorporated previous iterations of the software that

were not disclosed); id. at 30 (identifying evidence that this alleged non-disclosure was knowingly

made by Plaintiff); id. at 35 (pointing to evidence that shows Plaintiff allegedly altered lines of

code containing copyright notices); id. at 39 (identifying evidence that the software at issue in the

’391 Registration was not published in 2006); id. at 40 (indicating evidence that allegedly shows

the ’391 Registration completion date was knowingly mischaracterized by Plaintiff); id. at 41

(discussing evidence that Plaintiff knowingly failed to identify prior published versions of the

software at issue in the ’391 Registration); id. at 43 (pointing to evidence that Plaintiff allegedly

                                                 7
altered lines of code containing copyright notices). ASM also cites case law supporting the

conclusion that referral to the Register in circumstances involving these types of alleged

inaccuracies is proper. Id. at 20, 22, 33, 37–38.

       Indeed, it is largely undisputed that the applications for the ’425 and ’391 Registrations

contain some inaccuracies. See ECF No. 151 at 7, 10, 12, 16. The parties’ primary dispute is

whether ASM has sufficiently alleged that Mr. Greene, who prepared the applications, knew of the

inaccuracies at the time he submitted the applications. The Supreme Court in Unicolors recently

clarified the standard for demonstrating “knowledge” of inaccurate information under § 411(b)(2).

The Court held that “‘knowledge’ means actual, subjective awareness of both the facts and the

law.” Unicolors, 142 S. Ct. at 947 (describing actual knowledge scienter requirement). Thus, a

copyright holder’s providing inaccurate information based on a good faith mistake of law or fact

does not satisfy the statutory criteria of § 411(b)(1). Id. The Court noted, however, that “courts

need not automatically accept a copyright holder’s claim that it was unaware of the relevant legal

requirements of copyright law.” Id. at 948. Actual knowledge can also be proven through a finding

of willful blindness or based on circumstantial evidence that the applicant was actually aware of

the inaccuracy of the information. Id.

       Plaintiff, relying on Mr. Greene’s declaration, states that no information in the applications

was knowingly inaccurate. ECF No. 149 at 24. Mr. Greene avers that he “prepared and completed

the registration with the most accurate information available to him at the time,” acknowledging

that he “is neither an expert in copyright law nor procedure.” Id. at 7. For its part, Plaintiff also

discusses and attaches other evidence that it contends refutes ASM’s allegations to the contrary.

See, e.g., id. at 16, 17, 19. As Unicolors recognized, Mr. Greene’s declaration does not necessarily

defeat ASM’s allegations. Unicolors, 142 S. Ct. at 948. More importantly, the Court need not

                                                    8
resolve these factual disputes at this juncture because ASM is not required to prove knowing

inaccuracies in order to show that referral to the Register is required under § 411(b)(2). See

Tecnoglass, 2018 WL 11353287, at *4. Based on the evidence it presented, the Court finds that

ASM has sufficiently alleged an inaccuracy described in § 411(b)(1) and that the proposed

questions to the Register are proper.

       In light of the evidence submitted in support of ASM’s motion, the Court is not concerned

that ASM is seeking referral to the Register in bad faith. See Schenck v. Orosz, 105 F. Supp. 3d

812, 818 (M.D. Tenn. 2015) (expressing concerns that § 411(b)(2) “introduc[es] a mechanism by

which infringers can throw up roadblocks to merited infringement lawsuits, simply by ‘alleging’

technical violations of the underlying copyright registrations”). Nor does the Court believe referral

will delay the litigation or unduly prejudice Plaintiff. ASM has not requested, and the Court is not

ordering, a stay of the proceedings. See Palmer/Kane, 188 F. Supp. 3d at 349 (holding that the

statute does not “require courts to stay proceedings while a court’s request for an advisory opinion

is pending”). The Court also is not abdicating to the Register its duty to determine questions of

law and fact, as Plaintiff is apparently concerned. 2 Referral will simply allow the Register to

provide the Court with her advisory opinion based on her expert knowledge of the USCO’s

registration policies and procedures. To the extent this issue is relevant to the pending dispositive

motions, the parties may request supplemental briefing to address the Register’s response.

       In granting ASM’s motion, the Court reiterates that it is not making any final

determinations as to whether the ’425 and ’391 Registrations contained inaccurate information or

whether any inaccuracies were known to Plaintiff when it submitted its applications. Especially

       2
        Plaintiff argued that the question of whether the software at issue was derivative of earlier
work “[u]ltimately . . . is a question of law for the Court that should not be determined by the
USCO.” ECF No. 149 at 18.
                                                 9
in light of the Unicolors decision and Mr. Greene’s averments, this will likely require a fact

intensive determination on the merits.

                                         CONCLUSION

       The Court therefore GRANTS ASM’s Motion to Refer Questions to the Register of

Copyrights (ECF No. 146). The Court will refer ASM’s questions to the Register by separate

Order. The Court DENIES AS MOOT the Government’s Motion for Leave to File a Reply (ECF

No. 152) and Plaintiff’s Motion for Leave to File Documents for In Camera Review and to File a

Sur-reply to ASM’s Motion (ECF No. 153). The Court further ORDERS Plaintiff to file a

redacted version of its opposition brief (no exhibits) by no later than April 29, 2022.

       This opinion and order will be unsealed in its entirety after April 29, 2022, unless the parties

submit by no later than April 25, 2022, an objection specifically identifying the protected

information subject to redaction. Any objecting party must submit a proposed redacted version of

the decision and provide the reason(s) supporting the party’s request for redaction.

       SO ORDERED.

Dated: April 15, 2022                                  /s/ Kathryn C. Davis
                                                       KATHRYN C. DAVIS
                                                       Judge

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