Federal Copyright Preemption Extends to Preempt State Laws Which Protect Material That Congress Expressly Declined to Protect Under Federal Copyright Law: Ultraflo Corp. v. Pelican Tank Parts, Inc. (5th Cir. Jan. 11, 2017)

Recently, we discussed the broad reach of the doctrine of Federal Copyright Preemption.[1] In Ultraflo Corp. v. Pelican Tank Parts, Inc. 2017 U.S. App. LEXIS 509 (Jan. 11, 2017), the Fifth Circuit made clear that not only does the doctrine preempt state laws that protect copyrightable drawings, but it also preempts Texas unfair competition by misappropriation law that seeks to protect the plaintiff Ultraflo's valve design, where Congress, in passing the federal Copyright Act, extended copyright protection to the drawings of the valve but not to the design of the valve itself. In so holding, the Fifth Circuit relied on its decision in Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 596-97 (5th Cir. 2015), in which the Court had held that state laws are preempted if they seek to protect works that fall within the scope of copyright law, even if the works are denied protection under the federal statute, noting "[S]cope and protection are not synonyms" (Ultraflo at *8, quoting U.S. ex rel. Berge v. Bd. of Trs. of the Univ. of Ala., 104 F.3d 1453, 1463 (4th Cir. 1997)).[2] In Spear Marketing, the Fifth Circuit had held, according to Ultraflo, "that state claims based on ideas fixed in a tangible medium of expression fall within the subject matter of copyright even though copyright law does not protect the mere ideas" Ultraflo, at *9, citing Spear Marketing, 791 F.3d at 597. The Ultraflo court added:

The result should be no different for the valve design that Congress also chose to exclude from copyright protection * * * * Allowing state law to protect such works would undermine the "deliberate exclusion" of such subject matter from the federal copyright scheme. Spear Mktg., 791 F.3d at 596.

Ultraflo, at *9-10.

Having determined that the Texas unfair competition by misappropriation law seeks to protect rights falling within the scope of federal copyright law, the Fifth Circuit next turned to the "extra elements" analysis required to determine whether the state law requires proof of added elements not considered under copyright law. "If so, the state law protects rights different than those that the Copyright Act protects and there is no preemption."[3] But the Court's "extra elements" analysis arrived at the same conclusion it had reached when discussing the "subject matter" test:

Similar to what we saw with the subject matter inquiry, the "equivalent rights" inquiry thus looks not at the rights Congress actually provided but at the type of rights it has the power to confer. Withholding a particular right is part of the balance Congress struck between the need for copyright incentives and the value in public access to ideas.[4]

The plaintiff Ultraflo contended that Texas unfair competition by misappropriation law requires a showing of intentional misconduct, thus providing the "extra element" that exempts it from federal preemption. However, the Fifth Circuit, citing R.W. Beck, Inc. v. E3 Consulting, LLC, 577 F.3d 1133, 1148-49 (10th Cir. 2009), held: "That a state law requires scienter as a condition to liability, however, does not save the state law from preemption."[5]

This latest addition to the Fifth Circuit's inventory of cases discussing federal copyright preemption of state law makes clear that the span of federal preemption is, indeed, broad, reaching not only subject matter that Congress chose to make copyrightable, but also subject matter that Congress could have chosen to protect, but did not.

[1] Jacks and Morris, "Federal Copyright Preemption of State Law Claims —Still a Powerful Tool in Commercial Litigation" (Nov. 7, 2016), published at https://www.fr.com/fish-litigation/federal-copyright-preemption-still-powerful-in-commercial-litigation/

[2] "As the Fourth Circuit put it, 'the shadow actually cast by the Act’s preemption is notably broader than the wing of its protection.'  Ultraflo, at *8, quoting, U.S. ex rel. Berge, 104 F.3d at 1463.

[3] Ultraflo, at *10, citing Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 787 (5th Cir. 1999).

[4] Ultraflo, at *13 [Citations omitted].

[5] Id. at 11, note 8.