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G.D. SEARLE & CO. v. PHILIPS-MILLER & ASSOCS.

October 14, 1993

G.D. SEARLE & CO., Plaintiff,
v.
PHILIPS-MILLER & ASSOCIATES, INC., Defendant.


PLUNKETT


The opinion of the court was delivered by: PAUL E. PLUNKETT

Plaintiff Searle filed this action seeking a declaratory judgment to the effect that it did not misappropriate a marketing scheme presented to it by Philips-Miller. Philips-Miller has counterclaimed, alleging that Searle refused to pay for the program Philips-Miller presented to it, and instead gave the program to Searle's own advertising firm, who implemented it. This rather intricate matter is before us today upon Plaintiff-Counterdefendant G.D. Searle's Motion for Summary Judgment. For the reasons stated below, Searle's motion is denied.

 Undisputed Facts1

 Searle, a Delaware corporation, is a manufacturer and distributor of prescription drugs with its principal place of business is in Skokie, Illinois. Philips-Miller, a New York corporation, is in the advertising, public relations, and consulting business and maintains its principal place of business in New York City.

 In March 1990, Philips-Miller made a confidential presentation to Searle at its office in Skokie. The presentation, both in printed and oral form, described a program which involved daily phone calls to patients to remind them to take their Searle prescription drugs. The oral presentation was made on Philips-Miller's behalf by Dorothy Philips and Ella Shapiro. The parties dispute whether the program involved only a Searle hypertension drug called Calan SR, or several Searle brand drugs. While the printed presentation mentions several Searle drugs, (Def.'s Ex. 1), Philips-Miller's presenter, Dorothy Philips, has testified that her presentation focused entirely on Calan SR. (Def.'s Ex. 16 at P 6.) *fn2"

 Searle employees Greg Baird, Paul Laland and Laura Leber were present at Philips-Miller's presentation. Less than a month after the presentation, Searle told Philips-Miller that it was not interested in the proposal.

 Williams Douglas McAdams, Inc. ("McAdams") is a New York advertising agency that began working for Searle in 1986 or 1987, and is the advertising agency of record for Searle. McAdams is retained by Searle at the rate of $ 22,500.00 per month to develop and present marketing programs to Searle.

 Eugene Fine of McAdams presented *fn3" a "Patient in Compliance" program to Searle in August 1991. Searle employees present were Dr. Sheldon Gilgore, Searle's Chairman, President and CEO, Chuck Fry, Vice President of Public Affairs, and Greg Baird of Searle Public Affairs. The McAdams "Patient in Compliance" program was a proposal that Searle contact users of Calan SR to remind them to take their medication once a week during the first week after the prescription was written, four times during the second week, three times during the third week, and once during the fourth week. Searle avers that it implemented the McAdams proposal, and paid McAdams $ 50,250.00 for its initial development of the proposal and has paid additional sums to McAdams to implement the program.

 Searle argues that no one at McAdams ever saw the Philips-Miller proposal, and several McAdams employees have testified that they never saw the Philips-Miller proposal until they were shown it at their depositions in this case. Philips-Miller, of course disagrees.

 When Philips-Miller got wind of Searle's deal with McAdams, it was mortified. In April, 1992, Philips-Miller threatened to sue Searle over the alleged use of its proposal. Searle, however, launched a "preemptive strike" in May, 1992 by filing the instant case for declaratory relief. Philips-Miller filed counterclaims in June, 1992 seeking relief under the common law theories of misappropriation, quasi-contract and implied contract. Searle moved for summary judgment on two grounds: (1) nothing about Philips-Miller's proposal was novel or unique; and (2) McAdams independently developed its program.

 Upon our initial review of this motion and the pertinent law, we became concerned that part or all of Philips-Miller's claims may be preempted by section 301 of the Copyright Act. 17 U.S.C. § 301. Neither party had raised the issue in the original briefing. In order to benefit from the wisdom of the parties, we ordered additional briefing by minute order on July 7 on the issue of whether Philips-Miller's claims, in sum or in part, are preempted by section 301.

 Searle's 10-page Supplemental Memorandum argues that Philips-Miller's misappropriation claim is preempted by the Copyright Act, but that Philips-Miller's quasi and implied contract claims are not. Philips-Miller, in a 24-page brief, argues that none of its claims are preempted.

 Findings of Fact and Conclusions of Law

 For defendants to prevail on a summary judgment motion, "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, [must] 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." Fed. R. Civ. P. 56 (c). At this stage, we do not weigh evidence or determine the truth of asserted matters. We simply determine whether there is a genuine issue for trial, i.e. "whether a proper jury question was presented." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). If the nonmoving party bears "the burden of proof at trial on a dispositive issue, [however] . . . the nonmoving party [is required] to go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 324, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986), quoting Fed. R. Civ. P. 56 (e).

 I. Preemption Under Section 301 of the Copyright Act

 Section 301 of the Copyright Act, intended to end the dual copyright protection system that existed in the United States since 1790, provides in relevant part:

 
(a) On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. 17 U.S.C. § 301(a).

 Section 301 preempts state law copyright and equivalent claims. Under the statute, there is a three-pronged preemption analysis. Philips-Miller's action is preempted if (1) the work is fixed in tangible form; (2) the work comes within the subject matter of copyright as specified by sections 102 and 103 of the Act; and (3) the legal or equitable rights which plaintiff seeks to enforce are the equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106. Id. See also Baltimore Orioles v. Major League Baseball Players Ass'n, 805 F.2d 663, 674 (7th Cir. 1986), cert. denied, 480 U.S. 941, 94 L. Ed. 2d 782, 107 S. Ct. 1593 (1987); Weigel Broadcasting Co. v. Topel, No. 83 C 7921, 1985 WL 2360, *2 (N.D. Ill. Aug. 21, 1985) (Marshall, J.).

 Section 301(b) expressly provides that a state law cause of action is not preempted where the right protected by the state law is not the equivalent of an exclusive federal right and where it does not come within the subject matter of federal copyright laws, "including works of authorship not fixed in any tangible medium of expression." 17 U.S.C. § 301(b). However, most literary works are within the subject matter of copyright, even if the material cannot be copyrighted. See Om v. Weathers, No. 91 C 4005, 1992 U.S. Dist. LEXIS 8915, 1992 WL 151553, *2 (N.D. Ill. June 23, 1992) (Moran, C.J.).

 B. Section 102 of the Copyright Act

 Our first question must be whether the Philips-Miller proposal falls within the subject matter of Copyright as defined by section 102. Section 102 of the Act, entitled, "Subject Matter of Copyright: In General," provides some examples of "works of authorship" that are protected. 17 U.S.C. § 102(a). Under section 102, a work must meet three criteria. The work must be: (1) fixed in a tangible form; (2) an original work of authorship; and (3) it must come within the subject matter of copyright. Baltimore Orioles, 805 F.2d at 668.

 Section 102(a), though broad in its scope, does not protect mere "ideas:" "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(b). Rather, copyright protects "an author's ...


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