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APPELLEES-CROSS-APPELLANTS
GENERAL ELECTRIC COMPANY AND
POWER MAINTENANCE INTERNATIONAL, INC.’S RESPONSE
TO APPELLANT’S PETITION FOR REHEARING EN BANC
1. Number and Style of Case: Case No. 08-10521, MGE UPS Systems,
Defendants-Appellees-Cross-Appellants.
persons and entities as described in the fourth sentence of Rule 28.2.1 have or may
have an interest in the outcome of this case. These representations are made in order
that the judges of this court may evaluate possible disqualification or recusal.
A. Parties:
1. Plaintiff/Appellant/Cross-Appellee
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3. Defendant/Appellee/Cross-Appellant
4. Amici Curiae
B. Attorneys
Stephen A. Kennedy
KENNEDY, CLARK & WILLIAMS, P.C.
1700 Pacific Avenue, Suite 1280
Dallas, TX 75201
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Kenneth Doroshow
Senior VP, General Counsel
Entertainment Software Association
575 7th Street NW, Suite 300
Washington, DC 20004
Stacy R. Obenhaus
GARDERE WYNNE SEWELL LLP
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Jennifer Pariser
Senior VP, Litigation
Recording Industry Association of America
1025 F Street NW, 10th Floor
Washington, DC 20004
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Keith M. Kupferschmid
VP, Intellectual Property Policy & Enforcement
Software & Information Industry Association
1090 Vermont Avenue NW, 6th Floor
Washington, DC 20005
Andy Tindel
PROVOST iUMPHREY LAW FIRM LLP
112 East Line Street, Suite 304
Tyler, Texas 75702
Robert H. Rotstein
Wade B. Gentz
MITCHELL SILBERBERG & KNUPP LLP
11377 West Olympic Blvd.
Los Angeles, California 90064
David Carson
General Counsel
United States Copyright Office
Library of Congress
101 Independence Avenue SE
Washington, DC 20559
Tony West
James T. Jacks
Thomas M. Bondy
Mark R. Freeman
U.S. Department of Justice
950 Pennsylvania Avenue N.W.
Civil Division, Room 7228
Washington, D.C. 20530-0001
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TABLE OF CONTENTS
Page
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
CERTIFICATE OF SERVICE
CERTIFICATE OF COMPLIANCE
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TABLE OF AUTHORITIES
CASES PAGE
Travelers Cas. & Sur. Co. of Am. v. Ernst & Young LLP,
542 F.3d 475 (5th Cir. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
OFFICIAL TEXTS
17 U.S.C. § 504(b).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
17 U.S.C. § 1201(a)(1)(A).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 4, 8
17 U.S.C. § 1201(a)(3)(A).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 5
MISCELLANEOUS AUTHORITIES
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In its opinion, the panel affirmed the district court's dismissal of MGE's claim
Act (“DMCA”), 17 U.S.C. § 1201, et seq. Section 1201(a)(1)(A) provides that “[n]o
The panel articulated two independent bases for its rejection of MGE's DMCA
claim. First, the panel concluded that MGE’s DMCA claim failed because MGE’s
technology blocked only the ability to use its software, not to copy the software. (Op.
at 7) Second, the panel alternatively concluded that MGE’s DMCA claim failed
because MGE did not produce any evidence that a GE/PMI employee circumvented
MGE does not present a valid DMCA claim.”). MGE's petition for rehearing en banc
Three amici curiae, including the United States, have raised concerns about the
implications of the panel's first holding, which was based on its interpretation of the
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5)(emphasis added) Notably, none of the amici curiae challenge the panel's alternative
holding that MGE’s DMCA claim was also fatally flawed because MGE failed to
present any evidence that GE/PMI circumvented MGE’s technological measures.1 The
only argument MGE can muster to the panel’s alternative holding is an untenable
attempt to excise the circumvention requirement from the plain statutory text.
In light of the reservations raised by the United States (and the other amici
beyond the unique circumstances of this case, GE/PMI does not object to the
government’s suggestion that the panel consider withdrawing its discussion of the
that “[t]his approach would preserve and respect the finality of the panel’s decision,
while at the same time avoiding the need for en banc or Supreme Court review of the
panel’s interpretation of section 1201(a)(1).” (Gov. Br. at 13) The rejection of MGE's
DMCA claim would be undisturbed because it would be fully supported by the panel’s
alternative holding that MGE failed to produce any evidence on the independent
1
ESA et al. Br. at 2 n.2; MPAA Br. at 2 n.1; Gov. Br. at 12–13.
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of the concerns raised by the government and the other amici curiae. GE/PMI also
respectfully suggests that both the panel and the en banc court deny any further
GE/PMI’s response will therefore focus on why the panel's alternative ruling on
“circumvention” is well-supported by the text of the DMCA and does not warrant
reconsideration en banc. GE/PMI’s response also explains why the panel’s ruling that
MGE committed the “fatal error” of failing to prove damages is supported by Fifth
Circuit and Texas precedent and does not require en banc review. As this court has
intended to bring to the attention of the entire court an error of exceptional public
importance or an opinion that directly conflicts with prior Supreme Court, Fifth
MGE’s “circumvention” argument and damages issues do not come close to satisfying
The panel correctly concluded that MGE failed to cite any evidence that a
remove the need for MGE’s technological measure. (Op. at 7) Proof of circumvention
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measure that effectively controls access to a work protected under this title.” Because
the DMCA does not apply to mere use of a copyrighted work without proof of
circumvention, which is all that MGE established at trial, the panel correctly held that
guarding copyrighted material and “does not concern itself with the use of those
materials after circumvention has occurred.” Universal City Studios v. Corley, 273
F.3d 429, 443 (2d Cir. 2001)(emphasis in original). “‘The prohibition in 1201(a)(1)
was necessary because prior to the DMCA, the conduct of circumvention was never
before made unlawful.’” Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d
1178, 1195 (Fed. Cir. 2004)(quoting S. REP. NO. 105-90 at 12 (1998)). Copyright law
MGE attempts to overcome its failure of proof by advancing the novel theory
that “each time the ‘cracked’ software is launched, a new circumvention occurs.” (Pet.
at 13) The plain language of the DMCA forecloses MGE’s argument. The DMCA
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impair a technological measure, without the authority of the copyright owner.” MGE
states that the software was “altered to remove the code lines for MGE’s security key”
but then says that “[t]he act[] of altering the software, by itself, does not ‘circumvent’
the act of breaking the lock on the door does not break the lock on the door.
According to MGE’s logic, the lock is not actually broken until the door is opened,
and each time the door is opened, the lock is broken again. MGE’s bizarre
interpretation, for which MGE cites absolutely no authority, is not consistent with the
3
The government confirms that MGE has “no authority for its argument on this score.” (Gov.
Br. at 13)
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secrets, and unfair competition. But the panel concluded MGE committed the “fatal
error” of failing to prove damages. (Op. at 11–12)4 MGE erroneously claims that the
panel reversed the $4.6 million damage award “[b]ecause MGE allegedly did not
at 13) In fact, the panel reversed because MGE “fail[ed] to prove damages under 17
U.S.C. § 504(b).” (Op. at 13) MGE also erroneously contends that “[t]he panel erred
because it . . . concluded that MGE was required to prove something more than PMI’s
revenues related to infringement.” (Pet. at 14) In fact, the panel concluded that “[i]n
meeting its initial burden, . . . a copyright owner must show more than the defendant’s
total revenue from all of its profits streams . . . . Rather, ‘gross’ revenue refers only
Dawson, 404 F.3d 290, 294 (4th Cir. 2005))(emphasis in original) The panel
concluded that the only evidence introduced by MGE was PMI’s total revenue, which
far exceeded the approximately 10% of revenue reasonably related to the infringement
4
In its principal brief, GE/PMI stated that MGE’s failure to prove damages is yet another
independent ground for disposing of MGE’s DMCA claim. Because the panel did not reach this
issue (Op. at 15), GE/PMI will not address it in this proceeding.
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MGE also chides the panel for failing to “apply or even cite” the court’s
unpublished opinion in Powell v. Penhollow, 260 Fed. Appx. 683 (5th Cir. 2007), a
case MGE never even bothered to cite in any of its briefs. In Powell, the Fifth Circuit
held that “the copyright owner . . . bears the burden of putting on evidence of
Defendants’ gross revenue attributable to the infringement.” 260 Fed. Appx. at 686
(citing Bonner v. Dawson, 404 F.3d 290, 294 (4th Cir. 2005)). Powell is of no help
to MGE because it is entirely consistent with the panel’s decision in this case.
Finally, MGE argues that the panel misapplied In re Bass, 113 S.W.3d 735
(Tex. 2003). (Pet. at 15) The panel correctly noted that “Texas courts have not
§ 45's comment f is controlling in Texas courts is still an open question.” (Op. at 14)
Therefore, the panel made an “Erie guess” that the Texas Supreme Court would not
clearest available statement of Texas law.5 The panel based its opinion in part on
Elcor Chem. Corp. v. Agri-Sul, Inc., 494 S.W.2d 204, 214 (Tex. Civ. App.—Dallas
1973, writ ref’d n.r.e.), which held that in a misappropriation of trade secrets case, a
plaintiff cannot recover damages without offering evidence “to show the actual profit
5
If no state court decisions control, this court must make an “ Erie guess” as to how the Texas
Supreme Court would apply state law. Travelers Cas. & Sur. Co. of Am. v. Ernst & Young LLP, 542
F.3d 475, 483 (5th Cir. 2008).
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re Bass did not adopt wholesale the RESTATEMENT (THIRD) OF UNFAIR COMPETITION;
instead, the court simply “agree[d] with the RESTATEMENT and the majority of
jurisdictions that the party claiming a trade secret should not be required to satisfy all
six factors” before a trade secret is established. 113 S.W.3d at 740. The court’s
comments about the six factors in the RESTATEMENT have no bearing on any of the
issues in this case. The panel did not misapply In re Bass because no Texas court has
adopted comment f’s burden-shifting damage procedure. The panel therefore correctly
held that “[g]iven that comment f’s standard sets a plaintiff’s burden of proof for trade
secret damages lower than the standard applied in Elcor, we conclude that the Texas
Supreme Court would not adopt the burden-shifting procedure of comment f.” (Op.
at 14-15).
CONCLUSION
government’s request that this court withdraw its discussion of the types of “access”
banc.
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Respectfully submitted,
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petition for rehearing en banc with the Clerk of the Court for the United States Court
of Appeals for the Fifth Circuit by using the appellate CM/ECF system on September
9, 2010.
I further certify that the foregoing brief is being served this day on all counsel
Court’s CM/ECF or by U.S. mail for those counsel who are not authorized to receive
Notices of Electronic Filing from the Fifth Circuit Court of Appeals CM/ECF system.
Undersigned counsel, after reviewing the brief, hereby certifies the following:
Appellate Procedure 32(a)(7)(B) because this brief contains 8 pages, excluding the
Appellate Procedure 32(a)(5) and the type style requirements of Federal Rule of
Appellate Procedure 32(a)(6) because this brief has been prepared in a proportionally
spaced typeface using WordPerfect 12 in 14 point Times New Roman font for text
I hereby certify that any and all privacy redactions required by 5th Circuit Rule
I also certify that the electronic submission of this document is an exact copy
346046.3