United States District Court, D. Colorado
MEMORANDUM OPINION AND ORDER
RAYMOND P. MOORE UNITED STATES DISTRICT JUDGE.
parties' cross-motions for summary judgment ask the Court
to determine two issues arising under the Copyright Act of
1976, 17 U.S.C. § 101 et seq. First,
Plaintiff's motion seeks a declaratory judgment that it
owns the copyright in the code to four computer programs.
Second, Defendants' motion asks the Court to find that
Plaintiff, based on its conduct, granted an implied,
unlimited, nonexclusive license to retain, use, and modify
the software programs, which is a complete defense to
Plaintiff's second cause of action for copyright
reasons discussed below, the Court GRANTS Plaintiff's
motion for partial summary judgment. The Court DENIES
Defendants' motion for summary judgment.
following are the undisputed and material facts taken from
the parties' statements of undisputed facts and
Plaintiff and Defendants' Relationship
is a computer software and development company. (ECF No.
118-1, Pl.'s Sep. Statement of Undisputed Mat. Facts
(“Pl.'s SUMF”), Pl.'s SUMF ¶ 2.)
Plaintiff creates, develops, and maintains a variety of
computer software, software applications, data management
applications, and practice management applications.
(Id.) Defendants provide healthcare services directly to
patients and through a network of providers who have been
trained in Defendants' “soft-tissue manipulation
techniques.” (ECF No. 121-1, Defs.' Sep. Statement
of Undisputed Mat. Facts (“Defs.' SUMF”),
Defs.' SUMF ¶¶ 1, 2.)
parties' businesses overlapped as Plaintiff provided
software development and other IT services to Defendants from
2002 to 2013. (Id., Defs.' SUMF ¶ 5.)
Defendants terminated the business relationship with
Plaintiff in 2013-which is also when the parties'
conflicting copyright ownership claims over the programs
began. (Id., Defs.' SUMF ¶ 25.) The
disputes revolve around four programs referred to by the
parties as follows: the (1) Admin Program; (2) EPN Program;
(3) EHR Service Application; and (4) PMS Program.
(Id., Defs.' SUMF ¶ 6.) There are no
written agreements between Plaintiff and Defendants regarding
any of the programs. (Id., Defs.' SUMF ¶
Defendants refer to the programs “collectively, ”
the factual assertions surrounding the Admin and EPN Programs
are very different than those surrounding the EHR and PMS
Programs. As such, the Court will discuss the Admin and EPN
Programs together and the EHR and PMS Programs together.
The Admin Program and EPN Program
parties do not dispute that the Admin Program and EPN Program
were developed at Defendants' request to assist in
managing its data. (ECF No. 121-1, Defs.' SUMF
¶¶ 8, 11.) Plaintiff provided both programs on a
monthly basis for which it charged in arrears. (Id.,
Defs.' SUMF ¶¶ 10, 13.) Plaintiff adds that it
only invoiced Active Release Techniques, LLC for use of the
Admin Program whereas it only invoiced ART Corporate
Solutions, Inc. for use of the EPN Program. (Id.,
Defs.' SUMF, AF ¶¶ 10, 13.)
parties also do not dispute that the Admin Program and EPN
Program were hosted on servers owned by Plaintiff.
(Id., Defs.' SUMF ¶ 20.) It is uncontested
that, throughout the parties' business relationship,
Defendants' employees and providers could access and use
both programs. (Id., Defs.' SUMF ¶ 19.) But
Plaintiff asserts that Defendants did not have access to the
source code for the Admin Program or EPN Program; did
not have the ability to modify the programs; and the programs
were never installed on a computer or server owned or
controlled by Defendants. (Id., Defs.' SUMF, AF
¶ 19.) Similarly, Plaintiff contends that only its
employees had access to its servers. (Id.,
Defs.' SUMF, AF ¶ 20.) Plaintiff claims that it, and
it alone, made the conscious decision to limit
Defendants' electronic access to the programs and
Defendants' physical access to its servers.
reply that Plaintiff provided the source code for the Admin
Program and EPN Program in 2008 and again in 2013.
(Id., Defs.' SUMF, Reply to AF ¶
Furthermore, Defendants assert that the Plaintiff provided
them the source code and placed no restrictions on their
access to, or use of, the source code. (Id.) With
regard to hosting the programs on Plaintiff's servers,
Defendants state that it was a decision the parties mutually
agreed upon. (Id., Defs.' SUMF, Reply to AF
¶ 20.) Then, Defendants note that Plaintiff helped
transition the source code to a new vendor and did not
“put any limits on that[, ]” in 2008.
(Id.) Although it is unclear from the parties'
filings, it appears that the preceding factual contentions
are limited to the state of affairs before May of 2013.
2013, Defendants terminated the business relationship with
Plaintiff. (Id., Defs.' SUMF ¶ 25.)
According to Defendants, it was at that time Plaintiff
voluntarily turned over the source code and related files for
the Admin Program and EPN Program for a second time.
(Id., Defs.' SUMF ¶ 26.) Defendants cite
testimony from one of Plaintiff's principals to further
claim that the source code was turned over without any
restrictions on Defendants' access to, or use of, it.
(Id., Defs.' SUMF, Reply to AF ¶ 26.)
to Plaintiff, Defendants requested the source code to the
Admin Program and EPN Program to run the programs on
Defendants' servers so that Plaintiff would not have
access to Defendants' data. (Id., Defs.'
SUMF, AF ¶ 26.) Plaintiff admits that it provided
Defendants the source code to the Admin Program and EPN
Program. (ECF No. 113-3, Resps. to RFA Nos. 9 ant 11 at
25-26.) But Plaintiff contends that after being
“harassed” by third-party vendors, it
“finally acquiesced to [Defendants' demands] with
the promise from [Plaintiff] that [Plaintiff], within a few
months, cease using the Admin Program and the EPN
Program.” (ECF No. 121-1, Defs.' SUMF, AF ¶
26.) And Plaintiff states that it did not give permission to
modify or create derivative works with respect to the Admin
Program and EPN Program. (Id.) Despite
Defendants' promise, Plaintiff asserts that Defendants
continue to use the programs to this day. (Id.)
Defendants state that they paid Plaintiff approximately $2
million between 2002 and 2013. (Id., Defs.'
SUMF, ¶ 23.) Plaintiff responds that Defendants only
paid $1, 747, 531.09 over that time period, of which
“less than 30%” was for use of the Admin Program
and EPN Program. (Id., Defs.' SUMF, AF ¶
The EHR Service Application and PMS Program
to Plaintiff, it created and developed the EHR Service
Application, without any input or assistance from Defendants,
to be marketed to the healthcare industry for record
management-it was not developed for or at the request of
Defendants. (Id., Defs.' SUMF, AF ¶ 6.)
Plaintiff maintains that the PMS Program is merely a version
of its EHR Service Application that has been branded for use
by the Defendants' providers, not by Defendants.
(Id.) Plaintiff insists that the branded version was
created for Defendants pursuant to the following verbal
agreement: (a) an initial payment of $60, 000 from
Defendants; and (b) Plaintiff would give ART Business
Solutions, LLC 50% of any sales proceeds from the branded
version. (Id.; Defs.' SUMF, AF ¶ 33.)
Defendants, relying on allegations in Plaintiff's
Complaint, contend that Plaintiff agreed to create and
develop the PMS Program at Defendants' behest. (ECF No.
121-1, Defs.' SUMF, ¶ 6 and Reply to AF ¶ 6.)
the PMS Program had been developed, the parties agree that
Plaintiff did not voluntarily provide the
source code and related files to Defendants. (ECF No. 121-1,
Defs.' SUMF, ¶ 28.) Plaintiff only provided the
source code after being ordered to do so by a preliminary
injunction that Defendants obtained in state court.
(Id.) The parties further agree that the state court
vacated its preliminary injunction after Plaintiff (as the
defendant in the state court action) prevailed at trial on
all thirty-two (32) causes of action asserted against it.
Defendants direct the Court's attention to a copyright
notice contained in the PMS Program's source code and
several invoices from Plaintiff. (Id., Defs.'
SUMF, ¶¶ 17, 18.) With regard to invoices sent by
Plaintiff, Defendants point to the following statement at the
bottom of the documents: “All source code and Images
created by [Plaintiff] and used by the client become the
client's property when Invoice is paid in full.”
(Id., Defs.' SUMF, ¶ 18.) Plaintiff
counters that the copyright notice contained in the source
code was intended to cover Defendants' logo.
(Id., Defs.' SUMF, AF ¶ 17.) Plaintiff
asserts that the invoices were not related to the programs at
issue and that, in any event, various invoices were never
paid. (Id., Defs.' SUMF, AF ¶ 18.)
Complaint alleges two causes of action related to the
programs. First, Plaintiff seeks a declaratory judgment that
it owns the copyright in the Admin Program, EPN Program, EHR
Service Application, and PMS Program. (ECF No. 60, Compl.
¶¶ 74, 103-114.) Second, Plaintiff alleges that
Defendants are liable for copyright infringement as to each
of the programs. (Id. at ¶¶ 115-126.)
Plaintiff moves the Court for partial summary judgment and a
declaration that it owns the copyright in the Admin Program,
EPN Program, EHR Service ...