A person may make mistakes, but is not a failure until he or she blames others for those mistakes.
--John Wooden
Introduction
And so it is with a federal copyright or trademark infringement claim. The accused infringer.s first impulse is to deny it; the second impulse is often to point the finger somewhere else. Aside from any contractual right to indemnity, the accused infringer will likely assert an equitable indemnity or contribution claim against a third party.1/ However, that indemnity claim should fail, even if "the devil made me do it." Why? In short, because the federal copyright and trademark law each contain comprehensive remedial schemes, the accused infringer has no legal basis to seek either indemnity or contribution from third parties. Allowing the infringer.s indemnity claim would create rights the law did not intend the infringer to have, and federal courts do not allow new rights to be superimposed on a comprehensive statutory scheme. This rule was recently applied by a Federal District Court in San Jose to reject indemnity claims by an alleged infringer.
Equitable Indemnity and Contribution
Claims for contribution or equitable indemnity2/ are not founded on the express or implied provisions of a contract, but simply where equity (may) require that multiple tortfeasors share liability for a particular injury.3/ The equitable indemnity claim may be central to a lawsuit when no contract exists between the parties, or when the contract does not apply to the dispute.
The Lanham Act and the Copyright Act Establishes Comprehensive Remedial Schemes
Sections 502 to 510 of the Copyright Act (17 U.S.C. ' 502-510), and sections 1114 to 1125 of the Lanham Act (15 U.S.C. ' 1114-25), set forth the remedies available, respectively, against copyright and trademark infringers. Both Acts establish comprehensive remedies against infringers, including criminal and civil penalties, seizure and forfeiture by the government, and a private right of action to recover actual and statutory damages, injunctive relief, costs and attorney.s fees. Unlike other federal statutes, such as the Securities Exchange Act of 1934 ("Securities Act"), which contain express contribution provisions for recovery among alleged violators, neither the Lanham Act nor the Copyright Act contain express provisions permitting claims for contribution or indemnity by infringers against "more culpable" third parties.
Comprehensive Remedial Schemes Do Not Permit Creation of New Indemnity Claims
The Supreme Court has repeatedly stated that courts may not impose new rights or claims upon comprehensive remedial schemes. This rule was applied in Northwest Airlines and Texas Industries, Inc. v. Radcliff Materials, 451 U.S. 630, 638, 101 S.Ct. 2061 (1981). In both cases, the Supreme Court held that federal courts may fashion federal common law to supplement a statutory scheme only where a federal rule is necessary to protect uniquely federal interests, or in matters dominated by strong federal concerns, such as admiralty. Courts also may act only where the statute.s language and history reflect Congress. expectation that the federal courts will effectuate the broad mandate by drawing on federal common law. In Northwest Airlines, the Court denied a right to contribution under the Equal Pay Act and Title VII. In Texas Industries, the Court similarly refused to allow contribution under the Sherman and Clayton Acts.
The Court later refined its analysis by distinguishing between contribution rights based on judicially-created claims and statutory claims. In Musick, Peeler & Garrett v. Employees Ins., 508 U.S. 286, 294-98, 113 S.Ct. 2085 (1993), a securities case, the Court recognized a right of contribution among joint tortfeasors was appropriate only because the private right of action (under Rule 10b-5 of the Securities Act) was itself judicially implied, and only after the Court concluded that implying such a right was consistent with the Securities Act.
The Ninth Circuit, among others, has applied this same analysis - barring new indemnity rights where a comprehensive remedial scheme already exists - to claims asserted under the False Claims Act ("FCA") and the Cable Communications Policy Act (47 U.S.C. ' 553, 605). In Mortgages, Inc. v. U.S. Dist Ct. For Dist. Of Nev., 934 F.2d 209, 212 (9th Cir. 1991), an equitable indemnity claim was filed by an alleged violator of the FCA. The Ninth Circuit held that a right for one wrongdoer to recover from another implicates no federal interest, and that the comprehensive statutory scheme of the FCA made supplemental remedies inappropriate. Notably, the Ninth Circuit in Mortgages stressed that the indemnity claim was barred under both federal and California law, stating that where a court has found no basis for indemnity under federal law, "there can be no right to assert state law counterclaims that, if prevailed on, would end in the same result." Mortgages, 934 F.2d at 214.
Don King Prod./Kingvision v. Ferreira, 950 F.Supp. 286 (E.D. Cal. 1996); aff.d, Doherty v. Wireless Broadcasting Systems of Sacramento, Inc., 98 C.D.O.S. 6272 (9th Cir., 1998) followed Mortgages. There, the District Court found that the comprehensive statutory scheme of the Cable Communications Policy Act precluded an equitable indemnity claim by a party sued for intercepting the pay-per-view showing of a boxing match. The Ninth Circuit upheld that ruling on appeal. The same analysis has been applied to reject indemnity for other federal claims where statutes are part of a comprehensive remedial scheme.4/
Indemnity Claims Are Not Permitted Under the Federal Trademark and Copyright Law Due To Their Comprehensive Remedial Schemes
The result in Mortgages and Don King has previously been reached in the copyright and trademark context, but without extended analysis.5/ In Getty Petroleum Corp. v. Island Transp. Corp., 862 F.2d 10 (2nd Cir. 1988), the Second Circuit affirmed dismissal of a claim for contribution made by alleged trademark infringers under the Lanham Act. In Johnston v. Smith, 1997 WL 584349 (N.D. Ga. 1997), the court rejected an indemnity claim asserted by a party infringing the copyright on Bonnie Rait.s song "Let.s Give Them Something to Talk About." Similarly, in dicta, indemnity rights for alleged copyright infringers were rejected in Polygram Intl. Pub., Inc. v. Nevada/TIG, Inc., 855 F.Supp. 1314, 1334 (D.Mass. 1994)
In a recent unpublished decision in Ansel Communications, Inc., v Novell, Inc., (U.S.D.C., N.D. Cal. San Jose Division, Case No. C97-21088), United States District Court Judge Ronald M. Whyte provided a comprehensive analysis for rejecting an alleged infringer s claims for equitable indemnity under the Copyright Act and the Lanham Act.6/
In short, Ansel sued Novell. Novell counterclaimed, asserting federal copyright and trademark infringement claims against Ansel concerning Ansel.s sale of Novell.s NetWare software. Ansel sued two distributors of the software, seeking equitable indemnity for Novell.s claims. One distributor, Ingram Micro, moved to dismiss the indemnity claim asserted by the infringer.7/
The motion was granted. The court, citing Texas Instruments, Getty and Mortgages, held that there is no right of indemnity under either federal copyright and trademark law, and dismissed the indemnity claims for the federal copyright and trademark infringement claims without leave to amend. In an extensive analysis, the court concluded that the relevant authorities made implication of an indemnity right for alleged copyright or trademark infringers inappropriate, and that neither statutory scheme provided for express indemnity rights among joint tortfeasors. The court also rejected the infringer.s assertion that claims for contributory and induced infringement of copyrights and trademarks 8/ are judicially-created rights of action that permit a federal court to imply a right of indemnity.
Conclusion
Equitable indemnity claims are almost reflexively asserted. However, as explained above, infringers under either the Copyright Act or the Lanham Act may not assert equitable indemnity claims. Paraphrasing John Wooden, infringement is a mistake, but an infringer.s demand for equitable indemnity is doomed to failure.
Endnotes
1/Contractual indemnity claims are governed by the particular agreement; also, certain state law claims may not be subject to the bar on indemnity claims described here. Both topics are beyond the scope of this article.
2/Technically, contribution seeks recovery for only part of an actual or anticipated liability, and indemnity seeks recovery for all of it. Practically speaking, both courts and parties use the terms interchangeably. See Baird v. Jones (1993) 21 Cal.App.4th 684, 691. (Describing continuum for comparative equitable indemnity.)
3/Most jurisdictions, including California, recognize a right to contribution among joint tortfeasors. Northwest Airlines v. Transport Workers Union, 451 U.S. 77, 86-87, 101 S.Ct. 1571, 1578 (1981); Far West Financial Corp. v. D&S Co. (1988) 46 Cal. 3d 796, 808. (comparative equitable indemnity under California law); Cal. Code Civ. Proc. ' 875 (statutory right to contribution).
4/E.g., U.S. v. Cannons Eng. Corp., 899 F.2d 79, 92 (1st Cir. 1990) (no right to indemnity under CERCLA because Congress prohibited contribution in certain circumstances, and court refused to "make an end run around the statutory scheme" by creating a right to indemnity).
5/Equitable indemnity has also been rejected under federal patent law because of its comprehensive statutory scheme and the absence of any legislative intent to allow courts to fashion new remedies. Jack Frost Laboratories Inc. v. Physicians & Nurses Manuf. Corp., 35 U.S.P.Q.2d 1631, 1634 (S.D.N.Y. 1995).
6/"Order Granting Third Party Defendants. Motions to Dismiss," Docket Sub No. 53 (October 13, 1998).
7/The authors represent Ingram Micro in that action.
8/E.g., Sony Corp. v. Universal City Studios 104 S.Ct. 774, 785 (1984) (copyright) and Inwood Laboratories v. Ives Laboratories, 102 S.Ct. 2182, 2188 (1982) (trademark)
This article was originally published as a Intellectual Propery Update (May 1999), a Sheppard, Mullin, Richter & Hampton LLP publication.