Expediters International of Washington, Inc. v. Direct Line Cargo Management Services, Inc.

A Taiwan company, Direct Line Cargo Management Services, Inc. (CMS-Taiwan), was associated with Direct Line Cargo Management Services, Inc. (CMS-USA) (defendant), a New Jersey corporation. During that association, CMS-Taiwan granted to CMS-USA and to affiliated Asian companies a license to use copyrighted software. Later, however, CMS-Taiwan became associated with Expediters International of Washington, Inc. (EI) (plaintiff). This association resulted in CMS-Taiwan granting EI a license for the software and terminating the earlier software license to CMS-USA and to the affiliates. EI sued CMS-USA, alleging that CMS-USA had continued to use the copyrighted software following expiration of the earlier license from CMS-Taiwan. EI asserted several claims, including copyright infringement. CMS-USA admitted in open court that it had continued to use the software after the license expired. George McKenzie, CMS-USA’s president, testified that the software was extremely valuable to the companies’ businesses. The software had enabled CMS-USA to receive manifests and billing information. EI adduced evidence that CMS-USA and its Asian affiliates entered into joint business dealings and agency agreements and shared profits, leadership, and ownership. Additionally, CMS-USA characterized itself and its Asian affiliates as a “family of companies.” CMS-USA moved for summary judgment, contending that: (1) the Asian affiliates’ accused copying of the software occurred overseas and was thus beyond the territorial reach of the Copyright Act; (2) CMS-USA’s alleged authorization for the Asian affiliates’ copying did not alone suffice to establish liability for direct copyright infringement; and (3) even if CMS-USA’s alleged authorization were directly actionable under the Copyright Act, EI had not produced evidence that CMS-USA in fact had authorized the Asian affiliates to make copies of the software.