IP Law Daily Automobile loyalty program certificates protected by copyright, infringed by competitor
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Friday, July 30, 2021

Automobile loyalty program certificates protected by copyright, infringed by competitor

By Brian Craig, J.D.

The copyrighted lifetime powertrain loyalty program certificate for automobiles is not a generic fill-in-the blank form.

In a copyright infringement case involving competing administrators of automobile service contracts, the federal district court in Columbus, Ohio, has concluded that a loyalty program certificate for automobiles is protected by copyright. In granting summary judgment in favor of plaintiff Premier Dealer Service, Inc. ("PDS") on its copyright infringement claim, the court determined that PDS owned a valid copyright in the language found in the lifetime powertrain loyalty program certificate and that defendant Allegiance Administrators, LLC ("Allegiance") infringed the copyright. The language in the loyalty program certificates was not a generic fill-in-the blank form; it included some minimal degree of creativityThe damages on the copyright infringement claim will be left for trial (Premier Dealer Service, Inc., v. Allegiance Administrators, LLC, July 29, 2021, Sargus, E.).

PDS and Allegiance compete as administrators of automobile service contracts, or extended warranties. PDS filed suit against Allegiance in Ohio state court. Allegiance removed to the federal district court. PDS then filed a motion for preliminary injunction to enjoin Allegiance from using its alleged trade secrets. The court denied PDS’s motion for a preliminary injunction. PDS then filed an amended complaint for misappropriation of trade secrets and copyright infringement. PDS owns two registered copyrights for its Lifetime Powertrain Loyalty Program (LPLP) Certificates. Allegiance filed counterclaims for tortious interference with contract or business relationships, common law unfair competition, and a declaratory judgment that PDS did not have a protectable copyright interest. The parties cross-moved for summary judgment.

Trade secrets. The court first held that the PDS’s claim for misappropriation of trade secrets failed because the undisputed evidence established that another entity owned the alleges trade secrets. The court found that Tricor Automotive Group, which is not a party to the case and is the obligor in all service contracts relevant to the suit, owed the trade secrets. Therefore, the courtgranted Allegiance’s motion for summary judgment on the claim for misappropriation of trade secrets.

Copyright infringement. Next, the court held that Allegiance was liable for copyright infringement because PDS owned a valid copyright and Allegiance copied original portions of PDS’s copyrighted loyalty program certificates. The copyrighted loyalty certificate was not a generic fill-in-the blank form. While approximately 25 percent of the first page of the two-page form were blank boxes designed for the collecting of customer information, dealer information, and vehicle and certification information, the remaining sections conveyed an abundance of information about the lifetime powertrain program.

Furthermore, the court held that the information in the certificates did not fall under the scenes a faire doctrine. In the context of literature, this doctrine excludes copyright protection for incidents, characters, or settings which are as a practical matter indispensable, or at least standard, in the treatment of a given topic. The testimony showed that the loyalty certificate was not a product warranty nor was it a service contract. While the language in the loyalty program certificates might seem dull or boilerplate, all that is necessary for copyright protection is some minimal degree of creativity—and the language need not be novel. Allegiance failed to rebut PDS’s presumptively valid copyright.

The court also found that Allegiance copied original portions of PDS’s copyrighted certificate to support the second prong of copyright infringement. The copied language met the low threshold for originality required for copyright protection. It is undisputed that Allegiance created the new certificate nearly verbatim from a derivative certificate without authorization from PDS in Ohio.

Therefore, the court granted summary judgment in favor of PDS on its copyright infringement claim. Because PDS did not move for summary judgment on damages, the court decided that damages on the copyright infringement claim will be left for trial.

Tort counterclaims. Lastly, the court held that PDS was entitled to summary judgment on Allegiance’s counterclaims for tortious interference with contract or business relationships and common law unfair competition.

The Case is No. 2:18-cv-00735-EAS-CMV.

Attorneys: Scott R. Thomas (Hemmer Defrank PLLC) for Premier Dealer Services, Inc. Christopher W. Tackett (Narone Ltd.) for Allegiance Administrators, LLC.

Companies: Premier Dealer Service, Inc.; Allegiance Administrators, LLC; Dimension Service Corporation; Tricor Automotive Group

MainStory: TopStory Copyright TradeSecrets GCNNews OhioNews

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