RSA Network, Inc., is a Utah-based company that developed the pilot escort vehicle training program for the state of Utah.  A pilot escort vehicle is a vehicle that guides an oversized vehicle by driving directly in front of or directly behind the oversized vehicle.  RSA’s president, Randy Sorenson, wrote the pilot escort vehicle certification training manual for the Utah program in 1992.  Sorenson registered his copyright in the manual in 1993. 

Evergreen Safety Council is a non-profit Washington corporation that is the administrator for Washington State’s pilot escort vehicle training program.  Sorenson acted as a consultant to the State of Washington in the development of its pilot escort vehicle training program.  Washington State based its pilot escort vehicle training manual on Utah’s manual.  Evergreen’s president sent a draft copy of Washington State’s training manual to Sorenson in 1999, seeking comments and suggestions.  Sorenson did not respond and did not open the letter containing the draft manual until 2010.  Evergreen registered its copyright in a revised version of the Washington State manual in 2003.

In 2009, RSA accused the states of Oklahoma, North Carolina and Washington of infringing its copyright in its pilot escort vehicle training manual.  Evergreen filed a declaratory judgment action for a judgment of non-infringement against RSA.  RSA counterclaimed for copyright infringement, to which Evergreen pleaded the laches defense.  The district court granted summary judgment in Evergreen’s favor, ruling that RSA’s claims were barred by laches.  The Ninth Circuit Court of Appeals affirmed.

Laches.

Laches is an equitable defense that prevents a plaintiff who with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights.

(Opinion pdf page 7).

In cases involving copyright, laches manifests itself when the copyright owner has notice of the intended infringement, but does nothing until after the alleged infringer invests in developing the allegedly infringing work.  The copyright owner asserts her rights only after the allegedly infringing work becomes successful.  The copyright owner essentially speculates with the infringer’s money without taking on risk of her own. 

The defendant asserting laches must prove “both an unreasonable delay by the plaintiff and prejudice to itself.”  (Opinion pdf page 7).

Unreasonable delay.  The court evaluates the  time period between when the plaintiff knew or should have known of the infringement and when the plaintiff filed suit.  The cause of the delay is examined.  Delay is permissible when the plaintiff is required to exhaust an administrative process, uses the time to assess a complicated claim or uses the time to determine whether litigation will be cost effective.  “Delay is impermissible when its purpose or effect is to capitalize on the value of the alleged infringer’s labor by determining whether the infringing conduct will be profitable.”  (Opinion pdf page 8).

RSA’s delay was unreasonable, as it simply slept on its rights.

Prejudice.  There are two forms of prejudice in laches cases: evidentiary prejudice and expectations-based prejudice.  Evidentiary prejudice occurs when evidence has been lost, become stale, degraded or witnesses can’t remember or have died.  In this case, an important witness for Evergreen died and others had either forgotten details or were no longer with the company.  RSA’s own records on developing the Washington State pilot escort vehicle training program had been destroyed.  There was significant evidentiary prejudice.  There was also expectations-based prejudice, as Evergreen probably would not have reproduced and revised the manual multiple times had RSA asserted its claims in 1999, when Evergreen provided Sorenson with its draft manual.

Willfulness exception to laches.  Laches does not apply when the alleged infringer acts willfully, i.e., knows that her conduct is infringing.  There is no willfulness when the alleged infringer reasonably believes that she possesses a license or implied license.  Evergreen did not willfully infringe before RSA filed suit.  Evergreen sent Sorenson a copy of the draft manual, seeking comments.  Evergreen thanked Sorenson for his help in the foreword to its published manual.  Sorenson publicized and advertised his participation in developing Washington’s pilot escort training program.  The Ninth Circuit determined that Evergreen could reasonably believe that it had an express license or at least an implied license from RSA.

Evergreen also did not willfully infringe after RSA started sending it demand letters.  Evergreen argued that the diagrams that RSA claimed Evergreen infringed are scenes a faire for dangerous traffic situations for pilot escort cars.  Scenes a faire is the expression of a commonplace idea and is not protected by copyright.  The Ninth Circuit ruled that Evergreen reasonably believed that the diagrams of dangerous conditions contained in its manual were scenes a faire and that Evergreen did not willfully infringe.

The Ninth Circuit was unwilling to enjoin future acts of infringement by Evergreen.  Evergreen eliminated the similarities between its current manual and RSA’s original manual.  In addition, some of the similarities between the two manuals became available through the public domain. Evergreen is free to use public domain materials.

This case is Evergreen Safety Council v. RSA Network, Inc., No. 11-35680, Ninth Circuit Court of Appeals.