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Geophysical Service Inc. v. Tgs-Nopec Geophysical Co.

United States District Court, S.D. Texas, Houston Division

June 19, 2018

GEOPHYSICAL SERVICES, INCORPORATED, Plaintiff,
v.
TGS-NOPEC GEOPHYSICAL SERVICES, Defendant.

          MEMORANDUM AND OPINION

          Lee H. Rosenthal Chief United States District Judge

         The plaintiff, Geophysical Services Incorporated, brought this copyright suit against the defendant, TGS-NOPEC Geophysical Services. (Docket Entry No. 1). TGS moved for summary judgment, Geophysical responded, and TGS replied. (Docket Entry Nos. 96, 98, 99). The parties appeared at a hearing on July 15, 2018 and presented oral argument on their positions.

         Based on the law, the record, and the parties' arguments, the summary judgment motion is granted. Final judgment is entered separately. The reasons for this ruling are explained below.

         I. Background

         Geophysical Services Incorporated is a Canadian company that collects seismic data by bouncing sound waves off the ocean floor, recording the information and processing, transcribing, and storing the information as seismic lines.[1] Geophysical licenses the seismic data to oil and gas companies for use in oil, gas, and other hydrocarbon exploration. Geophysical asserts a copyright interest in the seismic data under United States law.

         In 1999, TGS, a Houston company, requested copies of seismic data that Geophysical had submitted to a Canadian agency in 1982 and 1983, the Canada Oil and Gas Lands Administration, pursuant to Canadian laws and regulations. The Administration's successor, the Canada-Newfoundland and Labrador Offshore Petroleum Board, made copies and sent them to TGS at its Houston address. TGS performed seismic surveys at several of the same locations Geophysical had surveyed in 1982. TGS licensed the seismic data it collected to oil and gas companies. Geophysical discovered TGS's actions in 2013 and sued in May 2014.

         II. Procedural History

         A. The First Motion to Dismiss

         Geophysical's original complaint alleged that TGS directly and contributorily infringed Geophysical's copyrights in the 1982 seismic data by requesting copies from the Board, making the copies it received from the Board available to third parties, creating derivative works by surveying the locations disclosed in the Geophysical seismic lines to collect its own seismic data, which it licensed to third parties, and licensing and distributing copies of these derivative works without including Geophysical's copyright-management information. (Docket Entry No. 1).

         TGS moved to dismiss, arguing that Geophysical's complaint failed to state a claim and that any claim was barred by the act-of-state doctrine and by international comity. (Docket Entry No. 10). After briefing and argument, the court granted TGS's motion to dismiss. (Docket Entry No. 28). The court vacated its dismissal because the opinion relied on grounds that the parties had not expressly raised. (Docket Entry No. 43). The court issued an amended memorandum and opinion and order that again dismissed Geophysical's complaint. Id.

         B. The Interlocutory Appeal

         Geophysical filed an interlocutory appeal challenging the dismissals of the unauthorized-importation basis of its direct infringement claim and the dismissal of the contributory infringement claim. Geophysical Serv., Inc. v. TGS-NOPEC Geophysical Co., 850 F.3d 785, 792 (5th Cir. 2017). The Fifth Circuit affirmed the dismissal of Geophysical's contributory infringement claim on extraterritoriality grounds, but reversed the dismissal of the unauthorized-importation component of Geophysical's direct infringement claim. Id. at 799-800. The Fifth Circuit directed this court to decide on remand which law governs the determination of whether the copies TGS imported were “lawfully made” under 17 U.S.C. § 109, and then to apply that law to the record in this case. Id.

         C. The Second Motion to Dismiss

         Following the Fifth Circuit's remand, TGS filed a renewed motion to dismiss, Geophysical responded, and TGS replied. (Docket Entry Nos. 62, 72, 74). After the court heard oral argument, (Docket Entry No. 79), TGS filed a supplemental reply, Geophysical filed a supplemental response, and TGS filed a second supplemental reply. (Docket Entry Nos. 81, 84, 85).

         On November 21, 201, this court issued a memorandum and order denying TGS's motion to dismiss. (Docket Entry No. 86). First, this court found that a copy is “lawfully made under this title” if the copy is lawfully made in the United States in compliance with Title 17, or in a foreign country in a manner that would comply with Title 17 if United States copyright law applied. Id. at 17; 17 U.S.C. § 602(a)(1). This court declined to dismiss on the basis of an implied license, because the record was insufficient to find a license as a matter of law. Id. at 26. The court stated:

TGS argues that Geophysical's complaint allegations establish an intent to convey an implied license because Geophysical was aware of and complied with Canada's licensing requirement to submit the seismic data and agree to a limited confidentiality period. TGS asserts that the Canadian regulatory regime has, at the relevant times, provided that the submitted data would be disclosed on request after a period of confidentiality, and that Geophysical voluntarily submitted its seismic data to the Board knowing that it could be disclosed when this period expired.
TGS is correct that the complaint alleges Geophysical's participation in this regulatory licensing scheme. Geophysical alleges that it “was required to, and did, submit to the [Board] a copy of [its works].” (Docket Entry No. 1, ¶ 29). But the parties dispute whether this amounted to an implied license and, if so, the parameters of the license that resulted. These disputes cannot be resolved on the present record.
One dispute is whether Geophysical intended to grant the Board an implied license that extended to copying and distribution. Geophysical alleges that the Board “was never authorized to copy or distribute [Geophysical's works], or make derivative works from [its works].” Id. at ¶ 30. As this court previously noted, “[n]either the Act nor the Regulations contain language limiting the Petroleum Board's authority to copy and distribute the seismic line and other data it requires surveyors to submit.” (Docket Entry No. 28, at 15). Instead, the Canadian regulations use broad language that gives the Board “extensive control over the data, including the right to copy and distribute it after the confidentiality period ends.” Id. But even assuming that the Board had the authority to copy and distribute the seismic data it required, the question of Geophysical's intent turns on the information and circumstances available to it at the relevant time. Would a company in Geophysical's position in 1982 and 1983 reasonably understand that the Canadian regulations permitting the Board to disclose the seismic data after the confidentiality period ended could result in the copying and distribution of that data to any requesting party? Did the Board have discretion to decide whether to copy and send the data to those requesting it, as Geophysical argues? (Docket Entry No. 72, at 25; Docket Entry No. 84, at 4). If so, does the Board's discretion affect whether Geophysical intended to grant an implied license that included copying and distribution? And if Geophysical granted an implied license, should Geophysical have reasonably expected the license to extend to importation of copies of its works into the United States?
These questions-and there may be more-cannot be answered on the present record. The questions are important to determine whether Geophysical's participation in the Canadian regulatory regime shows that it granted the Board an implied license to copy and distribute its seismic data and import it into the United States. See Geophysical, 850 F.3d at 799 (the creation of an implied license is a fact question). On the present record, TGS's motion to dismiss on the implied-license ground must be denied.

Id. at 25-27.

         On December 1, the parties were given a deadline to complete discovery limited to the implied-license issue. (Docket Entry Nos. 88, 89). After, TGS moved for summary judgment, Geophysical responded, and TGS replied. (Docket Entry Nos. 96, 98, 99).

         III. Timeline of Important Events

         The following timeline describes the Canadian regulatory regime and the actions of Geophysical and its predecessors as to the seismic data at issue under that regime:

• 1953: The Territorial Regulations of 1953 establishes a Canadian regime governing the submission and disclosure of geophysical data. (Docket Entry No. 81 at 3); Geophysical Serv., Inc. v. Encana Corp. et al., 2016 ABQB 230, ¶ 145 (Ct. Queen's Bench of Alberta 2016).
• 1960: The Canada Oil and Gas Regulations are enacted under the Territorial Lands Act and the Public Lands Grants Act. (Docket Entry No. 81 at 3); RSC 1952, c. 363; RSC 1952, c. 224. The regulations require offshore seismic surveyors to obtain government permission before beginning seismic surveying operations and to submit the resulting seismic data to the government. SOR 60-182, §§ 5(1), 29 (1960). The regulations provided for the “release” of the data after a one-year confidentiality period. SOR 60-182, § 108.
• 1961: The Canada Oil and Gas Land Regulations are amended to clarify the contents of the report that was required to be submitted by geophysical companies and to lengthen the confidentiality period. (Docket Entry No. 81 at 5); SOR 61-253, §§ 28, 54(2), 54(4)(a)-(c), 107(5)(a)(i) (1961).
• 1978: The Canada Oil and Gas Land Regulations are amended again, but no substantive changes are made. (Docket Entry No. 81 at 7); CRC 1518 (1978).
• April 1979: The Department of Energy, Mines and Resources' Resource Management Branch released the eighth issue of “Offshore Exploration, ” which contains information and procedures for offshore operators. (Docket Entry No. 96, Ex. 7). Offshore Exploration provides for the release of “[r]eports of geological and geophysical surveys, ” including “seismic sections and maps.” Id. at 61-62. “Copies” of “seismic sections and maps may be purchased after expiry of the confidential period.” Id. at 62.
• December 1981: The Canadian Parliament passed the Canada Oil and Gas Act, to become effective in March 1982. (Docket Entry No. 81 at 8); Canada Oil and Gas Act, SC 1980-81-82-83 (1982). Under the Oil and Gas Act, the 1978 Oil and Gas Regulations remained in effect to the extent they were consistent with the Oil and Gas Act. (Docket Entry No. 81 at 8); Canada Oil and Gas Act, SC 1980-81-82-83, c. 81, § 62 (1982). “The Oil and Gas Act did not contain a data submission requirement, ” but it does include a disclosure provision. (Docket Entry No. 81 at 8); Canada Oil and Gas Act, SC 1980-81-82-83, c. 81, § 50 (1982).
• January 1982: The Canada Oil and Gas Lands Administration was established, succeeding the Department of Energy, Mines and Resources and the Department of Indian and Northern Affairs Canada. (Docket Entry No. 96, Ex. 3 at ¶¶ 6-7). The Administration's Land Management Branch was “responsible for the negotiation, execution, and administration of exploration and production rights on all federal offshore and Northern lands.” Id. at ¶ 6. The Administration's Resource Evaluation Branch was responsible for “the regulatory regime governing the submission and disclosure of technical data such as seismic lines.” Id. at ¶ 7.
• March 24, 1982: Delaware GSI submitted a permit application seeking permission to conduct the survey that resulted in the creation of the seismic data at issue. (Docket Entry No. 96, Ex. 12). The application contained an Offshore Program Notice signed by a Delaware GSI official, but not yet approved by the Administration. Id. The notice states: “The requirements and services of the Federal agencies concerned are outlined in the publication “Offshore Exploration.” Id.
• May 4, 1982: The Administration approved Delaware GSI's permit application. (Docket Entry No. 96, Ex. 6). The returned Offshore Program Notice contains the same reference to “Offshore Exploration.” Id.
• November 1982: The Administration issued “Geophysical Surveys on Canada Lands: Guidelines for Approvals and Reports.” (Docket Entry No. 96, Ex. 8). The “Guidelines for Approvals and Reports” expressly refer to “Offshore Exploration” as a “recommended reference publication” that “outline[d] the responsibilities and requirements of federal departments and agencies concerned with the offshore, ” and provided the list of “released geophysical/geological reports to April 1979.” Id. at ¶ 1.
• November 26, 1982: According to Geophysical's records, the first submission of the seismic data at issue is made to the Administration. (Docket Entry No. 96, Ex. 11 at 4, Ex. 14).
• January 1983: The Administration issued “Released Geophysical and Geological Reports-Canada Lands, ” pre-dating at least four submissions of the seismic data. (Docket Entry No. 96, Ex. 11 at 4, Ex. 15). The “Reports” confirmed that released seismic lines would be “reproduce[ed]” and “duplicat[ed]” by a commercial firm, and identified 698 speculative and non-speculative geophysical programs that had already been released for reproduction and duplication. (Docket Entry No. 96, Ex. 15 at 5).
• March 8, 1983: Geophysical submitted prints of the seismic data at issue. (Docket Entry No. 96, Ex. 11 at 4, Ex. 16).
• March 21, 1983: Geophysical submitted prints of all Newfoundland data it shot and processed in 1982. (Docket Entry No. 96, Ex. 11 at 4, Ex. 17).
• April 6, 1983: Geophysical submits additional prints of the seismic data at issue. (Docket Entry No. 96, Ex. 11 at 4, Ex. 18).
• November 3, 1983: Geophysical submits additional prints of the seismic data at issue. (Docket Entry No. ...

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