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7th Circuit: Copyright suit not timely

April 18, 2016

The 7th Circuit Court of Appeals ruled a health care corporation’s attempt to gain back its copyright from materials it created to market a diabetes drug was not timely and affirmed dismissal of the suit.

Consumer Health Information Corp. created patient education materials for Amylin Pharmaceuticals to market Byetta, an injectable diabetes drug. Amylin worked with Eli Lilly Pharmaceuticals to develop it. In the services agreement, copyright for the materials was given to Amylin. Amylin stopped paying Consumer Health in 2006 but continued to use the materials.

Consumer Health filed a complaint seeking copyright infringement in 2013 seeking actual damages and disgorgement of profits attributable to the infringement. Consumer Health had not been paid for its work from December 2005 to March 2006 when it signed the contract, claiming it signed the contract under economic duress.

The U.S. District Court for the Southern District of Indiana said the suit was untimely under two statutes of limitation. Under the contract’s choice-of-law provision, it’s governed by California law, and the statute of limitations for rescission claims is four years. The court also said the suit was untimely under the copyright act’s three-year statute of limitations.

Consumer Health acknowledged it missed the deadline under both circumstances, but claims statutes of limitations do not apply to contract defenses. It said its fraud and duress claims were defensive claims to avoid enforcement of the contract, which says Amylin owns the copyright.

The court said that argument misunderstands the legal rule and its own litigating position. “Amylin didn’t sue Consumer Health to enforce the contract. Consumer Health sued Amylin asking for rescission as a necessary predicate to a claim of copyright ownership and recovery of damages for infringement. In short, Consumer Health is asserting fraud and economic duress offensively, not defensively, and as such cannot avoid the statute of limitations,” Judge Diane Sykes wrote for the panel.

Consumer Health also claimed benefit from the separate-accrual rule, but the court said that only applies to ordinary infringement suits, not copyright ownership suits.

The case is Consumer Health Information Corporation v. Amylin Pharmaceuticals Inc., et al., 14-3231.

 

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