Robinson's working relationship with the defendants during the relevant period of time existed solely for the purpose of creating, marketing, and selling Standards of Medical Care. Neither defendant ever had the right to assign any projects to Robinson other than her work on Standards of Medical Care. At all relevant times, Robinson had complete discretion over when and how long to work, provided that she complied with mutually agreed upon deadlines. Robinson was exclusively responsible for the decision to hire the individuals who assisted her in her work on Standards of Medical Care, including Pam Abbot and Gary Stephenson, both of whom were paid by R&R Publishing. The parties never executed a work-for-hire agreement, a written assignment, or any other document expressly transferring or assigning any interest or license in the copyright to Standards of Medical Care. During the time that Robinson was an officer and director of R&R, she received $ 48,875 as compensation for her work.
In April of 1992, Standards of Medical Care was first published by R&R, carrying on its front page a copyright notice in the name of "R&R Publishing, Inc." At all times from and after the date of its first publication, the work carried on its front page a copyright notice in the name of "R&R Publishing, Inc."
As 1992 drew to a close, the relationship between Robinson and Rees deteriorated. Robinson attempted unsuccessfully to negotiate with Rees over the terms and conditions of her continued involvement with R&R. On September 1, 1993, although not authorized to do so by the defendants, Robinson filed an application in her name with the United States Register of Copyrights for copyrights to Volume I of Standards of Medical Care. Robinson's revised applications were granted about one year later, as Copyright Registration Nos. TX 3-603-962, TX 3-804-048, and TX 3-804-047. On September 2, 1993, Robinson's attorney sent a letter to Rees, which stated: "This letter is formal notice that Ms. Robinson has decided to terminate her interest in R&R Publishing as both an Officer and Director of the corporation." On September 13, 1993, R&R submitted an application to the United States Register of Copyrights for registration of its copyright in and to Standards of Medical Care, which was granted in United States Copyright Registration No. TX 3-709-706.
Among other things, the plaintiff seeks a remedy for the alleged infringement of her copyright by the defendants subsequent to the time she resigned as an officer and director of the corporation. She seeks to enjoin the work's further publication by the defendants. Furthermore, she seeks declaratory judgment that the copyright is hers and seeks the cancellation of the registration of the work in R&R's name. The defendants believe that they are entitled to continue publishing Standards of Medical Care without compensating Robinson in any additional sums. They believe they have the exclusive and permanent right to the continuing stream of income generated by the sales of Standards of Medical Care into the indefinite future.
The defendant R&R claims it is entitled to judgment in its favor on the ground that the plaintiff breached her fiduciary duty as an officer and director by her claim of copyright ownership. The defendant Rees claims he is entitled to judgment on the ground that the plaintiff has failed to allege any facts that would justify holding Rees personally liable for any actions he took as an officer and director of R&R Publishing, Inc. In her Opposition, the plaintiff argues that the defendants' positions are not supported by the law.
At all times pertinent to the plaintiff's claims herein, she was an officer and director of the defendant corporation. The plaintiff incorporated the corporation, although she did not contribute to its initial financing. She had an opportunity to buy into the corporation, but declined to do so. She was paid by the corporation, and as an officer and director, she had a fiduciary obligation to provide to the corporation not only services, but her work product. The Court shall hold that the plaintiff violated this fiduciary duty by her actions and as more particularly hereinafter set forth.
I. THE PLAINTIFF USURPED A CORPORATE OPPORTUNITY WHEN SHE SOUGHT COPYRIGHT PROTECTION FOR STANDARDS OF MEDICAL CARE IN HER OWN NAME.
It is fundamental that officers and directors of a corporation occupy a fiduciary relationship to the corporation and its stockholders and must act in utmost good faith in managing corporate affairs. Mayflower Hotel Stockholders Protective Comm. v. Mayflower Hotel Corp., 84 U.S. App. D.C. 275, 173 F.2d 416, 418 (D.C. Cir. 1949) (citations omitted). A corporate fiduciary's duty of loyalty to the corporation undergirds the "corporate opportunity doctrine," which, generally stated, provides that
if there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake, is, from its nature, in the line of the corporation's business and is of practical advantage to it, is one in which the corporation has an interest or a reasonable expectancy, and, by embracing the opportunity, the self-interest of the officer or director will be brought into conflict with that of [the] corporation, the law will not permit [the officer or director personally] to seize the opportunity . . . . And, if, in such circumstances, the interest of the corporation are betrayed, the corporation may elect to claim all of the benefits of the transaction for itself, and the law will impress a trust in favor of the corporation upon the property, interests, and profits so acquired.
Guth v. Loft, 23 Del. Ch. 255, 5 A.2d 503, 511 (Del. 1939).
Because R&R is a District of Columbia corporation, the Court looks to District of Columbia law to ascertain the fiduciary obligations of its officers and directors. See Weiss v. Kay Jewelry Stores, Inc., 152 U.S. App. D.C. 350, 470 F.2d 1259, 1268 (D.C. Cir. 1972). However, the Court knows of no occasion when the District of Columbia Court of Appeals has addressed a situation similar to that presented here. Nevertheless, the Court assumes the District of Columbia would follow the general and well-established corporate opportunity doctrine as expressed above. Cf. Int'l Underwriters, Inc. v. Boyle, 365 A.2d 779 (D.C. 1976).
The corporate opportunity doctrine has been applied to the situation at issue here by a district court in the unreported case Ampersand Productions, Inc. v. Stahl, 1986 WL 2449 (E.D. Pa. 1986). In that case, two principals of a close corporation contested ownership of a copyright to a musical play. The Court held that, although the defendant in that case owned the copyright to the play, by producing the play under the aegis of a separate company, the defendant usurped a business opportunity properly belonging to the corporation. Id.
In an analogous case, McKay v. Wahlenmaier, 96 U.S. App. D.C. 313, 226 F.2d 35 (D.C. Cir. 1955), the Court of Appeals of this Circuit applied the corporate opportunity doctrine when it held that a fiduciary of a corporation misappropriated a land lease that the fiduciary knew would be appropriate for the corporation to acquire since it was in the line of the corporation's business. The Court noted that a fiduciary owes an obligation to a corporation to
develop [an] opportunity for it and in its behalf, and to refrain from doing anything that might work injury to [the corporation] or deprive it of profit or advantage which [the fiduciary's] skill, knowledge and ability might personally bring to it or enable it to realize in the reasonable exercise of its power.