Harris Market Research v. Marshall Marketing

Citation: Harris Market Research v. Marshall Marketing & Comms., Inc., 948 F.2d 1518 (10th Cir. 1991).

Factual Background
Marshall Marketing & Communications (Marshall) gathers marketing information for televisions and radio stations. Harris Market Research, Inc. (Harris) developed a customized software program for Marshall to assimilate this information for easier analysis. Marshall and Harris entered into a License and Operating Agreement (License Agreement) which allowed Marshall to enter into sublicense agreements for the computer program with televisions and radio stations. Marshall was to pay licensing and processing fees for the use of the computer program and Harris would allow such uses of the software and would also process the information. Marshall failed to make all payments so Harris sent Marshall notice of its intent to terminate. After Marshall orally agreed to cure its payment default, Harris sent a letter on July 15, 1986, agreeing to hold termination in abeyance if certain conditions set forth in the letter were met. Harris contended the conditions were not met and contacted the television stations directly for payment. When Harris finally received the sublicense agreements from Marshall, Harris concluded that it had not billed Marshall the correct amount, sent another notice and refused to undertake any new performance under the agreement. Plaintiff, Harris sued Marshall for breach of a license agreement and copyright infringement. Marshall counterclaimed for breach of the same agreement, misappropriation of proprietary information, interference with sublicense agreements and malicious prosecution of the copyright infringement claim. The jury returned verdicts for both parties finding Marshall liable for breach of the License Agreement and for copyright infringement, and finding Harris liable for breach of the License Agreement, interference with the sublicense agreements, misappropriation of proprietary information, and malicious prosecution of the copyright infringement claim. Defendant asserted on appeal that jury's verdict for both parties in plaintiff's suit were irreconcilable and required a new trial. Defendant also asserted that there were errors in the admission of evidence, denial of pretrial discovery, the award for attorney fees, and the jury instructions.

Appellate Court Decision
The court found that the trial court did not abuse its discretion by finding that the jury verdicts are not inconsistent and denying Marshall's motion for a new trial as the claims/liability of each party can be reconciled. With respect to errors in the admission of evidence, Marshall asserted: the development costs were not recoverable and therefore inadmissible; licensing and processing fees were too speculative and therefore inadmissible; the summaries were inadmissible hearsay; and the letter of July 15 was unfairly prejudicial and should not have been admitted. The court found that the trial court did not abuse its discretion by admitting evidence of Harris's development costs since such damages are recoverable as copyright damages and also found that trial did not abuse its discretion by admitting evidence of Harris's licensing and processing fees due under the sublicense agreements. The court did not consider the summary form as it was raised for the first time on appeal. With respect to errors in pretrial discovery, Marshall contends that the denial of its pretrial request for discovery of information concerning Harris's computer program precluded it from being able to attack the validity of Harris's copyright. The court found that the trial court did not abuse its discretion in issuing the protective order sought by Harris to prevent discovery of information concerning the internal workings of its computer program nor in admitting evidence of the copyright and copyright infringement. With respect to attorneys' fees, the trial court determined Harris was the prevailing party and ordered it to submit a detailed claim for attorneys' fees and expenses, which it did. Marshall alleged that the trial court erred in its determination of who is a "prevailing party." This determination is critical because under the License Agreement, the prevailing party in any litigation is entitled to attorney's fees. The court found that under the net judgment rule, Harris is the prevailing party entitled to attorneys' fees. With respect to jury instructions, the court declined to consider the issue in the absence of a record containing those portions of the transcript on which the parties rely. The court affirmed the trial court's judgment.