Free Other Notice - District Court of Arizona - Arizona

Merchant Transaction Systems, Inc. vs. Nelcela, Inc., et al. And related Cross and Third-Party Claims No. CIV-02-1954-PHX-MHM

EXHIBIT B (Revised Preliminary Jury Instructions)

Case 2:02-cv-01954-MHM

Document 466-3

Filed 04/06/2007

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Nelcela's Additional Proposed Jury Instruction No. 1 Preliminary Instruction re Claims and Defenses To help you follow the evidence, I will give you a brief summary of the positions of the parties. This case involves competing claims of ownership of computer software. Nelcela, Inc. is one corporation that claims to own the software at issue. Lexcel, Inc. and Lexcel Solutions, Inc. are two separate entities although they refer to themselves as "Lexcel." If you decide Lexcel owns any software, you must also determine if that software is owned by Lexcel, Inc. or Lexcel Solutions, Inc. You cannot simply determine that "Lexcel" owns it. Even though the Lexcel corporation(s), MTSI and Post Integrations, Inc. will often refer to themselves as: the Lexcel Parties, the MTSI Parties, the POST Parties, or the "Joint Parties," those are not true entities. Each of those definitions consists of one or more companies and their owners or officers. You will not ultimately be permitted to find in favor of "parties," but must decide which separate corporation owns the software as no individual is claiming ownership. Ultimately, your decision on ownership will be limited to ownership by Nelcela, Inc., Lexcel, Inc. or Lexcel Solutions, Inc.

Source:

Ninth Circuit Model Civil Jury Instruction 1.2 (with insertions)

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Nelcela's Additional Proposed Jury Instruction No. 2 Preliminary Instruction re Outline of the Trial The next phase of the trial will now begin. First, each side may make an opening statement. An opening statement is not evidence. It is simply an outline to help you understand what the party expects the evidence will show. A party is not required to make an opening statement. The original plaintiff in this case was Merchant Transaction Systems, Inc. ("MTSI"). MTSI sued both Nelcela and Post Integrations. Lexcel, Inc. and Lexcel Solutions, Inc. were not original parties in this matter. During the litigation, Lexcel, Inc. and Lexcel Solutions, Inc. intervened as additional Plaintiffs in this matter. The Lexcel entities sued MTSI, Nelcela, Post, and several individuals. Although Post is a defendant in this matter, Post has "aligned" with MTSI and Lexcel, and those parties entered into an Agreement regarding this litigation. Post, MTSI and Lexcel have now "agreed" that Lexcel owns the software, and they jointly have elected that only Lexcel will move forward in asserting its ownership in this phase of this case. Accordingly, Lexcel will present evidence of its claims that it owns the software at issue, and Nelcela may cross-examine on that evidence. Nelcela will then present evidence that Nelcela owns the software at issue, and Lexcel may cross-examine. After the evidence has been presented, the attorneys will make closing arguments, and I will instruct you on the law that applies to the case. You will then go to the jury room to deliberate on your verdict.

Source:

Ninth Circuit Model Civil Jury Instruction 1.12

(second paragraph modified consistent with proposed instruction I.B).

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Nelcela's Additional Proposed Jury Instruction No. 3 Copyright ­ Defined (17 U.S.C. § 106) Copyright is the exclusive right to copy. The right to copy includes the exclusive rights to: (1) authorize, or make additional copies, or otherwise reproduce the copyrighted work; (2) recast, transform, adapt the work, that is prepare derivative works based upon the copyrighted work; (3) distribute the copyrighted work to the public by sale or other transfer or ownership or lending; It is the owner of a copyright who may exercise these exclusive rights to copy. The term "owner" includes the author of a work, an assignee, and an exclusive licensee. In general, copyright law protects against production, adaptation, and distribution of substantially similar copies of the owner's copyrighted work without the owner's permission. An owner may enforce these rights to exclude others in an action for copyright infringement. Even though one may acquire a copy of the copyrighted work, the copyright owner retains rights and control of that copy, including uses that may result in additional copies or alterations of the work. The holder of a Certificate of Registration is the presumed owner of the work, and another party claiming ownership must overcome the presumption that the Certificate of Registration is valid.

Source:

Ninth Circuit Model Civil Jury Instruction 20.1 (only relevant parts included)

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Nelcela's Additional Proposed Jury Instruction No. 4 Copyright ­ Subject Matter (17 U.S.C. § 102) The works involved in this trial are known as computer programs, that is, a literary work composed of a set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result. You are instructed that a copyright may be obtained in the software at issue in this case.

Source:

Ninth Circuit Model Civil Jury Instruction 20.2 (only relevant parts included)

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Nelcela's Additional Proposed Jury Instruction No. 5 Preliminary Instruction re: Copyright Nelcela, Inc. and the various Lexcel entities each claim to own separate pieces of software at issue. Nelcela claims that its software was written first in time and that Lexcel copyrighted its software only after this litigation began and after it learned of Nelcela's copyrights. Lexcel claims that it wrote its software first in time and that Nelcela copied. To help you understand the evidence in this case, I will explain some of the legal terms you will hear during this trial. DEFINITION OF COPYRIGHT Copyright is the exclusive right to copy. The owner of a copyright has the right to exclude any other person from reproducing, preparing distributive works, distributing, performing, displaying, or using the work covered by copyright for a specific period of time. Names, facts, ideas, procedures, processes, systems, methods of operation, concepts, principles or discoveries cannot themselves be copyrighted. A computer program can be a copyrighted work. The copyrighted work must be original. An original work that closely resembles other works can be copyrighted so long as the similarity between the two works is not the result of copying. COPYRIGHT INTERESTS The copyright owner may transfer, sell, or convey to another person all or part of the owner's property interest in the copyright, that is, the right to exclude others from reproducing, preparing a derivative work from, distributing, performing, or displaying the copyrighted work. To be valid, the transfer, sale, or conveyance must be in writing. The person to whom a right is transferred is called an assignee. One who owns a copyright may agree to let another reproduce, prepare a derivative work of, distribute, perform, or display the copyrighted work. To be valid, the transfer, sale, or conveyance must be in writing. The person to whom this right is transferred is called an exclusive licensee. The exclusive licensee has the right to exclude others from copying the work to the extent of the rights granted in the license.

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HOW COPYRIGHT IS OBTAINED Copyright automatically exists in a work the moment it is fixed in any tangible medium of expression. The owner of the copyright may register the copyright by delivering to the Copyright Office of the Library of Congress a copy of the copyrighted work. After examination and a determination that the material deposited constitutes copyrightable subject matter and that legal and formal requirements are satisfied, the Register of Copyrights registers the work and issues a certificate of registration to the copyright owner. A Certificate of Registration issued by the Register of Copyrights acts as evidence of the validity of the copyrighted work and evidence of the facts provided in the Certificate.

PARTIES' BURDENS OF PROOF Lexcel claims that it owns the copyright of Nelcela's copyrighted software. Lexcel has the burden of proving by a preponderance of the evidence that Lexcel is the owner of the copyright and that Nelcela copied original elements of the copyrighted work. Nelcela claims that Nelcela owns the copyright of the Nelcela Terminal Driver System, the Nelcela Merchant System, and the Nelcela Authorization system. Nelcela has the burden of proving by a preponderance of the evidence that Nelcela is the owner of the copyrights. Nelcela obtained its separate copyright Certificate(s) of Registration from the United States Copyright Office prior to Lexcel having copyrighted any software. Thus, there is a legal presumption that the Nelcela certificates are valid. The Lexcel parties must overcome that presumption by a preponderance of the evidence in order to prevail on ownership. Preponderance of the evidence means that you must be persuaded by the evidence that it is more probably true than not true that the copyrighted work is owned by the party asserting ownership.

Source:

Ninth Circuit Model Civil Jury Instruction 20.0

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Nelcela's Additional Proposed Jury Instruction No. 6 Copyright Interests ­ Authorship (17 U.S.C. § 201(A)) The creator of an original work is called the author of that work. An author originates or "masterminds" the original work, controlling the whole work's creation and causing it to come into being. Others may help or make valuable or creative contributions to a work. However, such contributors cannot be the authors of the work unless they caused the work to come into being. One must translate an idea into a fixed, tangible expression in order to be the author of the work. Merely giving an idea to another does not make the giver an author of a work embodying that idea.

Source:

Ninth Circuit Model Civil Jury Instruction 20.6 (verbatim).

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Nelcela's Additional Proposed Jury Instruction No. 7 Copyright Interests ­ Derivative Works (17 U.S.C. §§ 101, 106(2)) A copyright owner is entitled to exclude others from creating derivative works based upon the owner's copyrighted work. The term derivative work refers to a work based on one or more pre-existing works, such as a translation, abridgement, condensation, or any other form in which the pre-existing work is recast, transformed, or adapted. Accordingly, the owner of a copyrighted work is entitled to exclude others from recasting, transforming or adapting the copyrighted work without the owner's permission. If the copyright owner exercises the right to create or allow others to create a derivative work based on the copyrighted work, this derivative work may also be copyrighted. The original works of authorship in the derivation, such as the editorial revisions, annotations, elaboration, or other modifications to the preexisting work are considered to be the derivative work.

Source:

Ninth Circuit Model Civil Jury Instruction 20.13 (only relevant portions included).

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Document 466-3

Filed 04/06/2007

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Nelcela's Additional Proposed Jury Instruction No. 8 Copyright ­Presumed Validity Nelcela's Claim for Ownership Nelcela, Inc. claims ownership of the software it created. Particularly, the Nelcela Authorization System and the Nelcela Merchant System, the software at issue in this matter. Nelcela was granted a Certificate of Registration by the United States Registrar of Copyrights (USCO) on May 18, 1999 for both its Merchant System and Authorization System. As the holder of the Certificates of Registration, Nelcela is presumed to be the owner of the works. The Lexcel entities must overcome the presumed validity of Nelcela's Certificates of Registration when claiming ownership of the software. Lexcel must show by a preponderance of the evidence that the Nelcela copyright(s), which were granted in 1999, are invalid. Lexcel must also prove by a preponderance of the evidence which Lexcel entity owns the software claimed and that the copyright(s), which were not granted until 2001, are valid.

Source: Ninth Circuit Model Civil Jury Instruction 20.5 (changed to reflect specific facts/claims in the case).

Case 2:02-cv-01954-MHM

Document 466-3

Filed 04/06/2007

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