In a case that has been closely followed by participants in the environmental due diligence market, a magistrate judge has issued a report (2024 R&R) in Sanborn Library LLC v. Eris Information Inc., 2024 U.S. Dist. LEXIS 76134 (S.D.N.Y. March 25, 2024) recommending dismissing copyright infringement claims of The Sanborn Library LLC (SBL) against defendant ERIS Information Inc. (ERIS) and granting summary judgment for ERIS on its equitable estoppel defense (2024 R&R).
The case involves the copyright status of 1.3 million large-scale fire insurance maps (Sanborn Maps) dating from 1867 to 1999 that depict commercial, industrial, and residential sections issued in 700,000 separate sheets. It involves complex concepts of copyright law that are beyond the scope of this blog. In general, though, copyright protection lasts for a limited period. After the copyright expires, the work enters the public domain and may be copied, distributed, or otherwise used without approval of the work’s author. A work that secured a copyright between 1923 and 1978 is protected for an initial term of 28 years and then may be renewed for another 67 years for a total of 95 years of protection after which the work moves into the public domain. If a copyright was not renewed at the end of the first 28-year term, and work lost its copyright protection.
Interestingly, a 1961 Copyright Office study found that fewer than 15% of all registered copyrights were renewed. A 2017 studycommissioned by the HathiTrust Digital Library found that over 50% of works published in the U.S. between 1923 and 1964 were in the public domain due to lack of proper copyright renewal. Relevant to this litigation, a 2014 report by the Penn State University Libraries (PSUL) of the copyright status of the 500 post-1922 Sanborn Maps in its collection as part of its digitization project concluded that over half of the Sanborn Maps in its collection that were published after 1922 were in the public domain.
The 95-year period for copyright protection expires at the end of the calendar year. Thus, on January 1, 2024, works published in 1929 have now entered the public domain. This is why the “Steamboat Willie” version of Mickey Mouse entered the public domain on January 1st of this year. (The 1998 Act has been derisively referred to as the “Mickey Mouse Extension Act” because it extended the expiration of the Steamboat Willie copyright from 2004 to 2024).
Before we discuss the allegations of the lawsuit and the Magistrate’s opinion, we will provide the following background on Sanborn Maps and their importance.
What Are Fire Insurance Maps and Why Are They Important?
We have explained in numerous posts why conducting comprehensive historical investigation is the single most important task in environmental due diligence. This is because the prior uses and configuration of properties can significantly differ from current conditions.
Failing to identify problematic prior environmental uses not only jeopardizes the ability of property owners and operators to assert various defenses to liability but it is also a leading source of liability to consultants Indeed, a focus of the two past revisions to the ASTM E1527 standard for performing Phase I Environmental Site Assessments (ESAs) has been to improve historical research.
Fire Insurance Maps (“FIMs”) are one of the “Big Four” standard historical resources that are generally required to be reviewed to satisfy the ASTM historical research objectives (the other three resources are Aerial Photographs, Topographic Maps and City Directories). In many geographic areas, FIMs can be the most critical of these historic resources because they can provide detailed information about how the subject property and its surroundings were used or developed over a period of time.
FIMs originated in London toward the end of the eighteenth century to help fire insurance companies and underwriters assess the hazards associated with the buildings they were insuring. The FIMs depict the size, shape, and construction of buildings, locations of windows and doors, sprinkler systems, and types of roofs. The maps also indicate widths and names of streets, property boundaries, building use, and house and block numbers.
The practice was adopted by American insurance companies in the mid-19th century, and demand for fire insurance mapping grew rapidly after the end of the Civil War.
In 1866, Daniel Sanborn, a civil engineer and surveyor, created the D. A. Sanborn National Insurance Diagram Bureau in 1867 which was incorporated as Sanborn Map and Publishing Company in 1876. Mr. Sanborn died in 1883, but his company continued to grow acquiring rival map publishing firms. One reason FIMs were popular with underwriters was because travel was both expensive and time-consuming at the turn of the 20th century. Agents in possession of FIMs did not have to actually inspect the property because the maps provided sufficient information to assess the risk.
In 1902, the firm’s name was shortened to the Sanborn Map Company (Sanborn I). By 1920, Sanborn had obtained a virtual monopoly of the insurance map industry with only two or three relatively small regional competitors. Indeed, Sanborn Maps so dominated the industry that “Sanborn” and “fire insurance maps” became synonymous-much like a later generation would use “Xerox” when referring to photocopying.
New map production peaked in the early 1930s but dramatically decreased after World War II principally because of changes in the insurance market. Sanborn printed its last catalog in 1950 and created its last new map in 1961. The last Sanborn fire maps were published on microfilm in 1977.
In 1959, Sanborn I assigned all its copyrights in the Sanborn maps to a newly created subsidiary, the Pelham Map Company, which was renamed the Sanborn Map Company, Inc. (Sanborn II). It appears that Sanborn II may have ceased filing copyright applications for new maps and renewals. In 1973, Real Estate Data, Inc. (REDI) acquired the assets of Sanborn II, including its inventory of maps, which were placed into a subsidiary named Sanborn Map Company, Inc. (Sanborn III).
The rise of the environmental due diligence market breathed new life into the importance of FIMs. In 1988, Sanborn III and its parent corporation were sold to Congressional Information Services, Inc. (CIS), a subsidiary of Elsevier Holdings. Sanborn III was renamed Sanborn Mapping and Geographic Information Services (Sanborn Service).
In 1990, Sanborn Service apparently entered into a licensing agreement with University Publications of America (UPA), an imprint of Congressional Information Service. This was followed by a licensing agreement C-H In August 1991.
In 1996, EDR Sanborn, Inc. (EDR Sanborn) entered into an asset purchase agreement to acquire the assets of Sanborn Service, including its inventory of 1.3 million Sanborn Maps located at its Pelham facility along with an assignment of any copyrights associated with Sanborn Maps.
Internal documents produced by EDR during discovery show that EDR Sanborn had questions about the validity of the copyrights of at least 60% of the Sanborn Maps it acquired in 1996, and knew copyrights to many of the Sanborn Maps had expired and were now considered to be in the public domain. EDR Sanborn signed an acknowledgment as part of the 1996 acquisition that many of the Sanborn Maps were in the public domain and that it would only be acquiring physical title to the complete collection.
EDR Sanborn was subsequently merged into The Sanborn Library, LLC. EDR subsequently became the exclusive licensee of all Sanborn Maps for commercial use.
What is the Sanborn Collection
The Sanborn Collection actually consists of several smaller collections of FIMs, including the Library of Congress (LOC) collection, the Pro-Quest LLC (ProQuest) collection and the University Publications of America (UPA) collection. The LOC collection is the largest extant collection of maps produced by the Sanborn Map Company and contains microfilms of Sanborn Maps that had been transferred by the Bureau of the Census to the LOC in 1967.
The LOC collection was first scanned during the early 1990s. In 2014, the LOC selected Historical Information Gatherers (HIG) to digitize a significant portion of its FIMs collection, making many of these maps electronically available in color for the first time. HIG initially digitized approximately 500,000 maps that are free of copyright restrictions and date back to 1867 through the early 1970s.
The ProQuest collection consists of approximately 660,000 digital Sanborn maps dating from 1867-1970 that were originally converted to microfilm by ProQuest’s predecessor, Chadwyck-Healey, Ltd. (CHL) along with approximately 300,000 microfilmed Sanborn Maps from the UPA Collection from the late 19th Century through 1990 that are not included in the LOC Collection.
City and town governments, local libraries and historical societies have partial collections of FIMs that are available online. Many universities have complete or near complete collections for their particular state. However, these library collections generally consist of microfilms of the LOC collection that were made by CHL in the early 1990s. To the chagrin of map librarians across the country, CHL chose to microfilm the map atlases in black and white or grayscale. Because color codes were the primary method for identifying building materials, these scanned versions lost a considerable amount of data contained in the original maps. In addition, many of the digital copies were low-quality scans of black and white maps.
When state or university libraries attempted to digitize color-coded copies of the Sanborn Map atlases, SBL/EDR denied requests despite questions about the validity of its Sanborn Maps copyright. For example, in 1997 the LOC announced plans to scan the Sanborn Maps in its collection, but this effort floundered after EDR objected. A few years later, the J. Willard Marriott Library of the University of Utah (Marriott Library) requested permission to scan and post all 3,000 maps of Utah in its collection. Not only did SBL deny this request but after the Marriott Library posted digital copies of Sanborn Maps that were clearly in the public domain (pre-1924), SBL informed Marriott Library that the terms “Sanborn” and “Sanborn Maps” were registered trademarks of SBL and required the library to insert trademark symbols on every map. Similarly, when the Ohio Information and Library Network and the Ohio Public Library Network sought to post digital Sanborn Maps online, they were pressured to limit access to K-12 students and teachers; students, faculty, and staff of higher education institutions; and public library users, even for images of Sanborn Maps that were considered to be in the public domain. on its to all its citizens.
Available Factual Background on the Litigation
We begin our discussion with the caveat that a large swath of documents produced during discovery are under seal. Even the briefs that are publicly available are heavily redacted.
The origin of this litigation dates to 2010 when ERIS was considering expanding into the U.S. environmental risk assessment data (ERAD) market. At that time, ERIS did not have any historical maps of U.S. locations. During its due diligence, ERIS learned from industry participants and its own ERAD consultant that there were significant questions about the validity of the copyrights to many maps within the Sanborn Collection library.
ERIS engaged an intellectual rights counsel to review the copyright status of the FIMs in this Sanborn Collection and to review EDR’s statements that it owned the copyright to the entire Sanborn Collection. ERIS was reportedly advised that EDR’s statements were untruthful because the copyright to the Sanborn Maps dated from the 19th and early 20th centuries had clearly expired. ERIS then completed its purchasing of the ProQuest Library in December 2010.
Shortly after ERIS entered the US ERAD market in 2013, ERIS was contacted by EDR representatives alleging that ERIS’s use of the Sanborn Maps in its reports infringed copyrights. ERIS’ copyright attorney wrote EDR and the general counsel of EDR’s parent asking which copyright registrations were infringed by ERIS’s conduct. EDR did not respond and ERIS took this the silence as confirmation that EDR did not have any interest in enforcing its copyright of the maps in question.
In 2014, EDR’s parent approached ERIS about acquiring substantially all of ERIS’s assets. During these negotiations EDR did not raise the topic of ERIS infringing on any of copyrights. ERIS subsequently declined the offer and continued to invest in its US operations.
In 2019, SBL filed a complaint alleging ERIS had reproduced and distributed 6,120 Sanborn Map volumes comprising over 150,000 individual maps without authorization in violation of Section 106 of the Copyright Act. Sanborn also alleged that ERIS violated Section 1202 of the Digital Millennium Copyright Act (DMCA) by removing Sanborn copyright management information (CMI) and replacing this marking with its own CMI on the FIMs.
ERIS, in turn, asserted counterclaims against Sanborn Library and EDR seeking declaratory relief for antitrust violations of the Sherman Act and Clayton Act, false advertising under the Lanham Act, defamation, product disparagement, trade libel, deceptive practices, false advertising, and tortious interference with prospective business relations under New York.
2021 Report and Recommendation
In 2021, the Magistrate issued a report and recommendation (2021 R&R) dismissing ERIS’s product disparagement, trade libel, and tortious interference claims, which was adopted by the district court. Sanborn Library LLC v. Eris Information Inc., 2021 U.S. Dist. LEXIS 165496 (S.D.N.Y. 8/30/2021).
However, the Magistrate recommended that some of ERIS’s antitrust and Latham Act claims proceed because ERIS had plausibly alleged that EDR representatives had made “literally false or deliberately misleading representations” that “all Sanborn Maps are protected by copyright and can only be legally used in Phase 1 ESA Reports when obtained from EDR-Sanborn” when EDR knew that many Sanborn Maps were in the public domain. The court found that these misrepresentations were material because they would influence the purchasing decisions of consumers in the ERAD market. The Magistrate also allowed ERIS’s Sherman Act Section 2 claims for sham litigation and product disparagement to proceed.
ERIS alleged that EDR manipulated the ASTM E1527 standard through its leadership position in ASTM. ERIS asserted that EDR influenced the task force developing the Phase 1 standard to include FIMs as one of the historic sources that had to be consulted and copied in the preparation of Phase I ESA Reports while EDR “knew” it would soon have “complete control of the only maps that could satisfy the standard.” The Magistrate found that EDR had a duty under ASTM’s policies and procedures to disclose its impending control of the essential Sanborn Maps and that ERIS had plausibly argued that ASTM would have adopted a different standard had it been aware of EDR’s planned acquisition. Thus, the Magistrate recommended the denial of EDR-Sanborn’s motion to dismiss ERIS’s standards manipulation claim.
2022 Order
In 2022, the Magistrate granted ERIS’s motion to compel the production of privileged documents. The Magistrate found that ERIS “provided a ‘reasonable basis’ to suspect the perpetration of a fraud” based on EDR’s knowledge “that at least some of its maps were out of copyright,” that it “attempted to hide or omit mention of which maps are in or out of copyright,” and that EDR may have engaged in these practices to “induce customers to obtain maps only from EDR and not other sources.” (Docket #210).
2024 Report and Recommendation
After extensive discovery, ERIS moved for summary judgment on its equitable-estoppel defense, Sanborn’s standing to bring the copyright claim, and Sanborn’s DMCA claim. SBL, in turn, cross-moved on ERIS’s estoppel and standing defenses.
SBL Standing and Copyright Validity Claim
ERIS advanced two buckets of arguments. The first bucket was that SBL did not own all or some of the claimed Sanborn Map copyrights because they had not been properly transferred. The second bucket was that those copyrights that were properly transferred to SBL were not valid and enforceable.
Specifically, ERIS argued the following categories of Sanborn Maps are now in the public domain.
- Maps published before 1924 since the copyrights expired by operation of law.
- Maps published between 1924 and 1964 whose copyrights were not effectively renewed, and
- Updates to the Sanborn maps published without an appropriate copyright notice as required under then-existing law.
The Magistrate said there was significant evidence from the record that when EDR representatives asserted to customers that it owned all of the copyrights to the Sanborn Maps and that it was unlawful to obtain or reproduce Sanborn Maps in Phase 1 reports except by purchasing a license through EDR, the company had considerable uncertainty about the validity of its copyrights. According to the Magistrate, EDR Sanborn questioned the enforceability of the Sanborn Map copyrights during its due diligence for the 1996 acquisition of the Sanborn Library. The company’s own internal analysis concluded that the copyrights for the maps it was acquiring had either lapsed or were invalid because predecessors had not been diligent in registering, updating, and/or renewing its copyrights.
In addition, internal documents from 2017 produced by EDR during discovery acknowledged that it had valid copyrights to only 15% of the Sanborn Maps in its collection with 25% of the maps clearly in the public domain. Indeed, as late as April 2018, the Magistrate said internal documents showed EDR was uncertain if it could establish that the Sanborn Maps copyrights were properly transferred to Sanborn III in 1973. In fact, the Magistrate pointed out that EDR signed an acknowledgment as part of its 1996 acquisition of the Sanborn Collection that many of the Sanborn Maps were in the public domain and that EDR was only acquiring the physical title to the complete collection.
As the Magistrate wrote, “EDR’s knowledge of which Sanborn Maps copyrights it owned, and which copyrights were valid and enforceable, was, at best, flimsy and uncertain.”
Because the Magistrate felt that genuine issues of material fact existed as to which copyrights were transferred and which copyrights are valid and enforceable, the 2024 R&R proposed the motions for summary judgment as to Sanborn’s standing to assert its copyright infringement claims be denied.
Equitable Estoppel-
Equitable estoppel is a judicial remedy to prevent unfairness or injustice. It prevents a litigant from enforcing rights if it engaged in some wrongful conduct through its acts or representations. A defendant may assert equitable estoppel as a defense if it can show that it detrimentally relied on a misrepresentation of a material fact.
A party asserting the defense must show that (1) plaintiff had knowledge of the defendant’s infringing conduct; (2) plaintiff either intended that defendant rely on its acts or omissions suggesting authorization or acted or caused the defendant to believe that it could rely on plaintiff’s conduct; (3) the defendant was ignorant of the true facts; and (4) the defendant relied on plaintiff’s conduct to its detriment. Even if a party has established the elements of the defense, a court may still decline to apply it to the case if it believes that equity so requires.
The Magistrate found there was no dispute that the first element of the test was met. For the second prong, the Magistrate said ERIS “has shown that Sanborn’s conduct in the lead-up to filing this lawsuit was misleading.” The Magistrate wrote that EDR-Sanborn failed to follow-up in any manner after its general counsel issued its 2013 copyright infringement. Moreover, this five years of inaction was made more misleading, the Magistrate concluded, when EDR failed to raise the infringement issues during its negotiations to purchase the ERIS assets . Based on this conduct, the Magistrate found that ERIS’ “inference that EDR did not intend to sue for copyright infringement over its use of Sanborn Maps and that the November 2013 letter was merely ‘bluffing,’ was especially reasonable and justifiable given the context of this apparent rapprochement.”
For the third prong, the Magistrate found substantial evidence in the record showing that EDR and its representatives expressed considerable uncertainty about the validity of its copyright to a large swath of the Sanborn Maps, and found it significant that when ERIS reached out to EDR to seek clarification on which copyrights EDR believed were being infringed, EDR did not respond. Accordingly, the Magistrate concluded it was “beyond the realm of plausibility” that ERIS could have known which Sanborn Maps copyrights EDR intended to enforce.
Finally, the Magistrate said the fourth element of the equitable estoppel defense was satisfied because ERIS proceeded with large-scale investments in the US ERAD market partly because of its belief that the risk of EDR bringing infringement litigation was negligible. These investments included expensive “georeferencing” projects to “stitch together” Sanborn Maps, expanding the geographical reach of its product offerings, acquiring a business that provided aerial photography, and adding new software to facilitate overlaying of aerial photographs and historical maps. ERIS sent employees and consultants to collect, scan and/or copy maps from libraries to obtain copies of FIMs that were not in the collections ERIS had purchased earlier.
Because ERIS satisfied all four elements of its equitable estoppel defense, the Magistrate recommended granting ERIS’s motion for summary judgment, denying SBL’s motion for summary judgment, and that the Court enter an order dismissing SBL’s complaint in its entirety.
SBL filed an objection to the 2024 R&R asserting that the Magistrate wrongly concluded there were no triable issues of fact on the four estoppel elements and drew incorrect inferences from the record that ERIS was misled. Moreover, EDR argues that even if there were no disputes on each of the four estoppel elements, the equities of the case did not favor ERIS.
One of the maxims of equity is that a party seeking to invoke an equitable remedy must show that it has “clean hands.” Another equity maxim is that one “who seeks equity must do equity.” SBL points to examples of deceitful behavior by ERIS alleging it misrepresented to ProQuest how it planned to use the Sanborn Maps it purchased and that had instructed contractors engaged to copy Sanborn Maps from libraries to say they were using the Sanborn Maps for research purposes. Thus, EDR asserts, the equities of the case did not favor ERIS or at least should have created a triable issue.
SBL claims that when ERIS decided to enter the US ERAD market, it obtained copies of Sanborn’s maps from Sanborn licensees in the academic market, knew those licenses precluded commercial use of the maps, and knew this conduct created litigation risk. Rather than being lulled by SBL into believing that SBL would not enforce its rights, SBL argues that ERIS made a calculated decision to accept that risk because ERIS concluded that it needed the Sanborn Maps to build a presence in the US ERAD market. In other words, SBL says ERIS chose to proceed not because of SBL’s Sanborn’s conduct but because of business considerations.
SBL points out in its objection that since ERIS continued to infringe on the SBL copyrights after the lawsuit was filed, this shows that ERIS’s decision to infringe was not because SBL misled ERIS about its intention to enforce its copyrights.
Moreover, SBL wrote in its opposition that the fact that ERIS showed the firm was aware of the risk and was not ignorant of the facts. SBL also says the 2013 letter did not have hallmarks that courts generally require to find an inference of misleading conduct since it did not contain an immediate or vigorous threat of enforcement, or a deadline for response. SBL also asserts that it was reasonable that its parent did not mention the potential copyright infringement during the potential negotiation since if the parties proceeded with the acquisition, the copyright infringement would become moot.
Some Concluding Observations
In the 2024 R&R, the Magistrate said there were disputed issues on the merits of the copyright that would have had to be resolved for trial had SBL been estopped from proceeding. Thus, it is possible that the district court may simply adopt the 2024 R&R. However, based on SBL’s opposition, the court may conclude that ERIS did not have sufficiently “clean hands” to warrant equitable relief and decide to deny the parties’ motions for summary judgment in their entirety so that the matter would proceed to trial.
Based on the available evidence, it seems that a trial would likely result in a ruling that a substantial amount of the Sanborn Collection will be found to be in the public domain. SBL should not be surprised by such a ruling since it would only confirm the concerns EDR-Sanborn management raised internally back in 1996 during its pre-acquisition due diligence for Sanborn Collection, as well as the internal analysis leading up to the filing of this lawsuit. Thus, in some respects, SBL would be better off if the district court adopts the 2024 R&R because this would mean that the court would not rule on the merits of the validity of SBL’s copyright claims.
Regardless of what happens next, it is fair to say that the EDR brand has suffered a brutal hit. The case has revealed that EDR perpetuated a false narrative to its customers that it owned all of the copyrights to the Sanborn Maps, that the copyrights covered all of the maps, and that the only way to lawfully use these maps was to purchase a license from EDR – a tale that enabled EDR to maintain a 70%-85% market share of the ERAD.
In addition to misleading statements to customers about the validity of the Sanborn Map copyrights, the case has also exposed some of EDR’s aggressive market strategies and anti-competitive behavior that it has used to maintain its dominance.
We do not write this with a frisson of schadenfreude. For several years, we were a regular contributor to EDR’s Common Grounds webpage. We were perceived as being part of the EDR family and attended many ERAD conferences at EDR’s invitation. At these events, environmental consultants would privately whisper or grumble at what they perceived as EDR’s anticompetitive or exploitative practices. It was hard to square these accounts with the people we associated with at EDR so we dismissed these complaints. So, it has been painful if not disheartening to read about the conduct of some EDR employees with whom we enjoyed a close business and personal relationship.
Regardless of the eventual outcome of this case, it would be hard to overstate its importance on the ERDA market. Environmental consultants now know they may be free to reuse a large quantity of Sanborn Maps they have accumulated over the years without purchasing a new license from EDR, or they may be able to obtain Sanborn Maps from other vendors such as ERIS at a lower price. This, in turn, would lower the cost of due diligence for clients. And then there is the impact that Artificial Intelligence on due diligence-which will be a topic of a forthcoming post.