FI L ED U.S. COURT OF A P P E A LS E LE V E N T H C IR C U IT J ULY 08, 2008 THOMAS K. KAH

N CL ERK

Ho no ra ble Pa sc o M . B ow man I I , Unit e d St ate s Ci rc uit Judg e fo r t

he Ei g hth Cir c uit , * sitti ngby desig nation. [ P U B L I S H ] IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ N o. 05- 1512 9

____ ____ ____ _ D. C. Docket N o. 04-61178 -CV -PCH PETER LETT ERESE AND ASSOCIATES, INC., a Fl or ida c or por at ion , Pl ai nt iff -Ap pe ll an t, ve rs us W ORLD INSTITUTE OF SCIENTOLO GY ENTE RPRI SES, INTERNATIONAL, RELIGIOUS TECHNOLOGY CENTER, INC., CHURCH OF SC IENTOLOGYINTERNATIONAL, INC., al l Ca li fo rn ia co rp or at io ns , CHURCH OF SP IRITUAL TECHNOLOGY , D ef en dants -Appe lle es .

____ ____ ____ __ Appeal f rom the United State s District Court fo r the S outhe rnD istri ct

of F lor ida

____ ____ ____ _ (J ul y 8, 200 8) Be fo re T JO FL A T , H U L L and B O W MA N , Ci rc uit

Jud ge s. *2

TJO FL AT , C ircuit Judg e: T he part ie s inthi s c as e dis ag re e ove r the sc ope of c opy ri ght pr ote ct ionin a bo okab ou t s al es tec hn iq ue s au th or edby the lat e Les li e Ach il le s “ Les” Dane . Pe te r L ette re se & A sso ci at es , I nc . ( “ PL &A ”) , the e xc lus ive li ce nse e of the co py ri ght in D an e’ s bo ok, c la im s th at thr ee e nti tie s a ff

ili at ed w iththe Chur chof Sc ie nto log y

have be eninf

ri ngi ng i ts c opy

ri ght by inc or por at ing portio ns o f the book int o th ei r ins tr

uc tio na l c our se m at er ia ls, and s ee ks d ec larator y and i nj unc tiv e relief. O n cross-m otion s for sum m ary j udgm ent, the district court assum ed that the inf ri nge m en t w as oc curr ing a s a lle ge d bu t r ule d f or de fe ndants . T he c ourt di d so o n tw o a lte rn at ive gr ound s: the inf ri nge m en t w as pe rm iss ibl e unde r the f ai r use do ct rin e; an d P L&A’s su it was b arre d b y lac he s. PL &A now appeals. W e uphold the district court’ s decision as to th ree cl ai m s, but

f ind e rr or in the c ourt’ s a

ppl ic at ionof

the f ai r use doc tr ine and the la ch es de fe nse to a re m ai nin g c la im . W e the re fo re a ff irm , in part , and v ac at e an d rem an d, i n p art . T he or ganiz at ionof

thi s op ini on p ro ce ed s a s f oll ow s. P ar

t I pr es en ts the fa ct ua l ba ck gr ound

and p ro ce dur al his tor

y of the c as e. P ar

t I I af fi rm s th e gr an t of sum m ar y j udgm en t w ithr es pe ct

to tw o c la im s a lle gin g th at de fe ndants ’ ins tr uc tio na l c our se s – i n and o f the m se lve s – c onst itu te inf ri ngi ng d er ivativ e3

works, but conclud es with re spect to two rem aining claim s that there is a genera l iss ue of m at er ia l f

ac t a s to w he the r the c our se m at er ia ls are sub stanti al ly sim ilar to D an e’ s bo ok. P ar

t I II e xpl ai ns the c ont our s of f ai r use , and c onc lud es that i t i s m erited as to som e, but no t all, of defendants’ uses of the book . Part I V c onsid ers th e ap pl ic ab il it y

of t he de fen se of l ach es in a co pyrig ht in fri ng em en t s ui t, a que sti on o f fi rs t i m

pr es sio n inthi s c ir cu it. P ar t Vc onc lud es . I. A. T he c opy ri ght ed w ork inque sti on i s aboo k by L es D an e en tit le d B ig L ea gue S al es Cl osi ng T ec hni que s ( “ Bi g L ea gue S al es ”) . T he intro duc tio n to the book c la im s th at

it s de sc ri pti ons of

“ spe ci fi c te ch nique s and tru e ca se s” collectively

“pinp oint[] the m ost effec tive, m iracle closes” in sales. T he balance of the boo k pr es en ts the se sa le s te ch nique s th ro ugh L es D an e’ s r ec ount ing of personal anecdotes, fr om which the titles of techniques (both g ood andbad) are draw n. T he bookrepeatedly returns to the “ one basic them e” that ea ch sales prospect is clad in a “ brick overcoat” of f ear, and that the well-pre pared salesm an w ill kno whowto ide nti fy dif fe re nt “br ic ks” ( sour ce s of sa le s r es ist an ce ) an d el im in at e th em . T he boo k w as or igi na lly

pub lis he d in197 1 by

the P ar ke r Pu bli shi ngParker Publis hing w as later

taken ove r by

Prentice H all. 1 4 Co m pany and d

uly r eg ist er ed

in Apr il 1971 in co m

pli an ce w iththe f

orm al iti es of 1 the Copyright Act of 1909, 35 Stat. 1075 , 17 U .S .C. § 1 et seq. ( 1976 ed.) . Under the c opy ri ght lawthe n ine ff

ec t, L es D an e w as e nti tle d to an in iti al 28- y ear te rm of co py ri ght pr ote ct ionand the r igh t t o r en ewf or an a ddi tio na l 28 -y ear te rm . 17 U . S. C. § 24 . Sh ortly the re af te r, L . Ro n H ubbard , the f ound er of the Chur chof Sc ie nto log y

( “ the Chur ch ”) and a

pr oli fi c w ri te r in h is o w n r igh t, too k ashi ne to Bi g L ea gue S al es and r ec om m en de d th at

it be use d to tr ai n S ci en tol ogy

“ re gis tr ar s, ” w ho s el l S ci en tol ogy boo ks and s er

vic es to Chur chm em

be rs . T he Hubbard Com

m unication s Of

fice dissem inated a num

ber of policy

letters re gard ing the te ac hin g of sa le sm an shi p te ch nique s and s kil ls f ro m the boo k, and i n 19 72 th e Ch ur ch be ga n t o c reat e a n um be r of co ur se s fo r tr ai ni ng reg is tra rs . T he Chur chde ve lop ed

m at er ia ls f

or use in the se c our se s, inc lud ing

“ ch ec kshe et s” and “ dr ill she et s. ” Ac he ck she et is a ste p- by -s te p li st o f the a ct ion s that a stu de nt i s r equir ed

to take to co m

ple te ac our se , suc h a s th e co m ple tio n of re ad ing a ssi gnm en ts and the pe rf orm an ce of

vari ous pr ac tic al e xe rc ise s, inc lud ing sa le s dr ill s. S tud en ts f

orm pa ir s, or “ tw ins , ” to p er fo rm

the sa le s dr ill s – g en er al ly inv olv ing som e fo rm

of r ole play – w hic h are de sc ri be d ondr ill she et sFor a thorough descr iption of the complex orga nizational st ructure of Scientolog y , see 2 g ener ally Church of Spiritual Tec hnology v. United States, 26 Cl. Ct . 713, 715–20 (1992). 5 ac co m pany ing the c he ck she et . Whil e the se c our se s a ssi gne d r ea din gs f ro m Bi g L ea gue S al es ( am ong oth er w ri tin gs) , the Chur chdid not m ak e co pie s of

the boo k i t s e l f ; s tu d e n t s wo u l de i t h e r

b o rr o wo r

p u r c h a s e th e b o o kf

o r th e i r s tu d y. It is undi sput ed

that L es D an e kne wof

the Chur ch ’ s us e of

Bi g L ea gue Sales and participated in such use. B eginnin g in the m id-1980 s, the Church hired L es D an e to trave l t o S ci en tol ogy c hur ch es in the U nit ed

S ta te s and a

br oa d to deliver sem inars to registrars and others on the application of the sales techniques in h is b ook. I n th es e se m inars , L es D an e oc ca sio na lly r ef er re d to the sa le s dr ill s an d s up erv is edth e p ract ic e o f th os e d ril ls . D ef en dants in thi s a ct ionare thr ee e nti tie s a ff ili at ed w iththe Chur ch : the Chur chof

S ci en tol ogy

I nte rn at ion al , I nc . ( “ CS I” ), the W or ld I nst itu te of ScientologyEnter

prises International, Inc. (“ W ISE ”), and the Church of Spiritual T ec hnol ogy

( “ CS T ”) . C SI ha s be enthe m oth er c hur chof

S ci en tol ogy

sin ce 198 1. 2 Am on g o th er dut ie s, CS I cre at es m at eri al s fo r us e in st aff t rai ni ng co ur se s. Of the se c our se s, the re are tw o m ai n ty pe s w hic h in cl ude the stu dy of Bi g L ea gue Sa le s; c our se s ty

pif ie d by the P ro fe ssi ona l R eg istratio n C our se and the Or ganization Executive Course, which wer e both com piled in 1 991. CSICSIdoes not adve rtise or mar ket these c ourses outside of Churc h membership. 3 6 en co ur ag es Chur chsta ff

m em be rs to take the se c our se s a s part of the ir tr ai nin g f

or ce rt ai n po sit ion s inChur chor ganiz at ion s. T he sta ff m em be rs c om ple te the 3 co ur se s a t the ir

ow n pa ce in co ur se r oom s pr ovi de d by CS I, and the ir

pr ogr es s is m oni tor ed

and a ssi ste d by

ac our se sup er

vis or . H ow ev er , the c our se sup er vis or doe s no t l ec tur e or

a dd t o th e subs tanti ve m at er ia l of the c our se . I n e xc hange f or takin g on e of

the se c our se s, e ac h st af

f m em be r sig ns a

pr om iss or

y not e fo r the

“ donatio n am ount

of the c our se . ” I n th e ev en t tha t the sta ff m em be r subs eque ntl y fails to serve out the duration o f his staff c ontract, the prom issory note becom es due to the Chur chor ganiz at iona s “ a de bt f or the se rv ic es that he too k w hil e on st aff.” W ISE , a lso form ed in 198 1, is a m em bership organization for businessm en an d pr of es sio na ls who s ee k to appl y H ubbard ’ s a dm ini str at ive te ch nol ogi es to se cu lar or ganiz at ion s. W IS E c re at es and s el ls p ac ks o f co ur se m at er ia l onthi s subject, and licenses som e of its m em bers to provid e business con sultin g services usi ng W IS E m at er ia ls. F ro m 198 3 un til Jun e 2004 , W IS E sol d f or af la t pr ic e of $7 5 a Sal es Co ur se pa ckwhi ch tau gh t t he sal es tec hn iq ue s fr om Big Leag ue Sal es . The r elevant sections of the checksheets and drills used in the Sales Course vary som ewha t i n c ont en t and o rg an iz at ionf ro m the c or re spon din g m at er ia ls u se d inWe e xplor e the re le va nt d ist inc tio ns be tw e e n th e Sa le s Co ur se pa c k a nd the CSI c ours e 4 mate ri a ls, and

pr ov ide e xten siv e e xamp le s o f t he a lle g e d in fr ing ingmate ri a l, i nf ra at pa rt I I .C. 7 the Professional Registration Course and the Organization E xecutive Course. 4 CS T w as c re at ed

in 1982 to re ce ive the bul k of the e state of

H ubbard , inc lud ing his int el le ct

ua l pr ope rty

r igh ts. ( H ubbard

die d in198 6. ) I ts m iss ionis to preserve Sc ientolo gy

scriptures, which consis t of the wr itten and spo ken word of H ubbard a s w el l a s f

ilm s c onc er

nin g r el igi ous tr ai nin g and the a dm ini str at ionof Sc ie nto log y

se rv ic es . C ST a cquir ed

the c opy ri ght s to H ubbard ’ s w orks i n 19 93 and has since licensed the rights to use thos e w orks to CSI, W ISE , and oth er affiliated e ntities. T houg h CST has claim ed not to h ave re viewed any of W ISE an d C SI ’ s c our se m at er ia ls, it ha d th e ri ght

to re vie wthe W IS E m at er ia ls p ur suant to th e li cen se ag reem en t. Pe te r L ette re se , apr inc ipa l of P L &A , w as an of

f- an d- on m em

be r of the Chur chf or appr oxi m at el y

tw o de ca de s be gin nin g in197 3. I n a ddi tio n to se rv ing as a reg is tra r, Lett eres e h el d s ev eral po si ti on s i n C hu rch org an iz at io ns . He ac co rd ing ly

stu die d B ig L ea gue S al es in se ve ra l c our se s, inc lud ing the O rg an iz at ionE xe cu tiv e Co ur se . D ur ing the la te 198 0s and e ar ly 199 0s, L ette re se was als o a m em

be r of W ISE; as s uc h, h e was li cen se d t o s el l WISE cou rs es . O n D ec em

be r 31, 199 3, w hil e L ette re se w as sti ll a m em be r in g ood standi ng8

in the Chur ch , P L &Aa cq uir ed the e xc lus ive r igh ts t o L es D an e’ s li te rary w orks (i nc lud ing the r igh t of

e nf or ce m en t) thr oughaw ri tte n c ontra ct w iththe he ir s of the D an e es ta te , inc lud ing L es D an e’ s w ido w , L ois “ Be tty ” D an e. T he se r igh ts ex te nde d th ro ugh the r en ew al te rm . P L &Aa lso pur ch as ed the out standi ng r igh ts of P re nti ce H al l i n 19 94. P L &Asub se que ntl y w ith dr ewBi g L ea gue S al es f ro m the m ar ke t; it ha s be enout

of pr int sin ce 199 4. T he Chur ch“ de cl ar ed , ” or e xc om m uni cate d, L ette re se in Jul y 199 4 f or violatin g certain Church policies. Nonetheless, L etterese continu ed to regard him self as a Scientologis t. I n July1995 , Marilyn Pisani, then the legal aff airs dir ec tor of Br idg e Pu

bli catio ns, I nc . ( the N orth A m er ic anpub lis he r of S ci en tol ogy w orks) , w ro te ale tte r to P re nti ce H al l se ek ing c er ta in n on- ex cl usi ve r igh ts i n B ig Le ague Sales. L ater that m onth , P rentice H all notified Bridge Publications that PL &A had purchased its right s. P isani then con tacted PL &A in late Novem ber 1995 se ek ing the r igh t t o r ep ubl ishthe boo k. I n r es pons e, D an ie l D as hm an , w ho was th en th e g en eral co un se l o f PL&A, at te m pt edsev eral ti m es to cal l Pi sa ni ba ck . Finally , in Augus t 1996 , D ashm an sent Pisani a letter stating that PL &A had ac qui re d B ig L ea gue S al es w iththe int en tio n of “ m ak ing it s own us e” of the boo k as w el l a s “ ke ep ing it

a va ila ble to the Chur ch . ” T he le tte r expla ine d: “ It w as not ou r in te nt io n i n 1 99 3, n oris itno w, no r wil l i t ev er b e in th e fu tu re t o p rev en t [L.9

Ro n H ubbard ’ s] int en tio n w ithr eg ar d to Mr . D an e’ s w ork to be thw ar te d or sto ppe d. ” I n sp ite of

P L &A ’ s de cl ar ed

w ishto en sur e the c ont inu ed a va ila bil ity of Bi g Le ag u e S al es t o th e C h u rc h , h o we v er , Da s h m an m ad e c l ea r t h at “ [n ]o state m en ts m ad e in this le tte r ar e int en de d no r shou ld the y be c onstru ed

a s a gr an tin g of

any r igh ts t o th e w ork of

Mr . L es D an e an d sp ec if ic al ly is not a granting of the right to republish [Big L eague Sale s] .” N o agreem ent was r eached at that tim e. T he c opy ri ght in Bi g L ea gue S al es w as dul y r en ew ed and r e- re gis te re d on January 4, 199 9. D ur ing 199 9 and 2 000, P L &Abe cam e em br oil ed in lit igatio n w iththe D an e fam ily

ove r the li ce nse a gr ee m en t. I n 20 00, Br idg e Pu bli catio ns contacted the Dane fam ily directly to seek rights relating to th e book, but was unsu ccessful. L ater that y ear, PL &A and Bridge Publications resum ed ne got ia tio ns c onc er

nin g B ri dge P ubl ic at ion s’ de sir e to p ubl ishhard c ove r ve rs ion s of the boo k f

or the int er na l us e of Chur chor ganiz at ion s. P er iod ic al ly f ro m 200 0 to 2 003, P L &Ac or

re spon de d w ithBr idg e Pu bli catio ns i n an a tte m

pt t o a sc er

ta in th e sc op e o f Bri dg e Publ ic at io ns ’ in te nd edus e o f th e b oo k. In200 3, P L &Asue d B ri dge P ubl ic at ion s inthe S upe ri or Co urt of L os Angeles County , C alifornia, alleging to rtious in terfe rence with contract and oth er rel at edcla im s. O n J a n u a ry 2 7 , 2 0 0 4 , a t t o rn e y D a v i dS c h i n d l e r o f L a t h a m &The re cord doe s not indicate what subsequently transpire d in PL &A ’s suit in L os 5 An g e le s Co unty

Sup e ri or Court . 10 W atkin s, L L P, c ont ac te d P L &A , se ek ing to ne got ia te ar es olu tio n of the pe ndi ng dis put e on b eh al f of

Br idg e Pu

bli catio ns, W IS E , and C SI . S ch ind le r m et w ith Lett eres e an d t wo o f hi s at to rn ey s o n F eb ru ary 13 , 20 04 , to ne go ti at e a s et tl em en t. O n F eb ru ar

y 27, 200 4, S ch ind le r se nt L ette re se ’ s a tto rn ey ale tte r co nf

irm ing the te rm s of an a gr ee m en t tha t pr ovi de d f or the dis m iss al of

the pe ndi ng s uit

w ith out pr ej udi ce and f

or aone -y ear m or at or ium

on l iti ga tio n of

any kin d be tw ee n any entity aff iliated with Le tterese and any entity aff iliated with the Church. PL &A dism issed its s uit, as agre ed. PL &A also sou ght further assurances that Schindler w as ind ee d auth or iz ed

to ac t onbe ha lf

of a ll Chur ch -r el at ed

e nti tie s, and tha t the ag reem en t was en fo rceabl e. On April 8, 2004, believing th at satisfactory assurances had not been pr ovi de d, P L &Ar et

ur ne d to the L os A nge le s C ounty S upe ri or Co urt and f

ile d a se co nd s uit

a ga ins t B ri dge P ubl ic at ion s, W IS E , CS I, and o the rs , se ek ing a declaration eith er that the Fe bruary 27 letter w as not a bindi ng agreem ent, or that it co nst itu te d abin din g a gr ee m en t w itha ll Chur ch -a ff ili at ed e nti tie s. 5 B. On Se ptem

ber 10, 2004, PL &A brough t this present su it in the United StatesP L &A ’s co mp l ai n tal s o n am edas d ef en d an t s s ev er al ad d i t i o n al o rga n i z at i o n s : Br i d ge 6 Publications, I nc.; the Church of Scientology

FlagService Org anization; New Era Publications International (a named but unserve d defe ndant); Scientolog y Missions I nternational (“SMI ”); C hurc ho f S ci en t o l o gy

M i s s i o no f F o rtL au d er d al e, In c. (“ M i s s i o n ”) ; th e C hurc ho f S ci en t o l o gy of F lorida; and 3200 unknown e ntities affiliated with Scientolog y . The c omplaint contained five counts – the four

counts descr ibed in the text which are be fore us in this appeal, and a count broug ht under sec tion 43(a) of the L anham Ac t, codified at 15 U.S.C. § 1125(a), which the court construed a s a cla im both for false de signation of orig in and fa lse adve rtising. The complaint soug ht both lega l and equitable r elief. PL &Aamende d its complaint at least twice. A r evised first amende d complaint, filed on Jul y 13, 2005, deleted the fifth count and e lected statutory damag es as PL &A ’s leg al re lief. The se cond ame nded complaint, filed on A ugust 19, 2005 (four day s befor e the district cour t gr anted de fenda

nts’ motion for summary

judgme nt now under re vie w) dr op pe d th e a dd iti on a l de fe nd ants name d a bo ve – le avin gon ly

CSI , CST , a

nd WI SE i n the ca se – and limited PL &A ’s pra y er f or re lief to a de clar atory

judgme nt and a pe rmane nt inj un c tio n. In th e te xt, ou r r e fe re nc e to t

he c omp la int

is t o th e se c on d ame nd e d c omp la int un le ss otherwise indicated. 17 U.S.C. § 507(b) sets a thre e-year statute of limitations for civil actions broug ht under 7 the Cop y ri g ht A c t. 17 U. S.C. § 1 06 (1 ) gra

nts to a c op y ri g ht o wn e r t

he e xclu siv e ri g ht t o r e pr od uc e and to 8 authorize others to re produce “the c opy rig hted work in c opies.” Ba sed on our r eview of

the pleading s, and by

neg ative implication from Counts 2 and 4, we un de rs tand

Counts 1 a

nd 3 to a lle g e that de fe nd ants ’ c he c ks he e ts a nd dr ill sh e e ts c on sti tut e unauthorized repr oductions of B ig L eague Sales, a nd not that they

are derivative works of the 11 District Court f

or the Southern District of F lorida against CSI, CST , and W ISE 6 fo r the a lle ge d vi olatio n of it s e xc lus ive r igh ts p ur suant t o th e Co py ri ght A ct , 17 U . S. C. § 10 1 e t se q. , w ith in the thr ee y ears pr ior to fi lin g. T he c om

pla int se t f orth 7 fo ur va gue ly ple d c au se s of

a ct ion , w hic h w e co nstru e in c onj unc tio n w iththe part ie s’ br ie fs . Co u n t1 i s ag ai n s tal l d ef en d an t s an dal l eg es th at th e WI SE Sa l es Co u rs e’s ch ec kshe et s and dri ll she et s c onst itu te una uth or iz ed r ep ro duc tio ns o f Bi g L ea gue Sa le s invio la tio n of

17 U . S. C. § 10 6( 1) . C ount 2 a lso nam es a ll de fe ndants and 8bo ok . B ut e ve n w e re thi s n ot t he c a se , a nd Counts 1 a

nd 3 p ro pe rl y

a lle g e d th at th e c he c ks he e ts and dr ill sh e e ts a

re de ri vativ e wo rk s o f B igL e a gue Sa le s, PL & A w ou ld s til l be re qu ir e d to d em o n s tra t e t h atth e p u t at i v e d er i v at i v e w o rk s wo u l d o th erwi s e b e i n fr i n gi n g, i n cl u d i n g a deter mination of substantial simi larity . See Atkins v. Fische r, 331 F .3d 988, 993 (D.C. Cir. 2003); Well-Made Toy

Mfg . Corp. v. Goffa

Int’l Corp., 354 F.3d 112, 117 (2d Cir. 2003) ; Kohus v. Mariol, 328 F.3d 848, 858 ( 6th Cir. 2003); Dam Thing s from De nmark v. Russ Be rrie & Co., Inc., 290 F .3d 548, 565 (3d Cir. 2002); Vault Corp. v. Qua id Software Ltd., 847 F.2d 255, 267 (5th Cir. 1988); L itchfield v. Spielberg , 736 F.2d 1352, 1357 ( 9th Cir. 1984). T h e e xc lu s iv e r igh ts o f

a c o p y r igh t o w n e r

in c lu d e th e r igh t t o p r e p ar e an d to a u th o r iz e 9 others to pre pare “der ivative works ba sed upon the c opy rig hted work.” 17 U.S.C. § 106(2). 12 al le ge s th at

the W IS E S al es Co ur se a s aw hol e – w hic h in cl ude s th e ch ec kshe et s, drill sheets, and Big Le ague Sales itself – c onsti tutes an infringin g derivative work based upo n the boo k in vio lation of 17 U.S. C. § 106 (2). 9 Counts 3 and 4 nam e only CSI and CST as defendants and concern courses suc h a s C SI ’ s O rg an iz at ionE xe cu tiv e Co ur se and P ro fe ssi ona l R eg istratio n Course. Count 3 alleges th at the checksheets and drill sheets used in these courses in fri ng e th e co pyrig ht in Big Leag ue Sal es in vi ol at io n o f 17 U.S.C. § 1 06 (1 ). L ike Co unt

2, Co unt 4 a lle ge s th at

the se c our se s a s aw hol e co nst itu te inf ri ngi ng derivative works based upon th e book in violatio n of 17 U. S. C. § 106 (2). D ef en dants answ er ed

P L &A ’ s c la im s by

de ny ing that the use of

the c our se m at er ia ls d es cr ibe d inthe c om pla int vio la te d th e Co py

ri ght A ct . A s a ff

irm at ive de fe nse s, de fe ndants a lle ge d th at the ir use of Bi g L ea gue S al es w as pe rm iss ibl e unde r the f

ai r use doc tr ine and, a lte rn at ive ly , that P L &A ’ s c la im s w er e barr ed by la ch es .This was, in fac t, PL &A ’s sec ond motion for summary judgme nt on the issue of 10 copy rig ht infring ement. PL &Afiled its first motion on April 1, 2005, before de fenda nts had conducte d any

discovery

and solely

on the streng th of aff

idavits submit ted by

L ettere se and PL & A’ s c ouns e l. B e c a

us e de fe nd ants we re un a

ble to p re se nt f

a c ts e sse nti a l to jus tif

y its opposition t o PL &A ’s motion, the court denie d the motion without prejudice. See F ed. R. Civ. P. 5 6( f) (p ro vid ingthat “ [i]f a pa rt y op po sin g[a s umm ary

jud g me nt m oti on ] sho ws by a ff ida vit that, for spe cified r easons, it ca nnot present f

acts e ssential to justi fy

its opposit ion, the court may” pr ov ide a

pp ro pr iate re lie f, inc lud ingde nia l of the mot ion

or the g ra nt o f a c ontin ua nc e to permit additional discover y ). Ad dit ion a lly , n otw ith sta

nd ingPL & A’ s v olu

nta ry wi thd ra wa l of its c la ims a g a ins t SMI and Mission, see supra

note 6, PL &Aclaims in this appeal that the district cour t should have g rante d Rule 56(f) r elief to pe rmit discovery into essential fac ts nece ssary to the proper dis po sit ion

of summa ry jud g me nt m oti on s su

bmi tte d b y

SMI and Mis sio n. We d isp os e of

thi s argume nt i n s ho rt

or de r. Th e re qu e st f

or Rul e 56 (f

) r e lie f t o p ur su e fu

rt he r d isc ov e ry

wi th re sp e c t to SMI

and Mis sio n w a s r e nd e re d mo ot whe n th e dis tr ic t c ourt g ra nte d PL & A l e ave to file a se cond ame nded complaint, which dr opped all par ties except defe ndants CSI , CST, and WI SE, a c on se qu e nc e wh ic h w a s argue d b y PL & A i tse lf

in i ts m e mor and

um i n s up po rt

of its motion for leave to amend (“ [F]or the dismi ssed par ties it removes any

FRCP 56(f) issues that the motion to compel raises.” ), and which was r eadily admitted by

PL &A ’s counse l at the hear ing on the motion. 13 Fo llo w ing ape ri od o f dis co ve ry , P L &Am ove d f or sum m ar y j udgm en t on Co unt s 2 and 4 onl y , arg uin g th at the S al es Co ur se , O rg an iz at ionE xe cu tiv e Co ur se , and P ro fe ssi ona l R eg istratio n C our se r ep re se nt i nf ri ngi ng d er ivativ e works of Big L eague Sale s. D efendants filed cross-m otion s for sum m ary 10 j udgm ent on all count s, ar guin g that the course m aterial is not subst antially sim ilar to the boo k and thus doe s no t i nf ri nge it s c opy

ri ght , and f

urthe r advanc ing the de fe nse s of

f ai r use and l ac he s. T he dis tr ic t c ourt di d no t c onc lud e that the copyright in Big League Sa les had been infringed; rather, it assum ed the existence of inf ri nge m en t and h el d th at , in an y e ve nt, f ai r use pr ec lud ed

r ec ove ry on a ll co unt s – i nc lud ing , of

c our se , a ga ins t those part ie s a lle ge d to be li ab le f orThe district cour t specifica lly

noted the existence of “ g enuine issues of material fa ct 11 re g ard ingCST ’s ri g ht t o s up e rv ise the [al le g e d] in fr ing inga c tiv ity and fi na nc ia l be ne fi t the re fr om a s to be lia

ble fo r c ontr ibutor

y or vic ari ou s in fr ing e me nt. ” No ne the le ss, be c a us e “[t] here can be no contributory infring ement without a dire ct infring ement,” B ridg eport Music, Inc . v . D iamon d T ime , Ltd. , 3 71 F .3 d 8 83 , 8 89 (6 th C ir . 2 00 4) , th e c ourt fo un d it unne c e ssa

ry to r u l e o nth e i s s u e o f

s e c o n d ar y l i a b i l i ty. In it s b ri e f, PL & A m ake s tw o me ri tle ss a rgume nts . F ir st, a s e vid e nc e to s up po rt its 12 mot ion fo r s umm ary

jud g me nt, PL & A tri e d to ob ta in e vid e nc e via dis c ov e ry

that de fe nd ants purportedly

launche d an “e conomic attac k” ag ainst it im mediately afte r it broug ht this sui t. Amongother thing s, this evidence w ould purportedly include testimony

that defe ndants mounted an “inter net smear campa ign” of L ettere se that “c ompromis[ ed] this l itigation” be cause the campa ign c aused him to lose income f rom his business and distracte d PL &A ’s counse l. Def endants moved the district court to bar suc h discovery . The c ourt sustained their objec tion. In its brief on appe al, PL &Aargues that the c ourt abused its discre tion. Had the discove ry been allowed, it contends, the resultingevidenc e would have established that def endants lac ked “c lean hands” a nd, moreove r, willfully

infring ed its copy

rig ht in BigL eague Sales. PL &A ’s ar gument is baseless. The evidenc e at issue is irre levant (be longing , if any thing, to anothe r lawsuit). Se c on d, PL & A c la ims that th e dis tr ic t c ourt e rr e d in a do pti ngthe ma g ist

rate jud g e ’s de nia l of

its motion for sanctions pre mised on alleg ations that defe ndants eng ag ed in witness tamper ing. Since PL &Afailed to make a timely objection to the mag istrate judg e’s de nial of the motion, as it was requir ed to do under Fe d. R. Civ. P . 72(a) , PL &Ahas wa ived this claim. See F arr ow v. West, 320 F.3d 1235, 1249 n.21 (11th Cir. 2003). We r e vie w the g ra

nt o f a mot ion fo r s umm ary

jud g me nt d e no vo , a

pp lyingthe same 13 leg al standar ds as the district cour t. Custom Mfg . & E ng ’g , Inc. v. Midway Servs., 508 F.3d 641, 646 (11th Cir. 2007). The grant of summar y judgme nt is appropriate wher e, upon viewingthe a dmi ssi ble e vid e nc e and

dr awi nga ll r e a so na

ble fa c tua l in fe re nc e s th e re fr om i n th e light m os t favor able to the non- moving pa rty , there rema ins no ge nuine issue of mate rial fa ct and the moving pa

rty is entitled to judgment as a matter of la

w. See Johnson v. Bd. of Reg ents, 263 F.3d 1234, 1243 (11th Cir. 2001) (c itation omit ted). 14 contributo ry

or vicarious infringem ent. T he district court also held th at 11 de fe ndants w er e en tit le d to sum m ar y j udgm en t onthe gr ound

of la ch es . 12 Purs uant t o it s r

uli ng, the dis tr ic t c ourt e nte re d j udgm en t f or de fe ndants on Augus t 23, 200 5. T his appe al f

oll ow ed . 13 II.A der ivative work is def ined as 14 a wor k based upon one or more pr eexisti ngworks, such a s a translation, musi cal arr ang ement, dra

matization, fictionaliz ation, motion picture version, sound rec ording , art re production, abr idgme nt, condensation, or any other for m in which a wor k may be re cast, tra

nsformed, or

adapte d. A work c onsisting of e ditorial revisions, annotations, elabor ations, or other modifications which, as a whole , repr esent a

n orig inal work of a

uthorship, is a “der ivative work.” 17 U.S.C. § 101. 15 W e be ginby

ana ly zi ng the ante ce de nt i ssu e, w he the r PL &Aha s m ad e out a p r i maf a c i e c a s e o f

i n f r i n g e me n ta s t o a l l c l a i ms . A s t o C o u n t s 2 an d4 , c l a i ms brough t under 17 U.S .C. § 106(2), w e find that defendants’ courses as a whole are not de ri va tiv e w orks o f Bi g L ea gue S al es , and the re fo re a ff irm the c ourt’ s gr an t of summ ary j udgm ent for defe ndants as to those coun ts. S ee P arks v. C ity of W arner Ro b i n s , 4 3 F. 3 d6 0 9 , 6 1 3 (1 1 t h Ci r. 1 9 9 5 ) ( “ [W]e may aff i rm th e d i s t ri ct co u rt ’s de ci sio n onany

a de qua te gr ound , e ve n if it is oth er than th e one on whic h th e co urt a ct ua lly r el ie d. ”) . W ithr es pe ct

to Co unt s 1 a

nd 3 , w e fi nd tha t the re is a genuin e issue of m aterial f act as to w hether defendants’ course m aterials ar e su bs ta nt ia ll y

si m il ar t o B ig Leag ue Sal es in vi ol at io n o f 17 U.S.C. § 1 06 (1 ). A. PL &Ac ont en ds tha t the dis tr ic t c ourt e rr ed in not tr eatin g de fe ndants ’ co ur se s a s de ri va tiv e w orks o f Bi g L ea gue S al es , w hic h it be lie ve s w oul d ne ce ssi ta te the gr an t of

sum m ar y j udgm en t i n it s f

av or a s to Co unt s 2 and 4 . 1416

Sp ec if ic al ly , P L &Aarg ue s th at the c our se s a s aw hol e ar e ak in t o th e de ri va tiv e w orks d es cr ibe d inthe m uc h- cr iti ci ze d c as e of

Mi ra ge E dit ion s v. A lbu que rque A . R. T . Co . , 856 F . 2d 1 341 (9 th C ir . 198 8) . S ee L ee v. A . R. T . Co . , 125 F . 3d 5 80, 582 n .1 (7th Cir. 1997 ) (“ Scholarly disapprov al of Mira ge Editions has been w ide spr ea d. ”) . I n th at

c as e, the de fe ndant c ut p ag es of artw ork pr int s ou t of plaintiffs’ book , “ m ount ed them indiv iduallyonto ceram ic tiles and soldthe tiles at r et ai l. ” Mi ra ge E dit ion s, 856 F . 2d at 13 42. B ec au se c onve nti ona l m ount ing an d f ram ing te ch nique s c le ar ly do n ot r es ult

in the pr ep ar at ionof

de ri va tiv e w orks, the court’ s decision find ing in fringem ent could no t have been based on the fact that the ti le w as asor

t of “ fl ush fr am e, ” but , a s th e L ee c ourt ob se rv ed , m ust have be enba se d onthe f

ac t tha t “ the e poxy

r es in b onds the art

to the ti le . ” L ee , 125 F.3 d a t 5 81 . L ike oth er s be fo re us, w e be lie ve that this j ust if ic at ionis a hig hly que sti ona ble one ind ee d. S ee id. ( not ing that “ thi s is adis tin ct ionw ith out a differe nce,” in part because conventional m ount ing and fram ing techniq ues are lik ew ise not

“ ea sil y r ev er sib le , ” as the y

c om m onl y inv olv e punc tur es , tr im

m ing , or bond ing a s apr el ude to fr am ing ). B ut e ve n if w e w er e to r eg ar d M ir ag e E dit ion s as repre senting the outer boun dary of w hat constitu tes a derivative w ork, w hat PL &Aa lle ge s inCo unt s 2 and 4 f al ls o uts ide that bo undary be ca use de fe ndants doPL & A atte mpt s to dis tin guis h th e c ours e s f ur the r b y arguin gthat th e “ fr ame ” (t he sk ill s 15 sheets and c heckshe ets) interr elates w ith, adds on to, and modifies the “pa inting” ( BigL eague Sales) such that the overa ll course c ould not stand without t he book. We find this argument unintelligible, eve n in the intended ana logous c ontext ; a fra me is ty pically chosen to c omplement an d i n t erre l at e w i thth e s tyl e o f t h e p ai n t i n g, an d m ay i n t erre l at e w i thth e p ai n t i n g o na v ery h i gh level indee d (take , for e x ample, Ge org es Seurat’s painted borde rs and f rame s, such as for

The 17 not sell checksheets and d rill sheets that are a ffixed to Big Le ague Sales. N or are an y pa ge s f ro m the boo k ph oto co pie d a s part of the c our se pa ck . I nde ed , the boo k is n ot a part of de fe ndants ’ c our se s inthe se nse that the c he ck she et s, dr ill she et s, an d bo ok “ as aw hol e, r ep re se nt an or igi na l w ork of auth or shi p, ” 17 U . S. C. § 10 1;

“ the auth or shi p of

[ the c he ck she et s and dri ll she et s] is en tir el y dif fe re nt and se parate f ro m the auth or shi p of

[ Bi g L ea gue S al es ] . ” S ee S H L I m ag ing , I nc . v. Art i s an Ho u s e, In c. , 1 1 7 F. Su p p . 2 d3 0 1 , 3 0 6 (S .D. N.Y . 2 0 0 0 ). PL& A’s ar gum en t r ed

uc es sim ply to the f lig htl es s c la im

that se lli ng the c our se m at er ia ls (s pe ci fi ca lly , se lli ng the c he ck she et s and dri ll she et s to be use d w ithlaw fu lly ac qui re d c opi es of

the boo k) f

ac ili ta te s a“ re m ount ing ” of Bi g L ea gue S al es . B ut lik e an y oth er f ram e, thi s arg um en t do es not f ulf ill the r equir em en t tha t a derivative work m

ust “ reca st, transform , or adapt” the preexisting work. S ee L ee, 125 F. 3d at 58 2 ( “ [T ] he c opy ri ght ed not e card s and l ith ogr ap hs w er e not

‘ transform ed’ in the sligh test. T he art w as bondedto a slab of cer am ic, but it was not changed in the process. It still depicts exactly what it depicted w hen it left Le e’ s stud io.”). W e theref ore af firm the district court’ s grant of summ ary 15Channel of Gr avelines, Petit For t Phil ippe). And c erta inly a fr amed Mona

L isa would be nothing without the Mona L isa. 18 j udgm en t a s to Co unt s 2 and 4 be ca use the c our se s a s aw hol e do n ot c onst itu te de riv at iv e wor ks . B. Be fo re e m

bark ing on an ana ly sis of P L &A ’ s r em ai nin g c la im s of c opy ri ght inf ri nge m en t, Co unt s 1 and 3 , w e fi rs t c lari fy the r el ev an t l eg al standard . T o m ak e out apr im a fa ci e ca se of

c opy ri ght inf ri nge m en t, apla int if

f m ust sho wthat ( 1) it ow ns a va lid c opy ri ght in the boo k and ( 2) de fe ndants c opi ed pr ote ct ed

e le m en ts fr om the boo k. F ei st P ubl ’ ns, I nc . v. Rura l T el . S er v. Co . , 499 U . S. 340 , 361 , 111 S. Ct . 128 2, 129 6, 113 L . E d. 2d 3 58 ( 1991 ); S unT ru st B an k v. H ough tonMi ff lin Co., 268 F.3d 1257 , 1266 (11th Cir. 2001). D efendants have not contested PL &A ’ s owne rs hip of

ava lid c opy ri ght . R athe r, the y

f oc us o n F ei st’ s se co nd pr ong, w hic h, in tur

n, e nta ils pr oof

of both f ac tua l and l eg al c opy ing , that i s: ( 1)

“ wh et h erth e d ef

en d an t , a s a f

ac tu al m at t er , c o p i ed p o rt i o n s o f t h e p l ai n t i ff ’s [w ork] ”; and ( 2) “ w he the r, a s am ixe d is sue of f ac t and l aw , tho se e le m en ts o f the [copyrighted work] that have been copied are protec ted expression andof such im portance to the copied work that the appropriation is actionable.” MiTe k H old ing s, I nc . v. A rc e E ng’ g, I nc . , 89 F . 3d 1 548, 155 4 ( 11th C ir . 199 6) ( ci ta tio nPr ob ativ e sim ila ri ty , “ in t his se ns e , ‘ e xists wh e re an ave ra g e lay ob se rv e r w ou ld 16 re co gn i z e t h e a l l ege d

co p y as h av i n g b ee nap p ro p ri at edfr o mth e c o p y ri gh t edwo rk . ’” S ee L ei gh v. Warner B ros., Inc., 212 F .3d 1210, 1214 (11th Cir. 2000) (quotingOrig inal Appalac hian Ar tw or ks , Inc . v . T oy

L of t, I nc ., 68 4 F .2 d 8 21 , 8 29 (1 1th Cir . 1 98 2) ). Pr e vio us c a se s in thi s circ uit have also re fer

red to this require ment of probative simil arity as “substantial similarity ,” wh ic h p ote nti a lly

c on fu se s th os e a sp e c ts o f s imi lari ty ne c e ssa ry to e sta bli shthe fa c tua l pr e dic ate that c an s up po rt

an in fe re nc e of

c op ying , w iththe dif

fe re nt a sp e c ts o f s imi lari ty ne c e ssa ry to establish that the copy

ing is leg ally

actionable . See B eal v. Par amount Pictures Corp., 20 F.3d 454, 459 n.4 (11th Cir. 1994) (“ The ter m ‘substantial simil arity ’ in copy rig ht infring ement actions has not alwa

y s been use d with prec ision.”). 19 om itt ed ); se e al so B U C I nt’ l C or p. v. I nt’ l Y ac ht C ounc il L td. , 489 F . 3d 1 129, 1148 n.40 (11th Cir. 2007). Inthe abse nc e of

dir ec t pr oof

, f ac tua l c opy ing m ay

be inf er re d f ro m ci rc um stanti al e vid en ce , e ith er thr oughe sta

bli shi ng tha t the w orks are “ str iki ngl y sim ilar, ” see C alhoun v. L illenas Publ’g, 298 F.3d 1228 , 1232 n.6 (11th Cir. 2002 ); or thr ough“pr oof

of a cc es s to the c opy

ri ght ed w ork and p ro ba tiv e sim ilari ty . ” Bate m anv. Mn em oni cs , I nc . , 79 F . 3d 1 532, 154 1 ( 11th C ir . 199 6) (i nte rn al quo ta tio n m ar

k om itt ed ). B ec au se de fe ndants a dm it that po rt ion s of Bi g 16 L ea gue S al es w er e co pie d, thi s a ppe al c en te rs on the sub se que nt i nqui ry of whether such copy ing is “ legally actionable; that is, w hether there is ‘ subs tantial sim ilarity ’ betwee n the allegedly offending [works] and the protectable, or iginal elem ents” of the book. See Batem an, 79 F. 3d at 154 2; Oravec v. S unnyIsles Lux ury Vent ur es , L.C., No. 06 -1 44 95 , 20 08 U.S. App . LEXIS 10 35 4, at *1 1 n .5 (1 1thCi r. May

14, 200 8) ( co nsi de ri ng “ w he the r a re as ona ble j ur y c oul d f ind theAs a pr e lim ina

ry matte r, the dis tr ic t c ourt , a do pti ngde fe nd ants ’ v ie w, e rr e d in its 17 assessment that B ig L eague Sales is only entitled to protection as a fac tual compilation of sales techniques a

nd conce pts. The Act de fines a “ compilation” as “ a wor k formed by

the collec tion and a sse mbl ingof

pr e e xistin gmate ri a ls o r o f d ata tha t are se le c te d, c oo rd inate d, or arr ang e d in such a w ay

that the re sulting work a s a whole c onstitut es an or igina l work of a uthorship. The te rm ‘c omp ilatio n’ inc lud e s c oll e c tiv e wo rk s. ” 17 U. S.C. § 1 01 . B igL e a gue Sa le s is a nondramatic literary

work that doe s more than simply list bare fa cts and data in a cr eative f ormat. See, e.g ., BU C I nt’l Corp. v. Int’l Yac ht Council L td., 489 F.3d 1129 (11th Cir. 2007) ( y acht listi ngdataba se); Warre n Publ’g v. Micr odos Data Corp., 115 F .3d 1509 (11th Cir. 1997) (printed dire ctory

containingcable fac ts); Schoolhouse, Inc. v. Ande rson, 275 F.3d 726 ( 8th Cir. 20 02 ) ( ta ble s o f i nf

or matio n o n a

re a sc ho ols ). I t is an e xten de d a rgume nt t hat L e s D ane “ wi ll show you that the sale should be a nd can be made at the first or sec ond contac t” with a sale s pr os pe c t. It is no t, t

he re fo re , a

“ c omp ilatio n” wi thi n th e me anin gof the Cop y ri g ht A c t. De fe nd ants c omp ound

the e rr or by arguin gthat be c a

us e (t he y be lie ve ) t he bo ok is a c omp ilatio n, the c ours e mate ri a l c ann ot b e fo un d to inf ri ng e the bo ok ’s c op y

ri g ht u nle ss t he re is “virtual identity ,” not simply “substantial similarity ” of e x pression. The c opy rig ht in a fac tual c omp ilatio n is “ thi n” in t

he se ns e that th e pr ote c tiv e sc op e of the c op y ri g ht e xten ds on ly

to cer tain elements – namely , the cr eative a nd orig inal “sele ction, arr ang ement, and c oordination” of the c ompilation – and not to the underlying f acts or ide as. See B ellSouth Adver. & Publ’g Corp. v. Donnelley

Info. Publ’g , Inc., 999 F .2d 1436, 1440 (11th Cir. 1993) (e n banc) (citing Fe ist P ubl’ns, Inc. v. Rural Te l. Serv. Co., 499 U.S. 340, 348, 111 S. C t. 1282, 1289, 113 L . Ed. 2d 358 (1991)) ; see a lso W arr en Publ’gv. Microdos Data Corp., 115 F.3d 1509, 1515 ( 11th Cir. 19 97 ) ( e n b anc ) ( “ On ly

wh e n o ne c op ie s th e pr ote c te d s e le c tio n, c oo rd inatio n, or arr ang e me nt i n a fa ctual compilation has one infring ed the c ompilation copy rig ht; copying of

the fa ctual mater ial contained in the c ompilation is not infring ement.”) . But this descr iption of which eleme nts are copy rig htable does not fur

ther e ntail applying a

more string ent standar d to such eleme nts, i.e., by requiringa showingof “virtua l identity ” betwe en the a lleg edly infring ing e lements and the or ig ina l e le me nts . Rathe r, the law i n th is c ir c uit is that outsi de of

the na rr owc onte xt of

“ c la ims of compilation copy

rig ht infring ement of nonlitera l elements of a computer pr og ram,” the appropr iate standa

rd to resolve claims for the infring ement of the selec tion, order, a nd arr ang ement of a

fac tual compilation is “substantial simi larity .” B UC Int’l Corp. v. Int’l Yac ht 20 com peting [works] subst antially sim ilar at the level of protected expression”); see al so L ei gh v . W ar

ne r Br os. , I nc . , 212 F . 3d 1 210, 121 4 ( 11th C ir . 200 0) ( not ing that su bst an tia l si m ilari ty

in thi s “ se co nd, m or e fo cu se d w ay ” is n ec es sary to es ta bli sh tha t the de fe ndant’ s a tte m pt at a ppr opr ia tio n “ suc ce ed ed

to a m eanin gf

ul degree”) . 17Council L td., 489 F.3d 1129, 1148–49 (11th Cir. 2007) ( distinguishing MiTe k Holdings, Inc. v.

Arc e Eng ’gCo., 89 F.3d 1548, 1558–59 (11th Cir. 1996)). 17 U.S.C. § 102(b) provides that “ [i ]n no case does c opy rig ht protection for

an orig inal 18 wo rk of a uth or sh ip e xten d to any

ide a , p ro c e dure , p ro c e ss, sy ste m, m e tho d o f o pe ratio n, c on c e pt, principle, or disc overy , reg ardle ss of the for m in which it is described, e x plained, illustrated, or embodied in such wor

k.” 21 Co py ri ght pr ote ct s or igi na l e xpr es sio n on ly ; i t do es not e xte nd t o any underly ing id eas, procedures, processes, and sy stem s. H erzog v. Castle Rock 18 E ntm ’ t, 193 F . 3d 1 241, 124 8 ( 11th C ir . 199 9) . “ Fo r ex am ple , the ide a of

hun tin g a fo rm ida ble w ha le a t the le ad

of an e cc en tr ic c ap ta in i s no t pr ote ct ed by c opy ri ght law . T he e xpr es sio n of

thi s id ea a s it is en ca psul at ed in the nov el Mo by -D ic k, ho wev er, i s p ro te ct edby cop yrig ht .” BUC In t’l Co rp ., 48 9 F .3dat 1 14 3. U nc opy ri ght ab le “ ide as ” inc lud e sc en es àf ai re , w hic h are “ se que nc es of e ve nts w hic h ne ce ssari ly

f oll owf ro m ac om m on the m e, ” or

“ inc ide nts , c hara ct er s, or settings that are indis pensable or standard in th e treatm ent of a given topic.” He rzog, 193 F. 3d at 124 8 (internal citations and qu otation m arks om itted). S ee, e. g. , Be al v. P ar am ount

P ic tur es Co rp . , 20 F . 3d 4 54, 463 ( 11th C ir . 199 4) ( “ [A ] ll w orks i nvol vin g c ourtsh ip and m ar ri ag e w ill f

eatur e a w ed din g, usu al ly ne ar the en d of the sto ry . ”) ; H er zo g, 193 F . 3d at 12 62 ( “ [D ] eath d ue to fo ul p lay

ins te ad of na tu ral cau se s i s a s ta nd ardele m en t o f m ur de r m y st eri es .”). H ist or ic al ly , c ourts h av e he sit at ed to m ak e de te rm inatio ns a s to22

inf ri nge m en t or

non -i nf ri nge m en t onasum

m ar y j udgm en t m oti on b ec au se of the ir

“ reluctan[ce ] to m ake subjec tive determ ination s regarding the sim ilarity betwee n two work s.” Her zo g, 1 93 F.3d at 1 24 7; see als o B eal , 20 F.3d at 4 59 . N one the le ss, w he re “ the sim ilari ty be tw ee n tw o w orks c onc er ns o nly non c o p yr i g h t ab l e e l e men t s o f th e p l a i n t i f

f ’s wo rk , ” o r

wh e r e “ n o r e a s o n ab l e ju ry, pr op erl y in st ru ct ed , cou ldfin d t ha t t he two work s ar e su bs ta nt ia ll y si m il ar,” su m m ary jud gm en t i s ap pr op ria te . Herzo g, 1 93 F.3d at 1 24 7. Based on our evaluation o f the course m aterial, we find that PL& A has es tabl is he d a pri m a fac ie cas e o f in fri ng em en t wi th res pe ctto Co un ts 1 an d 3 . A factf inder ultim ately

m ay conclude that the sim ilarities betwee n the protected el em en ts o f Bi g L ea gue S al es and the c our se m at er ia l are not sub stanti al , but

the s i m i l ar i t i es ar e s i g n i fi ca n ten o u g h t o cr ea t e a g en u i n e i s s u e o f mat er i al fa ct . We nowpr oc ee d to that ana ly sis . C. The c entral question with which Big Lea gue Sales grapples is: “ Why does the prospect balk when he gets face -to-fac e w ith the decision to buyor not buy ?” Dr aw ing up on his personal experience and the experience of fe llow salesm en, L es D an e de sc ri be s “ ste p- by -s pe ci fi c ste p” howasa le sm anoug ht t o de al w iththe c as e of a re luctant purchaser who is w rapped in a “brick overcoat” of his or her23

ind ivi dua l f

ears : “ re m ove the br ic ks unti l the pr ospe ct ive buy er is str ipp ed

of his fe ar – hi s sa le s r es ist an ce – and b ec om es sus ce pti ble to a cl ose . ” T he boo k is or ganiz ed int o th irte enc ha

pte rs . E ac h c ha

pte r is f urthe r subd ivi de d in to s ec tio ns w ithhe ad ing s id en tif

y ing the part ic ular te ch nique or il lus tr at ive ane cd ote . F or exam ple, Chapter

1, “ The B rick O vercoat of R esistance to the Sale: H ow Five K ey Br ic ks C anH el p Y ou” c ont ai ns e le ve n se ct ion s: “ Sc ar edy -C at , ” “ T he L eg iti m at e O bj ec tio n, ” “ L ist enF or

the Cl ose , ” “ T he N igh t S hif t C los e, ” “ Y ou and the Finance Man, ” “ Anything Goes, ” “ Fool-Proof Financing Form ula,” “ The S hopp erSt op pe r,” “ The Go-Ah ead ,” “ The Tod ay -On ly Clo se ,” an d “ Si m pl e Sel l Cl os e.” D ef en dants ’ c our se m at er ia l e xpr es sly te ac he s th e co nte nt o f Bi g L ea gue Sa le s. O rg an iz ed

int o ou tli ne f

orm , ac he ck she et

ty pic al ly li sts the boo k c ha

pte r to be readan d re ci te s b ot h t he ch ap te r ti tl e an d t he sec ti on he ad in gs . For e xa m pl e, a sa m ple c he ck she et

use d inthe P ro fe ssi ona l R eg istratio n C our se c ont ai ns a re fe re nc e to “ Ch ap te r 1: ‘ T he Br ic k O ve rc oa t of Re sis tanc e to the S al e: H owF ive K e y B r i c k s C a n He l p Yo u , ” an dl i s t s th e p e rt i n e n ts ub h e a d i n g s : “ a . Th e s c a r e d ycat and h owto cl ose him ”; “ b. T he le git im at e obj ec tio n” ; “ c. L ist en ing f or the close”; “ d. T he night -shift close”; “ e. T he go-ahead”; “ f. T he today -only close”;

“ g. T he sim

ple se ll cl ose . ” N o f

urthe r explana tio n of

the se te rm s is li ste d onthe ch ec kshe et ; i nst ea d, the c he ck she et c ro ss- re fe re nc es the sa le s dr ill a tta ch m en ts,24

which contain “ DRI LL S FO R BIG -L EA GU E S AL ES CL OS IN G T EC HN IQ UE S, CHA PT ER

1, T HE BRIC K O VE RCO AT OF RE SIS TA NCE TO TH E S AL E. ” A lth oughthe dif

fe re nc es a m ong the thr ee c our se s are m an if es t up on e ve n a curs or y r ev ie wof

the m at er ia l, the part ie s’ br ie fs did not e va luate e ac h c our se separately

in ligh t of these differ ences. T he content of CSI’ s Professional Re gis tr at ionCo ur se and O rg an iz at ionE xe cu tiv e Co ur se vari es f ro m that of W IS E ’ s S al es Co ur se in te rm s of ove ra ll or ganiz at ionand i n te rm s of the c ont en t an d le ngth of

the de sc ri pti ons in the sa le s dr ill s. C SI ’ s c our se s are m or e sim ilar to th e co ur se m at eri al de ve lo pe d b y th e Ch ur ch in th e 1 97 0s . Sig ni fic an tl y , a Hubbard Com

m unication s Of

fice B ulletin o f N ovem

ber 12, 1972, explained that t h e r e g i s t r a r

s a l e s man s h i p dr i l l s b a s e do n B i g L e a g u e S a l e s “f o l l o wth e s a me sequence as the book section by section,” and ins tructed students to adhere to that or de r. C SI ’ s c our se s r em ai n f ai thf ul t o th at se que nti al appr oa ch . B y c ontra st, the W ISE Sales C ourse’ s checksheet and sales drills em ploya som ew hat rear

ranged approach to the sections o f the book. (T hey are accom

panied by the sam e stern adm oniti on: “ All item s on thi s checksheet are to be done in th e sequence shown.” ) O ur r ev ie wof

the w orks i n qu es tio n r ev ea le d po te nti al ins tanc es of both fragm ented literal sim ilarity and com prehensive non literal sim ilarity of protectedL iteral similarity ref ers to ver batim copying or

para phrasingof a c opy

rig hted work. 19 “F ragmented litera l simi larity” exists where “ the work [copies] only a small part of

the c op y ri g hte d w or

k b ut [d oe s] so wo rd -f

or -w or d. ” Pa lme r v . B ra

un , 2 87 F .3 d 1 32 5, 13 30 (1 1th Cir . 2 00 2) . T his may

ri se to t he le ve l of

su bs tanti a l si mil ari ty

“ [i]f this fr a g me nte d c op y is important to the copy

rig hted work, a

nd of suffic ient quantity .” I d. Comprehensive nonlitera l simil arity conce rns the nonlitera l elements of a work, a nd is “evident whe re the fundame ntal essenc e or struc ture of one work is duplicated in a nother.” I d. (interna l quotation marks omitted). 25 expr es sio n. W e w ill be ginby r ev ie w ing the la tte r. C er ta in n onl ite ra l a spe ct s of 19 Bi g L ea gue S al es are pr ote ct ibl e as the auth or ’ s or igi na l e xpr es sio n, r ef le ct ing his opi nio n a s to w hic h sa le s te ch nique s, and i n w hic h or de r, are li ke ly to y ie ld the m ost e ff ec tiv e sa le s r es ult s. N onl ite ra l si m ilari ty be tw ee n th e book

and the c our se m at er ia l m ay

be pr es en t i n th e m an ne r in whic h th e co ur se m at er ia l tra ck s th e se le ct ionand o rg an iz at ionof the sa le s te ch nique s inthe boo k. T he c as e fo r nonl iteral sim ilarity

appears to be stronger w ith respect to CSI’ s courses, which canvass the book ’ s topics in the sam e order and sequen ce, but we conclude that the dif fe re nc es in the or de r of

W IS E ’ s S al es Co ur se m igh t be de em ed ins uf fi ci en t to de feat an ul ti m at e fi nd in g o f co m pr eh en si ve no nl it eral si m il ari ty. A s f or pot en tia l l ite ra l si m ilari ty , one of the m or e str iki ng e xa m

ple s c ite d by PL &Ais co nta ine d inCh ap te r 12 and the c or re spon din g sa le s dr ill de sc ri be d in Attac hm ent L of

the Profe ssion al Registration Course: Big Le ague Sales Profe ssion al Registration Course, A tta ch m en t L26

Six Basic Q uestion s That Guarantee So un d Qu al ifyin g: . . . T he que sti ons: 1. Whe re doe s he ( she ) w ork and h ow lon g? 2. What does he do th ere? 3. Whe r e d oe s he l i ve and h owl on g? ( C i r c um st a nc e s – own, r e nt , e t c . ?) 4. Mari ta l st at

us? C hil dr en ? 5. Who is th e (c ar, boat, insurance, furniture) f

or? 6. Appe ar an ce ? (P hy sic al , spe ec h, m anner, attitude) . . . the six basic qu estions that guarante e soun d qu al if

y ing . The questions are: 1. Whe re doe s he ( she ) w ork and h ow lon g? 2. What does he do th ere? 3. Whe r e d oe s he l i ve and h owl on g? (Ci rcu m st an ces – o wn, re nt , etc .) 4. Mari ta l st at

us? C hil dr en ? 5. Who is th e service or m aterials f or? 6. Appe ar an ce ? (P hy sic al , spe ec h, m anner, attitude) Si m ilarl y , A tta ch m en t H of the P ro fe ssi ona l R eg istratio n C our se se ts f orth the “ six closi ng errors” descr ibed in Chapter 8 of the bookin nearly identical language. T he bookadm onish es: “ Don’ t argue w ith y our prospect; Don’ t offer you r o p i n i o n s o r c ri t i ci s e yo u r p ro s p ec t s ; Do n ’t k n o cky o u r c o m p et i t i o n ; Do n ’t as sum e au tho ri ty

or br eak th e ch ai n of

c om m an d; D on’ t ov er se ll y our pr oduc t or the f inanc e te rm s; and m ost

im portant o f al l, D on’ t e ve r suc cum b to one of

the ot he r fi ve ‘ do n’ts ’ be li ev in g t ha t, ‘Ju st th is on ce wo n’t h ur t,’ or, ‘The DON’ TS really didn’t apply

in this case.” The sale s drill explains that “ the ‘ six do n’ ts’ ” ar e

“ 1. D on’t argue with y our prospect”; “ 2. D on’t of fer y our opin ions o r cr iticize y our pr ospe ct ’ s” ; “ 3. D on’ t kn oc k y our c om pe tit ion ”; “ 4. D on’ t a ssu m e au tho ri ty or break the chain of c omm and or violate pol icy ”; “ 5. D on’t overse ll y our product or the f inanc e te rm s” ; and “ 6. D on’ t su cc um b to one of

the oth er f ive ‘ don’ ts’Chapter 6 of the book is named “ All in Favor Nod Your H ead: Thr ee B asic Musts and 20 F our Wa y s to Ap ply

Th e m to the Clo se .” Th e re a de r i s a dmo nis he d to sti c k to thr e e ba sic mus ts: “you control the c onversa tion, y ou offe r a c hoice r ather than a yes-or -no, and you deliver your sales talk in a positive, ‘nod your hea d’ nature .” The se three basic musts are then applied throug h four a

pproac hes: first, “whe n the salesman, r ather than conc entrating on ove rcoming objections, place s the emphasis on cla uses or fe ature s of the ser vice or product in which the pr os pe c t ha s sh own a

n inte re st. ” In th e se c on d a pp ro a c h, the “ sa le sma

n h a s f ound wh at hi s prospec t wants. The thing s he likes, or is most conce rned a bout. From he re on he will apply the pr e ssu re the re , a nd the c los e wi ll c ome muc h e a sie r t ha n it wo uld if he bu c ke d h is m an, tr

yingto overc ome objections.” The third approa ch “is to let your prospe ct tell y ou what you’re selling,” a te c hn iqu e wh ic h is ill us tr ate d b y the ane c do te “ Mr . E lr od , I ’m Dumb . . . .” F ina lly , th e fo ur th approa ch is for the salesman to “use the demonstration.” “ Would y ou buy a four -thousand-dollar car , a thirty -thousand-dollar home, or a

$90 per month insuranc e portfolio bef ore you had see n w h aty o u ’ r e g e t t i n gf

o r y o ur m o n e y ?” Sales Drill #4 of the Sales Course sets forth “the three basic musts”: “1. Control the conver sation”; “2. Of

fer a choic e as a

g immick to by

pass a lar g e dec ision”; “3. Deliver y our sales in a positive manne r.” The sales drill explains that these are “done in va rious way s,” and provides four

examples. First: “Don’t c oncentr ate on ove rcomingobjections but find features of the se rv ic e that th e pr os pe c t is int e re ste d in and inc re a se that inte re st, the re by ra isi ngthe A, R, and C.” Se c on d: “ F ind

out w hat th e pr os pe c t is mos t c on c e rn e d a bo ut, wh at it

is h e wa nts ha nd le d a nd make fu ll u se of

the AR C Tr iang le and

c omm fo rm ula and sh owhim

that it re a lly can be handled.” Third: “L et him tell y ou how it would work for him (play

dumb).” And f

ourth: “ Em plo y the us e of

de mon str atio n ( sh ow ingthe pe rs on wh at he is g e tti ngfo r h is m on e y ). Th is c an b e do ne by

us ingsu c c e ss s tor ie s, be fo re and a ft e r gra ph s, le tti nghim

ha nd le the ne w m od e l, etc.” 27 believing that j ust on ce w on’t hurt or that they didn’t r eally

apply in that case. ” A nd i n a ddi tio n to the se ne ar ly ide nti ca l e xa m

ple s, the re are se ve ra l i nst an ce s of paraphrasing of the bookwhich could likewise support a finding of literal sim ilari ty . S ee K ep ne r- T re goe , I nc . v. L ea de rs hip S of tw ar e, N o. H -9 0- 804, 199 2 20 U. S. Dist. LE XI S 12780 , at *3 (S.D . T ex. Jan. 9, 1992) (finding su bstantial s i m i l ar i t y b et we en fi v e d ef i n i t i o n s o r “pr o ce s s es ” i n co rp o ra t ed fr o m p l ai n t i ff ’s m an ag em en t tra ini ng s em inar m at er ia ls i nto de fe ndant’ s m an ag em en t tra ini ng28

com puter program ). D ef en dants c ont en d th at

the c our se m at er ia l “ doe s no t c opy e xpr es sio n f

ro m [Big L eague Sale s] , and, w here it does, it c onsis ts alm ost exclusi vely of short phr as es , ti tle s, unp ro te ct ed m ethods or

pr oc ed ur es , or c onc ep ts tha t D an e adm ittedly

took from

others.” In the first place, the claim that Le s Dane pilfered sa le s te ch nique s f

ro m oth er sa le sm enm iss es the m ar k. C er ta inl y , m an y

of the sa le s te ch nique s de sc ri be d inthe boo k w er e nothin g ne wto a pr of es sio n th at

is one of the w or ld’ s ol de st. Wha t i s r el ev an t f or the pur pose s of c opy ri ght lawis that an a bstra ct ide a is n ev er

e lig ibl e fo r co py

ri ght pr ote ct ion . B ut whil e L es D an e co uld not have c opy

ri ght ed the und er ly ing sa le s te ch nique , any or igi na l e xpr es sio n he used to describe that techniqu e fa lls squ arely into th e re alm

of copyright. Se e Palm er v. Bra

un, 287 F.3d 1325 , 1331 (11th Cir. 2002) (noting that the idea “ that pe opl e’ s be lie fs c ana lte r howthe y e xpe ri en ce and unde rs tand the ir li ve s” is not copyrightable, but “ the questio n is whether [ plaintiff’ s course] expresses this idea i n a w ay t h at i n fr i n g es o n o ri g i n al ex p re s s i o n o f t h e s ame i d ea i n th e [ d ef en d an t ’s co ur se ] m at er ia ls” ); se e al so B ar bour v. H ea d, 178 F . S upp. 2d 7 58, 764 ( S. D . T ex . 2001 ) (n oti ng tha t a lth oughr ec ipe s th at are “ nothin g m or e than m er e re ci ta tio ns o f fa ct s” in the f

orm of “ m ec hanic al li sti ngs of

ing re die nts and c ooki ng d ir ec tio ns” are not eligi ble for copy

right protection , “ at least a f ew ” of defe ndant’s r ecipes29

“ contain statem ents that m ay be sufficiently

expressive to exceed the bound aries of m ere fact, ” such as anecdotal language and sug gestion s for food presentation); Ke pner-T regoe, Inc. , 1992 W L 281474 at *1. (“ Both the Vroom /Yetton m odel an d th e V ro om

/Ja go m ode l are too ls u se d to tr ai n m an ag er s inbe tte r w ay s of m ak ing de ci sio ns. A lth oughthe the or y uti liz ed by both m ode ls i s an id ea

taught w or ldw ide , the a ct

ua l m ode ls are e xpr es sio ns o f a m ethod by w hic h to m ak e decisions .” ). W e ha ve pr ev iou sly

r ec ogni ze d th at

“ in m an y c opy ri ght c as es , the li ne be tw ee n [ ide a] and e xpr es sio n is not e as ily dr awn, ” an d is to be de te rm ine d onthe tot al ity of the f ac ts. P al m er , 287 F . 3d at 13 34; se e al so S unT ru st B an k, 268 F . 3d at 126 6 ( not ing that a lth ough“ sto ck sc en es and h ac kne y ed

c hara ct er ty pe s” a t on e en d of the spe ctrum

are c onsi de re d id ea s, “ as plo ts b ec om e m or e intri cate ly de ta ile d and c hara ct er s be co m e m or e idi osy nc ratic , the y

a t so m e poi nt c ro ss the lin e int o ‘ expr es sio n’ ”) . Whe n dr aw ing the li ne , how ev er , “ it is u se fu l t o no te the policy purposes served bythe distin ction”; to “ encourag[e] the cre ation of origin al w orks o n th e one hand, ” an d to “pr om ot[ e] the f re e fl owof

ide as and i nf

orm at ion on the oth er . ” O rave c, 200 8 U . S. App. L E X IS 103 54, a t *1 4. Ar ea sona ble fa ct fi nde r co uld

c onc lud e that this li ne ha s be enbr ea ch ed on m or e than on e occasion by

the course m aterial. For e xam ple, both the boo k and the Professional30

Registration Course identify the “ four basic buy er ty

pes” as “ the professional buy er , ” “ the ind ivi dua l, ” “ the unatta ch ed f em al e, ” an d “ the f

am ily buy er . ” W ith re spe ct to the pr of

es sio na l buy er , the boo k ur ge s sa le sm ento “ [s ] el l hi m f ac ts, hard pr ic es and, w he re pos sib le , de m onstratio n of the pr oduc t or

se rv ic e, ” as he is som eone who “ wants facts, dem onstration s, and proof that y ours is the best service or pr oduc e [s ic ] he c anbuy f or the le as t m one y . ” T he sa le s dr ill state s: “ T he stu de nt m ust m ak e the c los e by

sho w ing w ithc old

f ac ts and d em onstratio n th at the se rv ic e or it em w ill pr oduc e the r es ult s r equir ed . S tud en t m ust have suc h f

ac ts, pr oof and d em onstratio n a t hi s f ing er tip s. ” A nothe r sa lie nt e xa m ple of the ap pr opr ia tio n of

or igi na l e xpr es sio n f

oll ow s f ro m the boo k’ s de sc ri pti on o f the

“ una tta ch ed

f em al e. ” A n un m ar

ri ed w om an , a cc or din g to the boo k, is som eo ne who is susceptibl e to “ a dab of flatter y here, som e good, practical advice there. ” The book then relates an anec dote from a salesm an who confided to the author,

“ [W ] ha t the y

r ea lly w an t i s to be able to tr

ust w ha t I te ll the m . ” T he corresponding sales drill paraphrases this passage as follows: “ The unattached fem ale. T he student m

ust hand le by

using flattery , good soun d practical a dvice, et c., so th e p ro sp ectfeel s s he can tru st what th e Reg is tra r is tel li ng he r.” De fendants have subm itted charts com paring the two works w hich further refl ecta m is gu id edun de rs ta nd in g o f wha t m ay co ns ti tu te in fri ng em en t.31

De fendants argue that short and un original ph rases such as “ nigh t shift,” “ tag te am , ” an d “ sc ar edy

c at ” m ust be “ fi lte re d ou t of

ac ourt’ s c onsi de ratio n” al tog ethe r. W e de cl ine to ad opt de fe ndants ’ appr oa cha s on e that un dul y co nstri ct s th e sc ope of

c opy ri ght pr ote ct ion . Asim ilar ar gum en t w as a dvanc ed by the defendant in Salinger v. R andom House, Inc. , 811 F. 2d 90 , 92 (2d Cir. 1987 ), in which the defendant wr ote a biography of the author J.D . S alinger that borrowed f

rom Salinger’ s unpu blish ed letters. In advancing the fair use def ense, the defendant argued that he had used on ly a sm all proportion of copyrighted expression, excluding from his calculations sev eral passages in w hich Salinger use d c lic hé s and m

undane c om

bin at ion s of

w or ds. I d. a t 98 . I n r ej ec tin g th is ar gum en t, the c ourt ob se rv ed : [C opy ri ght ] pr ote ct ionis av ai la ble f or the “ as soc ia tio n, pr es en ta tio n, an d c om bin at ionof

the ide as and thoug ht whic h go to m ak e up the [a uth or ’ s] li te rary

c om posi tio n. ” O r as w e ha ve r ec en tly state d, “ Wha t i s pr ote ct ed

is the m an ne r of

e xpr es sio n, the auth or ’ s ana ly sis or int er pr et at ionof

e ve nts , the w ay

he str uc tur es his m at er ia l and m ar sha ls h is f

ac ts, his c hoi ce of

w or ds and the e m

pha sis he giv es to part ic ular de ve lop m en ts. ” T he “ or din ar y ” phr as e m ay

e nj oy no protection as such, but its use in a sequence of expressive w ords does not c au se the e nti re pa ssa ge to los e pr ote ct ion . A nd thoug h th e “ or di na ry ” p hr as e m ay

be qu ot edwit ho ut fearof i nf rin ge m en t, a co pie r m ay

not quo te or para phr as e the se que nc e of

c re at ive expression th at includes such a phrase. Id. ( second alteration in origi nal) (internal c itations om itted). S im ilarly , her e, Le s32

D an e’ s in cl usi on o f unc opy ri ght ab le sho rt

phr as es in Bi g L ea gue S al es doe s no t the re by c au se the pa ssa ge in w hic h th ey are use d to los e pr ote ct ionof it s co py ri ght ab le e le m en ts –

the or igi na l “ se que nc e of tho ught s, c hoi ce of

w or ds, em pha sis , and arr an ge m en t. ” I d. De fendants also argue that any copy ing th at occurre d was de m inim is. S ee 2 M el vi ll e B. Nimm er & Dav idNimm er, Nimm er o n C op y rig ht , 8-2 4, § 8.0 1[ G] (2 002) ( “ [F ] or

sim ilari ty

to be sub stanti al , and h en ce a ct ion ab le , it m ust appl y to m or e than si m

ply ade m ini m is f

ra gm en t. ”) . W e dis ag re e. T he e xte nt o f co py ing m ust be a sse sse d w ithr es pe ct to both th e quanti ta tiv e an d th e qua lit at ive signi ficance of the am ount copied to the copyrighted work as a whole. MiT ek H old ing s, I nc . , 89 F . 3d at 15 60 & n. 26 ( not ing that su bst an tia l si m ilari ty

in thi s re spe ct inv olv es ac om

pari son of

the w orks “ as aw hol e, not c onst itu en t e le m en ts” the re of ); se e al so R ing gol d v. Bl ac k E ntm ’ t T el ev isi on, I nc . , 126 F . 3d 7 0, 75 ( 2d Ci r. 199 7) ( not ing that a

f ind ing of “ subs tanti al sim ilari ty , ” to b e le ga lly ac tio nable , r equir es that “ the a m ount of the c opy ri ght ed w ork th at

is co pie d” m

ust be “ quanti ta tiv el y

and qua lit at ive ly

suf fi ci en t” ). I n th e fi rs t pl ac e, e ve n if the bor ro w ed e xpr es sio n f

ro m the boo k do es not

e xc ee d on e pe rc en t of

de fe ndants ’ co ur se m at er ia ls ( its el f a que sti ona ble c al cu la tio n inli ght

of de fe ndants ’ ove rl y narr owvie wof

the boo k’ s pr ote ct ed

e xpr es sio n) , that arg um en t i s no t r ea lly onThe a ffirmative defe nse of f air use is a

mix ed question of law

and fa ct as to which the 21 proponent c arr ies the burde n of proof . See Campbell v. Ac uff- Rose Music, Inc., 510 U.S. 569, 590, 114 S. Ct . 1164, 1177, 127 L . Ed. 2d 500 (1994); Ha rper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560, 105 S. Ct. 2218, 2230, 85 L . Ed. 588 (1985). 33 poi nt, be ca

use it is the r el at ive portio n of

the c opy ri ght ed w ork – n ot the r el at ive portio n of

the inf ri ngi ng w ork – tha t i s th e re le vant c om pari son. T ak ento its extrem e, such a view w ouldpotentiallyperm it the wholesale copy ing of a brief w ork m er el y

by ins er tin g it int o am uc h lo nge r w ork. Mo re ove r, tho ugh the am ount of e xpr es sio n c opi ed

m ay be quanti ta tiv el y

sm al l w ithr es pe ct

to the le ngth of the boo k ( co nst itu tin g a

ppr oxi m at el y

180 pr ose pa ge s) , the qua lit at ive im portanc e of

the portio n c opi ed

– part ic ularl y

a s it appe ar s inthe sa le s dr ill s – i s sig nif ic an t e noug h to pr ec lud e the gr an t of sum m ar y j udgm en t f

or de fe ndants on thi s gr ound . A cc or din gly , P L &Aha s e sta bli she d apr im a fa ci e ca se of inf ri nge m en t of

Bi g L ea gue S al es w ithr es pe ct to Co unt s 1 and 3 . III . T he dis tr ic t c ourt’ s de ci sio n larg el y e sc he w ed

the f or eg oin g ana ly sis and re ste d pr im ar ily

on f ai r use gr ound s. B ec au se the dis tr ic t c ourt m isc onstru ed the 21 fa ct or s r el ev an t t o th e de fe nse of f ai r use , w e ar e at

som e pa ins to re ite rate the doc tr ine ’ s un de rl y ing pr inc ipl es and t o de m onstrate the ir appl ic at ion“ in se paratin g th e fa ir

use she ep f

ro m the inf ri ngi ng g oa ts” in thi s c as e. C am pbe ll v.The district cour t found that all four of

the statutory

fac tors favor ed def

endants a nd 22 conclude d that defe ndants had “ hit a g rand slam on the f air use pla

ying f ield.” The district court thus relied upon the Sec ond Circuit for the pr oposition t hat wher e a de fenda nt “shut[s ] outher opponent on the four

fac tor tally ,” then “ victory on the fa ir use play

ing f ield is assured.” Arica Inst., I nc. v. Palmer, 970 F .2d 1067, 1079 (2d Cir. 1992) (inter nal quotation marks and c itation omitted). We disagr ee. I n cer tain circ umstances, suc h “rig id application of the c opy rig ht statute” might “stifle the very

cre ativity which that law is de signe d to foster.” See Campbell, 510 U.S. at

34 A cu ff -R ose Mu sic , I nc . , 510 U . S. 569 , 586 , 114 S . Ct . 116 4, 117 5, 127 L . E d. 2d 500 (199 4). W e find upon proper application of the factors that defendants are e n t i t l e dt o th e d e f

e n s e a tth e s u mm a ry ju d g men ts t a g e a s t o C o u n t3 o n l y.

A. T he Co py ri ght A ct pr ovi de s th at : [T ] he fair use of a copy

righted work . . . for purposes such as cr iti ci sm , c om

m en t, ne w s r ep ortin g, te ac hin g ( inc lud ing m ult ipl e copies for classroom

use), scholarship, or research, is not an infringem ent of copyright. In deter m ining whether

the use m ade of a work in any

particular c ase is a f

air use the fa ctors to be consid ered shall includ e – (1) the purpos e and chara cter of the use, including whether suc h us e is o f a co m

m er ci al na tur e or

is fo r nonp ro fi t ed uc at ion al pur

pose s; (2 ) the na tur e of

the c opy ri ght ed w ork; (3 ) the a m ount

and s ubst an tia lity

of the portio n us ed

in re la tio n to the c opy

ri ght ed w ork a s aw hol e; and (4 ) the e ff

ec t of the use upo n th e pot en tia l m ar ke t f or or va lue of the c opy ri ght ed w ork. 17 U . S. C. § 10 7. F ai r use doc tr ine is an“ equit ab le r ule of r ea son” ; ne ith er

the exam ples of poss ible fair uses nor the four statutory fac tors are to be c onsid ered ex cl usi ve . S te w ar

t v. Abe nd, 495 U . S. 207 , 236 –37, 110 S . Ct . 175 0, 176 8, 109 22577, 114 S. Ct . at 1170. A cour t must ex amine the f

our statutory

fac tors to the extent they are rele vant to a par

ticular c ase, but we do not rule out the possibilit y that specific fac tual c ir c ums tanc e s ma

y c omp e l a c on c lus ion

that c uts a g a ins t th e g ra in o f a ll f our f a c tor s. Se e a lso Ty , Inc. v. Publ’ns Int’l L td., 292 F.3d 512, 522 (7th Cir. 2002) ( noting that be cause “the f our fac tors are a [non-exhaustive] chec klist of things to be consider ed rather than a formula f

or decision,” a

party “ca n g et nowher e in def

ending[sum mary] j udg ment by arguing that some or even a ll of them lean a g ainst the defe nse of f air use” ). 35 L. Ed. 2d18 4 (1 99 0) ; Ca m pb el l, 5 10 U.S. at 5 77 –7 8, 1 14 S. Ct. at 11 70 –7 1. Furthe rm or e, the statut or y f ac tor s are not

to “ be tr eate d iniso la tio n, one f ro m an oth er . A ll ar e to b e explo re d, and the r es ult s w ei ghe d to ge the r, in lig ht o f the pur pose s of c opy ri ght . ” Cam

pbe ll, 510 U . S. a t 57 8, 114 S . Ct . a t 11 70–7 1. The district court explicitly adopted a “ fifth” fa ctor, which it described as

“ the c opy ri ght ow ne r’ s a ct

ua l c onse nt t o th e use of

the c opy ri ght ed m at er ia l. ” T he court point ed to record evidence showing that “ both Dane and Plaintiff knew of, as se nte d to , and p ar

tic ipate d inD ef

en dants ’ use of

[ Bi g L ea gue S al es ] f

or de ca de s, ” na m el y , ( 1) the f ac t tha t i n th e 1980 s, L es D an e taught the boo k and used sales drills in Church sem inars, and (2) the fact that Letter ese knew of L es D an e’ s part ic ipatio n inChur chse m inars and, a s apr ac tic ing S ci en tol ogi st, too k se ve ra l c our se s te ac hin g th e book . I n a ddi tio n to c re at ing a“ co nse nt” f ac tor , the co urt f urthe r expla ine d th at

the se f ac ts “pe rm eate [d ] ” its e va luatio n of the f our statut or y f ac tor s. This w as incorrect, both in term s of logic and precedent. A s the districtThe c ase la w and c ong ressional history speak of fair use as “pr edicated on the author ’s 23 imp lie d c on se nt t o ‘ re a so na ble and c us tom ary ’ u se ,” Ha

rp e r & Row , 4 71 U. S. at 55 0, 10 5 S. Ct. at 22 25 , b ut w e un de rs tand su c h la ngua g e to r e fe r m or e to t

he do c tr ina l un de rp inn ing s o f f a ir us e in a sort of “ hy

pothetical conse nt” by

a rational author to a pa

rticular kind of

use, cf . Hanna Pitki n, Obligation and Consent–I , 59 Am. Pol. S ci. Rev. 990, 999 (1965) (explaining the doc trine of hy pothetical conse nt as one that pre dicates political oblig ation upon “the nature” and “the ob je c tiv e c ha

ra c te ri sti c s o f t

he g ov e rnme nt” : “ I f i t is a g oo d, jus t g ov e rnme nt d oin gwh at a g overnme nt should, then y ou must obey it” beca use “r ational men in a hy

pothetical ‘state of natur e ’ w ou ld c on se nt t o b e g ov e rn e d b y su c h a g ov e rnme nt” ); and

no t to su g g e st that in deter mining whe ther a

use is fair, one should look to t he ac tual past conduc t of the copy rig ht owner to determine whether

consent may

be implied. 36 co urt i tse lf

r ec ogni ze d, the e xis te nc e of a ct ua l c onse nt n eg at es the ne ce ssi ty of conductin g a fair

use analy sis in th e first place , a s the existence of a license is an independ ent affir

m ative defense to a c laim of copyright infringem ent. S ee A cuffRo se Mu sic , I nc . v. Jos te ns, I nc . , 155 F . 3d 1 40, 144 n. 2 ( 2d C ir . 199 8) ( “ T he doc tr ine of

‘ fa ir use ’ a llo w s th e ap pr opr ia tio n of ac opy ri ght ed w ork w ith out co nse nt unde r ce rt ai n c ir cum stanc es . ”) ( em pha sis a dde d) . A ct

ua l c onse nt the re fo re is not

pr ope rl y af ac tor in fa ir use ana ly sis . 23 Moreover, the district court erre d in findin g that defendants had o btained ac tua l c onse nt t o c opy

the boo k duri ng the r el ev an t pe ri od. D id L es D an e, a t on e tim e, giv e im

pli ed c onse nt t o th e use of

the boo k inthe c our se m at er ia l? P er ha ps so; he e vid en tly

kne wof and p er m itt ed H ubbard ’ s us e of

the boo k to som e ex te nt, as he e ve n ta

ught se m inars uti liz ing sa le s dr ill s onbe ha lf of the Chur chdur ing theAt oral a rgument, PL &A ’s counse l argued that L es Da ne could not have g rante d an 24 implied license to defe ndants bec ause “ Prentice H all had those rights.” I t is unclear f rom the rec ord exactly

which rights L es Da

ne assig ned to Parke r Publishing (Prentice Hall’s p r e d e c e s s o r ) , b u ta s e x p l a i n e d i n f r a , th i s d e t e r

m i n at i o ni s u l t i m at e l y un n e c e s s ar y. 37 1980 s. S ee K orm anv. H BC F la . , I nc . , 182 F . 3d 1 291, 129 3 ( 11th C ir . 199 9)

24 (“ Whi le an ex cl us iv e li cen se to us e co pyrig ht edm at eri al m us t b e wri tt en , a none xc lus ive li ce nse c anbe gr an te d or al ly or c anbe im

pli ed f ro m the c ondu ct

of the parties.” ). But PL &A does not allege that defendants’ use during th at tim e w as inf ri ngi ng; r athe r, thi s c as e is c onc er ne d w ithape ri od o f de fe ndants ’ use of the book that t ook pla ce a ft er

any suc h gr an t of

r igh ts t o de fe ndants w oul d have lapsed. Be cause L es Dane died before he c ouldregister f or the book ’ s renew al term , he could no t have consented to d efendants’ use of the book in the renew al term , e ven had he wished it. S ee S tewart, 495 U.S . at 230, 110 S. Ct. at 1765. L es D an e’ s “ de ath, pr ior

to the r en ew al pe ri od, te rm inate [d ] his [ co nti nge nt] int er es t i n the r en ew al , ” id. a t 21 9, 110 S . Ct . a t 17 59, and the sub se que nt r en ew al of the copyright byhis statut ory heirs, the Dane fam ily , c reate d a “ new e state” that w as

“ clear of all rights, interests or lice nses granted und er the original copyright.” P .C. Fi lm s C or

p. v. MG M/U A H om e V ide o, 138 F . 3d 4 53, 456 –57 (2 d C ir . 199 8) (quo ta ti on m ark s o m it te d) . By finding th at defendants’ use of Big L eague Sale s was f air beca use of Le s38

D an e’ s e ar lie r co nse nt, the dis tr ic t c ourt e ff ec tiv el y c ontrave ne d th is p ri nc ipl e by en cum be ri ng the r en ew al te rm . N or doe s th e fa ct

that L ette re se too k se ve ra l of the co ur se s w hil e he w as sti ll a pr ac tic ing S ci en tol ogi st m ean th at P L &Ac onse nte d to de fe ndants ’ use of

the boo k; P L &Aw as not the n th e ex cl usi ve li ce nse e of the bo ok . B. A s P L &Adid

not a ct ua lly c onse nt t o de fe ndants ’ use of Bi g L ea gue S al es , it is a ppr opr ia te to co nsi de r w he the r de fe ndants w er e en tit le d to the de fe nse of f ai r use . W e pr oc ee d th ro ugh anana ly sis of the statut or

y f ac tor s. 1. P urpose and Character of the U se.

“ T he f ir st f ac tor in the f ai r- use ana ly sis , the pur

pose and c hara ct er

of the al le ge dl y in fri ng in g wo rk , has sev eral face ts .” Su nTru st Ban k, 2 68 F.3d at 1 26 9. Tw o such facets ar e (1) whether the use serves a nonprofit educational purpo se, a s oppo se d to ac om

m er ci al pur

pose ; and ( 2) the de gr ee to w hic h th e w ork is a

“ transform ative” use, as oppos ed to a m erely superseding use, of the copyrighted w o rk . I d . B e f

o r e i l l u mi n i n g th e s e f

a c e t s , h o w e v e r , w e o b s e rv e th a tth e S up r e me Court has cautioned against the use of the fac ets to create “ hard evidentiary presum ption [s] ” or “ categories of pre sum ptivelyfair use.” Cam

pbell, 510 U. S. at 584, 114 S . Ct . a t 11 74 ( “ [T ] he m er e fa ct that a use is ed uc at ion al and n ot f

or39

pr of it doe s no t i nsul at e it fr om af ind ing of inf ri nge m en t, any

m or e than th e co m m er ci al c hara ct er

of ause bars af

ind ing of f ai rn es s. ”) . R athe r, the co m m er ci al or

non -transf

orm at ive use s of

aw ork are to be r eg ar de d a s “ se parate factor[ s] that tend[] to weigh against a finding of fair use, ” and “ the force of that tendency will vary with the context.” Id. at 585, 114 S. Ct. at 1174 (internal quot at ionm ar

ks o m itt ed ). A nd “ [t ] he m or e tr an sf orm at ive the ne ww ork, the le ss w ill be the sig nif

ic an ce of oth er f ac tor s, li ke c om

m er ci al ism , that m ay

w ei gh ag ai nst af ind ing of f ai r use . ” I d. a t 57 9, 114 S . Ct . a t 11 71. T he S upr em e Co urt ha s e m pha siz ed that “ [t ] he c ru x of

the pr of it/nonp ro fi t distin ction is no t whether the sole m otive of the use is m onetary gain but whether the use r stands to p ro fi t f ro m e xpl oit at ionof

the c opy ri ght ed m at er ia l w ith out pa y in g t he cu st om ary pr ic e.” Harp er & R ow, Pu bl is he rs , Inc . v. Nat io n En te rs ., 471 U.S . 539, 562, 105 S. Ct. 2218 , 2231, 85 L. Ed. 2d 588 (1985). T he district court m isconst rued this statem ent, c onclud ing th at because “ Dane and Plaintiff knew about Def

endants’ use of [Big L eague Sale s] but never charged or dem anded a fe e fo r it[ , ] . . . the re appe ar s to have be enno ‘ cu sto m ar y pr ic e’ a t a ll fo r the ir part ic ular use of

[ the boo k] . ” T he que sti on i s no t w he the r PL &Aand d ef en dants ha d se t a pr ic e be tw ee n th em se lve s ov er ac our se of

de al ing ( w hic h de fe ndants the n ne gle ct ed

to pay ); it

is w he the r the na tur e of

de fe ndants ’ use vis -a -v is the40

publ ic w as such that defendants sto od to p rofit com m ercia lly from it. S ee Param ount

P ic tur es Co rp . v. Caro l P ubl ’ g G ro up, 11 F . S upp. 2d 3 29, 334 (S . D . N . Y . 199 8) , a ff

’ d m em . , 199 9 W L 319 328 (2 d C ir . May 13, 199 9) ( not ing that the f ir st a spe ct

“ is whe the r the w ork is pr im ar ily c om m er ci al in na tur e or whe th er [i t] asp ire s t o s erv e b ro adpu bl ic pu rp os es ”). That W ISE charged $75 for eac h Sales Course pack c learly dem onstrates the com m ercia l purpos e of the course m aterials. See SunTr ust Bank, 268 F.3d at 1269 & n. 24 ( not ing that the f ac t tha t de fe ndant “ ch ose am ethod of pub lic at ion designedto generate ec onom ic profit” w eighed against a findin g of fair use). CSI did no t charge a

m onetary

fee outright for consum

ption of the Pr ofessional Re gis tr at ionCo ur se or

O rg an iz at ionE xe cu tiv e Co ur se , but it und en ia bly de ri ve d a com m ercia l benefit theref

rom by obtainin g a prom issory

note for the fixed

“ donatio n am ount

of the c our se , ” w hic h be cam e pay ab le in the e ve nt tha t the student failed to render services to the Church for the f ull du ration of his or her st aff c on tra ct . Cf. Ro y

Exp or t Co . Est ab li sh m en t v . Col um bi a Bro ad . Sy s. In c., 503 F. S upp. 113 7, 114 4 ( S. D . N . Y . 198 0) ( not ing that a lth oughCB S’ s br oa dc as t of atr ibu te to Ch ar lie Ch ap linw hic h in cl ude d c opy ri ght ed f ilm c lip s w as not spon sor ed , CB S “ sto od t o ga in at l ea st i ndi re ct c om m er ci al be ne fi t f

ro m the ratin gs b oost

w hic h it ha d r ea son to h ope w oul d ( an d inf ac t di d) r es ult

f ro m theThis does not mean that a use that har

ms the market f

or the orig inal work c annot be 25 tr ans fo rm ativ e . Atr ans fo rm ativ e wo rk may we ll r e du c e de mand

fo r t he or ig ina l w or

k o r i ts derivatives, as in the ca se of a n unfavor able r eview. See Castle Rock Ent’mt, Inc. v. Carol Pub l’ gGr ou

p, Inc ., 15 0 F .3 d 1 32 , 1 45 (2 d Ci r. 19 98 ). B ut t he int e ra c tio n o f t

his fi rs t f a c tor wi th the fo ur th f a c tor , th e e ff

e c t on the mark e t, i s n ot c e nte re d a ro un d “ wh e the r t

he se c on da

ry us e suppresses or

even de stroy s the marke t for the or igina l work or its potential derivatives, but whether the sec ondary

use usurps or substitutes for the ma rket of the orig inal work. The more transfor mative the sec ondary

use, the less likelihood that the sec ondary use substitutes for the orig inal.” I d. (empha sis added) ( internal c itation omit ted). 41 special”). Nor m ay defendants’ course m aterials properly be deem ed “ transform ative” of the boo k. Atr an sf

orm at ive w ork is one that “ ad ds s om ethin g ne w , w itha further purpose or differ ent charac ter, altering the first [w ork] with new ex pr es si on , m ean in g o r m es sa ge .” Cam pb el l, 5 10 U.S. at 5 79 , 11 4 S . Ct. at 11 71 . O n th e oth er

hand, aw ork th at

is not tr an sf orm at ive , and tha t “ m er el y sup er se de [s ] the obj ec ts o f the or igi na l c re at ion , ” is l es s li ke ly to be e nti tle d to the de fe nse of fa ir use be ca use of the gr eate r lik el iho od tha t i t w ill “ supp lant” the m ar ke t f or the co py ri ght ed w ork, “ fu lf

ill ing de m an d f

or the or igi na l. ” S ee id. a t 57 9, 588 , 114

25 S. Ct. at 1171, 1176 (alter ation in o riginal) (internal quotation m arks om itted); Harper & Row, 471 U.S . at 562, 105 S. Ct. at 2231 (noti ng the defendant’s e ffec t an d i nt en de d p ur

po se of “ su pp la nt in g” th e co pyrig ht own er’s co m m erci al rig ht s) . T he dif fe re nc e be tw ee n atr an sf

orm at ive use and a

sup er se din g us e is i llu str at ed by the c ontra st b etw ee n tw o w orks d er ive d f ro m Marg ar et Mi tc he ll’ s no ve l, G one42

W iththe W ind

( “ G W T W ”) . A lic e Randa ll’ s no ve l, T he W ind D one G one , inv er

ts the original sto ry line of GW TW in order “ to explo de the rom antic, idealize d portr ai t of

the ante be llum

S outh duri ng and a ft er

the Ci vil W ar . ” S unT ru st B an k, 268 F. 3d at 12 70. Whe re as the or igi na l no ve l “ de sc ri be s ho wboth bl ac ks and w hit es w er e pur

porte dly be tte r of f in the day s of

slave ry , ” Randa ll’ s hi ghl y tr an sf orm at ive paro dy

“ fl ips G W T W ’ s tr ad iti ona l r ac e ro le s, portr ay s po w er fu l w hit es a s st

upi d or f ec kle ss, and g en er al ly

se ts o ut t o de m

y sti fy G W T W and s tr ip the rom anticism

from Mitchell’ s specific ac count of this period of our histo ry .” Id . B y c ontra st, de spi te the inc lus ionof se ve ra l e le m en ts o f paro dy or sa tir e in the 1979 m usical productio n, Sc arlett Fe ver, the work “ as a w hole is no t a cr itical co m m en tary ” of

the or igi na l w ork, but

r athe r a w ork th at

f ulf ill s th e sa m e “ ove ra ll func tio n” – “ to e nte rt ai n. ” Me tr o- G oldw yn- May er , I nc . v. S how ca se A tlanta Co op . Pro ds ., Inc ., 47 9 F . Sup p. 3 51 , 35 7, 3 61 (N.D. Ga. 19 79 ). T he dif fe re nc e, the n, is one of

sub stanc e an d no t of

de gr ee . V ie w ed

in thi s light , def endants’ use of Big Le ague Sales in their course m aterials f alls short of a transform ative use. T he bookselects, orders, and describes a num ber of sales te ch nique s w iththe pur

pose of e duc at ing it s r ea de rs to be co m e m or e ef fe ct ive salesm en. The sam e is true of the W ISE and CSI course m aterials. A s the district court noted, “ De fendants’ courses and m aterials m erely attem pt to prov ide a user-In this respec t, the course materia ls teachingBigL eag ue Sales a re somewhat ana logous 26 to The Seinfeld Aptitude Te st, a trivia quiz book that tested its reader s’ memory of eve nts and char acte rs from the te levision series Seinfe ld. In Castle Rock Enterta inment, Inc. v. Carol Publis hing G roup, Inc., the Sec ond Circuit determined that the purpose of the trivia quiz book was not “to e ducate , criticize, parody , comment, re port upon, or re sear ch Seinfe ld,” as c laimed by defe ndants, but simply

“to re packa g e Seinfe ld to entertain Seinfe ld viewer s.” 150 F .3d at 14 2–43 . Sp e c if

ic a lly , th e c ou

rt he ld t hat th e tr ivi a

bo ok ’s e ff

or t to “ c a ptu re Se inf e ld’ s f lavo r i n quiz book fashion” was such a minimal alteration of the or igina l expression of Seinfeld as to lack

43 fr ie ndl y m ethod of

r ea din g and l earn ing f

ro m [ Bi g L ea gue S al es ] . ” T he c our se m at er ia ls d o no t r es ha

pe the ins tr

uc tio na l purp ose or

c hara ct er of the boo k, or

c as t th e b oo k i n a di ffer en t l ig ht th ro ug h a ne w m ean in g, m es sa ge , or e xp res si on . Although the course m aterials adopt a diffe rent form at, incorporate pedagogical too ls s uc h a s sa le s dr ill s, and c onde nse the m at er ia l i n th e book , the se c hange s do not a lte r the e duc at ion al c hara ct er of the m at er ia l t ak enf

ro m the boo k; the y

m er el y em ph as iz e, rat he r th an tra ns fo rm , th e o ve ral l p ur po se an d fu nc ti on of t he bo ok . Se e al so B lanc h v. K oons , 467 F . 3d 2 44, 252 ( 2d C ir . 200 6) ( not ing that i t w oul d be f uti le f or de fe ndant t o arg ue that a pa int ing is tr an sf

orm at ive of

apho tog ra

ph, be ca use suc h ade fe ndant w oul d have “ done no m or e than f ind ane ww ay

to exploit the cre ative virtues of the original work”); Param ount Pictures Cor p., 11 F. Su pp. 2d at 33 5 ( fi ndi ng the de fe ndant’ s w ork w as not tr an sf or m at ive be ca

use “ it sim ply r et el ls the sto ry

of S tar T re k inac onde nse d ve rs ion , a lbe it in a dif fe re nt or de r” ; hum or ous as ide s in te rs pe rs ed thr ough out

the sum m ar y did “ not suf fi ci en tly tr an sf orm ” the S tar T re k st or

y ). T he f

urthe r ad dit ionof

S ci en tol ogi ca l t er

m s or 26transfor

mative purpose. I d. at 142 (interna l quotation marks omitted). A third aspec t of the cha rac ter of the use is “the pr opriety of the de fenda

nt’s conduct,” 27 as “[f]air use pre supposes g ood faith and f air de aling .” Ha

rper & Row, 471 U .S. at 562–63, 105 S. Ct . at 22 31 –3 2 ( int e rn a l qu otatio n ma rk s o mitte d) (n oti ngthat de fe nd ants “ kn ow ing ly e xploi te d a

purl oin e d ma

nu sc ri pt” ). Ev ide nc e of

ba d f a ithmay be a re le va nt, but no t ne c e ssa

ri ly dispositi ve, aspe ct of the f irst fac tor. See Campbell, 510 U.S. at 585 & n.18, 114 S. Ct . at 1174 & n. 18 . H e re , th e dis tr ic t c ourt fo un d th at de fe nd a

nts ha d a c te d in

“ g oo d f a ith ” be c a us e the y fi rs t utiliz ed the book in the 1970s with the pe rmission of the author, “ continued such use for de cade s without any

protestations from Da

ne or Plaintiff,” did not concea l their use of the book, did not make unlaw ful duplicates of the book, and did not fa il to attribute the book to L es Da ne. Ev e n if we we re to c re dit

the dis tr ic t c ourt ’s g oo d- fa ithfi nd ing , h ow e ve r, sin c e g oo d f a ith does not insulate a de fenda nt from liability

and is mere ly

a “pr esupposition” of a de fenda nt’s claim to the def

ense, its exist ence here would not outweig h the commer cial and supe rseding nature of def

endants’ use . 44 co nc ep ts li ke wis e d oe s n ot tra ns fo rm th e o ve ral l ed uc at iv e p ur po se of t he bo ok . T his is part ic ularl y

tr ue w ithr es pe ct

to CS I’ s c our se m at er ia ls; in the co rr es pond ing sa le s dr ill s, the use of S ci en tol ogi ca l t er

m s is inc ide nta l. F or ex am ple , stu de nts pr et en d to be r eg istrars ( rathe r than or din ar y sa le sm en ) an d practice selling “ E- m eters” or “ Ac adem

y training” (rather

than cars or insurance po li ci es ). Acco rd in gl y , th e fi rs t fa ct orfav or s PL& A. 27 2. N at ur e of the Co py ri ght ed W ork. T he se co nd f

ac tor “ re co gni ze s th at

the re is a hie ra

rc hy of c opy ri ght pr ote ct ion ” de pe ndi ng u

pon the na tur e of

the c opy ri ght ed w ork. S unT ru st B an k, 268 F. 3d at 12 71. W orks tha t are “ cl ose r to the c or e of int en de d c opy

ri ght pr ote ct ion , ” an d thus m er it gr eate r pr ote ct ion , inc lud e or igi na l a s op pose d to derivative works; cre ative as oppos ed to factual w orks; and un publ ished as45

oppo se d to pub lis he d w orks. S ee Cam pbe ll, 510 U . S. a t 58 6, 114 S . Ct . a t 11 75; Harper & Row, 471 U.S . at 563, 105 S. Ct. at 2232 (“ The law gener ally rec ogni zes a gr eate r ne ed

to dis se m inate f

ac tua l w orks than w orks o f fi ct ionor f an ta sy . ”) ; i d. at 551, 105 S. C t. at 2226 –27 (“ Publication o f an author’ s expression b efore he has authorized its dis sem ination seriously infringes the author’ s right to d ecide w hen and whether it w ill be m ade public, a f actor not present in fair use of published works. ”); SunT rust Bank, 268 F.3d at 1271 (“ [O ] riginal, cr eative w orks are affor ded greater protection than derivative works or f actual com

pilation s.”) . Big Le ague Sales is neither a derivative work nor a factual c om pilation . It doe s, how ev er , f

al l r ough ly

und er the r ubr ic of af ac tua l w ork. B ut “ w ith in the fi el d of f ac t w orks, the re are gr ad at ion s a s to the r el at ive pr opor tio n of f ac t and fanc y . O ne m ay

m ove f ro m spars el y e m be lli she d m ap s and d ir ec tor ie s to e le gantl y w ri tte n bi ogr ap hy . ” H ar

pe r & R ow , 471 U . S. a t 56 3, 105 S . Ct . a t 22 32 ( quot ing Gorm an, F act or F ancy ? The Im plications for Copy

right, 29 J. Copy

right Soc. 560, 561 (198 2)) (internal quotation m arks om itted). W hile the und erly ing sales te ch nique s inBi g L ea gue S al es are not c opy ri ght ab le , the or igi na l and c re at ive expr es sio n inw hic h th ey are c ouc he d m ay

be . O ur r ev ie wof

the boo k r ev ea ls that, notw ith standi ng i ts i nf orm at ion al na tur e, the boo k c ont ai ns a sig nif ic an t

“ pr opor tio n of f ac t and f an cy , ” an d no t m er el y

in the sub

j ec tiv e se le ct ionandIn B onne r v . Ci ty of Pr ic ha rd , 6 61 F .2 d 1 20 6, 12 09 (1 1th Cir . 1 98 1) (e n b anc ), thi s 28 c ourt a do pte d a s b ind ingpr e c e de nt a ll d e c isi on s o f t he fo rm e r F if

th C ir c uit ha nd e d d own p ri or

to October 1, 1981. 46 arrangem ent of sales techniques; Les D ane utilizes original expressio n that su rp as se s t he ba re fa ct s n eces sa ry to co m m un ic at e th e u nd erl y in g t ech ni qu e. A lth oughthe te ch nique s are pr es en te d by w ay of pe rs ona l ane cd ote , it

is hard to be lie ve that su chane cd ote s f eatur e ac tua l pe rs ons an d a ct ua l r et el lin gs o f pa st events and conv ersations, as opposed to com posit e char acter s and experiences se rv edwit h a he al th y

do se of f ic ti on . As f or the publicatio n status o f Big L eague Sale s, def endants character ize the bookas out of print, w hich would tend to favor their c laim of fair use. S ee T ri an gle P ubl ’ ns, I nc . v. K nig ht- Ri dde r N ew spa

pe rs , I nc . , 626 F . 2d 1 171, 117 6 n. 14 ( 5thCi r. 198 0) ( “ [I ] f the c opy ri ght ed w ork is out

of pr int and c an not

be purchased, a user m ay

be m ore likely

to prevail on a fair use defense. ”). 28 Purs uant t o our re vie wof the r ec or d, how ev er , w e ar e co nvi nc ed that the publ ication status of the book requires further re finem ent. T he bookwa s publ ish ed in 1971 and w as sub se que ntl y w ith dr awn f

ro m the m ar ke t by P L &Ain the m id-1990 s. A lthou gh the bo ok’s w ithdrawal did not thereby render it an

“ unpu bli she d” w ork, w e fi nd tha t the pol ic ie s un de rl y ing the gr eate r pr ote ct ionof unpu bli she d w orks are im

pli cate d to ac er

ta in d eg re e an d c ouns el a ga ins t l um pin gWe n ote that “ [t]he c onve rs e of thi s p ri nc ipl e do e s n ot f

oll ow , h ow e ve r: Th e fa c t th at a 29 w o r k i s p u b l i s h e d d o e s n o tm e anth atth e s c o p e o f f a i r u s e i s b r o a d e r . ” S e e 1 W i l l i amF . P atr y, Copy rig ht L aw & Practice 767 n.195 (1994). 47 Big Le ague Sales together w ith the kin d of out-of-print works that m ight b e m ore su sc ep ti bl e to th e d efen se of f ai r us e. T he lawpr ovi de s gr eate r co py ri ght pr ote ct ionf

or unp ubl ish ed

w orks i n re co gni tio n of

the auth or ’ s pr ope rty

int er es t i n th e “ co m

m er ci al ly va lua ble r igh t of first publication ,” includin g the “ exploit ation of prepubli cation rights, which ar e va lua ble in the m se lve s and s er ve a s ava lua

ble a dj unc t t o publi ci ty

and m ar ke tin g, ” H ar

pe r & R ow , 471 U . S. a t 56 2, 555 , 105 S . Ct . a t 22 31, 222 8, and because of the author’ s “ personal interest” in “ creative or qualitycontrol,” id. at 564, 105 S. Ct. at 2232. By contrast, out-of-print w orks are gener ally accor ded 29 le ss c opy ri ght pr ote ct ion . T he r el ev an t f ac t i s no t si m

ply that the w ork is unavailable for purchase through n orm al channels. “ Any copyright infringer m ay claim to benefit the publ ic by

increasing publi c acc ess to the copyrighted work.” Id . a t 56 9, 105 S . Ct . a t 22 35. R athe r, that f ai r use is m or e lik el y

to ap ply in the standard scenario of an out-of-print work r eflec ts in large part the assum ption that no m ar ke t harm to the ow ne r w ill c om e of the use , a s pr es um ab ly

it w as la ck of dem and for the w ork that led to its dem ise. M oreover, as it wa s the m arket m ec hanis m

that c au se d th e w ork to be co m e unava ila ble , the c ount er

va ili ng48

pe rs ona l i nte re st o f the auth or is not im pli cate d; the auth or

pr es um ab ly

w oul d w ishf or the w ork’ s c ont inu ed

dis se m inatio n. N ei the r the pe rs ona l no r the pr ope rty int er es ts o f the auth or

are thu s stro ngl y

im pli cate d w ithr es pe ct

to the ty pic al out -o f- pr int

w ork. De fendants’ chara cterization o f Big L eague Sale s as an out-of-print work obscures the actual nature of the book. It is not “ out of print” in th e ty pical sense, as it w as the c opy

ri ght ow ne r’ s de ci sio n to w ith hol d th e book , and n ot the de ar th of sales, that led to its withdrawal f rom the m arket. Cf. id. at 553, 105 S. Ct. at 2227 ( dis tin gui shi ng unpub lis he d w orks f ro m out -o f- pr int

w orks b ec au se a lth ough

“ the w ork is unava ila

ble , thi s is the r es ult

of ade lib er at e ch oic e on the part of the co py ri ght ow ne r” ). N one the le ss, the pe rs ona l i nte re sts of the auth or

are le ss co m pe lli ng w ithr es pe ct

to the w ith dr awn w ork; the auth or ha s a lr ea dy

ha d am ple oppo rt uni ty to ex er ci se c re at ive and qua lity c ontro l ov er

his w ork duri ng the

“ cr iti ca l st ag e” pr ior

to “ the f ir st p ubl ic appe ar an ce ” of his w ork. I d. a t 55 5, 105 S. Ct . a t 22 27–2 8 ( not ing the “ obvi ous be ne fi t t o auth or and p ubl ic a lik e of as sur ing auth or s th e le isure to de ve lop the ir ide as f re e fr om f ear of e xpr opr ia tio n” pr ior to publ ic at ion ). Mo re ove r, the auth or of an a lr ea dy -p ubl ish ed

w ork is not al tog ethe r pow er le ss t o e xe rt c ont inu ed

e dit or ia l c ontro l; the pr int ing of r etra ct ion s o r o f s ub s e qu e n tr e v i s e de d i t i o n s s up p l y s u c h f u rt h e r o p p o rtu n i t y.49

U nli ke the c as e of

an ou t- of -p ri nt w ork, how ev er , the appl ic at ionof f ai r use in this c ont ex t m ay

harm the c opy ri ght ow ne r’ s m ar

ke t, and n ot s im

ply be ca use de m an d f or the or igi na l w ork is pr es um ab ly sti ll ex tant. P L &Ac la im s th at it s de ci sio n to w ith dr awthe boo k is a cc om panie d by the r es er va tio n of “ the de ci sio n as to when or whether to m ake [Big L eague Sale s] publi c again.” A s PL &A ind ic at es , the de ci sio n to w ith dr awaw ork f ro m the m ar ke t and the n r e- re le as e it can be a valuable m arketing tool –taking advant age of tim ing and p ent-up m arket de m an d, c f. Be lus hi v . W oodw ar d, 598 F . S upp. 36, 37 ( D . D . C. 198 4) ( not ing the im portanc e of

“ care fu lly

or ch es tr at ed

and c ost ly

plans f or se lli ng and m ar

ke tin g the boo k” that “ de pe nds uponthe c oor din at ionof a dve rt isi ng, se ri al iz at ion , auth or appearance s, and re views, and the release to the pub lic of the book”) – that has be ensuc ce ssf

ull y uti liz ed by oth er s. S ee , e . g. , Bo ose y & H aw ke s M usi c Publish ers, Ltd. v. W alt Disney Co., 145 F.3d 481, 485 (2d Cir. 1998) (noting that W al t D isn ey

ha s r e- re le as ed

the f ilm “ Fanta sia , ” starr ing Mi ck ey Mo use , f or th eat ric al di st rib ut io n a t l eas t s ev en ti m es si nc e it s o rig in al rel eas e). W e cannot agree, therefor e, that the publ ication status of Big L eague Sale s favor s de fe ndants ’ c la im

of f ai r use . S im ilarl y , the se m i- fa ct ua l natur e of

Bi g Leag ue Sal es ne it he r ex pa nd s n orco ns tri ct s t he sco pe of t he fai r us e d efen se . On ba lanc e, the re fo re , w e co nc lud e that this f ac tor is ne utr al .S e e , e . g . , W i l l i amW . F i s h e r III , R e c o n s tr

u c t i n gth e F a i r

U s e D o c tr i n e , 1 0 1 H ar

v . L. 30 Re v. 16 59 , 1 67 8 ( 19 88 ). In th is r e sp e c t, t he ana ly sis of

the thi rd fa c tor , whil e fa c ia lly

sim ila r i n some respe cts to the threshold inquiry of whe ther the a

mount taken is de minimis and therefor e do e s n ot r ise to t

he le ve l of

a c tio na ble c op ying , s e e su

pr a , is mor e nu anc e d. Th e inq uir y is whether the amount taken is re asonable in light of the pur pose of the use and the likelihood of marke t substit ution. See Campbell, 510 U.S. at 588, 114 S. Ct . at 1176 (notingthat in the c onte xt of pa ro dy , a ft e r d e te rm ini ngthe amou nt t hat is ne c e ssa

ry to c on jur e up the or ig ina l, de te rm ini ng“ ho w muc h mo re is r e a so na ble wi ll d e pe nd , s ay , o n th e e xtent to wh ic h th e [wo rk ’s ] overr iding pur

pose and c hara cter

is to parody

the orig inal or, in contra st, the likelihood that the parody may serve as a ma

rket substitute for the or igina l”).

50 3. A m ount

and S ubst an tia lity

of the P ortio n U se d. Wha te ve r the use , the portio n of the c opy ri ght ed w ork th at

is take n m

ust be re as ona ble ; i n othe r w or ds, thi s th ir d f ac tor e xa m ine s w he the r de fe ndants have

“ he lpe d th em se lve s ov er

m uc h” to the c opy

ri ght ed w ork inli ght

of the pur pose and ch ar ac te r of

the use . C am

pbe ll, 510 U . S. a t 58 7, 114 S . Ct . a t 11 75. L ike the pr ec ed ing f

ac tor s, thi s f

ac tor is int er tw ine d w iththe f

ourth f ac tor and p ar tly func tio ns a s ahe ur ist ic to de te rm ine the im pa ct on the m ar

ke t f or the or igi na l. A

30 book r ev ie w er w ho c opi es sni ppe ts o f a book is lik el y to inc re as e the de m an d f or the boo k, but

“ w er e a book

r ev ie w er to quot e the e nti re boo k inhis r ev ie w , or so m uc h of the boo k a s to m ak e the r ev ie wasub sti tut e fo r the boo k it se lf , he w oul d b e c u t t i n g i n t o th e p ub l i s h e r ’s mark e t , an dth e d e f e n s e o f f a i r u s e wo u l df

a i l . ” Ty, Inc. v. P ubl’ns Int’ l Ltd. , 292 F. 3d 51 2, 517 (7th Cir. 2002). T w o po int s be ar

part ic ular em

pha sis . F ir st, “ the a m ount and s ubst an tia lity of the portio n us ed ” is m ea sur ed w ithr es pe ct

to the “ co py

ri ght ed w ork a s a51

w hol e, ” not

to the put at ive ly

inf ri ngi ng w or

k. D ef en dants the re fo re go a str ay in fo cu sin g onthe arg um en t tha t the c opy ri ght ed e xpr es sio n take n f

ro m Bi g L ea gue Sales am ount s to a sm all fra ction of the 127 pages of the course pack for the Sales Co ur se , the 22 p ag es of

c he ck she et s and 2 50 p ag es of the c our se pa ck

f or the Profe ssion al Registration Course, and the 47 pages encom passing the checksheet an d sa le s dr ill s f

or the O rg an iz at ionE xe cu tiv e Co ur se . “ [A ] takin g m ay not be ex cu se d m erel y

be cau se itis in su bs ta nt ia l wi th res pe ctto th e in fri ng in g wo rk . . . .

‘ [N ] o pl ag iari st c ane xc use the w ro ng b y sho w ing howm

uc h of his w ork he did not pir at e. ’ ” H ar

pe r & R ow , 471 U . S. a t 56 5, 105 S . Ct . a t 22 33 ( quot ing S he ldo n v. M et ro -Go ld wyn P ic tu res Co rp ., 81 F.2d 49 , 56 (2d Cir . 19 36 )). Seco nd , in an al y zi ng th e am ou nt an d s ub st an ti al it y of t he po rti on us ed , a co urt c onsi de rs “ not

onl y . . . the quanti ty

of the m at er ia ls u se d, but

. . . the ir qu al it y an d i m po rta nc e, to o.” Cam

pb el l, 5 10 U.S. at 5 87 , 11 4 S . Ct. at 11 75 . Quantitatively , the am ount of verbatim copy ing or paraphrasing appears to be a sm al l po rt ionof

Bi g L ea gue S al es . B ut the am ount take n m ay

be sub stanti al f

ro m a qualitative perspective if the defendant has copied the “ heart of the book.” H ar pe r & R ow , 471 U . S. a t 56 4–65 , 105 S . Ct . a t 22 33. T ha t m ay ve ry w el l be the ca se he re ; a s th e dis tr ic t c ourt ob se rv ed , “ the inh er en t va lue of [ Bi g L ea gue S al es ] co m es not

j ust f ro m the sa le s te ch nique s and c onc ep ts, but part ic ularl y

f ro m the52

way th ey were ‘sel ect ed , coo rd in at ed , or a rran ge d’ by D an e.” Non et he le ss , we m igh t have f

ound the bare -b one s c opy ing of c ha pte r he ad ing s and s ubhe ad ing s into th e course chec ksheets to b e insubs tantial, if def endants had st opped th ere. In suc h asc en ar io, the a m ount take n m igh t have be ende em ed ne gli gib le be ca

use one co uld hard ly im ag ine that the he ad ing s and s ubhe ad ing s, div or ce d f ro m c ont ex t an d any e xpl an at ion , c oul d have asub sti tut ione ff ec t onthe m ar

ke t f or Bi g L ea gue Sa le s or de ri va tiv e w orks. B ut the inc or por at ionof

the sa le s dr ill s, w hic h in cl ude explana tio ns o f the sa le s te ch nique s, a dds fl es h to the or ganiz at ion al bon es and re nde rs the w hol e of

de fe ndants ’ c opy ing sub stanti al e noug h th at de m an d f

or the book or de ri va tiv e w orks m igh t be r ed uc ed . T hus, the a m ount

and s ubst an tia lity of th e p or ti on us edsl ig ht ly favo rs PL&A. 4. E ff ec t onthe Mark et . T he f ourth f ac tor is the de gr ee to w hic h th e de fe ndant’ s us e adve rs el y af fe ct s th e pot en tia l m ar

ke t or va lue of e ith er the or igi na l w ork or

de ri va tiv e works. W e m

ust cons ider two inquiries: (1) “ the extent of the m arket harm caused by the particular a ctions of the alleged infringer,” and (2) “ whether unrestricted an d w ide spr ea d c ondu ct

of the sor t e nga ge d inby

the de fe ndant [ ] w oul d r es ult in a substanti ally

adverse im

pact on the potent ial m arket. ” Cam pbell, 510 U. S. at 590, 114 S . Ct . a t 11 77 ( int er na l qu otatio n m ar

ks o m itt ed ). I n part ic ular, theAs Judg e Pos ne r e xpla ins , “ [I ]n e c on omi c te rm ino logy that ha s b e c ome or

tho do x in 31 fair- use ca se law, w e may say that copying that is complementary to the copy

rig hted work ( in the sense that na ils are c omplements of hammer s) is fair use , but copying that is a substitute for the copy rig hted work ( in the sense that na ils are substitutes for pe g s or scre ws), or f or der ivative works fr om the copy

rig hted work, is not fa ir use.” T y , Inc., 292 F .3d at 517 (interna l citation omitted). See also 3 Melville B . Nimmer & David Nimmer, N immer on Copy rig ht, 13-182, § 13.05[A] [4] (1994) ( “The fourth fa ctor looks to adver se impact only by rea son of usurpation of the demand f

or plaintiff’s w ork throug h defe ndant’s copy ing of protec tible expression from such work.” ). 53 adverse ef

fect w ith which fair use is prim arily concerned is that of m arket subs tit uti on. U se s w hic h are c om ple m en tary , on the oth er

hand, are m or e lik el y 31 to b e fo und fa ir

be ca use m ost auth or s w oul d no t w an t those use s to be im pe de d by a lic en se r equir em en t. S ee T y , I nc . , 292 F . 3d at 51 7 ( “ [F ai r use doc tr ine ] thu s econom izes on transaction costs.”). Th e d i s t ri ct co u rt ’s an al ysi s o f t h i s fa ct o r c en t er ed ar o u n dPL & A’s sti pul at ionin ope n c ourt tha t, “ fo r pur pose s of thi s c as e onl y

and f or pur pose s of the statut or

y dam ag es and the f

ai r use de fe nse , ” “ the re is no e xis tin g m ar ke t f or the D an e re la te d m at er ia l tha t [ PL &Aha s] ac opy ri ght to. T ha t the re is no potenti al m arket for

any of that m aterial, i.e ., that [PL &A has] never m ade a sale , [and i s] ne ve r goi ng t o m ak e a sa le . ” T he dis tr ic t c ourt a lso f ound that de fe ndants ’ course m aterial a ctually

contributed to the m arket for the book , since the c ourses require the purchase and stu dy of the book. De fendants contend th at PL &A has ef fe ct i v el y co n ce d ed th e f

o u rt h fa ct o r b y en t er i n g i n t o th e s t i p u l at i o n . WeL ike the question of f air use ove rall, this fourth fa ctor is “a mix ed question of law

and 32 fa c t.” Sun Tr

us t B ank , 2 68 F .3 d at 12 75 n. 32 (n oti ngthat w hil e the fo ur th f a c tor is n ot “ a pure ly le g a l matte r, ” ne ith e r i s it a “ pure ly fa c tua l or

e vid e nti ary

matte r” ). To the e xtent th at th e fo ur th fac tor involves a question of law , we a re not g ener ally

bound by PL &A ’s evidentiar

y stipulation. Duringthe cour se of discove ry , a dispute ar ose over PL &A ’s re fusal to produc e 33 fi na nc ia l r e c or ds fr om i ts d e nta l c on su lti ngbu sin e ss. Th e dis tr ic t c ourt , a do pti ngthe ma g istrate judge ’s re commendation, orde red PL &Ato produce the re quested doc uments. In an appa rent e ff or t to avo id t

he ir pr od uc tio n, PL & A r e vis e d it s f ir st a me nd e d c omp la int

so a s to dr op Count 5 entirely and to elec t statutory

damag es, there by

disclaiming a ctual dama g es and pr ofits pursuant to 17 U.S.C. § 504(a). See 17 U .S.C. § 504(c)(1) (per mitti ng“an a

war d of statutory

damag es for a ll i nf ri ng e me nts inv olv e d in

the a c tio n, wi th r e sp e c t to any on e wo rk . . . in a sum of no t le ss than $750 or more than $30,000 as the c ourt consider s just”). Def endants insisted that the bu sin e ss r e c or ds re ma ine d r e le va nt t o th e ir fa ir us e de fe ns e , s pe c if

ic a lly , to the mark e t f

or B ig L eague Sales. De fenda

nts wished to demonstrate that PL &A ’s profits fr om the book had bee n plummeting, and to disprove PL &A ’s claim that it would “mar ket [the book] to Fortune [500] companies” and would “ma ke millions of dollars doing that.” PL &Aenter ed into the stipulation in response to de fenda

nts’ motion for sanctions. PL & A’ s su

bs e qu e nt d e c isi on

to d ro p it s c la im f

or statut or y dama g e s w a s a

pp are ntl y motivated by

its belief that it would thus avoid the application of the e quitable doctrine of lac hes. We addre ss this argument in part IV, infra . 54 dis ag re e as to both th e sc ope and e ff ec t of the sti pul at ionon o ur

de te rm inatio n of the fourth factor. 32 T his w as an e vid en tiary

sti pul at ionm ad e in t

he c ont ex t of

de fe ndants ’ m oti on f or sanc tio ns d

ue to PL &A ’ s r es ist an ce to the pr oduc tio n of c er ta in fi nanc ia l r ec or ds. B as ed on o ur r ev ie wof

the he ar ing tr an sc ri pt, how ev er , w e do 33 not be lie ve that P L &Athe re by int en de d to c onc ed e de fe at a s to the f

ourth f ai r- use factor. PL &A apparently believed that the univ erse of existing or potential m ar ke ts i nc lud ed

onl y tho se m ar

ke ts tha t w er e be ing c om m er ci al ly e xpl oit ed

by the m se lve s or

by the de fe ndants – the “ ex ist ing m ar ke t, ” ac co rd ing to PL &A , is55

“ what the plaintiff does” w ith the copyright, w hereas the “potenti al m arket” r efer s to “ what the def

endants do with it” (f

rom the plaintiff’ s perspective, a “potenti al m ark et ” fo r ex pl oi ta ti on by the pl ai nt iff ). Bas edon th atun de rs ta nd in g, a stipu lation th at there w ere no existi ng or poten tial m arkets for B ig Lea gue Sales and derivative works would be tantam ount to a concession that PL&Ahad been una ble to pr of

it fr om the boo k, and w oul d no t de ve lop any suc h m ar ke t i n th e fu tur e. O ur

r ev ie wof

the tr an sc ri pt f

urthe r sugg es ts tha t de fe ndants and the dis tr ic t c ourt m ay

have be ensim ilarl y

la bor ing und er

an e rr one ous unde rs tandi ng of the appl ic ab le r

ule of lawabout

the f ourth f ac tor , w hic h r en de rs que sti ona ble the c ont en t tha t de fe ndants w oul d gi ve the sti pul at ion . C f. T ex . I nstrum en ts F ed . Cr ed it U nio n v. D el Bo nis , 72 F . 3d 9 21, 928 ( 1st Ci r. 199 5) ( “ L iti ga tio n sti pul at ion s c anbe und er sto od a s th e an al ogue of te rm s bi ndi ng p ar

tie s to a contract. ”). Even putting asid e the issue of intent, however , c onstrui ng the stip ulation as br oa dly a s de fe ndants w oul d li ke is pr obl em at ic giv enthe und isp ute d f ac ts o f the case. It is undisp uted, for e xam ple, that Br idge Publication s soug ht several tim es to p ur ch as e ri ght s to Bi g L ea gue S al es by c ont ac tin g th e D an e es ta te dir ec tly and, la te r, a tte m

pti ng t o ne got ia te w ithP L &A . Wha t i s f urthe r unde nia

ble is that the co ur se m at er ia ls tha t are the sub j ec t of thi s li tig at ione xpr es sly

r el y upo n56

contem poraneous us e of Big L eague Sale s, a fact which the dist rict court em phasized in findi ng that th e course m aterials ac tually contributed to the m arket fo r the boo k. Asti pul at ionthat B ig L ea gue S al es and d er ivativ e w orks l ac ke d a ll va lue and any

pot en tia l m ar

ke t, the re fo re , w oul d f

la tly c ontra dic t un dis put ed

f ac ts at the ve ry he ar t of the c as e. S ee D ar

w ishv. T em

p- G la ss G ro up, I nc . , 26 F ed . Appx. 477, 480 (6th Cir. 2002 ) (unpublis hed) (“ W e agre e w ith the dis trict court that ‘ part ie s [ cannot ] sti pul at e to p at en tly untru e fa ct s. ’ ”) ( al te ratio n inor igi na l) (quot ing F D IC v. S t. P au l F ir e & M ar ine I ns. Co . , 942 F . 2d 1 032, 103 8 n. 3 ( 6th Cir. 1991 ). While parties are perm itted and encouraged to st ipulate to facts that expedite the condu ct of litigation and avoid un necessary proof of peripheral fa ct ua l m atte rs , it

goe s a lm ost

w ith out say ing that su chf

ac ts s houl d be “ w ith in the range of possiblytrue fa cts.” See St. Paul Fir e & Marine Ins. Co., 942 F.2d at 1038 n. 3. As w e re ad the stipul ation, theref ore, PL &A has conceded that it has failed to d ev el op a

pr of ita ble m ar ke t f or Bi g L ea gue S al es or

de ri va tiv e w orks, and w ill not do so in the future. S uch a concession, however, falls short of establishin g that the intrinsi c value of the copy right is zero. “ Even an a

utho r w ho ha[s] disavowed an y int en tio n to pub lis h hi s w ork duri ng h is l if et im e [i s] e nti tle d to pr ote ct ionof his c opy ri ght , f ir st, be ca use the r el ev an t c onsi de ratio n [ is] the ‘ pot en tia l m ar ke t’57

an d, se co nd, be ca

use he ha s th e ri ght

to ch an ge his m ind . ” W or ldw ide Chur chof G od, 227 F . 3d at 11 19 ( ci tin g S al ing er v. Random

H ouse , I nc . , 811 F . 2d 9 0, 99 (2 d C ir . 198 7) ). P L &Ais not r equir ed to pr ove that i t ha s a ct

ua lly de ve lop ed

or will develop a m arket for Big Le ague Sales or der ivative works; even if a plaintiff

“ ha s ev id en cedli tt le if a ny int eres t i n e xp lo it in g [a ] m ark etforde riv at iv e wor ks . .

. , the copyright law m

ust respect that creative and econom ic choice. ” Ca stle Rock E ntm ’ t I nc . , 150 F . 3d at 14 5–46 ; P ac . & S. Co . v. D unc an , 744 F . 2d 1 490, 149 6 (1 1thCi r. 198 4) ( “ T he f

ac t tha t WX IAdoe s no t a ct ive ly m ar ke t c opi es of

the ne w s pr ogr am s do es not

m atte r, f or S ec tio n 10 7 lo oks to the ‘ pot en tia l m ar ke t’ in an al y zi ng the e ff

ec ts o f ana lle ge d in fr ing em en t. C opy ri ght s pr ote ct

ow ne rs w ho im m ediately m arket a work no m ore stringently than owners w ho delay

before entering the m arket. ”); Sa linger, 811 F.2d at 99 (“ [Salinger] is entitled to p rotect his op portuni ty

to sell his letters.”). T he que sti on r em ai ns, the re fo re , w he the r de fe ndants ’ use , or w ide spr ea d us e of the sam e kind, w ouldresult in subs tantial adverse harm to the potent ial m arket fo r Bi g L ea gue S al es or

de ri va tiv e w orks, w hic h “ inc lud es onl y tho se [ m ar

ke ts] that c re at or s of

or igi na l w orks w oul d inge ne ra l de ve lop or li ce nse oth er s toThere is thus “no protectible de rivative mar ket for c riticism” beca

use of “ the 34 un lik e lih oo d th at c re ator s o f i ma g inativ e wo rk s w ill lic e ns e c ri tic a l r e vie ws or lampo on s o f t

he ir own produc tions.” Campbell, 510 U.S. at 592, 114 S. C t. at 1178. Moreove r, a pla intiff’s ac tual lic e ns inga c tiv ity

c ann ot s take a

c la im o ve r a

de ri vativ e mark e t th at “ c re ator s o f o ri g ina l w or ks ” would not “in g ener al deve lop or license othe rs to develop.” See Castle Rock Entm’t, 150 F .3d at 145 n.11. In findingthat defe ndants’ cour se mater ials actua lly contributed to the mar

ket for the 35 book, the district court ove rlooked the c rucia l fac t that the control of de rivative wor ks is part of a copy rig ht owner’ s bundle of rights. The cour se mater ials may be compleme ntary

to the book, but they may also be mar

ket substitutes for derivative works of the book. See Ty , Inc., 292 F .3d at 51 8 ( “ Wer e c ontr ol o f d e ri vativ e wo rk s n ot p a rt of a c op y ri g ht o wn e r’ s b un dle of

ri g hts , it wo uld be cle ar that [ defe ndant’s] books fell on the complement side of the divide and so we re she ltered by the fa ir use def

ense.” ). Fur thermore , the fa ct that PL &Amight “of fer a compe ting c ourse of

entirely differ ent substance w ith its own set of e x planations, drills, and other mea ns of teac hing the sales techniques,” as the district cour t sugg ested, misses the point. The inquiry is not whether the marke t for der ivative works ha s been utter ly usurped; it is whether the re is a substantial mar ket su bs tit uti on e ff e c t. 58 de ve lop . ” Cam

pbe ll, 510 U . S. a t 59 0, 114 S . Ct . a t 11 78. W ithr es pe ct to the 34 W ISE Sales C ourse, w e think it m ay . The unrestric ted and widespread dis se m inatio n of

the S al es Co ur se – ause that i s no t transf orm at ive of

the boo k an d m ay be r eg ar de d a s a

ppr opr ia tin g “ the he ar

t” of it s e xpr es sio n – n am el y , the selection and structure of sales techniques and d istinctiv e descriptions th ereof

– m ay w el l us ur p th e pot en tia l m ar

ke t f or Bi g L ea gue S al es and d er ivativ e w orks. 35 D ef en dants have pr ovi de d in suf fi ci en t e vid en ce in supp ort of the ir c la im that the Sa le s C our se is unl ike ly

to adve rs el y

a ff ec t the pot en tia l m ar

ke t. T he sam e is n ot tru e, how ev er , w ithr es pe ct to the CS I co ur se s. A cc or din g to C SI , the O rg an iz at ionE xe cu tiv e Co ur se “ co nsi st[ s] e xc lus ive ly of w ri tin gs b ySpecifica lly , the cour se super visor “does not lec ture, nor in a ny way add his own 36 rendition of the subjec t.” This aspec t of the cour ses “e nsur[es] that a student re ceive s only the pure r endition as written or spoke n by Mr. Hubbar d himself,” bec ause the Church believe s that “the r esults obtained in Scientology come only

from close ly

followingthe technology exactly as wr itt e n b y

Mr . H ub ba

rd . . . . Ve rb a l r e nd iti on s p a sse d o n f ro m te a c he r t o s tud e nt w ou ld inevitably contain alter ations from the orig inal, howeve r unintentional, until S cientolog y ’s eff icac y would be lost.” Ther efor e, the main task of the cour se super

visor is to “assist the student to apply the study principles deve loped by

L . Ron Hubbard, so that he overc omes any misunderstandingand g rasps the me aningdirec tly from the Scr ipture.” I

n keepingwith this i dea, and in contra st to the W I SE courses, the CSIcourse s more close ly rese mble the cour ses as develope d by

the Church through the policy letters disseminated by

the Hubbar d Communi cations Off

ice. 59 L . Ro n H ubbard

c onc er nin g th e adm ini str at ionof c hur ch es . ” S im ilarl y , the Pr of es sio na l R eg istratio n c our se pa ck c ont ai ns “ 246 pa ge s of

te xt b y L . Ro n H ubbard , the F ound er

of the S ci en tol ogy

r el igi on. ” T he se c our se s are not taught through traditional pedago gical m eans; it is a fundam ental feature of the courses that “ [t ] he re is no ‘ te ac he r’ or ‘ le ct ur er ’ in a Sc ie nto log y

c our se ”; the c our se supe rv iso r m er el y

m oni tor s and a ssi sts the stu de nt’ s pr ogr es s th ro ugh the c our se m at er ia ls. 36 Wha t this sug ge sts is that de ri va tiv e w orks d ev el ope d by P L &A( or de ve lop ed

by oth er s purs uant t o ali ce nse ) w oul d no t be uti liz ed by CS I, be ca

use the y w oul d no t de ri ve f

ro m H ubbard ’ s w ri tin gs. D ef en dants have appare ntl y de ve lop ed

c our se m at er ia l up unt il 1994 , e igh t y ears a ft er H ubbard ’ s de ath, but even those version s bear the distilled im prim atur of H ubbard’s pen. For e xam ple, the e nd o f ea chvol um e of the O rg an iz at ionE xe cu tiv e Co ur se , da te d 19 91,On e might w on de r why PL & A c ou ld n ot c la im a s ma rk e t ha rm the los s o f r e ve nu e it 37 wo uld e arn if de fe nd ants we re re qu ir e d to lic e ns e the bo ok fo r u se in t

he e xistin gCSI

c ours e s, which re g istrars and of

fice rs obviously

would study . In the abse nce of evidenc e that such a licensingmarke t has bee n develope d, howeve r, we are persua ded that “the loss of the licensing fe e so ught i n th e c a se its e lf do e s n ot c on sti tut e ‘m ark e t ha rm .’ I f i t di d, c ir c ula

r r e a so nin gwo uld resolve a ll fair use c ases f or the plaintiff, who cer

tainly profits less if the def

endant wins.” Fitzge rald v. CB S Broa d., Inc., 491 F . Supp. 2d 177, 189 (D. Mass. 2007) (c iting Ring g old v. Bla ck Entm’t Tele vision, 126 F.3d 70, 81 (2d Cir. 1977) (“ Since the issue is whethe r the c opying should be compensa

ble, the fa ilure to rec eive lice nsing r evenue cannot be deter minative in the plaintiff’s fa

vor.”) ); see a lso Am. Geophy sical Union v. Texaco, 60 F .3d 913, 931 (2d Cir. 1994) (“ [I ]t is s e ns ibl e that a

pa rt ic ula r u na uth or ize d u se sh ou ld b e c on sid e re d ‘ mor e fa ir ’ whe n th e re is no rea dy marke t or means to pay

for the use , while such a

n authorized use should be c onsidered ‘less fa ir’ whe n there is a rea dy marke t or means to pay

for the use . The vice of circ ular rea soning a

rises only if the ava ilability

of pay ment is conclusive ag ainst fair use .”). 60 concludes with the legend: “ L. RO N H UBB ARD ; Founder; Com pilation assisted by L RH T ec hni ca l R es earc h and C om pil at ion s. ” T he f

ine pr int be lowthi s r ea ds:

“ (T he dir ec tio ns, dr ill s and s tudy a ssi gnm en ts whic h m ak e up this c our se ch ec kshe et

w er e w ri tte n by

L RH T ec hni ca l R es earc h and C om pil at ion s st af

f. T he co m pil at ionof

thi s c he ck she et

w as don e ac co rd ing to spe ci fi c L RH a dvi ce s on w ha t m at er ia ls s houl d be on this c our se , a s w el l a s L RH pol ic ie s and i nstru ct ion s wh i ch p re s cr i b e t h e s t an d ar dfo rmatfo r c o u rs e c h ec k s h ee t s .) .” Sa l es o f C SI ’s co ur se s to S ci en tol ogy

r eg istrars and o ff

ic er s w oul d have no i m

pa ct on the pot en tia l m ar

ke t f or de ri va tiv e w orks d ev el ope d by P L &A , be ca

use r eg istrars and of fi ce rs w oul d no t st

udy suc h te xts . C f. P ac . & S. Co . , I nc , 744 F . 2d at 14 96

37 (“ So m e co m

m er ci al pur

pose s . . . m igh t no t thr eate n th e inc en tiv es be ca use the use r pr of its f ro m an a ct ivi ty

that the ow ne r co uld

not pos sib ly take a dvanta ge61

of . ”) . S im ply put , P L &A ’ s de ri va tiv e w orks w oul d no t be m ar ke t su bst itu te s f

or CS I’ s c our se s, and v ic e ve rs a. S ee Cam pbe ll, 510 U . S. a t 59 3, 114 S . Ct . a t 11 78 (“ The only

harm to derivatives that need concern us . . . is the harm of m arket subs titutio n.”) . O ve ra ll A sse ssm en t W ithr es pe ct

to al l of the c our se s inque sti on, the f ir st and thir d f

ac tor s f av or PL &Ato som e de gr ee , w hil e the se co nd f ac tor is ne utr al . G ive n th e la ck of suf fi ci en t e vid en ce dis pr ovi ng the li ke lih ood that w ide spr ea d di sse m inatio n of the W IS E S al es Co ur se w oul d su ppl an t P L &A ’ s m ar

ke t f or de ri va tiv e w orks, the fo urth f ac tor a lso f av or s P L &Aw ithr es pe ct to tho se c our se m at er ia ls. D ef en dants ha ve the re fo re f

ai le d to pr ove the ir

e nti tle m en t t o su m

m ar y j udgm en t ba se d onf

ai r use with respect to Count 1. Be cause the use of Big L eague Sale s in CSI’ s courses doe s no t have asub stanti al ly a dve rs e subs tit

uti on e ff ec t onthe pot en tia l m ar

ke t f or derivative works, however, the fourth factor strongly favors defe ndants in that context. Upon con sideration of the factors in the aggregate, we find that de fe ndants are e nti tle d to sum m ar y j udgm en t a s to Co unt

3. IV. W e next consider whether sum m ary j udgm ent for defe ndants was ap pr opr ia te a s to Co unt

1 onthe a lte rn at e gr ound that P L &A ’ s c la im

is barr ed byWe reviewthe district court’s a pplication of the lac hes def ense f or abuse of discre tion. 38 See Sander s v. Dooly

County , 245 F.3d 1289, 1291 ( 11th Cir. 2001). Howeve r, the que stion of whether lache s is available a s a def ense in the c ontextof a c opy rig ht infring ement ca se is a pure question of law, whic h we de cide de novo. See Youngv. New Proc ess Steel, L P, 419 F.3d 1201, 1203 (11th Cir. 2005) (“ We decide pur e law issues de novo, which is another way of say ing that a rulingbased on a

n err or of law

is an abuse of

discretion.”) (interna l citation omitt ed). 62 the de fe nse of

la ch es , w hic h pr ev en ts a pla int if f w ho h as sle pt o n hi s r igh ts f ro m en fo rc ing tho se r igh ts a ga ins t a de fe ndant. T he que sti on whe the r the e qui ta ble doc tr ine of

la ch es m ay

bar a cl ai m

f or c opy ri ght inf ri nge m en t tha t w as f

ile d w ith in the statut e of

li m itatio ns h as ge ne rate d ac ir cu it spl it an d is aque sti on o f fi rs t im pr es sio n inthi s c ir cu it. 38 Judg e L earn ed

H an d ha s st at ed

that: It m ust be obv ious to every

one fam iliar w ith equit able principles that it is inequ itable for the owner of a c opyright, w ith full no tice of an intended in fringem ent, to stand inactive while the proposed infringer spe nds larg e sum s of

m one y in its e xpl oit at ion , and t o in te rv en e onl y when his speculation h as proved a success. De lay under such ci rc um stanc es a llo w s th e ow ne r to s pe cu la te w ith out r isk w iththe oth er ’ s m one y ; he c an not pos sib ly los e, and h e m ay

w in. Ha as v. L eo Feist, Inc. , 234 F. 105, 108 (S.D .N .Y . 1916). But at the tim e of that w ri tin g, “ the re w as no s ta tut e of li m itatio ns o n c ivi l su its r el at ing to co py ri ght infringem ent, and courts appl ied the law of the state in which the ac tion was br ou gh t.” Pr at he r v. Nev a Pap erb ack s, In c., 44 6 F .2d33 8, 3 39 (5t h C ir. 1 97 1) . Whe re the ana log ous state statut e of li m itatio ns h ad

not y et r un, the appl ic at ionof la ch es a s aj udge -m ad e, f le xib le li m it on the pe ri od i n w hic h apla int if f co uld br ingThe statute of limit ations, 17 U.S.C. § 507(b), serve s only to limi t the period of 39 rec overy to three year s. See Stone v. Wil liams, 970 F.2d 1043, 1049 (2d Cir. 1992) ( “Ea ch ac t of infring ement is a distinct harm g iving r ise to an indepe ndent claim for relief .”). 63 s u i td i dn o tp r e s e n tth e s a me q u e s t i o n a s i td o e s t o d a y. In195 7, how ev er , Co ngr es s e na ct ed athr ee -y ear statut e of

li m itatio ns f

or co py ri ght inf ri nge m en t c la im s. I d. I ts p ur pose w as to co unt er ac t the pr obl em of 39 fo ru m -s ho pp in g b y

pre sc rib in g a “ un ifo rm

fed eral pe rio d o f li m it at io ns .” Id . H ow ev er , in de ci din g th at the e qui ta

ble doc tr ine of

tol lin g no ne the le ss a

ppl ie d to a co py ri ght inf ri nge m en t c la im , the f

orm er F if th C ir cu it obse rv ed

that “ the int en t of the dr af te rs w as that the li m itatio ns p er iod w oul d a ff

ec t the r em edy

onl y , not the subs tanti ve r igh t, and tha t e qui ta ble c onsi de ratio ns w oul d th er ef or e ap ply to sus pe nd the r

unni ng o f the statut e. ” I d. a t 34 0. T he c ourt i n P rathe r the re fo re he ld that a court “ m

ust loo k to general equitable principles to determ ine the proper dis posi tio n” of

the pla int if

f’ s c au se of

a ct ion . I d. Inansw er ing the que sti on o f w he the r the de fe nse of la ch es m ay

be int er pose d inac opy

ri ght inf ri nge m en t su it, the re fo re , w e cannot a gr ee w iththe co nc lus ionof

the F ourth C ir cu it, w hic h is an un qua lif ie d “ no. ” S ee L y ons P’ shi p, L. P. v. Morr is Costum es, I nc., 243 F.3d 789, 798 (4th Cir. 2001 ). Prather recognized the applicabilityof general e quitabl e doctrines, and lik e tolling , la ches fa lls int o th at

c at eg or y . C f. T eam ste rs & E m

plo y er s W el fare T ru st o f Il l. v.64

G orm anBr os. Re ady

Mi x, 283 F . 3d 8 77, 882 ( 7thCi r. 200 2) ( “ Wha t i s sa uc e fo r the goo se ( the pla int if

f se ek ing to ex te nd the statut e of li m itatio ns) is sauc e fo r the gande r (the de fe ndant s ee kin g to c ontra ct it ). ”) . H ow ev er , w e re m ai n m ind fu l of the Fourth Circuit’ s invo cation of separation of powers principles w hich couns el against the use of “ the j udicially cre ated doctrine of laches to bar a feder al statutory claim that has been tim ely

filed under an express statute of lim itations .” L y ons P’ shi p, 243 F . 3d at 79 8. W e the re fo re answ er thi s qu es tio n w itha pr es um pti ve “ no” ; the re is a str ong pr es um pti on tha t a

pla int if f’ s su it is t im el y

if it is filed before the statute of lim itations has run. O nly in the m ost extraordinary ci rc um stanc es w ill la ch es be r ec ogni ze d a s ade fe nse . C f. Ch ir co v. Cr oss w ind s Com m uniti es, I nc., 474 F.3d 227, 234 (6th Cir. 2007 ) (noting the lim ited applicabilityof laches to copyright cases in “ what can best be described as unus ual circum stances”); Jacobsen v. D eseret B ook Co., 287 F. 3d 93 6, 951 (10th Cir. 2002 ) (“ A lth oughit

is poss ibl e, in rare c as es , that a statut e of li m itatio ns c anbe cu t sh ort by

the doc tr ine of

la ch es , w e se e no r ea son to s uppl an t the statut e of lim itations in this case.” ( internal quotatio n m arks and citation om itted)). Even w here such extraordinary circum stances exist, however , la ches serves as a ba r on ly to t he reco ve ry of r et ro sp ect iv e d am ag es , no t t o p ro sp ect iv e rel ie f. A s th e fo rm er

F if th C ir cu it expla ine d inapa te nt i nf ri nge m en t a ct ion :The fa ct that we ha ve per mitted laches to bar

injunctive relief

in tradema

rk ca ses, see , 40 e.g ., Kason Indus., Inc. v. Component Har dwar e Gr oup, Inc., 120 F .3d 1199, 1207 (11th Cir. 1997), does not compe l our holding likew ise in the copy rig ht context. Unli ke pate nt and copy rig ht infring ement ac tions, claims broug ht pursuant to the L anham Ac t are not subject to an e xpre ss s tatut e of

lim itatio ns , id . at 12 03 , a nd un lik e the lim ite d te rm s o f p ro te c tio n a c c or de d to patents and c opy

rig hts, trademar

k protec tion “can be of indefinite dur ation and lac hes may corr esponding ly

run for deca des.” A .C. Aukerman Co. v. R.L . Chaides Constr. Co., 960 F.2d 1020, 1040 (F ed. Cir. 1992) (notingmoreove r that “the public interest in avoidanc e of c onfusion in the marke t place ma

y lead a court to g rant a

n injunction ag ainst tradema rk infring ement on lache s alone” ). 65

A lth oughla ch es and e sto ppe l are r el at ed c onc ep ts, the re is a cl ear dis tin ct ionbe tw ee n th e tw o. T he de fe nse of la ch es m ay

be invo ked where the plaintiff has unreasonablyand inexcusablydelay ed in prosecutin g its right s and where that delay has resulted in m aterial pr ej udi ce to the de fe ndant. T he e ff ec t of la ch es is m er el y

to w ith hol d da m ag es f

or inf ri nge m en t w hic h oc curr ed pr ior to the f ili ng o f the su it . Estoppel, on the other hand, “ arises only when one has so acted as to m isl ea d anothe r an d th e one thu s m isl ed ha s r el ie d up on the ac tio n of the ind uc ing party

to his pr ej udi ce . ” E sto ppe l f or ec los es the patentee fr om

enforcing his patent prosp ectively through an inj unc tio n or

thr oughdam ag es f

or c ont inu ing inf

ri nge m en t. St udi en ge se lls ch af

t K ohl e m bH v. E as tm anK odak C o. , 616 F . 2d 1 315, 132 5 ( 5th Cir. 1980 ) (internal c itations om itted). T his dis tinction betwee n the rem edies fo re cl ose d by

la ch es and those f

or ec los ed by e sto ppe l a

ppl ie s w ithe qua l f

or ce in the copyright context. It is also true in the copyright infringem ent context that 40

“ fr om the ve ry na tur e of the thi ng [ a co py

ri ght ow ne r] c an not

be f ull y c ogni zant o f al l i nf ri nge m en ts tha t oc cur thr ough out the le ngth and b re adth o f thi s c ountry . H is inf orm at ionm ay

be larg el y

he ar say , ” an d “ the va lid ity of [ the c opy

ri ght ] and theThe F ourth Circuit has similarly held that “lac hes may

not be invoked to deny 41 injunctive relief

that otherwise w ould appea r appr opriate,” Ly ons P’ship, 243 F.3d at 800, althoug h its reasons for

so doing a

ppear to be g rounded in the pr ere quisites of injunctive relief : “A pr ospective injunction is enter ed only on the basis of c urre nt, ongoingconduct that thre atens future ha rm. Inhere ntly , such conduc t cannot be so r emote in time as to justify the application of the doctrine of lac hes.” I d. at 798; see a lso Hampton v. Paramount Pictures Corp., 279 F .2d 100, 105 (9th Cir. 1960) (a ffirmingthe trial cour t’s findingthat the ac tion was not barr ed by lache s wh e re “ [o]nl y

futur e us e of

the fi lms is e njo ine d. He nc e , Pa ra mou nt’ s k no wl e dg e in ye ars pa st, prior to asser

ting a specific claim ag ainst Hampton, is immaterial. This action is g rounded upon the 1955 infring ements alone , and wa s commence d less than nine months therea fter” ); Hayden v. Chalfant Press, Inc., 177 F . Supp. 303, 307 (S.D. Cal. 1959), aff ’d, 281 F .2d 543 (9th Cir. 1960) (n oti ng , w ithre sp e c t to pla int if f’ s c la im o f c op y

ri g ht i nf ri ng e me nt, that in

c ontr a st t o e sto pp e l, which “de stroy s the very

rig hts which it is sought to assert,” lache s “mig ht result in denial of equitable r elief, suc h as injunction and re cover y of prof its. But it would not st and in the wa y of the g rantingof dama g es for the unauthorized copy

ing or of injunction ag ainst future violations”) (empha sis added). Mo re re c e ntl y , th e Ni nth

Cir c uit , whil e a c kn ow le dg ingthe “ g e ne ra lly so un d” pr inc ipl e that “eve n if lache s applied, it does not bar a prospec tive injunction ag ainst future infr inge ment,” nonetheless ha s rec og nized an exception permitting lac hes to bar a claim for pr ospective inj un c tiv e re lie f whe re “ the fe are d f utu re inf ri ng e me nts are ide nti c a l to the a lle g e d p a st infring ements” a

nd are “subjec t to the same pre judice that bar s retrospe ctive re lief.” See Danjaq L .L .C. v. Sony

Cor p. , 2 63 F .3 d 9 42 , 9 59 (9 th C ir . 2 00 1) (d e nyinginj un c tio n to ba r f utu re se qu e ls 66 infringem ent thereof m ay be, as here, dispu ted. T hese defenses present m ixed que sti ons of

f ac t and l awc onc er

nin g w hic h th er e is n ec es sari ly som e doub t and uncertainty . In m any

cases, if not in m ost cases, the doubts are serious ones.” S ee A . C. A uke rm anCo . v. R. L . Ch ai de s C onst r. Co . , 960 F . 2d 1 020, 104 0–41 ( Fe d. Ci r. 199 2) ( “ [L ] ac he s bars r el ie f on a pa te nte e’ s c la im

onl y w ithr es pe ct

to da m ag es a cc ru ed

pr ior to sui t. ”) . P er

m itt ing la ch es to ope rate a s abar on p ost fi lin g dam ag es or

inj unc tiv e re lie f w oul d e nc our ag e co py ri ght ow ne rs to ini tiate m uc h ne ed le ss l iti ga tio n inor de r to p re ve nt o the rs f ro m obt ai nin g e ff

ec tiv e im m unityfrom

suit with respect to future infringem ents. L aches theref ore does 41and

re -r e le a se s in

the Jame s B on d mo vie fr anc his e ). We f ind thi s d e pa rt ur e fr om s ound

pr inc ipl e to be unwar

rante d in light of the policy g rounds outlined above. In this case, PL &Asoug ht to avoid the defe nse of lac hes by disclaiming da

mag es and 42 seekingonly

prospec tive equitable r elief. The district court re buffe d this attempt, citing the Supreme Court ca se of City of Sherr ill v. Oneida Indian Nation of N ew Yor k for the pr oposition that “[i] t is well established that lache s, a doctrine focuse d on one side’s ina ction and the other ’s le g iti mate re lia

nc e , ma y ba r l on g -d or

mant c la ims fo r e qu ita

ble re lie f. ” 54 4 U .S. 19 7, 21 7, 12 5 S. Ct. 1478, 1491, 161 L . Ed. 2d 386 (2005). The circ umstances of City of Sherr ill, however, rende r it eminently

distinguishable f

rom the fa cts of the c ase be fore us. In that case , the Oneida Indian Nation (“ the Tribe” ) soug ht “dec laratory and injunctive re lief re cog nizi ngits present and future sove reign immunit y from loca l tax ation on parc els of land the T ribe purc hased in the ope n marke t, properties that had bee n subject to state and loc al taxation for g ener ations” – since the e arl y 18 00 s, to b e mor e pr e c ise . I d. at 21 4, 12 5 S. Ct. at 14 89 . Sp e c if ic a lly , th e Tr ibe ’s c la ims wer e pre mised on “a f

eder al common law r ight to Indian homelands.” I d. at 210, 125 S. Ct. at 1488 (interna l quotation mark omitted). As J ustice Stevens had pointed out in a dissent to the op ini on in a n e arl ie r i te ratio n o f t

he c a se , th e Tr ibe ’s “ anc ie nt c la im at c omm on law” aro se “under the fe dera l common law, not under a ny cong ressional e nactment, a nd in this contex t the Court would not risk frustratingthe will of the L eg islature” if it were to apply

lache s. County

of Oneida v. O neida Indian Nation, 470 U.S. 226, 261–62, 105 S. Ct. 1245, 1266, 84 L . Ed. 2d 169 (1 98 5) (S te ve ns , J., dis se nti ng ). Ac c or din g ly , th e Court c ho se to a

pp ly la c he s, e xpla ini ngthat a “cla im to a sovereign’s pre rog ative . . . does ‘ not survive eter nally .’” City

of Sherr ill, 544 U.S. at 22 1 n .1 4, 12 5 S. Ct. at 14 94 n. 14 . With r e sp e c t to PL & A’ s c op y ri g ht i nf ri ng e me nt c la im, howeve r, “[s]eparation of powe rs principles . . . pr eclude us from apply ing the judicially

cre ated do c tr ine of

la c he s to ba

r a fe de ra l st atut or

y c la im that ha s b e e n ti me ly fi le d und e r a

n e xpre ss statute of limitations.” L y ons P’ship, 243 F.3d at 798 (“ [W ]hen consideringthe timeliness of a cause of ac tion broug ht pursuant to a statute for which Cong ress ha s provided a limitations pe ri od , a c ourt sh ou ld n ot a

pp ly la c he s to ov e rr

ule the le g isl atur e ’s jud g me nt a s to the a pp ro pr iate tim e lim it t o a

pp ly fo r a c tio ns br ou g ht u

nd e r t he statut e .” ). No tw ith sta

nd ingthe Sup re me Court ’s ho ldi ngin C ity

of She rr ill that la c he s b arr e d th e Tr ibe ’s anc ie nt c la im at c omm on law t o reg ain Indian homelands, ther efor e, we are bound in this copy rig ht infring ement ca se by our prior panel pr ece dent that has not bee n implicitl y overr uled. See Atl. Sounding Co. v. Townse nd, 496 F.3d 1282, 1284 ( 11th Cir. 2007) (“Unde r our pr ior pane l prec edent r ule, a late r pane l may

depar t from an e arlier

panel’ s decision only

when the inter

veningSupreme Court dec ision is ‘clearly on point.’”quotingGar

rett v. Univ. of Ala . at B irmingha m Bd. of T rs., 344 F.3d 1288, 1290–92 (1 1th Cir . 2 00 3) ); se e a lso F la . L e a gue of Pr of ’l L ob byist s, Inc . v . M e g g s, 87 F .3 d 4 57 , 4 62 (1 1th Cir. 1996) (“[W] e ar e not at liberty to disreg ard bindingcase law that is so closely on point and has bee n only

wea kened, r ather

than direc tly

overr uled, by the Supreme Court.” ). The district cour

t also cited Ne w Era

Publications I nternational v. Henry Holt & Co., 873 F .2 d 5 76 , 5 84 –8 5 ( 2d

Cir . 1 98 9) , f

or the pr op os iti on

that “ e qu ita

ble c on sid e ra

tio ns [of la c he s] dictate de nial of injunctive re lief in this [ copy rig ht infring ement] action.” The persua sive value 67 not preclude PL& A f

rom seeking prosp ective re lief. 42of Ne w Era Publications I nternational has bee n considera bly weakened by

the fa ct that a district court within the Second Circ uit has declined to be strictly bound by its holdi ng , noting that the opinion “fails to mention, much less discuss, the statute of limitations or separation of powers conce rns later

raised a nd addre ssed by

Ivani [Cont rac ting Corp. v. City of Ne w York, 103 F .3d 257, 259 (2d Cir. 1997)], albeit in the context of a differ ent statute.” Price v. Fox Entm’t Group, Inc., 2007 U.S. Dist. L EXI S 6081, at *15 n.41 (S.D.N.Y. Jan. 26, 2007). 68 Our holding to day

does not, of course, otherwise r estrict the power of a c o u rt , i n i t s d i s c r e t i o n , t o f a s h i o n ap p r o p r i a t e r e me d i a l r e l i e f . A s th e S up r e me Co urt ha s ob se rv ed , ape rm an en t i nj unc tio n do es not auto m at ic al ly

iss ue upo n a fi ndi ng o f co py

ri ght inf ri nge m en t. S ee e Bay

I nc . v. Me rc E xc hange , L . L . C. , 547 U . S. 388 , 392 , 126 S . Ct . 183 7, 184 0, 164 L . E d. 641 ( 2006 ) (“ L ike the P at en t A ct , t h e C o p yr i g h tA c tp r o v i d e s th a tc o u rt s ‘ma y’ g r a n ti n j u n c t i v e r e l i e f

‘o n s u c h t e rms as i tm ay d ee m

re as o n ab l e t o p re v en to r r es t ra i n i n fr i n g emen to f a co p yri g h t .’” ( qu o t i n g 1 7 U. S . C . § 5 0 2 ( a ) ) . R a t h e r , u n d e r “ w e l l - e s t ab l i s h e dp r i n c i p l e s o f e qu i t y, a plaintiff seeking a perm anent injunction m ust satisfy

a four- factor te st before a co urt m ay gr an t su chr el ie f, ” an d ac ourt’ s de ci sio n to gr an t or de ny suc h r el ie f is w ith in the e xe rc ise of

it s di sc re tio n. I d. a t 39 1, 126 S . Ct . a t 18 39. A pla int if f m ust de m onstrate : ( 1) that i t ha s su ff er ed an ir re para ble inj ur y ; ( 2) that r em ed ie s ava ila ble a t l aw , suc h a s m one tary dam ag es , ar e ina de quate to co m

pe nsa te f or that i nj ur y ; ( 3) that, c onsi de ri ng the ba lanc e of

hard shi ps b etw ee n th e pla int if f an d de fe ndant, ar em edy in equity is w ar rante d; and ( 4) that the pub lic int er es t w oul d no t be dis se rv ed by ape rm an en t i nj unc tio n. Id . S ee , e . g. , Ch ri sto phe r Ph el ps & A sso cs . v. G al low ay , 492 F . 3d 5 32, 543 –4669

(4 th C ir . 200 7) ( af

fi rm ing dis tr ic t c ourt’ s de ci sio n, ba se d ontr ad iti ona l e qui ty pr inc ipl es , to de ny

pla int if f’ s r eque st f

or an or de r pe rm an en tly

e nj oin ing de fe ndant from leasing or selling a ho use that infringed pl aintiff’ s architectural plans). V. Fo r the r ea sons he re in s ta te d, the j udgm en t of the dis tr ic t c ourt i s AF FIRM ED in part, REV ER SE D in part, and RE MAN DE D f or further pr oc ee din gs c onsi ste nt w iththi s op ini on.