Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20190701_0000513.C03.htm/qx
Timestamp: 2020-02-25 03:18:48
Document Index: 195829337

Matched Legal Cases: ['§ 504', '§ 1291', '§ 1292', '§ 3533', '§ 1292', '§ 1292']

FindACase™ | TD Bank N.A. v. Hill
VERNON W. HILL, II, Appellant
On Appeal from the United States District Court for the District of New Jersey (D.C. No. 1-12-cv-07188) Honorable Robert B. Kugler, U.S. District Judge
Susan M. Leming, Esq. Michael J. Miles, Esq. William M. Tambussi, Esq. [Argued] Brown & Connery Lori E. Lesser, Esq. Simpson Thacher & Bartlett Counsel for Plaintiff-Appellee T.D. Bank N.A.
Louis M. Barbone, Esq. Edwin J. Jacobs, Jr., Esq. Michael F. Myers, Esq. Jacobs & Barbone Howard S. Hogan, Esq. [Argued] Gibson Dunn & Crutcher Counsel for Defendant-Appellant Vernon W. Hill, II
Phillip R. Malone, Esq. Ashwin Aravind Dylan I. Scher Stanford Law School Juelsgaard Intellectual Property and Innovation Clinic, Mills Legal Clinic Jeffery T. Pearlman, Esq. University of Southern California Gould School of Law Counsel for Amici Intellectual Property Law Professors
This case marks the latest chapter in the bitter feud between Commerce Bank, which has since merged with TD Bank, and its former CEO, Vernon W. Hill, II. See generally Hill v. TD Bank, NA, 586 Fed.Appx. 874 (3d Cir. 2014); Commerce Bancorp, LLC v. Hill, No. 08-cv-5628, 2010 WL 2545166 (D.N.J. June 18, 2010). Beset by acrimony, TD Bank filed this copyright lawsuit against Hill, alleging that a portion of his 2012 book infringes a neglected manuscript that Hill co-authored while CEO of Commerce Bank. In enjoining Hill from publishing or marketing his book, the District Court concluded that TD Bank owned the copyright under a letter agreement and that Hill's book irreparably violated the Bank's "right to not use the copyright." App. 9. In this denouement, we resolve certain open questions in our Circuit concerning employees' rights to their artistic creations and the proper exercise of equitable discretion.
We conclude that, although the agreement between the parties did not vest initial ownership of the copyright in the Bank by purporting to designate the manuscript a work "for hire," it did transfer any ownership interest Hill possessed to TD Bank. As a result, Hill's co-ownership defense, like his other defenses, fails. As for the imposition of injunctive relief, however, we cannot accept the District Court's sweeping conclusions, which would justify the issuance of an injunction in every copyright case. Instead of employing "categorical rule[s]" that would resolve the propriety of injunctive relief "in a broad swath of cases," courts should issue injunctive relief only if the moving party makes a sufficient showing that such relief is warranted under the particular circumstances of that case. eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 393-94 (2006). Accordingly, we will vacate the District Court's permanent injunction.
Described by American Banker as "the closest thing that the staid banking industry has to a rock star," App. 1157, Vernon W. Hill, II headed Commerce Bank from its launch as a single "store" in 1973 until June 2007, a few months before TD Bank acquired it for approximately $8.5 billion. Hill built Commerce Bank in the highly saturated commercial banking industry by emphasizing customer loyalty through initiatives such as extended hours, quick account openings, and free perks at branches. His success also brought him personal acclaim, including articles in The Wall Street Journal, American Banker, The Guardian, The Philadelphia Inquirer, and The Daily Telegraph.
As CEO of Commerce Bank, Hill reported to the Board of Directors and handled the day-to-day management of the Bank's affairs, including reviewing the Bank's finances, visiting its stores, and handling real estate and insurance matters. Under his employment agreement with Commerce Bank, Hill had "primary responsibility for all operations of Commerce and its subsidiaries . . ., provided that such duties are consistent with his present duties," and agreed to "devote his full time and best efforts to the business and affairs of Commerce and its subsidiaries." App. 803. Notwithstanding this commitment, however, the Agreement allowed Hill to pursue "outside activities," which the Agreement did not define. App. 803.
In 2006, Hill decided to write a book about his business philosophy and more than 30-year tenure at the Bank. Seeing this as a marketing opportunity, Commerce Bank supported the endeavor by hiring a business book author, Robert Andelman, to collaborate with Hill in drafting the manuscript. Hill exchanged some emails about the project during weekdays but primarily worked on the project during evenings and weekends. Other Commerce Bank employees sometimes assisted, for example, by answering Andelman's inquiries and providing feedback about the manuscript. The final manuscript, completed in 2007, recounts Commerce Bank's history and business model from Hill's perspective. Resembling both an autobiography and a marketing tool, the 2007 manuscript included both a personal dedication to Hill's wife and "the entire Commerce team," App. 834, and a $20 gift certificate to open an account at Commerce Bank.
Commerce Bank spearheaded the publication efforts by entering into an agreement with Portfolio, a division of Penguin Books. In this publishing agreement, Commerce Bank, which is defined as the "Author," represented and warranted that it was the exclusive owner of all rights conveyed in the manuscript:
The Author [i.e., Commerce Bank] hereby represents and warrants . . . that Vernon Hill is the sole author of the Work; that the Work is or will be Vernon Hill's next book length work . . .; that the Author is the sole and exclusive owner of all rights granted to the Publisher in this Agreement and has not assigned, pledged or otherwise encumbered the same; . . . that the Author has full power to enter into this Agreement and to make the grants herein contained.
App. 1142. For his part, Vernon Hill signed a letter to Portfolio that referred to an attached copy of the publishing agreement and provided:
App. 1139. Both this letter agreement and the publishing agreement contain New York choice-of-law provisions.
But the best laid schemes of mice and men often go awry: The relationship between Hill and Commerce Bank soured, culminating in Hill's termination and TD Bank's acquisition of Commerce Bank. See Hill, 586 Fed.Appx. at 877. As a result, the 2007 manuscript was never published, and by April 2008, Commerce Bank terminated the publishing agreement with Portfolio.
As the years progressed, however, Hill sought to make use of certain portions of the manuscript. By July 2010, Hill had debuted his next commercial banking venture, Metro Bank UK. The bank's launch, the first in Great Britain for over a century, garnered significant press coverage on both sides of the Atlantic. Capitalizing on this comeback, Hill co-authored another book with Andelman-this one describing Hill's experiences founding Metro Bank UK, the British banking system, and Hill's pet insurance company, Petplan USA. The book, entitled FANS! Not Customers: How to Create Growth Companies in a No-Growth World, became available in November 2012 through online booksellers such as Amazon and barnesandnoble.com. Hill also publicized the book's launch through interviews, including with Jim Cramer, the host of Mad Money on CNBC, and with a columnist for the Philadelphia Inquirer.
The plot thickened when this new endeavor came to the attention of TD Bank. Having shelved the 2007 manuscript for years, the Bank suddenly registered it with the Copyright Office and sent take-down demands to twenty retailers alleging that Hill's book infringed its copyright. Shortly thereafter, it filed suit in the District of New Jersey for copyright infringement.
As the litigation progressed, discovery revealed that TD Bank had little actually at stake: TD Bank admitted that, at most, 16% of the book infringed the 2007 manuscript, and that it has never published the 2007 manuscript or any competing work and has no interest in doing so.
Nonetheless, in its summary judgment opinion, the District Court concluded that, because the letter agreement "deem[ed] the work to be a work made for hire," it was in fact a work for hire, vesting the copyright in the 2007 manuscript with Commerce Bank as Hill's employer. App. 35 n.10. Rejecting Hill's infringement defenses, the District Court determined that Hill had copied expressive content that was not unprotectable under the merger and scène-à-faire doctrines. And Hill's copying, the District Court held, was not fair use because Hill did not repurpose the copied portion; the original manuscript was unpublished; and Hill's infringement would likely result in "some impairment" to the market for the 2007 manuscript "should TD Bank ever choose to publish [it]." App. 48 (emphasis omitted). But the District Court declined to issue an injunction, explaining that TD Bank had failed to show a likelihood of continued infringement and had not addressed at all the adequacy of legal remedies or the balance of hardships.
Hill faced his peripeteia in this litigation a year later. Confronted with evidence of Hill's continued promotion of the 2012 book and distribution of complimentary copies at a local chamber of commerce event, the District Court enjoined Hill from "publish[ing], market[ing], distribut[ing] or sell[ing]" the 2012 book. App. 4. This conduct, the District Court found, irreparably harmed TD Bank by depriving it of the "right to not use the copyright." App. 9. Hill timely appealed.
There is no final judgment in this case because the District Court has stayed TD Bank's request for infringer's profits under 17 U.S.C. § 504(b) pending the outcome of this appeal. See Marshak v. Treadwell, 240 F.3d 184, 190-92 (3d Cir. 2001); 28 U.S.C. § 1291. Thus, we have jurisdiction only over the District Court's "grant[]" of a permanent injunction under 28 U.S.C. § 1292(a)(1).[2] See Marshak, 240 F.3d at 190. Before reaching the merits of Hill's appeal, we must first address TD Bank's contention that this appeal is moot and that we lack jurisdiction to consider the District Court's summary judgment ruling, even to the extent that it served as the necessary predicate for the permanent injunction. We reject both arguments.
TD Bank first contends that this appeal is moot because Hill released a revised version of the book about a month after the District Court issued the injunction and, as TD Bank posits in a footnote to its appellate brief, "the July 7, 2016 Kindle version [of Hill's book] . . . does not infringe on the 2007 manuscript."[3] Appellee's Br. 3 n.1. Compliance with an injunction can moot an appeal if there is no "reasonable expectation" that the injunction will govern the enjoined party's future conduct or otherwise injure him. Bell v. Wolfish, 441 U.S. 520, 543 n.25 (1979); see Harris v. City of Philadelphia, 47 F.3d 1311, 1326 (3d Cir. 1995); 13B Charles Alan Wright et al., Federal Practice & Procedure § 3533.2.2 (3d ed. 2018). Yet TD Bank's footnote conceding that the July 7, 2016 Kindle version does not infringe the 2007 manuscript hardly constitutes the broad "unconditional and irrevocable" covenant not to sue that is needed to moot a case. See Already, LLC v. Nike, Inc., 568 U.S. 85, 93 (2013) (applying the voluntary-cessation doctrine). Even if we accept the footnote as legally binding, it applies only to "the July 7, 2016 Kindle version." Appellee's Br. 3 n.1. In fact, at oral argument, TD Bank's counsel refused to concede that any other version of the revised book complied with the injunction, demanding twice that Hill first "certif[y]" that he will not publish, distribute, or otherwise market the 2012 book (which sounds much like a consent decree). Third Cir. Arg. Recording at 57:48-58:06, 58:38-58:50.[4] The record also reflects that the Bank sent two letters asserting that the rewritten book may still contain copyrighted content; the latter letter threatened to bring contempt sanctions against Hill. Hill, meanwhile, continues to profess his intention "to share the earlier book." Appellant's Reply Br. 3.
TD Bank's other arguments on appeal are inconsistent with its assertion that this case is moot. For instance, the Bank urges us not to vacate the permanent injunction if we conclude that this appeal is moot, see United States v. Munsingwear, Inc., 340 U.S. 36, 39 (1950), because doing so would "permit the infringing 2012 Book to become available." Appellee's Br. 3 n.3. That is to say, TD Bank does believe the injunction meaningfully constrains Hill's future conduct. And, in the same brief as its footnote concession, TD Bank accuses Hill of "continu[ing] to infringe TD Bank's copyright in the 2007 Manuscript" even "after the entry of the PI order." Appellee's Br. 24 n.12. TD Bank's motion to supplement the record reiterates these allegations, citing material that supposedly "evidences the District Court's prescience in finding that Mr. Hill was likely to continue infringing TD Bank's copyright." Appellee's Mot. Suppl. R. at 8 (Apr. 25, 2018).
TD Bank cannot have it both ways: Hill cannot be both a continuing infringer and fully compliant with the permanent injunction. As there is at least a reasonable likelihood that the injunction controls Hill's future conduct, this appeal is not moot. See Bell, 441 U.S. at 543 n.25.
B. Scope of the Appeal
TD Bank next contends that this Court lacks jurisdiction to consider the merits of the non-appealable summary judgment order-even to the extent that the permanent injunction order rests on its determination of ownership and liability-because Hill did not separately identify the summary judgment order in his notice of appeal. We are unpersuaded.
Our interlocutory jurisdiction under § 1292(a)(1) encompasses matters "inextricably linked" with the issuance of a permanent injunction. Marshak, 240 F.3d at 190; Kershner v. Mazurkiewicz, 670 F.2d 440, 449 (3d Cir. 1982) (en banc). Applying this standard, we have previously reviewed summary judgment orders that made the determination of liability necessary for the issuance of a permanent injunction. See, e.g., Doeblers' Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 819 (3d Cir. 2006); Cureton v. NCAA, 198 F.3d 107, 113 (3d Cir. 1999). Although we acquire jurisdiction only over orders specified or "fairly inferred" in the notice of appeal, we construe such notices liberally. Wiest v. Lynch, 710 F.3d 121, 127 (3d Cir. 2013) (citation omitted). To that end, we have held that we may review an unspecified order if (1) it is connected to those specified in the notice of appeal, (2) the intent to appeal the unspecified order is "apparent," and (3) the appellee is not prejudiced. Id. at 127; Polonski v. Trump Taj Mahal Assocs., 137 F.3d 139, 144 (3d Cir. 1998).
Hill did not separately identify the summary judgment order in his notice of appeal. Insofar as this was error, it is understandable because Hill cannot directly appeal the summary judgment order under § 1292(a)(1). At a minimum, the summary judgment order falls within those unspecified orders that we may consider on appeal. See Wiest, 710 F.3d at 127. The summary judgment order established two fundamental prerequisites for issuing a copyright injunction-namely, TD Bank's ownership of the copyright and Hill's liability for infringement. The District Court also made repeated references in its permanent injunction opinion to its summary judgment decision, including incorporating by reference that order's rendition of the undisputed facts. Nor can TD Bank seriously claim that the failure to specify the summary judgment order prejudiced it, as the record is complete and the Bank had notice of-and fully briefed-the ownership and liability issues.
Our conclusion is buttressed by the Second Circuit's decision in Shakhnes v. Berlin, 689 F.3d 244 (2d Cir. 2012), which held that the appellate court had jurisdiction to review the district court's grant of partial summary judgment, even though it was not specifically listed in the notice of appeal from a permanent injunction. Id. at 250 n.3. The summary judgment decision, the Second Circuit stressed, was "the principal legal basis" for issuing the permanent injunction and "[a]ny doubt" should have been dispelled by the injunction opinion's reference to the prior order. Id. We concur and conclude that our jurisdiction extends to the District Court's summary judgment decision, inasmuch as that decision resolved ownership of the copyright and Hill's liability.
We review the District Court's grant of summary judgment de novo, Brownstein v. Lindsay, 742 F.3d 55, 64 (3d Cir. 2014), and its grant of a permanent injunction for abuse of discretion, Doeblers' Pa. Hybrids, 442 F.3d at 819. A district court abuses its discretion if its decision rests on an incorrect legal standard, a clearly erroneous factual finding, or a misapplication of the law to the facts. Id. We may affirm on any basis supported by the record, even if it departs from the District Court's rationale. Erie Telecomms., Inc. v. City of Erie, 853 F.2d 1084, 1089 & n.10 (3d Cir. 1988).
To prevail at summary judgment, TD Bank needed to establish that: (1) it possessed exclusive rights in the 2007 manuscript, and (2) Hill's 2012 book copied protected expression without privilege. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The Bank then needed to show that the District Court should exercise its discretion to award permanent injunctive relief. eBay, 547 U.S. at 391. We address each requirement in turn.[5]
A. Exclusive Rights in the 2007 Manuscript
TD Bank and Hill dispute whether the Bank exclusively owns the copyright in the 2007 manuscript. Hill claims that his contributions to the work make him at least a joint author, in which case TD Bank could not sue him for copyright infringement. See Brownstein v. Lindsay, 742 F.3d 55, 68 (3d Cir. 2014); Cortner v. Israel, 732 F.2d 267, 271 (2d Cir. 1984). TD Bank does not dispute that Hill made an artistic contribution sufficient to secure authorial rights but contends that Commerce Bank exclusively owned the work through the letter agreement that Hill signed or because it satisfied the traditional agency criteria for determining whether a work falls within the scope of employment. Although the meaning of authorship has bedeviled philosophers and writers for centuries, see, e.g., Immanuel Kant, Critique of Judgment 174-88 (Werner S. Pluhar trans., 1987) (1790), we can resolve it here based on the Copyright Act and controlling precedent. Hill's co-ownership defense founders if: (1) the Copyright Act's statute of limitations bars the defense, (2) TD Bank exclusively owns the manuscript under the letter agreement, or (3) Hill created it within the scope of his employment under agency-law principles. We consider these issues seriatim.
1. The Copyright Act's Three-Year Statute of Limitations Does Not Apply to Hill's Co-Ownership Defense
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before addressing the merits of Hill&#39;s co-ownership defense, we must address TD Bank&#39;s argument that the Copyright Act&#39;s three-year statute of limitations prevents us from even considering it. Typically, a statute of limitations aims to "keep stale litigation out of the courts," not to bar the "consideration of a particular defense" in timely litigation. United States v. W. Pac. R.R. Co., 352 U.S. 59, 72 (1956). Hence, the Copyright Act&#39;s three-year statute of limitations does not preclude a defendant in an infringement action from raising an ownership defense.[6]Pritchett v. Pound, 473 F.3d 217, 220 (5th Cir. 2006); Burne Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149, 163-64 (2d Cir. 2003); 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright &sect; 12.05 (2018) (hereinafter Nimmer on Copyright) (observing that the Copyright Act&#39;s statute of limitations "has no purchase when a plaintiff attempts to invoke [it] . . . to defeat a defendant&#39;s position of being the pertinent author," because it operates only as a defense against claims or counterclaims). This rule holds true even if the defendant also brings an untimely ownership counterclaim. Burne Hogarth, 342 ...