Source: http://openjurist.org/168/f3d/1282
Timestamp: 2013-12-08 09:08:19
Document Index: 445975471

Matched Legal Cases: ['§ 1125', '§ 101', '§ 1125', '§ 504', '§ 101', '§ 102', '§ 101', '§ 102', '§ 7', '§ 411', '§ 410', '§ 405', '§ 101', '§ 103', '§ 3', '§ 101', '§ 411', '§ 501', '§ 106', '§ 501', '§ 411', '§ 7', '§ 504', '§ 14', '§ 14', '§ 106']

168 F3d 1282 Montgomery v. Noga | OpenJurist
168 F. 3d 1282 - Montgomery v. Noga	Home168 f3d 1282 montgomery v. noga
168 F3d 1282 Montgomery v. Noga 168 F.3d 1282
49 U.S.P.Q.2d 1961, 12 Fla. L. Weekly Fed. C 580
Robert MONTGOMERY, Plaintiff-Appellee,v.Rebecca NOGA and Florida Lion's Den, Inc., Defendants-Appellants.
No. 95-3000.
Michael K. Gray, Gray Law Firm, Vero Beach, FL, for Defendants-Appellants.
Stephen D. Milbrath, Lydia R. Annunziata, Allen, Dyer, Doppelt, et al., Orlando, FL, for Plaintiff-Appellee.
The jury in this case found the defendants liable for infringing the plaintiff's copyright in a computer program and for violating section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). The district court entered judgment against the defendants, awarding both actual damages and attorneys' fees to the plaintiff. On appeal, the defendants challenge numerous rulings of the district court. We affirm. In so doing, we endeavor to bring a small measure of clarity to certain "rather swampy"1 areas of copyright and unfair competition law.
Plaintiff Robert Montgomery is the author of VPIC, a computer software program that enables users to view pictures on a computer screen. Montgomery integrated several computer programs that he previously had written--each of which was capable of reading different picture file formats--to create the initial version of VPIC in December 1988. VPIC went through several versions during the course of its development, including version 1.3, released on February 2, 1989, and version 1.4, released on March 15, 1989. Montgomery did not register his copyrights in the early versions of VPIC and did not affix a copyright notice when he marketed these early versions on computer bulletin boards. On August 8, 1990, Montgomery registered his copyright in VPIC version 2.9a. VPIC 2.9a and subsequent versions did contain a copyright notice when Montgomery marketed them on computer bulletin board systems.2
The defendants, Florida Lion's Den, Inc. ("FLD") and Rebecca L. Noga (FLD's president and sole shareholder), produce CD-ROM discs that are largely pornographic in nature. In 1992, the defendants and FLD vice-president Blaine Richard downloaded VPIC version 4.33 from a bulletin board and incorporated it as a utility on four of FLD's CD-ROM titles without obtaining a license from Montgomery. Because the defendants had activated a certain feature of VPIC, the VPIC closing screen that contained Montgomery's copyright notice did not appear when users viewed the pictures on the defendants' discs.
Upon learning of the defendants' unauthorized use of VPIC, Montgomery--acting through his licensing agent, who sent a letter to the defendants on June 3, 1993--demanded that the defendants cease and desist from using VPIC on FLD products, recall all unsold products containing VPIC, and pay damages for their unauthorized use. The defendants did not comply with these demands; Montgomery therefore filed a complaint against them in the U.S. District Court for the Middle District of Florida on October 25, 1993. The complaint sought damages and injunctive relief for infringement of Montgomery's VPIC copyright in violation of 17 U.S.C. § 101 et seq., and for a violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).4 The defendants raised a number of affirmative defenses and impleaded Richard as a third-party defendant. Montgomery obtained a preliminary injunction on November 30, 1993, that enjoined the defendants from utilizing VPIC in FLD products.5
Both Montgomery and the defendants moved for summary judgment on Montgomery's two claims, but the district court denied these motions on January 24, 1995. The case went to trial before a jury on March 20, 1995. At the close of Montgomery's case in chief, the defendants moved for judgment as a matter of law on both claims; the court denied their motion. At the close of all the evidence, Montgomery moved for judgment as a matter of law and the defendants renewed their motion; the court denied these motions as well. The case was then submitted to the jury, which found in favor of Montgomery on both claims and awarded actual damages in the amount of $80,000 for the copyright infringement claim and $30 for the Lanham Act claim.6 The jury also found that, with regard to the copyright claim, the defendants' infringement had been "willful" and that, with regard to the Lanham Act claim, the case was "exceptional."
The district court subsequently entertained several post-trial motions. The court denied the defendants' motion for remittitur or a new trial, as well as their renewed motion for judgment as a matter of law.7 The court granted Montgomery's motion for a permanent injunction and, in light of the jury's "willful" and "exceptional" findings, granted Montgomery's motion for costs and attorneys' fees. Montgomery also moved for an award of statutory damages pursuant to 17 U.S.C. § 504(c)(1), but the district court declined to award additional damages. Judgment was therefore entered in favor of Montgomery and against the defendants in the amount of $228,833.34: $80,000 for the copyright claim, $30 for the Lanham Act claim, $142,289.26 for attorneys' fees, and $6,514.08 for costs.8 This appeal followed.9
The defendants contend that the district court erred in (A) denying their motion for judgment as a matter of law on the copyright infringement claim given that (1) Montgomery's copyright in VPIC 2.9a is invalid because earlier versions of VPIC were injected into the public domain, and (2) the scope of Montgomery's registered copyright in VPIC 2.9a, even if valid, does not extend to protect VPIC 4.3; (B) denying their motion for remittitur or a new trial on the issue of damages with respect to the copyright claim; (C) denying their motion for judgment as a matter of law on the Lanham Act claim; (D) precluding one of their witnesses from testifying as an expert; and (E) awarding Montgomery attorneys' fees on (1) the copyright claim and (2) the Lanham Act claim. We address these contentions seriatim.
In evaluating the defendants' contention that the district court improperly denied their motion for judgment as a matter of law on Montgomery's copyright infringement claim, we proceed from certain basic principles of copyright law. The Copyright Act of 1976, 17 U.S.C. § 101 et seq. (1994), provides protection for computer programs. See Cable/Home Communication Corp. v. Network Prods., Inc., 902 F.2d 829, 842 (11th Cir.1990); 17 U.S.C. § 102(a) (1994). The Act defines a computer program as "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result." 17 U.S.C. § 101 (1994). For original computer programs and other original works of authorship created after 1977, copyright automatically inheres in the work at the moment it is created without regard to whether it is ever registered. See Arthur Rutenberg Homes, Inc. v. Drew Homes, Inc., 29 F.3d 1529, 1531 (11th Cir.1994); 17 U.S.C. § 102(a); Melville B. Nimmer & David Nimmer, 2 Nimmer on Copyright § 7.16[A] (1998) [hereinafter Nimmer ]. In order to bring an action for copyright infringement, however, the author must first register the copyright. See 17 U.S.C. §§ 411(a), 501(b) (1994); M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F.2d 1486, 1488 & n. 4 (11th Cir.1990) (stating that "[t]he registration requirement is a jurisdictional prerequisite to an infringement suit"). Montgomery's claim of copyright infringement, therefore, necessarily is predicated on the defendants' infringement of VPIC 2.9a--the only version of VPIC that Montgomery had registered at the time he commenced this action.
Once a copyright infringement action has been properly commenced, the copyright holder must prove two elements in order to prevail: "(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original." Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 1296, 113 L.Ed.2d 358 (1991). Here, the element of copying is not in dispute. The defendants admit that, without obtaining a license from Montgomery, they downloaded VPIC 4.3 from a bulletin board and incorporated it as a utility on four FLD discs.
The defendants challenge the propriety of Montgomery's copyright infringement claim on two grounds. First, they argue that Montgomery does not own a valid copyright in VPIC 2.9a as required by Feist. According to the defendants, Montgomery's copyright in VPIC 2.9a is invalid because earlier versions of VPIC--components of which were contained in VPIC 2.9a--were injected into the public domain. Second, and alternatively, the defendants argue that the scope of Montgomery's copyright registration for VPIC 2.9a does not extend to support the commencement of an action for infringement of his unregistered copyright in VPIC 4.3--the version that the defendants incorporated.
The district court rejected these arguments, finding that the jury's verdict was in accordance with both the law and the evidence at trial. We review a district court's denial of a motion for judgment as a matter of law de novo, applying the same standards as the district court. In considering the sufficiency of the evidence that supports the jury's verdict, we review the evidence "in the light most favorable to, and with all reasonable inferences drawn in favor of, the nonmoving party." Walker v. NationsBank of Fla., N.A., 53 F.3d 1548, 1555 (11th Cir.1995). If reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions based on the evidence presented, the motion should be denied. See Walls v. Button Gwinnett Bancorp, Inc., 1 F.3d 1198, 1200 (11th Cir.1993). Questions of law raised by the motion, however, are reviewed de novo. See Morro v. City of Birmingham, 117 F.3d 508, 513 (11th Cir.1997), cert. denied, --- U.S. ----, 118 S.Ct. 1299, 140 L.Ed.2d 465 (1998). Applying these standards to the two arguments presented by the defendants, we conclude that the district court correctly denied their motion.
The plaintiff in a copyright infringement action normally bears the burden of proving ownership of a valid copyright. In order to meet this burden, the plaintiff must show that the work is original and that the applicable statutory formalities were followed. See Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1541 (11th Cir.1996). Given that Montgomery produced a certificate of copyright registration for VPIC 2.9a at trial, however, he benefited from a rebuttable presumption that the VPIC 2.9a copyright is valid. See 17 U.S.C. § 410(c) (1994).10 The burden therefore shifted to the defendants, who were required to demonstrate that "the work in which copyright is claimed is unprotectable (for lack of originality) or, more specifically, to prove that ... the copyrighted work actually taken is unworthy of copyright protection." Bateman, 79 F.3d at 1541.
The defendants' argument that VPIC 2.9a is unprotectable has two parts. Citing 17 U.S.C. § 405(a), the defendants initially claim that VPIC 1.3 and its predecessor versions were injected into the public domain--i.e., that Montgomery forfeited his unregistered copyrights in these versions--because these versions did not contain copyright notices when Montgomery released them to the public prior to March 1, 1989. Second, the defendants assert that the revisions Montgomery made to VPIC in versions 1.4 through 2.9a were not sufficiently original to support a valid copyright in version 2.9a.
We find that the defendants have not met their burden. Assuming arguendo that Montgomery forfeited his copyrights in VPIC 1.3 and its predecessors by publishing them without a copyright notice,11 we conclude that the modifications Montgomery made to VPIC in versions 1.4 through 2.9a were sufficiently original to support a valid copyright in version 2.9a as a derivative work. See SAS Inst., Inc. v. S & H Computer Sys., Inc., 605 F.Supp. 816, 826-27 (M.D.Tenn.1985) (concluding that regardless of whether previous version of computer programming system was in the public domain, subsequent version of system was sufficiently original to support valid copyright).
The Copyright Act states that "[a] work consisting of editorial revisions, annotations, elaborations, or other modifications [to a preexisting work that], as a whole, represent an original work of authorship, is a 'derivative work.' " 17 U.S.C. § 101. Such a work--if it is non-infringing and sufficiently original--qualifies for a separate copyright, although this copyright does not protect the preexisting material employed in the derivative work. See 17 U.S.C. § 103 (1994); Stewart v. Abend, 495 U.S. 207, 223-24, 110 S.Ct. 1750, 1761-62, 109 L.Ed.2d 184 (1990); 1 Nimmer §§ 3.01, 3.04[A]. In this case, the requirement of non-infringement clearly is satisfied. This is true regardless of whether Montgomery held valid copyrights in VPIC 1.3 and its predecessor versions when he modified them to create version 2.9a (as Montgomery maintains) or he merely took VPIC 1.3 and its predecessor versions from the public domain and modified them in order to create version 2.9a (as the defendants maintain).
With regard to the requirement of originality, all that must be shown is that the work "possesses at least some minimal degree of creativity.... To be sure, the requisite level of creativity is extremely low; even a slight amount will suffice." Feist, 499 U.S. at 345, 111 S.Ct. at 1287; see also id. at 348, 111 S.Ct. at 1289.12 The defendants claim that the modifications Montgomery made to VPIC in versions 1.4 through 2.9a did not cross even this low threshold. In support of this claim, they argue that Montgomery himself stated on cross-examination that the source code for VPIC version 2.9a was substantially similar to the source code for version 1.3. We find that the import of Montgomery's statement is far from clear.13 It is clear from other evidence presented at trial, however, that VPIC 2.9a contained several additions and corrections that were not present in version 1.3. For example, the revision history that was submitted with the VPIC 2.9a copyright registration application shows that in versions 1.4 through 2.9a, Montgomery corrected many problems, increased the number of graphics file formats that VPIC users could view, increased by 50 percent the speed at which VPIC would decode graphics stored in the GIF file format, and configured VPIC to work with additional graphics computer chips and cards. In light of this evidence, we conclude that the defendants failed to meet their burden of showing that the modifications Montgomery made to VPIC in versions 1.4 through 2.9a were not sufficiently original to support a valid copyright in version 2.9a as a derivative work. The district court, therefore, did not clearly err in rejecting the defendants' argument that VPIC 2.9a is unprotectable.14
We now turn to the defendants' alternative argument that the scope of Montgomery's copyright registration in VPIC 2.9a does not extend to support the commencement of an action for infringement of his unregistered copyright in the derivative work VPIC 4.3.15 The defendants base this argument on several provisions of the Copyright Act. First, they point to the following clause from the Act's discussion of when a work is "created": "[W]here the work has been prepared in different versions, each version constitutes a separate work." 17 U.S.C. § 101. The defendants also direct our attention to 17 U.S.C. § 411(a) (1994), which states that "no action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title." Reading these provisions together, the defendants conclude that because VPIC version 4.3 is a "separate work" that was not registered when Montgomery brought this suit, Montgomery could not maintain a copyright infringement action against them for copying that work. While the defendants recognize that Montgomery registered his copyright in VPIC 2.9a, they claim that the Copyright Act16 supports the conclusion that this registration does not cover material--such as the derivative work VPIC 4.3--not in existence at the time of the registration.
The defendants' argument, however, mischaracterizes Montgomery's claim of copyright infringement. The evidence at trial showed that VPIC 4.3 incorporated over seventy percent of the original source code from the registered work VPIC 2.9a, and that VPIC 4.3 would not function if the VPIC 2.9a code was removed. By downloading VPIC 4.3 and incorporating it as a utility on FLD discs, therefore, the defendants infringed Montgomery's registered copyright in VPIC 2.9a within the meaning of section 501(a) of the Copyright Act. See 17 U.S.C. § 501(a) (1994) ("Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 118 ... is an infringer of the copyright...."); 17 U.S.C. § 106(1)-(2) (1994) (noting that a copyright owner has the exclusive right to do and to authorize both reproduction of the copyrighted work in copies and preparation of derivative works based upon the copyrighted work); H.R.Rep. No. 94-1476, at 61 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5675 (noting that under section 106(1), "a copyrighted work would be infringed by reproducing it in whole or in any substantial part, and by duplicating it exactly or by imitation or simulation" (emphasis added)); id. at 62, reprinted in 1976 U.S.C.C.A.N. at 5675 ("The exclusive right to prepare derivative works, specified separately in clause (2) of section 106, overlaps the exclusive right of reproduction [in section 106(1) ] to some extent.... [T]o constitute a violation of section 106(2), the infringing work must incorporate a portion of the copyrighted work in some form." (emphasis added)). Such infringement is actionable under sections 501(b) and 411(a) of the Act.17 See 17 U.S.C. § 501(b) (1994) ("The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it."); 17 U.S.C. § 411(a) (1994); see also Lamb v. Starks, 949 F.Supp. 753, 755-56 (N.D.Cal.1996) (holding that a prima facie case of copyright infringement had been established where the defendant copied plaintiff's unregistered trailer that contained portions of a movie in which the plaintiff held a registered copyright); Central Point Software, Inc. v. Nugent, 903 F.Supp. 1057, 1060 & n. 5 (E.D.Tex.1995) (granting summary judgment on plaintiffs' copyright infringement claim where plaintiffs registered their copyrights in certain versions of computer programs and defendants copied subsequent versions that were derived from the registered works); 2 Nimmer § 7.16[B] (concluding that the owner of a registered underlying work that is part of an unregistered derivative work should be able to maintain a copyright infringement suit against a defendant who reproduces the derivative work--and thus the underlying work contained therein--without authorization); Douglas Y'Barbo, On Section 411 of the Copyright Code and Determining the Proper Scope of a Copyright Registration, 34 San Diego L.Rev. 343, 351-52, 354 n. 38, 356 (1997) (same).
We conclude, after considering this question of law de novo, that the district court did not err in rejecting the defendants' argument that the scope of Montgomery's registered copyright in VPIC 2.9a does not extend to protect VPIC 4.3. We therefore affirm the district court's decision to deny the defendants' motion for judgment as a matter of law.
The defendants' next claim of error relates to their motion for remittitur or--if Montgomery rejected a remittitur amount proposed by the court--for a new trial on the issue of damages with respect to Montgomery's copyright claim. In this motion, the defendants contended that the jury's award of $80,000 in damages for copyright infringement--$43,900 for actual damages sustained by Montgomery as a result of the infringement and $36,100 for the defendants' profits attributable to the infringement--was excessive and not supported by the evidence because the award was based on the value of unregistered VPIC versions issued subsequent to the registered version 2.9a. The defendants maintained that no evidence was introduced at trial regarding the value of VPIC 2.9a at the time of the infringement, and that there was no evidence that anyone had ever purchased a license from Montgomery to use VPIC 2.9a. The district court denied the motion, concluding that the verdict was in accordance with the jury instructions and the evidence presented at trial.
Although the defendants' briefs on appeal are somewhat opaque, the defendants apparently contend that the district court erred in two ways when it denied their motion. First, they claim that the court committed an error of law by failing to instruct the jury to base its calculation of actual damages on the reasonable value in the marketplace of the plaintiff's program VPIC 2.9a for commercial use at the time of the infringement. When the defendants' counsel suggested this instruction during the charge conference, the court expressed the view that it would be error to rule that the plaintiff could recover infringement damages only for VPIC 2.9a. Such a ruling, explained the court, would "foreclose the derivative work concept." Instead, the court merely instructed the jury to consider the reasonable value in the marketplace of the "plaintiff's program" for commercial use at the time of the infringement. The defendants' counsel did not object to the district court's version of the actual damages instruction as required by Fed.R.Civ.P. 51. See Electro Servs., Inc. v. Exide Corp., 847 F.2d 1524, 1528-29 (11th Cir.1988) (concluding that a party who offers a proposed instruction does not thereby preserve a challenge to the giving of a different instruction by the court, absent a specific objection). We therefore review the instruction only for plain error.18 See Pate v. Seaboard R.R., Inc., 819 F.2d 1074, 1082-83 (11th Cir.1987).
When reviewing a jury instruction under the plain error standard, we will reverse "only in exceptional cases where the error is 'so fundamental as to result in a miscarriage of justice.' " Iervolino v. Delta Air Lines, Inc., 796 F.2d 1408, 1414 (11th Cir.1986) (quoting Delancey v. Motichek Towing Serv., Inc., 427 F.2d 897, 901 (5th Cir.1970)). More specifically, we require appellants to establish "that the challenged instruction was an incorrect statement of the law and that it was probably responsible for an incorrect verdict, leading to substantial injustice." Pate, 819 F.2d at 1083. If the instruction will " 'mislead the jury or leave the jury to speculate as to an essential point of law,' the error is sufficiently fundamental to warrant a new trial despite a party's failure to state a proper objection." Id. (quoting Cruthirds v. RCI, Inc., 624 F.2d 632, 636 (5th Cir.1980)).
Applying this standard to the challenged instruction on the calculation of actual damages, we conclude that the defendants have not established that the instruction was fundamentally erroneous. The relevant provision of the Copyright Act states that "[t]he copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement...." 17 U.S.C. § 504(b) (1994). This provision requires the plaintiff to demonstrate a "causal connection" between the defendant's infringement and an injury to the market value of the plaintiff's copyrighted work at the time of infringement.19 See Key West Hand Print Fabrics, Inc. v. Serbin, Inc., 269 F.Supp. 605, 613 (S.D.Fla.1966); 4 Nimmer § 14.02[A]; see also Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1170-71 (1st Cir.1994) (defining the plaintiff's burden with reference to tort law principles of causation and damages). Having held that the defendants infringed Montgomery's registered copyright in VPIC 2.9a by placing VPIC 4.3 on FLD discs, see supra part II.A.2, it follows that the jury properly could consider evidence of the injury that the defendants' infringement caused to the value of subsequent unregistered VPIC versions derived from version 2.9a--such as VPIC 4.3--in order to determine the extent of the injury to the value of Montgomery's registered copyright at the time of infringement. Cf. 4 Nimmer § 14.02[A], at 14-8 n. 4 (noting that, in view of the copyright owner's exclusive right to prepare derivative works under 17 U.S.C. § 106(2), the injury to the market value of the copyrighted work includes any injury to the value of "sequel rights"). Obviously, Montgomery's damages could not adequately be measured solely by