University of Missouri School of Law

University of Missouri School of Law Scholarship Repository
Open Educational Resources

Spring 2019

Copyright Law: An Open Source Casebook
Gary Myers

Follow this and additional works at: https://scholarship.law.missouri.edu/oer
Part of the Intellectual Property Law Commons

COPYRIGHT LAW:
AN OPEN SOURCE CASEBOOK

BY GARY MYERS
UNIVERSITY OF MISSOURI
SCHOOL OF LAW

This book is released under the Creative Commons attribution license
(CC-BY 4.0).

1

2

CH. 1

CHAPTER 1
THE SUBJECT MATTER OF COPYRIGHT
■ ■ ■

A. USEFUL ARTICLES

MAZER V. STEIN
347 U.S. 201, 74 S.Ct. 460 (1954).

MR. JUSTICE REED delivered the opinion of the Court.
This case involves the validity of copyrights obtained by respondents
for statuettes of male and female dancing figures made of semivitreous
china. The controversy centers around the fact that although copyrighted
as “works of art,” the statuettes were intended for use and used as bases
for table lamps, with electric wiring, sockets and lamp shades attached.
[The defendant contended that the statuettes were not copyrightable
because plaintiff intended to, and did, mass produce them and use them as
lamp bases.]
***
This Court once essayed to fix the limits of the fine arts. That effort
need not be appraised in relation to this copyright issue. It is clear Congress
intended the scope of the [1909] copyright statute to include more than the
traditional fine arts. Herbert Putnam, Esq., then Librarian of Congress
and active in the movement to amend the copyright laws, told the joint
meeting of the House and Senate Committees:
* * * “The term ‘works of art’ is deliberately intended as a broader
specification than ‘works of the fine arts’ in the present statute
with the idea that there is subject-matter (for instance, of applied
design, not yet within the province of design patents), which may
properly be entitled to protection under the copyright law.”
The successive acts, the legislative history of the 1909 Act and the
practice of the Copyright Office unite to show that “works of art” and
“reproductions of works of art” are terms that were intended by Congress
to include the authority to copyright these statuettes. Individual perception

CH. 1

3

of the beautiful is too varied a power to permit a narrow or rigid concept of
art. * * *
But petitioners assert that congressional enactment of the design
patent laws should be interpreted as denying protection to artistic articles
embodied or reproduced in manufactured articles. They say:
“Fundamentally and historically, the Copyright Office is the
repository of what each claimant considers to be a cultural
treasure, whereas the Patent Office is the repository of what each
applicant considers to be evidence of the advance in industrial and
technological fields.”
Their argument is that design patents require the critical examination
given patents to protect the public against monopoly. Attention is called to
Gorham Mfg. Co. v. White, 14 Wall. 511, interpreting the design patent law
of 1842, 5 Stat. 544, granting a patent to anyone who by “their own
industry, genius, efforts, and expense, may have invented or produced any
new and original design for a manufacture * * *.” A pattern for flat silver
was there upheld. The intermediate and present law differs little.
“Whoever invents any new, original and ornamental design for an article
of manufacture may obtain a patent therefor, . . .” subject generally to the
provisions concerning patents for invention. § 171, 66 Stat. 805. As
petitioner sees the effect of the design patent law:
“If an industrial designer can not satisfy the novelty requirements
of the design patent laws, then his design as used on articles of
manufacture can be copied by anyone.”
Petitioner has furnished the Court a booklet of numerous design
patents for statuettes, bases for table lamps and similar articles for
manufacture, quite indistinguishable in type from the copyrighted
statuettes here in issue. Petitioner urges that overlapping of patent and
copyright legislation so as to give an author or inventor a choice between
patents and copyrights should not be permitted. We assume petitioner
takes the position that protection for a statuette for industrial use can only
be obtained by patent, if any protection can be given.
As we have held the statuettes here involved copyrightable, we need
not decide the question of their patentability. Though other courts have
passed upon the issue as to whether allowance by the election of the author
or patentee of one bars a grant of the other, we do not. We do hold that the
patentability of the statuettes, fitted as lamps or unfitted, does not bar
copyright as works of art. Neither the Copyright Statute nor any other says
that because a thing is patentable it may not be copyrighted. We should
not so hold.
* * * The copyright protects originality rather than novelty or
invention—conferring only “the sole right of multiplying copies.” Absent
copying there can be no infringement of copyright. Thus, respondents may

4

CH. 1

not exclude others from using statuettes of human figures in table lamps;
they may only prevent use of copies of their statuettes as such or as
incorporated in some other article. [Copyright Office] Regulation § 202.8,
supra, makes clear that artistic articles are protected in “form but not their
mechanical or utilitarian aspects.” See Stein v. Rosenthal, 103 F.Supp. 227,
231. The dichotomy of protection for the aesthetic is not beauty and utility
but art for the copyright and the invention of original and ornamental
design for design patents. We find nothing in the copyright statute to
support the argument that the intended use or use in industry of an article
eligible for copyright bars or invalidates its registration. We do not read
such a limitation into the copyright law.
***
“The copyright law, like the patent statutes, makes reward to the
owner a secondary consideration.” United States v. Paramount Pictures,
334 U.S. 131, 158. However, it is “intended definitely to grant valuable,
enforceable rights to authors, publishers, etc., without burdensome
requirements; ‘to afford greater encouragement to the production of
literary [or artistic] works of lasting benefit to the world.’ ” Washingtonian
Co. v. Pearson, 306 U.S. 30, 36.
The economic philosophy behind the clause empowering Congress to
grant patents and copyrights is the conviction that encouragement of
individual effort by personal gain is the best way to advance public welfare
through the talents of authors and inventors in “Science and useful Arts.”
Sacrificial days devoted to such creative activities deserve rewards
commensurate with the services rendered.
Affirmed.

STAR ATHLETICA, L.L.C. V. VARSITY BRANDS, INC.
137 S. Ct. (2017).

JUSTICE THOMAS delivered the opinion of the Court.
Congress has provided copyright protection for original works of art,
but not for industrial designs. The line between art and industrial design,
however, is often difficult to draw. This is particularly true when an
industrial design incorporates artistic elements. Congress has afforded
limited protection for these artistic elements by providing that “pictorial,
graphic, or sculptural features” of the “design of a useful article” are eligible
for copyright protection as artistic works if those features “can be identified
separately from, and are capable of existing independently of, the
utilitarian aspects of the article.” 17 U.S.C. § 101.
We granted certiorari to resolve widespread disagreement over the
proper test for implementing § 101’s separate-identification and

CH. 1

5

independent-existence requirements. We hold that a feature incorporated
into the design of a useful article is eligible for copyright protection only if
the feature (1) can be perceived as a two- or three-dimensional work of art
separate from the useful article and (2) would qualify as a protectable
pictorial, graphic, or sculptural work—either on its own or fixed in some
other tangible medium of expression—if it were imagined separately from
the useful article into which it is incorporated. Because that test is satisfied
in this case, we affirm.
I
Respondents Varsity Brands, Inc., Varsity Spirit Corporation, and
Varsity Spirit Fashions & Supplies, Inc., design, make, and sell
cheerleading uniforms. Respondents have obtained or acquired more than
200 U.S. copyright registrations for two-dimensional designs appearing on
the surface of their uniforms and other garments. These designs are
primarily “combinations, positionings, and arrangements of elements” that
include “chevrons ..., lines, curves, stripes, angles, diagonals, inverted
[chevrons], coloring, and shapes.”
Petitioner Star Athletica, L.L.C., also markets and sells cheerleading
uniforms. Respondents sued petitioner for infringing their copyrights in
the five designs. The District Court entered summary judgment for
petitioner on respondents’ copyright claims on the ground that the designs
did not qualify as protectable pictorial, graphic, or sculptural works. It
reasoned that the designs served the useful, or “utilitarian,” function of
identifying the garments as “cheerleading uniforms” and therefore could
not be “physically or conceptually” separated under § 101 “from the
utilitarian function” of the uniform.
The Court of Appeals for the Sixth Circuit reversed. In its view, the
“graphic designs” were “separately identifiable” because the designs “and
a blank cheerleading uniform can appear ‘side by side’—one as a graphic
design, and one as a cheerleading uniform.” And it determined that the
designs were “ ‘capable of existing independently’ ” because they could be
incorporated onto the surface of different types of garments, or hung on the
wall and framed as art.
Judge McKeague dissented. He would have held that, because
“identifying the wearer as a cheerleader” is a utilitarian function of a
cheerleading uniform and the surface designs were “integral to” achieving
that function, the designs were inseparable from the uniforms.
II

6

CH. 1

***
“Works of authorship” include “pictorial, graphic, and sculptural
works,” § 102(a)(5), which the statute defines to include “two-dimensional
and three-dimensional works of fine, graphic, and applied art,
photographs, prints and art reproductions, maps, globes, charts, diagrams,
models, and technical drawings, including architectural plans,” § 101. And
a work of authorship is “ ‘fixed’ in a tangible medium of expression when
it[ is] embodi[ed] in a” “material objec[t] ... from which the work can be
perceived, reproduced, or otherwise communicated.” Ibid. (definitions of
“fixed” and “copies”).
The Copyright Act also establishes a special rule for copyrighting a
pictorial, graphic, or sculptural work incorporated into a “useful article,”
which is defined as “an article having an intrinsic utilitarian function that
is not merely to portray the appearance of the article or to convey
information.” Ibid. The statute does not protect useful articles as such.
Rather, “the design of a useful article” is “considered a pictorial, graphical,
or sculptural work only if, and only to the extent that, such design
incorporates pictorial, graphic, or sculptural features that can be identified
separately from, and are capable of existing independently of, the
utilitarian aspects of the article.” Ibid.
Courts, the Copyright Office, and commentators have described the
analysis undertaken to determine whether a feature can be separately
identified from, and exist independently of, a useful article as
“separability.” In this case, our task is to determine whether the
arrangements of lines, chevrons, and colorful shapes appearing on the
surface of respondents’ cheerleading uniforms are eligible for copyright
protection as separable features of the design of those cheerleading
uniforms.
A
As an initial matter, we must address whether separability analysis is
necessary in this case.
1
Respondents argue that “[s]eparability is only implicated when a
[pictorial, graphic, or sculptural] work is the ‘design of a useful article.’ ”
They contend that the surface decorations in this case are “twodimensional graphic designs that appear on useful articles,” but are not
themselves designs of useful articles. Consequently, the surface
decorations are protected two-dimensional works of graphic art without

CH. 1

7

regard to any separability analysis under § 101. See 2 W. Patry, Copyright
§ 3:151, p. 3–485 (2016) (Patry) (“Courts looking at two-dimensional design
claims should not apply the separability analysis regardless of the threedimensional form that design is embodied in”). Under this theory, twodimensional artistic features on the surface of useful articles are
“inherently separable.”
This argument is inconsistent with the text of § 101. The statute
requires separability analysis for any “pictorial, graphic, or sculptural
features” incorporated into the “design of a useful article.” “Design” refers
here to “the combination” of “details” or “features” that “go to make up” the
useful article. 3 Oxford English Dictionary 244 (def. 7, first listing) (1933)
(OED). Furthermore, the words “pictorial” and “graphic” include, in this
context, two-dimensional features such as pictures, paintings, or drawings.
See 4 id., at 359 (defining “[g]raphic” to mean “[o]f or pertaining to drawing
or painting”); 7 id., at 830 (defining “[p]ictorial” to mean “of or pertaining
to painting or drawing”). And the statute expressly defines “[p]ictorial,
graphical, and sculptural works” to include “two-dimensional ... works of ...
art.” § 101. The statute thus provides that the “design of a useful article”
can include two-dimensional “pictorial” and “graphic” features, and
separability analysis applies to those features just as it does to threedimensional “sculptural” features.
***
B
We must now decide when a feature incorporated into a useful article “can
be identified separately from” and is “capable of existing independently of”
“the utilitarian aspects” of the article. This is not a free-ranging search for
the best copyright policy, but rather “depends solely on statutory
interpretation.” Mazer v. Stein, 347 U.S. 201 (1954). “The controlling
principle in this case is the basic and unexceptional rule that courts must
give effect to the clear meaning of statutes as written.” Estate of Cowart v.
Nicklos Drilling Co., 505 U.S. 469, 476 (1992). We thus begin and end our
inquiry with the text, giving each word its “ordinary, contemporary,
common meaning.” Walters v. Metropolitan Ed. Enterprises, Inc., 519 U.S.
202, 207 (1997) (internal quotation marks omitted). We do not, however,
limit this inquiry to the text of § 101 in isolation. “[I]nterpretation of a
phrase of uncertain reach is not confined to a single sentence when the text
of the whole statute gives instruction as to its meaning.” Maracich v.
Spears, 133 S.Ct. 2191, 2203 (2013). We thus “look to the provisions of the
whole law” to determine § 101’s meaning. United States v. Heirs of
Boisdore, 8 How. 113, 122 (1849).

8

CH. 1

1
The statute provides that a “pictorial, graphic, or sculptural featur[e]”
incorporated into the “design of a useful article” is eligible for copyright
protection if it (1) “can be identified separately from,” and (2) is “capable of
existing independently of, the utilitarian aspects of the article.” § 101. The
first requirement—separate identification—is not onerous. The
decisionmaker need only be able to look at the useful article and spot some
two- or three-dimensional element that appears to have pictorial, graphic,
or sculptural qualities. See 2 Patry § 3:146, at 3–474 to 3–475.
The independent-existence requirement is ordinarily more difficult to
satisfy. The decisionmaker must determine that the separately identified
feature has the capacity to exist apart from the utilitarian aspects of the
article. See 2 OED 88 (def. 5) (defining “[c]apable” of as “[h]aving the
needful capacity, power, or fitness for”). In other words, the feature must
be able to exist as its own pictorial, graphic, or sculptural work as defined
in § 101 once it is imagined apart from the useful article. If the feature is
not capable of existing as a pictorial, graphic, or sculptural work once
separated from the useful article, then it was not a pictorial, graphic, or
sculptural feature of that article, but rather one of its utilitarian aspects.
Of course, to qualify as a pictorial, graphic, or sculptural work on its
own, the feature cannot itself be a useful article or “[a]n article that is
normally a part of a useful article” (which is itself considered a useful
article). § 101. Nor could someone claim a copyright in a useful article
merely by creating a replica of that article in some other medium—for
example, a cardboard model of a car. Although the replica could itself be
copyrightable, it would not give rise to any rights in the useful article that
inspired it.
2
The statute as a whole confirms our interpretation. The Copyright Act
provides “the owner of [a] copyright” with the “exclusive righ[t] ... to
reproduce the copyrighted work in copies.” § 106(1). The statute clarifies
that this right “includes the right to reproduce the [copyrighted] work in or
on any kind of article, whether useful or otherwise.” § 113(a). *1011 Section
101 is, in essence, the mirror image of § 113(a). Whereas § 113(a) protects
a work of authorship first fixed in some tangible medium other than a
useful article and subsequently applied to a useful article, § 101 protects
art first fixed in the medium of a useful article. The two provisions make
clear that copyright protection extends to pictorial, graphic, and sculptural
works regardless of whether they were created as freestanding art or as
features of useful articles. The ultimate separability question, then, is

CH. 1

9

whether the feature for which copyright protection is claimed would have
been eligible for copyright protection as a pictorial, graphic, or sculptural
work had it originally been fixed in some tangible medium other than a
useful article before being applied to a useful article.
3
This interpretation is also consistent with the history of the Copyright
Act. In Mazer, a case decided under the 1909 Copyright Act, the
respondents copyrighted a statuette depicting a dancer. The statuette was
intended for use as a lamp base, “with electric wiring, sockets and lamp
shades attached.” 347 U.S., at 202, 74 S.Ct. 460. Copies of the statuette
were sold both as lamp bases and separately as statuettes. Id., at 203. The
petitioners copied the statuette and sold lamps with the statuette as the
base. They defended against the respondents’ infringement suit by arguing
that the respondents did not have a copyright in a statuette intended for
use as a lamp base. Id., at 204–205.
Two of Mazer’s holdings are relevant here. First, the Court held that
the respondents owned a copyright in the statuette even though it was
intended for use as a lamp base. See id., at 214. In doing so, the Court
approved the Copyright Office’s regulation extending copyright protection
to works of art that might also serve a useful purpose. See ibid. (approving
37 C.F.R. § 202.8(a) (1949) (protecting “works of artistic craftsmanship, in
so far as their form but not their mechanical or utilitarian aspects are
concerned”)).
Second, the Court held that it was irrelevant to the copyright inquiry
whether the statuette was initially created as a freestanding sculpture or
as a lamp base. 347 U.S., at 218–219 (“Nor do we think the subsequent
registration of a work of art published as an element in a manufactured
article, is a misuse of copyright. This is not different from the registration
of a statuette and its later embodiment in an industrial article”). Mazer
thus interpreted the 1909 Act consistently with the rule discussed above:
If a design would have been copyrightable as a standalone pictorial,
graphic, or sculptural work, it is copyrightable if created first as part of a
useful article.
Shortly thereafter, the Copyright Office enacted a regulation
implementing the holdings of Mazer. See 1 Nimmer § 2A.08[B][1][b] (2016).
As amended, the regulation introduced the modern separability test to
copyright law:
“If the sole intrinsic function of an article is its utility, the fact that the
article is unique and attractively shaped will not qualify it as a work of

10

CH. 1

art. However, if the shape of a utilitarian article incorporates features,
such as artistic sculpture, carving, or pictorial representation, which
can be identified separately and are capable of existing independently
as a work of art, such features will be eligible for registration.” 37
C.F.R. § 202.10(c) (1960) (punctuation altered).
Congress essentially lifted the language governing protection for the
design of a useful article directly from the post-Mazer regulations and
placed it into § 101 of the 1976 Act. Consistent with Mazer, the approach
we outline today interprets §§ 101 and 113 in a way that would afford
copyright protection to the statuette in Mazer regardless of whether it was
first created as a standalone sculptural work or as the base of the lamp.
See 347 U.S., at 218–219.
C
In sum, a feature of the design of a useful article is eligible for copyright
if, when identified and imagined apart from the useful article, it would
qualify as a pictorial, graphic, or sculptural work either on its own or when
fixed in some other tangible medium.
Applying this test to the surface decorations on the cheerleading
uniforms is straightforward. First, one can identify the decorations as
features having pictorial, graphic, or sculptural qualities. Second, if the
arrangement of colors, shapes, stripes, and chevrons on the surface of the
cheerleading uniforms were separated from the uniform and applied in
another medium—for example, on a painter’s canvas—they would qualify
as “two-dimensional ... works of ... art,” § 101. And imaginatively removing
the surface decorations from the uniforms and applying them in another
medium would not replicate the uniform itself. Indeed, respondents have
applied the designs in this case to other media of expression—different
types of clothing—without replicating the uniform. The decorations are
therefore separable from the uniforms and eligible for copyright protection.
The dissent argues that the designs are not separable because
imaginatively removing them from the uniforms and placing them in some
other medium of expression—a canvas, for example—would create
“pictures of cheerleader uniforms.” Post, at 1035 – 1036 (opinion of BREYER,
J.). Petitioner similarly argues that the decorations cannot be copyrighted
because, even when extracted from the useful article, they retain the
outline of a cheerleading uniform.
This is not a bar to copyright. Just as two-dimensional fine art
corresponds to the shape of the canvas on which it is painted, twodimensional applied art correlates to the contours of the article on which it

CH. 1

11

is applied. A fresco painted on a wall, ceiling panel, or dome would not lose
copyright protection, for example, simply because it was designed to track
the dimensions of the surface on which it was painted. Or consider, for
example, a design etched or painted on the surface of a guitar. If that entire
design is imaginatively removed from the guitar’s surface and placed on an
album cover, it would still resemble the shape of a guitar. But the image
on the cover does not “replicate” the guitar as a useful article. Rather, the
design is a two-dimensional work of art that corresponds to the shape of
the useful article to which it was applied. The statute protects that work of
art whether it is first drawn on the album cover and then applied to the
guitar’s surface, or vice versa. Failing to protect that art would create an
anomaly: It would extend protection to two-dimensional designs that cover
a part of a useful article but would not protect the same design if it covered
the entire article. The statute does not support that distinction, nor can it
be reconciled with the dissent’s recognition that “artwork printed on a tshirt” could be protected. Post, at 1019 (internal quotation marks omitted).
To be clear, the only feature of the cheerleading uniform eligible for a
copyright in this case is the two-dimensional work of art fixed in the
tangible medium of the uniform fabric. Even if respondents ultimately
succeed in establishing a valid copyright in the surface decorations at issue
here, respondents have no right to prohibit any person from manufacturing
a cheerleading uniform of identical shape, cut, and dimensions to the ones
on which the decorations in this case appear. They may prohibit only the
reproduction of the surface designs in any tangible medium of expression—
a uniform or otherwise.
D
Petitioner and the Government raise several objections to the approach
we announce today. None is meritorious.
1
Petitioner first argues that our reading of the statute is missing an
important step. It contends that a feature may exist independently only if
it can stand alone as a copyrightable work and if the useful article from
which it was extracted would remain equally useful. In other words,
copyright extends only to “solely artistic” features of useful articles.
According to petitioner, if a feature of a useful article “advance[s] the utility
of the article,” then it is categorically beyond the scope of copyright. The
designs here are not protected, it argues, because they are necessary to two
of the uniforms’ “inherent, essential, or natural functions”—identifying the
wearer as a cheerleader and enhancing the wearer’s physical appearance.
Because the uniforms would not be equally useful without the designs,

12

CH. 1

petitioner contends that the designs are inseparable from the “utilitarian
aspects” of the uniform.
The Government raises a similar argument, although it reaches a
different result. It suggests that the appropriate test is whether the useful
article with the artistic feature removed would “remai[n] similarly useful.”
In the view of the United States, however, a plain white cheerleading
uniform is “similarly useful” to uniforms with respondents’ designs.
The debate over the relative utility of a plain white cheerleading
uniform is unnecessary. The focus of the separability inquiry is on the
extracted feature and not on any aspects of the useful article that remain
after the imaginary extraction. The statute does not require the
decisionmaker to imagine a fully functioning useful article without the
artistic feature. Instead, it requires that the separated feature qualify as a
nonuseful pictorial, graphic, or sculptural work on its own.
Of course, because the removed feature may not be a useful article—as
it would then not qualify as a pictorial, graphic, or sculptural work—there
necessarily would be some aspects of the original useful article “left behind”
if the feature were conceptually removed. But the statute does not require
the imagined remainder to be a fully functioning useful article at all, much
less an equally useful one. Indeed, such a requirement would deprive the
Mazer statuette of protection had it been created first as a lamp base rather
than as a statuette. Without the base, the “lamp” would be just a shade,
bulb, and wires. The statute does not require that we imagine a nonartistic
replacement for the removed feature to determine whether that feature is
capable of an independent existence.
Petitioner’s argument follows from its flawed view that the statute
protects only “solely artistic” features that have no effect whatsoever on a
useful article’s utilitarian function. This view is inconsistent with the
statutory text. The statute expressly protects two- and three-dimensional
“applied art.” § 101. “Applied art” is art “employed in the decoration,
design, or execution of useful objects,” Webster’s Third New International
Dictionary 105 (1976) (emphasis added), or “those arts or crafts that have
a primarily utilitarian function, or ... the designs and decorations used in
these arts,” Random House Dictionary 73 (1966) (emphasis added); see also
1 OED 576 (2d ed. 1989) (defining “applied” as “[p]ut to practical use”). An
artistic feature that would be eligible for copyright protection on its own
cannot lose that protection simply because it was first created as a feature
of the design of a useful article, even if it makes that article more useful.
Indeed, this has been the rule since Mazer. In holding that the statuette
was protected, the Court emphasized that the 1909 Act abandoned any

CH. 1

13

“distinctions between purely aesthetic articles and useful works of art.” 347
U.S., at 211. Congress did not enact such a distinction in the 1976 Act.
Were we to accept petitioner’s argument that the only protectable features
are those that play absolutely no role in an article’s function, we would
effectively abrogate the rule of Mazer and read “applied art” out of the
statute.
Because we reject the view that a useful article must remain after the
artistic feature has been imaginatively separated from the article, we
necessarily abandon the distinction between “physical” and “conceptual”
separability, which some courts and commentators have adopted based on
the Copyright Act’s legislative history. See H.R. Rep. No. 94–1476, p. 55
(1976). According to this view, a feature is physically separable from the
underlying useful article if it can “be physically separated from the article
by ordinary means while leaving the utilitarian aspects of the article
completely intact.” Compendium § 924.2(A); see also Chosun Int’l, Inc. v.
Chrisha Creations, Ltd., 413 F.3d 324, 329 (C.A.2 2005). Conceptual
separability applies if the feature physically could not be removed from the
useful article by ordinary means. See Compendium § 924.2(B); but see 1 P.
Goldstein, Copyright § 2.5.3, p. 2:77 (3d ed. 2016) (explaining that the lower
courts have been unable to agree on a single conceptual separability test);
2 Patry §§ 3:140–3:144.40 (surveying the various approaches in the lower
courts).
The statutory text indicates that separability is a conceptual
undertaking. Because separability does not require the underlying useful
article to remain, the physical-conceptual distinction is unnecessary.
2
Petitioner next argues that we should incorporate two “objective”
components into our test to provide guidance to the lower courts: (1)
“whether the design elements can be identified as reflecting the designer’s
artistic judgment exercised independently of functional influence,” and (2)
whether “there is [a] substantial likelihood that the pictorial, graphic, or
sculptural feature would still be marketable to some significant segment of
the community without its utilitarian function.”
We reject this argument because neither consideration is grounded in
the text of the statute. The first would require the decisionmaker to
consider evidence of the creator’s design methods, purposes, and reasons.
Id., at 48. The statute’s text makes clear, however, that our inquiry is
limited to how the article and feature are perceived, not how or why they
were designed. See Brandir Int’l, Inc. v. Cascade Pacific Lumber Co., 834
F.2d 1142, 1152 (C.A.2 1987) (Winter, J., concurring in part and dissenting

14

CH. 1

in part) (The statute “expressly states that the legal test is how the final
article is perceived, not how it was developed through various stages”).
The same is true of marketability. Nothing in the statute suggests that
copyrightability depends on market surveys. Moreover, asking whether
some segment of the market would be interested in a given work threatens
to prize popular art over other forms, or to substitute judicial aesthetic
preferences for the policy choices embodied in the Copyright Act. See
Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251 (1903) (“It
would be a dangerous undertaking for persons trained only to the law to
constitute themselves final judges of the worth of pictorial illustrations,
outside of the narrowest and most obvious limits”).
3
Finally, petitioner argues that allowing the surface decorations to
qualify as a “work of authorship” is inconsistent with Congress’ intent to
entirely exclude industrial design from copyright. Petitioner notes that
Congress refused to pass a provision that would have provided limited
copyright protection for industrial designs, including clothing, when it
enacted the 1976 Act, see S. 22, Tit. II, 94th Cong., 2d Sess., 122 Cong. Rec.
3856–3859 (1976), and that it has enacted laws protecting designs for
specific useful articles—semiconductor chips and boat hulls, see 17 U.S.C.
§§ 901–914, 1301–1332—while declining to enact other industrial design
statutes. From this history of failed legislation petitioner reasons that
Congress intends to channel intellectual property claims for industrial
design into design patents. It therefore urges us to approach this question
with a presumption against copyrightability.
We do not share petitioner’s concern. As an initial matter,
“[c]ongressional inaction lacks persuasive significance” in most
circumstances. Pension Benefit Guaranty Corporation v. LTV Corp., 496
U.S. 633, 650 (1990) (internal quotation marks omitted). Moreover, we
have long held that design patent and copyright are not mutually exclusive.
See Mazer, 347 U.S., at 217. Congress has provided for limited copyright
protection for certain features of industrial design, and approaching the
statute with presumptive hostility toward protection for industrial design
would undermine Congress’ choice. In any event, as explained above, our
test does not render the shape, cut, and physical dimensions of the
cheerleading uniforms eligible for copyright protection.
III
We hold that an artistic feature of the design of a useful article is
eligible for copyright protection if the feature (1) can be perceived as a two-

CH. 1

15

or three-dimensional work of art separate from the useful article and (2)
would qualify as a protectable pictorial, graphic, or sculptural work either
on its own or in some other medium if imagined separately from the useful
article. Because the designs on the surface of respondents’ cheerleading
uniforms in this case satisfy these requirements, the judgment of the Court
of Appeals is affirmed.
JUSTICE GINSBURG, concurring in the judgment.
I concur in the Court’s judgment but not in its opinion. Unlike the
majority, I would not take up in this case the separability test appropriate
under 17 U.S.C. § 101. Consideration of that test is unwarranted because
the designs at issue are not designs of useful articles. Instead, the designs
are themselves copyrightable pictorial or graphic works reproduced on
useful articles.
***
The designs here in controversy are standalone pictorial and graphic
works that respondents Varsity Brands, Inc., et al. (Varsity) reproduce on
cheerleading uniforms. Varsity’s designs first appeared as pictorial and
graphic works that Varsity’s design team sketched on paper. * * *
In short, Varsity’s designs are not themselves useful articles meet for
separability determination under § 101; they are standalone PGS works
that may gain copyright protection as such, including the exclusive right to
reproduce the designs on useful articles.
JUSTICE BREYER, with whom JUSTICE KENNEDY joins, dissenting.
I agree with much in the Court’s opinion. But I do not agree that the
designs that Varsity Brands, Inc., submitted to the Copyright Office are
eligible for copyright protection. Even applying the majority’s test, the
designs cannot “be perceived as ... two- or three-dimensional work[s] of art
separate from the useful article.”
Look at the designs that Varsity submitted to the Copyright Office. See
Appendix to opinion of the Court, ante. You will see only pictures of
cheerleader uniforms. And cheerleader uniforms are useful articles. A
picture of the relevant design features, whether separately “perceived” on
paper or in the imagination, is a picture of, and thereby “replicate[s],” the
underlying useful article of which they are a part. Hence the design
features that Varsity seeks to protect are not “capable of existing
independently o[f] the utilitarian aspects of the article.”

16

CH. 1

***

CHAPTER 2
OWNERSHIP, ASSIGNMENT, AND
LICENSING OF COPYRIGHTS
CHILDRESS V. TAYLOR
945 F.2d 500 (2d Cir. 1991).

NEWMAN, CIRCUIT JUDGE.
This appeal requires consideration of the standards for determining
when a contributor to a copyrighted work is entitled to be regarded as a
joint author. The work in question is a play about the legendary Black
comedienne Jackie “Moms” Mabley. The plaintiff-appellee Alice Childress
claims to be the sole author of the play. Her claim is disputed by defendantappellant Clarice Taylor, who asserts that she is a joint author of the play.
***
Facts
[Actress Taylor asked playwright Childress to write her a play based
on the life of legendary black comedienne Jackie “Moms” Mabley. While
Childress was writing the play, the two spoke regularly about its progress,
and Taylor contributed her own research and ideas. Childress registered
the script’s copyright in her own name, and declined to enter an agreement
for co-ownership with Taylor. Taylor then hired another writer, Caldwell,
to revise the play without Childress’s consent.]
***
Taylor identifies the following as her major contributions to the play:
(1) she learned through interviews that “Moms” Mabley called all of her
piano players “Luther,” so Taylor suggested that the play include such a
character; (2) Taylor and Childress together interviewed Carey Jordan,
“Moms” Mabley’s housekeeper, and upon leaving the interview they came
to the conclusion that she would be a good character for the play, but Taylor
could not recall whether she or Childress suggested it; (3) Taylor informed
Childress that “Moms” Mabley made a weekly trip to Harlem to do ethnic
food shopping; (4) Taylor suggested a street scene in Harlem with speakers
because she recalled having seen or listened to such a scene many times;
(5) the idea of using a minstrel scene came out of Taylor’s research; (6) the
idea of a card game scene also came out of Taylor’s research, although

CH. 1

17

Taylor could not recall who specifically suggested the scene; (7) some of the
jokes used in the play came from Taylor’s research; and (8) the
characteristics of “Moms” Mabley’s personality portrayed in the play
emerged from Taylor’s research. Essentially, Taylor contributed facts and
details about “Moms” Mabley’s life and discussed some of them with
Childress. However, Childress was responsible for the actual structure of
the play and the dialogue.
***
Childress sued Taylor and other defendants alleging violations of the
Copyright Act, 17 U.S.C. § 101 et seq. (1988) * * *. Taylor contended that
she was a joint author with Childress, and therefore shared the rights to
the play. Childress moved for summary judgment, which the District Court
granted. The Court concluded that Taylor was not a joint author of
Childress’s play and that Caldwell’s play was substantially similar to and
infringed Childress’s play. In rejecting Taylor’s claim of joint authorship,
Judge Haight ruled (a) that a work qualifies as a “joint work” under the
definition section of the Copyright Act, 17 U.S.C. § 101, only when both
authors intended, at the time the work was created, “that their
contributions be merged into inseparable or interdependent parts of a
unitary whole,” id., and (b) that there was insufficient evidence to permit
a reasonable trier to find that Childress had the requisite intent. The Court
further ruled that copyright law requires the contributions of both authors
to be independently copyrightable, and that Taylor’s contributions, which
consisted of ideas and research, were not copyrightable.
Discussion
In common with many issues arising in the domain of copyrights, the
determination of whether to recognize joint authorship in a particular case
requires a sensitive accommodation of competing demands advanced by at
least two persons, both of whom have normally contributed in some way to
the creation of a work of value. Care must be taken to ensure that true
collaborators in the creative process are accorded the perquisites of coauthorship and to guard against the risk that a sole author is denied
exclusive authorship status simply because another person rendered some
form of assistance. Copyright law best serves the interests of creativity
when it carefully draws the bounds of “joint authorship” so as to protect the
legitimate claims of both sole authors and co-authors.
***
The Copyright Act defines a “joint work” as
a work prepared by two or more authors with the intention that
their contributions be merged into inseparable or interdependent
parts of a unitary whole.

18

CH. 1

17 U.S.C. § 101. As Professor Nimmer has pointed out, this definition is
really the definition of a work of joint authorship. See 1 NIMMER ON
COPYRIGHT § 6.01 (1991). The definition concerns the creation of the work
by the joint authors, not the circumstances, in addition to joint authorship,
under which a work may be jointly owned, for example, by assignment of
an undivided interest. The distinction affects the rights that are acquired.
Joint authors hold undivided interests in a work, like all joint owners of a
work, but joint authors, unlike other joint owners, also enjoy all the rights
of authorship, including the renewal rights applicable to works in which a
statutory copyright subsisted prior to January 1, 1978. See 17 U.S.C. § 304.
***
The legislative history also clarifies other aspects of the statutory
definition, but leaves some matters in doubt. Endeavoring to flesh out the
definition, the committee reports state:
[A] work is “joint” if the authors collaborated with each other, or
if each of the authors prepared his or her contribution with the
knowledge and intention that it would be merged with the
contributions of other authors as “inseparable or interdependent
parts of a unitary whole.” The touchstone here is the intention, at
the time the writing is done, that the parts be absorbed or
combined into an integrated unit. . . .
House Report at 120; Senate Report at 103 (emphasis added). This passage
appears to state two alternative criteria—one focusing on the act of
collaboration and the other on the parties’ intent. However, it is hard to
imagine activity that would constitute meaningful “collaboration”
unaccompanied by the requisite intent on the part of both participants that
their contributions be merged into a unitary whole, and the case law has
read the statutory language literally so that the intent requirement applies
to all works of joint authorship. See, e.g., Weissmann v. Freeman, 868 F.2d
1313, 1317–19 (2d Cir.1989); Eckert v. Hurley Chicago Co., Inc., 638 F.
Supp. 699, 702–03 (N.D.Ill.1986).
A more substantial issue arising under the statutory definition of
“joint work” is whether the contribution of each joint author must be
copyrightable or only the combined result of their joint efforts must be
copyrightable. The Nimmer treatise argues against a requirement of
copyrightability of each author’s contribution, see 1 NIMMER ON COPYRIGHT
§ 6.07; Professor Goldstein takes the contrary view, see 1 PAUL GOLDSTEIN,
COPYRIGHT: PRINCIPLES, LAW AND PRACTICE § 4.2.1.2 (1989), with the
apparent agreement of the Latman treatise, see WILLIAM F. PATRY,
LATMAN’S THE COPYRIGHT LAW 116 (6th ed. 1986). The case law supports
a requirement of copyrightability of each contribution. * * * The Register
of Copyrights strongly supports this view, arguing that it is required by the
statutory standard of “authorship” and perhaps by the Constitution. See
Moral Rights in Our Copyright Laws: Hearings on S. 1198 and S. 1253

CH. 1

19

Before the Subcomm. on Patents, Copyrights and Trademarks of the
Senate Comm. on the Judiciary, 101st Cong., 1st Sess. 210–11 (1989)
(statement of Ralph Oman).
The issue, apparently open in this Circuit, is troublesome. If the focus
is solely on the objective of copyright law to encourage the production of
creative works, it is difficult to see why the contributions of all joint authors
need be copyrightable. An individual creates a copyrightable work by
combining a non-copyrightable idea with a copyrightable form of
expression; the resulting work is no less a valuable result of the creative
process simply because the idea and the expression came from two different
individuals. Indeed, it is not unimaginable that there exists a skilled writer
who might never have produced a significant work until some other person
supplied the idea. The textual argument from the statute is not convincing.
The Act surely does not say that each contribution to a joint work must be
copyrightable, and the specification that there be “authors” does not
necessarily require a copyrightable contribution. “Author” is not defined in
the Act and appears to be used only in its ordinary sense of an originator.
The “author” of an uncopyrightable idea is nonetheless its author even
though, for entirely valid reasons, the law properly denies him a copyright
on the result of his creativity. And the Register’s tentative constitutional
argument seems questionable. It has not been supposed that the statutory
grant of “authorship” status to the employer of a work made for hire
exceeds the Constitution, though the employer has shown skill only in
selecting employees, not in creating protectable expression.
Nevertheless, we are persuaded to side with the position taken by the
case law and endorsed by the agency administering the Copyright Act. The
insistence on copyrightable contributions by all putative joint authors
might serve to prevent some spurious claims by those who might otherwise
try to share the fruits of the efforts of a sole author of a copyrightable work,
even though a claim of having contributed copyrightable material could be
asserted by those so inclined. More important, the prevailing view strikes
an appropriate balance in the domains of both copyright and contract law.
In the absence of contract, the copyright remains with the one or more
persons who created copyrightable material. Contract law enables a person
to hire another to create a copyrightable work, and the copyright law will
recognize the employer as “author.” 17 U.S.C. § 201(b). Similarly, the
person with non-copyrightable material who proposes to join forces with a
skilled writer to produce a copyrightable work is free to make a contract to
disclose his or her material in return for assignment of part ownership of
the resulting copyright. Id. § 201(d). And, as with all contract matters, the
parties may minimize subsequent disputes by formalizing their agreement
in a written contract. Cf. 17 U.S.C. § 101 (“work made for hire” definition
of “specially ordered” or “commissioned” work includes requirement of
written agreement). It seems more consistent with the spirit of copyright
law to oblige all joint authors to make copyrightable contributions, leaving

20

CH. 1

those with non-copyrightable contributions to protect their rights through
contract.
There remains for consideration the crucial aspect of joint
authorship—the nature of the intent that must be entertained by each
putative joint author at the time the contribution of each was created. The
wording of the statutory definition appears to make relevant only the state
of mind regarding the unitary nature of the finished work—an intention
“that their contributions be merged into inseparable or interdependent
parts of a unitary whole.” However, an inquiry so limited would extend
joint author status to many persons who are not likely to have been within
the contemplation of Congress. For example, a writer frequently works
with an editor who makes numerous useful revisions to the first draft, some
of which will consist of additions of copyrightable expression. Both intend
their contributions to be merged into inseparable parts of a unitary whole,
yet very few editors and even fewer writers would expect the editor to be
accorded the status of joint author, enjoying an undivided half interest in
the copyright in the published work. Similarly, research assistants may on
occasion contribute to an author some protectable expression or merely a
sufficiently original selection of factual material as would be entitled to a
copyright, yet not be entitled to be regarded as a joint author of the work
in which the contributed material appears. What distinguishes the writereditor relationship and the writer-researcher relationship from the true
joint author relationship is the lack of intent of both participants in the
venture to regard themselves as joint authors.
Focusing on whether the putative joint authors regarded themselves
as joint authors is especially important in circumstances, such as the
instant case, where one person (Childress) is indisputably the dominant
author of the work and the only issue is whether that person is the sole
author or she and another (Taylor) are joint authors. * * * This concern
requires less exacting consideration in the context of traditional forms of
collaboration, such as between the creators of the words and music of a
song.
In this case, appellant contends that Judge Haight’s observation that
“Childress never shared Taylor’s notion that they were co-authors of the
play” misapplies the statutory standard by focusing on whether Childress
“intended the legal consequences which flowed from her prior acts.” * * *
We do not think Judge Haight went so far. He did not inquire whether
Childress intended that she and Taylor would hold equal undivided
interests in the play. But he properly insisted that they entertain in their
minds the concept of joint authorship, whether or not they understood
precisely the legal consequences of that relationship. Though joint
authorship does not require an understanding by the co-authors of the legal
consequences of their relationship, obviously some distinguishing
characteristic of the relationship must be understood in order for it to be

CH. 1

21

the subject of their intent. In many instances, a useful test will be whether,
in the absence of contractual agreements concerning listed authorship,
each participant intended that all would be identified as co-authors.
Though “billing” or “credit” is not decisive in all cases and joint authorship
can exist without any explicit discussion of this topic by the parties,
consideration of the topic helpfully serves to focus the fact-finder’s
attention on how the parties implicitly regarded their undertaking.
***
Examination of whether the putative co-authors ever shared an intent
to be co-authors serves the valuable purpose of appropriately confining the
bounds of joint authorship arising by operation of copyright law, while
leaving those not in a true joint authorship relationship with an author
free to bargain for an arrangement that will be recognized as a matter of
both copyright and contract law. Joint authorship entitles the co-authors
to equal undivided interests in the work, see 17 U.S.C. § 201(a); Community
for Creative Non-Violence v. Reid, 846 F.2d 1485, 1498 (D.C.Cir.1988), aff’d
without consideration of this point, 490 U.S. 730 (1989). That equal sharing
of rights should be reserved for relationships in which all participants fully
intend to be joint authors. The sharing of benefits in other relationships
involving assistance in the creation of a copyrightable work can be more
precisely calibrated by the participants in their contract negotiations
regarding division of royalties or assignment of shares of ownership of the
copyright, see 17 U.S.C. § 201(d).
In this case, the issue is not only whether Judge Haight applied the
correct standard for determining joint authorship but also whether he was
entitled to conclude that the record warranted a summary judgment in
favor of Childress. We are satisfied that Judge Haight was correct as to
both issues. We need not determine whether we agree with his conclusion
that Taylor’s contributions were not independently copyrightable since,
even if they were protectable as expression or as an original selection of
facts, we agree that there is no evidence from which a trier could infer that
Childress had the state of mind required for joint authorship. As Judge
Haight observed, whatever thought of co-authorship might have existed in
Taylor’s mind “was emphatically not shared by the purported co-author.”
There is no evidence that Childress ever contemplated, much less would
have accepted, crediting the play as “written by Alice Childress and Clarice
Taylor.”
Childress was asked to write a play about “Moms” Mabley and did so.
To facilitate her writing task, she accepted the assistance that Taylor
provided, which consisted largely of furnishing the results of research
concerning the life of “Moms” Mabley. As the actress expected to portray
the leading role, Taylor also made some incidental suggestions,
contributing ideas about the presentation of the play’s subject and possibly
some minor bits of expression. But there is no evidence that these aspects

22

CH. 1

of Taylor’s role ever evolved into more than the helpful advice that might
come from the cast, the directors, or the producers of any play. A playwright
does not so easily acquire a co-author.
***

b.

Works Made for Hire

COMMUNITY FOR CREATIVE NON-VIOLENCE ET AL. V. REID
490 U.S. 730, 109 S.Ct. 2166 (1989).

JUSTICE MARSHALL delivered the opinion of the Court.
In this case, an artist and the organization that hired him to produce
a sculpture contest the ownership of the copyright in that work. To resolve
this dispute, we must construe the “work made for hire” provisions of the
Copyright Act of 1976 (Act or 1976 Act), 17 U.S.C. §§ 101 and 201(b), and
in particular, the provision in § 101, which defines as a “work made for
hire” a “work prepared by an employee within the scope of his or her
employment” (hereinafter § 101(1)).
I
[Petitioners are the Community for Creative Non-Violence (“CCNV”),
an organization dedicated to helping the homeless, and Mitch Snyder, a
member and trustee of CCNV. CCNV conceived the idea of commissioning,
as a Christmastime display, a modern Nativity scene titled “Third World
America,” which featured a sculpture of a homeless family on a steam
grate.]
***
Snyder made inquiries to locate an artist to produce the sculpture. He
was referred to respondent James Earl Reid, a Baltimore, Maryland,
sculptor. In the course of two telephone calls, Reid agreed to sculpt the
three human figures. CCNV agreed to make the steam grate and pedestal
for the statue. Reid proposed that the work be cast in bronze, at a total cost
of approximately $100,000 and taking six to eight months to complete.
Snyder rejected that proposal because CCNV did not have sufficient funds,
and because the statue had to be completed by December 12 to be included
in the pageant. Reid then suggested, and Snyder agreed, that the sculpture
would be made of a material known as “Design Cast 62,” a synthetic
substance that could meet CCNV’s monetary and time constraints, could
be tinted to resemble bronze, and could withstand the elements. The
parties agreed that the project would cost no more than $15,000, not
including Reid’s services, which he offered to donate. The parties did not
sign a written agreement. Neither party mentioned copyright.
After Reid received an advance of $3,000, he made several sketches of
figures in various poses. At Snyder’s request, Reid sent CCNV a sketch of

CH. 1

23

a proposed sculpture showing the family in a crechelike setting: the mother
seated, cradling a baby in her lap; the father standing behind her, bending
over her shoulder to touch the baby’s foot. Reid testified that Snyder asked
for the sketch to use in raising funds for the sculpture. Snyder testified that
it was also for his approval. Reid sought a black family to serve as a model
for the sculpture. Upon Snyder’s suggestion, Reid visited a family living at
CCNV’s Washington shelter but decided that only their newly born child
was a suitable model. While Reid was in Washington, Snyder took him to
see homeless people living on the streets. Snyder pointed out that they
tended to recline on steam grates, rather than sit or stand, in order to warm
their bodies. From that time on, Reid’s sketches contained only reclining
figures.
Throughout November and the first two weeks of December 1985, Reid
worked exclusively on the statue, assisted at various times by a dozen
different people who were paid with funds provided in installments by
CCNV. On a number of occasions, CCNV members visited Reid to check on
his progress and to coordinate CCNV’s construction of the base. CCNV
rejected Reid’s proposal to use suitcases or shopping bags to hold the
family’s personal belongings, insisting instead on a shopping cart. Reid and
CCNV members did not discuss copyright ownership on any of these visits.
On December 24, 1985, 12 days after the agreed-upon date, Reid
delivered the completed statue to Washington. There it was joined to the
steam grate and pedestal prepared by CCNV and placed on display near
the site of the pageant. Snyder paid Reid the final installment of the
$15,000. * * *
[When a dispute over copyright in the statue arose, both Reid and
CCNV filed certificates of copyright registration, and petitioners
commenced this action. The District Court held that CCNV owned the
copyright under the “work made for hire” doctrine, because Reid had acted
as an employee of CCNV.]
The Court of Appeals for the District of Columbia Circuit reversed and
remanded, holding that Reid owned the copyright because “Third World
America” was not a work for hire. 846 F.2d 1485, 1494 (1988). Adopting
what it termed the “literal interpretation” of the Act as articulated by the
Fifth Circuit in Easter Seal Society for Crippled Children & Adults of
Louisiana, Inc. v. Playboy Enterprises, 815 F.2d 323, 329 (1987), the court
read § 101 as creating “a simple dichotomy in fact between employees and
independent contractors.” Because, under agency law, Reid was an
independent contractor, the court concluded that the work was not
“prepared by an employee” under § 101(1). Nor was the sculpture a “work
made for hire” under the second subsection of § 101 (hereinafter § 101(2)):
sculpture is not one of the nine categories of works enumerated in that
subsection, and the parties had not agreed in writing that the sculpture
would be a work for hire. The court suggested that the sculpture

24

CH. 1

nevertheless may have been jointly authored by CCNV and Reid, and
remanded for a determination whether the sculpture is indeed a joint work
under the Act.
We granted certiorari to resolve a conflict among the Courts of Appeals
over the proper construction of the “work made for hire” provisions of the
Act. * * * We now affirm.
II
A
The Copyright Act of 1976 provides that copyright ownership “vests
initially in the author or authors of the work.” 17 U.S.C. § 201(a). As a
general rule, the author is the party who actually creates the work, that is,
the person who translates an idea into a fixed, tangible expression entitled
to copyright protection. § 102. The Act carves out an important exception,
however, for “works made for hire.” If the work is for hire, “the employer or
other person for whom the work was prepared is considered the author”
and owns the copyright, unless there is a written agreement to the
contrary. § 201(b). Classifying a work as “made for hire” determines not
only the initial ownership of its copyright, but also the copyright’s duration,
§ 302(c), and the owners’ renewal rights, § 304(a), [and] termination rights,
§ 203(a) * * *. The contours of the work for hire doctrine therefore carry
profound significance for freelance creators—including artists, writers,
photographers, designers, composers, and computer programmers—and
for the publishing, advertising, music, and other industries which
commission their works.
Section 101 of the 1976 Act provides that a work is “for hire” under two
sets of circumstances * * *. Petitioners do not claim that the statue satisfies
the terms of § 101(2). Quite clearly, it does not. Sculpture does not fit within
any of the nine categories of “specially ordered or commissioned” works
enumerated in that subsection, and no written agreement between the
parties establishes “Third World America” as a work for hire.
The dispositive inquiry in this case therefore is whether “Third World
America” is “a work prepared by an employee within the scope of his or her
employment” under § 101(1). The Act does not define these terms. In the
absence of such guidance, four interpretations have emerged. The first
holds that a work is prepared by an employee whenever the hiring party
retains the right to control the product. Petitioners take this view. A
second, and closely related, view is that a work is prepared by an employee
under § 101(1) when the hiring party has actually wielded control with
respect to the creation of a particular work. This approach was formulated
by the Court of Appeals for the Second Circuit, Aldon Accessories Ltd. v.
Spiegel, Inc., 738 F.2d 548 (1984), and adopted by the Fourth Circuit,
Brunswick Beacon, Inc. v. Schock-Hopchas Publishing Co., 810 F.2d 410
(1987), the Seventh Circuit, Evans Newton Inc. v. Chicago Systems

CH. 1

25

Software, 793 F.2d 889 (1986), and, at times, by petitioners. A third view
is that the term “employee” within § 101(1) carries its common-law agency
law meaning. This view was endorsed by the Fifth Circuit in Easter Seal
Society for Crippled Children & Adults of Louisiana, Inc. v. Playboy
Enterprises, 815 F.2d 323 (1987), and by the Court of Appeals below.
Finally, respondent and numerous amici curiae contend that the term
“employee” only refers to “formal, salaried” employees. * * * The Court of
Appeals for the Ninth Circuit recently adopted this view. See Dumas v.
Gommerman, 865 F.2d 1093 (1989).
The starting point for our interpretation of a statute is always its
language. The Act nowhere defines the terms “employee” or “scope of
employment.” It is, however, well established that “[w]here Congress uses
terms that have accumulated settled meaning under . . . the common law,
a court must infer, unless the statute otherwise dictates, that Congress
means to incorporate the established meaning of these terms.” NLRB v.
Amax Coal Co., 453 U.S. 322, 329 (1981). In the past, when Congress has
used the term “employee” without defining it, we have concluded that
Congress intended to describe the conventional master-servant
relationship as understood by common-law agency doctrine. See, e.g., Kelley
v. Southern Pacific Co., 419 U.S. 318, 322–323 (1974); Baker v. Texas &
Pacific R. Co., 359 U.S. 227, 228 (1959) (per curiam); Robinson v. Baltimore
& Ohio R. Co., 237 U.S. 84, 94 (1915). Nothing in the text of the work for
hire provisions indicates that Congress used the words “employee” and
“employment” to describe anything other than “ ‘the conventional relation
of employer and employee.’ ” Kelley, supra, at 323, quoting Robinson,
supra, at 94 * * *.
In past cases of statutory interpretation, when we have concluded that
Congress intended terms such as “employee,” “employer,” and “scope of
employment” to be understood in light of agency law, we have relied on the
general common law of agency, rather than on the law of any particular
State, to give meaning to these terms. This practice reflects the fact that
“federal statutes are generally intended to have uniform nationwide
application.” Mississippi Band of Choctaw Indians v. Holyfield, [490 U.S.
30 (1989)] at 43. Establishment of a federal rule of agency, rather than
reliance on state agency law, is particularly appropriate here given the
Act’s express objective of creating national, uniform copyright law by
broadly pre-empting state statutory and common-law copyright regulation.
See 17 U.S.C. § 301(a). We thus agree with the Court of Appeals that the
term “employee” should be understood in light of the general common law
of agency.
In contrast, neither test proposed by petitioners is consistent with the
text of the Act. The exclusive focus of the right to control the product test
on the relationship between the hiring party and the product clashes with
the language of § 101(1), which focuses on the relationship between the

26

CH. 1

hired and hiring parties. The right to control the product test also would
distort the meaning of the ensuing subsection, § 101(2). Section 101 plainly
creates two distinct ways in which a work can be deemed for hire: one for
works prepared by employees, the other for those specially ordered or
commissioned works which fall within one of the nine enumerated
categories and are the subject of a written agreement. The right to control
the product test ignores this dichotomy by transforming into a work for hire
under § 101(1) any “specially ordered or commissioned” work that is subject
to the supervision and control of the hiring party. Because a party who
hires a “specially ordered or commissioned” work by definition has a right
to specify the characteristics of the product desired, at the time the
commission is accepted, and frequently until it is completed, the right to
control the product test would mean that many works that could satisfy
§ 101(2) would already have been deemed works for hire under § 101(1).
Petitioners’ interpretation is particularly hard to square with § 101(2)’s
enumeration of the nine specific categories of specially ordered or
commissioned works eligible to be works for hire, e.g., “a contribution to a
collective work,” “a part of a motion picture,” and “answer material for a
test.” The unifying feature of these works is that they are usually prepared
at the instance, direction, and risk of a publisher or producer. By their very
nature, therefore, these types of works would be works by an employee
under petitioners’ right to control the product test.
The actual control test, articulated by the Second Circuit in Aldon
Accessories, fares only marginally better when measured against the
language and structure of § 101. Under this test, independent contractors
who are so controlled and supervised in the creation of a particular work
are deemed “employees” under § 101(1). Thus work for hire status under
§ 101(1) depends on a hiring party’s actual control of, rather than right to
control, the product. Under the actual control test, a work for hire could
arise under § 101(2), but not under § 101(1), where a party commissions,
but does not actually control, a product which falls into one of the nine
enumerated categories. Nonetheless, we agree with the Court of Appeals
for the Fifth Circuit that “[t]here is simply no way to milk the ‘actual
control’ test of Aldon Accessories from the language of the statute.” Easter
Seal Society, 815 F.2d, at 334. Section 101 clearly delineates between works
prepared by an employee and commissioned works. Sound though other
distinctions might be as a matter of copyright policy, there is no statutory
support for an additional dichotomy between commissioned works that are
actually controlled and supervised by the hiring party and those that are
not.
We therefore conclude that the language and structure of § 101 of the
Act do not support either the right to control the product or the actual

CH. 1

27

control approaches.8 The structure of § 101 indicates that a work for hire
can arise through one of two mutually exclusive means, one for employees
and one for independent contractors, and ordinary canons of statutory
interpretation indicate that the classification of a particular hired party
should be made with reference to agency law.
[The Court also examined the legislative history of the “work made for
hire” definition and found no support there for a “control” test of
employment status.]
***
Finally, petitioners’ construction of the work for hire provisions would
impede Congress’ paramount goal in revising the 1976 Act of enhancing
predictability and certainty of copyright ownership. In a “copyright
marketplace,” the parties negotiate with an expectation that one of them
will own the copyright in the completed work. With that expectation, the
parties at the outset can settle on relevant contractual terms, such as the
price for the work and the ownership of reproduction rights.
To the extent that petitioners endorse an actual control test, CCNV’s
construction of the work for hire provisions prevents such planning.
Because that test turns on whether the hiring party has closely monitored
the production process, the parties would not know until late in the process,
if not until the work is completed, whether a work will ultimately fall
within § 101(1). Under petitioners’ approach, therefore, parties would have
to predict in advance whether the hiring party will sufficiently control a
given work to make it the author. “If they guess incorrectly, their reliance
on ‘work for hire’ or an assignment may give them a copyright interest that
they did not bargain for.” Easter Seal Society, 815 F.2d, at 333.This
understanding of the work for hire provisions clearly thwarts Congress’
goal of ensuring predictability through advance planning. Moreover,
petitioners’ interpretation “leaves the door open for hiring parties, who
have failed to get a full assignment of copyright rights from independent
contractors falling outside the subdivision (2) guidelines, to unilaterally
obtain work-made-for-hire rights years after the work has been completed
as long as they directed or supervised the work, a standard that is hard not
to meet when one is a hiring party.” Hamilton, Commissioned Works as
Works Made for Hire Under the 1976 Copyright Act: Misinterpretation and
Injustice, 135 U. PA. L. REV. 1281, 1304 (1987).

8
We also reject the suggestion of respondent and amici that the § 101(1) term “employee”
refers only to formal, salaried employees. While there is some support for such a definition in the
legislative history, * * * the language of § 101(1) cannot support it. The Act does not say “formal”
or “salaried” employee, but simply “employee.” Moreover, respondent and those amici who endorse
a formal, salaried employee test do not agree upon the content of this test. * * * Even the one Court
of Appeals to adopt what it termed a formal, salaried employee test in fact embraced an approach
incorporating numerous factors drawn from the agency law definition of employee which we
endorse. See Dumas, 865 F.2d, at 1104.

28

CH. 1

In sum, we must reject petitioners’ argument. Transforming a
commissioned work into a work by an employee on the basis of the hiring
party’s right to control, or actual control of, the work is inconsistent with
the language, structure, and legislative history of the work for hire
provisions. To determine whether a work is for hire under the Act, a court
first should ascertain, using principles of general common law of agency,
whether the work was prepared by an employee or an independent
contractor. After making this determination, the court can apply the
appropriate subsection of § 101.
B
We turn, finally, to an application of § 101 to Reid’s production of
“Third World America.” In determining whether a hired party is an
employee under the general common law of agency, we consider the hiring
party’s right to control the manner and means by which the product is
accomplished. Among the other factors relevant to this inquiry are the skill
required; the source of the instrumentalities and tools; the location of the
work; the duration of the relationship between the parties; whether the
hiring party has the right to assign additional projects to the hired party;
the extent of the hired party’s discretion over when and how long to work;
the method of payment; the hired party’s role in hiring and paying
assistants; whether the work is part of the regular business of the hiring
party; whether the hiring party is in business; the provision of employee
benefits; and the tax treatment of the hired party. See Restatement
§ 220(2) (setting forth a nonexhaustive list of factors relevant to
determining whether a hired party is an employee). No one of these factors
is determinative.
Examining the circumstances of this case in light of these factors, we
agree with the Court of Appeals that Reid was not an employee of CCNV
but an independent contractor. True, CCNV members directed enough of
Reid’s work to ensure that he produced a sculpture that met their
specifications. But the extent of control the hiring party exercises over the
details of the product is not dispositive. Indeed, all the other circumstances
weigh heavily against finding an employment relationship. Reid is a
sculptor, a skilled occupation. Reid supplied his own tools. He worked in
his own studio in Baltimore, making daily supervision of his activities from
Washington practicably impossible. Reid was retained for less than two
months, a relatively short period of time. During and after this time, CCNV
had no right to assign additional projects to Reid. Apart from the deadline
for completing the sculpture, Reid had absolute freedom to decide when
and how long to work. CCNV paid Reid $15,000, a sum dependent on
“completion of a specific job, a method by which independent contractors
are often compensated.” Holt v. Winpisinger, 811 F.2d 1532, 1540 (1987).
Reid had total discretion in hiring and paying assistants. “Creating
sculptures was hardly ‘regular business’ for CCNV.” 846 F.2d, at 1494, n.

CH. 1

29

11. Indeed, CCNV is not a business at all. Finally, CCNV did not pay
payroll or Social Security taxes, provide any employee benefits, or
contribute to unemployment insurance or workers’ compensation funds.
Because Reid was an independent contractor, whether “Third World
America” is a work for hire depends on whether it satisfies the terms of
§ 101(2). This petitioners concede it cannot do. Thus, CCNV is not the
author of “Third World America” by virtue of the work for hire provisions
of the Act. However, as the Court of Appeals made clear, CCNV
nevertheless may be a joint author of the sculpture if, on remand, the
District Court determines that CCNV and Reid prepared the work “with
the intention that their contributions be merged into inseparable or
interdependent parts of a unitary whole.” 17 U.S.C. § 101. In that case,
CCNV and Reid would be co-owners of the copyright in the work. See
§ 201(a).
For the aforestated reasons, we affirm the judgment of the Court of
Appeals for the District of Columbia Circuit.
***
COPYRIGHT TRANSFER/LICENSING

EFFECTS ASSOCIATES, INC. V. COHEN
908 F.2d 555 (9th Cir. 1990).

KOZINSKI, CIRCUIT JUDGE.
What we have here is a failure to compensate. Larry Cohen, a lowbudget horror movie mogul, paid less than the agreed price for special
effects footage he had commissioned from Effects Associates. Cohen then
used this footage without first obtaining a written license or assignment of
the copyright; Effects sued for copyright infringement. We consider
whether a transfer of copyright without a written agreement, an
arrangement apparently not uncommon in the motion picture industry,
conforms with the requirements of the Copyright Act.
[When Effects orally agreed to provide special effects footage for
Cohen’s film, the parties never discussed who would own the copyright in
the commissioned footage. When Effects sued Cohen for infringement
(after Cohen failed to tender full payment), the district court granted
summary judgment, holding that Effects had granted Cohen an implied
license to use the footage. On appeal, the Ninth Circuit held that Effects
(which both parties agree is the initial copyright owner) had not
transferred the copyright to Cohen, because an oral transfer of copyright
ownership is invalid under 17 U.S.C. § 204(a). However, because a
“transfer” of copyright is defined by 17 U.S.C. § 101 to include an exclusive
license but not a nonexclusive license, the court then addressed the

30

CH. 1

question whether Cohen had acquired an oral nonexclusive license to use
the footage.]
***
Although we reject any suggestion that moviemakers are immune to
section 204, we note that there is a narrow exception to the writing
requirement that may apply here. Section 204 provides that all transfers
of copyright ownership must be in writing; section 101 defines transfers of
ownership broadly, but expressly removes from the scope of section 204 a
“nonexclusive license.” The sole issue that remains, then, is whether Cohen
had a nonexclusive license to use plaintiff’s special effects footage.
The leading treatise on copyright law states that “[a] nonexclusive
license may be granted orally, or may even be implied from conduct.” 3 M.
NIMMER & D. NIMMER, NIMMER ON COPYRIGHT § 10.03[A], at 10–36 (1989).
Cohen relies on the latter proposition; he insists that, although Effects
never gave him a written or oral license, Effects’s conduct created an
implied license to use the footage in “The Stuff.”
Cohen relies largely on our decision in Oddo v. Ries, 743 F.2d 630 (9th
Cir.1984). There, we held that Oddo, the author of a series of articles on
how to restore Ford F-100 pickup trucks, had impliedly granted a limited
non-exclusive license to Ries, a publisher, to use plaintiff’s articles in a book
on the same topic. We relied on the fact that Oddo and Ries had formed a
partnership to create and publish the book, with Oddo writing and Ries
providing capital. Id. at 632 & n. 1. Oddo prepared a manuscript consisting
partly of material taken from his prior articles and submitted it to Ries. Id.
at 632. Because the manuscript incorporated pre-existing material, it was
a derivative work; by publishing it, Ries would have necessarily infringed
the copyright in Oddo’s articles, unless Oddo had granted him a license. Id.
at 634. We concluded that, in preparing and handing over to Ries a
manuscript intended for publication that, if published, would infringe
Oddo’s copyright, Oddo “impliedly gave the partnership a license to use the
articles insofar as they were incorporated in the manuscript, for without
such a license, Oddo’s contribution to the partnership venture would have
been of minimal value.” Id.5
The district court agreed with Cohen, and we agree with the district
court: Oddo controls here. Like the plaintiff in Oddo, Effects created a work
at defendant’s request and handed it over, intending that defendant copy

5
Oddo did nevertheless prevail, but on other grounds. Ries was unhappy with Oddo’s
manuscript and hired another writer to do the job right. This writer added much new material,
but also used large chunks of Oddo’s manuscript, thereby incorporating portions of Oddo’s preexisting articles. 743 F.2d at 632. By publishing the other writer’s book, Ries exceeded the scope
of his implied license to use Oddo’s articles and was liable for copyright infringement. Id. at 634.

CH. 1

31

and distribute it.6 To hold that Effects did not at the same time convey a
license to use the footage in “The Stuff” would mean that plaintiff’s
contribution to the film was “of minimal value,” a conclusion that can’t be
squared with the fact that Cohen paid Effects almost $56,000 for this
footage. Accordingly, we conclude that Effects impliedly granted
nonexclusive licenses to Cohen and his production company to incorporate
the special effects footage into “The Stuff” and to New World
Entertainment to distribute the film.
Nor can we construe payment in full as a condition precedent to
implying a license. Conditions precedent are disfavored and will not be
read into a contract unless required by plain, unambiguous language.
Sulmeyer v. United States (In re Bubble Up Delaware, Inc.), 684 F.2d 1259,
1264 (9th Cir.1982). The language of the October 29, 1984, agreement
doesn’t support a conclusion that full payment was a condition precedent
to Cohen’s use of the footage. Moreover, Effects’s president conceded at his
deposition that he never told Cohen that a failure to pay would be viewed
as copyright infringement. * * *
Conclusion
We affirm the district court’s grant of summary judgment in favor of
Cohen and the other defendants. We note, however, that plaintiff doesn’t
leave this court empty-handed. Copyright ownership is comprised of a
bundle of rights; in granting a nonexclusive license to Cohen, Effects has
given up only one stick from that bundle—the right to sue Cohen for
copyright infringement. It retains the right to sue him in state court on a
variety of other grounds, including breach of contract. Additionally, Effects
may license, sell or give away for nothing its remaining rights in the special
effects footage. * * *

NEW YORK TIMES CO., INC. V. TASINI
533 U.S. 483, 121 S.Ct. 2381 (2001).

JUSTICE GINSBURG delivered the opinion of the Court.
This copyright case concerns the rights of freelance authors and a
presumptive privilege of their publishers. The litigation was initiated by
six freelance authors and relates to articles they contributed to three print
periodicals (two newspapers and one magazine). Under agreements with
the periodicals’ publishers, but without the freelancers’ consent, two
6
As the district court found, “every objective fact concerning the transaction at issue
supports a finding that an implied license existed.” Effects’s copyright registration certificate
states that the footage is to be used in “The Stuff,” so does the letter agreement of October 29,
1984, and Effects’s President James Danforth agreed at his deposition that this was his
understanding. Also, Effects delivered the film negatives to Cohen, never warning him that cutting
the negatives into the film would constitute copyright infringement. While delivery of a copy “does
not of itself convey any rights in the copyrighted work,” 17 U.S.C. § 202 (1988) (emphasis added),
it is one factor that may be relied upon in determining that an implied license has been granted.

32

CH. 1

computer database companies placed copies of the freelancers’ articles—
along with all other articles from the periodicals in which the freelancers’
work appeared—into three databases. Whether written by a freelancer or
staff member, each article is presented to, and retrievable by, the user in
isolation, clear of the context the original print publication presented.
The freelance authors’ complaint alleged that their copyrights had
been infringed by the inclusion of their articles in the databases. The
publishers, in response, relied on the privilege of reproduction and
distribution accorded them by § 201(c) of the Copyright Act * * *.
Specifically, the publishers maintained that, as copyright owners of
collective works, i.e., the original print publications, they had merely
exercised “the privilege” § 201(c) accords them to “reproduc[e] and
distribut[e]” the author’s discretely copyrighted contribution.
In agreement with the Second Circuit, we hold that § 201(c) does not
authorize the copying at issue here. The publishers are not sheltered by
§ 201(c), we conclude, because the databases reproduce and distribute
articles standing alone and not in context, not “as part of that particular
collective work” to which the author contributed, “as part of . . . any
revision” thereof, or “as part of . . . any later collective work in the same
series.” Both the print publishers and the electronic publishers, we rule,
have infringed the copyrights of the freelance authors.
I
A
* * * The Authors registered copyrights in each of the[ir] Articles. The
Times, Newsday, and Time (Print Publishers) registered collective work
copyrights in each periodical edition in which an Article originally
appeared. The Print Publishers engaged the Authors as independent
contractors (freelancers) under contracts that in no instance secured
consent from an Author to placement of an Article in an electronic
database.
At the time the Articles were published, all three Print Publishers had
agreements with petitioner LEXIS/NEXIS (formerly Mead Data Central
Corp.), owner and operator of NEXIS, a computerized database that stores
information in a text-only format. NEXIS contains articles from hundreds
of journals (newspapers and periodicals) spanning many years. The Print
Publishers have licensed to LEXIS/NEXIS the text of articles appearing in
the three periodicals. The licenses authorize LEXIS/NEXIS to copy and sell
any portion of those texts.
Pursuant to the licensing agreements, the Print Publishers regularly
provide LEXIS/NEXIS with a batch of all the articles published in each
periodical edition. The Print Publisher codes each article to facilitate
computerized retrieval, then transmits it in a separate file. After further
coding, LEXIS/NEXIS places the article in the central discs of its database.

CH. 1

33

Subscribers to NEXIS, accessing the system through a computer, may
search for articles by author, subject, date, publication, headline, key term,
words in text, or other criteria. * * * Each article appears as a separate,
isolated “story”—without any visible link to the other stories originally
published in the same newspaper or magazine edition. NEXIS does not
contain pictures or advertisements, and it does not reproduce the original
print publication’s formatting features such as headline size, page
placement (e.g., above or below the fold for newspapers), or location of
continuation pages.
***
We granted certiorari to determine whether the copying of the
Authors’ Articles in the Databases is privileged by 17 U.S.C. § 201(c). Like
the Court of Appeals, we conclude that the § 201(c) privilege does not
override the Authors’ copyrights, for the Databases do not reproduce and
distribute the Articles as part of a collective work privileged by § 201(c).
Accordingly, and again like the Court of Appeals, we find it unnecessary to
determine whether the privilege is transferable.
II
***
Section 201(c) both describes and circumscribes the “privilege” a
publisher acquires regarding an author’s contribution to a collective work:
“In the absence of an express transfer of the copyright or of any
rights under it, the owner of copyright in the collective work is
presumed to have acquired only the privilege of reproducing and
distributing the contribution as part of that particular collective
work, any revision of that collective work, and any later collective
work in the same series.” (Emphasis added.)
A newspaper or magazine publisher is thus privileged to reproduce or
distribute an article contributed by a freelance author, absent a contract
otherwise providing, only “as part of” any (or all) of three categories of
collective works: (a) “that collective work” to which the author contributed
her work, (b) “any revision of that collective work,” or (c) “any later
collective work in the same series.” In accord with Congress’ prescription,
a “publishing company could reprint a contribution from one issue in a later
issue of its magazine, and could reprint an article from a 1980 edition of an
encyclopedia in a 1990 revision of it; the publisher could not revise the
contribution itself or include it in a new anthology or an entirely different
magazine or other collective work.” H.R. Rep. 122–123, U.S.Code Cong. &
Admin.News 1976, pp. 5659, 5738.
Essentially, § 201(c) adjusts a publisher’s copyright in its collective
work to accommodate a freelancer’s copyright in her contribution. If there
is demand for a freelance article standing alone or in a new collection, the

34

CH. 1

Copyright Act allows the freelancer to benefit from that demand; after
authorizing initial publication, the freelancer may also sell the article to
others. * * * It would scarcely “preserve the author’s copyright in a
contribution” as contemplated by Congress, H.R. Rep. 122, U.S. Code Cong.
& Admin. News 1976, pp. 5659, 5738, if a newspaper or magazine publisher
were permitted to reproduce or distribute copies of the author’s
contribution in isolation or within new collective works. * * *
III
In the instant case, the Authors wrote several Articles and gave the
Print Publishers permission to publish the Articles in certain newspapers
and magazines. It is undisputed that the Authors hold copyrights and,
therefore, exclusive rights in the Articles.1 It is clear, moreover, that the
Print and Electronic Publishers have exercised at least some rights that
§ 106 initially assigns exclusively to the Authors * * *.
Against the Authors’ charge of infringement, the Publishers do not
here contend the Authors entered into an agreement authorizing
reproduction of the Articles in the Databases. * * * Each discrete edition of
the periodicals in which the Articles appeared is a “collective work,” the
Publishers agree. They contend, however, that reproduction and
distribution of each Article by the Databases lie within the “privilege of
reproducing and distributing the [Articles] as part of . . . [a] revision of that
collective work,” § 201(c). The Publishers’ encompassing construction of the
§ 201(c) privilege is unacceptable, we conclude, for it would diminish the
Authors’ exclusive rights in the Articles.
In determining whether the Articles have been reproduced and
distributed “as part of” a “revision” of the collective works in issue, we focus
on the Articles as presented to, and perceptible by, the user of the
Databases. In this case, the three Databases present articles to users clear
of the context provided either by the original periodical editions or by any
revision of those editions. * * * When the user conducts a search, each
article appears as a separate item within the search result. [The] article
appears to a user without the graphics, formatting, or other articles with
which the article was initially published. * * * [W]e cannot see how the
Database perceptibly reproduces and distributes the article “as part of”
either the original edition or a “revision” of that edition.
***
The Publishers press an analogy between the Databases, on the one
hand, and microfilm and microfiche, on the other. We find the analogy
1
The Publishers do not claim that the Articles are “work[s] made for hire.” 17 U.S.C.
§ 201(b). As to such works, the employer or person for whom a work was prepared is treated as the
author. Ibid. The Print Publishers, however, neither engaged the Authors to write the Articles as
“employee[s]” nor “commissioned” the Articles through “a written instrument signed by [both
parties]” indicating that the Articles shall be considered “work[s] made for hire.” § 101 (1994 ed.,
Supp. V) (defining “work made for hire”).

CH. 1

35

wanting. Microforms typically contain continuous photographic
reproductions of a periodical in the medium of miniaturized film.
Accordingly, articles appear on the microforms, writ very small, in
precisely the position in which the articles appeared in the newspaper. * * *
True, the microfilm roll contains multiple editions, and the microfilm user
can adjust the machine lens to focus only on the Article, to the exclusion of
surrounding material. Nonetheless, the user first encounters the Article in
context. In the Databases, by contrast, the Articles appear disconnected
from their original context. * * * In short, unlike microforms, the Databases
do not perceptibly reproduce articles as part of the collective work to which
the author contributed or as part of any “revision” thereof.
***
IV
The Publishers warn that a ruling for the Authors will have
“devastating” consequences. The Databases, the Publishers note, provide
easy access to complete newspaper texts going back decades. A ruling for
the Authors, the Publishers suggest, will punch gaping holes in the
electronic record of history. * * *
Notwithstanding the dire predictions from some quarters, it hardly
follows from today’s decision that an injunction against the inclusion of
these Articles in the Databases (much less all freelance articles in any
databases) must issue. The parties (Authors and Publishers) may enter
into an agreement allowing continued electronic reproduction of the
Authors’ works; they, and if necessary the courts and Congress, may draw
on numerous models for distributing copyrighted works and remunerating
authors for their distribution. In any event, speculation about future harms
is no basis for this Court to shrink authorial rights Congress established in
§ 201(c). Agreeing with the Court of Appeals that the Publishers are liable
for infringement, we leave remedial issues open for initial airing and
decision in the District Court.
***
We conclude that the Electronic Publishers infringed the Authors’
copyrights by reproducing and distributing the Articles in a manner not
authorized by the Authors and not privileged by § 201(c). We further
conclude that the Print Publishers infringed the Authors’ copyrights by
authorizing the Electronic Publishers to place the Articles in the Databases
and by aiding the Electronic Publishers in that endeavor. We therefore
affirm the judgment of the Court of Appeals.
It is so ordered.

36

CH. 1

MILNE V. STEPHEN SLESINGER, INC.
430 F.3d 1036 (9th Cir. 2005).

CALLAHAN, CIRCUIT JUDGE:
This copyright action arises from a termination notice sent by the
appellant to the appellee, seeking to recapture rights to various characters
created by her grandfather, Alan Alexander Milne, who authored the
“Winnie-the-Pooh” children’s books. Milne originally granted various
rights in those works to the appellee in 1930. Then, in 1983, due to a change
in copyright law in 1976, Milne’s heirs considered terminating the 1930
grant outright, but instead entered into a new agreement that revoked the
original grant and re-issued rights in the works to the appellee. The
appellant seeks to invalidate the 1983 agreement based on 1998 legislation.
The 1998 legislation only authorizes the termination of copyright
agreements executed before 1978. Because the 1983 revocation and regrant were valid, we affirm the district court’s decision.
***
In the 1920s, Alan Alexander Milne (“the author”) created in his classic
children’s books the characters of the boy Christopher Robin and his stuffed
bear, Winnie-the-Pooh, as well as their friends Eeyore, Owl, Piglet, Rabbit,
Kanga, Roo, and Tigger. Four of those works are involved in this action: (1)
When We Were Very Young; (2) Winnie-the-Pooh; (3) Now We Are Six; and
(4) House at Pooh Corner (collectively, “Pooh works”). U.S. copyrights in the
Pooh works were registered between 1924 and 1928, and renewed between
1952 and 1956.
[In 1930, the author granted exclusive merchandising and other rights
in the Pooh works, throughout the U.S. and Canada, to Stephen Slesinger,
Inc. (SSI) for the entire period of copyright and any renewal thereof, in
exchange for royalties.]
***
In 1956, the author passed away and was survived by his widow and
their son, Christopher Robin Milne. The author’s will bequeathed all
beneficial interests in the Pooh works to a trust for the benefit of his widow
during her lifetime (“Milne Trust”), and, after her death, to other
beneficiaries (“Pooh Properties Trust”), which included his son,
Christopher, and Christopher’s daughter, Clare. Clare is the author’s sole
grandchild and the plaintiff-appellant in this case.
In 1961, SSI granted exclusively to Walt Disney Productions
(“Disney”) the rights it had acquired in the 1930 grant, and Disney agreed
to pay certain royalties to SSI. Around the same time, Disney also entered
into a similar agreement with the author’s widow and the Milne Trust,
granting Disney exclusive motion-picture rights, foreign-merchandising

CH. 1

37

rights, and other exclusive rights in the Pooh works in exchange for
royalties
In 1971, the author’s widow passed away and, in 1972, her beneficial
interests under the Milne Trust were assigned to the Pooh Properties Trust
in accordance with the author’s will. This meant that the Pooh Properties
Trust would receive the author’s copyright interest in the Pooh works plus
the royalties payable under the 1961 Milne-Disney agreement.
***
In 1983, faced with the possibility that Christopher might seek to
terminate the rights Disney had received in 1961 from SSI, Disney
proposed that the parties renegotiate the rights to the Pooh works.
Christopher accepted Disney’s proposal and, using the bargaining power
conferred by his termination right, negotiated and signed on April 1, 1983
a more lucrative deal with SSI and Disney that would benefit the Pooh
Properties Trust and its beneficiaries.
The new agreement acknowledged the 1930 grant and the 1961
assignment of rights to Disney, and observed that although ownership of
the copyrights had been transferred to the Pooh Properties Trust, there
were “disputes[which] had existed[.]” Recognizing that the author’s heir,
Christopher, may well have a right of termination under the 1976
Copyright Act, the agreement declared that the parties were resolved to
“clarify certain aspects of their contractual arrangements and to settle
revised agreements.” Christopher therefore agreed not to seek termination
of the existing arrangements in return for executing the new agreement.
The agreement then provided for the revocation of the 1930 and 1961
agreements in favor of the new agreement, followed by the re-granting (on
the same page) of the rights in the Pooh works to SSI. In exchange for
royalties, SSI turned around and granted Disney the radio, television,
motion-picture, and merchandising rights to those works.
One result of the 1983 agreement was an increase of the amounts that
the Pooh Properties Trust received over the sums that had been payable
under the 1961 Milne-Disney agreement. The Pooh Properties Trust now
received double SSI’s share of the royalties, compared to about half of SSI’s
share before the 1983 agreement. Thus, the renegotiations between the
parties resulted, by some estimates, in a net gain of hundreds of millions
of dollars to the Pooh Properties Trust, which included Clare as a prime
beneficiary.
On November 4, 2002, motivated by the recent enactment of the CTEA
and its favorable treatment of authors’ heirs, Clare set out to recapture the
rights to the Pooh works. Toward that end, she served SSI with a notice of
termination, which referenced November 5, 2004 as the effective date for
termination of the 1930 grant of rights to SSI. The same day that she

38

CH. 1

served the termination notice, Clare entered into an agreement with
Disney, assigning the rights expected to revert to her in 2004.
[Clare sought a declaratory judgment that her termination was
effective to terminate SSI’s rights in the Pooh works. SSI argued that the
notice was invalid because the 1930 grant was revoked by the 1983
agreement. The District Court held the notice invalid, and Clare appealed.]
***
A.

Right of Termination Under the CTEA

Clare argues that she properly terminated SSI’s rights in the Pooh
works. We hold that the district court’s contrary conclusion is correct.
In a copyright case, as in most cases, the language of the statute
provides the starting point for our analysis. The CTEA provides in relevant
part:
In the case of any copyright other than a work made for hire,
subsisting in its renewal term on the effective date of the Sonny
Bono Copyright Term Extension Act [effective October 27, 1998]
for which the termination right provided in subsection (c) [of this
section] has expired by such date, where the author or owner of
the termination right has not previously exercised such
termination right, the exclusive or nonexclusive grant of a
transfer or license of the renewal copyright or any right under it,
executed before January 1, 1978, by any of the persons designated
in subsection (a)(1)(C) of this section, other than by will, is subject
to termination. . . .
17 U.S.C. § 304(d).
Although Clare’s termination notice purports to terminate the 1930
grant under the CTEA (section 304(d)), that statute provides a termination
right to only those transfers or licences “executed before January 1, 1978[.]”
Id. (emphasis added). The only pre-1978 grant of rights to SSI, and the only
grant to SSI specified in the termination notice, was the 1930 grant made
by the author to Slesinger. The 1930 grant, however, was terminated by
the beneficiaries of the Pooh Properties Trust upon the execution of the
1983 agreement. Accordingly, there was no pre-1978 grant of rights to SSI
in existence when Congress enacted the CTEA in 1998.
The sole grant of rights to SSI, either at the time of the CTEA’s
enactment or when Clare served her termination notice, was the grant of
rights embodied in the 1983 agreement. As the district court correctly
explained, however, this grant is not subject to termination under section
304(d) because it was not “executed before January 1, 1978,” as the statute
expressly requires. 17 U.S.C. § 304(d).

CH. 1
1.

39

“Agreement to the Contrary”

Faced with the reality that she is dealing with a post-1978 agreement,
Clare attempts to circumvent the 1983 agreement by claiming that another
provision of the CTEA, 17 U.S.C. § 304(c)(5), requires this court to regard
the 1983 agreement as an “agreement to the contrary” that does not
prevent her from terminating SSI’s rights to the Pooh works. Section
304(c)(5) states that a “[t]ermination . . . may be effected notwithstanding
any agreement to the contrary, including any agreement to make a will or
to make any future grant.” 17 U.S.C. § 304(c)(5).
The statute does not define the phrase “agreement to the contrary,”
although it does provide two examples of agreements that would constitute
an “agreement to the contrary”: “an agreement to make a will” and an
agreement “to make any future grant.” Id. The undisputed fact that the
1983 agreement does not fall into either category supports the district
court’s finding that the 1983 agreement is not “an agreement to the
contrary.”
***
Clare also relies on the Second Circuit’s decision in Marvel Characters,
Inc. v. Simon, 310 F.3d 280 (2d Cir.2002), to support her claim that the
1983 agreement is an “agreement to the contrary” under section 304(c)(5).
The contract at issue there was a settlement agreement between the
parties, which ended a series of lawsuits filed in the 1960s by the creator
of a copyrighted work. The creator argued that the settlement agreement
should not be given effect because it contractually changed the nature of
the copyrighted work, labeling it as a “work made for hire” many years
after its creation. The effects of this after-the-fact label were to make the
creator an “employee for hire” rather than the author of the copyrighted
work, and to foreclose his right to terminate the grant he had made in the
copyrighted work. Thus, unlike the issue presented in the case at bar, the
issue facing the Second Circuit was “whether § 304(c)(5)’s phrase ‘any
agreement to the contrary’ includes a settlement agreement stating that a
work was created for hire[.]” Id. at 290.
After examining the legislative history and considering the purpose of
section 304(c), the court concluded “that an agreement made subsequent to
a work’s creation which retroactively deems it a work for hire constitutes
an agreement to the contrary under § 304(c)(5) of the 1976 Act.” Id. at 292.
The Second Circuit held that an employer cannot contractually transform
a creator or author of a copyrighted work into an “employee for hire.” Id.
The court expressed concern that if it held otherwise, works not satisfying
the relationship-based “for hire” test could be coerced by post-facto
agreements that designate such works to be something they are not: “works
for hire.”

40

CH. 1

The facts, reasoning, and holding of Marvel have little relevance to this
case because, here, there is no after-the-fact attempt to recharacterize the
work or a prior agreement. Instead, the 1983 agreement involves
contractual provisions that operated prospectively through the revocation
of an existing grant and the making of a new one. As the district court
recognized, “[t]he parties in the 1983 [a]greement did not attempt to
change or modify the nature of their association with one another, or alter
the character of their long-standing author/grantee relationship.”
Reinforcing this reasoning are the undisputed facts that the 1930
grant was expressly revoked by the Pooh Properties Trust, which made a
new grant of rights to SSI that, inter alia, was more lucrative for the
author’s heirs. The fact that the 1983 agreement was meant to protect the
continuing viability of the author’s grant of rights to SSI is evident from
the agreement itself. In that vein, it is important to note that the parties
describe their 1983 agreement as a “new agreement for the future which
the parties believe would not be subject to any right of termination under
17 U.S.C. Secs. 203 or 304(c).”
Neither Marvel nor any other of Clare’s cited authority supplies a basis
for us to question the district court’s decision or to undo the 1983
agreement, which was freely and intelligently entered into by the parties.
The beneficiaries of the Pooh Properties Trust were able to obtain
considerably more money as a result of the bargaining power wielded by
the author’s son, Christopher, who was believed to own a statutory right to
terminate the 1930 grant under section 304(c) of the 1976 Copyright Act.
Although Christopher presumably could have served a termination notice,
he elected instead to use his leverage to obtain a better deal for the Pooh
Properties Trust. His daughter, Clare, was a beneficiary of this new
arrangement, and her current dissatisfaction provides no reason to
discredit the validity of the 1983 agreement and the rights conferred
thereby.
2.

Legislative History of Section 304(c)
***

After more than 50 years of advancement of the Pooh works in the
marketplace, their value was sufficiently demonstrated, and the 1976
Copyright Act provided Christopher a window for termination. The Pooh
Properties Trust recognized the perceived right to terminate as a valuable
bargaining chip, and used it to obtain an advantageous agreement that
doubled its royalty share relative to SSI’s share. Thus, the 1983 agreement
exemplifies the increased bargaining power that Congress intended to
bestow on authors and their heirs by creating the termination right under
the 1976 Copyright Act. As the 1983 agreement appears to be the type
expressly contemplated and endorsed by Congress, we do not consider it to
be a prohibited “agreement to the contrary” under section 304(c)(5).

CH. 1

41

***
B.

“Moment of Freedom”

Clare also advances the theory that the 1983 agreement did not serve
to revoke the 1930 grant to Slesinger because no “moment of freedom” was
built in between the agreement’s simultaneous revocation and re-granting
of rights in the Pooh works. She claims that section 304(c)(6)(D) requires
such a “moment of freedom” before a re-grant of rights may take place, and
that without such a moment of freedom, the 1983 agreement is nothing
more than an amendment to the original 1930 agreement, one that is
terminable under the CTEA.
Section 304(c)(6)(D) reads as follows:
A further grant, or agreement to make a further grant, of any
right covered by a terminated grant is valid only if it is made after
the effective date of the termination. As an exception, however, an
agreement for such a further grant may be made between the
author [or statutory heir(s)] . . . and the original grantee or such
grantee’s successor in title, after the notice of termination has
been served. . . .
17 U.S.C. § 304(c)(6)(D). This provision sets forth the proper timing
mechanism for grants and agreements to make grants where the statutory
termination under section 304(c)(5) has been exercised. But Clare does not
contend and cannot contend that in 1983 anyone exercised a statutory right
of termination with respect to the Pooh works.
Clare’s sole support for her position is found in a treatise authored by
the late-Professor Melville Nimmer. In his treatise, Professor Nimmer
expressed his assumption that this subsection—which on its face applies
only to the statutory termination of a prior copyright grant—is intended to
benefit authors and should therefore be extended to prohibit a
simultaneous contractual termination and re-grant of copyright rights. See
3 M. NIMMER, NIMMER ON COPYRIGHT § 11.07(6th ed.1978). * * *
We note that the district court reasonably posited that if Congress
intended to require a “moment of freedom,” it would have clearly said so.
After all, such an implied condition is difficult to harmonize with the
statute’s purpose of benefitting the original grantee or with other
provisions of Title 17. For example, three other statutory provisions require
advance notice of termination to be served at least two years before the
effective date of the termination. 17 U.S.C. §§ 203(a)(4)(A), 304(c)(4)(A),
304(d)(1).
During the two-year period between service of the notice and the
termination’s effective date, the original grant remains in effect so that the
holder of the termination right is no freer to walk away from the to-beterminated grant than he was before he served the notice. Thus, contrary

42

CH. 1

to the argument advanced by Clare and the Nimmer treatise, section
304(c)(6)(D) does not require a “moment of freedom” between termination
of a grant and the creation of a new grant in its place because it allows the
author or his heirs to enter into a binding agreement with the original
grantee after service of the termination notice but before its effective date.
***
III
For the foregoing reasons, the district court correctly declared Clare’s
termination notice ineffective. The CTEA’s termination provision does not
apply to post-1978 agreements such as the parties’ 1983 agreement, which
continues to control the parties’ rights and royalty shares in the Pooh
works. In addition, Clare is unable to show that the 1983 agreement
constitutes an “agreement to the contrary” under section 304(c)(5), and
thus the courts cannot disregard the 1983 agreement. Nor are we
persuaded by Clare’s “moment of freedom” argument. Quite simply, there
is no principle of logic, canon of statutory construction, or consideration of
fairness that supports Clare’s reading of the CTEA. Accordingly, the
decision of the district court is AFFIRMED.

CHAPTER 3
EXCLUSIVE RIGHTS

CH. 1

43

A. THE SECTION 106 RIGHTS
1. REPRODUCTION
HORGAN V. MACMILLAN, INC.
789 F.2d 157 (2d Cir. 1986).

FEINBERG, CHIEF JUDGE:
This appeal presents the novel question whether still photographs of
a ballet can infringe the copyright on the choreography for the ballet.
Barbara Horgan, executrix of the estate of the renowned choreographer
George Balanchine, appeals from a judgment of the United States District
Court for the Southern District of New York, Richard Owen, J., denying
her motion for a preliminary injunction. Appellant Horgan sought to enjoin
the publication of a book entitled “The Nutcracker: A Story & a Ballet,”
which portrays, in text and photographs, the New York City Ballet
Company’s production of The Nutcracker ballet, choreographed by
Balanchine. Defendant Macmillan is the publisher, and defendant Ellen
Switzer the author, of the book; defendants Steven Caras and Costas
provided the photographs. The district court held that the book did not
infringe Balanchine’s copyright because choreography is the flow of steps
in a ballet, which could not be reproduced from the still photographs in the
book. 621 F. Supp. 1169 (S.D.N.Y.1985). * * *
I.
[In 1954, Balanchine choreographed his now-classic version of the
ballet The Nutcracker, an adaptation of a folk tale set to music by
Tchaikovsky. Balanchine’s version of the ballet also incorporates elements
of a previous version by Russian choreographer Ivanov. The New York City
Ballet Company and other entities pay Balanchine’s estate a royalty or
other consideration in exchange for a license to publicly perform his
copyrighted choreography.]
In December 1981, Balanchine registered his claim to copyright in the
choreography of The Nutcracker with the United States Copyright Office.
As part of his claim, he deposited with the Copyright Office a videotape of
a New York City Ballet Company dress rehearsal of the ballet. * * *
In early April 1985, appellant Horgan learned for the first time that
Macmillan was planning to publish, under its Atheneum imprint, a book
about the New York City Ballet/Balanchine version of The Nutcracker.
***
The book is designed primarily for an audience of young people. The
title page displays three black and white photographs of George
Balanchine directing a rehearsal of the ballet. The book begins with a 15page text by defendant Switzer regarding the origins of The Nutcracker as

44

CH. 1

a story and as a ballet. The remainder of the book is introduced by a second
title page, as follows:
The Balanchine Ballet
As Performed by the Dancers of the New York City Ballet Company
The principal section of the book consists of 60 color photographs by
Caras and Costas of scenes from the New York City Ballet Company
production of The Nutcracker, following the sequence of the ballet’s story
and dances. The photographs are interspersed with Switzer’s narration of
the story, including those portions not portrayed visually. The final section
of the book contains interviews with ten of the dancers, with black and
white photographs of them out of costume. Defendants Switzer, Caras and
Costas obtained this material through their access to company rehearsals
and performances. Switzer is a free lance journalist who was apparently
given such access by the press liaison for the Company. Caras and Costas
are considered “official photographers” of the New York City Ballet.
According to appellant, this means that Balanchine authorized them to
take photographs of the Company, some of which might be purchased by
the Company for publicity and related purposes.
***
On October 11, 1985, Horgan brought suit on behalf of the estate,
seeking declaratory relief and both a preliminary and permanent
injunction against publication of the book. * * * [T]he judge denied
Horgan’s motion for a preliminary injunction. The judge stated, in an
opinion and order substantially similar to his earlier memorandum, that
the book did not infringe the copyright on Balanchine’s choreography
because
choreography has to do with the flow of the steps in a ballet. The
still photographs in the Nutcracker book, numerous though they
are, catch dancers in various attitudes at specific instants of time;
they do not, nor do they intend to, take or use the underlying
choreography. The staged performance could not be recreated
from them.
621 F. Supp. at 1170 [(adding in a footnote: “Just as a Beethoven symphony
could not be recreated from a document containing only every twenty-fifth
chord of the symphony.”)]. * * *
II.
The principal question on appeal, whether still photographs of a ballet
can infringe the copyright on the choreography for the ballet, is a matter of
first impression. Explicit federal copyright protection for choreography is a
fairly recent development, and the scope of that protection is an uncharted
area of the law. The 1976 Copyright Act (the Act), 17 U.S.C. § 101 et seq.,

CH. 1

45

was the first federal copyright statute expressly to include “choreographic
works” as a subject of protection. * * *
The Act does not define choreography, and the legislative reports on
the bill indicate only that “social dance steps and simple routines” are not
included. See, e.g., H.R. Rep. No. 1476, 94th Cong., 2d Sess. 53–54. The
Compendium of Copyright Office Practices, Compendium II (1984), which
is issued by that office, defines choreographic works as follows:
Choreography is the composition and arrangement of dance
movements and patterns, and is usually intended to be
accompanied by music. Dance is static and kinetic successions of
bodily movement in certain rhythmic and spatial relationships.
Choreographic works need not tell a story in order to be protected
by copyright.
Section 450.01. Under “Characteristics
Compendium II states that

of

choreographic

works,”

Choreography represents a related series of dance movements and
patterns organized into a coherent whole.
Section 450.03(a). * * * The Act grants the owner of a copyrighted original
work that is “fixed in any tangible medium of expression,” 17 U.S.C.
§ 102(a), the exclusive right “to reproduce the copyrighted work in copies
. . .,” “to prepare derivative works based upon the copyrighted work” and,
“in the case of . . . choreographic works, . . . to display the copyrighted work
publicly.” 17 U.S.C. § 106(1), (2) & (5). Appellant claims that the Switzer
book is a “copy” of Balanchine’s copyrighted work because it portrays the
essence of the Balanchine Nutcracker, or, in the alternative, that the book
is an infringing “derivative work.” * * *
In response, appellees assert that the photographs in the Switzer book
do not capture the flow of movement, which is the essence of dance, and
thus cannot possibly be substantially similar to the choreographic
component of the production of the ballet. Appellees rely on the various
definitions of choreography in Compendium II, quoted above, to support
their position that the central characteristic of choreography is
“movement.” According to appellees, since each photograph in the book
captures only a fraction of an instant, even the combined effect of 60 color
photographs does not reproduce the choreography itself, nor provide
sufficient details of movement to enable a choreographic work to be
reproduced from the photographs.
* * * [T]he district judge took a far too limited view of the extent to
which choreographic material may be conveyed in the medium of still
photography. A snapshot of a single moment in a dance sequence may
communicate a great deal. It may, for example, capture a gesture, the
composition of dancers’ bodies or the placement of dancers on the stage.
Such freezing of a choreographic moment is shown in a number of the

46

CH. 1

photographs in the Switzer book * * *. A photograph may also convey to the
viewer’s imagination the moments before and after the split second
recorded. On page 76–77 of the Switzer book, for example, there is a twopage photograph of the “Sugar Canes,” one of the troupes that perform in
The Nutcracker. In this photograph, the Sugar Canes are a foot or more off
the ground, holding large hoops above their heads. One member of the
ensemble is jumping through a hoop, which is held extended in front of the
dancer. The dancer’s legs are thrust forward, parallel to the stage and
several feet off the ground. The viewer understands instinctively, based
simply on the laws of gravity, that the Sugar Canes jumped up from the
floor only a moment earlier, and came down shortly after the photographed
moment. An ordinary observer, who had only recently seen a performance
of The Nutcracker, could probably perceive even more from this
photograph. The single instant thus communicates far more than a single
chord of a Beethoven symphony—the analogy suggested by the district
judge.
It may be that all of the photographs mentioned above are of
insufficient quantity or sequencing to constitute infringement; it may also
be that they do copy but also are protected as fair use. But that is not what
the district judge said in denying a preliminary injunction. The judge
erroneously held that still photographs cannot infringe choreography.
Since the judge applied the wrong test in evaluating appellant’s likelihood
of success on the preliminary injunction, we believe that a remand is
appropriate. * * *
We reverse and remand for further proceedings consistent with this
opinion.

WALT DISNEY PRODUCTIONS V. FILMATION ASSOCIATES
628 F.Supp. 871 (C.D. Cal. 1986).

STOTLER, UNITED STATES DISTRICT JUDGE:
Introduction
***
[Plaintiff Walt Disney Productions (“Disney”) alleges that Filmation
Associates (“Filmation”) copied cartoon figures from Disney’s animated
film “Pinocchio” and has begun to use them in producing an animated film
entitled “The New Adventures of Pinocchio.”]
* * * In the course of production, Filmation has produced a script,
“story board,” “story reel,”5 models, and designs, which are said to be
5
A “story reel” is a working model used to create the final animated product. To create a
story reel, Filmation first records a reading of the script. It then creates a “story board” comprising
sketches of the various scenes in the film set in the order in which they will be portrayed and

CH. 1

47

tangible and permanent reproductions of characters and scenes,
“constituting copies of material” copyrighted by Disney. Id., para. 61.
It is undisputed that Filmation has generated a substantial body of
work preliminary to a “finished film.” It is also undisputed, however, that
it has not completed its film “The New Adventures of Pinocchio.” Filmation
contends that Count Six is not actionable until it has completed work on
its motion picture. Alternatively, Filmation asserts it is entitled to
judgment because any articles so far produced are not substantially similar
to Disney’s copyrighted expressions.
1.

Actionable “Copies”

Filmation argues that the materials so far created are only transitory
steps en route to a fixed product, and that until its film is completed and
ready for distribution, there exists no article that could be said to infringe
any of Disney’s copyrights.
Filmation’s argument is refuted by the provisions of the 1976
Copyright Act, 17 U.S.C. §§ 101–914 (the “Act”). Under the Act, “ ‘copies’
are material objects . . . in which a work is fixed by any method now known
or later developed, and from which the work can be perceived, reproduced,
or otherwise communicated, either directly or with the aid of a machine or
device.” 17 U.S.C. § 101. The definition “includes the material object . . . in
which the work is first fixed.” Id. Further, a work is “ ‘fixed’ in a tangible
medium of expression when its embodiment in a copy . . . is sufficiently
permanent or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration.” Id. When the
work is “prepared over a period of time, the portion of it that has been fixed
at any particular time constitutes the work as of that time, and where the
work has been prepared in different versions, each version constitutes a
separate work.” Id. To constitute an actionable copy, therefore, an
expression need only be a material object permanently cast in some
intelligible form.
The articles created by Filmation in the production of its film,
including a script, story board, story reel, and promotional “trailer,” satisfy
this definition, and thus can constitute copies for purposes of the Act.
Because the right of reproduction affords a copyright owner protection
against an infringer even if he does not also infringe the § 106(3) right of
distribution, Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 474
(1984) (Blackmun, J., dissenting); House Report No. 94–1476, 94th Cong.,
2d Sess. (1976), p. 61, the fact that the articles may never be published or,
indeed, may be prepared only for the use of Filmation’s animators, does not
obviate the possibility of infringement. See Harper & Row v. Nation
“shoots” the sketches to synchronize with the recorded dialogue track and a rough music track. By
viewing the reel, the director can get a “feel” for the story line and pacing of the anticipated picture
and can begin allocating responsibility for its animation. * * *

48

CH. 1

Enterprises, 471 U.S. 539 (1985) (noting that the Act “eliminated
publication ‘as a dividing line between common law and statutory
protection,’ . . . extending statutory protection to all works from the time of
their creation”). As explained by Professor Nimmer, “subject to the
privilege of fair use, and subject to certain other exemptions, copyright
infringement occurs whenever an unauthorized copy . . . is made, even if it
is used solely for the private purposes of the reproducer.” 2 NIMMER,
§ 8.02(C), p. 8–26. It is thus irrelevant that Filmation has not concluded or
“realized” what it considers to be a final motion picture: the Act prohibits
the creation of copies, even if the creator considers those copies mere
interim steps toward some final goal.
It is similarly no defense to copying that some of Filmation’s
expressions may be embodied in a medium different from that of plaintiff’s.
Berkic v. Crichton, 761 F.2d 1289, 1292 (9th Cir.1985) (“in comparing . . . a
film with a written work, the proper question . . . is whether the ordinary,
reasonable audience would recognize the defendant’s work as a
‘dramatization’ or ‘picturization’ of the plaintiff’s work”). See also Eden
Toys, Inc. v. Florelee Undergarment Co., 697 F.2d 27 (2d Cir.1982) (copying
from gift wrapping paper to clothing actionable). But see Sid & Marty Krofft
Television v. McDonald’s Corp., 562 F.2d 1157, 1164 (9th Cir.1977)
(observing, in dicta, that a painting of a nude would not infringe a statue
of a nude). Thus, Filmation’s materials, including scripts and story
outlines, can infringe Disney’s copyright on “Pinocchio” even though they
are not rendered as a motion picture.
This had been the law in the Ninth Circuit even under the Copyright
Act of 1909. In Walker v. University Books, Inc., 602 F.2d 859 (9th
Cir.1979), plaintiff had copyrighted a set of fortune telling cards. She
attempted unsuccessfully to strike a marketing deal with defendants,
submitting to them a sample of her deck in the process. Afterward, she
assigned her copyright to a third party. Plaintiff subsequently discovered
that defendant planned to market a deck of cards similar to the ones she
had supplied them in the course of negotiations. She received from
defendants “certain blueprints,” which were produced before the date of the
assignment (id. at 863), but could adduce no evidence of a completed deck
of cards produced and sold during the period in which she owned the
copyright.
On appeal from summary judgment in defendant’s favor, the court of
appeals rejected defendant’s argument that the blueprints were not
themselves copies:
The district court viewed the making of the blueprints as merely
a preliminary step or process directed towards the manufacture of
[defendants’] finished product, their set of [cards]. . . . However,
the fact that an allegedly infringing copy of a protected work may
itself be only an inchoate representation of some final product to

CH. 1

49

be marketed commercially does not in itself negate the possibility
of infringement.
Walker, 602 F.2d at 864. According to the Walker court, the operative
question was not whether defendants considered the article a final product,
but “whether they unauthorizedly utilized [plaintiff’s] work in the
manufacture of their blueprints.” Id.
Finally, the absence of a completed motion picture does not preclude
meaningful comparison of Disney’s character depictions and film with
Filmation’s materials. Although Filmation contends that copyright
infringement of a cartoon character cannot be based on a mere sketch that
is not part of a story, there is no support for this proposition. It is true that
courts generally have considered “not only the visual resemblances but also
the totality of the characters’ attributes and traits,” 1 Nimmer § 2.12, p.
175, n. 16.2, and, thus, that the trier of fact would ordinarily evaluate a
character in the context of a story. But where the work sued upon is not a
“completed” story, but a series of depictions and other works, comparison
of the expressions may be made in the form in which they are presented.
Walt Disney Productions v. Air Pirates, 581 F.2d 751, 756 (9th Cir.1978)
(comparison of graphic images of cartoon characters sufficient to allow
action for copyright infringement).
***

CARTOON NETWORK LP V. CSC HOLDINGS, INC.
536 F.3d 121 (2d Cir. 2008).

JOHN M. WALKER, JR., CIRCUIT JUDGE.
Defendant-Appellant Cablevision Systems Corporation (“Cablevision”)
wants to market a new “Remote Storage” Digital Video Recorder system
(“RS-DVR”), using a technology akin to both traditional, set-top digital
video recorders, like TiVo (“DVRs”), and the video-on-demand (“VOD”)
services provided by many cable companies. Plaintiffs-Appellees produce
copyrighted movies and television programs that they provide to
Cablevision pursuant to numerous licensing agreements. They contend
that Cablevision, through the operation of its RS-DVR system as proposed,
would directly infringe their copyrights both by making unauthorized
reproductions, and by engaging in public performances, of their
copyrighted works. * * *
In the district court, plaintiffs successfully argued that Cablevision’s
proposed system would directly infringe their copyrights * * *. First, by
briefly storing data in the primary ingest buffer and other data buffers
integral to the function of the RS-DVR, Cablevision would make copies of
protected works and thereby directly infringe plaintiffs’ exclusive right of
reproduction under the Copyright Act. Second, by copying programs onto
the Arroyo Server hard disks (the “playback copies”), Cablevision would

50

CH. 1

again directly infringe the reproduction right. * * * Agreeing with
[plaintiffs,] the district court awarded summary declaratory judgment to
plaintiffs and enjoined Cablevision from operating the RS-DVR system
without obtaining licenses from the plaintiff copyright holders.
As to the buffer data, the district court rejected defendants’ arguments
1) that the data were not “fixed” and therefore were not “copies” as defined
in the Copyright Act, and 2) that any buffer copying was de minimis
because the buffers stored only small amounts of data for very short periods
of time. In rejecting the latter argument, the district court noted that the
“aggregate effect of the buffering” was to reproduce the entirety of
Cablevision’s programming, and such copying “can hardly be called de
minimis.”
***
I.

The Buffer Data

It is undisputed that Cablevision, not any customer or other entity,
takes the content from one stream of programming, after the split, and
stores it, one small piece at a time, in the BMR buffer and the primary
ingest buffer. As a result, the information is buffered before any customer
requests a recording, and would be buffered even if no such request were
made. The question is whether, by buffering the data that make up a given
work, Cablevision “reproduce[s]” that work “in copies,” 17 U.S.C. § 106(1),
and thereby infringes the copyright holder’s reproduction right.
“Copies,” as defined in the Copyright Act, “are material objects . . . in
which a work is fixed by any method . . . and from which the work can be
. . . reproduced.” Id. § 101. The Act also provides that a work is “ ‘fixed’ in
a tangible medium of expression when its embodiment . . . is sufficiently
permanent or stable to permit it to be . . . reproduced . . . for a period of
more than transitory duration.” Id. (emphasis added). We believe that this
language plainly imposes two distinct but related requirements: the work
must be embodied in a medium, i.e., placed in a medium such that it can
be perceived, reproduced, etc., from that medium (the “embodiment
requirement”), and it must remain thus embodied “for a period of more
than transitory duration” (the “duration requirement”). Unless both
requirements are met, the work is not “fixed” in the buffer, and, as a result,
the buffer data is not a “copy” of the original work whose data is buffered.
The district court mistakenly limited its analysis primarily to the
embodiment requirement. As a result of this error, once it determined that
the buffer data was “[c]learly . . . capable of being reproduced,” i.e., that the
work was embodied in the buffer, the district court concluded that the work
was therefore “fixed” in the buffer, and that a copy had thus been made. In
doing so, it relied on a line of cases beginning with MAI Systems Corp. v.
Peak Computer Inc., 991 F.2d 511 (9th Cir.1993). It also relied on the
United States Copyright Office’s 2001 report on the Digital Millennium

CH. 1

51

Copyright Act, which states, in essence, that an embodiment is fixed
“[u]nless a reproduction manifests itself so fleetingly that it cannot be
copied.” U.S. Copyright Office, DMCA Section 104 Report 111 (Aug.2001)
(“DMCA Report”) (emphasis added).
The district court’s reliance on cases like MAI Systems is misplaced. In
general, those cases conclude that an alleged copy is fixed without
addressing the duration requirement; it does not follow, however, that
those cases assume, much less establish, that such a requirement does not
exist. Indeed, the duration requirement, by itself, was not at issue in MAI
Systems and its progeny. As a result, they do not speak to the issues
squarely before us here: If a work is only “embodied” in a medium for a
period of transitory duration, can it be “fixed” in that medium, and thus a
copy? And what constitutes a period “of more than transitory duration”?
***
The MAI Systems court referenced the “transitory duration” language
but did not discuss or analyze it. The opinion notes that the defendants
“vigorously” argued that the program’s embodiment in the RAM was not a
copy, but it does not specify the arguments defendants made. This omission
suggests that the parties did not litigate the significance of the “transitory
duration” language, and the court therefore had no occasion to address it.
This is unsurprising, because it seems fair to assume that in these cases
the program was embodied in the RAM for at least several minutes.
Accordingly, we construe MAI Systems and its progeny as holding that
loading a program into a computer’s RAM can result in copying that
program. We do not read MAI Systems as holding that, as a matter of law,
loading a program into a form of RAM always results in copying. Such a
holding would read the “transitory duration” language out of the definition,
and we do not believe our sister circuit would dismiss this statutory
language without even discussing it. It appears the parties in MAI Systems
simply did not dispute that the duration requirement was satisfied; this
line of cases simply concludes that when a program is loaded into RAM, the
embodiment requirement is satisfied—an important holding in itself, and
one we see no reason to quibble with here.
At least one court, relying on MAI Systems in a highly similar factual
setting, has made this point explicitly. In Advanced Computer Services of
Michigan, Inc. v. MAI Systems Corp., the district court expressly noted that
the unlicensed user in that case ran copyrighted diagnostic software “for
minutes or longer,” but that the program’s embodiment in the computer’s
RAM might be too ephemeral to be fixed if the computer had been shut
down “within seconds or fractions of a second” after loading the copyrighted
program. 845 F.Supp. 356, 363 (E.D.Va. 1994). We have no quarrel with
this reasoning; it merely makes explicit the reasoning that is implicit in
the other MAI Systems cases. Accordingly, those cases provide no support

52

CH. 1

for the conclusion that the definition of “fixed” does not include a duration
requirement. * * *
Nor does the Copyright Office’s 2001 DMCA Report, also relied on by
the district court in this case, explicitly suggest that the definition of “fixed”
does not contain a duration requirement. However, as noted above, it does
suggest that an embodiment is fixed “[u]nless a reproduction manifests
itself so fleetingly that it cannot be copied, perceived or communicated.”
DMCA Report, supra, at 111. As we have stated, to determine whether a
work is “fixed” in a given medium, the statutory language directs us to ask
not only 1) whether a work is “embodied” in that medium, but also 2)
whether it is embodied in the medium “for a period of more than transitory
duration.” According to the Copyright Office, if the work is capable of being
copied from that medium for any amount of time, the answer to both
questions is “yes.” The problem with this interpretation is that it reads the
“transitory duration” language out of the statute.
***
In sum, no case law or other authority dissuades us from concluding
that the definition of “fixed” imposes both an embodiment requirement and
a duration requirement. Accord CoStar Group Inc. v. LoopNet, Inc., 373
F.3d 544, 551 (4th Cir.2004) (while temporary reproductions “may be made
in this transmission process, they would appear not to be ‘fixed’ in the sense
that they are ‘of more than transitory duration’ ”). We now turn to whether,
in this case, those requirements are met by the buffer data.
Cablevision does not seriously dispute that copyrighted works are
“embodied” in the buffer. Data in the BMR buffer can be reformatted and
transmitted to the other components of the RS-DVR system. Data in the
primary ingest buffer can be copied onto the Arroyo hard disks if a user has
requested a recording of that data. Thus, a work’s “embodiment” in either
buffer “is sufficiently permanent or stable to permit it to be perceived,
reproduced,” (as in the case of the ingest buffer) “or otherwise
communicated” (as in the BMR buffer). 17 U.S.C. § 101. The result might
be different if only a single second of a much longer work was placed in the
buffer in isolation. In such a situation, it might be reasonable to conclude
that only a minuscule portion of a work, rather than “a work” was embodied
in the buffer. Here, however, where every second of an entire work is
placed, one second at a time, in the buffer, we conclude that the work is
embodied in the buffer.
Does any such embodiment last “for a period of more than transitory
duration”? Id. No bit of data remains in any buffer for more than a fleeting
1.2 seconds. And unlike the data in cases like MAI Systems, which
remained embodied in the computer’s RAM memory until the user turned
the computer off, each bit of data here is rapidly and automatically
overwritten as soon as it is processed. While our inquiry is necessarily factspecific, and other factors not present here may alter the duration analysis

CH. 1

53

significantly, these facts strongly suggest that the works in this case are
embodied in the buffer for only a “transitory” period, thus failing the
duration requirement.
Against this evidence, plaintiffs argue only that the duration is not
transitory because the data persist “long enough for Cablevision to make
reproductions from them.” As we have explained above, however, this
reasoning impermissibly reads the duration language out of the statute,
and we reject it. Given that the data reside in no buffer for more than 1.2
seconds before being automatically overwritten, and in the absence of
compelling arguments to the contrary, we believe that the copyrighted
works here are not “embodied” in the buffers for a period of more than
transitory duration, and are therefore not “fixed” in the buffers.
Accordingly, the acts of buffering in the operation of the RS-DVR do not
create copies, as the Copyright Act defines that term. Our resolution of this
issue renders it unnecessary for us to determine whether any copies
produced by buffering data would be de minimis, and we express no opinion
on that question.
II. Direct Liability for Creating the Playback Copies
In most copyright disputes, the allegedly infringing act and the
identity of the infringer are never in doubt. These cases turn on whether
the conduct in question does, in fact, infringe the plaintiff’s copyright. In
this case, however, the core of the dispute is over the authorship of the
infringing conduct. After an RS-DVR subscriber selects a program to
record, and that program airs, a copy of the program—a copyrighted
work—resides on the hard disks of Cablevision’s Arroyo Server, its creation
unauthorized by the copyright holder. The question is who made this copy.
If it is Cablevision, plaintiffs’ theory of direct infringement succeeds; if it is
the customer, plaintiffs’ theory fails because Cablevision would then face,
at most, secondary liability, a theory of liability expressly disavowed by
plaintiffs.
Few cases examine the line between direct and contributory liability.
Both parties cite a line of cases beginning with Religious Technology Center
v. Netcom On-Line Communication Services, 907 F.Supp. 1361
(N.D.Cal.1995). In Netcom, a third-party customer of the defendant
Internet service provider (“ISP”) posted a copyrighted work that was
automatically reproduced by the defendant’s computer. The district court
refused to impose direct liability on the ISP, reasoning that “[a]lthough
copyright is a strict liability statute, there should still be some element of
volition or causation which is lacking where a defendant’s system is merely
used to create a copy by a third party.” Id. at 1370. Recently, the Fourth
Circuit endorsed the Netcom decision, noting that
to establish direct liability under . . . the Act, something more
must be shown than mere ownership of a machine used by others
to make illegal copies. There must be actual infringing conduct

54

CH. 1

with a nexus sufficiently close and causal to the illegal copying
that one could conclude that the machine owner himself
trespassed on the exclusive domain of the copyright owner.
CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th Cir.2004).
Here, the district court pigeon-holed the conclusions reached in
Netcom and its progeny as “premised on the unique attributes of the
Internet.” Cablevision I, 478 F.Supp.2d at 620. While the Netcom court was
plainly concerned with a theory of direct liability that would effectively
“hold the entire Internet liable” for the conduct of a single user, 907 F.Supp.
at 1372, its reasoning and conclusions, consistent with precedents of this
court and the Supreme Court, and with the text of the Copyright Act,
transcend the Internet. Like the Fourth Circuit, we reject the contention
that “the Netcom decision was driven by expedience and that its holding is
inconsistent with the established law of copyright,” CoStar, 373 F.3d at
549, and we find it “a particularly rational interpretation of § 106,” id. at
551, rather than a special-purpose rule applicable only to ISPs.
When there is a dispute as to the author of an allegedly infringing
instance of reproduction, Netcom and its progeny direct our attention to the
volitional conduct that causes the copy to be made. There are only two
instances of volitional conduct in this case: Cablevision’s conduct in
designing, housing, and maintaining a system that exists only to produce
a copy, and a customer’s conduct in ordering that system to produce a copy
of a specific program. In the case of a VCR, it seems clear—and we know of
no case holding otherwise—that the operator of the VCR, the person who
actually presses the button to make the recording, supplies the necessary
element of volition, not the person who manufactures, maintains, or, if
distinct from the operator, owns the machine. We do not believe that an
RS-DVR customer is sufficiently distinguishable from a VCR user to
impose liability as a direct infringer on a different party for copies that are
made automatically upon that customer’s command.
The district court emphasized the fact that copying is “instrumental”
rather than “incidental” to the function of the RS-DVR system. Cablevision
I, 478 F.Supp.2d at 620. While that may distinguish the RS-DVR from the
ISPs in Netcom and CoStar, it does not distinguish the RS-DVR from a
VCR, a photocopier, or even a typical copy shop. And the parties do not
seem to contest that a company that merely makes photocopiers available
to the public on its premises, without more, is not subject to liability for
direct infringement for reproductions made by customers using those
copiers. They only dispute whether Cablevision is similarly situated to such
a proprietor.
The district court found Cablevision analogous to a copy shop that
makes course packs for college professors. In the leading case involving
such a shop, for example, “[t]he professor [gave] the copyshop the materials
of which the coursepack [was] to be made up, and the copyshop [did] the

CH. 1

55

rest.” Princeton Univ. Press v. Mich. Document Servs., 99 F.3d 1381, 1384
(6th Cir.1996) (en banc). There did not appear to be any serious dispute in
that case that the shop itself was directly liable for reproducing copyrighted
works. The district court here found that Cablevision, like this copy shop,
would be “doing” the copying, albeit “at the customer’s behest.” Cablevision
I, 478 F.Supp.2d at 620.
But because volitional conduct is an important element of direct
liability, the district court’s analogy is flawed. In determining who actually
“makes” a copy, a significant difference exists between making a request to
a human employee, who then volitionally operates the copying system to
make the copy, and issuing a command directly to a system, which
automatically obeys commands and engages in no volitional conduct. In
cases like Princeton University Press, the defendants operated a copying
device and sold the product they made using that device. See 99 F.3d at
1383 (“The corporate defendant . . . is a commercial copyshop that
reproduced substantial segments of copyrighted works of scholarship,
bound the copies into ‘coursepacks,’ and sold the coursepacks to
students. . . .”). Here, by selling access to a system that automatically
produces copies on command, Cablevision more closely resembles a store
proprietor who charges customers to use a photocopier on his premises, and
it seems incorrect to say, without more, that such a proprietor “makes” any
copies when his machines are actually operated by his customers. See
Netcom, 907 F.Supp. at 1369. Some courts have held to the contrary, but
they do not explicitly explain why, and we find them unpersuasive. See,
e.g., Elektra Records Co. v. Gem Elec. Distribs., Inc., 360 F.Supp. 821, 823
(E.D.N.Y.1973) (concluding that, “regardless” of whether customers or
defendants’ employees operated the tape-copying machines at defendants’
stores, defendant had actively infringed copyrights).
***

2. PREPARATION OF DERIVATIVE WORKS
LEWIS GALOOB TOYS, INC. V. NINTENDO OF AMERICA, INC.
964 F.2d 965 (9th Cir. 1992).

FARRIS, CIRCUIT JUDGE:
Nintendo of America appeals the district court’s judgment following a
bench trial (1) declaring that Lewis Galoob Toys’ Game Genie does not
violate any Nintendo copyrights and dissolving a temporary injunction and
(2) denying Nintendo’s request for a permanent injunction enjoining
Galoob from marketing the Game Genie. * * * We affirm.

56

CH. 1

Facts
The Nintendo Entertainment System is a home video game system
marketed by Nintendo. To use the system, the player inserts a cartridge
containing a video game that Nintendo produces or licenses others to
produce. By pressing buttons and manipulating a control pad, the player
controls one of the game’s characters and progresses through the game.
The games are protected as audiovisual works under 17 U.S.C. § 102(a)(6).
The Game Genie is a device manufactured by Galoob that allows the
player to alter up to three features of a Nintendo game. For example, the
Game Genie can increase the number of lives of the player’s character,
increase the speed at which the character moves, and allow the character
to float above obstacles. The player controls the changes made by the Game
Genie by entering codes provided by the Game Genie Programming
Manual and Code Book. The player also can experiment with variations of
these codes.
The Game Genie functions by blocking the value for a single data byte
sent by the game cartridge to the central processing unit in the Nintendo
Entertainment System and replacing it with a new value. If that value
controls the character’s strength, for example, then the character can be
made invincible by increasing the value sufficiently. The Game Genie is
inserted between a game cartridge and the Nintendo Entertainment
System. The Game Genie does not alter the data that is stored in the game
cartridge. Its effects are temporary.
Discussion
1.

Derivative work

The Copyright Act of 1976 confers upon copyright holders the exclusive
right to prepare and authorize others to prepare derivative works based on
their copyrighted works. See 17 U.S.C. § 106(2). Nintendo argues that the
district court erred in concluding that the audiovisual displays created by
the Game Genie are not derivative works. * * *
A derivative work must incorporate a protected work in some concrete
or permanent “form.” * * *
Our analysis is not controlled by the Copyright Act’s definition of
“fixed.” The Act defines copies as “material objects, other than
phonorecords, in which a work is fixed by any method.” 17 U.S.C. § 101
(emphasis added). The Act’s definition of “derivative work,” in contrast,
lacks any such reference to fixation. See id. Further, we have held in a
copyright infringement action that “it makes no difference that the
derivation may not satisfy certain requirements for statutory copyright
registration itself.” Lone Ranger Television v. Program Radio Corp., 740
F.2d 718, 722 (9th Cir.1984). See also Paul Goldstein, Derivative Rights
and Derivative Works in Copyright, 30 J. COPYRIGHT SOC’Y U.S.A. 209, 231

CH. 1

57

n.75 (1983) (“the Act does not require that the derivative work be
protectable for its preparation to infringe”). Cf. Kalem Co. v. Harper Bros.,
222 U.S. 55, 61 (1911) (finding the movie “Ben Hur” infringed copyright in
the book Ben Hur even though Copyright Act did not yet include movies as
protectable works). A derivative work must be fixed to be protected under
the Act, see 17 U.S.C. § 102(a), but not to infringe.
The argument that a derivative work must be fixed because “[a]
‘derivative work’ is a work,” 17 U.S.C. § 101, and “[a] work is ‘created’ when
it is fixed in a copy or phonorecord for the first time,” id., relies on a
misapplication of the Copyright Act’s definition of “created”:
A work is ‘created’ when it is fixed in a copy or phonorecord for the
first time; where a work is prepared over a period of time, the
portion of it that has been fixed at any particular time constitutes
the work as of that time, and where the work has been prepared
in different versions, each version constitutes a separate work.
Id. The definition clarifies the time at which a work is created. If the
provision were a definition of “work,” it would not use that term in such a
casual manner. The Act does not contain a definition of “work.” Rather, it
contains specific definitions: “audiovisual works,” “literary works,” and
“pictorial, graphic and sculptural works,” for example. The definition of
“derivative work” does not require fixation.
The district court’s finding that no independent work is created, see
Galoob, 780 F. Supp. at 1291, is supported by the record. The Game Genie
merely enhances the audiovisual displays (or underlying data bytes) that
originate in Nintendo game cartridges. The altered displays do not
incorporate a portion of a copyrighted work in some concrete or permanent
form. Nintendo argues that the Game Genie’s displays are as fixed in the
hardware and software used to create them as Nintendo’s original displays.
Nintendo’s argument ignores the fact that the Game Genie cannot produce
an audiovisual display; the underlying display must be produced by a
Nintendo Entertainment System and game cartridge. Even if we were to
rely on the Copyright Act’s definition of “fixed,” we would similarly
conclude that the resulting display is not “embodied,” see 17 U.S.C. § 101,
in the Game Genie. It cannot be a derivative work.
Mirage Editions is illustrative. Albuquerque A.R.T. transferred
artworks from a commemorative book to individual ceramic tiles. See
Mirage Editions, 856 F.2d at 1342. We held that “by borrowing and
mounting the preexisting, copyrighted individual art images without the
consent of the copyright proprietors . . . [Albuquerque A.R.T.] has prepared
a derivative work and infringed the subject copyrights.” Id. at 1343. The
ceramic tiles physically incorporated the copyrighted works in a form that
could be sold. Perhaps more importantly, sales of the tiles supplanted
purchasers’ demand for the underlying works. Our holding in Mirage
Editions would have been much different if Albuquerque A.R.T. had

58

CH. 1

distributed lenses that merely enabled users to view several artworks
simultaneously.
Nintendo asserted at oral argument that the existence of a $150
million market for the Game Genie indicates that its audiovisual display
must be fixed. We understand Nintendo’s argument; consumers clearly
would not purchase the Game Genie if its display was not “sufficiently
permanent or stable to permit it to be perceived . . . for a period of more
than transitory duration.” 17 U.S.C. § 101. But, Nintendo’s reliance on the
Copyright Act’s definition of “fixed” is misplaced. Nintendo’s argument also
proves too much; the existence of a market does not, and cannot, determine
conclusively whether a work is an infringing derivative work. For example,
although there is a market for kaleidoscopes, it does not necessarily follow
that kaleidoscopes create unlawful derivative works when pointed at
protected artwork. The same can be said of countless other products that
enhance, but do not replace, copyrighted works.
Nintendo also argues that our analysis should focus exclusively on the
audiovisual displays created by the Game Genie, i.e., that we should
compare the altered displays to Nintendo’s original displays. Nintendo
emphasizes that “ ‘audiovisual works’ are works that consist of a series of
related images . . . regardless of the nature of the material objects . . . in
which the works are embodied.” 17 U.S.C. § 101 (emphasis added). The
Copyright Act’s definition of “audiovisual works” is inapposite; the only
question before us is whether the audiovisual displays created by the Game
Genie are “derivative works.” The Act does not similarly provide that a
work can be a derivative work regardless of the nature of the material
objects in which the work is embodied. A derivative work must incorporate
a protected work in some concrete or permanent form. We cannot ignore
the actual source of the Game Genie’s display.
Nintendo relies heavily on Midway Mfg. Co. v. Artic Int’l, Inc., 704 F.2d
1009 (7th Cir. 1983). Midway can be distinguished. The defendant in
Midway, Artic International, marketed a computer chip that could be
inserted in Galaxian video games to speed up the rate of play. The Seventh
Circuit held that the speeded-up version of Galaxian was a derivative work.
Id. at 1013–14. Artic’s chip substantially copied and replaced the chip that
was originally distributed by Midway. Purchasers of Artic’s chip also
benefited economically by offering the altered game for use by the general
public. The Game Genie does not physically incorporate a portion of a
copyrighted work, nor does it supplant demand for a component of that
work. The court in Midway acknowledged that the Copyright Act’s
definition of “derivative work” “must be stretched to accommodate speededup video games.” Id. at 1014. Stretching that definition further would chill
innovation and fail to protect “society’s competing interest in the free flow
of ideas, information, and commerce.” Sony Corp. of America v. Universal
Studios, Inc., 464 U.S. 417, 429 (1984).

CH. 1

59

In holding that the audiovisual displays created by the Game Genie
are not derivative works, we recognize that technology often advances by
improvement rather than replacement. * * * Some time ago, for example,
computer companies began marketing spell-checkers that operate within
existing word processors by signalling the writer when a word is
misspelled. These applications, as well as countless others, could not be
produced and marketed if courts were to conclude that the word processor
and spell-checker combination is a derivative work based on the word
processor alone. The Game Genie is useless by itself. It can only enhance,
and cannot duplicate or recast, a Nintendo game’s output. It does not
contain or produce a Nintendo game’s output in some concrete or
permanent form, nor does it supplant demand for Nintendo game
cartridges. Such innovations rarely will constitute infringing derivative
works under the Copyright Act. * * *
Galoob has not violated the Copyright Act. Nintendo therefore is not
entitled to a temporary or permanent injunction.
AFFIRMED.

LEE V. A.R.T. CO.
125 F.3d 580 (7th Cir. 1997).

EASTERBROOK, CIRCUIT JUDGE.
Annie Lee creates works of art, which she sells through her firm Annie
Lee & Friends. Deck the Walls, a chain of outlets for modestly priced art,
is among the buyers of her works, which have been registered with the
Register of Copyrights. One Deck the Walls store sold some of Lee’s
notecards and small lithographs to A.R.T. Company, which mounted the
works on ceramic tiles (covering the art with transparent epoxy resin in
the process) and resold the tiles. Lee contends that these tiles are
derivative works, which under 17 U.S.C. § 106(2) may not be prepared
without the permission of the copyright proprietor. She seeks both
monetary and injunctive relief. Her position has the support of two cases
holding that A.R.T.’s business violates the copyright laws. Munoz v.
Albuquerque A.R.T. Co., 38 F.3d 1218 (9th Cir.1994), affirming without
published opinion, 829 F. Supp. 309 (D.Alaska 1993); Mirage Editions, Inc.
v. Albuquerque A.R.T. Co., 856 F.2d 1341 (9th Cir.1988). Mirage Editions,
the only full appellate discussion, dealt with pages cut from books and
mounted on tiles; the court of appeals’ brief order in Munoz concludes that
the reasoning of Mirage Editions is equally applicable to works of art that
were sold loose. Our district court disagreed with these decisions and
entered summary judgment for the defendant. 925 F.Supp. 576
(N.D.Ill.1996).
Now one might suppose that this is an open and shut case under the
doctrine of first sale, codified at 17 U.S.C. § 109(a). A.R.T. bought the work

60

CH. 1

legitimately, mounted it on a tile, and resold what it had purchased.
Because the artist could capture the value of her art’s contribution to the
finished product as part of the price for the original transaction, the
economic rationale for protecting an adaptation as “derivative” is absent.
An alteration that includes (or consumes) a complete copy of the original
lacks economic significance. One work changes hands multiple times,
exactly what sec. 109(a) permits, so it may lack legal significance too. But
sec. 106(2) creates a separate exclusive right, to “prepare derivative works”,
and Lee believes that affixing the art to the tile is “preparation,” so that
A.R.T. would have violated sec. 106(2) even if it had dumped the finished
tiles into the Marianas Trench. For the sake of argument we assume that
this is so and ask whether card-on-a-tile is a “derivative work” in the first
place.
“Derivative work” is a defined term:
A “derivative work” is a work based upon one or more preexisting
works, such as a translation, musical arrangement,
dramatization, fictionalization, motion picture version, sound
recording, art reproduction, abridgment, condensation, or any
other form in which a work may be recast, transformed, or
adapted. A work consisting of editorial revisions, annotations,
elaborations, or other modifications which, as a whole, represent
an original work of authorship, is a “derivative work”.
17 U.S.C. § 101. The district court concluded that A.R.T.’s mounting of
Lee’s works on tile is not an “original work of authorship” because it is no
different in form or function from displaying a painting in a frame or
placing a medallion in a velvet case. No one believes that a museum
violates sec. 106(2) every time it changes the frame of a painting that is
still under copyright, although the choice of frame or glazing affects the
impression the art conveys, and many artists specify frames (or pedestals
for sculptures) in detail. Munoz and Mirage Editions acknowledge that
framing and other traditional means of mounting and displaying art do not
infringe authors’ exclusive right to make derivative works. Nonetheless,
the Ninth Circuit held, what A.R.T. does creates a derivative work because
the epoxy resin bonds the art to the tile. Our district judge thought this a
distinction without a difference, and we agree. If changing the way in which
a work of art will be displayed creates a derivative work, and if Lee is right
about what “prepared” means, then the derivative work is “prepared” when
the art is mounted; what happens later is not relevant, because the
violation of the sec. 106(2) right has already occurred. If the framing
process does not create a derivative work, then mounting art on a tile,
which serves as a flush frame, does not create a derivative work. What is
more, the Ninth Circuit erred in assuming that normal means of mounting
and displaying art are easily reversible. A painting is placed in a wooden
“stretcher” as part of the framing process; this leads to some punctures

CH. 1

61

(commonly tacks or staples), may entail trimming the edges of the canvas,
and may affect the surface of the painting as well. Works by Jackson
Pollock are notoriously hard to mount without damage, given the thickness
of their paint. As a prelude to framing, photographs, prints, and posters
may be mounted on stiff boards using wax sheets, but sometimes glue or
another more durable substance is employed to create the bond.
Lee wages a vigorous attack on the district court’s conclusion that
A.R.T.’s mounting process cannot create a derivative work because the
change to the work “as a whole” is not sufficiently original to support a
copyright. Cases such as Gracen v. The Bradford Exchange, Inc., 698 F.2d
300 (7th Cir.1983), show that neither A.R.T. nor Lee herself could have
obtained a copyright in the card-on-a-tile, thereby not only extending the
period of protection for the images but also eliminating competition in one
medium of display. After the Ninth Circuit held that its mounting process
created derivative works, A.R.T. tried to obtain a copyright in one of its
products; the Register of Copyrights sensibly informed A.R.T. that the
card-on-a-tile could not be copyrighted independently of the note card itself.
But Lee says that this is irrelevant—that a change in a work’s appearance
may infringe the exclusive right under sec. 106(2) even if the alteration is
too trivial to support an independent copyright. Pointing to the word
“original” in the second sentence of the statutory definition, the district
judge held that “originality” is essential to a derivative work. This
understanding has the support of both cases and respected commentators.
E.g., L. Batlin & Son, Inc. v. Snyder, 536 F.2d 486 (2d Cir.1976); MELVILLE
B. NIMMER & DAVID NIMMER, 1 NIMMER ON COPYRIGHTS sec. 3.03 (1997).
Pointing to the fact that the first sentence in the statutory definition omits
any reference to originality, Lee insists that a work may be derivative
despite the mechanical nature of the transformation. This view, too, has
the support of both cases and respected commentators. E.g., Lone Ranger
Television, Inc. v. Program Radio Corp., 740 F.2d 718, 722 (9th Cir.1984);
PAUL GOLDSTEIN, COPYRIGHT: PRINCIPLES, LAW AND PRACTICE sec. 5.3.1
(2d ed.1996) (suggesting that a transformation is covered by sec. 106(2)
whenever it creates a “new work for a different market”).
Fortunately, it is not necessary for us to choose sides. Assume for the
moment that the first sentence recognizes a set of non-original derivative
works. To prevail, then, Lee must show that A.R.T. altered her works in
one of the ways mentioned in the first sentence. The tile is not an “art
reproduction”; A.R.T. purchased and mounted Lee’s original works. That
leaves the residual clause: “any other form in which a work may be recast,
transformed, or adapted.” None of these words fits what A.R.T. did. Lee’s
works were not “recast” or “adapted”. “Transformed” comes closer and gives
the Ninth Circuit some purchase for its view that the permanence of the
bond between art and base matters. Yet the copyrighted note cards and
lithographs were not “transformed” in the slightest. The art was bonded to
a slab of ceramic, but it was not changed in the process. It still depicts

62

CH. 1

exactly what it depicted when it left Lee’s studio. If mounting works a
“transformation,” then changing a painting’s frame or a photograph’s mat
equally produces a derivative work. Indeed, if Lee is right about the
meaning of the definition’s first sentence, then any alteration of a work,
however slight, requires the author’s permission. We asked at oral
argument what would happen if a purchaser jotted a note on one of the note
cards, or used it as a coaster for a drink, or cut it in half, or if a collector
applied his seal (as is common in Japan); Lee’s counsel replied that such
changes prepare derivative works, but that as a practical matter artists
would not file suit. A definition of derivative work that makes criminals
out of art collectors and tourists is jarring despite Lee’s gracious offer not
to commence civil litigation.
If Lee (and the Ninth Circuit) are right about what counts as a
derivative work, then the United States has established through the back
door an extraordinarily broad version of authors’ moral rights, under which
artists may block any modification of their works of which they disapprove.
No European version of droit moral goes this far. Until recently it was
accepted wisdom that the United States did not enforce any claim of moral
rights; even bowdlerization of a work was permitted unless the
modifications produced a new work so different that it infringed the
exclusive right under sec. 106(2). Compare WGN Continental Broadcasting
Co. v. United Video, Inc., 693 F.2d 622 (7th Cir.1982), with Gilliam v.
American Broadcasting Companies, Inc., 538 F.2d 14, 24 (2d Cir.1976). The
Visual Artists Rights Act of 1990, Pub.L. 101–650, 104 Stat. 5089, 5123–
33, moves federal law in the direction of moral rights, but the cornerstone
of the new statute, 17 U.S.C. § 106A, does not assist Lee. Section
106A(a)(3)(A) gives an artist the right to “prevent any intentional
distortion, mutilation, or other modification of that work which would be
prejudicial to his or her honor or reputation”. At oral argument Lee’s
lawyer disclaimed any contention that the sale of her works on tile has
damaged her honor or reputation. What is more, sec. 106A applies only to
a “work of visual art”, a new term defined in sec. 101 to mean either a
unique work or part of a limited edition (200 copies or fewer) that has been
“signed and consecutively numbered by the author”. Lee’s note cards and
lithographs are not works of visual art under this definition, so she could
not invoke sec. 106A even if A.R.T.’s use of her works to produce kitsch had
damaged her reputation. It would not be sound to use sec. 106(2) to provide
artists with exclusive rights deliberately omitted from the Visual Artists
Rights Act. We therefore decline to follow Munoz and Mirage Editions.
Affirmed.

CH. 1

63

3. PUBLIC DISTRIBUTION
WALT DISNEY CO. V. VIDEO 47, INC.
972 F.Supp. 595 (S.D. Fla. 1996).

UNGARO-BENAGES, UNITED STATES DISTRICT JUDGE.
***
[Upon learning that defendants’ video stores rented to the public
unauthorized copies of plaintiffs’ copyrighted motion picture
videocassettes, plaintiffs filed an action for infringement. Pursuant to a
court order, the videotapes were seized and, upon examination, were
determined to be counterfeit. The district court then entered a Consent
Decree and Final Judgment pursuant to a settlement agreement. Upon
learning that the defendants were continuing to rent counterfeit tapes, the
plaintiffs filed this action for contempt.]
Findings of Fact
***
3. Plaintiffs are the lawful owners of the exclusive right under the
United States Copyright Act to reproduce, to distribute and to authorize
the reproduction and distribution of thirteen (13) motion picture titles at
issue in this action. * * *
4. Plaintiffs are members of the Motion Picture Association of
America (MPAA), a trade association whose film security office investigates
unlawful duplication and distribution of videocassette tapes whose
copyrights are owned by members of the MPAA.
5. Based upon a tip to the MPAA, an investigation of Defendants was
conducted from October 10, 1995 to October 11, 1995 as testified to by
Robert W. Butler (“Butler”), presently a field representative for the Film
Security office of the MPAA and formerly a Special Agent in Charge of the
Tampa Office for the Federal Bureau of Investigation (“FBI”).
6. The investigation of VIDEO 47 was conducted by Patrick R.
Cooney (“Cooney”), a former FBI agent who currently works for the antipiracy office of the MPAA. Cooney employed a “stringer” from the
neighborhood to rent tapes from VIDEO 47. Initially, six (6) tapes were
rented and five (5) were counterfeit * * *.
14. Defendants did not produce any documentation that showed any
authorization by Plaintiffs or any of their distributors to distribute copies
of the Plaintiffs’ copyrighted motion pictures.
15. Defendant Eduardo Celorio testified and stated that he * * *
purchased tapes from individuals who sold videocassettes from their cars
and that he contacted his distributors by beeper.

64

CH. 1

16. Defendant Eduardo Celorio testified that the 16 videocassettes at
issue were not available for rental to the public, whereas Mr. Cooney
testified that these videocassettes were seized from the portion of the store
where the videocassettes were available for rental. The Court rejects the
testimony of Defendant Eduardo Celorio and accepts the testimony of Mr.
Cooney on this factual issue.
***
Conclusions of Law
* * * [T]his Court entered a Consent Decree and Final Judgment in
this case on or about August 4, 1994, pursuant to which the Defendants
were permanently enjoined from infringing or participating in the
infringement by others of Plaintiffs’ rights in any motion pictures as to
which Plaintiffs own the copyrights or other exclusive interests. * * *
Plaintiffs now move to hold the Defendants in contempt for violation of
such Final Judgment. Therefore, the Court must determine whether
Defendants have violated Plaintiffs’ rights under the copyright laws, and
whether Defendants are liable for contempt for violation of this Court’s
prior Orders.
1.

Copyright

* * * Plaintiffs’ copyright registrations give Plaintiffs the exclusive
right to reproduce, distribute and sell videocassette tapes of the movie
titles at issue in this litigation. 17 U.S.C. § 106. The Court finds that
Defendants infringed Plaintiffs’ rights in the titles at issue in this litigation
by renting counterfeit videocassette tapes without Plaintiffs’ authorization
to do so. 17 U.S.C. § 501. Plaintiffs need not demonstrate knowledge or
intent on the part of the Defendants. * * *
As the Court finds that Defendants have violated Plaintiffs’ rights in
the motion pictures at issue here, it follows that Defendants are in direct
violation of this Court’s Consent Decree and Final Judgment dated August
4, 1994, which permanently enjoined Defendants from:
(a) manufacturing, duplicating or performing publicly, without
authorization, any motion picture as to which any Plaintiff holds
legal or beneficial ownership of the copyright or other exclusive
interest; (b) in any manner infringing or contributing to or
participating in the infringement by others of any copyright or
other exclusive interest owned by any Plaintiff in, for or to any
motion picture; or (c) acting in concert or confederacy with, or
aiding or abetting others to infringe in any way any copyright or
other exclusive interest owned by any Plaintiff.
***
[The court therefore held the defendants in contempt.]

CH. 1

65

RELIGIOUS TECHNOLOGY CENTER V. NETCOM
ON-LINE COMMUNICATION SERVICES, INC.
907 F.Supp. 1361 (N.D. Cal. 1995).

WHYTE, UNITED STATES DISTRICT JUDGE.
***
Plaintiffs Religious Technology Center (“RTC”) and Bridge
Publications, Inc. (“BPI”) hold copyrights in the unpublished and published
works of L. Ron Hubbard, the late founder of the Church of Scientology
(“the Church”). Defendant Dennis Erlich (“Erlich”) is a former minister of
Scientology turned vocal critic of the Church, whose pulpit is now the
Usenet newsgroup alt.religion.scientology (“a.r.s.”), an on-line forum for
discussion and criticism of Scientology. Plaintiffs maintain that Erlich
infringed their copyrights when he posted portions of their works on a.r.s.
Erlich gained his access to the Internet through defendant Thomas
Klemesrud’s (“Klemesrud’s”) BBS [bulletin board service] “support.com.”
Klemesrud is the operator of the BBS, which is run out of his home and has
approximately 500 paying users. Klemesrud’s BBS is not directly linked to
the Internet, but gains its connection through the facilities of defendant
Netcom On-Line Communications, Inc. (“Netcom”), one of the largest
providers of Internet access in the United States.
***
Playboy Enterprises, Inc. v. Frena involved a suit against the operator
of a small BBS whose system contained files of erotic pictures. 839 F. Supp.
1552, 1554 (M.D.Fla.1993). A subscriber of the defendant’s BBS had
uploaded files containing digitized pictures copied from the plaintiff’s
copyrighted magazine, which files remained on the BBS for other
subscribers to download. Id. The court did not conclude, as plaintiffs
suggest in this case, that the BBS is itself liable for the unauthorized
reproduction of plaintiffs’ work; instead, the court concluded that the BBS
operator was liable for violating the plaintiff’s right to publicly distribute
and display copies of its work. Id. at 1556–57.
***
Plaintiffs allege that Netcom is directly liable for making copies of
their works. They also allege that Netcom violated their exclusive rights to
publicly display copies of their works. There are no allegations that Netcom
violated plaintiffs’ exclusive right to publicly distribute their works.
However, in their discussion of direct infringement, plaintiffs insist that
Netcom is liable for “maintaining copies of [Erlich’s] messages on its server
for eleven days for access by its subscribers and ‘USENET neighbors’ ” and
they compare this case to the Playboy case, which discussed the right of
public distribution. Plaintiffs also argued this theory of infringement at
oral argument. Because this could be an attempt to argue that Netcom has

66

CH. 1

infringed plaintiffs’ rights of public distribution and display, the court will
address these arguments.
Playboy concluded that the defendant infringed the plaintiff’s
exclusive rights to publicly distribute and display copies of its works. 839
F. Supp. at 1556–57. The court is not entirely convinced that the mere
possession of a digital copy on a BBS that is accessible to some members of
the public constitutes direct infringement by the BBS operator. Such a
holding suffers from the same problem of causation as the reproduction
argument. Only the subscriber should be liable for causing the distribution
of plaintiffs’ work, as the contributing actions of the BBS provider are
automatic and indiscriminate. Erlich could have posted his messages
through countless access providers and the outcome would be the same:
anyone with access to Usenet newsgroups would be able to read his
messages. There is no logical reason to draw a line around Netcom and
Klemesrud and say that they are uniquely responsible for distributing
Erlich’s messages. Netcom is not even the first link in the chain of
distribution—Erlich had no direct relationship with Netcom but dealt
solely with Klemesrud’s BBS, which used Netcom to gain its Internet
access. Every Usenet server has a role in the distribution, so plaintiffs’
argument would create unreasonable liability. Where the BBS merely
stores and passes along all messages sent by its subscribers and others, the
BBS should not be seen as causing these works to be publicly distributed
or displayed.
Even accepting the Playboy court’s holding, the case is factually
distinguishable. Unlike the BBS in that case, Netcom does not maintain an
archive of files for its users. Thus, it cannot be said to be “supplying a
product.” In contrast to some of its larger competitors, Netcom does not
create or control the content of the information available to its subscribers;
it merely provides access to the Internet, whose content is controlled by no
single entity. Although the Internet consists of many different computers
networked together, some of which may contain infringing files, it does not
make sense to hold the operator of each computer liable as an infringer
merely because his or her computer is linked to a computer with an
infringing file. It would be especially inappropriate to hold liable a service
that acts more like a conduit, in other words, one that does not itself keep
an archive of files for more than a short duration. Finding such a service
liable would involve an unreasonably broad construction of public
distribution and display rights. No purpose would be served by holding
liable those who have no ability to control the information to which their
subscribers have access, even though they might be in some sense helping
to achieve the Internet’s automatic “public distribution” and the users’
“public” display of files.
***

CH. 1

67

4. PUBLIC PERFORMANCE AND PUBLIC DISPLAY
ON COMMAND VIDEO CORPORATION V.
COLUMBIA PICTURES INDUSTRIES
777 F.Supp. 787 (N.D. Cal. 1991).

WEIGEL, DISTRICT JUDGE:
Plaintiff seeks a declaratory judgment that its hotel video-movie
viewing system does not infringe defendants’ copyrights in the movies
shown through the system. * * * Plaintiff, the designer and builder of an
innovative video viewing system currently installed in a number of hotels,
insists that a hotel occupant’s viewing of one or more of defendants’ movies
through its system does not constitute a “public performance” under the
1976 Copyright Act, 17 U.S.C. § 101 et seq. Defendants, seven major
United States movie companies, contend that such viewings do constitute
public performances and that plaintiff’s system therefore violates
defendants’ exclusive right of public performance under § 106(4) of the Act.
I.

Facts

The material facts of this case are not in dispute. On Command has
developed a system for the electronic delivery of movie video tapes. The
system consists of a computer program, a sophisticated electronic switch,
and a bank of video cassette players (“VCPs”), all of which are centrally
located in a hotel equipment room. The VCPs are connected to the hotel’s
guest rooms by wiring. The computer program directs the electronic
switches so that a particular VCP will be dedicated to the guest room where
a particular movie is requested. Each VCP contains a video tape. When a
guest requests a particular movie, the computer identifies the VCP
containing that movie, switches the VCP to that particular room, and starts
the movie video.
A hotel guest operates the system from his or her room by remote
control. After the television is turned on, the screen lists a menu of
available movies. The guest selects a movie by entering the appropriate
code on the remote control. Once a particular video is selected, that video
selection disappears from the menu of available videos displayed on all
other television sets in the hotel. The video is seen only in the room where
it was selected by the guest. It cannot be seen in any other guest room or
in any other location in the hotel. The viewer cannot pause, rewind, or fastforward the video. When the movie ends, it is automatically rewound and
then immediately available for viewing by another hotel guest.
The only components of the system installed in the guest rooms are
the hand-held remote control and a microprocessor in the television set.
When a guest checks in to the hotel, the hotel clerk uses a front-desk
terminal connected to the On Command computer program to activate
movie transmission to the appropriate room. At the guest’s request, the

68

CH. 1

clerk can prevent the transmission of adult movies to a room or deactivate
service to a room altogether. The apparent advantages On Command’s
system enjoys over existing closed-circuit hotel video systems with pre-set
movie times, such as “Spectravision,” are the larger variety of movies
available for viewing and the guests’ freedom to watch them on their own
schedule. On Command’s system also eliminates the effort and potential
guest embarrassment of in-house hotel video rental programs, in which
VCPs are installed in individual rooms and guests must physically rent
videos from the hotel staff.
II. Discussion
A copyright owner has the exclusive right “to perform the copyrighted
work publicly” or to authorize any such public performance. 17 U.S.C.
§ 106(4). What constitutes a public performance is defined by the Copyright
Act in two clauses. Under clause (1), the “public place” clause, a
performance is public if it occurs
at a place open to the public or at any place where a substantial
number of persons outside of a normal circle of a family and its
social acquaintances is gathered.
17 U.S.C. § 101. Under clause (2), the “transmit” clause, a performance is
public if someone
transmits or otherwise communicates a performance or display of
the work to a place specified by clause (1) or to the public, by
means of any device or process.
Id. Under the transmit clause, a performance is public “whether the
members of the public capable of receiving the performance or display
receive it in the same place or in separate places and at the same time or
at different times.” Id.
Both plaintiff and defendants base their motions for summary
judgment on favorable interpretations of these clauses. Both also rely
heavily on the Ninth Circuit’s decision in Columbia Pictures v. Professional
Real Estate, 866 F.2d 278 (9th Cir.1989). This Court must therefore
determine whether On Command’s system results in the public
performance of defendants’ movies under the statutory clauses and
Professional Real Estate.
A.

The Public Place Clause.

Professional Real Estate held that hotel guest rooms are not “public
places” for the purposes of the Copyright Act. Defendants do not challenge
this holding. Rather, defendants argue that because On Command’s system
comprises components dispersed throughout a hotel—i.e., the command
center is located in a hotel equipment room, the hotel operator’s terminal
is in the front lobby, the transmission wiring is installed throughout the
walls and ceilings—the relevant place of performance is not the individual

CH. 1

69

hotel rooms but the entire hotel, which defendants contend is a public place
under the language of the Act. This argument is unavailing. At least for
the purposes of public place analysis, a performance of a work does not
occur every place a wire carrying the performance passes through; a
performance occurs where it is received. Accepting defendants’ argument
would eviscerate both the concepts of “performance” and “public place.” The
Act defines the performance of a motion picture as the “showing of its
images in any sequence or to make the sounds accompanying it audible.”
17 U.S.C. § 101. A movie video is thus performed only when it is visible and
audible. In On Command’s system, this viewing and hearing occurs only in
an individual guest room. That can be the only relevant place of
performance for public place analysis. Since hotel guest rooms are
indisputably not public places for copyright purposes, On Command’s
system results in no public performances under the public place clause.
B.

The Transmit Clause.

Public performance of defendants’ movies under this clause occurs if
On Command “transmits” the movies “to the public.” Under the Copyright
Act, to “transmit” a performance is
to communicate it by any device or process whereby images or
sounds are received beyond the place from which they are sent.
Id. Plaintiff’s argument that On Command’s system involves not
“transmissions” but “electronic rentals” similar to patrons’ physical
borrowing of videotapes is without merit. On Command transmits movie
performances directly under the language of the definition. The system
“communicates” the motion picture “images and sounds” by a “device or
process”—the equipment and wiring network—from a central console in a
hotel to individual guest rooms, where the images and sounds are received
“beyond the place from which they are sent.” The fact that hotel guests
initiate this transmission by turning on the television and choosing a video
is immaterial.
On Command’s video transmissions are also “to the public” for the
purposes of the transmit clause. Hotel guests watching a video movie in
their room through On Command’s system are not watching it in a “public
place” but they are nonetheless members of “the public.” See Columbia
Pictures Industries, Inc. v. Redd Horne, 568 F.Supp. 494 (W.D.Pa.1983),
aff’d 749 F.2d 154, 159 (3d Cir.1984) (“the transmission of a performance
to members of the public, even in private settings such as hotel rooms . . .
constitutes a public performance”) (citing H.R. Rep. No. 1476, 94th Cong.,
2d Sess. at 64 (1976) (“1976 House Report”)); ESPN Inc. v. Edinburg
Community Hotel, Inc., 735 F.Supp. 1334, 1340 (S.D.Tex.1986) (“The [1976]
House Report . . . on the Copyright Act makes explicit that performances
to occupants of hotel rooms fall within the definition of a public
performance”). This is because the relationship between the transmitter of
the performance, On Command, and the audience, hotel guests, is a

70

CH. 1

commercial, “public” one regardless of where the viewing takes place. The
non-public nature of the place of the performance has no bearing on
whether or not those who enjoy the performance constitute “the public”
under the transmit clause.
A performance may still be public under the transmit clause “whether
the members of the public . . . receive it in the same place or in separate
places and at the same time or at different times.” 17 U.S.C. § 101. A 1967
Report by the House of Representatives reveals that Congress added this
language to the transmit clause to cover precisely the sort of single-viewer
system developed by plaintiff:
[This language makes doubly clear that] a performance made
available by transmission to the public at large is “public” even
though the recipients are not gathered in a single place, and even
if there is no direct proof that any of the potential recipients was
operating his receiving apparatus at the time of the transmission.
The same principles apply whenever the potential recipients of
the transmission represent a limited segment of the public, such
as the occupants of hotel rooms. . . .; they are also applicable
where the transmission is capable of reaching different recipients
at different times, as in the case of sounds or images stored in an
information system and capable of being performed or displayed
at the initiative of individual members of the public.
H.R. Rep. No. 83, 90th Cong., 1st Sess. at 29 (1967). Thus, whether the
number of hotel guests viewing an On Command transmission is one or one
hundred, and whether these guests view the transmission simultaneously
or sequentially, the transmission is still a public performance since it goes
to members of the public. See also Redd Horne, 749 F.2d at 159
(transmissions of videos to private viewing booths occupied by one to four
persons infringing under transmit clause); Paramount Pictures Corp. v.
Labus, 16 U.S.P.Q. 2d (BNA) 1142, 1147 (W.D. Wisc.1990) (hotel’s
distribution of unauthorized copies of video cassettes to single guest
violated copyright owner’s exclusive right to distribute work to “the
public”). On Command therefore “publicly performs” defendants’ movies
under the meaning of the transmit clause.
***

CARTOON NETWORK LP V. CSC HOLDINGS, INC.
536 F.3d 121 (2d Cir. 2008).

JOHN M. WALKER, JR., CIRCUIT JUDGE:
[The facts and background for this case can be found in part A.1. of
this chapter, supra]
***

CH. 1

71

DISCUSSION
* * * [T]he district court found that Cablevision would infringe the
public performance right by transmitting a program to an RS-DVR
customer in response to that customer’s playback request. * * *
* * * The Act grants a copyright owner the exclusive right, “in the case
of . . . motion pictures and other audiovisual works, to perform the
copyrighted work publicly.” 17 U.S.C. § 106(4). Section 101, the definitional
section of the Act, explains that
[t]o perform or display a work “publicly” means (1) to perform or
display it at a place open to the public or at any place where a
substantial number of persons outside of a normal circle of a
family and its social acquaintances is gathered; or (2) to transmit
or otherwise communicate a performance or display of the work to
a place specified by clause (1) or to the public, by means of any
device or process, whether the members of the public capable of
receiving the performance or display receive it in the same place
or in separate places and at the same time or at different times.
Id.§ 101.
The parties agree that this case does not implicate clause (1).
Accordingly, we ask whether these facts satisfy the second, “transmit
clause” of the public performance definition: Does Cablevision “transmit
. . . a performance . . . of the work . . . to the public”? Id. No one disputes
that the RS-DVR playback results in the transmission of a performance of
a work—the transmission from the Arroyo Server to the customer’s
television set. Cablevision contends that (1) the RS-DVR customer, rather
than Cablevision, does the transmitting and thus the performing and (2)
the transmission is not “to the public” under the transmit clause.
As to Cablevision’s first argument, we note that our conclusion in Part
II [see excerpt, supra page ___] that the customer, not Cablevision, “does”
the copying does not dictate a parallel conclusion that the customer, and
not Cablevision, “performs” the copyrighted work. The definitions that
delineate the contours of the reproduction and public performance rights
vary in significant ways. For example, the statute defines the verb
“perform” and the noun “copies,” but not the verbs “reproduce” or “copy.”
Id. We need not address Cablevision’s first argument further because, even
if we assume that Cablevision makes the transmission when an RS-DVR
playback occurs, we find that the RS-DVR playback, as described here, does
not involve the transmission of a performance “to the public.”
The statute itself does not expressly define the term “performance” or
the phrase “to the public.” It does explain that a transmission may be “to
the public . . . whether the members of the public capable of receiving the
performance . . . receive it in the same place or in separate places and at
the same time or at different times.” Id. This plain language instructs us

72

CH. 1

that, in determining whether a transmission is “to the public,” it is of no
moment that the potential recipients of the transmission are in different
places, or that they may receive the transmission at different times. The
implication from this same language, however, is that it is relevant, in
determining whether a transmission is made to the public, to discern who
is “capable of receiving” the performance being transmitted. The fact that
the statute says “capable of receiving the performance,” instead of “capable
of receiving the transmission,” underscores the fact that a transmission of
a performance is itself a performance. Cf. Buck v. Jewell-La Salle Realty
Co., 283 U.S. 191, 197–98 (1931).
The legislative history of the transmit clause supports this
interpretation. The House Report on the 1976 Copyright Act states that
[u]nder the bill, as under the present law, a performance made
available by transmission to the public at large is “public” even
though the recipients are not gathered in a single place, and even
if there is no proof that any of the potential recipients was
operating his receiving apparatus at the time of the transmission.
The same principles apply whenever the potential recipients of the
transmission represent a limited segment of the public, such as
the occupants of hotel rooms or the subscribers of a cable
television service.
H.R.Rep. No. 94–1476, at 64–65 (1976) (emphases added).
***
From the foregoing, it is evident that the transmit clause directs us to
examine who precisely is “capable of receiving” a particular transmission
of a performance. Cablevision argues that, because each RS-DVR
transmission is made using a single unique copy of a work, made by an
individual subscriber, one that can be decoded exclusively by that
subscriber’s cable box, only one subscriber is capable of receiving any given
RS-DVR transmission. This argument accords with the language of the
transmit clause, which, as described above, directs us to consider the
potential audience of a given transmission. We are unpersuaded by the
district court’s reasoning and the plaintiffs’ arguments that we should
consider a larger potential audience in determining whether a
transmission is “to the public.”
The district court, in deciding whether the RS-DVR playback of a
program to a particular customer is “to the public,” apparently considered
all of Cablevision’s customers who subscribe to the channel airing that
program and all of Cablevision’s RS-DVR subscribers who request a copy
of that program. Thus, it concluded that the RS-DVR playbacks constituted
public performances because “Cablevision would transmit the same
program to members of the public, who may receive the performance at
different times, depending on whether they view the program in real time

CH. 1

73

or at a later time as an RS-DVR playback.” Cablevision I, 478 F.Supp.2d at
623 (emphasis added). In essence, the district court suggested that, in
considering whether a transmission is “to the public,” we consider not the
potential audience of a particular transmission, but the potential audience
of the underlying work (i.e., “the program”) whose content is being
transmitted.
We cannot reconcile the district court’s approach with the language of
the transmit clause. That clause speaks of people capable of receiving a
particular “transmission” or “performance,” and not of the potential
audience of a particular “work.” Indeed, such an approach would render
the “to the public” language surplusage. Doubtless the potential audience
for every copyrighted audiovisual work is the general public. As a result,
any transmission of the content of a copyrighted work would constitute a
public performance under the district court’s interpretation. But the
transmit clause obviously contemplates the existence of non-public
transmissions; if it did not, Congress would have stopped drafting that
clause after “performance.”
On appeal, plaintiffs offer a slight variation of this interpretation.
They argue that both in its real-time cablecast and via the RS-DVR
playback, Cablevision is in fact transmitting the “same performance” of a
given work: the performance of the work that occurs when the
programming service supplying Cablevision’s content transmits that
content to Cablevision and the service’s other licensees. * * *
Thus, according to plaintiffs, when Congress says that to perform a
work publicly means to transmit . . . a performance . . . to the public, they
really meant “transmit . . . the ‘original performance’ . . . to the public.” The
implication of this theory is that to determine whether a given
transmission of a performance is “to the public,” we would consider not only
the potential audience of that transmission, but also the potential audience
of any transmission of the same underlying “original” performance.
Like the district court’s interpretation, this view obviates any
possibility of a purely private transmission. Furthermore, it makes
Cablevision’s liability depend, in part, on the actions of legal strangers.
Assume that HBO transmits a copyrighted work to both Cablevision and
Comcast. Cablevision merely retransmits the work from one Cablevision
facility to another, while Comcast retransmits the program to its
subscribers. Under plaintiffs’ interpretation, Cablevision would still be
transmitting the performance to the public, solely because Comcast has
transmitted the same underlying performance to the public. Similarly, a
hapless customer who records a program in his den and later transmits the
recording to a television in his bedroom would be liable for publicly
performing the work simply because some other party had once
transmitted the same underlying performance to the public.

74

CH. 1

We do not believe Congress intended such odd results. Although the
transmit clause is not a model of clarity, we believe that when Congress
speaks of transmitting a performance to the public, it refers to the
performance created by the act of transmission. Thus, HBO transmits its
own performance of a work when it transmits to Cablevision, and
Cablevision transmits its own performance of the same work when it
retransmits the feed from HBO.
***
Given that each RS-DVR transmission is made to a given subscriber
using a copy made by that subscriber, we conclude that such a transmission
is not “to the public,” without analyzing the contours of that phrase in great
detail. No authority cited by the parties or the district court persuades us
to the contrary.
***
This holding, we must emphasize, does not generally permit content
delivery networks to avoid all copyright liability by making copies of each
item of content and associating one unique copy with each subscriber to the
network, or by giving their subscribers the capacity to make their own
individual copies. We do not address whether such a network operator
would be able to escape any other form of copyright liability, such as
liability for unauthorized reproductions or liability for contributory
infringement.
In sum, because we find, on undisputed facts, that Cablevision’s
proposed RS-DVR system would not directly infringe plaintiffs’ exclusive
rights to reproduce and publicly perform their copyrighted works, we grant
summary judgment in favor of Cablevision with respect to both rights.
***

AMERICAN BROADCASTING COS., INC. V. AEREO, INC.
___ U.S. ___, 134 S.Ct. 2498 (2014).

JUSTICE BREYER delivered the opinion of the Court.
The Copyright Act of 1976 gives a copyright owner the “exclusive
righ[t]” to “perform the copyrighted work publicly.” 17 U.S.C. § 106(4). The
Act’s Transmit Clause defines that exclusive right as including the right to
“transmit or otherwise communicate a performance . . . of the [copyrighted] work
. . . to the public, by means of any device or process, whether the members of the
public capable of receiving the performance . . . receive it in the same place or in
separate places and at the same time or at different times.” § 101.

We must decide whether respondent Aereo, Inc., infringes this
exclusive right by selling its subscribers a technologically complex service
that allows them to watch television programs over the Internet at about

CH. 1

75

the same time as the programs are broadcast over the air. We conclude that
it does.
I
A
For a monthly fee, Aereo offers subscribers broadcast television
programming over the Internet, virtually as the programming is being
broadcast. Much of this programming is made up of copyrighted works.
Aereo neither owns the copyright in those works nor holds a license from
the copyright owners to perform those works publicly.
Aereo’s system is made up of servers, transcoders, and thousands of
dime-sized antennas housed in a central warehouse. It works roughly as
follows: First, when a subscriber wants to watch a show that is currently
being broadcast, he visits Aereo’s website and selects, from a list of the local
programming, the show he wishes to see.
Second, one of Aereo’s servers selects an antenna, which it dedicates
to the use of that subscriber (and that subscriber alone) for the duration of
the selected show. A server then tunes the antenna to the over-the-air
broadcast carrying the show. The antenna begins to receive the broadcast,
and an Aereo transcoder translates the signals received into data that can
be transmitted over the Internet.
Third, rather than directly send the data to the subscriber, a server
saves the data in a subscriber-specific folder on Aereo’s hard drive. In other
words, Aereo’s system creates a subscriber-specific copy—that is, a
“personal” copy—of the subscriber’s program of choice.
Fourth, once several seconds of programming have been saved, Aereo’s
server begins to stream the saved copy of the show to the subscriber over
the Internet. (The subscriber may instead direct Aereo to stream the
program at a later time, but that aspect of Aereo’s service is not before us.)
The subscriber can watch the streamed program on the screen of his
personal computer, tablet, smart phone, Internet-connected television, or
other Internet-connected device. The streaming continues, a mere few
seconds behind the over-the-air broadcast, until the subscriber has
received the entire show. See A DICTIONARY OF COMPUTING 494 (6th ed.
2008) (defining “streaming” as “[t]he process of providing a steady flow of
audio or video data so that an Internet user is able to access it as it is
transmitted”).
Aereo emphasizes that the data that its system streams to each
subscriber are the data from his own personal copy, made from the
broadcast signals received by the particular antenna allotted to him. Its
system does not transmit data saved in one subscriber’s folder to any other
subscriber. When two subscribers wish to watch the same program, Aereo’s
system activates two separate antennas and saves two separate copies of

76

CH. 1

the program in two separate folders. It then streams the show to the
subscribers through two separate transmissions—each from the
subscriber’s personal copy.
B
Petitioners are television producers, marketers, distributors, and
broadcasters who own the copyrights in many of the programs that Aereo’s
system streams to its subscribers. They brought suit against Aereo for
copyright infringement in Federal District Court. They sought a
preliminary injunction, arguing that Aereo was infringing their right to
“perform” their works “publicly,” as the Transmit Clause defines those
terms.
[The Second Circuit affirmed the District Court’s denial of a
preliminary injunction, relying on Cartoon Network (excerpted at page ___,
supra).] * * * In the Second Circuit’s view, Aereo does not perform publicly
within the meaning of the Transmit Clause because it does not transmit
“to the public.” Rather, each time Aereo streams a program to a subscriber,
it sends a private transmission that is available only to that subscriber.
***
II
This case requires us to answer two questions: First, in operating in
the manner described above, does Aereo “perform” at all? And second, if so,
does Aereo do so “publicly”? We address these distinct questions in turn.
Does Aereo “perform”? See § 106(4) (“[T]he owner of [a] copyright . . .
has the exclusive righ[t] . . . to perform the copyrighted work publicly”
(emphasis added)); § 101 (“To perform . . . a work ‘publicly’ means [among
other things] to transmit . . . a performance . . . of the work . . . to the public
. . .” (emphasis added)). Phrased another way, does Aereo “transmit . . . a
performance” when a subscriber watches a show using Aereo’s system, or
is it only the subscriber who transmits? In Aereo’s view, it does not perform.
It does no more than supply equipment that “emulate[s] the operation of a
home antenna and [digital video recorder (DVR)].” Like a home antenna
and DVR, Aereo’s equipment simply responds to its subscribers’ directives.
So it is only the subscribers who “perform” when they use Aereo’s
equipment to stream television programs to themselves.
Considered alone, the language of the Act does not clearly indicate
when an entity “perform[s]” (or “transmit[s]”) and when it merely supplies
equipment that allows others to do so. But when read in light of its purpose,
the Act is unmistakable: An entity that engages in activities like Aereo’s
performs.
A
History makes plain that one of Congress’ primary purposes in
amending the Copyright Act in 1976 was to overturn this Court’s

CH. 1

77

determination that community antenna television (CATV) systems (the
precursors of modern cable systems) fell outside the Act’s scope. In
Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968), the
Court considered a CATV system that carried local television broadcasting,
much of which was copyrighted, to its subscribers in two cities. The CATV
provider placed antennas on hills above the cities and used coaxial cables
to carry the signals received by the antennas to the home television sets of
its subscribers. The system amplified and modulated the signals in order
to improve their strength and efficiently transmit them to subscribers. A
subscriber “could choose any of the . . . programs he wished to view by
simply turning the knob on his own television set.” The CATV provider
“neither edited the programs received nor originated any programs of its
own.”
Asked to decide whether the CATV provider infringed copyright
holders’ exclusive right to perform their works publicly, the Court held that
the provider did not “perform” at all. The Court drew a line: “Broadcasters
perform. Viewers do not perform.” And a CATV provider “falls on the
viewer’s side of the line.”
The Court reasoned that CATV providers were unlike broadcasters:
“Broadcasters select the programs to be viewed; CATV systems
simply carry, without editing, whatever programs they receive.
Broadcasters procure programs and propagate them to the public;
CATV systems receive programs that have been released to the
public and carry them by private channels to additional viewers.”
Instead, CATV providers were more like viewers, for “the basic function
[their] equipment serves is little different from that served by the
equipment generally furnished by” viewers. “Essentially,” the Court said,
“a CATV system no more than enhances the viewer’s capacity to receive
the broadcaster’s signals [by] provid[ing] a well-located antenna with an
efficient connection to the viewer’s television set.” Viewers do not become
performers by using “amplifying equipment,” and a CATV provider should
not be treated differently for providing viewers the same equipment.
In Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415
U.S. 394 (1974), the Court considered the copyright liability of a CATV
provider that carried broadcast television programming into subscribers’
homes from hundreds of miles away. Although the Court recognized that a
viewer might not be able to afford amplifying equipment that would
provide access to those distant signals, it nonetheless found that the CATV
provider was more like a viewer than a broadcaster. It explained: “The
reception and rechanneling of [broadcast television signals] for
simultaneous viewing is essentially a viewer function, irrespective of the
distance between the broadcasting station and the ultimate viewer.”

78

CH. 1

The Court also recognized that the CATV system exercised some
measure of choice over what to transmit. But that fact did not transform
the CATV system into a broadcaster. A broadcaster exercises significant
creativity in choosing what to air, the Court reasoned. In contrast, the
CATV provider makes an initial choice about which broadcast stations to
retransmit, but then “ ‘simply carr[ies], without editing, whatever
programs [it] receive[s].’ ”
B
In 1976 Congress amended the Copyright Act in large part to reject
the Court’s holdings in Fortnightly and Teleprompter. See H.R. REP. NO.
94–1476, pp. 86–87 (1976) (hereinafter H.R. REP.) (The 1976 amendments
“completely overturned” this Court’s narrow construction of the Act in
Fortnightly and Teleprompter). Congress enacted new language that
erased the Court’s line between broadcaster and viewer, in respect to
“perform[ing]” a work. The amended statute clarifies that to “perform” an
audiovisual work means “to show its images in any sequence or to make
the sounds accompanying it audible.” § 101; see ibid. (defining
“[a]udiovisual works” as “works that consist of a series of related images
which are intrinsically intended to be shown by the use of machines . . .,
together with accompanying sounds”). Under this new language, both the
broadcaster and the viewer of a television program “perform,” because they
both show the program’s images and make audible the program’s sounds.
See H.R. REP., at 63 (“[A] broadcasting network is performing when it
transmits [a singer’s performance of a song] . . . and any individual is
performing whenever he or she . . . communicates the performance by
turning on a receiving set”).
Congress also enacted the Transmit Clause, which specifies that an
entity performs publicly when it “transmit[s] . . . a performance . . . to the
public.” § 101; see ibid. (defining “[t]o ‘transmit’ a performance” as “to
communicate it by any device or process whereby images or sounds are
received beyond the place from which they are sent”). Cable system
activities, like those of the CATV systems in Fortnightly and Teleprompter,
lie at the heart of the activities that Congress intended this language to
cover. The Clause thus makes clear that an entity that acts like a CATV
system itself performs, even if when doing so, it simply enhances viewers’
ability to receive broadcast television signals.
Congress further created a new section of the Act to regulate cable
companies’ public performances of copyrighted works. See § 111. Section
111 creates a complex, highly detailed compulsory licensing scheme that
sets out the conditions, including the payment of compulsory fees, under
which cable systems may retransmit broadcasts.
Congress made these three changes to achieve a similar end: to bring
the activities of cable systems within the scope of the Copyright Act.

CH. 1

79

C
This history makes clear that Aereo is not simply an equipment
provider. Rather, Aereo, and not just its subscribers, “perform[s]” (or
“transmit[s]”). Aereo’s activities are substantially similar to those of the
CATV companies that Congress amended the Act to reach. See id., at 89
(“[C]able systems are commercial enterprises whose basic retransmission
operations are based on the carriage of copyrighted program material”).
Aereo sells a service that allows subscribers to watch television programs,
many of which are copyrighted, almost as they are being broadcast. In
providing this service, Aereo uses its own equipment, housed in a
centralized warehouse, outside of its users’ homes. By means of its
technology (antennas, transcoders, and servers), Aereo’s system “receive[s]
programs that have been released to the public and carr[ies] them by
private channels to additional viewers.” Fortnightly, 392 U.S., at 400. It
“carr[ies] . . . whatever programs [it] receive[s],” and it offers “all the
programming” of each over-the-air station it carries. Id., at 392, 400.
Aereo’s equipment may serve a “viewer function”; it may enhance the
viewer’s ability to receive a broadcaster’s programs. It may even emulate
equipment a viewer could use at home. But the same was true of the
equipment that was before the Court, and ultimately before Congress, in
Fortnightly and Teleprompter.
We recognize, and Aereo and the dissent emphasize, one particular
difference between Aereo’s system and the cable systems at issue in
Fortnightly and Teleprompter. The systems in those cases transmitted
constantly; they sent continuous programming to each subscriber’s
television set. In contrast, Aereo’s system remains inert until a subscriber
indicates that she wants to watch a program. Only at that moment, in
automatic response to the subscriber’s request, does Aereo’s system
activate an antenna and begin to transmit the requested program.
This is a critical difference, says the dissent. It means that Aereo’s
subscribers, not Aereo, “selec[t] the copyrighted content” that is
“perform[ed],” (opinion of SCALIA, J.), and for that reason they, not Aereo,
“transmit” the performance. Aereo is thus like “a copy shop that provides
its patrons with a library card.” A copy shop is not directly liable whenever
a patron uses the shop’s machines to “reproduce” copyrighted materials
found in that library. See § 106(1) (“exclusive righ[t] . . . to reproduce the
copyrighted work”). And by the same token, Aereo should not be directly
liable whenever its patrons use its equipment to “transmit” copyrighted
television programs to their screens.
In our view, however, the dissent’s copy shop argument, in whatever
form, makes too much out of too little. Given Aereo’s overwhelming likeness
to the cable companies targeted by the 1976 amendments, this sole
technological difference between Aereo and traditional cable companies
does not make a critical difference here. The subscribers of the Fortnightly

80

CH. 1

and Teleprompter cable systems also selected what programs to display on
their receiving sets. Indeed, as we explained in Fortnightly, such a
subscriber “could choose any of the . . . programs he wished to view by
simply turning the knob on his own television set.” The same is true of an
Aereo subscriber. Of course, in Fortnightly the television signals, in a
sense, lurked behind the screen, ready to emerge when the subscriber
turned the knob. Here the signals pursue their ordinary course of travel
through the universe until today’s “turn of the knob”—a click on a
website—activates machinery that intercepts and reroutes them to Aereo’s
subscribers over the Internet. But this difference means nothing to the
subscriber. It means nothing to the broadcaster. We do not see how this
single difference, invisible to subscriber and broadcaster alike, could
transform a system that is for all practical purposes a traditional cable
system into “a copy shop that provides its patrons with a library card.”
In other cases involving different kinds of service or technology
providers, a user’s involvement in the operation of the provider’s
equipment and selection of the content transmitted may well bear on
whether the provider performs within the meaning of the Act. * * * We
conclude that Aereo is not just an equipment supplier and that Aereo
“perform[s].”
III
Next, we must consider whether Aereo performs petitioners’ works
“publicly,” within the meaning of the Transmit Clause. Under the Clause,
an entity performs a work publicly when it “transmit[s] . . . a performance
. . . of the work . . . to the public.” § 101. Aereo denies that it satisfies this
definition. It reasons as follows: First, the “performance” it “transmit[s]” is
the performance created by its act of transmitting. And second, because
each of these performances is capable of being received by one and only one
subscriber, Aereo transmits privately, not publicly. Even assuming Aereo’s
first argument is correct, its second does not follow.
We begin with Aereo’s first argument. What performance does Aereo
transmit? Under the Act, “[t]o ‘transmit’ a performance . . . is to
communicate it by any device or process whereby images or sounds are
received beyond the place from which they are sent.” Ibid. And “[t]o
‘perform’ ” an audiovisual work means “to show its images in any sequence
or to make the sounds accompanying it audible.” Ibid.
Petitioners say Aereo transmits a prior performance of their works.
Thus when Aereo retransmits a network’s prior broadcast, the underlying
broadcast (itself a performance) is the performance that Aereo transmits.
Aereo, as discussed above, says the performance it transmits is the new
performance created by its act of transmitting. That performance comes
into existence when Aereo streams the sounds and images of a broadcast
program to a subscriber’s screen.

CH. 1

81

We assume arguendo that Aereo’s first argument is correct. Thus, for
present purposes, to transmit a performance of (at least) an audiovisual
work means to communicate contemporaneously visible images and
contemporaneously audible sounds of the work. Cf. United States v.
American Soc. of Composers, Authors and Publishers, 627 F.3d 64, 73 (2d
Cir. 2010) (holding that a download of a work is not a performance because
the data transmitted are not “contemporaneously perceptible”). When an
Aereo subscriber selects a program to watch, Aereo streams the program
over the Internet to that subscriber. Aereo thereby “communicate[s]” to the
subscriber, by means of a “device or process,” the work’s images and
sounds. And those images and sounds are contemporaneously visible and
audible on the subscriber’s computer (or other Internet-connected device).
So under our assumed definition, Aereo transmits a performance whenever
its subscribers watch a program.
But what about the Clause’s further requirement that Aereo transmit
a performance “to the public”? As we have said, an Aereo subscriber
receives broadcast television signals with an antenna dedicated to him
alone. Aereo’s system makes from those signals a personal copy of the
selected program. It streams the content of the copy to the same subscriber
and to no one else. One and only one subscriber has the ability to see and
hear each Aereo transmission. The fact that each transmission is to only
one subscriber, in Aereo’s view, means that it does not transmit a
performance “to the public.”
In terms of the Act’s purposes, these differences do not distinguish
Aereo’s system from cable systems, which do perform “publicly.” Viewed in
terms of Congress’ regulatory objectives, why should any of these
technological differences matter? They concern the behind-the-scenes way
in which Aereo delivers television programming to its viewers’ screens.
They do not render Aereo’s commercial objective any different from that of
cable companies. Nor do they significantly alter the viewing experience of
Aereo’s subscribers. Why would a subscriber who wishes to watch a
television show care much whether images and sounds are delivered to his
screen via a large multisubscriber antenna or one small dedicated antenna,
whether they arrive instantaneously or after a few seconds’ delay, or
whether they are transmitted directly or after a personal copy is made?
And why, if Aereo is right, could not modern CATV systems simply
continue the same commercial and consumer-oriented activities, free of
copyright restrictions, provided they substitute such new technologies for
old? Congress would as much have intended to protect a copyright holder
from the unlicensed activities of Aereo as from those of cable companies.
The text of the Clause effectuates Congress’ intent. Aereo’s argument
to the contrary relies on the premise that “to transmit . . . a performance”
means to make a single transmission. But the Clause suggests that an
entity may transmit a performance through multiple, discrete

82

CH. 1

transmissions. That is because one can “transmit” or “communicate”
something through a set of actions. Thus one can transmit a message to
one’s friends, irrespective of whether one sends separate identical e-mails
to each friend or a single e-mail to all at once. So can an elected official
communicate an idea, slogan, or speech to her constituents, regardless of
whether she communicates that idea, slogan, or speech during individual
phone calls to each constituent or in a public square.
The fact that a singular noun (“a performance”) follows the words “to
transmit” does not suggest the contrary. One can sing a song to his family,
whether he sings the same song one-on-one or in front of all together.
Similarly, one’s colleagues may watch a performance of a particular play—
say, this season’s modern-dress version of “Measure for Measure”—
whether they do so at separate or at the same showings. By the same
principle, an entity may transmit a performance through one or several
transmissions, where the performance is of the same work.
The Transmit Clause must permit this interpretation, for it provides
that one may transmit a performance to the public “whether the members
of the public capable of receiving the performance . . . receive it . . . at the
same time or at different times.” § 101. Were the words “to transmit . . . a
performance” limited to a single act of communication, members of the
public could not receive the performance communicated “at different
times.” Therefore, in light of the purpose and text of the Clause, we
conclude that when an entity communicates the same contemporaneously
perceptible images and sounds to multiple people, it transmits a
performance to them regardless of the number of discrete communications
it makes.
We do not see how the fact that Aereo transmits via personal copies of
programs could make a difference. The Act applies to transmissions “by
means of any device or process.” And retransmitting a television program
using user-specific copies is a “process” of transmitting a performance. A
“cop[y]” of a work is simply a “material objec[t] . . . in which a work is fixed
. . . and from which the work can be perceived, reproduced, or otherwise
communicated.” Ibid. So whether Aereo transmits from the same or
separate copies, it performs the same work; it shows the same images and
makes audible the same sounds. Therefore, when Aereo streams the same
television program to multiple subscribers, it “transmit[s] . . . a
performance” to all of them.
***
For these reasons, we conclude that Aereo transmits a performance of
petitioners’ copyrighted works to the public, within the meaning of the
Transmit Clause.

CH. 1

83

IV
Aereo and many of its supporting amici argue that to apply the
Transmit Clause to Aereo’s conduct will impose copyright liability on other
technologies, including new technologies, that Congress could not possibly
have wanted to reach. We agree that Congress, while intending the
Transmit Clause to apply broadly to cable companies and their equivalents,
did not intend to discourage or to control the emergence or use of different
kinds of technologies. But we do not believe that our limited holding today
will have that effect.
***
We cannot now answer more precisely how the Transmit Clause or
other provisions of the Copyright Act will apply to technologies not before
us. We agree with the Solicitor General that “[q]uestions involving cloud
computing, [remote storage] DVRs, and other novel issues not before the
Court, as to which ‘Congress has not plainly marked [the] course,’ should
await a case in which they are squarely presented.” And we note that, to
the extent commercial actors or other interested entities may be concerned
with the relationship between the development and use of such
technologies and the Copyright Act, they are of course free to seek action
from Congress.
3
In sum, having considered the details of Aereo’s practices, we find
them highly similar to those of the CATV systems in Fortnightly and
Teleprompter. And those are activities that the 1976 amendments sought
to bring within the scope of the Copyright Act. Insofar as there are
differences, those differences concern not the nature of the service that
Aereo provides so much as the technological manner in which it provides
the service. We conclude that those differences are not adequate to place
Aereo’s activities outside the scope of the Act.
For these reasons, we conclude that Aereo “perform[s]” petitioners’
copyrighted works “publicly,” as those terms are defined by the Transmit
Clause. We therefore reverse the contrary judgment of the Court of
Appeals, and we remand the case for further proceedings consistent with
this opinion.
It is so ordered.
JUSTICE SCALIA, with whom JUSTICE THOMAS and JUSTICE ALITO join,
dissenting.
This case is the latest skirmish in the long-running copyright battle
over the delivery of television programming. * * * The Networks sued Aereo
for several forms of copyright infringement, but we are here concerned with
a single claim: that Aereo violates the Networks’ “exclusive righ[t]” to
“perform” their programs “publicly.” 17 U.S.C. § 106(4). That claim fails at

84

CH. 1

the very outset because Aereo does not “perform” at all. The Court manages
to reach the opposite conclusion only by disregarding widely accepted rules
for service-provider liability and adopting in their place an improvised
standard (“looks-like-cable-TV”) that will sow confusion for years to come.
I.

Legal Standard

There are two types of liability for copyright infringement: direct and
secondary. As its name suggests, the former applies when an actor
personally engages in infringing conduct. See Sony Corp. of America v.
Universal City Studios, Inc., 464 U.S. 417, 433 (1984). Secondary liability,
by contrast, is a means of holding defendants responsible for infringement
by third parties, even when the defendants “have not themselves engaged
in the infringing activity.” Id., at 435. It applies when a defendant
“intentionally induc[es] or encourag[es]” infringing acts by others or profits
from such acts “while declining to exercise a right to stop or limit [them].”
Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930
(2005).
Most suits against equipment manufacturers and service providers
involve secondary-liability claims. For example, when movie studios sued
to block the sale of Sony’s Betamax videocassette recorder (VCR), they
argued that Sony was liable because its customers were making
unauthorized copies. Record labels and movie studios relied on a similar
theory when they sued Grokster and StreamCast, two providers of peer-topeer file-sharing software. See Grokster, supra, at 920–921, 927.
This suit, or rather the portion of it before us here, is fundamentally
different. The Networks claim that Aereo directly infringes their publicperformance right. Accordingly, the Networks must prove that Aereo
“perform[s]” copyrighted works, § 106(4), when its subscribers log in, select
a channel, and push the “watch” button. That process undoubtedly results
in a performance; the question is who does the performing. If Aereo’s
subscribers perform but Aereo does not, the claim necessarily fails.
The Networks’ claim is governed by a simple but profoundly important
rule: A defendant may be held directly liable only if it has engaged in
volitional conduct that violates the Act. This requirement is firmly
grounded in the Act’s text, which defines “perform” in active, affirmative
terms: One “perform[s]” a copyrighted “audiovisual work,” such as a movie
or news broadcast, by “show[ing] its images in any sequence” or “mak[ing]
the sounds accompanying it audible.” § 101. And since the Act makes it
unlawful to copy or perform copyrighted works, not to copy or perform in
general, see § 501(a), the volitional-act requirement demands conduct
directed to the plaintiff’s copyrighted material. Every Court of Appeals to
have considered an automated-service provider’s direct liability for
copyright infringement has adopted that rule. See Fox Broadcasting Co. v.
Dish Network LLC, 747 F.3d 1060, 1066–1068 (9th Cir. 2014); Cartoon
Network, supra, at 130–131 (2d Cir. 2008); CoStar Group, Inc. v. LoopNet,

CH. 1

85

Inc., 373 F.3d 544, 549–550 (4th Cir. 2004). Although we have not opined
on the issue, our cases are fully consistent with a volitional-conduct
requirement. For example, we gave several examples of direct infringement
in Sony, each of which involved a volitional act directed to the plaintiff’s
copyrighted material. See 464 U.S., at 437, n. 18.
The volitional-conduct requirement is not at issue in most directinfringement cases; the usual point of dispute is whether the defendant’s
conduct is infringing (e.g., Does the defendant’s design copy the plaintiff’s?),
rather than whether the defendant has acted at all (e.g., Did this defendant
create the infringing design?). But it comes right to the fore when a directinfringement claim is lodged against a defendant who does nothing more
than operate an automated, user-controlled system. Internet-service
providers are a prime example. When one user sends data to another, the
provider’s equipment facilitates the transfer automatically. Does that
mean that the provider is directly liable when the transmission happens to
result in the “reproduc[tion],” § 106(1), of a copyrighted work? It does not.
The provider’s system is “totally indifferent to the material’s content,”
whereas courts require “some aspect of volition” directed at the copyrighted
material before direct liability may be imposed. CoStar, 373 F.3d, at 550–
551.2 The defendant may be held directly liable only if the defendant itself
“trespassed on the exclusive domain of the copyright owner.” Id., at 550.
Most of the time that issue will come down to who selects the copyrighted
content: the defendant or its customers.
A comparison between copy shops and video-on-demand services
illustrates the point. A copy shop rents out photocopiers on a per-use basis.
One customer might copy his 10-year-old’s drawings—a perfectly lawful
thing to do—while another might duplicate a famous artist’s copyrighted
photographs—a use clearly prohibited by § 106(1). Either way, the
customer chooses the content and activates the copying function; the
photocopier does nothing except in response to the customer’s commands.
Because the shop plays no role in selecting the content, it cannot be held
directly liable when a customer makes an infringing copy.
Video-on-demand services, like photocopiers, respond automatically to
user input, but they differ in one crucial respect: They choose the content.
* * * That selection and arrangement by the service provider constitutes a
volitional act directed to specific copyrighted works and thus serves as a
basis for direct liability.
The distinction between direct and secondary liability would collapse
if there were not a clear rule for determining whether the defendant
committed the infringing act. The volitional-conduct requirement supplies
that rule; its purpose is not to excuse defendants from accountability, but
2
Congress has enacted several safe-harbor provisions applicable to automated network
processes, see, e.g., 17 U.S.C. § 512(a)–(b), but those provisions do not foreclose “any other defense,”
§ 512(l), including a volitional-conduct defense.

86

CH. 1

to channel the claims against them into the correct analytical track. Thus,
in the example given above, the fact that the copy shop does not choose the
content simply means that its culpability will be assessed using secondaryliability rules rather than direct-liability rules.
II. Application to Aereo
So which is Aereo: the copy shop or the video-on-demand service? In
truth, it is neither. Rather, it is akin to a copy shop that provides its patrons
with a library card. Aereo offers access to an automated system consisting
of routers, servers, transcoders, and dime-sized antennae. Like a
photocopier or VCR, that system lies dormant until a subscriber activates
it. When a subscriber selects a program, Aereo’s system picks up the
relevant broadcast signal, translates its audio and video components into
digital data, stores the data in a user-specific file, and transmits that file’s
contents to the subscriber via the Internet—at which point the subscriber’s
laptop, tablet, or other device displays the broadcast just as an ordinary
television would. The result of that process fits the statutory definition of
a performance to a tee: The subscriber’s device “show[s]” the broadcast’s
“images” and “make[s] the sounds accompanying” the broadcast “audible.”
§ 101. The only question is whether those performances are the product of
Aereo’s volitional conduct.
They are not. Unlike video-on-demand services, Aereo does not provide
a prearranged assortment of movies and television shows. Rather, it
assigns each subscriber an antenna that—like a library card—can be used
to obtain whatever broadcasts are freely available. Some of those
broadcasts are copyrighted; others are in the public domain. The key point
is that subscribers call all the shots: Aereo’s automated system does not
relay any program, copyrighted or not, until a subscriber selects the
program and tells Aereo to relay it. Aereo’s operation of that system is a
volitional act and a but-for cause of the resulting performances, but, as in
the case of the copy shop, that degree of involvement is not enough for
direct liability. See Grokster, 545 U.S., at 960 (BREYER, J., concurring)
(“[T]he producer of a technology which permits unlawful copying does not
himself engage in unlawful copying”).
In sum, Aereo does not “perform” for the sole and simple reason that
it does not make the choice of content. And because Aereo does not perform,
it cannot be held directly liable for infringing the Networks’ publicperformance right. That conclusion does not necessarily mean that Aereo’s
service complies with the Copyright Act. Quite the contrary. The Networks’
complaint alleges that Aereo is directly and secondarily liable for
infringing their public-performance rights (§ 106(4)) and also their
reproduction rights (§ 106(1)). Their request for a preliminary injunction—
the only issue before this Court—is based exclusively on the direct-liability
portion of the public-performance claim (and further limited to Aereo’s
“watch” function, as opposed to its “record” function). Affirming the

CH. 1

87

judgment below would merely return this case to the lower courts for
consideration of the Networks’ remaining claims.
III. Guilt By Resemblance
The Court’s conclusion that Aereo performs boils down to the following
syllogism: (1) Congress amended the Act to overrule our decisions holding
that cable systems do not perform when they retransmit over-the-air
broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo
performs. * * *
***
* * * The Court vows that its ruling will not affect cloud-storage
providers and cable-television systems, but it cannot deliver on that
promise given the imprecision of its result-driven rule. Indeed, the
difficulties inherent in the Court’s makeshift approach will become
apparent in this very case. Today’s decision addresses the legality of
Aereo’s “watch” function, which provides nearly contemporaneous access to
live broadcasts. On remand, one of the first questions the lower courts will
face is whether Aereo’s “record” function, which allows subscribers to save
a program while it is airing and watch it later, infringes the Networks’
public-performance right. The volitional-conduct rule provides a clear
answer to that question: Because Aereo does not select the programs
viewed by its users, it does not perform. But it is impossible to say how the
issue will come out under the Court’s analysis, since cable companies did
not offer remote recording and playback services when Congress amended
the Copyright Act in 1976.
I share the Court’s evident feeling that what Aereo is doing (or
enabling to be done) to the Networks’ copyrighted programming ought not
to be allowed. But perhaps we need not distort the Copyright Act to forbid
it. * * * It is not the role of this Court to identify and plug loopholes. It is
the role of good lawyers to identify and exploit them, and the role of
Congress to eliminate them if it wishes. * * *

UNITED STATES V. AMERICAN SOCIETY OF COMPOSERS,
AUTHORS AND PUBLISHERS
627 F.3d 64 (2d Cir. 2010).

JOHN M. WALKER, JR., CIRCUIT JUDGE:
This case presents two distinct questions that arise from the
transmittal of musical works over the Internet: First, whether a download
of a digital file containing a musical work constitutes a public performance
of that musical work; and, second, whether the district court, acting in its
capacity as the rate court, was reasonable in its assessment of the blanket
license fees of Yahoo! Inc. and RealNetworks, Inc. (collectively, “the
Internet Companies”) to publicly perform any of the millions of musical

88

CH. 1

compositions in the American Society of Composers, Authors and
Publishers (“ASCAP”) repertory.
For the reasons set forth below, we affirm the district court’s ruling
that a download of a musical work does not constitute a public performance
of that work * * *.
I.

Public Performance Right as Applied to Downloads

The Copyright Act confers upon the owner of a copyright “a bundle of
discrete exclusive rights,” each of which may be transferred or retained
separately by the copyright owner. N.Y. Times Co. v. Tasini, 533 U.S. 483,
495–96 (2001). Section 106 of the Copyright Act sets forth these various
rights, including the right “to reproduce the copyrighted work in copies”
and the right “to perform the copyrighted work publicly.” 17 U.S.C.
§§ 106(1), (4). In this case, the Internet Companies offer their customers
the ability to download musical works over the Internet. It is undisputed
that these downloads create copies of the musical works, for which the
parties agree the copyright owners must be compensated. However, the
parties dispute whether these downloads are also public performances of
the musical works, for which the copyright owners must separately and
additionally be compensated. The district court held that these downloads
are not public performances, and we agree.
In answering the question of whether a download is a public
performance, we turn to Section 101 of the Copyright Act, which states that
“[t]o ‘perform’ a work means to recite, render, play, dance, or act it, either
directly or by means of any device or process.” 17 U.S.C. § 101. A download
plainly is neither a “dance” nor an “act.” Thus, we must determine whether
a download of a musical work falls within the meaning of the terms “recite,”
“render,” or “play.”
***
The ordinary sense of the words “recite,” “render,” and “play” refer to
actions that can be perceived contemporaneously. To “recite” is “to repeat
from memory or read aloud esp[ecially] before an audience,” WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY 1895 (1981); to “render” is to “say
over: recite, repeat,” id. at 1922; and to “play” is to “perform on a musical
instrument,” “sound in performance,” “reproduce sound of recorded
material,” or “act on a stage or in some other dramatic medium,” id. at
1737. All three actions entail contemporaneous perceptibility.
These definitions comport with our common-sense understandings of
these words. Itzakh Perlman gives a “recital” of Beethoven’s Violin
Concerto in D Major when he performs it aloud before an audience. Jimmy
Hendrix memorably (or not, depending on one’s sensibility) offered a
“rendition” of the Star-Spangled Banner at Woodstock when he performed
it aloud in 1969. Yo-Yo Ma “plays” the Cello Suite No. 1 when he draws the
bow across his cello strings to audibly reproduce the notes that Bach

CH. 1

89

inscribed. Music is neither recited, rendered, nor played when a recording
(electronic or otherwise) is simply delivered to a potential listener.
The final clause of the § 101 definition of “to perform” further confirms
our interpretation. It states that “[t]o ‘perform’ . . . a motion picture or other
audiovisual work . . . [is] to show its images in any sequence or to make the
sounds accompanying it audible.” 17 U.S.C. § 101. The fact that the statute
defines performance in the audio-visual context as “show[ing]” the work or
making it “audible” reinforces the conclusion that “to perform” a musical
work entails contemporaneous perceptibility. ASCAP has provided no
reason, and we can surmise none, why the statute would require a
contemporaneously perceptible event in the context of an audio-visual
work, but not in the context of a musical work.
The downloads at issue in this appeal are not musical performances
that are contemporaneously perceived by the listener. They are simply
transfers of electronic files containing digital copies from an on-line server
to a local hard drive. The downloaded songs are not performed in any
perceptible manner during the transfers; the user must take some further
action to play the songs after they are downloaded. Because the electronic
download itself involves no recitation, rendering, or playing of the musical
work encoded in the digital transmission, we hold that such a download is
not a performance of that work, as defined by § 101.
ASCAP, pointing to the definition of “publicly” in § 101, argues that a
download constitutes a public performance. Section 101 defines “[t]o
perform or display a work ‘publicly’ ” as follows:
(1) to perform or display it at a place open to the public or at any
place where a substantial number of persons outside of a normal
circle of a family and its social acquaintances is gathered; or (2) to
transmit or otherwise communicate a performance or display of
the work to a place specified by clause (1) or to the public, by
means of any device or process, whether the members of the public
capable of receiving the performance or display receive it in the
same place or in separate places and at the same time or at
different times.
Id. § 101. ASCAP argues that downloads fall under clause (2) of this
definition because downloads “transmit or otherwise communicate a
performance,” id., namely the initial or underlying performance of the
copyrighted work, to the public. We find this argument unavailing. The
definition of “publicly” simply defines the circumstances under which a
performance will be considered public; it does not define the meaning of
“performance.” Moreover, ASCAP’s proposed interpretation misreads the
definition of “publicly.” As we concluded in Cartoon Network LP v. CSC
Holdings, Inc., “when Congress speaks of transmitting a performance to
the public, it refers to the performance created by the act of transmission,”
not simply to transmitting a recording of a performance. 536 F.3d 121, 136

90

CH. 1

(2d Cir.2008). ASCAP’s alternative interpretation is flawed because, in
disaggregating the “transmission” from the simultaneous “performance”
and treating the transmission itself as a performance, ASCAP renders
superfluous the subsequent “a performance . . . of the work” as the object
of the transmittal. See Duncan v. Walker, 533 U.S. 167, 174 (2001) (“It is
our duty to give effect, if possible, to every clause and word of a statute.”).
In contrast, our interpretation in Cartoon Network recognizes that a
“transmittal of a work” is distinct from a transmittal of “a performance”—
the former being a transmittal of the underlying work and the latter being
a transmittal that is itself a performance of the underlying work. See 536
F.3d at 134 (“The fact that the statute says ‘capable of receiving the
performance,’ instead of ‘capable of receiving the transmission,’
underscores the fact that a transmission of a performance is itself a
performance.”).
The Internet Companies’ stream transmissions, which all parties
agree constitute public performances, illustrate why a download is not a
public performance. A stream is an electronic transmission that renders
the musical work audible as it is received by the client-computer’s
temporary memory. This transmission, like a television or radio broadcast,
is a performance because there is a playing of the song that is perceived
simultaneously with the transmission. In contrast, downloads do not
immediately produce sound; only after a file has been downloaded on a
user’s hard drive can he perceive a performance by playing the downloaded
song. Unlike musical works played during radio broadcasts and stream
transmissions, downloaded musical works are transmitted at one point in
time and performed at another. Transmittal without a performance does
not constitute a “public performance.” Cf. Columbia Pictures Indus., Inc.,
v. Prof’l Real Estate Investors, Inc., 866 F.2d 278, 282 (9th Cir.1989)
(holding that renting videodiscs to a hotel guest for playback in the guest’s
room does not constitute the “transmission” of a public performance).
ASCAP misreads our opinion in NFL v. PrimeTime 24 Joint Venture,
211 F.3d 10, 11–13 (2d Cir.2000), to hold that the Copyright Act does not,
in fact, require a contemporaneously perceptible performance to infringe
on the public performance right. In NFL, defendant PrimeTime, a satellite
television provider, captured protected content in the United States from
the NFL, transmitted it from the United States to a satellite (“the uplink”),
and then transmitted it from the satellite to subscribers in both the United
States and Canada (“the downlink”). PrimeTime had a license to transmit
NFL games to its subscribers in the United States but not to Canada. The
NFL sought to enjoin the transmissions sent to Canada by arguing that the
uplink in the United States constituted unauthorized public performances
of the games in the United States. The relevant issue was whether the
uplink transmission was a public performance even though the uplink was
only to a satellite and could not, itself, be perceived by viewers. We
determined that PrimeTime’s uplink transmission of signals captured in

CH. 1

91

the United States amounted to a public performance because it was an
integral part of the larger process by which the NFL’s protected work was
delivered to a public audience.
ASCAP seizes on the fact that the uplink to the satellite was not
contemporaneously perceptible to argue against a contemporaneous
perceptibility requirement in this case. ASCAP’s argument, however, fails
to accord controlling significance to the fact that the immediately
sequential downlink from the satellite to Canadian PrimeTime subscribers
was a public performance of the games. Id. at 11–13; see also David v.
Showtime/The Movie Channel, Inc., 697 F.Supp. 752, 758–60
(S.D.N.Y.1988) (finding that because “Showtime and The Movie Channel
both broadcast television programming . . . to cable system operators,”
which, in turn, “pass[ed] the signal along to their individual customers,”
the initial transmissions constituted public performances because they
were a “step in the process by which a protected work wends its way to its
audience”); MELVILLE B. NIMMER & DAVID NIMMER, 2 NIMMER ON
COPYRIGHT § 8.14[C][2] at 190.6 & n. 63 (2009) (explaining that when a
transmission is made “to cable systems that will in turn transmit directly
to the public,” the earlier transmission is a public performance despite the
absence of any contemporaneous perceptibility). In holding the
transmission in Cartoon Network not to be a public performance, we
distinguished NFL on the basis that in that case the final act in the
sequence of transmissions was a public performance. That same distinction
applies here. Just as in Cartoon Network, the Internet Companies transmit
a copy of the work to the user, who then plays his unique copy of the song
whenever he wants to hear it; because the performance is made by a unique
reproduction of the song that was sold to the user, the ultimate
performance of the song is not “to the public.” See id. at 137, 138.
Accordingly, we affirm the district court’s grant of partial summary
judgment on the basis that downloads do not constitute public
performances of the downloaded musical works.
[Discussion of royalty rates omitted.]
***

5. THE SCOPE OF EXCLUSIVE RIGHTS
IN SOUND RECORDINGS
Statutes: 17 U.S.C. §§ 106(6), 114–15
In the case of sound recordings, section 114 defines the exclusive rights
to reproduce a work and to incorporate it in derivative works more
narrowly than in the case of other copyrightable works. In addition, section
114(a) clarifies that there is no exclusive public performance right in sound
recordings under section 106(4). Sound recordings are one instance in

92

CH. 1

which the classification of a work under section 102(a) significantly affects
the scope of the copyright owner’s rights.
Until 1995, the United States did not recognize performance rights in
sound recordings at all. However, the Digital Performance Right in Sound
Recordings Act, Pub. L. 104–39 (1995), added new section 106(6), giving
the owners of copyrights in sound recordings a public performance right
limited to performances via transmission by digital subscription services.
In 1998, the right was extended to encompass certain nonsubscription
services, most notably webcasting. The Act reflected the concern that
digital transmissions have the potential to supplant record sales, thus
reducing the revenues which those sales previously generated for the
owners of sound recording copyrights. In addition, any decrease in record
sales will reduce the mechanical royalties payable by record companies to
composers, publishers, and performers according to their contracts.
The new law benefits recording artists regardless of whether they own
copyright interests in the recordings on which they perform; new section
114(g) allocates a portion of the digital licensing revenues to the recording
artists.
Section 114(d)(3) limits the right of the sound recording copyright
owner to grant exclusive licenses of the section 106(6) right to interactive
subscription services (where the user selects the recording to be
performed), in response to the concern expressed by composers and
publishers “that the copyright owners of sound recordings might become
‘gatekeepers’ and limit opportunities for public performances of the musical
works embodied in the sound recordings.” S. Rep. No. 104–128, 104th
Cong., 1st Sess. 25 (1995). No restrictions are imposed on the granting of
nonexclusive licenses for section 106(6) rights. New sections 114(e) through
(i) establish licensing rules and statutory royalty rates for digital
performance rights.
Nations that recognize broader performance rights in sound
recordings have in the past refused to allow United States persons owning
sound recording copyrights to collect royalties for public performances in
those countries, because the United States did not reciprocate. Most
nations have continued this practice in spite of the enactment of Pub. L.
104–39, although some nations will remit royalties for digital
performances.

CH. 1

93

B. LIMITS ON SECTION 106 RIGHTS
1. SECTION 117: COMPUTER SOFTWARE

VAULT CORP. V. QUAID SOFTWARE LTD.
847 F.2d 255 (5th Cir. 1988).

REAVLEY, CIRCUIT JUDGE:
[Plaintiff Vault manufactured and marketed PROLOK computer
diskettes containing Vault’s copyrighted copy-protection software, which
prevented persons from making fully functional copies of any other
computer programs contained on those diskettes. Vault sold its diskettes
to software makers who would place their own copyrighted programs on
the copy-protected diskettes in order to prevent unauthorized copying.
Defendant Quaid manufactured and sold CopyWrite diskettes, which
contained software with a feature known as “RAMKEY” that could “unlock”
the PROLOK copy protection. Buyers of Copywrite diskettes could use
them to make fully functional copies of any software contained in a
PROLOK diskette.]
* * * Vault claims that Quaid infringed its copyright under § 501(a) by:
(1) directly copying Vault’s program into the memory of Quaid’s computer;
(2) contributing to the unauthorized copying of Vault’s program and the
programs Vault’s customers place on PROLOK diskettes; and (3) preparing
derivative works of Vault’s program.
Section 117 of the Copyright Act limits a copyright owner’s exclusive
rights under § 106 by permitting an owner of a computer program to make
certain copies of that program without obtaining permission from the
program’s copyright owner. With respect to Vault’s first two claims of
copyright infringement, Quaid contends that its activities fall within the
§ 117 exceptions and that it has, therefore, not infringed Vault’s exclusive
rights under § 501(a). To appreciate the arguments of the parties, we
examine the legislative history of § 117.
A.

Background

In 1974 Congress established the National Commission on New
Technological Uses of Copyrighted Works (the “CONTU”) to perform
research and make recommendations concerning copyright protection for
computer programs. Before receiving the CONTU’s recommendations,
Congress amended the Copyright Act in 1976 to include computer
programs in the definition of protectable literary works and to establish
that a program copied into a computer’s memory constitutes a
reproduction. * * *

94

CH. 1

In 1978 the CONTU issued its final report in which it recognized that
“the cost of developing computer programs is far greater than the cost of
their duplication,” CONTU Report at 26, and concluded that “some form of
protection is necessary to encourage the creation and broad distribution of
computer programs in a competitive market,” id. at 27. After
acknowledging the importance of balancing the interest of proprietors in
obtaining “reasonable protection” against the risks of “unduly burdening
users of programs and the general public,” id. at 29, the Report
recommended * * * the enactment of a new section 117 which would
proscribe the unauthorized copying of computer programs but permit a
“rightful possessor” of a program
to make or authorize the making of another copy or adaptation of
that computer program provided:
(1) that such a new copy or adaptation is created as an
essential step in the utilization of the computer program in
conjunction with a machine and that it is used in no other
manner, or
(2) that such new copy or adaptation is for archival purposes
only and that all archival copies are destroyed in the event
that continued possession of the computer program should
cease to be rightful.
Id. at 30 (emphasis in original).
Because the act of loading a program from a medium of storage into a
computer’s memory creates a copy of the program, the CONTU reasoned
that “one who rightfully possesses a copy of a program . . . should be
provided with a legal right to copy it to that extent which will permit its
use by the possessor,” and drafted proposed § 117(1) to “provide that
persons in rightful possession of copies of programs be able to use them
freely without fear of exposure to copyright liability.” Id. at 31. With respect
to proposed section 117(2), the “archival exception,” the Report explained
that a person in rightful possession of a program should have the right “to
prepare archival copies of it to guard against destruction or damage by
mechanical or electrical failure. But this permission would not extend to
other copies of the program. Thus one could not, for example, make archival
copies of a program and later sell some to another while retaining some for
use.” Id.
In 1980, Congress enacted the Computer Software Copyright Act
which adopted the recommendations contained in the CONTU Report.
Section 11711 * * * was enacted, and the proposed definition of “computer
program” was added to section 101. The Act’s legislative history, contained
11 In enacting the new section 117, Congress adopted the proposed section with only one
change. The final version grants “owners,” as opposed to “rightful possessors,” a limited right to
copy and adapt their software. * * *

CH. 1

95

in a short paragraph in a committee report, merely states that the Act,
“embodies the recommendations of [the CONTU] with respect to clarifying
the law of copyright of computer software.” H.R. Rep. No. 1307, 96th Cong.,
2d Sess., pt. 1, at 23. The absence of an extensive legislative history and
the fact that Congress enacted proposed section 117 with only one change
have prompted courts to rely on the CONTU Report as an expression of
legislative intent.
B.

Direct Copying

In order to develop RAMKEY, Quaid analyzed Vault’s program by
copying it into its computer’s memory. Vault contends that, by making this
unauthorized copy, Quaid directly infringed upon Vault’s copyright. The
district court held that “Quaid’s actions clearly fall within [the § 117(1)]
exemption. The loading of [Vault’s] program into the [memory] of a
computer is an ‘essential step in the utilization’ of [Vault’s] program.
Therefore, Quaid has not infringed Vault’s copyright by loading [Vault’s
program] into [its computer’s memory].” Vault, 655 F. Supp. at 758.
Section 117(1) permits an owner of a program to make a copy of that
program provided that the copy “is created as an essential step in the
utilization of the computer program in conjunction with a machine and that
it is used in no other manner.” Congress recognized that a computer
program cannot be used unless it is first copied into a computer’s memory,
and thus provided the § 117(1) exception to permit copying for this
essential purpose. See CONTU Report at 31. Vault contends that, due to
the inclusion of the phrase “and that it is used in no other manner,” this
exception should be interpreted to permit only the copying of a computer
program for the purpose of using it for its intended purpose. Because Quaid
copied Vault’s program into its computer’s memory for the express purpose
of devising a means of defeating its protective function, Vault contends that
§ 117(1) is not applicable.
We decline to construe § 117(1) in this manner. Even though the copy
of Vault’s program made by Quaid was not used to prevent the copying of
the program placed on the PROLOK diskette by one of Vault’s customers
(which is the purpose of Vault’s program), and was, indeed, made for the
express purpose of devising a means of defeating its protective function,
the copy made by Quaid was “created as an essential step in the utilization”
of Vault’s program. Section 117(1) contains no language to suggest that the
copy it permits must be employed for a use intended by the copyright
owner, and, absent clear congressional guidance to the contrary, we refuse
to read such limiting language into this exception. We therefore hold that
Quaid did not infringe Vault’s exclusive right to reproduce its program in
copies under § 106(1).
***

96
C.

CH. 1

Contributory Infringement

Vault contends that, because purchasers of programs placed on
PROLOK diskettes use the RAMKEY feature of CopyWrite to make
unauthorized copies, Quaid’s advertisement and sale of CopyWrite
diskettes with the RAMKEY feature violate the Copyright Act by
contributing to the infringement of Vault’s copyright and the copyrights
owned by Vault’s customers. Vault asserts that it lost customers and
substantial revenue as a result of Quaid’s contributory infringement
because software companies which previously relied on PROLOK diskettes
to protect their programs from unauthorized copying have discontinued
their use.
***
[The court reviewed the test for contributory copyright infringement
(see Chapter 20.C.2, infra) and determined that Quaid could not be held
liable for the infringing acts of RAMKEY customers if RAMKEY also had
substantial “commercially significant” noninfringing uses.]
Quaid asserts that RAMKEY serves the legitimate purpose of
permitting purchasers of programs recorded on PROLOK diskettes to make
archival copies under § 117(2) and that this purpose constitutes a
substantial noninfringing use. At trial, witnesses for Quaid testified that
software programs placed on floppy diskettes are subject to damage by
physical and human mishap and that RAMKEY protects a purchaser’s
investment by providing a fully functional archival copy that can be used
if the original program on the PROLOK protected diskette, or the diskette
itself, is destroyed. Quaid contends that an archival copy of a PROLOK
protected program, made without RAMKEY, does not serve to protect
against these forms of damage because a computer will not read the
program into its memory from the copy unless the PROLOK diskette
containing the original undamaged program is also in one of its disk drives,
which is impossible if the PROLOK diskette, or the program placed
thereon, has been destroyed due to physical or human mishap.
Computer programs can be stored on a variety of mediums, including
floppy diskettes, hard disks, non-erasable read only memory (“ROM”)
chips, and a computer’s random access memory, and may appear only as
printed instructions on a sheet of paper. Vault contends that the archival
exception was designed to permit only the copying of programs which are
subject to “destruction or damage by mechanical or electrical failure.”
CONTU Report at 31 (emphasis added). While programs stored on all
mediums may be subject to damage due to physical abuse or human error,
programs stored on certain mediums are not subject to damage by
mechanical or electrical failure. Therefore, Vault argues, the medium of
storage determines whether the archival exception applies, thus providing
only owners of programs, placed on mediums of storage which subject them
to damage by mechanical or electrical failure, the right to make back-up

CH. 1

97

copies. To support its construction of § 117(2), Vault notes that one court
has held that the archival exception does not apply to the copying of
programs stored on ROM chips where there was no evidence that programs
stored on this medium were subject to damage by mechanical or electrical
failure, Atari[, Inc. v. JS & A Group, Inc., 597 F. Supp. 5, 9–10
(N.D.Ill.1983)], and another court has likewise held that the archival
exception does not apply to the copying of programs which appear only in
the form of printed instructions in a magazine, Micro-Sparc, Inc. v. Amtype
Corp., 592 F. Supp. 33, 35–36 (D.Mass.1984).
Vault contends that the district court’s finding that programs stored
on floppy diskettes are subject to damage by mechanical or electrical failure
is erroneous because there was insufficient evidence presented at trial to
support it, and, based on this contention, Vault asserts that the archival
exception does not apply to permit the unauthorized copying of these
programs. Vault performed a trial demonstration to prove that even if a
program on an original PROLOK diskette, and Vault’s protective program,
were completely erased from this diskette, these programs could be
restored on the original diskette using a copy made without RAMKEY.
Therefore, Vault argues that even if a program recorded on a PROLOK
diskette is subject to damage by mechanical or electrical failure, the nonoperational copy of a PROLOK protected program made without RAMKEY
is sufficient to protect against this type of damage. Vault concludes that, in
light of the fact that RAMKEY facilitates the making of unauthorized
copies and owners of PROLOK protected programs can make copies to
protect against damage by mechanical and electrical failure without
RAMKEY, the RAMKEY feature is not capable of substantial
noninfringing uses.
* * * We read the stated causes of damage [in CONTU] to be
illustrative only, and not exclusive. Similarly, the statement follows with
the prohibited use of the archival copies which does not include a
prohibition against copying for purposes other than to protect against
“mechanical or electrical failure.” The Report, or Congress, could have
easily limited the scope of § 117(2) to authorize the making of archival
copies of programs subject to damage, and to guard against, only
mechanical or electrical failure. CONTU did not recommend that language,
nor did Congress enact it. Congress, following CONTU’s advice, provided
that an owner of a computer program may make a copy of that program
provided that “such new copy . . . is for archival purposes only.” 17 U.S.C.
§ 117(2). Congress did not choose to spell out detailed restrictions on the
copying as was done in sections 108 and 112. Congress imposed no
restriction upon the purpose or reason of the owner in making the archival
copy; only the use made of that copy is restricted. See CONTU Report at 31
(“one could not, for example, make archival copies of a program and later
sell some to another while retaining some for use”). An owner of a program
is entitled, under § 117(2), to make an archival copy of that program in

98

CH. 1

order to guard against all types of risks, including physical and human
mishap as well as mechanical and electrical failure.
A copy of a PROLOK protected program made with RAMKEY protects
an owner from all types of damage to the original program, while a copy
made without RAMKEY only serves the limited function of protecting
against damage to the original program by mechanical and electrical
failure. Because § 117(2) permits the making of fully functional archival
copies, it follows that RAMKEY is capable of substantial noninfringing
uses. Quaid’s advertisement and sale of CopyWrite diskettes with the
RAMKEY feature does not constitute contributory infringement.
***

2. SECTION 109: THE FIRST SALE DOCTRINE
a.

Sale vs. License

VERNOR V. AUTODESK, INC.
621 F.3d 1102 (9th Cir. 2010).

CALLAHAN, CIRCUIT JUDGE:
Timothy Vernor purchased several used copies of Autodesk, Inc.’s
AutoCAD Release 14 software from one of Autodesk’s direct customers, and
he resold the Release 14 copies on eBay. Vernor brought this declaratory
judgment action against Autodesk to establish that these resales did not
infringe Autodesk’s copyright. The district court issued the requested
declaratory judgment, holding that Vernor’s sales were lawful because of
two of the Copyright Act’s affirmative defenses that apply to owners of
copies of copyrighted works, the first sale doctrine and the essential step
defense.
Autodesk distributes Release 14 pursuant to a limited license
agreement in which it reserves title to the software copies and imposes
significant use and transfer restrictions on its customers. We determine
that Autodesk’s direct customers are licensees of their copies of the
software rather than owners, which has two ramifications. Because Vernor
did not purchase the Release 14 copies from an owner, he may not invoke
the first sale doctrine, and he also may not assert an essential step defense
on behalf of his customers. For these reasons, we vacate the district court’s
grant of summary judgment to Vernor and remand for further proceedings.
I.
A.

Autodesk’s Release 14 software and licensing practices
***

CH. 1

99

Since at least 1986, Autodesk has offered AutoCAD to customers
pursuant to an accompanying software license agreement (“SLA”), which
customers must accept before installing the software. A customer who does
not accept the SLA can return the software for a full refund. Autodesk
offers SLAs with different terms for commercial, educational institution,
and student users. The commercial license, which is the most expensive,
imposes the fewest restrictions on users and allows them software
upgrades at discounted prices.
The SLA for Release 14 first recites that Autodesk retains title to all
copies. Second, it states that the customer has a nonexclusive and
nontransferable license to use Release 14. Third, it imposes transfer
restrictions, prohibiting customers from renting, leasing, or transferring
the software without Autodesk’s prior consent and from electronically or
physically transferring the software out of the Western Hemisphere.
Fourth, it imposes significant use restrictions:
YOU MAY NOT: (1) modify, translate, reverse-engineer,
decompile, or disassemble the Software . . . (3) remove any
proprietary notices, labels, or marks from the Software or
Documentation; (4) use . . . the Software outside of the Western
Hemisphere; (5) utilize any computer software or hardware
designed to defeat any hardware copy-protection device, should
the software you have licensed be equipped with such protection;
or (6) use the Software for commercial or other revenuegenerating purposes if the Software has been licensed or labeled
for educational use only.
Fifth, the SLA provides for license termination if the user copies the
software without authorization or does not comply with the SLA’s
restrictions. Finally, the SLA provides that if the software is an upgrade of
a previous version [then the customer must destroy its copies of the
previous version.]
Autodesk takes measures to enforce these license requirements. It
assigns a serial number to each copy of AutoCAD and tracks registered
licensees. It requires customers to input “activation codes” within one
month after installation to continue using the software. * * *
B.

Autodesk’s provision of Release 14 software to CTA

[Autodesk customer CTA acquired Release 14 and agreed to the terms
of the SLA. However, when it later upgraded to Release 15, CTA did not
destroy its copies of Release 14 as the SLA required, but sold them to
Vernor along with the activation codes. Vernor acquired an additional copy
from another source. While Vernor was aware of the SLA’s existence, he
never agreed to its terms. Vernor offered his copies for sale on eBay. When
Autodesk alleged that these sales were infringing, Vernor sought and
obtained a declaratory judgment of non-infringement. Autodesk appealed.]

100

CH. 1

III.
Copyright is a federal law protection provided to the authors of
“original works of authorship,” including software programs. 17 U.S.C.
§§ 101–103. The Copyright Act confers several exclusive rights on
copyright owners, including the exclusive rights to reproduce their works
and to distribute their works by sale or rental. Id. § 106(1), (3). The
exclusive distribution right is limited by the first sale doctrine, an
affirmative defense to copyright infringement that allows owners of copies
of copyrighted works to resell those copies. The exclusive reproduction right
is limited within the software context by the essential step defense, another
affirmative defense to copyright infringement that is discussed further
infra. Both of these affirmative defenses are unavailable to those who are
only licensed to use their copies of copyrighted works.
This case requires us to decide whether Autodesk sold Release 14
copies to its customers or licensed the copies to its customers. If CTA owned
its copies of Release 14, then both its sales to Vernor and Vernor’s
subsequent sales were non-infringing under the first sale doctrine.6
However, if Autodesk only licensed CTA to use copies of Release 14, then
CTA’s and Vernor’s sales of those copies are not protected by the first sale
doctrine and would therefore infringe Autodesk’s exclusive distribution
right.
A.

The first sale doctrine

The Supreme Court articulated the first sale doctrine in 1908, holding
that a copyright owner’s exclusive distribution right is exhausted after the
owner’s first sale of a particular copy of the copyrighted work. See BobbsMerrill Co. v. Straus, 210 U.S. 339, 350–51 (1908). In Bobbs-Merrill, the
plaintiff-copyright owner sold its book with a printed notice announcing
that any retailer who sold the book for less than one dollar was responsible
for copyright infringement. Plaintiff sought injunctive relief against
defendants-booksellers who failed to comply with the price restriction. The
Supreme Court rejected the plaintiff’s claim, holding that its exclusive
distribution right applied only to first sales of copies of the work. The
distribution right did not permit plaintiff to dictate that subsequent sales
of the work below a particular price were infringing. The Court noted that
its decision solely applied to the rights of a copyright owner that distributed
its work without a license agreement. Id. at 350 (“There is no claim in this
case of contract limitation, nor license agreement controlling the
subsequent sales of the book.”).
Congress codified the first sale doctrine the following year. See 17
U.S.C. § 41 (1909). In its current form, it allows the “owner of a particular
6
If Autodesk’s transfer of Release 14 copies to CTA was a first sale, then CTA’s resale of the
software in violation of the SLA’s terms would be a breach of contract, but would not result in
copyright liability.

CH. 1

101

copy” of a copyrighted work to sell or dispose of his copy without the
copyright owner’s authorization. Id. § 109(a) (enacted 1976). The first sale
doctrine does not apply to a person who possesses a copy of the copyrighted
work without owning it, such as a licensee. See id. § 109(d); cf. Quality King
Distribs., Inc. v. L’anza Research Int’l Inc., 523 U.S. 135, 146–47 (1998)
(“[T]he first sale doctrine would not provide a defense to . . . any non-owner
such as a bailee, a licensee, a consignee, or one whose possession of the copy
was unlawful.”).
B.

Owners vs. licensees

We turn to our precedents governing whether a transferee of a copy of
a copyrighted work is an owner or licensee of that copy. We then apply
those precedents to CTA’s and Vernor’s possession of Release 14 copies.
1.

United States v. Wise, 550 F.2d 1180 (9th Cir.1977)

In Wise, a criminal copyright infringement case, we considered
whether copyright owners who transferred copies of their motion pictures
pursuant to written distribution agreements had executed first sales. The
defendant was found guilty of copyright infringement based on his forprofit sales of motion picture prints. The copyright owners distributed their
films to third parties pursuant to written agreements that restricted their
use and transfer. On appeal, the defendant argued that the government
failed to prove the absence of a first sale for each film. If the copyright
owners’ initial transfers of the films were first sales, then the defendant’s
resales were protected by the first sale doctrine and thus were not
copyright infringement.
To determine whether a first sale occurred, we considered multiple
factors pertaining to each film distribution agreement. Specifically, we
considered whether the agreement (a) was labeled a license, (b) provided
that the copyright owner retained title to the prints, (c) required the return
or destruction of the prints, (d) forbade duplication of prints, or (e) required
the transferee to maintain possession of the prints for the agreement’s
duration. * * *
2.

The “MAI trio” of cases

Over fifteen years after Wise, we again considered the distinction
between owners and licensees of copies of copyrighted works in three
software copyright cases, the “MAI trio”. See MAI Sys. Corp. v. Peak
Computer, Inc., 991 F.2d 511 (9th Cir.1993); Triad Sys. Corp. v. Se. Express
Co., 64 F.3d 1330 (9th Cir.1995); Wall Data, Inc. v. Los Angeles County
Sheriff’s Dep’t, 447 F.3d 769 (9th Cir.2006). In the MAI trio, we considered
which software purchasers were owners of copies of copyrighted works for
purposes of a second affirmative defense to infringement, the essential step
defense.

102

CH. 1

The enforcement of copyright owners’ exclusive right to reproduce
their work under the Copyright Act, 17 U.S.C. § 106(1), has posed special
challenges in the software context. In order to use a software program, a
user’s computer will automatically copy the software into the computer’s
random access memory (“RAM”), which is a form of computer data storage.
Congress enacted the essential step defense to codify that a software user
who is the “owner of a copy” of a copyrighted software program does not
infringe by making a copy of the computer program, if the new copy is
“created as an essential step in the utilization of the computer program in
conjunction with a machine and . . . is used in no other manner.” 17 U.S.C.
§ 117(a)(1).
The Copyright Act provides that an “owner of a copy” of copyrighted
software may claim the essential step defense, and the “owner of a
particular copy” of copyrighted software may claim the first sale doctrine.
17 U.S.C. §§ 109(a), 117(a)(1). The MAI trio construed the phrase “owner
of a copy” for essential step defense purposes. Neither Vernor nor Autodesk
contends that the first sale doctrine’s inclusion of the word “particular”
alters the phrase’s meaning, and we “presume that words used more than
once in the same statute have the same meaning throughout.” Moldo v.
Matsco, Inc. (In re Cybernetic Servs., Inc.), 252 F.3d 1039, 1051 (9th
Cir.2001). Accordingly, we consider the MAI trio’s construction of “owner
of a copy” controlling in our analysis of whether CTA and Vernor became
“owner[s] of a particular copy” of Release 14 software.
In MAI and Triad, the defendants maintained computers that ran the
plaintiffs’ operating system software. When the defendants ran the
computers, the computers automatically loaded plaintiffs’ software into
RAM. The plaintiffs in both cases sold their software pursuant to
restrictive license agreements, and we held that their customers were
licensees who were therefore not entitled to claim the essential step
defense. We found that the defendants infringed plaintiffs’ software
copyrights by their unauthorized loading of copyrighted software into
RAM. In Triad, the plaintiff had earlier sold software outright to some
customers. We noted that these customers were owners who were entitled
to the essential step defense, and the defendant did not infringe by making
RAM copies in servicing their computers.
In Wall Data, plaintiff sold 3,663 software licenses to the defendant.
The licenses (1) were non-exclusive; (2) permitted use of the software on a
single computer; and (3) permitted transfer of the software once per month,
if the software was removed from the original computer. The defendant
installed the software onto 6,007 computers via hard drive imaging, which
saved it from installing the software manually on each computer. It made
an unverified claim that only 3,663 users could simultaneously access the
software.

CH. 1

103

The plaintiff sued for copyright infringement, contending that the
defendant violated the license by “over-installing” the software. The
defendant raised an essential step defense, contending that its hard drive
imaging was a necessary step of installation. * * * Citing MAI, we held that
the essential step defense does not apply where the copyright owner grants
the user a license and significantly restricts the user’s ability to transfer
the software. Since the plaintiff’s license imposed “significant restrictions”
on the defendant’s software rights, the defendant was a licensee and was
not entitled to the essential step defense.
***
We read Wise and the MAI trio to prescribe three considerations that
we may use to determine whether a software user is a licensee, rather than
an owner of a copy. First, we consider whether the copyright owner
specifies that a user is granted a license. Second, we consider whether the
copyright owner significantly restricts the user’s ability to transfer the
software. Finally, we consider whether the copyright owner imposes
notable use restrictions. Our holding reconciles the MAI trio and Wise, even
though the MAI trio did not cite Wise.
***
IV.
***
A.

Analysis

We hold today that a software user is a licensee rather than an owner
of a copy where the copyright owner (1) specifies that the user is granted a
license; (2) significantly restricts the user’s ability to transfer the software;
and (3) imposes notable use restrictions. Applying our holding to
Autodesk’s SLA, we conclude that CTA was a licensee rather than an owner
of copies of Release 14 and thus was not entitled to invoke the first sale
doctrine or the essential step defense.
Autodesk retained title to the software and imposed significant
transfer restrictions: it stated that the license is nontransferable, the
software could not be transferred or leased without Autodesk’s written
consent, and the software could not be transferred outside the Western
Hemisphere. The SLA also imposed use restrictions against the use of the
software outside the Western Hemisphere and against modifying,
translating, or reverse-engineering the software, removing any proprietary
marks from the software or documentation, or defeating any copy
protection device. Furthermore, the SLA provided for termination of the
license upon the licensee’s unauthorized copying or failure to comply with
other license restrictions. Thus, because Autodesk reserved title to Release
14 copies and imposed significant transfer and use restrictions, we

104

CH. 1

conclude that its customers are licensees of their copies of Release 14 rather
than owners.
CTA was a licensee rather than an “owner of a particular copy” of
Release 14, and it was not entitled to resell its Release 14 copies to Vernor
under the first sale doctrine. 17 U.S.C. § 109(a). Therefore, Vernor did not
receive title to the copies from CTA and accordingly could not pass
ownership on to others. Both CTA’s and Vernor’s sales infringed Autodesk’s
exclusive right to distribute copies of its work. Id. § 106(3).
Because Vernor was not an owner, his customers are also not owners
of Release 14 copies. Therefore, when they install Release 14 on their
computers, the copies of the software that they make during installation
infringe Autodesk’s exclusive reproduction right because they too are not
entitled to the benefit of the essential step defense.13 17 U.S.C. §§ 106(1),
117(a)(1).
Although unnecessary to our resolution of the case, we address the
legislative history in order to address the arguments raised by the parties
and amici. That legislative history supports our conclusion that licensees
such as CTA are not entitled to claim the first sale doctrine. The House
Report for § 109 underscores Congress’ view that the first sale doctrine is
available only to a person who has acquired a copy via an “outright sale”.
H.R.Rep. No. 94–1476, at 79 (1976). The report also asserts that the first
sale doctrine does not “apply to someone who merely possesses a copy or
phonorecord without having acquired ownership of it.” Id.
Our conclusion that those who rightfully possess, but do not own, a
copy of copyrighted software are not entitled to claim the essential step
defense is also supported by the legislative history. Congress enacted § 117
following a report from the National Commission on New Technological
Uses of Copyrighted Works (“CONTU”) proposing Copyright Act
amendments. CONTU’s proposed version of § 117 was identical to the
version that Congress enacted with one exception. CONTU’s version
provided, “[I]t is not an infringement for the rightful possessor of a copy of
a computer program to make or authorize the making of another copy or
adaptation of that program. . . .” Id. Without explanation, Congress
substituted “owner” for “rightful possessor.” This modification suggests
that more than rightful possession is required for § 117 to apply—i.e., that
Congress did not intend licensees subject to significant transfer and use
restrictions to receive the benefit of the essential step defense.
***
13 It may seem intuitive that every lawful user of a copyrighted software program, whether
they own their copies or are merely licensed to use them, should be entitled to an “essential step
defense” that provides that they do not infringe simply by using a computer program that they
lawfully acquired. However, the Copyright Act confers this defense only on owners of software
copies. See 17 U.S.C. § 117. In contrast, a licensee’s right to use the software, including the right
to copy the software into RAM, is conferred by the terms of its license agreement.

CH. 1

105

V.
Although our holding today is controlled by our precedent, we
recognize the significant policy considerations raised by the parties and
amici on both sides of this appeal.
Autodesk, the Software & Information Industry Association (“SIIA”),
and the Motion Picture Association of America (“MPAA”) have presented
policy arguments that favor our result. For instance, Autodesk argues in
favor of judicial enforcement of software license agreements that restrict
transfers of copies of the work. Autodesk contends that this (1) allows for
tiered pricing for different software markets, such as reduced pricing for
students or educational institutions; (2) increases software companies’
sales; (3) lowers prices for all consumers by spreading costs among a large
number of purchasers; and (4) reduces the incidence of piracy by allowing
copyright owners to bring infringement actions against unauthorized
resellers. SIIA argues that a license can exist even where a customer (1)
receives his copy of the work after making a single payment and (2) can
indefinitely possess a software copy, because it is the software code and
associated rights that are valuable rather than the inexpensive discs on
which the code may be stored. Also, the MPAA argues that a customer’s
ability to possess a copyrighted work indefinitely should not compel a
finding of a first sale, because there is often no practically feasible way for
a consumer to return a copy to the copyright owner.
Vernor, eBay, and the American Library Association (“ALA”) have
presented policy arguments against our decision. Vernor contends that our
decision (1) does not vindicate the law’s aversion to restraints on alienation
of personal property; (2) may force everyone purchasing copyrighted
property to trace the chain of title to ensure that a first sale occurred; and
(3) ignores the economic realities of the relevant transactions, in which the
copyright owner permanently released software copies into the stream of
commerce without expectation of return in exchange for upfront payment
of the full software price. eBay contends that a broad view of the first sale
doctrine is necessary to facilitate the creation of secondary markets for
copyrighted works, which contributes to the public good by (1) giving
consumers additional opportunities to purchase and sell copyrighted
works, often at below-retail prices; (2) allowing consumers to obtain copies
of works after a copyright owner has ceased distribution; and (3) allowing
the proliferation of businesses.
The ALA contends that the first sale doctrine facilitates the
availability of copyrighted works after their commercial lifespan, by inter
alia enabling the existence of libraries, used bookstores, and hand-to-hand
exchanges of copyrighted materials. The ALA further contends that judicial
enforcement of software license agreements, which are often contracts of
adhesion, could eliminate the software resale market, require used
computer sellers to delete legitimate software prior to sale, and increase

106

CH. 1

prices for consumers by reducing price competition for software vendors. It
contends that Autodesk’s position (1) undermines 17 U.S.C. § 109(b)(2),
which permits non-profit libraries to lend software for non-commercial
purposes, and (2) would hamper efforts by non-profits to collect and
preserve out-of-print software. The ALA fears that the software industry’s
licensing practices could be adopted by other copyright owners, including
book publishers, record labels, and movie studios.
These are serious contentions on both sides, but they do not alter our
conclusion that our precedent from Wise through the MAI trio requires the
result we reach. Congress is free, of course, to modify the first sale doctrine
and the essential step defense if it deems these or other policy
considerations to require a different approach.
***

b.

Importing Copies

KIRTSAENG V. JOHN WILEY & SONS, INC.
568 U.S. 519, 133 S.Ct. 1351 (2013).

JUSTICE BREYER delivered the opinion of the Court.
Section 106 of the Copyright Act grants “the owner of copyright under
this title” certain “exclusive rights,” including the right “to distribute copies
. . . of the copyrighted work to the public by sale or other transfer of
ownership.” 17 U.S.C. § 106(3). These rights are qualified, however, by the
application of various limitations set forth in the next several sections of
the Act, §§ 107 through 122. Those sections, typically entitled “Limitations
on exclusive rights,” include, for example, the principle of “fair use” (§ 107),
permission for limited library archival reproduction (§ 108), and the
doctrine at issue here, the “first sale” doctrine (§ 109).
Section 109(a) sets forth the “first sale” doctrine as follows:
“Notwithstanding the provisions of section 106(3) [the section that
grants the owner exclusive distribution rights], the owner of a
particular copy or phonorecord lawfully made under this title . . .
is entitled, without the authority of the copyright owner, to sell or
otherwise dispose of the possession of that copy or phonorecord.”
(Emphasis added.)
Thus, even though § 106(3) forbids distribution of a copy of, say, the
copyrighted novel Herzog without the copyright owner’s permission,
§ 109(a) adds that, once a copy of Herzog has been lawfully sold (or its
ownership otherwise lawfully transferred), the buyer of that copy and
subsequent owners are free to dispose of it as they wish. In copyright
jargon, the “first sale” has “exhausted” the copyright owner’s § 106(3)
exclusive distribution right.

CH. 1

107

What, however, if the copy of Herzog was printed abroad and then
initially sold with the copyright owner’s permission? Does the “first sale”
doctrine still apply? Is the buyer, like the buyer of a domestically
manufactured copy, free to bring the copy into the United States and
dispose of it as he or she wishes?
To put the matter technically, an “importation” provision, § 602(a)(1),
says that
“[i]mportation into the United States, without the authority of the
owner of copyright under this title, of copies . . . of a work that
have been acquired outside the United States is an infringement
of the exclusive right to distribute copies . . . under, Netcom does
not maintain an archive of files for its users. Thus, it cannot be
said to be “supplying a product.” In contrast to some of its larger
competitors, Netcom does not create or control the content of the
information available to its subscribers; it merely provides access
to the Internet, whose content is controlled by no single entity.
Although the Internet consists of many different computers
networked together, some of which may contain infringing files, it
does not make sense to hold the operator of each computer liable
as an infringer merely because his or her computer is linked to a
computer with an infringing file. It would be especially
inappropriate to hold liable a service that acts more like a conduit,
in other words, one that does not itself keep an archive of files for
more than a short duration. Finding such a service liable would
involve an unreasonably broad construction of public distribution
and display rights. No purpose would be served by holding liable
those who have no ability to control the information to which their
subscribers have access, even though they might be in some sense
helping to achieve the Internet’s automatic “public distribution”
and the users’ “public” display of files. . . .”
17 U.S.C. § 602(a)(1) (2006 ed., Supp. V) (emphasis added).
Thus § 602(a)(1) makes clear that importing a copy without permission
violates the owner’s exclusive distribution right. But in doing so, § 602(a)(1)
refers explicitly to the § 106(3) exclusive distribution right. As we have just
said, § 106 is by its terms “[s]ubject to” the various doctrines and principles
contained in §§ 107 through 122, including § 109(a)’s “first sale” limitation.
Do those same modifications apply—in particular, does the “first sale”
modification apply—when considering whether § 602(a)(1) prohibits
importing a copy?
In Quality King Distributors, Inc. v. L’anza Research Int’l, Inc., 523
U.S. 135, 145 (1998), we held that § 602(a)(1)’s reference to § 106(3)’s
exclusive distribution right incorporates the later subsections’ limitations,
including, in particular, the “first sale” doctrine of § 109. Thus, it might
seem that, § 602(a)(1) notwithstanding, one who buys a copy abroad can

108

CH. 1

freely import that copy into the United States and dispose of it, just as he
could had he bought the copy in the United States.
But Quality King considered an instance in which the copy, though
purchased abroad, was initially manufactured in the United States (and
then sent abroad and sold). This case is like Quality King but for one
important fact. The copies at issue here were manufactured abroad. That
fact is important because § 109(a) says that the “first sale” doctrine applies
to “a particular copy or phonorecord lawfully made under this title.” And
we must decide here whether the five words, “lawfully made under this
title,” make a critical legal difference.
Putting section numbers to the side, we ask whether the “first sale”
doctrine applies to protect a buyer or other lawful owner of a copy (of a
copyrighted work) lawfully manufactured abroad. Can that buyer bring
that copy into the United States (and sell it or give it away) without
obtaining permission to do so from the copyright owner? Can, for example,
someone who purchases, say at a used bookstore, a book printed abroad
subsequently resell it without the copyright owner’s permission?
In our view, the answers to these questions are, yes. We hold that the
“first sale” doctrine applies to copies of a copyrighted work lawfully made
abroad.
I
A
***
* * * [T]here are two essentially equivalent versions of a Wiley
textbook, each version manufactured and sold with Wiley’s permission: (1)
an American version printed and sold in the United States, and (2) a
foreign version manufactured and sold abroad. And Wiley makes certain
that copies of the second version state that they are not to be taken (without
permission) into the United States.
Petitioner, Supap Kirtsaeng, a citizen of Thailand, moved to the
United States in 1997 to study mathematics at Cornell University. He paid
for his education with the help of a Thai Government scholarship which
required him to teach in Thailand for 10 years on his return. Kirtsaeng
successfully completed his undergraduate courses at Cornell, successfully
completed a Ph.D. program in mathematics at the University of Southern
California, and then, as promised, returned to Thailand to teach. While he
was studying in the United States, Kirtsaeng asked his friends and family
in Thailand to buy copies of foreign edition English-language textbooks at
Thai book shops, where they sold at low prices, and mail them to him in
the United States. Kirtsaeng would then sell them, reimburse his family
and friends, and keep the profit.

CH. 1

109

B
In 2008 Wiley brought this federal lawsuit against Kirtsaeng for
copyright infringement. Wiley claimed that Kirtsaeng’s unauthorized
importation of its books and his later resale of those books amounted to an
infringement of Wiley’s § 106(3) exclusive right to distribute as well as
§ 602’s related import prohibition. Kirtsaeng replied that the books he had
acquired were “ ‘lawfully made’ ” and that he had acquired them
legitimately. Thus, in his view, § 109(a)’s “first sale” doctrine permitted
him to resell or otherwise dispose of the books without the copyright
owner’s further permission.
***
II
We must decide whether the words “lawfully made under this title”
restrict the scope of § 109(a)’s “first sale” doctrine geographically. The
Second Circuit, the Ninth Circuit, Wiley, and the Solicitor General (as
amicus) all read those words as imposing a form of geographical limitation.
The Second Circuit held that they limit the “first sale” doctrine to
particular copies “made in territories in which the Copyright Act is law,”
which (the Circuit says) are copies “manufactured domestically,” not
“outside of the United States.” * * * And the Ninth Circuit has held that
those words limit the “first sale” doctrine’s applicability (1) to copies
lawfully made in the United States, and (2) to copies lawfully made outside
the United States but initially sold in the United States with the copyright
owner’s permission. Denbicare U.S.A. Inc. v. Toys “R” Us, Inc., 84 F.3d
1143, 1149–1150 (1996).
Under any of these geographical interpretations, § 109(a)’s “first sale”
doctrine would not apply to the Wiley Asia books at issue here. And, despite
an American copyright owner’s permission to make copies abroad, one who
buys a copy of any such book or other copyrighted work—whether at a retail
store, over the Internet, or at a library sale—could not resell (or otherwise
dispose of) that particular copy without further permission.
Kirtsaeng, however, reads the words “lawfully made under this title”
as imposing a non-geographical limitation. He says that they mean made
“in accordance with” or “in compliance with” the Copyright Act. In that
case, § 109(a)’s “first sale” doctrine would apply to copyrighted works as
long as their manufacture met the requirements of American copyright
law. In particular, the doctrine would apply where, as here, copies are
manufactured abroad with the permission of the copyright owner.
In our view, § 109(a)’s language, its context, and the common-law
history of the “first sale” doctrine, taken together, favor a non-geographical
interpretation. We also doubt that Congress would have intended to create
the practical copyright-related harms with which a geographical
interpretation would threaten ordinary scholarly, artistic, commercial, and

110
consumer activities. We consequently conclude that
nongeographical reading is the better reading of the Act.

CH. 1

Kirtsaeng’s

A
The language of § 109(a) read literally favors Kirtsaeng’s
nongeographical interpretation, namely, that “lawfully made under this
title” means made “in accordance with” or “in compliance with” the
Copyright Act. The language of § 109(a) says nothing about geography. The
word “under” can mean “[i]n accordance with.” 18 OXFORD ENGLISH
DICTIONARY 950 (2d ed.1989). And a nongeographical interpretation
provides each word of the five-word phrase with a distinct purpose. The
first two words of the phrase, “lawfully made,” suggest an effort to
distinguish those copies that were made lawfully from those that were not,
and the last three words, “under this title,” set forth the standard of
“lawful[ness].” Thus, the nongeographical reading is simple, it promotes a
traditional copyright objective (combatting piracy), and it makes word-byword linguistic sense.
The geographical interpretation, however, bristles with linguistic
difficulties. It gives the word “lawfully” little, if any, linguistic work to do.
(How could a book be unlawfully “made under this title”?) It imports
geography into a statutory provision that says nothing explicitly about it.
And it is far more complex than may at first appear.
To read the clause geographically, Wiley, like the Second Circuit and
the Solicitor General, must first emphasize the word “under.” Indeed,
Wiley reads “under this title” to mean “in conformance with the Copyright
Act where the Copyright Act is applicable.” Wiley must then take a second
step, arguing that the Act “is applicable” only in the United States. And the
Solicitor General must do the same.
One difficulty is that neither “under” nor any other word in the phrase
means “where.” See, e.g., 18 OXFORD ENGLISH DICTIONARY, supra, at
947–952 (definition of “under”). It might mean “subject to,” but as this
Court has repeatedly acknowledged, the word evades a uniform, consistent
meaning.
A far more serious difficulty arises out of the uncertainty and
complexity surrounding the second step’s effort to read the necessary
geographical limitation into the word “applicable” (or the equivalent).
Where, precisely, is the Copyright Act “applicable”? The Act does not
instantly protect an American copyright holder from unauthorized piracy
taking place abroad. But that fact does not mean the Act is inapplicable to
copies made abroad. * * *
The appropriateness of this linguistic usage is underscored by the fact
that § 104 of the Act itself says that works “subject to protection under this
title” include unpublished works “without regard to the nationality or
domicile of the author,” and works “first published” in any one of the nearly

CH. 1

111

180 nations that have signed a copyright treaty with the United States.
Thus, ordinary English permits us to say that the Act “applies” to an Irish
manuscript lying in its author’s Dublin desk drawer as well as to an
original recording of a ballet performance first made in Japan and now on
display in a Kyoto art gallery.
The Ninth Circuit’s geographical interpretation produces still greater
linguistic difficulty. As we said, that Circuit interprets the “first sale”
doctrine to cover both (1) copies manufactured in the United States and (2)
copies manufactured abroad but first sold in the United States with the
American copyright owner’s permission. Denbicare U.S.A., 84 F.3d, at
1149–1150.
We can understand why the Ninth Circuit may have thought it
necessary to add the second part of its definition. As we shall later describe,
without some such qualification a copyright holder could prevent a buyer
from domestically reselling or even giving away copies of a video game
made in Japan, a film made in Germany, or a dress (with a design
copyright) made in China, even if the copyright holder has granted
permission for the foreign manufacture, importation, and an initial
domestic sale of the copy. A publisher such as Wiley would be free to print
its books abroad, allow their importation and sale within the United States,
but prohibit students from later selling their used texts at a campus
bookstore. We see no way, however, to reconcile this half-geographical/halfnongeographical interpretation with the language of the phrase, “lawfully
made under this title.” As a matter of English, it would seem that those
five words either do cover copies lawfully made abroad or they do not.
In sum, we believe that geographical interpretations create more
linguistic problems than they resolve. And considerations of simplicity and
coherence tip the purely linguistic balance in Kirtsaeng’s, nongeographical,
favor.
B
Both historical and contemporary statutory context indicate that
Congress, when writing the present version of § 109(a), did not have
geography in mind. In respect to history, we compare § 109(a)’s present
language with the language of its immediate predecessor. That predecessor
said:
“[N]othing in this Act shall be deemed to forbid, prevent, or
restrict the transfer of any copy of a copyrighted work the
possession of which has been lawfully obtained.”
Copyright Act of 1909, § 41, 35 Stat. 1084 (emphasis added). The
predecessor says nothing about geography (and Wiley does not argue that
it does). So we ask whether Congress, in changing its language implicitly
introduced a geographical limitation that previously was lacking.

112

CH. 1

A comparison of language indicates that it did not. The predecessor
says that the “first sale” doctrine protects “the transfer of any copy the
possession of which has been lawfully obtained.” The present version says
that “the owner of a particular copy or phonorecord lawfully made under
this title is entitled to sell or otherwise dispose of the possession of that
copy or phonorecord.” What does this change in language accomplish?
The language of the former version referred to those who are not
owners of a copy, but mere possessors who “lawfully obtained” a copy. The
present version covers only those who are owners of a “lawfully made” copy.
Whom does the change leave out? Who might have lawfully obtained a copy
of a copyrighted work but not owned that copy? One answer is owners of
movie theaters, who during the 1970’s (and before) often leased films from
movie distributors or filmmakers. Because the theater owners had
“lawfully obtained” their copies, the earlier version could be read as
allowing them to sell that copy, i.e., it might have given them “first sale”
protection. Because the theater owners were lessees, not owners, of their
copies, the change in language makes clear that they (like bailees and other
lessees) cannot take advantage of the “first sale” doctrine. * * *
This objective perfectly well explains the new language of the present
version, including the five words here at issue. Section 109(a) now makes
clear that a lessee of a copy will not receive “first sale” protection but one
who owns a copy will receive “first sale” protection, provided, of course, that
the copy was “lawfully made ” and not pirated. The new language also takes
into account that a copy may be “lawfully made under this title” when the
copy, say of a phonorecord, comes into its owner’s possession through use
of a compulsory license, which “this title” provides for elsewhere, namely,
in § 115. * * *
Other provisions of the present statute also support a nongeographical
interpretation. For one thing, the statute phases out the “manufacturing
clause,” a clause that appeared in earlier statutes and had limited
importation of many copies (of copyrighted works) printed outside the
United States. § 601, 90 Stat. 2588 (“Prior to July 1, 1982 . . . the
importation into or public distribution in the United States of copies of a
work consisting preponderantly of nondramatic literary material . . . is
prohibited unless the portions consisting of such material have been
manufactured in the United States or Canada”). The phasing out of this
clause sought to equalize treatment of copies manufactured in America and
copies manufactured abroad.
The “equal treatment” principle, however, is difficult to square with a
geographical interpretation of the “first sale” clause that would grant the
holder of an American copyright (perhaps a foreign national) permanent
control over the American distribution chain (sales, resales, gifts, and other
distribution) in respect to copies printed abroad but not in respect to copies
printed in America. And it is particularly difficult to believe that Congress

CH. 1

113

would have sought this unequal treatment while saying nothing about it
and while, in a related clause (the manufacturing phase-out), seeking the
opposite kind of policy goal. * * *
Finally, we normally presume that the words “lawfully made under
this title” carry the same meaning when they appear in different but
related sections. But doing so here produces surprising consequences.
Consider:
(1) Section 109(c) says that, despite the copyright owner’s
exclusive right “to display” a copyrighted work (provided in
§ 106(5)), the owner of a particular copy “lawfully made under this
title” may publicly display it without further authorization. To
interpret these words geographically would mean that one who
buys a copyrighted work of art, a poster, or even a bumper sticker,
in Canada, in Europe, in Asia, could not display it in America
without the copyright owner’s further authorization.
(2) Section 109(e) specifically provides that the owner of a
particular copy of a copyrighted video arcade game “lawfully made
under this title” may “publicly perform or display that game in
coin-operated equipment” without the authorization of the
copyright owner. To interpret these words geographically means
that an arcade owner could not (“without the authority of the
copyright owner”) perform or display arcade games (whether new
or used) originally made in Japan.
(3) Section 110(1) says that a teacher, without the copyright
owner’s authorization, is allowed to perform or display a
copyrighted work (say, an audiovisual work) “in the course of faceto-face teaching activities”—unless the teacher knowingly used “a
copy that was not lawfully made under this title.” To interpret
these words geographically would mean that the teacher could not
(without further authorization) use a copy of a film during class if
the copy was lawfully made in Canada, Mexico, Europe, Africa, or
Asia.
(4) In its introductory sentence, § 106 provides the Act’s basic
exclusive rights to an “owner of a copyright under this title.” The
last three words cannot support a geographic interpretation.
Wiley basically accepts the first three readings, but argues that
Congress intended the restrictive consequences. And it argues that context
simply requires that the words of the fourth example receive a different
interpretation. Leaving the fourth example to the side, we shall explain in
Part II-D why we find it unlikely that Congress would have intended these,
and other related consequences.

114

CH. 1

C
A relevant canon of statutory interpretation favors a nongeographical
reading. “[W]hen a statute covers an issue previously governed by the
common law,” we must presume that “Congress intended to retain the
substance of the common law.” Samantar v. Yousuf, 560 U.S. 305, 319 n.
13 (2010).
The “first sale” doctrine is a common-law doctrine with an impeccable
historic pedigree. In the early 17th century Lord Coke explained the
common law’s refusal to permit restraints on the alienation of chattels.
Referring to Littleton, who wrote in the 15th century, Lord Coke wrote:
“[If] a man be possessed of . . . a horse, or of any other chattell . . .
and give or sell his whole interest . . . therein upon condition that
the Donee or Vendee shall not alien[ate] the same, the [condition]
is voi[d], because his whole interest . . . is out of him, so as he hath
no possibilit[y] of a Reverter, and it is against Trade and Traffi[c],
and bargaining and contracting betwee[n] man and man: and it is
within the reason of our Author that it should ouster him of all
power given to him.”
1 E. COKE, INSTITUTES OF THE LAWS OF ENGLAND § 360, p. 223 (1628).
A law that permits a copyright holder to control the resale or other
disposition of a chattel once sold is similarly “against Trade and Traffi[c],
and bargaining and contracting.” Id.
With these last few words, Coke emphasizes the importance of leaving
buyers of goods free to compete with each other when reselling or otherwise
disposing of those goods. American law too has generally thought that
competition, including freedom to resell, can work to the advantage of the
consumer.
The “first sale” doctrine also frees courts from the administrative
burden of trying to enforce restrictions upon difficult-to-trace, readily
movable goods. And it avoids the selective enforcement inherent in any
such effort. Thus, it is not surprising that for at least a century the “first
sale” doctrine has played an important role in American copyright law. See
Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908); Copyright Act of 1909,
§ 41, 35 Stat. 1084.
The common-law doctrine makes no geographical distinctions; nor can
we find any in Bobbs-Merrill (where this Court first applied the “first sale”
doctrine) or in § 109(a)’s predecessor provision, which Congress enacted a
year later. Rather, as the Solicitor General acknowledges, “a
straightforward application of Bobbs-Merrill” would not preclude the “first
sale” defense from applying to authorized copies made overseas. And we
can find no language, context, purpose, or history that would rebut a
“straightforward application” of that doctrine here.

CH. 1

115

***
D
Associations of libraries, used-book dealers, technology companies,
consumer-goods retailers, and museums point to various ways in which a
geographical interpretation would fail to further basic constitutional
copyright objectives, in particular “promot[ing] the Progress of Science and
useful Arts.” U.S. CONST., ART. I, § 8, cl. 8.
The American Library Association tells us that library collections
contain at least 200 million books published abroad (presumably, many
were first published in one of the nearly 180 copyright-treaty nations and
enjoy American copyright protection under 17 U.S.C. § 104; that many
others were first published in the United States but printed abroad because
of lower costs; and that a geographical interpretation will likely require the
libraries to obtain permission (or at least create significant uncertainty)
before circulating or otherwise distributing these books.
How, the American Library Association asks, are the libraries to
obtain permission to distribute these millions of books? * * * Are the
libraries to stop circulating or distributing or displaying the millions of
books in their collections that were printed abroad?
Used-book dealers tell us that, from the time when Benjamin Franklin
and Thomas Jefferson built commercial and personal libraries of foreign
books, American readers have bought used books published and printed
abroad. The dealers say that they have “operat[ed]. . . for centuries” under
the assumption that the “first sale” doctrine applies. But under a
geographical interpretation a contemporary tourist who buys, say, at
Shakespeare and Co. (in Paris), a dozen copies of a foreign book for
American friends might find that she had violated the copyright law. The
used-book dealers cannot easily predict what the foreign copyright holder
may think about a reader’s effort to sell a used copy of a novel. And they
believe that a geographical interpretation will injure a large portion of the
used-book business.
Technology companies tell us that “automobiles, microwaves,
calculators, mobile phones, tablets, and personal computers” contain
copyrightable software programs or packaging. Many of these items are
made abroad with the American copyright holder’s permission and then
sold and imported (with that permission) to the United States. A
geographical interpretation would prevent the resale of, say, a car, without
the permission of the holder of each copyright on each piece of copyrighted
automobile software. Yet there is no reason to believe that foreign auto
manufacturers regularly obtain this kind of permission from their software
component suppliers, and Wiley did not indicate to the contrary when
asked. Without that permission a foreign car owner could not sell his or her
used car.

116

CH. 1

Retailers tell us that over $2.3 trillion worth of foreign goods were
imported in 2011. American retailers buy many of these goods after a first
sale abroad. And, many of these items bear, carry, or contain copyrighted
“packaging, logos, labels, and product inserts and instructions for [the use
of] everyday packaged goods from floor cleaners and health and beauty
products to breakfast cereals.” The retailers add that American sales of
more traditional copyrighted works, “such as books, recorded music, motion
pictures, and magazines” likely amount to over $220 billion. A geographical
interpretation would subject many, if not all, of them to the disruptive
impact of the threat of infringement suits.
Art museum directors ask us to consider their efforts to display
foreign-produced works by, say, Cy Twombly, Rene Magritte, Henri
Matisse, Pablo Picasso, and others. A geographical interpretation, they
say, would require the museums to obtain permission from the copyright
owners before they could display the work—even if the copyright owner has
already sold or donated the work to a foreign museum. What are the
museums to do, they ask, if the artist retained the copyright, if the artist
cannot be found, or if a group of heirs is arguing about who owns which
copyright?
***
Thus, we believe that the practical problems that petitioner and his
amici have described are too serious, too extensive, and too likely to come
about for us to dismiss them as insignificant—particularly in light of the
ever-growing importance of foreign trade to America. The upshot is that
copyright-related consequences along with language, context, and
interpretive canons argue strongly against a geographical interpretation of
§ 109(a).
***
* * * Wiley and the dissent claim that a nongeographical
interpretation will make it difficult, perhaps impossible, for publishers
(and other copyright holders) to divide foreign and domestic markets. We
concede that is so. A publisher may find it more difficult to charge different
prices for the same book in different geographic markets. But we do not see
how these facts help Wiley, for we can find no basic principle of copyright
law that suggests that publishers are especially entitled to such rights.
***
To the contrary, Congress enacted a copyright law that (through the
“first sale” doctrine) limits copyright holders’ ability to divide domestic
markets. And that limitation is consistent with antitrust laws that
ordinarily forbid market divisions. Whether copyright owners should, or
should not, have more than ordinary commercial power to divide
international markets is a matter for Congress to decide. We do no more
here than try to determine what decision Congress has taken.

CH. 1

117

***
For these reasons we conclude that the considerations supporting
Kirtsaeng’s nongeographical interpretation of the words “lawfully made
under this title” are the more persuasive. The judgment of the Court of
Appeals is reversed, and the case is remanded for further proceedings
consistent with this opinion.
It is so ordered.
JUSTICE KAGAN, with whom JUSTICE ALITO joins, concurring.
I concur fully in the Court’s opinion. Neither the text nor the history
of 17 U.S.C. § 109(a) supports removing first-sale protection from every
copy of a protected work manufactured abroad. I recognize, however, that
the combination of today’s decision and Quality King Distributors, Inc. v.
L’anza Research Int’l, Inc., 523 U.S. 135 (1998), constricts the scope of
§ 602(a)(1)’s ban on unauthorized importation. I write to suggest that any
problems associated with that limitation come not from our reading of
§ 109(a) here, but from Quality King’s holding that § 109(a) limits
§ 602(a)(1). * * * In now holding that copies “lawfully made under this title”
include copies manufactured abroad, we unavoidably diminish § 602(a)(1)’s
scope—indeed, limit it to a fairly esoteric set of applications.
But if Congress views the shrinking of § 602(a)(1) as a problem, it
should recognize Quality King—not our decision today—as the culprit.
Here, after all, we merely construe § 109(a); Quality King is the decision
holding that § 109(a) limits § 602(a)(1). Had we come out the opposite way
in that case, § 602(a)(1) would allow a copyright owner to restrict the
importation of copies irrespective of the first-sale doctrine.1 That result
would enable the copyright owner to divide international markets in the
way John Wiley claims Congress intended when enacting § 602(a)(1). But
it would do so without imposing downstream liability on those who
purchase and resell in the United States copies that happen to have been
manufactured abroad. In other words, that outcome would target
unauthorized importers alone, and not the “libraries, used-book dealers,
technology companies, consumer-goods retailers, and museums” with
whom the Court today is rightly concerned. Assuming Congress adopted
§ 602(a)(1) to permit market segmentation, I suspect that is how Congress
thought the provision would work—not by removing first-sale protection
from every copy manufactured abroad (as John Wiley urges us to do here),

1
Although Quality King concluded that the statute’s text foreclosed that outcome, the
Solicitor General offered a cogent argument to the contrary. He reasoned that § 109(a) does not
limit § 602(a)(1) because the former authorizes owners only to “sell or “dispose” of copies—not to
import them: The Act’s first-sale provision and its importation ban thus regulate separate, nonoverlapping spheres of conduct. That reading remains the Government’s preferred way of
construing the statute.

118

CH. 1

but by enabling the copyright holder to control imports even when the firstsale doctrine applies (as Quality King now prevents).2
At bottom, John Wiley (together with the dissent) asks us to
misconstrue § 109(a) in order to restore § 602(a)(1) to its purportedly
rightful function of enabling copyright holders to segment international
markets. I think John Wiley may have a point about what § 602(a)(1) was
designed to do; that gives me pause about Quality King’s holding that the
first-sale doctrine limits the importation ban’s scope. But the Court today
correctly declines the invitation to save § 602(a)(1) from Quality King by
destroying the first-sale protection that § 109(a) gives to every owner of a
copy manufactured abroad. That would swap one (possible) mistake for a
much worse one, and make our reading of the statute only less reflective of
Congressional intent. If Congress thinks copyright owners need greater
power to restrict importation and thus divide markets, a ready solution is
at hand—not the one John Wiley offers in this case, but the one the Court
rejected in Quality King.
JUSTICE GINSBURG, with whom JUSTICE KENNEDY joins, and with
whom JUSTICE SCALIA joins except as to Parts III and V-B-1, dissenting.
“In the interpretation of statutes, the function of the courts is easily
stated. It is to construe the language so as to give effect to the intent of
Congress.” United States v. American Trucking Assns., Inc., 310 U.S. 534,
542 (1940). Instead of adhering to the Legislature’s design, the Court today
adopts an interpretation of the Copyright Act at odds with Congress’ aim
to protect copyright owners against the unauthorized importation of lowpriced, foreign-made copies of their copyrighted works. * * *
To justify a holding that shrinks to insignificance copyright protection
against the unauthorized importation of foreign-made copies, the Court
identifies several “practical problems.” The Court’s parade of horribles,
however, is largely imaginary. Congress’ objective in enacting 17 U.S.C.
§ 602(a)(1)’s importation prohibition can be honored without generating
the absurd consequences hypothesized in the Court’s opinion. I dissent
from the Court’s embrace of “international exhaustion,” and would affirm
the sound judgment of the Court of Appeals.
***
II
The text of the Copyright Act demonstrates that Congress intended to
provide copyright owners with a potent remedy against the importation of
foreign-made copies of their copyrighted works. As the Court recognizes
this case turns on the meaning of the phrase “lawfully made under this
title” in § 109(a). In my view, that phrase is most sensibly read as referring
2
* * * I can see no reason why Congress would have conditioned a copyright owner’s power
to divide markets on outsourcing its manufacturing to a foreign country.

CH. 1

119

to instances in which a copy’s creation is governed by, and conducted in
compliance with, Title 17 of the U.S. Code. * * *
Section 109(a), properly read, affords Kirtsaeng no defense against
Wiley’s claim of copyright infringement. The Copyright Act, it has been
observed time and again, does not apply extraterritorially. The printing of
Wiley’s foreign-manufactured textbooks therefore was not governed by
Title 17. The textbooks thus were not “lawfully made under [Title 17],” the
crucial precondition for application of § 109(a). And if § 109(a) does not
apply, there is no dispute that Kirtsaeng’s conduct constituted copyright
infringement under § 602(a)(1).
The Court’s point of departure is similar to mine. According to the
Court, the phrase “ ‘lawfully made under this title’ means made ‘in
accordance with’ or ‘in compliance with’ the Copyright Act.” But the Court
overlooks that, according to the very dictionaries it cites, the word “under”
commonly signals a relationship of subjection, where one thing is governed
or regulated by another. See BLACK’S LAW DICTIONARY 1525 (6th
ed.1990) (“under “frequently” means “inferior” or “subordinate” (internal
quotation marks omitted)); 18 OXFORD ENGLISH DICTIONARY 950 (2d
ed.1989) (“under” means, among other things, “[i]n accordance with (some
regulative power or principle)” (emphasis added)). Only by disregarding
this established meaning of “under” can the Court arrive at the conclusion
that Wiley’s foreign-manufactured textbooks were “lawfully made under”
U.S. copyright law, even though that law did not govern their creation. * * *
***
III
The history of § 602(a)(1) reinforces the conclusion I draw from the text
of the relevant provisions: § 109(a) does not apply to copies manufactured
abroad.
***
The current text of § 602(a)(1) was finally enacted into law in 1976.
The House and Senate Committee Reports on the 1976 Act demonstrate
that Congress understood, as did the Copyright Office, just what that text
meant. Both Reports state:
“Section 602 [deals] with two separate situations: importation of
‘piratical’ articles (that is, copies or phonorecords made without
any authorization of the copyright owner), and unauthorized
importation of copies or phonorecords that were lawfully made.
The general approach of section 602 is to make unauthorized
importation an act of infringement in both cases, but to permit the
Bureau of Customs to prohibit importation only of ‘piratical’
articles.”
S. REP. NO. 94–473, p. 151 (1975).

120

CH. 1

In sum, the legislative history of the Copyright Act of 1976 is hardly
“inconclusive.” To the contrary, it confirms what the plain text of the Act
conveys: Congress intended § 602(a)(1) to provide copyright owners with a
remedy against the unauthorized importation of foreign-made copies of
their works, even if those copies were made and sold abroad with the
copyright owner’s authorization.
***
V
I turn now to the Court’s justifications for a decision difficult to
reconcile with the Copyright Act’s text and history.
***
B
The Court sees many “horribles” following from a holding that the
§ 109(a) phrase “lawfully made under this title” does not encompass
foreign-made copies. If § 109(a) excluded foreign-made copies, the Court
fears, then copyright owners could exercise perpetual control over the
downstream distribution or public display of such copies. A ruling in
Wiley’s favor, the Court asserts, would shutter libraries, put used-book
dealers out of business, cripple art museums, and prevent the resale of a
wide range of consumer goods, from cars to calculators. Copyright law and
precedent, however, erect barriers to the anticipated horribles.
1
***
Under the logic of Bobbs-Merrill, the sale of a foreign-manufactured
copy in the United States carried out with the copyright owner’s
authorization would exhaust the copyright owner’s right to “vend” that
copy. The copy could thenceforth be resold, lent out, or otherwise
redistributed without further authorization from the copyright owner.
Although § 106(3) uses the word “distribute” rather than “vend,” there is
no reason to think Congress intended the word “distribute” to bear a
meaning different from the construction the Court gave to the word “vend”
in Bobbs-Merrill. Thus, in accord with Bobbs-Merrill, the first authorized
distribution of a foreign-made copy in the United States exhausts the
copyright owner’s distribution right under § 106(3). After such an
authorized distribution, a library may lend, or a used-book dealer may
resell, the foreign-made copy without seeking the copyright owner’s
permission.
For example, if Wiley, rather than Kirtsaeng, had imported into the
United States and then sold the foreign-made textbooks at issue in this
case, Wiley’s § 106(3) distribution right would have been exhausted under
the rationale of Bobbs-Merrill. Purchasers of the textbooks would thus be

CH. 1

121

free to dispose of the books as they wished without first gaining a license
from Wiley.
***
2
Other statutory prescriptions provide further protection against the
absurd consequences imagined by the Court. For example, § 602(a)(3)(C)
permits “an organization operated for scholarly, educational, or religious
purposes” to import, without the copyright owner’s authorization, up to five
foreign-made copies of a non-audiovisual work—notably, a book—for
“library lending or archival purposes.”
***
Limiting § 109(c) to U.S.-made works, however, does not bar art
museums from lawfully displaying works made in other countries.
Museums can, of course, seek the copyright owner’s permission to display
a work. Furthermore, the sale of a work of art to a U.S. museum may carry
with it an implied license to publicly display the work. Displaying a work
of art as part of a museum exhibition might also qualify as a “fair use”
under 17 U.S.C. § 107.
The Court worries about the resale of foreign-made consumer goods
“contain[ing] copyrightable software programs or packaging.” For example,
the Court observes that a car might be programmed with diverse forms of
software, the copyrights to which might be owned by individuals or entities
other than the manufacturer of the car. Must a car owner, the Court asks,
obtain permission from all of these various copyright owners before
reselling her car?
Although this question strays far from the one presented in this case
and briefed by the parties, principles of fair use and implied license (to the
extent that express licenses do not exist) would likely permit the car to be
resold without the copyright owners’ authorization.25
***

CAMBRIDGE UNIVERSITY PRESS V. PATTON
United States Court of Appeals, Eleventh Circuit
Oct. 17, 2014.
769 F.3d 1232

25 Principles of fair use and implied license may also allow a U.S. tourist “who buys a
copyrighted work of art, a poster, or . . . a bumper sticker” abroad to publicly “display it in America
without the copyright owner’s further authorization.” (The tourist could lawfully bring the work of
art, poster, or bumper sticker into the United States under 17 U.S.C. § 602(a)(3)(B), which provides
that § 602(a)(1)’s importation ban does not apply to “importation . . . by any person arriving from
outside the United States . . . with respect to copies . . . forming part of such person’s personal
baggage.”). * * *

122

CH. 1

TJOFLAT, Circuit Judge:
Three publishing houses, Cambridge University Press, Oxford University
Press, and Sage Publications, Inc. (collectively, “Plaintiffs”) allege that
members of the Board of Regents of the University System of Georgia and
officials at Georgia State University (“GSU”) (collectively, “Defendants”)
infringed Plaintiffs’ copyrights by maintaining a policy which allows GSU
professors to make digital copies of excerpts of Plaintiffs’ books available to
students without paying Plaintiffs. Plaintiffs alleged seventy-four
individual instances of infringement, which took place during three
academic terms in 2009. The District Court issued an order finding that
Plaintiffs failed to establish a prima facie case of infringement in twentysix instances, that the fair use defense applied in forty-three instances, and
that Defendants had infringed Plaintiffs’ copyrights in the remaining five
instances.
Finding that GSU’s policy caused the five instances of infringement, the
District Court granted declaratory and injunctive relief to Plaintiffs.
Nevertheless, the District Court found that Defendants were the prevailing
party and awarded them costs and attorneys’ fees. Because we find that
the District Court’s fair use analysis was in part erroneous, we reverse the
District Court’s judgment; vacate the injunction, declaratory relief, and
award of costs and fees; and remand for further proceedings consistent with
this opinion.
I.
A.
Like many recent issues in copyright law, this is a case in which
technological advances have created a new, more efficient means of
delivery for copyrighted works, causing copyright owners and consumers
to struggle to define the appropriate boundaries of copyright protection in
the new digital marketplace. These boundaries must be drawn carefully in
order to assure that copyright law serves its intended purpose, which is to
promote the creation of new works for the public good by providing authors
and other creators with an economic incentive to create. See Twentieth
Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2044, 45
L.Ed.2d 84 (1975). If copyright’s utilitarian goal is to be met, we must be
careful not to place overbroad restrictions on the use of copyrighted works,
because to do so would prevent would-be authors from effectively building
on the ideas of others. Some unpaid use of copyrighted materials must be
allowed in order to prevent copyright from functioning as a straightjacket
that stifles the very creative activity it seeks to foster. If we allow too much
unpaid copying, however, we risk extinguishing the economic incentive to
create that copyright is intended to provide.

CH. 1

123

*** Here, we are called upon to determine whether the unpaid copying of
scholarly works by a university for use by students—facilitated by the
development of systems for digital delivery over the Internet—should be
excused under the doctrine of fair use.
Plaintiffs are three publishing houses that specialize in academic works.
Plaintiff Cambridge University Press (“Cambridge”) is the not-for-profit
publishing house of the University of Cambridge in England, having an
American branch headquartered in New York City. Plaintiff Oxford
University Press, Inc. (“Oxford”) is a not-for-profit United States
corporation associated with Oxford University in England and
headquartered in New York City. Plaintiff Sage Publications, Inc. (“Sage”)
is a for-profit Delaware corporation, headquartered in Sherman Oaks,
California.
Plaintiffs do not publish the large, general textbooks commonly used in
entry-level university courses. Rather, Plaintiffs publish advanced
scholarly works, which might be used in upper-level undergraduate and
graduate courses. Cambridge and Oxford publish scholarly books and
journals on niche subject areas. Their works involved in this case include
research-based monographs, which are “small, single author books which
give in-depth analysis of a narrow topic,” Cambridge Univ. Press v. Becker,
863 F.Supp.2d 1190, 1212 (N.D.Ga.2012) (footnote omitted), instructional
books, trade books, and other works on academic topics. Sage primarily
publishes books on the social sciences. All three plaintiffs publish, in
addition to works by a single author, “edited books” which feature the
contributions of multiple authors. Id.
Plaintiffs market their books to professors who teach at universities and
colleges. Cambridge and Oxford regularly send complimentary copies of
their publications to professors. Sage provides trial copies upon request.
Plaintiffs intend that professors use Plaintiffs’ publications in their work
and assign them as required reading so that students will purchase them.
Rather than assigning whole books, some professors assign or suggest
excerpts from Plaintiffs’ books as part of the curriculum for their courses.
Professors might do this by putting the work on reserve at the university
library so that students can visit the library to read an assigned excerpt.
Or, professors might prepare a bound, photocopied, paper “coursepack”
containing excerpts from several works for a particular course. Often, a
third-party copy shop assembles these coursepacks, performing the copying
and binding, obtaining the necessary licenses from publishers, and
charging students a fee for the finished coursepack. In recent years,
however, universities—following the trend with regard to distribution of

124

CH. 1

many forms of media the world over—have increasingly abandoned paper
coursepacks in favor of digital distribution of excerpts over the Internet.
GSU is a public university in Atlanta, Georgia. It is part of the University
System of Georgia, and is overseen by the Board of Regents of the
University System of Georgia. GSU maintains two on-campus systems
known as “ERes” and “uLearn” for digital distribution of course materials
to students.
ERes (short for “E–Reserves”) is an “electronic reserve system” hosted on
servers maintained by GSU and managed by GSU’s library staff. Since
2004, GSU has used ERes to allow GSU students to access course
materials—including course syllabi, class notes, sample exams, and
excerpts from books and journals—on the Internet via a web browser. In
order to place an excerpt from a book or journal on ERes, a professor must
either provide a personal copy of the work to the GSU library staff or
indicate that the GSU library owns a copy. A member of the library staff
then scans the excerpt to convert it to a digital format and posts the
scanned copy to ERes. GSU students are given access to an ERes website
specific to the courses in which they are enrolled. On each course-specific
ERes website, students find their reading assignments listed by title. The
scanned excerpts are accessible via hyperlink. When a student clicks a link
for a particular assignment, the student receives a digital copy of a scanned
excerpt that the student may view, print, save to his or her computer, and
potentially keep indefinitely. ERes course websites are password-protected
in order to limit access to the students in the particular course. Once a
course ends, students no longer have access to the ERes website for that
course.
uLearn is a “course management system” hosted on servers maintained by
the Board of Regents. Like ERes, uLearn provides course-specific webpages
through which professors may make course material available, including
digital copies of excerpts from books, which students in the course may
view, print, or save. The most significant difference between the ERes and
uLearn systems is that uLearn allows professors to upload digital copies of
reading material directly to their course websites while ERes forces
professors to rely on GSU library personnel to upload reading material for
them.
ERes and uLearn have been popular at GSU. For example, during the
Spring 2009 term, paper coursepacks were offered for only about fifteen
courses, while instructors in hundreds of courses made readings available
on ERes. Thus, the excerpts from larger works that make up some portion
of course readings at GSU, and which were once distributed to students via
a paper coursepack purchased at the university bookstore, are now largely

CH. 1

125

distributed to students via digital download on the Internet, that the
students pay for only indirectly via tuition and fees.
There exists a well-established system for the licensing of excerpts of
copyrighted works. Copyright Clearance Center (“CCC”) is a not-for-profit
corporation with headquarters in Danvers, Massachusetts. CCC licenses
excerpts from copyrighted works for a fee, acting on behalf of publishers
who choose to make their works available through CCC. These licenses are
called “permissions.” All three Plaintiffs offer excerpt-specific permissions
to photocopy or digitally reproduce portions of their works, which may be
obtained directly from Plaintiffs or through CCC. Permissions are not,
however, available for licensed copying of excerpts from all of Plaintiffs’
works.
CCC offers a variety of permissions services to various categories of users,
including corporate, educational, and institutional users. One such service,
the Academic Permissions Service (“APS”), licenses educational users to
make print copies on a per-use basis. CCC also offers an electronic course
content service (“ECCS”) for licensing of digital excerpts by educational
users on a per-use basis, that—in 2008, the year for which evidence on the
question was presented—offered only a small percentage of the works that
were available through APS. ECCS is designed for electronic reserve
systems such as ERes and uLearn. Software is available that would allow
GSU library personnel to place an order with CCC for a permission to
provide students with a digital copy of an excerpt via ERes. CCC also offers
an Academic Repertory License Service (“ARLS”) which affords subscribers
access to excerpts from a set group of about nine million titles,
approximately 17 percent of which are available in digital format. Sage
participates in ARLS and did so in 2009, Oxford participated in 2009 with
regard to journals but not books, and Cambridge does not participate. GSU
did not and does not subscribe to this program.
When the GSU bookstore assembles and sells a paper coursepack
containing excerpts from copyrighted works, GSU pays permissions fees
for use of the excerpts. The central issue in this case is under what
circumstances GSU must pay permissions fees to post a digital copy of an
excerpt of Plaintiffs’ works to ERes or uLearn.
B.
On April 15, 2008, Plaintiffs filed their original complaint in the United
States District Court for the Northern District of Georgia. Plaintiffs alleged
that hundreds of GSU professors have made thousands of copyrighted
works—including works owned or controlled by Plaintiffs—available on
GSU’s electronic reserve systems without obtaining permissions from

126

CH. 1

copyright holders, and that GSU’s administration facilitated, encouraged,
and induced this practice. Plaintiffs sued Defendants in their official
capacities as GSU officials, claiming (1) direct copyright infringement
caused by the officials “scanning, copying, displaying, and distributing
Plaintiffs’ copyrighted material;” (2) contributory copyright infringement
caused by the officials’ “facilitating, encouraging, and inducing librarians
and professors to scan, copy, display, and distribute Plaintiffs’ copyrighted
material” and “students to view, download, copy and further distribute
[Plaintiffs’] copyrighted material;” and (3) vicarious copyright infringement
caused by the officials’ inducing GSU employees and students to copy
Plaintiffs’ copyrighted material, profiting from this practice, and failing to
stop it despite having the right and ability to do so. Plaintiffs sought
declaratory and injunctive relief. Plaintiffs supported their allegations
with numerous examples of GSU professors posting excerpts of Plaintiffs’
works on GSU’s electronic reserve systems. Defendants filed an Answer,
denying Plaintiffs’ allegations of infringement; claiming sovereign
immunity and Eleventh Amendment immunity based on Defendants’
status as state officials; and asserting a defense of fair use because “any
alleged use of copyrighted materials was for the purpose of teaching,
scholarship or research and for nonprofit educational purposes.”
***
In late December 2008, the University System of Georgia convened a Select
Committee on Copyright to review GSU’s then-existing copyright policy,
which was called the “Regents’ Guide to Understanding Copyright &
Educational Fair Use.” On February 17, 2009, the Select Committee
announced a new copyright policy for GSU (the “2009 Policy”), which went
into effect the same day. Under the 2009 Policy, a revised version of which
remains in effect today, GSU professors who wish to post an excerpt of a
copyrighted work on ERes or uLearn for distribution to their students must
first determine whether they believe that doing so would be fair use. In
order to make this determination, professors must fill out a “Fair Use
Checklist” for each excerpt.
The Checklist allows GSU professors to perform a version of the analysis a
court might perform should the professor claim fair use in a subsequent
copyright infringement suit. As described above, see supra part I.A, the fair
use analysis involves a consideration of whether allowing the unpaid use
in a given case would be equitable and serve the objectives of copyright in
light of four statutory factors, see 17 U.S.C. § 107. For each factor, the
Checklist provides several criteria that purportedly weigh either for or
against a finding of fair use, each with a corresponding checkbox. The
Checklist instructs professors to check each criterion that applies, and then
add up the checks to determine whether the factor weighs in favor of or

CH. 1

127

against a finding of fair use. After making this tally, the Checklist explains
that “[w]here the factors favoring fair use outnumber those against it,
reliance on fair use is justified. Where fewer than half the factors favor fair
use, instructors should seek permission from the rights holder.” Thus,
under the 2009 Policy, a GSU professor may post an excerpt of a
copyrighted work on ERes or uLearn without obtaining a permission from
the copyright holder if the professor first decides that doing so would be
protected by the doctrine of fair use, according to the criteria set forth in
the Checklist.
After completing an initial round of discovery, both parties moved for
summary judgment on February 26, 2010. Plaintiffs alleged that the 2009
Policy had failed to curb the alleged infringement of their copyrighted
works, and argued that they were entitled to summary judgment on all
claims. Plaintiffs argued that they were entitled to an injunction based on
the alleged infringements listed in their First Amended Complaint, that
had occurred prior to enactment of the 2009 Policy, and added allegations
regarding new instances of infringement, which also occurred prior to
enactment of the 2009 Policy. Plaintiffs also argued that injunctive relief
was appropriate as to Defendants under Ex parte Young, 209 U.S. 123, 28
S.Ct. 441, 52 L.Ed. 714 (1908), which permits prospective injunctive relief
against state officers in their official capacities.
***
III.
A.
As an initial matter, we must dispose of Defendants’ contention that they
are immune from suit pursuant to the Eleventh Amendment. Because this
argument is outside the scope of Plaintiffs’ brief and was not raised by
Defendants on cross-appeal, we find that the argument is not properly
raised. As we have previously explained, “a party who has not appealed
may not bring an argument in opposition to a judgment or attack the
judgment in any respect, or hitch a ride on his adversary’s notice of appeal
to enlarge his rights under the judgment or diminish those of the opposing
party.” Lawhorn v. Allen, 519 F.3d 1272, 1286 n. 20 (11th Cir.2008)
(citations omitted) (quotation marks omitted). An argument that the
District Court’s ruling must be vacated because suit is barred by Eleventh
Amendment immunity is not excepted from this rule. Majette v. O’Connor,
811 F.2d 1416, 1419 n. 3 (11th Cir.1987). Accordingly, we decline to address
Defendants’ Eleventh Amendment argument.
B.

128

CH. 1

***
How much unpaid use should be allowed is the bailiwick of the fair use
doctrine. To further the purpose of copyright, we must provide for some fair
use taking of copyrighted material. This may be viewed as a transaction
cost, incidental to the business of authorship. But if we set this transaction
cost too high by allowing too much taking, we run the risk of eliminating
the economic incentive for the creation of original works that is at the core
of copyright and—by driving creators out of the market—killing the
proverbial goose that laid the golden egg.
Thus, the proper scope of the fair use doctrine in a given case boils down to
an evidentiary question. As a conceptual matter, in making fair use
determinations, we must conjure up a hypothetical perfect market for the
work in question, consisting of the whole universe of those who might buy
it, in which everyone involved has perfect knowledge of the value of the
work to its author and to potential buyers, and excluding for the moment
any potential fair uses of the work. Then, keeping in mind the purposes
animating copyright law—the fostering of learning and the creation of new
works—we must determine how much of that value the implied licenseefair users can capture before the value of the remaining market is so
diminished that it no longer makes economic sense for the author—or a
subsequent holder of the copyright—to propagate the work in the first
place.
In most instances, licensors (authors and copyright holders) and licensees
(both paying licensees, and implied-by-law fair use licensees) will
independently perform some version of this analysis in order to reach a
mutually equitable arrangement. Ideally, a copyright holder will sell his or
her works to buyers who pay the price that the market will bear and will
routinely tolerate secondary uses which do not adversely impact that
market. However, in the event of a disagreement, the copyright holder can
file an infringement suit and the secondary user may invoke the fair use
defense. In so doing, the parties essentially turn to a court to make a
determination for them as to the appropriate boundaries of the secondary
user’s implied license.
The fair use doctrine, as codified by Congress, furnishes judges with a
laboratory within which to work to answer this question. ***
In drafting § 107, Congress “resisted pressures from special interest groups
to create presumptive categories of fair use, but structured the provision
as an affirmative defense requiring a case-by-case analysis.” Harper &
Row, 471 U.S. at 561, 105 S.Ct. at 2231 (citing H.R.Rep. No. 83, 90th Cong.,
1st Sess., 37 (1967)). Accordingly, the fair use inquiry is a flexible one. The

CH. 1

129

four statutory factors provide courts with tools to determine—through a
weighing of the four factors in light of the facts of a given case—whether a
finding of fair use is warranted in that particular instance.
* * * Furthermore, because fair use is an affirmative defense, its proponent
bears the burden of proof in demonstrating that it applies. See Campbell,
510 U.S. at 590, 114 S.Ct. at 1177; Harper & Row, 471 U.S. at 561, 105
S.Ct. at 2231.
C.
Before we turn to the District Court’s analysis of each of the four fair use
factors, we must first address the District Court’s overarching fair use
methodology. Plaintiffs make two broad arguments that the District
Court’s methodology was flawed, only one of which is persuasive.
Plaintiffs contend that the District Court erred by performing a work-bywork analysis that focused on whether the use of each individual work was
fair use rather than on the broader context of ongoing practices at GSU.
We disagree. Fair use must be determined on a case-by-case basis, by
applying the four factors to each work at issue. See Campbell, 510 U.S. at
577, 114 S.Ct. at 1170. Were we to accept Plaintiffs’ argument, the District
Court would have no principled method of determining whether a nebulous
cloud of infringements purportedly caused by GSU’s “ongoing practices”
should be excused by the defense of fair use. Thus, we find that the District
Court’s work-by-work approach—in which the District Court considered
whether the fair use defense excused a representative sample of instances
of alleged infringement in order to determine the need for injunctive
relief—was the proper one.
Plaintiffs also argue that the District Court erred in giving each of the four
factors equal weight, essentially taking a mechanical “add up the factors”
approach, finding fair use if three factors weighed in favor of fair use and
one against and vice versa, and only performing further analysis in case of
a “tie.” We agree that the District Court’s arithmetic approach was
improper.
Congress, in the Copyright Act, spoke neither to the relative weight courts
should attach to each of the four factors nor to precisely how the factors
ought to be balanced. However, the Supreme Court has explained that “the
four statutory factors [may not] be treated in isolation, one from another.
All are to be explored, and the results weighed together, in light of the
purposes of copyright.” Id. at 578, 114 S.Ct. at 1170–71. In keeping with
this approach, a given factor may be more or less important in determining
whether a particular use should be considered fair under the specific

130

CH. 1

circumstances of the case. See id. at 586, 114 S.Ct. at 1175 (noting that the
second factor is generally not important in determining whether a finding
of fair use is justified in the case of a parody). As such, the four factors “do
not mechanistically resolve fair use issues.” Harper & Row, 471 U.S. at 588,
105 S.Ct. at 2245 (Brennan, J., dissenting). “Because [fair use] is not a
mechanical determination, a party need not ‘shut-out’ her opponent on the
four factor tally to prevail.” Wright v. Warner Books, Inc., 953 F.2d 731,
740 (2d Cir.1991). Accordingly, we find that the District Court erred in
giving each of the four factors equal weight, and in treating the four factors
as a simple mathematical formula. As we will explain, because of the
circumstances of this case, some of the factors weigh more heavily on the
fair use determination than others.
D.
We now turn to the District Court’s analysis of each individual fair use
factor. Although we have found that the District Court’s method for
weighing the four factors against one another was erroneous, this does not
mean that the District Court’s reasoning under each of the four factors is
also necessarily flawed. Rather, we must determine the correct analysis
under each factor and then ascertain whether the District Court properly
applied that analysis.
Plaintiffs argue that the District Court erred in its application of each of
the four fair use factors. Plaintiffs’ argument centers on a comparison of
the circumstances of the instant case to those of the so-called “coursepack
cases,” in which courts rejected a defense of fair use for commercial
copyshops that assembled paper coursepacks containing unlicensed
excerpts of copyrighted works for use in university courses.
In Basic Books, Inc. v. Kinko’s Graphics Corp., publishing houses sued
Kinko’s, a commercial copyshop, alleging that Kinko’s infringed the
publishers’ copyrights when it copied excerpts from the publishers’ books,
without permission and without payment of a license fee, and sold the
copies for profit in bound, paper coursepacks to students for use in college
courses. 758 F.Supp. 1522, 1526 (S.D.N.Y.1991). The District Court
rejected Kinko’s claim that its use of the excerpts was fair use, and granted
injunctive relief to the publishers.
Similarly, in Princeton University Press v. Michigan Document Services,
Inc., the Sixth Circuit upheld the District Court’s ruling that Michigan
Document Services, a commercial copyshop, was not entitled to a fair use
defense when it reproduced substantial portions of copyrighted academic
works and sold the copies in bound, paper coursepacks to students for use
in courses at the University of Michigan, without obtaining permission

CH. 1

131

from the copyright holder. 99 F.3d 1381, 1383 (6th Cir.1996) (en banc). The
Sixth Circuit held that injunctive relief was therefore warranted.
In essence, Plaintiffs argue that the coursepack cases should have guided
the District Court’s analysis in this case, because GSU cannot alter the fair
use calculus simply by choosing to distribute course readings in an
electronic rather than paper format. In making this argument, Plaintiffs
invoke the “media neutrality” principle, which “mandates that the ‘transfer
of a work between media does not alter the character of that work for
copyright purposes.’ ” See Greenberg v. Nat’l Geographic Soc., 533 F.3d
1244, 1257 (11th Cir.2008) (en banc) (quoting N.Y. Times Co., Inc. v. Tasini,
533 U.S. 483, 502, 121 S.Ct. 2381, 2392, 150 L.Ed.2d 500 (2001)).
Plaintiffs’ reliance on the media neutrality doctrine is misplaced. Congress
established that doctrine to ensure that works created with new
technologies, perhaps not in existence at the time of the Copyright Act of
1976, would qualify for copyright protection. See id. (citing 17 U.S.C. §
102(a) ( “Copyright protection subsists ... in original works of authorship
fixed in any tangible medium of expression, now known or later
developed....” (emphasis added))); see also H.R.Rep. No. 94–1476, at 52
(1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5665 (“This broad language
is intended to avoid the artificial and largely unjustifiable distinctions ...
under which statutory copyrightability in certain cases has been made to
depend upon the form or medium in which the work is fixed.”). The media
neutrality doctrine concerns copyrightability and does not dictate the
result in a fair use inquiry. Congress would not have intended this doctrine
to effectively displace the flexible work-by-work fair use analysis in favor
of a one dimensional analysis as to whether the case involves a transfer of
a work between media.
Likewise, because the fair use analysis is highly fact-specific and must be
performed on a work-by-work basis, see Cariou, 714 F.3d at 694, the
coursepack cases provide guidance but do not dictate the results here,
which must be based upon a careful consideration of the circumstances of
the individual instances of alleged infringement involved in this case.
1.
The first fair use factor is “the purpose and character of the use, including
whether such use is of a commercial nature or is for nonprofit educational
purposes.” 17 U.S.C. § 107(1). The inquiry under the first factor has several
facets, including (1) the extent to which the use is a “transformative” rather
than merely superseding use of the original work and (2) whether the use
is for a nonprofit educational purpose, as opposed to a commercial purpose
“Before illumining these facets, however, we observe that the Supreme

132

CH. 1

Court has cautioned against the use of the facets to create ‘hard evidentiary
presumption [s]’ or ‘categories of presumptively fair use.’ ” Id. (alteration
in original) (citing Campbell, 510 U.S. at 584, 114 S.Ct. at 1174 (“[T]he
mere fact that a use is educational and not for profit does not insulate it
from a finding of infringement, any more than the commercial character of
a use bars a finding of fairness.”)).
Our initial inquiry under the first factor asks whether Defendants’ use is
transformative, i.e., “whether the new work merely supersede [s] the
objects of the original creation, or instead adds something new, with a
further purpose or different character, altering the first with new
expression, meaning, or message.” Campbell, 510 U.S. at 579, 114 S.Ct. at
1171 (alteration in original) (citations omitted) (quotation marks omitted).
For example, a parody transforms a work by appropriating elements of the
work for purposes of comment or criticism, and thus “reflects
transformative value because it ‘can provide social benefit, by shedding
light on an earlier work, and, in the process, creating a new one.’ ” Suntrust
Bank, 268 F.3d at 1271 (quoting Campbell, 510 U.S. at 579, 114 S.Ct. at
1171). A nontransformative use, on the other hand, is one which serves the
same “overall function” as the original work.
Even verbatim copying “may be transformative so long as the copy serves
a different function than the original work.” Perfect 10, Inc. v. Amazon.com,
Inc., 508 F.3d 1146, 1165 (9th Cir.2007) (finding a search engine’s copying
of website images in order to create an Internet search index
transformative because the original works “serve[d] an entertainment,
aesthetic, or informative function, [whereas the] search engine transforms
the image into a pointer directing a user to a source of information”); A.V.
v. iParadigms, LLC, 562 F.3d 630, 640 (4th Cir.2009) (finding use of
student papers in an online plagiarism detection database transformative
because the database used the papers not for their original purpose as
schoolwork, but rather to automatically detect plagiarism in the works of
other student authors); Bill Graham Archives v. Dorling Kindersley Ltd.,
448 F.3d 605, 609 (2d Cir.2006) (finding use by publishers of concert posters
reproduced in full, although in reduced size, in a biography of a musical
group transformative because the use was for historical and educational
purposes, rather than advertising and informational purposes).
Allowing would-be fair users latitude for transformative uses furthers “the
goal of copyright, to promote science and the arts.” See Campbell, 510 U.S.
at 579, 114 S.Ct. at 1171. This is because transformative works possess a
comparatively large share of the novelty copyright seeks to foster. At the
same time, transformative uses are less likely, generally speaking, to
negatively impact the original creator’s bottom line, because they do not “
‘merely supersede the objects of the original creation’ ” and therefore are

CH. 1

133

less likely to “ ‘supplant’ the market for the copyrighted work [by] ‘fulfilling
demand for the original.’ ” See Peter Letterese & Assocs., 533 F.3d at 1310
(alteration omitted) (quoting Campbell, 510 U.S. at 579, 588, 114 S.Ct. at
1171, 1176).
Here, Defendants’ use of excerpts of Plaintiffs’ works is not transformative.
The excerpts of Plaintiffs’ works posted on GSU’s electronic reserve system
are verbatim copies of portions of the original books which have merely
been converted into a digital format. Although a professor may arrange
these excerpts into a particular order or combination for use in a college
course, this does not imbue the excerpts themselves with any more than a
de minimis amount of new meaning. See Princeton University Press, 99
F.3d at 1389 (“[I]f you make verbatim copies of 95 pages of a 316–page book,
you have not transformed the 95 pages very much—even if you juxtapose
them to excerpts from other works.”).
Nor do Defendants use the excerpts for anything other than the same
intrinsic purpose—or at least one of the purposes—served by Plaintiffs’
works: reading material for students in university courses. Although an
electronic reserve system may facilitate easy access to excerpts of Plaintiffs’
works, it does nothing to transform those works. But see Authors Guild,
Inc. v. HathiTrust, 755 F.3d 87, 97 (2d Cir.2014) (holding that universities’
systematic digitization of copyrighted books was transformative because
the digital copies were used to create a searchable database which supplied
users with lists of page numbers and not with copies of the original works,
and so the copies served a different purpose than the original works).
Rather, Defendants’ use of excerpts of Plaintiffs’ works “supersede[s] the
objects of the original creation.” See Campbell, 510 U.S. at 579, 114 S.Ct.
at 1171 (alteration in original) (quotation marks omitted). Were this
element by itself dispositive, we would be compelled to find that the first
factor weighs against a finding of fair use.
However, we must also consider under the first factor whether Defendants’
use is for a nonprofit educational purpose, as opposed to a commercial
purpose. “[T]he commercial or non-transformative uses of a work are to be
regarded as ‘separate factor[s] that tend[ ] to weigh against a finding of fair
use,’ and ‘the force of that tendency will vary with the context.’ ” Peter
Letterese & Assocs., 533 F.3d at 1309 (alteration in original) (quoting
Campbell, 510 U.S. at 585, 114 S.Ct. at 1174). Indeed, the Supreme Court
has recognized in dicta that nonprofit educational use may weigh in favor
of a finding of fair use under the first factor, even when nontransformative.
Campbell, 510 U.S. at 579 n. 11, 114 S.Ct. at 1171 n. 11 (“The obvious
statutory exception to this focus on transformative uses is the straight
reproduction of multiple copies for classroom distribution.”).

134

CH. 1

Because “copyright has always been used to promote learning,” Suntrust
Bank, 268 F.3d at 1261, allowing some leeway for educational fair use
furthers the purpose of copyright by providing students and teachers with
a means to lawfully access works in order to further their learning in
circumstances where it would be unreasonable to require permission. But,
as always, care must be taken not to allow too much educational use, lest
we undermine the goals of copyright by enervating the incentive for
authors to create the works upon which students and teachers depend.
In the coursepack cases, Princeton University Press, 99 F.3d at 1389, and
Basic Books, 758 F.Supp. at 1531–32, the first factor weighed against a
finding of fair use when the nontransformative, educational use in question
was performed by a for-profit copyshop, and was therefore commercial. In
a more recent case, a district court refused to allow a commercial copyshop
to sidestep the outcome of the coursepack cases by requiring its student
customers to perform the photocopying themselves (for a fee) when
assembling paper coursepacks from master copies held by the copyshop.
Blackwell Publ’g, Inc. v. Excel Research Grp., LLC, 661 F.Supp.2d 786, 794
(E.D.Mich.2009). In all three instances, the court refused to allow the
defendants, who were engaged in commercial operations, to stand in the
shoes of students and professors in claiming that their making of multiple
copies of scholarly works was for nonprofit educational purposes.
However, in both of the coursepack cases, the courts expressly declined to
conclude that the copying would fall outside the boundaries of fair use if
conducted by professors, students, or academic institutions. See Princeton
University Press, 99 F.3d at 1389 (“As to the proposition that it would be
fair use for the students or professors to make their own copies, the issue
is by no means free from doubt. We need not decide this question, however,
for the fact is that the copying complained of here was performed on a
profit-making basis by a commercial enterprise.”); Basic Books, 758
F.Supp. at 1536 n. 13 (“Expressly, the decision of this court does not
consider copying performed by students, libraries, nor on-campus
copyshops, whether conducted for-profit or not.”). In Blackwell Publishing,
the District Court noted that, conversely, “the fact that students do the
copying does not ipso facto mean that a commercial use cannot be found.”
661 F.Supp.2d at 793.
Furthermore, where we previously held that the first factor weighed
against a finding of fair use in a case involving use that was
nontransformative but educational, the use in question was commercial.
Peter Letterese & Assocs., 533 F.3d at 1309–12 (finding that the first factor
weighed against a finding of fair use in a case involving the verbatim use
of copyrighted material in an instructional coursepack for use by the
Church of Scientology, where defendants charged a fee or obtained a

CH. 1

135

promissory note in exchange for the coursepacks and hence the use was for
commercial purposes).
Thus, the question becomes whether Defendants’ use of Plaintiffs’ works is
truly a nonprofit educational use under § 107(1), and if so, whether this
places sufficient weight on the first factor scales to justify a finding that
this factor favors fair use despite the nontransformativeness of Defendants’
use.
GSU is a nonprofit educational institution. While this is relevant, our
inquiry does not end there: we must consider not only the nature of the
user, but the use itself. See Am. Geophysical Union v. Texaco Inc., 60 F.3d
913, 921–22 (2d Cir.1994) (“[A] court’s focus should be on the use of the
copyrighted material and not simply on the user, [although] it is overly
simplistic to suggest that the ‘purpose and character of the use’ can be fully
discerned without considering the nature and objectives of the user.”).
Defendants’ use of Plaintiffs’ works in the teaching of university courses is
clearly for educational purposes. Nevertheless, it is not entirely clear that
use by a nonprofit entity for educational purposes is always a “nonprofit”
use as contemplated by § 107(1). The Supreme Court has explained that
“[t]he crux of the profit/nonprofit distinction is not whether the sole motive
of the use is monetary gain but whether the user stands to profit from
exploitation of the copyrighted material without paying the customary
price.” Harper & Row, 471 U.S. at 562, 105 S.Ct. at 2231. Plaintiffs point
to several cases in which courts have found that educational use of
copyrighted works by a nonprofit entity (or an individual associated with
such an entity) was commercial even though the secondary user was not
selling the items in question, in which “profit” took the form of an indirect
economic benefit or a nonmonetary, professional benefit. See, e.g., Soc’y of
Holy Transfiguration Monastery, Inc. v. Gregory, 689 F.3d 29, 61 (1st
Cir.2012), cert. denied, ––– U.S. ––––, 133 S.Ct. 1315, 185 L.Ed.2d 195
(2013) (finding that the first factor weighed against fair use where an
archbishop used copyrighted translations of a religious text on his website;
although the use was educational, the archbishop profited from the use, in
part, in the form of enhanced professional reputation); Worldwide Church
of God v. Philadelphia Church of God, Inc., 227 F.3d 1110, 1118 (9th
Cir.2000) (finding the first factor weighed against fair use where a religious
organization distributed copies of a copyrighted book for use in its religious
observance; the use was nontransformative, and although the use was
educational, the organization profited indirectly by using the work to
attract new members who would tithe ten percent of their income);
Weissmann v. Freeman, 868 F.2d 1313, 1324 (2d Cir.1989) (finding that
the first factor weighed against fair use where a professor claimed an
assistant’s paper as his own work and copied it for use in his class, under

136

CH. 1

the professor’s name, because the professor profited from the use by
enhancing his professional reputation and gaining a valuable authorship
credit).
Under this line of reasoning, Defendants’ educational use of Plaintiffs’
works is a for-profit use despite GSU’s status as a nonprofit educational
institution, and despite the fact that GSU does not directly sell access to
Plaintiffs’ works on Eres and uLearn. Defendants “exploited” Plaintiffs’
copyrighted material for use in university courses without “paying the
customary price”—a licensing fee. Defendants profited from the use of
excerpts of Plaintiffs’ works—however indirectly—because GSU collects
money from students in the form of tuition and fees (which students pay in
part for access to ERes and uLearn) and reduces its costs by avoiding fees
it might have otherwise paid for the excerpts.
However, this reasoning is somewhat circular, and hence of limited
usefulness to our fair use inquiry. Of course, any unlicensed use of
copyrighted material profits the user in the sense that the user does not
pay a potential licensing fee, allowing the user to keep his or her money. If
this analysis were persuasive, no use could qualify as “nonprofit” under the
first factor. Moreover, if the use is a fair use, then the copyright owner is
not entitled to charge for the use, and there is no “customary price” to be
paid in the first place.
Accordingly, evaluating the indirect profit GSU gained by refusing to pay
to license Plaintiffs’ works provides little useful guidance under the first
factor. Simply put, the greater the amount of a work taken by the secondary
user (or the more valuable the portion taken), the more the user “profits”
by not paying for the use. Thus, the concern we have identified with profit
in this sense is better dealt with under the third factor, which directs us to
consider the amount of the original work that the secondary user
appropriated, and the substantiality of the portion used.
Defendants’ use of Plaintiffs’ works does not provide GSU with a
noneconomic but measurable professional benefit, such as an enhanced
reputation. Contra Soc’y of Holy Transfiguration Monastery, 689 F.3d at
61. Although GSU students are likely pleased with the convenience of ERes
and uLearn, there is no evidence that the presence of excerpts of Plaintiffs’
works on these electronic reserve systems enhances GSU’s reputation in
any meaningful sense. There is no evidence that GSU gains any other
measurable, indirect benefit by distributing Plaintiffs’ works to students,
such as a valuable authorship credit either. Contra Weissmann, 868 F.2d
at 1324.
Ultimately, we agree with the Second Circuit’s assessment that

CH. 1

137

[t]he commercial/nonprofit dichotomy concerns the unfairness that arises
when a secondary user makes unauthorized use of copyrighted material to
capture significant revenues as a direct consequence of copying the original
work.
Consistent with these principles, courts will not sustain a claimed defense
of fair use when the secondary use can fairly be characterized as a form of
“commercial exploitation,” i.e., when the copier directly and exclusively
acquires conspicuous financial rewards from its use of the copyrighted
material. Conversely, courts are more willing to find a secondary use fair
when it produces a value that benefits the broader public interest. The
greater the private economic rewards reaped by the secondary user (to the
exclusion of broader public benefits), the more likely the first factor will
favor the copyright holder and the less likely the use will be considered fair.
Texaco, 60 F.3d at 922 (2d Cir.1994) (citations omitted).
Although GSU certainly benefits from its use of Plaintiffs’ works by being
able to provide the works conveniently to students, and profits in the sense
that it avoids paying licensing fees, Defendants’ use is not fairly
characterized as “commercial exploitation.” Even if Defendants’ use profits
GSU in some sense, we are not convinced that this type of benefit is
indicative of “commercial” use. There is no evidence that Defendants
capture significant revenues as a direct consequence of copying Plaintiffs’
works. At the same time, the use provides a broader public benefitfurthering the education of students at a public university.
Thus, we find that Defendants’ use of Plaintiffs’ works is of the nonprofit
educational nature that Congress intended the fair use defense to allow
under certain circumstances. Furthermore, we find this sufficiently
weighty that the first factor favors a finding of fair use despite the
nontransformative nature of the use.
The text of the fair use statute highlights the importance Congress placed
on educational use. The preamble to the statute provides that fair uses may
include “teaching (including multiple copies for classroom use),
scholarship, or research” and the first factor singles out “nonprofit
educational purposes.” 17 U.S.C. § 107. The legislative history of § 107
further demonstrates that Congress singled out educational purposes for
special consideration. In the years leading up to passage of the Copyright
Act of 1976 (which introduced § 107), Congress devoted considerable
attention to working out the proper scope of the fair use defense as applied
to copying for educational and classroom purposes, going so far as to
include in a final report the Classroom Guidelines developed by
representatives of educator, author, and publisher groups at the urging of
Congress. See H.R.Rep. No. 2237, at 59–66 (1966); S.Rep. No. 93–983, at

138

CH. 1

116–19 (1974); S.Rep. No. 94–473, at 63–65 (1975); H.R.Rep. No. 94–1476,
at 66–70 (1976).
Notably, early drafts of § 107 did not include the parenthetical “including
multiple copies for classroom use” or the specific direction to consider
“whether [the] use is of a commercial nature or is for nonprofit educational
purposes.” See S. 3008, H.R. 11947, H.R. 12354, 88th Cong. (1st Sess.1964);
S. 1006, H.R. 4347, H.R. 5680, H.R. 6831, H.R. 6835, 89th Cong. (1st
Sess.1965); S. 597, H.R. 2512, H.R. 5650, 90th Cong. (1st Sess.1967). This
language was not inserted until one month before the passage of the
Copyright Act of 1976. See S. 22, 94th Cong. (2d Sess.1976).
In sum, Congress devoted extensive effort to ensure that fair use would
allow for educational copying under the proper circumstances and was
sufficiently determined to achieve this goal that it amended the text of the
statute at the eleventh hour in order to expressly state it. Furthermore, as
described above, allowing latitude for educational fair use promotes the
goals of copyright. Thus, we are persuaded that, despite the recent focus on
transformativeness under the first factor, use for teaching purposes by a
nonprofit, educational institution such as Defendants’ favors a finding of
fair use under the first factor, despite the nontransformative nature of the
use.
Accordingly, we find that the District Court did not err in holding that the
first factor favors a finding of fair use. Nevertheless, because Defendants’
use of Plaintiffs’ works is nontransformative, the threat of market
substitution is significant. We note that insofar as the first factor is
concerned with uses that supplant demand for the original, this factor is
“closely related” to “[t]he fourth fair use factor, the effect on the potential
market for the work.” See Pac. & S. Co., 744 F.2d at 1496. We will thus
revisit this concern when we analyze the fourth factor. See infra part
III.D.4.
2.
The second fair use factor, “the nature of the copyrighted work,” 17 U.S.C.
§ 107(2), “calls for recognition that some works are closer to the core of
intended copyright protection than others, with the consequence that fair
use is more difficult to establish when the former works are copied,”
Campbell, 510 U.S. at 586, 114 S.Ct. at 1175. The inquiry under the second
factor generally focuses on two criteria. First, because works that are
highly creative are closer to the core of copyright—that is, such works
contain the most originality and inventiveness—the law affords such works
maximal protection, and hence it is less likely that use of such works will
be fair use.. In contrast, “[t]he law generally recognizes a greater need to

CH. 1

139

disseminate factual works than works of fiction or fantasy,” and so it is
more likely that the use of a factual or informational work will be fair use.
Harper & Row, 471 U.S. at 563, 105 S.Ct. at 2232; see also Stewart v.
Abend, 495 U.S. 207, 237, 110 S.Ct. 1750, 1769, 109 L.Ed.2d 184 (1990).
Second, because an “author’s right to control the first public appearance of
his expression weighs against such use of the work before its release,” use
of an unpublished work is less likely to be fair use. Harper & Row, 471 U.S.
at 564, 105 S.Ct. at 2232. Because all of Plaintiffs’ works in question here
are published, we will focus on the creative/factual distinction.
A paradigmatic example of a creative work, the use of which will disfavor
fair use under the second factor, is “[a] motion picture based on a fictional
short story.” Abend, 495 U.S. at 238, 110 S.Ct. at 1769. On the factual end
of the spectrum, secondary use of a “bare factual compilation[ ]” favors fair
use under the second factor. Campbell, 510 U.S. at 586, 114 S.Ct. at 1175
(citing Feist, 499 U.S. at 348–51, 111 S.Ct. at 1289–91). However, “[e]ven
within the field of fact[ual] works, there are gradations as to the relative
proportion of fact and fancy. One may move from sparsely embellished
maps and directories to elegantly written biography.” Harper & Row, 471
U.S. at 563, 105 S.Ct. at 2232 (quoting Robert A. Gorman, Fact or Fancy?
The Implications for Copyright, 29 J. Copyright Soc’y 560, 561 (1982)).
The coursepack cases—which involved copying of academic works similar
to those involved here—reached opposite conclusions as to the effect of the
second factor. Compare Princeton Univ. Press, 99 F.3d at 1389 (“[T]he
excerpts copied for the coursepacks contained creative material, or
‘expression;’ it was certainly not telephone book listings that the
defendants were reproducing. This factor ... cuts against a finding of fair
use.”), with Basic Books, 758 F.Supp. at 1533 (“The books infringed in suit
were factual in nature. This factor weighs in favor of defendant.”).
Nevertheless, relevant precedent indicates the proper approach. In Harper
& Row, a publisher holding exclusive rights to President Ford’s
unpublished memoirs sued The Nation magazine after The Nation
published portions of the memoirs. 471 U.S. at 543, 105 S.Ct. at 2221–22.
Although it focused on the unpublished nature of the memoir, the Court
held that the second factor disfavored fair use in part because “The Nation
did not stop at isolated phrases and instead excerpted subjective
descriptions and portraits of public figures whose power lies in the author’s
individualized expression. Such use, focusing on the most expressive
elements of the work, exceeds that necessary to disseminate the facts.” Id.
at 563–64, 105 S.Ct. at 2232.
In Peter Letterese & Associates, the holder of the copyright on a book about
sales techniques sued several entities associated with the Church of

140

CH. 1

Scientology after the entities used portions of the book in materials
prepared for Church training courses. 533 F.3d at 1294–96. We held that
the second factor was neutral—i.e., did not weigh for or against fair use—
in part because, although the book
[fell] roughly under the rubric of a factual work[,] ... [it]
contain[ed] a significant “proportion of fact and fancy,” and
not merely in the subjective selection and arrangement of
sales techniques; [the author] utilize[d] original expression
that surpasses the bare facts necessary to communicate the
underlying technique. Although the techniques are
presented by way of personal anecdote, it is hard to believe
that such anecdotes feature actual persons and actual
retellings of past events and conversations, as opposed to
composite characters and experiences served with a healthy
dose of fiction.
Id. at 1312–13.
***
Here, the District Court held that “[b]ecause all of the excerpts are
informational and educational in nature and none are fictional, fair use
factor two weighs in favor of Defendants.” Cambridge Univ. Press, 863
F.Supp.2d at 1242. We disagree.
The District Court found that “[s]ome of the books [at issue] are not merely
descriptive; they contain material of an evaluative nature, giving the
authors’ perspectives and opinions.” Id. at 1226. Such material might
involve “subjective descriptions [that rely on] the author’s individualized
expression,” Harper & Row, 471 U.S. at 563, 105 S.Ct. at 2232, may
“surpass[ ] the bare facts necessary to communicate the underlying”
information, Peter Letterese & Assocs., 533 F.3d at 1312, or may be
“derived from [the author’s] own experiences,” Rowley, 695 F.2d at 1176.
Although there appears to be no evidence that any of the non-fiction works
in question here are “served with a healthy dose of fiction,” neither are all
of the works mere “factual compilation[s].” Peter Letterese & Assocs., 533
F.3d at 1312–13.
Defendants argue that GSU professors chose the excerpts of Plaintiffs’
works for their factual content, not for any expressive content the works
may contain, noting that several professors testified that if the use of a
particular excerpt was not a fair use, they would have found another
source. Of course, other professors testified that they chose particular
excerpts because of the author’s interpretative originality and significance.
Regardless of whether GSU faculty chose the excerpts for their expressive

CH. 1

141

or factual content, the excerpts were copied wholesale—facts, ideas, and
original expression alike. Which aspect the secondary user was interested
in is irrelevant to the disposition of the second factor.
Accordingly, we find that the District Court erred in holding that the
second factor favored fair use in every instance. Where the excerpts of
Plaintiffs’ works contained evaluative, analytical, or subjectively
descriptive material that surpasses the bare facts necessary to
communicate information, or derives from the author’s experiences or
opinions, the District Court should have held that the second factor was
neutral, or even weighed against fair use in cases of excerpts that were
dominated by such material. That being said, the second fair use factor is
of relatively little importance in this case.
3.
The third fair use factor is “the amount and substantiality of the portion
used in relation to the copyrighted work as a whole.” 17 U.S.C. § 107(3).
“[T]his third factor examines whether defendants have ‘helped themselves
overmuch’ of the copyrighted work in light of the purpose and character of
the use.” Peter Letterese & Assocs., 533 F.3d at 1314 (quoting Campbell,
510 U.S. at 587, 114 S.Ct. at 1175). Thus, this factor is intertwined with
the first factor.
“[T]his factor is [also] intertwined with the fourth factor and partly
functions as a heuristic to determine the impact on the market for the
original.” Id. (footnote omitted). As we have explained,
A book reviewer who copies snippets of a book is likely to increase the
demand for the book, but “were a book reviewer to quote the entire book in
his review, or so much of the book as to make the review a substitute for
the book itself, he would be cutting into the publisher’s market, and the
defense of fair use would fail.” Id. (quoting Ty, Inc. v. Publ’ns Int’l Ltd., 292
F.3d 512, 517 (7th Cir.2002)). Thus, “[t]he inquiry is whether the amount
taken is reasonable in light of the purpose of the use and the likelihood of
market substitution.” Id. at 1314 n. 30 (citing Campbell, 510 U.S. at 588,
114 S.Ct. at 1176).
In making this determination, we must consider “not only ... the quantity
of the materials used, but ... their quality and importance, too.” Campbell,
510 U.S. at 587, 114 S.Ct. at 1175; see also Harper & Row, 471 U.S. at 565,
105 S.Ct. at 2233 (holding that the third factor disfavored fair use because
the defendant copied a qualitatively substantial portion of the original
work—“the most interesting and moving parts of the entire manuscript” or
“the heart of the book”—even though the defendants copied only

142

CH. 1

approximately 300 words out of the 200,000 words in the plaintiffs’ work
(quotation marks omitted)).
Here, the District Court found that the third factor favored fair use in
instances where Defendants copied no more than 10 percent of a work, or
one chapter in case of a book with ten or more chapters. Cambridge Univ.
Press, 863 F.Supp.2d at 1243. The District Court’s blanket 10 percent-orone-chapter benchmark was improper. The fair use analysis must be
performed on a case-by-case/work-by-work basis. Campbell, 510 U.S. at
577, 114 S.Ct. at 1170; see supra discussion accompanying note 20. We
must avoid “hard evidentiary presumption[s] ... and ‘eschew[ ] a rigid,
bright-line approach to fair use.’ ” Campbell, 510 U.S. at 584–85, 114 S.Ct.
at 1174 (quoting Sony, 464 U.S. at 449 n. 31, 104 S.Ct. at 792 n. 31). By
holding that the third factor favored fair use whenever the amount of
copying fell within a 10 percent-or-one-chapter baseline, the District Court
abdicated its duty to analyze the third factor for each instance of alleged
infringement individually.
Defendants argue that the District Court’s 10 percent-or-one-chapter
baseline served as a starting point only. However, this “starting point” in
fact served as a substantive safe harbor in the third factor analysis, an
approach which is incompatible with the prescribed work-by-work
analysis. Even if we consider the baseline as a starting point only,
application of the same non-statutory starting point to each instance of
infringement is not a feature of a proper work-by-work analysis under the
third fair use factor.
Defendants also argue that the District Court’s 10 percent-or-one-chapter
approach is supported by the record. Defendants’ explain that a CCC white
paper, Using Electronic Reserves: Guidelines and Best Practices for
Copyright Compliance (2011), identifies “best practices” for electronic
reserves, stating that electronic reserve materials should be limited to
“small excerpts” and that “[m]ost experts advise using a single article or ...
chapter of a copyrighted work....” See Defendants’ Trial Ex. 906, at 2.
However, even if we accept that the 10 percent-or-one-chapter approach
represents a general industry “best practice” for electronic reserves, this is
not relevant to an individualized fair use analysis.
Plaintiffs offer four additional critiques of the District Court’s analysis
under the third factor. First, Plaintiffs argue that the District Court erred
in focusing its inquiry on whether the amount copied suited GSU’s
pedagogical purposes. ***. Thus, we find that the District Court properly
took into account whether the amount copied suited GSU’s pedagogical
purposes.

CH. 1

143

Second, Plaintiffs argue that the District Court erred in measuring the
amount taken based on the length of the entire book even where the copied
material was an independently authored chapter in an edited volume.
Rather, Plaintiffs contend, the relevant “work” in the case of an edited
volume is the chapter copied, not the entire book; to conclude otherwise
would create the anomalous result that a work bound with other works in
an edited volume would enjoy less copyright protection than if the same
work were published in a journal. See Texaco, 60 F.3d at 926 (treating
individual articles in a journal as discrete works of authorship for purposes
of third factor analysis).
As noted earlier, the District Court declined to consider this argument
because Plaintiffs raised it late in the proceedings. The decision whether to
hear an argument raised late in litigation is squarely within the discretion
of the District Court. ***
Third, Plaintiffs argue that the copying permitted by the District Court
exceeds the amounts outlined in the Classroom Guidelines. We note that
the Classroom Guidelines, although part of the legislative history of the
Copyright Act, do not carry force of law. In any case, to treat the Classroom
Guidelines as indicative of what is allowable would be to create the type of
“hard evidentiary presumption” that the Supreme Court has cautioned
against, because fair use must operate as a “ ‘sensitive balancing of
interests.’ ” Campbell, 510 U.S. at 584, 114 S.Ct. at 1174 (quoting Sony,
464 U.S. at 455, n. 40, 104 S.Ct. at 795, n. 40). As discussed, the fair use
analysis must be performed on a work-by-work basis, and so we must not
give undue weight to the amounts of copying set forth in the Classroom
Guidelines.
Furthermore, although Plaintiffs characterize the amounts set forth in the
Classroom Guidelines as “limits,” the Classroom Guidelines were intended
to suggest a minimum, not maximum, amount of allowable educational
copying that might be fair use, and were not intended to limit fair use in
any way:
The purpose of the [Classroom] [G]uidelines is to state the minimum and
not the maximum standards of educational fair use....
Moreover, the following statement of guidelines is not intended to limit the
types of copying permitted under the standards of fair use under judicial
decision and which are stated in Section 107 of the Copyright Revision Bill.
H.R.Rep. No. 94–1476, at 68 (1976), reprinted in U.S.C.C.A.N. 5659, 5681.
Thus, while the Classroom Guidelines may be seen to represent Congress’
tentative view of the permissible amount of educational copying in 1976,
we are not persuaded by the Plaintiffs’ argument that the Classroom
Guidelines should control the analysis under factor three in this case.

144

CH. 1

Finally, Plaintiffs argue that the District Court allowed excessive taking
as a percentage of the entire book compared to the amounts held to be “over
the line” in the coursepack cases. ***
We first note that the coursepack cases are not binding authority on this
Court. Furthermore, because the four factors must be “weighed together”
and not “treated in isolation,” Campbell, 510 U.S. at 578, 114 S.Ct. at 1171,
it is appropriate for the District Court to take the educational purpose of
the use into consideration when analyzing how much copying is
permissible under the third factor. This must be done on a work-by-work
basis in a case such as this. While this type of analysis necessarily
precludes hard-and-fast evidentiary presumptions, the wholesale
reproduction of an entire work will not generally be considered fair unless
the use is highly transformative.
Accordingly, we find that the District Court properly considered whether
the individual instances of alleged infringement were excessive in relation
to Defendants’ pedagogical purpose, properly measured the amounts taken
in all cases based on the length of the entire book, and properly declined to
tie its analysis under the third factor to the Classroom Guidelines or to the
coursepack cases. However, we find that the District Court erred in
applying a 10 percent-or-one-chapter safe harbor in it analysis of the
individual instances of alleged infringement. The District Court should
have analyzed each instance of alleged copying individually, considering
the quantity and the quality of the material taken—including whether the
material taken constituted the heart of the work—and whether that taking
was excessive in light of the educational purpose of the use and the threat
of market substitution.
4.
The fourth fair use factor is “the effect of the use upon the potential market
for or value of the copyrighted work.” 17 U.S.C. § 107(4). “We must consider
two inquiries: (1) ‘the extent of the market harm caused by the particular
actions of the alleged infringer,’ and (2) ‘whether unrestricted and
widespread conduct of the sort engaged in by the defendant [ ] would result
in a substantially adverse impact on the potential market.’ ” Peter
Letterese & Assocs., 533 F.3d at 1315 (alteration in original) (quoting
Campbell, 510 U.S. at 590, 114 S.Ct. at 1177 (quotation marks omitted)).
The adverse impact we are “primarily concerned [with] is that of market
substitution.” Id.; see also Harper & Row, 471 U.S. at 568, 105 S.Ct. at 2235
(explaining that the fourth factor is concerned with “use that supplants any
part of the normal market for a copyrighted work” (quoting S.Rep. No. 94–
473, at 65 (1975))). Furthermore, “[m]arket harm is a matter of degree, and

CH. 1

145

the importance of [the fourth] factor will vary, not only with the amount of
harm, but also with the relative strength of the showing on the other
factors.” Campbell, 510 U.S. at 590 n. 21, 114 S.Ct. at 1177 n. 21. Because
Defendants’ use is nontransformative and fulfills the educational purposes
that Plaintiffs, at least in part, market their works for, the threat of market
substitution here is great and thus the fourth factor looms large in the
overall fair use analysis.
The central question under the fourth factor is not whether Defendants’
use of Plaintiffs’ works caused Plaintiffs to lose some potential revenue.
Rather, it is whether Defendants’ use—taking into account the damage
that might occur if “everybody did it”—would cause substantial economic
harm such that allowing it would frustrate the purposes of copyright by
materially impairing Defendants’ incentive to publish the work. See
Harper & Row, 471 U.S. at 566–67, 105 S.Ct. at 2234 (“Fair use, when
properly applied, is limited to copying by others which does not materially
impair the marketability of the work which is copied.” (emphasis added)
(quotation marks omitted)).
We agree with the District Court that the small excerpts Defendants used
do not substitute for the full books from which they were drawn. “Plaintiffs
offered no trial testimony or evidence showing that they lost any book sales
in or after 2009 on account of any actions by anyone at Georgia State.”
Cambridge Univ. Press, 863 F.Supp.2d at 1217. Thus, the District Court
did not err in finding that “Defendants’ use of small excerpts did not affect
Plaintiffs’ actual or potential sales of books.” Id. at 1236.
However, CCC’s various programs for academic permissions—and
Plaintiffs’ own permissions programs—constitute a workable market
through which universities like GSU may purchase licenses to use excerpts
of Plaintiffs’ works. Plaintiffs contend that, by failing to purchase digital
permissions to use excerpts of Plaintiffs’ works on ERes and uLearn,
Defendants caused substantial harm to the market for licenses, and that
widespread adoption of this practice would cause substantial harm to the
potential market. Plaintiffs also argue that, even if a license for a digital
excerpt of a work was unavailable, this should not weigh in favor of fair use
because the copyright owner is not obliged to accommodate prospective
users.
Defendants argue that, because permissions income for academic books
represents a miniscule percentage of Plaintiffs’ overall revenue,
Defendants’ practices have not caused substantial harm to the market for
Plaintiffs works, and would not do so even if widely adopted. Defendants
further argue that unavailability of licensing opportunities for particular
works should weigh in favor of fair use.

146

CH. 1

We note that it is not determinative that programs exist through which
universities may license excerpts of Plaintiffs’ works. In other words, the
fact that Plaintiffs have made paying easier does not automatically dictate
a right to payment. “[A] copyright holder can always assert some degree of
adverse [effect] on its potential licensing revenues as a consequence of the
secondary use at issue simply because the copyright holder has not been
paid a fee to permit that particular use.” Texaco, 60 F.3d at 929 n. 17
(citations omitted). The goal of copyright is to stimulate the creation of new
works, not to furnish copyright holders with control over all markets.
Accordingly, the ability to license does not demand a finding against fair
use.
Nevertheless, “it is sensible that a particular unauthorized use should be
considered ‘more fair’ when there is no ready market or means to pay for
the use, while such an unauthorized use should be considered ‘less fair’
when there is a ready market or means to pay for the use. The vice of
circular reasoning arises only if the availability of payment is conclusive
against fair use.” Id. at 931. Put simply, absent evidence to the contrary, if
a copyright holder has not made a license available to use a particular work
in a particular manner, the inference is that the author or publisher did
not think that there would be enough such use to bother making a license
available. In such a case, there is little damage to the publisher’s market
when someone makes use of the work in that way without obtaining a
license, and hence the fourth factor should generally weigh in favor of fair
use. This is true of Plaintiffs’ works for which no license for a digital excerpt
was available.
Plaintiffs argue that even though a use is less fair when licensing is readily
available, it does not follow that a use becomes more fair if, for a legitimate
reason, the copyright holder has not offered to license the work. Plaintiffs
cite several cases which have found that the fourth factor weighs against
fair use even though the copyright holder was not actively marketing the
work in question because the secondary use negatively impacted the
potential market for the work. We note that our own precedent also
supports this theory in some circumstances. See Pac. & S. Co., 744 F.2d at
1496 (finding harm to the potential market for plaintiff’s news broadcasts
where a defendant videotaped the broadcasts and sold tapes to the subjects
of the news reports because “[c]opyrights protect owners who immediately
market a work no more stringently than owners who delay before entering
the market” and so “[t]he fact that [the plaintiff] does not actively market
copies of the news programs does not matter, for Section 107 looks to the
‘potential market’ in analyzing the effects of an alleged infringement”).
However, this reasoning need not dictate the result in this case, which
concerns not the market for Plaintiffs’ original works themselves or for

CH. 1

147

derivative works based upon those works, but rather a market for licenses
to use Plaintiffs’ works in a particular way. As previously explained,
licensing poses a particular threat that the fair use analysis will become
circular, and Plaintiffs may not head off a defense of fair use by
complaining that every potential licensing opportunity represents a
potential market for purposes of the fourth fair use factor.
An analogy is helpful. A publisher acts like a securities underwriter. A
publisher determines the value of a work, which is set by the anticipated
demand for the work. Thus, the greater the demand for the work—the
greater the market—the more the publisher will pay the author of the work
up front, and the more the publisher will endeavor to make the work widely
available. If a publisher makes licenses available for some uses but not for
others, this indicates that the publisher has likely made a reasoned
decision not to enter the licensing market for those uses, which implies that
the value of that market is minimal.
With regard to the works for which digital permissions were unavailable,
Plaintiffs choose to enter those works into some markets—print copies of
the whole work, or perhaps licenses for paper copies of excerpts—but not
the digital permission market. This tells us that Plaintiffs likely
anticipated that there would be little to no demand for digital excerpts of
the excluded works and thus saw the value of that market as de minimis
or zero. If the market for digital excerpts were in fact de minimis or zero,
then neither Defendants’ particular use nor a widespread use of similar
kind would be likely to cause significant market harm. Of course, if
publishers choose to participate in the market the calculation will change.
In its individual analysis under the fourth factor of each of the forty-eight
works for which it found Plaintiffs had made a prima facie case of
infringement, the District Court performed a sufficiently nuanced review
of the evidence regarding license availability. Where the evidence showed
that there was a ready market for digital excerpts of a work in 2009, the
time of the purported infringements, the District Court found that there
was small—due to the amount of money involved—but actual damage to
the value of Plaintiffs’ copyright. The District Court also properly took into
account that widespread use of similar unlicensed excerpts could cause
substantial harm to the potential market. Thus, where there was a license
for digital excerpts available, the District Court generally held that the
fourth factor weighed against a finding of fair use. In close cases, the
District Court went further and examined the amount of permissions
income a work had generated in order to determine how much this
particular revenue source contributed to the value of the copyright in the
work, noting that where there is no significant demand for excerpts, the
likelihood of repetitive unpaid use is diminished. Where there was no
evidence in the record to show that a license for digital excerpts was

148

CH. 1

available—as was the case for seventeen works published by Oxford and
Cambridge—the District Court held that the fourth factor weighted in
favor of fair use. We find that the District Court’s analysis under the fourth
factor was correct, and that the District Court properly took license
availability into account in determining whether the fourth factor weighted
for or against fair use.
Plaintiffs argue that the District Court erred by placing the burden on
Plaintiffs to show that digital licenses for the particular works in question
were reasonably available through CCC in 2009. Cognizant that fair use is
an affirmative defense, the District Court kept the overall burden on
Defendants to show that “no substantial damage was caused to the
potential market for or the value of Plaintiffs’ works” in order to prevail on
the question of whether the fourth factor should favor fair use. Cambridge
Univ. Press, 863 F.Supp.2d at 1237. However, the District Court found that
because Plaintiffs were “advocates of the theory that the availability of
licenses shifts the factor four fair use analysis in their favor ... it is
appropriate for them to be called upon to show that CCC provided in 2009
reasonably efficient, reasonably priced, convenient access to the particular
excerpts which are in question in this case.” Id. Plaintiffs argue that this
amounted to relieving the Defendants of their burden of proof on the fourth
factor.
We disagree. Fair use is an affirmative defense, and the evidentiary burden
on all four of its factors rests on the alleged infringer. See Campbell, 510
U.S. at 590, 114 S.Ct. at 1177. However, Plaintiffs—as publishers—can
reasonably be expected to have the evidence as to availability of licenses
for their own works. It is therefore reasonable to place on Plaintiffs the
burden of going forward with the evidence on this question.
*** This is reasonable, because if a license was available during the
relevant time period, Plaintiffs can rebut the presumption of no market by
going forward with evidence of license availability. If there is evidence of a
potential, future market, Plaintiffs can rebut the presumption by going
forward with that. Then, Defendants—retaining the overall burden of
persuasion on the fourth factor—must demonstrate that their use does not
materially impair the existing or potential market in order to prevail.
Although the District Court did not articulate its approach to the
evidentiary burden on license availability in exactly this manner, the
District Court did essentially what we have described. The District Court
required Plaintiffs to put on evidence as to the availability of digital
permissions in 2009, and Plaintiffs provided such evidence for some of the
works in question but not for others. For those seventeen works for which
Plaintiffs presented no evidence that digital permissions were available,
the District Court—noting that, because access was limited to particular

CH. 1

149

classes, it was unlikely that Defendants’ use would result in exposure of
the works to the general public and so there was little risk of widespread
market substitution for excerpts of the works—held that there was no
harm to the actual or potential market. For those works for which Plaintiffs
demonstrated that digital permissions were available, the District Court
considered the evidence demonstrating that the actual harm to the value
of Plaintiffs’ copyright was minor (because the fees Defendants would have
paid for a small number of licenses for the works in question amounted to
a relatively small amount), but reasonably concluded that widespread
conduct of the sort engaged in by Defendants would cause substantial
harm. Thus, although the District Court required Plaintiffs to go forward
with evidence of license availability, the District Court properly kept the
ultimate burden of persuasion on Defendants on the question of market
harm under the fourth factor. Accordingly, the District Court did not
engage in improper burden shifting.
Finally, Plaintiffs argue that the District Court erred in finding that digital
licenses for many of the works in question were unavailable in 2009.
Plaintiffs point to the joint exhibit enumerating the allegations of
infringement which were to be the basis of the trial, filed on March 15,
2011. Plaintiffs note that this document identified what it would have cost
in 2009 to license each of the works at issue through CCC. Defendants,
however, argue that the joint exhibit merely depicts what the permission
fee for each work might have been using the standard per-page rates
charged by CCC for each publisher. The District Court accepted this
argument, noting that “[t]he fact that a license to copy an excerpt of an
individual work would have cost a particular amount is not a substitute for
evidence that the license was actually available.”
Given the evidence in the record, it was reasonable for the District Court
to find that a lack of direct evidence of availability indicated that licenses
were unavailable. Cambridge’s representative testified that Cambridge
does not allow excerpts of certain categories of books to be licensed through
CCC, including reference and language books (as several of the works at
issue here are). Representatives of Oxford, Cambridge, and CCC testified,
but did not explain whether digital licenses for excerpts were available in
2009 for the books at issue in this case.37 The District Court also noted
that the record shows that Cambridge and Oxford have been reluctant to
make digital excerpts available. Thus, the District Court’s findings of fact
regarding license availability are not clearly erroneous.
The District Court engaged in a careful investigation of the evidence in the
record, properly considered the availability of digital permissions in 2009,
and appropriately placed the burden of going forward with the evidence on
this issue on Plaintiffs. Accordingly, we find that the District Court did not

150

CH. 1

err in its application of the fourth factor. However, because Defendants’
copying was nontransformative and the threat of market substitution was
therefore serious, the District Court erred by not affording the fourth factor
additional weight in its overall fair use calculus.
5.
The District Court enumerated two additional, purportedly non-statutory
considerations which it held favored fair use: (1) that “[l]imited unpaid
copying of excerpts will not deter academic authors from creating new
academic works,” and (2) that “[t]he slight limitation of permissions income
caused by the fair use authorized by this Order will not appreciably
diminish Plaintiffs’ ability to publish scholarly works and will promote the
spread of knowledge.” Id. at 1240. Although it is within the District Court’s
discretion to go beyond the considerations set forth in the four factors, see
Harper & Row, 471 U.S. at 549, 105 S.Ct. at 2225 (explaining that the four
statutory fair use factors are nonexclusive), the District Court’s
supplemental considerations are not actually supplemental, and as such
should have instead been considered within the existing statutory
framework.
The District Court’s first additional consideration was more properly
considered under the first fair use factor—“the purpose and character of
the use, including whether such use is of a commercial nature or is for
nonprofit educational purposes.” 17 U.S.C. § 107(1). Nonprofit educational
uses are more likely to be fair because they promote the ultimate aims of
copyright—the creation and dissemination of knowledge. Both of these
aims must be kept in mind when evaluating a claim of fair use. Thus,
whether the limited unpaid copying of excerpts will deter academic authors
from creating is relevant. Nevertheless, it is the publishers—not academic
authors—that are the holders of the copyrights at issue here. Publishers—
not authors—are claiming infringement. Thus, when determining whether
Defendants’ unpaid copying should be excused under the doctrine of fair
use in this case, we are primarily concerned with the effect of Defendants’
copying on Plaintiffs’ incentive to publish, not on academic authors’
incentive to write.
The District Court’s second additional consideration may be divided into
two findings. First, the District Court found that a slight diminution of
Plaintiffs’ permissions income caused by Defendants’ fair use would not
appreciably harm Plaintiffs’ ability to publish scholarly works. However,
this consideration is adequately dealt with under the fourth factor, which,
as we have explained, asks whether the market harm caused by
Defendants’ unpaid copying will materially impair Plaintiffs’ incentive to
publish.

CH. 1

151

Second, the District Court found that that “it is consistent with the
principles of copyright to apply the fair use doctrine in a way that promotes
the dissemination of knowledge, and not simply its creation,” and treated
this as a basis to allow the slight diminution of Plaintiffs’ permissions
income caused by Defendants’ unpaid copying. Cambridge Univ. Press, 863
F.Supp.2d at 1241. We agree with the proposition that applying fair use in
a manner which promotes the dissemination of knowledge is consistent
with the goals of copyright. See Golan v. Holder, ––– U.S. ––––, 132 S.Ct.
873, 888, 181 L.Ed.2d 835 (2012) (explaining that the Progress of Science,
which Congress is empowered to promote pursuant to the Copyright
Clause, “refers broadly to the creation and spread of knowledge and
learning” (emphasis added) (quotation marks omitted)). However, all
unpaid copying could be said to promote the spread of knowledge, so this
principal is not particularly helpful in “separating the fair use sheep from
the infringing goats.” See Campbell, 510 U.S. at 586, 114 S.Ct. at 1175. To
the extent that it is relevant here, this consideration is more neatly dealt
with under the first factor, which teaches that educational uses—which
certainly promote the dissemination of knowledge—are more likely to be
fair.
Accordingly, we hold that the District Court erred by separating the
following considerations from its analysis of the first and fourth factors: (1)
whether limited unpaid copying of excerpts will deter authors from
creating new academic works, and (2) whether the slight limitation of
permissions income caused by Defendants’ use would promote the spread
of knowledge and would not appreciably diminish Plaintiffs’ ability to
publish scholarly works
E.
In sum, we hold that the District Court did not err in performing a workby-work analysis of individual instances of alleged infringement in order
to determine the need for injunctive relief. However, the District Court did
err by giving each of the four fair use factors equal weight, and by treating
the four factors mechanistically. The District Court should have
undertaken a holistic analysis which carefully balanced the four factors in
the manner we have explained.
The District Court did not err in holding that the first factor—the purpose
and character of the use—favors fair use. Although Defendants’ use was
nontransformative, it was also for nonprofit educational purposes, which
are favored under the fair use statute. However, the District Court did err
in holding that the second fair use factor—the nature of the copyrighted
work—favors fair use in every case. Though this factor is of comparatively

152

CH. 1

little weight in this case, particularly because the works at issue are
neither fictional nor unpublished, where the excerpt in question contained
evaluative, analytical, or subjectively descriptive material that surpasses
the bare facts, or derive from the author’s own experiences or opinions, the
District Court should have held that the second factor was neutral or even
weighed against fair use where such material dominated.
With regard to the third factor—the amount used in relation to the
copyrighted work as a whole—the District Court erred in setting a 10
percent-or-one-chapter benchmark. The District Court should have
performed this analysis on a work-by-work basis, taking into account
whether the amount taken—qualitatively and quantitatively—was
reasonable in light of the pedagogical purpose of the use and the threat of
market substitution. However, the District Court appropriately measured
the amount copied based on the length of the entire book in all cases,
declined to give much weight to the Classroom Guidelines, and found that
the Defendants’ educational purpose may increase the amount of
permissible copying.
With regard to the fourth factor—the effect of Defendants’ use on the
market for the original—the District Court did not err. However, because
Defendants’ unpaid copying was nontransformative and they used
Plaintiffs’ works for one of the purposes for which they are marketed, the
threat of market substitution is severe. Therefore, the District Court
should have afforded the fourth fair use factor more significant weight in
its overall fair use analysis. Finally, the District Court erred by separating
two considerations from its analysis of the first and fourth fair use factors,
as described above supra part III.D.5.
***
Accordingly, we REVERSE the judgment of the District Court. We
VACATE the injunction, declaratory relief, and award of fees and costs to
Defendants, and REMAND for further proceedings consistent with this

opinion.

THE AUTHORS GUILD V. GOOGLE, INC.
United States Court of Appeals, Second Circuit
Oct. 16, 2015
804 F.3d 202

LEVAL, Circuit Judge:

CH. 1

153

This copyright dispute tests the boundaries of fair use. Plaintiffs, who are
authors of published books under copyright, sued Google, Inc. (“Google”) for
copyright infringement in the United States District Court for the Southern
District of New York (Chin, J.). They appeal from the grant of summary
judgment in Google’s favor. Through its Library Project and its Google Books
project, acting without permission of rights holders, Google has made digital
copies of tens of millions of books, including Plaintiffs’, that were submitted to
it for that purpose by major libraries. Google has scanned the digital copies
and established a publicly available search function. An Internet user can use
this function to search without charge to determine whether the book contains
a specified word or term and also see “snippets” of text containing the searchedfor terms. In addition, Google has allowed the participating libraries to
download and retain digital copies of the books they submit, under agreements
which commit the libraries not to use their digital copies in violation of the
copyright laws. These activities of Google are alleged to constitute
infringement of Plaintiffs’ copyrights. Plaintiffs sought injunctive and
declaratory relief as well as damages.
Google defended on the ground that its actions constitute “fair use,” which,
under 17 U.S.C. § 107, is “not an infringement.” The district court agreed.
Plaintiffs brought this appeal.
Plaintiffs contend the district court’s ruling was flawed in several respects.
They argue: (1) Google’s digital copying of entire books, allowing users through
the snippet function to read portions, is not a “transformative use” within the
meaning of Campbell v. Acuff–Rose Music, Inc., 510 U.S. 569, 578–585, 114
S.Ct. 1164, 127 L.Ed.2d 500 (1994), and provides a substitute for Plaintiffs’
works; (2) notwithstanding that Google provides public access to the search
and snippet functions without charge and without advertising, its ultimate
commercial profit motivation and its derivation of revenue from its dominance
of the world-wide Internet search market to which the books project
contributes, preclude a finding of fair use; (3) even if Google’s copying and
revelations of text do not infringe plaintiffs’ books, they infringe Plaintiffs’
derivative rights in search functions, depriving Plaintiffs of revenues or other
benefits they would gain from licensed search markets; (4) Google’s storage of
digital copies exposes Plaintiffs to the risk that hackers will make their books
freely (or cheaply) available on the Internet, destroying the value of their
copyrights; and (5) Google’s distribution of digital copies to participant
libraries is not a transformative use, and it subjects Plaintiffs to the risk of loss
of copyright revenues through access allowed by libraries. We reject these
arguments and conclude that the district court correctly sustained Google’s fair
use defense.
Google’s making of a digital copy to provide a search function is a
transformative use, which augments public knowledge by making available
information about Plaintiffs’ books without providing the public with a
substantial substitute for matter protected by the Plaintiffs’ copyright

154

CH. 1

interests in the original works or derivatives of them. The same is true, at least
under present conditions, of Google’s provision of the snippet function.
Plaintiffs’ contention that Google has usurped their opportunity to access paid
and unpaid licensing markets for substantially the same functions that Google
provides fails, in part because the licensing markets in fact involve very
different functions than those that Google provides, and in part because an
author’s derivative rights do not include an exclusive right to supply
information (of the sort provided by Google) about her works. Google’s profit
motivation does not in these circumstances justify denial of fair use. Google’s
program does not, at this time and on the record before us, expose Plaintiffs to
an unreasonable risk of loss of copyright value through incursions of hackers.
Finally, Google’s provision of digital copies to participating libraries,
authorizing them to make non-infringing uses, is non-infringing, and the mere
speculative possibility that the libraries might allow use of their copies in an
infringing manner does not make Google a contributory infringer. Plaintiffs
have failed to show a material issue of fact in dispute.
We affirm the judgment.

BACKGROUND

I. Plaintiffs
The author-plaintiffs are Jim Bouton, author of Ball Four; Betty Miles, author
of The Trouble with Thirteen; and Joseph Goulden, author of The
Superlawyers: The Small and Powerful World of the Great Washington Law
Firms. Each of them has a legal or beneficial ownership in the copyright for his
or her book. Their books have been scanned without their permission by
Google, which made them available to Internet users for search and snippet
view on Google’s website.
II. Google Books and the Google Library Project
Google’s Library Project, which began in 2004, involves bi-lateral agreements
between Google and a number of the world’s major research libraries. Under
these agreements, the participating libraries select books from their collections
to submit to Google for inclusion in the project. Google makes a digital scan of
each book, extracts a machine-readable text, and creates an index of the
machine-readable text of each book. Google retains the original scanned image
of each book, in part so as to improve the accuracy of the machine-readable
texts and indices as image-to-text conversion technologies improve.
Since 2004, Google has scanned, rendered machine-readable, and indexed
more than 20 million books, including both copyrighted works and works in
the public domain. The vast majority of the books are non-fiction, and most are
out of print. All of the digital information created by Google in the process is

CH. 1

155

stored on servers protected by the same security systems Google uses to shield
its own confidential information.
The digital corpus created by the scanning of these millions of books enables
the Google Books search engine. Members of the public who access the Google
Books website can enter search words or terms of their own choice, receiving
in response a list of all books in the database in which those terms appear, as
well as the number of times the term appears in each book. A brief description
of each book, entitled “About the Book,” gives some rudimentary additional
information, including a list of the words and terms that appear with most
frequency in the book. It sometimes provides links to buy the book online and
identifies libraries where the book can be founThe search tool permits a
researcher to identify those books, out of millions, that do, as well as those that
do not, use the terms selected by the researcher. Google notes that this
identifying information instantaneously supplied would otherwise not be
obtainable in lifetimes of searching.
No advertising is displayed to a user of the search function. Nor does Google
receive payment by reason of the searcher’s use of Google’s link to purchase
the book.
The search engine also makes possible new forms of research, known as “text
mining” and “data mining.” Google’s “ngrams” research tool draws on the
Google Library Project corpus to furnish statistical information to Internet
users about the frequency of word and phrase usage over centuries. This tool
permits users to discern fluctuations of interest in a particular subject over
time and space by showing increases and decreases in the frequency of
reference and usage in different periods and different linguistic regions. It also
allows researchers to comb over the tens of millions of books Google has
scanned in order to examine “word frequencies, syntactic patterns, and
thematic markers” and to derive information on how nomenclature, linguistic
usage, and literary style have changed over time. The district court gave as an
example “track[ing] the frequency of references to the United States as a single
entity (‘the United States is’) versus references to the United States in the
plural (‘the United States are’) and how that usage has changed over time.”
The Google Books search function also allows the user a limited viewing of text.
In addition to telling the number of times the word or term selected by the
searcher appears in the book, the search function will display a maximum of
three “snippets” containing it. A snippet is a horizontal segment comprising
ordinarily an eighth of a page. Each page of a conventionally formatted book
in the Google Books database is divided into eight non-overlapping horizontal
segments, each such horizontal segment being a snippet. (Thus, for such a book
with 24 lines to a page, each snippet is comprised of three lines of text.) Each
search for a particular word or term within a book will reveal the same three
snippets, regardless of the number of computers from which the search is
launched. Only the first usage of the term on a given page is displayed. Thus,

156

CH. 1

if the top snippet of a page contains two (or more) words for which the user
searches, and Google’s program is fixed to reveal that particular snippet in
response to a search for either term, the second search will duplicate the
snippet already revealed by the first search, rather than moving to reveal a
different snippet containing the word because the first snippet was already
revealed. Google’s program does not allow a searcher to increase the number
of snippets revealed by repeated entry of the same search term or by entering
searches from different computers. A searcher can view more than three
snippets of a book by entering additional searches for different terms.
However, Google makes permanently unavailable for snippet view one snippet
on each page and one complete page out of every ten—a process Google calls
“blacklisting.”
Google also disables snippet view entirely for types of books for which a single
snippet is likely to satisfy the searcher’s present need for the book, such as
dictionaries, cookbooks, and books of short poems. Finally, since 2005, Google
will exclude any book altogether from snippet view at the request of the rights
holder by the submission of an online form.
Under its contracts with the participating libraries, Google allows each library
to download copies—of both the digital image and machine-readable versions—
of the books that library submitted to Google for scanning (but not of books
submitted by other libraries). This is done by giving each participating library
access to the Google Return Interface (“GRIN”). The agreements between
Google and the libraries, although not in all respects uniform, require the
libraries to abide by copyright law in utilizing the digital copies they download
and to take precautions to prevent dissemination of their digital copies to the
public at large. Through the GRIN facility, participant libraries have
downloaded at least 2.7 million digital copies of their own volumes.

III. Procedural History
Plaintiffs brought this suit on September 20, 2005, as a putative class action
on behalf of similarly situated, rights-owning authors. After several years of
negotiation, the parties reached a proposed settlement that would have
resolved the claims on a class-wide basis. The proposed settlement allowed
Google to make substantially more extensive use of its scans of copyrighted
books than contemplated under the present judgment, and provided that
Google would make payments to the rights holders in return. On March 22,
2011, however, the district court rejected the proposed settlement as unfair to
the class members who relied on the named plaintiffs to represent their
interests.
On October 14, 2011, Plaintiffs filed a fourth amended class action complaint,
which is the operative complaint for this appeal. The district court certified a
class on May 31, 2012. Google appealed from the certification, and moved in

CH. 1

157

the district court for summary judgment on its fair use defense. Plaintiffs crossmoved in the district court for summary judgment. On the appeal from the
class certification, our court—questioning whether it was reasonable to infer
that the putative class of authors favored the relief sought by the named
plaintiffs—provisionally vacated that class certification without addressing
the merits of the issue, concluding instead that “resolution of Google’s fair use
defense in the first instance will necessarily inform and perhaps moot our
analysis of many class certification issues.” Authors Guild, Inc. v. Google Inc.,
721 F.3d 132, 134 (2d Cir.2013).
On November 14, 2013, the district court granted Google’s motion for summary
judgment, concluding that the uses made by Google of copyrighted books were
fair uses, protected by § 107. Upon consideration of the four statutory factors
of § 107, the district court found that Google’s uses were transformative, that
its display of copyrighted material was properly limited, and that the Google
Books program did not impermissibly serve as a market substitute for the
original works. The court entered judgment initially on November 27, 2013,
followed by an amended judgment on December 10, 2013, dismissing Plaintiffs’
claims with prejudice. Plaintiffs filed timely notice of appeal.
DISCUSSION

I. The Law of Fair Use
The ultimate goal of copyright is to expand public knowledge and
understanding, which copyright seeks to achieve by giving potential creators
exclusive control over copying of their works, thus giving them a financial
incentive to create informative, intellectually enriching works for public
consumption. This objective is clearly reflected in the Constitution’s
empowerment of Congress “To promote the Progress of Science ... by securing
for limited Times to Authors ... the exclusive Right to their respective
Writings.” U.S. Const., Art. I, § 8, cl. 8 (emphasis added). Thus, while authors
are undoubtedly important intended beneficiaries of copyright, the ultimate,
primary intended beneficiary is the public, whose access to knowledge
copyright seeks to advance by providing rewards for authorship.
For nearly three hundred years, since shortly after the birth of copyright in
England in 1710, courts have recognized that, in certain circumstances, giving
authors absolute control over all copying from their works would tend in some
circumstances to limit, rather than expand, public knowledge. In the words of
Lord Ellenborough, “[W]hile I shall think myself bound to secure every man in
the enjoyment of his copy-right, one must not put manacles upon science.” Cary
v. Kearsley, 170 Eng. Rep. 679, 681, 4 Esp. 168, 170 (1802). Courts thus
developed the doctrine, eventually named fair use, which permits
unauthorized copying in some circumstances, so as to further “copyright’s very
purpose, ‘[t]o promote the Progress of Science and useful Arts.’ ” Campbell v.

158

CH. 1

Acuff–Rose Music, Inc., 510 U.S. 569, 575, 114 S.Ct. 1164, 127 L.Ed.2d 500
(1994) (quoting U.S. Const., Art. I, § 8, cl. 8). Although well established in the
common law development of copyright, fair use was not recognized in the terms
of our statute until the adoption of § 107 in the Copyright Act of 1976. 17 U.S.C.
§§ 101 et seq.
***
The Campbell Court undertook a comprehensive analysis of fair use’s
requirements, discussing every segment of § 107. Beginning with the examples
of purposes set forth in the statute’s preamble, the Court made clear that they
are “illustrative and not limitative” and “provide only general guidance about
the sorts of copying that courts and Congress most commonly ha[ve] found to
be fair uses.” 510 U.S. at 577–578, 114 S.Ct. 1164 (internal quotations and
citations omitted). The statute “calls for case-by-case analysis” and “is not to
be simplified with bright-line rules.” Id. at 577, 114 S.Ct. 1164. Section 107’s
four factors are not to “be treated in isolation, one from another. All are to be
explored, and the results weighed together, in light of the purposes of
copyright.” Id. at 578, 114 S.Ct. 1164. Each factor thus stands as part of a
multifaceted assessment of the crucial question: how to define the boundary
limit of the original author’s exclusive rights in order to best serve the overall
objectives of the copyright law to expand public learning while protecting the
incentives of authors to create for the public good.
At the same time, the Supreme Court has made clear that some of the statute’s
four listed factors are more significant than others. The Court observed in
Harper & Row Publishers, Inc. v. Nation Enterprises that the fourth factor,
which assesses the harm the secondary use can cause to the market for, or the
value of, the copyright for the original, “is undoubtedly the single most
important element of fair use.” 471 U.S. 539, 566, 105 S.Ct. 2218, 85 L.Ed.2d
588 (1985) (citing MELVILLE B. NIMMER, 3 NIMMER ON COPYRIGHT §
13.05[A], at 13–76 (1984)). This is consistent with the fact that the copyright
is a commercial right, intended to protect the ability of authors to profit from
the exclusive right to merchandise their own work.
In Campbell, the Court stressed also the importance of the first factor, the
“purpose and character of the secondary use.” 17 U.S.C. § 107(1). The more the
appropriator is using the copied material for new, transformative purposes, the
more it serves copyright’s goal of enriching public knowledge and the less likely
it is that the appropriation will serve as a substitute for the original or its
plausible derivatives, shrinking the protected market opportunities of the
copyrighted work. 510 U.S. at 591, 114 S.Ct. 1164 (noting that, when the
secondary use is transformative, “market substitution is at least less certain,
and market harm may not be so readily inferred.”).
With this background, we proceed to discuss each of the statutory factors, as
illuminated by Campbell and subsequent case law, in relation to the issues

CH. 1

159

here in dispute.

II. The Search and Snippet View Functions
A. Factor One
(1) Transformative purpose. Campbell ‘s explanation of the first factor’s inquiry
into the “purpose and character” of the secondary use focuses on whether the
new work, “in Justice Story’s words, ... merely ‘supersede[s] the objects’ of the
original creation, ... or instead adds something new, with a further purpose....
[I]t asks, in other words, whether and to what extent the new work is
‘transformative.’ ” 510 U.S. at 578–579, 114 S.Ct. 1164 (citations omitted).
While recognizing that a transformative use is “not absolutely necessary for a
finding of fair use,” the opinion further explains that the “goal of copyright, to
promote science and the arts, is generally furthered by the creation of
transformative works” and that “[s]uch works thus lie at the heart of the fair
use doctrine’s guarantee of breathing space within the confines of copyright.”
Id. at 579, 114 S.Ct. 1164. In other words, transformative uses tend to favor a
fair use finding because a transformative use is one that communicates
something new and different from the original or expands its utility, thus
serving copyright’s overall objective of contributing to public knowledge.
The word “transformative” cannot be taken too literally as a sufficient key to
understanding the elements of fair use. It is rather a suggestive symbol for a
complex thought, and does not mean that any and all changes made to an
author’s original text will necessarily support a finding of fair use. The
Supreme Court’s discussion in Campbell gave important guidance on assessing
when a transformative use tends to support a conclusion of fair use. The
defendant in that case defended on the ground that its work was a parody of
the original and that parody is a time-honored category of fair use. Explaining
why parody makes a stronger, or in any event more obvious, claim of fair use
than satire, the Court stated,
[T]he heart of any parodist’s claim to quote from existing
material ... is the use of ... a prior author’s composition to
... comment[ ] on that author’s works.... If, on the contrary,
the commentary has no critical bearing on the substance
or style of the original composition, which the alleged
infringer merely uses to get attention or to avoid the
drudgery in working up something fresh, the claim to
fairness in borrowing from another’s work diminishes
accordingly (if it does not vanish).... Parody needs to mimic
an original to make its point, and so has some claim to use
the creation of its victim’s ... imagination, whereas satire
can stand on its own two feet and so requires justification
for the very act of borrowing.

160

CH. 1

Id. at 580–81, 114 S.Ct. 1164 (emphasis added). In other words, the would-be
fair user of another’s work must have justification for the taking. A secondary
author is not necessarily at liberty to make wholesale takings of the original
author’s expression merely because of how well the original author’s expression
would convey the secondary author’s different message. Among the best
recognized justifications for copying from another’s work is to provide comment
on it or criticism of it. A taking from another author’s work for the purpose of
making points that have no bearing on the original may well be fair use, but
the taker would need to show a justification. This part of the Supreme Court’s
discussion is significant in assessing Google’s claim of fair use because, as
discussed extensively below, Google’s claim of transformative purpose for
copying from the works of others is to provide otherwise unavailable
information about the originals.
A further complication that can result from oversimplified reliance on whether
the copying involves transformation is that the word “transform” also plays a
role in defining “derivative works,” over which the original rights holder
retains exclusive control. Section 106 of the Act specifies the “exclusive right[
]” of the copyright owner “(2) to prepare derivative works based upon the
copyrighted work.” See 17 U.S.C. § 106. The statute defines derivative works
largely by example, rather than explanation. The examples include
“translation, musical arrangement, dramatization, fictionalization, motion
picture version, sound recording, art reproduction, abridgement,
condensation,” to which list the statute adds “any other form in which a work
may be ... transformed.” 17 U.S.C. § 101 (emphasis added). As we noted in
Authors Guild, Inc. v. HathiTrust, “[p]aradigmatic examples of derivative
works include the translation of a novel into another language, the adaptation
of a novel into a movie or play, or the recasting of a novel as an e-book or an
audiobook.” 755 F.3d 87, 95 (2d Cir.2014). While such changes can be described
as transformations, they do not involve the kind of transformative purpose that
favors a fair use finding. The statutory definition suggests that derivative
works generally involve transformations in the nature of changes of form. 17
U.S.C. § 101. By contrast, copying from an original for the purpose of criticism
or commentary on the original or provision of information about it, tends most
clearly to satisfy Campbell ‘s notion of the “transformative” purpose involved
in the analysis of Factor One.
With these considerations in mind, we first consider whether Google’s search
and snippet views functions satisfy the first fair use factor with respect to
Plaintiffs’ rights in their books. (The question whether these functions might
infringe upon Plaintiffs’ derivative rights is discussed in the next Part.)
(2) Search Function. We have no difficulty concluding that Google’s making of
a digital copy of Plaintiffs’ books for the purpose of enabling a search for
identification of books containing a term of interest to the searcher involves a
highly transformative purpose, in the sense intended by Campbell. Our court’s
exemplary discussion in HathiTrust informs our ruling. That case involved a

CH. 1

161

dispute that is closely related, although not identical, to this one. Authors
brought claims of copyright infringement against HathiTrust, an entity formed
by libraries participating in the Google Library Project to pool the digital copies
of their books created for them by Google. The suit challenged various usages
HathiTrust made of the digital copies. Among the challenged uses was
HathiTrust’s offer to its patrons of “full-text searches,” which, very much like
the search offered by Google Books to Internet users, permitted patrons of the
libraries to locate in which of the digitized books specific words or phrases
appeared. 755 F.3d at 98. (HathiTrust’s search facility did not include the
snippet view function, or any other display of text.) We concluded that both the
making of the digital copies and the use of those copies to offer the search tool
were fair uses. Id. at 105.
Notwithstanding that the libraries had downloaded and stored complete
digital copies of entire books, we noted that such copying was essential to
permit searchers to identify and locate the books in which words or phrases of
interest to them appeared. Id. at 97. We concluded “that the creation of a fulltext searchable database is a quintessentially transformative use ... [as] the
result of a word search is different in purpose, character, expression, meaning,
and message from the page (and the book) from which it is drawn.” Id. We cited
A.V. ex rel. Vanderhye v. iParadigms, LLC, 562 F.3d 630, 639–40 (4th
Cir.2009), Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th
Cir.2007), and Kelly v. Arriba Soft Corp., 336 F.3d 811, 819 (9th Cir.2003) as
examples of cases in which courts had similarly found the creation of complete
digital copies of copyrighted works to be transformative fair uses when the
copies “served a different function from the original.” HathiTrust, 755 F.3d at
97.
As with HathiTrust (and iParadigms ), the purpose of Google’s copying of the
original copyrighted books is to make available significant information about
those books, permitting a searcher to identify those that contain a word or term
of interest, as well as those that do not include reference to it. In addition,
through the ngrams tool, Google allows readers to learn the frequency of usage
of selected words in the aggregate corpus of published books in different
historical periods. We have no doubt that the purpose of this copying is the sort
of transformative purpose described in Campbell as strongly favoring
satisfaction of the first factor.
We recognize that our case differs from HathiTrust in two potentially
significant respects. First, HathiTrust did not “display to the user any text
from the underlying copyrighted work,” 755 F.3d at 91, whereas Google Books
provides the searcher with snippets containing the word that is the subject of
the search. Second, HathiTrust was a nonprofit educational entity, while
Google is a profit-motivated commercial corporation. We discuss those
differences below.
(3) Snippet View. Plaintiffs correctly point out that this case is significantly

162

CH. 1

different from HathiTrust in that the Google Books search function allows
searchers to read snippets from the book searched, whereas HathiTrust did not
allow searchers to view any part of the book. Snippet view adds important
value to the basic transformative search function, which tells only whether and
how often the searched term appears in the book. Merely knowing that a term
of interest appears in a book does not necessarily tell the searcher whether she
needs to obtain the book, because it does not reveal whether the term is
discussed in a manner or context falling within the scope of the searcher’s
interest. For example, a searcher seeking books that explore Einstein’s
theories, who finds that a particular book includes 39 usages of “Einstein,” will
nonetheless conclude she can skip that book if the snippets reveal that the book
speaks of “Einstein” because that is the name of the author’s cat. In contrast,
the snippet will tell the searcher that this is a book she needs to obtain if the
snippet shows that the author is engaging with Einstein’s theories.
Google’s division of the page into tiny snippets is designed to show the searcher
just enough context surrounding the searched term to help her evaluate
whether the book falls within the scope of her interest (without revealing so
much as to threaten the author’s copyright interests). Snippet view thus adds
importantly to the highly transformative purpose of identifying books of
interest to the searcher. With respect to the first factor test, it favors a finding
of fair use (unless the value of its transformative purpose is overcome by its
providing text in a manner that offers a competing substitute for Plaintiffs’
books, which we discuss under factors three and four below).
(4) Google’s Commercial Motivation. Plaintiffs also contend that Google’s
commercial motivation weighs in their favor under the first factor. Google’s
commercial motivation distinguishes this case from HathiTrust, as the
defendant in that case was a non-profit entity founded by, and acting as the
representative of, libraries. Although Google has no revenues flowing directly
from its operation of the Google Books functions, Plaintiffs stress that Google
is profit-motivated and seeks to use its dominance of book search to fortify its
overall dominance of the Internet search market, and that thereby Google
indirectly reaps profits from the Google Books functions.
For these arguments Plaintiffs rely primarily on two sources. First is
Congress’s specification in spelling out the first fair use factor in the text of §
107 that consideration of the “purpose and character of the [secondary] use”
should “include[e] whether such use is of a commercial nature or is for
nonprofit educational purposes.” Second is the Supreme Court’s assertion in
dictum in Sony Corporation of America v. Universal City Studios, Inc, that
“every commercial use of copyrighted material is presumptively ... unfair.” 464
U.S. 417, 451, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). If that were the extent of
precedential authority on the relevance of commercial motivation, Plaintiffs’
arguments would muster impressive support. However, while the commercial
motivation of the secondary use can undoubtedly weigh against a finding of
fair use in some circumstances, the Supreme Court, our court, and others have

CH. 1

163

eventually recognized that the Sony dictum was enormously overstated.
The Sixth Circuit took the Sony dictum at its word in Acuff–Rose Music, Inc. v.
Campbell, concluding that, because the defendant rap music group’s spoof of
the plaintiff’s ballad was done for profit, it could not be fair use. 972 F.2d 1429,
1436–1437 (6th Cir.1992). The Supreme Court reversed on this very point,
observing that “Congress could not have intended” such a broad presumption
against commercial fair uses, as “nearly all of the illustrative uses listed in the
preamble paragraph of § 107 ... are generally conducted for profit in this
country.” Campbell, 510 U.S. at 584, 114 S.Ct. 1164 (internal quotation marks
and citations omitted). The Court emphasized Congress’s statement in the
House Report to the effect that the commercial or nonprofit character of a work
is “not conclusive” but merely “a fact to be ‘weighed along with other[s] in fair
use decisions.’ ” Id. at 585, 114 S.Ct. 1164 (quoting H.R.Rep. No. 94–1476, at
66 (1976)). In explaining the first fair use factor, the Court clarified that “the
more transformative the [secondary] work, the less will be the significance of
other factors, like commercialism, that may weigh against a finding of fair use.”
Id. at 579, 114 S.Ct. 1164.
Our court has since repeatedly rejected the contention that commercial
motivation should outweigh a convincing transformative purpose and absence
of significant substitutive competition with the original. See Cariou v. Prince,
714 F.3d 694, 708 (2d Cir.2013), cert. denied, ––– U.S. ––––, 134 S.Ct. 618, 187
L.Ed.2d 411 (2013) (“The commercial/nonprofit dichotomy concerns the
unfairness that arises when a secondary user makes unauthorized use of
copyrighted material to capture significant revenues as a direct consequence
of copying the original work. This factor must be applied with caution because,
as the Supreme Court has recognized, Congress could not have intended a rule
that commercial uses are presumptively unfair. Instead, the more
transformative the new work, the less will be the significance of other factors,
like commercialism, that may weigh against a finding of fair use.”) (internal
quotation marks, citations, and alterations omitted); Castle Rock Entm’t, Inc.
v. Carol Pub. Grp., Inc., 150 F.3d 132, 141–42 (2d Cir.1998) ( “We ... do not give
much weight to the fact that the secondary use was for commercial gain. The
more critical inquiry under the first factor and in fair use analysis generally is
whether the allegedly infringing work merely supersedes the original work or
instead adds something new, with a further purpose or different character,
altering the first with new meaning or message, in other words whether and
to what extent the new work is transformative.”) (internal quotation marks,
citations, and alterations omitted).
While we recognize that in some circumstances, a commercial motivation on
the part of the secondary user will weigh against her, especially, as the
Supreme Court suggested, when a persuasive transformative purpose is
lacking, Campbell, 510 U.S. at 579, 114 S.Ct. 1164, we see no reason in this
case why Google’s overall profit motivation should prevail as a reason for
denying fair use over its highly convincing transformative purpose, together

164

CH. 1

with the absence of significant substitutive competition, as reasons for
granting fair use. Many of the most universally accepted forms of fair use, such
as news reporting and commentary, quotation in historical or analytic books,
reviews of books, and performances, as well as parody, are all normally done
commercially for profit.
B. Factor Two
The second fair use factor directs consideration of the “nature of the
copyrighted work.” While the “transformative purpose” inquiry discussed
above is conventionally treated as a part of first factor analysis, it inevitably
involves the second factor as well. One cannot assess whether the copying work
has an objective that differs from the original without considering both works,
and their respective objectives.
The second factor has rarely played a significant role in the determination of a
fair use dispute. See WILLIAM F. PATRY, PATRY ON FAIR USE § 4.1 (2015).
The Supreme Court in Harper & Row made a passing observation in dictum
that, “[t]he law generally recognizes a greater need to disseminate factual
works than works of fiction or fantasy.” 471 U.S. 539, 563, 105 S.Ct. 2218
(1985). Courts have sometimes speculated that this might mean that a finding
of fair use is more favored when the copying is of factual works than when
copying is from works of fiction. However, while the copyright does not protect
facts or ideas set forth in a work, it does protect that author’s manner of
expressing those facts and ideas. At least unless a persuasive fair use
justification is involved, authors of factual works, like authors of fiction, should
be entitled to copyright protection of their protected expression. The mere fact
that the original is a factual work therefore should not imply that others may
freely copy it. Those who report the news undoubtedly create factual works. It
cannot seriously be argued that, for that reason, others may freely copy and redisseminate news reports.
In considering the second factor in HathiTrust, we concluded that it was “not
dispositive,” 755 F.3d at 98, commenting that courts have hardly ever found
that the second factor in isolation played a large role in explaining a fair use
decision. The same is true here. While each of the three Plaintiffs’ books in this
case is factual, we do not consider that as a boost to Google’s claim of fair use.
If one (or all) of the plaintiff works were fiction, we do not think that would
change in any way our appraisal. Nothing in this case influences us one way
or the other with respect to the second factor considered in isolation. To the
extent that the “nature” of the original copyrighted work necessarily combines
with the “purpose and character” of the secondary work to permit assessment
of whether the secondary work uses the original in a “transformative” manner,
as the term is used in Campbell, the second factor favors fair use not because
Plaintiffs’ works are factual, but because the secondary use transformatively
provides valuable information about the original, rather than replicating
protected expression in a manner that provides a meaningful substitute for the
original.

CH. 1

165

C. Factor Three
The third statutory factor instructs us to consider “the amount and
substantiality of the portion used in relation to the copyrighted work as a
whole.” The clear implication of the third factor is that a finding of fair use is
more likely when small amounts, or less important passages, are copied than
when the copying is extensive, or encompasses the most important parts of the
original. The obvious reason for this lies in the relationship between the third
and the fourth factors. The larger the amount, or the more important the part,
of the original that is copied, the greater the likelihood that the secondary work
might serve as an effectively competing substitute for the original, and might
therefore diminish the original rights holder’s sales and profits.
(1) Search Function. The Google Books program has made a digital copy of the
entirety of each of Plaintiffs’ books. Notwithstanding the reasonable
implication of Factor Three that fair use is more likely to be favored by the
copying of smaller, rather than larger, portions of the original, courts have
rejected any categorical rule that a copying of the entirety cannot be a fair use.
Complete unchanged copying has repeatedly been found justified as fair use
when the copying was reasonably appropriate to achieve the copier’s
transformative purpose and was done in such a manner that it did not offer a
competing substitute for the original. The Supreme Court said in Campbell
that “the extent of permissible copying varies with the purpose and character
of the use” and characterized the relevant questions as whether “the amount
and substantiality of the portion used ... are reasonable in relation to the
purpose of the copying,” Campbell, 510 U.S. at 586–587, 114 S.Ct. 1164, noting
that the answer to that question will be affected by “the degree to which the
[copying work] may serve as a market substitute for the original or potentially
licensed derivatives,” id. at 587–588, 114 S.Ct. 1164 (finding that, in the case
of a parodic song, “how much ... is reasonable will depend, say, on the extent to
which the song’s overriding purpose and character is to parody the original or,
in contrast, the likelihood that the parody may serve as a market substitute
for the original”).
In HathiTrust, our court concluded in its discussion of the third factor that
“[b]ecause it was reasonably necessary for the [HathiTrust Digital Library] to
make use of the entirety of the works in order to enable the full-text search
function, we do not believe the copying was excessive.” 755 F.3d at 98. As with
HathiTrust, not only is the copying of the totality of the original reasonably
appropriate to Google’s transformative purpose, it is literally necessary to
achieve that purpose. If Google copied less than the totality of the originals, its
search function could not advise searchers reliably whether their searched
term appears in a book (or how many times).
While Google makes an unauthorized digital copy of the entire book, it does not
reveal that digital copy to the public. The copy is made to enable the search

166

CH. 1

functions to reveal limited, important information about the books. With
respect to the search function, Google satisfies the third factor test, as
illuminated by the Supreme Court in Campbell.
(2) Snippet View. Google’s provision of snippet view makes our third factor
inquiry different from that inquiry in HathiTrust. What matters in such cases
is not so much “the amount and substantiality of the portion used” in making
a copy, but rather the amount and substantiality of what is thereby made
accessible to a public for which it may serve as a competing substitute. In
HathiTrust, notwithstanding the defendant’s full-text copying, the search
function revealed virtually nothing of the text of the originals to the public.
Here, through the snippet view, more is revealed to searchers than in
HathiTrust.
Without doubt, enabling searchers to see portions of the copied texts could have
determinative effect on the fair use analysis. The larger the quantity of the
copyrighted text the searcher can see and the more control the searcher can
exercise over what part of the text she sees, the greater the likelihood that
those revelations could serve her as an effective, free substitute for the
purchase of the plaintiff’s book. We nonetheless conclude that, at least as
presently structured by Google, the snippet view does not reveal matter that
offers the marketplace a significantly competing substitute for the copyrighted
work.
Google has constructed the snippet feature in a manner that substantially
protects against its serving as an effectively competing substitute for Plaintiffs’
books. In the Background section of this opinion, we describe a variety of
limitations Google imposes on the snippet function. These include the small
size of the snippets (normally one eighth of a page), the blacklisting of one
snippet per page and of one page in every ten, the fact that no more than three
snippets are shown—and no more than one per page—for each term searched,
and the fact that the same snippets are shown for a searched term no matter
how many times, or from how many different computers, the term is searched.
In addition, Google does not provide snippet view for types of books, such as
dictionaries and cookbooks, for which viewing a small segment is likely to
satisfy the searcher’s need. The result of these restrictions is, so far as the
record demonstrates, that a searcher cannot succeed, even after long extended
effort to multiply what can be revealed, in revealing through a snippet search
what could usefully serve as a competing substitute for the original.
The blacklisting, which permanently blocks about 22% of a book’s text from
snippet view, is by no means the most important of the obstacles Google has
designed. While it is true that the blacklisting of 22% leaves 78% of a book
theoretically accessible to a searcher, it does not follow that any large part of
that 78% is in fact accessible. The other restrictions built into the program
work together to ensure that, even after protracted effort over a substantial
period of time, only small and randomly scattered portions of a book will be

CH. 1

167

accessible. In an effort to show what large portions of text searchers can read
through persistently augmented snippet searches, Plaintiffs’ counsel employed
researchers over a period of weeks to do multiple word searches on Plaintiffs’
books. In no case were they able to access as much as 16% of the text, and the
snippets collected were usually not sequential but scattered randomly
throughout the book. Because Google’s snippets are arbitrarily and uniformly
divided by lines of text, and not by complete sentences, paragraphs, or any
measure dictated by content, a searcher would have great difficulty
constructing a search so as to provide any extensive information about the
book’s use of that term. As snippet view never reveals more than one snippet
per page in response to repeated searches for the same term, it is at least
difficult, and often impossible, for a searcher to gain access to more than a
single snippet’s worth of an extended, continuous discussion of the term.
The fact that Plaintiffs’ searchers managed to reveal nearly 16% of the text of
Plaintiffs’ books overstates the degree to which snippet view can provide a
meaningful substitute. At least as important as the percentage of words of a
book that are revealed is the manner and order in which they are revealed.
Even if the search function revealed 100% of the words of the copyrighted book,
this would be of little substitutive value if the words were revealed in
alphabetical order, or any order other than the order they follow in the original
book. It cannot be said that a revelation is “substantial” in the sense intended
by the statute’s third factor if the revelation is in a form that communicates
little of the sense of the original. The fragmentary and scattered nature of the
snippets revealed, even after a determined, assiduous, time-consuming search,
results in a revelation that is not “substantial,” even if it includes an aggregate
16% of the text of the book. If snippet view could be used to reveal a coherent
block amounting to 16% of a book, that would raise a very different question
beyond the scope of our inquiry.
D. Factor Four
The fourth fair use factor, “the effect of the [copying] use upon the potential
market for or value of the copyrighted work,” focuses on whether the copy
brings to the marketplace a competing substitute for the original, or its
derivative, so as to deprive the rights holder of significant revenues because of
the likelihood that potential purchasers may opt to acquire the copy in
preference to the original. Because copyright is a commercial doctrine whose
objective is to stimulate creativity among potential authors by enabling them
to earn money from their creations, the fourth factor is of great importance in
making a fair use assessment. See Harper & Row, 471 U.S. at 566, 105 S.Ct.
2218 (describing the fourth factor as “undoubtedly the single most important
element of fair use”).
Campbell stressed the close linkage between the first and fourth factors, in
that the more the copying is done to achieve a purpose that differs from the
purpose of the original, the less likely it is that the copy will serve as a
satisfactory substitute for the original. 510 U.S. at 591, 114 S.Ct. 1164.

168

CH. 1

Consistent with that observation, the HathiTrust court found that the fourth
factor favored the defendant and supported a finding of fair use because the
ability to search the text of the book to determine whether it includes selected
words “does not serve as a substitute for the books that are being searched.”
755 F.3d at 100.
However, Campbell ‘s observation as to the likelihood of a secondary use
serving as an effective substitute goes only so far. Even if the purpose of the
copying is for a valuably transformative purpose, such copying might
nonetheless harm the value of the copyrighted original if done in a manner
that results in widespread revelation of sufficiently significant portions of the
original as to make available a significantly competing substitute. The
question for us is whether snippet view, notwithstanding its transformative
purpose, does that. We conclude that, at least as snippet view is presently
constructed, it does not.
Especially in view of the fact that the normal purchase price of a book is
relatively low in relation to the cost of manpower needed to secure an arbitrary
assortment of randomly scattered snippets, we conclude that the snippet
function does not give searchers access to effectively competing substitutes.
Snippet view, at best and after a large commitment of manpower, produces
discontinuous, tiny fragments, amounting in the aggregate to no more than
16% of a book. This does not threaten the rights holders with any significant
harm to the value of their copyrights or diminish their harvest of copyright
revenue.
We recognize that the snippet function can cause some loss of sales. There are
surely instances in which a searcher’s need for access to a text will be satisfied
by the snippet view, resulting in either the loss of a sale to that searcher, or
reduction of demand on libraries for that title, which might have resulted in
libraries purchasing additional copies. But the possibility, or even the
probability or certainty, of some loss of sales does not suffice to make the copy
an effectively competing substitute that would tilt the weighty fourth factor in
favor of the rights holder in the original. There must be a meaningful or
significant effect “upon the potential market for or value of the copyrighted
work.” 17 U.S.C. § 107(4).
Furthermore, the type of loss of sale envisioned above will generally occur in
relation to interests that are not protected by the copyright. A snippet’s
capacity to satisfy a searcher’s need for access to a copyrighted book will at
times be because the snippet conveys a historical fact that the searcher needs
to ascertain. For example, a student writing a paper on Franklin D. Roosevelt
might need to learn the year Roosevelt was stricken with polio. By entering
“Roosevelt polio” in a Google Books search, the student would be taken to
(among numerous sites) a snippet from page 31 of Richard Thayer Goldberg’s
The Making of Franklin D. Roosevelt (1981), telling that the polio attack
occurred in 1921. This would satisfy the searcher’s need for the book,

CH. 1

169

eliminating any need to purchase it or acquire it from a library. But what the
searcher derived from the snippet was a historical fact. Author Goldberg’s
copyright does not extend to the facts communicated by his book. It protects
only the author’s manner of expression. Hoehling v. Universal City Studios,
Inc., 618 F.2d 972, 974 (2d Cir.1980) (“A grant of copyright in a published work
secures for its author a limited monopoly over the expression it contains.”)
(emphasis added). Google would be entitled, without infringement of
Goldberg’s copyright, to answer the student’s query about the year Roosevelt
was afflicted, taking the information from Goldberg’s book. The fact that, in
the case of the student’s snippet search, the information came embedded in
three lines of Goldberg’s writing, which were superfluous to the searcher’s
needs, would not change the taking of an unprotected fact into a copyright
infringement.
Even if the snippet reveals some authorial expression, because of the brevity
of a single snippet and the cumbersome, disjointed, and incomplete nature of
the aggregation of snippets made available through snippet view, we think it
would be a rare case in which the searcher’s interest in the protected aspect of
the author’s work would be satisfied by what is available from snippet view,
and rarer still—because of the cumbersome, disjointed, and incomplete nature
of the aggregation of snippets made available through snippet view—that
snippet view could provide a significant substitute for the purchase of the
author’s book.
Accordingly, considering the four fair use factors in light of the goals of
copyright, we conclude that Google’s making of a complete digital copy of
Plaintiffs’ works for the purpose of providing the public with its search and
snippet view functions (at least as snippet view is presently designed) is a fair
use and does not infringe Plaintiffs’ copyrights in their books.
***
In sum, we conclude that: (1) Google’s unauthorized digitizing of copyrightprotected works, creation of a search functionality, and display of snippets from
those works are non-infringing fair uses. The purpose of the copying is highly
transformative, the public display of text is limited, and the revelations do not
provide a significant market substitute for the protected aspects of the
originals. Google’s commercial nature and profit motivation do not justify
denial of fair use. (2) Google’s provision of digitized copies to the libraries that
supplied the books, on the understanding that the libraries will use the copies
in a manner consistent with the copyright law, also does not constitute
infringement. Nor, on this record, is Google a contributory infringer.
The judgment of the district court is AFFIRMED.

170

CH. 1

3. OTHER LIMITATIONS:
17 U.S.C. § 110 (Public performance and display)
17 U.S.C. § 108 (Libraries and Archives)
17 U.S.C. § 115 (Compulsory Licensing of Musical Works)
17 U.S.C. § 120 (Architectural Works)
17 U.S.C. § 112 (Ephemeral Recordings)
17 U.S.C. §§ 111, 113(a)–(c), 116, 118–19, 121–22 (Various other limits)

C. MORAL RIGHTS
MASSACHUSETTS MUSEUM OF
CONTEMPORARY ART V. BUCHEL
593 F.3d 38 (1st Cir. 2010).

LIPEZ, CIRCUIT JUDGE.
As one observer has noted, this case, which raises important and
unsettled legal issues under the Visual Artists Rights Act (“VARA”), may
well serve as “the ultimate how-not-to guide in the complicated world of
installation art.” Geoff Edgers, Dismantled, The Boston Globe, Oct. 21,
2007, at 1N. Artist Christoph Büchel conceived of an ambitious, footballfield-sized art installation entitled “Training Ground for Democracy,”
which was to be exhibited at the Massachusetts Museum of Contemporary
Art (“MASS MoCA,” or “the Museum”). Unfortunately, the parties never
memorialized the terms of their relationship or their understanding of the
intellectual property issues involved in the installation in a written
agreement. Even more unfortunately, the project was never completed.
Numerous conflicts and a steadily deteriorating relationship between the
artist and the Museum prevented the completion of “Training Ground for
Democracy” in its final form.
In the wake of this failed endeavor, the Museum went to federal court
seeking a declaration that it was “entitled to present to the public the
materials and partial constructions” it had collected for “Training Ground
for Democracy.” Büchel responded with several counterclaims under VARA
and the Copyright Act, seeking an injunction that would prevent MASS
MoCA from displaying the unfinished installation and damages for the
Museum’s alleged violations of his rights under both VARA and the general
Copyright Act.
On cross-motions for summary judgment, the district court assumed
that VARA applies to unfinished works of art, but it nonetheless ruled for
the Museum in all respects because, even granting VARA’s applicability, it

CH. 1

171

found no genuine issues of material fact. Massachusetts Museum of
Contemporary Art Found., Inc. v. Büchel, 565 F.Supp.2d 245
(D.Mass.2008). Büchel appeals. Because we find that, if VARA applies,
genuine issues of material fact would foreclose summary judgment on one
of Büchel’s VARA claims—that MASS MoCA violated his right of artistic
integrity by modifying the installation—we cannot assume that VARA
applies to unfinished works but instead must decide its applicability. We
conclude that the statute does apply to such works.
***
B.

Factual Background

* * * [T]he key conflict between MASS MoCA and the artist involved
Büchel’s dissatisfaction with the way in which the Museum was
implementing his instructions and procuring the items necessary for the
installation. Büchel himself was not present in North Adams for the first
several months of work on the project. Instead, he conducted much of his
work on the installation throughout the fall of 2006 remotely, by providing
Museum personnel with detailed instructions as to the particular materials
he required and their placement within the exhibition space. [Büchel
returned in October, 2006, to complete the installation, but he was
dissatisfied with the Museum’s progress. He departed again in December.
During this time there were numerous disputes between the parties, and
their relationship deteriorated.]
***
As the vitriolic exchanges between the parties continued, and
negotiations over the project’s eventual completion became hopeless,
“Training Ground” languished in its unfinished state. It became clear that
Büchel would not complete the installation. On May 22, 2007, MASS MoCA
announced the cancellation of “Training Ground,” and contemporaneously
publicized the opening of a new exhibit entitled “Made at MASS MoCA,”
which was to be “a documentary project exploring the issues raised in the
course of complex collaborative projects between artists and institutions.”
The press release noted that this lawsuit had been filed the previous day;
it also highlighted the Museum’s desire to use its “other experiences
working with artists” to “provide [its] audience with thought-provoking
insights into the complexities of the art-making process.” The release
further explained that, due to “space constraints imposed by the materials
assembled for Training Ground for Democracy,” the exhibition would be
presented in the Museum’s “only remaining available gallery space”;
therefore, in order to enter the exhibit, visitors would have to pass through
Building 5, “housing the materials and unfinished fabrications that were
to have comprised elements of Training Ground for Democracy.” The
Museum represented that “[r]easonable steps [had] been taken to control
and restrict the view of these materials, pending a court ruling.”

172

CH. 1

When “Made at MASS MoCA” opened, many in the art world disagreed
with the Museum’s handling of its dispute with Büchel, though the parties
have different views on whether the Museum’s actions ultimately
tarnished the artist’s reputation. Moreover, the parties differ on whether
the “reasonable steps . . . taken to control and restrict the view of the[ ]
materials”—the placement of yellow tarpaulins over the unfinished work—
actually concealed all of the individual components and vital design
elements of “Training Ground,” or whether the tarpaulins simply “hid[ ] an
elephant behind a napkin,” effectively inviting individuals to peek behind
the cloth coverings and view the unfinished work. See Charles Giuliano,
Christoph Buchel’s Tarp Art at Mass MoCA: Crap Under Wrap (July 31,
2007).
***
[Both Büchel and MASS MoCA asked the district court for declaratory
judgments of their respective rights in the exhibit.] The court ruled in favor
of the Museum, noting that nothing in VARA prevented MASS MoCA from
showing the incomplete project. Therefore, MASS MoCA was “entitled to
present” the unfinished installation to the public as long as it posted a
disclaimer that would “inform anyone viewing the exhibit that the
materials assembled in Building 5 constitute an unfinished project that
[did] not carry out the installation’s original intent.” The court
correspondingly denied the artist’s request for injunctive relief barring
public display of the unfinished installation, ruling that he had failed to
prove a likelihood of success on the merits of his VARA claim.
II.
Passed in 1990, the Visual Artists Rights Act, 17 U.S.C. § 106A, was
an amendment to the Copyright Act that protects the “moral rights” of
certain visual artists in the works they create, consistent with Article 6 bis
of the Berne Convention. Phillips v. Pembroke Real Estate, Inc., 459 F.3d
128, 133 (1st Cir.2006); Carter v. Helmsley-Spear, Inc., 71 F.3d 77, 83 (2d
Cir.1995) (citing H.R.Rep. No. 101–514, at 5 (1990) (“House Report”)). The
“rubric of moral rights encompasses many varieties of rights,” but the two
most widely recognized are attribution and integrity. Id. at 81. We will
discuss both of these in detail below, but note briefly now that the right of
attribution protects the author’s right to be identified as the author of his
work and also protects against the use of his name in connection with
works created by others. The right of integrity “allows the author to prevent
any deforming or mutilating changes to his work.” Id. Although these
moral rights “exist independent[ly] of the economic rights” granted to all
authors under the Copyright Act, they are part of the same statutory
framework.
***

CH. 1
B.

173

VARA

Beyond the Copyright Act’s protections of certain economic rights,
VARA provides additional and independent protections to authors of works
of visual art. A work of visual art is defined to include “a painting, drawing,
print, or sculpture, existing in a single copy” or in a limited edition. 17
U.S.C. § 101. The definition specifically excludes a number of works that
are otherwise copyrightable, including motion pictures and other
audiovisual works, books, posters, periodicals, works made for hire, and
merchandising, advertising, promotional, or packaging materials. Id.
VARA provides that, in addition to the exclusive rights provided by
section 106 of the Copyright Act, but subject to certain limitations, the
author of a work of visual art
(1) shall have the right—
(A) to claim authorship of that work, and
(B) to prevent the use of his or her name as the author of any
work of visual art which he or she did not create;
(2) shall have the right to prevent the use of his or her name as
the author of the work of visual art in the event of a distortion,
mutilation, or other modification of the work which would be
prejudicial to his or her honor or reputation; and
(3) subject to the limitations set forth in section 113(d), shall
have the right—
(A) to prevent any intentional distortion, mutilation, or other
modification of that work which would be prejudicial to his or
her honor or reputation, and any intentional distortion,
mutilation, or modification of that work is a violation of that
right, and
(B) to prevent any destruction of a work of recognized
stature, and any intentional or grossly negligent destruction
of that work is a violation of that right.
17 U.S.C. § 106A(a).
VARA’s passage reflected Congress’s belief that the art covered by the
Act “meet[s] a special societal need, and [its] protection and preservation
serve an important public interest.” House Report at 5–6. To encourage the
creation of such art, VARA protects the “moral rights” of its creators. These
are “rights of a spiritual, non-economic and personal nature” that exist
“independently of an artist’s copyright in his or her work” and “spring from
a belief that an artist in the process of creation injects his spirit into the
work and that the artist’s personality, as well as the integrity of the work,
should therefore be protected and preserved.” Carter, 71 F.3d at 81. The
recognition of moral rights fosters a “ ‘climate of artistic worth and honor

174

CH. 1

that encourages the author in the arduous act of creation.’ ” Id. at 83
(quoting House Report at 6). Although an artist may not transfer his VARA
rights (as they are considered an extension of his personality), he may
waive those rights by “expressly agree[ing] to such waiver in a written
instrument.” 17 U.S.C. § 106A(e)(1). Also, “[a]ll remedies available under
copyright law, other than criminal remedies, are available in an action for
infringement of moral rights.” Carter, 71 F.3d at 83 (citing 17 U.S.C. § 506);
see also 17 U.S.C. § 501(a).
More specifically, by guaranteeing the moral rights of “attribution”
and “integrity,” VARA “ ‘protects both the reputations of certain visual
artists and the works of art they create.’ ” Carter, 71 F.3d at 83 (quoting
House Report at 6). Before discussing the precise contours of these rights,
we consider whether, as a threshold matter, the indisputably unfinished
“Training Ground for Democracy” was a “work of visual art” within the
meaning of VARA.
C.

Does VARA Apply to Unfinished Works of Art?
***

The text of VARA itself does not state when an artistic project becomes
a work of visual art subject to its protections. However, VARA is part of the
Copyright Act, and that Act’s definition section, which defines “work of
visual art,” specifies that its definitions, unless otherwise provided, control
throughout Title 17. See 17 U.S.C. § 101. That general definitional section
of the Copyright Act states that a work is “created” when it “is fixed in a
copy . . . for the first time.” Further, “where a work is prepared over a period
of time, the portion of it that has been fixed at any particular time
constitutes the work as of that time.” 17 U.S.C. § 101 (emphasis added). A
work is “fixed” when it has been formed, “by or under the authority of the
author,” in a way that is “sufficiently permanent or stable to permit it to be
perceived, reproduced, or otherwise communicated for a period of more
than transitory duration.” Id.
Not surprisingly, based on section 101’s general definitions, courts
have held that the Copyright Act’s protections extend to unfinished works.
***
Reading VARA in accordance with the definitions in section 101, it too
must be read to protect unfinished, but “fixed,” works of art that, if
completed, would qualify for protection under the statute. To conclude
otherwise would be “contrary to the rule that provisions of a single act
should be construed in as harmonious a fashion as possible.” United States
v. Maravilla, 907 F.2d 216, 231 (1st Cir.1990). At least one circuit has
previously assumed VARA’s applicability to unfinished works. See Carter,
71 F.3d at 83–88 (discussing VARA claims stemming from an unfinished,
walk-through sculpture being installed in the lobby of a building).
***

CH. 1

175

III.
Given Büchel’s right to protection under VARA for his artistic
investment in a partially completed artwork, we must now assess the
district court’s ruling that Büchel failed to raise a genuine issue of material
fact with respect to any of his claims. * * *
A.

The Scope of VARA’s Integrity and Attribution Right
1.

The Right of Integrity

VARA’s right of integrity, codified at 17 U.S.C. § 106A(a)(3)(A),
provides that an artist shall have the right “to prevent any intentional
distortion, mutilation, or other modification of [his or her] work which
would be prejudicial to his or her honor or reputation, and [that] any
intentional distortion, mutilation, or modification of that work is a
violation of that right.” It thus allows artists to protect their works against
intentional modifications that would be prejudicial to their honor or
reputations.
There is arguably some uncertainty about the plaintiff’s burden of
proof in a case such as this because the second part of section (a)(3)(A)—
stating that “any intentional distortion, mutilation, or modification of th[e]
work is a violation” of the right of integrity—does not explicitly require a
showing of prejudice when the alteration already has occurred and
damages, rather than injunctive relief, would be the appropriate remedy.
* * * [W]e have found no case law discussing a possible difference in the
showing required for injunctive relief and damages for right-of-integrity
claims.
Some courts, however, have assumed without analysis that the
prejudice showing is necessary for both injunctive relief and damages. See,
e.g., Hanrahan v. Ramirez, No. 2:97–CV–7470, 1998 WL 34369997, at *3
(C.D.Cal. June 3, 1998) (citing 17 U.S.C. § 106A(a)(3)); Carter v. HelmsleySpear, Inc., 861 F.Supp. 303, 329–30 (S.D.N.Y.1994), aff’d in part, vacated
in part, and rev’d in part by Carter, 71 F.3d at 77. At least one commentator
likewise accepts, without discussion, that the damages remedy requires a
showing of prejudice. See MELVILLE B. NIMMER, 3–8D NIMMER ON
COPYRIGHT § 8D.06[C][1] (noting that “an intentional and prejudicial
mutilation is an integrity violation, remediable through not only an
injunction, but damages as well”). Interestingly, Nimmer raises, and
dismisses, a different imprecision in section (a)(3)(A):
The statutory language—“distortion, mutilation, or other
modification of the work which would be prejudicial to his or her
honor or reputation”—is susceptible of a reading whereby the
requisite prejudice applies only to “modification,” not to the
antecedents of “distortion” or “mutilation.” Though not without
ambiguity, the better view under the Berne Convention, from

176

CH. 1

which this language is drawn, is that prejudice applies in all three
instances.
Id.
We agree with Nimmer’s view of the provision, including the
application of the prejudice requirement to a claim for damages, and
consider that construction soundly grounded in VARA’s legislative history.
Under the heading “Purpose of the Legislation,” the House Report notes
that the right of integrity “allows artists to protect their works against
modifications and destructions that are prejudicial to their honor or
reputations.” House Report at 6. The Report also notes that the rights
provided by VARA are “analogous to those protected by Article 6bis of the
Berne Convention,” id., which in turn describes the right of integrity as
applicable to “certain modifications and other derogatory actions” that
would be prejudicial to the artist’s honor or reputation.14 Given the stated
purpose of the legislation and the similar depiction of the integrity right in
the Berne Convention, we conclude that Congress intended the prejudice
requirement to apply to the right of integrity whether the remedy sought
is injunctive relief or damages.
Although VARA does not define the terms “prejudicial,” “honor,” or
“reputation,” the House Report recommended that the prejudice inquiry
“focus on the artistic or professional honor or reputation of the individual
as embodied in the work that is protected,” and “examine the way in which
a work has been modified and the professional reputation of the author of
the work.” House Report at 15. Relying on dictionary definitions of
prejudice, honor and reputation, the district court in Carter concluded that
it should “consider whether [the proposed] alteration would cause injury or
damage to plaintiffs’ good name, public esteem, or reputation in the artistic
community.” 861 F.Supp. at 323. We think this a useful approach, but
emphasize that the focus is on the artist’s reputation in relation to the
altered work of art; the artist need not have public stature beyond the
context of the creation at issue. See House Report at 15 (“[A]n author need
not prove a pre-existing standing in the artistic community.”).
2.

The Right of Attribution

VARA’s right of attribution grants the author of a work of visual art
the right, in part, (1) “to claim authorship of that work”; (2) “to prevent the
use of his or her name as the author of any work of visual art which he or
14 Article 6bis of the Berne Convention, which is titled “Moral Rights,” includes a heading
that lists among those rights “to object to certain modifications and other derogatory actions.” The
provision itself states, in relevant part:
(1) Independently of the author’s economic rights, and even after the transfer of the said
rights, the author shall have the right . . . to object to any distortion, mutilation or other
modification of, or other derogatory action in relation to, the said work, which would be
prejudicial to his honor or reputation.
Berne Convention for the Protection of Literary and Artistic Works art. 6 bis, Sept. 9, 1986, S.
Treaty Doc. No. 99–27, 1161 U.N.T.S. 30.

CH. 1

177

she did not create”; and (3) “to prevent the use of his or her name as the
author of the work of visual art in the event of a distortion, mutilation, or
other modification of the work which would be prejudicial to his or her
honor or reputation.” 17 U.S.C. § 106A(a)(1),(2). The right “ensures that
artists are correctly identified with the works of art they create, and that
they are not identified with works created by others.” House Report at 6.
In addition, if a work of visual art has been distorted or modified (and,
unlike the integrity right, the original distortion or modification need not
be intentional), associating the author’s name with the distorted work
against his wishes would violate his right of attribution.
The right of attribution under VARA thus gives an artist a claim for
injunctive relief to, inter alia, assert or disclaim authorship of a work.
Whether VARA entitles an artist to damages for violation of the right of
attribution is a separate question. We find the answer in the difference
between the statutory language on the right of integrity and the language
on the right of attribution. Subsection (a)(3) of section 106A, which codifies
the right of integrity, is further divided into two subsections: (A) confers
the right to protect the work against intentional alterations that would be
prejudicial to honor or reputation, and (B) confers the right to protect a
work of “recognized stature” from destruction.16 Although both subsections
are framed as rights “to prevent” certain conduct, they both also contain an
additional clause stating that the occurrence of that conduct is, at least in
certain circumstances, “a violation of th[e] right” to prevent the conduct
from happening. See 17 U.S.C. § 106A(a)(3)(A) (“any intentional distortion,
mutilation, or modification of that work is a violation of that right”); id. at
§ 106(a)(3)(B) (“any intentional or grossly negligent destruction of that
work is a violation of that right”).
No such “violation” clause is included in the sections codifying the
right of attribution. See NIMMER, supra, at § 8D.06[B][1] (“The statute does
not make any provision to redress violation of any of the foregoing three
attribution rights.”). The legislative history sheds no light on this
difference, but Nimmer speculates as follows:
Perhaps the implication is that whereas an integrity violation
could give rise to a monetary recovery, failure to attribute is
remediable solely through injunction. If that conclusion were
intended, Congress certainly could have expressed its intent less
obliquely.
Id. We agree with Nimmer’s surmise that VARA does not provide a
damages remedy for an attribution violation. Where the statutory language
is framed as a right “to prevent” conduct, it does not necessarily follow that
16 Section 106A(a)(3) states that the author of a work of visual art shall have the right “(A)
to prevent any intentional distortion, mutilation, or other modification of that work which would
be prejudicial to his or her honor or reputation” and the right “(B) to prevent any destruction of a
work of recognized stature.”

178

CH. 1

a plaintiff is entitled to damages once the conduct occurs. The question is
whether “doing” the act the artist has a right to prevent also triggers a
damages remedy, and the statutory language indicates that Congress
answered that question for the attribution right differently from the
integrity right.
It is also noteworthy that Congress crafted a damages remedy for the
destruction of a work of recognized stature that is narrower than the right
to prevent destruction of such works. While an artist may “prevent any
destruction of a work of recognized stature,” only an “intentional or grossly
negligent destruction of that work is a violation of that right.” 17 U.S.C.
§ 106A(a)(3)(B) (emphasis added). This narrowing further indicates that
Congress did not intend a damages remedy to arise automatically from the
right to prevent conduct. In failing to provide a damages remedy for any
type of violation of the moral right of attribution, Congress may have
concluded that artists could obtain adequate relief for the harms of false
attribution by resorting to the Copyright Act and other traditional claims.
B.

Büchel’s VARA Claims

With this legal framework in mind, we turn to the record before the
district court. By dismantling “Training Ground,” the Museum prevented
the further use of Büchel’s name in connection with the work, eliminating
any basis for injunctive relief, and we therefore do not address the
attribution claim in our VARA analysis. We thus consider the evidence in
the light most favorable to Büchel in determining whether there are
genuine issues of material fact regarding the alleged violations of his right
of integrity.
***
Büchel alleges that MASS MoCA violated his right to integrity in three
distinct ways: first, by continuing to work on the installation without his
authorization, particularly in early 2007, and by then exhibiting the
distorted artwork to the public; second, by using tarpaulins to “partially
cover[ ]”—and thus modify and distort—the installation, and allowing
Museum visitors to see it in that condition; and third, merely by showing
Büchel’s work in its unfinished state, which he claims was a distortion.
Büchel asserts that these actions caused prejudice to his honor or
reputation.
As we shall explain, we conclude that summary judgment was
improperly granted to MASS MoCA because material disputes of fact exist
concerning the first of Büchel’s integrity claims—i.e., that MASS MoCA
modified “Training Ground” over his objections, to his detriment. We
further conclude that the record contains sufficient evidence to allow a jury
to find that MASS MoCA’s actions caused prejudice to Büchel’s honor or
reputation. The other integrity claims, however, are unavailing.

CH. 1
1.

179

Continuing Work on “Training Ground”
***

Both in his deposition and in his affidavit, Büchel described ways in
which he felt the Museum had knowingly disregarded his specific
instructions. * * * Indeed, even the Museum, in its August 31, 2007
memorandum of law in support of its motion for summary judgment,
admitted that the installation “[m]aterials as they now stand reflect
significant aesthetic and design choices by MASS MoCA personnel,
including with respect to the layout of the [m]aterials, and with respect to
the selection and procurement of pre-existing buildings and vehicles that
have been modified and incorporated into the [m]aterials.” (Emphasis
added.)
MASS MoCA argues that the evidence, taken in its entirety, does not
add up to a triable issue with respect to a violation of Büchel’s right of
integrity, but shows only that Museum personnel were attempting to carry
out Büchel’s vision based on his instructions. * * *
As we have noted, a jury may well accept the Museum’s depiction of
its intention and its actions. At this juncture, however, the record must be
viewed in the light most favorable to Büchel. The evidence we have
described would permit a jury to find that the Museum forged ahead with
the installation in the first half of 2007 knowing that the continuing
construction in Büchel’s absence would frustrate—and likely contradict—
Büchel’s artistic vision. We thus conclude that a jury issue exists as to
whether these actions effected an intentional distortion or other
modification of “Training Ground” that subjected MASS MoCA to liability
under VARA.
The record also contains evidence from which a jury could conclude
that the Museum’s alterations had a detrimental impact on Büchel’s honor
or reputation. An article in the Boston Globe reported that, in February,
Museum officials had shown the unfinished project to a group of Museum
directors and curators who were attending an arts conference in the area.
Another journalist reported on observing the unfinished (and still
untarped) work. [Another report indicated that the work was shown to
several elected officials.]
Although the commentary generated by these visits is not all negative,
there was sufficient evidence for a jury to find that the changes to “Training
Ground” caused prejudice to Büchel. The New York Times noted that the
exhibition would “certainly give people unfamiliar with his obsessive,
history-driven aesthetic an inaccurate sense of his art, and this is indeed a
form of damage.” A critic for the Boston Globe similarly observed that
“many people are going to judge [Büchel] and his work on the basis of this
experience.” One viewer, writing in Commentary magazine, observed that
“I am not sure that it suffers from being enveiled.” A review published in

180

CH. 1

Berkshire Fine Arts—subtitled “Crap Under Wrap”—concluded that it
would be a “huge mistake” to uncover the installation, which offered
“virtually nothing of substance or interest.”
The record thus shows that some viewers of the installation reacted
unfavorably to the work in its allegedly modified and distorted form. A
factfinder might conclude, of course, that it was Büchel’s underlying
concept (notwithstanding its unfinished state) rather than MASS MoCA’s
actions that elicited the negative reactions. However, a jury could also
reasonably infer that the negative impressions resulted from the Museum’s
unauthorized modifications to “Training Ground,” diminishing the quality
of the work and thereby harming Büchel’s professional honor or reputation
as a visual artist.
***
2.

Showing “Training Ground” Covered with Tarpaulins

Büchel also claims that MASS MoCA improperly modified and
distorted “Training Ground” when it partially covered it with the yellow
tarpaulins and displayed it in that condition. * * *
Although the tarpaulins did prevent visitors to the Museum from
seeing the entire unfinished installation, the record shows that a number
of people were able to form an impression of “Training Ground” despite the
partial covering. For example, according to one observer,
[the tarps] don’t reach the floor, and they rise only about two feet
above eye level, so they don’t cover much. You can easily crouch
down to slip your head underneath or peek through the slits
between the vinyl sheets. * * *
Thomas Micchelli, Christoph Büchel Training Ground for Democracy, The
Brooklyn Rail (September 2007). Another critic noted that the installation
“under all the tarps is really kind of a conceptual peep show. It doesn’t take
much effort or imagination to see most of the work. . . . Mass MoCA is
hiding an elephant behind a napkin,” and called it a “wink, wink, wrap
show.” Photographs in the record confirm that the covers did not obscure
the general path and layout of the installation. Indeed, given the location
of “Training Ground,” visitors to “Made at MASS MoCA” could not avoid
seeing the unfinished “Training Ground” bedecked in tarpaulins.
Nonetheless, although the installation unquestionably looked
different with the tarpaulins partially covering it, we agree with the
district court that the mere covering of the artwork by the Museum, its
host, cannot reasonably be deemed an intentional act of distortion or
modification of Büchel’s creation. To conclude otherwise would be to say
that, even if all had gone well, the Museum would have been subject to a
right-of-integrity claim if it had partially covered the work before its formal
opening to prevent visitors from seeing it prematurely.

CH. 1

181

***
3.

Exhibiting “Training Ground” in Its Unfinished State

Büchel maintains that, even aside from the alleged modifications to
“Training Ground,” merely exhibiting the work of art in its unfinished
state, without the artist’s consent, constitutes a distortion. We reject this
claim. A separate moral right of disclosure (also known as the right of
divulgation) protects an author’s authority to “prevent third parties from
disclosing [his or her] work to the public without the author’s consent,” and
is not covered by VARA.
Although Büchel proffered an expert who opined that showing an
unfinished work without the artist’s permission is inherently a distortion,
we decline to interpret VARA to include such a claim where a separate
moral right of disclosure is widely recognized in other jurisdictions and
Congress explicitly limited the statute’s coverage to the rights of
attribution and integrity. Any right Büchel possesses to withhold display
of his artwork must be found outside VARA. * * *
4.

Summary of VARA Claims

After careful review of the record, we are persuaded that a reasonable
jury could find that Büchel is entitled to relief under VARA based on the
Museum’s continuing work on “Training Ground” over his objections.
Genuine disputes of material fact foreclose summary judgment for either
Büchel or MASS MoCA on that claim. We find no merit, however, in
Büchel’s claim that MASS MoCA intentionally modified or distorted
“Training Ground” by covering it with tarpaulins, and we reject as outside
the scope of the statute Büchel’s claim that the Museum violated VARA by
displaying the installation over his objections. We affirm the district court’s
grant of summary judgment for the Museum on Büchel’s right-ofattribution claim, which became moot when MASS MoCA dismantled the
installation in 2007.
***
V.
We summarize our holdings:
1. VARA’s protection of an artist’s moral rights extends to
unfinished creations that are “works of art” within the meaning of the
Copyright Act;
2. The right of integrity under VARA protects artists from
distortions, mutilations or modifications of their works that are
prejudicial to their reputation or honor, and prejudice must be shown
for both injunctive relief and damages;
3. Büchel has adduced sufficient evidence to raise a genuine
issue of material fact as to whether MASS MoCA violated his right of

182

CH. 1

integrity on one of his three asserted bases for liability, namely, by
modifying “Training Ground” over his objections in a manner that
harmed his honor or reputation. His right-of-integrity claims based on
the yellow tarpaulins and the mere display of “Training Ground” lack
merit;
4. Büchel’s right-of-attribution claim is moot, as VARA provides
only injunctive relief to protect the right of attribution and the
installation no longer exists;
***
We thus remand the case for further proceedings on Büchel’s
remaining right-of-integrity claim under VARA and his public display
claim under section 106 of the Copyright Act.

GILLIAM V. AMERICAN BROADCASTING COMPANIES, INC.
538 F.2d 14 (2d Cir. 1976).

LUMBARD, CIRCUIT JUDGE.
[Plaintiffs Gilliam et al., known as the “Monty Python” group, were the
authors and copyright owners of certain television scripts which they
licensed to BBC for production and public performance. The plaintiffs
retained their copyright in the scripts, however, and the licensing
agreement expressly reserved to them the right to object to any alterations
of the recorded programs. BBC sublicensed the American television rights
to Time-Warner. When Time-Warner granted broadcast rights to ABC,
ABC edited the programs extensively in order to fit time constraints and
insert commercials. After determining that the plaintiffs were likely to
succeed on their claim that this unauthorized editing violated the plaintiffs’
exclusive right under 17 U.S.C. § 106(2) to create derivative works, the
court of appeals addressed the plaintiffs’ claims under section 43(a) of the
Lanham Act, 15 U.S.C. § 1125(a).]
***
Here, the appellants claim that the editing done for ABC mutilated the
original work and that consequently the broadcast of those programs as the
creation of Monty Python violated the Lanham Act § 43(a), 15 U.S.C.
§ 1125(a).10 This statute, the federal counterpart to state unfair
competition laws, has been invoked to prevent misrepresentations that
may injure plaintiff’s business or personal reputation, even where no
That statute provides in part:
Any person who shall affix, apply, or annex, or use in connection with any goods or
services, . . . a false designation of origin, or any false description or representation . . .
and shall cause such goods or services to enter into commerce . . . shall be liable to a civil
action by any person . . . who believes that he is or is likely to be damaged by the use of
any such false description or representation.
10

CH. 1

183

registered trademark is concerned. It is sufficient to violate the Act that a
representation of a product, although technically true, creates a false
impression of the product’s origin. See Rich v. RCA Corp., 390 F. Supp. 530
(S.D.N.Y.1975) (recent picture of plaintiff on cover of album containing
songs recorded in distant past held to be a false representation that the
songs were new).
These cases cannot be distinguished from the situation in which a
television network broadcasts a program properly designated as having
been written and performed by a group, but which has been edited, without
the writer’s consent, into a form that departs substantially from the
original work. “To deform his work is to present him to the public as the
creator of a work not his own, and thus makes him subject to criticism for
work he has not done.” Roeder, The Doctrine of Moral Right, 53 HARV. L.
REV. 554, 569 (1940). In such a case, it is the writer or performer, rather
than the network, who suffers the consequences of the mutilation, for the
public will have only the final product by which to evaluate the work. Thus,
an allegation that a defendant has presented to the public a “garbled,”
distorted version of plaintiff’s work seeks to redress the very rights sought
to be protected by the Lanham Act, 15 U.S.C. § 1125(a), and should be
recognized as stating a cause of action under that statute. During the
hearing on the preliminary injunction, Judge Lasker viewed the edited
version of the Monty Python program broadcast on December 26 and the
original, unedited version. After hearing argument of this appeal, this
panel also viewed and compared the two versions. We find that the
truncated version at times omitted the climax of the skits to which
appellants’ rare brand of humor was leading and at other times deleted
essential elements in the schematic development of a story line. We
therefore agree with Judge Lasker’s conclusion that the edited version
broadcast by ABC impaired the integrity of appellants’ work and
represented to the public as the product of appellants what was actually a
mere caricature of their talents. We believe that a valid cause of action for
such distortion exists and that therefore a preliminary injunction may
issue to prevent repetition of the broadcast prior to final determination of
the iss

CHAPTER 4
DEFENSES

184

CH. 1

1. COPYRIGHT MISUSE
LASERCOMB AMERICA, INC. V. REYNOLDS
United States Court of Appeals for the Fourth Circuit.
911 F.2d 970 (1990).

SPROUSE, Circuit Judge:
Appellants Larry Holliday and Job Reynolds appeal from a district
court judgment holding them liable to appellee Lasercomb America, Inc.,
for copyright infringement and for fraud, based on appellants’
unauthorized copying and marketing of appellee’s software. We affirm in
part, reverse in part, and remand for recomputation of damages.
I
FACTS AND PROCEEDINGS BELOW
Appellants and defendants below are Larry Holliday, president and
sole shareholder of Holiday Steel Rule Die Corporation (Holiday Steel), and
Job Reynolds, a computer programmer for that company. Appellee is
Lasercomb America, Inc. (Lasercomb), the plaintiff below. Holiday Steel
and Lasercomb were competitors in the manufacture of steel rule dies that
are used to cut and score paper and cardboard for folding into boxes and
cartons. Lasercomb developed a software program, Interact, which is the
object of the dispute between the parties. Using this program, a designer
creates a template of a cardboard cutout on a computer screen and the
software directs the mechanized creation of the conforming steel rule die.
In 1983, before Lasercomb was ready to market its Interact program
generally, it licensed four prerelease copies to Holiday Steel which paid
$35,000 for the first copy, $17,500 each for the next two copies, and $2,000
for the fourth copy. Lasercomb informed Holiday Steel that it would charge
$2,000 for each additional copy Holiday Steel cared to purchase.
Apparently ambitious to create for itself an even better deal, Holiday Steel
circumvented the protective devices Lasercomb had provided with the
software and made three unauthorized copies of Interact which it used on
its computer systems. Perhaps buoyed by its success in copying, Holiday
Steel then created a software program called “PDS–1000,” which was
almost entirely a direct copy of Interact, and marketed it as its own
CAD/CAM die-making software. These infringing activities were
accomplished by Job Reynolds at the direction of Larry Holliday.
There is no question that defendants engaged in unauthorized copying,
and the purposefulness of their unlawful action is manifest from their
deceptive practices. For example, Lasercomb had asked Holiday Steel to
use devices called “chronoguards” to prevent unauthorized access to
Interact. Although defendants had deduced how to circumvent the
chronoguards and had removed them from their computers, they

CH. 1

185

represented to Lasercomb that the chronoguards were in use. Another
example of subterfuge is Reynolds’ attempt to modify the PDS–1000
program output so it would present a different appearance than the output
from Interact.
When Lasercomb discovered Holiday Steel’s activities, it registered its
copyright in Interact and filed this action against Holiday Steel, Holliday,
and Reynolds on March 7, 1986. Lasercomb claimed copyright
infringement, breach of contract, misappropriation of trade secret, false
designation of origin, unfair competition, and fraud. Defendants filed a
number of counterclaims.
On March 24, 1986, the district court entered a preliminary injunction,
enjoining defendants from marketing the PDS–1000 software.
The procedural history of this case is complex, with various claims and
defenses experiencing both death and resurrection on various pretrial
motions and at the bench trial itself. For purposes of this appeal it suffices
to say that, ultimately, all of the counterclaims were dismissed;
Lasercomb’s claims of misappropriation of trade secret, false designation
of origin, and unfair competition were dismissed as preempted by the
Copyright Act; the court found the defendants liable to Lasercomb for
copyright infringement, rejecting their affirmative defenses of misuse of
copyright and lack of statutory copyright notice; and the court held for
Lasercomb on its claims of breach of contract and fraud.
The district court awarded Lasercomb $105,000 in actual damages for
copyright infringement and for fraud–with Holiday Steel, Holliday, and
Reynolds jointly and severally liable–plus $10,000 against Holliday and
$5,000 against Reynolds as punitive damages on the fraud claim. All
defendants were permanently enjoined from publishing and marketing the
PDS-1000 software.
Holliday and Reynolds raise several issues on appeal. They do not
dispute that they copied Interact, but they contend that Lasercomb is
barred from recovery for infringement by its concomitant culpability. They
assert that, assuming Lasercomb had a perfected copyright, it
impermissibly abused it. This assertion of the “misuse of copyright” defense
is based on language in Lasercomb’s standard licensing agreement,
restricting licensees from creating any of their own CAD/CAM die-making
software. ***
II
MISUSE OF COPYRIGHT DEFENSE
A successful defense of misuse of copyright bars a culpable plaintiff
from prevailing on an action for infringement of the misused copyright.
Here, appellants claim Lasercomb has misused its copyright by including
in its standard licensing agreement clauses which prevent the licensee

186

CH. 1

from participating in any manner in the creation of computer-assisted diemaking software. The offending paragraphs read:
D. Licensee agrees during the term of this Agreement that
it will not permit or suffer its directors, officers and employees,
directly or indirectly, to write, develop, produce or sell computer
assisted die making software.
E. Licensee agrees during the term of this Agreement and
for one (1) year after the termination of this Agreement, that it
will not write, develop, produce or sell or assist others in the
writing, developing, producing or selling computer assisted die
making software, directly or indirectly without Lasercomb’s prior
written consent. Any such activity undertaken without
Lasercomb’s written consent shall nullify any warranties or
agreements of Lasercomb set forth herein.
The “term of this Agreement” referred to in these clauses is ninety-nine
years. Defendants were not themselves bound by the standard licensing
agreement. Lasercomb had sent the agreement to Holiday Steel with a
request that it be signed and returned. Larry Holliday, however, decided
not to sign the document, and Lasercomb apparently overlooked the fact
that the document had not been returned. Although defendants were not
party to the restrictions of which they complain, they proved at trial that
at least one Interact licensee had entered into the standard agreement,
including the anticompetitive language.
The district court rejected the copyright misuse defense for three
reasons. First, it noted that defendants had not explicitly agreed to the
contract clauses alleged to constitute copyright misuse. Second, it found
“such a clause is reasonable in light of the delicate and sensitive area of
computer software.” And, third, it questioned whether such a defense
exists. We consider the district court’s reasoning in reverse order.
A.

Does a “Misuse of Copyright” Defense Exist?

We agree with the district court that much uncertainty engulfs the
“misuse of copyright” defense.
We are persuaded, however, that a misuse of copyright defense is
inherent in the law of copyright just as a misuse of patent defense is
inherent in patent law.
The misuse of a patent is a potential defense to suit for its
infringement, and both the existence and parameters of that body of law
are well established. E.g., United States Gypsum Co. v. National Gypsum
Co., 352 U.S. 457, 465, 77 S.Ct. 490, 494, 1 L.Ed.2d 465 (1957); see
generally 8 E. Lipscomb, Lipscomb’s Walker on Patents §§ 28:32–28:36 (3d
ed. 1989) [hereinafter Walker on Patents]; Calkins, Patent Law: The
Impact of the 1988 Patent Misuse Reform Act and Noerr–Pennington

CH. 1

187

Doctrine on Misuse Defenses and Antitrust Counterclaims, 38 Drake
L.Rev. 175 (1989) [hereinafter Calkins, Patent Law]. Although there is
little case law on the subject, courts from time to time have intimated that
the similarity of rationales underlying the law of patents and the law of
copyrights argues for a defense to an infringement of copyright based on
misuse of the copyright. E.g., United States v. Loew’s, Inc., 371 U.S. 38,
44–51, 83 S.Ct. 97, 101–05, 9 L.Ed.2d 11 (1962); United States v.
Paramount Pictures, Inc., 334 U.S. 131, 157–59, 68 S.Ct. 915, 929–30, 92
L.Ed. 1260 (1948); Mitchell Bros. Film Group v. Cinema Adult Theater, 604
F.2d 852, 865 & n. 27 (5th Cir.1979), cert. denied, 445 U.S. 917, 100 S.Ct.
1277, 63 L.Ed.2d 601 (1980). The origins of patent and copyright law in
England, the treatment of these two aspects of intellectual property by the
framers of our Constitution, and the later statutory and judicial
development of patent and copyright law in this country persuade us that
parallel public policies underlie the protection of both types of intellectual
property rights. We think these parallel policies call for application of the
misuse defense to copyright as well as patent law.
1.

Overview

Because of the paucity of precedent in the copyright misuse area, some
historical perspective of the elements underlying intellectual property law
is helpful to our inquiry. Fortunately, respected treatise authors have
captured well the essence of the relevant historical perspective.
During the sixteenth century, it became common for the English
Crown to grant “letters patent” which gave individuals exclusive rights to
produce, import and/or sell given items within the kingdom. 1 Walker on
Patents §§ 1:1–1:2. These monopolies were granted for such commonplace
items as salt, vinegar, and calfskins, to name but a few. The practice of
granting monopolies led to widespread abuses, such as shortages and
inflated prices for items that would otherwise be easily and cheaply
available. Consequently, Parliament passed the Statute of Monopolies
(1623–24), prohibiting the creation of such monopolies by the Crown. Id. at
§ 1.5. An exception was made, however, to permit a patent to be granted
for a period of fourteen years to the creator of a new invention. 21 Jac., ch.
3, § 6.
The rationale for allowing patents for new inventions was and is to
encourage their creation for the benefit of society. 1 Walker on Patents
§ 1:6. The monopolies granted by the Crown had been odious because they
restrained trade in articles that had previously been a part of the public
domain. An invention, however, does not withdraw anything from public
traffic; rather, it introduces something new. To encourage and reward
inventors for increasing the inventory of useful objects, the government
grants them, for a limited time, the right to exclude others from making
and selling their inventions.

188

CH. 1

The development of copyright law in England likewise grew out of a
differentiation by Parliament between a monopoly that restricts
publication of works and a limited copyright that encourages the efforts of
authors. In sixteenth-century England, the Crown granted to the
Stationers’ Company the exclusive right to publish and print all published
works (apparently to enable censorship of Protestant materials). In the
early 1700s, the Stationer’s Company petitioned Parliament to recognize
that these rights inured to it in perpetuity. Instead, Parliament passed the
Statute of Anne (1709–10), the first known copyright legislation. A.
Latman, The Copyright Law: Howell’s Copyright Law Revised and the
1976 Act 2–3 (5th ed. 1979) [hereinafter Howell’s Copyright Law]; R.
Bowker, Copyright: Its History and Its Law 21–23 (1912). That
statute
gave authors the sole right of publication for up to twenty-eight years.
Thus, the English statutory treatment of copyright was similar to that
of patent in that it granted the creator a monopoly for a limited time only.
It is significant, we think, that the framers of our Constitution
continued the English development of intellectual property law and
considered in tandem those property rights protectable by copyrights and
those protectable by patents. In giving Congress the power to create
copyright and patent laws, the framers combined the two concepts in one
clause, stating a unitary purpose—to promote progress. Article I, section 8,
clause 8 of the United States Constitution provides:
[The Congress shall have power] To promote the Progress of
Science and useful Arts, by securing for limited Times to Authors
and Inventors the exclusive Right to their respective Writings and
Discoveries.
This clause was adopted without debate, and material explaining the
intention of the framers is limited. However, a comment in The Federalist
papers indicates the public policy behind the grant of copyright and patent
powers is essentially the same:
The utility of this power will scarcely be questioned. The copyright
of authors has been solemnly adjudged, in Great Britain, to be a
right of common law. The right to useful inventions seems with
equal reason to belong to the inventors. The public good fully
coincides in both cases with the claims of individuals.
The Federalist, No. 43 at 279 (J. Madison) (Mod.Lib. ed. 1941).13
13 The Court of Customs and Patent Appeals observed that the patent/copyright clause was
unusual in stating the reason the power had been granted, and commented:
Its inclusion doubtlessly was due to the fact that those who formulated the Constitution were
familiar with the long struggle over monopolies so prominent in English history, where exclusive
rights to engage even in ordinary business activities were granted so frequently by the Crown for
the financial benefits accruing to the Crown only. It was desired that in this country any

CH. 1

189

Supreme Court comment has likewise equated the public policies of
copyright and patent. For example, in Mazer v. Stein, 347 U.S. 201, 219,
74 S.Ct. 460, 471, 98 L.Ed. 630 (1953), the Supreme Court stated:
The economic philosophy behind the clause empowering Congress
to grant patents and copyrights is the conviction that
encouragement of individual effort by personal gain is the best
way to advance public welfare through the talents of authors and
inventors in “Science and useful Arts.” Sacrificial days devoted to
such creative activities deserve rewards commensurate with the
services rendered.
The philosophy behind copyright, parallel to that discussed above for
patent, is that the public benefits from the efforts of authors to introduce
new ideas and knowledge into the public domain. To encourage such
efforts, society grants authors exclusive rights in their works for a limited
time.
2.

The Misuse of Patent Defense

Although a patent misuse defense was recognized by the courts as
early as 1917, most commentators point to Morton Salt Co. v. G.S.
Suppiger, 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363 (1942), as the
foundational patent misuse case. In that case, the plaintiff Morton Salt
brought suit on the basis that the defendant had infringed Morton’s patent
in a salt-depositing machine.
***
Since Morton Salt, the courts have recognized patent misuse as a valid
defense and have applied it in a number of cases in which patent owners
have attempted to use their patents for price fixing, tie-ins, territorial
restrictions, and so forth. See Calkins, Patent Law, at 187–89 n. 38, 8
Walker on Patents §§ 28:32–28:36; W. Holmes, Intellectual Property and
Antitrust Law § 1.07 (1989) [hereinafter Holmes, Intellectual Property].
The patent misuse defense also has been acknowledged by Congress in the
1988 Patent Misuse Reform Act, Pub.L. No. 100–703, 102 Stat. 4676 (1988)
(codified at 35 U.S.C. § 271(d)(4) & (5)), which limited but did not eliminate
the defense.
3.

The “Misuse of Copyright” Defense

Although the patent misuse defense has been generally recognized
since Morton Salt, it has been much less certain whether an analogous
copyright misuse defense exists. This uncertainty persists because no
United States Supreme Court decision has firmly established a copyright
misuse defense in a manner analogous to the establishment of the patent
Government grant of a monopoly for even a limited time should be limited to those things which
serve in the promotion of science and the useful arts.
In Re Shao Wen Yuan, 188 F.2d 377, 380 (C.C.P.A.1951).

190

CH. 1

misuse defense by Morton Salt. The few courts considering the issue have
split on whether the defense should be recognized, see Holmes, Intellectual
Property § 4.09 (collecting cases), and we have discovered only one case
which has actually applied copyright misuse to bar an action for
infringement. M. Witmark & Sons v. Jensen, 80 F.Supp. 843
(D.Minn.1948), appeal dismissed, 177 F.2d 515 (8th Cir.1949).
We are of the view, however, that since copyright and patent law serve
parallel public interests, a “misuse” defense should apply to infringement
actions brought to vindicate either right. As discussed above, the similarity
of the policies underlying patent and copyright is great and historically has
been consistently recognized. Both patent law and copyright law seek to
increase the store of human knowledge and arts by rewarding inventors
and authors with the exclusive rights to their works for a limited time. At
the same time, the granted monopoly power does not extend to property
not covered by the patent or copyright. Morton Salt, 314 U.S. at 492, 62
S.Ct. at 405; Paramount Pictures, 334 U.S. at 156–58, 68 S.Ct. at 928–29;
cf. Baker v. Selden, 101 U.S. 99, 101–04, 25 L.Ed. 841 (1880).
Thus, we are persuaded that the rationale of Morton Salt in
establishing the misuse defense applies to copyrights. *** Having
determined that “misuse of copyright” is a valid defense, analogous to the
misuse of patent defense, our next task is to determine whether the defense
should have been applied by the district court to bar Lasercomb’s
infringement action against the defendants in this case.
B. The District Court’s Finding that the Anticompetitive Clauses Are
Reasonable
In declining to recognize a misuse of copyright defense, the district
court found “reasonable” Lasercomb’s attempt to protect its software
copyright by using anticompetitive clauses in their licensing agreement. In
briefly expressing its reasoning, the court referred to the “delicate and
sensitive” nature of software. It also observed that Lasercomb’s president
had testified that the noncompete language was negotiable.
If, as it appears, the district court analogized from the “rule of reason”
concept of antitrust law, we think its reliance on that principle was
misplaced. Such reliance is, however, understandable.
Both the presentation by appellants and the literature tend to
intermingle antitrust and misuse defenses. E.g., Holmes, Intellectual
Property, at § 4.09. A patent or copyright is often regarded as a limited
monopoly—an exception to the general public policy against restraints of
trade. Since antitrust law is the statutory embodiment of that public policy,
there is an understandable association of antitrust law with the misuse
defense. Certainly, an entity which uses its patent as the means of violating
antitrust law is subject to a misuse of patent defense. However, Morton

CH. 1

191

Salt held that it is not necessary to prove an antitrust violation in order to
successfully assert patent misuse:
It is unnecessary to decide whether respondent has violated the
Clayton Act, for we conclude that in any event the maintenance of
the present suit to restrain petitioner’s manufacture or sale of the
alleged infringing machines is contrary to public policy and that
the district court rightly dismissed the complaint for want of
equity.
314 U.S. at 494, 62 S.Ct. at 406. See also Hensley Equip. Co. v. Esco Corp.,
383 F.2d 252, 261 & n. 19, amended on reh’g, 386 F.2d 442 (5th Cir.1967);
8 Walker on Patents, at § 28:33.
So while it is true that the attempted use of a copyright to violate
antitrust law probably would give rise to a misuse of copyright defense, the
converse is not necessarily true—a misuse need not be a violation of
antitrust law in order to comprise an equitable defense to an infringement
action. The question is not whether the copyright is being used in a manner
violative of antitrust law (such as whether the licensing agreement is
“reasonable”), but whether the copyright is being used in a manner
violative of the public policy embodied in the grant of a copyright.
Lasercomb undoubtedly has the right to protect against copying of the
Interact code. Its standard licensing agreement, however, goes much
further and essentially attempts to suppress any attempt by the licensee
to independently implement the idea which Interact expresses.
The agreement forbids the licensee to develop or assist in developing
any kind of computer-assisted die-making software. If the licensee is a
business, it is to prevent all its directors, officers and employees from
assisting in any manner to develop computer-assisted die-making software.
Although one or another licensee might succeed in negotiating out the
noncompete provisions, this does not negate the fact that Lasercomb is
attempting to use its copyright in a manner adverse to the public policy
embodied in copyright law, and that it has succeeded in doing so with at
least one licensee. See supra note 8 and accompanying text. Cf. Berlenbach
v. Anderson & Thompson Ski Co., 329 F.2d 782, 784–85 (9th Cir.), cert.
denied, 379 U.S. 830, 85 S.Ct. 60, 13 L.Ed.2d 39 (1964).
The language employed in the Lasercomb agreement is extremely
broad. Each time Lasercomb sells its Interact program to a company and
obtains that company’s agreement to the noncompete language, the
company is required to forego utilization of the creative abilities of all its
officers, directors and employees in the area of CAD/CAM die-making
software. Of yet greater concern, these creative abilities are withdrawn
from the public. The period for which this anticompetitive restraint exists
is ninety-nine years, which could be longer than the life of the copyright
itself.

192

CH. 1

We previously have considered the effect of anticompetitive language
in a licensing agreement in the context of patent misuse. Compton v. Metal
Products, Inc., 453 F.2d 38 (4th Cir.1971), cert. denied, 406 U.S. 968, 92
S.Ct. 2414, 32 L.Ed.2d 667 (1972). Compton had invented and patented
coal auguring equipment. He granted an exclusive license in the patents to
Joy Manufacturing, and the license agreement included a provision that
Compton would not “engage in any business or activity relating to the
manufacture or sale of equipment of the type licensed hereunder” for as
long as he was due royalties under the patents. Suit for infringement of the
Compton patents was brought against Metal Products, and the district
court granted injunctive relief and damages. On appeal we held that relief
for the infringement was barred by the misuse defense, stating:
The need of Joy to protect its investment does not outweigh the
public’s right under our system to expect competition and the
benefits which flow therefrom, and the total withdrawal of
Compton from the mining machine business . . . everywhere in the
world for a period of 20 years unreasonably lessens the
competition which the public has a right to expect, and constitutes
misuse of the patents.
Id. at 45. Cf. Berlenbach, supra (applying misuse doctrine where license to
sell patented ski bindings prohibited licensee from manufacturing or
selling any competing ski binding).
We think the anticompetitive language in Lasercomb’s licensing
agreement is at least as egregious as that which led us to bar the
infringement action in Compton, and therefore amounts to misuse of its
copyright. Again, the analysis necessary to a finding of misuse is similar to
but separate from the analysis necessary to a finding of antitrust violation.
The misuse arises from Lasercomb’s attempt to use its copyright in a
particular expression, the Interact software, to control competition in an
area outside the copyright, i.e., the idea of computer-assisted die
manufacture, regardless of whether such conduct amounts to an antitrust
violation.
C.

The Effect of Appellants Not Being Party to the Anticompetitive
Contract

In its rejection of the copyright misuse defense, the district court
emphasized that Holiday Steel was not explicitly party to a licensing
agreement containing the offending language.
However, again analogizing to patent misuse, the defense of copyright
misuse is available even if the defendants themselves have not been
injured by the misuse. In Morton Salt, the defendant was not a party to the
license requirement that only Morton-produced salt tablets be used with
Morton’s salt-depositing machine. Nevertheless, suit against defendant for
infringement of Morton’s patent was barred on public policy grounds.

CH. 1

193

Similarly, in Compton, even though the defendant Metal Products was not
a party to the license agreement that restrained competition by Compton,
suit against Metal Products was barred because of the public interest in
free competition. See also Hensley Equip. Co., 383 F.2d at 261; cf.
Berlenbach, 329 F.2d at 784–85.
Therefore, the fact that appellants here were not parties to one of
Lasercomb’s standard license agreements is inapposite to their copyright
misuse defense. The question is whether Lasercomb is using its copyright
in a manner contrary to public policy, which question we have answered in
the affirmative.
In sum, we find that misuse of copyright is a valid defense, that
Lasercomb’s anticompetitive clauses in its standard licensing agreement
constitute misuse of copyright, and that the defense is available to
appellants even though they were not parties to the standard licensing
agreement.
Holding that Lasercomb should have been barred by the defense of
copyright misuse from suing for infringement of its copyright in the
Interact program, we reverse the injunction and the award of damages for
copyright infringement. * * *
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

ATARI GAMES CORP. V. NINTENDO OF AMERICA INC.
United States Court of Appeals for the Federal Circuit
975 F.2d 832 (1992)

RADER, Circuit Judge.
Nintendo of America Inc., and Nintendo Co., Ltd. sell the Nintendo
Entertainment System (NES). Two of Nintendo’s competitors, Atari Games
Corporation and its wholly-owned subsidiary, Tengen, Inc., sued Nintendo for,
among other things, unfair competition, Sherman Act violations, and patent
infringement. Nintendo sued Atari for, among other things, unfair competition,
patent infringement, copyright infringement, and trade secret violations. The
United States District Court for the Northern District of California
consolidated the two cases and preliminarily enjoined Atari from exploiting
Nintendo’s copyrighted computer program. Because Nintendo has shown a
likelihood of success on its copyright infringement claims, this court affirms.

BACKGROUND
Nintendo’s home video game system—the NES—includes a monitor,
console, and controls. The console is a base unit into which a user inserts game

194

CH. 1

cartridges. These cartridges contain the various game programs for the NES.
As dictated by the program on the cartridge, the console controls an image on
a video monitor, often a television set. In response to this video display, the
user interacts with the system by manipulating the controls. Thus, by
operating the controls in response to the video image, an individual plays the
game on the cartridge in the NES console. ***
Nintendo designed a program—the 10NES—to prevent the NES from
accepting unauthorized game cartridges. Both the NES console and authorized
game cartridges contain microprocessors or chips programed with the 10NES.
The console contains a “master chip” or “lock.” Authorized game cartridges
contain a “slave chip” or “key.” When a user inserts an authorized cartridge
into a console, the slave chip in effect unlocks the console; the console detects
a coded message and accepts the game cartridge. When a user inserts an
unauthorized cartridge, the console detects no unlocking message and refuses
to operate the cartridge. Nintendo’s 10NES program thus controls access to the
NES.
Atari first attempted to analyze and replicate the NES security system in
1986. Atari could not break the 10NES program code by monitoring the
communication between the master and slave chips. Atari next tried to break
the code by analyzing the chips themselves. Atari analysts chemically peeled
layers from the NES chips to allow microscopic examination of the object code.
Nonetheless, Atari still could not decipher the code sufficiently to replicate the
NES security system.
In December 1987, Atari became a Nintendo licensee. Atari paid Nintendo
to gain access to the NES for its video games. The license terms, however,
strictly controlled Atari’s access to Nintendo’s technology, including the 10NES
program. Under the license, Nintendo would take Atari’s games, place them in
cartridges containing the 10NES program, and resell them to Atari. Atari could
then market the games to NES owners. Nintendo limited all licensees,
including Atari, to five new NES games per year. The Nintendo license also
prohibited Atari from licensing NES games to other home video game systems
for two years from Atari’s first sale of the game.
In early 1988, Atari’s attorney applied to the Copyright Office for a
reproduction of the 10NES program. The application stated that Atari was a
defendant in an infringement action and needed a copy of the program for that
litigation. Atari falsely alleged that it was a present defendant in a case in the
Northern District of California. Atari assured the “Library of Congress that
the requested copy [would] be used only in connection with the specified
litigation.” In fact, no suit existed between the parties until December 1988,

CH. 1

195

when Atari sued Nintendo for antitrust violations and unfair competition.
Nintendo filed no infringement action against Atari until November 1989.
After obtaining the 10NES source code from the Copyright Office, Atari
again tried to read the object code from peeled chips. Through microscopic
examination, Atari’s analysts transcribed the 10NES object code into a
handwritten representation of zeros and ones. Atari used the information from
the Copyright Office to correct errors in this transcription. The Copyright
Office copy facilitated Atari’s replication of the 10NES object code.
After deciphering the 10NES program, Atari developed its own program—
the Rabbit program—to unlock the NES. Atari’s Rabbit program generates
signals indistinguishable from the 10NES program. The Rabbit uses a
different microprocessor. The Rabbit chip, for instance, operates faster. Thus,
to generate signals recognizable by the 10NES master chip, the Rabbit
program must include pauses. Atari also programmed the Rabbit in a different
language. Because Atari chose a different microprocessor and programming
language, the line-by-line instructions of the 10NES and Rabbit programs
vary. Nonetheless, as the district court found, the Rabbit program generates
signals functionally indistinguishable from the 10NES program. The Rabbit
gave Atari access to NES owners without Nintendo’s strict license conditions.
Nintendo asked the district court to enjoin Atari’s alleged infringement of
its 10NES copyright. Atari sought in a separate motion to enjoin Nintendo’s
alleged antitrust violations and alleged misuse of its property rights. Nintendo
prevailed on both motions. Atari appealed both rulings but subsequently
moved to dismiss its appeal from the denial of its motion for a preliminary
injunction. This court granted that motion. Atari asserts copyright misuse as
a defense to copyright infringement.

ANALYSIS
*** Nintendo is likely to show that its 10NES program contains
protectable expression. Atari’s efforts to reverse engineer the 10NES chip to
learn the ideas in the program will not alone support a copyright infringement
claim. To the extent, however, Nintendo is likely to show misappropriation and
copying of the unauthorized Copyright Office copy, it is likely to succeed on the
merits of its infringement claim. Alternatively, Nintendo is likely to prove
substantial similarity between the Rabbit and 10NES programs sufficient to
support its infringement claims. This record thus justifies the trial court’s
imposition of a preliminary injunction.

196

CH. 1

Copyright Misuse
As a defense to copyright infringement, Atari asserts Nintendo has
misused its copyright of the lockout program. Atari alleges Nintendo has
conditioned the license of its copyrighted lockout program on the acceptance of
contract provisions that give it control over the games developed by
independent, third-party software developers. The standard license exclusivity
provision Nintendo includes in its contracts provides:
Exclusivity: LICENSEE agrees to sell the Licensed Products for use only
in conjunction with the NES. For a period of two (2) years following the date of
first sale by LICENSEE of any Licensed Products pertaining to any particular
video game program developed by LICENSEE under this Agreement,
LICENSEE will not adapt or offer such video game program or any derivatives
of such video game program, for use in any: (a) other home video system; or,
(b) home computer system....
The district court granted Nintendo’s motion for preliminary injunction in
response to which Atari asserted the copyright misuse defense. Atari contends
Nintendo’s copyright misuse should prevent copyright enforcement. The
district court did not discuss copyright misuse in its order granting the
preliminary injunction. However, on Atari’s earlier motion for summary
judgment, the court held, as a matter of law, that Nintendo did not misuse its
copyright:
The record does not demonstrate, as a matter of law, that such restrictions
restrain the creativity of Nintendo licensees and thereby thwart the intent of
the patent and copyright laws.
In its opinion, the district court raised questions about the origin of a
copyright misuse defense. Once again, this court applies Ninth Circuit law.
Sun Studs v. Applied Theory Assoc., 772 F.2d 1557, 1560–61 (Fed.Cir.1985).
Several circuit courts, including the Ninth Circuit, have entertained
defenses of copyright misuse. Lasercomb Am. v. Reynolds, 911 F.2d 970 (4th
Cir.1990); United Tel. Co. v. Johnson Publishing Co., 855 F.2d 604, 610–12 (8th
Cir.1988); Supermarket of Homes v. San Fernando Valley Bd. of Realtors, 786
F.2d 1400, 1408 (9th Cir.1986); F.E.L. Publications v. Catholic Bishop, 214
U.S.P.Q. 409, 413 (7th Cir.), cert. denied, 459 U.S. 859, 103 S.Ct. 131, 74
L.Ed.2d 113 (1982); Edward B. Marks Music v. Colorado Magnetics, 497 F.2d
285, 290 (10th Cir.1974), cert. denied, 419 U.S. 1120, 95 S.Ct. 801, 42 L.Ed.2d
819 (1975); Broadcast Music v. Moor–Law, 527 F.Supp. 758, 772 (D.Del.1981),
aff’d without opinion, 691 F.2d 490 (3rd Cir.1982); Mitchell Bros. Film Group
v. Cinema Adult Theater, 604 F.2d 852, 865 (5th Cir.1979), cert. denied, 445
U.S. 917, 100 S.Ct. 1277, 63 L.Ed.2d 601 (1980). Only one circuit has sustained
the defense. Lasercomb, 911 F.2d at 970. Although no Ninth Circuit case has
applied the defense to prevent enforcement of a copyright infringement claim,

CH. 1

197

the Ninth Circuit suggests that, under the appropriate factual setting,
copyright misuse may be a viable defense against a claim of copyright
infringement. Supermarket of Homes, 786 F.2d at 1408; see also, Sega Enter.,
at 1399.
Although it has yet to apply the copyright misuse defense, the United
States Supreme Court has given at least tacit approval of the defense. United
States v. Loew’s, Inc., 371 U.S. 38, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962). In Loew’s,
the Court applied principles of patent misuse to a patentee’s unlawful tying
arrangements and held that recovery for infringement should be denied. The
Court then went on to apply, with reference to the copyrights, the same
antitrust restrictions on tie-in of sales. Numerous cases suggest that the
purpose and policy of patent misuse apply as well to copyright. See, e.g., Sony
Corp., 464 U.S. at 439, 104 S.Ct. at 787; Loew’s, 371 U.S. at 44–51, 83 S.Ct. at
101–05; United States v. Paramount Pictures, 334 U.S. 131, 157–59, 68 S.Ct.
915, 929–30, 92 L.Ed. 1260 (1948); Mitchell Bros., 604 F.2d at 865; Bellsouth,
933 F.2d at 960–61.
In the absence of any statutory entitlement to a copyright misuse defense,
however, the defense is solely an equitable doctrine. Any party seeking
equitable relief must come to the court with “clean hands.” Keystone Driller
Co. v. General Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 147, 78 L.Ed.
293 (1933). The Ninth Circuit has noted that the doctrine of unclean hands can
also preclude the defense of copyright misuse. Supermarket of Homes, 786 F.2d
at 1408. The district court states, “Atari lied to the Copyright Office in order to
obtain the copyrighted 10NES program.” This record supports the district
court’s conclusion and suggests that Atari’s unclean hands prevent it from
invoking equity. Thus, even if the Ninth Circuit permits an equitable copyright
misuse defense, Atari appears ineligible to invoke the defense. This court
discerns no reversible error in the district court’s assessment of Nintendo’s
likelihood of success on the merits of its copyright infringement claim.
CONCLUSION
The district court did not err by granting Nintendo’s request for a
preliminary injunction. Nintendo is likely to prove that the 10NES program
contains protected expression. Nintendo is also likely to prove that Atari made
unauthorized verbatim copies of the 10NES program. On this record, the
district court did not err in determining that Nintendo is likely to show
successfully that Atari infringed the 10NES copyright by obtaining and
copying the source code from the Copyright Office. Furthermore, Nintendo is
likely to prove that Atari’s Rabbit program is substantially similar to the
10NES program and that the similarities relate to protected expression.
Nintendo is also likely to overcome Atari’s assertion of copyright misuse as a
defense. Atari presents no arguments to rebut the presumption of irreparable
harm that arises upon a showing of likelihood of success on the merits.

198

CH. 1

IN RE INDEPENDENT SERVICE ORGANIZATIONS
ANTITRUST LITIGATION
(CSU, L.L.C. V. XEROX CORPORATION)
United States Court of Appeals for the Federal Circuit.
203 F.3d 1322 (2000).
MAYER, Chief Judge.
CSU, L.L.C. appeals the judgment of the United States District Court for
the District of Kansas, dismissing on summary judgment CSU’s claims that
Xerox’s refusal to sell patented parts and copyrighted manuals and to license
copyrighted software violate the antitrust laws. Because we agree with the
district court that CSU has not raised a genuine issue as to any material fact
and that Xerox is entitled to judgment as a matter of law, we affirm.
BACKGROUND
Xerox manufactures, sells, and services high-volume copiers. Beginning
in 1984, it established a policy of not selling parts unique to its series 10 copiers
to independent service organizations (“ISOs”), including CSU, unless they
were also end-users of the copiers. In 1987, the policy was expanded to include
all new products as well as existing series 9 copiers. Enforcement of this policy
was tightened in 1989, and Xerox cut off CSU’s direct purchase of restricted
parts. Xerox also implemented an “on-site end-user verification” procedure to
confirm that the parts ordered by certain ISOs or their customers were actually
for their end-user use. Initially this procedure applied to only the six most
successful ISOs, which included CSU.
To maintain its existing business of servicing Xerox equipment, CSU used
parts cannibalized from used Xerox equipment, parts obtained from other
ISOs, and parts purchased through a limited number of its customers. For
approximately one year, CSU also obtained parts from Rank Xerox, a majorityowned European affiliate of Xerox, until Xerox forced Rank Xerox to stop
selling parts to CSU and other ISOs. In 1994, Xerox settled an antitrust
lawsuit with a class of ISOs by which it agreed to suspend its restrictive parts
policy for six and one-half years and to license its diagnostic software for four
and one-half years. CSU opted out of that settlement and filed this suit alleging
that Xerox violated the Sherman Act by setting the prices on its patented parts
much higher for ISOs than for end-users to force ISOs to raise their prices.
This would eliminate ISOs in general and CSU in particular as competitors in
the relevant service markets for high speed copiers and printers.
Xerox counterclaimed for patent and copyright infringement and
contested CSU’s antitrust claims as relying on injury solely caused by Xerox’s
lawful refusal to sell or license patented parts and copyrighted software. Xerox
also claimed that CSU could not assert a patent or copyright misuse defense to
Xerox’s infringement counterclaims based on Xerox’s refusal to deal.

CH. 1

199

The district court granted summary judgment to Xerox dismissing CSU’s
antitrust claims and holding that if a patent or copyright is lawfully acquired,
the patent or copyright holder’s unilateral refusal to sell or license its patented
invention or copyrighted expression is not unlawful exclusionary conduct
under the antitrust laws, even if the refusal to deal impacts competition in
more than one market. The court also held, in both the patent and copyright
contexts, that the right holder’s intent in refusing to deal and any other alleged
exclusionary acts committed by the right holder are irrelevant to antitrust law.
This appeal followed.
DISCUSSION
The issue is whether the district court erred in granting Xerox’s motion
for summary judgment on CSU’s antitrust claims. * * *
As a general proposition, when reviewing a district court’s judgment
involving federal antitrust law, we are guided by the law of the regional circuit
in which that district court sits, in this case the Tenth Circuit. See
Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068, 46
USPQ2d 1097, 1104 (Fed.Cir.1998). We apply our own law, not regional circuit
law, to resolve issues that clearly involve our exclusive jurisdiction. See Pro–
Mold & Tool Co. v. Great Lakes Plastics, Inc., 75 F.3d 1568, 1574–75, 37
USPQ2d 1626, 1631 (Fed.Cir.1996). “Whether conduct in procuring or
enforcing a patent is sufficient to strip a patentee of its immunity from the
antitrust laws is to be decided as a question of Federal Circuit law.”
Nobelpharma, 141 F.3d at 1068, 46 USPQ2d at 1104; see Midwest Indus., Inc.
v. Karavan Trailers, Inc., 175 F.3d 1356, 1360, 50 USPQ2d 1672, 1676
(Fed.Cir.1999) (en banc in relevant part) (“Pro-Mold and Nobelpharma make
clear that our responsibility as the tribunal having sole appellate responsibility
for the development of patent law requires that we do more than simply apply
our law to questions of substantive patent law. In order to fulfill our obligation
of promoting uniformity in the field of patent law, it is equally important to
apply our construction of patent law to the questions whether and to what
extent patent law preempts or conflicts with other causes of action.”). The
district court’s grant of summary judgment as to CSU’s antitrust claims arising
from Xerox’s refusal to sell its patented parts is therefore reviewed as a matter
of Federal Circuit law, while consideration of the antitrust claim based on
Xerox’s refusal to sell or license its copyrighted manuals and software is under
Tenth Circuit law.
A.
Intellectual property rights do not confer a privilege to violate the
antitrust laws. See Intergraph Corp. v. Intel Corp., 195 F.3d 1346, 1362, 52
USPQ2d 1641, 1652 (Fed.Cir.1999). “But it is also correct that the antitrust
laws do not negate the patentee’s right to exclude others from patent property.”
Id. (citation omitted). “The commercial advantage gained by new technology
and its statutory protection by patent do not convert the possessor thereof into
a prohibited monopolist.” Abbott Lab. v. Brennan, 952 F.2d 1346, 1354, 21
USPQ2d 1192, 1199 (Fed.Cir.1991). “The patent right must be ‘coupled with

200

CH. 1

violations of § 2’, and the elements of violation of 15 U.S.C. § 2 must be met.”
Id. (citations omitted). “Determination of whether the patentee meets the
Sherman Act elements of monopolization or attempt to monopolize is governed
by the rules of application of the antitrust laws to market participants, with
due consideration to the exclusivity that inheres in the patent grant.” Id. at
1354–55, 952 F.2d 1346, 21 USPQ2d at 1199 (citations omitted).
A patent alone does not demonstrate market power. See id. at 1355, 952
F.2d 1346, 21 USPQ2d at 1199. The United States Department of Justice and
Federal Trade Commission have issued guidance that, even where it exists,
such “market power does not ‘impose on the intellectual property owner an
obligation to license the use of that property to others.’ ” Intergraph, 195 F.3d
at 1362, 52 USPQ2d at 1652 (citing United States Department of Justice and
Federal Trade Comm’n Antitrust Guidelines for the Licensing of Intellectual
Property 4 (1995)). There is “no reported case in which a court ha[s] imposed
antitrust liability for a unilateral refusal to sell or license a patent. . . .” Id.
(citing Image Technical Servs. v. Eastman Kodak Co., 125 F.3d 1195, 1216, 44
USPQ2d 1065, 1079 (9th Cir.1997)). The patentee’s right to exclude is further
supported by section 271(d) of the Patent Act which states, in pertinent part,
that “[n]o patent owner otherwise entitled to relief . . . shall be denied relief or
deemed guilty of misuse or illegal extension of the patent right by reason of his
having . . . (4) refused to license or use any rights to the patent . . .” 35 U.S.C.
§ 271(d) (1999) (emphasis added).
The patentee’s right to exclude, however, is not without limit. As we
recently observed in Glass Equipment Development Inc. v. Besten, Inc., a
patent owner who brings suit to enforce the statutory right to exclude others
from making, using, or selling the claimed invention is exempt from the
antitrust laws, even though such a suit may have an anticompetitive effect,
unless the infringement defendant proves one of two conditions. 174 F.3d 1337,
1343, 50 USPQ2d 1300, 1304 (Fed.Cir.1999) (citing Nobelpharma, 141 F.3d at
1068, 46 USPQ2d at 1104). First, he may prove that the asserted patent was
obtained through knowing and willful fraud within the meaning of Walker
Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172,
177, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965). See Glass Equip. Dev., 174 F.3d at
1343. Or he may demonstrate that the infringement suit was a mere sham to
cover what is actually no more than an attempt to interfere directly with the
business relationships of a competitor. See id. (citing Eastern R.R. Presidents
Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144, 81 S.Ct. 523, 5
L.Ed.2d 464 (1961)). Here, CSU makes no claim that Xerox obtained its patents
through fraud in the Patent and Trademark Office; the Walker Process
analysis is not implicated.
“[I]rrespective of the patent applicant’s conduct before the [Patent and
Trademark Office], an antitrust claim can also be based on [an] allegation that
a suit is baseless; in order to prove that a suit was within Noerr’s ‘sham’
exception to immunity, [see Noerr, 365 U.S. at 144, 81 S.Ct. 523], an antitrust
plaintiff must prove that the suit was both objectively baseless and subjectively
motivated by a desire to impose collateral, anti-competitive injury rather than

CH. 1

201

to obtain a justifiable legal remedy.” Nobelpharma, 141 F.3d at 1071, 46
USPQ2d at 1107 (citing Professional Real Estate Investors, Inc. v. Columbia
Pictures Indus., Inc., 508 U.S. 49, 60–61, 113 S.Ct. 1920, 123 L.Ed.2d 611, 26
USPQ2d 1641, 1646 (1993)). “Accordingly, if a suit is not objectively baseless,
an antitrust defendant’s subjective motivation is immaterial.” Id. at 1072, 46
USPQ2d at 1107. CSU has alleged that Xerox misused its patents but has not
claimed that Xerox’s patent infringement counterclaims were shams.
To support its argument that Xerox illegally sought to leverage its
presumably legitimate dominance in the equipment and parts market into
dominance in the service market, CSU relies on a footnote in Eastman Kodak
Co. v. Image Technical Services, Inc., 504 U.S. 451, 480 n. 29, 112 S.Ct. 2072,
2089 n. 29, 119 L.Ed.2d 265 (1992), that “[t]he Court has held many times that
power gained through some natural and legal advantage such as a patent, . . .
can give rise to liability if ‘a seller exploits his dominant position in one market
to expand his empire into the next.’ ” Notably, Kodak was a tying case when it
came before the Supreme Court, and no patents had been asserted in defense
of the antitrust claims against Kodak. Conversely, there are no claims in this
case of illegally tying the sale of Xerox’s patented parts to unpatented products.
Therefore, the issue was not resolved by the Kodak language cited by CSU.
Properly viewed within the framework of a tying case, the footnote can be
interpreted as restating the undisputed premise that the patent holder cannot
use his statutory right to refuse to sell patented parts to gain a monopoly in a
market beyond the scope of the patent. See, e.g., Atari Games Corp. v.
Nintendo of Am., Inc., 897 F.2d 1572, 1576, 14 USPQ2d 1034, 1037
(Fed.Cir.1990) (“[A] patent owner may not take the property right granted by
a patent and use it to extend his power in the marketplace improperly, i.e.
beyond the limits of what Congress intended to give in the patent laws.”).
The cited language from Kodak does nothing to limit the right of the
patentee to refuse to sell or license in markets within the scope of the statutory
patent grant. In fact, we have expressly held that, absent exceptional
circumstances, a patent may confer the right to exclude competition altogether
in more than one antitrust market. See B. Braun Med., Inc. v. Abbott Lab., 124
F.3d 1419, 1427 n. 4, 43 USPQ2d 1896, 1902 n. 4 (Fed.Cir.1997) (patentee had
right to exclude competition in both the market for patented valves and the
market for extension sets incorporating patented valves).
CSU further relies on the Ninth Circuit’s holding on remand in Image
Technical Services that “ ‘while exclusionary conduct can include a
monopolist’s unilateral refusal to license a [patent] or to sell its patented . . .
work, a monopolist’s ‘desire to exclude others from its [protected] work is a
presumptively valid business justification for any immediate harm to
consumers.’ ” 125 F.3d at 1218, 44 USPQ2d at 1081 (citing Data General Corp.
v. Grumman Sys. Support Corp., 36 F.3d 1147, 1187, 32 USPQ2d 1385, 1417
(1st Cir.1994)). By that case, the Ninth Circuit adopted a rebuttable
presumption that the exercise of the statutory right to exclude provides a valid
business justification for consumer harm, but then excused as harmless the
district court’s error in failing to give any instruction on the effect of

202

CH. 1

intellectual property rights on the application of the antitrust laws. See id. at
1219–20, 44 USPQ2d at 1081. It concluded that the jury must have rejected
the presumptively valid business justification as pretextual. See id. This logic
requires an evaluation of the patentee’s subjective motivation for refusing to
sell or license its patented products for pretext. We decline to follow Image
Technical Services.
We have held that “if a [patent infringement] suit is not objectively
baseless, an antitrust defendant’s subjective motivation is immaterial.”
Nobelpharma, 141 F.3d at 1072, 46 USPQ2d at 1107. We see no more reason
to inquire into the subjective motivation of Xerox in refusing to sell or license
its patented works than we found in evaluating the subjective motivation of a
patentee in bringing suit to enforce that same right. In the absence of any
indication of illegal tying, fraud in the Patent and Trademark Office, or sham
litigation, the patent holder may enforce the statutory right to exclude others
from making, using, or selling the claimed invention free from liability under
the antitrust laws. We therefore will not inquire into his subjective motivation
for exerting his statutory rights, even though his refusal to sell or license his
patented invention may have an anticompetitive effect, so long as that
anticompetitive effect is not illegally extended beyond the statutory patent
grant. See Glass Equip. Dev., 174 F.3d at 1343, 50 USPQ2d at 1304. It is the
infringement defendant and not the patentee that bears the burden to show
that one of these exceptional situations exists and, in the absence of such proof,
we will not inquire into the patentee’s motivations for asserting his statutory
right to exclude. Even in cases where the infringement defendant has met this
burden, which CSU has not, he must then also prove the elements of the
Sherman Act violation.
We answer the threshold question of whether Xerox’s refusal to sell its
patented parts exceeds the scope of the patent grant in the negative. Therefore,
our inquiry is at an end. Xerox was under no obligation to sell or license its
patented parts and did not violate the antitrust laws by refusing to do so.
B.
The Copyright Act expressly grants a copyright owner the exclusive right
to distribute the protected work by “transfer of ownership, or by rental, lease,
or lending.” 17 U.S.C. § 106(3) (1996). “[T]he owner of the copyright, if [it]
pleases, may refrain from vending or licensing and content [itself] with simply
exercising the right to exclude others from using [its] property.” Data General,
36 F.3d at 1186, 32 USPQ2d at 1416 (citing Fox Film Corp. v. Doyal, 286 U.S.
123, 127, 52 S.Ct. 546, 547, 76 L.Ed. 1010 (1932)).
The Supreme Court has made clear that the property right granted by
copyright law cannot be used with impunity to extend power in the
marketplace beyond what Congress intended. See United States v. Loew’s,
Inc., 371 U.S. 38, 47–48, 83 S.Ct. 97, 103–04, 9 L.Ed.2d 11 (1962) (block
booking of copyrighted motion pictures is illegal tying in violation of Sherman
Act). The Court has not, however, directly addressed the antitrust implications
of a unilateral refusal to sell or license copyrighted expression.

CH. 1

203

The Tenth Circuit has not addressed in any published opinion the extent
to which the unilateral refusal to sell or license copyrighted expression can
form the basis of a violation of the Sherman Act. We are therefore left to
determine how that circuit would likely resolve the issue; the precedent of
other circuits is instructive in that consideration. The Fourth Circuit has
rejected a claim of illegal tying, supported only by evidence of a unilateral
decision to license copyrighted diagnostic software to some but not to others.
See Service & Training, Inc. v. Data General Corp., 963 F.2d 680, 686, 23
USPQ2d 1102, 1106 (4th Cir.1992). In reaching this conclusion, the court
recognized the copyright owner’s exclusive right to “sell, rent, lease, lend, or
otherwise distribute copies of a copyrighted work,” id. (citing 17 U.S.C. §
106(3)), and concluded that “Section 1 of the Sherman Act does not entitle ‘a
purchaser . . . to buy a product that the seller does not wish to offer for sale.’ ”
Id. (citing Jefferson Parish Hosp. Dist. v. Hyde, 466 U.S. 2, 24 n. 40, 104 S.Ct.
1551, 80 L.Ed.2d 2 (1984)).
Perhaps the most extensive analysis of the effect of a unilateral refusal to
license copyrighted expression was conducted by the First Circuit in Data
General Corp. v. Grumman Systems Support Corp., 36 F.3d 1147, 32 USPQ2d
1385. There, the court noted that the limited copyright monopoly is based on
Congress’ empirical assumption that the right to “exclude others from using
their works creates a system of incentives that promotes consumer welfare in
the long term by encouraging investment in the creation of desirable artistic
and functional works of expression. . . . We cannot require antitrust defendants
to prove and reprove the merits of this legislative assumption in every case
where a refusal to license a copyrighted work comes under attack.” Id. at 1186–
87, 36 F.3d 1147, 32 USPQ2d at 1416. The court went on to establish as a legal
standard that “while exclusionary conduct can include a monopolist’s
unilateral refusal to license a copyright, an author’s desire to exclude others
from use of its copyrighted work is a presumptively valid business justification
for any immediate harm to consumers.” See id. at 1187, 36 F.3d 1147, 32
USPQ2d at 1417. The burden to overcome this presumption was firmly placed
on the antitrust plaintiff. The court gave no weight to evidence showing
knowledge that developing a proprietary position would help to maintain a
monopoly in the service market in the face of contrary evidence of the
defendant’s desire to develop state-of-the-art diagnostic software to enhance
its service and consumer benefit. See id. at 1188–89, 36 F.3d 1147, 32 USPQ2d
at 1418.
As discussed above, the Ninth Circuit adopted a modified version of this
Data General standard. Both courts agreed that the presumption could be
rebutted by evidence that “the monopolist acquired the protection of the
intellectual property laws in an unlawful manner.” Image Technical Servs.,
125 F.3d at 1219, 44 USPQ2d at 1082 (citing Data General, 36 F.3d at 1188,
32 USPQ2d at 1418). The Ninth Circuit, however, extended the possible means
of rebutting the presumption to include evidence that the defense and
exploitation of the copyright grant was merely a pretextual business
justification to mask anticompetitive conduct. See id. The hazards of this
approach are evident in both the path taken and the outcome reached. The jury

204

CH. 1

in that case was instructed to examine each proffered business justification for
pretext, and no weight was given to the intellectual property rights in the
instructions. See id. at 1218, 1220 n. 12, 44 USPQ2d at 1082 n. 12. This
permitted the jury to second guess the subjective motivation of the copyright
holder in asserting its statutory rights to exclude under the copyright laws
without properly weighing the presumption of legitimacy in asserting its rights
under the copyright laws. While concluding that the failure to weigh the
intellectual property rights was an abuse of discretion, the Ninth Circuit
nevertheless held the error harmless because it thought the jury must have
rejected the presumptive validity of asserting the copyrights as pretextual. See
id. at 1219–20, 125 F.3d 1195, 44 USPQ2d at 1081–82. This is in reality a
significant departure from the First Circuit’s central premise that rebutting
the presumption would be an uphill battle and would only be appropriate in
those rare cases in which imposing antitrust liability is unlikely to frustrate
the objectives of the Copyright Act. See Data General, 36 F.3d at 1187 n. 64,
1188, 32 USPQ2d at 1417 n. 64.
We believe the First Circuit’s approach is more consistent with both the
antitrust and the copyright laws and is the standard that would most likely be
followed by the Tenth Circuit in considering the effect of Xerox’s unilateral
right to refuse to license or sell copyrighted manuals and diagnostic software
on liability under the antitrust laws. We therefore reject CSU’s invitation to
examine Xerox’s subjective motivation in asserting its right to exclude under
the copyright laws for pretext, in the absence of any evidence that the
copyrights were obtained by unlawful means or were used to gain monopoly
power beyond the statutory copyright granted by Congress. In the absence of
such definitive rebuttal evidence, Xerox’s refusal to sell or license its
copyrighted works was squarely within the rights granted by Congress to the
copyright holder and did not constitute a violation of the antitrust laws.
CONCLUSION
Accordingly, the judgment of the United States District Court for the
District of Kansas is affirmed.

2. STANDING
EDEN TOYS, INC. V. FLORELEE UNDERGARMENT CO., INC.
United States Court of Appeals, Second Circuit
Dec. 2, 1982
697 F.2d 27

MANSFIELD, Circuit Judge:

CH. 1

205

Eden Toys, Inc. (“Eden”) appeals from an order of the Southern District of
New York granting summary judgment dismissing its claim against
Florelee Undergarment Co., Inc. (“Florelee”) for copyright infringement.
*** We affirm in part and reverse and remand in part.
The subject of this case is the alleged copying of a drawing of the
copyrighted fictional character Paddington Bear, the central figure in a
series of children’s books written by Michael Bond.1 Paddington and
Company, Limited (“Paddington”), a British corporation, holds all rights to
these books, and to the characters therein. In 1975 Paddington entered into
an agreement with Eden, an American corporation, granting Eden
exclusive North American rights to produce and sell, and to sublicense the
production and sale of, a number of Paddington products. This agreement
was amended in 1980 to grant Eden the exclusive North American rights
to produce and sublicense all Paddington products except books, tapes and
records, stage plays, motion pictures, and radio and television productions.
At some point between 1975 and 1977 Ivor Wood, the illustrator of the
Paddington Bear books, drew a series of sketches (“the Ivor Wood
sketches”) for the use of Eden and its sublicensees. There is evidence in the
record that in July 1980 Eden obtained in its own name U.S. copyright
registration certificate No. TXU 50–185 for these sketches as “derivative”
works. Using the Ivor Wood sketches as a point of departure, the C.R.
Gibson Company (“Gibson”), pursuant to a sublicense from Eden, produced
a design for gift wrap that included seven drawings of Paddington Bear
(“the Eden/Gibson drawings”). This gift wrap was first published in
January 1978. In March 1980, Eden registered the gift wrap design with
the Copyright Office as a derivative work.
In November 1979, Eden discovered that Florelee was selling a nightshirt
featuring a print of a bear later found by the district court to be “identical
in almost all respects” to one of the Eden/Gibson drawings of Paddington
Bear. The nightshirt bore the legend “© Fred Original.” After discovering
a second nightshirt with the same apparent “knockoff” of the Eden/Gibson
drawing Eden filed suit against Florelee in April 1980, alleging both that
Florelee had violated Eden’s rights under the Copyright Act and that
Florelee had made a “false designation of origin” or “false description” of its
product, in violation of § 43(a) of the Lanham Act by printing “© Fred
Original” on its shirts. Following cross-motions for summary judgment,
Judge Carter granted Florelee’s motion for summary judgment dismissing
the copyright claim, and Eden’s motion for summary judgment enforcing
the Lanham Act claim.
Reprinted below are (1) a drawing from page 8 of The Great Big Paddington
Book, copyrighted by Paddington; (2) the Ivor Wood sketch used as a model

206

CH. 1

by Gibson, and apparently copyrighted by Eden; (3) the Eden/Gibson
drawing, copyrighted by Eden and infringed by Florelee, and (4) Florelee’s
“Fred Bear” drawing.

Drawing of original Paddington Bear, from pre-existing book copyrighted
by Paddington. U.S. Copyright Reg. No. VA 11-588.

Ivor Wood sketch, apparently copyrighted by Eden. (See App. 165a-166a.)
U.S. Copyright Reg. No. TXU 50-185.

Eden/Gibson drawing, copyrighted by Eden. U.S. Copyright Reg. No. VA
44-638.

Defendant’s “Fred Bear” drawing.

DISCUSSION
The Copyright Act authorizes only two types of claimants to sue for
copyright infringement: (1) owners of copyrights, and (2) persons who have
been granted exclusive licenses by owners of copyrights. 17 U.S.C. § 501(b).
Within the first category are both those who hold copyrights on wholly new
material, and those who hold copyrights on derivative works, based
substantially on pre-existing materials. 17 U.S.C. § 103(a).
In the present case, Eden claims to be the owner of the copyrights in certain
derivative works—the Eden/Gibson drawing (No. 3 above) and the Ivor
Wood sketch (No. 2 above), upon which No. 3 is based—and the exclusive
licensee of certain rights under Paddington’s original copyrights. We
discuss each of these in turn. Eden’s complaint is limited to claims based
on its ownership of the Eden/Gibson copyrighted drawing (No. 3 above); by
express or implied consent of the parties, Eden’s claims as exclusive
licensee of certain rights under the original copyrighted Paddington
drawings (No. 1 above) were also considered by the court. Eden’s later

CH. 1

207

motion to add a claim based on its ownership of the Ivor Wood copyrighted
drawings was denied but will be granted on remand.
Eden’s Claims as Copyright Owner
Assuming that, upon remand and amendment of the complaint to add its
claim based upon the Ivor Wood copyrighted sketch (No. 2 above) derived
from pre-existing Paddington Bear drawings (such as No. 1), Eden were
found to be the owner of U.S. Copyright No. TXU 50–185, registered July
22, 1980, which covers the Ivor Wood sketch, Eden would be entitled to
copyright protection for any novel additions made by this work to the
existing copyrighted drawings of Paddington. G. Ricordi & Co. v.
Paramount Pictures, 189 F.2d 469, 471 (2d Cir.1951). The fact that Eden
apparently did not register this copyright (or the Eden/Gibson copyright)
until after Florelee’s alleged infringement does not preclude Eden from
recovering for infringement of these copyrights occurring before the date of
registration. See 17 U.S.C. § 411. However, Eden’s delay in registering the
copyrights would preclude it from claiming either attorney’s fees or
statutory damages. 17 U.S.C. § 412.
Similarly, Eden’s copyrighted Eden/Gibson drawing (No. 3 above)
registered on March 7, 1980, as No. VA 44–638 and the balance of its gift
wrap design represent derivative works based on the copyrighted Ivor
Wood sketches (including No. 2 above).
The district court’s finding that Paddington rather than Eden holds the
copyrights in the Ivor Wood sketch appears to be incorrect. The record
contains a copy of an apparently valid U.S. Copyright Certificate, Reg. No.
TXU 50–185, dated July 22, 1980, issued to Eden for “adaptation of designs
and additional artistic work” based on “the copyrighted Paddington Bear
series of books by Michael Bond, including ‘The Great Big Paddington
Book.’” We therefore remand the issue to the district court for
redetermination of ownership following amendment of the complaint to add
the claim based on the copyrighted Ivor Wood sketch. In addition, the
district court found or at least strongly implied that Eden’s copyright in the
Eden/Gibson drawing was invalid because the changes made by Gibson to
the pre-existing Ivor Wood sketch were too insignificant to qualify the
drawing as an “original work” under the Copyright Act. In so finding,
however, the district court applied a test that erroneously mingled the
standard for sufficient originality and the test for infringement. The
standard for sufficient originality is whether a work contains “some
substantial, not merely trivial, originality.” L. Batlin & Sons, Inc. v.
Snyder, 536 F.2d 486, 490 (2d Cir.) (en banc), cert. denied, 429 U.S. 857, 97
S.Ct. 156, 50 L.Ed.2d 135 (1976); Chamberlin v. Uris Sales Corp., 150 F.2d
512, 513 (2d Cir.1945). The standard for copyright infringement, by

208

CH. 1

contrast, is whether the defendant’s work is “substantially similar” to the
plaintiff’s work. Warner Bros., Inc. v. American Broadcasting Co., 654 F.2d
204, 208 (2d Cir.1981).
The difference between these two tests is not merely academic. A work
which makes non-trivial contributions to an existing one may be
copyrighted as a derivative work and yet, because it retains the “same
aesthetic appeal” as the original work, render the holder liable for
infringement of the original copyright if the derivative work were to be
published without permission from the owner of the original copyright. An
example is the second edition of a textbook, which is copyrightable even
though it makes only minor revisions of or additions to the first edition. By
its very nature a “derivative” work, which is copyrightable as such, borrows
substantially from existing works, and is so defined. 17 U.S.C. § 101 (Supp.
IV 1980). Yet it is entitled to registration as a copyrighted work even
though it would infringe the original copyrighted work if it were created
without the permission of the owner of copyright in the underlying work.
United States v. Taxe, 540 F.2d 961, 965 n. 2 (9th Cir.1976), cert. denied,
429 U.S. 1040, 97 S.Ct. 737, 50 L.Ed.2d 751 (1977).
In this case, the Eden/Gibson variations of the Ivor Wood sketch, although
too minor to entitle the Eden/Gibson work to claim a different aesthetic
appeal, are still original and substantial enough to deserve independent
copyright protection. The numerous changes made by Gibson—the changed
proportions of the hat, the elimination of individualized fingers and toes,
the overall smoothing of lines—combine to give the Eden/Gibson drawing
a different, cleaner “look” than the Ivor Wood sketch on which it is based.
Such a contribution satisfies the minimal requirements of originality for
registration under the Copyright Act. Durham Industries v. Tomy Corp.,
630 F.2d 905, 910 (2d Cir.1980). Since the factual question here depends
entirely on visual comparison of exhibits, we are in as good a position as
the district court to judge the originality of the work in question. Taylor v.
Lombard, 606 F.2d 371, 372 (2d Cir.1979); Jack Kahn Music Co. v. Baldwin
Piano and Organ Co., 604 F.2d 755, 758 (2d Cir.1979). To the extent that
the district court applied the proper test for originality, its finding of
insufficient originality was erroneous. To the extent that the district court
applied the Peter Pan Fabrics test for copyright infringement as the test
for determining originality, the district court erred as a matter of law. The
Ivor Wood variations (No. 2 above) from the original Paddington sketch
(No. 1 above), while retaining the same aesthetic appeal as the original, are
even more pronounced and substantial than Gibson’s contributions to the
Ivor Wood sketch and hence clearly meet the requirements of the Copyright
Act for originality entitling the owner to registration. Durham Industries
v. Tomy Corp., supra, 630 F.2d at 910.

CH. 1

209

Thus, assuming that the district court upon remand finds that Eden holds
a valid copyright in the Ivor Wood sketch, this case involves three
successive tiers of valid copyrights in designs of the Paddington Bear. The
first copyrighted tier (No. 1 above), belonging to Paddington, consists of a
body of illustrations of Paddington Bear in the books or other publications
copyrighted by Paddington. The second tier (No. 2 above) consists of the
new contributions made by the Ivor Wood sketch to the existing body of
Paddington Bear illustrations. Rights to these contributions are apparently
owned by Eden, which claims to hold the copyright to that sketch. Finally,
the third tier (No. 3 above) consists of the new contributions made by
Gibson in transforming the Ivor Wood sketch into the Eden/Gibson
drawing. Rights to these contributions are held by Eden, which copyrighted
the Eden/Gibson drawing.
Thus, whatever the outcome of the exclusive license issue discussed below,
Eden appears to be entitled to recover for the cumulative contributions
made by the Ivor Wood sketch and the Eden/Gibson drawing to the existing
body of Paddington Bear illustrations. The remaining issue, whether
Florelee infringed Eden’s copyrights, requires little discussion. As the
district court noted, the Florelee print is “identical in almost all respects”
to one of the validly copyrighted Eden/Gibson drawings and in view of the
close resemblance of the Florelee print to the copyrighted Ivor Wood sketch
the same observation applies with respect to Eden’s contention that
Florelee infringed the Ivor Wood copyright.
Assuming that Florelee infringed either or both of Eden’s copyrights in the
derivative works, the fact that the Eden/Gibson drawing was printed on
gift wrap while the Florelee design was printed on clothing is irrelevant.
No one may copy another’s novel additions in a derivative work, even if the
copier employs a medium different from that used by the holder of the
derivative copyright. Davis v. E.I. DuPont deNemours & Co., 240 F.Supp.
612 (S.D.N.Y.1965).
Eden’s Claim as Exclusive Licensee
Eden also sues for infringement as exclusive North American licensee for
certain Paddington Bear products. An exclusive licensee of a right under a
copyright is entitled to bring suits for infringement “of that particular
right,” 17 U.S.C. § 501(b) (Supp. IV 1980), without being required to join
his licensor. 3 M. Nimmer, supra, § 12.02, at 12–24 (1981). The question,
then, is whether Eden was the exclusive licensee of the right allegedly
infringed by Florelee, i.e., the right to produce images of Paddington Bear
on adult clothing. Florelee argues correctly that adult clothing was clearly
not among the “licensed products” listed in the 1975 agreement between
Eden and Paddington, and concludes from this fact that Eden was not the
exclusive licensee of this right at the time the allegedly infringing garments

210

CH. 1

were sold in 1979. Eden responds that at that time Eden was operating
under an informal understanding with Paddington, later formalized in the
1980 amendment to the 1975 agreement, that gave Eden the exclusive
North American rights to produce any Paddington Bear product except
books, records, and a few other items not relevant here.
Under the pre-1978 copyright law, exclusive licenses could be granted
orally or by conduct. Id., § 10.03[B][1], at 10–37 (1980). Under the new
Copyright Act, however, Eden’s claim of an informal grant of an exclusive
license seemingly must fail in light of the statute of frauds provision of the
new Act, which states that an exclusive license “is not valid unless an
instrument of conveyance, or a note or memorandum of the transfer, is in
writing and signed by the owner of the rights conveyed....” 17 U.S.C. §
204(a) (Supp. IV 1980). However, since the purpose of the provision is to
protect copyright holders from persons mistakenly or fraudulently claiming
oral licenses, the “note or memorandum of the transfer” need not be made
at the time when the license is initiated; the requirement is satisfied by the
copyright owner’s later execution of a writing which confirms the
agreement. See Dan-Dee Imports, Inc. v. Well-Made Toy Mfg. Corp., 524
F.Supp. 615, 618–19 (E.D.N.Y.1981). In this case, in which the copyright
holder appears to have no dispute with its licensee on this matter, it would
be anomalous to permit a third party infringer to invoke this provision
against the licensee.
Since the district court rejected as a matter of law the notion that
Paddington could orally or through conduct grant an exclusive license to
Eden, it made no findings on the issue of whether Paddington had in fact
granted Eden such an informal license at any time during Florelee’s
apparent infringement, and whether that understanding was ever
committed to writing. We therefore remand for findings on this issue.
If Paddington granted Eden an informal exclusive license to sell
Paddington Bear products in the market in which Florelee sold—adult
clothing—and that informal license was later confirmed in a writing signed
by Paddington, Eden may sue in its own name, without joining Paddington,
for infringement of any Paddington-owned copyrights in that market.
Combined with Eden’s rights in the derivative work(s) discussed earlier,
Eden would be entitled to sue for all damages caused by Florelee’s
infringement of the Eden/Gibson version of Paddington Bear.
If the district court finds that no such informal understanding existed, or
that such an understanding was never memorialized, Paddington, which
has expressed a willingness to be made a co-plaintiff in this lawsuit, should
be joined as a plaintiff. The district court has the power to order the joinder
of “any person having or claiming an interest in the copyright [at issue].”

CH. 1

211

17 U.S.C. § 501(b) (Supp. IV 1980). In this case, the exercise of that power
would clearly be appropriate if Paddington in fact owns some of the rights
apparently infringed by Florelee. The equities in this case lie heavily in
favor of Eden, and it would be unjust to deny redress to Eden because of an
easily remediable procedural defect. ***
The judgment of the district court dismissing Eden’s claim of copyright
infringement is reversed and the copyright infringement aspects of the case
are remanded for further proceedings consistent with this opinion. ***

3. CHOICE OF LAW
ITAR–TASS RUSSIAN NEWS AGENCY V. RUSSIAN KURIER, INC.
United States Court of Appeals, Second Circuit
Decided Aug. 27, 1998
153 F.3d 82

JON O. NEWMAN, Circuit Judge:
This appeal primarily presents issues concerning the choice of law in
international copyright cases and the substantive meaning of Russian
copyright law as to the respective rights of newspaper reporters and
newspaper publishers. The conflicts issue is which country’s law applies to
issues of copyright ownership and to issues of infringement. The primary
substantive issue under Russian copyright law is whether a newspaper
publishing company has an interest sufficient to give it standing to sue for
copying the text of individual articles appearing in its newspapers, or
whether complaint about such copying may be made only by the reporters
who authored the articles. Defendants-appellants Russian Kurier, Inc.
(“Kurier”) and Oleg Pogrebnoy (collectively “the Kurier defendants”) appeal
from the March 25, 1997, judgment of the District Court for the Southern
District of New York (John G. Koeltl, Judge) enjoining them from copying
articles that have appeared or will appear in publications of the plaintiffsappellees, mainly Russian newspapers and a Russian news agency, and
awarding the appellees substantial damages for copyright infringement.
On the conflicts issue, we conclude that, with respect to the Russian
plaintiffs, Russian law determines the ownership and essential nature of
the copyrights alleged to have been infringed and that United States law
determines whether those copyrights have been infringed in the United
States and, if so, what remedies are available. We also conclude that

212

CH. 1

Russian law, which explicitly excludes newspapers from a work-for-hire
doctrine, vests exclusive ownership interests in newspaper articles in the
journalists who wrote the articles, not in the newspaper employers who
compile their writings. We further conclude that to the extent that Russian
law accords newspaper publishers an interest distinct from the copyright
of the newspaper reporters, the publishers’ interest, like the usual
ownership interest in a compilation, extends to the publishers’ original
selection and arrangement of the articles, and does not entitle the
publishers to damages for copying the texts of articles contained in a
newspaper compilation. We therefore reverse the judgment to the extent
that it granted the newspapers relief for copying the texts of the articles.
However, because one non-newspaper plaintiff-appellee is entitled to some
injunctive relief and damages and other plaintiffs-appellees may be
entitled to some, perhaps considerable, relief, we also remand for further
consideration of this lawsuit.
Background
The lawsuit concerns Kurier, a Russian language weekly newspaper with
a circulation in the New York area of about 20,000. It is published in New
York City by defendant Kurier. Defendant Pogrebnoy is president and sole
shareholder of Kurier and editor-in-chief of Kurier. The plaintiffs include
corporations that publish, daily or weekly, major Russian language
newspapers in Russia and Russian language magazines in Russia or Israel;
Itar–Tass Russian News Agency (“Itar–Tass”), formerly known as the
Telegraph Agency of the Soviet Union (TASS), a wire service and news
gathering company centered in Moscow, functioning similarly to the
Associated Press; and the Union of Journalists of Russia (“UJR”), the
professional writers union of accredited print and broadcast journalists of
the Russian Federation.
The Kurier defendants do not dispute that Kurier has copied about 500
articles that first appeared in the plaintiffs’ publications or were
distributed by Itar–Tass. The copied material, though extensive, was a
small percentage of the total number of articles published in Kurier. The
Kurier defendants also do not dispute how the copying occurred: articles
from the plaintiffs’ publications, sometimes containing headlines, pictures,
bylines, and graphics, in addition to text, were cut out, pasted on layout
sheets, and sent to Kurier ‘s printer for photographic reproduction and
printing in the pages of Kurier.
Most significantly, the Kurier defendants also do not dispute that, with one
exception, they had not obtained permission from any of the plaintiffs to
copy the articles that appeared in Kurier. Pogrebnoy claimed at trial to
have received permission from the publisher of one newspaper, but his

CH. 1

213

claim was rejected by the District Court at trial. ***
Preliminary injunction ruling. After a hearing in May 1995, the District
Court issued a preliminary injunction, prohibiting the Kurier defendants
from copying the “works” of four plaintiff news organizations. ***
Preliminarily, the Court ruled that the request for a preliminary injunction
concerned articles published after March 13, 1995, the date that Russia
acceded to the Berne Convention. The Court then ruled that the copied
works were “Berne Convention work[s],” 17 U.S.C. § 101, and that the
plaintiffs’ rights were to be determined according to Russian copyright law.
The Court noted that under Russian copyright law authors of newspaper
articles retain the copyright in their articles unless there has been a
contractual assignment to their employer or some specific provision of law
provides that the author’s rights vest in the employer. Since the defendants
alleged no claim of a contractual assignment, the Court next considered the
provision of the 1993 Russian Federation Law on Copyright and
Neighboring Rights (“Russian Copyright Law”) (World Intellectual
Property Organization (WIPO) translation) concerning what the United
States Copyrights Act calls “works made for hire,” 17 U.S.C. § 201(b). See
Russian Copyright Law, Art. 14(2). That provision gives employers the
exclusive right to “exploit” the “service-related work” produced by
employees in the scope of their employment, absent some contractual
arrangement. However, the Court noted, Article 14(4) specifies that
subsection 2 does not apply to various categories of works, including
newspapers. Accepting the view of plaintiffs’ expert, Professor Vratislav
Pechota, Judge Koeltl therefore ruled that the Russian version of the workfor-hire doctrine in Article 14(2), though exempting newspapers, applies to
press agencies, like Itar–Tass.
Turning to the rights of the newspapers, Judge Koeltl relied on Article 11,
captioned “Copyright of Compiler of Collections and Other Works.” This
Article contains two subsections. Article 11(1) specifies the rights of
compilers generally:
The author of a collection or any other composite work
(compiler) shall enjoy copyright in the selection or
arrangement of subject matter that he has made insofar as
that selection or arrangement is the result of a creative
effort of compilation.
The compiler shall enjoy copyright subject to respect for the rights of the
authors of each work included in the composite work.
Each of the authors of the works included in the composite work shall have
the right to exploit his own work independently of the composite work

214

CH. 1

unless the author’s contract provides otherwise.
....
Russian Copyright Law, Art. 11(1). Article 11(2), the interpretation of
which is critical to this appeal, specifies the rights of compilers of those
works that are excluded from the work-for-hire provision of Article 14(2):
The exclusive right to exploit encyclopedias, encyclopedic dictionaries,
collections of scientific works—published in either one or several
installments—newspapers, reviews and other periodical publications shall
belong to the editor1 thereof. The editor shall have the right to mention his
name or to demand such mention whenever the said publications are
exploited.
The authors of the works included in the said publications shall retain the
exclusive rights to exploit their works independently of the publication of
the whole work.
Id., Art. 11(2). In another translation of the Russian Copyright Law, which
was in evidence at the trial, the last phrase of Article 11(2) was rendered
“independently from the publication as a whole.” Russian Copyright Law,
Art. 11(2) (Newton Davis translation). Because the parties’ experts focused
on the phrase “as a whole” in the Davis translation of Article 11(2), we will
rely on the Davis translation for the rendering of this key phrase of Article
11(2), but all other references to the Russian Copyright Law will be to the
WIPO translation.
The District Court acknowledged, as the plaintiffs’ expert had stated, that
considerable scholarly debate existed in Russia as to the nature of a
publisher’s right “in a work as a whole.” Judge Koeltl accepted Professor
Pechota’s view that the newspaper could prevent infringing activity
“sufficient to interfere with the publisher’s interest in the integrity of the
work.” Without endeavoring to determine what extent of copying would
“interfere with” the “integrity of the work,” Judge Koeltl concluded that a
preliminary injunction was warranted because what Kurier had copied was
“the creative effort of the newspapers in the compilation of articles
including numerous articles for the same issues, together with headlines
and photographs.” The Court’s preliminary injunction opinion left it
unclear whether at trial the plaintiffs could obtain damages only for
copying the newspapers’ creative efforts as a compiler, such as the selection
and arrangement of articles, the creation of headlines, and the layout of
text and graphics, or also for copying the text of individual articles.
Expert testimony at trial. [Extensive discussion of expert testimony
omitted.]

CH. 1

215

Trial ruling. The District Court resolved the dispute among the experts by
accepting Newcity’s interpretation of Russian copyright law. As he had
previously ruled in granting the preliminary injunction, Judge Koeltl
recognized that newspapers acquire no rights to individual articles by
virtue of Article 14 since the Russian version of the work-for-hire doctrine
is inapplicable to newspapers. Nevertheless, Judge Koeltl accepted
Newcity’s view of Article 11, relying on both the movement of the phrase
“as a whole” from the first paragraph of Article 11(2) to the second
paragraph of Article 11(2), and the opinion of the Informational Disputes
Chamber. He also reasoned that publishers have “the real economic
incentive to prevent wholesale unauthorized copying,” and that, in the
absence of assignments of rights to individual articles, widespread copying
would occur if publishers could not prevent Kurier ‘s infringements.
The District Court estimated Kurier ‘s profits during the relevant years at
$2 million and found that 25 percent of these profits were attributable to
the copied articles. The Court therefore awarded the plaintiffs $500,000 in
actual damages against Kurier and Pogrebnoy. The Court also ruled that
the plaintiffs were entitled to statutory damages with respect to 28 articles
for which the plaintiffs had obtained United States copyright registrations.
The Court found that the registered articles had originally appeared in 15
different publications and concluded that the plaintiffs were entitled to 15
awards of statutory damages. The Court found the violations willful, see
17 U.S.C. § 504(c)(1), and set each statutory award at $2,700. However, to
avoid duplicative recovery, the Court ruled that the actual and statutory
damages could not be aggregated and afforded the plaintiffs their choice of
whether to receive statutory damages (offsetting the statutory award from
the actual damages award) or actual damages. ***
Discussion
I. Choice of Law
The threshold issue concerns the choice of law for resolution of this dispute.
That issue was not initially considered by the parties, all of whom turned
directly to Russian law for resolution of the case. Believing that the
conflicts issue merited consideration, we requested supplemental briefs
from the parties and appointed Professor William F. Patry as Amicus
Curiae. Prof. Patry has submitted an extremely helpful brief on the choice
of law issue.
Choice of law issues in international copyright cases have been largely
ignored in the reported decisions and dealt with rather cursorily by most
commentators. Examples pertinent to the pending appeal are those
decisions involving a work created by the employee of a foreign corporation.
Several courts have applied the United States work-for-hire doctrine, see

216

CH. 1

17 U.S.C. § 201(b), without explicit consideration of the conflicts issue. See,
e.g., Aldon Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548, 551–53 (2d
Cir.1984) (U.S. law applied to determine if statuettes crafted abroad were
works for hire); Dae Han Video Productions, Inc. v. Kuk Dong Oriental
Food, Inc., 19 U.S.P.Q.2d 1294 (D.Md.1990) (U.S. law applied to determine
if scripts written abroad were works for hire); P & D International v.
Halsey Publishing Co., 672 F.Supp. 1429, 1435–36 (S.D.Fla.1987) (U.S.
work-for-hire law assumed to apply). Other courts have applied foreign
law. See Frink America, Inc. v. Champion Road Machinery Ltd., 961
F.Supp. 398 (N.D.N.Y.1997) (Canadian copyright law applied on issue of
ownership); Greenwich Film Productions v. DRG Drugs Inc., 1992 WL
279357 (S.D.N.Y. Sept. 25, 1992) (French law applied to determine
ownership of right to musical work commissioned in France for French
film); Dae Han Video Production Inc. v. Doug San Chun, 17 U.S.P.Q.2d
1306, 1310 n. 6, 1990 WL 265976 (E.D.Va. June 18, 1990) (foreign law
relied on to determine that alleged licensor lacks rights); see also Autoskill,
Inc. v. National Educational Support Systems, Inc., 994 F.2d 1476, 1489 n.
16 (10th Cir.1993) (U.S. work-for-hire law applied where claim that
contrary Canadian law should apply was belatedly raised and for that
reason not considered); Pepe (U.K.) Ltd. v. Grupo Pepe Ltda., 24
U.S.P.Q.2d 1354, 1356 (S.D.Fla.1992) (congruent foreign and U.S. law both
applied). In none of these cases, however, was the issue of choice of law
explicitly adjudicated. The conflicts issue was identified but ruled not
necessary to be resolved in Greenwich Film Productions S.A. v. D.R.G.
Drugs, Inc., 25 U.S.P.Q.2d 1435, 1437–38 (S.D.N.Y.1992).
The Nimmer treatise briefly (and perhaps optimistically) suggests that
conflicts issues “have rarely proved troublesome in the law of copyright.”
Nimmer on Copyright § 17.05 (1998) (“Nimmer”). Relying on the “national
treatment” principle of the Berne Convention and the Universal Copyright
Convention (“U.C.C.”), Nimmer asserts, correctly in our view, that “an
author who is a national of one of the member states of either Berne or the
U.C.C., or one who first publishes his work in any such member state, is
entitled to the same copyright protection in each other member state as
such other state accords to its own nationals.” Id. Nimmer then somewhat
overstates the national treatment principle: “The applicable law is the
copyright law of the state in which the infringement occurred, not that of
the state of which the author is a national, or in which the work is first
published.” Id. The difficulty with this broad statement is that it subsumes
under the phrase “applicable law” the law concerning two distinct issues—
ownership and substantive rights, i.e., scope of protection. Another
commentator has also broadly stated the principle of national treatment,
but described its application in a way that does not necessarily cover issues
of ownership. “The principle of national treatment also means that both
the question of whether the right exists and the question of the scope of the

CH. 1

217

right are to be answered in accordance with the law of the country where
the protection is claimed.” S.M. Stewart, International Copyright and
Neighboring Rights § 3.17 (2d ed. 1989). We agree with the view of the
Amicus that the Convention’s principle of national treatment simply
assures that if the law of the country of infringement applies to the scope
of substantive copyright protection, that law will be applied uniformly to
foreign and domestic authors. See Murray v. British Broadcasting Corp.,
906 F.Supp. 858 (S.D.N.Y.1995), aff’d, 81 F.3d 287 (1996).
Source of conflicts rules. Our analysis of the conflicts issue begins with
consideration of the source of law for selecting a conflicts rule. Though
Nimmer turns directly to the Berne Convention and the U.C.C., we think
that step moves too quickly past the Berne Convention Implementation Act
of 1988, 17 U.S.C. § 101. Section 4(a)(3) of the Act amends Title 17 to
provide: “No right or interest in a work eligible for protection under this
title may be claimed by virtue of ... the provisions of the Berne
Convention.... Any rights in a work eligible for protection under this title
that derive from this title ... shall not be expanded or reduced by virtue of
... the provisions of the Berne Convention.” 17 U.S.C. § 104(c).
We start our analysis with the Copyrights Act itself, which contains no
provision relevant to the pending case concerning conflicts issues. We
therefore fill the interstices of the Act by developing federal common law
on the conflicts issue. See D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447,
62 S.Ct. 676, 86 L.Ed. 956 (1942); id. at 472, 62 S.Ct. 676 (Jackson, J.,
concurring) (“The law which we apply to this case consists of principles of
established credit in jurisprudence, selected by us because they are
appropriate to effectuate the policy of the governing Act.”). In doing so, we
are entitled to consider and apply principles of private international law,
which are “‘part of our law.’” Maxwell Communication Corp. v. Societe
Generale, 93 F.3d 1036, 1047 (2d Cir.1996) (quoting Hilton v. Guyot, 159
U.S. 113, 143 (1895)).
The choice of law applicable to the pending case is not necessarily the same
for all issues. See Restatement (Second) of Conflict of Laws § 222 (“The
courts have long recognized that they are not bound to decide all issues
under the local law of a single state.”). We consider first the law applicable
to the issue of copyright ownership.
Conflicts rule for issues of ownership. Copyright is a form of property, and
the usual rule is that the interests of the parties in property are determined
by the law of the state with “the most significant relationship” to the
property and the parties. See id. The Restatement recognizes the
applicability of this principle to intangibles such as “a literary idea.” Id.
Since the works at issue were created by Russian nationals and first

218

CH. 1

published in Russia, Russian law is the appropriate source of law to
determine issues of ownership of rights. That is the well-reasoned
conclusion of the Amicus Curiae, Prof. Patry, and the parties in their
supplemental briefs are in agreement on this point. In terms of the United
States Copyrights Act and its reference to the Berne Convention, Russia is
the “country of origin” of these works, see 17 U.S.C. § 101 (definition of
“country of origin” of Berne Convention work); Berne Convention, Art. 5(4),
although “country of origin” might not always be the appropriate country
for purposes of choice of law concerning ownership.
To whatever extent we look to the Berne Convention itself as guidance in
the development of federal common law on the conflicts issue, we find
nothing to alter our conclusion. The Convention does not purport to settle
issues of ownership, with one exception not relevant to this case. See Jane
C. Ginsburg, Ownership of Electronic Rights and the Private International
Law of Copyright, 22 Colum.–VLA J.L. & Arts 165, 167–68 (1998) (The
Berne Convention “provides that the law of the country where protection
is claimed defines what rights are protected, the scope of the protection,
and the available remedies; the treaty does not supply a choice of law rule
for determining ownership.”).
Selection of Russian law to determine copyright ownership is, however,
subject to one procedural qualification. Under United States law, an owner
(including one determined according to foreign law) may sue for
infringement in a United States court only if it meets the standing test of
17 U.S.C. § 501(b), which accords standing only to the legal or beneficial
owner of an “exclusive right.”
Conflicts rule for infringement issues. On infringement issues, the
governing conflicts principle is usually lex loci delicti, the doctrine
generally applicable to torts. See Lauritzen v. Larsen, 345 U.S. 571, 583
(1953). We have implicitly adopted that approach to infringement claims,
applying United States copyright law to a work that was unprotected in its
country of origin. See Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d
189, 192–93 (2d Cir.1985). In the pending case, the place of the tort is
plainly the United States. To whatever extent lex loci delicti is to be
considered only one part of a broader “interest” approach, see Carbotrade
S.p.A. v. Bureau Veritas, 99 F.3d 86, 89–90 (2d Cir.1996), United States
law would still apply to infringement issues, since not only is this country
the place of the tort, but also the defendant is a United States corporation.
The division of issues, for conflicts purposes, between ownership and
infringement issues will not always be as easily made as the above
discussion implies. If the issue is the relatively straightforward one of
which of two contending parties owns a copyright, the issue is

CH. 1

219

unquestionably an ownership issue, and the law of the country with the
closest relationship to the work will apply to settle the ownership dispute.
But in some cases, including the pending one, the issue is not simply who
owns the copyright but also what is the nature of the ownership interest.
Yet as a court considers the nature of an ownership interest, there is some
risk that it will too readily shift the inquiry over to the issue of whether an
alleged copy has infringed the asserted copyright. Whether a copy infringes
depends in part on the scope of the interest of the copyright owner.
Nevertheless, though the issues are related, the nature of a copyright
interest is an issue distinct from the issue of whether the copyright has
been infringed. See, e.g., Kregos v. Associated Press, 937 F.2d 700, 709–10
(2d Cir.1991) (pointing out that although work survives summary
judgment on issue of copyrightability of compilation, scope of protection
against claim of infringement might be limited). The pending case is one
that requires consideration not simply of who owns an interest, but, as to
the newspapers, the nature of the interest that is owned.
II. Determination of Ownership Rights Under Russian Law
Since United States law permits suit only by owners of “an exclusive right
under a copyright,” 17 U.S.C. § 501(b), we must first determine whether
any of the plaintiffs own an exclusive right. That issue of ownership, as we
have indicated, is to be determined by Russian law.
Determination of a foreign country’s law is an issue of law. See Fed.R.Civ.P.
44.1; Bassis v. Universal Line, S.A., 436 F.2d 64, 68 (2d Cir.1970). Even
though the District Court heard live testimony from experts from both
sides, that Court’s opportunity to assess the witnesses’ demeanor provides
no basis for a reviewing court to defer to the trier’s ruling on the content of
foreign law. In cases of this sort, it is not the credibility of the experts that
is at issue, it is the persuasive force of the opinions they expressed. See
Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir.1998) ( “[A]ppellate courts, as
well as trial courts, may find and apply foreign law.”).
Under Article 14 of the Russian Copyright Law, Itar–Tass is the owner of
the copyright interests in the articles written by its employees. However,
Article 14(4) excludes newspapers from the Russian version of the workfor-hire doctrine. The newspaper plaintiffs, therefore, must locate their
ownership rights, if any, in some other source of law. They rely on Article
11. The District Court upheld their position, apparently recognizing in the
newspaper publishers “exclusive” rights to the articles, even though, by
virtue of Article 11(2), the reporters also retained “exclusive” rights to these
articles.
Having considered all of the views presented by the expert witnesses, we
conclude that the defendants’ experts are far more persuasive as to the

220

CH. 1

meaning of Article 11. In the first place, once Article 14 of the Russian
Copyright Law explicitly denies newspapers the benefit of a work-for-hire
doctrine, which, if available, would accord them rights to individual articles
written by their employees, it is highly unlikely that Article 11 would
confer on newspapers the very right that Article 14 has denied them.
Moreover, Article 11 has an entirely reasonable scope if confined, as its
caption suggests, to defining the “Copyright of Compilers of Collections and
Other Works.” That article accords compilers copyright “in the selection
and arrangement of subject matter that he has made insofar as that
selection or arrangement is the result of a creative effort of compilation.”
Russian Copyright Law, Art. 11(1). Article 11(2) accords a publisher of
compilations the right to exploit such works, including the right to insist
on having their names mentioned, while expressly reserving to “authors of
the works included” in compilations the “exclusive rights to exploit their
works independently of the publication of the whole work.” Id. Art. 11(2).
As the defendants’ experts testified, Article 11 lets authors of newspaper
articles sue for infringement of their rights in the text of their articles, and
lets newspaper publishers sue for wholesale copying of all of the newspaper
or for copying any portions of the newspaper that embody their selection,
arrangement, and presentation of articles (including headlines)—copying
that infringes their ownership interest in the compilation.
Newcity’s contrary interpretation, according publishers (and reporters)
exclusive rights to the text of articles, draws entirely unwarranted
significance from the shift of the phrase “as a whole” from the first to the
second paragraph of Article 11(2). One would not expect drafters of the
revised Article 11(2) to accomplish a major broadening of the rights of
newspaper publishers simply by shifting the placement of this phrase.
Moreover, the drafter of the revision testified that the shift was a matter
of grammar, and not of any substance. Furthermore, Newcity’s
interpretation rests on the untenable premise that both the publisher of a
newspaper and the author of an article have exclusive rights to the same
article. Under his interpretation, as he acknowledged, the publisher could
grant a license to a third party to publish an article, the “exclusive” rights
to which are held by the author. That unlikely result cannot be accepted in
the absence of clear statutory language authorizing it.
The opinion of the Informational Disputes Chamber is not a sufficient basis
for upholding the plaintiffs’ interpretation. As the defendants’ experts
pointed out, the bylaws of that body confine its authority to matters
affecting free press issues, and explicitly preclude it from adjudicating
issues arising under copyright law. Moreover, the opinion that the
Chamber rendered does not necessarily support the plaintiffs’ position. In
asserting that a newspaper may petition for redress “in defense of its
rights,” the Chamber might have meant only that a newspaper can protect

CH. 1

221

its limited compilation rights in the selection and arrangement of articles
even when only a small number of articles are copied. The opinion of the
Chamber does not state that the newspaper has a protectable copyright
interest in the text of each article.
Nor can the District Court’s conclusion be supported by its observation that
extensive copying of newspapers will ensue unless newspapers are
permitted to secure redress for the copying of individual articles. In the
first place, copying of articles may always be prevented at the behest of the
authors of the articles or their assignees. Second, the newspapers may well
be entitled to prevent copying of the protectable elements of their
compilations. Lastly, even if authors lack sufficient economic incentive to
bring individual suits, as the District Court apprehended, Russian
copyright law authorizes the creation of organizations “for the collective
administration of the economic rights of authors ... in cases where the
individual exercise thereof is hampered by difficulties of a practical
nature.” Russian Copyright Law, Art. 44(1). Indeed, UJR, the reporters’
organization, may well be able in this litigation to protect the rights of the
reporters whose articles were copied by Kurier.
Relief. Our disagreement with the District Court’s interpretation of Article
11 does not mean, however, that the defendants may continue copying with
impunity. In the first place, Itar–Tass, as a press agency, is within the
scope of Article 14, and, unlike the excluded newspapers, enjoys the benefit
of the Russian version of the work-for-hire doctrine. Itar–Tass is therefore
entitled to injunctive relief to prevent unauthorized copying of its articles
and to damages for such copying, and the judgment is affirmed as to this
plaintiff.
Furthermore, the newspaper plaintiffs, though not entitled to relief for the
copying of the text of the articles they published, may well be entitled to
injunctive relief and damages if they can show that Kurier infringed the
publishers’ ownership interests in the newspaper compilations. Because
the District Court upheld the newspapers’ right to relief for copying the
text of the articles, it had no occasion to consider what relief the
newspapers might be entitled to by reason of Kurier ‘s copying of the
newspapers’ creative efforts in the selection, arrangement, or display of the
articles. Since Kurier ‘s photocopying reproduced not only the text of
articles but also headlines and graphic materials as they originally
appeared in the plaintiffs’ publication, it is likely that on remand the
newspaper plaintiffs will be able to obtain some form of injunctive relief
and some damages. On these infringement issues, as we have indicated,
United States law will apply.
Finally, there remains for consideration what relief, if any, might be

222

CH. 1

awarded to UJR, acting on behalf of any of its members whose articles have
been copied. In its opinion granting the newspapers a preliminary
injunction, the District Court noted that the plaintiffs had not “established
the union’s organizational standing to sue to enforce the rights of its
members,” an issue the Court expected would be considered later in the
lawsuit. In its ruling on the merits, the District Court ruled that the UJR
had standing to sue on behalf of its members. However, the Court noted
that UJR sought only injunctive relief and then ruled that since UJR
declined to furnish a list of its members, the Court was unable to frame an
injunction that would be narrowly tailored and sufficient to give the
defendants notice of its scope.
In view of our conclusion that the newspaper plaintiffs may not secure
relief for the copying of the text of any articles as such, it will now become
appropriate for the District Court on remand to revisit the issue of whether
relief might be fashioned in favor of UJR on behalf of the authors. Despite
UJR’s unwillingness to disclose its entire membership list, it might be
possible to frame some form of injunctive relief that affords protection for
those author-members that UJR is willing to identify. And UJR should now
be given an opportunity to amend its prayer for relief to state whatever
claim it might have to collect damages for the benefit of its member-authors
whose rights have been infringed. Finally, the District Court should
consider the appropriateness and feasibility of giving some form of notice
(perhaps at the defendants’ expense) that is calculated to alert the authors
of the infringed articles to their right to intervene in this lawsuit. Such
notice might, for example, be addressed generally to the group of reporters
currently employed at each of the plaintiff newspapers.
In view of the reckless conduct of the defendants in the flagrant copying
that infringed the rights of Itar–Tass, the rights of the authors, and very
likely some aspects of the limited protectable rights of the newspapers, we
will leave the injunction in force until such time as the District Court has
had an opportunity, on remand, to modify the injunction consistent with
this opinion and with such further rulings as the District Court may make
in light of this opinion.
Conclusion
Accordingly, we affirm the judgment to the extent that it granted relief to
Itar–Tass, we reverse to the extent that the judgment granted relief to the
other plaintiffs, and we remand for further proceedings. No costs.

4. INJUNCTIVE RELIEF/REMEDIES

CH. 1

223

CHRISTOPHER PHELPS & ASSOCIATES, LLC V. GALLOWAY
United States Court of Appeals, Fourth Circuit
Decided: July 5, 2007
492 F.3d 532

NIEMEYER, Circuit Judge:
After R. Wayne Galloway began construction of his retirement home on
Lake Wylie, near Charlotte, North Carolina, using architectural plans
designed and copyrighted by Christopher Phelps & Associates, LLC
(“Phelps & Associates”), without permission, Phelps & Associates
commenced this action against Galloway for copyright infringement.
Phelps & Associates sought damages, disgorgement of profits, and
injunctive relief. A jury found that Galloway infringed Phelps & Associates’
copyright and awarded it $20,000 in damages, the fee that Phelps &
Associates traditionally charged for such plans. The jury also found that
Galloway had realized no profits to disgorge. The district court thereafter
declined to enter an injunction, finding that the jury verdict had made
Phelps & Associates “whole,” and entered judgment in favor of Phelps &
Associates for $20,000. From that judgment, Phelps & Associates appeals,
requesting a new trial on damages and the entry of an injunction
prohibiting the future lease or sale of the infringing house and mandating
the destruction or return of the infringing plans.
***
We agree with Galloway’s contention that the court in the circumstances
presented here did not abuse its discretion in refusing to enter a permanent
injunction, as requested by Phelps & Associates, prohibiting Galloway from
ever leasing or selling the house. Such an injunction would be overly broad
and would unduly restrain the alienation of real property. Other injunctive
relief, however, might be available in applying the general principles of
equity, as required by eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388,
126 S.Ct. 1837, 164 L.Ed.2d 641 (2006), which was decided after the district
court’s order denying relief in this case. Accordingly, we vacate portions of
the district court’s order denying injunctive relief and remand for the
limited purpose of reconsidering other equitable relief, such as an order
requiring Galloway to destroy the infringing plans or return them to Phelps
& Associates.
I.
R. Wayne Galloway, in anticipation of retirement, planned to build his
“dream home” on a lot that he owned on the North Carolina side of Lake
Wylie, southwest of Charlotte, North Carolina. Displeased with the design

224

CH. 1

work done by an architect whom he had hired, Galloway went with his sonin-law to view the designs of homes on Lake Norman, an expensive
residential area about 30 miles north of Lake Wylie, where his son-in-law
was working as an iron-work subcontractor. There, Galloway saw a
French-country style house that he liked. His son-in-law approached the
builder of the house, Simonini Builders, Inc., and asked the superintendent
for a copy of the plans. The superintendent said that Galloway would have
to speak with the owner, Mrs. Gina Bridgeford, because “she purchased the
plans, they were actually drawn for her.” Galloway contacted Mrs.
Bridgeford, who gave Galloway her consent for use of the plans “as long as
you don’t build in our area.” As to her authority to give consent, Mrs.
Bridgeford testified at trial, “I felt with all we had paid, we owned the plans
at that time.” Galloway assured Mrs. Bridgeford that he would not build in
the area, telling her that he planned to build on Lake Wylie about 30 miles
away. With Mrs. Bridgeford’s permission, the superintendent at Simonini
Builders gave Galloway a copy of the plans for “The Bridgeford Residence.”
Each page of the plans included the copyright notice, in small print, of the
designing architect as follows:
© 2000 Copyright—Christopher Phelps & Assoc., L.L.C. These plans are
protected under the federal copyright laws. The original purchaser of this
plan is authorized to construct one and only one home using this plan.
Modifications or reuse of this plan is prohibited.
Galloway altered the plans only to cover the name and address of “The
Bridgeford Residence” with the name and address of “The Galloway
Residence,” and then he copied them for constructing his house.
Phelps & Associates, which designed the Bridgeford Residence, is an
architectural firm in Charlotte, North Carolina, that designs upscale
custom houses. It created the design for the Bridgeford Residence as a
variation of its earlier design—“The Bell and Brown Residence.” Bell and
Brown had commissioned and paid Phelps & Associates for the earlier
design, but ultimately decided not to build the house. Phelps & Associates
modified the Bell and Brown design somewhat for the Bridgefords by
moving a dormer window, changing the front entry and reconfiguring part
of the floor plan, and removing the basement. The Bridgefords paid Phelps
& Associates $20,000 for The Bridgeford Residence design, and the
Bridgefords built their house on Lake Norman in accordance with that
design.
Acting as his own general contractor, Galloway began construction of his
house in September 2001, using the Phelps & Associates plans for the
Bridgeford Residence. During the course of construction, some of the
subcontractors checked back with Phelps & Associates for clarification,

CH. 1

225

particularly with respect to the windows. Phelps & Associates did not then
know that the construction was being pursued without permission.
Galloway’s framing contractor, who had been asked to do some work for
Galloway’s brother-in-law using pirated Phelps & Associates plans,
surmised that Galloway did not have permission to use the plans and
approached Galloway to warn him that he could “get in trouble
constructing a copyright plan.” Galloway “shrugged his shoulders and said
something to the effect: ‘They’ve got to find me, catch me first.’”
Through rumors from subcontractors, Phelps & Associates learned in early
2003 that Galloway was constructing a house using its designs. After
confirming that fact, Phelps & Associates sent Galloway a cease and desist
letter in July 2003. Upon receipt of the letter, Galloway stopped
construction on his house, which was then over half completed. Thereafter,
in August 2003, Phelps & Associates registered its plans for The Bridgeford
Residence with the Copyright Office and then commenced this action
against Galloway for copyright infringement.
In its suit, Phelps & Associates sought compensatory damages,
disgorgement of Galloway’s profits (claimed as the difference between the
value of Galloway’s house and his provable expenses in constructing it),
and injunctive relief. With respect to compensatory damages, Christopher
Phelps, the principal of Phelps & Associates, testified at trial that if
Galloway had come to him and asked Phelps & Associates to design “a
house like the Bridgeford house,” Phelps & Associates would have charged
Galloway $20,000—the same fee that it had charged Mrs. Bridgeford.
Christopher Phelps made clear, however, that he would not have sold
Galloway the actual Bridgeford Residence design, but something different,
as Phelps & Associates prided itself on designing “custom homes.” With
respect to Galloway’s profits, Phelps & Associates presented expert
testimony that Galloway’s house would be worth $1.1 million when
completed. With this estimated value, Galloway would have realized over
$200,000 in profits if he were to sell the completed house.
Galloway testified at trial that he would have made no profit in the house
had he sold it—he had spent more on the house than it was worth. He
estimated that if he completed the house, he would show a loss of about
$160,000. He introduced into evidence his receipts and ledger of
expenditures for construction to date totaling approximately $660,000, and
he estimated that it would cost an additional $250,000 to $300,000 to
complete the house. He estimated that upon completion, the house itself
would be worth $758,000. He also introduced into evidence the
Mecklenburg County tax assessment of his house when half-completed,
which evaluated the house in that state at $408,100.

226

CH. 1

At the end of the trial, the jury returned a verdict in favor of Phelps &
Associates, finding that Galloway had infringed Phelps & Associate’s
architectural design copyright; awarding Phelps & Associates $20,000 in
actual damages; and finding that Galloway had no profits to disgorge.
Thereafter, Phelps & Associates requested injunctive relief from the court
(1) ordering that the infringing copy of the plans be returned or destroyed;
(2) enjoining completion of the house; and (3) permanently enjoining the
lease or sale of the house. The court “in its discretion” denied all injunctive
relief, finding that the $20,000 jury award made Phelps & Associates
“whole.” Accordingly, the court entered judgment in favor of Phelps &
Associates for $20,000 in damages.
On appeal, Phelps & Associates *** argues that the district court’s refusal
to enter an injunction was error as a matter of law because it had proved a
past infringement and a likelihood of future infringement.
Phelps & Associates did not obtain an injunction pending appeal, and,
according to representations made at oral argument, Galloway has
completed the construction of his house, where he now resides. Galloway
has also satisfied the $20,000 money judgment. ***
III.
After the jury returned its verdict, Phelps & Associates filed a motion
under 17 U.S.C. §§ 502, 503(b) for injunctive relief (1) to prohibit the
completion of the house; (2) to enjoin permanently the lease or sale of the
house; and (3) to require the destruction or return of the infringing plans.
The district court denied the motion and all of the relief requested, stating:
After trial in this matter, the jury awarded the Plaintiff $20,000 in actual
damages. The court finds that the Plaintiff has been made whole, and in
its discretion, declines to order Defendant to destroy all copies of the plans
at issue. Moreover, the court declines to enjoin further construction of the
house, alteration of the house, or the future lease or sale of the house.
Evidence at trial revealed that the house is substantially constructed and
that only interior finish work remains to be done. Thus, there is no
likelihood that completion of the house will result in further infringement.
Taking into account equitable considerations, the court refuses to grant the
relief requested by the Plaintiff.
Phelps & Associates contends that in denying injunctive relief, the district
court erred as a matter of law. It argues that the court denied injunctive
relief simply because Phelps & Associates received damages and thereby
had been made “whole.” It maintains that “the mere fact that a copyright
owner may recover damages does not negate his right to injunctive relief.”
See Lyons P’ship, LP v. Morris Costumes, Inc., 243 F.3d 789, 801 (4th

CH. 1

227

Cir.2001) (remanding for the entry of a permanent injunction and a
determination of the amount of damages award). Phelps & Associates
argues affirmatively that when copyright infringement has been proved
and there is a threat of continuing infringement, the copyright holder is
“entitled to an injunction.” Walt Disney Co. v. Powell, 897 F.2d 565, 567
(D.C.Cir.1990). Because Phelps & Associates says that it made that
showing, it claims that it was entitled to injunctive relief.
Insofar as Phelps & Associates suggests that it is entitled to injunctive
relief, we reject the argument. See eBay Inc. v. MercExchange, L.L.C., 547
U.S. 388, 126 S.Ct. 1837, 1839 (2006). In eBay, the Supreme Court rejected
any notion that “an injunction automatically follows a determination that
a copyright has been infringed.” 126 S.Ct. at 1840 (reversing the Federal
Circuit, which had articulated “a ‘general rule,’ unique to patent disputes,
‘that a permanent injunction will issue once infringement and validity have
been adjudged’ ”). The Supreme Court reaffirmed the traditional showing
that a plaintiff must make to obtain a permanent injunction in any type of
case, including a patent or copyright case:
A plaintiff must demonstrate: (1) that it has suffered an irreparable injury;
(2) that remedies available at law, such as monetary damages, are
inadequate to compensate for that injury; (3) that, considering the balance
of hardships between the plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not be disserved by a
permanent injunction.
Id. at 1839. Moreover, the Court reiterated that even upon this showing,
whether to grant the injunction still remains in the “equitable discretion”
of the court.
Rejecting Phelps & Associates’ claim to an automatic injunction or an
“entitlement” to one, we now apply traditional equity principles to each of
Phelps & Associates’ requests for injunctive relief to determine whether
the district court abused its discretion.
A
Phelps & Associates’ first request, that Galloway be enjoined from
completing the house, appears to be moot. At oral argument, the parties
represented that the house had been completed.
B
Phelps & Associates’ second request for equitable relief, that Galloway be
permanently enjoined from leasing or selling the completed house, is
argued with the following syllogism: First, the completed house is an
infringing copy of Phelps & Associates’ copyrighted work. See 17 U.S.C. §
101. Second, as the copyright holder, Phelps & Associates has the exclusive

228

CH. 1

right to “distribute” its copyrighted work “by sale or other transfer of
ownership.” See id. § 106(3). Therefore, Galloway may never lease or sell
the house without infringing Phelps & Associates’ copyright. See id. §
501(a). Because it is likely that Galloway will lease or sell the house, Phelps
& Associates believes this lease or sale should be foreclosed by a permanent
injunction.
We agree with Phelps & Associates that Galloway will inevitably sell or
transfer his house within the period during which Phelps & Associates still
holds the copyright—i.e. 95 years, see 17 U.S.C. § 302(c)—and that such a
sale could, absent this action, expose Galloway to further relief, see id. §
106(3); id. § 501(a); cf. id. § 109(a) (permitting resale of “lawfully made”
copies); 1 William F. Patry, Patry on Copyright § 3.111 (2007) (arguing that
sale of a copyrighted structure is not a “distribution” under § 106(3)). But
Phelps & Associates has requested relief for that inevitable transaction
now in this action, as part of the panoply of remedies available under the
Copyright Act, and therefore entitlement to that relief can be and is
resolved in this action under the principles of eBay, 126 S.Ct. at 1839.
The first two eBay criteria for injunctive relief—irreparable injury and the
inadequacy of monetary damages—have most likely been demonstrated.
Irreparable injury often derives from the nature of copyright violations,
which deprive the copyright holder of intangible exclusive rights. Damages
at law will not remedy the continuing existence of Phelps & Associates’
design in the Galloway house. Moreover, while the calculation of future
damages and profits for each future sale might be possible, any such effort
would entail a substantial amount of speculation and guesswork that
renders the effort difficult or impossible in this case. Accordingly, we
conclude that Phelps & Associates most likely has satisfied the first two
eBay factors.
When considering the third and fourth factors, however—the balance of
hardships and the public interest—Phelps & Associates’ showing has fallen
short.
First, Phelps & Associates has been fully and adequately compensated for
the copying and use of its design as manifested in the single Galloway
house, as described above in Part II. A sale of the house would not be a
second copy or manifestation of the design, but merely a transfer of the
structure in which the design was first copied. An injunction against sale
would but slightly benefit Phelps & Associates’ legitimate entitlements
because the infringing house would retain the same form and location,
remaining a permanent nuisance to the copyright regardless of whether
there is an injunction. An injunction against sale would neither undo the
prior infringement, nor diminish the chances of future copying. At the same

CH. 1

229

time, a permanent injunction would impose a draconian burden on
Galloway, effectively creating a lis pendens on the house and subjecting
him to contempt proceedings simply for selling his own property.
Second, a house or building, as an expression of the architect’s copyrighted
plans, usually has a predominantly functional character. This functional
character was the reason American copyright law, pre-Berne Convention,
denied protection to constructed architectural works altogether. See 1
Nimmer & Nimmer, supra, § 2.08[D][2][b], at 2–126 (“an architectural
structure ordinarily constitutes a ‘useful article’.... For that reason, such
structures remained unprotected by United States copyright law from
passage of the current [Copyright] Act until enactment of an amendment,
the Architectural Works Copyright Protection Act”). This is the same
reason that Congress manifested an expectation that injunctions will not
be routinely issued against substantially completed houses whose designs
violated architectural copyrights. H.R.Rep. No. 101–735, at 13–14 (1990),
reprinted in 1990 U.S.C.C.A.N. 6935, 6944 (explaining that buildings “are
the only form of copyrightable subject matter that is habitable”). Those
considerations are at their strongest when the architectural structure is
completed and inhabited by the infringer, as here. While Galloway
infringed the copyright, he now is living in a “copy” of the architectural
work. His interest in remaining there, with the same rights as other
homeowners to alienate his property, is substantial and, in this case,
trumps Phelps & Associates’ interests in any injunction prohibiting a lease
or sale of the house.
Third, an injunction against sale of the house would be overbroad, as it
would encumber a great deal of property unrelated to the infringement.
The materials and labor that went into the Galloway house, in addition to
the swimming pool, the fence, and other non-infringing features, as well as
the land underneath the house, would be restrained by the requested
injunction. As such, the injunction would take on a fundamentally punitive
character, which has not been countenanced in the Copyright Act’s
remedies. See Bucklew v. Hawkins, Ash, Baptie & Co., 329 F.3d 923, 931
(7th Cir.2003) (noting that the Copyright Act does not authorize punitive
damages). In a similar vein, the requested injunction would undermine an
ancient reluctance by the courts to restrain the alienability of real property.
See, e.g., Williams v. First Fed. Sav. & Loan Ass’n, 651 F.2d 910, 919 n. 18
(4th Cir.1981); Jiggets v. Davis, 28 Va. 368 (1829); Howard v. Earl of
Shrewsbury, (1867) 2 Ch.App. 760. For these reasons, the public interest
would be disserved by the entry of an injunction.
Finally, ultimate discretion to grant any such injunctive relief rests with
the district court, and for the reasons enumerated, we conclude that
deference to the district court’s refusal is appropriate in the absence of any

230

CH. 1

showing that such refusal was otherwise an abuse of discretion. See eBay,
126 S.Ct. at 1839.
Thus, with respect to the Galloway house as one manifestation of the
Phelps & Associates’ design, arising from a single infringing transaction,
Phelps & Associates is limited to the other relief provided in this case. Upon
satisfaction of that relief, Galloway will be entitled to peaceful ownership
of the house, with good and marketable title. This is consistent with the
result reached when a converter of property satisfies a judgment: if the
judgment does not order return of the property, but rather other relief, the
converter obtains good and marketable title to the property after satisfying
the judgment. See Restatement (Second) of Torts § 222A, cmt. (c) (“When
the defendant satisfies the judgment in the action for conversion, title to
the chattel passes to him, so that he is in effect required to buy it at a forced
judicial sale”); Lovejoy v. Murray, 70 U.S. (3 Wall.) 1, 16–17, 18 L.Ed. 129
(1866); Stirling v. Garritee, 18 Md. 468, 474 (1862) (“The measure of
damages in trover, is the value of the goods at the time of conversion. The
plaintiff obtaining this value, it operates as a transfer of title from the time
of conversion”). The same policies of promoting clear property rights and
finality apply in the case of copyright actions involving single copies of
completed structures. Indeed, they are perhaps stronger, as we are
promoting the alienability of real property.
Phelps & Associates relies upon Sony Corporation of America v. Universal
City Studios, Inc., 464 U.S. 417, 446 n. 28, 104 S.Ct. 774, 78 L.Ed.2d 574
(1984), to argue that the refusal to issue an injunction against future leases
and sales of the Galloway house amounts to a judicially-created compulsory
license, which is disfavored. The reliance on Sony, however, is misplaced.
The remedies under the Copyright Act do not resemble a license because
the Copyright Act remedies are far broader than simply requiring a
defendant to make license payments. Under the Copyright Act, a copyright
holder is entitled to both actual damages—the market price of the license—
and disgorgement of the infringer’s profits, which might be immensely
greater than the price of a license. See 17 U.S.C. § 504. Moreover, the
infringer takes the risk that the district court will order, in its discretion,
the destruction or other disposition of the infringing article. See id. §
503(b). In the garden-variety piracy case, such orders are routinely issued.
See, e.g., Loud Records, LLC v. Lambright, Civ. No. 1:05–0171, 2006 WL
2038655, 2006 U.S. Dist. LEXIS 38016 (S.D.W.Va., March 30, 2006);
Graduate Mgmt. Admission Council v. Raju, 267 F.Supp.2d 505
(E.D.Va.2003); Microsoft Corp. v. Grey Computer, 910 F.Supp. 1077
(D.Md.1995). Given the risks attendant to infringement, denying an
injunction is not equivalent to a compulsory license. See Walker v. Forbes,
Inc., 28 F.3d 409, 412 (4th Cir.1994) (“By stripping the infringer not only
of the licensing fee but also of the profit generated as a result of the use of

CH. 1

231

the infringed item, the law makes clear that there is no gain to be made
from taking someone else’s intellectual property without their consent”).
While granting an injunction to destroy an infringing article might be
usual with respect to personal property, especially in the garden-variety
music or movie piracy case, refusing to order destruction or the
inalienability of property is also consistent with the Copyright Act’s
remedial scheme and does not amount to a compelled license.
For all of these reasons, we affirm the district court’s order denying an
injunction against the future lease or sale of Galloway’s house.
C
Finally, Phelps & Associates contends that the district court erred as a
matter of law in refusing to grant injunctive relief to require the return or
destruction of the infringing plans. See 17 U.S.C. § 503(b).
Again, any relief granted in equity is at the discretion of the district court,
and a petitioner cannot claim that it was entitled to injunctive relief. See
eBay, 126 S.Ct. at 1839. Nonetheless, the district court, without the benefit
of eBay, may have denied equitable relief categorically, rather than basing
its analysis on the traditional principles of equity.
In denying Phelps & Associates’ motion for an injunction, the district court
stated:
The court finds that the Plaintiff has been made whole, and
in its discretion, declines to order Defendant to destroy all
copies of the plans at issue.
Being made whole in the circumstances of this case, however, could only
have referred to the jury award of damages for the cost of a license and its
finding that Galloway realized no profits for disgorgement. It could not
have related to other questions, such as the existence of infringing plans or
future acts of infringement.
To explain its ruling, the court stated only,
Evidence at trial revealed that the house is substantially constructed and
that only interior finish work remains to be done. Thus, there is no
likelihood that completion of the house will result in further infringement.
It does not follow, however, that because the plans were not needed to
complete the house, they should not therefore be returned or destroyed, as
authorized by 17 U.S.C. § 503(b). The risk of future infringement includes
the possible use of plans to build another house, publication of the plans,
or other violations of the exclusive rights conferred by 17 U.S.C. § 106. See
Serv. & Training, Inc. v. Data Gen. Corp., 963 F.2d 680, 690 (4th Cir.1992)
(affirming the entry of a preliminary injunction against further

232

CH. 1

unauthorized use and copying of copyrighted software).
When Phelps & Associates requested the return or destruction of the
infringing plans, the district court was obligated to consider the traditional
factors for equitable relief. Yet it appears that the court did not do so. At
most, it stated without explanation that it declined “in its discretion ... to
order defendant to destroy all copies of the plans at issue.” Considering the
court’s ruling in the context of the admonitions given in eBay, we cannot
conclude that the district court properly performed its equitable functions.
See eBay, 126 S.Ct. at 1839. Therefore, we vacate that portion of its order
as an abuse of discretion.
In sum, while we affirm the jury’s verdict and the district court’s order
refusing to enjoin the future leasing or sale of Galloway’s house, we remand
this case for further consideration, in light of eBay, of Phelps & Associates’
request for injunctive relief with respect to the return or destruction of the
infringing plans.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED

CH. 1

233

CHAPTER 5
ENFORCEMENT, SPECIAL TOPICS, &
REMEDIES

A. FAIR USE AND HOME VIDEO

SONY CORPORATION
CITY STUDIOS, INC.

OF

Supreme
Court
of
the
464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574.

AMERICA
United

V.

UNIVERSAL
States,

1984.

JUSTICE STEVENS delivered the opinion of the Court.
IV
***
A.

Authorized Time-Shifting.

[The Court noted the District Court’s finding that a considerable
number of copyright owners of television programs—sports leagues,
religious broadcasters, and educational communication agencies—wished
to have home video tape recorders (VTRs, as they were then called)
available for viewers to use to tape their programs for viewing at a later
time.] . . . Although the District Court made these statements in the
context of considering the propriety of injunctive relief, the statements
constitute a finding that the evidence concerning “sports, religious,
educational and other programming” was sufficient to establish a
significant quantity of broadcasting whose copying is now authorized, and
a significant potential for future authorized copying. That finding is amply
supported by the record.
***
If there are millions of owners of VTRs who make copies of televised
sports events, religious broadcasts, and educational programs such as
Mister Rogers’ Neighborhood, and if the proprietors of those programs
welcome the practice, the business of supplying the equipment that makes
such copying feasible should not be stifled simply because the equipment

234

CH. 1

is used by some individuals to make unauthorized reproductions of
respondents’ works. The respondents do not represent a class composed of
all copyright holders. Yet a finding of contributory infringement would
inevitably frustrate the interests of broadcasters in reaching the portion of
their audience that is available only through time-shifting.
Of course, the fact that other copyright holders may welcome the
practice of time-shifting does not mean that respondents should be deemed
to have granted a license to copy their programs. Third-party conduct
would be wholly irrelevant in an action for direct infringement of
respondents’ copyrights. But in an action for contributory infringement
against the seller of copying equipment, the copyright holder may not
prevail unless the relief that he seeks affects only his programs, or unless
he speaks for virtually all copyright holders with an interest in the
outcome. In this case, the record makes it perfectly clear that there are
many important producers of national and local television programs who
find nothing objectionable about the enlargement in the size of the
television audience that results from the practice of time-shifting for
private home use. The seller of the equipment that expands those
producers’ audiences cannot be a contributory infringer if, as is true in this
case, it has had no direct involvement with any infringing activity.
B.

Unauthorized Time-Shifting.

Even unauthorized uses of a copyrighted work are not necessarily
infringing. An unlicensed use of the copyright is not an infringement unless
it conflicts with one of the specific exclusive rights conferred by the
copyright statute. Twentieth Century Music Corp. v. Aiken, 422 U.S. 151,
at 154–155 (1975). Moreover, the definition of exclusive rights in § 106 of
the present Act is prefaced by the words “subject to sections 107 through
118.” Those sections describe a variety of uses of copyrighted material that
“are not infringements of copyright” “notwithstanding the provisions of
section 106.” The most pertinent in this case is § 107, the legislative
endorsement of the doctrine of “fair use.”
That section identifies various factors that enable a court to apply an
“equitable rule of reason” analysis to particular claims of infringement.
Although not conclusive, the first factor requires that “the commercial or
nonprofit character of an activity” be weighed in any fair use decision. If
the Betamax were used to make copies for a commercial or profit-making
purpose, such use would presumptively be unfair. The contrary
presumption is appropriate here, however, because the District Court’s
findings plainly establish that time-shifting for private home use must be
characterized as a noncommercial, nonprofit activity. Moreover, when one
considers the nature of a televised copyrighted audiovisual work, and that
time-shifting merely enables a viewer to see such a work which he had been
invited to witness in its entirety free of charge, the fact that the entire work

CH. 1

235

is reproduced, see § 107(3), does not have its ordinary effect of militating
against a finding of fair use.
This is not, however, the end of the inquiry because Congress has also
directed us to consider “the effect of the use upon the potential market for
or value of the copyrighted work.” § 107(4). The purpose of copyright is to
create incentives for creative effort. Even copying for noncommercial
purposes may impair the copyright holder’s ability to obtain the rewards
that Congress intended him to have. But a use that has no demonstrable
effect upon the potential market for, or the value of, the copyrighted work
need not be prohibited in order to protect the author’s incentive to create.
The prohibition of such noncommercial uses would merely inhibit access to
ideas without any countervailing benefit.
Thus, although every commercial use of copyrighted material is
presumptively an unfair exploitation of the monopoly privilege that belongs
to the owner of the copyright, noncommercial uses are a different matter.
A challenge to a noncommercial use of a copyrighted work requires proof
either that the particular use is harmful, or that if it should become
widespread, it would adversely affect the potential market for the
copyrighted work. Actual present harm need not be shown; such a
requirement would leave the copyright holder with no defense against
predictable damage. Nor is it necessary to show with certainty that future
harm will result. What is necessary is a showing by a preponderance of the
evidence that some meaningful likelihood of future harm exists. If the
intended use is for commercial gain, that likelihood may be presumed. But
if it is for a noncommercial purpose, the likelihood must be demonstrated.
In this case, respondents failed to carry their burden with regard to
home time-shifting. The District Court described respondents’ evidence as
follows:
“Plaintiffs’ experts admitted at several points in the trial that the timeshifting without librarying would result in ‘not a great deal of harm.’
Plaintiffs’ greatest concern about time-shifting is with ‘a point of important
philosophy that transcends even commercial judgment.’ They fear that
with any Betamax usage, ‘invisible boundaries’ are passed: ‘the copyright
owner has lost control over his program.’ ”
***
There was no need for the District Court to say much about past harm.
“Plaintiffs have admitted that no actual harm to their copyrights has
occurred to date.”
On the question of potential future harm from time-shifting, the
District Court offered a more detailed analysis of the evidence. It rejected
respondents’ “fear that persons ‘watching’ the original telecast of a program
will not be measured in the live audience and the ratings and revenues will
decrease,” by observing that current measurement technology allows the

236

CH. 1

Betamax audience to be reflected. It rejected respondents’ prediction “that
live television or movie audiences will decrease as more people watch
Betamax tapes as an alternative,” with the observation that “[there] is no
factual basis for [the underlying] assumption.” It rejected respondents’
“fear that time-shifting will reduce audiences for telecast reruns,” and
concluded instead that “given current market practices, this should aid
plaintiffs rather than harm them.” And it declared that respondents’
suggestion that “theater or film rental exhibition of a program will suffer
because of time-shift recording of that program” “lacks merit.”
***
The District Court’s conclusions are buttressed by the fact that to the
extent time-shifting expands public access to freely broadcast television
programs, it yields societal benefits. In Community Television of Southern
California v. Gottfried, 459 U.S. 498, 508 (1983), we acknowledged the
public interest in making television broadcasting more available.
Concededly, that interest is not unlimited. But it supports an
interpretation of the concept of “fair use” that requires the copyright holder
to demonstrate some likelihood of harm before he may condemn a private
act of time-shifting as a violation of federal law.
When these factors are all weighed in the “equitable rule of reason”
balance, we must conclude that this record amply supports the District
Court’s conclusion that home time-shifting is fair use. In light of the
findings of the District Court regarding the state of the empirical data, it
is clear that the Court of Appeals erred in holding that the statute as
presently written bars such conduct.
In summary, the record and findings of the District Court lead us to
two conclusions. First, Sony demonstrated a significant likelihood that
substantial numbers of copyright holders who license their works for
broadcast on free television would not object to having their broadcasts
time-shifted by private viewers. And second, respondents failed to
demonstrate that time-shifting would cause any likelihood of nominal
harm to the potential market for, or the value of, their copyrighted works.
The Betamax is, therefore, capable of substantial noninfringing uses.
Sony’s sale of such equipment to the general public does not constitute
contributory infringement of respondents’ copyrights.
V
“The direction of Art. I is that Congress shall have the power to
promote the progress of science and the useful arts. When, as here, the
Constitution is permissive, the sign of how far Congress has chosen to go
can come only from Congress.” Deepsouth Packing Co. v. Laitram Corp.,
406 U.S. 518, 530 (1972).
One may search the Copyright Act in vain for any sign that the elected
representatives of the millions of people who watch television every day

CH. 1

237

have made it unlawful to copy a program for later viewing at home, or have
enacted a flat prohibition against the sale of machines that make such
copying possible.
It may well be that Congress will take a fresh look at this new
technology, just as it so often has examined other innovations in the past.
But it is not our job to apply laws that have not yet been written. Applying
the copyright statute, as it now reads, to the facts as they have been
developed in this case, the judgment of the Court of Appeals must be
reversed.
It is so ordered.

———
Justice Blackmun’s dissent disagreed with the majority on almost
every analytical point. For example, rather than focusing on the personal
and noncommercial character of home videotaping, the dissent emphasized
its lack of creative value:
The intent of § 107(1) is to encourage users to engage in activities
the primary benefit of which accrues to others. Time-shifting
involves no such humanitarian impulse. It is likewise something
of a mischaracterization of time-shifting to describe it as
noncommercial in the sense that that term is used in the statute.
As one commentator has observed, time-shifting is noncommercial
in the same sense that stealing jewelry and wearing it—instead
of reselling it—is noncommercial. Purely consumptive uses are
certainly not what the fair use doctrine was designed to protect,
and the awkwardness of applying the statutory language to timeshifting only makes clearer that fair use was designed to protect
only uses that are productive.
464 U.S. at 496. Because home copying amounted to personal consumption
rather than social production, greater weight had to be given to the risk of
harm to the studio copyright owners.
The Studios have identified a number of ways in which VTR
recording could damage their copyrights. VTR recording could
reduce their ability to market their works in movie theaters and
through the rental or sale of prerecorded videotapes or videodiscs;
it also could reduce their rerun audience, and consequently the
license fees available to them for repeated showings. Moreover,
advertisers may be willing to pay for only “live” viewing
audiences, if they believe VTR viewers will delete commercials or
if rating services are unable to measure VTR use; if this is the
case, VTR recording could reduce the license fees the Studios are
able to charge even for first-run showings. Library-building may
raise the potential for each of the types of harm identified by the

238

CH. 1

Studios, and time-shifting may raise the potential for substantial
harm as well.35
The Studios introduced expert testimony that both time-shifting
and librarying would tend to decrease their revenue from
copyrighted works. The District Court’s findings also show
substantial library-building and avoidance of commercials. Both
sides submitted surveys showing that the average Betamax user
owns between 25 and 32 tapes. The Studios’ survey showed that
at least 40% of users had more than 10 tapes in a “library”; Sony’s
survey showed that more than 40% of users planned to view their
tapes more than once; and both sides’ surveys showed that
commercials were avoided at least 25% of the time.
464 U.S. at 483. Nor was the fact that the studio copyright owners had
licensed a “free” over-the-air television broadcast a reason for denying
them protection against copying and replaying that broadcast.
Although a television broadcast may be free to the viewer, this
fact is equally irrelevant; a book borrowed from the public library
may not be copied any more freely than a book that is purchased.
464 U.S. at 480.
The development of the VTR has created a new market for the
works produced by the Studios. That market consists of those
persons who desire to view television programs at times other
than when they are broadcast, and who therefore purchase VTR
recorders to enable them to time-shift. Because time-shifting of
the Studios’ copyrighted works involves the copying of them,
however, the Studios are entitled to share in the benefits of that
new market. Those benefits currently go to Sony through
Betamax sales. Respondents therefore can show harm from VTR
use simply by showing that the value of their copyrights would
increase if they were compensated for the copies that are used in
the new market. The existence of this effect is self-evident.
464 U.S. at 497–98. Nor was the dissent persuaded by the majority’s
argument that classifying videotaping as illegal copying rather than as fair
use would actually harm some program owners who wanted home viewers
to be able to tape their shows and view them at times when they could.
Such reasoning . . . simply confuses the question of liability with
the difficulty of fashioning an appropriate remedy. It may be that
an injunction prohibiting the sale of VTRs would harm the
35 A VTR owner who has taped a favorite movie for repeated viewing will be less likely to
rent or buy a tape containing a movie, watch a televised rerun, or pay to see the movie at a theater.
Both library-builders and time-shifters may avoid commercials; the library-builder may use the
pause control to record without them, and all users may fast-forward through commercials on
playback.

CH. 1

239

interests of copyright holders who have no objection to others
making copies of their programs. But such concerns should and
would be taken into account in fashioning an appropriate remedy
once liability has been found. Remedies may well be available that
would not interfere with authorized time-shifting at all. The Court
of Appeals mentioned the possibility of a royalty payment that
would allow VTR sales and time-shifting to continue unabated,
and the parties may be able to devise other narrowly tailored
remedies. Sony may be able, for example, to build a VTR that
enables broadcasters to scramble the signal of individual
programs and “jam” the unauthorized recording of them. Even
were an appropriate remedy not available at this time, the Court
should not misconstrue copyright holders’ rights in a manner that
prevents enforcement of them when, through development of
better techniques, an appropriate remedy becomes available.
464 U.S. at 494. Justice Blackmun, however, was not able to persuade a
fifth Justice to subscribe to this alternative analysis of the fair use issue.

NEWER TECHNOLOGIES

CARTOON NETWORK, LP V. CSC HOLDINGS, INC.
United
States
536 F.3d 121.

Court

of

Appeals,

Second

Circuit,

2008.

WALKER, CIRCUIT JUDGE.
Defendant-Appellant Cablevision Systems Corporation (“Cablevision”)
wants to market a new “Remote Storage” Digital Video Recorder system
(“RS-DVR”), using a technology akin to both traditional, set-top digital
video recorders, like TiVo (“DVRs”), and the video-on-demand (“VOD”)
services provided by many cable companies. Plaintiffs-Appellees produce
copyrighted movies and television programs that they provide to
Cablevision pursuant to numerous licensing agreements. They contend
that Cablevision, through the operation of its RS-DVR system as proposed,
would directly infringe their copyrights both by making unauthorized
reproductions, and by engaging in public performances, of their
copyrighted works. The material facts are not in dispute. Because we
conclude that Cablevision would not directly infringe plaintiffs’ rights
under the Copyright Act by offering its RS-DVR system to consumers, we
reverse the district court’s award of summary judgment to plaintiffs, and
we vacate its injunction against Cablevision.
BACKGROUND
Today’s television viewers increasingly use digital video recorders
(“DVRs”) instead of video cassette recorders (“VCRs”) to record television

240

CH. 1

programs and play them back later at their convenience. DVRs generally
store recorded programming on an internal hard drive rather than a
cassette. But, as this case demonstrates, the generic term “DVR” actually
refers to a growing number of different devices and systems. Companies
like TiVo sell a stand-alone DVR device that is typically connected to a
user’s cable box and television much like a VCR. Many cable companies
also lease to their subscribers “set-top storage DVRs,” which combine many
of the functions of a standard cable box and a stand-alone DVR in a single
device.
In March 2006, Cablevision, an operator of cable television systems,
announced the advent of its new “Remote Storage DVR System.” As
designed, the RS-DVR allows Cablevision customers who do not have a
stand-alone DVR to record cable programming on central hard drives
housed and maintained by Cablevision at a “remote” location. RS-DVR
customers may then receive playback of those programs through their
home television sets, using only a remote control and a standard cable box
equipped with the RS-DVR software. Cablevision notified its content
providers, including plaintiffs, of its plans to offer RS-DVR, but it did not
seek any license from them to operate or sell the RS-DVR.
Plaintiffs, which hold the copyrights to numerous movies and
television programs, sued Cablevision for declaratory and injunctive relief.
They alleged that Cablevision’s proposed operation of the RS-DVR would
directly infringe their exclusive rights to both reproduce and publicly
perform their copyrighted works. Critically for our analysis here, plaintiffs
alleged theories only of direct infringement, not contributory infringement,
and defendants waived any defense based on fair use.
***
“Section 106 of the Copyright Act grants copyright holders a bundle of
exclusive rights. . . .” Id. at 607–08. This case implicates two of those rights:
the right “to reproduce the copyrighted work in copies,” and the right “to
perform the copyrighted work publicly.” 17 U.S.C. § 106(1), (4). As
discussed above, the district court found that Cablevision infringed the
first right by 1) buffering the data from its programming stream and 2)
copying content onto the Arroyo Server hard disks to enable playback of a
program requested by an RS-DVR customer. In addition, the district court
found that Cablevision would infringe the public performance right by
transmitting a program to an RS-DVR customer in response to that
customer’s playback request. We address each of these three allegedly
infringing acts in turn.
I.

The Buffer Data

It is undisputed that Cablevision, not any customer or other entity,
takes the content from one stream of programming, after the split, and
stores it, one small piece at a time, in the BMR buffer and the primary

CH. 1

241

ingest buffer. As a result, the information is buffered before any customer
requests a recording, and would be buffered even if no such request were
made. The question is whether, by buffering the data that make up a given
work, Cablevision “reproduce[s]” that work “in copies,” 17 U.S.C. § 106(1),
and thereby infringes the copyright holder’s reproduction right.
“Copies,” as defined in the Copyright Act, “are material objects . . . in
which a work is fixed by any method . . . and from which the work can be
. . . reproduced.” Id. § 101. The Act also provides that a work is “ ‘fixed’ in
a tangible medium of expression when its embodiment . . . is sufficiently
permanent or stable to permit it to be . . . reproduced . . . for a period of
more than transitory duration.” Id. (emphasis added). We believe that this
language plainly imposes two distinct but related requirements: the work
must be embodied in a medium, i.e., placed in a medium such that it can
be perceived, reproduced, etc., from that medium (the “embodiment
requirement”), and it must remain thus embodied “for a period of more
than transitory duration” (the “duration requirement”). See 2 Melville B.
Nimmer & David Nimmer, Nimmer on Copyright § 8.02[B][3], at 8–32
(2007). Unless both requirements are met, the work is not “fixed” in the
buffer, and, as a result, the buffer data is not a “copy” of the original work
whose data is buffered.
The district court mistakenly limited its analysis primarily to the
embodiment requirement. As a result of this error, once it determined that
the buffer data was “[c]learly . . . capable of being reproduced,” i.e., that the
work was embodied in the buffer, the district court concluded that the work
was therefore “fixed” in the buffer, and that a copy had thus been made.
Cablevision I, 478 F.Supp.2d at 621–22. In doing so, it relied on a line of
cases beginning with MAI Systems Corp. v. Peak Computer Inc., 991 F.2d
511 (9th Cir.1993). It also relied on the United States Copyright Office’s
2001 report on the Digital Millennium Copyright Act, which states, in
essence, that an embodiment is fixed “[u]nless a reproduction manifests
itself so fleetingly that it cannot be copied.” U.S. Copyright Office, DMCA
Section 104 Report 111 (Aug.2001) (“DMCA Report”) (emphasis added),
available
at
http://www.copyright.gov/reports/studies/dmca/sec–104–
report–vol–1.pdf.
***
Cablevision does not seriously dispute that copyrighted works are
“embodied” in the buffer. Data in the BMR buffer can be reformatted and
transmitted to the other components of the RS-DVR system. Data in the
primary ingest buffer can be copied onto the Arroyo hard disks if a user has
requested a recording of that data. Thus, a work’s “embodiment” in either
buffer “is sufficiently permanent or stable to permit it to be perceived,
reproduced,” (as in the case of the ingest buffer) “or otherwise
communicated” (as in the BMR buffer). 17 U.S.C. § 101. The result might
be different if only a single second of a much longer work was placed in the

242

CH. 1

buffer in isolation. In such a situation, it might be reasonable to conclude
that only a minuscule portion of a work, rather than “a work” was embodied
in the buffer. Here, however, where every second of an entire work is
placed, one second at a time, in the buffer, we conclude that the work is
embodied in the buffer.
Does any such embodiment last “for a period of more than transitory
duration”? Id. No bit of data remains in any buffer for more than a fleeting
1.2 seconds. And unlike the data in cases like MAI *130 Systems, which
remained embodied in the computer’s RAM memory until the user turned
the computer off, each bit of data here is rapidly and automatically
overwritten as soon as it is processed. While our inquiry is necessarily factspecific, and other factors not present here may alter the duration analysis
significantly, these facts strongly suggest that the works in this case are
embodied in the buffer for only a “transitory” period, thus failing the
duration requirement.
Against this evidence, plaintiffs argue only that the duration is not
transitory because the data persist “long enough for Cablevision to make
reproductions from them.” Br. of Pls.-Appellees the Cartoon Network et al.
at 51. As we have explained above, however, this reasoning impermissibly
reads the duration language out of the statute, and we reject it. Given that
the data reside in no buffer for more than 1.2 seconds before being
automatically overwritten, and in the absence of compelling arguments to
the contrary, we believe that the copyrighted works here are not
“embodied” in the buffers for a period of more than transitory duration, and
are therefore not “fixed” in the buffers. Accordingly, the acts of buffering in
the operation of the RS-DVR do not create copies, as the Copyright Act
defines that term. Our resolution of this issue renders it unnecessary for
us to determine whether any copies produced by buffering data would be
de minimis, and we express no opinion on that question.
II. Direct Liability for Creating the Playback Copies
In most copyright disputes, the allegedly infringing act and the
identity of the infringer are never in doubt. These cases turn on whether
the conduct in question does, in fact, infringe the plaintiff’s copyright. In
this case, however, the core of the dispute is over the authorship of the
infringing conduct. After an RS-DVR subscriber selects a program to
record, and that program airs, a copy of the program—a copyrighted
work—resides on the hard disks of Cablevision’s Arroyo Server, its creation
unauthorized by the copyright holder. The question is who made this copy.
If it is Cablevision, plaintiffs’ theory of direct infringement succeeds; if it is
the customer, plaintiffs’ theory fails because Cablevision would then face,
at most, secondary liability, a theory of liability expressly disavowed by
plaintiffs.
Few cases examine the line between direct and contributory liability.
Both parties cite a line of cases beginning with Religious Technology Center

CH. 1

243

v. Netcom On-Line Communication Services, 907 F.Supp. 1361
(N.D.Cal.1995). In Netcom, a third-party customer of the defendant
Internet service provider (“ISP”) posted a copyrighted work that was
automatically reproduced by the defendant’s computer. The district court
refused to impose direct liability on the ISP, reasoning that “[a]lthough
copyright is a strict liability statute, there should still be some element of
volition or causation which is lacking where a defendant’s system is merely
used to create a copy by a third party.” Id. at 1370. Recently, the Fourth
Circuit endorsed the Netcom decision, noting that
to establish direct liability under . . . the Act, something more
must be shown than mere ownership of a machine used by others
to make illegal copies. There must be actual infringing conduct
with a nexus sufficiently close and causal to the illegal copying
that one could conclude that the machine owner himself
trespassed on the exclusive domain of the copyright owner.”
CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th Cir.2004).
Here, the district court pigeon-holed the conclusions reached in
Netcom and its progeny as “premised on the unique attributes of the
Internet.” Cablevision I, 478 F.Supp.2d at 620. While the Netcom court was
plainly concerned with a theory of direct liability that would effectively
“hold the entire Internet liable” for the conduct of a single user, 907 F.Supp.
at 1372, its reasoning and conclusions, consistent with precedents of this
court and the Supreme Court, and with the text of the Copyright Act,
transcend the Internet. Like the Fourth Circuit, we reject the contention
that “the Netcom decision was driven by expedience and that its holding is
inconsistent with the established law of copyright,” CoStar, 373 F.3d at
549, and we find it “a particularly rational interpretation of § 106,” id. at
551, rather than a special-purpose rule applicable only to ISPs.
When there is a dispute as to the author of an allegedly infringing
instance of reproduction, Netcom and its progeny direct our attention to the
volitional conduct that causes the copy to be made. There are only two
instances of volitional conduct in this case: Cablevision’s conduct in
designing, housing, and maintaining a system that exists only to produce
a copy, and a customer’s conduct in ordering that system to produce a copy
of a specific program. In the case of a VCR, it seems clear—and we know of
no case holding otherwise—that the operator of the VCR, the person who
actually presses the button to make the recording, supplies the necessary
element of volition, not the person who manufactures, maintains, or, if
distinct from the operator, owns the machine. We do not believe that an
RS-DVR customer is sufficiently distinguishable from a VCR user to
impose liability as a direct infringer on a different party for copies that are
made automatically upon that customer’s command.
The district court emphasized the fact that copying is “instrumental”
rather than “incidental” to the function of the RS-DVR system. Cablevision

244

CH. 1

I, 478 F.Supp.2d at 620. While that may distinguish the RS-DVR from the
ISPs in Netcom and CoStar, it does not distinguish the RS-DVR from a
VCR, a photocopier, or even a typical copy shop. And the parties do not
seem to contest that a company that merely makes photocopiers available
to the public on its premises, without more, is not subject to liability for
direct infringement for reproductions made by customers using those
copiers. They only dispute whether Cablevision is similarly situated to such
a proprietor.
The district court found Cablevision analogous to a copy shop that
makes course packs for college professors. In the leading case involving
such a shop, for example, “[t]he professor [gave] the copyshop the materials
of which the coursepack [was] to be made up, and the copyshop [did] the
rest.” Princeton Univ. Press v. Mich. Document Servs., 99 F.3d 1381, 1384
(6th Cir.1996) (en banc). There did not appear to be any serious dispute in
that case that the shop itself was directly liable for reproducing copyrighted
works. The district court here found that Cablevision, like this copy shop,
would be “doing” the copying, albeit “at the customer’s behest.” Cablevision
I, 478 F.Supp.2d at 620.
But because volitional conduct is an important element of direct
liability, the district court’s analogy is flawed. In determining who actually
“makes” a copy, a significant difference exists between making a request to
a human employee, who then volitionally operates the copying system to
make the copy, and issuing a command directly to a system, which
automatically obeys commands and engages in no volitional conduct. In
cases like Princeton University Press, the defendants operated a copying
device and sold the product they made using that device. See 99 F.3d at
1383 (“The corporate defendant . . . is a commercial copyshop that
reproduced substantial segments of copyrighted works of scholarship,
bound the copies into ‘coursepacks,’ and sold the coursepacks to
students. . . .”). Here, by selling access to a system that automatically
produces copies on command, Cablevision more closely resembles a store
proprietor who charges customers to use a photocopier on his premises, and
it seems incorrect to say, without more, that such a proprietor “makes” any
copies when his machines are actually operated by his customers. See
Netcom, 907 F.Supp. at 1369. Some courts have held to the contrary, but
they do not explicitly explain why, and we find them unpersuasive. See,
e.g., Elektra Records Co. v. Gem Elec. Distribs., Inc., 360 F.Supp. 821, 823
(E.D.N.Y.1973) (concluding that, “regardless” of whether customers or
defendants’ employees operated the tape-copying machines at defendants’
stores, defendant had actively infringed copyrights).
The district court also emphasized Cablevision’s “unfettered discretion
in selecting the programming that it would make available for recording.”
Cablevision I, 478 F.Supp.2d at 620. This conduct is indeed more proximate
to the creation of illegal copying than, say, operating an ISP or opening a

CH. 1

245

copy shop, where all copied content was supplied by the customers
themselves or other third parties. Nonetheless, we do not think it
sufficiently proximate to the copying to displace the customer as the person
who “makes” the copies when determining liability under the Copyright
Act. Cablevision, we note, also has subscribers who use home VCRs or
DVRs (like TiVo), and has significant control over the content recorded by
these customers. But this control is limited to the channels of programming
available to a customer and not to the programs themselves. Cablevision
has no control over what programs are made available on individual
channels or when those programs will air, if at all. In this respect,
Cablevision possesses far less control over recordable content than it does
in the VOD context, where it actively selects and makes available
beforehand the individual programs available for viewing. For these
reasons, we are not inclined to say that Cablevision, rather than the user,
“does” the copying produced by the RS-DVR system. As a result, we find
that the district court erred in concluding that Cablevision, rather than its
RS-DVR customers, makes the copies carried out by the RS-DVR system.
Our refusal to find Cablevision directly liable on these facts is
buttressed by the existence and contours of the Supreme Court’s doctrine
of contributory liability in the copyright context. After all, the purpose of
any causation-based liability doctrine is to identify the actor (or actors)
whose “conduct has been so significant and important a cause that [he or
she] should be legally responsible.” W. Page Keeton et al., Prosser and
Keeton on Torts § 42, at 273 (5th ed.1984). But here, to the extent that we
may construe the boundaries of direct liability more narrowly, the doctrine
of contributory liability stands ready to provide adequate protection to
copyrighted works.
Most of the facts found dispositive by the district court—e.g.,
Cablevision’s “continuing relationship” with its RS-DVR customers, its
control over recordable content, and the “instrumental[ity]” of copying to
the RS-DVR system, Cablevision I, 478 F.Supp.2d at 618–20—seem to us
more relevant to the question of contributory liability. In Sony Corp. of
America v. Universal City Studios, Inc., the lack of an “ongoing
relationship” between Sony and its VCR customers supported the Court’s
conclusion that it should not impose contributory liability on Sony for any
infringing copying done by Sony VCR owners. 464 U.S. 417, 437–38, 104
S.Ct. 774, 78 L.Ed.2d 574 (1984). The Sony Court did deem it “just” to
impose liability on a party in a “position to control” the infringing uses of
another, but as a contributory, not direct, infringer. Id. at 437, 104 S.Ct.
774. And asking whether copying copyrighted material is only “incidental”
to a given technology is akin to asking whether that technology has
“commercially significant noninfringing uses,” another inquiry the Sony
Court found relevant to whether imposing contributory liability was just.
Id. at 442, 104 S.Ct. 774.

246

CH. 1

The Supreme Court’s desire to maintain a meaningful distinction
between direct and contributory copyright infringement is consistent with
congressional intent. The Patent Act, unlike the Copyright Act, expressly
provides that someone who “actively induces infringement of a patent” is
“liable as an infringer,” 35 U.S.C. § 271(b), just like someone who commits
the underlying infringing act by “us[ing]” a patented invention without
authorization, id. § 271(a). In contrast, someone who merely “sells . . . a
material or apparatus for use in practicing a patented process” faces only
liability as a “contributory infringer.” Id. § 271(c). If Congress had meant
to assign direct liability to both the person who actually commits a
copyright-infringing act and any person who actively induces that
infringement, the Patent Act tells us that it knew how to draft a statute
that would have this effect. Because Congress did not do so, the Sony Court
concluded that “[t]he Copyright Act does not expressly render anyone liable
for infringement committed by another.” 464 U.S. at 434, 104 S.Ct. 774.
Furthermore, in cases like Sony, the Supreme Court has strongly signaled
its intent to use the doctrine of contributory infringement, not direct
infringement, to “identify[ ] the circumstances in which it is just to hold
one individual accountable for the actions of another.” Id. at 435, 104 S.Ct.
774. Thus, although Sony warns us that “the lines between direct
infringement, contributory infringement, and vicarious liability are not
clearly drawn,” id. at 435 n. 17, 104 S.Ct. 774 (internal quotation marks
and citation omitted), that decision does not absolve us of our duty to
discern where that line falls in cases, like this one, that require us to decide
the question.
The district court apparently concluded that Cablevision’s operation of
the RS-DVR system would contribute in such a major way to the copying
done by another that it made sense to say that Cablevision was a direct
infringer, and thus, in effect, was “doing” the relevant copying. There are
certainly other cases, not binding on us, that follow this approach. See, e.g.,
Playboy Enters. v. Russ Hardenburgh, Inc., 982 F.Supp. 503, 513 (N.D.Ohio
1997) (noting that defendant ISP’s encouragement of its users to copy
protected files was “crucial” to finding that it was a direct infringer). We
need not decide today whether one’s contribution to the creation of an
infringing copy may be so great that it warrants holding that party directly
liable for the infringement, even though another party has actually made
the copy. We conclude only that on the facts of this case, copies produced
by the RS-DVR system are “made” by the RS-DVR customer, and
Cablevision’s contribution to this reproduction by providing the system
does not warrant the imposition of direct liability. Therefore, Cablevision
is entitled to summary judgment on this point, and the district court erred
in awarding summary judgment to plaintiffs.

CH. 1

247

III. Transmission of RS-DVR Playback
Plaintiffs’ final theory is that Cablevision will violate the Copyright
Act by engaging in unauthorized public performances of their works
through the playback of the RS-DVR copies. The Act grants a copyright
owner the exclusive right, “in the case of . . . motion pictures and other
audiovisual works, to perform the copyrighted work publicly.” 17 U.S.C.
§ 106(4). Section 101, the definitional section of the Act, explains that
[t]o perform or display a work “publicly” means (1) to perform or
display it at a place open to the public or at any place where a
substantial number of persons outside of a normal circle of a
family and its social acquaintances is gathered; or (2) to transmit
or otherwise communicate a performance or display of the work to
a place specified by clause (1) or to the public, by means of any
device or process, whether the members of the public capable of
receiving the performance or display receive it in the same place
or in separate places and at the same time or at different times.
Id. § 101.
The parties agree that this case does not implicate clause (1).
Accordingly, we ask whether these facts satisfy the second, “transmit
clause” of the public performance definition: Does Cablevision “transmit
. . . a performance . . . of the work . . . to the public”? Id. No one disputes
that the RS-DVR playback results in the transmission of a performance of
a work—the transmission from the Arroyo Server to the customer’s
television set. Cablevision contends that (1) the RS-DVR customer, rather
than Cablevision, does the transmitting and thus the performing and
(2) the transmission is not “to the public” under the transmit clause.
As to Cablevision’s first argument, we note that our conclusion in Part
II that the customer, not Cablevision, “does” the copying does not dictate a
parallel conclusion that the customer, and not Cablevision, “performs” the
copyrighted work. The definitions that delineate the contours of the
reproduction and public performance rights vary in significant ways. For
example, the statute defines the verb “perform” and the noun “copies,” but
not the verbs “reproduce” or “copy.” Id. We need not address Cablevision’s
first argument further because, even if we assume that Cablevision makes
the transmission when an RS-DVR playback occurs, we find that the RSDVR playback, as described here, does not involve the transmission of a
performance “to the public.”
The statute itself does not expressly define the term “performance” or
the phrase “to the public.” It does explain that a transmission may be “to
the public . . . whether the members of the public capable of receiving the
performance . . . receive it in the same place or in separate places and at
the same time or at different times.” Id. This plain language instructs us
that, in determining whether a transmission is “to the public,” it is of no

248

CH. 1

moment that the potential recipients of the transmission are in different
places, or that they may receive the transmission at different times. The
implication from this same language, however, is that it is relevant, in
determining whether a transmission is made to the public, to discern who
is “capable of receiving” the performance being transmitted. The fact that
the statute says “capable of receiving the performance,” instead of “capable
of receiving the transmission,” underscores the fact that a transmission of
a performance is itself a performance. Cf. Buck v. Jewell-La Salle Realty
Co., 283 U.S. 191, 197–98, 51 S.Ct. 410, 75 L.Ed. 971 (1931).
The legislative history of the transmit clause supports this
interpretation. The House Report on the 1976 Copyright Act states that
[u]nder the bill, as under the present law, a performance made
available by transmission to the public at large is “public” even
though the recipients are not gathered in a single place, and even
if there is no proof that any of the potential recipients was
operating his receiving apparatus at the time of the transmission.
The same principles apply whenever the potential recipients of the
transmission represent a limited segment of the public, such as
the occupants of hotel rooms or the subscribers of a cable
television service.
H.R.Rep. No. 94–1476, at 64–65 (1976), reprinted in 1976 U.S.C.C.A.N.
5659, 5678 (emphases added).
Plaintiffs also reference a 1967 House Report, issued nearly a decade
before the Act we are interpreting, stating that the same principles apply
where the transmission is “capable of reaching different recipients at
different times, as in the case of sounds or images stored in an information
system and capable of being performed or displayed at the initiative of
individual members of the public.” H.R.Rep. No. 90–83, at 29 (1967)
(emphases added). We question how much deference this report deserves.
But we need not belabor the point here, as the 1967 report is consistent
with both legislative history contemporaneous with the Act’s passage and
our own interpretation of the statute’s plain meaning.
From the foregoing, it is evident that the transmit clause directs us to
examine who precisely is “capable of receiving” a particular transmission
of a performance. Cablevision argues that, because each RS-DVR
transmission is made using a single unique copy of a work, made by an
individual subscriber, one that can be decoded exclusively by that
subscriber’s cable box, only one subscriber is capable of receiving any given
RS-DVR transmission. This argument accords with the language of the
transmit clause, which, as described above, directs us to consider the
potential audience of a given transmission. We are unpersuaded by the
district court’s reasoning and the plaintiffs’ arguments that we should
consider a larger potential audience in determining whether a
transmission is “to the public.”

CH. 1

249

The district court, in deciding whether the RS-DVR playback of a
program to a particular customer is “to the public,” apparently considered
all of Cablevision’s customers who subscribe to the channel airing that
program and all of Cablevision’s RS-DVR subscribers who request a copy
of that program. Thus, it concluded that the RS-DVR playbacks constituted
public performances because “Cablevision would transmit the same
program to members of the public, who may receive the performance at
different times, depending on whether they view the program in real time
or at a later time as an RS-DVR playback.” Cablevision I, 478 F.Supp.2d at
623 (emphasis added). In essence, the district court suggested that, in
considering whether a transmission is “to the public,” we consider not the
potential audience of a particular transmission, but the potential audience
of the underlying work (i.e., “the program”) whose content is being
transmitted.
We cannot reconcile the district court’s approach with the language of
the transmit clause. That clause speaks of people capable of receiving a
particular “transmission” or “performance,” and not of the potential
audience of a particular “work.” Indeed, such an approach would render
the “to the public” language surplusage. Doubtless the potential audience
for every copyrighted audiovisual work is the general public. As a result,
any transmission of the content of a copyrighted work would constitute a
public performance under the district court’s interpretation. But the
transmit clause obviously contemplates the existence of non-public
transmissions; if it did not, Congress would have stopped drafting that
clause after “performance.”
On appeal, plaintiffs offer a slight variation of this interpretation.
They argue that both in its real-time cablecast and via the RS-DVR
playback, Cablevision is in fact transmitting the “same performance” of a
given work: the performance of the work that occurs when the
programming service supplying Cablevision’s content transmits that
content to Cablevision and the service’s other licensees. See Br. of Pls.Appellees Twentieth Century Fox Film Corp. et al. at 27 (“Fox Br.”) (“The
critical factor . . . is that the same performance is transmitted to different
subscribers at different times . . . . more specifically, the performance of
that program by HBO or another programming service.” (third emphasis
added)).
Thus, according to plaintiffs, when Congress says that to perform a
work publicly means to transmit . . . a performance . . . to the public, they
really meant “transmit . . . the ‘original performance’ . . . to the public.” The
implication of this theory is that to determine whether a given
transmission of a performance is “to the public,” we would consider not only
the potential audience of that transmission, but also the potential audience
of any transmission of the same underlying “original” performance.

250

CH. 1

Like the district court’s interpretation, this view obviates any
possibility of a purely private transmission. Furthermore, it makes
Cablevision’s liability depend, in part, on the actions of legal strangers.
Assume that HBO transmits a copyrighted work to both Cablevision and
Comcast. Cablevision merely retransmits the work from one Cablevision
facility to another, while Comcast retransmits the program to its
subscribers. Under plaintiffs’ interpretation, Cablevision would still be
transmitting the performance to the public, solely because Comcast has
transmitted the same underlying performance to the public. Similarly, a
hapless customer who records a program in his den and later transmits the
recording to a television in his bedroom would be liable for publicly
performing the work simply because some other party had once
transmitted the same underlying performance to the public.
We do not believe Congress intended such odd results. Although the
transmit clause is not a model of clarity, we believe that when Congress
speaks of transmitting a performance to the public, it refers to the
performance created by the act of transmission. Thus, HBO transmits its
own performance of a work when it transmits to Cablevision, and
Cablevision transmits its own performance of the same work when it
retransmits the feed from HBO.
Furthermore, we believe it would be inconsistent with our own
transmit clause jurisprudence to consider the potential audience of an
upstream transmission by a third party when determining whether a
defendant’s own subsequent transmission of a performance is “to the
public.” In National Football League v. PrimeTime 24 Joint Venture (NFL),
211 F.3d 10 (2000), we examined the transmit clause in the context of
satellite television provider PrimeTime, which captured protected content
in the United States from the NFL, transmitted it from the United States
to a satellite (“the uplink”), and then transmitted it from the satellite to
subscribers in both the United States and Canada (“the downlink”).
PrimeTime had a license to transmit to its U.S. customers, but not its
Canadian customers. It argued that although the downlink transmission
to its Canadian subscribers was a public performance, it could not be held
liable for that act because it occurred entirely outside of the United States
and therefore was not subject to the strictures of the Copyright Act. It also
argued that the uplink transmission was not a public performance because
it was a transmission to a single satellite. See id. at 12.
The NFL court did not question the first assumption, but it flatly
rejected the second on a specific and germane ground:
We believe the most logical interpretation of the Copyright Act is to
hold that a public performance or display includes each step in the process
by which a protected work wends its way to its audience. Under that
analysis, it is clear that PrimeTime’s uplink transmission of signals

CH. 1

251

captured in the United States is a step in the process by which NFL’s
protected work wends its way to a public audience.
Id. at 13 (emphasis added) (internal quotation and citation omitted).
Thus, while the uplink transmission that took place in the United States
was not, in itself, “to the public,” the NFL court deemed it so because it
ultimately resulted in an undisputed public performance. Notably, the NFL
court did not base its decision on the fact that an upstream transmission
by another party (the NFL) might have been to the public. Nor did the court
base its decision on the fact that Primetime simultaneously transmitted a
performance of the work to the public in the United States. Because NFL
directs us to look downstream, rather than upstream or laterally, to
determine whether any link in a chain of transmissions made by a party
constitutes a public performance, we reject plaintiffs’ contention that we
examine the potential recipients of the content provider’s initial
transmission to determine who is capable of receiving the RS-DVR
playback transmission.
Plaintiffs also rely on NFL for the proposition that Cablevision
publicly performs a work when it splits its programming stream and
transmits the second stream to the RS-DVR system. Because NFL only
supports that conclusion if we determine that the final transmission in the
chain (i.e., the RS-DVR playback transmission) is “to the public,” plaintiffs’
reliance on NFL is misplaced. NFL dealt with a chain of transmissions
whose final link was undisputedly a public performance. It therefore does
not guide our current inquiry.
In sum, none of the arguments advanced by plaintiffs or the district
court alters our conclusion that, under the transmit clause, we must
examine the potential audience of a given transmission by an alleged
infringer to determine whether that transmission is “to the public.” And
because the RS-DVR system, as designed, only makes transmissions to one
subscriber using a copy made by that subscriber, we believe that the
universe of people capable of receiving an RS-DVR transmission is the
single subscriber whose self-made copy is used to create that transmission.
Plaintiffs contend that it is “wholly irrelevant, in determining the
existence of a public performance, whether ‘unique’ copies of the same work
are used to make the transmissions.” Fox Br. at 27. But plaintiffs cite no
authority for this contention. And our analysis of the transmit clause
suggests that, in general, any factor that limits the potential audience of a
transmission is relevant.
Furthermore, no transmission of an audiovisual work can be made, we
assume, without using a copy of that work: to transmit a performance of a
movie, for example, the transmitter generally must obtain a copy of that
movie. As a result, in the context of movies, television programs, and other
audiovisual works, the right of reproduction can reinforce and protect the
right of public performance. If the owner of a copyright believes he is

252

CH. 1

injured by a particular transmission of a performance of his work, he may
be able to seek redress not only for the infringing transmission, but also for
the underlying copying that facilitated the transmission. Given this
interplay between the various rights in this context, it seems quite
consistent with the Act to treat a transmission made using Copy A as
distinct from one made using Copy B, just as we would treat a transmission
made by Cablevision as distinct from an otherwise identical transmission
made by Comcast. Both factors—the identity of the transmitter and the
source material of the transmission—limit the potential audience of a
transmission in this case and are therefore germane in determining
whether that transmission is made “to the public.”
Indeed, we believe that Columbia Pictures Industries, Inc. v. Redd
Horne, Inc., 749 F.2d 154 (3d Cir.1984), relied on by both plaintiffs and the
district court, supports our decision to accord significance to the existence
and use of distinct copies in our transmit clause analysis. In that case,
defendant operated a video rental store, Maxwell’s, which also housed a
number of small private booths containing seats and a television. Patrons
would select a film, enter the booth, and close the door. An employee would
then load a copy of the requested movie into a bank of VCRs at the front of
the store and push play, thereby transmitting the content of the tape to the
television in the viewing booth. See id. at 156–57.
The Third Circuit found that defendants’ conduct constituted a public
performance under both clauses of the statutory definition. In concluding
that Maxwell’s violated the transmit clause, that court explicitly relied on
the fact that defendants showed the same copy of a work seriatim to its
clientele, and it quoted a treatise emphasizing the same fact:
Professor Nimmer’s examination of this definition is particularly
pertinent: “if the same copy . . . of a given work is repeatedly played (i.e.,
‘performed’) by different members of the public, albeit at different times,
this constitutes a ‘public’ performance.” 2 M. Nimmer, § 8.14[C][3], at 8–
142 (emphasis in original). . . . Although Maxwell’s has only one copy of
each film, it shows each copy repeatedly to different members of the public.
This constitutes a public performance.
Id. at 159 (first omission in original).
Unfortunately, neither the Redd Horne court nor Prof. Nimmer
explicitly explains why the use of a distinct copy affects the transmit clause
inquiry. But our independent analysis confirms the soundness of their
intuition: the use of a unique copy may limit the potential audience of a
transmission and is therefore relevant to whether that transmission is
made “to the public.” Plaintiffs’ unsupported arguments to the contrary are
unavailing.
Given that each RS-DVR transmission is made to a given subscriber
using a copy made by that subscriber, we conclude that such a transmission

CH. 1

253

is not “to the public,” without analyzing the contours of that phrase in great
detail. No authority cited by the parties or the district court persuades us
to the contrary.
In addition to Redd Horne, the district court also cited and analyzed
On Command Video Corp. v. Columbia Pictures Industries, 777 F.Supp.
787 (N.D.Cal.1991), in its transmit clause analysis. In that case, defendant
On Command developed and sold “a system for the electronic delivery of
movie video tapes,” which it sold to hotels. Id. at 788. The hub of the system
was a bank of video cassette players, each containing a copy of a particular
movie. From his room, a hotel guest could select a movie via remote control
from a list on his television. The corresponding cassette player would start,
and its output would be transmitted to that guest’s room. During this
playback, the movie selected was unavailable to other guests. See id. The
court concluded that the transmissions made by this system were made to
the public “because the relationship between the transmitter of the
performance, On Command, and the audience, hotel guests, is a
commercial, ‘public’ one regardless of where the viewing takes place.” Id.
at 790.
Thus, according to the On Command court, any commercial
transmission is a transmission “to the public.” We find this interpretation
untenable, as it completely rewrites the language of the statutory
definition. If Congress had wished to make all commercial transmissions
public performances, the transmit clause would read: “to perform a work
publicly means . . . to transmit a performance for commercial purposes.” In
addition, this interpretation overlooks, as Congress did not, the possibility
that even non-commercial transmissions to the public may diminish the
value of a copyright. Finally, like Redd Horne, On Command is factually
distinguishable, as successive transmissions to different viewers in that
case could be made using a single copy of a given work. Thus, at the
moment of transmission, any of the hotel’s guests was capable of receiving
a transmission made using a single copy of a given movie. As a result, the
district court in this case erred in relying on On Command.
Plaintiffs also rely on Ford Motor Co. v. Summit Motor Products, Inc.,
930 F.2d 277 (3d Cir.1991), in which the Third Circuit interpreted § 106(3)
of the Copyright Act, which gives the copyright holder the exclusive right
“to distribute copies . . . of the copyrighted work to the public,” 17 U.S.C.
§ 106(3) (emphasis added). The court concluded that “even one person can
be the public for the purposes of section 106(3).” Ford, 930 F.2d at 299
(emphasis added). Commentators have criticized the Ford court for
divesting the phrase “to the public” of “all meaning whatsoever,” 2 Nimmer
& Nimmer, supra, § 8.11[A], at 8–149, and the decision does appear to have
that result. Whether this result was justified in the context of the
distribution right is not for us to decide in this case. We merely note that
we find no compelling reason, in the context of the transmit clause and the

254

CH. 1

public performance right, to interpret the phrase “to the public” out of
existence.
In sum, we find that the transmit clause directs us to identify the
potential audience of a given transmission, i.e., the persons “capable of
receiving” it, to determine whether that transmission is made “to the
public.” Because each RS-DVR playback transmission is made to a single
subscriber using a single unique copy produced by that subscriber, we
conclude that such transmissions are not performances “to the public,” and
therefore do not infringe any exclusive right of public performance. We base
this decision on the application of undisputed facts; thus, Cablevision is
entitled to summary judgment on this point.
This holding, we must emphasize, does not generally permit content
delivery networks to avoid all copyright liability by making copies of each
item of content and associating one unique copy with each subscriber to the
network, or by giving their subscribers the capacity to make their own
individual copies. We do not address whether such a network operator
would be able to escape any other form of copyright liability, such as
liability for unauthorized reproductions or liability for contributory
infringement.
In sum, because we find, on undisputed facts, that Cablevision’s
proposed RS-DVR system would not directly infringe plaintiffs’ exclusive
rights to reproduce and publicly perform their copyrighted works, we grant
summary judgment in favor of Cablevision with respect to both rights.
CONCLUSION
For the foregoing reasons, the district court’s award of summary judgment
to the plaintiffs is REVERSED and the district court’s injunction against
Cablevision is VACATED. The case is REMANDED for further proceedings
consistent with this opinion.

———

A & M RECORDS, ET AL. V. NAPSTER
United
States
239 F.3d 1004.

Court

of

Appeals,

Ninth

Circuit,

2001.

BEEZER, CIRCUIT JUDGE.
[After walking through the basic doctrinal issues of whether Napster
users were engaging in copyright infringement or fair use, the Circuit then
turned to Napster’s principal defense of the legality of its registered users’
actions.]

CH. 1
5.

255

Identified Uses

Napster maintains that its identified uses of sampling and spaceshifting were wrongly excluded as fair uses by the district court.
a.

Sampling

Napster contends that its users download MP3 files to “sample” the
music in order to decide whether to purchase the recording. Napster argues
that the district court: (1) erred in concluding that sampling is a
commercial use because it conflated a noncommercial use with a personal
use; (2) erred in determining that sampling adversely affects the market
for plaintiffs copyrighted music, a requirement if the use is noncommercial;
and (3) erroneously concluded that sampling is not a fair use because it
determined that samplers may also engage in other infringing activity.
The district court determined that sampling remains a commercial use
even if some users eventually purchase the music. We find no error in the
district court’s determination. Plaintiffs have established that they are
likely to succeed in proving that even authorized temporary downloading
of individual songs for sampling purposes is commercial in nature. The
record supports a finding that free promotional downloads are highly
regulated by the record company plaintiffs and that the companies collect
royalties for song samples available on retail Internet sites. Evidence relied
on by the district court demonstrates that the free downloads provided by
the record companies consist of thirty-to-sixty second samples or are full
songs programmed to “time out,” that is, exist only for a short time on the
downloader’s computer. In comparison, Napster users download a full, free
and permanent copy of the recording. The determination by the district
court as to the commercial purpose and character of sampling is not clearly
erroneous.
The district court further found that both the market for audio CDs
and market for online distribution are adversely affected by Napster’s
service. As stated in our discussion of the district court’s general fair use
analysis: the court did not abuse its discretion when it found that, overall,
Napster has an adverse impact on the audio CD and digital download
markets. Contrary to Napster’s assertion that the district court failed to
specifically address the market impact of sampling, the district court
determined that “even if the type of sampling supposedly done on Napster
were a non-commercial use, plaintiffs have demonstrated a substantial
likelihood that it would adversely affect the potential market for their
copyrighted works if it became widespread.” Napster, 114 F. Supp. 2d at
914. The record supports the district court’s preliminary determinations
that: (1) the more music that sampling users download, the less likely they
are to eventually purchase the recordings on audio CD; and (2) even if the
audio CD market is not harmed, Napster has adverse effects on the
developing digital download market.

256

CH. 1

Napster further argues that the district court erred in rejecting its
evidence that the users’ downloading of “samples” increases or tends to
increase audio CD sales. The district court, however, correctly noted that
“any potential enhancement of plaintiffs’ sales . . . would not tip the fair
use analysis conclusively in favor of defendant.” Id. at 914. We agree that
increased sales of copyrighted material attributable to unauthorized use
should not deprive the copyright holder of the right to license the material.
See Campbell, 510 U.S. at 591 n.21 (“Even favorable evidence, without
more, is no guarantee of fairness. Judge Leval gives the example of the film
producer’s appropriation of a composer’s previously unknown song that
turns the song into a commercial success; the boon to the song does not
make the film’s simple copying fair.”). Nor does positive impact in one
market, here the audio CD market, deprive the copyright holder of the right
to develop identified alternative markets, here the digital download
market.
We find no error in the district court’s factual findings or abuse of
discretion in the court’s conclusion that plaintiffs will likely prevail in
establishing that sampling does not constitute a fair use.
b.

Space-Shifting

Napster also maintains that space-shifting is a fair use. Space-shifting
occurs when a Napster user downloads MP3 music files in order to listen
to music he already owns on audio CD. Napster asserts that we have
already held that space-shifting of musical compositions and sound
recordings is a fair use. See Recording Indus. Ass’n of Am. v. Diamond
Multimedia Sys., Inc., 180 F.3d 1072, 1079 (9th Cir. 1999) (“Rio [a portable
MP3 player] merely makes copies in order to render portable, or ‘spaceshift,’ those files that already reside on a user’s hard drive. Such copying is
a paradigmatic noncommercial personal use.”). See also generally Sony,
464 U.S. at 423 (holding that “time-shifting,” where a video tape recorder
owner records a television show for later viewing, is a fair use).
We conclude that the district court did not err when it refused to apply
the “shifting” analyses of Sony and Diamond. Both Diamond and Sony are
inapposite because the methods of shifting in these cases did not also
simultaneously involve distribution of the copyrighted material to the
general public; the time or space-shifting of copyrighted material exposed
the material only to the original user. In Diamond, for example, the
copyrighted music was transferred from the user’s computer hard drive to
the user’s portable MP3 player. So too Sony, where “the majority of VCR
purchasers did not distribute taped television broadcasts, but merely
enjoyed them at home.” Napster, 114 F. Supp.2d at 913. Conversely, it is
obvious that once a user lists a copy of music he already owns on the
Napster system in order to access the music from another location, the song
becomes “available to millions of other individuals,” not just the original
CD owner. See UMG Recordings, 92 F. Supp.2d at 351–52 (finding space-

CH. 1

257

shifting of MP3 files not a fair use even when previous ownership is
demonstrated before a download is allowed).
***
(The Circuit then turned to the question of whether Napster was itself
liable for contributing to the infringement by its users.)
IV
A.

Knowledge

Contributory liability requires that the secondary infringer “know or
have reason to know” of direct infringement. The district court found that
Napster had both actual and constructive knowledge that its users
exchanged copyrighted music. The district court also concluded that the
law does not require knowledge of “specific acts of infringement” and
rejected Napster’s contention that because the company cannot distinguish
infringing from noninfringing files, it does not “know” of the direct
infringement.
It is apparent from the record that Napster has knowledge, both actual
and constructive, of direct infringement. Napster claims that it is
nevertheless protected from contributory liability by the teaching of Sony
Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984). We disagree. We
observe that Napster’s actual, specific knowledge of direct infringement
renders Sony’s holding of limited assistance to Napster. We are compelled
to make a clear distinction between the architecture of the Napster system
and Napster’s conduct in relation to the operational capacity of the system.
We are bound to follow Sony, and will not impute the requisite level of
knowledge to Napster merely because peer-to-peer file sharing technology
may be used to infringe plaintiffs’ copyrights. See 464 U.S. at 436 (rejecting
argument that merely supplying the “ ‘means’ to accomplish an infringing
activity” leads to imposition of liability). We depart from the reasoning of
the district court that Napster failed to demonstrate that its system is
capable of commercially significant noninfringing uses. The district court
improperly confined the use analysis to current uses, ignoring the system’s
capabilities. See generally Sony, 464 U.S. at 442–43 (framing inquiry as
whether the video tape recorder is “capable of commercially significant
noninfringing uses”). Consequently, the district court placed undue weight
on the proportion of current infringing use as compared to current and
future noninfringing use. Nonetheless, whether we might arrive at a
different result is not the issue here. The instant appeal occurs at an early
point in the proceedings and “the fully developed factual record may be
materially different from that initially before the district court. . . .”
Regardless of the number of Napster’s infringing versus noninfringing
uses, the evidentiary record here supported the district court’s finding that
plaintiffs would likely prevail in establishing that Napster knew or had
reason to know of its users’ infringement of plaintiffs’ copyrights.

258

CH. 1

***
We agree that if a computer system operator learns of specific
infringing material available on his system and fails to purge such material
from the system, the operator knows of and contributes to direct
infringement. Conversely, absent any specific information which identifies
infringing activity, a computer system operator cannot be liable for
contributory infringement merely because the structure of the system
allows for the exchange of copyrighted material. See Sony, 464 U.S. at 436,
442–43. To enjoin simply because a computer network allows for infringing
use would, in our opinion, violate Sony and potentially restrict activity
unrelated to infringing use.
We nevertheless conclude that sufficient knowledge exists to impose
contributory liability when linked to demonstrated infringing use of the
Napster system. The record supports the district court’s finding that
Napster has actual knowledge that specific infringing material is available
using its system, that it could block access to the system by suppliers of the
infringing material, and that it failed to remove the material.
B.

Material Contribution

Under the facts as found by the district court, Napster materially
contributes to the infringing activity. Relying on Fonovisa v. Cherry
Auction, 76 F.3d 259 (9th Cir. 1996), the district court concluded that
“without the support services defendant provides, Napster users could not
find and download the music they want with the ease of which defendant
boasts.” Napster, 114 F. Supp.2d at 919–20 (“Napster is an integrated
service designed to enable users to locate and download MP3 music files.”).
We agree that Napster provides “the site and facilities” for direct
infringement. The district court correctly applied the reasoning in
Fonovisa, and properly found that Napster materially contributes to direct
infringement.
V
We turn to the question whether Napster engages in vicarious
copyright infringement. Vicarious copyright liability is an “outgrowth” of
respondeat superior. Fonovisa, 76 F.3d at 262. In the context of copyright
law, vicarious liability extends beyond an employer/employee relationship
to cases in which a defendant “has the right and ability to supervise the
infringing activity and also has a direct financial interest in such
activities.”
Before moving into this discussion, we note that Sony’s “staple article
of commerce” analysis has no application to Napster’s potential liability for
vicarious copyright infringement. The issues of Sony’s liability under the
“doctrines of ‘direct infringement’ and ‘vicarious liability’ ” were not before
the Supreme Court, although the Court recognized that the “lines between
direct infringement, contributory infringement, and vicarious liability are

CH. 1

259

not clearly drawn.” Consequently, when the Sony Court used the term
“vicarious liability,” it did so broadly and outside of a technical analysis of
the doctrine of vicarious copyright infringement. Id. at 435 (“Vicarious
liability is imposed in virtually all areas of the law, and the concept of
contributory infringement is merely a species of the broader problem of
identifying the circumstances in which it is just to hold one individual
accountable for the actions of another.”).
A.

Financial Benefit

The district court determined that plaintiffs had demonstrated they
would likely succeed in establishing that Napster has a direct financial
interest in the infringing activity. We agree. Financial benefit exists where
the availability of infringing material “acts as a ‘draw’ for customers.”
Ample evidence supports the district court’s finding that Napster’s future
revenue is directly dependent upon “increases in userbase.” More users
register with the Napster system as the “quality and quantity of available
music increases.” We conclude that the district court did not err in
determining that Napster financially benefits from the availability of
protected works on its system.
B.

Supervision

The district court determined that Napster has the right and ability to
supervise its users’ conduct. We agree in part. The ability to block
infringers’ access to a particular environment for any reason whatsoever is
evidence of the right and ability to supervise. Here, plaintiffs have
demonstrated that Napster retains the right to control access to its system.
Napster has an express reservation of rights policy, stating on its website
that it expressly reserves the “right to refuse service and terminate
accounts in [its] discretion, including, but not limited to, if Napster believes
that user conduct violates applicable law . . . or for any reason in Napster’s
sole discretion, with or without cause.”
To escape imposition of vicarious liability, the reserved right to police
must be exercised to its fullest extent. Turning a blind eye to detectable
acts of infringement for the sake of profit gives rise to liability . . . The
district court correctly determined that Napster had the right and ability
to police its system and failed to exercise that right to prevent the exchange
of copyrighted material. The district court, however, failed to recognize that
the boundaries of the premises that Napster “controls and patrols” are
limited. Put differently, Napster’s reserved “right and ability” to police is
cabined by the system’s current architecture. As shown by the record, the
Napster system does not “read” the content of indexed files, other than to
check that they are in the proper MP3 format.
Napster, however, has the ability to locate infringing material listed
on its search indices, and the right to terminate users’ access to the system.
The file name indices, therefore, are within the “premises” that Napster

260

CH. 1

has the ability to police. We recognize that the files are user-named and
may not match copyrighted material exactly (for example, the artist or song
could be spelled wrong). For Napster to function effectively, however, file
names must reasonably or roughly correspond to the material contained in
the files, otherwise no user could ever locate any desired music. As a
practical matter, Napster, its users and the record company plaintiffs have
equal access to infringing material by employing Napster’s “search
function.”
Our review of the record requires us to accept the district court’s
conclusion that plaintiffs have demonstrated a likelihood of success on the
merits of the vicarious copyright infringement claim. Napster’s failure to
police the system’s “premises,” combined with a showing that Napster
financially benefits from the continuing availability of infringing files on
its system, leads to the imposition of vicarious liability.
VIII
[The one change of consequence in the Circuit Court ruling related to
the nature of the interim injunctive relief to be granted the music industry
against this Napster service.]
The district court correctly recognized that a preliminary injunction
against Napster’s participation in copyright infringement is not only
warranted but required. We believe, however, that the scope of the
injunction needs modification in light of our opinion. Specifically, we
reiterate that contributory liability may potentially be imposed only to the
extent that Napster: (1) receives reasonable knowledge of specific
infringing files with copyrighted musical compositions and sound
recordings; (2) knows or should know that such files are available on the
Napster system; and (3) fails to act to prevent viral distribution of the
works. The mere existence of the Napster system, absent actual notice and
Napster’s demonstrated failure to remove the offending material, is
insufficient to impose contributory liability. See Sony, 464 U.S. at 442–43.
Conversely, Napster may be vicariously liable when it fails to
affirmatively use its ability to patrol its system and preclude access to
potentially infringing files listed in its search index. Napster has both the
ability to use its search function to identify infringing musical recordings
and the right to bar participation of users who engage in the transmission
of infringing files.
The preliminary injunction which we stayed is overbroad because it
places on Napster the entire burden of ensuring that no “copying,
downloading, uploading, transmitting, or distributing” of plaintiffs’ works
occur on the system. As stated, we place the burden on plaintiffs to provide
notice to Napster of copyrighted works and files containing such works
available on the Napster system before Napster has the duty to disable
access to the offending content. Napster, however, also bears the burden of

CH. 1

261

policing the system within the limits of the system. Here, we recognize that
this is not an exact science in that the files are user named. In crafting the
injunction on remand, the district court should recognize that Napster’s
system does not currently appear to allow Napster access to users’ MP3
files.
Based on our decision to remand, Napster’s additional arguments on
appeal going to the scope of the injunction need not be addressed. We,
however, briefly address Napster’s First Amendment argument so that it
is not reasserted on remand. Napster contends that the present injunction
violates the First Amendment because it is broader than necessary. The
company asserts two distinct free speech rights: (1) its right to publish a
“directory” (here, the search index) and (2) its users’ right to exchange
information. We note that First Amendment concerns in copyright are
allayed by the presence of the fair use doctrine. There was a preliminary
determination here that Napster users are not fair users. Uses of
copyrighted material that are not fair uses are rightfully enjoined. See Dr.
Seuss Enters. v. Penguin Books USA, Inc., 109 F.3d 1394, 1403 (9th Cir.
1997) (rejecting defendants’ claim that injunction would constitute a prior
restraint in violation of the First Amendment).
Affirmed in Part, Reversed in Part, and Remanded.

———
Eventually Napster was sold to one of the copyright plaintiffs, which
then offered a new Internet service we will be reading about soon. RIAA
members were also developing their own Internet music services. Three of
the major labels, Warner Music, EMI, and BMG, combined with
RealNetwork and AOL to create a new MusicNet, while the other two
majors, Sony and Universal Music, did the same with their own new
Pressplay (with EMI offering its songs on this service as well). After having
developed what they considered to be safe technology and securing
acceptable contracts from the music publishers who also had copyrights in
the songs, these systems both started operating in 2001. For a fee of $10 a
month, a subscriber had access to around 100,000 songs, but was entitled
to stream or download just 100 songs, all of which would be extinguished
after that month unless the service and fee was renewed.
By the summer of 2001, Internet services emerged employing new
software created by FastTrack: Kazaa, run by a FastTrack partner out of
Amsterdam, MusicCity Morpheus (a branch of Streamcast Networks)
based in Franklin, Tennessee, and Grokster, operated from Nevis Island in
the Caribbean West Indies. These new services were more decentralized
than Napster, which had required its users to log on to its own server
containing a central directory of everyone who had available songs. By
September 2001, more music files were being exchanged on the new
FastTrack software than back in February 2001 on Napster. MusicCity

262

CH. 1

provided this service for free (as had Napster), but displayed
advertisements on its webpages.
Another potentially important difference between MusicCity and
Napster was that the former provided access not only to music, but to
movies, photo images, and documents. Thus, not only albums from Bob
Dylan and ‘N Sync, but movies like Planet of the Apes and Legally Blonde
were appearing on computers round the world a day or two after they had
been released in American movie theaters. Movie “fans” would bring video
cameras into the theater to tape the movie while they were watching it,
and then compressing the film into their computers for distribution via
MusicCity, Kazaa, and Grokster over the FastTrack software. By the fall
of 2001, surveys found millions of exchanges of thousands of movies over
the Internet, and these numbers were growing as higher-speed connections
became available to exchange three-hour movies like The Lord of the Rings,
or even an entire series of The Sopranos, rather than just a three-minute
song.
Thus, in October 2001, the MPAA and RIAA members filed suit
against these file-sharing services. MGM v. Grokster, Ltd., 243 F. Supp. 2d
1073 (C.D. Cal. 2003). According to the complaint, these “defendants have
created a 21st Century piratical bazaar where the unlawful exchange of
protected material takes place across the vast expanse of the Internet.” The
defendants responded that their new service made it possible for people to
learn about such public events as the “World Trade Center terrorist
tragedy,” as well as for young musicians to share their new work; and that
they had neither knowledge of any specific items people were seeking to
exchange, nor any ability to control the illegal ones.

METRO-GOLDWYN-MAYER
GROKSTER, LTD.
Supreme
Court
of
the
545 U.S. 913, 125 S.Ct. 2764, 162 L.Ed.2d 781.

STUDIOS
United

INC.
States,

V.
2005.

JUSTICE SOUTER delivered the opinion of the Court.
The question is under what circumstances the distributor of a product
capable of both lawful and unlawful use is liable for acts of copyright
infringement by third parties using the product. We hold that one who
distributes a device with the object of promoting its use to infringe
copyright, as shown by clear expression or other affirmative steps taken to
foster infringement, is liable for the resulting acts of infringement by third
parties.

CH. 1

263

I
A
Respondents, Grokster, Ltd., and StreamCast Networks, Inc.,
defendants in the trial court, distribute free software products that allow
computer users to share electronic files through peer-to-peer networks, so
called because users’ computers communicate directly with each other, not
through central servers. The advantage of peer-to-peer networks over
information networks of other types shows up in their substantial and
growing popularity. Because they need no central computer server to
mediate the exchange of information or files among users, the highbandwidth communications capacity for a server may be dispensed with,
and the need for costly server storage space is eliminated. Since copies of a
file (particularly a popular one) are available on many users’ computers,
file requests and retrievals may be faster than on other types of networks,
and since file exchanges do not travel through a server, communications
can take place between any computers that remain connected to the
network without risk that a glitch in the server will disable the network in
its entirety. Given these benefits in security, cost, and efficiency, peer-topeer networks are employed to store and distribute electronic files by
universities, government agencies, corporations, and libraries, among
others.
Other users of peer-to-peer networks include individual recipients of
Grokster’s and StreamCast’s software, and although the networks that
they enjoy through using the software can be used to share any type of
digital file, they have prominently employed those networks in sharing
copyrighted music and video files without authorization. A group of
copyright holders (MGM for short, but including motion picture studios,
recording companies, song-writers, and music publishers) sued Grokster
and StreamCast for their users’ copyright infringements, alleging that they
knowingly and intentionally distributed their software to enable users to
reproduce and distribute the copyrighted works in violation of the
Copyright Act. MGM sought damages and an injunction.
Discovery during the litigation revealed the way the software worked,
the business aims of each defendant company, and the predilections of the
users. Grokster’s eponymous software employs what is known as
FastTrack technology, a protocol developed by others and licensed to
Grokster. StreamCast distributes a very similar product except that its
software, called Morpheus, relies on what is known as Gnutella technology.
A user who downloads and installs either software possesses the protocol
to send requests for files directly to the computers of others using software
compatible with FastTrack or Gnutella. On the FastTrack network opened
by the Grokster software, the user’s request goes to a computer given an
indexing capacity by the software and designated a supernode, or to some
other computer with comparable power and capacity to collect temporary

264

CH. 1

indexes of the files available on the computers of users connected to it. The
supernode (or indexing computer) searches its own index and may
communicate the search request to other supernodes. If the file is found,
the supernode discloses its location to the computer requesting it, and the
requesting user can download the file directly from the computer located.
The copied file is placed in a designated sharing folder on the requesting
user’s computer, where it is available for other users to download in turn,
along with any other file in that folder.
In the Gnutella network made available by Morpheus, the process is
mostly the same, except that in some versions of the Gnutella protocol
there are no supernodes. In these versions, peer computers using the
protocol communicate directly with each other. When a user enters a
search request into the Morpheus software, it sends the request to
computers connected with it, which in turn pass the request along to other
connected peers. The search results are communicated to the requesting
computer, and the user can download desired files directly from peers’
computers. As this description indicates, Grokster and StreamCast use no
servers to intercept the content of the search requests or to mediate the file
transfers conducted by users of the software, there being no central point
through which the substance of the communications passes in either
direction.
Although Grokster and StreamCast do not therefore know when
particular files are copied, a few searches using their software would show
what is available on the networks the software reaches. MGM
commissioned a statistician to conduct a systematic search, and his study
showed that nearly 90% of the files available for download on the
FastTrack system were copyrighted works.5 Grokster and StreamCast
dispute this figure, raising methodological problems and arguing that free
copying even of copyrighted works may be authorized by the rightholders.
They also argue that potential noninfringing uses of their software are
significant in kind, even if infrequent in practice. Some musical performers,
for example, have gained new audiences by distributing their copyrighted
works for free across peer-to-peer networks, and some distributors of
unprotected content have used peer-to-peer networks to disseminate files,
Shakespeare being an example. Indeed, StreamCast has given Morpheus
users the opportunity to download the briefs in this very case, though their
popularity has not been quantified.
5
By comparison, evidence introduced by the plaintiffs in A & M Records, Inc. v. Napster,
Inc., 239 F. 3d 1004 (CA9 2001), showed that 87% of files available on the Napster filesharing
network were copyrighted, id., at 1013. Among the key early scholarly treatments of these issues
are Lawrence Lessig, The Future of Ideas: The Fate of the Commons in a Connected World (Random
House, 2001); Jane C. Ginsburg, Copyright Use and Excuse on the Internet, 24 Colum. VLA J. L.
& the Arts 1 (2000); R. Anthony Reese, Copyright & Internet Music Transmissions: Existing Law,
Major Controversies, Possible Solutions, 55 U. Miami L. Rev. 237 (2001). The major one now is the
book by William Fisher, Promises to Keep: Technology Law and the Future of Entertainment
(Stanford Univ. Press 2004).

CH. 1

265

As for quantification, the parties’ anecdotal and statistical evidence
entered thus far to show the content available on the FastTrack and
Gnutella networks does not say much about which files are actually
downloaded by users, and no one can say how often the software is used to
obtain copies of unprotected material. But MGM’s evidence gives reason to
think that the vast majority of users’ downloads are acts of infringement,
and because well over 100 million copies of the software in question are
known to have been downloaded, and billions of files are shared across the
FastTrack and Gnutella networks each month, the probable scope of
copyright infringement is staggering. Grokster and StreamCast concede
the infringement in most downloads, and it is uncontested that they are
aware that users employ their software primarily to download copyrighted
files, even if the decentralized FastTrack and Gnutella networks fail to
reveal which files are being copied, and when. From time to time, moreover,
the companies have learned about their users’ infringement directly, as
from users who have sent e-mail to each company with questions about
playing copyrighted movies they had downloaded, to whom the companies
have responded with guidance. And MGM notified the companies of 8
million copyrighted files that could be obtained using their software.
Grokster and StreamCast are not, however, merely passive recipients of
information about infringing use. The record is replete with evidence that
from the moment Grokster and StreamCast began to distribute their free
software, each one clearly voiced the objective that recipients use it to
download copyrighted works, and each took active steps to encourage
infringement.
After the notorious file-sharing service, Napster, was sued by
copyright holders for facilitation of copyright infringement. StreamCast
gave away a software program of a kind known as OpenNap, designed as
compatible with the Napster program and open to Napster users for
downloading files from other Napster and OpenNap users’ computers.
Evidence indicates that “[i]t was always [StreamCast’s] intent to use [its
OpenNap network] to be able to capture email addresses of [its] initial
target market so that [it] could promote [its] StreamCast Morpheus
interface to them,” indeed, the OpenNap program was engineered “ ‘to
leverage Napster’s 50 million user base.’ ”
StreamCast monitored both the number of users downloading its
OpenNap program and the number of music files they downloaded. It also
used the resulting OpenNap network to distribute copies of the Morpheus
software and to encourage users to adopt it. Internal company documents
indicate that StreamCast hoped to attract large numbers of former Napster
users if that company was shut down by court order or otherwise, and that
StreamCast planned to be the next Napster. A kit developed by
StreamCast to be delivered to advertisers, for example, contained press
articles about StreamCast’s potential to capture former Napster users, and
it introduced itself to some potential advertisers as a company “which is

266

CH. 1

similar to what Napster was.” It broadcast banner advertisements to users
of other Napster-compatible software, urging them to adopt its OpenNap.
An internal e-mail from a company executive stated: “ ‘We have put this
network in place so that when Napster pulls the plug on their free service
. . . or if the Court orders them shut down prior to that . . . we will be
positioned to capture the flood of their 32 million users that will be actively
looking for an alternative.’ ”
Thus, StreamCast developed promotional materials to market its
service as the best Napster alternative. One proposed advertisement read:
“Napster Inc. has announced that it will soon begin charging you a fee.
That’s if the courts don’t order it shut down first. What will you do to get
around it?”
Another proposed ad touted StreamCast’s software as the “#1
alternative to Napster” and asked “[w]hen the lights went off at Napster
. . . where did the users go?” StreamCast even planned to flaunt the illegal
uses of its software; when it launched the OpenNap network, the chief
technology officer of the company averred that “[t]he goal is to get in trouble
with the law and get sued. It’s the best way to get in the new[s].” The
evidence that Grokster sought to capture the market of former Napster
users is sparser but revealing, for Grokster launched its own OpenNap
system called Swaptor and inserted digital codes into its Web site so that
computer users using Web search engines to look for “Napster” or “[f]ree
filesharing” would be directed to the Grokster Web site, where they could
download the Grokster software. And Grokster’s name is an apparent
derivative of Napster.
StreamCast’s executives monitored the number of songs by certain
commercial artists available on their networks, and an internal
communication indicates they aimed to have a larger number of
copyrighted songs available on their networks than other file-sharing
networks. The point, of course, would be to attract users of a mind to
infringe, just as it would be with their promotional materials developed
showing copyrighted songs as examples of the kinds of files available
through Morpheus. Morpheus in fact allowed users to search specifically
for “Top 40” songs, which were inevitably copyrighted. Similarly, Grokster
sent users a newsletter promoting its ability to provide particular, popular
copyrighted materials.
In addition to this evidence of express promotion, marketing, and
intent to promote further, the business models employed by Grokster and
StreamCast confirm that their principal object was use of their software to
download copyrighted works. Grokster and StreamCast receive no revenue
from users, who obtain the software itself for nothing. Instead, both
companies generate income by selling advertising space, and they stream
the advertising to Grokster and Morpheus users while they are employing
the programs. As the number of users of each program increases,

CH. 1

267

advertising opportunities become worth more. While there is doubtless
some demand for free Shakespeare, the evidence shows that substantive
volume is a function of free access to copyrighted work. Users seeking Top
40 songs, for example, or the latest release by Modest Mouse, are certain
to be far more numerous than those seeking a free Decameron, and
Grokster and StreamCast translated that demand into dollars. Finally,
there is no evidence that either company made an effort to filter
copyrighted material from users’ downloads or otherwise impede the
sharing of copyrighted files. Although Grokster appears to have sent emails warning users about infringing content when it received threatening
notice from the copyright holders, it never blocked anyone from continuing
to use its software to share copyrighted files. StreamCast not only rejected
another company’s offer of help to monitor infringement, but blocked the
Internet Protocol addresses of entities it believed were trying to engage in
such monitoring on its networks.
B
[Justice Souter noted the lower courts’ reading of Sony] as holding that
distribution of a commercial product capable of substantial noninfringing
uses could not give rise to contributory liability for infringement unless the
distributor had actual knowledge of specific instances of infringement and
failed to act on that knowledge. The fact that the software was capable of
substantial noninfringing uses in the Ninth Circuit’s view meant that
Grokster and StreamCast were not liable, because they had no such actual
knowledge, owing to the decentralized architecture of their software. The
court also held that Grokster and StreamCast did not materially contribute
to their users’ infringement because it was the users themselves who
searched for, retrieved, and stored the infringing files, with no involvement
by the defendants beyond providing the software in the first place.
***
II
A
MGM and many of the amici fault the Court of Appeals’s holding for
upsetting a sound balance between the respective values of supporting
creative pursuits through copyright protection and promoting innovation
in new communication technologies by limiting the incidence of liability for
copyright infringement. The more artistic protection is favored, the more
technological innovation may be discouraged; the administration of
copyright law is an exercise in managing the trade-off.
The tension between the two values is the subject of this case, with its
claim that digital distribution of copyrighted material threatens copyright
holders as never before, because every copy is identical to the original,
copying is easy, and many people (especially the young) use file-sharing
software to download copyrighted works. This very breadth of the

268

CH. 1

software’s use may well draw the public directly into the debate over
copyright policy, and the indications are that the ease of copying songs or
movies using software like Grokster’s and Napster’s is fostering disdain for
copyright protection. As the case has been presented to us, these fears are
said to be offset by the different concern that imposing liability, not only on
infringers but on distributors of software based on its potential for unlawful
use, could limit further development of beneficial technologies.8
The argument for imposing indirect liability in this case is, however, a
powerful one, given the number of infringing downloads that occur every
day using StreamCast’s and Grokster’s software. When a widely shared
service or product is used to commit infringement, it may be impossible to
enforce rights in the protected work effectively against all direct infringers,
the only practical alternative being to go against the distributor of the
copying device for secondary liability on a theory of contributory or
vicarious infringement. See In re Aimster Copyright Litigation, 334 F. 3d
643, 645–646 (CA7 2003).
One infringes contributorily by intentionally inducing or encouraging
direct infringement, and infringes vicariously by profiting from direct
infringement while declining to exercise a right to stop or limit it.9
Although “[t]he Copyright Act does not expressly render anyone liable for
infringement committed by another,” Sony Corp. v. Universal City Studios,
464 U.S., at 434, these doctrines of secondary liability emerged from
common law principles and are well established in the law.
B
***
In sum, where an article is “good for nothing else” but infringement,
there is no legitimate public interest in its unlicensed availability, and
there is no injustice in presuming or imputing an intent to infringe.
8
The mutual exclusivity of these values should not be overstated, however. On the one hand
technological innovators, including those writing filesharing computer programs, may wish for
effective copyright protections for their work. See, e.g., Wu, When Code Isn’t Law, 89 Va. L. Rev.
679, 750 (2003). (StreamCast itself was urged by an associate to “get [its] technology written down
and [its intellectual property] protected.”) On the other hand the widespread distribution of
creative works through improved technologies may enable the synthesis of new works or generate
audiences for emerging artists. See Eldred v. Ashcroft, 537 U.S. 186, 223–226 (2003) (STEVENS,
J., dissenting); Van Houweling, Distributive Values in Copyright, 83 Texas L. Rev. 1535, 1539–40,
1562–64 (2005).
9
We stated in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984),
that “ ‘the lines between direct infringement, contributory infringement and vicarious liability are
not clearly drawn’ [R]easoned analysis of [the Sony plaintiffs’ contributory infringement claim]
necessarily entails consideration of arguments and case law which may also be forwarded under
the other labels, and indeed the parties . . . rely upon such arguments and authority in support of
their respective positions on the issue of contributory infringement,”. In the present case MGM
has argued a vicarious liability theory, which allows imposition of liability when the defendant
profits directly from the infringement and has a right and ability to supervise the direct infringer,
even if the defendant initially lacks knowledge of the infringement. Because we resolve the case
based on an inducement theory, there is no need to analyze separately MGM’s vicarious liability
theory.

CH. 1

269

Conversely, the doctrine absolves the equivocal conduct of selling an item
with substantial lawful as well as unlawful uses, and limits liability to
instances of more acute fault than the mere understanding that some of
one’s products will be misused. It leaves breathing room for innovation and
a vigorous commerce.
The parties and many of the amici in this case think the key to
resolving it is the Sony rule and, in particular, what it means for a product
to be “capable of commercially significant noninfringing uses.” MGM
advances the argument that granting summary judgment to Grokster and
StreamCast as to their current activities gave too much weight to the value
of innovative technology, and too little to the copyrights infringed by users
of their software, given that 90% of works available on one of the networks
was shown to be copyrighted. Assuming the remaining 10% to be its
noninfringing use, MGM says this should not qualify as “substantial,” and
the Court should quantify Sony to the extent of holding that a product used
“principally” for infringement does not qualify. As mentioned before,
Grokster and StreamCast reply by citing evidence that their software can
be used to reproduce public domain works, and they point to copyright
holders who actually encourage copying. Even if infringement is the
principal practice with their software today, they argue, the noninfringing
uses are significant and will grow.
We agree with MGM that the Court of Appeals misapplied Sony, which
it read as limiting secondary liability quite beyond the circumstances to
which the case applied. Sony barred secondary liability based on
presuming or imputing intent to cause infringement solely from the design
or distribution of a product capable of substantial lawful use, which the
distributor knows is in fact used for infringement. The Ninth Circuit has
read Sony’s limitation to mean that whenever a product is capable of
substantial lawful use, the producer can never be held contributorily liable
for third parties’ infringing use of it; it read the rule as being this broad,
even when an actual purpose to cause infringing use is shown by evidence
independent of design and distribution of the product, unless the
distributors had “specific knowledge of infringement at a time at which
they contributed to the infringement, and failed to act upon that
information.” Because the Circuit found the StreamCast and Grokster
software capable of substantial lawful use, it concluded on the basis of its
reading of Sony that neither company could be held liable, since there was
no showing that their software, being without any central server, afforded
them knowledge of specific unlawful uses.
This view of Sony, however, was error, converting the case from one
about liability resting on imputed intent to one about liability on any
theory. Because Sony did not displace other theories of secondary liability,
and because we find below that it was error to grant summary judgment to
the companies on MGM’s inducement claim, we do not revisit Sony further,

270

CH. 1

as MGM requests, to add a more quantified description of the point of
balance between protection and commerce when liability rests solely on
distribution with knowledge that unlawful use will occur. It is enough to
note that the Ninth Circuit’s judgment rested on an erroneous
understanding of Sony and to leave further consideration of the Sony rule
for a day when that may be required.
C
Sony’s rule limits imputing culpable intent as a matter of law from the
characteristics or uses of a distributed product. But nothing in Sony
requires courts to ignore evidence of intent if there is such evidence, and
the case was never meant to foreclose rules of fault-based liability derived
from the common law. Thus, where evidence goes beyond a product’s
characteristics or the knowledge that it may be put to infringing uses, and
shows statements or actions directed to promoting infringement, Sony’s
staple-article rule will not preclude liability. The classic case of direct
evidence of unlawful purpose occurs when one induces commission of
infringement by another, or “entic[es] or persuad[es] another” to infringe,
Black’s Law Dictionary 790 (8th ed. 2004), as by advertising. Thus at
common law a copyright or patent defendant who “not only expected but
invoked [infringing use] by advertisement” was liable for infringement “on
principles recognized in every part of the law.”
The rule on inducement of infringement as developed in the early cases
is no different today.11 Evidence of “active steps . . . taken to encourage
direct infringement,” Oak Industries, Inc. v. Zenith Electronics Corp., 697
F. Supp. 988, 992 (N.D.Ill.1988), such as advertising an infringing use or
instructing how to engage in an infringing use, show an affirmative intent
that the product be used to infringe, and a showing that infringement was
encouraged overcomes the law’s reluctance to find liability when a
defendant merely sells a commercial product suitable for some lawful use.
Cf. W. Keeton, D. Dobbs, R. Keeton, & D. Owen, Prosser and Keeton on
Law of Torts 37 (5th ed. 1984) (“There is a definite tendency to impose
greater responsibility upon a defendant whose conduct was intended to do
harm, or was morally wrong”).
For the same reasons that Sony took the staple-article doctrine of
patent law as a model for its copyright safe-harbor rule, the inducement
rule, too, is a sensible one for copyright. We adopt it here, holding that one
who distributes a device with the object of promoting its use to infringe
copyright, as shown by clear expression or other affirmative steps taken to
foster infringement, is liable for the resulting acts of infringement by third
parties. We are, of course, mindful of the need to keep from trenching on
regular commerce or discouraging the development of technologies with
lawful and unlawful potential. Accordingly, just as Sony did not find
11

Inducement has been codified in patent law. See 35 U.S.C. § 271(b).

CH. 1

271

intentional inducement despite the knowledge of the VCR manufacturer
that its device could be used to infringe, mere knowledge of infringing
potential or of actual infringing uses would not be enough here to subject a
distributor to liability. Nor would ordinary acts incident to product
distribution, such as offering customers technical support or product
updates, support liability in themselves. The inducement rule, instead,
premises liability on purposeful, culpable expression and conduct, and thus
does nothing to compromise legitimate commerce or discourage innovation
having a lawful promise.
III
A
The only apparent question about treating MGM’s evidence as
sufficient to withstand summary judgment under the theory of inducement
goes to the need on MGM’s part to adduce evidence that StreamCast and
Grokster communicated an inducing message to their software users. The
classic instance of inducement is by advertisement or solicitation that
broadcasts a message designed to stimulate others to commit violations.
MGM claims that such a message is shown here. It is undisputed that
StreamCast beamed onto the computer screens of users of Napstercompatible programs ads urging the adoption of its OpenNap program,
which was designed, as its name implied, to invite the custom of patrons of
Napster, then under attack in the courts for facilitating massive
infringement. Those who accepted StreamCast’s OpenNap program were
offered software to perform the same services, which a fact finder could
conclude would readily have been understood in the Napster market as the
ability to download copyrighted music files. Grokster distributed an
electronic newsletter containing links to articles promoting its software’s
ability to access popular copyrighted music. And anyone whose Napster or
free file-sharing searches turned up a link to Grokster would have
understood Grokster to be offering the same file-sharing ability as Napster,
and to the same people who probably used Napster for infringing
downloads; that would also have been the understanding of anyone offered
Grokster’s suggestively named Swaptor software, its version of OpenNap.
And both companies communicated a clear message by responding
affirmatively to requests for help in locating and playing copyrighted
materials.
In StreamCast’s case, of course, the evidence just described was
supplemented by other unequivocal indications of unlawful purpose in the
internal communications and advertising designs aimed at Napster users
(“When the lights went off at Napster . . . where did the users go?” App. 836
(ellipsis in original)). Whether the messages were communicated is not to
the point on this record. The function of the message in the theory of
inducement is to prove by a defendant’s own statements that his unlawful
purpose disqualifies him from claiming protection (and incidentally to

272

CH. 1

point to actual violators likely to be found among those who hear or read
the message). Proving that a message was sent out, then, is the preeminent
but not exclusive way of showing that active steps were taken with the
purpose of bringing about infringing acts, and of showing that infringing
acts took place by using the device distributed. Here, the summary
judgment record is replete with other evidence that Grokster and
StreamCast, unlike the manufacturer and distributor in Sony, acted with
a purpose to cause copyright violations by use of software suitable for
illegal use.
Three features of this evidence of intent are particularly notable. First,
each company showed itself to be aiming to satisfy a known source of
demand for copyright infringement, the market comprising former Napster
users. StreamCast’s internal documents made constant reference to
Napster, it initially distributed its Morpheus software through an
OpenNap program compatible with Napster, it advertised its OpenNap
program to Napster users, and its Morpheus software functions as Napster
did except that it could be used to distribute more kinds of files, including
copyrighted movies and software programs. Grokster’s name is apparently
derived from Napster, it too initially offered an OpenNap program, its
software’s function is likewise comparable to Napster’s, and it attempted
to divert queries for Napster onto its own Web site. Grokster and
StreamCast’s efforts to supply services to former Napster users, deprived
of a mechanism to copy and distribute what were overwhelmingly
infringing files, indicate a principal, if not exclusive, intent on the part of
each to bring about infringement.
Second, this evidence of unlawful objective is given added significance
by MGM’s showing that neither company attempted to develop filtering
tools or other mechanisms to diminish the infringing activity using their
software. While the Ninth Circuit treated the defendants’ failure to develop
such tools as irrelevant because they lacked an independent duty to
monitor their users’ activity, we think this evidence underscores Grokster’s
and StreamCast’s intentional facilitation of their users’ infringement.12
Third, there is a further complement to the direct evidence of unlawful
objective. It is useful to recall that StreamCast and Grokster make money
by selling advertising space, by directing ads to the screens of computers
employing their software. As the record shows, the more the software is
used, the more ads are sent out and the greater the advertising revenue
becomes. Since the extent of the software’s use determines the gain to the

12 Of course, in the absence of other evidence of intent, a court would be unable to find
contributory infringement liability merely based on a failure to take affirmative steps to prevent
infringement, if the device otherwise was capable of substantial noninfringing uses. Such a holding
would tread too close to the Sony safe harbor.

CH. 1

273

distributors, the commercial sense of their enterprise turns on high-volume
use, which the record shows is infringing.13
This evidence alone would not justify an inference of unlawful intent,
but viewed in the context of the entire record its import is clear.
The unlawful objective is unmistakable.
B
In addition to intent to bring about infringement and distribution of a
device suitable for infringing use, the inducement theory of course requires
evidence of actual infringement by recipients of the device, the software in
this case. As the account of the facts indicates, there is evidence of
infringement on a gigantic scale, and there is no serious issue of the
adequacy of MGM’s showing on this point in order to survive the
companies’ summary judgment requests. Although an exact calculation of
infringing use, as a basis for a claim of damages, is subject to dispute, there
is no question that the summary judgment evidence is at least adequate to
entitle MGM to go forward with claims for damages and equitable relief.
***
In sum, this case is significantly different from Sony and reliance on
that case to rule in favor of StreamCast and Grokster was error. Sony dealt
with a claim of liability based solely on distributing a product with
alternative lawful and unlawful uses, with knowledge that some users
would follow the unlawful course. The case struck a balance between the
interests of protection and innovation by holding that the product’s
capability of substantial lawful employment should bar the imputation of
fault and consequent secondary liability for the unlawful acts of others.
MGM’s evidence in this case most obviously addresses a different basis of
liability for distributing a product open to alternative uses. Here, evidence
of the distributors’ words and deeds going beyond distribution as such
shows a purpose to cause and profit from third-party acts of copyright
infringement. If liability for inducing infringement is ultimately found, it
will not be on the basis of presuming or imputing fault, but from inferring
a patently illegal objective from statements and actions showing what that
objective was.
13 Grokster and StreamCast contend that any theory of liability based on their conduct is not
properly before this Court because the rulings in the trial and appellate courts dealt only with the
present versions of their software, not “past acts . . . that allegedly encouraged infringement or
assisted . . . known acts of infringement.” This contention misapprehends the basis for their
potential liability. It is not only that encouraging a particular consumer to infringe a copyright can
give rise to secondary liability for the infringement that results. Inducement liability goes beyond
that, and the distribution of a product can itself give rise to liability where evidence shows that
the distributor intended and encouraged the product to be used to infringe. In such a case, the
culpable act is not merely the encouragement of infringement but also the distribution of the tool
intended for infringing use. See Kalem Co. v. Harper Brothers, 222 U.S. 55, 62–63 (1911);
Cable/Home Communication Corp. v. Network Productions, Inc., 902 F. 2d 829, 846 (CA11 1990);
A & M Records, Inc. v. Abdallah, 948 F. Supp. 1449, 1456 (CD Cal. 1996).

274

CH. 1

There is substantial evidence in MGM’s favor on all elements of
inducement, and summary judgment in favor of Grokster and StreamCast
was error. On remand, reconsideration of MGM’s motion for summary
judgment will be in order.
The judgment of the Court of Appeals is vacated, and the case is
remanded for further proceedings consistent with this opinion.
It is so ordered.
JUSTICE GINSBURG, with whom THE CHIEF JUSTICE and JUSTICE KENNEDY
join, concurring.
***
[Justice Ginsburg began this opinion by stating that while she fully
concurred with Justice Souter vacating the lower court’s summary
dismissal of the plaintiffs’ claim that Grokster and Streamcast could be
liable “for actively inducing copyright infringement,” she also judged that
the claim of “contributory copyright infringement” should be reinstated as
at least potentially viable.]
At bottom, however labeled, the question in this case is whether
Grokster and StreamCast are liable for the direct infringing acts of others.
Liability under our jurisprudence may be predicated on actively
encouraging (or inducing) infringement through specific acts (as the
Court’s opinion develops) or on distributing a product distributees use to
infringe copyrights, if the product is not capable of “substantial” or
“commercially significant” noninfringing uses. While the two categories
overlap, they capture different culpable behavior. Long coexisting, both are
now codified in patent law. Compare 35 U.S.C. § 271(b) (active inducement
liability), with § 271(c) (contributory liability for distribution of a product
not “suitable for substantial noninfringing use”).
***
“The staple article of commerce doctrine” applied to copyright, the
Sony Court stated, “must strike a balance between a copyright holder’s
legitimate demand for effective—not merely symbolic—protection of the
statutory monopoly, and the rights of others freely to engage in
substantially unrelated areas of commerce.” “Accordingly,” the Court held,
“the sale of copying equipment, like the sale of other articles of commerce,
does not constitute contributory infringement if the product is widely used
for legitimate, unobjectionable purposes. Indeed, it need merely be capable
of substantial noninfringing uses.” Thus, to resolve the Sony case, the
Court explained, it had to determine “whether the Betamax is capable of
commercially significant noninfringing uses.”
To answer that question, the Court considered whether “a significant
number of [potential uses of the Betamax were] noninfringing.” The Court
homed in on one potential use—private, noncommercial time-shifting of

CH. 1

275

television programs in the home (i.e., recording a broad-cast TV program
for later personal viewing). Time-shifting was noninfringing, the Court
concluded, because in some cases trial testimony showed it was authorized
by the copyright holder, and in others it qualified as legitimate fair use.
Most purchasers used the Betamax principally to engage in time-shifting,
a use that “plainly satisfie[d]” the Court’s standard. Thus, there was no
need in Sony to “give precise content to the question of how much [actual
or potential] use is commercially significant.”1 Further development was
left for later days and cases.
The Ninth Circuit went astray, I will endeavor to explain, when that
court granted summary judgment to Grokster and StreamCast on the
charge of contributory liability based on distribution of their software
products. Relying on its earlier opinion in A & M Records, Inc. v. Napster,
Inc., 239 F. 3d 1004 (CA9 2001), the Court of Appeals held that “if
substantial noninfringing use was shown, the copyright owner would be
required to show that the defendant had reasonable knowledge of specific
infringing files.” “A careful examination of the record,” the court concluded,
“indicates that there is no genuine issue of material fact as to noninfringing
use.” The appeals court pointed to the band Wilco, which made one of its
albums available for free downloading, to other recording artists who may
have authorized free distribution of their music through the Internet, and
to public domain literary works and films available through Grokster’s and
StreamCast’s software. Although it acknowledged MGM’s assertion that
“the vast majority of the software use is for copyright infringement,” the
court concluded that Grokster’s and StreamCast’s proffered evidence met
Sony’s requirement that “a product need only be capable of substantial
noninfringing uses.”

1
Justice Breyer finds in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417
(1984), a “clear” rule permitting contributory liability for copyright infringement based on
distribution of a product only when the product “will be used almost exclusively to infringe
copyrights.” But cf. Sony, 464 U.S., at 442 (recognizing “copyright holder’s legitimate demand for
effective—not merely symbolic—protection”). Sony, as I read it, contains no clear, near-exclusivity
test. Nor have Courts of Appeals unanimously recognized Justice Breyer’s clear rule. Compare A
& M Records, Inc. v. Napster, Inc., 239 F. 3d 1004, 1021 (CA9 2001) (“[E]vidence of actual
knowledge of specific acts of infringement is required to hold a computer system operator liable for
contributory copyright infringement.”), with In re Aimster Copyright Litigation, 334 F. 3d 643,
649–650 (CA7 2003) (“[W]hen a supplier is offering a product or service that has noninfringing as
well as infringing uses, some estimate of the respective magnitudes of these uses is necessary for
a finding of contributory infringement . . . But the balancing of costs and benefits is necessary only
in a case in which substantial noninfringing uses, present or prospective, are demonstrated.”). See
also Matthew Bender & Co., Inc. v. West Pub. Co., 158 F. 3d 693, 707 (CA2 1998) (“The Supreme
Court applied [the Sony] test to prevent copyright holders from leveraging the copyrights in their
original work to control distribution of . . . products that might be used incidentally for
infringement, but that had substantial noninfringing uses . . . The same rationale applies here [to
products] that have substantial, predominant and noninfringing uses as tools for research and
citation.”). All Members of the Court agree, moreover, that “the Court of Appeals misapplied Sony,”
at least to the extent it read that decision to limit “secondary liability” to a hardly-ever category,
“quite beyond the circumstances to which the case applied.”

276

CH. 1

This case differs markedly from Sony. Here, there has been no finding
of any fair use and little beyond anecdotal evidence of noninfringing uses.
In finding the Grokster and StreamCast software products capable of
substantial noninfringing uses, the District Court and the Court of Appeals
appear to have relied largely on declarations submitted by the defendants.
These declarations include assertions (some of them hearsay) that a
number of copyright owners authorize distribution of their works on the
Internet and that some public domain material is available through peerto-peer networks including those accessed through Grokster’s and
StreamCast’s software.
The District Court declared it “undisputed that there are substantial
noninfringing uses for Defendants’ software,” thus obviating the need for
further proceedings. This conclusion appears to rest almost entirely on the
collection of declarations submitted by Grokster and StreamCast. Review
of these declarations reveals mostly anecdotal evidence, sometimes
obtained second-hand, of authorized copyrighted works or public domain
works available online and shared through peer-to-peer networks, and
general statements about the benefits of peer-to-peer technology. [Here,
Justice Ginsburg mentioned various examples cited, including not only the
Bible and the Declaration of Independence but also the “search on
Morpheus for President Bush’s speeches.”] These declarations do not
support summary judgment in the face of evidence, proffered by MGM, of
overwhelming use of Grokster’s and StreamCast’s software for
infringement.3
Even if the absolute number of noninfringing files copied using the
Grokster and StreamCast software is large, it does not follow that the
products are therefore put to substantial noninfringing uses and are thus
immune from liability. The number of noninfringing copies may be
reflective of, and dwarfed by, the huge total volume of files shared. Further,
the District Court and the Court of Appeals did not sharply distinguish
between uses of Grokster’s and StreamCast’s software products (which this

3
Justice Breyer finds support for summary judgment in this motley collection of
declarations and in a survey conducted by an expert retained by MGM. That survey identified 75%
of the files available through Grokster as copyrighted works owned or controlled by the plaintiffs,
and 15% of the files as works likely copyrighted.
As to the remaining 10% of the files, “there was not enough information to form reasonable
conclusions either as to what those files even consisted of, and/or whether they were infringing or
non-infringing.” Even assuming, as Justice Breyer does, that the Sony Court would have absolved
Sony of contributory liability solely on the basis of the use of the Betamax for authorized timeshifting, summary judgment is not inevitably appropriate here. Sony stressed that the plaintiffs
there owned “well below 10%” of copyrighted television programming, and found, based on trial
testimony from representatives of the four major sports leagues and other individuals authorized
to consent to home-recording of their copyrighted broadcasts, that a similar percentage of program
copying was authorized. Here, the plaintiffs allegedly control copyrights for 70% or 75% of the
material exchanged through the Grokster and StreamCast software, and the District Court does
not appear to have relied on comparable testimony about authorized copying from copyright
holders.

CH. 1

277

case is about) and uses of peer-to-peer technology generally (which this case
is not about).
In sum, when the record in this case was developed, there was evidence
that Grokster’s and StreamCast’s products were, and had been for some
time, overwhelmingly used to infringe, and that this infringement was the
overwhelming source of revenue from the products. Fairly appraised, the
evidence was insufficient to demonstrate, beyond genuine debate, a
reasonable prospect that substantial or commercially significant
noninfringing uses were likely to develop over time. On this record, the
District Court should not have ruled dispositively on the contributory
infringement charge by granting summary judgment to Grokster and
StreamCast.
If, on remand, the case is not resolved on summary judgment in favor
of MGM based on Grokster and StreamCast actively inducing
infringement, the Court of Appeals, I would emphasize, should reconsider,
on a fuller record, its interpretation of Sony’s product distribution holding.
JUSTICE BREYER, with whom JUSTICE STEVENS and JUSTICE O’CONNOR
join, concurring.
I
A
[Justice Breyer began by stating that while he fully agreed with
Souter’s basis for judging that the defendants could potentially be held
liable as “the distributor of a dual-use technology” for “actively”
encouraging its use for infringement, he disagreed with Ginsburg’s reading
of Sony for purposes of contributory liability. After describing the Sony
evaluation of the VCR and whether it had produced “substantial” noninfringing—i.e., “authorized”—taping, he then turned to the same issue on
the Internet.]
B
When measured against Sony’s underlying evidence and analysis, the
evidence now before us shows that Grokster passes Sony’s test—that is,
whether the company’s product is capable of substantial or commercially
significant noninfringing uses. For one thing, petitioners’ (hereinafter
MGM) own expert declared that 75% of current files available on Grokster
are infringing and 15% are “likely infringing.” That leaves some number of
files near 10% that apparently are noninfringing, a figure very similar to
the 9% or so of authorized time-shifting uses of the VCR that the Court
faced in Sony.
As in Sony, witnesses here explained the nature of the noninfringing
files on Grokster’s network without detailed quantification. Those files
include:

278

CH. 1

—

Authorized copies of music by artists such as Wilco, Janis Ian,
Pearl Jam, Dave Matthews, John Mayer, and others.

—

Free electronic books and other works from various online
publishers, including Project Gutenberg.

—

Public domain and authorized software, such as WinZip 8.1.

—

Licensed music videos and television and movie segments
distributed via digital video packaging with the permission of the
copyright holder.

The nature of these and other lawfully swapped files is such that it is
reasonable to infer quantities of current lawful use roughly approximate to
those at issue in Sony. At least, MGM has offered no evidence sufficient to
survive summary judgment that could plausibly demonstrate a significant
quantitative difference. To be sure, in quantitative terms these uses
account for only a small percentage of the total number of uses of Grokster’s
product. But the same was true in Sony, which characterized the relatively
limited authorized copying market as “substantial.” Importantly, Sony also
used the word “capable,” asking whether the product is “capable of”
substantial noninfringing uses. Its language and analysis suggest that a
figure like 10%, if fixed for all time, might well prove insufficient, but that
such a figure serves as an adequate foundation where there is a reasonable
prospect of expanded legitimate uses over time. And its language also
indicates the appropriateness of looking to potential future uses of the
product to determine its “capability.”
Here the record reveals a significant future market for noninfringing
uses of Grokster-type peer-to-peer software. Such software permits the
exchange of any sort of digital file—whether that file does, or does not,
contain copyrighted material. As more and more uncopyrighted
information is stored in swappable form, it seems a likely inference that
lawful peer-to-peer sharing will become increasingly prevalent.
And that is just what is happening. Such legitimate noninfringing uses
are coming to include the swapping of: research information (the initial
purpose of many peer-to-peer networks); public domain films (e.g., those
owned by the Prelinger Archive); historical recordings and digital
educational materials (e.g., those stored on the Internet Archive); digital
photos (OurPictures, for example, is starting a P2P photo-swapping
service); “shareware” and “freeware” (e.g., Linux and certain Windows
software); secure licensed music and movie files (Intent MediaWorks, for
example, protects licensed content sent across P2P networks); news
broadcasts past and present (the BBC Creative Archive lets users “rip, mix
and share the BBC”); user-created audio and video files (including
“podcasts” that may be distributed through P2P software); and all manner
of free “open content” works collected by Creative Commons (one can search
for Creative Commons material on StreamCast). I can find nothing in the

CH. 1

279

record that suggests that this course of events will not continue to flow
naturally as a consequence of the character of the software taken together
with the foreseeable development of the Internet and of information
technology.
There may be other now-unforeseen noninfringing uses that develop
for peer-to-peer software, just as the home-video rental industry
(unmentioned in Sony) developed for the VCR. But the foreseeable
development of such uses, when taken together with an estimated 10%
noninfringing material, is sufficient to meet Sony’s standard. And while
Sony considered the record following a trial, there are no facts asserted by
MGM in its summary judgment filings that lead me to believe the outcome
after a trial here could be any different. The lower courts reached the same
conclusion.
Of course, Grokster itself may not want to develop these other
noninfringing uses. But Sony’s standard seeks to protect not the Groksters
of this world (which in any event may well be liable under today’s holding),
but the development of technology more generally. And Grokster’s desires
in this respect are beside the point.
II
The real question here, I believe, is not whether the record evidence
satisfies Sony. As I have interpreted the standard set forth in that case, it
does. And of the Courts of Appeals that have considered the matter, only
one has proposed interpreting Sony more strictly than I would do—in a
case where the product might have failed under any standard. In re Aimster
Copyright Litigation, 334 F. 3d 643, 653 (CA7 2003) (defendant “failed to
show that its service is ever used for any purpose other than to infringe”
copyrights (emphasis added)); see Matthew Bender & Co., Inc. v. West Pub.
Co., 158 F. 3d 693, 706–707 (CA2 1998) (court did not require that
noninfringing uses be “predominant,” it merely found that they were
predominant, and therefore provided no analysis of Sony’s boundaries).
Instead, the real question is whether we should modify the Sony standard,
as MGM requests, or interpret Sony more strictly, as I believe Justice
Ginsburg’s approach would do in practice.
As I have said, Sony itself sought to “strike a balance between a
copyright holder’s legitimate demand for effective—not merely symbolic—
protection of the statutory monopoly, and the rights of others freely to
engage in substantially unrelated areas of commerce.” Thus, to determine
whether modification, or a strict interpretation, of Sony is needed, I would
ask whether MGM has shown that Sony incorrectly balanced copyright and
new-technology interests. In particular: (1) Has Sony (as I interpret it)
worked to protect new technology? (2) If so, would modification or strict
interpretation significantly weaken that protection? (3) If so, would new or
necessary copyright-related benefits outweigh any such weakening?

280

CH. 1

A
The first question is the easiest to answer. Sony’s rule, as I interpret
it, has provided entrepreneurs with needed assurance that they will be
shielded from copyright liability as they bring valuable new technologies to
market. Sony’s rule is clear. That clarity allows those who develop new
products that are capable of substantial noninfringing uses to know, ex
ante, that distribution of their product will not yield massive monetary
liability. At the same time, it helps deter them from distributing products
that have no other real function than—or that are specifically intended
for—copyright infringement, deterrence that the Court’s holding today
reinforces (by adding a weapon to the copyright holder’s legal arsenal).
Sony’s rule is strongly technology protecting. The rule deliberately
makes it difficult for courts to find secondary liability where new
technology is at issue. It establishes that the law will not impose copyright
liability upon the distributors of dual-use technologies (who do not
themselves engage in unauthorized copying) unless the product in question
will be used almost exclusively to infringe copyrights (or unless they
actively induce infringements as we today describe). Sony thereby
recognizes that the copyright laws are not intended to discourage or to
control the emergence of new technologies, including (perhaps especially)
those that help disseminate information and ideas more broadly or more
efficiently. Thus Sony’s rule shelters VCRs, typewriters, tape recorders,
photocopiers, computers, cassette players, compact disc burners, digital
video recorders, MP3 players, Internet search engines, and peer-to-peer
software. But Sony’s rule does not shelter descramblers, even if one could
theoretically use a descrambler in a noninfringing way.
Sony’s rule is forward looking. It does not confine its scope to a static
snapshot of a product’s current uses (thereby threatening technologies that
have undeveloped future markets). Rather, as the VCR example makes
clear, a product’s market can evolve dramatically over time. And Sony—by
referring to a capacity for substantial noninfringing uses—recognizes that
fact.
Sony’s word “capable” refers to a plausible, not simply a theoretical,
likelihood that such uses will come to pass, and that fact anchors Sony in
practical reality.
Sony’s rule is mindful of the limitations facing judges where matters of
technology are concerned. Judges have no specialized technical ability to
answer questions about present or future technological feasibilility or
commercial viability where technology professionals, engineers, and
venture capitalists themselves may radically disagree and where answers
may differ depending upon whether one focuses upon the time of product
development or the time of distribution. Consider, for example, the
question whether devices can be added to Grokster’s software that will
filter out infringing files. MGM tells us this is easy enough to do, as do

CH. 1

281

several amici that produce and sell the filtering technology. Grokster says
it is not at all easy to do, and not an efficient solution in any event, and
several apparently disinterested computer science professors agree. Which
account should a judge credit? Sony says that the judge will not necessarily
have to decide.
Given the nature of the Sony rule, it is not surprising that in the last
20 years, there have been relatively few contributory infringement suits—
based on a product distribution theory—brought against technology
providers (a small handful of federal appellate court cases and perhaps
fewer than two dozen District Court cases in the last 20 years). I have found
nothing in the briefs or the record that shows that Sony has failed to
achieve its innovation-protecting objective.
B
The second, more difficult, question is whether a modified Sony rule
(or a strict interpretation) would significantly weaken the law’s ability to
protect new technology. Justice Ginsburg’s approach would require
defendants to produce considerably more concrete evidence—more than
was presented here—to earn Sony’s shelter. That heavier evidentiary
demand, and especially the more dramatic (case-by-case balancing)
modifications that MGM and the Government seek, would, I believe,
undercut the protection that Sony now offers.
To require defendants to provide, for example, detailed evidence—say
business plans, profitability estimates, projected technological
modifications, and so forth—would doubtless make life easier for
copyrightholder plaintiffs. But it would simultaneously increase the legal
uncertainty that surrounds the creation or development of a new
technology capable of being put to infringing uses. Inventors and
entrepreneurs (in the garage, the dorm room, the corporate lab, or the
boardroom) would have to fear (and in many cases endure) costly and
extensive trials when they create, produce, or distribute the sort of
information technology that can be used for copyright infringement. They
would often be left guessing as to how a court, upon later review of the
product and its uses, would decide when necessarily rough estimates
amounted to sufficient evidence. They would have no way to predict how
courts would weigh the respective values of infringing and noninfringing
uses; determine the efficiency and advisability of technological changes; or
assess a product’s potential future markets. The price of a wrong guess—
even if it involves a good-faith effort to assess technical and commercial
viability—could be large statutory damages (not less than $750 and up to
$30,000 per infringed work). 17 U.S.C. § 504(c)(1). The additional risk and
uncertainty would mean a consequent additional chill of technological
development.

282

CH. 1

C
The third question—whether a positive copyright impact would
outweigh any technology-related loss—I find the most difficult of the three.
I do not doubt that a more intrusive Sony test would generally provide
greater revenue security for copyright holders. But it is harder to conclude
that the gains on the copyright swings would exceed the losses on the
technology roundabouts.
For one thing, the law disfavors equating the two different kinds of
gain and loss; rather, it leans in favor of protecting technology. As Sony
itself makes clear, the producer of a technology which permits unlawful
copying does not himself engage in unlawful copying—a fact that makes
the attachment of copyright liability to the creation, production, or
distribution of the technology an exceptional thing. Moreover, Sony has
been the law for some time. And that fact imposes a serious burden upon
copyright holders like MGM to show a need for change in the current rules
of the game, including a more strict interpretation of the test.
In any event, the evidence now available does not, in my view, make
out a sufficiently strong case for change. To say this is not to doubt the
basic need to protect copyrighted material from infringement. The
Constitution itself stresses the vital role that copyright plays in advancing
the “useful Arts.” Art. I, § 8, cl. 8. No one disputes that “reward to the
author or artist serves to induce release to the public of the products of his
creative genius.” United States v. Paramount Pictures, Inc., 334 U.S. 131,
158 (1948). And deliberate unlawful copying is no less an unlawful taking
of property than garden-variety theft. But these highly general principles
cannot by themselves tell us how to balance the interests at issue in Sony
or whether Sony’s standard needs modification. And at certain key points,
information is lacking.
Will an unmodified Sony lead to a significant diminution in the
amount or quality of creative work produced? Since copyright’s basic
objective is creation and its revenue objectives but a means to that end, this
is the underlying copyright question. See Twentieth Century Music Corp.
v. Aiken, 422 U.S. 151, 156 (1975) (“Creative work is to be encouraged and
rewarded, but private motivation must ultimately serve the cause of
promoting broad public availability of literature, music, and the other
arts”). And its answer is far from clear.
Unauthorized copying likely diminishes industry revenue, though it is
not clear by how much. The extent to which related production has actually
and resultingly declined remains uncertain, though there is good reason to
believe that the decline, if any, is not substantial. See, Benkler, Sharing
Nicely: On Shareable Goods and the Emergence of Sharing as a Modality
of Economic Production, 114 Yale L. J. 273, 351–52 (2004) (“Much of the
actual flow of revenue to artists—from performances and other sources—
is stable even assuming a complete displacement of the CD market by peer-

CH. 1

283

to-peer distribution. . . . [I]t would be silly to think that music, a cultural
form without which no human society has existed, will cease to be in our
world [because of illegal file swapping]”). More importantly, copyright
holders at least potentially have other tools available to reduce piracy and
to abate whatever threat it poses to creative production. As today’s opinion
makes clear, a copyright holder may proceed against a technology provider
where a provable specific intent to infringe (of the kind the Court describes)
is present. Services like Grokster may well be liable under an inducement
theory.
In addition, a copyright holder has always had the legal authority to
bring a traditional infringement suit against one who wrongfully copies.
Indeed, since September 2003, the Recording Industry Association of
America (RIAA) has filed “thousands of suits against people for sharing
copyrighted material.” These suits have provided copyright holders with
damages; have served as a teaching tool, making clear that much file
sharing, if done without permission, is unlawful; and apparently have had
a real and significant deterrent effect. (number of people downloading files
fell from a peak of roughly 35 million to roughly 23 million in the year
following the first suits; 38% of current downloaders report downloading
fewer files because of the suits); but see Evangelista, Downloading Music
and Movie Files is as Popular as Ever, San Francisco Chronicle, Mar. 28,
2005, p. E1 (referring to the continuing “tide of rampant copyright
infringement,” while noting that the RIAA says it believes the “campaign
of lawsuits and public education has at least contained the problem”).
Further, copyright holders may develop new technological devices that
will help curb unlawful infringement. Some new technology, called “digital
‘watermarking’ ” and “digital fingerprint[ing],” can encode within the file
information about the author and the copyright scope and date, which
“fingerprints” can help to expose infringers. Other technology can, through
encryption, potentially restrict users’ ability to make a digital copy.
At the same time, advances in technology have discouraged unlawful
copying by making lawful copying (e.g., downloading music with the
copyright holder’s permission) cheaper and easier to achieve. Several
services now sell music for less than $1 per song. (Walmart.com, for
example, charges $0.88 each). Consequently, many consumers initially
attracted to the convenience and flexibility of services like Grokster are
now migrating to lawful paid services (services with copying permission)
where they can enjoy at little cost even greater convenience and flexibility
without engaging in unlawful swapping. See M. Madden & L. Rainie,
March 2005 Data Memo, supra, at 6–7 (percentage of current downloaders
who have used paid services rose from 24% to 43% in a year; number using
free services fell from 58% to 41%).
Thus, lawful music downloading services—those that charge the
customer for downloading music and pay royalties to the copyright

284

CH. 1

holder—have continued to grow and to produce substantial revenue. See
Bruno, Digital Entertainment: Piracy Fight Shows Encouraging Signs
(Mar. 5, 2005), available at LEXIS, News Library, Billboard File (in 2004,
consumers worldwide purchased more than 10 times the number of digital
tracks purchased in 2003; global digital music market of $330 million in
2004 expected to double in 2005); Press Release, Informa Media Report,
supra (global digital revenues will likely exceed $3 billion in 2010); Ashton,
[International Federation of the Phonographic Industry] Predicts
Downloads Will Hit the Mainstream, Music Week, Jan. 29, 2005, p. 6 (legal
music sites and portable MP3 players “are helping transform the digital
music market” into “an everyday consumer experience”). And more
advanced types of non-music-oriented P2P networks have also started to
develop, drawing in part on the lessons of Grokster.
Finally, as Sony recognized, the legislative option remains available.
Courts are less well suited than Congress to the task of “accommodat[ing]
fully the varied permutations of competing interests that are inevitably
implicated by such new technology.”
I do not know whether these developments and similar alternatives
will prove sufficient, but I am reasonably certain that, given their
existence, a strong demonstrated need for modifying Sony (or for
interpreting Sony’s standard more strictly) has not yet been shown. That
fact, along with the added risks that modification (or strict interpretation)
would impose upon technological innovation, leads me to the conclusion
that we should maintain Sony, reading its standard as I have read it. As so
read, it requires affirmance of the Ninth Circuit’s determination of the
relevant aspects of the Sony question.
***
For these reasons, I disagree with Justice Ginsburg, but I agree with
the Court and join its opinion.
***
The entertainment industry battle was also going on in Congress. In
2005, President Bush signed into law a new bipartisan Family
Entertainment and Copyright Act, also known as Artists Rights and Theft
Prevention Act, making it a federal crime to use a video camera to copy a
film on the screen in a movie theater, and also giving the theater staff the
right to detain anyone reasonably suspected of doing so. But the industry’s
lack of confidence that Grokster solved its problems was shown by the filing
of another 874 individual lawsuits, bringing the total to nearly 12,000.
This practice had begun in 2003 when the record labels had located
online and filed lawsuits against four college students, asserting violation
of their copyrights. Since the potential damage awards ranged from $750
to $150,000 for each copyrighted work made available online, these four
defendants and their families were pleased to negotiate settlements

CH. 1

285

requiring each to pay total damages ranging from $12,000 to $17,000 and
a commitment never again to use computers to gain or provide free access
to copyrighted material.
The viability of these lawsuits had just been dramatically expanded by
a 2003 ruling which compelled Verizon Communications to hand over the
names and addresses of any subscribers who had been sharing music on its
Internet service. The court ruled that refusing to allow these subpoenas
“would create a huge loophole in Congress’s effort to prevent copyright
infringement on the Internet.” The industry then obtained more than 1000
subpoenas against Verizon, Comcast, and Time Warner Cable, as well as
universities like Princeton, MIT, and Boston College. Supported by the
ACLU and the Consumers Union, Verizon appealed, and the universities
asserted a special defense based on students’ privacy rights under the
federal Family Educational Rights and Privacy Act. Verizon won its appeal
in the D.C. Circuit, and the Supreme Court denied certiorari. Nevertheless,
the major RIAA music industry members filed thousands of new lawsuits
against individual file-sharers they had located.
In 2003, Apple Computer fashioned a new Internet service with
licenses from the music labels, called the iTunes Music Store, inviting
people to “Rip, Mix, and Burn” the licensed songs into a portable music
player or onto a CD. Though they originally made this service available
just to users of Apple’s Macintosh computers, they sold over one million
songs this way in their first week, and over 10 million within a few months.
A key reason for iTunes’ appeal was that not only did the consumers not
have to go to a store, but they only had to pay 99 cents per song and $9.90
for a full album. The music labels and performers were still earning their
own full financial return because nobody had to be paying for the
manufacture and distribution of a physical album in a store, which
typically accounts for around 40 percent of the list $18 price of a CD.
Indeed, the major labels soon reduced the wholesale price of CDs to reflect
the new market realities.
Despite the new digital medium, however, some of the same problems
arose that were part and parcel of owning vinyl records—unwanted music.
While in those days one could buy and sell used records from the local
record store, it was not clear how one could do this with digital music. In
October 2011, a company called ReDigi sought to capture this market,
advertising itself as the virtual marketplace for “pre-owned” digital music.
Soon after, Capitol Records filed a lawsuit, alleging copyright
infringement.

286

CH. 1

CAPITOL RECORDS, LLC V. REDIGI, INC.
United States District
934 F. Supp.2d 640.

Court,

Southern

District

of

New

York,

2013.

SULLIVAN, DISTRICT JUDGE
Capitol Records, LLC (“Capitol”), the recording label for such classic
vinyls as Frank Sinatra’s “Come Fly With Me” and The Beatles’ “Yellow
Submarine,” brings this action against ReDigi Inc. (“ReDigi”), a twentyfirst century technology company that touts itself as a “virtual”
marketplace for “pre-owned” digital music. What has ensued in a
fundamental clash over culture, policy, and copyright law, with Capitol
alleging that ReDigi’s web-based service amounts to copyright
infringement in violation of the Copyright Act of 1976 (the “Copyright
Act”), 17 U.S.C. § 101 et seq. Now before the Court are Capitol’s motion for
partial summary judgment and ReDigi’s motion for summary judgment,
both filed pursuant to Federal Rule of Civil Procedure 56. Because this is a
court of law and not a congressional subcommittee or technology blog, the
issues are narrow, technical, and purely legal. Thus, for the reasons that
follow, Capitol’s motion is granted and ReDigi’s motion is denied.
I.

BACKGROUND

A.

Facts

ReDigi markets itself as “the world’s first and only online marketplace
for digital used music.” (Capitol 56.1 Stmt., Doc. No. 50 (“Cap. 56.1”), ¶ 6.)
Launched on October 13, 2011, ReDigi’s website invites users to “sell their
legally acquired digital music files, and buy used digital music from others
at a fraction of the price currently available on iTunes.” (Id. ¶¶ 6, 9.) Thus,
much like used record stores, ReDigi permits its users to recoup value on
their unwanted music. Unlike used record stores, however, ReDigi’s sales
take place entirely in the digital domain. (See ReDigi Reply 56.1 Stmt., Doc.
No. 83 (“RD Rep. 56.1”), 4 ¶ 16.)
To sell music on ReDigi’s website, a user must first download ReDigi’s
“Media Manager” to his computer. (ReDigi 56.1 Stmt., Doc. No. 56 (“RD
56.1”), ¶ 8.) Once installed, Media Manager analyzes the user’s computer
to build a list of digital music files eligible for sale. (Id.) A file is eligible
only if it was purchased on iTunes or from another ReDigi user; music
downloaded from a CD or other file-sharing website is ineligible for sale.
(Id.) After this validation process, Media Manager continually runs on the
user’s computer and attached devices to ensure that the user has not
retained music that has been sold or uploaded for sale. (Id. ¶ 10.) However,
Media Manager cannot detect copies stored in other locations. (Cap. 56.1
¶¶ 59–61, 63; see Capitol Reply 56.1 Stmt., Doc. No. 78 (“Cap. Rep. 56.1”),
¶ 10.) If a copy is detected, Media Manager prompts the user to delete the
file. (Cap. 56.1 ¶ 64.) The file is not deleted automatically or involuntarily,

CH. 1

287

though ReDigi’s policy is to suspend the accounts of users who refuse to
comply. (Id.)
After the list is built, a user may upload any of his eligible files to
ReDigi’s “Cloud Locker,” an ethereal moniker for what is, in fact, merely a
remote server in Arizona. (RD 56.1 ¶¶ 9, 11; Cap. 56.1 ¶ 22.) ReDigi’s
upload process is a source of contention between the parties. (See RD 56.1
¶¶ 14–23; Cap. Rep. 56.1 ¶¶ 14–23.) ReDigi asserts that the process
involves “migrating” a user’s file, packet by packet—“analogous to a
train”—from the user’s computer to the Cloud Locker so that data does not
exist in two places at any one time. (RD 56.1 ¶¶ 14, 36.) Capitol asserts
*646 that, semantics aside, ReDigi’s upload process “necessarily involves
copying” a file from the user’s computer to the Cloud Locker. (Cap. Rep.
56.1 ¶ 14.) Regardless, at the end of the process, the digital music file is
located in the Cloud Locker and not on the user’s computer. (RD 56.1 ¶ 21.)
Moreover, Media Manager deletes any additional copies of the file on the
user’s computer and connected devices. (Id. ¶ 38.)
Once uploaded, a digital music file undergoes a second analysis to
verify eligibility. (Cap. 56.1 ¶¶ 31–32.) If ReDigi determines that the file
has not been tampered with or offered for sale by another user, the file is
stored in the Cloud Locker, and the user is given the option of simply
storing and streaming the file for personal use or offering it for sale in
ReDigi’s marketplace. (Id. ¶¶ 33–37.) If a user chooses to sell his digital
music file, his access to the file is terminated and transferred to the new
owner at the time of purchase. (Id. ¶ 49.) Thereafter, the new owner can
store the file in the Cloud Locker, stream it, sell it, or download it to her
computer and other devices. (Id. ¶ 50.) No money changes hands in these
transactions. (RD Rep. 56.15 ¶ 18.) Instead, users buy music with credits
they either purchased from ReDigi or acquired from other sales. (Id.)
ReDigi credits, once acquired, cannot be exchanged for money. (Id.)
Instead, they can only be used to purchase additional music. (Id.)
To encourage activity in its marketplace, ReDigi initially permitted
users to preview thirty-second clips and view album cover art of songs
posted for sale pursuant to a licensing agreement with a third party. (See
RD 56.1 ¶¶ 73–78.) However, shortly after its launch, ReDigi lost the
licenses. (Id.) Accordingly, ReDigi now sends users to either YouTube or
iTunes to listen to and view this promotional material. (Id. ¶¶ 77, 79.)
ReDigi also offers its users a number of incentives. (Cap. 56.1 ¶ 39.) For
instance, ReDigi gives twenty-cent credits to users who post files for sale
and enters active sellers into contests for prizes. (Id. ¶¶ 39, 42.) ReDigi also
encourages sales by advising new users via email that they can “[c]ash in”
their music on the website, tracking and posting the titles of sought after
songs on its website and in its newsletter, notifying users when they are
low on credits and advising them to either purchase more credits or sell

288

CH. 1

songs, and connecting users who are seeking unavailable songs with
potential sellers. (Id. ¶¶ 39–48.)
Finally, ReDigi earns a fee for every transaction. (Id. ¶ 54.) ReDigi’s
website prices digital music files at fifty-nine to seventy-nine cents each.
(Id. ¶ 55.) When users purchase a file, with credits, 20% of the sale price is
allocated to the seller, 20% goes to an “escrow” fund for the artist, and 60%
is retained by ReDigi. (Id.)
***
III. DISCUSSION
Section 106 of the Copyright Act grants “the owner of copyright under
this title” certain “exclusive rights,” including the right “to reproduce the
copyrighted work in copies or phonorecords,” “to distribute copies or
phonorecords of the copyrighted work to the public by sale or other transfer
of ownership,” and to publicly perform and display certain copyrighted
works. 17 U.S.C. §§ 106(1), (3)–(5). However, these exclusive rights are
limited by several subsequent sections of the statute. Pertinently, Section
109 sets forth the “first sale” doctrine, which provides that “the owner of a
particular copy or phonorecord lawfully made under this title, or any
person authorized by such owner, is entitled, without the authority of the
copyright owner, to sell or otherwise dispose of the possession of that copy
or phonorecord.” Id. § 109(a). The novel question presented in this action is
whether a digital music file, lawfully made and purchased, may be resold
by its owner through ReDigi under the first sale doctrine. The Court
determines that it cannot.
A.

Infringement of Capitol’s Copyrights

To state a claim for copyright infringement, a plaintiff must establish
that it owns a valid copyright in the work at issue and that the defendant
violated one of the exclusive rights the plaintiff holds in the work. Twin
Peaks Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1372 (2d Cir.1993)
(citing Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111
S.Ct. 1282, 113 L.Ed.2d 358 (1991)). It is undisputed that Capitol owns
copyrights in a number of the recordings sold on ReDigi’s website. (See Cap.
56.1 ¶¶ 68–73; RD Rep. 56.118–19, ¶¶ 68–73; Decl. of Richard S. Mandel,
dated July 19, 2012, Doc. No. 52 (“Mandel Decl.”), ¶ 16, Ex. M; Decl. of
Alasdair J. McMullan, dated July 19, 2012, Doc. No. 51 (“McMullan Decl.”),
¶¶ 3–5, Ex. 1.) It is also undisputed that Capitol did not approve the
reproduction or distribution of its copyrighted recordings on ReDigi’s
website. Thus, if digital music files are “reproduce[d]” and “distribute[d]”
on ReDigi’s website within the meaning of the Copyright Act, Capitol’s
copyrights have been infringed.

CH. 1
1.

289

Reproduction Rights

Courts have consistently held that the unauthorized duplication of
digital music files over the Internet infringes a copyright owner’s exclusive
right to reproduce. See, e.g., A & M Records, Inc. v. Napster, Inc., 239 F.3d
1004, 1014 (9th Cir.2001). However, courts have not previously addressed
whether the unauthorized transfer of a digital music file over the
Internet—where only one file exists before and after the transfer—
constitutes reproduction within the meaning of the Copyright Act. The
Court holds that it does.
The Copyright Act provides that a copyright owner has the exclusive
right “to reproduce the copyrighted work in . . . phonorecords.” 17 U.S.C.
§ 106(1) (emphasis added). Copyrighted works are defined to include, inter
alia, “sound recordings,” which are “works that result from the fixation of
a series of musical, spoken, or other sounds.” Id. § 101. Such works are
distinguished from their material embodiments. These include
phonorecords, which are the “material objects in which sounds . . . are fixed
by any method now known or later developed, and from which the sounds
can be perceived, reproduced, or otherwise communicated, either directly
or with the aid of a machine or device.” Id. § 101 (emphasis added). Thus,
the plain text of the Copyright Act makes clear that reproduction occurs
when a copyrighted work is fixed in a new material object. See Matthew
Bender & Co., Inc. v. W. Pub. Co., 158 F.3d 693, 703 (2d Cir.1998).
The legislative history of the Copyright Act bolsters this reading. The
House Report on the Copyright Act distinguished between sound
recordings and phonorecords, stating that “[t]he copyrightable work
comprises the aggregation of sounds and not the tangible medium of
fixation. Thus, ‘sound recordings’ as copyrightable subject matter are
distinguished from ‘phonorecords[,]’ the latter being physical objects in
which sounds are fixed.” H.R.Rep. No. 94–1476, at 56 (1976), 1976
U.S.C.C.A.N. 5659, 5669. Similarly, the House and Senate Reports on the
Act both explained:
Read together with the relevant definitions in [S]ection 101, the right
“to reproduce the copyrighted work in copies or phonorecords” means the
right to produce a material object in which the work is duplicated,
transcribed, imitated, or simulated in a fixed form from which it can be
“perceived, reproduced, or otherwise communicated, either directly or with
the aid of a machine or device.”
Id. at 61, 1976 U.S.C.C.A.N. at 5675; S.Rep. No. 94–473, at 58 (1975).
Put differently, the reproduction right is the exclusive right to embody, and
to prevent others from embodying, the copyrighted work (or sound
recording) in a new material object (or phonorecord). See Nimmer on
Copyright § 8.02 (stating that “in order to infringe the reproduction right,
the defendant must embody the plaintiff’s work in a ‘material object’ ”).

290

CH. 1

Courts that have dealt with infringement on peer-to-peer (“P2P”) filesharing systems provide valuable guidance on the application of this right
in the digital domain. For instance, in London-Sire Records, Inc. v. John
Doe 1, the court addressed whether users of P2P software violated
copyright owners’ distribution rights. 542 F.Supp.2d 153, 166 & n. 16
(D.Mass.2008). Citing the “material object” requirement, the court
expressly differentiated between the copyrighted work—or digital music
file—and the phonorecord—or “appropriate segment of the hard disk” that
the file would be embodied in following its transfer. Id. at 171. Specifically,
[w]hen a user on a [P2P] network downloads a song from another
user, he receives into his computer a digital sequence representing
the sound recording. That sequence is magnetically encoded on a
segment of his hard disk (or likewise written on other media).
With the right hardware and software, the downloader can use
the magnetic sequence to reproduce the sound recording. The
electronic file (or, perhaps more accurately, the appropriate
segment of the hard disk) is therefore a “phonorecord” within the
meaning of the statute.
Id. (emphasis added). Accordingly, when a user downloads a digital music
file or “digital sequence” to his “hard disk,” the file is “reproduce[d]” on a
new phonorecord within the meaning of the Copyright Act. Id.
This understanding is, of course, confirmed by the laws of physics. It
is simply impossible that the same “material object” can be transferred over
the Internet. Thus, logically, the court in London-Sire noted that the
Internet transfer of a file results in a material object being “created
elsewhere at its finish.” Id. at 173. Because the reproduction right is
necessarily implicated when a copyrighted work is embodied in a new
material object, and because digital music files must be embodied in a new
material object following their transfer over the Internet, the Court
determines that the embodiment of a digital music file on a new hard disk
is a reproduction within the meaning of the Copyright Act.
This finding holds regardless of whether one or multiple copies of the
file exist. London-Sire, like all of the P2P cases, obviously concerned
multiple copies of one digital music file. But that distinction is immaterial
under the plain language of the Copyright Act. Simply put, it is the creation
of a new material object and not an additional material object that defines
the reproduction right. The dictionary defines “reproduction” to mean, inter
alia, “to produce again” or “to cause to exist again or anew.” See MerriamWebster Collegiate Edition 994 (10th ed. 1998) (emphasis added).
Significantly, it is not defined as “to produce again while the original
exists.” Thus, the right “to reproduce the copyrighted work in . . .
phonorecords” is implicated whenever a sound recording is fixed in a new
material object, regardless of whether the sound recording remains fixed
in the original material object.

CH. 1

291

Given this finding, the Court concludes that ReDigi’s service infringes
Capitol’s reproduction rights under any description of the technology.
ReDigi stresses that it “migrates” a file from a user’s computer to its Cloud
Locker, so that the same file is transferred to the ReDigi server and no
copying occurs. However, even if that were the case, the fact that a file has
moved from one material object—the user’s computer—to another—the
ReDigi server—means that a reproduction has occurred. Similarly, when a
ReDigi user downloads a new purchase from the ReDigi website to her
computer, yet another reproduction is created. It is beside the point that
the original phonorecord no longer exists. It matters only that a new
phonorecord has been created.
***
Accordingly, the Court finds that, absent the existence of an
affirmative defense, the sale of digital music files on ReDigi’s website
infringes Capitol’s exclusive right of reproduction.
2.

Distribution Rights

In addition to the reproduction right, a copyright owner also has the
exclusive right “to distribute copies or phonorecords of the copyrighted
work to the public by sale or other transfer of ownership.” 17 U.S.C.
§ 106(3). Like the court in London-Sire, the Court agrees that “[a]n
electronic file transfer is plainly within the sort of transaction that § 106(3)
was intended to reach [and] . . . fit[s] within the definition of ‘distribution’
of a phonorecord.” London-Sire, 542 F.Supp.2d at 173–74. For that reason,
“courts have not hesitated to find copyright infringement by distribution in
cases of file-sharing or electronic transmission of copyrighted works.”
Arista Records LLC v. Greubel, 453 F.Supp.2d 961, 968 (N.D.Tex.2006)
(collecting cases); see, e.g., Napster, 239 F.3d at 1014. Indeed, in New York
Times Co., Inc. v. Tasini, the Supreme Court stated it was “clear” that an
online news database violated authors’ distribution rights by selling
electronic copies of their articles for download. 533 U.S. 483, 498, 121 S.Ct.
2381, 150 L.Ed.2d 500 (2001).
There is no dispute that sales occurred on ReDigi’s website. Capitol
has established that it was able to buy more than one-hundred of its own
recordings on ReDigi’s website, and ReDigi itself compiled a list of its
completed sales of Capitol’s recordings. (Cap. 56.1 ¶¶ 68–73; RD Rep. 56.1
¶¶ 68–73.) ReDigi, in fact, does not contest that distribution occurs on its
website—it only asserts that the distribution is protected by the fair use
and first sale defenses. (See, e.g., ReDigi Opp’n 15 (noting that “any
distributions . . . which occur on the ReDigi marketplace are protected”).)
Accordingly, the Court concludes that, absent the existence of an
affirmative defense, the sale of digital music files on ReDigi’s website
infringes Capitol’s exclusive right of distribution.

292
3.

CH. 1

Performance and Display Rights

Finally, a copyright owner has the exclusive right, “in the case of . . .
musical . . . works, to perform the copyrighted work publicly.” 17 U.S.C.
§ 106(4). Public performance includes transmission to the public regardless
of “whether the members of the public . . . receive it in the same place or in
separate places and at the same time or at different times.” Id. § 101.
Accordingly, audio streams are performances because a “stream is an
electronic transmission that renders the musical work audible as it is
received by the client-computer’s temporary memory. This transmission,
like a television or radio broadcast, is a performance because there is a
playing of the song that is perceived simultaneously with the
transmission.” United States v. Am. Soc. Of Composers, Authors, &
Publishers, 627 F.3d 64, 74 (2d Cir.2010). To state a claim for infringement
of the performance right, a plaintiff must establish that (1) the public
performance or display of the copyrighted work was for profit, and (2) the
defendant lacked authorization from the plaintiff or the plaintiff’s
representative. See Broad. Music, Inc. v. 315 W. 44th St. Rest. Corp., No.
93 Civ. 8082(MBM), 1995 WL 408399, at *2 (S.D.N.Y. July 11, 1995).
The copyright owner also has the exclusive right, “in the case of . . .
pictorial [and] graphic . . . works[,] . . . to display the copyrighted work
publicly.” 17 U.S.C. § 106(5). Public display includes “show[ing] a copy of
[a work], either directly or by means of a film, slide, television image, or
any other device or process.” Id. § 101. The Ninth Circuit has held that the
display of a photographic image on a computer may implicate the display
right, though infringement hinges, in part, on where the image was hosted.
Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1160 (9th Cir.2007).
Capitol alleges that ReDigi infringed its copyrights by streaming
thirty-second song clips and exhibiting album cover art to potential buyers.
(Compl. ¶¶ 25–26.) ReDigi counters that it only posted such content
pursuant to a licensing agreement and within the terms of that agreement.
(ReDigi Mem. 24–25.) ReDigi also asserts that it promptly removed the
content when its licenses were terminated, and instead sent users to
YouTube or iTunes for previews. (Id.) Capitol, in response, claims that
ReDigi’s use violated the terms of those licenses and did not cease at the
time the licenses were terminated. (Compare RD 56.1 ¶¶ 73–79, with Cap.
Rep. 56.1 ¶¶ 73–79.) As such, there are material disputes as to the source
of the content, whether ReDigi was authorized to transmit the content,
when authorization was or was not revoked, and when ReDigi ceased
providing the content. Because the Court cannot determine whether
ReDigi infringed Capitol’s display and performance rights on the present
record, ReDigi’s motion for summary judgment on its alleged infringement
of these exclusive rights is denied.

CH. 1
B.

293

Affirmative Defenses

Having concluded that sales on ReDigi’s website infringe Capitol’s
exclusive rights of reproduction and distribution, the Court turns to
whether the fair use or first sale defenses excuse that infringement. For
the reasons set forth below, the Court determines that they do not.
1.

Fair Use

“The ultimate test of fair use . . . is whether the copyright law’s goal of
‘promot[ing] the Progress of Science and useful Arts’ would be better served
by allowing the use than by preventing it.” Castle Rock Entm’t, Inc. v. Carol
Publ’g Grp., Inc., 150 F.3d 132, 141 (2d Cir.1998) (quoting U.S. Const., art.
I, § 8, cl. 8). Accordingly, fair use permits reproduction of copyrighted work
without the copyright owner’s consent “for purposes such as criticism,
comment, news reporting, teaching (including multiple copies for
classroom use), scholarship, or research.” 17 U.S.C. § 107. The list is not
exhaustive but merely illustrates the types of copying typically embraced
by fair use. Castle Rock Entm’t, Inc., 150 F.3d at 141. In addition, four
statutory factors guide courts’ application of the doctrine. Specifically,
courts look to:
(1) the purpose and character of the use, including whether such
use is of a commercial nature or is for nonprofit educational
purposes; (2) the nature of the copyrighted work; (3) the amount
and substantiality of the portion used in relation to the
copyrighted work as a whole; and (4) the effect of the use upon the
potential market for or value of the copyrighted work.
17 U.S.C. § 107. Because fair use is an “equitable rule of reason,” courts are
“free to adapt the doctrine to particular situations on a case-by-case basis.”
Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 448 n. 31,
104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (quoting H. Rep. No. 94–1476, at 65–
66, 1976 U.S.C.C.A.N. at 5679–5680); see Iowa State Univ. Research
Found., Inc. v. Am. Broad. Cos., 621 F.2d 57, 60 (2d Cir.1980).
On the record before it, the Court has little difficulty concluding that
ReDigi’s reproduction and distribution of Capitol’s copyrighted works falls
well outside the fair use defense. ReDigi obliquely argues that uploading
to and downloading from the Cloud Locker for storage and personal use are
protected fair use. (See ReDigi Mem. 15.) Significantly, Capitol does not
contest that claim. (See Tr. 12:8–23.) Instead, Capitol asserts only that
uploading to and downloading from the Cloud Locker incident to sale fall
outside the ambit of fair use. The Court agrees. See Arista Records, LLC v.
Doe 3, 604 F.3d 110, 124 (2d Cir.2010) (rejecting application of fair use to
user uploads and downloads on P2P file-sharing network).
Each of the statutory factors counsels against a finding of fair use. The
first factor requires the Court to determine whether ReDigi’s use
“transforms” the copyrighted work and whether it is commercial. Campbell

294

CH. 1

v. Acuff-Rose Music, Inc., 510 U.S. 569, 578–79, 114 S.Ct. 1164, 127 L.Ed.2d
500 (1994). Both inquiries disfavor ReDigi’s claim. Plainly, the upload, sale,
and download of digital music files on ReDigi’s website does nothing to “add
[ ] something new, with a further purpose or different character” to the
copyrighted works. Id.; see, e.g., Napster, 239 F.3d at 1015 (endorsing
district court finding that “downloading MP3 files does not transform the
copyrighted work”). ReDigi’s use is also undoubtedly commercial. ReDigi
and the uploading user directly profit from the sale of a digital music file,
and the downloading user saves significantly on the price of the song in the
primary market. See Harper & Row Publishers, Inc. v. Nation Enters., 471
U.S. 539, 562, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (“The crux of the
profit/nonprofit distinction is not whether the sole motive of the use is
monetary gain but whether the user stands to profit from exploitation of
the copyrighted material without paying the customary price.”). ReDigi
asserts that downloads for personal, and not public or commercial, use
“must be characterized as . . . noncommercial, nonprofit activity.” (ReDigi
Mem. 16 (quoting Sony, 464 U.S. at 449, 104 S.Ct. 774).) However, ReDigi
twists the law to fit its facts. When a user downloads purchased files from
the Cloud Locker, the resultant reproduction is an essential component of
ReDigi’s commercial enterprise. Thus, ReDigi’s argument is unavailing.
The second factor—the nature of the copyrighted work—also weighs
against application of the fair use defense, as creative works like sound
recordings are “close to the core of the intended copyright protection” and
“far removed from the . . . factual or descriptive work more amenable to fair
use.” UMG Recordings, Inc. v. MP3.Com, Inc., 92 F.Supp.2d 349, 351
(S.D.N.Y.2000) (alteration and internal quotation marks omitted) (citing
Campbell, 510 U.S. at 586, 114 S.Ct. 1164). The third factor—the portion
of the work copied—suggests a similar outcome because ReDigi transmits
the works in their entirety, “negating any claim of fair use.” Id. at 352, 114
S.Ct. 1164. Finally, ReDigi’s sales are likely to undercut the “market for or
value of the copyrighted work” and, accordingly, the fourth factor cuts
against a finding of fair use. Cf. Arista Records, LLC v. Doe 3, 604 F.3d at
124 (rejecting application of fair use to P2P file sharing, in part, because
“the likely detrimental effect of file-sharing on the value of copyrighted
compositions is well documented.” (citing Metro-Goldwyn-Mayer Studios
Inc. v. Grokster, Ltd., 545 U.S. 913, 923, 125 S.Ct. 2764, 162 L.Ed.2d 781
(2005))). The product sold in ReDigi’s secondary market is
indistinguishable from that sold in the legitimate primary market save for
its lower price. The clear inference is that ReDigi will divert buyers away
from that primary market. ReDigi incredibly argues that Capitol is
preempted from making a market-based argument because Capitol itself
condones downloading of its works on iTunes. (ReDigi Mem. 18.) Of course,
Capitol, as copyright owner, does not forfeit its right to claim copyright
infringement merely because it permits certain uses of its works. This
argument, too, is therefore unavailing.

CH. 1

295

In sum, ReDigi facilitates and profits from the sale of copyrighted
commercial recordings, transferred in their entirety, with a likely
detrimental impact on the primary market for these goods. Accordingly,
the Court concludes that the fair use defense does not permit ReDigi’s users
to upload and download files to and from the Cloud Locker incident to sale.
***
IV. CONCLUSION
At base, ReDigi seeks judicial amendment of the Copyright Act to
reach its desired policy outcome. However, “[s]ound policy, as well as
history, supports [the Court’s] consistent deference to Congress when
major technological innovations alter the market for copyrighted materials.
Congress has the constitutional authority and the institutional ability to
accommodate fully the varied permutations of competing interests that are
inevitably implicated by such new technology.” Sony, 464 U.S. at 431, 104
S.Ct. 774. Such defence often counsels for a limited interpretation of
copyright protection. However, here, the Court cannot of its own accord
condone the wholesale application of the first sale defense to the digital
sphere, particularly when Congress itself has declined to take that step.
Accordingly, and for the reasons stated above, the Court GRANTS Capitol’s
motion for summary judgment on its claims for ReDigi’s direct,
contributory, and vicarious infringement of its distribution and
reproduction rights. The Court also DENIES ReDigi’s motion in its
entirety.
Because issues remain with respect to Capitol’s performance and
display rights, and ReDigi’s secondary infringement of Capitol’s common
law copyrights, as well as damages, injunctive relief, and attorney’s fees,
IT IS HEREBY ORDERED THAT the parties shall submit a joint letter to
the Court no later than April 12, 2013 concerning the next contemplated
steps in this case.
The Clerk of Court is respectfully directed to terminate the motions
pending at Doc. Nos. 48 and 54.
SO ORDERED.

———

DIGITAL SAMPLING AND IMAGING

296

CH. 1

Jersey,

1993.

JARVIS V. A & M RECORDS
United
States
827 F. Supp. 282.

District

Court,

District

of

New

ACKERMAN, DISTRICT JUDGE.
***
I.

Undisputed Factual Background

The facts of this case are undisputed and relatively simple. About a
decade ago, Boyd Jarvis wrote a song entitled “The Music’s Got Me.” He
recorded the song with his group, Visual, and copyrighted the composition
together with the arrangement in November 1982. The song subsequently
was released on Prelude Records, and the undisputed evidence shows that
Prelude Records retains the copyright to the sound recording.
In 1989, defendant Robert Clivilles and David Cole wrote and recorded
a song entitled “Get Dumb! (Free Your Body)” and the song was released
in three formats on A & M Records and Vendetta Records, A & M’s
subsidiary label. The three relevant versions are: (1) “Get Dumb! Free Your
Body” as it appears on the “b” side of a single record called “Heartbeat” by
the defendant group Seduction; (2) a trio of versions of “Get Dumb! Free
Your Body” that appear on another 12 single by Cole/Clivilles Music
Enterprises, recorded by a group called The Crew (featuring Freedom
Williams); (3) the cassette single of the song “Get Dumb!”
In all three of the releases of “Get Dumb!”, defendants digitally
sampled sections of Mr. Jarvis’s “The Music’s Got Me.” Digital sampling
has been described as:
the conversion of analog sound waves into a digital code. The
digital code that describes the sampled music . . . can then be
reused, manipulated or combined with other digitalized or
recorded sounds using a machine with digital data processing
capabilities, such as a . . . computerized synthesizer.
Judith Greenberg Finell, How a Musicologist Views Digital Sampling
Issues, N.Y.L.J. p.5 n. 3 (May 22, 1992). Thus, digital sampling is similar
to taping the original composition and reusing it in another context. In this
case, then, throughout the defendants’ songs, one occasionally hears an
actual piece of “The Music’s Got Me.”
In 1990, Mr. Jarvis sued the defendants for copyright infringement.
Defendants now move for summary judgment, on a variety of grounds. . . .
***
This is a case of what Professor Nimmer has termed “fragmented
literal similarity,” see Nimmer on Copyright, § 13.03[A][2] at 13–46, that
is, there is literal verbatim similarity between plaintiff’s and defendants’
works. In fact, the copied parts could not be more similar—they were

CH. 1

297

digitally copied from plaintiff’s recording. Two parts from plaintiff’s song
were copied: first, the bridge section, which contains the words “ooh . . .
move . . . free your body,” was taken. Second, a distinctive keyboard riff,
which functions as both a rhythm and melody, included in the last several
minutes of plaintiff’s song, were also sampled and incorporated into
defendants’ work.
As courts and commentators have repeatedly noted, the test for
substantial similarity is difficult to define and vague to apply. Nonetheless,
it is repeatedly said that the test to determine substantial similarity is the
response of the ordinary lay person.
Defendants build on the premise of the lay audience test by arguing
that only if the two songs are similar in their entirety should the
defendant’s song be held to have infringed plaintiff’s song. Indeed,
defendants’ cite apparent authority for this proposition. In a case decided
a half-century ago, a court, in rejecting the plaintiff’s argument of
infringement, stated that “I have heard the compositions played, and to my
ear there is a similarity, but not such a similarity as would impress one. In
other words, I would not take the one for the other.” Allen v. Walt Disney
Productions, Ltd., 41 F. Supp. 134, 140 (S.D.N.Y. 1941). Similarly, the
district judge in Arnstein v. BMI, 46 F. Supp. 379 (S.D.N.Y. 1942), wrote
that “infringement must be founded upon more than the adoption of a few
measures here and there. The theme and general melody must be
substantially lifted.” Moreover, the defendants cite an influential article by
Jeffrey Sherman:
A defendant should not be held liable for infringement unless he
copied a substantial portion of the complaining work and there
exists the sort of aural similarity between the two works that a
lay audience would detect. As to the first requirement, the portion
copied may be either qualitatively or quantitatively substantial.
As to the second, the two pieces must be similar enough to sound
similar to a lay audience, since only then is it reasonable to
suppose that the performance or publication of the accused work
could in any way injure the rights of the plaintiff composer.
J. Sherman, Musical Copyright Infringement: The Requirement of
Substantial Similarity, Common Law Symposium, No. 92, ASCAP, p. 145
(1977).
However, defendants misconstrue the scope of the examination, at
least in the context of fragmented literal similarity, where there
unquestionably is copying, albeit of only a portion of plaintiff’s song. If it
really were true that for infringement to follow a listener must have to
confuse one work for the other, a work could be immune from infringement
so long as the infringing work reaches a substantially different audience
than the infringed work. In such a situation, a rap song, for instance, could
never be held to have infringed an easy listening song or a pop song. See,

298

CH. 1

e.g., Grand Upright Music, Ltd. v. Warner Brothers Records, Inc., 780 F.
Supp. 182 (S.D.N.Y. 1991) (finding that rap song infringed easy listening
song).
Moreover, defendants’ test, applied in cases of fragmented literal
similarity, would eviscerate the qualitative/quantitative analysis, which
revolves around the premise that a party may be held liable when he or she
appropriates a large section or a qualitatively important section of
plaintiff’s work, see Werlin v. Reader’s Digest Association, 528 F. Supp. 451,
463 (S.D.N.Y. 1981) (Ward, D.J.).
Finally, such a strict test would seem to go counter to another general
principle—that the relevant question in copyright infringement cases is
whether the segment in question constituted a substantial portion of the
plaintiff’s work, not whether it constituted a substantial portion of the
defendant’s work. . . .
Thus, infringement based on fragmented literal similarity depends on
the truth of the principle that “the value of a work may be substantially
diminished even when only a part of it is copied, if the part that is copied
is of great qualitative importance to the work as a whole.” Werlin at 463.
[The court then discussed Grand Upright and concluded that “[t]he
proper question to ask is whether the defendant appropriated, either
quantitatively or qualitatively, ‘constituent elements of the work that are
original’, see Feist Publications, Inc. v. Rural Telephone Service Co., 499
U.S. 340 (1991), such that the copying rises to the level of an unlawful
appropriation.”]
***
I now turn to the songs at issue in this case.
Plaintiff’s song begins with a rhythm and melody utterly unlike
defendants’ songs. But halfway through the song, the tone changes as the
verse-chorus repetition segues into a lengthy bridge. The bridge begins
with a series of “oohs,” sung over a distinctive rhythm, changes into a series
of “moves” and then culminates with vocal repetitions of the phrase “free
your body.” A couple of minutes later in plaintiff’s song, the tone again
changes. This time, the song segues into a distinctive keyboard riff (musical
phrase), that functions as both rhythm and melody, and for some time stays
in the foreground of the song. It remains throughout the end of the song,
as lyrics are sung over it.
Nonetheless, defendants argue that the vocal portions of plaintiff’s
song which defendants copied were non-copyrightable and therefore those
portions must be factored out prior to performing the substantial similarity
test.
Since it is not unlawful to copy non-copyrightable portions of a
plaintiff’s work, non-copyrightable elements must be factored out in an

CH. 1

299

inquiry into infringement. See Warner Brothers v. American Broadcasting
Companies, 720 F.2d 231, 240 (2d Cir. 1983). . . . The policy behind the rule
is to prevent a deterring effect on the creation of new works because of
authors’ fears of copying innocuous segments.
There is no easily codified standard to govern whether the plaintiff’s
material is sufficiently original and/or novel to be copyrightable. “Cliched
language, phrases and expressions conveying an idea that is typically
expressed in a limited number of stereotypic fashions, are not subject to
copyright protection.” Easily arrived at phrases and chord progressions are
usually non-copyrightable. Thus, in one case, a court held that defendant’s
appropriation of the phrase “night and noon,” in a song entirely different
from plaintiff’s song, was not copyright infringement. O’Brien v. Chappel
& Co., 159 F. Supp. 58, 58 (S.D.N.Y. 1958)(Dawson, D.J.). In another case,
a court held that when plaintiff’s and defendant’s mug coasters referenced
ideas of enjoyment, a drinking mug, friendship, sunshine, and flowers, the
plaintiff’s ideas were unprotected.
However, if a piece is sufficiently distinctive, it is copyrightable.
This case bears no relationship to the cases cited above. It is unfair to
characterize the “oohs,” “moves” and “free your body” as cliched phrases
typical in the field. To the contrary, they are used together in a particular
arrangement and in the context of a particular melody. And the precise
relationship of the phrases vis-á-vis each other was copied. There is no
question that the combined phrase “ooh ooh ooh ooh . . . move free your
body” is an expression of an idea that is copyrightable. Moreover, the
keyboard line that was copied represents a distinctive melody/rhythm that
sets it far apart from the ordinary cliched phrases held not copyrightable.
It, too, is an expression of an idea, and is capable of being infringed. Again,
the fact that defendants appropriated the exact arrangement of plaintiff’s
composition says more than what can be captured in abstract legal
analysis.
It is certainly not clear as a matter of law that the portions copied from
plaintiff’s song were insignificant to plaintiff’s song. To the contrary, the
“oohs” and “move, free your body” occur in a bridge that attempts to be
distinct and attention-grabbing. The keyboard riff begins the final portion
of plaintiff’s song, setting the rhythm as well as the melody.
Summary dismissal denied.

———
In 2005, the Sixth Circuit provided its judgment on this score, in
Bridgeport Music v. Dimension Films, 410 F.3d 792 (6th Cir. 2005). The
plaintiffs were suing the defendants for playing five times in their 1998
movie I Got The Hook-Up, a four-second line “Get off your Ass and Jam”
from George Clinton, Jr. and the Funkedelics’ rap song “100 Miles and

300

CH. 1

Runnin.” The trial judge summarily dismissed this suit on the grounds that
no one would recognize the source. The Sixth Circuit reversed, saying first
that one was free “to take three notes from a musical composition but not
three notes by way of sampling from a bought recording,” because the latter
“is a physical taking rather than an intellectual one.” They concluded by
stating:
Unfortunately, there is no Rosetta stone for the interpretation of
the copyright statute. We have taken a “literal reading” approach
. . . If this is not what Congress intended or is not what they would
intend now, it is easy enough for the record industry, as they have
done in the past, to go back to Congress for a clarification or
change in the law. This is the best place for the change to be made
rather than in the courts, because as this case demonstrates the
court is never aware of much more than the tip of the iceberg.
Id. at 805.

E. COPYRIGHT OWNERSHIP
COMMUNITY FOR CREATIVE NON-VIOLENCE V. REID
Supreme
Court
of
the
490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811.

United

States,

1989.

JUSTICE MARSHALL delivered the opinion of the Court.
In this case, an artist and the organization that hired him to produce
a sculpture contest the ownership of the copyright in that work. To resolve
this dispute, we must construe the “work made for hire” provisions of the
Copyright Act of 1976, 17 U.S.C. §§ 101 and 201(b), and in particular, the
provision in § 101, which defines as a “work made for hire” a “work
prepared by an employee within the scope of his or her employment”
(hereinafter § 101(1)).
I
[Petitioner is the Community for Creative Non-Violence (CCNV), a
nonprofit association dedicated to eliminating homelessness in America. In
the fall of 1985, CCNV decided to participate in the Christmastime Pageant
of Peace in Washington, D.C., by sponsoring a display to dramatize the
plight of the homeless.
CCNV members decided to commission a sculpture of a modern
Nativity scene in which, instead of the traditional Holy Family, the two
adult figures and the infant would appear as contemporary homeless
people huddled on a street-side steam grate. The steam grate would be
positioned atop a platform within which special-effects equipment would
emit simulated “steam” through the grid. The title for the work was to be

CH. 1

301

“Third World America,” and a legend for the pedestal was to read: “and still
there is no room at the inn.”
CCNV was referred to respondent James Earl Reid, a Baltimore
sculptor who agreed to complete the sculpture. The parties agreed that the
sculpture would be made of “Design Cast 62,” a synthetic substance that
could meet CCNV’s monetary and time constraints, could be tinted to
resemble bronze, and could withstand the elements. The parties agreed
that the project would cost no more than $15,000, not including Reid’s
services, which he donated. The parties did not sign a written agreement,
and neither party mentioned copyright.
Reid made several sketches of figures in various poses. At CCNV’s
request, Reid sent CCNV a sketch of a proposed sculpture showing the
family in a creche-like setting. CCNV also took Reid to see homeless people
living on the streets and pointed out that they tended to recline on steam
grates, rather than sit or stand. From that time on, Reid’s sketches
contained only reclining figures. Various CCNV member visited Reid to
check on his. CCNV rejected Reid’s proposal to use suitcases or shopping
bags to hold the family’s personal belongings, insisting instead on a
shopping cart. After Reid finished the statue, it was taken to Washington,
D.C. and mounted on its base. After the pageant, the sculpture was
returned to Reid for minor repairs. When CCNV asked for the return of the
sculpture for a multi-city tour, Reid refused and filed a certificate of
copyright registration for the work. CCNV then filed a competing copyright
claim.]
***
II
A
The Copyright Act of 1976 provides that copyright ownership “vests
initially in the author or authors of the work.” As a general rule, the author
is the party who actually creates the work, that is, the person who
translates an idea into a fixed, tangible expression entitled to copyright
protection. The Act carves out an important exception, however, for “works
made for hire.” If the work is for hire, “the employer or other person for
whom the work was prepared is considered the author” and owns the
copyright, unless there is a written agreement to the contrary. Classifying
a work as “made for hire” determines not only the initial ownership of its
copyright, but also the copyright’s duration, and the owners’ renewal
rights, § 304(a), termination rights, and right to import certain goods
bearing the copyright. The contours of the work for hire doctrine therefore
carry profound significance for freelance creators—including artists,
writers,
photographers,
designers,
composers,
and
computer
programmers—and for the publishing, advertising, music, and other
industries which commission their works.

302

CH. 1

***
Petitioners do not claim that the statute satisfies the terms of § 101(2).
Quite clearly, it does not. Sculpture does not fit within any of the nine
categories of “specially ordered or commissioned” works enumerated in
that subsection, and no written agreement between the parties establishes
“Third World America” as a work for hire.
[The Court turned, then, from § 101(2)’s standards for “works made for
hire” by independent contractors to the general § 101(1) standard for
“employees,” who presumptively make all their works for hire.] The
starting point for our interpretation of a statute is always its language. The
Act nowhere defines the terms “employee” or “scope of employment.” It is,
however, well established that “[w]here Congress uses terms that have
accumulated settled meaning under . . . the common law, a court must
infer, unless the statute otherwise dictates, that Congress means to
incorporate the established meaning of these terms.” In the past, when
Congress has used the term “employee” without defining it, we have
concluded that Congress intended to describe the conventional masterservant relationship as understood by common-law agency doctrine.
Nothing in the text of the work for hire provisions indicates that Congress
used the words “employee” and “employment” to describe anything other
than “ ‘the conventional relation of employer and employee.’ ” On the
contrary, Congress’ intent to incorporate the agency law definition is
suggested by § 101(1)’s use of the term, “scope of employment,” a widely
used term of art in agency law.
***
[The Court then rejected CCNV’s proposal alternatives, a “right to
control the product” as “actual control” of the product, as incompatible with
the specific additions to Section 101(1) that Congress had enacted in
Section 101(2).] Section 101 clearly delineates between works prepared by
an employee and commissioned works. Sound though other distinctions
might be as a matter of copyright policy, there is no statutory support for
an additional dichotomy between commissioned works that are actually
controlled and supervised by the hiring party and those that are not.
We therefore conclude that the language and structure of § 101 of the
Act do not support either the right to control the product or the actual
control approaches. The structure of § 101 indicates that a work for hire
can arise through one of two mutually exclusive means, one for employees
and one for independent contractors, and ordinary canons of statutory
interpretation indicate that the classification of a particular hired party
should be made with reference to agency law.
***
Finally, petitioners’ construction of the work for hire provisions would
impede Congress’ paramount goal in revising the 1976 Act of enhancing

CH. 1

303

predictability and certainty of copyright ownership. In a “copyright
marketplace,” the parties negotiate with an expectation that one of them
will own the copyright in the completed work. With that expectation, the
parties at the outset can settle on relevant contractual terms, such as the
price for the work and the ownership of reproduction rights.
To the extent that petitioners endorse an actual control test, CCNV’s
construction of the work for hire provisions prevents such planning.
Because that test turns on whether the hiring party has closely monitored
the production process, the parties would not know until late in the process,
if not until the work is completed, whether a work will ultimately fall
within § 101(1). Under petitioners’ approach, therefore, parties would have
to predict in advance whether the hiring party will sufficiently control a
given work to make it the author. “If they guess incorrectly, their reliance
on ‘work for hire’ or an assignment may give them a copyright interest that
they did not bargain for.” This understanding of the work for hire
provisions clearly thwarts Congress’ goal of ensuring predictability
through advance planning. Moreover, petitioners’ interpretation “leaves
the door open for hiring parties, who have failed to get a full assignment of
copyright rights from independent contractors falling outside the
subdivision (2) guidelines, to unilaterally obtain work-made-for-hire rights
years after the work has been completed as long as they directed or
supervised the work, a standard that is hard not to meet when one is a
hiring party.” Hamilton, Commissioned Works as Works Made for Hire
Under the 1976 Copyright Act: Misinterpretation and Injustice, 135 U. Pa.
L. Rev. 1281, 1304 (1987).
In sum, we must reject petitioners’ argument. Transforming a
commissioned work into a work by an employee on the basis of the hiring
party’s right to control, or actual control of, the work is inconsistent with
the language, structure, and legislative history of the work for hire
provisions. To determine whether a work is for hire under the Act, a court
first should ascertain, using principles of general common law of agency,
whether the work was prepared by an employee or an independent
contractor. After making this determination, the court can apply the
appropriate subsection of § 101.
B
We turn, finally, to an application of § 101 to Reid’s production of
“Third World America.” In determining whether a hired party is an
employee under the general common law of agency, we consider the hiring
party’s right to control the manner and means by which the product is
accomplished. Among the other factors relevant to this inquiry are the skill
required; the source of the instrumentalities and tools; the location of the
work; the duration of the relationship between the parties; whether the
hiring party has the right to assign additional projects to the hired party;
the extent of the hired party’s discretion over when and how long to work;

304

CH. 1

the method of payment; the hired party’s role in hiring and paying
assistants; whether the work is part of the regular business of the hiring
party; whether the hiring party is in business; the provision of employee
benefits; and the tax treatment of the hired party. See Restatement
(Second) of Agency § 220(2) (1958) (setting forth a nonexhaustive list of
factors relevant to determining whether a hired party is an employee). No
one of these factors is determinative.
Examining the circumstances of this case in light of these factors, we
agree with the Court of Appeals that Reid was not an employee of CCNV
but an independent contractor. True, CCNV members directed enough of
Reid’s work to ensure that he produced a sculpture that met their
specifications. But the extent of control the hiring party exercises over the
details of the product is not dispositive. Indeed, all the other circumstances
weigh heavily against finding an employment relationship. Reid is a
sculptor, a skilled occupation. Reid supplied his own tools. He worked in
his own studio in Baltimore, making daily supervision of his activities from
Washington practicably impossible. Reid was retained for less than two
months, a relatively short period of time. During and after this time, CCNV
had no right to assign additional projects to Reid. Apart from the deadline
for completing the sculpture, Reid had absolute freedom to decide when
and how long to work. CCNV paid Reid $15,000, a sum dependent on
“completion of a specific job, a method by which independent contractors
are often compensated.” Reid had total discretion in hiring and paying
assistants. Indeed, CCNV is not a business at all. Finally, CCNV did not
pay payroll or Social Security taxes, provide any employee benefits, or
contribute to unemployment insurance or workers’ compensation funds.
Affirmed.

JOHN CARTER V. HELMSLEY–SPEAR, INC.
United States Court of Appeals, Second Circuit.
Decided Dec. 1, 1995.
71 F.3d 77

CARDAMONE, Circuit Judge:
Defendants 474431 Associates and Helmsley–Spear, Inc. (defendants or
appellants), as the owner and managing agent respectively, of a
commercial building in Queens, New York, appeal from an order of the
United States District Court for the Southern District of New York
(Edelstein, J.), entered on September 6, 1994 following a bench trial. The
order granted plaintiffs, who are three artists, a permanent injunction that
enjoined defendants from removing, modifying or destroying a work of
visual art that had been installed in defendants’ building by plaintiffs-

CH. 1

305

artists commissioned by a former tenant to install the work. See Carter v.
Helmsley–Spear, Inc., 861 F.Supp. 303 (S.D.N.Y.1994). * * *
On this appeal we deal with an Act of Congress that protects the rights of
artists to preserve their works. One of America’s most insightful thinkers
observed that a country is not truly civilized “where the arts, such as they
have, are all imported, having no indigenous life.” 7 Works of Ralph Waldo
Emerson, Society and Solitude, Chapt. II Civilization 34 (AMS. ed. 1968).
From such reflection it follows that American artists are to be encouraged
by laws that protect their works. Although Congress in the statute before
us did just that, it did not mandate the preservation of art at all costs and
without due regard for the rights of others.
For the reasons that follow, we reverse and vacate the grant of injunctive
relief to plaintiffs and affirm the dismissal by the district court of plaintiffs’
other claims and its dismissal of defendants’ counterclaim for waste.
BACKGROUND
Defendant 474431 Associates (Associates) is the owner of a mixed use
commercial building located at 47–44 31st Street, Queens, New York,
which it has owned since 1978. Associates is a New York general
partnership. The general partners are Alvin Schwartz and Supervisory
Management Corp., a wholly-owned subsidiary of Helmsley Enterprises,
Inc. Defendant Helmsley–Spear, Inc. is the current managing agent of the
property for Associates.
On February 1, 1990 Associates entered into a 48–year net lease, leasing
the building to 47–44 31st Street Associates, L.P. (Limited Partnership), a
Delaware limited partnership. From February 1, 1990 until June 1993,
Irwin Cohen or an entity under his control was the general partner of the
Limited Partnership, and managed the property through Cohen’s SIG
Management Company (SIG). Corporate Life Insurance Company
(Corporate Life) was a limited partner in the Limited Partnership. In June
1993 SIG ceased its involvement with the property and Corporate Life,
through an entity controlled by it, became the general partner of the
Limited Partnership. The property was then managed by the Limited
Partnership, through Theodore Nering, a Corporate Life representative.
There is no relationship, other than the lease, between Associates, the
lessor, and the Limited Partnership, the lessee.
Plaintiffs John Carter, John Swing and John Veronis (artists or plaintiffs)
are professional sculptors who work together and are known collectively as
the “Three–J’s” or “Jx3.” On December 16, 1991 SIG entered into a oneyear agreement with the plaintiffs “engag[ing] and hir[ing] the Artists ...

306

CH. 1

to design, create and install sculpture and other permanent installations”
in the building, primarily the lobby. Under the agreement plaintiffs had
“full authority in design, color and style,” and SIG retained authority to
direct the location and installation of the artwork within the building. The
artists were to retain copyrights to their work and SIG was to receive 50
percent of any proceeds from its exploitation. On January 20, 1993 SIG and
the artists signed an agreement extending the duration of their commission
for an additional year. When Corporate Life became a general partner of
the Limited Partnership, the Limited Partnership assumed the agreement
with plaintiffs and in December 1993 again extended the agreement.
The artwork that is the subject of this litigation is a very large “walkthrough sculpture” occupying most, but not all, of the building’s lobby. The
artwork consists of a variety of sculptural elements constructed from
recycled materials, much of it metal, affixed to the walls and ceiling, and a
vast mosaic made from pieces of recycled glass embedded in the floor and
walls. Elements of the work include a giant hand fashioned from an old
school bus, a face made of automobile parts, and a number of interactive
components. These assorted elements make up a theme relating to
environmental concerns and the significance of recycling.
The Limited Partnership’s lease on the building was terminated on March
31, 1994. It filed for bankruptcy one week later. The property was
surrendered to defendant Associates on April 6, 1994 and defendant
Helmsley–Spear, Inc. took over management of the property.
Representatives of defendants informed the artists that they could no
longer continue to install artwork at the property, and instead had to
vacate the building. These representatives also made statements
indicating that defendants intended to remove the artwork already in place
in the building’s lobby.
As a result of defendants’ actions, artists commenced this litigation. On
April 26, 1994 the district court issued a temporary restraining order
enjoining defendants from taking any action to alter, deface, modify or
mutilate the artwork installed in the building. In May 1994 a hearing was
held on whether a preliminary injunction should issue. The district court
subsequently granted a preliminary injunction enjoining defendants from
removing the artwork pending the resolution of the instant litigation.
A bench trial was subsequently held in June and July 1994, at the
conclusion of which the trial court granted the artists the permanent
injunction prohibiting defendants from distorting, mutilating, modifying,
destroying and removing plaintiffs’ artwork. The injunction is to remain in
effect for the lifetimes of the three plaintiffs. Plaintiffs’ other claims,
including their cause of action for tortious interference and a request for

CH. 1

307

an award of costs and attorney’s fees and that they be allowed to continue
to add to the artwork in the lobby, as well as defendants’ counterclaim for
waste, were all dismissed with prejudice. This appeal and cross-appeal
followed.
DISCUSSION
I Artists’ Moral Rights [omitted]…
II Work of Visual Art
Because VARA is relatively new, a fuller explication of it is helpful. In
analyzing the Act, therefore, we will follow in order the definition set forth
in § 101, as did the district court when presiding over this litigation. The
district court determined that the work of art installed in the lobby of
Associates’ building was a work of visual art as defined by VARA; that
distortion, mutilation, or modification of the work would prejudice
plaintiffs’ honor and reputations; that the work was of recognized stature,
thus protecting it from destruction (including removal that would result in
destruction); and that Associates consented to or ratified the installation of
the work in its building. The result was that defendants were enjoined from
removing or otherwise altering the work during the lifetimes of the three
artists.
A. Singleness of the Work
As a preliminary matter, we must determine whether the trial court
correctly found that the work is a single piece of art, to be analyzed under
VARA as a whole, rather than separate works to be considered
individually. This finding was a factual one reviewed under the clearly
erroneous standard. For purposes of framing the issues at trial the parties
entered into a joint stipulation relating to numerous facts, including a
definition of “the Work.” This stipulated definition contained a long,
detailed list of all the sculptural elements contained in the building’s lobby.
The district court found that, with a few precise exceptions determined to
be separate works of art, the artwork created by plaintiffs in the lobby was
a single work. This finding was based on testimony, credited by the trial
judge, of the artists themselves and of their expert witnesses.
The trial court found further support for its conclusion in the method by
which the artists created the work—each additional element of the
sculpture was based on the element preceding it so that they would mesh
together. The result was a thematically consistent, inter-related work
whose elements could not be separated without losing continuity and

308

CH. 1

meaning. The record evidence of singleness was confirmed at the request
of the parties by the district court’s own inspection of the work.
Appellants’ primary contention is that the finding of singleness is
inconsistent with a finding that certain works of art were separate from
the work that is the subject of this appeal. This assertion rests on the
mistaken belief that the parties’ joint stipulation to a definition of “the
Work” precluded an ultimate determination by the factfinder that most but
not all of the work installed in the lobby was a single artwork. In other
words, according to appellants, either every component in the stipulated
definition is part of a single work or every component is an individual work;
there is no middle ground. Appellants’ goal is to have VARA applied to each
element of the sculpture individually, so that components that may not be
visual art standing alone cannot be considered visual art when they are
combined by the artists to create a whole that has a nature different than
the mere sum of its parts.
Appellants’ goal is not attainable. The parties stipulated that when they
used the term “the Work” it included a list of sculptural components. The
result was that during the trial there was no dispute as to the parties’
meaning when referring to “the Work.” The trial court was free to find that
a few items of “the Work” were separate works of art, while the remainder
of “the Work” was a single, interrelated, indivisible work of art. The finding
of singleness was based on determinations of witness credibility as well as
the district court’s own inspection of the artwork. We cannot say that such
a finding was clearly erroneous.
B. The Statutory Definition
A “work of visual art” is defined by the Act in terms both positive (what it
is) and negative (what it is not). In relevant part VARA defines a work of
visual art as “a painting, drawing, print, or sculpture, existing in a single
copy” or in a limited edition of 200 copies or fewer. 17 U.S.C. § 101.
Although defendants aver that elements of the work are not visual art,
their contention is foreclosed by the factual finding that the work is a
single, indivisible whole. Concededly, considered as a whole, the work is a
sculpture and exists only in a single copy. Therefore, the work satisfies the
Act’s positive definition of a work of visual art. We next turn to the second
part of the statutory definition—what is not a work of visual art.
The definition of visual art excludes “any poster, map, globe, chart,
technical drawing, diagram, model, applied art, motion picture or other
audio-visual work.” 17 U.S.C. § 101. Congress meant to distinguish works
of visual art from other media, such as audio-visual works and motion
pictures, due to the different circumstances surrounding how works of each
genre are created and disseminated. See H.R.Rep. No. 514 at 9. Although
this concern led to a narrow definition of works of visual art,

CH. 1

309

[t]he courts should use common sense and generally accepted standards of
the artistic community in determining whether a particular work falls
within the scope of the definition. Artists may work in a variety of media,
and use any number of materials in creating their works. Therefore,
whether a particular work falls within the definition should not depend on
the medium or materials used.
Id. at 11.
“Applied art” describes “two- and three-dimensional ornamentation or
decoration that is affixed to otherwise utilitarian objects.” Carter, 861
F.Supp. at 315, citing Kieselstein–Cord v. Accessories By Pearl, Inc., 632
F.2d 989, 997 (2d Cir.1980). Defendants’ assertion that at least parts of the
work are applied art appears to rest on the fact that some of the sculptural
elements are affixed to the lobby’s floor, walls, and ceiling—all utilitarian
objects. Interpreting applied art to include such works would render
meaningless VARA’s protection for works of visual art installed in
buildings. A court should not read one part of a statute so as to deprive
another part of meaning. See, e.g., United States Nat’l Bank of Or. v.
Independent Ins. Agents of America, Inc., 508 U.S. 439, ––––, 113 S.Ct.
2173, 2182, 124 L.Ed.2d 402 (1993); United States v. LaPorta, 46 F.3d 152,
156 (2d Cir.1994).
Appellants do not suggest the entire work is applied art. The district court
correctly stated that even if components of the work standing alone were
applied art, “nothing in VARA proscribes protection of works of visual art
that incorporate elements of, rather than constitute, applied art.” 861
F.Supp. at 315. VARA’s legislative history leaves no doubt that “a new and
independent work created from snippets of [excluded] materials, such as a
collage, is of course not excluded” from the definition of a work of visual
art. H.R.Rep. No. 514 at 14. The trial judge correctly ruled the work is not
applied art precluded from protection under the Act.
III Work Made for Hire
Also excluded from the definition of a work of visual art is any work made
for hire. 17 U.S.C. § 1012(B). A “work made for hire” is defined in the
Copyright Act, in relevant part, as “a work prepared by an employee within
the scope of his or her employment.” Id. § 101(1). Appellants maintain the
work was made for hire and therefore is not a work of visual art under
VARA. The district court held otherwise, finding that the plaintiffs were
hired as independent contractors.
A. Reid Tests

310

CH. 1

The Copyright Act does not define the terms “employee” or “scope of
employment.” In Community for Creative Non–Violence v. Reid, 490 U.S.
730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989), the Supreme Court looked to
the general common law of agency for guidance. It held that a multi-factor
balancing test was required to determine if a work was produced for hire
(by an employee) or was produced by an independent contractor. Reid, 490
U.S. at 751, 109 S.Ct. at 2178. The Court elaborated 13 specific factors:
the hiring party’s right to control the manner and means by which the
product is accomplished.... the skill required; the source of the
instrumentalities and tools; the location of the work; the duration of the
relationship between the parties; whether the hiring party has the right to
assign additional projects to the hired party; the extent of the hired party’s
discretion over when and how long to work; the method of payment; the
hired party’s role in hiring and paying assistants; whether the work is part
of the regular business of the hiring party; whether the hiring party is in
business; the provision of employee benefits; and the tax treatment of the
hired party.
Reid, 490 U.S. at 751–52, 109 S.Ct. at 2178–79. While all of these factors
are relevant, no single factor is determinative. Id. at 752. See also Hilton
International Company v. NLRB, 690 F.2d 318, 321 (2d Cir.1982). Instead,
the factors are weighed by referring to the facts of a given case. See Aymes
v. Bonelli, 980 F.2d 857, 861 (2d Cir.1992).
The district court determined that the sculpture was not “work for hire”
and therefore not excluded from the definition of visual art. The Reid test
is a list of factors not all of which may come into play in a given case. See
Aymes, 980 F.2d at 861. The Reid test is therefore easily misapplied. We
are usually reluctant to reverse a district court’s factual findings as to the
presence or absence of any of the Reid factors and do so only when the
district court’s findings are clearly erroneous. By contrast, the ultimate
legal conclusion as to whether or not the sculpture is “work for hire” is
reviewed de novo. The district court correctly stated the legal test. But
some of its factual findings, we think, were clearly erroneous.
B. Factors Applied
The district court properly noted that Aymes established five factors which
would be relevant in nearly all cases: the right to control the manner and
means of production; requisite skill; provision of employee benefits; tax
treatment of the hired party; whether the hired party may be assigned
additional projects. See 980 F.2d at 861. Analysis begins with a discussion
of these factors.
First, plaintiffs had complete artistic freedom with respect to every aspect
of the sculpture’s creation. Although the artists heeded advice or accepted

CH. 1

311

suggestions from building engineers, architects, and others, such actions
were not a relinquishment of their artistic freedom. The evidence strongly
supports the finding that plaintiffs controlled the work’s “manner and
means.” This fact, in turn, lent credence to their contention that they were
independent contractors. See Hilton, 690 F.2d at 320. While artistic
freedom remains a central factor in our inquiry, the Supreme Court has
cautioned that “the extent of control the hiring party exercises over the
details of the product is not dispositive.” Reid, 490 U.S. at 752, 109 S.Ct. at
2179. Hence, resolving the question of whether plaintiffs had artistic
freedom does not end the analysis.
The district court also correctly found the artists’ conception and execution
of the work required great skill in execution. Appellants’ contention that
the plaintiffs’ reliance on assistants in some way mitigates the skill
required for this work is meritless, particularly because each of the
plaintiffs is a professional sculptor and the parties stipulated that
professional sculpting is a highly skilled occupation. The right to control
the manner and means and the requisite skill needed for execution of this
project were both properly found by the district court to weigh against
“work for hire” status.
The trial court erred, however, when it ruled that the defendants could not
assign the artists additional projects. First, the employment agreement
between SIG Management Company and the artists clearly states that the
artists agreed not only to install the sculpture but also to “render such
other related services and duties as may be assigned to [them] from time
to time by the Company.” By the very terms of the contract the defendants
and their predecessors in interest had the right to assign other related
projects to the artists. The district court incorrectly decided that this
language supported the artists’ claim to be independent contractors. While
the artists’ obligations were limited to related services and duties, the
defendants nonetheless did have the right to assign to plaintiffs work other
than the principal sculpture.
Further, the defendants did, in fact, assign such other projects. The
district court concedes as much, explaining that “plaintiffs did create art
work on the property other than that in the Lobby.” Carter, 861 F.Supp. at
319. The record shows the artists performed projects on the sixth floor of
the building, on the eighth floor, and in the boiler room. Thus, on at least
three different occasions the plaintiffs were assigned additional projects,
which they completed without further compensation. The trial court
suggests this fact “does not undermine plaintiffs’ contention that they were
hired solely to install art work on the Property.” Id. We disagree. If the
artists were hired to perform work other than the sculpture (as both their
employment agreement and their actual practice suggests) then they were

312

CH. 1

not hired solely to install the sculpture. It makes no difference that all work
performed by the plaintiffs was artistic in nature. The point is that the
performance of other assigned work not of the artists’ choosing supports a
conclusion that the artists were not independent contractors but
employees.
We must also consider factors the district court correctly found to favor
finding the sculpture to be work for hire. Specifically, the provision of
employee benefits and the tax treatment of the plaintiffs weigh strongly in
favor of employee status. The defendants paid payroll and social security
taxes, provided employee benefits such as life, health, and liability
insurance and paid vacations, and contributed to unemployment insurance
and workers’ compensation funds on plaintiffs’ behalf. Moreover, two of the
three artists filed for unemployment benefits after their positions were
terminated, listing the building’s management company as their former
employer. Other formal indicia of an employment relationship existed. For
instance, each plaintiff was paid a weekly salary. The artists also agreed
in their written contract that they would work principally for the
defendants for the duration of their agreement on a 40–hour per week basis
and they would only do other work to the extent that it would not “interfere
with services to be provided” to the defendants. All of these facts strongly
suggest the artists were employees.
Some of the other Reid factors bolster this view. The artists were provided
with many (if not most) of the supplies used to create the sculpture. This
factor was not, as the district court found, “inconclusive.” The court also
wrongly ruled that plaintiffs were hired for a “finite term of engagement.”
In fact, they were employed for a substantial period of time, their work
continuing for over two years with no set date of termination (other than
the sculpture’s completion). Nor was the fact that the artists could not hire
paid assistants without the defendants’ approval “inconclusive” as the trial
court erroneously found. Instead, this and the other just enumerated
factors point towards an employer-employee relationship between the
parties.
In reaching its conclusion, the district court also relied partly on the
artists’ copyright ownership of the sculpture, viewing such ownership as a
“plus factor.” We are not certain whether this element is a “plus factor,”
and therefore put off for another day deciding whether copyright ownership
is probative of independent contractor status. Even were it to be weighed
as a “plus factor,” it would not change the outcome in this case.
C. Employee Status

CH. 1

313

Our review of the legal conclusion drawn from balancing the various Reid
factors persuades us that the factors that weigh in favor of finding the
artists were employees outweigh those factors supporting the artists’ claim
that they were independent contractors. One of the factors that did not
persuade us was the appellants’ simplistic contention that usage of the
words “employ” or “employment” in the agreements between the artists and
SIG or the Limited Partnership establishes that the plaintiffs were
employees. The use of these terms does not transform them into “magic
words” imbued with legally controlling significance.
Again, we emphasize that despite the conclusion reached we do not intend
to marginalize factors such as artistic freedom and skill, making them
peripheral to the status inquiry. The fact that artists will always be
retained for creative purposes cannot serve to minimalize this factor of the
Reid test, even though it will usually favor VARA protection. Also, that the
work was produced on the employer’s premises is a necessary incident to
all nonremovable art and therefore should not carry great weight.
Similarly, we were not swayed by the boilerplate contract language or the
accounting decision to deduct FICA taxes. To so read § 101 runs against
the broad remedial purposes of VARA. As discussed earlier, the moral
rights of the artist whose artistic work comes under VARA’s umbrella are
to be protected, not ignored, in light of Congress’ pathbreaking legislation.
Moreover, because the Reid test is fact-dependent, future cases involving
the work for hire question will not always fit neatly into an employee or
independent contractor category. We also recognize that by counting
indicia such as health insurance and paid vacations against the artists’
independent contractor status, it may appear that artists regrettably are
being forced to choose between the personal benefits inuring in an
employment relationship and VARA’s protection of the artists’ work
afforded only to independent contractors. Of course, when an employer
today denies an artist “basic attributes of employment” like vacation time
or health benefits, such denial will be wholly inconsistent with a “work for
hire” defense. See Aymes, 980 F.2d at 862–63.
Consequently, while the existence of payroll formalities alone would not
be controlling, see Reid, 490 U.S. at 743 n. 8, 109 S.Ct. at 2174 n. 8, in
combination with other factors, it may lead to a conclusion that a given
work is one made for hire. Such other factors include: plaintiffs under their
contract could be and were in fact assigned projects in addition to the work
in the lobby; they were paid a weekly salary for over two years for a
contracted 40 hours of work per week; they were furnished many of the
needed supplies necessary to create the work; and plaintiffs could not hire
paid assistants without defendants’ consent. These factors, properly
considered and weighed with the employee benefits granted plaintiffs and
the tax treatment accorded them, are more than sufficient to demonstrate

314

CH. 1

that the artists were employees, and the sculpture is therefore a work made
for hire as a matter of law.
CONCLUSION
Accordingly, the district court’s order insofar as it held the work was one
not made for hire is reversed and the injunction vacated. In all other
respects, the order of the district court is affirmed. Each party to bear its
own costs.

Chapman KELLEY v. CHICAGO PARK DISTRICT
United States Court of Appeals, Seventh Circuit
Decided Feb. 15, 2011.
635 F.3d 290

SYKES, Circuit Judge.
Chapman Kelley is a nationally recognized artist known for his
representational paintings of landscapes and flowers—in particular,
romantic floral and woodland interpretations set within ellipses. In 1984
he received permission from the Chicago Park District to install an
ambitious wildflower display at the north end of Grant Park, a prominent
public space in the heart of downtown Chicago. “Wildflower Works” was
thereafter planted: two enormous elliptical flower beds, each nearly as big
as a football field, featuring a variety of native wildflowers and edged with
borders of gravel and steel.
Promoted as “living art,” Wildflower Works received critical and popular
acclaim, and for a while Kelley and a group of volunteers tended the vast
garden, pruning and replanting as needed. But by 2004 Wildflower Works
had deteriorated, and the City’s goals for Grant Park had changed. So the
Park District dramatically modified the garden, substantially reducing its
size, reconfiguring the oval flower beds into rectangles, and changing some
of the planting material.
Kelley sued the Park District for violating his “right of integrity” under
the Visual Artists Rights Act of 1990 (“VARA”), 17 U.S.C. § 106A, and also
for breach of contract. The contract claim is insubstantial; the main event
here is the VARA claim, which is novel and tests the boundaries of
copyright law. Congress enacted this statute to comply with the nation’s
obligations under the Berne Convention for the Protection of Literary and

CH. 1

315

Artistic Works. VARA amended the Copyright Act, importing a limited
version of the civil-law concept of the “moral rights of the artist” into our
intellectual-property law. In brief, for certain types of visual art—
paintings, drawings, prints, sculptures, and exhibition photographs—
VARA confers upon the artist certain rights of attribution and integrity.
The latter include the right of the artist to prevent, during his lifetime, any
distortion or modification of his work that would be “prejudicial to his ...
honor or reputation,” and to recover for any such intentional distortion or
modification undertaken without his consent. See 17 U.S.C. §
106A(a)(3)(A).
The district court held a bench trial and entered a split judgment. The
court rejected Kelley’s moral-rights claim for two reasons. First, the judge
held that although Wildflower Works could be classified as both a painting
and a sculpture and therefore a work of visual art under VARA, it lacked
sufficient originality to be eligible for copyright, a foundational
requirement in the statute. Second, following the First Circuit’s decision in
Phillips v. Pembroke Real Estate, Inc., 459 F.3d 128 (1st Cir.2006), the
court concluded that site-specific art like Wildflower Works is categorically
excluded from protection under VARA. The court then held for Kelley on
the contract claim, but found his evidence of damages uncertain and
entered a nominal award of $1. Both sides appealed.
We affirm in part and reverse in part. There is reason to doubt several of
the district court’s conclusions: that Wildflower Works is a painting or
sculpture; that it flunks the test for originality; and that all site-specific art
is excluded from VARA. But the court was right to reject this claim; for
reasons relating to copyright’s requirements of expressive authorship and
fixation, a living garden like Wildflower Works is not copyrightable. The
district court’s treatment of the contract claim is another matter; the Park
District is entitled to judgment on that claim as well.
I.

Background

Kelley is a painter noted for his use of bold, elliptical outlines to surround
scenes of landscapes and flowers. In the late–1970s and 1980s, he moved
from the canvas to the soil and created a series of large outdoor wildflower
displays that resembled his paintings. He planted the first in 1976
alongside a runway at the Dallas–Fort Worth International Airport and
the second in 1982 outside the Dallas Museum of Natural History. The
wildflower exhibit at the museum was temporary; the one at the airport
just “gradually petered out.”
In 1983 Kelley accepted an invitation from Chicago-based oil executive
John Swearingen and his wife, Bonnie—collectors of Kelley’s paintings—

316

CH. 1

to come to Chicago to explore the possibility of creating a large outdoor
wildflower display in the area. He scouted sites by land and by air and
eventually settled on Grant Park, the city’s showcase public space running
along Lake Michigan in the center of downtown Chicago. This location
suited Kelley’s artistic, environmental, and educational mission; it also
provided the best opportunity to reach a large audience. Kelley met with
the Park District superintendent to present his proposal, and on June 19,
1984, the Park District Board of Commissioners granted him a permit to
install a “permanent Wild Flower Floral Display” on a grassy area on top
of the underground Monroe Street parking garage in Daley Bicentennial
Plaza in Grant Park. Under the terms of the permit, Kelley was to install
and maintain the exhibit at his own expense. The Park District reserved
the right to terminate the installation by giving Kelley “a 90 day notice to
remove the planting.”
Kelley named the project “Chicago Wildflower Works I.” The Park District
issued a press release announcing that “a new form of ‘living’ art” was
coming to Grant Park—“giant ovals of multicolored wildflowers” created by
Kelley, a painter and “pioneer in the use of natural materials” who
“attracted national prominence for his efforts to incorporate the landscape
in artistic creation.” The announcement explained that “[o]nce the ovals
mature, the results will be two breathtaking natural canvases of Kelleydesigned color patterns.”
In the late summer of 1984, Kelley began installing the two large-scale
elliptical flower beds at the Grant Park site; they spanned 1.5 acres of
parkland and were set within gravel and steel borders. A gravel walkway
bisected one of the ovals, and each flower bed also accommodated several
large, preexisting air vents that were flush with the planting surface,
providing ventilation to the parking garage below. For planting material
Kelley selected between 48 and 60 species of self-sustaining wildflowers
native to the region. The species were selected for various aesthetic,
environmental, and cultural reasons, but also to increase the likelihood
that the garden could withstand Chicago’s harsh winters and survive with
minimal maintenance. Kelley designed the initial placement of the
wildflowers so they would blossom sequentially, changing colors
throughout the growing season and increasing in brightness towards the
center of each ellipse. He purchased the initial planting material—between
200,000 and 300,000 wildflower plugs—at a cost of between $80,000 and
$152,000. In September of 1984, a battery of volunteers planted the
seedlings under Kelley’s direction.
When the wildflowers bloomed the following year, Wildflower Works was
greeted with widespread acclaim. Chicago’s mayor, the Illinois Senate, and
the Illinois Chapter of the American Society of Landscape Artists issued

CH. 1

317

commendations. People flocked to see the lovely display—marketed by the
Park District as “living landscape art”—and admiring articles appeared in
national newspapers. Wildflower Works was a hit. Here’s a picture:
For the next several years, Kelley’s permit was renewed
and he and his volunteers tended the impressive garden.
They pruned and weeded and regularly planted new seeds,
both to experiment with the garden’s composition and to fill
in where initial specimen had not flourished. Of course, the
forces of nature—the varying bloom periods of the plants;
their spread habits, compatibility, and life cycles; and the
weather—produced constant change. Some wildflowers
naturally did better than others. Some spread aggressively
and encroached on neighboring plants. Some withered and
died. Unwanted plants sprung up from seeds brought in by
birds and the wind. Insects, rabbits, and weeds settled in,
eventually taking a toll. Four years after Wildflower Works
was planted, the Park District decided to discontinue the
exhibit. On June 3, 1988, the District gave Kelley a 90–day
notice of termination.
Kelley responded by suing the Park District in federal court, claiming the
termination of his permit violated the First Amendment. The parties
quickly settled; in exchange for dismissal of the suit, the Park District
agreed to extend Kelley’s permit for another year. On September 14, 1988,
the Park District issued a “Temporary Permit” to Kelley and Chicago
Wildflower Works, Inc., a nonprofit organization formed by his volunteers.
This permit authorized them “to operate and maintain a two ellipse
Wildflowers Garden Display ... at Daley Bicentennial Plaza in Grant Park”
until September 1, 1989. The permit stipulated that Kelley “will have
responsibility and control over matters relating to the aesthetic design and
content of Wildflower Works I,” and Wildflower Works, Inc. “shall maintain
the Wildflower Works I at no cost to the Chicago Park District including,
without limitation, weeding and application of fertilizer.” Although it did
not contain a notice-of-termination provision, the permit did state that
“[t]he planting material is the property of Mr. Chapman Kelley” and that
Kelley “may remove the planting material” if the permit was not extended.
Finally, the permit provided that “[t]his agreement does not create any
proprietary interest for Chicago Wildflower Works, Inc., or Mr. Chapman
Kelley in continuing to operate and maintain the Wildflower Garden
Display after September 1, 1989.”
The Park District formally extended this permit each succeeding year
through 1994. After that point Kelley and his volunteers continued to
cultivate Wildflower Works without a permit, and the Park District took

318

CH. 1

no action, adverse or otherwise, regarding the garden’s future. In March
2004 Kelley and Jonathan Dedmon, president of Wildflower Works, Inc.,
attended a luncheon to discuss the 20th anniversary of Wildflower Works.
At the luncheon Dedmon asked Park District Commissioner Margaret
Burroughs if Wildflower Works needed a new permit. Commissioner
Burroughs responded, “You’re still there, aren’t you? That’s all you need to
do.”
Three months later, on June 10, 2004, Park District officials met with
Kelley and Dedmon to discuss problems relating to inadequate
maintenance of the garden and forthcoming changes to Grant Park
necessitated by the construction of the adjacent Millennium Park. The
officials proposed reconfiguring Wildflower Works—decreasing its size
from approximately 66,000 square feet to just under 30,000 square feet and
remaking its elliptical flower beds into rectangles. The District’s director of
development invited Kelley’s views on this proposal but made it clear that
the District planned to go forward with the reconfiguration with or without
Kelley’s approval. Kelley objected to the proposed changes, but did not
request an opportunity to remove his planting material before the
reconfiguration took place. A week later the Park District proceeded with
its plan and reduced Wildflower Works to less than half its original size.
The elliptical borders became rectilinear, weeds were removed, surviving
wildflowers were replanted in the smaller-scale garden, and some new
planting material was added. Dedmon sent a letter of protest to the Park
District.
Kelley then sued the Park District for violating his moral rights under
VARA. He claimed that Wildflower Works was both a painting and a
sculpture and therefore a “work of visual art” under VARA, and that the
Park District’s reconfiguration of it was an intentional “distortion,
mutilation, or other modification” of his work and was “prejudicial to his ...
honor or reputation.” See 17 U.S.C. § 106A(a)(3)(A). He also alleged breach
of contract; he claimed that Commissioner Burroughs’s remark created an
implied contract that the Park District had breached when it altered
Wildflower Works without providing reasonable notice. On the VARA claim
Kelley sought compensation for the moral-rights violation, statutory
damages, and attorney’s fees; on the contract claim he sought the fairmarket value of the planting material removed in the reconfiguration. He
later quantified his damages, estimating the value of the plants at $1.5
million and requesting a staggering $25 million for the VARA violation.
The case proceeded to a bench trial, and the district court entered
judgment for the Park District on the VARA claim and for Kelley on the
contract claim. The judge first concluded that Wildflower Works could be
classified as both a painting and a sculpture and therefore qualified as a
work of visual art under VARA. But he also held that Wildflower Works

CH. 1

319

was insufficiently original for copyright, a prerequisite to moral-rights
protection under VARA. Alternatively, the judge concluded that Wildflower
Works was site-specific art, and following the First Circuit’s decision in
Phillips, held that VARA did not apply to this category of art. * * *
Kelley appealed, challenging the adverse judgment on the VARA claim and
the district court’s treatment of the damages issue on the contract claim.
The Park District cross-appealed from the judgment on the contract claim.
II.

Discussion

This case comes to us from a judgment entered after a bench trial; we
review the district court’s factual findings for clear error and its conclusions
of law de novo. Spurgin–Dienst v. United States, 359 F.3d 451, 453 (7th
Cir.2004). In this circuit, questions of copyright eligibility are issues of law
subject to independent review. Schrock v. Learning Curve Int’l, Inc., 586
F.3d 513, 517 (7th Cir.2009).
A. Kelley’s Moral–Rights Claim Under the Visual Artists Rights Act of
1990
1. A brief history of moral rights
2. VARA’s scope
[sections omitted]
3. Is Wildflower Works a painting or sculpture?
The district court held that Wildflower Works was both a painting and a
sculpture but was insufficiently original to qualify for copyright.
Alternatively, the court concluded that it was site-specific art and held that
all site-specific art is implicitly excluded from VARA. Other arguments—
in particular, whether Wildflower Works satisfies additional threshold
requirements for copyright and whether VARA’s public-presentation or
building exceptions applied—were not reached.
On appeal Kelley contests the district court’s conclusions regarding
originality and site-specific art. The Park District defends these holdings
and also reiterates the other arguments it made in the district court, except
one: The Park District has not challenged the district court’s conclusion
that Wildflower Works is a painting and a sculpture.
This is an astonishing omission. VARA’s definition of “work of visual art”
operates to narrow and focus the statute’s coverage; only a “painting,
drawing, print, or sculpture,” or an exhibition photograph will qualify.

320

CH. 1

These terms are not further defined, but the overall structure of the
statutory scheme clearly illuminates the limiting effect of this definition.
Copyright’s broad general coverage extends to “original works of
authorship,” and this includes “pictorial, graphic, and sculptural works.”
17 U.S.C. § 102(a)(5). The use of the adjectives “pictorial” and “sculptural”
suggests flexibility and breadth in application. In contrast VARA uses the
specific nouns “painting” and “sculpture.” To qualify for moral-rights
protection under VARA, Wildflower Works cannot just be “pictorial” or
“sculptural” in some aspect or effect, it must actually be a “painting” or a
“sculpture.” Not metaphorically or by analogy, but really.
That Kelley considered the garden to be both a painting and a sculpture—
only rendered in living material—is not dispositive. He also characterized
it as an experiment in environmental theory, telling a reporter he was
trying to “figure out the economic and ecological impact of introducing
wildflowers into cities.” In promoting Wildflower Works, Kelley variously
described the project as a “living wildflower painting,” a “study on
wildflower landscape and management,” and “a new vegetative
management system that beautifies [the] landscape economically with lowmaintenance wildflowers.”
Kelley’s expert, a professor of art history, reinforced his view that
Wildflower Works was both a painting and a sculpture, but the district
court largely disregarded her testimony as unhelpful. For its part the Park
District initially marketed Wildflower Works as “living art,” but this adds
little to the analysis. VARA plainly uses the terms “painting” and
“sculpture” as words of limitation. Even assuming a generous stance on
what qualifies, see 5 PATRY § 16:7 (suggesting a “liberal attitude toward
what may be considered a painting, drawing, print, or sculpture”), the
terms cannot be read coextensively with the broader categories of
“pictorial” and “sculptural” works that are generally eligible for copyright
under § 102(a)(5). If a living garden like Wildflower Works really counts as
both a painting and a sculpture, then these terms do no limiting work at
all.
The district judge worried about taking “too literalist an approach to
determining whether a given object qualifies as a sculpture or painting.”
His concern was the “tension between the law and the evolution of ideas in
modern or avant garden art; the former requires legislatures to taxonomize
artistic creations, whereas the latter is occupied with expanding the
definition of what we accept to be art.” We agree with this important
insight. But there’s a big difference between avoiding a literalistic
approach and embracing one that is infinitely malleable. The judge appears
to have come down too close to the latter extreme.

CH. 1

321

In short, this case raises serious questions about the meaning and
application of VARA’s definition of qualifying works of visual art—
questions with potentially decisive consequences for this and other moralrights claims. But the Park District has not challenged this aspect of the
district court’s decision, so we move directly to the question of
copyrightability, which is actually where the analysis should start in the
first place.
4. Is Wildflower Works copyrightable?
To merit copyright protection, Wildflower Works must be an “original work
[ ] of authorship fixed in a[ ] tangible medium of expression ... from which
[it] can be perceived, reproduced, or otherwise communicated.” 17 U.S.C. §
102(a). The district court held that although Wildflower Works was both a
painting and a sculpture, it was ineligible for copyright because it lacked
originality. There is a contradiction here. As we have explained, VARA
supplements general copyright protection and applies only to artists who
create the specific subcategories of art enumerated in the statute. VARAeligible paintings and sculptures comprise a discrete subset of otherwise
copyrightable pictorial and sculptural works; the statute designates these
works of fine art as worthy of special protection. If a work is so lacking in
originality that it cannot satisfy the basic requirements for copyright, then
it can hardly qualify as a painting or sculpture eligible for extra protection
under VARA. See Cronin, Dead on the Vine, 12 VAND. J. ENT. & TECH.
L.. at 239 (“[I]f a work does not evince sufficient original expression to be
copyrightable, the work should belong in a category other than ‘visual art’
as this term is contemplated under VARA.”).
That point aside, the district court’s conclusion misunderstands the
originality requirement. Originality is “the touchstone of copyright
protection today,” an implicit constitutional and explicit statutory
requirement. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 347,
346, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991) (“Originality is a constitutional
requirement.”); id. at 355 (The Copyright Act of 1976 made the originality
requirement explicit.); see also Schrock, 586 F.3d at 518–19 (“As a
constitutional and statutory matter, ‘[t]he sine qua non of copyright is
originality.’ ” (quoting Feist, 499 U.S. at 345, 111 S.Ct. 1282)). Despite its
centrality in our copyright regime, the threshold for originality is minimal.
See Feist, 499 U.S. at 345, 111 S.Ct. 1282; Am. Dental Ass’n v. Delta Dental
Plans Ass’n, 126 F.3d 977, 979 (7th Cir.1997) (“The necessary degree of
‘originality’ is low....”). The standard requires “only that the work was
independently created by the author (as opposed to copied from other
works), and that it possesses at least some minimal degree of creativity.”
Feist, 499 U.S. at 345, 111 S.Ct. 1282 (citation omitted). The “requisite
level of creativity is extremely low; even a slight amount will suffice. The

322

CH. 1

vast majority of works make the grade quite easily, as they possess some
creative spark.” Id. (citation omitted).
The district court took the position that Wildflower Works was not original
because Kelley was not “the first person to ever conceive of and express an
arrangement of growing wildflowers in ellipse-shaped enclosed area [s].”
This mistakenly equates originality with novelty; the law is clear that a
work can be original even if it is not novel. Feist, 499 U.S. at 345, 111 S.Ct.
1282 (“Originality does not signify novelty; a work may be original even
though it closely resembles other works so long as the similarity is
fortuitous, not the result of copying.”). No one argues that Wildflower
Works was copied; it plainly possesses more than a little creative spark.
The judge was also at a loss to discover “what about the exhibit is original.
Is it the elliptical design? The size? The use of native instead of non-native
plants? The environmentally-sustainable gardening method to which
‘vegetative management system’ apparently refers?” It is true that common
geometric shapes cannot be copyrighted. See U.S. COPYRIGHT OFFICE,
COMPENDIUM II: COPYRIGHT OFFICE PRACTICES § 503.02(a)-(b)
(1984); 2 PATRY § 4:17 (2010). And “[i]n no case does copyright protection
for an original work of authorship extend to any idea, procedure, process,
system, method of operation, concept, principle, or discovery, regardless of
the form in which it is described, explained, illustrated, or embodied in
such a work.” 17 U.S.C. § 102(b).
The Park District suggests that Wildflower Works is an uncopyrightable
“method” or “system,” and is also ineligible because its design uses simple
elliptical shapes. The first of these arguments is not well-developed; the
second is misplaced. Although Wildflower Works was designed to be largely
self-sustaining (at least initially), it’s not really a “method” or “system” at
all. It’s a garden. And Kelley is seeking statutory protection for the garden
itself, not any supposed “system” of vegetative management encompassed
within it. Regarding the use of elliptical shapes, an author’s expressive
combination or arrangement of otherwise noncopyrightable elements (like
geometric shapes) may satisfy the originality requirement. Roulo v. Russ
Berrie & Co., 886 F.2d 931, 939 (7th Cir.1989); 2 PATRY § 4:17 (Geometric
shapes or symbols cannot themselves be protected, but an original creative
arrangement of them can be.).
The real impediment to copyright here is not that Wildflower Works fails
the test for originality (understood as “not copied” and “possessing some
creativity”) but that a living garden lacks the kind of authorship and stable
fixation normally required to support copyright. Unlike originality,
authorship and fixation are explicit constitutional requirements; the
Copyright Clause empowers Congress to secure for “authors” exclusive
rights in their “writings.” U.S. CONST. art 1, § 8, cl. 8; see also 2 PATRY §

CH. 1

323

3:20 (2010) (“[T]he Constitution uses the terms ‘writings’ and ‘authors;’
‘originality’ is not used.”); id. § 3:22 (2010); 1 NIMMER § 2.03[A]-[B] (2004).
The originality requirement is implicit in these express limitations on the
congressional copyright power. See Feist, 499 U.S. at 346, 111 S.Ct. 1282
(The constitutional reference to “authors” and “writings” “presuppose[s] a
degree of originality.”). The Supreme Court has “repeatedly construed all
three terms in relation to one another [or] perhaps has collapsed them into
a single concept”; therefore, “[w]ritings are what authors create, but for one
to be an author, the writing has to be original.” 2 PATRY § 3:20.
“Without fixation,” moreover, “there cannot be a ‘writing.’ ” Id. § 3:22. The
Nimmer treatise elaborates:
Fixation in tangible form is not merely a statutory condition to copyright.
It is also a constitutional necessity. That is, unless a work is reduced to
tangible form it cannot be regarded as a “writing” within the meaning of
the constitutional clause authorizing federal copyright legislation. Thus,
certain works of conceptual art stand outside of copyright protection.
1 NIMMER § 2.03[B]. A work is “fixed” in a tangible medium of expression
“when its embodiment in a copy or phonorecord ... is sufficiently permanent
or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration.” 17 U.S.C. §
101. As William Patry explains:
Fixation serves two basic roles: (1) easing problems of proof
of creation and infringement, and (2) providing the dividing
line between state common law protection and protection
under the federal Copyright Act, since works that are not
fixed are ineligible for federal protection but may be
protected under state law. The distinction between the
intangible intellectual property (the work of authorship)
and its fixation in a tangible medium of expression (the
copy) is an old and fundamental and important one. The
distinction may be understood by examples of multiple
fixations of the same work: A musical composition may be
embodied in sheet music, on an audio-tape, on a compact
disc, on a computer hard drive or server, or as part of a
motion picture soundtrack. In each of the fixations, the
intangible property remains a musical composition.
2 PATRY § 3:22 (internal quotation marks omitted).
Finally, “authorship is an entirely human endeavor.” Id. § 3:19 (2010).
Authors of copyrightable works must be human; works owing their form to
the forces of nature cannot be copyrighted. Id. § 3:19 n. 1; see also U.S.
COPYRIGHT OFFICE, COMPENDIUM II: COPYRIGHT OFFICE

324

CH. 1

PRACTICES § 503.03(a) (“[A] work must be the product of human
authorship” and not the forces of nature.) (1984); id. § 202.02(b).
Recognizing copyright in Wildflower Works presses too hard on these basic
principles. We fully accept that the artistic community might classify
Kelley’s garden as a work of postmodern conceptual art. We acknowledge
as well that copyright’s prerequisites of authorship and fixation are broadly
defined. But the law must have some limits; not all conceptual art may be
copyrighted. In the ordinary copyright case, authorship and fixation are
not contested; most works presented for copyright are unambiguously
authored and unambiguously fixed. But this is not an ordinary case. A
living garden like Wildflower Works is neither “authored” nor “fixed” in the
senses required for copyright. See Toney v. L’Oreal USA, Inc., 406 F.3d 905,
910 (7th Cir.2005) (“A person’s likeness—her persona—is not authored and
it is not fixed.”); see also Cronin, Dead on the Vine, 12 VAND. J. ENT. &
TECH. L.. at 227–39.
Simply put, gardens are planted and cultivated, not authored. A garden’s
constituent elements are alive and inherently changeable, not fixed. Most
of what we see and experience in a garden—the colors, shapes, textures,
and scents of the plants—originates in nature, not in the mind of the
gardener. At any given moment in time, a garden owes most of its form and
appearance to natural forces, though the gardener who plants and tends it
obviously assists. All this is true of Wildflower Works, even though it was
designed and planted by an artist.
Of course, a human “author”—whether an artist, a professional landscape
designer, or an amateur backyard gardener—determines the initial
arrangement of the plants in a garden. This is not the kind of authorship
required for copyright. To the extent that seeds or seedlings can be
considered a “medium of expression,” they originate in nature, and natural
forces—not the intellect of the gardener—determine their form, growth,
and appearance. Moreover, a garden is simply too changeable to satisfy the
primary purpose of fixation; its appearance is too inherently variable to
supply a baseline for determining questions of copyright creation and
infringement. If a garden can qualify as a “work of authorship” sufficiently
“embodied in a copy,” at what point has fixation occurred? When the garden
is newly planted? When its first blossoms appear? When it is in full bloom?
How—and at what point in time—is a court to determine whether
infringing copying has occurred?
In contrast, when a landscape designer conceives of a plan for a garden
and puts it in writing—records it in text, diagrams, or drawings on paper
or on a digital-storage device—we can say that his intangible intellectual
property has been embodied in a fixed and tangible “copy.” This writing is

CH. 1

325

a sufficiently permanent and stable copy of the designer’s intellectual
expression and is vulnerable to infringing copying, giving rise to the
designer’s right to claim copyright. The same cannot be said of a garden,
which is not a fixed copy of the gardener’s intellectual property. Although
the planting material is tangible and can be perceived for more than a
transitory duration, it is not stable or permanent enough to be called
“fixed.” Seeds and plants in a garden are naturally in a state of perpetual
change; they germinate, grow, bloom, become dormant, and eventually die.
This life cycle moves gradually, over days, weeks, and season to season, but
the real barrier to copyright here is not temporal but essential. The essence
of a garden is its vitality, not its fixedness. It may endure from season to
season, but its nature is one of dynamic change.
We are not suggesting that copyright attaches only to works that are static
or fully permanent (no medium of expression lasts forever), or that artists
who incorporate natural or living elements in their work can never claim
copyright. Kelley compares Wildflower Works to the Crown Fountain, a
sculpture by Spanish artist Jaume Plensa that sits nearby in Chicago’s
Millennium Park. The surfaces of Plensa’s fountain are embedded with
LED screens that replay recorded video images of the faces of 1,000
Chicagoans.
See
http://www.explorechicago.org/city/en/things_see_do/attractions/dca_
tourism/Crown_Fountain.html (last visited Feb. 10, 2011). But the
Copyright Act specifically contemplates works that incorporate or consist
of sounds or images that are broadcast or transmitted electronically, such
as telecasts of sporting events or other live performances, video games, and
the like. See 17 U.S.C. § 101 (defining “fixed” as including a “work
consisting of sounds, images, or both, that are being transmitted ... if a
fixation of the work is being made simultaneously with its transmission”);
see also Balt. Orioles, Inc. v. Major League Baseball Players Ass’n, 805 F.2d
663, 675 (7th Cir.1986); Midway Mfg. Co. v. Artic Int’l, Inc., 704 F.2d 1009,
1013–14 (7th Cir.1983). Wildflower Works does not fit in this category; the
Crown Fountain is not analogous.
Though not addressing the requirement of fixation directly, the district
court compared Wildflower Works to “[t]he mobiles of Alexander Calder”
and “Jeff Koons’ ‘Puppy,’ a 43–foot flowering topiary.” These analogies are
also inapt. Although the aesthetic effect of a Calder mobile is attributable
in part to its subtle movement in response to air currents, see
http://en.wikipedia.org/wiki/Alexander_Calder (last visited Feb. 10, 2011),
the mobile itself is obviously fixed and stable. In “Puppy” the artist
assembled a huge metal frame in the shape of a puppy and covered it with
thousands of blooming flowers sustained by an irrigation system within the
frame. See http://en.wikipedia.org/wiki/Jeff_Koons (last visited Feb. 10,
2011). This may be sufficient fixation for copyright (we venture no opinion

326

CH. 1

on the question), but Wildflower Works is quite different. It is
quintessentially a garden; “Puppy” is not.
In short, Wildflower Works presents serious problems of authorship and
fixation that these and other examples of conceptual or kinetic art do not.
Because Kelley’s garden is neither “authored” nor “fixed” in the senses
required for basic copyright, it cannot qualify for moral-rights protection
under VARA.
5. Site-specific art, and the public-presentation and building exceptions
This case also raises some important questions about the application of
VARA to site-specific art, as well as the statute’s public-presentation and
building exceptions. Though we need not decide these questions, we do
have a few words of caution about the district court’s treatment of the issue
of VARA and site-specific art. The court classified Wildflower Works as a
form of site-specific art; we see no reason to upset this factual finding. The
court then adopted the First Circuit’s holding in Phillips that site-specific
art is categorically excluded from VARA. This legal conclusion is open to
question.
Phillips involved a VARA claim brought by artist David Phillips in a
dispute over a display of 27 of his sculptures in Boston’s Eastport Park
across from Boston Harbor. Phillips v. Pembroke Real Estate, Inc., 459
F.3d 128, 130 (1st Cir.2006). A planned redesign of the park called for the
removal and relocation of Phillips’s sculptures; he sought an injunction
under VARA, claiming the removal of his sculptures would violate his right
of integrity. Id. at 131. The district court held that although the sculptures
qualified as a single integrated work of visual art, park administrators
were entitled to remove them under VARA’s public-presentation exception.
Id. at 138–39. The First Circuit affirmed on alternative grounds, holding
that VARA does not apply to any site-specific art.
The court based this holding on a perceived irreconcilable tension between
the public-presentation exception and the purpose of site-specific art: “By
definition, site-specific art integrates its location as one of its elements.
Therefore, the removal of a site-specific work from its location necessarily
destroys that work of art.” Id. at 140. Under the public-presentation
exception, a modification of a work of visual art stemming from a change
in its “public presentation, including lighting or placement,” is not
actionable unless it is caused by gross negligence. If VARA applied to sitespecific art, the First Circuit reasoned, then the statute would “purport[ ]
to protect site-specific art” but also “permit its destruction by the
application” of the public-presentation exception. Id. The court held that
“VARA does not protect site-specific art and then permit its destruction by

CH. 1

327

removal from its site pursuant to the statute’s public presentation
exception. VARA does not apply to site-specific art at all.” Id. at 143.
There are a couple of reasons to question this interpretation of VARA.
First, the term “site-specific art” appears nowhere in the statute. Nothing
in the definition of a “work of visual art” either explicitly or by implication
excludes this form of art from moral-rights protection. Nor does application
of the public-presentation exception operate to eliminate every type of
protection VARA grants to creators of site-specific art; the exception simply
narrows the scope of the statute’s protection for all qualifying works of
visual art. The exception basically provides a safe harbor for ordinary
changes in the public presentation of VARA-qualifying artworks; the artist
has no cause of action unless through gross negligence the work is modified,
distorted, or destroyed in the process of changing its public presentation.
Second, Phillips’s all-or-nothing approach to site-specific art may be
unwarranted. Site-specific art is not necessarily destroyed if moved;
modified, yes, but not always utterly destroyed. Moreover, some of VARA’s
protections are unaffected by the public-presentation exception. An artist’s
right of integrity can be violated in ways that do not implicate the work’s
location or manner of public presentation; site-specific art—like any other
type of art—can be defaced and damaged in ways that do not relate to its
public display. And the public-presentation exception does nothing to limit
the right of attribution, which prevents an artist’s name from being
misappropriated.
Then there is the matter of the building exception, which applies to works
“incorporated in or made part of a building in such a way that removing
the work from the building will cause the destruction, distortion,
mutilation, or other modification of the work.” 17 U.S.C. § 113(d)(1)(A).
These works do not get moral-rights protection if the artist: (1) consented
to the installation of his work in the building (if pre-VARA); or (2) executed
a written acknowledgment that removal of the work may subject it to
destruction, distortion, mutilation, or modification (if post-VARA). Id. §
113(d)(1)(B). On its face this exception covers a particular kind of sitespecific art. Its presence in the statute suggests that site-specific art is not
categorically excluded from VARA.
These observations are of course general and not dispositive. Because we
are resolving the VARA claim on other grounds, we need not decide
whether VARA is inapplicable to site-specific art.
***
For the foregoing reasons, we AFFIRM the judgment in favor of the Park
District on the VARA claim; we REVERSE the judgment in favor of Kelley

328

CH. 1

on the contract claim and REMAND with instructions to enter judgment
for the Park District.

———
The following decisions illustrate assessments of copyright damages.

GASTE V. MORRIS KAISERMAN A/K/A MORRIS ALBERT
United States Court of Appeals, Second Circuit, 1988.
863 F.2d 1061.

JON O. NEWMAN, CIRCUIT JUDGE.
[This case involved a copyright suit brought by Louis Gaste, French
composer of the 1956 song “Pour Toi,” against the Brazilian composer and
singer Morris Kaiserman (known professionally as Morris Albert) as to his
1973 hit “Feelings.” Though “Pour Toi” (which was part of the music score
for the movie Le Feu aux Poudres) had earned only $15,000 in revenues
over a quarter century, the circuit court upheld the jury’s verdict that
“Feelings” had copied the music, though not the lyrics, of “Pour Toi.” A
further issue was the appropriateness of a $268,000 damage award against
Fermata International Melodies, the producer and publisher of “Feelings.”
(The jury had awarded another $233,000 against Kaiserman, which the
trial judge reduced to $135,000 to exclude revenues attributable to foreign
sources.) Fermata argued that its $268,000 award (which was based on
U.S. revenues from “Feelings”) should be reduced (a) to account for the
contribution of the lyrics (not just the music) to “Feelings,” and (b) to allow
for the cost of producing and distributing the song.]
***
We note preliminarily that the jury apparently made some
apportionment of profits to account for the contribution of the lyrics and for
the expenses incurred by Fermata. The parties agreed that Fermata’s gross
revenues from “Feelings” for the relevant time period were, in round
numbers, $337,000. Although the record is not entirely clear on
Kaiserman’s revenue, the relevant figure appears to be $265,000. The jury
found damages in the amount of $268,000 against Fermata and $233,000
against Kaiserman. Thus, the jury awarded Gaste approximately 80
percent of Fermata’s gross revenues from “Feelings,” and 88 percent of
Kaiserman’s revenues.
The District Court instructed the jury that if it made an
apportionment for the lyrics, that apportionment would apply equally to
Fermata and to Kaiserman. The jury was also told that only Fermata was
entitled to reductions to cover the costs it incurred. Therefore, although we
cannot be certain of the jury’s reasoning absent a special verdict, it seems
likely that the jury made a 12 percent reduction for both defendants to
account for the lyrics and then made a further reduction of 8 percent for

CH. 1

329

Fermata to account for its costs. With that in mind, we take Fermata’s
argument to be that the jury did not apportion enough and did not
recognize enough of Fermata’s costs.
A. Lyrics. A successful copyright plaintiff is entitled to recover only
those profits that are “attributable to the infringement.” 17 U.S.C. § 504(b)
(1983). “In establishing the infringer’s profits, the copyright owner is
required to present proof only of the infringer’s gross revenue, and the
infringer is required to prove his or her deductible expenses and the
elements of profit attributable to factors other than the copyrighted work.”
An infringing defendant is entitled to an apportionment of profits to
account for his independent contributions only when “the evidence is
sufficient to provide a fair basis of division so as to give the copyright
proprietor all the profits that can be deemed to have resulted from the use
of what belonged to him.” Confronted with imprecision in the computation
of expenses, a court should err on the side of guaranteeing the plaintiff a
full recovery, but want of precision is not a ground for denying
apportionment altogether.
There was no dispute at the trial that Kaiserman wrote the lyrics to
“Feelings,” and that those lyrics were non-infringing. Fermata and
Kaiserman argued to the jury that as much as 80 percent of the income
from the song should be attributed to the lyrics.
The evidence on the value of the lyrics was decidedly mixed.
Kaiserman’s expert, Lou Levy, a retired music publisher, testified that
while there was no set rule, the normal practice in the record industry
when the lyrics and music to a song are written by different artists is to
split the royalties “50/50.” He said a well-known lyricist or composer could
draw a larger share and that a “bad” lyricist might get as little as 15
percent. Levy testified that he “loved” the song “Feelings” and that he
believed the title and lyrics were “far better” than the music itself.
Nonetheless, he was unable to recall the words to the song on the stand
and yet was able to sing the opening tune. He also said that the music and
the words were inseparable and refused to estimate any percentage
division.
Defendants also argued at trial that the lyrics must have had some
effect because “Pour Toi” had virtually no commercial success, while
“Feelings” was a smash hit. On the other hand, there was also evidence
that “Dis Lui,” a French version of “Feelings” with completely different
words, also had considerable success. This could indicate either that the
French words were also popular or that it was the music that gave the song
its appeal.
We note that in ABKCO Music, Inc. v. Harrisongs Music, Ltd., 508 F.
Supp. 798 (S.D.N.Y. 1981), modified, 722 F.2d 988 (2d Cir. 1983), the
District Court determined that three-fourths of the income of the infringing
song “My Sweet Lord” was due to the music plagiarized from an earlier hit

330

CH. 1

song, “He’s So Fine.” The Court deducted 25 percent for the defendant’s
contribution of the lyrics to “My Sweet Lord” and for the marketability
added to the song by the fact that the defendant was former Beatle George
Harrison.
Judge Conner, contrasting this case to ABKCO and declining to alter
the jury’s damage award, noted that Kaiserman, a virtual unknown before
“Feelings,” did not independently add the selling power of a Harrison. On
the other hand, Fermata points out that the music to “Pour Toi” did not
have the independently confirmed selling power of the music to “He’s So
Fine,” which had been a No. 1 song in its own right.
We find no grounds to reject the jury’s decision to apportion no more
than 12 percent for the lyrics. . . . The jury had an opportunity to judge for
itself the independent appeal of the lyrics and the music. The evidence of
the varied success of the three songs with the same music—“Feelings,”
“Pour Toi,” and “Dis Lui”—could reasonably have been interpreted as
favoring either side. . . .
B. Fermata’s Costs. [T]he jury appears to have subtracted
approximately 8 percent from Fermata’s revenues to account for Fermata’s
costs related to “Feelings,” in addition to the 12 percent deduction for the
lyrics. Fermata argues that the jury’s verdict was contrary to the
evidence. . . .
Again, we decline to overturn the jury’s verdict. . . . Fermata’s evidence
of its costs was sorely lacking in documentation. . . . The jury here did not
act unreasonably in rejecting estimates of costs that were not fully
documented.
We also reject Fermata’s contention that nearly 90 percent of its costs
must be attributed to “Feelings” because “Feelings” brought in nearly 90
percent of the company’s revenues. In a very similar case, we held that
“ ‘overhead’ which does not assist in the production of the infringement
should not be credited to the infringer; that which does, should be; it is a
question of fact in all cases,” Wilkie v. Santly Bros., 139 F.2d 264, 265 (2d
Cir. 1943). In Wilkie, a music publisher found liable for infringement also
sought to attribute nearly all of his costs to the infringing song because it
was by far his biggest seller. The Court found no reason not to allocate the
costs equally across all 47 songs the publisher published, because it was
shown that the better selling songs were not more responsible for the
overhead costs than the others.
Here, Fermata published some 200 songs in addition to “Feelings.” It
was Fermata’s burden to prove that its overhead was nonetheless
attributable mainly to “Feelings.” . . . In Sygma Photo News v. High Society
Magazine, 778 F.2d 89, 95 (2d Cir. 1985), we held that even when
defendants had not been able to establish their costs with precision, they
should be able to deduct the minimum amount they in all likelihood spent.

CH. 1

331

The jury’s decision to allow Fermata only an 8 percent reduction for its
costs is not inconsistent with that rule.
Affirmed.

2. ATTORNEY FEES
FOGERTY V. FANTASY, INC.
Supreme Court of the United States, 1994.
510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455.

CHIEF JUSTICE REHNQUIST delivered the opinion of the Court.
***
Respondent advances three arguments in support of the dual standard
followed by the Court of Appeals for the Ninth Circuit in this case. First, it
contends that the language of § 505, when read in the light of our decisions
construing similar fee-shifting language, supports the rule. Second, it
asserts that treating prevailing plaintiffs and defendants differently
comports with the “objectives” and “equitable considerations” underlying
the Copyright Act as a whole. Finally, respondent contends that the
legislative history of § 505 indicates that Congress ratified the dual
standard which it claims was “uniformly” followed by the lower courts
under identical language in the 1909 Copyright Act. We address each of
these arguments in turn.
The statutory language—“the court may also award a reasonable
attorney’s fee to the prevailing party as part of the costs”—gives no hint
that successful plaintiffs are to be treated differently than successful
defendants. But respondent contends that our decision in Christiansburg
Garment Co. v. EEOC, 434 U.S. 412 (1978), in which we construed virtually
identical language, supports a differentiation in treatment between
plaintiffs and defendants.
Christiansburg construed the language of Title VII of the Civil Rights
Act of 1964, which in relevant part provided that the court “in its discretion,
may allow the prevailing party . . . a reasonable attorney’s fee as part of
the costs. . . .” 42 U.S.C. § 2000e–5(k). We had earlier held, interpreting the
cognate provision of Title II of that Act, that a prevailing plaintiff “should
ordinarily recover an attorney’s fee unless some special circumstances
would render such an award unjust.” Newman v. Piggie Park Enterprises,
Inc., 390 U.S. 400, 402 (1968). This decision was based on what we found
to be the important policy objectives of the Civil Rights statutes, and the
intent of Congress to achieve such objectives through the use of plaintiffs
as “ ‘private attorneys general.’ ” In Christiansburg, supra, we determined
that the same policy considerations were not at work in the case of a

332

CH. 1

prevailing civil rights defendant. We noted that a Title VII plaintiff, like a
Title II plaintiff in Piggie Park, is “the chosen instrument of Congress to
vindicate ‘a policy that Congress considered of the highest priority.’ ” We
also relied on the admittedly sparse legislative history to indicate that
different standards were to be applied to successful plaintiffs than to
successful defendants.
Respondent points to our language in Flight Attendants v. Zipes, 491
U.S. 754, 758, n. 2 (1989), that “fee-shifting statutes’ similar language is a
‘strong indication’ that they are to be interpreted alike.” But here we think
this normal indication is overborne by the factors relied upon in our
Christiansburg opinion which are absent in the case of the Copyright Act.
The legislative history of § 505 provides no support for treating prevailing
plaintiffs and defendants differently with respect to the recovery of
attorney’s fees. The attorney’s fees provision § 505 of the 1976 Act was
carried forward verbatim from the 1909 Act with very little discussion. The
relevant House Report provides simply:
“Under section 505 the awarding of costs and attorney’s fees are
left to the court’s discretion, and the section also makes clear that
neither costs nor attorney’s fees can be awarded to or against ‘the
United States or an officer thereof.’ ”
***
The goals and objectives of the two Acts are likewise not completely
similar. Oftentimes, in the civil rights context, impecunious “private
attorney general” plaintiffs can ill afford to litigate their claims against
defendants with more resources. Congress sought to redress this balance
in part, and to provide incentives for the bringing of meritorious lawsuits,
by treating successful plaintiffs more favorably than successful defendants
in terms of the award of attorney’s fees. The primary objective of the
Copyright Act is to encourage the production of original literary, artistic,
and musical expression for the good of the public. In the copyright context,
it has been noted that “entities which sue for copyright infringement as
plaintiffs can run the gamut from corporate behemoths to starving artists;
the same is true of prospective copyright infringement defendants.”
We thus conclude that respondent’s argument based on our feeshifting decisions under the Civil Rights Act must fail.
Respondent next argues that the policies and objectives of § 505 and of
the Copyright Act in general are best served by the “dual approach” to the
award of attorney’s fees.13 The most common reason advanced in support
13 Respondent points to four important interests allegedly advanced by the dual standard:
(1) it promotes the vigorous enforcement of the Copyright Act; (2) it distinguishes between the
wrongdoers and the blameless; (3) it enhances the predictability and certainty in copyrights by
providing a relatively certain benchmark for the award of attorney’s fees; and (4) it affords
copyright defendants sufficient incentives to litigate their defenses.

CH. 1

333

of the dual approach is that, by awarding attorney’s fees to prevailing
plaintiffs as a matter of course, it encourages litigation of meritorious
claims of copyright infringement . . . Indeed, respondent relies heavily on
this argument. We think the argument is flawed because it expresses a
one-sided view of the purposes of the Copyright Act. While it is true that
one of the goals of the Copyright Act is to discourage infringement, it is by
no means the only goal of that Act. In the first place, it is by no means
always the case that the plaintiff in an infringement action is the only
holder of a copyright; often times, defendants hold copyrights too, as
exemplified in the case at hand.
More importantly, the policies served by the Copyright Act are more
complex, more measured, than simply maximizing the number of
meritorious suits for copyright infringement. The Constitution grants to
Congress the power “To promote the Progress of Science and useful Arts,
by securing for limited Times to Authors and Inventors the exclusive Right
to their respective Writings and Discoveries.” U.S. Const., Art. I, § 8, cl. 8.
We have often recognized the monopoly privileges that Congress has
authorized, while “intended to motivate the creative activity of authors and
inventors by the provision of a special reward,” are limited in nature and
must ultimately serve the public good. Sony Corp. of America v. Universal
City Studios, Inc., 464 U.S. 417, 429 (1984).
***
Because copyright law ultimately serves the purpose of enriching the
general public through access to creative works, it is peculiarly important
that the boundaries of copyright law be demarcated as clearly as possible.
To that end, defendants who seek to advance a variety of meritorious
copyright defenses should be encouraged to litigate them to the same
extent that plaintiffs are encouraged to litigate meritorious claims of
infringement. In the case before us, the successful defense of “The Old Man
Down the Road” increased public exposure to a musical work that could, as
a result, lead to further creative pieces. Thus a successful defense of a
copyright infringement action may further the policies of the Copyright Act
every bit as much as a successful prosecution of an infringement claim by
the holder of a copyright.
***
[After analyzing and rejecting Fantasy’s argument that the legislative
history of § 505 supported the dual standard for awarding attorney fees,
the Court turned to Fogerty’s] argument that § 505 was intended to adopt
the “British Rule.” Petitioner argues that, consistent with the neutral
language of § 505, both prevailing plaintiffs and defendants should be
awarded attorney’s fees as a matter of course, absent exceptional
circumstances. For two reasons we reject this argument. . . .

334

CH. 1

First, just as the plain language of § 505 supports petitioner’s claim
for disapproving the dual standard, it cuts against him in arguing for the
British Rule. The statute says that “the court may also award a reasonable
attorney’s fee to the prevailing party as part of the costs.” The word “may”
clearly connotes discretion. The automatic awarding of attorney’s fees to
the prevailing party would pretermit the exercise of that discretion.
Second, we are mindful that Congress legislates against the strong
background of the American Rule. Unlike Britain where counsel fees are
regularly awarded to the prevailing party, it is the general rule in this
country that unless Congress provides otherwise, parties are to bear their
own attorney’s fees. . . .
Thus we reject both the “dual standard” adopted by several of the
Courts of Appeals, and petitioner’s claim that § 505 enacted the British
Rule for automatic recovery of attorney’s fees by the prevailing party.
Prevailing plaintiffs and prevailing defendants are to be treated alike, but
attorney’s fees are to be awarded to prevailing parties only as a matter of
the court’s discretion. “There is no precise rule or formula for making these
determinations,” but instead equitable discretion should be exercised “in
light of the considerations we have identified.” Hensley v. Eckerhart, 461
U.S. 424, 436–437 (1983). Because the Court of Appeals erroneously held
petitioner, the prevailing defendant, to a more stringent standard than
that applicable to a prevailing plaintiff, its judgment is reversed and the
case is remanded for further proceedings consistent with this opinion.
It is so ordered.

BOUCHAT V. BALTIMORE RAVENS FOOTBALL CLUB,
INCORPORATED
United States Court of Appeals, Fourth Circuit.
Oct. 8, 2003.
346 F.3d 514

KING, Circuit Judge:
This appeal arises from the damages phase of a protracted copyright
dispute involving the Baltimore Ravens football team. Frederick Bouchat,
the holder of the infringed copyright, raises several challenges to the
district court’s conduct of proceedings that culminated in a jury verdict
finding him entitled to no portion of the infringers’ profits. In particular,
Bouchat asserts that the court erroneously failed to accord him the benefit

CH. 1

335

of a statutory presumption that an infringer’s revenues are entirely
attributable to the infringement. For the reasons explained below, we
affirm.
I.
On November 6, 1995, the National Football League (“NFL”) announced
that one of its teams, the Cleveland Browns, would shortly be moving to
Baltimore. The team was to leave its entire Browns identity in Cleveland,
and thus would need a new name and logo when it moved to its new
Maryland home. Bouchat, a Baltimore security guard and amateur artist,
became interested in the new team, and he began drawing logo designs
based on the various names that the team was considering, including the
name “Ravens.” On or about December 5, 1995, Bouchat created a drawing
of a winged shield (the “Shield Drawing”) as a “Ravens” logo.
In March of 1996, the Baltimore team adopted the name “Ravens.” In early
April, Bouchat sent the Shield Drawing via fax to the Maryland Stadium
Authority. Beside the Shield Drawing, Bouchat penned a note asking the
Chairman of the Authority to send the sketch to the Ravens’ president.
Bouchat also requested that if the Ravens used the Shield Drawing, they
send him a letter of recognition and an autographed helmet.
In a jury trial on the issue of liability, Bouchat’s Shield Drawing was found
to have been mistakenly used by National Football League Properties, Inc.
(“NFLP”) in NFLP’s production of the Ravens’ new logo, the “Flying B.” The
Ravens had no knowledge that the NFLP had infringed anyone’s work and
assumed that the Flying B was an original work owned by NFLP. The
Ravens used the Flying B as their primary identifying symbol, and the logo
appeared in every aspect of the Ravens’ activities, including uniforms,
stationery, tickets, banners, on-field insignia, and merchandise.
II.
On May 8, 1997, Bouchat filed suit in the District of Maryland, alleging
that the Ravens and NFLP (collectively, the “Defendants”) had infringed
his copyright on the Shield Drawing and on several other drawings, and
seeking ten million dollars in damages. The court bifurcated the case and
first tried the liability issues. On November 3, 1998, the jury found that
Bouchat had proven infringement of the Shield Drawing. [After appeals,
the case was returned to the district court for trial on the damages.] ****
Bouchat sought damages from the Ravens and NFLP pursuant to 17 U.S.C.

336

CH. 1

§ 504(a)(1), which renders an infringer liable for “the copyright owner’s
actual damages and any additional profits of the infringer, as provided by
[17 U.S.C. § 504(b) ].” Section 504(b), in turn, entitles the copyright owner
to recover both “the actual damages suffered by him or her as a result of
the infringement, and any profits of the infringer that are attributable to
the infringement and are not taken into account in computing the actual
damages.” 17 U.S.C. § 504(b). Because Bouchat made no claim for actual
damages, the sole question presented for resolution in the damages trial
was the amount, if any, of the Defendants’ profits that was attributable to
the infringement.
In his complaint, Bouchat contended that some portion of essentially all of
the Defendants’ revenues was attributable to the infringing use of
Bouchat’s artwork. To satisfy his initial burden under § 504(b), Bouchat
presented evidence of the gross receipts from all NFLP and Ravens
activities. The district court, however, awarded partial summary judgment
to the Defendants with respect to all revenues derived from sources other
than (1) sales of merchandise bearing the Flying B logo, and (2) royalties
obtained from licensees who sold such merchandise (collectively, the
“Merchandise Revenues”). The court reasoned that “[i]f the use of the
Flying B logo to designate the Ravens could not reasonably be found to have
affected the amount of revenue obtained from an activity, the revenue from
that activity could not reasonably be found attributable to the
infringement.” Id. at 617–18. Concluding that only the Merchandise
Revenues could reasonably be found to have been affected by the
Defendants’ unlawful use of the Flying B, the court excluded, as a matter
of law, the remainder of the Defendants’ revenues (collectively, the “Non–
Merchandise Revenues”) from the pool of income that the jury could
consider in awarding § 504 damages.
At the close of discovery, the district court further narrowed the scope of
the Defendants’ revenues from which the jury would be permitted to award
§ 504 damages, when it excluded certain portions of the Merchandise
Revenues. Specifically, the court awarded partial summary judgment to
the Defendants as to Bouchat’s claims for profits from “minimum
guarantee shortfalls,” “free merchandise,” trading cards, video games, and
game programs (collectively, the “Excluded Merchandise Revenues”). ***
The damages trial was conducted over a period of six days, *** and the jury
was asked to decide whether the Defendants had proven, by a
preponderance of the evidence, that the Non–Excluded Merchandise
Revenues were attributable entirely to factors other than the Defendants’
infringement of Bouchat’s copyright. If the jury found that they were not,
then it was charged to decide the percentage of the Non-Excluded
Merchandise Revenues attributable to factors other than the infringement.

CH. 1

337

After a full day of deliberations, the jury answered the first question in the
affirmative, thereby denying Bouchat any monetary recovery. On July 26,
2002, the court entered judgment on the jury verdict. ***
III.
A.
Bouchat’s primary contention on appeal is that the district court erred in
awarding partial summary judgment to the Defendants with respect to
certain portions of the Defendants’ revenues. In particular, Bouchat asserts
that the court failed to give him the benefit of the § 504 statutory
presumption that an infringer’s revenues are entirely attributable to the
infringement. That presumption, he maintains, creates a question of
material fact that cannot be resolved on summary judgment. Thus, he
asserts, whether any portion of an infringer’s revenues are attributable to
some source other than the infringement is a question that can be resolved
only
by
a
jury.
As
explained
below,
we
disagree.
***
2.
Bouchat seeks to recover damages pursuant to 17 U.S.C. § 504(b) for the
Defendants’ infringement of his copyright. Section 504(b) entitles a
successful copyright plaintiff to recover “any profits of the infringer that
are attributable to the infringement.” 17 U.S.C. § 504(b). The statute goes
on to specify that,
[i]n establishing the infringer’s profits, the copyright
owner is required to present proof only of the infringer’s
gross revenue, and the infringer is required to prove his
or her deductible expenses and the elements of profit
attributable to factors other than the copyrighted work.
Thus, § 504(b) creates an initial presumption that the infringer’s “profits
... attributable to the infringement” are equal to the infringer’s gross
revenue. See Konor Enters., Inc. v. Eagle Publ’ns, Inc., 878 F.2d 138, 140
(4th Cir.1989). Once the copyright owner has established the amount of the
infringer’s gross revenues, the burden shifts to the infringer to prove either
that part or all of those revenues are “deductible expenses” (i.e., are not
profits), or that they are “attributable to factors other than the copyrighted
work.” Id. Although § 504(b) places the burden on the infringer to

338

CH. 1

demonstrate that certain portions of its revenues were due to factors other
than the infringement, the infringer need not prove these amounts with
mathematical precision. See Cream Records, Inc. v. Jos. Schlitz Brewing
Co., 754 F.2d 826, 828–29 (9th Cir.1985).
3.
Despite the existence of § 504(b)’s burden-shifting provision, summary
judgment in favor of an infringer with respect to some portion of the
infringer’s gross revenues may, in the proper circumstances, be
appropriate. Though our Court has not spoken directly on this point,
several of our sister circuits have awarded partial summary judgment to
infringers, excluding as a matter of law certain portions of an infringer’s
revenues from the jury’s § 504(b) attributability inquiry. Furthermore, an
award of partial summary judgment to an infringer with respect to
particular categories of revenue comports, in the proper circumstances,
with the basic tenets of our Rule 56 jurisprudence.
a.
We begin by looking to the decisions of our sister circuits. The § 504(b) cases
in which partial summary judgment in favor of an infringer with respect to
part, or all, of the infringer’s revenues has been found proper, fall roughly
into two categories: (1) those in which there existed no conceivable
connection between the infringement and a given revenue stream; and (2)
those in which, despite the existence of a conceivable link, the plaintiff
failed to offer anything more than mere speculation as to the existence of a
causal connection between the infringement and the claimed revenues. ***
A party opposing a properly supported motion for summary judgment “may
not rest upon the mere allegations or denials of [his] pleadings,” but rather
must “set forth specific facts showing that there is a genuine issue for trial.”
Fed.R.Civ.P. 56(e); see Matsushita Elec. Indus. Co., 475 U.S. at 586–87, 106
S.Ct. 1348 (holding that, once motion for summary judgment is properly
made and supported, opposing party bears burden of showing, by means of
affidavits or other verified evidence, that genuine dispute of material fact
exists); Cray Communications, Inc. v. Novatel Computer Sys., Inc., 33 F.3d
390, 393–94 (4th Cir.1994). Furthermore, neither “[u]nsupported
speculation,” Felty, 818 F.2d at 1128, nor evidence that is “merely
colorable” or “not significantly probative,” Anderson, 477 U.S. at 249, 106
S.Ct. 2505, will suffice to defeat a motion for summary judgment; rather, if
the adverse party fails to bring forth facts showing that “reasonable minds
could differ” on a material point, id. at 250, 106 S.Ct. 2505, then, regardless
of “[a]ny proof or evidentiary requirements imposed by the substantive
law,” id. at 248, 106 S.Ct. 2505, “summary judgment, if appropriate, shall

CH. 1

339

be entered,” Fed.R.Civ.P. 56(e).
These general principles only further highlight the propriety of an award
of summary judgment under circumstances such as those presented in On
Davis and Mackie. Despite § 504(b)’s presumption that the recoverable
“profits ... attributable to the infringement” are equal to the infringer’s
gross revenues, the statute does not exempt the copyright plaintiff from the
requirement of Rule 56 that he respond to a properly supported motion for
summary judgment by “set[ting] forth specific facts showing that there is
a genuine issue for trial.” Fed.R.Civ.P. 56(e). Should the plaintiff fail so to
respond—whether that failure is due to the absence of any conceivable
connection between the infringement and the claimed revenues, or instead
simply due to the plaintiff’s inability to muster nonspeculative evidence in
support of the alleged causal link—then summary judgment may properly
be awarded to the infringer with respect to part or all of the contested
revenues.
c.
In sum, we conclude that the Defendants could properly be awarded
summary judgment with respect to any given revenue stream if either (1)
there exists no conceivable connection between the infringement and those
revenues; or (2) despite the existence of a conceivable connection, Bouchat
offered only speculation as to the existence of a causal link between the
infringement and the revenues. It is to these inquiries that we turn next.
4.
The Defendants derive revenues from six major sources: (1) sponsorships;
(2) broadcast and other media licenses; (3) sale of tickets; (4) miscellaneous
business activities, which appear to include provision of game-day stadium
parking; (5) sale of official team merchandise; and (6) royalties from
licensees who sell official team merchandise. The first four of these sources
we characterize as the “Non–Merchandise Revenues,” while the fifth and
sixth are the “Merchandise Revenues.” To briefly review the history
relevant to this appeal: Early in the case, the court awarded partial
summary judgment to the Defendants with respect to the Non–
Merchandise Revenues, leaving the Merchandise Revenues for later
consideration. Subsequently, the court awarded partial summary
judgment to the Defendants with respect to certain portions of the
Merchandise Revenues, to wit, the revenue received from: “minimum
guarantee shortfalls”; “free merchandise”; trading cards; video games; and
game programs.
Bouchat contends that, because of the Defendants’ widespread use of the

340

CH. 1

Flying B as the primary logo—and as an integral marketing tool—for the
Baltimore Ravens, some portion of the revenues that the Defendants
earned from both the Non–Merchandise Revenues and the Excluded
Merchandise Revenues is attributable to the Defendants’ infringement of
his copyright. When the district court awarded summary judgment to the
Defendants as to large segments of their revenues, however, it denied
Bouchat the opportunity to prove this contention to the jury. Despite the
fact that § 504(b) places on the infringer the burden of proving that
revenues are not attributable to the infringement, summary judgment was
appropriate with respect to both the Non–Merchandise Revenues and the
Excluded Merchandise Revenues.
As detailed above, we analyze the excluded revenue streams in two steps.
We first consider whether any of the Non–Merchandise Revenues and the
Excluded Merchandise Revenues lacked a conceivable connection to the
infringement. If so, summary judgment in favor of the Defendants with
respect to those revenues was proper. Turning then to the remaining
excluded revenues, we inquire whether, despite the existence of a
conceivable connection between those revenues and the infringement,
Bouchat offered only speculative evidence of such a causal link in response
to a properly supported motion for summary judgment. If so, then
summary judgment in favor of the Defendants was appropriate with
respect to these revenues as well.
a.
Of all the excluded revenues, only the revenues from minimum guarantee
shortfalls and free merchandise lack all conceivable connection to the
Defendants’ infringement of Bouchat’s copyright. Because no rational trier
of fact could find that these two subcategories of the Excluded Merchandise
Revenues were affected by the Defendants’ adoption of the infringing
Flying B logo, the court properly removed them from the pool of
Defendants’ revenues submitted to the jury for consideration under §
504(b).
The levels of each licensee’s minimum guarantee and free merchandise
obligation were established, ex ante, by the terms of the licensee’s contract
with NFLP; neither figure could fluctuate in response to consumer
behavior. As a consequence, the amount of revenue that the Defendants
received in the form of minimum guarantee shortfalls and free
merchandise was necessarily independent of any reaction that any
individual might have had to the Flying B logo. Whereas it is at least
hypothetically possible (albeit highly unlikely) that an individual became
so enamored of the infringing aspects of the Flying B logo that he was thus

CH. 1

341

inspired to purchase tickets for the Ravens’ games, to pay for parking, to
buy non-logo-bearing concessions, and thus to boost the Defendants’
revenues from these sources, a similar scenario cannot be conjured with
respect to revenues whose levels were fixed and immutable before licensees
had an opportunity to stock their shelves with logo-bearing goods. No
rational trier of fact could find that the infringing Flying B logo enabled
the defendants to generate more income from these two sources than they
would otherwise have done. Because no portion of the Defendants’ gross
revenues from minimum guarantee shortfalls and free merchandise could
be attributable to the infringement of Bouchat’s copyright, the court did
not err in awarding summary judgment to the Defendants with respect to
these two sub-categories of the Excluded Merchandise Revenues.
b.
Having concluded that summary judgment in favor of the Defendants was
proper with respect to both the minimum guarantee short-falls and the free
merchandise, we turn now to the Non–Merchandise Revenues and the
remaining sub-categories of the Excluded Merchandise Revenues (i.e., the
revenues from trading cards, video games, and game programs). Our
inquiry on this point is whether, despite the existence of a conceivable
connection between the infringement and the level of revenue that the
Defendants earned from these sources, the court was correct in excluding
them through summary judgment. Because Bouchat offered only
speculative evidence of a causal link between the infringement and the
level of the revenues that the Defendants earned from these sources, and
because the Defendants’ request for summary judgment was supported by
unrebutted evidence demonstrating that these revenues were not, in fact,
in any way attributable to the infringement, there was no issue of material
fact for consideration by the jury. As a result, the court did not err in
awarding summary judgment to the Defendants with respect to these
remaining categories of revenue.
When they moved for summary judgment, the Defendants successfully
carried their initial burden of demonstrating the absence of a genuine issue
of material fact. See Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. In
support of their initial motion for summary judgment, the Defendants
proffered affidavits showing that Non–Merchandise Revenues are driven
by business and consumer interest in NFL football, and are in no way
responsive to logo design. In support of their subsequent summary
judgment motion, the Defendants again proffered numerous affidavits, this
time showing that sales of trading cards, video games, and game programs
are driven by consumer interest in NFL football, and likewise are in no way
responsive to logo design. The supporting affidavits established beyond

342

CH. 1

reasonable debate that neither any portion of the Defendants’ Non–
Merchandise Revenues, nor any portion of their revenues from trading
cards, video games, or game programs, was attributable to the Defendants’
selection and use of the infringing Flying B rather than some other logo.
Having met their initial burden, the Defendants successfully shifted the
onus onto Bouchat to come forward and demonstrate that such an issue
does, in fact, exist. See Matsushita Elec. Indus. Co., 475 U.S. at 586–87,
106 S.Ct. 1348. A party opposing a properly supported motion for summary
judgment “may not rest upon the mere allegations or denials of [his]
pleadings,” but rather must “set forth specific facts showing that there is a
genuine issue for trial.” Fed.R.Civ.P. 56(e). Bouchat, however, produced no
specific facts showing that there was a genuine issue for trial; in fact, he
declined to respond to the summary judgment motions with any evidence
at all, resting instead on his initial, and sole, evidentiary proffer: the total
receipts generated by all NFLP and Ravens activities. Because Bouchat
failed to offer any nonspeculative evidence demonstrating the existence of
a genuine dispute of material fact, the court appropriately awarded
summary judgment to the Defendants on the ground that the Non–
Merchandise Revenues and the revenues from trading cards, video games,
and game programs could not reasonably be found attributable to the
infringement.
In sum, the Defendants established in their motions for summary
judgment that there existed no causal link between their adoption of the
infringing Flying B logo and either the Defendants’ Non–Merchandise
Revenues or their revenues from trading cards, video games, or game
programs. In response, Bouchat rested on his speculation that somehow,
somewhere, some part of the Defendants’ revenues from these sources was
influenced by the fact that the Defendants selected the Flying B rather
than some other logo. However, because “[u]nsupported speculation is not
sufficient to defeat a summary judgment motion,” Felty, 818 F.2d at 1128,
the court properly awarded summary judgment to the Defendants both
with respect to the Non–Merchandise Revenues and with respect to the
revenues from sales of trading cards, video games, and game programs.
c.
It is the “affirmative obligation of the trial judge to prevent factually
unsupported claims and defenses from proceeding to trial.” Drewitt v.
Pratt, 999 F.2d 774, 778–79 (4th Cir.1993) (internal quotation marks
omitted). Once the Defendants had carried their initial burden of
demonstrating the absence of any genuine issue of material fact regarding
the attributability of the contested revenues, Bouchat could survive the

CH. 1

343

motion for summary judgment only by adducing specific, non-speculative
evidence supporting the existence of a link between the infringement and
the Defendants’ supposedly enhanced revenues. Because Bouchat failed to
make such a showing, the court properly awarded summary judgment to
the Defendants.

B.
Finally, Bouchat contends that the district court, in its instructions to the
jury, failed to accord him the full benefit of the statutory presumption
contained in § 504(b). Specifically, Bouchat maintains that the court
abused its discretion by failing to make clear to the jury that the Ravens
bore the burden of proof in the damages trial. To the contrary, the court
made it eminently clear in its instructions that the Ravens were obliged to
shoulder the burden of proof. See, e.g., J.A. 563–65 (stating to jury, at the
outset of trial, that “[i]n this case, the burden of proof is on the defendants
to prove the extent to which the revenue derived from the sale of these
products is attributable to factors other than the art work of the Flying B
logo.... Question one [of the Verdict form] asks, have defendants proven by
a preponderance of the evidence that income derived by defendants from
the sale of products bearing the Flying B logo was attributable completely
to factors other than the art work of the Flying B logo.”(emphasis added));
J.A. 903 (instructing jury immediately prior to deliberations that “[t]he
case is about whether on the evidence the defendants ... have carried their
burden of proof.... On those questions the defendants have the burden of
proof by a preponderance of the evidence.” (emphasis added)).
This burden of proof point was further emphasized by the first question on
the Verdict form tendered to the jury by the court, reading “Have the
Defendants proven by a preponderance of the evidence that income derived
by the Defendants from the sale of products bearing the Flying B logo was
attributable completely to factors other than the art work of the Flying B
logo?” J.A. 564–65 (emphasis added). Viewed in context, the instructions
plainly informed the jury of the controlling legal principles; the court
therefore did not abuse its discretion.
***
AFFIRMED

WIDENER, Circuit Judge, dissenting:
I respectfully dissent. I am of opinion that the district court erred by

344

CH. 1

refusing to instruct the jury that the defendants’ profits are deemed
attributable to the alleged copyright infringement unless the defendants
prove otherwise. ***

FRANK MUSIC CORP V. METRO–GOLDWYN–MAYER INC.
United States Court of Appeals, Ninth Circuit
Sept. 27, 1989.
886 F.2d 1545

FLETCHER, Circuit Judge:
In Frank Music Corp. v. Metro–Goldwyn–Mayer, Inc., 772 F.2d 505 (9th
Cir.1985) (Frank Music I ), we affirmed the district court’s holding that
defendants infringed plaintiffs’ copyright in the dramatico-musical play
Kismet, but remanded for reconsideration of the amount of profits
attributable to the infringement and for consideration of whether
defendants Donn Arden and Metro–Goldwyn–Mayer, Inc. (MGM, Inc.)
should be liable in addition to MGM Grand Hotel, Inc. (MGM Grand). On
remand, the district court awarded plaintiffs $343,724 against MGM
Grand, dismissed the action against MGM, Inc. and Arden, and awarded
plaintiffs $115,000 in attorney’s fees. Plaintiffs appeal and defendants
cross-appeal. We affirm in part, reverse in part, and remand.
I.

FACTS

The facts are fully set out in Frank Music I, 772 F.2d at 509–11. We
reiterate only selectively. Plaintiffs are the copyright owners and authors
of Kismet, a dramatico-musical work. MGM, Inc. under license produced a
musical motion picture version of Kismet. Beginning April 26, 1974, MGM
Grand presented a musical revue entitled Hallelujah Hollywood in the
hotel’s Ziegfeld Theatre. Hallelujah Hollywood was largely created by an
employee of MGM Grand, Donn Arden, who also staged, produced and
directed the show. The show comprised ten acts, four billed as “tributes” to
MGM motion pictures. Act IV was entitled “Kismet”, and was a tribute to
the MGM movie of that name. It was based almost entirely on music from
Kismet, and used characters and settings from that musical. Act IV
“Kismet” was performed approximately 1700 times, until July 16, 1976,
when, under pressure resulting from this litigation, MGM Grand
substituted a new Act IV.
Plaintiffs filed suit, alleging copyright infringement, unfair competition,
and breach of contract. In Frank Music I, we affirmed the district court’s

CH. 1

345

conclusion that the use of Kismet in Hallelujah Hollywood was beyond the
scope of MGM Grand’s ASCAP license and infringed plaintiffs’ copyright.
In this appeal, the parties focus on the adequacy of damages and attorney’s
fees.
II.

DISCUSSION

A. Apportionment of Profits
1. Direct Profits
In Frank Music I, 772 F.2d at 514, we upheld the district court’s conclusion
that the plaintiffs failed to prove actual damages arising from the
infringement, but vacated the district court’s award of $22,000 in
apportioned profits as “grossly inadequate,” and remanded to the district
court for reconsideration.
On remand, the district court calculated MGM Grand’s net profit from
Hallelujah Hollywood at $6,131,606, by deducting from its gross revenues
the direct costs MGM Grand proved it had incurred. Neither party
challenges this calculation.
In apportioning the profits between Act IV and the other acts in the show,
the district court made the following finding:
Act IV of “Hallelujah Hollywood” was one of ten acts, approximately a ten
minute segment of a 100 minute revue. On this basis, the Court concludes
that ten percent of the profits of “Hallelujah Hollywood” are attributable to
Act IV.
Plaintiffs assert that this finding is in error in several respects. First, they
point out that on Saturdays Hallelujah Hollywood contained only eight
acts, not ten, and that on Saturdays the show ran only 75 minutes, not 100.
Second, Act IV was approximately eleven and a half minutes long, not ten.
Because the show was performed three times on Saturdays, and twice a
night on the other evenings of the week, the district court substantially
underestimated the running time of Act IV in relation to the rest of the
show.
If the district court relied exclusively on a quantitative comparison and
failed to consider the relative quality or drawing power of the show’s
various component parts, it erred. See ABKCO Music, Inc. v. Harrisongs
Music, Ltd., 508 F.Supp. 798, 800 (S.D.N.Y.1981), modified on other
grounds, 722 F.2d 988 (2d Cir.1983). However, the district court’s
apportionment based on comparative durations would be appropriate if the

346

CH. 1

district court implicitly concluded that all the acts of the show were of
roughly equal value. Cf. Frank Music I, 772 F.2d at 518 (“Each element
contributed significantly to the show’s success, but no one element was the
sole or overriding reason for that success.”) While a more precise statement
of the district court’s reasons would have been desirable, we find support
in the record for the conclusion that all the acts in the show were of
substantially equal value.
The district court went on to apportion the parties’ relative contributions
to Act IV itself:
The infringing musical material was only one of several elements
contributing to the segment. A portion of the profits attributable to Act IV
must be allocated to other elements, including the creative talent of the
producer and director, the talents of performers, composers,
choreographers, costume designers and others who participated in creating
Act IV, and the attraction of the unique Ziegfeld Theatre with its elaborate
stage effects.... While no precise mathematical formula can be applied, the
Court concludes that ... a fair approximation of the value of the infringing
work to Act IV is twenty-five percent.
The district court was correct in probing into the parties’ relative
contributions to Act IV. Where a defendant alters infringing material to
suit its own unique purposes, those alterations and the creativity behind
them should be taken into account in apportioning the profits of the
infringing work. Cf. Sheldon v. Metro–Goldwyn Pictures Corp., 106 F.2d
45, 49–51 (2d Cir.1939), aff’d, 309 U.S. 390 (1940). However, the district
court appears to have ignored its finding in its previous decision that
defendants used not only the plaintiffs’ music, but also their lyrics,
characters, settings, and costume designs, recreating to a substantial
extent the look and sound of the licensed movie version of Kismet.
While it was not inappropriate to consider the creativity of producers,
performers and others involved in staging and adapting excerpts from
Kismet for use in Hallelujah Hollywood, the district court erred in weighing
these contributions so heavily. In performing the apportionment, the
benefit of the doubt must always be given to the plaintiff, not the
defendant. Sheldon, 106 F.2d at 51. And while the apportionment may take
into account the role of uncopyrightable elements of a work in generating
that work’s profits, see Sheldon, 106 F.2d at 50–51 (considering role of
movie’s actors, scenery, producers and directors); cf. McCulloch v. Albert E.
Price, Inc., 823 F.2d 316, 320 (9th Cir.1987) (substantial similarity analysis
can include examination of uncopyrightable elements), the apportionment
should not place too high a value on the defendants’ staging of the work, at
the expense of undervaluing the plaintiffs’ more substantive creative
contributions. Production contributions involving expensive costumes and

CH. 1

347

lavish sets will largely be taken into account when deducting the
defendants’ costs. Indeed, defendants concede that had they produced
Kismet in toto, it would have been proper for the district court to award
100% of their profits, despite their own creative efforts in staging such a
production.
The district court found that defendants’ staging of the Kismet excerpts
was highly significant to Act IV’s success. While we believe that a
defendant’s efforts in staging an infringing production will generally not
support more than a de minimis deduction from the plaintiff’s share of the
profits, we cannot say the district court’s conclusion that the defendants’
contributions were substantial in this case is clearly erroneous. We
recognize that there will be shows in which the attraction of the costumes,
scenery or performers outweighs the attraction of the music or dialogue.
On the other hand, a producer’s ability to stage a lavish presentation, or a
performer’s ability to fill a hall from the drawing power of her name alone,
is not a license to use freely the copyrighted works of others.
We conclude that apportioning 75% of Act IV to the defendants grossly
undervalues the importance of the plaintiffs’ contributions. Act IV was
essentially Kismet, with contributions by the defendants; it was not
essentially a new work incidentally plagiarizing elements of Kismet. A
fairer apportionment, giving due regard to the district court’s findings,
attributes 75% of Act IV to elements taken from the plaintiffs and 25% to
the defendants’ contributions.
2. Indirect Profits
In Frank Music I, we held that the plaintiffs were entitled to recover, in
addition to direct profits, a proportion of ascertainable indirect profits from
defendants’ hotel and gaming operations attributable to the promotional
value of Hallelujah Hollywood. The district court considered the relative
contributions of Hallelujah Hollywood and other factors contributing to the
hotel’s profits, including the hotel’s guest accommodations, restaurants,
cocktail lounges, star entertainment in the “Celebrity” room, the movie
theater, Jai Alai, the casino itself, convention and banquet facilities, tennis
courts, swimming pools, gym and sauna, and also the role of advertising
and general promotional activities in bringing customers to the hotel. The
district court concluded that two percent of MGM Grand’s indirect profit
was attributable to Hallelujah Hollywood. In light of the general promotion
and the wide variety of attractions available at MGM Grand, this
conclusion is not clearly erroneous.
B. Prejudgment Interest

348

CH. 1

The district court, without comment, declined to award prejudgment
interest. The availability of prejudgment interest under the Copyright Act
of 1909 is an issue of first impression in this circuit.
The 1909 Act does not mention prejudgment interest. Nevertheless, courts
may allow prejudgment interest even though the governing statute is
silent. Rodgers v. United States, 332 U.S. 371, 373 (1947). “[A] persuasive
consideration ... is the relative equities between the beneficiaries of the
obligation and those upon whom it has been imposed.” The goal of
compensating the injured party fairly for the loss caused by the defendant’s
breach of the statutory obligation should be kept in mind. Prejudgment
interest compensates the injured party for the loss of the use of money he
would otherwise have had.
Defendants argue that Congress did not intend for prejudgment interest to
be available under the 1909 Act. They ask us to infer this from the inclusion
of prejudgment interest in the Patent Act, 35 U.S.C. § 284 (1982), and the
omission of reference to prejudgment interest in either the 1909 Act or the
Copyright Act of 1976. Because the Patent and Copyright Acts are similar
statutes with similar purposes, defendants argue that differences between
the two Acts with respect to prejudgment interest are intentional. Cf. Sony
Corp. of America v. Universal City Studios, 464 U.S. 417, 435, 439 (1984)
(patent law appropriate source of guidance for novel copyright issues, but
noting that doctrine of contributory infringement applies in copyright
cases, where the statute is silent, as well as in patent cases, where the
statute specifically refers to contributory infringers).
Examination of the history of prejudgment interest in the patent context
suggests this argument is flawed. Before Congress enacted 35 U.S.C. § 284,
prejudgment interest was generally available in patent infringement cases
from the date damages were liquidated, and in exceptional cases from the
date of infringement. See, e.g., Duplate Corp. v. Triplex Safety Glass Co.,
298 U.S. 448, 459 (1936); Tilghman v. Proctor, 125 U.S. 136, 160 (1888).
Such a remedy was available despite the fact that the patent laws then in
effect made no mention of prejudgment interest. Indeed, the wording of the
relevant patent statute was similar to that of § 101(b) of the 1909 Copyright
Act.
Thus, interpreting the 1909 Act in light of patent law doctrine existing at
the time of its enactment and during much of its effective period, we cannot
conclude that Congress intended from its silence that prejudgment interest
would not be available under the 1909 Act. Just as courts awarded
prejudgment interest in order to provide adequate compensation to patent
holders before the enactment of 35 U.S.C. § 284, this same remedy should
be available to copyright owners for the same purpose. See also Fishman v.

CH. 1

349

Estate of Wirtz, 807 F.2d 520, 584 (7th Cir.1986) (“The denial of
prejudgment interest systematically undercompensates victims and
underdeters putative offenders.”) (Easterbrook, dissenting).
We therefore hold that prejudgment interest is an available remedy under
the 1909 Act. Whether the circumstances of this case warrant the remedy
is a separate question. The common-law rule during much of the effective
period of the 1909 Act awarded prejudgment interest only on damages that
were liquidated or readily ascertainable by mathematical computations
and did not rely on opinion or discretion. See, e.g., General Motors, 461
U.S. at 651–52 & n. 5 (discussing history of common law rule). But even
where damages were not liquidated or readily ascertainable, courts had the
power to award prejudgment interest on unliquidated damages when
necessary to compensate the plaintiff fairly. Miller v. Robertson, 266 U.S.
243, 258, 45 S.Ct. 73, 79 (1924).
Because the 1909 Act allows plaintiffs to recover only the greater of the
defendant’s profits or the plaintiff’s actual damages, see Frank Music I, 772
F.2d at 512; Sid & Marty Krofft Television Productions, Inc. v. McDonald’s
Corp., 562 F.2d 1157, 1176 (9th Cir.1977), an award of profits or damages
under the 1909 Act will not necessarily be adequate to compensate a
prevailing copyright owner. Accordingly, we conclude prejudgment interest
ordinarily should be awarded.
Awarding prejudgment interest on the apportioned share of defendant’s
profits is consistent with the purposes underlying the profits remedy.
Profits are awarded to the plaintiff not only to compensate for the plaintiff’s
injury, but also and primarily to prevent the defendant from being unjustly
enriched by its infringing use of the plaintiff’s property. See Sheldon v.
Metro–Goldwyn Pictures Corp., 309 U.S. 390, 399 (1940); D. Dobbs,
Handbook on the Law of Remedies 1 (1973). For the restitutionary purpose
of this remedy to be served fully, the defendant generally should be
required to turn over to the plaintiff not only the profits made from the use
of his property, but also the interest on these profits, which can well exceed
the profits themselves. See D. Dobbs, supra, at 169–70; Fishman, 807 F.2d
at 583–84 (giving examples of the effect of compound interest to
demonstrate how “the time value of money works in defendants’ favor.”)
(Easterbrook, dissenting). Indeed, one way to view this interest is as
another form of indirect profit accruing from the infringement, which
should be turned over to the copyright owner along with other forms of
indirect profit. It would be anomalous to hold that a plaintiff can recover,
for example, profits derived from the promotional use of its copyrighted
material, but not for the value of the use of the revenue generated by the
infringement.

350

CH. 1

We accordingly remand to the district court to enter an award of
prejudgment interest. The award should be based on the fifty-two week
Treasury bill rate, unless the district court concludes that the equities
demand a different rate. See In re Bloom, 875 F.2d 224, 228 (9th Cir.1989);
Columbia Brick Works, Inc. v. Royal Ins. Co., 768 F.2d 1066, 1071 (9th
Cir.1985).

F. Attorney’s Fees
Both parties appeal from the district court’s award of attorney’s fees to the
plaintiffs. The plaintiffs argue that the district court awarded them too
small a fee. The defendants argue that the plaintiffs are not entitled to a
fee at all, and even if they are, the fee awarded was too high.
The decision to award fees, and the amount of fees awarded, are both
reviewed for abuse of discretion. Moore v. Jas. H. Matthews & Co., 682 F.2d
830, 838 (9th Cir.1982); Russell v. Price, 612 F.2d 1123, 1132 (9th
Cir.1979). Plaintiffs in copyright actions may be awarded attorney’s fees
simply by virtue of prevailing in the action: no other precondition need be
met, although the fee awarded must be reasonable. McCulloch v. Albert E.
Price, Inc., 823 F.2d 316, 323 (9th Cir.1987) (“fees are generally awarded
to a prevailing plaintiff”); Original Appalachian Artworks, Inc. v. Toy Loft,
Inc., 684 F.2d 821, 832 (11th Cir.1982). The district court correctly noted
that such awards to prevailing plaintiffs serve the purpose of encouraging
private enforcement and deterring infringements. The district court did not
abuse its discretion in determining that the plaintiffs are entitled to an
award of attorney’s fees.
We conclude, however, that the district court erred in failing to explain the
basis for the amount awarded. Plaintiffs’ counsel did not provide the
district court with contemporaneous time records. His “reconstructed
records” claim 1707.5 hours spent on this case from 1975 through mid-May
1980. This reconstruction is memorialized in an itemized list. In addition,
he estimated that he expended another 3500 hours on the case from midMay 1980 to the summer of 1987, listing the services performed during that
period but not allocating his time among the various services. Counsel
sought compensation at the rate of $250 per hour. Counsel’s only
explanation for his failure to keep track of seven years of his work was that
he “got out of the habit of keeping time on the case.”
The district court found that counsel expended much unwarranted time—
as much as 300 hours of work where only a single hour was necessary. The
court found the facts simple, but noted that complicated legal issues
relating to damages were presented. As additional reasons for reducing the
amount of the fees award, the court remarked that plaintiffs prevailed on

CH. 1

351

only one of three claims, and that “both sides engendered numerous delays
and petty discovery disputes, resulting in the inordinate length of time
necessary to resolve this case.” The court, “[i]n view of all these factors,”
concluded that a reasonable attorney’s fee was $115,000. The district court
made no specific findings either as to the number of hours reasonably spent
or what was a reasonable hourly rate.
The trial court correctly refused to accept uncritically plaintiffs’ counsel’s
representations concerning the time expended. Sealy, Inc. v. Easy Living,
Inc., 743 F.2d 1378, 1385 (9th Cir.1984). Plaintiffs bear the burden of
showing the time spent and that it was reasonably necessary to the
successful prosecution of their copyright claims. The lack of
contemporaneous records does not justify an automatic reduction in the
hours claimed, but such hours should be credited only if reasonable under
the circumstances and supported by other evidence such as testimony or
secondary documentation. Johnson v. University College, 706 F.2d 1205,
1207 (11th Cir.1983). Time spent by plaintiffs’ counsel responding to
motions or actions by the defendants should not be excluded from the fee
award. “[A]lthough [defendants] had the right to play hardball in
contesting [plaintiffs’] claims, it is also appropriate that [defendants] bear
the cost of their obstructionist strategy.” Burgess v. Premier Corp., 727
F.2d 826, 841 (9th Cir.1984). The district court blamed both sides for delays
and petty discovery disputes, without differentiating those delays and
disputes properly the fault of the plaintiffs from those properly the fault of
the defendants.
In setting a reasonable attorney’s fee, the district court should make
specific findings of the rate and hours it has determined to be reasonable.
Sealy, 743 F.2d at 1385. In Moore, the district court reduced counsels’ fee
request because, in the district court’s opinion, they “were ... inclined to
produce a large volume of less than useful material.” 682 F.2d at 837
(ellipsis in original). We reversed and remanded that award, holding that
the district court abused its discretion by reducing counsels’ claimed hours
by half and allowing less than half their normal billing rate solely on the
ground that some of their work was less than useful. Id. at 839. Plaintiffs’
counsel’s inadequate showing has invited substantial discounting of his fee.
Still, he is entitled to a reasonable amount. Before determining the
appropriate fee, the district court should make a more detailed analysis of
the time records presented and a finding as to the reasonable hourly rate.
See Sealy, 743 F.2d at 1385. We accordingly remand to the district court to
reconsider its award and to substantiate whatever fee it awards. In its
discretion, it can require the parties to supplement the record.
III.

CONCLUSION

352

CH. 1

We vacate the damages award. We conclude that the proper apportionment
entitles plaintiffs to 9% of the direct profits from Hallelujah Hollywood. We
affirm the district court’s finding as to the percentage of indirect profits
attributable to Hallelujah Hollywood. We correct the award however for a
mathematical error. Accordingly, plaintiffs are entitled to $551,844.54 as
their share of direct profits and $699,963.10 as their share of indirect
profits. We conclude that prejudgment interest should have been awarded,
and remand for a calculation of the appropriate amount. *** We vacate the
award of attorney’s fees so that the district court may make the necessary
findings and recompute the amount to be awarded. We remand to the
district court for further proceedings consistent with this opinion.
AFFIRMED in part, REVERSED in part, and REMANDED with
directions.

ZOMBA ENTERPRISES, INC. V. PANORAMA RECORDS, INC.
United States Court of Appeals, Sixth Circuit.
June 26, 2007
491 F.3d 574

KAREN NELSON MOORE, Circuit Judge.
From Japan to the United States and beyond, karaoke is wildly popular.
Countless people have lined up at various venues to perform their favorite
songs with, and in front of, their friends. But few participants (with the
possible exception of IP lawyers) ever stop to consider the intellectual
property regime governing karaoke.
Panorama Records, Inc. (“Panorama”), a purveyor of karaoke discs,
resembles the majority of these participants. It entered the business of
recording and selling karaoke discs without considering whether doing so
infringed the intellectual property rights of others. Before long, this lack of
foresight caught up with Panorama.
This case requires us to review a district court’s entry of summary
judgment in favor of, and monetary award to, a plaintiff copyright holder
whose musical compositions Panorama copied on its karaoke discs.
Ultimately, we conclude that the district court (1) correctly concluded that
Panorama willfully infringed the plaintiffs’ copyrights, and did not abuse
its discretion by (2) awarding the plaintiffs $806,000 in statutory damages,
(3) denying Panorama’s motion to transfer venue, and (4) awarding the
plaintiffs attorney fees. Accordingly, we AFFIRM the district court’s

CH. 1

353

judgment in all respects.
I. FACTS AND PROCEDURE
A. Statutory Background
Our Constitution grants Congress the power “[t]o promote the Progress of
Science and useful Arts, by securing for limited Times to Authors ... the
exclusive Right to their respective Writings.” U.S. CONST. art. I, § 8, cl. 8.
Toward that end, the Copyright Act offers protection to various kinds of
works of authorship, including “musical works, including any
accompanying words.” 17 U.S.C. § 102(a)(2). This protection provides
copyright owners with the exclusive rights to reproduce the works and to
distribute these copies to the public. Id. § 106(1), (3). Anyone who violates
these, or other, rights of the copyright owner is an “infringer,” and thus is
liable to the owner, id. § 501(a), (b), and subject to injunctions, id. § 502,
damages, id. § 504, and attorney fees, id. § 505.
Plaintiff copyright owners whose copyrights actually have been infringed
may elect between receiving as damages (1) their actual damages plus the
infringer’s profits attributable to its infringement, or (2) statutory
damages. Id. § 504(b), (c). In the standard copyright-infringement case, the
district court has discretion to award statutory damages of any amount
between $750 and $30,000 for each copyright infringed. Id. § 504(c)(1).
However, if the plaintiff proves that the infringement is willful, the
statutory-damage ceiling rises to $150,000. Id. § 504(c)(2). Conversely, if
the defendant establishes that infringement is innocent, the statutorydamage floor falls to $200.
B. Factual Background
Since 1998, Panorama has been in the business of manufacturing and
selling karaoke compact discs. It issues a new disc monthly in each of a
variety of musical genres, including country, pop, rock, and R & B. Each
installment (or “karaoke package”) contains the top hits in that genre for
the relevant month. Laurindo Santos is one of Panorama’s four
shareholders, and at all times relevant to this case he was the decisionmaker regarding the release of products.
The individual discs that Panorama makes and sells are in the CD+G
format—shorthand for “compact disc plus graphics.” As Panorama
explains, “[t]hese are compact discs on which musicians that are hired by
Panorama record a musical composition of a work which at some time may

354

CH. 1

have been made popular by another artist. The CD+G contains a graphic
element and is designed to be viewed when played on a karaoke machine.”
The graphic element consists of the text of each song’s lyrics, and it scrolls
across a screen as the music (sans vocals) plays, permitting karaoke
participants to read the lyrics as they sing along. Each of Panorama’s
karaoke packages contained nine or ten songs, with two tracks for each
song, one track released with audible lyrics and one without.
Zomba Enterprises, Inc. and Zomba Songs, Inc. (collectively, “Zomba”) are
music publishing corporations often identified by the trade name Zomba
Music Publishing. Zomba “is in the business of exploiting musical
compositions for commercial gain.” Toward this purpose, and at all times
relevant to this case, Zomba held and administered the copyrights to a
variety of musical compositions, including songs performed by pop music
performers such as 98 Degrees, Backstreet Boys, *NSYNC, and Britney
Spears.
Without Anna Music (“Without Anna”) is another music publishing
company, but is not a party to this action. In 2000, Without Anna
discovered that some of the songs to which it owned copyrights appeared
on Panorama’s karaoke packages. In response, attorney Linda Edell
Howard sent a cease-and-desist letter to Panorama on Without Anna’s
behalf, demanding that Panorama quit selling unlicensed copies of Without
Anna’s songs. When Panorama received this letter from Howard in 2000,
it had not acquired licenses from the copyright owners of any of the songs
it had released in its karaoke packages. Panorama then hired Vincent
Castalucci, a licensing agent, and began negotiating licenses. Eventually,
Panorama obtained license agreements from Without Anna.
On February 28, 2002, Howard sent another cease-and-desist letter to
Panorama, this time on behalf of Zomba. Like Without Anna, Zomba had
discovered that Panorama’s karaoke packages contained copies of songs it
owned. Zomba’s cease-and-desist letter specified the terms upon which
Zomba would be willing to grant a license: a $250 fixing fee for each Zombaowned song on each package, plus royalties of $0.16 per song per CD+G
sold for the first half of the five-year license term, and $0.19 per song per
CD+G sold for the second-half of the term. Santos and Castalucci contacted
Howard in response to this letter, but Panorama did not stop selling CD+Gs
with Zomba’s songs on them, nor did it obtain any licenses.
On April 12, 2002, Howard sent a follow-up cease-and-desist letter on
Zomba’s behalf. Again, Santos and Castalucci responded to the letter. And
again, Panorama failed both to obtain licenses to Zomba’s songs and to
cease selling CD+Gs containing them.

CH. 1

355

C. Procedural History
On January 13, 2003, Zomba filed its complaint, asserting thirty counts of
copyright infringement—one count for each Zomba-owned musical
composition that Panorama recorded and sold in its karaoke packages.
Panorama answered, asserting no affirmative defenses other than
estoppel, laches, waiver, and acquiescence. On April 22, 2003, the parties
entered into a consent order in which Panorama agreed “to be restrained
from distributing, releasing or otherwise exploiting any karaoke package
containing compositions owned or administered by” Zomba. Within a week
of entering this consent order, Panorama breached its agreement and
resumed selling CD+Gs containing Zomba’s copyrighted work. This
conduct continued, and a year later, Zomba moved for sanctions on this
basis.
After the parties filed cross-motions for summary judgment but before the
district court ruled, Panorama’s counsel withdrew on May 10, 2004. On
June 18, 2004, the district court granted Zomba’s, and denied Panorama’s,
motion for summary judgment on the issue of copyright infringement,
rejecting Panorama’s fair-use defense.
To determine damages, the district court scheduled a bench trial for August
10, 2004. Panorama was unable to obtain new counsel and consequently
failed to file any of the required pretrial documents or to appear at the
pretrial conference held on July 29, 2004. The district court accordingly
entered a default against Panorama on the issue of damages. Panorama
responded by filing for bankruptcy in the Bankruptcy Court for the District
of Massachusetts on August 9, 2004. In response, the district court stayed
the case.
After the bankruptcy court lifted its stay, *** the district court held a
hearing to determine the amount of damages. A month later, the district
court issued findings of fact and conclusions of law. The district court
concluded that Panorama’s infringement was willful, and accordingly
awarded Zomba $31,000 for each of the twenty-six infringements at issue,
for a total of $806,000. On January 23, 2006, the district court also awarded
Zomba $76,456.16 in attorney fees and $1058.91 in costs. Panorama timely
filed notices of appeal on December 29, 2005, and February 15, 2006. ***
III. ANALYSIS
On appeal, Panorama raises a series of challenges. First, it objects to the
district court’s rejection of its fair-use defense and the district court’s
correlative conclusion that Panorama infringed Zomba’s copyrights. Next,
it disputes the district court’s statutory-damage calculation, arguing both

356

CH. 1

that any infringement was not willful and that the $806,000 damage award
is unconstitutionally high. *** Finally, Panorama appeals the district
court’s award of attorney fees to Zomba.
***
Because all four fair-use factors indicate that Panorama’s copying was not
a fair use, we conclude that the district court correctly rejected this defense
and concluded that Panorama infringed Zomba’s copyrights.
B. Willfulness
Next, Panorama argues that even if it infringed Zomba’s copyrights, the
district court erred by concluding that the infringement was willful and
thus was subject to enhanced statutory damages. According to Panorama,
any infringement was innocent, and certainly not willful. We disagree.
For infringement to be “willful,” it must be done “with knowledge that
[one’s] conduct constitutes copyright infringement.” Princeton Univ. Press,
99 F.3d at 1392. Accordingly, “one who has been notified that his conduct
constitutes copyright infringement, but who reasonably and in good faith
believes the contrary, is not ‘willful’ for these purposes.” Id. This belief
must be both (1) reasonable and (2) held in good faith.
Panorama argues that it held a good-faith belief that the copying here at
issue was a fair use, and contends that even if ultimately erroneous, this
belief precludes a finding of willfulness. As in Princeton University Press,
the issue is not so much whether Panorama held in good faith its belief that
its copying was fair use (although we have serious misgivings on this
matter), but whether Panorama reasonably believed that its conduct did
not amount to copyright infringement. Princeton Univ. Press, 99 F.3d at
1392. To decide this issue, we must determine “whether the copyright law
supported the plaintiffs’ position so clearly that the defendants must be
deemed as a matter of law to have exhibited a reckless disregard of the
plaintiffs’ property rights.” Id. We review de novo this narrow issue, but we
note that other circuits have reviewed for clear error district courts’
conclusions on the broader issue of willfulness, see, e.g., Kepner–Tregoe, Inc.
v. Vroom, 186 F.3d 283, 288 (2d Cir.1999); Chi–Boy Music v. Charlie Club,
Inc., 930 F.2d 1224, 1227 (7th Cir.1991). Because our analysis focuses
solely on the narrower issue, we need not determine whether Princeton
University Press’s de novo standard applies to the broader issue of
willfulness in general. Accordingly, we express no opinion on that issue,
leaving it for a future case.
Here, we conclude that Panorama exhibited a reckless disregard for

CH. 1

357

Zomba’s rights, and accordingly, that Panorama’s reliance on its fair-use
defense was objectively unreasonable. The fact most crucial to this inquiry
is that Panorama continued to sell karaoke packages containing copies of
each of the relevant compositions after the district court entered its April
22, 2003, consent order forbidding Panorama to do so.
In copyright cases, it is unreasonable to rely on a defense to infringement
after a court rejects it on the merits. Kepner–Tregoe, 186 F.3d at 288–89
(2d Cir.1999) (holding that copyright defendant’s reliance on a defense was
unreasonable when the Fifth Circuit had previously concluded that the
plaintiff’s copyright was valid and enforceable). This principle does not
dispose fully of Panorama’s position because the April 22, 2003, consent
order did not resolve any issues on the merits. To the contrary, the order
stated that it “shall not be construed as a finding of any fact by the
[District] Court or a finding by the [District] Court that Plaintiff has
established ... any ... substantive element of its case.”
This caveat, however, does not justify Panorama’s continued reliance on its
fair-use defense. By entering into the consent decree, Panorama agreed to
cease infringing Zomba’s copyrights. Thus, it implicitly agreed to suspend
its reliance on the fair-use defense at least temporarily, and this agreement
was reduced to an order of the court. Because an order entered by a court
of competent jurisdiction must be obeyed even if it is erroneously issued,
see Walker v. City of Birmingham, 388 U.S. 307, 321, 87 S.Ct. 1824, 18
L.Ed.2d 1210 (1967), Panorama lacked any legal justification for
continuing to distribute copies of Zomba’s copyrighted works after April 22,
2003. Without expressing any opinion regarding the reasonableness of
Panorama’s position before that date, we are certain that from April 22,
2003, on, the law applicable to this case “supported [Zomba’s] position so
clearly that [Panorama] must be deemed as a matter of law to have
exhibited a reckless disregard of [Zomba’s] property rights.” Princeton
Univ. Press, 99 F.3d at 1392. On this basis, we agree with the district
court’s conclusion that Panorama’s infringements were willful and
accordingly justified enhanced statutory damages.
C. Amount of Statutory–Damage Award
Panorama next challenges the district court’s $806,000 statutory-damage
award. First, it argues that the district court abused its discretion in
calculating the award. Next, it argues that the awards are disproportionate
and unreasonable under the Eighth Amendment and the Fifth
Amendment’s Due Process Clause.
1. Abuse of Discretion

358

CH. 1

Panorama contends that the district court believed that, after making a
finding of willfulness, it lacked discretion to award statutory damages of
less than $30,000 per infringement. On this basis, Panorama maintains
that the district court abused its discretion. The record does not support
this argument.
In its conclusions of law, the district court recognized that it had “wide
discretion in determining the amount of statutory damages to be awarded,
constrained only by the maximum and minimum amounts.” It found “that
the maximum statutory amount of $30,000 per work for ‘innocent’
infringement is not sufficient in this case because of the clearly willful
nature of Defendant’s conduct,” but that the maximum award of $150,000
per infringement was excessive, given the dollar amounts involved in the
case.
Nowhere did the district court indicate that it believed that it lacked
discretion to award statutory damages of less than $30,000 per
infringement. To the contrary, Panorama’s willfulness prompted the
district court to conclude that the maximum penalty for nonwillful
infringement was not sufficient given Panorama’s conduct. We therefore
conclude that Panorama has not shown that the district court abused its
discretion by setting the statutory damage award at $31,000 per
infringement.
2. Eighth Amendment
Panorama next argues that such a high award of statutory damages, in
light of the relatively low actual damages, renders the district court’s
award an “excessive fine” under the Eighth Amendment. However, the
Supreme Court has explained that the word “fine” in this context means a
payment to the government. United States v. Bajakajian, 524 U.S. 321, 327,
118 S.Ct. 2028, 141 L.Ed.2d 314 (1998). Consequently, the Court has held
that the Excessive Fines Clause “does not constrain an award of money
damages in a civil suit when the government neither has prosecuted the
action nor has any right to receive a share of the damages awarded.”
Browning–Ferris Indus. of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S.
257, 264, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989). Panorama’s Eighth
Amendment argument thus fails.
3. Due Process
Panorama argues, based upon BMW of North America, Inc. v. Gore, 517
U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), and State Farm Mutual
Automobile Insurance Co. v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155
L.Ed.2d 585 (2003), that an award of statutory damages that (it alleges) is

CH. 1

359

thirty-seven times the actual damages violates its right to due process.
Again, we disagree.
We note at the outset that both Gore and Campbell addressed due-process
challenges to punitive-damages awards. In both cases, the award was
greater than one hundred times the amount of compensatory damages
awarded. In Gore, the Court concluded that the award in question (which
amounted to 500 times the compensatory-damages award) was “grossly
excessive,” 517 U.S. at 574, after considering three “guideposts”: (1) “the
degree of reprehensibility of the” defendant’s conduct; (2) “the disparity
between the harm or potential harm suffered by [the plaintiff] and [the]
punitive damages award”; and (3) “the difference between this remedy and
the civil penalties authorized or imposed in comparable cases,” id. at 575.
In Campbell, the Court considered the same three guidepost factors and
concluded that the punitive-damages award (which amounted to 145 times
the compensatory-damages award) “was an irrational and arbitrary
deprivation of the property of the defendant.” 538 U.S. at 429. Regarding
the second guidepost, neither case created a “concrete constitutional limit[
]” to the punitive-to-compensatory damages ratio. Id. at 424. Instead, the
Campbell Court explicitly “decline[d] ... to impose a bright-line ratio which
a punitive damages award cannot exceed,” although it expressed a general
preference for single-digit ratios. Id. at 425.
The Supreme Court has not indicated whether Gore and Campbell apply to
awards of statutory damages. We know of no case invalidating such an
award of statutory damages under Gore or Campbell, although we note
that some courts have suggested in dicta that these precedents may apply
to statutory-damage awards. See, e.g., Parker v. Time Warner Entm’t Co.,
331 F.3d 13, 22 (2d Cir.2003) (suggesting that “in a sufficiently serious
case,” due process may require courts to reduce a statutory-damage award
in a class action, and citing both Campbell and Gore); but see Lowry’s
Reports, Inc. v. Legg Mason, Inc., 302 F.Supp.2d 455, 459–60 (D.Md.2004)
(concluding that Gore and Campbell do not limit statutory damages in
copyright cases).
Regardless of the uncertainty regarding the application of Gore and
Campbell to statutory-damage awards, we may review such awards under
St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66–67, 40 S.Ct. 71, 64
L.Ed. 139 (1919), to ensure they comport with due process. In such cases,
we inquire whether the awards are “so severe and oppressive as to be
wholly disproportioned to the offense and obviously unreasonable.” Id. at
67. This review, however, is extraordinarily deferential—even more so than
in cases applying abuse-of-discretion review. Douglas v. Cunningham, 294
U.S. 207, 210, 55 S.Ct. 365, 79 L.Ed. 862 (1935) (Congress’s purpose in
enacting the statutory-damage provision of the 1909 Copyright Act and its

360

CH. 1

delineation of specified limits for statutory damages “take[ ] the matter out
of the ordinary rule with respect to abuse of discretion”); Broad. Music, Inc.
v. Star Amusements, Inc., 44 F.3d 485, 487 (7th Cir.1995) (interpreting the
modern Copyright Act and noting “that the standard for reviewing an
award of statutory damages within the allowed range is even more
deferential than abuse of discretion”).
Williams is instructive, and leads us to conclude that the statutory-damage
award against Panorama was not sufficiently oppressive to constitute a
deprivation of due process. In that case, a railroad charged two sisters
sixty-six cents apiece more than the maximum rate permissible by
regulation. 251 U.S. at 64. A state statute sought to deter such overcharges
by providing for statutory damages of between $50 and $350 when a
railroad charged more than the permissible rate. Id. The sisters sued
separately, and received statutory damage awards of $75 apiece—over 113
times the amount they were overcharged. Id. Before the Supreme Court,
the railroad argued that the penalty was so disproportionate to the harm
sustained that it violated due process. Rejecting this argument, the Court
concluded that the award “properly cannot be said to be so severe and
oppressive as to be wholly disproportioned to the offense or obviously
unreasonable.” Id. at 67.
If the Supreme Court countenanced a 113:1 ratio in Williams, we cannot
conclude that a 44:1 ratio is unacceptable here. We acknowledge the
Supreme Court’s preference for a lower punitive-to-compensatory ratio, as
stated in Campbell, but emphasize that this case does not involve a
punitive-damages award. Until the Supreme Court applies Campbell to an
award of statutory damages, we conclude that Williams controls, not
Campbell, and accordingly reject Panorama’s due-process argument.
***
E. Attorney fees
Lastly, Panorama argues that the district court abused its discretion by
awarding attorney fees to Zomba. The Copyright Act provides that “the
[district] court in its discretion may allow the recovery of full costs ... [and]
may also award a reasonable attorney’s fee to the prevailing party as part
of the costs.” 17 U.S.C. § 505. In Fogerty v. Fantasy, Inc., 510 U.S. 517, 114
S.Ct. 1023, 127 L.Ed.2d 455 (1994), the Supreme Court endorsed in dicta a
series of factors “to guide courts’ discretion” in awarding attorney fees. Id.
at 534 n. 19. The factors include “frivolousness, motivation, objective
unreasonableness (both in the factual and in the legal components of the
case) and the need in particular circumstances to advance considerations
of compensation and deterrence.” Id.

CH. 1

361

According to Panorama, the district court abused its discretion by failing
to consider the Fogerty factors. However, as Zomba notes, the parties
provided the district court with briefing focused on the factors, so even if
the district court did not precisely recount its assessment of the factors, it
was alerted to them. Further, given the unreasonableness of Panorama’s
positions and the need to deter such conduct, it is difficult to see how the
imposition of attorney fees here could qualify as an abuse of discretion.
IV. CONCLUSION
For the reasons stated above, we AFFIRM the district court’s judgment in
all respects.
Note
Footnote 10 of the court's opinion summarizes the actual damages that
could have been awarded in this case: "Panorama asserted that it sold a
total of 74,734 copies of the twenty-six infringed compositions. Based upon
this figure, Zomba lost approximately $11,957.92 in royalties, plus an
additional $6500 in fixing fees, for a total of $18,457.92.
Additionally, Panorama asserted that its net profit attributable to the
twenty-six compositions at issue was $9693.86, although Panorama never
substantiated its expenses to the district court. Assuming arguendo that
this profit figure is accurate, Zomba would have been entitled to $28,151.78
if it had not elected to pursue statutory damages."
Footnote 11 discusses the ratio: "Dividing the statutory-damage award
($806,000) by the lost licensing fees, as calculated by Panorama, ($18,458)
yields a ratio of about 44:1. The 37:1 figure that Panorama advances in its
brief includes in the denominator Panorama’s unsubstantiated net profits
figure of $9693.86."
Does the statutory damages award seem excessive or appropriate?

362

CH. 1

CAPITOL RECORDS, INC. V. THOMAS–RASSET
United States Court of Appeals, Eighth Circuit
Filed: Sept. 11, 2012.
692 F.3d 899

COLLOTON, Circuit Judge.
This appeal arises from a dispute between several recording companies and
Jammie Thomas–Rasset. There is a complicated procedural history
involving three jury trials, but for purposes of appeal, it is undisputed that
Thomas–Rasset willfully infringed copyrights of twenty-four sound
recordings by engaging in file-sharing on the Internet. After a first jury
found Thomas–Rasset liable and awarded damages of $222,000, the
district court granted a new trial on the ground that the jury instructions
incorrectly provided that the Copyright Act forbids making sound
recordings available for distribution on a peer-to-peer network, regardless
of whether there is proof of “actual distribution.” A second jury found
Thomas–Rasset liable for willful copyright infringement under a different
instruction, and awarded statutory damages of $1,920,000. The district
court remitted the award to $54,000, and the companies opted for a new
trial on damages. A third jury awarded statutory damages of $1,500,000,
but the district court ultimately ruled that the maximum amount
permitted by the Due Process Clause of the Fifth Amendment was $54,000
and reduced the verdict accordingly. The court also enjoined Thomas–
Rasset from taking certain actions with respect to copyrighted recordings
owned by the recording companies.
The companies appeal two aspects of the remedy ordered by the district
court. They object to the district court’s ruling on damages, and they seek
an award of $222,000, which was the amount awarded by the jury in the
first trial. They also seek a broader injunction that bars Thomas–Rasset
from making any of their sound recordings available to the public. For
tactical reasons, the companies do not seek reinstatement of the third jury’s
award of $1,500,000. They urge instead that this court should reverse the
district court’s order granting a new trial, rule that the Copyright Act does
protect a right to “making available” sound recordings, reinstate the first
jury’s award of $222,000, and direct entry of a broader injunction. In a
cross-appeal, Thomas–Rasset argues that any award of statutory damages
is unconstitutional, and urges us to vacate the award of damages
altogether.

CH. 1

363

For reasons set forth below, we conclude that the recording companies are
entitled to the remedies they seek: damages of $222,000 and a broadened
injunction that forbids Thomas–Rasset to make available sound recordings
for distribution. But because the verdicts returned by the second and third
juries are sufficient to justify these remedies, it is unnecessary for this
court to consider the merits of the district court’s order granting a new trial
after the first verdict. Important though the “making available” legal issue
may be to the recording companies, they are not entitled to an opinion on
an issue of law that is unnecessary for the remedies sought or to a
freestanding decision on whether Thomas–Rasset violated the law by
making recordings available.
I.
Capitol Records, Inc., Sony BMG Music Entertainment, Arista Records
LLC, Interscope Records, Warner Bros. Records, and UMG Recordings,
Inc., are recording companies that own the copyrights to large catalogs of
music recordings. In 2005, they undertook to investigate suspected
infringement of these copyrights. MediaSentry, an online investigative
firm hired by the recording companies, discovered that an individual with
the username “tereastarr” was participating in unauthorized file sharing
on the peer-to-peer network KaZaA.
During the relevant time period, KaZaA was a file-sharing computer
program that allowed its users to search for and download specific files
from other users. KaZaA users shared files using a share folder. A share
folder is a location on the user’s computer in which the user places files—
such as audio or video recordings—that she wants to make available for
other users to download. KaZaA allowed its users to access other users’
share folders, view the files in the folder, and download copies of files from
the folder.
MediaSentry accessed tereastarr’s share folder. The investigative firm
determined that the user had downloaded copyrighted songs and was
making those songs available for download by other KaZaA users.
MediaSentry took screen shots of tereastarr’s share folder, which included
over 1,700 music files, and downloaded samples of the files. But
MediaSentry was unable to collect direct evidence that other users had
downloaded the files from tereastarr. MediaSentry then used KaZaA to
send two instant messages to tereastarr, notifying the user of potential
copyright infringement. Tereastarr did not respond to the messages.
MediaSentry also determined tereastarr’s IP address, and traced the
address to an Internet service account in Duluth, Minnesota, provided by
Charter Communications. MediaSentry compiled this data in a report that
it prepared for the recording companies.

364

CH. 1

Using the information provided by MediaSentry, the recording companies,
through the Recording Industry Association of America (RIAA), issued a
subpoena to Charter Communications requesting the name of the person
associated with tereastarr’s IP address. Charter informed the RIAA that
the IP address belonged to Jammie Thomas–Rasset. The RIAA then sent a
letter to Thomas–Rasset informing her that she had been identified as
engaging in unauthorized trading of music and inviting her to contact them
to discuss the situation and settle the matter. Thomas–Rasset contacted
the RIAA as directed in the letter and engaged in settlement conversations
with the organization. The parties were unable to resolve the matter.
In 2006, the recording companies sued Thomas–Rasset, seeking statutory
damages and injunctive relief for willful copyright infringement under the
Copyright Act. They alleged that Thomas–Rasset violated their exclusive
right to reproduction and distribution under 17 U.S.C. § 106 by
impermissibly downloading, distributing, and making available for
distribution twenty-four copyrighted sound recordings.
A jury trial was held in October 2007. At trial, Thomas–Rasset conceded
that “tereastarr” is a username that she uses regularly for Internet and
computer accounts. She admitted familiarity with and interest in some of
the artists of works found in the tereastarr KaZaA account. She also
acknowledged that she wrote a case study during college on the legality of
Napster—another peer-to-peer file sharing program—and knew that
Napster was shut down because it was illegal. Nonetheless, Thomas–
Rasset testified that she had never heard of KaZaA before this case, did not
have KaZaA on her computer, and did not use KaZaA to download files.
The jury also heard evidence from a forensic investigator that Thomas–
Rasset removed and replaced the hard drive on her computer with a new
hard drive after investigators notified her of her potential infringement.
The new hard drive did not contain the files at issue.
***
II.
In their brief on appeal, the record companies urge this court to review the
district court’s order granting a new trial after the first verdict. The
companies argue that the court erred by holding that an individual does
not infringe a copyright holder’s exclusive rights by making a copyrighted
work available to the public without authorization. They argue that
accepting their position on that issue would “lead to reversing the District
Court’s erroneous refusal to enjoin Thomas–Rasset from making Plaintiffs’
copyrighted works available, but also would reinstate the first jury’s
$9,250–per–work verdict,” for total damages of $222,000. Although the
third jury’s verdict awarded $62,500 per work, for a total of $1,500,000, the
companies seek only the smaller amount awarded by the first jury, because

CH. 1

365

they want a ruling on the legal issue whether making works available is
part of the distribution right protected by the Copyright Act.
In reply, Thomas–Rasset says that she has no objection to reinstatement
of the first verdict, subject to her arguments on the constitutionality of the
damages. She maintains that she still disagrees with the recording
companies about the meaning of “distribute” in the Copyright Act, but she
does not object to the relief that the companies request on appeal. She now
suggests that this court should reinstate the first jury’s verdict on liability
(albeit without making precedent on the meaning of “distribute”) and then
determine whether the first damages award of $222,000 is constitutional.
Thomas–Rasset is liable for willful infringement under any of the verdicts,
and it suits her fine to cap the maximum possible damages at $222,000
rather than $1,500,000. Thomas–Rasset also offers to acquiesce in the
entry of an injunction that forbids her to make copyrighted works available
for distribution. In light of these concessions, she suggests that the issue
whether making works available is part of the distribution right protected
by the Copyright Act is moot.
Our response to these tactical maneuvers is to observe that this court
reviews judgments, not decisions on issues. Thompson v. Mo. Bd. of Prob.
& Parole, 39 F.3d 186, 189 n. 2 (8th Cir.1994). The record companies appeal
the district court’s final judgment and seek additional remedies that the
district court refused to order. The entitlement of the companies to these
remedies—damages of $222,000 and an injunction against making
copyrighted works available to the public—are the matters in controversy.
That the companies seek these remedies with the objective of securing a
ruling on a particular legal issue does not make that legal issue itself the
matter in controversy. Once the requested remedies are ordered, the desire
of the companies for an opinion on the meaning of the Copyright Act, or for
a statement that Thomas–Rasset violated the law by making works
available, is not sufficient to maintain an Article III case or controversy.
Chathas v. Local 134 IBEW, 233 F.3d 508, 512 (7th Cir.2002).
For the reasons set forth below, we conclude that when the district court
entered judgment after the verdict in the third trial, the court should have
enjoined Thomas–Rasset from making copyrighted works available to the
public, whether or not that conduct by itself violates rights under the
Copyright Act. We also conclude that statutory damages of at least
$222,000 were constitutional, and that the district court erred in holding
that the Due Process Clause allowed statutory damages of only $54,000.
We therefore will vacate the district court’s judgment and remand with
directions to enter a judgment that includes those remedies. The question
whether the district court correctly granted a new trial after the first
verdict is moot.

366

CH. 1

A.
After the third trial, the district court entered an injunction that prohibits
Thomas–Rasset from “using the Internet or any online media distribution
system to reproduce (i.e., download) any of Plaintiffs’ Recordings, or to
distribute (i.e., upload) any of Plaintiff’s Recordings.” The recording
companies urged the district court to amend the judgment to enjoin
Thomas–Rasset from making any of their sound recordings available for
distribution to the public through an online media distribution system. The
district court declined to do so on the ground that the Copyright Act does
not provide an exclusive right to making recordings available. The court
further reasoned that the injunction as granted was adequate to address
the concerns of the companies. We review the grant or denial of a
permanent injunction for abuse of discretion. Fogie v. THORN Americas,
Inc., 95 F.3d 645, 649 (8th Cir.1996). “Abuse of discretion occurs if the
district court reaches its conclusion by applying erroneous legal principles
or relying on clearly erroneous factual findings.”
We conclude that the district court’s ruling was based on an error of law.
Even assuming for the sake of analysis that the district court’s ruling on
the scope of the Copyright Act was correct, a district court has authority to
issue a broad injunction in cases where “a proclivity for unlawful conduct
has been shown.” See McComb v. Jacksonville Paper Co., 336 U.S. 187, 192
(1949). The district court is even permitted to “enjoin certain otherwise
lawful conduct” where “the defendant’s conduct has demonstrated that
prohibiting only unlawful conduct would not effectively protect the
plaintiff’s rights against future encroachment.” Russian Media Grp., LLC
v. Cable America, Inc., 598 F.3d 302, 307 (7th Cir.2010). If a party has
violated the governing statute, then a court may in appropriate
circumstances enjoin conduct that allowed the prohibited actions to occur,
even if that conduct “standing alone, would have been unassailable.” EEOC
v. Wilson Metal Casket Co., 24 F.3d 836, 842 (6th Cir.1994).
Thomas–Rasset’s willful infringement and subsequent efforts to conceal
her actions certainly show “a proclivity for unlawful conduct.” The
recording companies rightly point out that once Thomas–Rasset makes
copyrighted works available on an online media distribution system, she
has completed all of the steps necessary for her to engage in the same
distribution that the court did enjoin. The record also demonstrates the
practical difficulties of detecting actual transfer of recordings to third
parties even when a party has made large numbers of recordings available
for distribution online. The narrower injunction granted by the district
court thus could be difficult to enforce.
For these reasons, we conclude that the district court erred after the third
trial by concluding that the broader injunction requested by the companies

CH. 1

367

was impermissible as a matter of law. An injunction against making
recordings available was lawful and appropriate under the circumstances,
even accepting the district court’s interpretation of the Copyright Act.
Thomas–Rasset does not resist expanding the injunction to include this
relief. We therefore will direct the district court to modify the judgment to
include the requested injunction.
B.
On the question of damages, we conclude that a statutory damages award
of $9,250 for each of the twenty-four infringed songs, for a total of $222,000,
does not contravene the Due Process Clause. The district court erred in
reducing the third jury’s verdict to $2,250 per work, for a total of $54,000,
on the ground that this amount was the maximum permitted by the
Constitution.
The Supreme Court long ago declared that damages awarded pursuant to
a statute violate due process only if they are “so severe and oppressive as
to be wholly disproportioned to the offense and obviously unreasonable.”
St. Louis, I. M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67 139 (1919). Under
this standard, Congress possesses a “wide latitude of discretion” in setting
statutory damages. Id. at 66. Williams is still good law, and the district
court was correct to apply it.
Thomas–Rasset urges us to consider instead the “guideposts” announced
by the Supreme Court for the review of punitive damages awards under
the Due Process Clause. When a party challenges an award of punitive
damages, a reviewing court is directed to consider three factors in
determining whether the award is excessive and unconstitutional: “(1) the
degree of reprehensibility of the defendant’s misconduct; (2) the disparity
between the actual or potential harm suffered by the plaintiff and the
punitive damages award; and (3) the difference between the punitive
damages awarded by the jury and the civil penalties authorized or imposed
in comparable cases.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S.
408, 418 (2003); see also BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574–
75 (1996).
The Supreme Court never has held that the punitive damages guideposts
are applicable in the context of statutory damages. See Zomba Enters., Inc.
v. Panorama Records, Inc., 491 F.3d 574, 586–88 (6th Cir.2007). Due
process prohibits excessive punitive damages because “ ‘[e]lementary
notions of fairness enshrined in our constitutional jurisprudence dictate
that a person receive fair notice not only of the conduct that will subject
him to punishment, but also of the severity of the penalty that a State may
impose.’ ” Campbell, 538 U.S. at 417. This concern about fair notice does
not apply to statutory damages, because those damages are identified and

368

CH. 1

constrained by the authorizing statute. The guideposts themselves,
moreover, would be nonsensical if applied to statutory damages. It makes
no sense to consider the disparity between “actual harm” and an award of
statutory damages when statutory damages are designed precisely for
instances where actual harm is difficult or impossible to calculate. See Cass
Cnty. Music Co. v. C.H.L.R., Inc., 88 F.3d 635, 643 (8th Cir.1996). Nor could
a reviewing court consider the difference between an award of statutory
damages and the “civil penalties authorized,” because statutory damages
are the civil penalties authorized.
Applying the Williams standard, we conclude that an award of $9,250 per
each of twenty-four works is not “so severe and oppressive as to be wholly
disproportioned to the offense and obviously unreasonable.” 251 U.S. at 67.
Congress, exercising its “wide latitude of discretion,” set a statutory
damages range for willful copyright infringement of $750 to $150,000 per
infringed work. 17 U.S.C. § 504(c). The award here is toward the lower end
of this broad range. As in Williams, “the interests of the public, the
numberless opportunities for committing the offense, and the need for
securing uniform adherence to [federal law]” support the constitutionality
of the award. Id. at 67.
Congress’s protection of copyrights is not a “special private benefit,” but is
meant to achieve an important public interest: “to motivate the creative
activity of authors and inventors by the provision of a special reward, and
to allow the public access to the products of their genius after the limited
period of exclusive control has expired.” Sony Corp. of Am. v. Universal
City Studios, Inc., 464 U.S. 417, 429 (1984). With the rapid advancement
of technology, copyright infringement through online file-sharing has
become a serious problem in the recording industry. Evidence at trial
showed that revenues across the industry decreased by fifty percent
between 1999 and 2006, a decline that the record companies attributed to
piracy. This decline in revenue caused a corresponding drop in industry
jobs and a reduction in the number of artists represented and albums
released. See Sony BMG Music Entm’t v. Tenenbaum, 660 F.3d 487, 492
(1st Cir.2011).
Congress no doubt was aware of the serious problem posed by online
copyright infringement, and the “numberless opportunities for committing
the offense,” when it last revisited the Copyright Act in 1999. To provide a
deterrent against such infringement, Congress amended § 504(c) to
increase the minimum per-work award from $500 to $750, the maximum
per-work award from $20,000 to $30,000, and the maximum per-work
award for willful infringement from $100,000 to $150,000.
Thomas–Rasset contends that the range of statutory damages established

CH. 1

369

by § 504(c) reflects only a congressional judgment “at a very general level,”
but that courts have authority to declare it “severe and oppressive” and
“wholly disproportioned” in particular cases. The district court similarly
emphasized that Thomas–Rasset was “not a business acting for profit, but
rather an individual consumer illegally seeking free access to music for her
own use.” By its terms, however, the statute plainly encompasses
infringers who act without a profit motive, and the statute already provides
for a broad range of damages that allows courts and juries to calibrate the
award based on the nature of the violation. For those who favor resort to
legislative history, the record also suggests that Congress was well aware
of the threat of noncommercial copyright infringement when it established
the lower end of the range. See H.R. Rep. 106–216, at 3 (1999).
Congressional amendments to the criminal provisions of the Copyright Act
in 1997 also reflect an awareness that the statute would apply to
noncommercial infringement. See No Electronic Theft (NET) Act, Pub.L.
No. 105–147, § 2(a), 111 Stat. 2678 (1997); see also H.R. Rep. 105–339, at
5 (1997).
In holding that any award over $2,250 per work would violate the
Constitution, the district court effectively imposed a treble damages limit
on the $750 minimum statutory damages award. The district court based
this holding on a “broad legal practice of establishing a treble award as the
upper limit permitted to address willful or particularly damaging
behavior.” Any “broad legal practice” of treble damages for statutory
violations, however, does not control whether an award of statutory
damages is within the limits prescribed by the Constitution. The limits of
treble damages to which the district court referred, such as in the antitrust
laws or other intellectual property laws, represent congressional
judgments about the appropriate maximum in a given context. They do not
establish a constitutional rule that can be substituted for a different
congressional judgment in the area of copyright infringement. Although
the United States seems to think that the district court’s ruling did not
question the constitutionality of the statutory damages statute, the district
court’s approach in our view would make the statute unconstitutional as
applied to a significant category of copyright infringers. The evidence
against Thomas–Rasset demonstrated an aggravated case of willful
infringement by an individual consumer who acted to download and
distribute copyrighted recordings without profit motive. If an award near
the bottom of the statutory range is unconstitutional as applied to her
infringement of twenty-four works, then it would be the rare case of
noncommercial infringement to which the statute could be applied.
Thomas–Rasset’s cross-appeal goes so far as to argue that any award of
statutory damages would be unconstitutional, because even the minimum
damages award of $750 per violation would be “wholly disproportioned to

370

CH. 1

the offense” and thus unconstitutional. This is so, Thomas–Rasset argues,
because the damages award is not based on any evidence of harm caused
by her specific infringement, but rather reflects the harm caused by filesharing in general. The district court similarly concluded that “statutory
damages must still bear some relation to actual damages.” The Supreme
Court in Williams, however, disagreed that the constitutional inquiry calls
for a comparison of an award of statutory damages to actual damages
caused by the violation. 251 U.S. at 66. Because the damages award “is
imposed as a punishment for the violation of a public law, the Legislature
may adjust its amount to the public wrong rather than the private injury,
just as if it were going to the state.” Id. The protection of copyrights is a
vindication of the public interest, Sony Corp. of Am., 464 U.S. at 429, and
statutory damages are “by definition a substitute for unproven or
unprovable actual damages.” Cass Cnty. Music Co., 88 F.3d at 643. For
copyright infringement, moreover, statutory damages are “designed to
discourage wrongful conduct,” in addition to providing “restitution of profit
and reparation for injury.” F.W. Woolworth Co. v. Contemporary Arts, 344
U.S. 228, 233 (1952).
Thomas–Rasset highlights that if the recording companies had sued her
based on infringement of 1,000 copyrighted recordings instead of the
twenty-four recordings that they selected, then an award of $9,250 per song
would have resulted in a total award of $9,250,000. Because that
hypothetical award would be obviously excessive and unreasonable, she
reasons, an award of $222,000 based on the same amount per song must
likewise be invalid. Whatever the constitutionality of the hypothetical
award, we disagree that the validity of the lesser amount sought here
depends on whether the Due Process Clause would permit the extrapolated
award that she posits. The absolute amount of the award, not just the
amount per violation, is relevant to whether the award is “so severe and
oppressive as to be wholly disproportioned to the offense and obviously
unreasonable.” Williams, 251 U.S. at 67. The recording companies here
opted to sue over twenty-four recordings. If they had sued over 1,000
recordings, then a finder of fact may well have considered the number of
recordings and the proportionality of the total award as factors in
determining where within the range to assess the statutory damages. If
and when a jury returns a multi-million dollar award for noncommercial
online copyright infringement, then there will be time enough to consider
it.
***
For the foregoing reasons, we conclude that the recording companies are
entitled to the remedies that they seek on appeal. The judgment of the
district court is vacated, and the case is remanded with directions to enter
a judgment for damages in the amount of $222,000, and to include an

CH. 1

371

injunction that precludes Thomas–Rasset from making any of the
plaintiffs’ recordings available for distribution to the public through an
online media distribution system.

FELTNER V. COLUMBIA PICTURES TELEVISION, INC.
Supreme Court of the United States
Decided March 31, 1998
118 S.Ct. 1279

Justice THOMAS delivered the opinion of the Court.
Section 504(c) of the Copyright Act of 1976 permits a copyright owner “to
recover, instead of actual damages and profits, an award of statutory
damages ..., in a sum of not less than $500 or more than $20,000 as the
court considers just.” 90 Stat. 2585, as amended, 17 U.S.C. § 504(c)(1). In
this case, we consider whether § 504(c) or the Seventh Amendment grants
a right to a jury trial when a copyright owner elects to recover statutory
damages. We hold that although the statute is silent on the point, the
Seventh Amendment provides a right to a jury trial, which includes a right
to a jury determination of the amount of statutory damages. We therefore
reverse.
I
Petitioner C. Elvin Feltner owns Krypton International Corporation, which
in 1990 acquired three television stations in the southeastern United
States. Respondent Columbia Pictures Television, Inc., had licensed
several television series to these stations, including “Who’s the Boss,”
“Silver Spoons,” “Hart to Hart,” and “T.J. Hooker.” After the stations
became delinquent in making their royalty payments to Columbia, Krypton
and Columbia entered into negotiations to restructure the stations’ debt.
These discussions were unavailing, and Columbia terminated the stations’
license agreements in October 1991. Despite Columbia’s termination, the
stations continued broadcasting the programs.
Columbia sued Feltner, Krypton, the stations, various Krypton
subsidiaries, and certain Krypton officers in Federal District Court
alleging, inter alia, copyright infringement arising from the stations’
unauthorized broadcasting of the programs. Columbia sought various
forms of relief under the Copyright Act of 1976 (Copyright Act), 17 U.S.C.
§ 101 et seq., including a permanent injunction, § 502; impoundment of all
copies of the programs, § 503; actual damages or, in the alternative,
statutory damages, § 504; and costs and attorney’s fees, § 505. On
Columbia’s motion, the District Court entered partial summary judgment
as to liability for Columbia on its copyright infringement claims.

372

CH. 1

Columbia exercised the option afforded by § 504(c) of the Copyright Act to
recover “Statutory Damages” in lieu of actual damages. In relevant part, §
504(c) provides:
“STATUTORY DAMAGES—
“(1) Except as provided by clause (2) of this subsection, the copyright owner
may elect, at any time before final judgment is rendered, to recover, instead
of actual damages and profits, an award of statutory damages for all
infringements involved in the action, with respect to any one work, ... in a
sum of not less than $500 or more than $20,000 as the court considers
just....
“(2) In a case where the copyright owner sustains the burden of proving,
and the court finds, that infringement was committed willfully, the court
in its discretion may increase the award of statutory damages to a sum of
not more than $100,000. In a case where the infringer sustains the burden
of proving, and the court finds, that such infringer was not aware and had
no reason to believe that his or her acts constituted an infringement of
copyright, the court [in] its discretion may reduce the award of statutory
damages to a sum of not less than $200....” 17 U.S.C. § 504(c).
The District Court denied Feltner’s request for a jury trial on statutory
damages, ruling instead that such issues would be determined at a bench
trial. After two days of trial, the trial judge held that each episode of each
series constituted a separate work and that the airing of the same episode
by different stations controlled by Feltner constituted separate violations;
accordingly, the trial judge determined that there had been a total of 440
acts of infringement. The trial judge further found that Feltner’s
infringement was willful and fixed statutory damages at $20,000 per act of
infringement. Applying that amount to the number of acts of infringement,
the trial judge determined that Columbia was entitled to $8,800,000 in
statutory damages, plus costs and attorney’s fees.
The Court of Appeals for the Ninth Circuit affirmed in all relevant respects.
Most importantly for present purposes, the court rejected Feltner’s
argument that he was entitled to have a jury determine statutory damages.
*** We granted certiorari.
II
Before inquiring into the applicability of the Seventh Amendment, we must
“ ‘first ascertain whether a construction of the statute is fairly possible by
which the [constitutional] question may be avoided.’ ” Tull v. United States,
481 U.S. 412, 417, n. 3 (1987). Such a construction is not possible here, for
we cannot discern “any congressional intent to grant ... the right to a jury

CH. 1

373

trial,” 481 U.S., at 417, on an award of statutory damages.
The language of § 504(c) does not grant a right to have a jury assess
statutory damages. Statutory damages are to be assessed in an amount
that “the court considers just.” § 504(c)(1). Further, in the event that “the
court finds” the infringement was willful or innocent, “the court in its
discretion” may, within limits, increase or decrease the amount of statutory
damages. § 504(c)(2). These phrases, like the entire statutory provision,
make no mention of a right to a jury trial or, for that matter, to juries at
all. ***
We thus discern no statutory right to a jury trial when a copyright owner
elects to recover statutory damages. Accordingly, we must reach the
constitutional question.
III
The Seventh Amendment provides that “[i]n Suits at common law, where
the value in controversy shall exceed twenty dollars, the right of trial by
jury shall be preserved....” U.S. Const., Amdt. 7. Since Justice Story’s time,
the Court has understood “Suits at common law” to refer “not merely [to]
suits, which the common law recognized among its old and settled
proceedings, but [to] suits in which legal rights were to be ascertained and
determined, in contradistinction to those where equitable rights alone were
recognized, and equitable remedies were administered.” Parsons v.
Bedford, 3 Pet. 433, 447, 7 L.Ed. 732 (1830). The Seventh Amendment thus
applies not only to common-law causes of action, but also to “actions
brought to enforce statutory rights that are analogous to common-law
causes of action ordinarily decided in English law courts in the late 18th
century, as opposed to those customarily heard by courts of equity or
admiralty.” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 (1989). To
determine whether a statutory action is more analogous to cases tried in
courts of law than to suits tried in courts of equity or admiralty, we examine
both the nature of the statutory action and the remedy sought.
Unlike many of our recent Seventh Amendment cases, which have involved
modern statutory rights unknown to 18th-century England, see, e.g.,
Wooddell v. International Brotherhood of Electrical Workers, 502 U.S. 93
(1991) (alleged violations of union’s duties under Labor Management
Relations Act, 1947, and Labor–Management Reporting and Disclosure Act
of 1959); Granfinanciera v. Nordberg, supra (action to rescind fraudulent
preference under Bankruptcy Act); Tull v. United States, 481 U.S. 412
(1987) (Government’s claim for civil penalties under Clean Water Act);
Curtis v. Loether, supra (claim under Title VIII of Civil Rights Act of 1968),
in this case there are close analogues to actions seeking statutory damages
under § 504(c). Before the adoption of the Seventh Amendment, the

374

CH. 1

common law and statutes in England and this country granted copyright
owners causes of action for infringement. More importantly, copyright suits
for monetary damages were tried in courts of law, and thus before juries.
By the middle of the 17th century, the common law recognized an author’s
right to prevent the unauthorized publication of his manuscript. See, e.g.,
Stationers Co. v. Patentees, Carter’s Rep. 89, 124 Eng. Rep. 842 (C.P.1666).
This protection derived from the principle that the manuscript was the
product of intellectual labor and was as much the author’s property as the
material on which it was written. See Millar v. Taylor, 4 Burr. 2303, 2398,
98 Eng. Rep. 201, 252 (K.B.1769) (opinion of Mansfield, C.J.) (common-law
copyright derived from principle that “it is just, that an Author should reap
the pecuniary Profits of his own ingenuity and Labour”). Actions seeking
damages for infringement of common-law copyright, like actions seeking
damages for invasions of other property rights, were tried in courts of law
in actions on the case. See Millar v. Taylor, supra, at 2396–2397, 98 Eng.
Rep., at 251. Actions on the case, like other actions at law, were tried before
juries. See McClenachan v. McCarty, 1 Dall. 375, 378, 1 L.Ed. 183 (1788);
5 J. Moore, Moore’s Federal Practice ¶ 38.11[5] (2d ed.1996).
In 1710, the first English copyright statute, the Statute of Anne, was
enacted to protect published books. 8 Anne ch. 19 (1710). Under the Statute
of Anne, damages for infringement were set at “one Penny for every Sheet
which shall be found in [the infringer’s] custody, either printed or printing,
published, or exposed to Sale,” half (“one Moiety”) to go to the Crown and
half to the copyright owner, and were “to be recovered ... by Action of Debt,
Bill, Plaint, or Information.” § 1. Like the earlier practice with regard to
common-law copyright claims for damages, actions seeking damages under
the Statute of Anne were tried in courts of law. See Beckford v. Hood, 7
T.R. 621, 627, 101 Eng. Rep. 1164, 1167 (K.B.1798) (opinion of Kenyon,
C.J.) (“[T]he statute having vested that right in the author, the common
law gives the remedy by action on the case for the violation of it”).
The practice of trying copyright damages actions at law before juries was
followed in this country, where statutory copyright protections were
enacted even before adoption of the Constitution. In 1783, the Continental
Congress passed a resolution recommending that the States secure
copyright protections for authors. See U.S. Copyright Office, Copyright
Enactments: Laws Passed in the United States Since 1783 Relating to
Copyright, Bulletin No. 3, p. 1 (rev. ed.1963) (hereinafter Copyright
Enactments). Twelve States (all except Delaware) responded by enacting
copyright statutes, each of which provided a cause of action for damages,
and none of which made any reference to equity jurisdiction. At least three
of these state statutes expressly stated that damages were to be recovered
through actions at law ***. Although these statutes were short-lived, and

CH. 1

375

hence few courts had occasion to interpret them, the available evidence
suggests that the practice was for copyright actions seeking damages to be
tried to a jury. See Hudson v. Patten, 1 Root 133, 134 Conn.Super.1789)
(jury awarded copyright owner £100 under Connecticut copyright statute).
Moreover, three of the state statutes specifically authorized an award of
damages from a statutory range, just as § 504(c) does today. See Copyright
Enactments 4 (in Massachusetts, damages of not less than £5 and not more
than £3,000); id., at 8 (in New Hampshire, damages of not less than £5 and
not more than £1,000); id., at 9 (in Rhode Island, damages of not less than
£5 and not more than £3,000). Although we have found no direct evidence
of the practice under these statutes, there is no reason to suppose that such
actions were intended to deviate from the traditional practice: The
damages were to be recovered by an “action of debt,” see id., at 4–9, which
was an action at law, see Maitland 357.
In 1790, Congress passed the first federal copyright statute, the Copyright
Act of 1790, which similarly authorized the awarding of damages for
copyright infringements. Act of May 31, 1790, ch. 15, §§ 2, 6, 1 Stat. 124,
125. The Copyright Act of 1790 provided that damages for copyright
infringement of published works would be “the sum of fifty cents for every
sheet which shall be found in [the infringer’s] possession, ... to be recovered
by action of debt in any court of record in the United States, wherein the
same is cognizable.” § 2. Like the Statute of Anne, the Copyright Act of
1790 provided that half (“one moiety”) of such damages were to go to the
copyright owner and half to the United States. For infringement of an
unpublished manuscript, the statute entitled a copyright owner to “all
damages occasioned by such injury, to be recovered by a special action on
the case founded upon this act, in any court having cognizance thereof.” §
6.
There is no evidence that the Copyright Act of 1790 changed the practice
of trying copyright actions for damages in courts of law before juries. As we
have noted, actions on the case and actions of debt were actions at law for
which a jury was required. Moreover, actions to recover damages under the
Copyright Act of 1831—which differed from the Copyright Act of 1790 only
in the amount (increased to $1 from 50 cents) authorized to be recovered
for certain infringing sheets—were consistently tried to juries. See, e.g.,
Backus v. Gould, 7 How. 798, 802, 12 L.Ed. 919 (1849) (jury awarded
damages of $2,069.75); Reed v. Carusi, 20 F. Cas. 431, 432, No. 11,642
(D.Md.1845) (CC Md.1845) (jury awarded damages of $200); Millett v.
Snowden, 17 F. Cas. 374, 375 (No. 9,600) (S.D.N.Y.1844) (jury awarded
damages of $625); Dwight v. Appleton, 8 F.Cas. 183, 185 (No. 4,215)
(C.D.N.Y.1843) (jury awarded damages of $2,000).

376

CH. 1

Columbia does not dispute this historical evidence. In fact, Columbia
makes no attempt to draw an analogy between an action for statutory
damages under § 504(c) and any historical cause of action—including those
actions for monetary relief that we have characterized as equitable, such
as actions for disgorgement of improper profits. See Teamsters v. Terry,
494 U.S. 558, 570–571 (1990); Tull v. United States, 481 U.S., at 424.
Rather, Columbia merely contends that statutory damages are clearly
equitable in nature.
We are not persuaded. We have recognized the “general rule” that
monetary relief is legal, Teamsters v. Terry, supra, at 570, and an award
of statutory damages may serve purposes traditionally associated with
legal relief, such as compensation and punishment. See Curtis v. Loether,
415 U.S., at 196 (actual damages are “traditional form of relief offered in
the courts of law”). Nor, as we have previously stated, is a monetary remedy
rendered equitable simply because it is “not fixed or readily calculable from
a fixed formula.” Id., at 422, n. 7. And there is historical evidence that cases
involving discretionary monetary relief were tried before juries. See, e.g.,
Coryell v. Colbaugh, 1 N.J.L. 77 (1791) (jury award of “exemplary damages”
in an action on a promise of marriage). Accordingly, we must conclude that
the Seventh Amendment provides a right to a jury trial where the copyright
owner elects to recover statutory damages.
The right to a jury trial includes the right to have a jury determine the
amount of statutory damages, if any, awarded to the copyright owner. It
has long been recognized that “by the law the jury are judges of the
damages.” Lord Townshend v. Hughes, 2 Mod. 150, 151, 86 Eng. Rep. 994,
994–995 (C.P. 1677). Thus in Dimick v. Schiedt, 293 U.S. 474 (1935), the
Court stated that “the common law rule as it existed at the time of the
adoption of the Constitution” was that “in cases where the amount of
damages was uncertain[,] their assessment was a matter so peculiarly
within the province of the jury that the Court should not alter it.” Id., at
480 (internal quotation marks and citations omitted). And there is
overwhelming evidence that the consistent practice at common law was for
juries to award damages. ***
More specifically, this was the consistent practice in copyright cases. In
Hudson v. Patten, 1 Root, at 134, for example, a jury awarded a copyright
owner £100 under the Connecticut copyright statute, which permitted
damages in an amount double the value of the infringed copy. In addition,
juries assessed the amount of damages under the Copyright Act of 1831,
even though that statute, like the Copyright Act of 1790, fixed damages at
a set amount per infringing sheet. See Backus v. Gould, supra, at 802 (jury
awarded damages of $2,069.75); Reed v. Carusi, supra, at 432 (same, but
$200); Dwight v. Appleton, supra, at 185 (same, but $2,000); Millett v.

CH. 1

377

Snowden, supra, at 375 (same, but $625).
Relying on Tull v. United States, supra, Columbia contends that the
Seventh Amendment does not provide a right to a jury determination of the
amount of the award. In Tull, we held that the Seventh Amendment grants
a right to a jury trial on all issues relating to liability for civil penalties
under the Clean Water Act, 33 U.S.C. §§ 1251, 1319(d), see 481 U.S., at
425, but then went on to decide that Congress could constitutionally
authorize trial judges to assess the amount of the civil penalties, see id., at
426–427. According to Columbia, Tull demonstrates that a jury
determination of the amount of statutory damages is not necessary “to
preserve ‘the substance of the common-law right of trial by jury.’ ” Id., at
426.
In Tull, however, we were presented with no evidence that juries
historically had determined the amount of civil penalties to be paid to the
Government. Moreover, the awarding of civil penalties to the Government
could be viewed as analogous to sentencing in a criminal proceeding. See
481 U.S., at 428 (SCALIA, J., concurring in part and dissenting in part).
Here, of course, there is no similar analogy, and there is clear and direct
historical evidence that juries, both as a general matter and in copyright
cases, set the amount of damages awarded to a successful plaintiff. Tull is
thus inapposite. As a result, if a party so demands, a jury must determine
the actual amount of statutory damages under § 504(c) in order “to preserve
‘the substance of the common-law right of trial by jury.’” Id., at 426.
***
For the foregoing reasons, we hold that the Seventh Amendment provides
a right to a jury trial on all issues pertinent to an award of statutory
damages under § 504(c) of the Copyright Act, including the amount itself.
The judgment below is reversed, and we remand the case for proceedings
consistent with this opinion.
It is so ordered.
Note
A bit of trivia: John G. Roberts, Jr., Washington, DC, argued on behalf of
the petitioner in this case.

378

CH. 1

FOGERTY V. FANTASY, INC.
Supreme Court of the United States
Decided March 1, 1994
114 S.Ct. 1023

Chief Justice REHNQUIST delivered the opinion of the Court.
The Copyright Act of 1976, 17 U.S.C. § 505, provides in relevant part that
in any copyright infringement action “the court may ... award a reasonable
attorney’s fee to the prevailing party as part of the costs.” The question
presented in this case is what standards should inform a court’s decision to
award attorney’s fees to a prevailing defendant in a copyright infringement
action—a question that has produced conflicting views in the Courts of
Appeals.
Petitioner John Fogerty is a successful musician, who, in the late 1960’s,
was the lead singer and songwriter of a popular music group known as
“Creedence Clearwater Revival.” In 1970, he wrote a song entitled “Run
Through the Jungle” and sold the exclusive publishing rights to
predecessors-in-interest of respondent Fantasy, Inc., who later obtained
the copyright by assignment. The music group disbanded in 1972 and
Fogerty subsequently published under another recording label. In 1985, he
published and registered a copyright to a song entitled “The Old Man Down
the Road,” which was released on an album distributed by Warner Brothers
Records, Inc. Respondent Fantasy, Inc., sued Fogerty, Warner Brothers,
and affiliated companies in District Court, alleging that “The Old Man
Down the Road” was merely “Run Through the Jungle” with new words.
The copyright infringement claim went to trial and a jury returned a
verdict in favor of Fogerty.
After his successful defense of the action, Fogerty moved for reasonable
attorney’s fees pursuant to 17 U.S.C. § 505. The District Court denied the
motion, finding that Fantasy’s infringement suit was not brought
frivolously or in bad faith as required by Circuit precedent for an award of
attorney’s fees to a successful defendant. The Court of Appeals affirmed,
and declined to abandon the existing Ninth Circuit standard for awarding
attorney’s fees which treats successful plaintiffs and successful defendants
differently. Under that standard, commonly termed the “dual” standard,
prevailing plaintiffs are generally awarded attorney’s fees as a matter of
course, while prevailing defendants must show that the original suit was
frivolous or brought in bad faith. In contrast, some Courts of Appeals follow
the so-called “evenhanded” approach in which no distinction is made
between prevailing plaintiffs and prevailing defendants. The Court of

CH. 1

379

Appeals for the Third Circuit, for example, has ruled that “we do not
require bad faith, nor do we mandate an allowance of fees as a concomitant
of prevailing in every case, but we do favor an evenhanded approach.” Lieb
v. Topstone Industries, Inc., 788 F.2d 151, 156 (1986).
We granted certiorari to address an important area of federal law and to
resolve the conflict between the Ninth Circuit’s “dual” standard for
awarding attorney’s fees under § 505, and the so-called “evenhanded”
approach exemplified by the Third Circuit. We reverse.
Respondent advances three arguments in support of the dual standard
followed by the Court of Appeals for the Ninth Circuit in this case. First, it
contends that the language of § 505, when read in the light of our decisions
construing similar fee-shifting language, supports the rule. Second, it
asserts that treating prevailing plaintiffs and defendants differently
comports with the “objectives” and “equitable considerations” underlying
the Copyright Act as a whole. Finally, respondent contends that the
legislative history of § 505 indicates that Congress ratified the dual
standard which it claims was “uniformly” followed by the lower courts
under identical language in the 1909 Copyright Act. We address each of
these arguments in turn.
The statutory language—“the court may also award a reasonable
attorney’s fee to the prevailing party as part of the costs”—gives no hint
that successful plaintiffs are to be treated differently from successful
defendants. But respondent contends that our decision in Christiansburg
Garment Co. v. EEOC, 434 U.S. 412 (1978), in which we construed virtually
identical language, supports a differentiation in treatment between
plaintiffs and defendants.
Christiansburg construed the language of Title VII of the Civil Rights Act
of 1964, which in relevant part provided that the court, “in its discretion,
may allow the prevailing party ... a reasonable attorney’s fee as part of the
costs....” 42 U.S.C. § 2000e–5(k). We had earlier held, interpreting the
cognate provision of Title II of that Act, 42 U.S.C. § 2000a–3(b), that a
prevailing plaintiff “should ordinarily recover an attorney’s fee unless some
special circumstances would render such an award unjust.” Newman v.
Piggie Park Enterprises, Inc., 390 U.S. 400, 402 (1968). This decision was
based on what we found to be the important policy objectives of the Civil
Rights statutes, and the intent of Congress to achieve such objectives
through the use of plaintiffs as “ ‘private attorney[s] general.’ ” Ibid. In
Christiansburg, supra, we determined that the same policy considerations
were not at work in the case of a prevailing civil rights defendant. We noted
that a Title VII plaintiff, like a Title II plaintiff in Piggie Park, is “the
chosen instrument of Congress to vindicate ‘a policy that Congress

380

CH. 1

considered of the highest priority.’ ” 434 U.S., at 418. We also relied on the
admittedly sparse legislative history to indicate that different standards
were to be applied to successful plaintiffs than to successful defendants.
Respondent points to our language in Flight Attendants v. Zipes, 491 U.S.
754, 758, n. 2 (1989), that “fee-shifting statutes’ similar language is a
‘strong indication’ that they are to be interpreted alike.” But here we think
this normal indication is overborne by the factors relied upon in our
Christiansburg opinion that are absent in the case of the Copyright Act.
The legislative history of § 505 provides no support for treating prevailing
plaintiffs and defendants differently with respect to the recovery of
attorney’s fees. The attorney’s fees provision of § 505 of the 1976 Act was
carried forward verbatim from the 1909 Act with very little discussion. The
relevant House Report provides simply:
“Under section 505 the awarding of costs and attorney’s fees are left to the
court’s discretion, and the section also makes clear that neither costs nor
attorney’s fees can be awarded to or against ‘the United States or an officer
thereof.’ ” H.R.Rep. No. 94–1476, p. 163 (1976).
Other courts and commentators have noted the paucity of legislative
history of § 505. ***
The goals and objectives of the two Acts are likewise not completely similar.
Oftentimes, in the civil rights context, impecunious “private attorney
general” plaintiffs can ill afford to litigate their claims against defendants
with more resources. Congress sought to redress this balance in part, and
to provide incentives for the bringing of meritorious lawsuits, by treating
successful plaintiffs more favorably than successful defendants in terms of
the award of attorney’s fees. The primary objective of the Copyright Act is
to encourage the production of original literary, artistic, and musical
expression for the good of the public. See infra, at 1029–1030. In the
copyright context, it has been noted that “[e]ntities which sue for copyright
infringement as plaintiffs can run the gamut from corporate behemoths to
starving artists; the same is true of prospective copyright infringement
defendants.” Cohen, supra, at 622–623.
We thus conclude that respondent’s argument based on our fee-shifting
decisions under the Civil Rights Act must fail.
Respondent next argues that the policies and objectives of § 505 and of the
Copyright Act in general are best served by the “dual approach” to the
award of attorney’s fees. The most common reason advanced in support of
the dual approach is that, by awarding attorney’s fees to prevailing
plaintiffs as a matter of course, it encourages litigation of meritorious

CH. 1

381

claims of copyright infringement. See, e.g., McCulloch v. Albert E. Price,
Inc., 823 F.2d 316, 323 (CA9 1987) (“Because section 505 is intended in part
to encourage the assertion of colorable copyright claims, to deter
infringement, and to make the plaintiff whole, fees are generally awarded
to a prevailing plaintiff”); Diamond v. Am–Law Publishing Corp., 745 F.2d
142, 148 (CA2 1984). Indeed, respondent relies heavily on this argument.
We think the argument is flawed because it expresses a one-sided view of
the purposes of the Copyright Act. While it is true that one of the goals of
the Copyright Act is to discourage infringement, it is by no means the only
goal of that Act. In the first place, it is by no means always the case that
the plaintiff in an infringement action is the only holder of a copyright;
often times, defendants hold copyrights too, as exemplified in the case at
hand. See Lieb v. Topstone Industries, Inc., 788 F.2d, at 155 (noting that
“in many cases the defendants are the [copyright] holders”).
More importantly, the policies served by the Copyright Act are more
complex, more measured, than simply maximizing the number of
meritorious suits for copyright infringement. The Constitution grants to
Congress the power “To promote the Progress of Science and useful Arts,
by securing for limited Times to Authors and Inventors the exclusive Right
to their respective Writings and Discoveries.” U.S. Const., Art. I, § 8, cl. 8.
We have often recognized the monopoly privileges that Congress has
authorized, while “intended to motivate the creative activity of authors and
inventors by the provision of a special reward,” are limited in nature and
must ultimately serve the public good. Sony Corp. of America v. Universal
City Studios, Inc., 464 U.S. 417, 429 (1984). For example, in Twentieth
Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975), we discussed the
policies
underlying
the
1909
Copyright
Act
as
follows:
“The limited scope of the copyright holder’s statutory monopoly ... reflects
a balance of competing claims upon the public interest: Creative work is to
be encouraged and rewarded, but private motivation must ultimately serve
the cause of promoting broad public availability of literature, music, and
the other arts. The immediate effect of our copyright law is to secure a fair
return for an ‘author’s’ creative labor. But the ultimate aim is, by this
incentive, to stimulate artistic creativity for the general public good.”
We reiterated this theme in Feist Publications, Inc. v. Rural Telephone
Service Co., 499 U.S. 340, 349–350 (1991), where we said:
“The primary objective of copyright is not to reward the labor of authors,
but ‘[t]o promote the Progress of Science and useful Arts.’ To this end,
copyright assures authors the right to their original expression, but
encourages others to build freely upon the ideas and information conveyed
by a work.”

382

CH. 1

Because copyright law ultimately serves the purpose of enriching the
general public through access to creative works, it is peculiarly important
that the boundaries of copyright law be demarcated as clearly as possible.
To that end, defendants who seek to advance a variety of meritorious
copyright defenses should be encouraged to litigate them to the same
extent that plaintiffs are encouraged to litigate meritorious claims of
infringement. In the case before us, the successful defense of “The Old Man
Down the Road” increased public exposure to a musical work that could, as
a result, lead to further creative pieces. Thus a successful defense of a
copyright infringement action may further the policies of the Copyright Act
every bit as much as a successful prosecution of an infringement claim by
the holder of a copyright.
Respondent finally urges that the legislative history supports the dual
standard, relying on the principle of ratification. See Lorillard v. Pons, 434
U.S. 575, 580 (1978) (“Congress is presumed to be aware of an
administrative or judicial interpretation of a statute and to adopt that
interpretation when it re-enacts a statute without change ...”). Respondent
surveys the great number of lower court cases interpreting the identical
provision in the 1909 Act, 17 U.S.C. § 116 (1976 ed.), and asserts that “it
was firmly established” that prevailing defendants should be awarded
attorney’s fees only where the plaintiff’s claim was frivolous or brought
with a vexatious purpose. Furthermore, respondent claims that Congress
was aware of this construction of former § 116 because of two copyright
studies submitted to Congress when it was studying revisions to the Act.
***
Before turning to the import of the two studies and the cases decided under
the 1909 Act, we summarize briefly the factual background of Lorillard,
whence comes the statement upon which respondent relies. There the
question was whether there was a right to jury trial in an action for lost
wages under the Age Discrimination in Employment Act of 1967 (ADEA).
In enacting that statute, Congress provided, inter alia, that the provisions
of the ADEA were to be “enforced in accordance with the ‘powers, remedies
and procedures’ ” of specified sections of the Fair Labor Standards Act
(FLSA), 81 Stat. 604, 29 U.S.C. § 626(b). Lorillard, 434 U.S., at 580. In the
three decided cases which had treated the right to jury trial under the
FLSA, each court had decided that there was such a right. In enacting the
ADEA, “Congress exhibited both a detailed knowledge of the FLSA
provisions and their judicial interpretation and a willingness to depart
from those provisions regarded as undesirable or inappropriate for
incorporation.” Id., at 581. ***
Our review of the prior case law itself leads us to conclude that there was

CH. 1

383

no settled “dual standard” interpretation of former § 116 about which
Congress could have been aware. We note initially that at least one
reported case stated no reason in awarding attorney’s fees to successful
defendants. See, e.g., Marks v. Leo Feist, Inc., 8 F.2d 460, 461 (CA2 1925)
(noting that the Copyright Act gave courts “absolute discretion,” the court
awarded attorney’s fees to prevailing defendant after plaintiff voluntarily
dismissed suit). More importantly, while it appears that the majority of
lower courts exercised their discretion in awarding attorney’s fees to
prevailing defendants based on a finding of frivolousness or bad faith, not
all courts expressly described the test in those terms. In fact, only one pre–
1976 case expressly endorsed a dual standard. Breffort v. I Had a Ball Co.,
271 F.Supp. 623 (SDNY 1967). This is hardly the sort of uniform
construction that Congress might have endorsed.
In summary, neither of the two studies presented to Congress, nor the
cases referred to by the studies, support respondent’s view that there was
a settled construction in favor of the “dual standard” under § 116 of the
1909 Copyright Act.
We thus reject each of respondent’s three arguments in support of the dual
standard. We now turn to petitioner’s argument that § 505 was intended
to adopt the “British Rule.” Petitioner argues that, consistent with the
neutral language of § 505, both prevailing plaintiffs and defendants should
be awarded attorney’s fees as a matter of course, absent exceptional
circumstances. For two reasons we reject this argument for the British
Rule.
First, just as the plain language of § 505 supports petitioner’s claim for
disapproving the dual standard, it cuts against him in arguing for the
British Rule. The statute says that “the court may also award a reasonable
attorney’s fee to the prevailing party as part of the costs.” The word “may”
clearly connotes discretion. The automatic awarding of attorney’s fees to
the prevailing party would pretermit the exercise of that discretion.
Second, we are mindful that Congress legislates against the strong
background of the American Rule. Unlike Britain where counsel fees are
regularly awarded to the prevailing party, it is the general rule in this
country that unless Congress provides otherwise, parties are to bear their
own attorney’s fees. Alyeska Pipeline Service Co. v. Wilderness Society, 421
U.S. 240, 247–262 (1975) (tracing the origins and development of the
American Rule); Flight Attendants v. Zipes, 491 U.S., at 758. While § 505
is one situation in which Congress has modified the American Rule to allow
an award of attorney’s fees in the court’s discretion, we find it impossible
to believe that Congress, without more, intended to adopt the British Rule.
Such a bold departure from traditional practice would have surely drawn

384

CH. 1

more explicit statutory language and legislative comment. Cf. Isbrandtsen
Co. v. Johnson, 343 U.S. 779, 783 (1952) (“Statutes which invade the
common law ... are to be read with a presumption favoring the retention of
long-established and familiar principles, except when a statutory purpose
to the contrary is evident”). Not surprisingly, no court has held that § 505
(or its predecessor statute) adopted the British Rule.
Thus we reject both the “dual standard” adopted by several of the Courts
of Appeals and petitioner’s claim that § 505 enacted the British Rule for
automatic recovery of attorney’s fees by the prevailing party. Prevailing
plaintiffs and prevailing defendants are to be treated alike, but attorney’s
fees are to be awarded to prevailing parties only as a matter of the court’s
discretion. “There is no precise rule or formula for making these
determinations,” but instead equitable discretion should be exercised “in
light of the considerations we have identified.” Hensley v. Eckerhart, 461
U.S. 424, 436–437 (1983). Because the Court of Appeals erroneously held
petitioner, the prevailing defendant, to a more stringent standard than
that applicable to a prevailing plaintiff, its judgment is reversed, and the
case is remanded for further proceedings consistent with this opinion.
It is so ordered.

KIRTSAENG V. JOHN WILEY & SONS, INC.
Supreme Court of the United States
Decided June 16, 2016
136 S.Ct. 1979

Justice KAGAN delivered the opinion of the Court.
Section 505 of the Copyright Act provides that a district court “may ...
award a reasonable attorney’s fee to the prevailing party.” 17 U.S.C. § 505.
The question presented here is whether a court, in exercising that
authority, should give substantial weight to the objective reasonableness
of the losing party’s position. The answer, as both decisions below held, is
yes—the court should. But the court must also give due consideration to all
other circumstances relevant to granting fees; and it retains discretion, in
light of those factors, to make an award even when the losing party
advanced a reasonable claim or defense. Because we are not certain that
the lower courts here understood the full scope of that discretion, we return
the case for further consideration of the prevailing party’s fee application.
I
*** [The facts of this case can be found in the first sale section of this
casebook, where the Court held that the first-sale doctrine allows the resale

CH. 1

385

of foreign-made books, just as it does domestic ones.]
Returning victorious to the District Court, Kirtsaeng invoked § 505 to seek
more than $2 million in attorney’s fees from Wiley. The court denied his
motion. Relying on Second Circuit precedent, the court gave “substantial
weight” to the “objective reasonableness” of Wiley’s infringement claim. In
explanation of that approach, the court stated that “the imposition of a fee
award against a copyright holder with an objectively reasonable”—
although unsuccessful—“litigation position will generally not promote the
purposes of the Copyright Act.” Here, Wiley’s position was reasonable:
After all, several Courts of Appeals and three Justices of the Supreme
Court had agreed with it. And according to the District Court, no other
circumstance “overr[o]de” that objective reasonableness, so as to warrant
fee-shifting. The Court of Appeals affirmed, concluding in a brief summary
order that “the district court properly placed ‘substantial weight’ on the
reasonableness of [Wiley’s] position” and committed no abuse of discretion
in deciding that other “factors did not outweigh” the reasonableness
finding.
We granted certiorari to resolve disagreement in the lower courts about
how to address an application for attorney’s fees in a copyright case.
II
Section 505 states that a district court “may ... award a reasonable
attorney’s fee to the prevailing party.” It thus authorizes fee-shifting, but
without specifying standards that courts should adopt, or guideposts they
should use, in determining when such awards are appropriate.
In Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), this Court recognized the
broad leeway § 505 gives to district courts—but also established several
principles and criteria to guide their decisions. See id., at 519 (asking “what
standards should inform” the exercise of the trial court’s authority). The
statutory language, we stated, “clearly connotes discretion,” and eschews
any “precise rule or formula” for awarding fees. Id., at 533, 534. Still, we
established a pair of restrictions. First, a district court may not “award[ ]
attorney’s fees as a matter of course”; rather, a court must make a more
particularized, case-by-case assessment. Id., at 533. Second, a court may
not treat prevailing plaintiffs and prevailing defendants any differently;
defendants should be “encouraged to litigate [meritorious copyright
defenses] to the same extent that plaintiffs are encouraged to litigate
meritorious claims of infringement.” Id., at 527. In addition, we noted with
approval “several nonexclusive factors” to inform a court’s fee-shifting
decisions: “frivolousness, motivation, objective unreasonableness[,] and the
need in particular circumstances to advance considerations of

386

CH. 1

compensation and deterrence.” Id., at 534, n. 19. And we left open the
possibility of providing further guidance in the future, in response to (and
grounded on) lower courts’ evolving experience. See id., at 534–535; Martin
v. Franklin Capital Corp., 546 U.S. 132, 140 (2005) (noting that Fogerty
was not intended to be the end of the matter).
The parties here, though sharing some common ground, now dispute what
else we should say to district courts. Both Kirtsaeng and Wiley agree—as
they must—that § 505 grants courts wide latitude to award attorney’s fees
based on the totality of circumstances in a case. Yet both reject the position,
taken by some Courts of Appeals, that Fogerty spelled out the only
appropriate limits on judicial discretion—in other words, that each district
court should otherwise proceed as it sees fit, assigning whatever weight to
whatever factors it chooses. Rather, Kirtsaeng and Wiley both call, in
almost identical language, for “[c]hanneling district court discretion
towards the purposes of the Copyright Act.” But at that point, the two part
ways. Wiley argues that giving substantial weight to the reasonableness of
a losing party’s position will best serve the Act’s objectives. By contrast,
Kirtsaeng favors giving special consideration to whether a lawsuit resolved
an important and close legal issue and thus “meaningfully clarifie[d]”
copyright law.
We join both parties in seeing a need for some additional guidance
respecting the application of § 505. In addressing other open-ended feeshifting statutes, this Court has emphasized that “in a system of laws
discretion is rarely without limits.” Flight Attendants v. Zipes, 491 U.S.
754, 758 (1989). Without governing standards or principles, such
provisions threaten to condone judicial “whim” or predilection. Martin, 546
U.S., at 139. At the least, utterly freewheeling inquiries often deprive
litigants of “the basic principle of justice that like cases should be decided
alike,” Martin, 546 U.S., at 139—as when, for example, one judge thinks
the parties’ “motivation [s]” determinative and another believes the need
for “compensation” trumps all else, Fogerty, 510 U.S., at 534, n. 19. And so
too, such unconstrained discretion prevents individuals from predicting
how fee decisions will turn out, and thus from making properly informed
judgments about whether to litigate. For those reasons, when applying feeshifting laws with “no explicit limit or condition,” Halo, ante, at 8, we have
nonetheless “found limits” in them—and we have done so, just as both
parties urge, by looking to “the large objectives of the relevant Act,” Zipes,
491 U.S., at 759.
In accord with such precedents, we must consider if either Wiley’s or
Kirtsaeng’s proposal well advances the Copyright Act’s goals. Those
objectives are well settled. As Fogerty explained, “copyright law ultimately
serves the purpose of enriching the general public through access to

CH. 1

387

creative works.” 510 U.S., at 527; see U.S. Const., Art. I, § 8, cl. 8 (“To
promote the Progress of Science and useful Arts”). The statute achieves
that end by striking a balance between two subsidiary aims: encouraging
and rewarding authors’ creations while also enabling others to build on
that work. See Fogerty, 510 U.S., at 526. Accordingly, fee awards under §
505 should encourage the types of lawsuits that promote those purposes.
(That is why, for example, Fogerty insisted on treating prevailing plaintiffs
and prevailing defendants alike—because the one could “further the
policies of the Copyright Act every bit as much as” the other. 510 U.S., at
527.) On that much, both parties agree. The contested issue is whether
giving substantial weight to the objective (un)reasonableness of a losing
party’s litigating position—or, alternatively, to a lawsuit’s role in settling
significant and uncertain legal issues—will predictably encourage such
useful copyright litigation.
The objective-reasonableness approach that Wiley favors passes that test
because it both encourages parties with strong legal positions to stand on
their rights and deters those with weak ones from proceeding with
litigation. When a litigant—whether plaintiff or defendant—is clearly
correct, the likelihood that he will recover fees from the opposing (i.e.,
unreasonable) party gives him an incentive to litigate the case all the way
to the end. The holder of a copyright that has obviously been infringed has
good reason to bring and maintain a suit even if the damages at stake are
small; and likewise, a person defending against a patently meritless
copyright claim has every incentive to keep fighting, no matter that
attorney’s fees in a protracted suit might be as or more costly than a
settlement. Conversely, when a person (again, whether plaintiff or
defendant) has an unreasonable litigating position, the likelihood that he
will have to pay two sets of fees discourages legal action. The copyright
holder with no reasonable infringement claim has good reason not to bring
suit in the first instance (knowing he cannot force a settlement and will
have to proceed to judgment); and the infringer with no reasonable defense
has every reason to give in quickly, before each side’s litigation costs
mount. All of those results promote the Copyright Act’s purposes, by
enhancing the probability that both creators and users (i.e., potential
plaintiffs and defendants) will enjoy the substantive rights the statute
provides.
By contrast, Kirtsaeng’s proposal would not produce any sure benefits. We
accept his premise that litigation of close cases can help ensure that “the
boundaries of copyright law [are] demarcated as clearly as possible,” thus
advancing the public interest in creative work. But we cannot agree that
fee-shifting will necessarily, or even usually, encourage parties to litigate
those cases to judgment. Fee awards are a double-edged sword: They
increase the reward for a victory—but also enhance the penalty for a

388

CH. 1

defeat. And the hallmark of hard cases is that no party can be confident if
he will win or lose. That means Kirtsaeng’s approach could just as easily
discourage as encourage parties to pursue the kinds of suits that
“meaningfully clarif[y]” copyright law. It would (by definition) raise the
stakes of such suits; but whether those higher stakes would provide an
incentive—or instead a disincentive—to litigate hinges on a party’s
attitude toward risk. Is the person risk-preferring or risk-averse—a highroller or a penny-ante type? Only the former would litigate more in
Kirtsaeng’s world. See Posner, An Economic Approach to Legal Procedure
and Judicial Administration, 2 J. Legal Studies 399, 428 (1973) (fees
“make[ ] the expected value of litigation less for risk-averse litigants, which
will encourage [them to] settle[ ]”). And Kirtsaeng offers no reason to think
that serious gamblers predominate. See, e.g., Texas Industries, Inc. v.
Radcliff Materials, Inc., 451 U.S. 630, 636, n. 8 (1981) (“Economists
disagree over whether business decisionmakers[ ] are ‘risk averse’ ”);
CIGNA Corp. v. Amara, 563 U.S. 421, 430 (2011) (“[M]ost individuals are
risk averse”). So the value of his standard, unlike Wiley’s, is entirely
speculative.
What is more, Wiley’s approach is more administrable than Kirtsaeng’s. A
district court that has ruled on the merits of a copyright case can easily
assess whether the losing party advanced an unreasonable claim or
defense. That is closely related to what the court has already done: In
deciding any case, a judge cannot help but consider the strength and
weakness of each side’s arguments. By contrast, a judge may not know at
the conclusion of a suit whether a newly decided issue will have, as
Kirtsaeng thinks critical, broad legal significance. The precedent-setting,
law-clarifying value of a decision may become apparent only in retrospect—
sometimes, not until many years later. And so too a decision’s practical
impact (to the extent Kirtsaeng would have courts separately consider that
factor). District courts are not accustomed to evaluating in real time either
the jurisprudential or the on-the-ground import of their rulings. Exactly
how they would do so is uncertain (Kirtsaeng points to no other context in
which courts undertake such an analysis), but we fear that the inquiry
would implicate our oft-stated concern that an application for attorney’s
fees “should not result in a second major litigation.” Zipes, 491 U.S., at 766.
And we suspect that even at the end of that post-lawsuit lawsuit, the
results would typically reflect little more than educated guesses.
Contrary to Kirtsaeng’s view, placing substantial weight on objective
reasonableness also treats plaintiffs and defendants even-handedly, as
Fogerty commands. No matter which side wins a case, the court must
assess whether the other side’s position was (un)reasonable. And of course,
both plaintiffs and defendants can (and sometimes do) make unreasonable
arguments. Kirtsaeng claims that the reasonableness inquiry

CH. 1

389

systematically favors plaintiffs because a losing defendant “will virtually
always be found to have done something culpable.” But that conflates two
different questions: whether a defendant in fact infringed a copyright and
whether he made serious arguments in defense of his conduct. Courts every
day see reasonable defenses that ultimately fail (just as they see reasonable
claims that come to nothing); in this context, as in any other, they are
capable of distinguishing between those defenses (or claims) and the
objectively unreasonable variety. And if some court confuses the issue of
liability with that of reasonableness, its fee award should be reversed for
abuse of discretion.
All of that said, objective reasonableness can be only an important factor
in assessing fee applications—not the controlling one. As we recognized in
Fogerty, § 505 confers broad discretion on district courts and, in deciding
whether to fee-shift, they must take into account a range of considerations
beyond the reasonableness of litigating positions. See supra, at 1985. That
means in any given case a court may award fees even though the losing
party offered reasonable arguments (or, conversely, deny fees even though
the losing party made unreasonable ones). For example, a court may order
fee-shifting because of a party’s litigation misconduct, whatever the
reasonableness of his claims or defenses. See, e.g., Viva Video, Inc. v.
Cabrera, 9 Fed.Appx. 77, 80 (C.A.2 2001). Or a court may do so to deter
repeated instances of copyright infringement or overaggressive assertions
of copyright claims, again even if the losing position was reasonable in a
particular case. See, e.g., Bridgeport Music, Inc. v. WB Music Corp., 520
F.3d 588, 593–595 (C.A.6 2008) (awarding fees against a copyright holder
who filed hundreds of suits on an overbroad legal theory, including in a
subset of cases in which it was objectively reasonable). Although objective
reasonableness carries significant weight, courts must view all the
circumstances of a case on their own terms, in light of the Copyright Act’s
essential goals.
And on that score, Kirtsaeng has raised serious questions about how feeshifting actually operates in the Second Circuit. To be sure, the Court of
Appeals’ framing of the inquiry resembles our own: It calls for a district
court to give “substantial weight” to the reasonableness of a losing party’s
litigating positions while also considering other relevant circumstances.
See 605 Fed.Appx., at 49–50; Matthew Bender, 240 F.3d, at 122. But the
Court of Appeals’ language at times suggests that a finding of
reasonableness raises a presumption against granting fees—and that goes
too far in cabining how a district court must structure its analysis and what
it may conclude from its review of relevant factors. Still more, district
courts in the Second Circuit appear to have overly learned the Court of
Appeals’ lesson, turning “substantial” into more nearly “dispositive”
weight. As Kirtsaeng notes, hardly any decisions in that Circuit have

390

CH. 1

granted fees when the losing party raised a reasonable argument (and none
have denied fees when the losing party failed to do so). See For these
reasons, we vacate the decision below so that the District Court can take
another look at Kirtsaeng’s fee application. In sending back the case for
this purpose, we do not at all intimate that the District Court should reach
a different conclusion. Rather, we merely ensure that the court will
evaluate the motion consistent with the analysis we have set out—giving
substantial weight to the reasonableness of Wiley’s litigating position, but
also taking into account all other relevant factors.
***
The judgment of the Court of Appeals is vacated, and the case is remanded
for further proceedings consistent with this opinion.

UNITED STATES V. LIU
United States Court of Appeals, Ninth Circuit
Oct. 1, 2013
731 F.3d 982

NGUYEN, Circuit Judge:
Julius Liu appeals his convictions and sentence for criminal copyright
infringement and trafficking in counterfeit labels. Liu’s company, Super
DVD, commercially replicated CDs and DVDs for various clients on a scale
that subjects him to substantial criminal liability if a client—and, by
extension, Liu—lacked permission from the copyright holder to make the
copies.
Under the relevant criminal statutes, Liu’s guilt turns on whether he acted
“willfully” and “knowingly.” We hold that the term “willfully” requires the
government to prove that a defendant knew he was acting illegally rather
than simply that he knew he was making copies. Similarly, to “knowingly”
traffic in counterfeit labels requires knowledge that the labels were
counterfeit. Because the district court improperly instructed the jury
otherwise, we vacate Liu’s convictions and remand. ***
BACKGROUND
I.

The Replication of CDs and DVDs

Commercial CD and DVD replication differs from the process of recording
content onto CDs and DVDs in that prerecorded discs have their content
stamped onto them—requiring a molding machine and a stamper—rather
than burned. To create a CD stamper, a process known as “mastering,”

CH. 1

391

some source material containing digital content is necessary, such as a
tape, recordable CD, or music file. Counterfeiters making a “straight
counterfeit,” i.e., an exact copy of an existing CD, can start with either a
legitimate or counterfeit version of the CD. Counterfeiters making a
previously nonexistent compilation of tracks take multiple legitimate disks
and burn the relevant tracks onto a recordable CD, which then serves as
the source material for the stamper.
Replication plants process orders for customers, who are typically the
publishers (or persons purporting to be the publishers) who own the
reproduction rights to the works in question. While a few plants specialize
in mastering, most deal exclusively with replicating. Plants offering both
types of services are rare because of the higher cost associated with
mastering, which requires more expensive equipment, larger premises, a
clean room environment, and greater expertise to operate. A replication
plant that does not create stampers in-house will outsource the work to a
mastering plant.
II.

The Investigation of Liu and Super DVD

Liu has worked in the replication industry since the early 1990s. In 2000,
he founded, and became the CEO of, a DVD-manufacturing company called
Super DVD. By 2001, Super DVD employed about 65 people and operated
four replication machines at its Hayward, California warehouse.
In mid–2001, Super DVD fell on hard financial times. The manufacturer of
one of its replication machines went bankrupt and the machine was taken
back to Irvine, California. Two of the other machines were repossessed
because Super DVD fell behind on its lease payments. Use of the final
replication machine was frozen due to a dispute over royalties between the
machine manufacturer and another company. Super DVD’s engineers left
for other employment, and in 2003 the company did not renew its business
license with the city. In an effort to lease the factory space, Liu showed the
property to approximately 10–15 persons per week.
Meanwhile, the government had become suspicious of Super DVD’s
operations. In May 2003, Immigration and Customs Enforcement agents
raided the warehouse of Vertex International Trading, a computer software
reseller based in Coral Springs, Florida, where agents recovered
counterfeit copies of the Symantec software “Norton Anti–Virus 2003” and
related documentation. The documentation included purchase orders,
handwritten notes, and FedEx shipping labels from more than 50 vendors,
including Super DVD.
Later that month, private investigator Cynthia Navarro, working on behalf

392

CH. 1

of Symantec, posed as a potential lessee to investigate Super DVD’s
warehouse. While there, Navarro observed a man using one of two
machines that she believed were used for CD or DVD replication. Through
a window, she could see into a locked room that was filled wall to wall with
spindles of CDs.
At the end of July 2003, agents executed a search warrant on the Super
DVD warehouse and recovered thousands of DVDs and CDs. One room
stored CDs and DVDs, and another held stampers, artwork, and masters.
The CDs included a compilation of rap tracks, Rap Masters Vol. 2; three
compilations of Latin music tracks, Los Tucanes de Tijuana: Romanticas,
Lo Mejor de la Mafia, and 3 Reyars [sic] del Tex Mex: Romanticas; and a
greatest hits album, Beatles 1. The agents also recovered DVD copies of the
film Crouching Tiger, Hidden Dragon. Liu did not have authorization from
the copyright holders to replicate any of these works.
During an interview and at trial, Liu admitted that Super DVD
manufactured the Crouching Tiger DVDs in 2001 for a company called R
& E Trading. R & E gave Super DVD a stamper with the name “Tiger” on
it but not the full title of the film. The DVDs were still in Super DVD’s
warehouse at the time the search warrant was executed because R & E had
rejected them, claiming that the movies would freeze. Liu stated that when
R & E refused to pay for the order, he became personally involved and
realized that R & E did not have the rights to duplicate such a famous
movie. Super DVD filed a lawsuit against R & E alleging that R & E
deceived it about the copyrights. The lawsuit sought payment from R & E
on about 40 invoices totaling approximately $85,000, including work done
on the Crouching Tiger movie. Super DVD obtained a jury verdict for
approximately $600.
Liu generally denied any knowledge of or involvement in replicating the
other works. Liu explained that he became involved with the Latin music
compilations when one of the former Super DVD engineers introduced Liu
to his uncle, Juan Valdez, a famous mariachi singer. Liu and Valdez got
together and played music—Liu on the guitar, Valdez singing. Valdez
expressed interest in publishing CDs, and Liu told him that he didn’t have
the facility to do it but suggested companies that could take care of the
mastering, printing, and even the sleeve. Liu volunteered to do the
overwrapping for Valdez because it only cost him “pennies.” Valdez told Liu
that he created the tracks by mixing his voice with music from a Karaoke
machine and that he had paid for the license. Liu listened to some of the
tracks and, believing that it was Valdez’s voice, thought that the music
“belong[ed] to him.”
III.

Liu’s Convictions and Sentence

CH. 1

393

The government charged Liu with three counts of criminal copyright
infringement under 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(b)(1)
based on the music CDs, the Crouching Tiger DVD, and the Norton AntiVirus software. A fourth count alleged that Liu trafficked in the counterfeit
labels on the software, 18 U.S.C. § 2318(a). Following a three-day jury trial,
Liu was convicted on all counts. The district court sentenced Liu to four
years in prison followed by three years of supervised release. ***
ANALYSIS
I.

The District Court Erred in Instructing the Jury on the
“Willfulness” and “Knowledge” Elements

A. Standard of Review
“When a party properly objects to a jury instruction, we review de novo
whether the instructions given ‘accurately describe the elements of the
charged crime.’ ” United States v. Munguia, 704 F.3d 596, 598 (9th
Cir.2012) (quoting United States v. Heredia, 483 F.3d 913, 921 (9th
Cir.2007) (en banc)). A district court’s omission or misstatement of an
element of an offense in the jury instructions is subject to harmless error
review. United States v. Wilkes, 662 F.3d 524, 544 (9th Cir.2011) (quoting
United States v. Kilbride, 584 F.3d 1240, 1247 (9th Cir.2009)). We review
unpreserved errors in the jury instructions for plain error. United States
v. Phillips, 704 F.3d 754, 762 (9th Cir.2012) (citing United States v.
Moreland, 622 F.3d 1147, 1166–67 (9th Cir.2010)). ***
B. The “Willfulness” Element of Criminal Copyright Infringement Requires
Knowledge that the Conduct Was Unlawful
Copyright infringers have been subject to civil liability since the Nation’s
founding. See Act of May 31, 1790, ch. 15, § 2, 1 Stat. 124, 124–25. In a civil
suit, liability for copyright infringement is strict. “[T]he innocent intent of
the defendant constitutes no defense to liability.” Monge v. Maya
Magazines, Inc., 688 F.3d 1164, 1170 (9th Cir.2012) (citing 4 Melville B.
Nimmer & David Nimmer, Nimmer on Copyright § 13.08[B][1] (Matthew
Bender rev. ed.2011)).
Congress first imposed criminal liability for certain types of infringement
in the late nineteenth century. See Act of January 6, 1897, ch. 4, 29 Stat.
481, 482. The general approach to criminal copyright enforcement—then,
as now—has been to punish only those violations that are both willful and
economically motivated. See id. (punishing as misdemeanor infringement
that is “willful and for profit”); accord 17 U.S.C. § 506(a)(1)(A)) (imposing

394

CH. 1

criminal liability on “[a]ny person who infringes a copyright willfully and
for purposes of commercial advantage or private financial gain”).
Of the two factors that distinguish criminal from noncriminal copyright
violations, willfulness and commerciality, the latter is of little practical
importance. The Copyright Act defines “financial gain” broadly to include
“receipt, or expectation of receipt, of anything of value, including the
receipt of other copyrighted works.” 17 U.S.C. § 101. The commerciality
requirement thus “does not meaningfully winnow down the population of
copyright defendants potentially liable to incarceration.... [T]he only bar
against an overzealous prosecutor criminalizing nearly every copyright
infringement case lies in the other prerequisite to criminal liability:
willfulness.” 4 Nimmer, supra, § 15.01[A][2].
But the term “willfully” is ambiguous. See Ratzlaf v. United States, 510
U.S. 135, 141 (1994) ( “‘Willful’ ... is a ‘word of many meanings….’”). To
infringe willfully could simply mean to intentionally commit the act that
constitutes infringement. Alternatively, it could mean that the defendant
must act with a “ ‘bad purpose’ or ‘evil motive’ in the sense that there was
an ‘intentional violation of a known legal duty.’ ” United States v. Moran,
757 F.Supp. 1046, 1048 (D.Neb.1991). The 1976 Copyright Act does not
define “willfully,” and its legislative history offers little guidance.
When faced with a criminal statute containing an ambiguous “willfulness”
element, courts normally resolve any doubt in favor of the defendant.
Ratzlaf, 510 U.S. at 148. Although the general rule is that “ignorance of the
law or a mistake of law is no defense to criminal prosecution,” the modern
proliferation of statutes and regulations “sometimes ma[kes] it difficult for
the average citizen to know and comprehend the extent of the duties and
obligations imposed by the ... laws.” Cheek, 498 U.S. at 199–200. Thus, the
government must prove that the defendant acted “willfully”—that is, with
“specific intent to violate the law”—to be convicted of certain federal
criminal offenses. Id. at 200; see also Bryan v. United States, 524 U.S. 184,
191–92 (1998) (“As a general matter, when used in the criminal context, a
‘willful’ act is one undertaken with a ‘bad purpose.’ In other words, in order
to establish a ‘willful’ violation of a statute, ‘the Government must prove
that the defendant acted with knowledge that his conduct was unlawful.’”).
In reviewing a conviction for criminal copyright infringement, we, and
numerous other circuits, have assumed that proof of the defendant’s
specific intent to violate someone’s copyright is required. See United States
v. Beltran, 503 F.3d 1, 2 (1st Cir.2007); United States v. Minor, 756 F.2d
731, 734 (9th Cir.1985); United States v. Gottesman, 724 F.2d 1517, 1522
(11th Cir.1984); United States v. Whetzel, 589 F.2d 707, 712
(D.C.Cir.1978). But compare United States v. Backer, 134 F.2d 533, 535

CH. 1

395

(2d Cir.1943) (finding sufficient evidence that the defendant had willfully
copied where he “deliberately had the copies made and deliberately sold
them for profit”), with United States v. Rose, 149 U.S.P.Q. 820, 824
(S.D.N.Y.1966) (instructing, notwithstanding Backer, that the government
must prove the defendant acted “voluntarily and purposely and with
specific intent to do that which the law forbids—that is to say, with bad
purpose either to disobey or disregard the law”). We now explicitly hold
that “willfully” as used in 17 U.S.C. § 506(a) connotes a “voluntary,
intentional violation of a known legal duty.” Cheek, 498 U.S. at 201.
The Copyright Act’s legislative history supports our interpretation. In
1997, Congress updated the statutory provision governing criminal
copyright infringement by inserting the language that Liu requested:
“evidence of reproduction or distribution of a copyrighted work, by itself,
shall not be sufficient to establish willful infringement.” No Electronic
Theft (NET) Act, Pub.L. 105–147, § 2(b), 111 Stat 2678, 2678 (1997)
(codified as amended at 17 U.S.C. § 506(c)). This language was in response
to the “on-going debate about what precisely is the ‘willfulness’ standard in
the Copyright Act.” 143 Cong. Rec. S12,689 (daily ed. Nov. 13, 1997)
(statement of Sen. Orrin Hatch); see also id. at 12,690 (statement of Sen.
Patrick Leahy) (“This clarification was included to address the concerns
expressed ... because the standard of ‘willfulness’ for criminal copyright
infringement is not statutorily defined and the court’s interpretation[s]
have varied somewhat among the Federal circuits.”). Upon passage of the
bill in the Senate, Senator Hatch stated that willful “ought to mean the
intent to violate a known legal duty.... As Chairman of the Judiciary
Committee, that is the interpretation that I give to this term. Otherwise, I
would have objected and not allowed this bill to pass by unanimous
consent.” 143 Cong. Rec. S12, 689.
As a practical matter, requiring only a general intent to copy as a basis for
a criminal conviction would not shield any appreciable amount of
infringing conduct from the threat of prosecution. Civil liability will not lie
if an author fortuitously creates a work that is substantially similar to
another author’s copyrighted work. See Airframe Sys., Inc. v. L–3
Commc’ns Corp., 658 F.3d 100, 106 (1st Cir.2011) (“[E]ven when two works
are substantially similar with respect to protectable expression, if the
defendant did not copy as a factual matter, but instead independently
created the work at issue, then infringement liability must be denied.”). To
infringe a copyright, one must copy the protected work. See, e.g., L.A.
Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir.2012)
(“To establish copyright infringement, a plaintiff must prove two elements:
‘(1) ownership of a valid copyright, and (2) copying of constituent elements
of the work that are original.’”). Copying is of necessity an intentional act.
If we were to read 17 U.S.C. § 506(a)’s willfulness requirement to mean

396

CH. 1

only an intent to copy, there would be no meaningful distinction between
civil and criminal liability in the vast majority of cases. That cannot be the
result that Congress sought.
In the present case, notwithstanding the parties’ agreement to add an
instruction that “[e]vidence of reproduction or distribution of a copyrighted
work, by itself, shall not be sufficient to establish willful infringement of a
copyright,” 17 U.S.C. § 506(a)(2), the district court did not include the
requested language. In fact, the district court exacerbated the omission by
defining willful infringement without the crucial knowledge component:
In order for the defendant to be found guilty of [copyright infringement],
the government must prove each of the following elements beyond a
reasonable doubt:
First, that on a date beginning in 2001 and continuing to on or about July
31, 2003, in the Northern District of California, defendant willfully
infringed, that is, without authorization, duplicated, reproduced, or sold
compact disks that infringed the copyright belonging to the owners of the
works....
By defining “willfully infringed” without any requirement that the
defendant knew he was committing copyright infringement, the district
court instructed the jury to apply a civil liability standard.
The district court further compounded this error a short time later,
instructing the jury that “[a]n act is done ‘willfully’ if the act is done
knowingly and intentionally, not through ignorance, mistake, or accident.”
We recently considered a virtually identical instruction in United States v.
Berry, 683 F.3d 1015 (9th Cir.2012). The district court had instructed the
jury that “an act is done willfully if the defendant acted or failed to act
knowingly and intentionally and did not act or fail to act through
ignorance, mistake, or accident.” Id. at 1021. Finding error, we explained
that “the instruction given merged the concepts of ‘knowing’ and ‘willful’
without conveying the culpable state of mind that the term ‘willfully’ is
designed to invoke in the criminal arena.” Id.
We conclude that the district court in this case erred by defining willfulness
such that the jury could have convicted Liu without finding that he knew
that his actions were unlawful.
C. The Instructional Error Was Not Harmless
Liu’s convictions on the copyright infringement counts cannot stand unless
the instructional error was harmless. “An error in describing an element of
the offense in a jury instruction is harmless only if it is ‘clear beyond a
reasonable doubt that a rational jury would have found the defendant
guilty absent the error.’ ” Munguia, 704 F.3d at 603–04.

CH. 1

397

The conclusion was irresistible that the infringing CDs and DVDs were
replicated in the Super DVD warehouse. The discs all were found there
with the exception of the Norton Anti–Virus software, which was
discovered at the Vertex warehouse along with purchase orders and
shipping labels linking it to Liu and Super DVD. Almost all of the music
CDs bore Liu’s initials, “JL.” Liu admitted to reproducing the Crouching
Tiger DVDs for R & E Trading, and there was a written agreement from
early 2001 between Super DVD and R & E to press 2,000 copies of the
Beatles CD. Although Liu claimed to have no knowledge of how the other
discs were made, suggesting that the orders may have been handled by his
sales staff, it is unclear whether the jury disbelieved him, thought he had
forgotten, or found his employees’ acts attributable to him.
Whatever the case, Liu’s state of mind was critical. Liu was aware of
copyright laws and admittedly had been sued for copyright infringement in
the past. His guilt thus hinged on whether he knew that his clients did not
have authorization to replicate the disks at issue.
Liu presented evidence that his customers signed agreements stating that
they had the copyright to the works in question and promising “to be
responsible for all copyright related legal responsibilities.” His expert
witness testified that other replicators also rely on such agreements rather
than carefully investigate each customer. Liu testified that he attempted
to verify that there were no copyright violations on the Latin music
compilations by listening to the some of the tracks and satisfying himself
that it was Valdez’s voice. He further claimed that he did not realize R &
E’s order for Crouching Tiger DVDs was unauthorized until he became
embroiled in the payment dispute, at which time he filed a lawsuit against
R & E. The fact that he initiated a lawsuit over a dispute involving
thousands of infringing copies of Crouching Tiger, Hidden Dragon that he
created is arguably compelling evidence that he did not understand his
conduct to have been wrongful.
We cannot say that the jury would not have credited some or all of this
evidence had the jury appreciated its relevance. The evidence may have
supported a finding that Liu did not know that he was illegally copying
copyrighted material and thus he did not willfully infringe the copyrights.
Therefore, the failure to provide a proper willfulness instruction was not
harmless beyond a reasonable doubt.
We reject the government’s contention that any error was harmless
because, on the second day of trial, the district court correctly described the
concept of willfulness to the jury. The court stated that “one of the issues
in this case [is that] the government claims that Mr. Liu did certain conduct

398

CH. 1

willfully, which means that he did it intentionally, that he knew what was
going on and he knew that it was a violation of someone’s rights under the
copyright laws, or he had good reason to know that.” But this statement is
itself problematic. Having “good reason to know” one is violating the law is
not tantamount to knowing it.
Even if the court’s statement accurately conveyed the willfulness standard
to the jury, a correct statement of the law given during trial does not cure
an incorrect one delivered immediately prior to deliberations. See Seltzer
v. Chesley, 512 F.2d 1030, 1035 (9th Cir.1975) (“Erroneous instructions can
be corrected by the trial judge only by expressly correcting them and by
directing the members of the jury to expunge the erroneous statements
from their minds.”).
Further, the district court’s statement about willfulness was made in a
context that had nothing to do with the elements of criminal copyright
infringement. The court was in the middle of delivering unrelated
comments about character evidence. It immediately minimized the need
for the jury to pay attention to its comments, adding that “[t]hose are all
things I’ll tell you about when I give you my instructions on the law.” Thus,
it is inconceivable that the district court’s partially correct statement on
willfulness mid-trial overcame the effect of its erroneous statements in the
oral and written jury instructions given to the jury immediately prior to
deliberations.
Accordingly, we vacate Liu’s convictions and sentence for criminal
copyright infringement on counts one through three and remand to the
district court. For reasons we will explain, count two must be dismissed.
***