Court Opinion

ID: 9945022
Source: CourtListenerOpinion
Date Created: 2024-02-26 21:00:38.603993+00
Date Added: 2024-06-11T14:25:20.058048
License: Public Domain

RECOMMENDED FOR PUBLICATION
                                 Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                        File Name: 24a0039p.06

                   UNITED STATES COURT OF APPEALS
                                    FOR THE SIXTH CIRCUIT

                                                              ┐
 PREMIER DEALER SERVICES, INC.,
                                                              │
                                     Plaintiff-Appellee,      │
                                                               >        No. 23-3394
                                                              │
        v.                                                    │
                                                              │
 ALLEGIANCE ADMINISTRATORS, LLC,                              │
                             Defendant-Appellant.             │
                                                              ┘

  Appeal from the United States District Court for the Southern District of Ohio at Columbus.
                 No. 2:18-cv-00735—Edmund A. Sargus, Jr., District Judge.

                                    Argued: February 1, 2024

                               Decided and Filed: February 26, 2024

         Before: SUTTON, Chief Judge; CLAY and BLOOMEKATZ, Circuit Judges.
                                 _________________

                                             COUNSEL

ARGUED: Andrew E. Samuels, BAKER & HOSTETLER LLP, Columbus, Ohio, for
Appellant. Scott R. Thomas, HEMMER WESSELS MCMURTRY PLLC, Ft. Mitchell,
Kentucky, for Appellee. ON BRIEF: Andrew E. Samuels, BAKER & HOSTETLER LLP,
Columbus, Ohio, for Appellant. Scott R. Thomas, HEMMER WESSELS MCMURTRY PLLC,
Ft. Mitchell, Kentucky, Gregory J. Krabacher, EPSTEIN BECKER GREEN, Columbus, Ohio,
for Appellee.
                                       _________________

                                              OPINION
                                       _________________

       SUTTON,     Chief   Judge. Premier         Dealer      Services      competes   with   Allegiance
Administrators to manage car dealers’ loyalty programs, an arrangement used to service cars
after the dealer sells them.     The terms and conditions of the programs appear on loyalty
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certificates that dealers use to enroll buyers. When Allegiance obtained the account of a former
Premier client, it incorporated Premier’s Lifetime Powertrain Loyalty Program certificates into
its own plan. Premier sued Allegiance for using its copyrighted certificates. The district court
held that Allegiance infringed Premier’s copyright, ordered Allegiance to disgorge any profits
from using the certificates, and awarded Premier attorney’s fees. We affirm.

                                                   I.

        A car dealer’s business usually does not end when a customer leaves the lot. Buyers need
to service their vehicles over time, and dealers like to capture this cradle-to-grave business.
“Loyalty programs” satisfy both goals by providing the buyer a place to service the car and by
giving the seller the business. Unlike the warranties provided by manufacturers and the service
contracts that car owners must purchase out of pocket, car dealers offer loyalty programs for free
to capture this repeat business. A loyalty program contains two components. In one direction,
car buyers must continue to pay dealers for oil changes, tire rotations, and other routine
maintenance at intervals spelled out in the plan. In the other direction, if a covered part turns
defective, the plan requires the dealer to cover the cost to repair or replace it.

        This case concerns one such plan, the Lifetime Powertrain Loyalty Program. Premier
Dealer Services, a developer and administrator of automobile dealers’ aftermarket products,
created the plan. As with most of these plans, the dealer promises to repair defects in a car’s
engine and transmission as long as the owner brings the vehicle to the dealer for required
maintenance. Car dealers purchase access to the program from Premier and give it away as a
promotion. When an owner brings a car back to the dealer for a powertrain repair, for example,
the dealer initiates a claim by contacting Premier. Premier verifies that the plan covers the claim
and that the owner has performed all required maintenance at the dealership. Once Premier
approves the claim, the dealership sends an invoice to Premier, which pays the claim.

        As part of the program, Premier designed a loyalty certificate for dealers to provide to car
owners. The two-page certificate collects the owner’s personal information and sets out the
Program’s terms and conditions. Premier created this certificate in 2008 and registered it for
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copyright protection in 2012. That same year, it also registered a second certificate, largely the
same as the first. A copy of that certificate appears as Appendix A to this opinion.

       In 2008, Premier sold access to the program to Tricor Automotive Group, a Canadian
corporation that develops dealership programs on behalf of approximately 250 dealer-owners.
Tricor marketed the program to its members under its own brand and trained them on its
operation. Premier received $40 (in Canadian dollars) every time a dealer provided a certificate
to a car buyer in exchange for administering the program. As part of the agreement, Premier
modified its copyrighted loyalty certificate for Tricor’s Canadian market. It made cosmetic
changes such as replacing miles with kilometers and states with provinces, but it otherwise left
the terms the same. Tricor’s contract with Premier acknowledged that the form belonged to
Premier and could not be disclosed or sold to anyone.

       In 2018, after a decade of working with Premier, Tricor hired Allegiance to administer its
aftermarket programs, including the Lifetime Powertrain Loyalty Program. Allegiance checked
whether its new client needed a loyalty certificate. Tricor replied that it would continue to use its
existing Lifetime Powertrain Loyalty Program certificates and provided Allegiance with a copy.
Allegiance noticed that the certificate listed a website and American P.O. box and asked whether
it belonged to another company. Tricor’s representative explained that Premier previously
administered the program and that Allegiance should insert its own information. Allegiance
substituted its contact information and kept the remainder of the certificate the same. The first
page of that certificate appears as Appendix B to this opinion. Allegiance, like Premier, received
$40 Canadian every time a dealer issued a certificate.

       Premier sued Allegiance for infringing the copyrighted certificate. The district court
granted summary judgment to Premier, reasoning that the certificate’s “dull” subject matter did
not preclude it from being original or from otherwise obtaining copyright protection. R.128 at
19–22. After a bench trial on damages, the court awarded Premier $441,239 of Allegiance’s
profits and enjoined Allegiance from infringing the copyright. The court awarded Premier
$577,736 in attorney’s fees.
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                                                 II.

       Copyright protection.     The Constitution allows Congress to grant authors exclusive
copyrights over their works. U.S. Const. art. I, § 8, cl. 8. The copyright statute extends this
protection to “original works of authorship fixed in any tangible medium of expression.”
17 U.S.C. § 102(a). If an author registers a copyright within five years of its first publication, it
receives a statutory presumption of validity. Id. § 410(c); see RJ Control Consultants, Inc. v.
Multiject, LLC, 981 F.3d 446, 454 (6th Cir. 2020). Any copying of original materials counts as
infringement. See Varsity Brands, Inc. v. Star Athletica, LLC, 799 F.3d 468, 476 (6th Cir. 2015).
One way to rebut the presumption of validity is to show that the work is not original. See id.

       Originality has a low threshold, requiring only that the author “independently created” a
work with “some minimal degree of creativity.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc.,
499 U.S. 340, 345 (1991). Authors fulfill originality’s requirement of minimal creativity by
making “non-obvious choices” from “among more than a few options.” ATC Distrib. Grp., Inc.
v. Whatever It Takes Transmission & Parts, Inc., 402 F.3d 700, 707 (6th Cir. 2005) (quoting
Matthew Bender & Co. v. W. Publ’g Co., 158 F.3d 674, 682 (2d Cir. 1998)). The author’s
choices must evince some “inventiveness and imagination,” Hiller, LLC v. Success Grp. Int’l
Learning All., LLC, 976 F.3d 620, 627 (6th Cir. 2020), but not necessarily artistic merit, see
Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251–52 (1903). Alongside choices
about style and setting, this creative spark may arise from decisions about what materials to
include and how to organize them. See ATC Dist., 402 F.3d at 711–12 & 711 n.7; Ross, Brovins
& Oehmke, P.C. v. Lexis Nexis Grp., 463 F.3d 478, 484 n.3 (6th Cir. 2006); see also Experian
Info. Sols., Inc. v. Nationwide Mktg. Servs. Inc., 893 F.3d 1176, 1184–85 (9th Cir. 2018)
(selecting, arranging, or coordinating facts may be creative).

       Most works will satisfy this low standard of creativity, no matter how humdrum the
subject matter. Feist, 499 U.S. at 345. Consider a few recent examples. A testing company
evinced sufficient creativity in its workforce-development technical manuals by choosing to
divide such skills as “Reading for Information” into subskills and arranging them by skill level.
ACT, Inc v. Worldwide Interactive Network, Inc., 46 F.4th 489, 500–02 (6th Cir. 2022). A guide
for training HVAC technicians satisfied this requirement because its author made such creative
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choices as delineating four steps to prepare for service calls and including fill-in-the-blank
problems.    Hiller, 976 F.3d at 626–27.      Physician credentialing forms proved sufficiently
creative by eliminating some of the questions that competitors asked and rearranging others in a
unique way. S. Credentialing Support Servs., L.L.C. v. Hammond Surgical Hosp., L.L.C., 946
F.3d 780, 783–84 (5th Cir. 2020).

       This modest threshold comes with at least three qualifications. One is that copyright
protection does not extend to facts that already exist in the world, even if no one has discovered
or published them. Feist, 499 U.S. at 347; see 17 U.S.C. § 102(b); see also Mazer v. Stein, 347
U.S. 201, 217 (1954) (distinguishing copyrights from patents). A copyright extends only to an
author’s original expression of those facts, such as their selection, ordering, and arrangement.
Feist, 499 U.S. at 347–48. So it is that an author may not obtain a copyright with respect to the
unyielding principles of arithmetic or the physics of gravity. But the author may obtain a
copyright in a math or physics textbook with respect to its problems and answer keys. Baker v.
Selden, 101 U.S. 99, 103–04 (1879). The author of an autobiography may not obtain copyright
protection over the facts of his life. But he may protect the way he describes them in his
memoirs. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 563–64 (1985).

       A second qualification, known as merger, arises when there is only a single way to
express a given set of facts. Kohus v. Mariol, 328 F.3d 848, 856 (6th Cir. 2003); see generally 4
Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.03[B][3] (2024). If copyright
protection extended to those expressions, the first author to create a work would prevent others
from expressing the underlying idea. See Murray Hill Publ’ns, Inc. v. Twentieth Century Fox
Film Corp., 361 F.3d 312, 318 n.2 (6th Cir. 2004). Consider the example of a company deciding
where to list a new part in its catalog. The only way for it to express the idea that the part
belongs to a certain category—say, gaskets and not sealing rings—is to list it under that
category. ATC Dist., 402 F.3d at 707. Copyright law does not impede other companies from
expressing that idea by listing the part in an identical way. Id. at 707–08.

       A third qualification, the one directly at issue today, is known as “scenes a faire”—
settings, in other words, that must be done. Cain v. Universal Pictures Co., 47 F. Supp. 1013,
1017 (S.D. Cal. 1942) (Yankwich, J.) (coining this phrase to describe this aspect of copyright
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law). Scenes a faire arise when the expectations of an industry or subject matter require an
author to express facts in a certain way, rendering only a few choices “feasible in that setting”
even if alternatives theoretically remain. Lexmark Int’l, Inc. v. Static Control Components, Inc.,
387 F.3d 522, 538 (6th Cir. 2004), abrogated on other grounds by eBay Inc. v. MercExchange,
L.L.C., 547 U.S. 388, 392–94 (2006); see Ross, 463 F.3d at 485. The author’s choice to select
the obvious approach over less functional alternatives does not qualify as minimally creative.
See ATC Dist., 402 F.3d at 711–12.          In determining whether an industry’s standards and
practices tolerate sufficient creativity in the expression of facts, expert testimony “is desirable, if
not required.” RJ Control, 981 F.3d at 458; see Lexmark, 387 F.3d at 539–40 (evaluating
dueling expert reports about the feasibility of software alternatives); see also Feist, 499 U.S. at
363 (citing industry association’s amicus brief about standards).

       Take the white pages section of what once occupied a central place in every home: a
three-dimensional phonebook.        It collects the facts of residential telephone numbers and
addresses and expresses them alphabetically by the last name of the homeowner.                    The
phonebook could have chosen a different expression for those facts by, say, grouping them by
street name. See Feist, 499 U.S. at 358, 362–63. But alphabetical order has become “so
commonplace that it has come to be expected as a matter of course” and is “practically
inevitable.” Id. at 363. This expected expression of the facts, as a result, falls short of even the
“de minimis quantum of creativity” required for copyright protection. Id.

       Measured by these guidelines and requirements, Allegiance’s challenge to the originality
of Premier’s copyright falls short. Premier registered its loyalty forms for copyright within five
years of first using them by filing them in the U.S. Copyright Office located in the Library of
Congress. They thus presumptively receive copyright protection unless Allegiance rebuts the
presumption that Premier possesses a valid copyright.

       What, one might initially wonder, are these automobile loyalty certificates doing in the
Library of Congress? Surely this is not what Samuel Johnson had in mind when he said, “The
chief glory of every people arises from its authors.” 1 Samuel Johnson, A Dictionary of the
English Language x (1755). Probably not. But the long-accepted policy of the copyright laws is
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that they protect all manner of works—mundane and lofty, commercial and non-commercial,
even the dull and workaday—so long as they satisfy the modest imperatives of originality.

       The loyalty certificates amount to original expression under this test. They are “original
to the author,” Feist, 499 U.S. at 345, because Premier designed them “in-house” and
“independent of forms used by competitors,” R.101-1 at 8. And they presumptively possess a
“minimal creative spark,” Feist, 499 U.S. at 363, by showing some “inventiveness and
imagination,” Hiller, 976 F.3d at 627. The copyright covers a particular auto maintenance
program, the customized expression and organization of which places the certificates beyond the
kinds of highly abstracted descriptions typical of uncopyrightable facts and ideas. See Kohus,
328 F.3d at 855. The run-of-the-mine subject matter of the certificates does not detract from
Premier’s creative choices in crafting them. To see why, compare the organization of Premier’s
certificates to the rival certificates that Allegiance included in the record and that we have
included as Appendix C. Premier’s certificates include a distinct section on eligibility that
covers different categories of required maintenance, including a selection of different mileage
options between required oil changes. The other form lacks a distinct section on eligibility or
maintenance, and it provides a single oil change standard above the signature line. Premier’s
offering of a menu of different mileage options, together with its choice to arrange the form with
that section, evinces more creativity than simply moving headers or rearranging identical
sections. See ATC Dist., 402 F.3d at 711; cf. S. Credentialing, 946 F.3d at 784 (reasoning that
the “distinctive arrangement” of business rivals’ competing forms shows originality).

       The content of these certificates also expresses the idea of covering damage to a car in
different ways. Premier’s certificates define several categories of covered parts, some of which
depend on whether the part suffered damage resulting from “mechanical failure to an internally
lubricated part.” R.100-1 at 3. The other company lists different parts under the single heading
of “Engine” and offers to expand coverage to other components in the event of “mechanical
failure . . . caused by the above-listed parts.” R.101-7 at 4. Choices about how to select and
group categories and subcategories suffice to establish creativity. See ACT, Inc., 46 F.4th at
500–02 (finding skill and subskill classification and arrangement minimally creative).
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       The juxtaposition between Premier’s creative expression in the body of the certificates
and the unoriginal top half of the front page, which merely provides spaces for the dealer to
record the car buyer’s information, helps to illustrates the originality of the body of the
certificates. See 37 C.F.R. § 202.1(c) (excluding blank forms from copyright). Premier had
some choices over what information to request—such as by asking for the vehicle purchase date
and odometer reading, but not its color—but such categories prove obvious in the automotive
context and required no creative spark to select. See Utopia Provider Sys., Inc. v. Pro-Med
Clinical Sys., L.L.C., 596 F.3d 1313, 1322–24 (11th Cir. 2010); see also Kregos v. Associated
Press, 937 F.2d 700, 708–09 (2d Cir. 1991) (distinguishing uncopyrightable blank forms that use
obvious headings from copyrightable forms whose headings satisfy originality). The remaining
three-quarters of the certificates, however, go beyond such obvious information collection to
provide details about the workings of the program itself. See M.M. Bus. Forms Corp. v. Uarco,
Inc., 472 F.2d 1137, 1139 (6th Cir. 1973).

       The doctrines of uncopyrightable ideas, merger, and scenes a faire do not excuse
Allegiance’s imitation. Premier’s certificate expresses the idea of a particular type of loyalty
program, and comparison of Premier’s form to the others in the record shows that companies can
choose different ways to express that idea. The record also lacks any evidence about external
constraints on the expression of these loyalty certificates. At summary judgment, Allegiance did
not submit any testimony or affidavits from industry insiders or expert witnesses that car owners
or dealers expect these forms to look a certain way or to include the same terms or conditions.
See Kohus, 328 F.3d at 856 (explaining that external considerations include “standard industry
practices” and professional organization standards).

       Allegiance, last of all, copied the certificates. This case presents “rare[]” direct evidence
of copying, Fogerty v. MGM Grp. Holdings Corp., Inc., 379 F.3d 348, 352 (6th Cir. 2004), as no
one in the case disputes.

       All elements considered, the district court correctly ruled that Allegiance violated
Premier’s copyright in the loyalty program certificates.
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       Allegiance tries to counter this conclusion in several ways. It maintains that the district
court mistakenly reasoned that originality always trumps the scenes a faire doctrine. But that is
not what the district court said or did. It recognized that Premier’s timely copyright registration
shifted the burden to Allegiance to “rebut the copyright’s presumptive validity.” R.128 at 16. It
explained that scenes a faire represents one exception to originality. See Kohus, 328 F.3d at 856.
And it determined that the record failed to establish that any “requirements of insurance
companies” or similar constraints dictated how Premier expressed the details of its plan. R.128
at 18. In the absence of that expert testimony or other expert evidence at summary judgment, it
properly concluded this chain of reasoning by holding that Allegiance failed to rebut the
presumption that Premier enjoys a valid copyright.

       The concepts underlying scenes a faire and merger, we appreciate, sometimes bear on the
threshold originality of the copyright and sometimes are best viewed through the lens of an
affirmative defense. As in Feist itself, a court may treat these principles as crucial to the initial
question of originality. 499 U.S. at 358 (“[T]he principal focus should be on whether the
selection, coordination, and arrangement [of a fact-based work] are sufficiently original to merit
protection.”). At other times, it may make more sense to think about these doctrines as distinct
underlying affirmative defenses to infringement, perhaps when an infringer copies only part of
an original work. See, e.g., Kregos, 937 F.2d at 705; Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d
1068, 1082 (9th Cir. 2000). That a copyright concept may go to the validity of a copyright in the
first instance does not preclude it from operating as a defense to infringement in other instances.
See Lexmark, 387 F.3d at 537–39. As the Copyright Office itself recognizes, “scènes à faire
cannot be registered by themselves,” but works containing scenes a faire qualify for copyright
registration “provided that the work as a whole contains a sufficient amount of original
expression.” U.S. Copyright Off., Compendium of U.S. Copyright Office Practices § 313.4(I)
(3d ed. 2021); see also id. § 313.3(B) (listing examples where the Office “refuse[d] to register
the claim” due to merger). Consider again the white pages. If that compilation consisted of
nothing but a list of numbers, such an expected arrangement would not qualify as minimally
creative in the first instance. See Feist, 499 U.S. at 363; see also Southco, Inc. v. Kanebridge
Corp., 390 F.3d 276, 288–89 (3d Cir. 2004) (Becker, J., concurring) (“The scènes à
faire doctrine, therefore, dispels the notion that there was the requisite originality in [the
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author’s] selection of characteristics and values to merit copyright protection.”). An author
perhaps might obtain a valid copyright registration by tacking on original content to that
compilation, such as a foreword. Feist, 499 U.S. at 361. But the resulting “thin” copyright
would protect only those original additions from copying, not the listings themselves. Id. at 349;
cf. Atari Games Corp. v. Oman, 888 F.2d 878, 886 (D.C. Cir. 1989) (Ginsburg, J.).

       In this instance, any distinction between using scenes a faire as a threshold defense to
originality or as an affirmative defense to infringement does not make a difference. Even the
courts that treat scenes a faire only as an affirmative defense have cautioned that this doctrine
still does not permit the infringer to produce work “virtually identical” to the original. Incredible
Techs., Inc. v. Virtual Techs., Inc., 400 F.3d 1007, 1014–15 (7th Cir. 2005); see Apple Comput.,
Inc. v. Microsoft Corp., 35 F.3d 1435, 1444, 1446–47 (9th Cir. 1994). No one denies that
Allegiance’s certificates copy Premier’s certificate, save for a few minor points of contact
information. No matter how a court understands the doctrine of scenes a faire, Allegiance still
had to produce evidence that external constraints dictated how Premier created its certificate.
See RJ Control, 981 F.3d at 458; cf. Automated Sols. Corp. v. Paragon Data Sys., Inc., 756 F.3d
504, 520 (6th Cir. 2014). Allegiance did not offer any such evidence.

       Allegiance, it is true, provided the district court with another company’s forms that
resemble Premier’s certificates. But similarity by itself does not suffice to demonstrate scenes a
faire. Expert testimony usually is needed to show that convention and the setting of the work
constrained the author’s choices. Confirming the point, similar works still receive copyright
protection so long as they are original to the author and satisfy the minimal threshold of
creativity. Feist, 499 U.S. at 345–46. Identical “stock or standard phrases” in the end give rise
to scenes a faire only if they “necessarily follow from a common theme or setting.” RJ Control,
981 F.3d at 458 (quoting Lexmark, 387 F.3d at 535).

       The scattered similarities in parts of these forms, often due to their coverage of the same
subject matter as opposed to a required convention, do not undermine their creative features.
Consider an example that Allegiance identifies: the certificates’ similarities and differences
when it comes to service intervals. Yes, the wording of each one largely parallels the other given
the imperative of covering a common subject—how often the owner must obtain service of the
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car. But Premier’s form includes that language as part of a section on “eligibility” that offers
multiple checkboxes for different mileage options. R.100-1 at 3. The other company, by
contrast, expresses this condition as a take-it-or-leave-it “responsibility” without any mechanism
for customization. R.101-7 at 3. The existence of such substantive variation within the industry
undercuts Allegiance’s claims that external constraints determined the content of Premier’s
certificates. See S. Credentialing, 946 F.3d at 784.

       There is another way, Allegiance adds, that external constraints limited Premier’s
expressiveness. Insurance companies review the certificates and require the inclusion of “some
language.”     R.91-1 at 26.    But this reality does not show that insurers have deprived
administrators of their flexibility when crafting loyalty certificates “as a whole.” Lexmark, 387
F.3d at 538. Even legally compliant expressions of facts may possess the modest creativity
needed to qualify as original. As one court helpfully put the point: “Although laws and hospital
policies dictate the contents of the credentialing forms, Southern Credentialing’s unique selection
and arrangement of information exhibit creative expression.” S. Credentialing, 946 F.3d at 784;
see SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms., Inc., 211 F.3d 21, 25,
29 (2d Cir. 2000).

       Allegiance also offers testimony from a former Premier contractor who claimed that the
company drew upon “decades of prior underwriting work” in choosing to “model[]” its
certificate on other existing programs. R.162-1 at 4. And it refers to the report of an auto service
and finance expert who explained that dealers often dictate identical language and coverage to
administrators. But Allegiance never introduced these sources into the summary judgment
record. It thus has forfeited the invocation of them today. See Fed. R. Civ. P. 56(c).

       Nor does it make a difference that Allegiance urged the district court to reconsider its
summary judgment ruling on the basis of this new evidence. The district court denied that
motion because it raised new legal theories and new evidence that were both available at the time
of summary judgment. Allegiance did not challenge the decision on appeal.

       Disgorgement. Even if Allegiance faces copyright liability, it claims that the district
court miscalculated the profits from the infringement that Allegiance is required to disgorge.
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A copyright owner may recover actual damages 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).         A burden-shifting process frames the lost-profits calculation.
ECIMOS, LLC v. Carrier Corp., 971 F.3d 616, 634 (6th Cir. 2020). The copyright owner
initially must provide evidence of the infringer’s gross revenue.           Id.   The gross-revenue
calculation must bear a “reasonable relationship” or “relevance” to the infringement, but the
plaintiff does not have to demonstrate strict causation. Balsley v. LFP, Inc., 691 F.3d 747, 769 &
n.6 (6th Cir. 2012). The revenue figures suffice if they correspond to the product containing the
infringing work, such as a magazine that reprints a copyrighted image. Id. at 770.

       Once the plaintiff makes this showing, the infringer must show what part of its gross
revenues did not result from the infringement. See ECIMOS, 971 F.3d at 635. It may do so by
offering proof of its “deductible expenses” as well as the “elements of profit attributable to
factors other than the copyrighted work.” 17 U.S.C. § 504(b). The calculation of expenses and
allocation of profits, no surprise, are fact driven. See Bridgeport Music, Inc. v. Justin Combs
Publ’g, 507 F.3d 470, 484 (6th Cir. 2007). If “plausible evidence” supports a finding, we will
not second guess it. ECIMOS, 971 F.3d at 637.

       This statutory burden-shifting corresponds to the reality that the infringer usually
possesses the information necessary to provide the victim a fair share of the profits.            See
Singletary Constr., LLC v. Reda Home Builders, Inc., 815 F. App’x 892, 907 (6th Cir. 2020)
(Murphy, J., concurring in part); see also Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S.
390, 399, 408 (1940).      Because the victim of infringement cannot readily extend its own
experience to calculate the infringer’s costs, the statute requires the infringer to account for its
actual expenses. See Thoroughbred Software Int’l, Inc. v. Dice Corp., 488 F.3d 352, 360–61
(6th Cir. 2007).

       So too for the allocation of profits. Copyright plaintiffs may not always compete head-
to-head with the infringer and so can fail to appreciate all the other inputs that contribute to gross
revenues and profits. Once the plaintiff has identified a final product containing the infringing
work, the statute assigns the burden of allocating profit to the infringer, who possesses every
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incentive to identify as many alternative contributors to its profits as it can. Cf. Sheldon,
309 U.S. at 407–08.

       The district court’s disgorgement award hewed to this process. Premier, as an initial
matter, met its burden of showing the gross revenues for Allegiance’s infringement of the
certificate. The certificates rest at the core of what Tricor hired Allegiance to do. They set forth
the terms and conditions of the loyalty program, and car dealers enrolled buyers with
Allegiance’s administration system using the certificates to collect their registration information.
Allegiance in turn received $40 Canadian every time a dealer issued a certificate to the buyer.
As Premier’s expert testified, his calculation of Allegiance’s gross revenues came out “very
close” to a back-of-the-envelope estimation that multiplies the number of loyalty certificates
issued by $40 Canadian. R.255 at 32. The district court found that, after adjusting for exchange
rates, Allegiance earned $1,279,280 from administering the Lifetime Powertrain Program
between April 2018 and April 2022.

       After that, the district court found that Allegiance could deduct $838,041 in costs, leaving
a profit of $441,239. The court acknowledged that Allegiance thought that none of this profit
could be attributed to the infringing certificates because it simply administered these plans for
Tricor, the ultimate beneficiary of any infringement. But the court reasonably concluded that
Allegiance’s arguments did not satisfy its burden of showing its own profitability figures; they
just went to Premier’s showing of gross revenues. Because Allegiance failed to carry its burden
of allocating profits, the court fairly required it to pay this amount. No clear error occurred.

       Allegiance replies that this analysis confuses the “words on the [loyalty] Certificate[s]”
with the “administration services” that Allegiance performed. Appellant’s Br. 31–32. Because
buyers do not review the certificate’s text before enrolling in the program and do not enroll in the
program before purchasing a car, Allegiance claims Premier failed to satisfy its burden of
relating Allegiance’s revenue from the loyalty program to its infringement of the certificates’
text. See R.189-2 at 2 (stating in Allegiance’s expert report that fees for administration relate to
the “fair market value for the administration services” and not “the language or style of the form
used”). But this argument asks too much of Premier. The statute places a low burden on the
victim of the infringement to explain “why that [gross revenue] number is related to the
 No. 23-3394            Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC            Page 14

infringement” without requiring a “causal connection.” Balsley, 691 F.3d at 769 n.6, 770 n.7.
Any burden of proving causation instead falls on Allegiance, which must prove in the second
phase of the burden-shifting framework how much of its profits stemmed from activity unrelated
to the infringement. Id.

        To our knowledge and to the knowledge of the parties, we have never required a plaintiff
to limit gross revenues to the infringing expression. Few infringers will be so bold as to resell
the infringed work by itself. Revenues from magazine sales reasonably relate to the inclusion of
an infringing photograph, id. at 770–71, and revenues from a factory’s output reasonably relate
to quality-control software that end-consumers never use, ECIMOS, 971 F.3d at 623–25, 636.
So too here. Allegiance sold administrative services to Tricor and received $40 Canadian in
compensation each time a dealer issued a certificate. The gross revenue figures correspond to
that income stream alone, excluding other products that Allegiance administered for Tricor. On
this record, Premier had no obligation to refine its scope further. See id. at 636 (limiting
revenues to single factory); Balsley, 691 F.3d at 770.

        Allegiance claims that a few out-of-circuit district court cases have emphasized causation
at the plaintiff’s stage of the burden-shifting process. But they do not offer meaningful parallels
to this case. One of them involved a pipe replacement company that infringed the copyrighted
contract form of a rival firm. Phx. Renovation Corp. v. Rodriguez, 461 F. Supp. 2d 411, 414
(E.D. Va. 2006). The plaintiff calculated how much the infringer had earned from jobs that
began by signing the contract. But the court declined to shift the burden as the plaintiff had not
shown any customers hired the defendant because of that form. Id. at 421–23. In the second
case, a bank infringed a copyrighted mortgage form. Homeowner Options for Mass. Elders, Inc.
v. Brookline Bancorp, Inc., No. 09-11790-NMG, 2012 WL 3136786, at *1–2 (D. Mass. July 31,
2012). Those cases both imposed a legal standard of causation higher than the relationship test
that we have adopted. Balsley, 691 F.3d at 769 & n.6. No matter whether Premier has shown
that car buyers, dealers, or Tricor contracted with Allegiance because it had copied Premier’s
expression, Premier satisfied its burden of establishing that Allegiance’s revenues reasonably
relate to its use of the certificate.
 No. 23-3394          Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC               Page 15

       Shifting gears, Allegiance challenges the district court’s factual findings about the
operation of its program, claiming they are internally inconsistent. We disagree. The district
court accurately described the “final product sold” by Allegiance as the Lifetime Powertrain
Loyalty Program. R.241 at 6. Although it stated that the certificate was “not part of the final
product sold,” it accurately explained that Allegiance “used [the certificate] to administer the
program” and that the certificate formed “one small part of the final product” akin to other inputs
that never reach the ultimate consumer. Id.; cf. ECIMOS, 971 F.3d at 636.

       Allegiance adds that the findings lack specificity because the district court did not cite
trial evidence about how this program operated or about Allegiance’s role in it. Not so. All that
the court needed to do was find facts sufficient to give us an “understanding of the basis” for its
decision, and we may assume the district court drew reasonable inferences from its findings.
Solis v. Laurelbrook Sanitarium & Sch., Inc., 642 F.3d 518, 530 (6th Cir. 2011) (quotation
omitted). The court’s orders met these modest requirements.

       Attorney’s fees. Allegiance challenges the district court’s award of statutory attorney’s
fees to Premier. We review that decision for an abuse of discretion. Balsley, 691 F.3d at 771.

       Under copyright law, a district court “in its discretion may allow the recovery of full
costs,” which includes “a reasonable attorney’s fee to the prevailing party.” 17 U.S.C. § 505.
District courts determine whether to do so based on the totality of the circumstances: the
unreasonableness of the infringement, the unreasonableness of any litigation behavior, the need
to deter future infringement, the frivolity or not of the lawsuit, and any suspect motivations in
defending the challenge. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994).

       The district court did not abuse its discretion in awarding these fees. In considering
Allegiance’s litigation position, the court found that its arguments about the infringer’s burden in
disgorgement calculations unreasonably ignored our precedent, and it found unreasonable
Allegiance’s “late hour” challenges to the summary judgment decision. R.266 at 13–15. The
court then concluded that the goal of deterrence also supported a fee award given that Allegiance
had continued to profit from Premier’s copyright even after the summary judgment, and the
company suggested that it would continue to do so absent a permanent injunction.
 No. 23-3394          Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC              Page 16

       Allegiance claims that the district court could not rely on the rationale of deterrence once
it enjoined Allegiance from infringing this copyright.      But the Supreme Court declined to
endorse all-or-nothing approaches to deterrence when it observed that courts must consider this
factor “in particular circumstances.” Fogerty, 510 U.S. at 534 n.19. A case-by-case approach
makes considerable sense in the equitable setting of injunctions.       The district court had a
legitimate basis to believe that an injunction by itself would not deter Allegiance from continuing
to infringe on Premier’s certificate. Allegiance had continued to infringe on the certificate
during the litigation and had suggested that it would keep doing so.

       Allegiance adds that the district court erred by finding that Allegiance took an
unreasonable position on disgorgement. But the case law explains that plaintiffs possess a
burden only to show a reasonable relationship between infringement and gross revenues.
Balsley, 691 F.3d at 769. A district court does not abuse its discretion in characterizing as
unreasonable arguments that are contrary to settled law. See Coles v. Wonder, 283 F.3d 798,
803–04 (6th Cir. 2002). Nor was that finding clearly erroneous. Allegiance supports its claim
about ambiguous precedent with a single district court opinion. Yet even that opinion correctly
explained that the plaintiff could “not establish that the revenues are reasonably related to
infringement.” Satija v. Permanent Gen. Assurance Corp. of Ohio, No. 1:13-CV-00082, 2014
WL 1514240, at *5 (N.D. Ohio Apr. 16, 2014).

       Allegiance claims that the court erred when it described several of Allegiance’s motions
as unreasonable because they were untimely and amounted to thinly veiled attempts to relitigate
summary judgment. Because the district court had a ring-side seat to the parties’ litigation
strategies and positions, we will not lightly disturb its discretion in this area. See Bridgeport
Music, Inc. v. Dimension Films, 410 F.3d 792, 809–10 (6th Cir. 2005) (amended opinion).
Allegiance gives no reason why we should second guess the district court’s determination that
Allegiance needlessly delayed filing its motion for reconsideration.

       We affirm.
No. 23-3394   Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC   Page 17

                Appendix A. Premier’s Copyrighted Certificate
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                     Appendix B. Allegiance’s Certificate
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                      Appendix C. Comparison Certificate
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