Court Opinion

ID: 2799437
Source: CourtListenerOpinion
Date Created: 2015-05-07 22:01:25.448708+00
Date Added: 2024-06-11T11:30:54.055315
License: Public Domain

Case: 14-12371   Date Filed: 05/07/2015   Page: 1 of 13

                                                       [DO NOT PUBLISH]

          IN THE UNITED STATES COURT OF APPEALS

                  FOR THE ELEVENTH CIRCUIT
                    ________________________

                           No. 14-12371
                     ________________________

                  D.C. Docket No. 5:11-cv-01511-IPJ

KEITH KARLSON,

                                  Plaintiff - Counter Defendant -Appellant,

versus

RED DOOR HOMES, LLC,
SMA OPERATIONS MANAGEMENT, LLC,
RDH ADVISING, LLC,

                                Defendants - Counter Claimants - Appellees.

                     ________________________

              Appeal from the United States District Court
                 for the Northern District of Alabama
                     ________________________

                            (May 7, 2015)
              Case: 14-12371      Date Filed: 05/07/2015     Page: 2 of 13

Before MARCUS, ROSENBAUM, and GINSBURG, * Circuit Judges.

PER CURIAM:

      Keith Karlson appeals from the district court’s order granting summary

judgment to Red Door Homes, LLC, SMA Operations Management, LLC, and

RDH Advising, LLC (collectively, “Red Door”), in his action for copyright

infringement, breach of contract, and conversion. Karlson claims that Red Door

unlawfully sold and relicensed his computer-generated illustrations of architectural

plans, or renderings, to third parties.          The district court found that Karlson

impliedly granted to Red Door a nonexclusive license to use and distribute the

renderings, a finding that it determined disposed of all of Karlson’s claims. For the

reasons that follow, we affirm.

                                            I.

      Karlson is a self-employed artist who makes renderings of homes—colored

illustrations of what homes will look like when built—from architectural plans. In

the normal course of Karlson’s business dealings, a customer sends Karlson an

email with attachments containing certain architectural plans.          Karlson uses a

computer, a camera, and Photoshop software to create a rendering, and then emails

the customer back, sending the rendering to the customer as an email attachment.

*
  Honorable Douglas H. Ginsburg, United States Circuit Judge for the District of Columbia,
sitting by designation.
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He later emails the customer an invoice for the work, and he is paid one fee per

rendering.

      Karlson met Patrick Miller, an architectural home plan designer, in 1998.

Miller would frequently ask Karlson to create renderings of Miller’s home designs

and plans if one of Miller’s homebuilder clients requested such renderings. In or

around 2005, Karlson and Miller formed a business together for the purpose of

licensing their existing stock of previously created designs and renderings. Miller

would sell drafting and design consultation to homebuilders, and he would refer

the homebuilders to Karlson to obtain renderings.

      In 2008, Miller became a minority shareholder of Red Door Homes, LLC,

and he is currently the Director of Product Development there.           That entity

provides support to developers and homebuilders, such as marketing, purchasing,

estimating, drafting, designing, and accounting. It aims mainly to provide software

estimates and building packages to developers and homebuilders through license

agreements. The licensees receive proprietary planning and ordering software and

the ability to access rendered home plans and designs.

      In April 2008, Miller began ordering renderings from Karlson on behalf of

Red Door. Karlson testified that when he created a rendering for Red Door, he

understood that Red Door was going to use his rendering in a product line it was

selling to homebuilders—in other words, that his rendering would be presented to

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potential homebuilder clients and offered as part of the assets and services that Red

Door was advertising to those clients. Karlson further conceded that, before he

sent any renderings to Miller, he understood that Red Door intended to take his

renderings and sell them to clients, or that Red Door would provide the renderings

to others. And, Karlson acknowledged that he understood that if Red Door found a

willing client, his renderings would be sold to the client. In addition, Karlson

explained that he understood that Red Door would not be building homes; instead,

the clients to whom the renderings were provided were going to build homes.

Significantly, Karlson testified that he gave Red Door “clear permission” to sell

clients his renderings along with Red Door’s plans and services. But, Karlson

contends, he believed he would get paid each time Red Door did.

      From April 2008 through November 2009, Red Door placed twenty-three

separate orders from Karlson, and Karlson created approximately 130 renderings

for Red Door. Karlson emailed twenty-three separate invoices to Miller for the

renderings, sending each invoice sometime after he created and delivered to Miller

the relevant renderings. Red Door paid each and every one of these invoices.

      The bottom of each email invoice contained a “Copyrights Declaration,”

drafted by Karlson, which Karlson never discussed with Miller. The declaration

provided that, with the delivery of the renderings in the invoice, Karlson

transferred to Red Door “a limited copyright to reproduce the artwork . . . in

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unlimited quantities on any media . . . , royalty-free, but only for use directly by

[Red Door] . . . .” It provided that the “copyright may not be transferred to, or

utilized for the benefit of, another business entity without [Karlson’s] expressed

permission.” It further provided, “By using the artwork in any way, [Red Door]

hereby agree[s] to these terms and limitations to the copyrights transferred to [Red

Door] with delivery of [Red Door’s] artwork.” Notably, Karlson had never before

placed a copyright declaration on any invoice that he had emailed to Miller; but,

for the first time in all of his dealings with Miller, he included the copyright

declaration in the invoice emails for the work he did on behalf of Red Door. Nor

had Karlson ever before received any royalty payments from Miller or Miller’s

employers for renderings.

      Around October or November 2009, Karlson discovered that Red Door had

made what he believes were impermissible, undisclosed distributions of his

renderings. He wrote an email to Miller in which he explained that he thought he

would be getting paid each time Red Door transferred a rendering to a client. He

also asked Red Door to pay him royalty fees based upon the number of builders the

artwork benefitted and the number of renderings those builders used.

      Miller responded that Red Door could not agree to Karlson’s terms, as it

would not be a wise business model for Red Door. In response, Karlson demanded

that Red Door inform third parties using his artwork to immediately cease and

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desist. Miller replied that Red Door would respond in a timely and professional

manner, most likely by removing the renderings from its website and brochures

and replacing them with a new set of renderings.

      Karlson applied for copyright protection for the renderings and was issued a

Certificate of Copyright Registration effective December 18, 2009. On January

26, 2010, Red Door internally informed personnel, via email, that Karlson’s

renderings would be removed from the website and replaced as soon as possible.

The email explained that Red Door had found another source of renderings from

which it clearly obtained the unlimited rights to use the artwork, and it expected to

have the new renderings within two weeks. Red Door asserts that it informed its

licensees by telephone calls in early 2010 to no longer use Karlson’s renderings.

Though Karlson asserts that Red Door continues to use his renderings, whether this

is correct is unclear from the record.

                                         II.

      We review a district court’s grant of summary judgment de novo, viewing all

evidence and drawing all inferences in favor of the nonmoving party. Wilchombe

v. TeeVee Toons, Inc., 555 F.3d 949, 956 (11th Cir. 2009). Summary judgment is

appropriate where there is no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a).

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                                        III.

      The Copyright Act provides a copyright owner with the exclusive right to

copy, distribute, or display his work. See 17 U.S.C. § 106; MacLean Assocs., Inc.

v. Wm. M. Mercer-Meidinger-Hansen, Inc., 952 F.2d 769, 778 (3d Cir. 1991). A

copyright owner can transfer copyright ownership through the grant of an

exclusive license, but the grant must be in writing. See 17 U.S.C. §§ 101, 204(a);

MacLean Assocs., 952 F.2d at 778. Alternatively, a copyright owner may allow

another to use the copyrighted material without transferring ownership in the

material through the grant of a nonexclusive license.       See Kennedy v. Nat’l

Juvenile Det. Ass’n, 187 F.3d 690, 694 (7th Cir. 1999).           With an implied

nonexclusive license, “the copyright owner . . . permits the use of a copyrighted

work in a particular manner.” I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir.

1996). The grant of a nonexclusive license does not require a writing under the

Copyright Act, and it may occur orally or may be implied from the copyright

owner’s conduct. Latimer v. Roaring Toyz, Inc., 601 F.3d 1224, 1235 (11th Cir.

2010); see 17 U.S.C. §§ 101, 204(a).

      Because an implied nonexclusive license can provide an affirmative defense

to a claim of copyright infringement, the alleged infringer bears the burden to show

that such an implied nonexclusive license exists. Latimer, 601 F.3d at 1235. “An

implied license is created when one party (1) creates a work at another’s request;

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(2) delivers the work to that person; and (3) intends that the person copy and

distribute the work.” Id. Courts examine the totality of the parties’ conduct to

evaluate intent. See Estate of Hevia v. Portrio Corp., 602 F.3d 34, 41 (1st Cir.

2010).

       We have instructed, “In determining whether an implied license exists, a

court should look at objective factors evincing the party’s intent, including

deposition testimony and whether the copyrighted material was delivered without

warning that its further use would constitute copyright infringement.” Wilchombe,

555 F.3d at 956 (internal quotation marks and citation omitted). An implied

nonexclusive license may be limited in scope, and a defendant commits copyright

infringement if he exceeds the scope of the license. Latimer, 601 F.3d at 1235.

So, courts must focus on objective evidence revealing the intent of the parties both

to determine whether an implied license exists and, if so, to determine the scope of

the license. Id. “[A]n implied license will be limited to a specific use only if that

limitation is expressly conveyed when the work is delivered.” Id.

       Here, we agree with the district court that Karlson impliedly granted Red

Door a nonexclusive license to use and distribute his renderings. 1 It is undisputed

that Karlson created the renderings at Red Door’s request and delivered them to

       1
           For the purposes of this discussion, we assume without deciding, as the district court
did, that Karlson holds valid copyrights in his renderings.

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Red Door. With respect to Karlson’s intent, the record shows that Karlson knew

that Red Door would be using and distributing his work to clients. He testified that

when he created renderings for Red Door, he understood that Red Door was going

to use the renderings in the product line it was selling to homebuilders and that his

renderings would be presented to potential clients and offered as a part of the

assets and services Red Door advertised to those clients. He also stated that he

knew that Red Door was going to “sell or provide” his renderings to clients along

with Red Door’s plans and services and that he gave Red Door “clear permission”

to do so.2

       Karlson argues that, though he may have granted a nonexclusive license to

Red Door to use and distribute his renderings, he intended any such license to be

limited in scope so that Red Door could not sell and relicense his renderings to

clients. In support of this position, Karlson asserts the following: (1) he had never

authorized any customer to license his renderings to third parties without additional

compensation in the past; (2) he had an eight-year course of performance with

       2
          In a prior appeal in this case, this Court stated in the factual background section of the
opinion that Red Door “licensed Karlson’s illustrations to third parties without Karlson’s
knowledge or permission.” Karlson v. Red Door Homes, LLC, 553 F. App’x 875, 876 (11th Cir.
2014) (per curiam). We do not read this statement as a factual finding, as the Court in that
decision did not address the facts or the merits of Karlson’s claims. See id. at 876-78. Instead,
the Court merely remanded the case to the district court because the parties had not had the
opportunity to address the implied nonexclusive license issue below: the district court had
decided Karlson’s claims on that ground sua sponte without giving adequate notice to the parties.
Id. at 876. Thus, the Court’s statement was not meant to constitute a finding, but rather recited
Karlson’s allegations to give context to the Court’s decision.
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Miller whereby Miller’s customers ordered renderings from Karlson, and each

customer paid separately for the renderings; (3) he drafted and included a notice of

limited copyright in each of the twenty-three separate invoices he emailed to

Miller; and (4) he immediately applied for copyright protection and emailed Red

Door upon discovering that it had been relicensing his renderings to clients for

their own copying and distribution.

      We find Karlson’s arguments unavailing. First, though Karlson claims that

he never authorized any customer to relicense his renderings to third parties

without additional compensation, he provides no evidence of any circumstance in

which he denied such authorization to a customer. Second, nor does Karlson

present any evidence that in his prior dealings with Miller, he was ever paid more

than once for a rendering. Karlson did not provide any evidence of any situation in

which he received multiple payments for his renderings, and he testified that he

never before received any royalty payments from Miller or Miller’s employers for

renderings he sold to them.

      Third, though Karlson included a copyright declaration in his email invoices

through which he purportedly intended to limit the scope of Red Door’s use of his

renderings, each and every invoice pertained to only renderings that Karlson had

previously delivered to Red Door. But an implied license is “limited to a specific

use only if that limitation is expressly conveyed when the work is delivered.”

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Latimer, 601 F.3d at 1235 (emphasis added); see also Wilchombe, 555 F.3d at 956

(explaining that the court looks at “objective factors evincing the party’s intent,

including . . . whether the copyrighted material was delivered without warning that

its future use would constitute copyright infringement”) (internal quotation marks

and citation omitted) (emphasis added). Because there is no evidence that Karlson

intended to limit the scope of Red Door’s use of his renderings at the time that he

delivered the renderings, he could not have, as a matter of law, limited the scope of

the nonexclusive license he granted.

      Finally, the fact that Karlson emailed Red Door demanding additional

payment and applied for copyright protection immediately upon discovering that

Red Door had been relicensing his renderings to customers is, at best, weak, if any,

evidence of Karlson’s intent when he created and delivered the renderings.

      For these reasons, we find that the scope of the nonexclusive license that

Karlson impliedly granted to Red Door was not limited to the use and distribution

of his renderings, but also included the right to sell and relicense the renderings to

third-party clients. We conclude that the district court properly granted summary

judgment to Red Door on Karlson’s copyright-infringement claim.

                                         IV.

      The district court also properly granted summary judgment to Red Door on

Karlson’s breach-of-contract and conversion claims.

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      Karlson’s breach-of-contract claim turns on whether his post-delivery

copyright declaration is enforceable as part of the parties’ agreement. It is not.

Through the copyright declaration in each of the invoices, Karlson attempted to

materially alter the terms of the parties’ agreement regarding the scope of a

nonexclusive license that he had already impliedly granted. But, as discussed

previously, to limit the grant of a nonexclusive license to a specific use, a

copyright owner must expressly convey the limitation when the work is delivered.

See Latimer, 601 F.3d at 1235. Thus, each time Karlson emailed an invoice for

renderings he had already delivered, it was too late for him to modify the parties’

agreement with respect to the scope of the license for the previously delivered

works. Because the copyright declaration could not have become part of the

parties’ agreement, Red Door could not have breached the terms in the copyright

declaration.

      Karlson’s conversion claim similarly fails. Karlson argues that Red Door’s

selling and relicensing of his renderings constituted conversion because it was an

illegal assumption of ownership.           Under Alabama law, 3 a conversion is “a

wrongful taking or a wrongful detention or interference, an illegal assumption of

ownership, or an illegal use or misuse of another’s property.” Horne v. TGM

Assocs., L.P., 56 So. 3d 615, 628 (Ala. 2010) (quotation marks and citation

      3
          Karlson asserts the conversion claim under Alabama law.
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omitted). Here, because Karlson impliedly granted Red Door the right to sell and

license his renderings, its selling and relicensing of his renderings was not

wrongful or illegal.4

                                               V.

       For the foregoing reasons, we affirm the district court’s grant of summary

judgment to Red Door on all of Karlson’s claims.

       AFFIRMED.

       4
          We note that Red Door argues that Karlson’s conversion claim is preempted by the
Copyright Act, which preempts certain state-law claims. See 17 U.S.C. § 301(a); Utopia
Provider Sys., Inc. v. Pro-Med Clinical Sys., L.L.C., 596 F.3d 1313, 1325 (11th Cir. 2010). We
do not opine on this issue because we find that Karlson’s claim for conversion fails regardless of
whether it may also be preempted.
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