Court Opinion

ID: 4273448
Source: CourtListenerOpinion
Date Created: 2018-05-08 20:00:25.520166+00
Date Added: 2024-06-11T14:06:35.661656
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
No. 17-1733

LIMECORAL, LTD.,
                                                 Plaintiff-Appellant,

                                 v.

CAREERBUILDER, LLC,
                                                Defendant-Appellee.

        Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
        No. 1:15-cv-07484 — Samuel Der-Yeghiayan, Judge.

     ARGUED NOVEMBER 1, 2017 — DECIDED MAY 8, 2018

   Before MANION, KANNE, and ROVNER, Circuit Judges.
   ROVNER, Circuit Judge. Graphics-design firm LimeCoral,
Ltd., sued the job website CareerBuilder, LLC, for breach of
copyright and breach of an alleged oral agreement to pay
LimeCoral for each annual renewal of a graphic design that
LimeCoral prepared for a job posting on CareerBuilder’s
website. The district court entered summary judgment in favor
2                                                   No. 17-1733

of CareerBuilder, finding that CareerBuilder had an irrevoca-
ble, implied license to use LimeCoral’s designs that was not
conditioned upon any agreement to pay LimeCoral renewal
fees. We affirm.
                               I.
    CareerBuilder operates the online employment website
www.careerbuilder.com, where employers list job openings
and job seekers can post their resumes, browse job openings by
category, and submit employment applications. Employers pay
CareerBuilder to post their job openings, and one option that
CareerBuilder offers is a “premium job branding” that incorpo-
rates customized HTML and static and animated graphics into
a job posting. As relevant here, job postings were sold for a
one-year term.
    LimeCoral was a small design firm that prepared media
files incorporating customized graphic designs for premium
job brandings on the CareerBuilder website from 2008 through
2014. Brian Schoenholtz, a former employee of CareerBuilder,
was LimeCoral’s principal.
    LimeCoral entered into an Independent Contractor Agree-
ment with CareerBuilder on October 1, 2008 (the “2008
Agreement”), pursuant to which LimeCoral agreed to prepare
custom graphic designs on behalf of CareerBuilder’s employer
clients and CareerBuilder agreed to pay LimeCoral for those
designs pursuant to a schedule of fees set forth in an exhibit to
be attached to the agreement. CareerBuilder committed in this
agreement to give LimeCoral 50 percent of its orders for online
design services. The agreement was for a term of six months.
The agreement specified that all graphic designs created for
No. 17-1733                                                  3

CareerBuilder (included within the scope of “Confidential
Information” as defined in the contract) would constitute the
sole and exclusive property of CareerBuilder. The agreement
said nothing about LimeCoral’s entitlement to renewal fees
when a CareerBuilder client renewed a job posting.
     By its terms, the 2008 Agreement expired at the end of six
months. The evidence indicates that the parties were unable to
come to terms on a new agreement. CareerBuilder, in particu-
lar, was no longer willing to promise any particular percentage
or dollar amount of its design business to LimeCoral as
LimeCoral wished. (Later proposed agreements ran into the
same impasse.) LimeCoral and CareerBuilder nonetheless
agreed to continue doing business with one another, albeit
without a written agreement. Over the course of the next six
years, the relationship between the parties went on largely as
before. LimeCoral continued to prepare media files incorporat-
ing custom graphic designs (more than 2,000, all told) at the
request of CareerBuilder in exchange for a design fee—
typically $3,000 for each new design. However, as there was no
longer a written agreement transferring ownership of the
copyright on the designs to CareerBuilder, LimeCoral retained
ownership of the copyright and, as discussed below, implicitly
granted CareerBuilder a license to use the designs. What the
parties dispute is whether the license was unconditional and
irrevocable, or subject to CareerBuilder’s alleged agreement to
pay LimeCoral an annual renewal fee for every design that
CareerBuilder continued to use beyond the initial period of one
year.
   In practice, when an employer renewed a job posting with
CareerBuilder, it would pay a fee to CareerBuilder—$10,000 or
4                                                  No. 17-1733

more, according to LimeCoral. If the employer wanted an
entirely new design for its posting, then CareerBuilder would
commission LimeCoral or one of its other vendors to prepare
the design, without regard to who had designed the original.
If, however, the employer wanted to stick with the original
design but make revisions to it (to incorporate a new company
logo, for example), CareerBuilder routinely would, for the sake
of efficiency, have the vendor who prepared the original
design make the changes, and the vendor would be paid for
those changes. Thus, whenever revisions to a LimeCoral design
for a renewed job posting were called for, CareerBuilder would
pay LimeCoral a flat fee for those modifications (typically
$1500), however large or small the degree of work required.
    The parties disagree as to the import of the revision fees.
LimeCoral characterizes them as a practice of CareerBuilder
paying it a fee for any renewal, given that it received the same
fee even when the requisite revisions involved only an insignif-
icant amount of work. CareerBuilder, on the other hand, insists
that it only paid LimeCoral a fee when revisions were required
in connection with a renewal, such that the fees were genuinely
tied to the revisions rather than the renewals.
   There is evidence in the record that confirms Career-
Builder’s understanding of the practice. In his deposition,
Schoenholtz said he “believe[d]” it to be the case both that
LimeCoral had never sought a renewal fee when revisions to
the original design were not called for and that CareerBuilder
had never paid it a fee on renewal in the absence of revisions.
R. 32-1 at 59, Schoenholtz Dep. 230–31. Additionally, email
correspondence between Schoenholtz and CareerBuilder
makes explicit the connection between fees and revisions to
No. 17-1733                                                   5

renewed postings. In a January 2012 email to Schoenholtz,
CareerBuilder’s production manager, Molly Bendell, wrote:
     Thanks for reaching out, Brian. Go ahead and start
     the revisions so as not to hold anything up. In the
     meantime, I’ll have a conversation with Hyemi and
     Loren about when to pay designers for revisions.
     Personally, I’ve always paid once the client has
     renewed and requested edits. If we get more money
     then you get more money for the work you do. If it’s
     just a minor revision and not part of a renewal, then
     I usually expect that to be done as part of the origi-
     nal work order.
     Are you in agreement with that?
R. 32-1 at 202. Schoenholtz replied:
     Sounds good to me. I agree 100% with your assess-
     ment on renewals and revisions, and minor revi-
     sions on existing projects.
R. 32-1 at 202. The following year, there was a similar email
exchange. CareerBuilder’s Bendell advised Schoenholtz:
     … And, to clarify, we only pay you guys [design
     vendors] at renewals when a client requests
     changes. We treat it as a new project, essentially …
     so if they renew in January and don’t request edits
     until March that same year, then we would still pay
     you. If they ask for further edits throughout the year
     after that, then that’s a one-off you need to discuss
     with the Brand Strategist.
6                                                 No. 17-1733

      Does that all help clarify?
R. 32-1 at 204. Schoenholtz responded:
     No worries on my side, just wanted to explain the
     situation so you guys know I’m not trying to get
     greedy. …
R. 32-1 at 204.
    In 2014, CareerBuilder reduced the volume of its orders for
online design work to LimeCoral. Although, upon expiration
of the 2008 Agreement, CareerBuilder had not formally
committed to direct any particular amount of business to
LimeCoral, in practice CareerBuilder’s Bendell had made it a
“goal” to give LimeCoral an average of $35,000 per month in
design work. But once CareerBuilder decided in 2014 to award
a certain type of work to another firm, Bendell advised
Schoenholtz that CareerBuilder would no longer meet the
$35,000 per month goal. At that point, LimeCoral concluded
that it was not being sufficiently compensated to warrant
continuation of the license CareerBuilder had been granted in
its works. In a letter dated July 17, 2014, LimeCoral notified
CareerBuilder that it was revoking the latter’s license to
continue using any media file prepared by LimeCoral and used
beyond the one-year period for which CareerBuilder had paid
a design or revision fee. CareerBuilder declined to comply with
LimeCoral’s demand that it remove any such media files from
its website, prompting LimeCoral to file this lawsuit.
   LimeCoral charged CareerBuilder with breach of contract,
based on its alleged failure to pay renewal fees to LimeCoral,
and breach of copyright on the hundreds of media files that
No. 17-1733                                                   7

CareerBuilder continued to use for more than one year
following their creation (or renewal) and after LimeCoral had
declared that it was revoking the license on such files.
    The district court granted summary judgment to Career-
Builder on both claims. The court reasoned that, upon the
expiration of the parties’ original written contract, Career-
Builder had acquired an implied, non-exclusive license to use
LimeCoral’s designs, and that, contrary to LimeCoral’s
assertions, there was no subsequent oral agreement that
imposed any conditions on that license. In particular, the court
found no evidence to support the notion that CareerBuilder
had agreed to pay LimeCoral a renewal fee whenever a
customer renewed a job posting, even if no revisions to the
LimeCoral design were required. “[I]t is undisputed,” the court
wrote, “that for a period of over six years and two thousand
projects, LimeCoral has not pointed to evidence showing that
CareerBuilder ever paid any renewal fee or that LimeCoral
asked for any renewal fee.” R. 64 at 10. Even if there were
proof sufficient to establish such an oral agreement, the court
added, the record made clear that LimeCoral had waived any
claim to breach of such an agreement by remaining silent for
so long when such fees were not being paid. The absence of
proof that CareerBuilder promised to pay LimeCoral renewal
fees, and that the license to use LimeCoral’s media files was
conditioned on such a promise, was fatal to both the copyright
claim and the contract claim.
                              II.
   On appeal, LimeCoral renews its contention that
CareerBuilder agreed to pay it a fee for the renewal of any job
8                                                     No. 17-1733

posting and that CareerBuilder’s license to use LimeCoral’s
copyrighted work was subject to that agreement. Career-
Builder’s refusal to pay LimeCoral renewal fees gave Lime-
Coral the power to revoke the license on its works and, in
LimeCoral’s view, rendered CareerBuilder liable for breach of
the purported agreement and for copyright infringement on
any media files CareerBuilder continued to use despite
LimeCoral’s revocation of the license to use them.
    Following the expiration of the 2008 independent contractor
agreement, the parties, as we have discussed, continued to
transact business as before. Although the expiration of the 2008
Agreement meant that ownership of the copyrights in the job
brandings that LimeCoral created now remained with
LimeCoral, there is no dispute that CareerBuilder acquired a
non-exclusive implied license to use those brandings.
3 Nimmer on Copyright § 10.03 (A)(7) (Matthew Bender, rev.
ed. 2018); I.A.E., Inc. v. Shaver, 74 F.3d 768, 775 (7th Cir. 1996);
see also Muhammad-Ali v. Final Call, Inc., 832 F.3d 755, 762 (7th
Cir. 2016), cert. denied, 137 S. Ct. 681 (2017); ITOFCA, Inc. v.
MegaTrans Logistics, Inc., 322 F.3d 928, 940–41 (7th Cir. 2003)
(Ripple, J., concurring); Kennedy v. Nat’l Juvenile Det. Ass’n, 187
F.3d 690, 694 (7th Cir. 1999). LimeCoral created the brandings
at the request of CareerBuilder and conveyed them to
CareerBuilder with the understanding that CareerBuilder
would use them on its website. See Effects Assocs., Inc. v. Cohen,
908 F.2d 555, 558–59 (9th Cir. 1990) (cited with approval in
I.A.E.). Absent a limitation imposed on the license at the time
these works were delivered to CareerBuilder, the license
impliedly granted to CareerBuilder would encompass all of the
rights of LimeCoral as the copyright holder. See Latimer v.
No. 17-1733                                                       9

Roaring Toyz, Inc., 601 F.3d 1224, 1235 (11th Cir. 2010); Asset
Mktg. Sys., Inc. v. Gagnon, 542 F.3d 748, 757 (9th Cir. 2008). In
view of CareerBuilder’s payment for the job brandings, its
license would also be irrevocable. Nimmer § 10.02(B)(5); I.A.E.,
74 F.3d at 777; see also Asset Mktg. Sys., 542 F.3d at 757; Lulirama
Ltd. v. Axcess Broad. Servs., Inc., 128 F.3d 872, 879, 882 (5th Cir.
1997).
   LimeCoral contends that the license acquired by
CareerBuilder was conditioned upon CareerBuilder’s
agreement to pay LimeCoral a renewal fee for every branding
that was renewed beyond the initial one-year term by Career-
Builder’s customer.1 Once its business from CareerBuilder
dropped off and LimeCoral (by its own account) learned that
there were some renewed job brandings for which it was not
receiving a renewal fee from CareerBuilder, it purported to
revoke CareerBuilder’s license to continue using the brandings
that LimeCoral had created. In fact, as we discuss below, the
record indicates that LimeCoral was never paid renewal fees
as such, that LimeCoral knew this, and that the license it
conveyed to CareerBuilder was never conditioned on the
payment of such fees.
    LimeCoral suggests that the parties had an understanding
as to its entitlement to renewal fees from the outset of their
relationship, but the 2008 independent contractor agreement
contradicts such an understanding. That written agreement,
which by its terms expressly superseded any and all oral

1
   LimeCoral does not contend on appeal that the license was also
conditioned upon a promise by CareerBuilder to give LimeCoral a
particular percentage or dollar amount of business.
10                                                           No. 17-1733

agreements preceding it, conveyed complete ownership of the
copyright in each job branding to CareerBuilder, with no
attendant obligation by CareerBuilder to pay LimeCoral a
renewal fee. So the notion that there was an agreement at the
inception of the parties’ relationship to pay renewal fees is a
non-starter.2
    Nor is there any evidence that upon or subsequent to the
expiration of the 2008 Agreement, CareerBuilder ever agreed
to pay LimeCoral a renewal fee for each branding renewed by
a CareerBuilder customer. Schoenholtz admitted, when asked,
that he could not recall an instance in which CareerBuilder
agreed to pay LimeCoral a fee for each and every renewal.
R. 32-1 at 64, Schoenholtz Dep. 250–51. “I—offhand, no. I can’t
think of anything that’s relating to what you’re talking about,”
he said. It is true, as LimeCoral points out, that elsewhere in his
deposition (and in his post-deposition affidavit), Schoenholtz
contended summarily that there was an oral agreement
between the parties that LimeCoral would be paid renewal
fees. But Schoenholtz, as LimeCoral’s principal, would be the
individual with knowledge as to the timing and terms of any
such agreement. The fact that he could not “think of anything”

2
    LimeCoral suggests that because a schedule of fees was, in fact, never
attached to the contract as the parties envisioned, the agreement was only
partially integrated, leaving LimeCoral free to resort to extrinsic evidence
to show that their agreement, from the start, included an unwritten promise
to pay LimeCoral a fee for each and every renewal. Yet, as we discuss
below, LimeCoral had identified no evidence of such a promise (in 2008 or
later) and, to the contrary, what record evidence there is on this subject
indicates that there was never an agreement to pay, nor a practice of
paying, LimeCoral renewal fees as such.
No. 17-1733                                                                11

relating to such an agreement, in the face of CareerBuilder’s
consistent denials that there ever was such an understanding,
leaves, shall we say, a large hole in LimeCoral’s case for the
existence of a limitation on CareerBuilder’s license to use the
brandings.
    Reinforcing the point are the two instances in 2012 and 2013
in which CareerBuilder expressly advised Schoenholtz that
CareerBuilder was not and would not be paying renewal fees
to LimeCoral, and Schoenholtz expressed his agreement with
this understanding. Thus, when production manager Bendell
explained to Schoenholtz that CareerBuilder would only pay
LimeCoral when a customer both renewed a job posting and
requested edits to the graphic files, Schoenholtz replied that he
“agree[d] 100%” with that understanding. R. 32-1 at 202. And
when, the following year, Bendell again advised Schoenholtz
that “we only pay [design vendors like LimeCoral] at renewals
when a client requests changes [to the design],” Schoenholtz
expressed “[n]o worries on my side … .” R. 32-1 at 104. These
interchanges are directly contrary to the idea that Career-
Builder had agreed to compensate LimeCoral for all renewals.
And, of course, Schoenholtz acknowledged in his deposition
that, consistent with these emails, LimeCoral in fact had been
paid fees in connection with renewals only when revisions to
its original designs (be they large or small) were called for.
R. 32-1 at 59, Schoenholtz Dep. 230–31.3

3
   In its initial brief, LimeCoral has characterized certain of Schoenholtz’s
interchanges with CareerBuilder on this point as manifesting an
“agreem[ent] to disagree.” LimeCoral Brief 35, 46. But as CareerBuilder
                                                                (continued...)
12                                                         No. 17-1733

    These communications do show that CareerBuilder was
paying LimeCoral for any revisions to the job branding
requested at the time of renewal; and because the revisions
were minor in some instances, LimeCoral treats Career-
Builder’s willingness to pay a fee for minimal revisions as an
agreement to pay for any renewal, period. But this elides the
distinction between a revision fee and a renewal fee. It is
undisputed that CareerBuilder paid LimeCoral whenever
revisions to an existing job branding were called for, even if the
revisions took little effort on LimeCoral’s part. (We may set
aside any question about what might differentiate minor from
major revisions.) Given that the fee paid to LimeCoral was the
same whatever the degree of revisions called for, Career-
Builder (and LimeCoral, for that matter) may have thought
that everything would wash out in the end as between labor-
intensive and labor-minimal revisions. The essential point is
that the fee was tied to revisions rather than a simple renewal.
    There is, then, no evidence that would permit the factfinder
to conclude that there was an agreement between LimeCoral
and CareerBuilder that LimeCoral would be paid a fee for each
renewal, and that the implied license LimeCoral granted to
CareerBuilder to use the job brandings was subject to that
agreement. The license was, consequently, unconditional and
irrevocable, and encompassed the rights to use and distribute
the job brandings as CareerBuilder and its customers wished.

3
  (...continued)
naturally and rightly points out, an agreement to disagree is no agreement
at all.
No. 17-1733                                                  13

This dooms LimeCoral’s copyright claim as well as its claim for
breach of contract.
    As we have noted, the district court went on to conclude,
alternatively, that even if there were an agreement between
CareerBuilder and LimeCoral as to renewal fees, LimeCoral
waived any breach of that agreement by remaining silent for
the duration of the six-year relationship between the parties
despite its awareness that CareerBuilder was not paying it a fee
for all job-branding renewals. In view of our conclusion that
the record does not support the notion that there was any such
agreement, we need not take up the matter of waiver.
    Finally, LimeCoral contends that the district court
improperly denied as moot its cross-motion for partial
summary judgment on the matter of its ownership of the
copyright on the job brandings; but we can find no fault in the
court’s judgment on this point. CareerBuilder did not contest
LimeCoral’s ownership of the copyright as to works created
after the expiration of the 2008 Agreement, and although
ownership was obviously a key element of LimeCoral’s
copyright infringement claim against CareerBuilder, it was not
the only element. The copyright claim failed for the reasons we
have discussed: CareerBuilder had an implied license to use
the works that was neither limited nor revocable. And because
the claim failed on those grounds, there was no need to grant
LimeCoral partial summary judgment on the limited (and
uncontroverted) matter of who owned the copyright.
                              III.
   As the implied license granted to CareerBuilder to use the
graphic works in question was not conditioned on any
14                                             No. 17-1733

agreement to pay LimeCoral renewal fees, the district court
properly granted summary judgment to CareerBuilder on
LimeCoral’s claims of copyright infringement and breach of
contract.
                                               AFFIRMED