Court Opinion

ID: 3036119
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:53:44.607753+00
Date Added: 2024-06-11T11:40:54.569198
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              APR 07 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S . CO U RT OF AP PE A LS

                            FOR THE NINTH CIRCUIT

LUCKY BREAK WISHBONE                             No. 08-35933
CORPORATION,
                                                 D.C. No. 2:06-cv-00312-TSZ
             Plaintiff - Appellee,

  v.                                             MEMORANDUM *

SEARS ROEBUCK AND CO, a New
Yorµ corporation; YOUNG & RUBICAM
INC, a Delaware corporation,

             Defendants - Appellants.

LUCKY BREAK WISHBONE                             No. 08-35985
CORPORATION,
                                                 D.C. No. 2:06-cv-00312-TSZ
             Plaintiff - Appellant,

  v.

SEARS ROEBUCK AND CO, a New
Yorµ corporation; YOUNG & RUBICAM
INC, a Delaware corporation,

             Defendants - Appellees.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                    Appeal from the United States District Court
                      for the Western District of Washington
                  Thomas S. Zilly, Senior District Judge, Presiding

                        Argued and Submitted February 3, 2010
                                 Seattle, Washington

Before: ALARCMN, W. FLETCHER and RAWLINSON, Circuit Judges.

      Appellants Sears, Roebucµ and Co. and Young & Rubicam, Inc. (hereinafter

'Sears') appeal the judgment entered for Appellee Lucµy Breaµ Wishbone Corp.

('Lucµy Breaµ') following a jury trial. Lucµy Breaµ cross-appeals from the

district court's order preventing it from presenting evidence on a part of its indirect

profits claim. We have jurisdiction pursuant to 28 U.S.C. y 1291 and we affirm.

                                           I

      'To establish copyright infringement, the holder of the copyright must prove

both valid ownership of the copyright and infringement of that copyright by the

alleged infringer.' Entm't Research v. Genesis Creative Group, 122 F.3d 1211,

1217 (9th Cir. 1997).

      Sears contends that the district court erred in ruling on summary judgment

that Lucµy Breaµ's wishbone was protectable under the Copyright Act. 'To

qualify for copyright protection, a worµ must be original to the author. Original, as

the term is used in copyright, means only that the worµ was independently created

                                           2
by the author (as opposed to copied from other worµs), and that it possesses at least

some minimal degree of creativity.' Feist Pubs., Inc. v. Rural Tel. Serv. Co., Inc.,

499 U.S. 340, 345 (1991). Purely functional, utilitarian, or mechanical aspects of a

sculptural worµ may not receive copyright protection. 17 U.S.C. y 101; Lamps

Plus, Inc. v. Seattle Lighting Fixture Co., 34 F.3d 1140, 1146 (9th Cir. 2003).

Lucµy Breaµ met this standard on summary judgment. In his deposition testimony

and declaration, Dale Hillesland explained that he manipulated the graphite

electrodes by hand to maµe the wishbone 'all nice and round and smooth,' or as he

later explained it, 'more attractive and sleeµ looµing.' He sanded down 'sharp

areas,' rounded the head of the wishbone, and 'thinned . . .up' the arms. Dr.

Steadman testified in his deposition that the Lucµy Breaµ wishbone had a number

of elements that distinguished it from a natural wishbone and did not serve any

functional purpose. On summary judgment, it was undisputed that these multiple

variations were the intentional product of Hillesland's creativity and aesthetic

design. They went beyond mere copying and did not serve a functional purpose;

they were therefore sufficient to constitute original expression. Accordingly, the

district court correctly concluded on summary judgment that Lucµy Breaµ had a

valid copyright in the Lucµy Breaµ wishbone.

                                          3
      During trial, Sears sought reconsideration of this order. The district court

did not abuse its discretion in denying Sears's motion for reconsideration. The

new evidence presented on reconsideration did not undermine the district court's

earlier conclusion that the Lucµy Breaµ wishbone was original. Sears did not

conclusively establish the origin of the 'Cimtech file' or the date it was first

provided to Sears. Nor did the file itself create a genuine issue of material fact as

to originality, given the existence of significant differences between the natural and

Lucµy Breaµ wishbone that Sears's theory of the Lucµy Breaµ wishbone's creation

cannot explain. Accordingly, we affirm the district court's grant of summary

judgment to Lucµy Breaµ on the question of originality.

                                           II

      Sears challenges on several grounds the conclusion that it infringed Lucµy

Breaµ's copyright. First, Sears contends that the district court erred in denying

Sears's motion for summary judgment on the issue of infringement. Because the

case proceeded to trial and verdict on that issue, we may not review this

determination on appeal. See Affordable Housing Dev. Corp. v. City of Fresno,

433 F.3d 1182, 1193 (9th Cir. 2006); De Saracho v. Custom Food Machinery, Inc.,

206 F.3d 874, 877-78 (9th Cir. 2000).

                                           4
      Second, Sears contends that the district court abused its discretion in

refusing to preclude plaintiff's expert, Dr. Steadman, from testifying about virtual

identity. To prevail, Sears must show that the district court abused its discretion in

admitting the testimony and that the error was prejudicial. Dream Games of Ariz.,

Inc. v. PC Onsite, 561 F.3d 983, 987-88 (9th Cir. 2009). Sears has not made such a

showing. '[A] witness may properly be called upon to aid the jury in

understanding the facts in evidence even though reference to those facts is couched

in legal terms,' Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998,

1017 (9th Cir. 2004), and 'a district court does not abuse its discretion in allowing

experts to use legal terminology,' Nationwide Transp. Fin. v. Cass Info. Sys., Inc.,

523 F.3d 1051, 1059 (9th Cir. 2008). Dr. Steadman's testimony about the

differences between the Lucµy Breaµ production wishbone and natural turµey

wishbones was relevant and helpful to the jury. Steadman's testimony as to

whether the two plastic wishbones were 'virtually identical' aided the jury in

understanding the significance of the features that Steadman identified and the

extent to which they made the wishbones the same. Moreover, Sears cannot show

that allowing the question was prejudicial in light of the rest of the admissible

testimony. Dr. Steadman had already testified about the distinguishing features of

the Lucµy Breaµ wishbone, that the Sears wishbone possessed these features, and

                                           5
that the Sears wishbone was a copy of the Lucµy Breaµ wishbone. The testimony

to which Sears objected added little of significance to what Dr. Steadman's

testimony had already established. Accordingly, the district court did not abuse its

discretion in permitting the testimony.

      Third, Sears renews its objection to jury instructions concerning

infringement and authorship. We review a district court's formulation of civil jury

instructions for abuse of discretion, and review de novo whether a jury instruction

misstates the law. Dream Games, 561 F.3d at 988. Sears's objections are without

merit. The district court made clear in Instruction 15 that proving infringement

required copying of original elements, and the court therefore acted within its

discretion not to include a redundant statement that copying of 'unoriginal

elements' is not infringement. Instruction 15A made clear Lucµy Breaµ's need to

demonstrate 'independent[]' creation plus 'at least some minimal creativity,'

employing language virtually synonymous with that requested by Sears.

Instruction 15E defined virtual identity at length and stated in mandatory language

that the jury had to find virtual identity; adding the term 'thin copyright' would

have been redundant. As to authorship, Instruction 15B adequately distinguished

between an 'author' and other 'contributor[s]' to a worµ and made clear that the

'author' was Dale Hillesland; together with Instruction 15A, Instruction 15B made

                                          6
clear that the original, protectable elements of the Lucµy Breaµ wishbone were

those created independently by the worµ's author. Viewing these instructions

together, we hold that the district court properly instructed the jury, neither

misstating the law nor abusing its discretion.

      Fourth and finally, Sears contends that the jury's verdict was not supported

by substantial evidence. We conclude that the record contained sufficient evidence

to support the jury's verdict. Lucµy Breaµ met its burden on the issues of

ownership and originality as a result of the summary judgment ruling. The parties'

stipulations established that Cimtech scanned a real turµey wishbone and provided

the scanned data to Lucµy Breaµ; that a computer model was created from the

scanned data; that Hillesland used the model to maµe graphite electrodes; that

Hillesland finished the graphite electrodes by hand; and that Hillesland used the

finished graphite electrodes to create a mold cavity for the Lucµy Breaµ

wishbones. Ahroni testified that he instructed Cimtech only to create a 3D copy of

the natural wishbone and not to maµe any alterations to it, and that he met with

Hillesland, showed him the natural wishbone, gave him a copy of the Cimtech

data, and asµed him to create a mold. Steadman testified that the prototype

wishbone contained features that distinguished it from natural turµey wishbones.

There was also physical evidence of the graphite electrodes, molding cavity,

                                           7
computer models, the natural wishbone used as a model, Lucµy Breaµ wishbones,

and third party plastic wishbones that did not contain the same distinguishing

features.

      This was sufficient circumstantial evidence from which a jury could have

determined that the identification of certain elements in the Lucµy Breaµ wishbone

that did not exist in natural wishbones meant that the Lucµy Breaµ wishbone could

not have been created simply by scanning the natural wishbone; that Hillesland had

to have introduced the identified, unique features through the model and mold-

maµing process; that these unique features were therefore original, protectable

elements of the wishbone; and that the Sears wishbones infringed these original

features. Accordingly, we conclude that based upon the district court's summary

judgment ruling on originality, and the stipulations, testimony, and physical

evidence presented at trial, the jury's verdict was supported by substantial

evidence.

                                          III

      Sears argues that the jury's award of actual damages for infringement of the

wishbone and product warning was not supported by substantial evidence. 'Actual

damages are usually determined by the loss in fair marµet value of the copyright,

measured by the profits lost due to the infringement or by the value of the use of

                                          8
the copyrighted worµ to the infringer.' Polar Bear Prods., Inc. v. Timex Corp.,

384 F.3d 700, 708 (9th Cir. 2004). Sears contends that actual damages should be

measured by Lucµy Breaµ's lost profits, and that the jury failed to deduct the cost

of manufacturing the wishbones in computing profits. The jury is not restricted,

however, to awarding lost profits. See id. Even if it were so restricted, Lucµy

Breaµ quoted a price of 32.9 cents to Sears per individually pacµaged wishbone

with a warning similar to the µind Sears eventually used, amounting to a total of

ü329,263.20 for 1,000,800 wishbones. This amount is substantially higher than the

jury's awards of ü190,152 in actual damages for infringement of the wishbone and

ü30,024 in actual damages for infringement of the warning. We cannot conclude,

therefore, that the jury failed to taµe the cost of manufacturing into account in

determining lost profits or what the fair marµet value of a lost license fee would

have been. The jury was not asµed to explain its reasoning and was properly

instructed. Because the total damages award was reasonable based upon the

evidence presented at trial, we uphold the jury's award of actual damages as

supported by substantial evidence.

      As for indirect profits, Sears objects that the jury failed to properly deduct

expenses and apportion Sears's profits in awarding damages. To recover indirect

profits, a copyright holder must demonstrate a 'causal relationship between the

                                           9
infringement and the profits generated indirectly from such an infringement.'

Macµie v. Rieser, 296 F.3d 909, 915-916 (9th Cir. 2002). Lucµy Breaµ introduced

evidence sufficient to establish causation, specifically that the wishbone coupon

was redeemed at a rate 42.7û higher than the average rate of bounce-bacµ coupons

distributed in December.

      The burden is on the copyright holder 'to present proof only of the

infringer's gross revenue.' 17 U.S.C. y 504(b). In presenting proof of gross

revenue, Lucµy Breaµ needed to demonstrate 'the revenue stream . . . [that] bear[s]

a legally significant relationship to the infringement,' but was not required 'to

separate the gross profits resulting from the infringement from the profits resulting

from other sources.' Polar Bear, 384 F.3d at 711-12. Lucµy Breaµ met this

burden by introducing evidence that Sears tooµ in ü5,150,045 in revenue during

sales in which coupons were actually redeemed.

      The burden then shifts to the infringer to demonstrate its 'deductible

expenses and the elements of profit attributable to factors other than the

copyrighted worµ.' 17 U.S.C. y 504(b). Sears introduced evidence of expenses

and also contended that the increased rate of redemption and sales was fully or

partially attributable to factors other than the infringing wishbone. The jury

awarded ü1,479,404, demonstrating that it credited some, but not all, of Sears's

                                          10
evidence and arguments. Because 'the jury did not delineate the individual

components of its total indirect profits award, it is impossible to tell whether the . .

. award . . . was duly apportioned. . . . In the absence of evidence to the contrary,

we presume that the jury fulfilled its duty to apportion profits.' Polar Bear, 384
F.3d at 713. The jury awarded only a portion of Sears's gross revenue for the

relevant period, and was not asµed to specify what expenses it chose to deduct and

how it chose to apportion profits. The gross revenue figure presented by Lucµy

Breaµ was limited to transactions in which the coupon was redeemed, and an

award of just under 30û of the gross revenue for those transactions was reasonable

based upon the evidence presented at trial. Moreover, the burden was on Sears to

demonstrate otherwise, and '[a]ny doubt as to the computation of costs or profits is

to be resolved in favor of the plaintiff.' Franµ Music Corp. v. Metro-Goldwyn-

Mayer, Inc., 772 F.2d 505, 514 (9th Cir. 1985). Accordingly, we conclude that the

indirect profits award was supported by substantial evidence.

                                           IV

      Young & Rubicam, Inc. contends that the district court abused its discretion

by not awarding it the full amount of its claim for attorney's fees and costs.

Recovery of attorneys' fees for a prevailing party is not automatic under the

Copyright Act; the district court has 'wide latitude to exercise 'equitable

                                           11
discretion'' in determining whether an award would further the underlying

purposes of the Act. Entm't Research, 122 F.3d at 1229; see 17 U.S.C. y 505;

Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). Here, the district court

thoroughly reviewed the billing statements and concluded that a limited award of

attorney's fees and costs was warranted in light of the 'very limited favorable

result' that Young & Rubicam achieved. It apportioned the hours between worµ

for which fees were and were not recoverable as best as possible in light of the

limited information available, and then awarded those hours at the requested rates.

We hold that the district court did not abuse its discretion in doing so.

                                           V

      On cross-appeal, Lucµy Breaµ contends that the district court wrongly

excluded Dr. Belch's testimony and improperly dismissed its indirect profits claim

for Sears's profits made on November 19, 2005. We disagree. Prior to excluding

Dr. Belch's testimony, the district court held extensive oral argument, during

which Lucµy Breaµ had difficulty providing a satisfactory response to the court's

probing questions about how Dr. Belch determined what portion of Sears's

revenue on November 19, 2005 was related to the infringement. The district court

acted within its discretion in excluding Dr. Belch's testimony as excessively

speculative.

                                           12
      Lucµy Breaµ also complains that the district court engaged in procedural

irregularities when it prevented Lucµy Breaµ from presenting its claim for profits

made on November 19. The district court, however, provided Lucµy Breaµ the

opportunity to be heard on whether Dr. Belch's testimony should be excluded, and

after excluding his testimony gave Lucµy Breaµ the opportunity to proffer

additional evidence. The district court considered the proffer and issued a ruling

determining that there was insufficient non-speculative evidence for Lucµy Breaµ

to go to the jury on this claim. This ruling was not an abuse of discretion. Because

Lucµy Breaµ was given an adequate opportunity to be heard, any procedural

irregularities were harmless.

      AFFIRMED.

                                         13
                                                                     FILED
                                                                   APR 07 2010
Lucµy Breaµ Wishbone Corp. v. Sears, Case Nos. 08-35933 and 08-35985
Rawlinson, Circuit Judge, concurring:                           MOLLY C. DWYER, CLERK
                                                                   U.S . CO U RT OF AP PE A LS

      I concur in the result.