Court Opinion

ID: 2648678
Source: CourtListenerOpinion
Date Created: 2014-01-09 18:25:46.903041+00
Date Added: 2024-06-11T12:56:38.236399
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

INHALE, INC., a California                No. 12-56331
Corporation,
                 Plaintiff-Appellant,       D.C. No.
                                         2:11-cv-03838-
                 v.                        ODW-FFM

STARBUZZ TOBACCO, INC., a
California Corporation; WAEL                OPINION
SALIM ELHALAWANI, an individual
residing in California,
               Defendants-Appellees.

      Appeal from the United States District Court
          for the Central District of California
      Otis D. Wright, II, District Judge, Presiding

              Argued and Submitted
       November 4, 2013—Pasadena, California

                 Filed January 9, 2014

   Before: Diarmuid F. O’Scannlain, Susan P. Graber,
           and Carlos T. Bea, Circuit Judges.

             Opinion by Judge O’Scannlain;
              Concurrence by Judge Bea
2         INHALE, INC. V. STARBUZZ TOBACCO, INC.

                           SUMMARY*

                             Copyright

    Affirming the district court’s grant of summary judgment
and award of attorneys’ fees in favor of the defendant, the
panel held that the shape of a hookah water container was not
entitled to copyright protection.

     The panel held that the hookah water container, a useful
article, was not copyrightable because it did not incorporate
sculptural features that could be identified separately from,
and were capable of existing independently of, the container’s
utilitarian aspects. Adopting the reasoning of the Copyright
Office, the panel held that whether an item’s shape is
distinctive does not affect conceptual separability.

    The panel also held that the district court did not abuse its
discretion in awarding attorneys’ fees to the defendant under
17 U.S.C. § 505. The panel awarded attorneys’ fees for the
appeal in an amount to be determined by the district court.

    Concurring in part, Judge Bea wrote that he concurred
with the majority’s opinion, except for the part of Part II.C
that discusses the level of deference owed to the Copyright
Office’s interpretations of the Copyright Office. Judge Bea
wrote that because the statute was not ambiguous, it was
unnecessary to look to the Copyright Office for further
guidance.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
          INHALE, INC. V. STARBUZZ TOBACCO, INC.                       3

                             COUNSEL

Louis F. Teran, SLC Law Group, Pasadena, California,
argued the cause and filed the briefs for Plaintiff-Appellant.

Natu J. Patel, The Patel Law Firm, P.C., Irvine, California,
argued the cause and filed the brief for Defendants-Appellees.

                             OPINION

O’SCANNLAIN, Circuit Judge:

   We must decide whether the shape of a hookah water
container1 is entitled to copyright protection.

                                    I

    Inhale, Inc. claims copyright protection in the shape of a
hookah water container that it first published on August 29,
2008 and registered with the United States Copyright Office
on April 21, 2011. At both the time of publication and the
time of registration, the container included skull-and-
crossbones images on the outside.

    Less than a month after registration, Inhale sued Starbuzz
Tobacco, Inc. and Wael Salim Elhalawani (collectively,
“Starbuzz”) for copyright infringement. Inhale claimed that

  1
     A “hookah” is a device for smoking tobacco. It contains coals that
cause the tobacco to smoke. A user’s inhalation through a tube causes the
smoke to travel through water, which cools and filters the smoke, before
it reaches the user. The water is held in a container at the base of the
hookah.
4        INHALE, INC. V. STARBUZZ TOBACCO, INC.

Starbuzz sold hookah water containers that were identical in
shape to Inhale’s container. The allegedly infringing
containers did not contain skull-and-crossbones images.
After determining that the shape of the water container is not
copyrightable, the district court granted summary judgment
in favor of Starbuzz.

                               II

    Because “ownership of a valid copyright” is an element
of copyright infringement, Feist Publ’ns, Inc. v. Rural Tel.
Serv. Co., 499 U.S. 340, 361 (1991), summary judgment was
appropriate if the shape of Inhale’s hookah water container is
not copyrightable.

                               A

    The parties agree that Inhale’s hookah water container is
a “useful article.” As “the design of a useful article,” the
shape of the container is copyrightable “only if, and only to
the extent that, [it] incorporates . . . sculptural features that
can be identified separately from, and are capable of existing
independently of, the utilitarian aspects of the” container.
17 U.S.C. § 101 (defining “[p]ictorial, graphic, and
sculptural works”); id. § 102(a)(5) (granting copyright
protection to “pictorial, graphic, and sculptural works”).

    This statutory standard is satisfied by either physical or
conceptual separability. See 1 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright § 2.08[B][3], at 2-99–2-100
(2011). Inhale does not argue that the container’s shape
satisfies the requirements of physical separability. Thus, we
consider only conceptual separability.
         INHALE, INC. V. STARBUZZ TOBACCO, INC.                 5

                                B

    Relying on Poe v. Missing Persons, 745 F.2d 1238 (9th
Cir. 1984), Inhale argues that conceptual separability is a
question of fact. Inhale’s reliance on Poe is misplaced. Poe
decided that whether an item is a useful article is a factual
question. Id. at 1241–42. But usefulness is distinct from
separability.

     In Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068 (9th Cir.
2000), we ruled that the shape of a vodka bottle was not
separable from its utilitarian features. Rather than treat
separability as a question for the jury, we conducted our own
analysis. See id at 1080. (“[T]he district court did not identify
any artistic features of the bottle that are separable from its
utilitarian ones. We also find none.”). In Fabrica Inc. v. El
Dorado Corp., 697 F.2d 890 (9th Cir. 1983), we affirmed a
district court’s directed verdict in favor of a copyright
defendant on the ground that the allegedly infringed work
was not copyrightable. We assessed separability ourselves.
See id. at 893 (“There is no element of the folders that can be
separated out and exist independently of their utilitarian
aspects.”).

    Our precedent suggests that whether a useful article has
conceptually separable features is a mixed question of law
and fact. See Pullman-Standard v. Swint, 456 U.S. 273, 289
n.19 (1982) (describing mixed questions of law and fact as
those “in which the historical facts are admitted or
established, the rule of law is undisputed, and the issue is
whether the facts satisfy the statutory standard”). Because
both parties agree that the hookah water container is a useful
article that holds water within its shape, all that is left is the
application of the legal standard to those facts. Thus, whether
6          INHALE, INC. V. STARBUZZ TOBACCO, INC.

the shape of the container is conceptually separable is a
conclusion that we review de novo. See Mathews v. Chevron
Corp., 362 F.3d 1172, 1180 (9th Cir. 2004) (“Mixed
questions of law and fact are reviewed de novo; however, the
underlying factual findings are reviewed for clear error.”).

                                     C

     Relying in part on Ets-Hokin, the district court ruled that
the container’s shape is not conceptually separable from its
utilitarian features. In Ets-Hokin, we held that the shape of a
vodka “bottle without a distinctive shape” was not
conceptually separable. See 225 F.3d at 1080. Attempting to
distinguish this case from our precedent, however, Inhale
emphasizes the distinctive shape of its hookah water
container.      Therefore, we must determine whether
distinctiveness of shape affects separability.

    When interpreting the Copyright Act, we defer to the
Copyright Office’s interpretations in the appropriate
circumstances.2 See Richlin v. Metro-Goldwyn-Mayer
Pictures, Inc., 531 F.3d 962, 972–73 (9th Cir. 2008); Batjac

    2
    “Courts have twisted themselves into knots trying to create a test to
effectively ascertain whether the artistic aspects of a useful article can be
identified separately from and exist independently of the article’s
utilitarian function.” Masquerade Novelty, Inc. v. Unique Indus., 912 F.2d
663, 670 (3d Cir. 1990). Under some interpretations of 17 U.S.C. § 101,
distinctiveness of shape would be relevant. See, e.g., Brandir Int’l, Inc.
v. Cascade Pac. Lumber Co., 834 F.2d 1142, 1145 (2d Cir. 1987) (asking
whether “design elements can be identified as reflecting the designer’s
artistic judgment exercised independently of functional influences”). We
think § 101 is sufficiently ambiguous to justify deference to administrative
interpretations. See High Sierra Hikers Ass’n v. Blackwell, 390 F.3d 630,
638–39 (9th Cir. 2004).
         INHALE, INC. V. STARBUZZ TOBACCO, INC.                7

Prods. Inc. v. GoodTimes Home Video Corp., 160 F.3d 1223,
1230–31 (9th Cir. 1998) (deferring to the Register’s
interpretation in an internal manual, Compendium of
Copyright Office Practices). Because Chevron deference
does not apply to internal agency manuals or opinion letters,
we defer to the Copyright Office’s views expressed in such
materials “only to the extent that those interpretations have
the ‘power to persuade.’” See Christensen v. Harris Cnty.,
529 U.S. 576, 587 (2000).

    In an opinion letter and an internal manual, the Copyright
Office has determined that whether an item’s shape is
distinctive does not affect separability. See Letter from
Nanette Petruzzelli, Assoc. Register, U.S. Copyright Office,
to Jeffrey H. Brown, attorney for MSRF, Inc., Re: Fanciful
Ornamental Bottle Designs 1–9, Control No. 61-309-9525(S),
April 9, 2008. That determination was based on the principle
that “analogizing the general shape of a useful article to
works of modern sculpture” is insufficient for conceptual
separability. Compendium of Copyright Office Practices II
(Compendium II) § 505.03. Although Inhale’s water
container, like a piece of modern sculpture, has a distinctive
shape, “[t]he shape of the alleged ‘artistic features’ and of the
useful article are one and the same.” Id.

    Because the Copyright Office’s reasoning is persuasive,
we adopt it for this case. The shape of a container is not
independent of the container’s utilitarian function—to hold
the contents within its shape—because the shape
accomplishes the function. The district court correctly
8          INHALE, INC. V. STARBUZZ TOBACCO, INC.

concluded that the shape of Inhale’s hookah water container
is not copyrightable.3

                                    III

                                    A

     Exercising its discretion under 17 U.S.C. § 505, the
district court awarded $111,993 in attorneys’ fees to Starbuzz.
The district court considered the five, non-exclusive factors
listed in Jackson v. Axton: “[1] the degree of success
obtained; [2] frivolousness; [3] motivation; [4] objective
unreasonableness (both in the factual and legal arguments in
the case); and [5] the need in particular circumstances to
advance considerations of compensation and deterrence.”
25 F.3d 884, 890 (9th Cir. 1994) (citation omitted). In ruling
that the factors favored an award to Starbuzz, the district
court relied on, among other things, Starbuzz’s “total success
on the merits” and the need for deterrence of “similarly
frivolous claims against innocent Defendants.”

    The district court did not abuse its discretion because “the
reasons given by the district court in this case are well-
founded in the record and are in keeping with the purposes of
the Copyright Act,” Fantasy, Inc. v. Fogerty, 94 F.3d 553,
560 (9th Cir. 1996). A successful defense furthers the
purposes of the Copyright Act just as much as a successful
infringement suit does. See Fogerty v. Fantasy, Inc.,

    3
    That the Copyright Office issued a certificate of registration to Inhale
does not contradict this conclusion. Because Inhale’s application included
skull-and-crossbones images on the container, the certificate of
registration does not show that the Copyright Office considers the shape
of the container copyrightable.
         INHALE, INC. V. STARBUZZ TOBACCO, INC.               9

510 U.S. 517, 527 (1994) (“[D]efendants who seek to
advance a variety of meritorious copyright defenses should be
encouraged to litigate them to the same extent that plaintiffs
are encouraged to litigate meritorious claims of
infringement.”).

                               B

    Starbuzz also requests attorneys’ fees for this appeal
under 17 U.S.C. § 505. Section 505 gives us the same
discretion that it gave to the district court. See Disenos
Artisticos E Industriales, S.A. v. Costco Wholesale Corp.,
97 F.3d 377, 382 (9th Cir. 1996). We award attorneys’ fees
incurred in the defense of this appeal to Starbuzz in an
amount to be determined by the district court. See Fantasy,
94 F.3d at 561(“[W]e conclude that fees are warranted under
§ 505 inasmuch as it served the purposes of the Copyright
Act for Fogerty to defend an appeal so that the district court’s
fee award would not be taken away from him.”).

                              IV

    For the foregoing reasons, we affirm the district court’s
grant of summary judgment and award of attorneys’ fees to
Starbuzz. We award attorneys’ fees for this appeal in an
amount to be determined by the district court.

   AFFIRMED AND REMANDED.
10       INHALE, INC. V. STARBUZZ TOBACCO, INC.

BEA, Circuit Judge, concurring in part:

    I concur with the majority’s opinion, except for the part
of Part II.C which discusses the level of deference owed to
the Copyright Office’s interpretations of the Copyright Act.
The text of 17 U.S.C. § 101 does not suggest that
“distinctiveness” is an element of separability. Because the
statute is not ambiguous in this respect, it is unnecessary to
look to the Copyright Office for further guidance.

    Once we start engrafting administrative interpretation to
our opinions, there is a tendency to look elsewhere than the
text of the enactments of Congress. This misplaces the power
of enactment of laws from the legislative to the administrative
branch and is contrary to my concept of the separation of
powers.