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Tenth Circuit Contributes Clarity to Contributory Liability in Copyright Infringement

by | Nov 9, 2023 |

Addressing the elements of contributory copyright infringement, the US Court of Appeals for the Tenth Circuit found that a plaintiff had plausibly alleged contributory copyright infringement when he alleged that the defendants had “caused, materially contributed to, or authorized the direct infringement” of his copyrights. Greer v. Moon, et al., Case No. 21-4128 (10th Cir. Oct. 16, 2023) (Bachrach, Moritz, Rossman, JJ.)

Joshua Moon owns and operates the controversial website, Kiwi Farms, “a site ‘built to exploit and showcase those Moon and his users have deemed to be eccentric and weird,’ [m]any of [whom] are physically or mentally disabled.” Russell Greer, who suffers from a form of facial paralysis, was targeted by Kiwi Farms users after Greer sued Taylor Swift in 2016. In 2017, Greer wrote a book to “explain his side of things,” titled “Why I Sued Taylor Swift and How I Became Falsely Known as Frivolous, Litigious and Crazy,” which he published and copyrighted. In 2019, Greer registered his copyright for his song, “I Don’t Get You, Taylor Swift.” Greer alleged that Kiwi Farms users infringed both works by creating and uploading unauthorized audio recordings of the book, posting links to a full copy of the book on the Kiwi Farms platform and uploading his song to the Kiwi Farms website.

Pursuant to the Digital Millennium Copyright Act, Greer sent Moon a takedown notice, identifying the infringing materials and the location of those unauthorized copies. In response, Moon published the takedown notice and Greer’s contact information on Kiwi Farms and responded to Greer via an email in which Moon “derid[ed]” Greer and refused to remove the copyrighted materials. Shortly thereafter, Greer sued Moon and Kiwi Farms for contributory copyright infringement, among other things. The district court granted the defendants’ motion to dismiss for failure to state a claim, and Greer appealed.

The Tenth Circuit explained that there are “three flavors of secondary liability for copyright infringement”:

  1. Vicarious liability, when a secondary infringer has a financial interest in the exploitation of the copyrighted materials and the ability to supervise the direct infringer
  2. The inducement rule, when the secondary infringer distributes a device that is intended to be used for copyright infringement
  3. Contributory liability, when the secondary infringer “causes or materially contributes to” the direct infringer’s activities.

Greer’s claims were based on contributory liability, which occurs when there is direct infringement of a plaintiff’s copyrighted material(s), the defendant had knowledge of the direct infringement and the defendant “intentionally caused, induced, or materially contributed to the direct infringement.”

There was no dispute that Greer’s pro se complaint met the first two prongs of the test. The district court granted the defendants’ motion to dismiss because it found that Greer failed to plausibly plead the third element of contributory infringement: “It is not enough for contributory liability for a defendant to have merely permitted the infringing material to remain on the website, without having induced or encouraged the initial infringement” (internal quotations omitted).

The Tenth Circuit dismissed the district court’s [...]

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Seeking Harmony: Supreme Court to Consider Retrospective Relief for Timely Copyright Claims Under Discovery Rule

by | Oct 5, 2023 |

The Supreme Court of the United States agreed to consider whether a copyright plaintiff’s timely claim under the discovery rule is subject to retrospective relief for infringement occurring more than three years before the suit was filed. Warner Chappell Music, et al. v. Nealy, Case No. 22-1078 (Supr. Ct., Sept. 29, 2023) (certiorari granted). The specific question presented is as follows:

Whether, under the discovery accrual rule applied by the circuit courts and the Copyright Act’s statute of limitations for civil actions, 17 U. S. C. §507(b), a copyright plaintiff can recover damages for acts that allegedly occurred more than three years before the filing of a lawsuit.

Music Specialist and Sherman Nealy (collectively, Nealy) filed a copyright infringement suit against Warner alleging that Warner was using Nealy’s musical works based on invalid third-party licenses and in violation of 17 U.S.C. § 501. The alleged copyright infringement occurred as early as 10 years before Nealy filed the lawsuit. The district court denied Warner’s motion for summary judgment on statute of limitation grounds, finding that there was a genuine dispute of material fact regarding when Nealy’s claim accrual occurred. In a separate order, the district court certified for interlocutory appeal whether “damages in this copyright action are limited to the three-year lookback period as calculated from the date of the filing of the Complaint pursuant to the Copyright Act and Petrella.” Warner appealed.

The US Court of Appeals for the Eleventh Circuit agreed with the district court, issuing a decision that where a copyright plaintiff has a timely claim for infringement occurring more than three years before the filing of the lawsuit, the plaintiff may obtain retrospective relief for that infringement.

The Eleventh Circuit’s approach specifically disagreed with the Second Circuit’s approach to the application of the discovery rule, thereby creating a circuit split.



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Standard Practice: The Public Has Right to Copyrighted Material Incorporated Into Law

by | Sep 28, 2023 |

In a case that attracted a slew of amicus curiae participation and was the most recent in the series of American Society for Testing and Materials (ASTM) copyright cases, the US Court of Appeals for the District of Columbia Circuit affirmed the district court’s holding that the noncommercial dissemination of standards, as incorporated by reference into law, constitutes fair use and thus does not support liability for copyright infringement. Am. Soc’y for Testing & Materials v. Public.Resource.Org, Case No. 22-7063 (DC Cir. Sept. 12, 2023) (Henderson, Pillard, Katsas, JJ.)

The ASTM and the other plaintiffs are private organizations that develop and promulgate standards for establishing best practices for their respective industries or products. In 2013, they brought an action for copyright infringement against Public.Resource.Org for posting their copyrighted standards (as they were referenced in agency rulemaking and incorporated into law) on its website, thereby making these materials available to the public at no cost. After the district court initially granted ASTM’s motion for summary judgment of copyright infringement and rejected Public Resource’s fair use defense, the DC Circuit reversed and remanded for further consideration the issue of whether posting the incorporated standards constituted fair use. Subsequently, the district court “found fair use as to the posting of standards incorporated into law and infringement as to the standards not so incorporated.” The plaintiffs appealed.

On appeal, the DC Circuit analyzed the following fact-intensive fair use factors:

  • The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
  • The nature of the copyrighted work
  • The amount and substantiality of the portion used in relation to the copyrighted work as a whole
  • The effect of the use upon the potential market for or value of the copyrighted work.

The DC Circuit concluded that the first three factors strongly favored holding that Public Resource’s posting of the incorporated standards constituted fair use. As to the first factor, the Court explained that in a manner similar to the one discussed by the Supreme Court of the United States in its 2021 Google v. Oracle Am. case, Public Resource’s use was for nonprofit, noncommercial educational purposes. The DC Circuit further found Public Resource’s use transformative in that it served different purposes than ASTM’s use (“provide[ing] the public with a free and comprehensive repository of the law” versus “producing standards reflecting industry or engineering best practices.”)

As to the second factor, the DC Circuit reasoned that the “nature of the copyrighted work” heavily favored fair use because the standards “fall at the factual end of the fact-fiction spectrum” and “have legal force, [such that] they . . . fall ‘at best, at the outer edge of copyright’s protective purposes.’” As to the third factor, the Court found that it strongly supported fair use because the standards had been incorporated and thus had “the force of law.”

With respect to the fourth factor, the DC Circuit recognized that Public Resource’s [...]

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Tragic Ending: Award-Winning AI Artwork Refused Copyright Registration

by | Sep 21, 2023 |

The US Copyright Office (CO) Review Board rejected a request to register artwork partially generated by artificial intelligence (AI) because the work contains more than a de minimis amount of content generated by AI and the applicant was unwilling to disclaim the AI-generated material. Second Request for Reconsideration for Refusal to Register Théâtre D’opéra Spatial (Copyright Review Board Sept. 5, 2023) (S. Wilson., Gen. Counsel; M. Strong, Associate Reg. of Copyrights; J. Rubel Asst. Gen. Counsel).

In 2022, Jason Allen filed an application to register a copyright for a work named “Théâtre D’opéra Spatial,” reproduced below.

The artwork garnered national attention in 2022 for being the first AI-generated image to win the Colorado State Fair’s annual fine art competition. The examiner assigned to the application requested information about Allen’s use of Midjourney, a text-to-picture AI service, in the creation of the work. Allen explained that he “input numerous revisions and text prompts at least 624 times to arrive at the initial version of the image.” He went on to state that after Midjourney created the initial version of the work, he used Adobe Photoshop to remove flaws and create new visual content and used Gigapixel AI to “upscale” the image, increasing its resolution and size. As a result of these disclosures, the examiner requested that the features of the work generated by Midjourney be excluded from the copyright claim. Allen declined to exclude the AI-generated portions. As a result, the CO refused to register the claim because the deposit for the work did not “fix only [Mr. Allen’s] alleged authorship” but instead included “inextricably merged, inseparable contributions” from both Allen and Midjourney. Allen asked the CO to reconsider the denial.

The CO upheld the denial of registration, finding that the work contained more than a de minimis amount of AI-generated content, which must be disclaimed in a registration application. The CO explained that when analyzing AI-generated material, it must determine when a human user can be considered the “creator” of AI-generated output. If all of a work’s “traditional elements of authorship” were produced by a machine, the work lacks human authorship and the CO will not register it. If, however, a work containing AI-generated material also contains sufficient human authorship to support a claim to copyright, then the CO will register the human’s contributions.

Applying these principles to the work, the CO analyzed the circumstances of its creation, including Allen’s use of an AI tool. Allen argued that his use of Midjourney allowed him to claim authorship of the image generated by the service because he provided “creative input” when he “entered a series of prompts, adjusted the scene, selected portions to focus on, and dictated the tone of the image.” The CO disagreed, finding that these actions do not make Allen the author of the Midjourney-created image because his sole contribution was inputting the text prompt that produced it.

The [...]

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Copyright Office Seeks Comments on Artificial Intelligence

by | Sep 21, 2023 |

The US Copyright Office (CO) issued a notice, seeking comments on copyright law and policy issues raised by artificial intelligence (AI) systems. Artificial Intelligence and Copyright, 88 Fed. Reg. 59942 (Aug. 30, 2023).

The purpose of the notice is to collect factual information and views relevant to the copyright law and policy issues raised by recent advances in generative AI. The CO intends to use this information to advise Congress by providing analyses on the current state of the law, identifying unresolved issues and evaluating potential areas for congressional action. The CO will also use this information to inform its regulatory work and to offer resources to the public, courts and other government entities considering these issues. The questions presented in the notice are grouped into the following categories:

  • General high-level questions
  • AI training, including questions of transparency and accountability
  • Generative AI outputs, including questions of copyrightability, infringement and labeling or identification of such outputs
  • Other issues related to copyrights.

The specific questions can be found in the notice. Given the importance of using shared language when discussing AI, a glossary of terms is also provided, on which commentators can provide feedback. The CO indicated that it does not expect every party choosing to respond to the notice to address every question raised. Instead, the questions are designed to gather views from a broad range of stakeholders.

Written comments are due no later than 11:59 pm (EDT) on October 18, 2023. Written reply comments are due no later than 11:59 pm (EST) on November 15, 2023.



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It’s a Taking: Copyright Deposit Requirement Violates Fifth Amendment

by | Sep 7, 2023 |

Addressing the issue for the first time, the US Court of Appeals for the District of Columbia found that the Copyright Act of 1976’s requirement to deposit two copies of a work with the Library of Congress within three months of the work’s publication was unconstitutional under the Fifth Amendment’s Takings Clause. Valancourt Books, LLC v. Merrick B. Garland and Shira Perlmutter, Case No. 21-5203 (D.C. Cir. Aug. 29, 2023) (Srinivasan, Henderson, Edwards, JJ.)

Valancourt Books is a small business in Richmond, Virginia, which publishes rare and out-of-print fiction on an on-demand basis (i.e., in response to a specific customer request). Despite never having sought copyright registration for any of its works, Valancourt received a letter in 2018 from the US Copyright Office (CO) demanding a complete copy of 341 books published by Valancourt “for the use or disposition of the Library of Congress.” Failure to comply would subject Valancourt to fines of up to $250 per work plus the total retail price of the copies and an additional $2,500 for repeated failure to comply. Valancourt responded that it could not afford to submit copies of all the requested works, noting that some of the works contained material in the public domain and offering instead to sell copies of the works to the CO at cost. In response, the CO narrowed the list of requested copies to 240 works.

Valancourt sued seeking a declaration that the application of Section 407 of the Copyright Act is unconstitutional under the First and Fifth Amendments and an injunction against its enforcement. The CO offered Valancourt the option to electronically submit the deposits, but Valancourt declined. The parties both moved for summary judgment. After considering whether the CO’s offer to accept electronic copies had mooted the dispute, the district court concluded that the CO’s offer had merely narrowed the dispute to one of electronic deposit copies and granted summary judgment to CO on the constitutional claims. Valancourt appealed.

Valancourt challenged the district court’s grant of summary judgment on Valancourt’s First and Fifth Amendment claims and the district court’s conclusion that the dispute had been limited to one about electronic copies. The DC Circuit agreed, stating that the CO’s “offer did not moot Valancourt’s challenge to the demand for physical copies” because “[a] party’s voluntary cessation of challenged conduct does not moot the challenged [requirement] unless it is ‘absolutely clear’ that the challenged conduct will not recur after the litigation.” Accordingly, the Court considered only the demand for physical (rather than electronic) deposits.

With respect to Valancourt’s constitutional challenges, the DC Circuit concluded that Section 407’s requirement for physical deposit copies violated the Fifth Amendment’s Takings Clause as there was no benefit received by the copyright owner in response to the deposit: “A demand for personal property would not be a taking . . . if it involved a voluntary exchange for a governmental benefit.” In this case, however, no such benefit existed. Pursuant to the Copyright Act, copyright attaches automatically upon fixation of a [...]

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Uncompleted Building Sold in Bankruptcy Doesn’t Infringe Architect’s Copyright

by | Aug 24, 2023 |

The US Court of Appeals for the Eighth Circuit affirmed a district court’s ruling that there was no actionable infringement where an uncompleted building sold under the authority of a bankruptcy court was later completed. Cornice & Rose International, LLC v. Four Keys, LLC et al., Case No. 22-1976 (8th Cir. Aug. 11, 2023) (Loken, Shepard, Kelly, JJ.) (per curiam). The Court explained that the architectural copyright claims were precluded by the bankruptcy court’s order approving the sale.

McQuillen Place Company retained Cornice & Rose, an architectural firm, to design a building. Cornice created technical drawings for the building and obtained copyrights for its drawings and for the building itself, the tangible embodiment of its design work. When the building was 90% complete, McQuillen halted construction and filed for bankruptcy. During liquidation proceedings, the trustee moved to sell the building to the lender, First Security Bank & Trust Company. Cornice objected to the sale on various grounds, including that its copyright protection in the building itself would be infringed by an order authorizing the sale. In response, First Security Bank suggested language to protect the parties, which the court incorporated into its order authorizing the sale of the uncompleted building, as follows:

Copyright: So long as the Purchaser, or its assignee, or its architect or agents do not use the Plans or Drawings or any work in which Cornice & Rose International, LLC (“C & R”) holds a valid copyright (the C & R Intellectual Property), the Purchaser, or its assignee, may use and occupy the Property, develop the Property, and complete the existing interior and exterior of the Property, free and clear of existing and future claims of C & R, whether for copyright infringement or otherwise. The Purchaser, or its assignee, or its architect or agents may not use the C &R Intellectual Property without first making arrangements satisfactory to C & R for the use of the C & R Intellectual Property. Nothing contained herein shall preclude future claims of copyright infringement resulting from the improper or unauthorized use of the C & R Intellectual Property by the Purchaser, or its assignee, or any third parties.

Cornice filed a motion to reconsider, arguing that under its contract with McQuillen, the license for the use of the building was conditioned on full, complete and timely payment. Because that had not occurred, there was no license for the construction of the building and, therefore, the building was an infringing copy of the architectural work. The following day the bankruptcy court denied the motion. Cornice filed an appeal, which the bankruptcy court dismissed under 1 U.S.C. §363(m) because the sale had been completed.

While the appeal was pending, the trustee sold the building, and First Security Bank assigned its interest to Four Keys, which hired various companies to finish the building. Cornice then sued First Security Bank, its president, Four Keys and others for copyright infringement by finishing the building as an infringing derivative work. Cornice sought a declaratory judgment [...]

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Copyright Office Issues New Rule

by | Aug 17, 2023 |

Adopting its interim rule from December 2022, the US Copyright Office issued a final rule that governs district court referrals, proof of service forms, default proceedings and the appearance of law student representatives before the Copyright Claims Board (CCB).

District Court Referrals

CCB proceedings qualify as alternative dispute resolution processes under 28 U.S.C. § 651 for purposes of referral of eligible cases by US district courts upon consent of the parties. The CCB was created to resolve certain copyright claims more efficiently and at a lower cost than a district court. In furtherance of this objective, the CCB has the authority to adjust or suspend certain rules that would otherwise apply if doing so would be in the interest of efficiently resolving the dispute. The new rule excludes district court referrals from the limits on the number of proceedings a claim, attorney or law firm may file with the CCB and does not require a claimant to pay a filing fee for such a proceeding.

Proof of Service Forms

Claimants may file either the proof of service form provided on the CCB’s website or an alternative proof of service form that contains all of the information required by the CCB-provided form.

Evidence in Default Proceedings

Evidence presented by the parties in a default proceeding is not limited to materials exchanged during discovery, as a default proceeding may occur before discovery has begun.

Law Student Representatives

The final rule allows for law student representatives, provided that they qualify under the laws, court rules, or bar rules of the jurisdiction that allows, authorizes or permits them to practice law. The CCB’s regulations only govern law students who make a formal appearance in CCB proceedings, rather than those who provide legal assistance to parties in other capacities.



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Off the Charts: Derivative Work Copyright Registers All Material in Derivative Work

by | Jul 27, 2023 |

In a matter of first impression, the US Court of Appeals for the Ninth Circuit reversed the district court’s partial grant of summary judgment in favor of the defendants, vacated a jury verdict and an award of attorneys’ fees, and remanded an action alleging infringement of copyright in two charts depicting organizational change. The Court agreed with other circuits that by registering a derivative work, an author registers all the material included in the derivative work, including any unregistered original works. Enterprise Management Limited, Inc. v. Construx Software Builders Inc., Case No. 22-35345 (9th Cir. July 17, 2023) (Fletcher, Clifton, Ikuta, JJ.)

Mary Lippitt and her company Enterprise Management filed a lawsuit against Steve McConnell and his company Construx for copyright infringement. Lippitt has built a career around advising companies on organizational change. To this end, she created charts and materials, including one titled “Managing Complex Change,” to demonstrate how an organization can fail by missing key transitional elements. According to Lippitt, the “Managing Complex Change” chart was registered with the US Copyright Office in 1987 as part of a presentation called “Transition: Accomplishing Organization Change.” The Copyright Office subsequently destroyed the deposit copy of the registration as part of its routine practice. In 2000, an updated presentation with an updated version of the chart was registered with the Copyright Office. In 2003, the updated chart, “Aligning for Success,” was registered individually.

In 2016, McConnell used Lippitt’s chart in a YouTube video presentation. McConnell titled the chart “Lippitt/Knoster Change Model,” added supplementary information and made stylistic changes. When Lippitt found out that McConnell used her chart, she sent cease-and-desist letters. After McConnell refused to stop using the chart, Lippitt sued.

Following discovery, McConnell moved for summary judgment, which the district court granted in part and denied in part. The district court ruled that Lippitt failed to show that she had registered the “Managing Complex Change” chart because she did not present evidence that the chart was included in the “Transition: Accomplishing Organization Change” material registered in 1987. The district court also denied the motion for summary judgment with respect to Lippitt’s claim that McConnell infringed the “Aligning for Success” chart because there was a genuine issue of material fact as to whether McConnell had copied it. Based on these rulings, the district court issued a pretrial order precluding Lippitt from basing any argument on her alleged ownership of the copyright in the “Managing Complex Change” chart, including any argument that McConnell infringed the “Aligning for Success” chart by copying elements from the “Managing Complex Change” chart. At trial, the jury returned a verdict for McConnell. The district court subsequently granted McConnell’s motion for attorneys’ fees. Lippitt appealed.

The Ninth Circuit first addressed whether Lippitt raised a genuine issue of material fact that she registered the “Managing Complex Change” chart by including it in the “Transition: Accomplishing Organization Change” materials. The Ninth Circuit explained that the district court’s ruling was partially based on the fact that the copyright for Lippitt’s original [...]

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Lanham Act Liability May Apply to Copyrighted Material

by | Jun 8, 2023 | ,

The US Court of Appeals for the Ninth Circuit found that liability under the Copyright Act and liability under the Lanham Act are not mutually exclusive and that liability under the Copyright Act does not negate trade dress damages under the Lanham Act. Jason Scott Collection, Inc. v. Trendily Furniture, LLC, Case No. 21-16978 (9th Cir. May 30, 2023) (Wardlaw, Bumatay, Schreier (sitting by designation), JJ.)

Jason Scott Collection (JSC) and Trendily Furniture are high-end furniture manufacturers that sell their products in the Texas market. In 2016, Trendily intentionally copied three unique furniture designs by JSC and sold them to Texas retailers. Both collections featured heavy carved wood pieces with detailed embellishments and metal elements. The record showed that Trendily’s collection had been based on photographs of the preexisting JSC collection. The Trendily pieces were so similar that even JSC had initially mistaken the furniture as its own when confronted by a retailer. After JSC filed suit, the district court granted summary judgment to JSC on its copyright claim. Following a bench trial, the district court held Trendily liable on the trade dress claim. On that claim, the district court awarded almost $133,000 in prospective lost annual profits over a period of three years, which amounted to about six times the almost $20,000 in retrospective gross profits awarded on JSC’s copyright claim. Trendily appealed.

To obtain a judgment for trade dress infringement, a plaintiff must prove that the claimed trade dress is nonfunctional, the claimed trade dress serves a source-identifying role because it is either inherently distinctive or has acquired a secondary meaning and the defendant’s product creates a likelihood of confusion. Trendily argued that JSC had not adequately established a secondary meaning (for trade dress the parties stipulated was not inherently distinctive) or likelihood of confusion. The Ninth Circuit, however, found that the district court found adequate evidence of secondary meaning through copying and through confusion by retailers and consumers in the high-end furniture market. The Ninth Circuit also found that the district court had correctly found likelihood of confusion, putting special emphasis on Trendily’s intentional and precise copying of the JSC pieces leading to retailer confusion.

Turning to the damages award, Trendily argued that because copying is a commercially acceptable and necessary act in terms of competition, Trendily should only be held liable under the Copyright Act, rather than for trade dress infringement under the Lanham Act. However, the Ninth Circuit affirmed that liability under the Copyright Act and liability under the Lanham Act are not mutually exclusive and that liability under the Copyright Act did not negate the judgment against Trendily for trade dress damages under the Lanham Act. The Court then affirmed the trade dress damages award, finding that the prospective damages incurred when one of JSC’s business relationships fell apart because of Trendily’s copied furniture were reasonably foreseeable and had been “satisfactorily demonstrated.” The Court emphasized that the law only required “crude measures of damages in cases of intentional infringement.”

Finally, the Ninth Circuit affirmed [...]

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