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Results for "Copyright appeals"
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Creative License: Fair Use Defense Paints Over Infringement Battle

by | Oct 3, 2024 | ,

Affirming the application of the fair use defense to copyright infringement, the US Court of Appeals for the Fifth Circuit determined that a district court’s sua sponte invocation of a fair use defense to parallel trademark claims was harmless error. The Court also affirmed that the district court did not abuse its discretion in awarding attorneys’ fees based on the prevailing party standard for copyright claims. Keck v. Mix Creative Learning Ctr., L.L.C., Case No. 23-20188 (5th Cir. Sept. 18, 2024) (Jones, Smith, Ho, JJ.)

Michel Keck, a multimedia artist, sued Mix Creative Learning Center, a Texas-based art studio, for copyright and trademark infringement after Mix Creative sold art kits featuring Keck’s dog-themed artwork and a brief biography, intended for at-home learning during the pandemic. Keck had registered her Dog Art series (in the form of decorative works) with the US Copyright Office and her name as a trademark with the US Patent & Trademark Office. Keck claimed that Mix Creative’s art kits violated her rights. After receiving notice of the lawsuit, Mix Creative promptly ceased selling its kits.

Following discovery, both parties filed cross-motions for summary judgment. The district court granted summary judgment in favor of Mix Creative on Keck’s copyright claim, finding fair use, and also granted summary judgment on the trademark claim sua sponte, as both parties had agreed that the fair use defense applied to both claims. The district court further awarded Mix Creative more than $100,000 in attorneys’ fees and costs, although it declined to hold Keck’s attorneys jointly and severally liable.

Keck appealed, challenging the copyright fair use finding and the district court’s sua sponte application of the fair use defense to the trademark claim. Mix Creative challenged the district court’s refusal to hold Keck’s attorneys jointly and severally liable for fees.

The Fifth Circuit affirmed the district court’s application of the fair use defense to Keck’s copyright claims. The Court focused on the first and fourth factors of the fair use defense (respectively, the purpose and character of the use and the effect of the use on the potential market for or value of the original work), noting that the courts typically give these two factors special attention.

On the first factor, the Fifth Circuit found Mix Creative’s use to be transformative. Although Mix Creative is a commercial enterprise, the art kits served an educational purpose, distinct from the decorative purpose of Keck’s original works. As a result, the likelihood of Mix Creative’s kits serving as a substitute for Keck’s original works in the market was low.

The fourth factor also favored Mix Creative, as the Fifth Circuit found no evidence that Mix Creative’s kits would harm the market value of Keck’s original decorative works. In fact, the Court suggested that the kits might enhance Keck’s reputation and sales by providing her with free advertising. Furthermore, Mix Creative operated in a different market (educational rather than decorative), and Keck had not demonstrated any history of selling derivative works for children’s art lessons. The [...]

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Even Free Libraries Come With a Cost

by | Sep 12, 2024 |

The US Court of Appeals for the Second Circuit affirmed a district court’s judgment of copyright infringement against an internet book archive, holding that its free-to-access library did not constitute fair use of the copyrighted books. Hachette Book Group Inc. v. Internet Archive, Case No. 23-1260 (2d Cir. Sept. 4, 2024) (Menashi, Robinson, Kahn, JJ.)

Hachette Book Group, HarperCollins Publishers, John Wiley & Sons, and Penguin Random House (collectively, the publishers) brought suit against Internet Archive alleging that its “Free Digital Library,” which loans copies of the publishers’ books without charge, violated the publishers’ copyrights. Internet Archive argued that its use of the publishers’ copyrighted material fell under the fair use exception to the Copyright Act because Internet Archive acquired physical books and digitized them for borrowing (much like a traditional library) and maintained a 1:1 ratio of borrowed material to physical copies except for a brief period during the COVID-19 pandemic.

The district court reviewed the four statutory fair use factors set forth in § 107 of the Copyright Act:

  • The purpose and character of the use, including whether such use is of a 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 district court found that Internet Archive’s use of the works was not covered by the fair use exception because its use was non-transformative, was commercial in nature due to its solicitation of donations, and was disruptive of the market for e-book licenses. Internet Archive appealed.

The Second Circuit affirmed, addressing each factor in turn.

The Second Circuit held that Internet Archive’s use of the copyrighted material was non-transformative because Internet Archive copied the works wholesale and the “transformation” of the material from a physical copy to a digital copy that could be loaned out was not sufficient to fundamentally alter the nature of the copyrighted material. The Court maintained that the “recasting of a novel as an e-book” is a “paradigmatic” example of a derivative work.

However, contrary to the district court, the Second Circuit found that Internet Archive’s use of the works was not commercial in nature despite its solicitation of donations, citing Internet Archive’s nonprofit status and free distribution of archived materials. The Court explained that the mere association with other platforms where users may buy print copies of the works combined with the existence of a “donate” button was insufficient to render the use commercial.

The Second Circuit held that the second fair use factor also weighed against Internet Archive, since both the fiction and nonfiction works digitized by Internet Archive were nonetheless original and creative. The Court held that the “greater leeway” that is allowed for fair use of “factual or informational” work was not sufficient to weigh in favor of Internet Archive since the nonfiction works nevertheless “represent the authors’ [...]

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It’s All Grecco to Me: No “Sophisticated Plaintiff” Exception to Discovery Rule

by | Aug 29, 2024 |

In a case of first impression, the US Court of Appeals for the Second Circuit held that there is no “sophisticated plaintiff” exception to the Copyright Act’s discovery rule, which provides that a copyright claim only accrues upon the copyright owner’s discovery of the infringement or when the copyright owner (in the exercise of due diligence) should have discovered the infringement. Michael Grecco Productions, Inc. v. RADesign, Inc., Case No. 23-1078 (2d Cir. Aug. 16, 2024) (Wesley, Chin, Lee, JJ.)

Michael Grecco Productions (MGP) is a photography studio and business owned by commercial photographer Michael Grecco, who presents himself as an industry leader in copyright registration and enforcement. This case arose in the context of Grecco’s January 2017 photos of a model wearing shoes designed by Ruthie Davis. The photos were published in a magazine in August 2017. MGP claimed that Davis republished at least two of these photos on her brand’s website and social media platforms without a license. In its complaint, MGP alleged that Davis’s use of the photos began on August 16, 2017, but that MGP did not discover this infringement until February 8, 2021. On October 12, 2021 (more than four years after the infringement began but less than one year after its discovery), MGP filed suit against Davis alleging copyright infringement. MGP’s complaint also pled facts describing Grecco’s “efforts to educate photographers concerning the benefits of copyright registration” and how Grecco himself “spends time and money to actively search for hard-to-detect infringements, and how he enforces his rights under the Copyright Act.”

Davis moved to dismiss the suit as time-barred, arguing that the complaint was deficient on its face based on the Copyright Act’s three-year limitations period. Purporting to apply the governing “discovery rule,” the district court found that MGP’s “relative sophistication as an experienced litigator in identifying and bringing causes of action for unauthorized uses of Grecco’s copyrighted works leads to the conclusion that it should have discovered, with the exercise of due diligence,” the alleged infringement within the statute’s three-year limitations period. Based on this rationale, the district court granted Davis’s motion to dismiss. MGP appealed.

Reviewing the district court’s ruling de novo, the Second Circuit found that the district court erred as a matter of law in concluding that MGP’s complaint was barred by the three-year limitations period.

The Second Circuit explained that it (and 10 other circuit courts) had already held that in enacting the Copyright Act, Congress intended to employ “the discovery rule” as the measure of when a claim for infringement accrues. Under this rule, a claim for copyright infringement accrues when a diligent plaintiff discovers or should have discovered the infringement. This timing is in contrast to “the injury rule,” under which the claim would accrue when the infringement in-fact occurred. As the Court explained, the discovery rule is not an equitable tolling or estoppel doctrine available to some “worthy” plaintiffs but not others. Rather, it is the rule used to determine when a cognizable claim for copyright [...]

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Insuring Innovation: Software Code May Be Protected as an Arrangement

by | Aug 22, 2024 | ,

The US Court of Appeals for the Eleventh Circuit once again remanded a trade secret and copyright dispute involving software for generating life insurance quotes, finding that the district court erred by failing to consider the copyrightability of the source code’s arrangement. As to the trade secret claim, however, the Eleventh Circuit found that the district court did not err in finding that the defendants misappropriated the trade secrets at issue and could be held jointly and severally liable, despite varying levels of culpability. Compulife Software, Inc. v. Newman, Case No. 21-14074 (11th Cir. Aug. 1, 2024) (Jordan, Brasher, Abudu, JJ.)

Compulife’s software generates life insurance quotes using a proprietary database of insurance rates. The software produces a quote by using blocks of code, arranged in a particular manner, that correspond to different data points such as state, birth month, birthday, birth year, sex and smoking status. Compulife licenses its software to customers and offers an online version to the public.

David Rutstein is a former insurance agent who is permanently barred from the profession. Rutstein misled Compulife into giving him its software by pretending that he worked with someone who had a license to use it. Rutstein then created and registered several websites in his son’s name using Compulife’s software in connection with the sites. One of the websites was later owned by Aaron Levy. Rutstein and Levy directed an employee, Moses Newman, to launch a scraping attack on Compulife’s website to get millions of quotes, which they used for their own websites. Compulife’s sales declined as a result.

Compulife sued Rutstein, Rutstein’s son, Levy and Newman for copyright infringement and misappropriation of trade secrets, among other claims. After a bench trial, the parties appealed, and the Eleventh Circuit directed the district court to make more specific findings. After a second bench trial, the district court determined that the defendants did not infringe Compulife’s software by copying it and using it for their own website, but they did misappropriate Compulife’s trade secrets. The defendants were held jointly and severally liable despite differing degrees of culpability. All parties appealed.

Compulife argued that the district court erred in concluding that the defendants did not infringe its copyright. The Eleventh Circuit agreed in part, finding that the district court incorrectly applied the abstraction-filtration-comparison test used in software copyright infringement analyses. Compulife claimed that the arrangement of its various source code elements (e.g., state, birth month, birthday, birth year and sex) was a creative and therefore protectable form of expression. The Court agreed that the arrangement was potentially protectable, similar to its holding in another case that the arrangement of yacht listings in a boat guide could be protectable. BUC Int’l v. Int’l Yacht Council (11th Cir. 2007). The Court remanded the copyright infringement analysis to the district court, finding that it erred in the abstraction step because it “never identified the entire arrangement of these variables in the code as a constituent component of the code.” The Eleventh Circuit disagreed, however, with [...]

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Digital Rights, Digital Wrongs: The DMCA Lives On

by | Aug 15, 2024 |

The US Court of Appeals for the District of Columbia affirmed that the Digital Millennium Copyright Act’s (DMCA) laws against bypassing digital locks and distributing circumvention tools are designed to prevent piracy and are not unconstitutionally broad. Matthew D. Green, et al. v. United States Department of Justice, et al., Case No. 23-5159 (D.C. Cir. Aug. 2, 2024) (Pillard, Henderson, Millett, JJ.)

As technology has advanced, access to copyrighted content has expanded dramatically, with billions of people now able to stream or download content instantly. In response to this digital revolution, Congress enacted the DMCA 26 years ago to address the growing threat of digital piracy and unauthorized access to copyrighted materials online. The DMCA reinforces the use of technological protection measures, or “digital walls,” to secure copyrighted works from unauthorized access. The DMCA’s anticircumvention provision prohibits bypassing these technological protections, treating such acts as akin to digital trespassing.

Matthew Green, a computer science professor at Johns Hopkins University, and Andrew Huang, a tech inventor, challenged the constitutionality of key sections of the DMCA. They argued that the DMCA’s anticircumvention and antitrafficking provisions, which prohibit the circumvention of technological protections on copyrighted works and the distribution of circumvention tools, violated their First Amendment rights. They claimed that these provisions excessively restricted their ability to engage in lawful speech, particularly in the context of fair use.

While the DMCA leaves the fair use defense intact, Green and Huang argued that the DMCA unduly restricts fair use, particularly when the DMCA prohibits activities that would otherwise be considered lawful under copyright law. The district court dismissed Green and Huang’s facial First Amendment challenges, finding that they had not demonstrated that § 1201 of the DMCA overwhelmingly restricted protected speech to the extent that it warranted facial invalidation. Green and Huang appealed.

The DC Circuit explained that the DMCA’s anticircumvention provisions primarily target conduct – specifically, the act of bypassing digital protections – rather than expression. The Court noted that such conduct is not inherently expressive and does not typically implicate the First Amendment. The Court also found that the DMCA’s anticircumvention provisions serve a legitimate and extensive purpose in preventing piracy. While Green and Huang cited examples of potential overreach, such as a teacher circumventing a DVD’s encryption for classroom use, the Court explained that these examples did not convincingly demonstrate that the statute’s unconstitutional applications outweighed its lawful ones. The Court further explained that existing exemptions, such as those allowing circumvention for educational purposes, reduce the burden on free speech.

Green and Huang also argued that § 1201(a) imposes an unconstitutional prior restraint on speech by requiring fair users to obtain exemptions from the Librarian of Congress before circumventing technological protections. They likened this process to a speech-licensing regime, claiming that it invites content and viewpoint discrimination without sufficient judicial oversight. However, the DC Circuit rejected this claim, ruling that the DMCA’s exemption process is not a prior restraint on speech. The Court reiterated and emphasized that § 1201(a) regulates conduct, [...]

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Go Home: No “Prevailing Party” Status After Voluntary Dismissal Without Prejudice

by | Aug 15, 2024 |

The US Court of Appeals for the Eleventh Circuit affirmed a district court’s ruling that a copyright holder’s voluntary dismissal of its claims did not render the defendant a prevailing party entitled to attorneys’ fees under the Copyright Act. Affordable Aerial Photography, Inc. v. Prop. Matters USA, LLC, Case No. 23-12563 (11th Cir. July 30, 2024) (Wilson, Grant, Lagoa, JJ.)

Affordable Aerial Photography (AAP) filed suit against Property Matters and Home Junction over alleged copyright infringement of a 2010 photograph titled “Presidential Place Front Aerial 2010 AAP,” which provides an aerial view of a residential condominium complex. AAP owns all real estate photos and related products (slide shows, virtual tours, stock photography) of Robert Stevens and licenses them for limited use by customers, such as luxury real estate companies. Property Matters is a real estate brokerage, and Home Junction is a real estate marketing solutions and services provider that designed and maintained Property Matters’ website.

The work was posted with copyright management information and registered with the Copyright Office in April 2018. During or before April 2017, the work appeared on Property Matters’ website without authorization, but AAP did not discover the alleged infringement until February 2022. After AAP filed suit, Property Matters filed a motion to dismiss arguing (in relevant part) that 17 U.S.C. § 507(b) sets a three-year statute of limitations from when the claim accrued (i.e., April 2017) to bring civil action and, therefore, AAP’s suit was untimely by more than two years. The district court denied the motion without prejudice. AAP then filed a notice of voluntary dismissal without prejudice under Rule 41(a)(1)(A)(i) with respect to its action against Property Matters and filed a joint notice of settlement with Home Junction soon after, which closed the case.

Property Matters then moved for attorneys’ fees under 17 U.S.C. § 505, asserting that “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” AAP argued that Property Matters was not the prevailing party because the voluntary dismissal was without prejudice and the limitations period had not yet expired. The district court found that the voluntary dismissal did not materially alter the legal relationship between the parties. The district court applied the “discovery rule” to conclude that AAP’s copyright infringement claim did not accrue until it discovered the alleged infringement in February 2022 and therefore AAP was not time-barred from raising its copyright infringement claim in a separate suit against Property Matters through February 2025. Property Matters appealed.

Reviewing the legal question on appeal de novo, the Eleventh Circuit affirmed. The Court reasoned that a defendant is not the prevailing party when a plaintiff’s action is voluntarily dismissed without prejudice under Rule 41(a)(1)(A)(i). This is true regardless of whether a statute of limitations has expired. The Court explained that a defendant does not attain prevailing party status merely because, as a practical matter, a plaintiff is unlikely or unable to refile its claims. Instead, the district court itself must act to reject [...]

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Message Received: Trade Secret Law Damages Available for Sales Outside US

by | Jul 18, 2024 | ,

The US Court of Appeals for the Seventh Circuit affirmed, in a matter of first impression, a district court’s decision to apply trade secret law extraterritorially and award trade secret damages for foreign sales while also finding that the copyright damages award needed to be reduced to eliminate foreign sales. Motorola Solutions, Inc. v. Hytera Communications Ltd., Case Nos. 22-2370; -2413 (7th Cir. July 2, 2024) (Hamilton, Brennan, St. Eve., JJ.)

Motorola Solutions and Hytera compete globally in the market for two-way radio systems. Motorola spent years and tens of millions of dollars developing trade secrets embodied in its line of high-end digital mobile radio (DMR) products. Hytera struggled to overcome technical challenges to develop its own competing DMR products. After failing for years, Hytera hatched a plan to “leap-frog Motorola” by stealing its trade secrets. Hytera, headquartered in China, hired three engineers from Motorola in Malaysia, offering them high-paying jobs in exchange for Motorola’s proprietary information. Before the engineers left Motorola, acting at Hytera’s direction, they downloaded thousands of documents and computer files containing Motorola’s trade secrets and copyrighted source code. Hytera relied on the stolen material to develop and launch a line of DMR radios that were functionally indistinguishable from Motorola’s DMR radios. Hytera sold these DMR radios in the United States and abroad.

Motorola sued Hytera for copyright infringement and trade secret misappropriation. The jury found that Hytera had violated both the Defend Trade Secrets Act of 2016 (DTSA) and the Copyright Act. The jury awarded compensatory damages under the Copyright Act and both compensatory and punitive damages under the DTSA for a total award of $765 million. The district court later reduced the award to $544 million, which included $136 million in copyright damages and $408 million in trade secrets damages. Hytera appealed.

Hytera conceded liability and instead challenged the damages award under both the Copyright Act and the DTSA. Among other things, Hytera argued that copyright and trade secret damages should not have been awarded for its sales outside the US. With respect to the copyright award, the Seventh Circuit agreed that Motorola failed to show a domestic violation of the Copyright Act and therefore was not entitled to recover damages for any of Hytera’s foreign sales of infringing products as unjust enrichment. Specifically, to show a domestic violation of the Copyright Act, Motorola had asserted that its code was copied from servers based in Chicago. While the district court accepted Motorola’s argument, the Seventh Circuit found that this factual finding lacked adequate support in the record, citing Motorola’s expert’s admission that there was no evidence of downloads from the Chicago servers. The Court instead found that given the location of the employees in Malaysia, it was likelier that the code was downloaded from Motorola’s Malaysia server. The Court therefore reversed the $136 million copyright award and remanded with instructions to limit the copyright award to Hytera’s domestic sales of infringing products.

The Seventh Circuit affirmed with respect to the trade secret award. Like the [...]

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Family Feud: Counterclaims Too Little, Too Late

by | Jun 27, 2024 |

The US Court of Appeals for the Seventh Circuit affirmed a district court’s ruling that aggrieved family members’ counterclaims for various intellectual property matters were long overdue and subject to a laches defense. Sumrall v. LeSEA, Inc., Case No. 23-2833 (7th Cir. June 12, 2024) (Scudder, Pryor, St. Eve, JJ.)

During Lester Frank Sumrall’s life, he created a legacy that began as a church, later blossoming into the Lester Sumrall Evangelical Association (LeSEA). Through LeSEA, Sumrall delivered his ministry from Indiana to the rest of the world via television, travel, writings and media productions. These works, including books and films (many of which Sumrall registered for copyrights in his or LeSEA’s name) are the subject of dispute. Particularly in dispute was the ownership of the “Traveler Photo,” a picture that Sumrall’s grandson Lester took during a ministry trip to China while Lester worked for LeSEA.

Sumrall’s death raised issues regarding succession. After his death, Sumrall’s sons, Peter, Stephen and Frank, took over LeSEA. Peter and Stephen relayed to Frank and others that Sumrall left all his assets to the ministry. Eight years later, Lester researched Indiana’s intestate succession law. Believing that Sumrall died without a will, Lester thought Frank should have inherited one-third of Sumrall’s estate. Under this belief, Frank granted Lester power of attorney to legally pursue his interest in the estate. For 12 years, Lester took no further legal action.

After learning that Sumrall did indeed have a will, Lester petitioned an Indiana probate court to open an estate for Sumrall in 2017. One of Lester’s cousins produced the will that granted some personal items to Sumrall’s grandchildren, with the remainder of his estate divided among his sons equally. The probate court denied the petition, reasoning that the estate was devoid of assets.

This case began with LeSEA’s trademark infringement claims against Lester and a competitor Lester created, the LeSEA Broadcasting Corporation. Those claims were resolved after Lester stopped using LeSEA’s name and therefore were not on appeal.

At issue in the appeal were counterclaims brought by the Lester Sumrall Family Trust against LeSEA, LeSEA’s affiliate corporations, and Lester’s uncles and cousins who are currently involved in the ministry (collectively, LeSEA). Lester and the trust asserted that:

  • LeSEA unrightfully took ownership of Sumrall’s copyrights.
  • LeSEA unlawfully used the Traveler Photo in its materials.
  • The trust was entitled to damages for its state law claims.
  • LeSEA unlawfully continued to use Sumrall’s right of publicity.

The Seventh Circuit rejected the appellants’ assertion that they owned Sumrall’s copyrighted works. The Court ruled that the appellants’ copyright claim arose under the Copyright Act, which bars suits three years after they accrue. The Court explained that an ownership claim accrues “when plain and express repudiation of co-ownership is communicated to the claimant.” Here, repudiation occurred when Sumrall died 28 years prior to the counterclaim and Stephen and Peter declared in “plain and express” terms that LeSEA owned the copyrights and the remainder of the estate.

As for the Traveler Photo, the [...]

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What Do You Meme? TFW Commercial Use Outweighs Fair Use

by | Jun 20, 2024 |

The US Court of Appeals for the Eighth Circuit affirmed a district court’s copyright infringement decision, finding that a congressional reelection campaign’s use of a popular meme to solicit donations was commercial in nature and therefore not fair use. Laney Griner v. King for Congress, Case No. 22-3623 (8th Cir. June 7, 2024) (Benton, Erickson, Kobes JJ.)

Laney Griner owns the copyright for the popular meme “Success Kid,” which is a photograph of then 11-month-old Sam Griner with his hand in a fist clenching sand at the beach.

Griner took the photograph in 2007. The photograph went on to become one of the first viral memes, with billions of internet users spreading the image with a variety of captions. Griner registered the copyright of the Success Kid meme in 2012 and has since licensed that photograph to many companies, including Virgin Mobile, Vitamin Water, Microsoft and Coca-Cola, for commercial use.

Steven King served as a congressional representative from Iowa from 2003 to 2021. During his 2020 reelection campaign, the King for Congress Committee, which supported the congressional campaign, posted the meme on its website, Facebook and Twitter in an effort to seek donations:

After requesting the removal of the posts to no avail, Griner filed a lawsuit for copyright infringement and violation of Sam’s privacy. The jury found that neither the committee nor the congressman violated Sam’s privacy, but it did find that the committee (but not the congressman) had “innocently” infringed Griner’s copyright. The jury awarded $750 in damages, which is the statutory minimum. The committee appealed.

The committee argued that its use of the meme was fair use under Section 107 of the Copyright Act. Under the Copyright Act, four factors define fair use:

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

The Eighth Circuit found that the first factor weighed against the committee since the post clearly used the meme to call for donations and was undoubtedly commercial in nature. The commercial nature of the use voided the committee’s argument that the meme had been used millions, if not billions, of times without permission by users across the internet. Likewise, the “transformative elements” that the committee added (original text) were not persuasive enough to overcome this commercial nature. The Court found that the third factor also weighed against the committee since the “most substantial part of the work,” the “Success Kid himself,” was used in the committee’s post. The Court found that the fourth factor weighed in neither party’s favor, despite the fact [...]

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Fourth Estate Redux: Dismissal for Lack of Registration Not on the Merits

by | Jun 20, 2024 |

In the latest development of a complicated eight-year court battle regarding a copyright infringement claim, the US Court of Appeals for the First Circuit vacated and remanded the district court’s dismissal on claim preclusion grounds. The Court concluded that dismissal for failure to register the copyright was not “on the merits,” and therefore preclusion did not apply. Foss v. Marvic Inc. et al., Case No. 23-1214 (1st Cir June 10, 2024) (Barron, C.J.; Lipez, Kayatta, JJ.)

In 2006, Cynthia Foss designed a brochure for Marvic, a purveyor of sunrooms, for $3,000. Foss’s grievance with Marvic began in 2016 when she discovered that Marvic had been using a modified version of that brochure without permission. Foss filed a copyright infringement claim in January 2018 demanding $264,000. She inaccurately alleged that she had applied to register the copyright for the brochure. Eight months later, Foss amended her complaint, falsely alleging that she had registered the brochure with the US Copyright Office in February 2018 when in fact she had only applied for registration.

The district court stayed the action pending the Supreme Court’s decision in Fourth Estate v. Wall-Street, which construed 17 U.S.C. § 411(a) to require registration before a copyright claimant may sue for infringement. After Fourth Estate was issued, the district court dismissed Foss’s copyright infringement claim because the Copyright Office had not acted on her application for copyright. Later, the Copyright Office granted Foss a copyright registration in the brochure. Rather than move for reconsideration of the dismissal of her claim in the first action, Foss filed an appeal, which she lost.

After losing the appeal, Foss filed a second copyright infringement complaint against Marvic based on the same facts as the first. Foss also filed an amended complaint naming Charter Communication. She sought a declaratory judgment that Charter was not entitled to assert a safe harbor defense under the Digital Millenium Copyright Act (DMCA). Marvic and Charter filed motions to dismiss. In February 2023, the district court granted the motions, finding that “[b]ecause Foss’s prior copyright infringement claim against Marvic was dismissed with prejudice, [we] agree[d], for substantially the reasons stated in their supporting memorand[a], that her copyright claims . . . are barred by res judicata.” Foss appealed.

On the issue of claim preclusion, the First Circuit concluded that the first dismissal had not been a “final judgment on the merits” because it was based exclusively on the failure to satisfy the precondition of registration. The Court noted that it had ruled on this issue in Foss v. Eastern States Exposition, another copyright infringement action brought by Foss. The Court explained that, as it concluded in the Eastern States Exposition case, dismissal due to lack of prior registration is “too disconnected from the merits of the underlying claim” to be claim preclusive.

Marvic argued that the prior dismissal “with prejudice” constituted a final judgment on the merits and that the dismissal was “a sanction” based on Foss’s “repeatedly ignoring court directives [...]

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