Mavrix Photographs, LLC v. LiveJournal, Inc.

The panel filed an amended opinion (1) reversing the district court’s holding, on summary judgment, that the defendant was protected by the safe harbor of the Digital Millennium Copyright Act from liability for posting the plaintiff’s photographs online and (2) vacating a discovery order.

In its amended opinion, the panel held that the safe harbor set forth in 17 U.S.C. § 512(c) would apply if the photographs were stored at the direction of users. The defendant, a social media platform, posted the photographs after a team of volunteer moderators, led by an employee of the defendant, reviewed and approved them. The panel held that whether the photographs were stored at the direction of users depended on whether the acts of the moderators could be attributed to the defendant. Disagreeing with the district court, the panel held that the common law of agency applied to the defendant’s safe harbor defense. Because there were genuine factual disputes regarding whether the moderators were the defendant’s agents, the panel reversed the district court’s summary judgment and remanded the case for trial.

The panel also discussed the remaining elements of the safe harbor affirmative defense. If an internet service provider shows that the infringing material was posted “at the direction of the user,” it must then also show that (1) it lacked actual or red flag knowledge of the infringing material; and (2) it did not financially benefit from infringements that it had the right and ability to control. The panel held that to fully assess actual knowledge, the fact finder must consider not only whether the copyright holder has given notice of the infringement, but also the service provider’s subjective knowledge of the infringing nature of the posts. The panel held that to determine whether the defendant had red flag knowledge, the fact finder would need to assess whether it would be objectively obvious to a reasonable person that material bearing a generic watermark or a watermark referring to the plaintiff’s website was infringing. When assessing the service provider’s right and ability to control the infringements, the fact finder should consider the service provider’s procedures that existed at the time of the infringements and whether the service provider had “something more” than the ability to remove or block access to posted materials.

Finally, the panel vacated the district court’s order denying discovery of the moderators’ identities. It remanded the case for further proceedings.

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Disney Enterprises, Inc. v. VidAngel, Inc.

The panel affirmed the district court’s preliminary injunction against the defendant in an action under the Copyright Act and the Digital Millennium Copyright Act.

Defendant VidAngel, Inc., operated an online streaming service that removed objectionable content from movies and television shows. VidAngel purchased physical discs containing copyrighted movies and television shows, decrypted the discs to “rip” a digital copy to a computer, and then streamed to its customers a filtered version of the work.

The panel held that the district court did not abuse its discretion in concluding that VidAngel’s copying infringed the plaintiffs’ exclusive reproduction right. Because VidAngel did not filter authorized copies of movies, it was unlikely to succeed on the merits of its defense that the Family Movie Act of 2005 exempted it from liability for copyright infringement. VidAngel also was unlikely to succeed on its fair use defense.

The panel held that the district court also did not abuse its discretion in concluding that the plaintiffs were likely to succeed on their DCMA claim.

The panel held that the anticircumvention provision of the DMCA, 17 U.S.C. § 1201(a), covered the plaintiffs’ technological protection measures, which controlled both access to and use of the copyrighted works.

The panel affirmed the district court’s findings regarding the likelihood of irreparable harm, the balancing of the equities, and the public interest.

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Jordan-Benel v. Universal City Studios, Inc.

The panel affirmed the district court’s order denying defendants’ anti-SLAPP motion to strike a state law claim for breach of implied-in-fact contract in a copyright case.

The plaintiff alleged that the defendants infringed his copyright in a screenplay and used his screenplay idea to create films without providing him compensation as a writer. The panel held that the breach of contract claim did not arise from an act in furtherance of the right of free speech because the claim was based on defendants’ failure to pay for the use of plaintiff’s idea, not the creation, production, distribution, or content of the films. Accordingly, the district court did not err in denying defendants’ motion to strike the state law claim under California’s anti-SLAPP statute.

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Design Basics, LLC v. Lexington Homes, Inc.

This copyright suit shows the difficulty in finding protected creative expression in a crowded field, in this case, architectural design of single‐family homes. The case also shows the challenge in administering intellectual property law to discourage so‐called intellectual property “trolls” while protecting genuine creativity.

Plaintiffs Design Basics, LLC; Prime Designs, Inc.; and Plan Pro, Inc. (collectively, “Design Basics”) and their affili‐ ates claim rights to some 2700 home designs. They sued defendants Lexington Homes, Inc. and related parties (collectively, “Lexington”) for copyright infringement, contending that Lexington built homes that infringed four of Design Basics’ designs.

The district court granted summary judgment to Lexington, finding no evidence that Lexington ever had access to De‐ sign Basics’ home plans. Without access, the court reasoned, there could be no copying and no copyright infringement. We affirm. We agree with the district court that Design Basics has no evidence of access. We also conclude that no reasonable jury could find that Lexington’s accused plans bear substantial similarities to any original material in Design Basics’ plans.  

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Fourth Estate Public Benefit v. Wall-Street com, LLC

“Registration” of a copyright is a precondition to filing suit for copyright infringement. 17 U.S.C. § 411(a). This appeal requires us to decide an issue that has divided the circuits: whether registration occurs when an owner files an application to register the copyright or when the Register of Copyrights registers the copyright. Compare Cosmetic Ideas, Inc. v. IAC/Interactivecorp, 606 F.3d 612, 619 (9th Cir. 2010) (concluding that registration occurs when the owner files an application), with La Resolana Architects, PA v. Clay Realtors Angel Fire, 416 F.3d 1195, 1197 (10th Cir. 2005) (concluding that registration occurs when the Register approves an application), abrogated in part by Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 157 (2010). Fourth Estate Public Benefit Corporation filed a suit for infringement against Wall-Street.com and Jerrold Burden. The complaint alleged that Fourth Estate had filed an application to register its allegedly infringed copyrights, but that the Copyright Office had not registered its claims. The district court dismissed the action because Fourth Estate failed to plead compliance with the registration requirement, 17 U.S.C. § 411(a). Because registration occurs when the Register of Copyrights “register[s] the claim,” id. § 410(a), we affirm.

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SoundExchange, Inc. v. Muzak LLC

This case pits SoundExchange, a nonprofit entity, charged with the responsibility of collecting royalties for performing artists and copyright owners of music, against Muzak, a company that supplies digital music channels to satellite television networks who, in turn, sell to subscribers. SoundExchange sued Muzak under the Copyright Act in district court, claiming that Muzak underpaid royalties owed. The district court dismissed SoundExchange’s complaint. (From the point of view of classic administrative law, the Register of Copyrights, to which we normally are obliged to defer, plays a rather unusual role.) Although the case is close – the controlling statute is dreadfully ambiguous – we conclude that SoundExchange has the better position, and therefore reverse the district court.

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Mavrix Photographs, LLC v. LiveJournal, Inc.

Digital Millennium Copyright Act

The panel (1) reversed the district court’s holding, on summary judgment, that the defendant was protected by the safe harbor of the Digital Millennium Copyright Act from liability for posting the plaintiff’s photographs online and (2) vacated a discovery order.

The panel held that the safe harbor set forth in 17 U.S.C. § 512(c) would apply if the photographs were posted at the direction of users. The defendant, a social media platform, posted the photographs after a team of volunteer moderators, led by an employee of the defendant, reviewed and approved them. The panel held that whether the photographs were posted at the direction of users depended on whether the acts of the moderators could be attributed to the defendant. Disagreeing with the district court, the panel held that the common law of agency applied to the defendant’s safe harbor defense. Because there were genuine factual disputes regarding whether the moderators were the defendant’s agents, the panel reversed the district court’s summary judgment and remanded the case for trial. The panel also discussed the remaining elements of the safe harbor affirmative defense. If an internet service provider shows that the infringing material was posted “at the direction of the user,” it must then also show that (1) it lacked actual or red flag knowledge of the infringing material; and (2) it did not financially benefit from infringements that it had the right and ability to control. The panel held that to fully assess actual knowledge, the fact finder must consider not only whether the copyright holder has given notice of the infringement, but also the service provider’s subjective knowledge of the infringing nature of the posts. The panel held that to determine whether the defendant had red flag knowledge, the fact finder would need to assess whether it would be objectively obvious to a reasonable person that material bearing a generic watermark or a watermark referring to the plaintiff’s website was infringing. When assessing the service provider’s right and ability to control the infringements, the fact finder should consider the service provider’s procedures that existed at the time of the infringements and whether the service provider had “something more” than the ability to remove or block access to posted materials.

Finally, the panel vacated the district court’s order denying discovery of the moderators’ identities.

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BWP Media USA, Inc. v. T & S Software Associates, Inc.

This appeal is about whether “volitional conduct” is required to establish a claim for direct copyright infringement. Defendant T&S Software Associates, an internet service provider, hosted an internet forum on which third-party users posted images that infringed copyrights owned by plaintiffs BWP Media USA and National Photo Group. The plaintiffs sued T&S for direct and secondary copyright infringement. The district court granted summary judgment in favor of T&S. The plaintiffs appeal the district court’s direct infringement holding. We AFFIRM.

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Fox Television Stations, Inc. v. Aereokiller LLC

Reversing the district court’s partial summary judgment in favor of defendants, the panel held that a service that captures copyrighted works broadcast over the air, and then retransmits them to paying subscribers over the Internet without the consent of the copyright holders, is not a “cable system” eligible for a compulsory license under the Copyright Act.

Under § 111 of the Act, a “cable system” is eligible for a so-called compulsory license that allows it to retransmit “a performance or display of a work” that had originally been broadcast by someone else—even if such material is copyrighted— without having to secure the consent of the copyright holder. So long as the cable system pays a statutory fee to the Copyright Office and complies with other regulations, it is protected from infringement liability.

The panel concluded that § 111 was ambiguous on the question presented. Deferring to the Copyright Office’s interpretation, the panel held that Internet-based retransmission services are not eligible for the compulsory license that § 111 makes available to “cable systems.”

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Star Athletica v. Varsity Brands

A feature incorporated into the design of a useful article is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article, and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated. That test is satisfied here. Pp. 3–17.

(a) Separability analysis is necessary in this case. Respondents claim that two-dimensional surface decorations are always separable, even without resorting to a §101 analysis, because they are “on a useful article” rather than “designs of a useful article.” But this argument is inconsistent with §101’s text. ”[P]ictorial” and “graphic” denote two-dimensional features such as pictures, paintings, or drawings. Thus, by providing protection for “pictorial, graphical, and sculptural works” incorporated into the “design of a useful article,” §101 necessarily contemplates that such a design can include two dimensional features. This Court will not adjudicate in the first instance the Government’s distinct argument against applying separability analysis, which was neither raised below nor advanced here by any party. Pp. 4–6.

(b) Whether a feature incorporated into a useful article “can be identified separately from,” and is “capable of existing independently of,” the article’s “utilitarian aspects” is a matter of “statutory interpretation.” Mazer v. Stein, 347 U. S. 201, 214. Pp. 6–10.

(1) Section 101’s separate-identification requirement is met if the decision maker is able to look at the useful article and spot some two or three-dimensional element that appears to have pictorial, graphic, or sculptural qualities. To satisfy the independent-existence requirement, the feature must be able to exist as its own pictorial, graphic, or sculptural work once it is imagined apart from the useful article. If the feature could not exist as a pictorial, graphic, or sculptural work on its own, it is simply one of the article’s utilitarian aspects. And to qualify as a pictorial, graphic, or sculptural work on its own, the feature cannot be a useful article or “[a]n article that is normally a part of a useful article,” §101. Neither could one claim a copyright in a useful article by creating a replica of it in another medium. Pp. 7–8.

(2) The statute as a whole confirms this interpretation. Section 101, which protects art first fixed in the medium of a useful article, is essentially the mirror image of §113(a), which protects art first fixed in a medium other than a useful article and subsequently applied to a useful article. Together, these provisions make clear that copyright protection extends to pictorial, graphic, and sculptural works regardless of whether they were created as freestanding art or as features of useful articles. P. 8.

(3) This interpretation is also consistent with the Copyright Act’s history. In Mazer, a case decided under the 1909 Copyright Act, the Court held that respondents owned a copyright in a statuette created for use as a lamp base. In so holding, the Court approved a Copyright Office regulation extending protection to works of art that might also serve a useful purpose and held that it was irrelevant to the copyright inquiry whether the statuette was initially created as a freestanding sculpture or as a lamp base. Soon after, the Copyright Office enacted a regulation implementing Mazer’s holding that anticipated the language of §101, thereby introducing the modern separability test to copyright law. Congress essentially lifted the language from those post-Mazer regulations and placed it in §101 of the 1976 Act. Pp. 8–10.

(c) Applying the proper test here, the surface decorations on the cheerleading uniforms are separable and therefore eligible for copyright protection. First, the decorations can be identified as features having pictorial, graphic, or sculptural qualities. Second, if those decorations were separated from the uniforms and applied in another medium, they would qualify as two-dimensional works of art under §101. Imaginatively removing the decorations from the uniforms and applying them in another medium also would not replicate the uniform itself.

The dissent argues that the decorations are ineligible for copyright protection because, when imaginatively extracted, they form a picture of a cheerleading uniform. Petitioner similarly claims that the decorations cannot be copyrighted because, even when extracted from the useful article, they retain the outline of a cheerleading uniform. But this is not a bar to copyright. Just as two-dimensional fine art correlates to the shape of the canvas on which it is painted, two dimensional applied art correlates to the contours of the article on which it is applied. The only feature of respondents’ cheerleading uniform eligible for a copyright is the two-dimensional applied art on the surface of the uniforms. Respondents may prohibit the reproduction only of the surface designs on a uniform or in any other medium of expression. Respondents have no right to prevent anyone from manufacturing a cheerleading uniform that is identical in shape, cut, or dimensions to the uniforms at issue here. Pp. 10–12.

(d) None of the objections raised by petitioner or the Government is meritorious. Pp. 12–17.

(1) Petitioner and the Government focus on the relative utility of the plain white uniform that would remain if the designs were physically removed from the uniform. But the separability inquiry focuses on the extracted feature and not on any aspects of the useful article remaining after the imaginary extraction. The statute does not require the imagined remainder to be a fully functioning useful article at all. Nor can an artistic feature that would be eligible for copyright protection on its own lose that protection simply because it was first created as a feature of the design of a useful article, even if it makes that article more useful. This has been the rule since Mazer, and it is consistent with the statute’s explicit protection of “applied art.” In rejecting petitioner’s view, the Court necessarily abandons the distinction between “physical” and “conceptual” separability adopted by some courts and commentators. Pp. 12–15.

(2) Petitioner also suggests incorporating two “objective” components into the test—one requiring consideration of evidence of the creator’s design methods, purposes, and reasons, and one looking to the feature’s marketability. The Court declines to incorporate these components because neither is grounded in the statute’s text. Pp. 15–16.

(3) Finally, petitioner claims that protecting surface decorations is inconsistent with Congress’ intent to entirely exclude industrial design from copyright. But Congress has given limited copyright protection to certain features of industrial design. Approaching the statute with presumptive hostility toward protection for industrial design would undermine that choice. In any event, the test adopted here does not render the underlying uniform eligible for copyright protection. Pp. 16–17.

799 F. 3d 468, affirmed.

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