Intellectual Property, Entertainment & Sports Section Presents: “Intellectual Property Law Year in Review”

Alabama State Bar – Annual Meeting

Intellectual Property, Entertainment & Sports Section presents: “Intellectual Property Law Year in Review”

Michael S. Denniston – Bradley Arant Boult Cummings LLP Michael J. Douglas – Leak, Douglas & Morano, P.C.

June 23, 2016

Trademark Cases ADT, LLC v. Alarm Protection Technology Florida, LLC, Nos. 15-11277, 15-12650 (11th Cir. Mar. 24, 2016) Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (11th Cir. 2015) Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (11th Cir. 2015) Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (11th Cir. 2015) Sandshaker Lounge & Package Store LLC v. Quietwater Entertainment Inc., 602 Fed.Appx. 784 2015 WL 1245462 (11th Cir. Mar. 19, 2015) Donut Joe’s, Inc. v. Interveston Food Services, LLC, 116 F.Supp.3d 1290 (N.D. Ala. 2015)

Copyright Cases E.S.Y., Inc. v. Scottsdale Insurance Company, --- F.Supp.3d ---- 2015 WL 6164666 (S. D. Fla. Oct. 14, 2015) Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (11th Cir. 2015) Katz v. Google Inc., 802 F.3d 1178 (11th Cir. 2015) Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (11th Cir. 2015) Olem Shoe Corp. v. Washington Shoe Corp., 591 Fed.Appx. 873, 2015 WL 136552 (11th Cir. Jan. 12, 2015) Karlson v. Red Door Homes, LLC, 611 Fed.Appx. 566 2015 WL 2117247, (11th Cir. May 7, 2015)

Legislation Alabama Right of Publicity Act Federal Defend Trade Secrets Act of 2016

Case: 15-11277 Date Filed: 03/24/2016 Page: 1 of 16

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ______

Nos. 15-11277, 15-12650 ______

D.C. Docket No. 9:12-cv-80898-KLR

ADT LLC, a Delaware limited liability company,

Plaintiff-Appellant,

versus

ALARM PROTECTION TECHNOLOGY FLORIDA, LLC, a Florida limited liability company, JACOB DAHL, ADAM DALTON SCHANZ, ALARM PROTECTION TECHNOLOGY LLC, ALARM PROTECTION TECHNOLOGY HOLDINGS, LLC, ALARM PROTECTION TECHNOLOGY MANAGEMENT, LLC,

Defendants-Appellees.

______

Appeals from the United States District Court for the Southern District of Florida ______

(March 24, 2016)

Case: 15-11277 Date Filed: 03/24/2016 Page: 2 of 16

Before WILLIAM PRYOR and DUBINA, Circuit Judges, and ROBRENO,* District Judge.

PER CURIAM:

This case involves two sets of letters: ADT and APT. Plaintiff ADT is a well-known provider of burglar and fire alarm systems. Defendant Alarm

Protection Technology (“APT” or “Alarm Protection”) sells alarm systems on a door-to-door basis. ADT sued Alarm Protection for unfair competition and trademark infringement based on its use of “APT” in its sales pitch. A jury returned a verdict in Alarm Protection’s favor, and ADT now appeals the district court’s refusal to give three of ADT’s requested jury instructions. In a separate appeal, which is now consolidated with the first, ADT takes issue with the district court’s denial of ADT’s motion to stay payment of the preliminary injunction bond pending this appeal. After reading the briefs, reviewing the record below, and hearing oral argument, we affirm the district court in all respects.

I. BACKGROUND Adam Schanz began selling alarm systems door-to-door in 2004. In 2008,

Schanz formed Alarm Protection Technology LLC in Utah, adopting “APT” as a d/b/a name for his company. In 2011, Schanz formed a number of other entities, including Alarm Protection Technology Florida LLC. The company used “APT”

* Honorable Eduardo C. Robreno, United States District Judge for the Eastern District of Pennsylvania, sitting by designation.

Case: 15-11277 Date Filed: 03/24/2016 Page: 3 of 16 on their yard signs, in their website URL, in their toll-free number, and in their sales literature.

In 2012, ADT LLC began receiving reports from its Florida customers that

Alarm Protection’s sales agents were going to ADT customers’ homes and asking if they were interested in an “upgrade” to their ADT alarm systems. According to

ADT, the “upgrade” pitch, combined with the similarity in names, misled customers into signing contracts with Alarm Protection under the erroneous belief that they were upgrading their current ADT systems.

ADT initially sued Alarm Protection for deceptive trade practices under the

Lanham Act, 15 U.S.C. § 1125(a)(1), and Florida’s Deceptive and Unfair Trade

Practices Act, Fla. Stat. § 501.201, et seq., as well as intentional interference with contractual relations and commercial disparagement. ADT sought and obtained a preliminary injunction to bar Alarm Protection from using the sales pitch in its door-to-door sales.

ADT later amended its complaint to add a separate claim for trademark infringement under the Lanham Act, 15 U.S.C. § 1125(a), (c). Thereafter, ADT sought and obtained a second preliminary injunction to bar Alarm Protection from using the “APT” acronym in commerce pending trial. ADT was ordered to post a

$100,000 bond to protect Alarm Protection with respect to the injunction. ADT later filed a Second Amended Complaint to name other Alarm Protection entities.

Case: 15-11277 Date Filed: 03/24/2016 Page: 4 of 16

With trial approaching, ADT moved in limine to prevent Alarm Protection from introducing evidence of the company’s “Clarification Questionnaires” and

“Welcome Calls,” which were used to dispel customer confusion. ADT based its motion on the “initial interest confusion” doctrine. The district court denied the motion, explaining that the Eleventh Circuit has not recognized the doctrine.

At trial, ADT customers testified that Alarm Protection’s sales agents began their pitch by identifying themselves as working for “APT,” which, according to customer testimony, sounds like “ADT” through the door during a door-to-door introduction. Part of Alarm Protection’s defense theory was that it had cured any possible confusion at the initiation of the door-to-door sale by the transaction’s close. Alarm Protection argued that customers signed a “Clarification

Questionnaire” to affirm their understanding that the sales agent represented only

Alarm Protection. The customer later participated in a “Welcome Call,” during which an Alarm Protection operator explained that Alarm Protection is unrelated to any other company.

ADT also requested a jury instruction on the initial interest confusion doctrine, despite the district court’s earlier denial of ADT’s motion in limine on those same grounds. ADT also requested an instruction on the “type and strength of mark.” This requested instruction stated that “the law provides expanded protection for trademarks made up of acronyms or letter combinations, because it

Case: 15-11277 Date Filed: 03/24/2016 Page: 5 of 16 is more difficult to remember a series of arbitrary letters.” ADT sought an additional instruction stating that Schanz could be individually liable for any infringements that he caused by creating and doing business with the “APT” mark.

The district court declined to give these requested instructions. At the charge conference, the district court explained that it had “done a lot of reading of cases,” and determined that “the initial interest confusion [doctrine]” had not been

“adopted.” The district court proposed that the jury verdict form include a specific question to ask whether there was “confusion at the initial interest time.” Neither party objected to the proposed verdict form.

Ultimately, the district court, basing its instruction on the Eleventh Circuit

Pattern Civil Jury Instruction for trademark infringement, explained to the jury that

[i]t is not essential that the acronym used by Defendants be an exact copy of ADT’s trademark. Instead, ADT must demonstrate by a preponderance of the evidence that Defendants’ use of its trademark is, when viewed in its entirety, likely to cause confusion as to the source, origin, affiliation, approval or sponsorship of the goods in question.

See 11th Cir. Pattern Civ. Jury Instr. 10.1 (2013).

Additionally, instead of giving the specific “type and strength” instruction requested by ADT, the district court explained that “[t]he first factor” the jury should consider “in determining whether a likelihood of confusion exists” is “the type and strength of the mark.” The district court further stated that “ADT’s

Case: 15-11277 Date Filed: 03/24/2016 Page: 6 of 16 trademark is an arbitrary trademark that is a strong trademark,” and it provided a definition and example of an arbitrary trademark.

As to corporate and individual liability, the district court instructed that “a corporation is responsible under the law for the acts and statements of its employees that are made within the scope of their duties as employees of the company.” Finally, regarding the trademark infringement count, the district court instructed the jury that “ADT claims that Alarm Protection Technology, Alarm

Protection Technology Florida, Alarm Protection Technology Management and

Alarm Protection Technology Holdings and Adam Schanz have infringed its registered trademark.”

After the district court delivered the jury instructions, it reviewed the verdict form with the jury. The district court addressed the second question on the verdict form, which asked whether the jury “find[s] from a preponderance of the evidence that the Defendants’ use of the trademark caused a likelihood of initial interest confusion as to Defendants’ affiliation with ADT.” The district court specifically stated that “[i]nitial interest confusion is another word for saying initially at the door, not necessarily later on the sale.”

The jury returned a verdict in Alarm Protection’s favor, and the district court entered judgment on the verdict. ADT did not file a renewed motion for judgment as a matter of law or motion for a new trial, but rather filed only a notice of appeal.

Case: 15-11277 Date Filed: 03/24/2016 Page: 7 of 16

After entry of judgment, Alarm Protection moved to recover on the injunction bond posted earlier by ADT, which the district court granted over

ADT’s objection. ADT then posted a supersedeas bond and appealed the district court’s ruling on the injunction bond. We consolidated the two appeals, and both are presently before the Court.

II. STANDARD OF REVIEW We review a district court’s refusal to give a requested jury instruction for abuse of discretion. Burchfield v. CSX Transp., Inc., 636 F.3d 1330, 1333 (11th

Cir. 2011). A district court abuses its discretion by refusing to give a requested instruction “only when (1) the requested instruction correctly stated the law, (2) the instruction dealt with an issue properly before the jury, and (3) the failure to give the instruction resulted in prejudicial harm to the requesting party.” Id. at 1333–34

(quoting Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1287 (11th Cir. 2008)).

“When the instructions, taken together, properly express the law applicable to the case, there is no error even though an isolated clause may be inaccurate, ambiguous, incomplete or otherwise subject to criticism.” Morgan v. Family Dollar

Stores, Inc., 551 F.3d 1233, 1283 (11th Cir. 2008) (quoting Somer v. Johnson, 704

F.2d 1473, 1477–78 (11th Cir. 1983)). The Court will reverse only if “left with a substantial and ineradicable doubt as to whether the jury was properly guided in its deliberations.” Bateman v. Mnemonics, Inc., 79 F.3d 1532, 1543 (11th Cir. 1996)

Case: 15-11277 Date Filed: 03/24/2016 Page: 8 of 16

(quoting Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1372 (11th Cir.

1981)).

III. DISCUSSION ADT argues that the district court abused its discretion in refusing to give its requested jury instructions as to (1) the “initial interest confusion” doctrine; (2) the protections provided to trademarks consisting of words and letter combinations; and (3) a company owner’s individual liability for trademark infringement. We address each argument in turn.

1. Initial Interest Confusion Instruction

ADT first argues that its proposed “initial interest confusion” instruction correctly stated that “a defendant violates the law when it causes confusion only before a sale . . . even if the customer understands the defendant’s identity by the time the sale is actually made.” The Eleventh Circuit has not yet decided whether a trademark infringement claim based on “initial interest confusion” is actionable under the Lanham Act. See Suntree Techs. Inc. v. Ecosense Int’l, Inc., 693 F.3d

1338, 1347 (11th Cir. 2012) (declining to address the issue). Courts of appeals in other Circuits, however, have held that such a claim is actionable. See, e.g.,

Australian Gold, Inc. v. Hatfield, 436 F.3d 1228, 1238–39 (10th Cir. 2006); Gen.

Motors Corp. v. Keystone Auto. Indus., Inc., 453 F.3d 351, 355 (6th Cir. 2006)

(describing the doctrine as “confusion at the point of sale”); Louis Vuitton

Case: 15-11277 Date Filed: 03/24/2016 Page: 9 of 16

Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 537 n.2 (2d

Cir. 2005); Checkpoint Sys., Inc. v. Check Point Software Techs., Inc., 269 F.3d

270, 292 (3d Cir. 2001); Interstellar Starship Servs., Ltd. v. Epix Inc., 184 F.3d

1107, 1110 (9th Cir. 1999); Elvis Presley Enters. Inc. v. Capece, 141 F.3d 188, 204

(5th Cir. 1998); Dorr-Oliver, Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 382 (7th Cir.

1996); Downtowner/Passport Int’l Hotel Corp. v. Norlew, Inc., 841 F.2d 214, 219–

20 (8th Cir. 1988) (discussing “likelihood of confusion that initially existed”). But see Lamparello v. Falwell, 420 F.3d 309, 316 (4th Cir. 2005) (“[W]e have never adopted the initial interest confusion theory; rather, we have followed a very different mode of analysis, requiring courts to determine whether a likelihood of confusion exists by ‘examin[ing] the allegedly infringing use in the context in which it is seen by the ordinary consumer.’” (second alteration in original)

(quoting Anheuser-Busch, Inc. v. L&L Wings, Inc., 962 F.2d 316, 319 (4th Cir.

1992)). But we need not decide whether the “initial interest confusion” theory is actionable because, even if it were, the district court’s failure to give the requested instruction did not prejudicially harm ADT.

During the charge conference, the district court denied ADT’s requested instruction on “initial interest confusion.” The district court explained that it would include a special interrogatory on the jury verdict form instead. If the jury were to find that there was confusion, the district court proposed “to have a sub-question

Case: 15-11277 Date Filed: 03/24/2016 Page: 10 of 16

A: Was the confusion at the initial interest time, yes or no; was there confusion at the contract time, yes or no.” ADT did not object to the proposed solution.

After the district court instructed the jury on the trademark infringement count, the court reviewed the verdict form with the jury and specifically stated that

“[i]nitial interest confusion is another word for saying initially at the door, not necessarily later on the sale.” This explanation adequately addressed ADT’s initial interest theory.

The Court is not persuaded by ADT’s argument that the district court’s use of the Eleventh Circuit pattern instruction on trademark infringement foreclosed the jury from fairly considering ADT’s theory. The district court instructed the jury that “ADT must demonstrate by a preponderance of the evidence that Defendants’ use of its trademark is, when viewed in its entirety, likely to cause confusion as to the source, origin, affiliation, approval or sponsorship of the goods in question.”

See Pattern Civ. Jury Instr. 11th Cir. 10.1. Considering Alarm Protection’s trademark use “in its entirety” did not bar the jury from considering ADT’s theory of initial interest confusion, because the “entirety” of Alarm Protection’s actions include its actions at the initial stage of the sale. Even those circuits that have recognized the initial interest doctrine have not included any reference to the doctrine in their pattern instructions. See, e.g., Fed. Civ. Jury Instr. 7th Cir. 13.1.2

(2008). And even some, in a manner similar to the Eleventh Circuit, maintain

Case: 15-11277 Date Filed: 03/24/2016 Page: 11 of 16 reference to “the total” or “all” of the defendant’s actions. See, e.g., Model Civ.

Jury Instr. 9th Cir. 15.16 (2007) (“[Y]ou must consider all relevant evidence in determining [the likelihood of confusion].”); see also 3A Fed. Jury Prac. & Instr.

§ 159:25 (6th ed. 2015) (“[E]ach [likelihood of confusion factor] should be weighed in light of the total evidence presented at trial.”). Therefore, because the failure to give the instruction did not prejudicially harm ADT, the district court did not abuse its discretion.

2. Protections for Trademarks that Consist of Words and Letter Combinations

ADT also appeals the district court’s refusal to give an instruction stating that “the law provides expanded protection for trademarks made up of acronyms or letter combinations, because it is more difficult to remember a series of arbitrary letters.” But ADT’s requested instruction did not correctly state the law and the district court’s failure to give the instruction did not prejudicially harm ADT.

First, we agree that the requested instruction did not correctly state the law.

It is true that “letter marks [are] generally accorded broader trademark protection because ‘it is more difficult to remember a series of arbitrarily arranged letters than it is to remember words, figures, phrases, or syllables.’” CAE, Inc. v. Clean Air

Eng’g, Inc., 267 F.3d 660, 684 (7th Cir. 2001) (quoting 3 J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition § 23:33 (4th ed. 2015)). This broader protection results from an application of the likelihood-of-confusion 11

Case: 15-11277 Date Filed: 03/24/2016 Page: 12 of 16 factors, one of which is the strength of the mark. See, e.g., Kadant, Inc. v. Seeley

Mach., Inc., 244 F. Supp. 2d 19, 27–29 (N.D.N.Y. 2003) (stating that the

“[p]laintiff’s mark--AES--has inherent distinctiveness” as an arbitrary acronym, which indicates the mark’s strength for purposes of the likelihood-of-confusion analysis); Dere v. Inst. for Sci. Info., Inc., 420 F.2d 1068, 1069 (C.C.P.A. 1970)

(“We conclude that it is more difficult to remember a series of arbitrarily arranged letters than it is to remember figures, syllables, or phrases, and that the difficulty of remembering such multiple-letter marks makes the likelihood of confusion between such marks, when similar, more probable.”).

But the mark is not afforded “expanded” protection as a matter of law simply because it is a word or letter combination. Indeed, none of the cases on which ADT relies describe the protection afforded to acronyms and letter combinations as “expanded.” See, e.g., CAE, Inc., 267 F.3d at 684–85 (stating only that “confusion is more likely” between “arbitrarily arranged letters” than other categories of marks) (quoting Edison Bros. Stores, Inc. v. Brutting E.B. Sport-Int’l

Gmbh, 230 U.S.P.Q 530, 533 (T.T.A.B. 1986)); Kadant, 244 F. Supp. 2d at 29

(considering the similarity in acronyms “[t]o determine whether such confusion is likely”). Therefore, the requested instruction is not a correct statement of the law.

Second, even if it were a correct statement of the law, the district court’s failure to give the requested instruction did not prejudicially harm ADT, because

Case: 15-11277 Date Filed: 03/24/2016 Page: 13 of 16 the proposed instruction was substantially covered by another instruction. See

Goulah v. Ford Motor Co., 118 F.3d 1478, 1485 (11th Cir. 1997). Here, the district court instructed the jury that “[t]here are seven factors you can use to determine whether a likelihood of confusion exists” and “[t]he first factor is the type and strength of the trademark.” Specifically, the district court told the jury that “ADT’s trademark is an arbitrary trademark that is a strong trademark,” proceeded to define an arbitrary mark, and provided an example. Therefore, ADT was not prejudicially harmed by the district court’s failure to give the requested instruction.

3. Adam Schanz’s Individual Liability

Finally, ADT appeals the district court’s refusal to instruct the jury on

Schanz’s individual liability. ADT sought an instruction stating that Schanz could be directly liable for any infringements that he caused by creating and doing business with the “APT” mark. The proposed instruction would have explained that “ADT, LLC has alleged that Adam Schanz is individually liable for trademark infringement” and “[i]ndividuals, as well as companies, may be liable for trademark infringement.” It would have also stated that “[i]f an individual actively and knowingly caused the infringement as a moving, conscious force, then he can be liable for trademark infringement, if ADT, LLC is able to prove all other elements of its claim against that individual.” The district court declined to give the instruction.

Case: 15-11277 Date Filed: 03/24/2016 Page: 14 of 16

First, the requested instruction correctly stated the law. “Natural persons, as well as corporations, may be liable for trademark infringement under the Lanham

Act” if, as a business entity’s agent, an individual “actively caused the infringement, as a moving, conscious force.” Chanel, Inc. v. Italian Activewear of

Fla., Inc., 931 F.2d 1472, 1477–48 (11th Cir. 1991) (citing Mead Johnson & Co. v.

Baby’s Formula Serv., Inc., 402 F.2d 19 (5th Cir. 1968)). “Specifically, a corporate officer who directs, controls, ratifies, participates in, or is the moving force behind the infringing activity, is personally liable for such infringement without regard to piercing of the corporate veil.” Babbit Elecs., Inc. v. Dynascan Corp., 38 F.3d

1161, 1184 (11th Cir. 1994).

Alarm Protection’s status as a limited liability company, rather than a corporation, is a distinction without a difference. Individual liability for trademark infringement does not turn on corporate form. Rather, it turns on the principle that

“[i]f an individual actively and knowingly caused the trademark infringement, he is personally responsible.” Id. (quoting Chanel, 931 F.2d at 1477). Therefore, ADT’s requested instruction as to Schanz’s individual liability correctly stated the law.

Second, the issue was properly before the jury. See Nat’l Fire Ins. Co. v.

Hous. Dev. Co., 827 F.2d 1475, 1482 (11th Cir. 1987). It was Schanz, as Alarm

Protection’s sole owner, who chose Alarm Protection’s business name, selected its d/b/a acronym, and trained its sales agents on the door-to-door sales tactics. The

Case: 15-11277 Date Filed: 03/24/2016 Page: 15 of 16 jury could have considered this evidence to determine whether Schanz “actively and knowingly” and “as a moving, conscious force” caused the alleged infringement. Chanel, 931 F.2d at 1477–78. Therefore, the issue was properly before the jury.

But the district court did not abuse its discretion because ADT was not prejudicially harmed. The district court’s refusal to given the individual liability instruction was, at most, harmless error. The district court instructed the jury that

ADT’s infringement claims were against the Alarm Protection Technology business entities, as well as Adam Schanz.

Moreover, the district court instructed the jury that “a corporation is responsible under the law for the acts and statements of its employees that are made within the scope of their duties as employees of the company.” Accordingly, under agency principles, Alarm Protection’s liability and Schanz’s liability were coextensive. And because the jury did not find Alarm Protection liable for trademark infringement, which it could have done only based on Schanz’s individual actions, the absence of an individual liability instruction did not affect the case’s outcome. Therefore, the district court’s refusal to give the requested instruction does not warrant reversal.

Because no reversible error occurred, the Court need not address ADT’s request for entry of judgment as a matter of law. Likewise, the Court need not

Case: 15-11277 Date Filed: 03/24/2016 Page: 16 of 16 address ADT’s challenge to the post-judgment order that required ADT to pay the injunction bond, because ADT was not successful in this appeal.

IV. CONCLUSION

We AFFIRM the decisions of the district court.

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

810 F.3d 767 United States Court of Appeals, [1] Federal Courts Eleventh Circuit. Preliminary injunction; temporary restraining order JYSK BED’N LINEN, as successor to Quick Ship Holding, Inc., d.b.a. By Design Furniture, Court of Appeals reviews district court’s ruling Plaintiff–Counter Defendant–Appellee, on motion for preliminary injunction for an v. abuse of discretion. Monosij DUTTA–ROY, Defendant–Counter Claimant–Appellant. Cases that cite this headnote No. 13–15309. | Dec. 16, 2015.

[2] Federal Courts Abuse of discretion in general Synopsis Background: Retail seller of furniture that operated A district court abuses its discretion if it applies under the trade name and common-law trademark “By an incorrect legal standard, follows improper Design,” filed suit against its website designer claiming procedures in making the determination, makes his registration of Internet domain names associated with findings of fact that are clearly erroneous, or its trademark violated Anticybersquatting Consumer applies the law in an unreasonable or incorrect Protection Act (ACPA). The United States District Court manner. for the Northern District of Georgia granted trademark holder a temporary injunction. Website designer appealed. Cases that cite this headnote

Holdings: The Court of Appeals, Tjoflat, Circuit Judge held that: [3] Injunction [1] as a matter of first impression in the circuit, Actual success on merits re-registration of an Internet domain name constituted a Injunction “registration” under ACPA, for purposes of Likelihood of success on merits cybersquatting claim; The standard for obtaining a preliminary [2] plaintiff was likely to succeed on merits of claim for injunction is essentially the same as for a violation of ACPA; permanent injunction with the exception that plaintiff must show a likelihood of success on [3] even if marks were not inherently distinctive, they the merits rather than actual success. obtained secondary meaning; and

[4] plaintiff would suffer loss of goodwill absent Cases that cite this headnote injunction, balance of harms weighed in plaintiff’s favor, and public interest would not be disserved by injunction.

Affirmed. [4] Injunction Grounds in general; multiple factors

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

on the merits; (2) that irreparable injury will be (ACPA) occurs when the cybersquatter intends suffered unless the injunction is issued; (3) the to profit by diverting customers from the threatened injury to the moving party outweighs website of the trademark owner to defendant’s whatever damage the proposed injunction might own website, where those consumers would cause the non-moving party; and (4) if issued, purchase defendant’s products or services the injunction would not be adverse to the public instead of those of the trademark owner. interest. Anticybersquatting Consumer Protection Act, § 1000(a)(9)[3002(a)], 15 U.S.C.A. § 1125(d). Cases that cite this headnote Cases that cite this headnote

[5] Trademarks Purpose and construction in general [8] Trademarks Trademarks Nature and elements in general Nature and elements in general In violating the Anticybersquatting Consumer The Anticybersquatting Consumer Protection Protection Act (ACPA), a cybersquatter Act (ACPA) was enacted to prevent muddies the clear pool of a trademark owner’s “cybersquatting,” which is essentially extortion. goodwill and then profits off the resulting Anticybersquatting Consumer Protection Act, § murkiness. Anticybersquatting Consumer 1000(a)(9)[3002(a)], 15 U.S.C.A. § 1125(d). Protection Act, § 1000(a)(9)[3002(a)], 15 U.S.C.A. § 1125(d). Cases that cite this headnote Cases that cite this headnote

[6] Trademarks Practices or conduct prohibited [9] Trademarks Practices or conduct prohibited Cybersquatting, as will violate Anticybersquatting Consumer Protection Act There are three statutory conduct hooks that can (ACPA), can take the form of registering land a defendant within the purview of the numerous domain names containing trademarks Anticybersquatting Consumer Protection Act or trade names only to hold them ransom in (ACPA): registering, trafficking in, and using a exchange for money. Anticybersquatting domain name. Anticybersquatting Consumer Consumer Protection Act, § Protection Act, § 1000(a)(9)[3002(a)], 15 1000(a)(9)[3002(a)], 15 U.S.C.A. § 1125(d). U.S.C.A. § 1125(d)(1)(A).

Cases that cite this headnote Cases that cite this headnote

[7] Trademarks [10] Federal Courts Practices or conduct prohibited Statutes, regulations, and ordinances, Trademarks questions concerning in general Knowledge, intent, and motives; bad faith Court of Appeals reviews a district court’s One form of cybersquatting that violates interpretation of a statute de novo. Anticybersquatting Consumer Protection Act © 2016 Thomson Reuters. No claim to original U.S. Government Works. 2

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

its claim against its website designer for Cases that cite this headnote cybersquatting, in violation of Anticybersquatting Consumer Protection Act (ACPA), as factor in determining whether a temporary injunction would issue prohibiting designer from interfering with owner’s [11] Trademarks trademark; although website designer had been Practices or conduct prohibited directed to register the domain name “bydesignfurniture.com” in owner’s name, Re-registration of a domain name constitutes a designer had registered it in his own name, “registration” of the name under the instead, and although he never used the domain, Anticybersquatting Consumer Protection Act he later re-registered it along with the domain (ACPA), for purposes of cybersquatting claim. names “bydesignfurniture.org,” Anticybersquatting Consumer Protection Act, § “bydesignfurnitures.com,” and 1000(a)(9) [3002(a)], 15 U.S.C.A. § “bydesign-furnitures.com,” then demanded 1125(d)(1)(A). payment from owner in an attempt to profit from the registration and use of the domain names. Anticybersquatting Consumer Protection Act, § Cases that cite this headnote 1000(a)(9)[3002(a)], 15 U.S.C.A. § 1125(d).

Cases that cite this headnote

[12] Statutes Plain language; plain, ordinary, common, or literal meaning [15] Trademarks When the language of a statute is plain and Generic terms or marks unambiguous court must apply that meaning. A generic mark is not distinctive and may not be registered as a trademark. Cases that cite this headnote

Cases that cite this headnote

[13] Trademarks Scope and Priority of Use; Multiple Users, Markets, or Territories [16] Trademarks Levels or categories of distinctiveness in Common-law trademark rights are appropriated general; strength of marks in general only through actual prior use in commerce. Marks that are merely descriptive require acquired distinctiveness for trademark Cases that cite this headnote protection, while suggestive and fanciful or

arbitrary marks are inherently distinctive.

[14] Cases that cite this headnote Trademarks Misuse of internet domain names; cybersquatting

Retail seller of furniture that operated under the [17] Trademarks trade name and common-law trademark “By Descriptive Terms or Marks Design” was likely to succeed on the merits of © 2016 Thomson Reuters. No claim to original U.S. Government Works. 3

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

A “descriptive mark” is one that identifies a meaning in general characteristic or quality of the service or product. A plaintiff seeking trademark protection can make a prima facie showing of secondary meaning by showing that name has been used in Cases that cite this headnote connection with its goods or service continuously and substantially exclusively for five years.

[18] Trademarks Cases that cite this headnote Levels or categories of distinctiveness in general; strength of marks in general

Trademark law distinguishes four gradations of distinctiveness of marks, in descending order of [22] Trademarks strength: fanciful or arbitrary, suggestive, Acquired distinctiveness and secondary descriptive, and generic. meaning in general

Even if “By Design” and Cases that cite this headnote “bydesignfurniture.com” marks used in conjunction with home and office furniture were not inherently distinctive when registered, they obtained secondary meaning, for purposes of

[19] trademark protection, when owner used the Trademarks marks in commerce in connection with its Acquired distinctiveness; secondary meaning furniture for more than five-year period.

A descriptive mark can acquire distinctiveness or secondary meaning by becoming associated Cases that cite this headnote with the proprietor’s product or service.

Cases that cite this headnote [23] Injunction Injury to or restraint of trade or business in general

[20] Trademarks Although economic losses alone do not justify a Acquired distinctiveness and secondary preliminary injunction, the loss of customers and meaning in general goodwill is an irreparable injury.

A name has acquired “secondary meaning” under trademark law when the primary Cases that cite this headnote significance of the term in the minds of the consuming public is not the product but the producer.

[24] Trademarks Cases that cite this headnote Misuse of internet domain names; cybersquatting

Temporary injunction would issue in favor of

[21] retail seller of furniture that operated under the Trademarks trade name and common-law trademark “By Acquired distinctiveness and secondary Design,” against website designer who had © 2016 Thomson Reuters. No claim to original U.S. Government Works. 4

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

wrongfully registered domain name Northern District of Georgia. D.C. Docket No. “bydesignfurniture.com” and three related 1:12–cv–03198–TWT. names, demanding payment from owner in an Before TJOFLAT, WILLIAM PRYOR, and BALDOCK,* attempt to profit from the registration, in Circuit Judges. violation of Anticybersquatting Consumer * Honorable Bobby R. Baldock, United States Circuit Protection Act (ACPA), in that owner would Judge for the Tenth Circuit, sitting by designation. suffer irreparable injury to its customer base and goodwill absent injunctive relief against alleged

cybersquatter, the balance of harms weighed in owner’s favor, since alleged cybersquatter was Opinion not using the domain names in any way other than to host owner’s website, and public interest TJOFLAT, Circuit Judge: would not be disserved by an injunction placing the domain names in the hands of their rightful owner. Anticybersquatting Consumer Protection The Anticybersquatting Consumer Protection Act, § 43(d) Act, § 1000(a)(9)[3002(a)], 15 U.S.C.A. § of the Lanham Act, 15 U.S.C. § 1125(d), provides: “A 1125(d). person shall be liable ... by the owner of a mark *771 ... if ... that person ... has a bad faith intent to profit from that mark ...; and ... registers, traffics in, or uses a domain Cases that cite this headnote name that ... is identical or confusingly similar to that mark.” Id. § 1125(d)(1)(A). In this case, the District Court granted Jysk Bed’N Linen an injunction requiring

Monosij Dutta–Roy to transfer to Jysk four domain names

he had registered in his own name. The court also granted [25] Trademarks Jysk’s motion for summary judgment on Dutta–Roy’s Alphabetical listing counterclaims. Dutta–Roy appeals these two decisions

pursuant to 28 U.S.C. § 1291 as if, together, they By Design. constitute a final judgment in the case.1 They do not because still pending resolution in the District Court are Cases that cite this headnote claims Jysk brought against Dutta–Roy under §§ 43(a) and (c) of the Lanham Act, 15 U.S.C. §§ 1125(a) and (c), and state law.2 Although we lack jurisdiction to entertain Dutta–Roy’s appeal under § 1291, we have jurisdiction under 28 U.S.C. § 1292(a)(1) to review the District [26] Trademarks Court’s injunction.3 Exercising that jurisdiction, we find Alphabetical listing no merit in Dutta–Roy’s challenges to the injunction and therefore affirm. bydesignfurniture.com. 1 The full text of 28 U.S.C. § 1291 provides: The courts of appeals (other than the United States Cases that cite this headnote Court of Appeals for the Federal Circuit) shall have jurisdiction of appeals from all final decisions of the district courts of the United States, the United States District Court for the District of the Canal Zone, the District Court of Guam, and the District Court of the Virgin Islands, except Attorneys and Law Firms where a direct review may be had in the Supreme Court. The jurisdiction of the United States Court *770 Jonathan H. Fain, Jonathan H. Fain & Associates, of Appeals for the Federal Circuit shall be limited PC, Ashutosh Sharadchand Joshi, Joshi Law Firm, PC, to the jurisdiction described in sections 1292(c) Atlanta, GA, for Plaintiff–Counter Defendant–Appellee. and (d) and 1295 of this title.

Monosij Dutta–Roy, Atlanta, GA, pro se. 2 Because there has not been a resolution of all claims by Appeal from the United States District Court for the

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

all parties, we do not have jurisdiction under 28 U.S.C. 5 The parties dispute whether Jysk’s trademark is By § 1291. See, e.g., Nat’l Ass’n of Bds. of Pharmacy v. Design or By Design Furniture. Because, as explained Bd. of Regents of the Univ. Sys. of Ga., 633 F.3d 1297, in part II.A.2, infra, the domain names at issue are 1306 (11th Cir.2011) (“The district court’s ... order ... identical or confusingly similar to both, it is immaterial was not a final appealable order under 28 U.S.C. § which trademark Jysk actually owns. 1291 because it did not resolve all pending claims against all parties.”).

6 As we indicate in part I.B, infra, this point is disputed

by the parties. 3 The full text of 28 U.S.C. § 1292(a)(1) provides: (a) Except as provided in subsections (c) and (d)

of this section, the courts of appeals shall have jurisdiction of appeals from: In September 1999, Dutta–Roy, Sonnad, Negandhi, and (1) Interlocutory orders of the district courts of the Worah formed Bazaarworks, LLC, and began working on United States, the United States District Court for the website. At first, Dutta–Roy worked on designing the the District of the Canal Zone, the District Court website. After the relationship between Jysk and of Guam, and the District Court of the Virgin Bazaarworks fell apart in 2003, Sonnad took over through Islands, or of the judges thereof, granting, her company, Dead Dog, Inc., and monitored the continuing, modifying, refusing or dissolving website’s performance through the filing of this lawsuit.7 injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court. 7 Sonnad’s work included major redesigning of the The injunctive order the District Court issued is website in 2006 and 2008. interlocutory because four of Jysk’s claims are still pending resolution.

On April 9, 2012, Dutta–Roy’s registration of bydesignfurniture.com expired, which caused Jysk’s website to go down. Jysk immediately discovered that it did not own the registration because it was in Dutta–Roy’s name, and asked Dutta–Roy to re-register I. bydesignfurniture.com in its name. Dutta–Roy refused. On April 20, he re-registered bydesignfurniture.com and on April 26 he registered the domain names A. bydesignfurniture.org, bydesignfurnitures.com, and bydesign-furnitures.com. Jysk Bed’N Linen, Inc.4 is a retail seller of furniture for the home, office, and patio operating stores in Georgia, Dutta–Roy thereafter offered to transfer the domain New Jersey, and North Carolina. Since 1990, it has names to Jysk “if [he was] adequately compensated solely operated under the trade name and common-law for the over 4,000 hours work [he] ... performed for [Jysk] trademark By Design.5 In early 1999, Jysk contracted with pursuant to the Partnership Agreement” between Monosij Dutta–Roy, Shashi Sonnad, Ashish Negandhi, Bazaarworks, LLC and Jysk’s predecessor, Quick Ship and Dev Worah to create an online-shopping website. The Holding, Inc. The agreement never existed; therefore, website needed a domain name, so Dutta–Roy was Jysk rejected Dutta–Roy’s offer. It filed this lawsuit instructed to register the name bydesignfurniture.com, instead. listing *772 Jysk as the owner.6 Dutta–Roy registered that domain name, in April 1999, but he listed himself, not Jysk, as the owner.

B. 4 Dutta–Roy initially dealt with Jysk through its predecessor-Quick Ship Holding, Inc., d/b/a By Design Jysk brought this action against Dutta–Roy in the Furniture, a company Jysk absorbed. For clarity, we Northern District of Georgia on September 12, 2012. Its refer to these entities together throughout the opinion complaint contained five counts. Our discussion today simply as Jysk. deals with only one of the counts, Jysk’s claim under the Anticybersquatting Consumer Protection Act (“ACPA”).8 The ACPA count recited the facts set out in part I.A © 2016 Thomson Reuters. No claim to original U.S. Government Works. 6

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above, with the exception of Dutta–Roy’s registration on April 26, 2012, of the domain names 10 The court denied Dutta–Roy’s motion because bydesignfurniture.org, bydesignfurnitures.com, and Bazaarworks, LLC had been dissolved in 2005. bydesign-furnitures.com, and alleged that Dutta–Roy intended in bad faith “to profit from the registration and use of the Internet domain name bydesignfurniture.com by creating an association with [Jysk]’s famous 11 Counsel moved the court for leave to withdraw due to bydesignfurniture.com trademark as to source or their inability to agree with Dutta–Roy on an sponsorship and further by intending to dilute the appropriate litigation strategy. distinctive quality of, [Jysk]’s famous bydesignfurniture.com trademark.” The ACPA count sought preliminary and permanent injunctive relief, 12 Dutta–Roy is prosecuting this appeal pro se. including an order requiring Dutta–Roy “to relinquish all rights in the Internet domain name bydesignfurniture.com.”

I. Doing anything with or to the registration of the 8 The counts we do not address in this opinion because bydesignfurniture.com domain that would cause the they are still pending in the District Court are claims for Plaintiff’s website to be unable to be accessed by the unfair competition under § 43(a) of the Lanham Act, 15 public, or result in the removal of the domain from U.S.C. § 1125(a); trademark dilution under § 43(c) of the Lanham Act, 15 U.S.C. § 1125(c); and unfair the internet; competition and conversion under Georgia law. II. Transferring ownership of the bydesignfurniture.com domain to anyone, other than the Plaintiff; Dutta–Roy’s answer denied that he was instructed to register the domain name bydesignfurniture.com and III. Altering in any way the current contents of designate Jysk as the owner, and that he intended to profit the bydesignfurniture.com domain and website; by maintaining the registration in his name.9 After and answering Jysk’s complaint, *773 Dutta–Roy moved the District Court for leave to join Bazaarworks, LLC as a IV. Doing anything that would cause a change party. The court denied the motion.10 At this point, in the current status quo of the Dutta–Roy’s attorneys moved the court for leave to bydesignfurniture.com trademark. withdraw.11 The court granted the motion, and Dutta–Roy decided to proceed pro se.12 Shortly thereafter, Jysk The court granted the preliminary injunction as to moved the District Court for a preliminary injunction. requests I, II, and IV and denied it with respect to Jysk requested the court to enjoin Dutta–Roy from: request III.13 13 A transcript of the hearing the District Court held on 9 Dutta–Roy accompanied his answer with a Jysk’s motion for a preliminary injunction is not part of counterclaim containing six counts for monetary relief the record on appeal. based on Jysk’s breach of a partnership agreement Bazaarworks, LLC had allegedly made with Jysk’s predecessor, Quick Ship Holding, Inc. According to At the close of discovery, Jysk moved the District Court Dutta–Roy, Quick Ship Holding agreed to compensate Dutta–Roy and Bazaarworks, LLC based upon levels of for partial summary judgment. In effect, the motion revenue generated through the online-shopping website. sought an expansion of the preliminary injunction Specifically, it was agreed that Dutta–Roy and previously issued with respect to Jysk’s ACPA claim so Bazaarworks, LLC would receive twelve percent that the injunction would cover the domain names (12%) of sales if the sales were less than One bydesignfurniture.org, bydesignfurnitures.com, and Million Dollars ($1,000,000.00), eleven percent bydesign-furnitures.com in addition to (11%) if the sales were between One and Two bydesignfurniture.com.14 The court granted the motion. It Million Dollars ($1,000,000.00 and found that Dutta–Roy, in re-registering $2,000,000.00) and ten percent (10%) of sales if bydesignfurniture.com on April 20, 2012, and in sales exceeded Two Million Dollars ($2,000,000.00) attributable to the website. registering bydesignfurniture.org, Doc. 5 at 17. bydesignfurnitures.com, and bydesign-furnitures.com on April 26, 2012, did so in bad faith, violating Jysk’s rights

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

under the ACPA, and ordered him to transfer the names to After prevailing on the merits, 15 Jysk. “[A] plaintiff seeking a permanent injunction must 14 Jysk also moved the District Court for summary satisfy a four-factor test judgment on Dutta–Roy’s counterclaims. As indicated before a court may grant in the opening paragraph of this opinion, the court such relief. A plaintiff must granted the motion. demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as 15 The court also awarded Jysk statutory damages of monetary damages, are $4,000. inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the II. public interest would not be disserved by a permanent [1] [2] We review Dutta–Roy’s appeal of the District injunction.” Court’s preliminary injunction for an abuse of discretion. Monsanto Co. v. Geertson Seed Farms, 561 U.S. BellSouth Telecomms., Inc. v. MCIMetro Access 139, 156–57, 130 S.Ct. 2743, 2756, 177 L.Ed.2d 461 Transmission Servs., LLC, 425 F.3d 964, 968 (11th (2010) (alteration in original) (quoting eBay Inc. v. Cir.2005). “ ‘A district court abuses its discretion if it MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. applies an incorrect legal *774 standard, follows improper 1837, 1839 164 L.Ed.2d 641 (2006)). procedures in making the determination, or makes findings of fact that are clearly erroneous.’ A district court may also abuse its discretion by applying the law in an unreasonable or incorrect manner.” Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1096 (11th Cir.2004) (citation omitted) (quoting Martin v. Automobili A. Lamborghini Exclusive, Inc., 307 F.3d 1332, 1336 (11th Cir.2002)). Jysk’s “substantial likelihood of success on the merits” turns on a preliminary question: whether Dutta–Roy’s [3] [4] Jysk was entitled to a preliminary injunction if it re-registration of bydesignfurniture.com falls within the showed: “(1) a substantial likelihood of success on the ACPA’s “registration” hook. We hold that the merits; (2) that irreparable injury will be suffered unless re-registration constituted a registration under the ACPA the injunction is issued; (3) the threatened injury to the and that Jysk is likely to succeed on the merits of its moving party outweighs whatever damage the proposed ACPA claim. injunction might cause the non-moving party; and (4) if issued, the injunction would not be adverse to the public interest.” BellSouth Telecomms., Inc., 425 F.3d at 968 (citing Four Seasons Hotels & Resorts, B.V. v. Consorcio 1. Barr, S.A., 320 F.3d 1205, 1210 (11th Cir.2003)).16 We review each of the factors in turn. Dutta–Roy argues that the District Court erred in determining that his conduct fell within the ACPA. Read 16 “ ‘The standard for [obtaining] a preliminary injunction generously, his argument is this: his re-registration of is essentially the same as for a permanent injunction bydesignfurniture.com, on which the District Court based with the exception that the plaintiff must show a its finding of bad faith, could not have violated the ACPA likelihood of success on the merits rather than actual because re-registrations are not “registrations” within the success.’ ” Winter v. Nat. Res. Def. Council, Inc., 555 purview of the statute. We disagree. U.S. 7, 32, 129 S.Ct. 365, 381, 172 L.Ed.2d 249 (2008) (quoting Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 546 n. 12, 107 S.Ct. 1396, 1404, 94 L.Ed.2d 542 Internet websites are located at Internet Protocol (“IP”) (1987)). addresses, which consist of a string of numbers. Karl M. Manheim & Lawrence B. Solum, An Economic Analysis © 2016 Thomson Reuters. No claim to original U.S. Government Works. 8

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of Domain Name Policy, 25 Hastings Comm. & Ent. L.J. which is protected as a mark under this section if, 359, 364–65 (2003). “An Internet domain name is an without regard to the goods or services of the alpha-numeric mnemonic device that can be mapped onto parties, that person— an [IP] address to enable users” to more easily access (i) has a bad faith intent to profit from that mark, websites. Jacqueline D. Lipton, Beyond Cybersquatting: including a personal name which is protected as a Taking Domain Name Disputes Past Trademark Policy, mark under this section; and 40 Wake Forest L. Rev. 1361, 1365 (2005). Domain (ii) registers, traffics in, or uses a domain name names are unique. Manheim & Solum, supra, at 364. It is that— (I) in the case of a mark that is distinctive at the therefore important that the trademark owner reserve the time of registration of the domain name, is domain name closely associated with or identical to *775 identical or confusingly similar to that mark; or its trademark so that it may take advantage of its (II) in the case of a famous mark that is famous at goodwill. The registration of domain names is managed the time of registration of the domain name, is by the private organization Internet Corporation for identical or confusingly similar to or dilutive of Assigned Names and Numbers (“ICANN”). Lipton, that mark; or supra, at 1366–67. ICANN oversees numerous third-party (III) is a trademark, word, or name protected by registries with which the applicant registers the domain reason of section 706 of Title 18 or section 220506 name. Id. at 1367. The third-party registry is referred to as of Title 36. 15 U.S.C. § 1125(d)(1)(A). the registrar, and the applicant, who later becomes the owner of the domain name, is referred to as the registrant.

[5] [6] [7] [8] The ACPA was enacted to prevent 15 U.S.C. § 1125(d)(1)(A) (emphasis added). There are cybersquatting. S. Grouts & Mortars, Inc. v. 3M Co., 575 three statutory conduct hooks that can land a defendant F.3d 1235, 1246 (11th Cir.2009). Cybersquatting is within the purview of the ACPA: “register[ing],” essentially extortion. Cybersquatting can take the form of “traffic[king] in,” and “us[ing]” a domain name. Id. That “register[ing] numerous domain names containing ... defendant will violate the ACPA if it commits in bad faith trademarks or tradenames only to hold them ransom in one of these three actions with respect to a domain name exchange for money.” Id. at 1247 (quotation marks that is identical or confusingly similar to a distinctive omitted) (quoting H.R.Rep. No. 106–412 (1999)). mark. Id. The statute provides a list of nine factors that Another form of cybersquatting occurs when the may be considered by the court when determining cybersquatter “intend[s] to profit by diverting customers whether the defendant “ha[d] a bad faith intent to profit from the website of the trademark owner to the from th[e] mark.” Id. Those factors are: defendant’s own website, where those consumers would purchase the defendant’s products or services instead of *776 1. Whether the defendant has a “trademark or the trademark owner’s.” Id. (quotation marks omitted) other intellectual property rights” in the domain (quoting Utah Lighthouse Ministry v. Found. for name; Apologetic Info. and Research, 527 F.3d 1045, 1058 (10th 2. Whether the domain name refers to the legal name Cir.2008)). In a sense, the cybersquatter muddies the clear of the defendant; pool of the trademark owner’s goodwill and then profits off the resulting murkiness. 3. Whether the defendant ever used the domain name

[9] “in connection with the bona fide offering of any goods The ACPA provides that, or services”;

A person shall be liable in a civil action by the owner 4. Whether the defendant has a “bona fide of a mark ... if ... that person— noncommercial or fair use of the mark in a site accessible under the domain name”; (i) has a bad faith intent to profit from that mark ...; and (ii) registers, traffics in, or uses a domain name that ... 5. Whether the defendant has an “intent to divert in the case of a mark that is distinctive at the time of consumers” from the mark owner’s website to his own, registration of the domain name, is identical or either for commercial gain “or with the intent to tarnish 17 confusingly similar to that mark. or disparage the mark,” when that diversion could cause harm to the mark owner’s goodwill; 17 The full text of the relevant provision is as follows: (1)(A) A person shall be liable in a civil action by 6. Whether the defendant offers to transfer or sell the the owner of a mark, including a personal name domain name for financial gain when he has not used

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or had an intent to use the domain name in connection to the goods or services of the parties; and with “the bona fide offering of any goods or services”; (IX) the extent to which the mark incorporated in the person’s domain name registration is or is not 7. Whether the defendant provides “material and distinctive and famous within the meaning of misleading false contact information when applying for subsection (c) of this section. the registration of the domain name” or the defendant 15 U.S.C. § 1125(d)(1)(B). “intentional[ly] fail[s] to maintain accurate contact information”; Id. § 1125(d)(1)(B)(i). There is also a safe-harbor 8. Whether the defendant acquired multiple domain provision in the ACPA that provides that “[b]ad faith names that the defendant knows are identical or intent ... shall *777 not be found in any case in which the confusingly similar to distinctive marks; and court determines that the person believed and had 18 9. Whether the mark is distinctive or famous. reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” Id. § 18 The full text of the statutory factors is as follows: 1125(d)(1)(B)(ii).19 (B)(i) In determining whether a person has a bad faith intent described under subparagraph (A), a 19 court may consider factors such as, but not limited The full text of the safe-harbor provision is: “Bad faith to— intent described under subparagraph (A) shall not be (I) the trademark or other intellectual property found in any case in which the court determines that the rights of the person, if any, in the domain name; person believed and has reasonable grounds to believe (II) the extent to which the domain name consists that the use of the domain name was a fair use or of the legal name of the person or a name that is otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii). otherwise commonly used to identify that person; (III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of [10] We review a district court’s interpretation of a statute any goods or services; de novo. Silva–Hernandez v. U.S. Bureau of Citizenship (IV) the person’s bona fide noncommercial or fair & Immigration Servs., 701 F.3d 356, 361 (11th Cir.2012) use of the mark in a site accessible under the domain name; (quoting Serrano v. U.S. Att’y Gen., 655 F.3d 1260, 1264 (V) the person’s intent to divert consumers from (11th Cir.2011)). The District Court assumed without the mark owner’s online location to a site discussion that a re-registration falls within the ACPA’s accessible under the domain name that could harm purview under the Act’s registration hook. This is an issue the goodwill represented by the mark, either for of first impression for our circuit. commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of Two of our sister circuits have provided divergent confusion as to the source, sponsorship, affiliation, answers to this question. The Third Circuit, in or endorsement of the site; Schmidheiny v. Weber, 319 F.3d 581 (3d Cir.2003), found (VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark that a re-registration falls within the registration hook of owner or any third party for financial gain without the ACPA. Id. at 581. It explained that “the language of having used, or having an intent to use, the domain the statute does not limit the word ‘registration’ to the name in the bona fide offering of any goods or narrow concept of ‘creation registration’ ” and that “[t]he services, or the person’s prior conduct indicating a words ‘initial’ and ‘creation’ appear nowhere in [the pattern of such conduct; statute].” Id. at 582–83. The Third Circuit likened the (VII) the person’s provision of material and registration of the domain name to a contract between the misleading false contact information when registrar and the registrant, and specifically held “that the applying for the registration of the domain name, word ‘registration’ includes a new contract at a different the person’s intentional failure to maintain accurate contact information, or the person’s prior registrar and to a different registrant.” Id. at 583. conduct indicating a pattern of such conduct; (VIII) the person’s registration or acquisition of The Ninth Circuit came to the opposite conclusion in multiple domain names which the person knows GoPets Ltd. v. Hise, 657 F.3d 1024 (9th Cir.2011), are identical or confusingly similar to marks of holding that a re-registration is not a registration for others that are distinctive at the time of registration purposes of the ACPA. Id. at 1032. The Ninth Circuit of such domain names, or dilutive of famous viewed the domain-name registration through the lens of marks of others that are famous at the time of property law, rather than through the Third Circuit’s registration of such domain names, without regard analogy to contract law. Id. at 1031. It reasoned that a

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registrant owns a property right in the domain name when on the merits of its ACPA claim. To show a violation of he registers it, and therefore he is entitled to transfer that the ACPA, Jysk had to show that Dutta–Roy registered property to another owner. Id. “The general rule is that a the domain name, that the domain name was identical or property owner may sell all of the rights he holds in confusingly similar to its trademark that was distinctive at property.” Id. The Ninth Circuit worried that if it were to the time of the registration, and that the domain name was hold that a re-registration fell within the purview of the registered in bad faith. 15 U.S.C. § 1125(d). There is no Act, it “would make rights to many domain names dispute that bydesignfurniture.com, effectively inalienable, whether the alienation is by gift, bydesignfurniture.org, bydesignfurnitures.com, and inheritance, sale or other form of transfer.” Id. at bydesign-furnitures.com were registered by Dutta–Roy, 1031–32. and there is no serious dispute that bydesignfurniture.com, bydesignfurniture.org, bydesignfurnitures.com, and [11] [12] We agree with the Third Circuit. The Act does not bydesign-furnitures.com are identical or at least define the term register. The Act nowhere contains the confusingly similar to Jysk’s marks qualifications of initial or creation when it refers to the bydesignfurniture.com and By Design. Jysk has also act of registering. It refers simply to a registration, and a established that it owns the marks bydesignfurniture.com re-registration is, by definition, a registration. To and By Design.20 “re-register” is “[t]o register again.” Re-register, v., Oxford English Dictionary (2015). “When the language of 20 Dutta–Roy suggests that he, rather than Jysk, owns the a statute is plain and unambiguous we must apply that bydesignfurniture.com mark. It is true that Dutta–Roy meaning.” Cox Enters., Inc. v. Pension Benefit Guar. has control of the domain name bydesignfurniture.com. Corp., 666 F.3d 697, 704 (11th Cir.2012); see also Redus But it is not clear that Dutta–Roy understands that it is Fla. Commercial, LLC v. Coll. Station Retail Ctr., LLC, possible for bydesignfurniture.com to serve as both a 777 F.3d 1187, 1191 (11th Cir.2014) ( “Generally, words domain name and a trademark and for control of these are interpreted with their ordinary and plain meaning two to vest in different entities, as it does here. because we assume that [the legislature] uses words in a “Common-law trademark rights are ‘appropriated only through actual prior use in commerce.’ ” Crystal Entm’t statute as they are commonly understood.” (citation, & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1321 quotation marks, and alterations omitted)). (11th Cir.2011) (quoting Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193–94 (11th Including re-registrations under the registration hook Cir.2001)). The District Court correctly concluded that comports with the purpose of Congress in enacting the Jysk owns the common-law trademarks By Design and ACPA—to prevent cybersquatting. See S. Grouts & bydesignfurniture.com because Jysk has been using the Mortars, Inc., 575 F.3d at 1246–47 (“Registering *778 a marks in commerce in connection with its goods since famous trademark as a domain name and then offering it at least 1990 and 1999, respectively. for sale to the trademark owner is exactly the wrong Congress intended to remedy when it passed the ACPA.” (quotation marks omitted) (quoting Ford Motor Co. v. [15] [16] [17] [18] [19] [20] [21] A distinctive mark “serve[s] the Catalanotte, 342 F.3d 543, 549 (6th Cir.2003))). It would purpose of identifying the source of the goods or be nonsensical to exempt the bad-faith re-registration of a services.” Welding Servs. Inc. v. Forman, 509 F.3d 1351, domain name simply because the bad-faith behavior 1357 (11th Cir.2007). “Trademark law distinguishes four occurred during a noninitial registration, thereby allowing gradations of distinctiveness of marks, in descending the exact behavior that Congress sought to prevent. order of strength: fanciful or arbitrary, suggestive, descriptive, and generic.”21 Id. A descriptive mark We accordingly will not read additional words into the statute such as initial or creation. The plain meaning of 21 A generic mark is not distinctive and “may not be register includes a re-registration. The District Court registered as a trademark.” Welding Servs. Inc. v. correctly held that a re-registration falls within the Forman, 509 F.3d 1351, 1358 (11th Cir.2007). Within purview of the ACPA. the remaining three gradations, marks can either be inherently distinctive or they can acquire distinctiveness “by becoming associated with the proprietor’s product or service.” Id. Marks that are merely descriptive require acquired distinctiveness, 2. while suggestive and fanciful or arbitrary marks are inherently distinctive. Id. A merely descriptive mark [13] [14] Next, we must determine whether the District “identifies a characteristic or quality of the service or Court correctly determined that Jysk was likely to succeed product.” Id.

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

names after the Plaintiff approached him to recover the bydesignfurniture.com domain name. Further, the Defendant can acquire distinctiveness or “secondary meaning” by demanded payment from the becoming associated with the proprietor’s product or Plaintiff for the domain names, and service.... A name has acquired secondary meaning the Defendant admits he intends to when “the primary significance of the term in the profit from the registration and use minds of the [consuming] public is not the product but of the domain name. the *779 producer.” ... A proprietor can make a prima facie showing of “secondary meaning” by showing that the name has been used in connection with the We agree with the District Court’s analysis. When proprietor’s goods or service continuously and Dutta–Roy re-registered bydesignfurniture.com under his substantially exclusively for five years. own name rather than Jysk’s, he was expressing his intent Id. (alteration in original) (quoting Am. Television & or ability to infringe on Jysk’s trademark. He admitted Commc’ns Corp. v. Am. Commc’ns & Television, Inc., that he never had used the domain names in the bona fide 810 F.2d 1546, 1548–49 (11th Cir.1987)). We need not offering of any goods or services. His demand for money determine which gradation of distinctiveness Jysk’s can be looked at in two ways, and they are two sides of marks fall under; all we need decide is whether they are the same coin. First, the amount of money demanded distinctive. could show how much he believes the domain name [22] Jysk’s marks were distinctive when Dutta–Roy smudges the goodwill of the trademark—that is, how registered the domain names in 2012. Even if much money Jysk would lose out on if Dutta–Roy were to bydesignfurniture.com and By Design are merely use the domain names to misdirect Jysk’s customers. descriptive of Jysk’s furniture, Jysk has been using these Second, the amount of money demanded could show how marks for far more than five years, and the marks much value he believes Jysk puts on the domain names. therefore have acquired secondary meaning. See id. In either case, bad-faith intent abounds. Additionally, in a November 2012 letter, the United States Patent and Trademark Office responded to Jysk’s As for the factors, we find one, three, six, and eight 22 application for acquired distinctiveness status for the relevant. Dutta–Roy does *780 not have any bydesignfurniture.com mark, stating that the application intellectual-property rights in the domain names, nor does was “unnecessary because the mark appears to be he offer or has ever offered any goods or services in inherently distinctive and is eligible for registration on the connection with the domain names. Dutta–Roy did offer Principal Register without proof of acquired to transfer or sell the domain name to the mark owner, distinctiveness.” Jysk’s marks bydesignfurniture.com and Jysk, for financial gain without having used it in By Design are therefore distinctive. connection with the offering of any goods or services. Dutta–Roy did register multiple domain names that he Dutta–Roy argues that he did not act in bad faith when knew are identical or confusingly similar to Jysk’s marks. registering the domain names. The District Court found that at least five of the nine permissive statutory factors of 22 Those factors are, again: bad faith were relevant to Dutta–Roy’s actions: (I) the trademark or other intellectual property rights of the person, if any, in the domain name; ... Here, the 2012 registrations of (III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of bydesignfurniture.com, any goods or services; ... bydesignfurniture.org, (VI) the person’s offer to transfer, sell, or bydesignfurnitures.com, and otherwise assign the domain name to the mark bydesign-furnitures.com were owner or any third party for financial gain without made in bad faith. The Defendant having used, or having an intent to use, the domain does not have intellectual property name in the bona fide offering of any goods or rights in the bydesignfurniture.com services, or the person’s prior conduct indicating a trade name. The Defendant has pattern of such conduct; ... never used the websites for a bona (VIII) the person’s registration or acquisition of multiple domain names which the person knows fide offering of goods or services. are identical or confusingly similar to marks of The Defendant re-registered others that are distinctive at the time of registration bydesignfurniture.com and of such domain names, or dilutive of famous registered the three similar domain

Jysk Bed’N Linen v. Dutta-Roy, 810 F.3d 767 (2015) 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly Fed. C 1877

marks of others that are famous at the time of and could have lost goodwill. “Although economic losses registration of such domain names, without regard alone do not justify a preliminary injunction, ‘the loss of to the goods or services of the parties. customers and goodwill is an irreparable injury.’ ” Id. at 15 U.S.C. § 1125(d)(1)(B). 970 (quoting Ferrero v. Associated Materials Inc., 923 F.2d 1441, 1449 (11th Cir.1991)). Dutta–Roy was not using the domain name in any way other than to host Finally, Dutta–Roy is unable to take advantage of the Jysk’s website. He was not offering any goods or services ACPA safe harbor, which provides that bad faith will not for sale nor even charging Jysk a licensing price for the be found when “the person believed and had reasonable use of the domain name. Therefore, there is no potential grounds to believe that the use of the domain name was a harm to Dutta–Roy, and the balance of harms weighs in fair use or otherwise lawful.” 15 U.S.C. § Jysk’s favor. Finally, the injunction will not disserve the 1125(d)(1)(B)(ii). Dutta–Roy’s apparent belief that he public interest because it places the domain names in the was entitled to take the domain name hostage in exchange hands of their rightful owner: the trademark holder. for the alleged contract price in the partnership agreement Dutta–Roy’s actions are those of a cybersquatter, and purportedly entered into by Jysk’s predecessor and therefore granting an injunction to Jysk fulfills Congress’s Bazaarworks, LLC23 is without basis in the agreement or policy goals in enacting the ACPA. in law, and therefore unreasonable.

23 See supra note 9. III.

For the foregoing reasons, we conclude that the District Because Jysk showed that Dutta–Roy registered the Court’s issuance of the *781 preliminary injunction did domain names, that the domain names were identical or not constitute an abuse of discretion and is accordingly confusingly similar to Jysk’s distinctive mark at the time AFFIRMED.24 of the registration, that Dutta–Roy had bad-faith intent at

the time of the registrations, and that Dutta–Roy cannot avail himself of the safe harbor’s protections, Jysk has 24 Dutta–Roy’s appeal of the District Court’s order shown that it is substantially likely to prevail on the granting Jysk summary judgment on his counterclaims merits of its ACPA claims. is dismissed for lack of jurisdiction. See 28 U.S.C. § 1291.

AFFIRMED. B.

[23] [24] Next, we must determine whether the District Court erred in determining that Jysk would suffer irreparable injury unless the injunction issued, that the All Citations balance of harms weighed in Jysk’s favor, and that the public interest would not be disserved by the injunction. 810 F.3d 767, 117 U.S.P.Q.2d 1200, 25 Fla. L. Weekly BellSouth Telecomms., Inc., 425 F.3d at 968. If the Fed. C 1877 websites were not transferred to Jysk, Jysk would not have had full control over websites that bear its trademark

Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (2015) 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly Fed. C 1327

factual findings are reviewed for clear error. 790 F.3d 1253 United States Court of Appeals, Eleventh Circuit. 1 Cases that cite this headnote

Paul B. TARTELL, M.D., Plaintiff–Appellee, v. SOUTH FLORIDA SINUS AND ALLERGY CENTER, INC., Lee M. Mandel, M.D., Inc., a [2] Federal Courts Florida Corporation, Lee M. Mandel, M.D., Intellectual property Individually, Defendants–Appellants. District court’s findings as to existence of No. 14–13178. secondary meaning for descriptive trade name is | a question of fact, reviewed under the clearly June 23, 2015. erroneous standard.

1 Cases that cite this headnote Synopsis Background: Sinus doctor brought action against his former partner and partner’s incorporated practices, alleging cybersquatting, unfair competition, and other violations of the Lanham Act, based on partner’s [3] Federal Courts registration of domain names using variations of sinus Definite and firm conviction of mistake doctor’s name. Following bench trial, the United States District Court for the Southern District of Florida, District court’s factual finding is clearly William P. Dimitrouleas, J., entered judgment in favor of erroneous if, after viewing all the evidence, the sinus doctor. reviewing court is left with the definite and firm conviction that a mistake has been committed.

[Holding:] The Court of Appeals, William Pryor, Circuit 1 Cases that cite this headnote Judge, held that doctor failed to present evidence that his name acquired secondary meaning in minds of consumers and was therefore not a protectable mark under the Lanham Act. [4] Trademarks Marks protected Reversed, and judgment rendered in favor of defendant. To establish a claim for cybersquatting, a plaintiff must prove that his service mark is distinctive. Lanham Act, § 43(d)(1)(A)(ii)(I), 15 U.S.C.A. § 1125(d)(1)(A)(ii)(I). West Headnotes (11)

1 Cases that cite this headnote [1] Federal Courts Questions of Law in General Federal Courts “Clearly erroneous” standard of review in [5] general Trademarks Unfair competition On appeal from bench trial, district court’s conclusions of law are reviewed de novo and its In order to establish liability under Lanham Act provision prohibiting false designation of origin

Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (2015) 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly Fed. C 1327

and unfair competition, a plaintiff must prove Act, with direct evidence, such as consumer his service mark is distinctive. Lanham Act, § surveys, or circumstantial evidence. Lanham 43(a), 15 U.S.C.A. § 1125(a). Act, § 43(a), 15 U.S.C.A. § 1125(a).

1 Cases that cite this headnote 1 Cases that cite this headnote

[6] Trademarks [9] Trademarks Acquired distinctiveness; secondary meaning Secondary Meaning

Descriptive marks, for purposes of acquiring A court should consider four factors to trademark protection under the Lanham Act, are determine if circumstantial evidence establishes not inherently distinctive for trademark that a mark has acquired secondary meaning for protection purposes, but may become purposes of acquiring protection from sufficiently distinctive by acquiring secondary infringement under the Lanham Act: (1) the meaning. Lanham Act, § 43(a), 15 U.S.C.A. § length and nature of the name’s use, (2) the 1125(a). nature and extent of advertising and promotion of the name, (3) the efforts of the proprietor to promote a conscious connection between the Cases that cite this headnote name and the business, and (4) the degree of actual recognition by the public that the name designates the proprietor’s product or service. Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a).

[7] Trademarks Names as Marks Cases that cite this headnote

A name, for purposes of acquiring trademark protection under the Lanham Act, has acquired secondary meaning when the primary significance of the term in the minds of the [10] Trademarks consuming public is not the product but the Acquired distinctiveness and secondary producer; that is, secondary meaning requires meaning in general that a name denotes to the consumer or purchaser a single thing coming from a single The minds of the consuming public, define source. Lanham Act, § 43(a), 15 U.S.C.A. § what, if any, secondary meaning is attributed to 1125(a). a mark for purposes of acquiring protection from infringement under the Lanham Act, and as such, the owner of a mark must adduce evidence Cases that cite this headnote of what the mark denotes to the consumer. Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a).

Cases that cite this headnote [8] Trademarks Secondary Meaning Trademarks Consumer data and market research; tests and surveys [11] Trademarks Persons, names of A plaintiff may prove a mark has acquired secondary meaning, for purposes of acquiring Sinus doctor failed to produce substantial protection from infringement under the Lanham evidence that his name had acquired secondary © 2016 Thomson Reuters. No claim to original U.S. Government Works. 15

Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (2015) 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly Fed. C 1327

meaning in minds of consumers for purposes of registered six domain names with variations of Dr. establishing he had a protectible service mark Tartell’s name. Dr. Tartell then filed a complaint against under Lanham Act, in action against former Dr. Mandel, his incorporated practice, and another partner who registered domain names using corporation owned by Dr. Mandel for cybersquatting, 15 variations of sinus doctor’s name; evidence of U.S.C. § 1125(d), false designation of origin, id. § recognition of doctor’s name in professional and 1125(a), and unfair competition. Dr. Mandel canceled the academic settings, self-serving statements about registration for the domain names the day after Dr. Tartell his reputation, and advertisements from previous filed his complaint, but the parties persisted in this sinus practice wherein doctor’s name was not litigation. At a bench trial, Dr. Tartell presented evidence prominently displayed or featured any that his name had appeared on several advertisements for differently than his partner’s, did not their joint practice, but Dr. Tartell presented no demonstrate actual recognition or what his name substantial evidence about the effect of those denoted to consumers. Lanham Act, § 43(a), 15 advertisements on consumers. The district court ruled that U.S.C.A. § 1125(a). Dr. Tartell’s name had acquired secondary meaning, but awarded him only statutory damages for cybersquatting in the absence of any evidence of actual damages. Because 1 Cases that cite this headnote Dr. Tartell failed to present substantial evidence that his name had acquired secondary meaning in the minds of consumers, the district court clearly erred. We reverse and render a judgment in favor of Dr. Mandel and his corporations.

Attorneys and Law Firms

*1255 Beverly A. Pohl, Matthew Scott Nelles, Adam Rabinowitz, Barbara Viota–Sawisch, Broad & Cassel One I. BACKGROUND Financial PLZ, Fort Lauderdale, FL, for Plaintiff–Appellee. From 1998 to 2011, Dr. Tartell and Dr. Mandel practiced together as part of Tartell & Mandel, M.D., LLC., under James J. McGuire, Mark R. Caramanica, Thomas & the name South Florida Sinus and Allergy Center. In Locicero, PL, Tampa, FL, Tracy Newmark, Esq., The February 2011, the doctors split their practices, and the Newmark Law Firm, PA, Fort Lauderdale, FL, for split was contentious. Defendants–Appellee. After the split of their practices, Dr. Mandel incorporated Appeals from the United States District Court for the the name of their *1256 practice, South Florida Sinus and Southern District of Florida. Allergy Center, Inc., without Dr. Tartell’s knowledge, and Before WILLIAM PRYOR, JULIE CARNES, and Dr. Mandel registered six domain names that used some SILER,* Circuit Judges. variation of Dr. Tartell’s name: ptartell.com, * Honorable Eugene E. Siler, Jr., United States Circuit paultartellmd.net, paultartellmd.com, paultartell.net, Judge for the Sixth Circuit, sitting by designation. paultartell.com, and tartell.net. Dr. Mandel configured five of the domain names to forward users to sfsac.com, a domain name he controlled. Dr. Mandel also purchased Google AdWords for “Paul Tartell” and “Paul Tartell, Opinion MD,” which caused sfsac.com to appear as an advertisement whenever someone searched with those WILLIAM PRYOR, Circuit Judge: terms on Google.

After Dr. Tartell discovered the registered domain names, This appeal requires us to decide whether the district he filed a complaint against Dr. Mandel; Dr. Mandel’s court clearly erred when it found that a physician’s name professional corporation, Lee M. Mandel, M.D., Inc.; and had acquired “secondary meaning,” Tana v. Dantanna’s, South Florida Sinus and Allergy Center, Inc. Dr. Tartell 611 F.3d 767, 774 (11th Cir.2010) (internal quotation asserted five causes action: federal cybersquatting, 15 marks omitted). Dr. Paul B. Tartell and Dr. Lee M. U.S.C. § 1125(d); false designation of origin, id. § Mandel jointly practiced medicine in South Florida until 1125(a); unfair competition; false advertising, id. § 2011. After they split their practices, Dr. Mandel 1125(a); and unauthorized publication of name and

Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (2015) 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly Fed. C 1327 likeness, Fla. Stat. § 540.08. Dr. Mandel cancelled the Tartell, but it made no specific findings with respect to domain names the day after Dr. Tartell filed his each of the four factors that courts should consider when complaint. But as the district court aptly described, “this determining whether a mark has acquired secondary action continued all the way through [a four-day bench] meaning, see id. at 776. trial because Dr. Mandel refused to take responsibility for his antics while Dr. Tartell sought a statutory windfall for The district court entered a judgment in favor of Dr. a short-lived and largely pointless deceit.” Tartell for cybersquatting, false designation, unfair competition, and unauthorized publication of name and To prove that his name had acquired “secondary likeness, but against his claim for false advertising. The meaning,” Tana, 611 F.3d at 774 (internal quotation district court awarded Dr. Tartell $1,000 in statutory marks omitted), Dr. Tartell presented evidence of his damages for each claim for cybersquatting, for a total of academic and community activities, evidence of $6,000, but it awarded Dr. Tartell no other relief because commercial advertisements of his practice with Dr. he failed to prove actual damages. The district court later Mandel, and testimony about patient and doctor ruled that Mandel, Inc., and South Florida Sinus and recognition of his name. For example, Dr. Tartell Allergy Center, Inc., were liable to the same extent that presented evidence that he gave 39 lectures from 1990 to Dr. Mandel was liable. 1997 and 11 presentations from 1988 to 1995 and that he published ten articles in medical journals between 1989 and 1999. Dr. Tartell also testified that he gave “[d]ozens” of non-academic lectures to various groups with “50 or so” people and that he participated in II. STANDARDS OF REVIEW charitable organizations. But Dr. Tartell provided no [1] [2] [3] details about his non-academic lectures. Dr. Tartell also “After a bench trial, we review the district court’s presented evidence that his name appeared on a variety of conclusions of law de novo and the district court’s factual promotional materials, including several advertisements findings for clear error.” Proudfoot Consulting Co. v. for the Center that appeared at the Bank Atlantic Center, Gordon, 576 F.3d 1223, 1230 (11th Cir.2009). “The where the Florida Panthers play professional hockey; existence of secondary meaning is a question of fact,” advertisements for the Center that appeared on concession which we review “under the clearly erroneous standard.” items at the Arena; a biography of Dr. Tartell that Am. Television & Commc’ns Corp. v. Am. Commc’ns & appeared in the program and on the website for the Television, Inc., 810 F.2d 1546, 1549 (11th Cir.1987). A Panthers; advertisements for the Center in the Sun factual finding is clearly erroneous “if, after viewing all Sentinel newspaper and on the radio; and listings of Dr. the evidence, we are left with the definite and firm Tartell’s name in directories for patients and medical conviction that a mistake has been committed.” HGI professionals. Dr. Tartell testified that, “not Assocs., Inc. v. Wetmore Printing Co., 427 F.3d 867, 873 infrequent[ly],” patients “come to [him] saying that the (11th Cir.2005) (internal quotation marks and citation reason they’re coming to [him] ... is because they omitted). searched [him], and they found ... article[s] that [he] had written” and that “everybody that [went to the Bank Atlantic Center] knew that [he was] the voice doctor[ ].” He testified that his academic activities caused other III. DISCUSSION doctors to contact him with questions or to refer patients to him. And two referring doctors testified that other [4] [5] [6] A plaintiff must prove that his service mark is doctors “thought very highly of” Dr. Tartell, that their “distinctive” to establish a claim for cybersquatting, 15 patients were usually “happy with the results” when U.S.C. § 1125(d)(1)(A)(ii)(I), for false designation of referred to Dr. Tartell, and that other doctors gave “the origin, Conagra, Inc. v. Singleton, 743 F.2d 1508, utmost praise” when talking about Dr. Tartell. 1512–13 (11th Cir.1984), and for unfair competition, Custom Mfg. & Eng’g, Inc. v. Midway Servs., Inc., 508 The district court found that “Dr. Tartell’s name has F.3d 641, 652 (11th Cir.2007). We “recognize[ ] four acquired secondary meaning within South Florida” based categories of distinctiveness” for marks, but the parties on “the length and prevalence of Dr. Tartell’s overall agree that Dr. Tartell’s name is a “descriptive” mark, public use of his name in conjunction with his medical which is a “mark[ ] that identif[ies] the characteristic or services—including his widespread advertisements quality of a product or service.” Tana, 611 F.3d at 774. through affiliation with the Florida Panthers.” The district Although a descriptive mark is not “inherently court mentioned the evidence submitted *1257 by Dr. distinctive,” it “may become sufficiently distinctive to

Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (2015) 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly Fed. C 1327

enjoy trademark protection by acquiring ‘secondary probative of whether his name had acquired secondary meaning.’ ” Id. meaning. The target audience for Dr. Tartell’s academic activities, most of which occurred more than two decades [7] [8] [9] [10] “A name has acquired secondary meaning ago, was not consumers of his medical services—that is, when the primary significance of the term in the minds of potential patients. And nothing in the record suggests that, the consuming public is not the product but the producer.” “present-day [potential patients] would specifically Id. (quoting Welding Servs., Inc. v. Forman, 509 F.3d associate [his] name with [his services],” Tana, 611 F.3d 1351, 1358 (11th Cir.2007)). In other words, secondary at 777, based on his academic activities. See also Flynn v. meaning requires that a “name denotes to the consumer or AK Peters, Ltd., 377 F.3d 13, 20–21 (1st Cir.2004) purchaser ‘a single thing coming from a single source.’ ” (holding that academic activities are not evidence of Am. Television, 810 F.2d at 1549 (quoting Am. Heritage secondary meaning where “consumers [are not] aware of Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 12 (5th [the] academic achievements”). Likewise, evidence that Cir.1974)). A plaintiff may prove secondary meaning Dr. Tartell is respected by his peers “suggests nothing with direct evidence, such as consumer surveys, or more than that [his] name ... may have a familiar ring to a circumstantial evidence. Investacorp, Inc. v. Arabian Inv. discrete group,” Tana, 611 F.3d at 777. Banking Corp. (Investcorp) E.C., 931 F.2d 1519, 1525 (11th Cir.1991). A court should consider the four Dr. Tartell produced no substantial evidence relevant to Conagra factors to determine if circumstantial evidence the fourth Conagra factor, “the degree of actual establishes that a mark has acquired secondary meaning: recognition by the public,” id. at 776 (internal quotation marks and citation omitted), which bears directly on what (1) the length and nature of the his name “denotes to the consumer,” Am. Television, 810 name’s use, (2) the nature and F.2d at 1549. The only evidence related to this factor was extent of advertising and promotion Dr. Tartell’s self-serving testimony that some patients told of the name, (3) the efforts of the him that they selected him because of his articles and that proprietor to promote a conscious “everybody that [went to the Bank Atlantic Center] knew connection between the name and that [he was] the voice doctor[ ].” But Dr. Tartell’s the business, and (4) the degree of “generalized self-serving statements as to [his] reputation actual recognition by the public ... add no material evidence ... that is relevant to the that the name designates the secondary-meaning inquiry,” Tana, 611 F.3d at 777; see proprietor’s product or service. also Flynn, 377 F.3d at 21 (explaining that a plaintiff’s testimony “that a handful of strangers have told her that *1258 Tana, 611 F.3d at 776 (internal quotation marks they recognized her from a talk or that they had read her and citation omitted). The “minds of the consuming [work]” is “limited anecdotal evidence [that] does little to public,” id. at 774 (internal quotation marks and citation establish that her name has acquired secondary omitted), define what, if any, secondary meaning is meaning”). attributed to a mark, and as such, the owner of a mark must adduce evidence of what “the [mark] denotes to the Dr. Tartell’s remaining evidence says nothing about the consumer,” Am. Television, 810 F.2d at 1549. perceptions of consumers. For example, “there is nothing significant about the manner of [Dr. Tartell]’s use of” his [11] The district court clearly erred when it found that Dr. name, Investacorp, 931 F.2d at 1525. Dr. Tartell practiced Tartell’s name had acquired secondary meaning. Because under the name “South Florida Sinus and Allergy Center” Dr. Tartell offered no consumer surveys, he had to rely on for most of the 13 years before this action, so Dr. Tartell’s circumstantial evidence to prove that his name had name was not the primary mark by which his services acquired secondary meaning. Although Dr. Tartell were identified during this period. See J. Thomas produced some evidence relevant to the Conagra factors, McCarthy, McCarthy on Trademarks and Unfair he failed to produce any substantial evidence of what his Competition § 7.3 (4th ed.2009) ( “[T]he prominence of a name “denotes to the consumer,” id. As a result, “we are word or symbol is certainly an important element in left with the definite and firm conviction that a mistake determining whether it creates a separate commercial has been committed,” HGI Assocs., 427 F.3d at 873 impression on the average buyer.”). Dr. Tartell produced (internal quotation marks and citation omitted). no evidence *1259 that his use of his name was unique as compared to how another doctor would use his name. See As a threshold matter, Dr. Tartell’s evidence about the use id. § 13.2 (explaining that, in “professions where the use of his name in academic settings and evidence about his of personal names as identifiers is traditional,” such as the reputation among other medical professionals are not medical profession, it is more difficult to establish

Tartell v. South Florida Sinus and Allergy Center, Inc., 790 F.3d 1253 (2015) 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly Fed. C 1327 secondary meaning). And, “the nature and extent of name of the Center, not Dr. Tartell’s name. Although Dr. advertising,” Tana, 611 F.3d at 776 (internal quotation Tartell also mentioned various lectures he gave in the marks and citation omitted), of Dr. Tartell’s name fails to community, his “generalized self-serving statements,” id. establish that his name had acquired secondary meaning. at 777, failed to provide any details about these lectures. Although Dr. Tartell’s name appeared on numerous Moreover, “[d]ozens” of lectures to “50 or so” people advertisements and other promotional material, his name cannot establish that his name had acquired a secondary was not displayed “prominently.” See Conagra, 743 F.2d meaning with a significant portion of potential patients in at 1513 (stating that the “prominen [ce]” of a name on densely populated South Florida. Dr. Tartell presented no packaging may support a finding of secondary meaning). evidence that “advertising campaigns made major inroads All of the advertisements instead displayed the name of to the consumer psyche.” Investacorp, 931 F.2d at 1526. the Center or its logo more prominently. “South Florida Sinus and Allergy Center” was written in larger font, and the visual features of each advertisement drew the reader’s attention to that mark. Dr. Tartell’s name appeared in smaller font, near the bottom of the IV. CONCLUSION advertisements, alongside Dr. Mandel’s and a physician assistant’s names. These advertisements fail to suggest We REVERSE the judgment in favor of Dr. Tartell and that ‘a single thing[, sinus and allergy services at the RENDER a judgment in favor of Dr. Mandel and his Center,] com[es] from a single source[, Dr. Tartell],’ ” corporations. Am. Television, 810 F.2d at 1549 (internal quotation marks and citation omitted). Dr. Tartell also failed to present any evidence about his “efforts ... to promote a All Citations conscious connection between [his] name and [his services],” Tana, 611 F.3d at 776 (internal quotation 790 F.3d 1253, 115 U.S.P.Q.2d 1268, 25 Fla. L. Weekly marks and citation omitted). Dr. Tartell testified that he Fed. C 1327 chose the content of the advertisements to create a connection between sinus and allergy services and his name, but those advertisements prominently featured the

Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (2015) 2015-2 Trade Cases P 79,257, 25 Fla. L. Weekly Fed. C 1465

[8] operator failed to state a claim for tortious interference. 797 F.3d 1248 United States Court of Appeals, Eleventh Circuit. Affirmed.

DUTY FREE AMERICAS, INC., Plaintiff–Appellant, v. The ESTÉE LAUDER COMPANIES, INC., West Headnotes (57) Defendant–Appellee.

No. 14–11853. [1] Antitrust and Trade Regulation | Elements in General Aug. 7, 2015. A plaintiff alleging a claim for attempted monopolization under the Sherman Act must plausibly assert three things: (1) that the Synopsis defendant has engaged in predatory or Background: Operator of duty free retail stores at several anticompetitive conduct; with (2) a specific airports brought action against beauty products intent to monopolize; and (3) a dangerous manufacturer alleging anticompetitive behavior in probability of achieving monopoly power. violation of the Sherman Act, contributory false Sherman Act, § 2, 15 U.S.C.A. § 2. advertising in violation of the Lanham Act, as well as tortious interference under state law, after manufacturer informed airport authorities that it would not let operator Cases that cite this headnote sell its products in operator’s stores. Manufacturer moved to dismiss. The United States District Court for the Southern District of Florida, Robert N. Scola, Jr., J., No. 0:12–cv–60741–RNS, 2014 WL 1329359, granted the motion. Operator appealed. [2] Antitrust and Trade Regulation Elements in General

The predatory or anticompetitive conduct Holdings: The Court of Appeals, Marcus, Circuit Judge, requirement is arguably the single most held that: important aspect of a claim for attempted

[1] monopolization under the Sherman Act. operator failed to state an attempted monopolization Sherman Act, § 2, 15 U.S.C.A. § 2. claim;

[2] operator failed to state business disparagement claim; Cases that cite this headnote

[3] four-year limitations period applied;

[4] operator lacked standing to seek injunctive relief; [3] Antitrust and Trade Regulation [5] operator lacked antitrust standing; Elements in General

[6] as a matter of first impression a manufacturer or To survive a motion to dismiss, the plaintiff distributor can be liable for trademark infringement based bringing a claim for attempted monopolization on a theory of contribution; under the Sherman Act must adequately allege actual or potential harm to competition; this [7] manufacturer was not liable for contributory false means the plaintiff must allege a factual advertising; connection between the alleged harmful conduct and its impact, or likely impact, on competition

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in the market. Sherman Act, § 2, 15 U.S.C.A. § 2.

Cases that cite this headnote [7] Antitrust and Trade Regulation Elements in General

For purposes of an attempted monopolization claim under the Sherman Act, the relevant [4] Antitrust and Trade Regulation market has two components, and the plaintiff Elements in General must define both the geographic market and the product market in which the defendant allegedly Damage to individual competitors is rarely possesses increasing power. Sherman Act, § 2, sufficient to establish the predatory or 15 U.S.C.A. § 2. anticompetitive conduct element of an attempted monopolization claim under the Sherman Act. Sherman Act, § 2, 15 U.S.C.A. § 2. Cases that cite this headnote

Cases that cite this headnote

[8] Antitrust and Trade Regulation Elements in General

[5] Antitrust and Trade Regulation For purposes of an attempted monopolization Elements in General claim under the Sherman Act, the relevant geographic market is the area of effective For purposes of an attempted monopolization competition in which a product or its reasonably claim under the Sherman Act, actual interchangeable substitutes are traded; the court anticompetitive effects include, but are not considers whether outside sellers are precluded limited to, reduction of output, increase in price, from entering the market, and whether or deterioration in quality; a showing of market consumers cannot realistically turn outside the power is necessary, but not sufficient, to geographic area. Sherman Act, § 2, 15 U.S.C.A. establish potential harm to competition. § 2. Sherman Act, § 2, 15 U.S.C.A. § 2.

Cases that cite this headnote Cases that cite this headnote

[9] Antitrust and Trade Regulation [6] Antitrust and Trade Regulation Elements in General Elements in General For purposes of an attempted monopolization To show that the defendant’s conduct caused claim under the Sherman Act, economic and harm to competition, as a required element of an physical barriers to expansion such as attempted monopolization claim under the transportation costs, delivery limitations and Sherman Act, the plaintiff must define the customer convenience and preference are relevant market and establish that the defendants pertinent to the determining the relevant market. possessed power in that market. Sherman Act, § Sherman Act, § 2, 15 U.S.C.A. § 2. 2, 15 U.S.C.A. § 2.

Cases that cite this headnote Cases that cite this headnote

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[10] Antitrust and Trade Regulation Elasticity of supply and demand [13] Antitrust and Trade Regulation Defining a relevant product market for purposes Intent of an attempted monopolization claim under the Sherman Act is primarily a process of describing For purposes of a Sherman Act attempted those groups of producers which, because of the monopolization claim, anticompetitive intent is similarity of their products, have the actual or the design to gain greater market share, to drive potential ability to take significant amounts of up prices, or to obtain some other illegal goal. business away from each other; therefore, courts Sherman Act, § 2, 15 U.S.C.A. § 2. pay particular attention to evidence of the cross-elasticity of demand measured by the extent to which consumers demand less of the Cases that cite this headnote particular product as the price for its alleged substitute declines. Sherman Act, § 2, 15

U.S.C.A. § 2.

[14] Antitrust and Trade Regulation Cases that cite this headnote Chance of success in the relevant market

To adequately plead dangerous probability of achieving monopoly power, as element of attempted monopolization claim under the of the [11] Antitrust and Trade Regulation Sherman Act, the plaintiff must allege that the Elements in General defendant is close to achieving monopoly power in the relevant product market. Sherman Act, § Defining the relevant product market for 2, 15 U.S.C.A. § 2. purposes of an attempted monopolization claim under the Sherman Act is a fact-intensive endeavor; courts consider a variety of factors in Cases that cite this headnote the calculus, including industry or public recognition of the submarket as a separate

economic entity, the product’s peculiar

characteristics and uses, unique production [15] Antitrust and Trade Regulation facilities, distinct customers, distinct prices, Elements in General sensitivity to price changes, and specialized

vendors. Sherman Act, § 2, 15 U.S.C.A. § 2. For purposes of an attempted monopolization claim under the Sherman Act, “monopoly Cases that cite this headnote power” is the power to raise prices to supra-competitive levels or the power to exclude competition in the relevant market either by restricting entry of new competitors or by driving existing competitors out of the market. [12] Antitrust and Trade Regulation Intent Cases that cite this headnote A Sherman Act attempted monopolization claim plaintiff must allege that the defendant acted

with specific intent to monopolize. Sherman

Act, § 2, 15 U.S.C.A. § 2. [16] Antitrust and Trade Regulation Chance of success in the relevant market Cases that cite this headnote © 2016 Thomson Reuters. No claim to original U.S. Government Works. 22

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For purposes of an attempted monopolization claim under the Sherman Act, a dangerous Cases that cite this headnote probability of achieving monopoly power may be established by a 50 percent share of the relevant market. Sherman Act, § 2, 15 U.S.C.A. § 2. [20] Antitrust and Trade Regulation Presumptions and burden of proof Cases that cite this headnote Courts generally require a Sherman Act plaintiff alleging attempted monopolization by anticompetitive disparagement to rebut the presumption that statements are de minimis by [17] Antitrust and Trade Regulation showing the defendant’s statements were: (1) Elements in General clearly false; (2) clearly material; (3) clearly likely to induce reasonable reliance; (4) made to A unilateral refusal to deal is generally not buyers without knowledge of the subject matter; unlawful attempted monopolization under the (5) continued for prolonged periods; and (6) not Sherman Act. Sherman Act, § 2, 15 U.S.C.A. § readily susceptible to neutralization or other 2. offset by rivals. Sherman Act, § 2, 15 U.S.C.A. § 2. Cases that cite this headnote Cases that cite this headnote

[18] Antitrust and Trade Regulation Refusals to Deal [21] Antitrust and Trade Regulation Elements in General The high value that courts have placed on the right to refuse to deal with other firms does not For purposes of an attempted monopolization mean that the right is unqualified; thus, a refusal claim under the Sherman Act based on business to deal under some circumstances can constitute disparagement, where a plaintiff complains of anticompetitive conduct and violate the Sherman isolated rather than systemic disparagement, the Act. Sherman Act, § 2, 15 U.S.C.A. § 2. effects on the plaintiff are necessarily speculative and the effects on competition even more so. Sherman Act, § 2, 15 U.S.C.A. § 2. Cases that cite this headnote

Cases that cite this headnote

[19] Antitrust and Trade Regulation Particular Industries or Businesses [22] Antitrust and Trade Regulation Operator of duty free stores failed to allege that Particular Industries or Businesses beauty products manufacturer unilaterally stopped dealing with it, that manufacturer’s Operator of duty free stores failed to allege that decision not to re-engage with operator was due a beauty products manufacturer made false to anticompetitive motivations, or that statements to certain airport authorities during manufacturer already had a monopoly, and thus biddings for spaces in which to operate duty free failed to state a claim for attempted stores, and thus failed to state a claim for monopolization under the Sherman Act. attempted monopolization under the Sherman Sherman Act, § 2, 15 U.S.C.A. § 2. Act based on disparagement. Sherman Act, § 2,

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15 U.S.C.A. § 2. authorities regarding operator’s inability to sell manufacturer’s products, and thus operator failed to state a claim against manufacturer for Cases that cite this headnote attempted monopolization under the Sherman Act based on its alleged failure to stop competitors from making those statements. Sherman Act, § 2, 15 U.S.C.A. § 2.

[23] Antitrust and Trade Regulation Particular Industries or Businesses Cases that cite this headnote

Operator of duty free stores at airports failed to allege harm stemming from allegedly false statements made by beauty products manufacturer with significant market share to [26] Antitrust and Trade Regulation airport authorities during biddings for spaces to Limitation of actions; time to sue operate duty free stores at certain airports, and thus failed to state a claim attempted Four year limitations period for attempted monopolization claim under the Sherman Act monopolization claims under the Sherman Act based on predatory behavior towards operator. applied to duty free store operator’s claims Sherman Act, § 2, 15 U.S.C.A. § 2. against beauty products manufacturer with significant market share for its display space and inventory requirements. Clayton Act, § 4B, 15 Cases that cite this headnote U.S.C.A. § 15(b).

Cases that cite this headnote

[24] Antitrust and Trade Regulation Elements in General Antitrust and Trade Regulation Complaint [27] Federal Civil Procedure In general; injury or interest Market power alone cannot be sufficient to show Federal Courts the potential for genuine adverse effects on Necessity of Objection; Power and Duty of competition required to state an attempted Court monopolization claim under the Sherman Act; the plaintiff is required to make specific Because the constitutional standing doctrine allegations linking market power to harm to stems directly from the Article III “case or competition in that market. Sherman Act, § 2, 15 controversy” requirement, standing implicates a U.S.C.A. § 2. court’s subject matter jurisdiction, and accordingly must be addressed as a threshold matter regardless of whether it is raised by the Cases that cite this headnote parties. U.S.C.A. Const. Art. 3, § 1 et seq.

4 Cases that cite this headnote

[25] Antitrust and Trade Regulation Particular Industries or Businesses

Duty free store operator that sought to operate in [28] Federal Civil Procedure certain airports failed to allege a conspiracy or In general; injury or interest agency relationship between a beauty products manufacturer and operator’s competitors that When analyzing a defendant’s motion to allegedly made disparaging comments to airport dismiss, the court must evaluate Article III © 2016 Thomson Reuters. No claim to original U.S. Government Works. 24

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standing based on the facts alleged in the under the Sherman Act using a two pronged test complaint, and may not speculate concerning the that involves consideration of the nexus between existence of standing or piece together support the antitrust violation and the plaintiff’s harm for the plaintiff. U.S.C.A. Const. Art. 3, § 1 et and whether the harm alleged is of the type for seq. which Congress provides a remedy. Sherman Act, § 2, 15 U.S.C.A. § 2. 3 Cases that cite this headnote Cases that cite this headnote

[29] Injunction Persons entitled to apply; standing [32] Antitrust and Trade Regulation Injury to Business or Property Because injunctions regulate future conduct, a party has Article III standing to seek injunctive The first prong for determining antitrust relief only if the party alleges, and ultimately standing to bring a claim under the Sherman Act proves, a real and immediate threat of future is whether the plaintiff has suffered an antitrust injury. U.S.C.A. Const. Art. 3, § 1 et seq. injury; “antitrust injury” is injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendant’s Cases that cite this headnote acts unlawful. Sherman Act, § 2, 15 U.S.C.A. § 2.

Cases that cite this headnote [30] Antitrust and Trade Regulation Particular cases

Operator of duty free stores in airports lacked Article III standing to seek injunctive relief on [33] Antitrust and Trade Regulation Sherman Act attempted monopolization claim Injury to Business or Property against beauty products manufacturer based on Antitrust and Trade Regulation its display space and inventory requirements for Causation stores carrying its products; operator failed to demonstrate immediate threat of future harm In order to allege antitrust injury, as required based on manufacturer’s requirements, since element of antitrust standing to bring claim operator was not dealing with manufacturer, and under Sherman Act, where a plaintiff is seeking there was no indication that it was likely to do injunctive relief, it must allege threatened injury so. U.S.C.A. Const. Art. 3, § 1 et seq.; Sherman that would constitute antitrust injury if inflicted Act, § 2, 15 U.S.C.A. § 2. upon the plaintiff and the defendant’s causal responsibility for such threatened injury. Clayton Act, § 4(b), 15 U.S.C.A. § 15(b). Cases that cite this headnote

1 Cases that cite this headnote

[31] Antitrust and Trade Regulation Injury to Business or Property Antitrust and Trade Regulation [34] Antitrust and Trade Regulation Causation Right of Action; Persons Entitled to Sue; Standing; Parties The Court of Appeals analyzes antitrust standing to bring an attempted monopolization claim In order to possess standing to bring a claim for © 2016 Thomson Reuters. No claim to original U.S. Government Works. 25

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antitrust injury under the Sherman Act, the Particular cases plaintiff must be an efficient enforcer of the antitrust laws. Sherman Act, § 2, 15 U.S.C.A. § Operator of duty free stores at airports lacked 2. antitrust standing to bring attempted monopolization claim under Sherman Act against beauty products manufacturer for Cases that cite this headnote manufacturer’s shelf space and inventory requirements for stores with which it did business, where operator failed to allege any harm, since it did not sell manufacturer’s

[35] products, and was not likely to do so. Sherman Antitrust and Trade Regulation Act, § 2, 15 U.S.C.A. § 2. Right of Action; Persons Entitled to Sue; Standing; Parties Cases that cite this headnote For purposes of standing to bring an antitrust claim, when only injunctive relief is sought, the dangers of mismanaging the antitrust laws are less pervasive, and accordingly the Court of Appeals is less concerned about whether the [38] Trademarks party would be the most efficient enforcer of the Contributory liability antitrust laws. Sherman Act, § 2, 15 U.S.C.A. § 2. When a claim involves trademark infringement, a manufacturer or distributor can be liable based on a theory of contribution if it intentionally Cases that cite this headnote induces another to infringe a trademark or continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement. Lanham Act, § 1 et seq., 15 U.S.C.A. § 1051 et seq. [36] Antitrust and Trade Regulation Right of Action; Persons Entitled to Sue; Cases that cite this headnote Standing; Parties

For purposes of an attempted monopolization claim under the Sherman Act, the Court of Appeals usually considers six factors in [39] Antitrust and Trade Regulation determining whether a plaintiff would be an Persons liable efficient enforcer of the antitrust laws: (1) whether the plaintiff has suffered a direct injury; Lanham Act provides a cause of action for (2) whether its injury is remote; (3) whether contributory false advertising. Lanham Act, § other plaintiffs are better suited to bring the suit; 43(a), 15 U.S.C.A. § 1125(a). (4) whether the plaintiff’s injuries are speculative; (5) whether the calculation of damages would be complex and run the risk of 1 Cases that cite this headnote duplicative recoveries; and (6) whether the plaintiff could enforce the court’s judgment. Sherman Act, § 2, 15 U.S.C.A. § 2.

[40] Antitrust and Trade Regulation Cases that cite this headnote Persons liable

To state a contributory false advertising claim under the Lanham Act, the plaintiff must show first that a third party in fact directly engaged in [37] Antitrust and Trade Regulation false advertising that injured the plaintiff, and © 2016 Thomson Reuters. No claim to original U.S. Government Works. 26

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second, that the defendant contributed to that mind in that it intended to participate in, or conduct either by knowingly inducing or actually knew about, the false advertising. causing the conduct, or by materially Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a). participating in it. Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a). 3 Cases that cite this headnote

1 Cases that cite this headnote

[44] Antitrust and Trade Regulation Persons liable [41] Antitrust and Trade Regulation Persons liable The plaintiff alleging contributory false advertising under the Lanham Act must allege In order to establish that a third party engaged in that the defendant actively and materially false advertising, as required element of furthered the unlawful conduct by inducing it, contributory false advertising claim under the causing it, or in some other way working to Lanham Act, the plaintiff must plead, and bring it about. Lanham Act, § 43(a), 15 ultimately prove, an injury to a commercial U.S.C.A. § 1125(a). interest in sales or business reputation proximately caused by the misrepresentations. Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a). Cases that cite this headnote

Cases that cite this headnote

[45] Antitrust and Trade Regulation Persons liable

[42] Antitrust and Trade Regulation In determining whether a plaintiff has Advertising, Marketing, and Promotion adequately alleged facts to support a contributory false advertising claim under the Lanham Act’s false advertising provision allows Lanham Act, the Court of Appeals looks to a plaintiff to base its claim not only on whether the complaint suggests a plausible statements that are literally false, but also on inference of knowing or intentional statements that are misleading when considered participation, examining the nature and extent of in their full context. Lanham Act, § 43(a), 15 the communication between the third party and U.S.C.A. § 1125(a). the defendant regarding the false advertising, including factors such as: whether or not the defendant explicitly or implicitly encouraged the 2 Cases that cite this headnote false advertising; whether the false advertising is serious and widespread, making it more likely that the defendant knew about and condoned the acts; and whether the defendant engaged in bad

[43] faith refusal to exercise a clear contractual Antitrust and Trade Regulation power to halt the false advertising. Lanham Act, Persons liable § 43(a), 15 U.S.C.A. § 1125(a).

For purposes of a contributory false advertising claim under the Lanham Act, once the plaintiff 2 Cases that cite this headnote establishes the elements of a direct false advertising claim against a third party, it must allege that the defendant contributed to that conduct; this means that the plaintiff must allege that the defendant had the necessary state of [46] Antitrust and Trade Regulation © 2016 Thomson Reuters. No claim to original U.S. Government Works. 27

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Persons liable

Beauty products manufacturer did not contribute to any statements made by duty free store operator’s competitors in the course of certain [49] Torts bidding processes for space to operate duty free Business relations or economic advantage, in stores in certain airports, and thus manufacturer general was not liable for contributory false advertising under the Lanham Act; manufacturer’s Under Florida law, the elements of tortious continuing to supply “favored” competitors with interference with a business relationship are: (1) its products was not necessary to provide the existence of a business relationship; (2) competitors with the ability to make false knowledge of the relationship on the part of the statements regarding operator’s ability to sell defendant; (3) an intentional and unjustified manufacturer’s products, and there was no interference with the relationship by the indication that manufacturer coordinated with defendant; and (4) damage to the plaintiff as a competitors or encouraged such statements. result of the breach of the relationship. Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a). Cases that cite this headnote Cases that cite this headnote

[50] Torts [47] Antitrust and Trade Regulation Existence of valid or identifiable contract, Persons liable relationship or expectancy

For purposes of a contributory false advertising Under Florida law, a mere offer to sell does not, claim under the Lanham Act, the mere sale of by itself, give rise to sufficient legal rights to products in the course of an ordinary business support a claim of intentional interference with a relationship, without more, cannot justify a business relationship. finding that a defendant induced, encouraged, caused, procured, or brought about false advertising. Lanham Act, § 43(a), 15 U.S.C.A. § Cases that cite this headnote 1125(a).

Cases that cite this headnote [51] Torts Absence of justification or privilege

The third element of a tortious interference with [48] Antitrust and Trade Regulation a prospective business relationship claim under Persons liable Florida law, intentional and unjustified interference with a business relationship, Contributory false advertising claims are requires the plaintiff to allege that the defendant cognizable under the Lanham Act, but a plaintiff acted without justification; this is a must allege more than an ordinary business fact-intensive inquiry that requires an relationship between the defendant and the examination of the defendant’s conduct, its direct false advertiser in order to plausibly plead motive, and the interests it sought to advance. its claim. Lanham Act, § 43(a), 15 U.S.C.A. § 1125(a). Cases that cite this headnote

Cases that cite this headnote

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[52] Torts Defense, justification or privilege in general [55] Torts Torts Business relations or economic advantage, in Competition general

For purposes of a claim for tortious interference Operator of several duty-free stores at airports with a prospective business relationship, Florida failed to allege that beauty products law recognizes a privilege of interference; this manufacturer made statements to airport means that where there is no contract right to authorities that operator’s inability to carry its have the relation continued, but only an products would harm its revenue generating expectancy, a competitor has the privilege of potential, and thus failed to state a claim under interference in order to acquire the business for Florida law for tortious interference with a himself. prospective business relationship.

Cases that cite this headnote Cases that cite this headnote

[53] Torts [56] Torts Defense, justification or privilege in general Business relations or economic advantage, in general For purposes of the “privilege of interference” exception to liability for tortious interference Operator of several duty-free stores at airports with a prospective business relationship under failed to allege that beauty products Florida law, if a defendant interferes with a manufacturer induced operator’s competitors to contract in order to safeguard a preexisting make statements to airport authorities in relation economic interest of his own, the defendant’s to bidding processes for space in airports to right to protect his own established economic operate duty free stores, including that interest outweighs the plaintiff’s right to be free operator’s inability to carry manufacturer’s of interference, and his actions are usually products would harm its revenue generating recognized as privileged and nonactionable. potential, and thus failed to state a claim under Florida law for tortious interference with a prospective business relationship. Cases that cite this headnote

Cases that cite this headnote

[54] Torts Defense, justification or privilege in general [57] Torts For purposes of a tortious interference claim Business relations or economic advantage, in under Florida law, where the plaintiff alleges general only a prospective business relationship such that plaintiff has a mere expectancy of a new Under Florida law, privilege of interference relationship, the privilege of interference bars applied to alleged statements made to airport only interference consisting of malicious authorities by beauty products manufacturer and conduct. competitors of duty-free store operator, that operator’s inability to carry manufacturer’s products would harm its revenue generating Cases that cite this headnote capabilities, precluding liability for tortious interference with a prospective business

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relationship; alleged statements were made says that Estée Lauder places anticompetitive restrictions during competitive bidding process to obtain on duty free operators’ display space and ability to select space in airports to operate duty free stores, their own inventory; it seeks injunctive relief from these statements were not made solely to harm requirements. Finally, DFA claims that its competitors operator, and were made to advance disparaged its business methods and financial projections competitors’ own business interests. to airport authorities and seeks to hold Estée Lauder accountable for all of those statements. DFA filed suit in the United States District Court for the Southern District Cases that cite this headnote of Florida, asserting three claims in its amended complaint: (1) attempted monopolization, in violation of § 2 of the Sherman Act; (2) contributory false advertising, in violation of § 43(a) of the Lanham Act; and (3) tortious interference with a prospective business relationship, in violation of Florida law. The district court dismissed the Attorneys and Law Firms lawsuit in its entirety for failure to state a claim. *1256 Paul Joseph Schwiep, Gabriel Groisman, Armando Rosquete, Coffey Burlington, PL, Miami, FL, Emily E. After thorough review, we affirm. On each claim, DFA Chow, Craig S. Coleman, Richard Alan Duncan, Faegre failed to allege basic facts sufficient to state a claim to Baker Daniels, LLP, Minneapolis, MN, for relief that is plausible on its face. Thus, in pleading its Plaintiff–Appellant. antitrust claim, DFA did not adequately allege that Estée Lauder engaged in predatory or anticompetitive conduct. Cristina Alonso, Charles Martin Rosenberg, Aaron Nor has DFA come close to establishing standing to seek Stenzler Weiss, Carlton Fields Jorden Burt, PA, Miami, injunctive relief from the requirements that Estée Lauder FL, Thomas G. Hungar, Thomas M. Johnson, Jr., Joseph places on its competitors, inasmuch as DFA no longer Kattan, Gibson Dunn & Crutcher, LLP, Washington, DC, does any business with Estée Lauder. As for its false Robert C. Walters, Gibson Dunn & Crutcher, LLP, advertising claim, DFA failed to plead sufficient facts Dallas, TX, for Defendant–Appellee. from which a court could find that Estée Lauder made false statements, or, for that matter, was responsible for Appeal from the United States District Court for the any such statements made by DFA’s competitors. Finally, Southern District of Florida. D.C. Docket No. the complaint failed to allege any improper conduct 0:12–cv–60741–RNS. sufficient to constitute tortious interference with a Before MARCUS and WILSON, Circuit Judges, and business relationship in violation of Florida law. THAPAR,* District Judge.

* Honorable Amul R. Thapar, United States District Judge for the Eastern District of Kentucky, sitting by designation. I.

Opinion A.

MARCUS, Circuit Judge: The essential facts contained in DFA’s complaint and its attached exhibits are *1257 these. DFA operates many duty free stores in American airports with international Duty Free Americas, Inc. (“DFA”), which operates duty terminals. DFA is one of approximately ten major free stores in many international airports nationwide, operators of duty free stores in the United States. DFA appeals the district court’s dismissal of its multicount suit currently holds leases in thirteen international airports against The Estée Lauder Companies, Inc. (“Estée located in eleven cities: New York (JFK and LaGuardia), Lauder”), the largest manufacturer of beauty products Washington, D.C. (Dulles and Reagan National), Detroit, sold in duty free retail outlets in the United States. DFA Miami, Atlanta, Baltimore, San Antonio, Phoenix, San claims that Estée Lauder’s refusal to do business with Diego, Salt Lake City, and Charlotte. It competes with DFA, and its communication of that fact to airport other duty free operators for the limited rental space authorities evaluating whether to offer rental space to available in U.S. airports servicing international flights. DFA, violates several federal and state laws. DFA also

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Airports generally rent their dedicated duty free space for particular brand (“full line forcing”) and carry the lease terms of between five and ten years. An airport company’s less-popular fragrances if they wanted to sell seeking to rent to a duty free operator proceeds by cosmetics (“tying”). Estée Lauder also mandated that initiating competitive bidding. Typically, the airport operators reserve display space of a certain size and issues a request for proposal (“RFP”), and interested duty quality for its products and that they keep excess free operators respond with proposals explaining what inventory in stock, and routinely threatened to cut off products they would carry at the airport and the amount of *1258 all product supply when duty free operators rent they are willing to pay. Proposed rent in the duty free resisted these conditions. According to the complaint and market is comprised of both a minimum annual guarantee its attached exhibits, DFA was last subject to Estée and a percentage of sales revenue. Normally, all of the Lauder’s various contractual requirements several years space that an airport allocates for duty free retail space is ago: (1) “display space and inventory demands” in March leased by the same operator. 2008; (2) “full line forcing” in March 2008; and (3) “tying” fragrances to other products in April 2006. At duty free stores, customers—who must be outbound international travelers—can purchase luxury products at In January 2007, Estée Lauder announced plans to discounted prices. Beauty products—which include eliminate the differences between its suggested domestic makeup, skin care products, and fragrances—are a retail prices and suggested travel retail prices. In other substantial component of duty free stores’ product words, it would promulgate only one suggested retail offerings. And Estée Lauder is the “largest manufacturer price for each product that would be used in both of beauty products sold in duty-free stores in U.S. traditional retail outlets and duty free stores. This planned airports.” DFA notes that in 2010 Estée Lauder’s market change, which would both increase the prices DFA paid share of cosmetics, a subgroup consisting of makeup and for Estée Lauder products and eliminate the discount that skin care, sold in duty free stores was approximately DFA’s customers gained by shopping at duty free stores, 45.71%, while its market share for skin care products was supposed to take effect on April 1, 2008. As a result exceeded 50%. DFA further estimates that Estée Lauder’s of the changing price structure, DFA terminated its market share has increased in the intervening years. business dealings with Estée Lauder by June 2008. Newcomers to the duty free beauty products market are apparently rare, due to the “extremely limited shelf space DFA adapted to the loss of Estée Lauder’s product lines available in airport duty free shops,” and DFA alleges that by devoting the display space that it formerly reserved for “[t]here has been no change in the composition of the top Estée Lauder products to other beauty brands. But at some five beauty product manufacturers in the past five years, undisclosed point, DFA sought to renew its prior other than [Estée Lauder’s] continuous increase in market relationship with Estée Lauder. The manufacturer refused share each year.” to have any further dealings with DFA. The decision not to resume relations with DFA costs Estée Lauder an DFA purchased Estée Lauder beauty products to sell in its estimated $14.5 million each year. duty free stores until June 2008. During that time, Estée Lauder set two different prices for each product—a Since 2008, DFA has participated in competitive bidding suggested domestic retail price and a lower suggested for duty free retail space at four international airports: travel retail price. Retailers that sold Estée Lauder Newark Liberty International Airport, Boston Logan products in traditional outlets, such as department stores, International Airport, Orlando International Airport, and could purchase goods at wholesale prices, which were set Hartsfield–Jackson Atlanta International Airport. Because by discounting the suggested domestic retail prices of DFA’s allegations of unlawful conduct stem from Estée items. By contrast, duty free operators like DFA could Lauder’s involvement, directly and indirectly, in these purchase at lower travel wholesale rates that were set by bidding processes, we relay the events that occurred in discounting the suggested travel retail prices for particular some detail. products. For most of DFA’s relationship with Estée Lauder, the suggested travel retail price for beauty In December 2008, Newark Liberty International Airport products offered customers a 10% discount off of the issued a request for proposal, seeking a tenant to lease its suggested domestic retail price. duty free retail space for a seven-year term. DFA submitted a proposal in response to the RFP, as did three Duty free operators that contracted with Estée Lauder had competitors: International Shoppes, Dufry, and EJE to comply with several inventory and display Travel Retail. Each of the other operators sold Estée requirements. In particular, Estée Lauder required Lauder products. During the RFP process, Estée Lauder’s operators to carry the full line of products within a President of Travel Retailing Worldwide, Olivier Bottrie,

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sent a letter to the leasing agent responsible for Nuance/DFASS partnership, ranking DFA’s proposal administering Newark’s bidding. The letter included a list second among the submitted bids. DFA appealed the of duty free operators that sold Estée Lauder products. decision, and the Airport Authority conducted a hearing Bottrie wrote: “We are confident that each of these on November 15, 2011. authorized retailers brings the expected quality of in-store execution and required operational excellence necessary At the appeal hearing, DFA was asked to explain why its to represent our brands and service your valued proposal implied that it would sell Estée Lauder products passengers.” in the Orlando Airport if it were awarded the lease.1 DFA and Stellar attempted to account for the discrepancy by Newark ultimately rejected DFA’s proposal and opted to arguing that its proposal had not been misleading, because lease its space to Dufry. Newark also ranked the the two operators assumed that the Stellar locations within proposals, indicating that it chose the Dufry proposal the airport would carry Estée Lauder products. Stellar because “Dufry had ... [the] strongest financial position.” explained that, in the past, it sold Estée Lauder products The airport ranked DFA’s proposal second to last among in its Tampa duty free space. However, it had been forced those submitted, stating only “Duty Free Americas does to downsize its physical space and could no longer not have the rights to sell Est[é]e Lauder brands.” comply with Estée Lauder’s display requirements. Stellar’s representative claimed that Estée Lauder had In May 2011, Boston Logan International Airport issued assured Stellar that if the company acquired sufficient an RFP, seeking a tenant to lease its duty free retail space physical space to meet Estée Lauder’s display for a seven-year term. At the time the RFP was issued, requirements, the two companies could resume their DFA had been the incumbent duty free operator at the relationship.2 Boston airport for the last 16 years. DFA submitted a bid for the lease, as did two competitors, International 1 Specifically, DFA’s proposal had listed a “significant Shoppes and Dufry. Both of the other operators had number of Estée Lauder brand items” that would be ongoing relationships with Estée Lauder. During the sold in its Orlando stores. Next, the promotional bidding *1259 process, Estée Lauder informed the brochure that DFA included with its proposal made contractor administering the RFP that the company did multiple references to Estée Lauder. First, the brochure not sell its products to DFA. Boston elected to lease its included a section entitled “DFA Name Brands.” Both duty free space to International Shoppes. The contractor Estée Lauder and Clinique—one of Estée Lauder’s explained its reasoning, emphasizing two factors: brands—were included in this list. Second, the brochure included pictures of DFA retail space in International Shoppes was authorized to sell Estée Lauder which Estée Lauder and Clinique signage and products products, and the minimum annual guarantee component were visible. Finally, during the interview that the of International Shoppes’ proposed rent was higher than Airport Authority conducted after the proposals were DFA’s. submitted, when DFA representatives were asked to confirm that the company had “a direct merchandise In August 2011, Orlando International Airport issued an purchasing relationship with all that brands [it was] RFP, seeking an operator to develop duty free space. DFA offering,” both representatives responded “yes” to the submitted a proposal in partnership with Stellar Partners question. Inc.—a local Florida entity that operated the duty free stores at Tampa International Airport. Under the terms of DFA and Stellar’s joint proposal, each company would 2 DFA also alleges that Estée Lauder engaged in similar run separately branded stores within the Orlando airport. conduct toward another of its partners, Concourse DFA alleges that its bid “proposed to pay millions of Concessions. Concourse Concessions partners with dollars more in rent than any other bidder over the life of DFA to run duty free stores in three airports—Miami, the contract.” Four bids were also submitted by DFA’s Dulles, and San Diego—but partners with another competitors: Dufry, Heinemann (in conjunction with a operator in the Los Angeles airport. Estée Lauder has local partner, Travel Retail), World Duty Free, and a refused to sell products to Concourse Concessions for partnership of Nuance and DFASS. During the bidding resale in Miami, Dulles, and San Diego, but supplies the operator with products for its Los Angeles location. process, Bottrie wrote to the Executive Director of the Greater Orlando Aviation Authority to inform him that Estée Lauder would not do business with DFA or with Stellar. The other four bids were submitted by entities or *1260 During the appeal hearing, several competitors for partnerships that sold Estée Lauder products. The Airport the Orlando International Airport contract criticized Authority awarded its duty free concessions to the DFA’s proposal. Travel Retail expressed its view that DFA’s financial projections were “unreasonable in light © 2016 Thomson Reuters. No claim to original U.S. Government Works. 32

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of past performance,” and that awarding a contract to asked DFA to confirm that it could in fact carry those DFA would be a “risk.” Travel Retail further said, “we items. DFA explained that it could supply everything strongly believe that Estée Lauder is a product which you listed in the proposal out of outstanding inventory. have to sell.” Travel Retail reiterated this view in a letter Subsequently, in early January 2012, the contract was after the hearing, in which it cited information “received officially awarded to DFA. directly from Estée Lauder” that placed “Estée Lauder’s market share [at] first in all categories” of beauty products On January 13, 2012, an attorney representing World sold in U.S. airport duty free stores. Travel Retail Duty Free wrote to Bottrie, asking him whether DFA was emphasized, “failure to offer the Estée Lauder product authorized to sell Estée Lauder’s products. Bottrie line will negatively impact duty free and duty paid sales responded, “Estée Lauder ... do[es] not have a commercial revenue for both international and domestic travelers.” relationship with DFA or its affiliates and ha[s] no plans Similarly, Nuance, the winner of the Orlando contract, to enter into such a relationship. In accordance, DFA does criticized DFA’s proposal, claiming that the ability to sell not have authority to offer our *1261 product lines in their Estée Lauder products was a “key component” of operations.”3 operating a successful duty free store and “echo[ing]” Travel Retail’s concerns. Specifically, Nuance argued that 3 An attorney representing Nuance later contacted “DFA[’s] sale projections are deemed to be unreasonable Bottrie, seeking confirmation that Estée Lauder had not and not sustainable in light of the history.” resumed relations with DFA. Bottrie responded with a similar letter to the one he sent to World Duty Free, In January 2012, the Orlando Airport Authority affirmed stating that DFA had no relationship with Estée Lauder. its decision to award the Orlando lease to Nuance/DFASS, stating that it found DFA’s “sales projections ... overstated and not reasonably attainable.” On January 17, Nuance sent a letter to Smith formally Specifically, the Airport Authority concluded that DFA’s protesting the decision to award the Atlanta contract to inability to offer Estée Lauder products would adversely DFA and accusing DFA of making misrepresentations in impact sales. Moreover, the data that DFA provided from its proposal. Nuance stated in its letter “DFA may have its other airport locations cast doubt on its predictions for made misrepresentations about its ability to carry Estée sales in Orlando, and DFA’s estimates for future Lauder brands.” The letter also claimed that “a lack of performance far exceeded what the independent access to Estée Lauder brands would cast doubt on the consultant that the Airport Authority hired to evaluate the validity of DFA’s projected revenue streams.” Nuance proposals believed was probable. based this statement on the fact that “Estée Lauder brands account for 20% of cosmetic and fragrance sales ... and Finally, in July 2011, Hartsfield–Jackson Atlanta cosmetic and fragrance sales constitute one of the largest International Airport issued an RFP for a seven-year lease sources of revenue for duty free stores.” The letter also to operate its duty free retail space. DFA submitted a contained excerpts from the Orlando appeal decision. The proposal here too, as did three of its competitors: World protest letter apparently had no impact on the Atlanta Duty Free, Dufry, and Nuance. In November 2011, officials’ decision. Atlanta’s Chief Procurement Officer, Adam Smith, informed the bidders that the contract would be awarded to DFA. In December, an attorney representing one of the other bidders wrote a letter to Atlanta officials regarding DFA. The letter suggested that DFA had made improper B. representations about its relationship with Estée Lauder, and it included Bottrie’s contact information, a list of On April 26, 2012, DFA commenced this action in the Estée Lauder-owned brands, and information about the United States District Court for the Southern District of Orlando Airport Authority appeal hearing. The attorney Florida, asserting four claims against Estée Lauder: (1) urged Smith to examine DFA’s proposal for indications conspiracy in restraint of trade, in violation of § 1 of the that the company was planning to sell Estée Lauder Sherman Act, 15 U.S.C. § 1; (2) conspiracy to products if awarded the Atlanta contract, and suggested monopolize, in violation of § 2 of the Sherman Act, 15 that Smith contact Bottrie to verify any representations U.S.C. § 2; (3) attempt to monopolize, in violation of § 2 DFA may have made. of the Sherman Act; and (4) tortious interference with prospective business relationships, in violation of Florida Smith contacted DFA. He recounted that DFA had listed law. Estée Lauder moved to dismiss under Federal Rule 19 stock keeping units of Estée Lauder’s products, and of Civil Procedure 12(b)(6); the district court granted the motion, and dismissed the claims without prejudice. Soon © 2016 Thomson Reuters. No claim to original U.S. Government Works. 33

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thereafter, DFA amended its complaint. This time, DFA Murphy v. F.D.I.C., 208 F.3d 959, 962 (11th Cir.2000). raised three claims: (1) attempt to monopolize, in “However, we afford no presumption of truth to legal violation of § 2 of the Sherman Act; (2) contributory false conclusions and recitations of the basic elements of a advertising, in violation of § 43(a) of the Lanham Act, 15 cause of action.” Franklin v. Curry, 738 F.3d 1246, 1248 U.S.C. § 1125(a); and (3) tortious interference with n. 1 (11th Cir.2013) (per curiam). We are “free to affirm prospective business relationships, in violation of Florida the district court’s decision on any ground that is law. supported by the record.” United States v. Elmes, 532 F.3d 1138, 1142 (11th Cir.2008) (quotation omitted); see Estée Lauder again moved to dismiss the claims, and once also Am. United Life Ins. Co. v. Martinez, 480 F.3d 1043, again, the district court granted Estée Lauder’s motion. 1059 (11th Cir.2007) (“[W]e may ... affirm a district This time, though the court dismissed the Lanham Act court’s decision to grant or deny a motion for any reason, claim without prejudice, it dismissed the Sherman Act regardless of whether it was raised below.”). and tortious interference claims with prejudice, because “DFA [had] already had an opportunity to amend these Rule 8(a) provides that a plaintiff’s pleading “must claims” after accessing “tens of thousands” of Estée contain ... a short and plain statement of the claim Lauder documents in discovery. The court first addressed showing that the pleader is entitled to relief.” The DFA’s attempted monopolization claim, examining the Supreme Court has further instructed that the plaintiff three different forms of conduct that DFA alleged were must submit “more than an unadorned, anticompetitive. It concluded that the first two—refusing the-defendant-unlawfully-harmed-me accusation.” to deal with DFA and disparaging DFA to airport Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 authorities—did not constitute anticompetitive conduct L.Ed.2d 868 (2009). In order “[t]o survive a motion to within the meaning of the antitrust laws. As for the last dismiss, a complaint must contain sufficient factual allegation—that Estée Lauder imposed restrictions on matter, accepted as true, to ‘state a claim to relief that is duty free operators’ display space allocation and plausible on its face.’ ” Id. (quoting Bell Atl. Corp. v. inventory stocking—the court concluded that the claim Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 was time barred to the extent DFA sought damages. To L.Ed.2d 929 (2007)). This “plausibility standard is met the extent that DFA sought injunctive relief, the district only where the facts alleged enable ‘the court to draw the court held that the claim was barred by laches or, in the reasonable inference that the defendant is liable for the alternative, that DFA lacked antitrust standing to pursue misconduct alleged.’ ” Simpson v. Sanderson Farms, Inc., it. Next, the court concluded that the Lanham Act claim 744 F.3d 702, 708 (11th Cir.2014) (quoting Iqbal, 556 failed because DFA did not adequately allege that Estée U.S. at 678, 129 S.Ct. 1937). “Where a complaint pleads Lauder or any of the duty free operators had made any facts that are ‘merely consistent with’ a defendant’s false or misleading statements about DFA. In the trial liability, it ‘stops short of the line between possibility and court’s view, each of the offending statements expressed plausibility of “entitlement to relief.” ’ ” Iqbal, 556 U.S. merely an opinion or *1262 prediction for the future and at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at not a verifiable fact. Thus, it concluded that the 557, 127 S.Ct. 1955). Although “[a] plaintiff need not statements were not actionable under § 43(a) of the plead ‘detailed factual allegations[,] ... a formulaic Lanham Act. Finally, the court dismissed the tortious recitation of the elements of a cause of action will not do,’ interference claim because the complaint contained no ” and the plaintiff must offer in support of its claim allegations of improper conduct that would amount to an “sufficient factual matter, accepted as true, to ‘raise a unjustified interference with DFA’s business right to relief above the speculative level.’ ” Simpson, 744 relationships. F.3d at 708 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). DFA timely appealed. We measure each claim against this standard.

II. III. We review de novo the district court’s order dismissing DFA’s complaint pursuant to Rule 12(b)(6). Henderson v. [1] DFA first says that Estée Lauder violated the Sherman Wash. Nat. Ins. Co., 454 F.3d 1278, 1281 (11th Cir.2006). Act by attempting to monopolize the market for duty free We accept the allegations in the complaint as true and beauty products sold in United States airports. Section 2 construe them in the light most favorable to the plaintiff. of the Act establishes that “[e]very person who shall ...

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attempt to monopolize ... any part of the trade or possesses increasing power. McWane, Inc. v. F.T.C., 783 commerce among the several States, or with foreign F.3d 814, 828 (11th Cir.2015). The relevant geographic nations, shall be deemed guilty of a felony.” 15 U.S.C. § market is “the area of effective competition in which a 2. Section 15 of the same statute prescribes that “any product or its reasonably interchangeable substitutes are person who shall be injured in his business or property by traded.” L.A. Draper & Son v. Wheelabrator–Frye, Inc., reason of anything forbidden in the antitrust laws may sue 735 F.2d 414, 423 (11th Cir.1984) (quotation omitted). therefor.” *1263 15 U.S.C. § 15. A plaintiff alleging a The Court considers whether outside sellers are precluded claim for attempted monopolization under § 2 must from entering the market, id., and whether consumers plausibly assert three things: “(1) that the defendant has cannot realistically turn outside the geographic area, T. engaged in predatory or anticompetitive conduct with (2) Harris Young & Associates, Inc. v. Marquette a specific intent to monopolize and (3) a dangerous Electronics, Inc., 931 F.2d 816, 823 (11th Cir.1991). probability of achieving monopoly power.” Spectrum “[E]conomic and physical barriers to expansion [such] as Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. transportation costs, delivery limitations and customer 884, 122 L.Ed.2d 247 (1993). convenience and preference” are relevant to this determination. L.A. Draper & Son, 735 F.2d at 423 [2] [3] [4] “[T]he conduct requirement is arguably the single (quotation omitted). most important aspect of attempted monopolization.” Spanish Broad. Sys. of Fla., Inc. v. Clear Channel [10] “Defining a relevant product market is primarily a Commc’ns, Inc., 376 F.3d 1065, 1075 (11th Cir.2004) process of describing those groups of producers which, (quotation omitted). To survive a motion to dismiss, the because of the similarity of their products, have the plaintiff must adequately allege “actual or potential harm ability—actual or potential—to take significant amounts to competition.” Jacobs v. Tempur–Pedic Int’l, Inc., 626 of business away from each other.” Polypore Int’l, Inc. v. F.3d 1327, 1339 (11th Cir.2010). This means the plaintiff F.T.C., 686 F.3d 1208, 1217 (11th Cir.2012) (quoting must allege a “factual connection between the alleged U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 968, harmful conduct and its impact [or likely impact] on 995 (11th Cir.1993)). For *1264 this reason, we “pay competition in the market.” Id. Damage to individual particular attention to evidence of the cross-elasticity of competitors is rarely sufficient to establish this element. demand”—the extent to which consumers demand less of See Spanish Broad. Sys. of Fla., Inc., 376 F.3d at 1072–73 the particular product as the price for its alleged substitute (“Although damage to a critical competitor may also declines. Jacobs, 626 F.3d at 1337 & n.16. “A high damage competition in general, [the plaintiff] bears the cross-elasticity of demand (that is, consumers demanding burden of drawing that implication with specific factual proportionately greater quantities of Product X in allegations.” (emphasis omitted)). response to a relatively minor price increase in Product Y) indicates that the two products are close substitutes for [5] [6] “Actual anticompetitive effects include, but are not each other,” and are part of the same product market. Id. limited to, reduction of output, increase in price, or at 1337 n.16. In other words, “[a] product market consists deterioration in quality.” Jacobs, 626 F.3d at 1339. “[A] of ‘products that have reasonable interchangeability for showing of market power is necessary, but not sufficient, the purposes for which they are produced.’ ” McWane, to establish potential harm to competition.” Id. at 1340; Inc., 783 F.3d at 828 (quoting United States v. E.I. du see Spanish Broad. Sys. of Fla., Inc., 376 F.3d at 1073 Pont de Nemours & Co., 351 U.S. 377, 404, 76 S.Ct. 994, (“A plaintiff seeking to use market power as a proxy for 100 L.Ed. 1264 (1956)). adverse effect must show market power, plus some other ground for believing that the challenged behavior could [11] Defining the relevant product market is a harm competition in the market....” (quoting Tops Mkts., fact-intensive endeavor. U.S. Anchor, 7 F.3d at 994. We Inc. v. Quality Mkts., Inc., 142 F.3d 90, 97 (2d consider a variety of factors in the calculus, including Cir.1998))). To show that the defendant’s conduct caused “industry or public recognition of the submarket as a harm to competition, “the plaintiff must define the separate economic entity, the product’s peculiar relevant market and establish that the defendants characteristics and uses, unique production facilities, possessed power in that market.” Maris Distrib. Co. v. distinct customers, distinct prices, sensitivity to price Anheuser–Busch, Inc., 302 F.3d 1207, 1213 (11th changes, and specialized vendors.” Polypore Int’l, Inc., Cir.2002) (quotation omitted). 686 F.3d at 1217 (quoting U.S. Anchor, 7 F.3d at 995).

[7] [8] [9] The relevant market has two components, and the [12] [13] Second, the plaintiff must allege that the defendant plaintiff must define both the geographic market and the acted with specific intent to monopolize. Anticompetitive product market in which the defendant allegedly intent is the design “to gain greater market share, to drive

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up prices, or to obtain some other illegal goal.” Mr. products, and, on the other hand, the complaint posits Furniture Warehouse, Inc. v. Barclays Am./Commercial that Estée Lauder has entered the sales side of the Inc., 919 F.2d 1517, 1522 (11th Cir.1990). We have also market by hiring its own staff to work in duty free explained that intent “may sometimes be inferred from stores and by placing vending machines in predatory conduct itself.” U.S. Anchor, 7 F.3d at 1001. DFA-dedicated airports. Estée Lauder challenges both formulations, arguing that it is not a seller—or at least [14] [15] [16] Lastly, to adequately plead dangerous not an airport duty free retailer—and DFA is not a probability of achieving monopoly power, the plaintiff manufacturer. must allege that the defendant is “close to achieving monopoly power” in the relevant product market. U.S. Anchor, 7 F.3d at 994. “Monopoly power is ‘the power to raise prices to supra-competitive levels or ... the power to exclude competition in the relevant market either by restricting entry of new competitors or by driving existing A. competitors out of the market.’ ” Id. (alteration in [17] DFA first argues that Estée Lauder’s refusal to original) (quoting Am. Key Corp. v. Cole Nat’l Corp., 762 reinstate its sales relationship with DFA constitutes F.2d 1569, 1581 (11th Cir.1985)); see McWane, Inc., 783 anticompetitive conduct. It is by now well settled that “[a] F.3d at 830 (“Monopoly power is the ability to control unilateral refusal to deal is [generally] not unlawful.” Mr. prices or exclude competition.” (quotation omitted)). “[A] Furniture Warehouse, Inc., 919 F.2d at 1522 (second dangerous probability of achieving monopoly power may alteration in original). The Supreme Court has for many be established by a 50% share” of the relevant market. years emphasized that “the Sherman Act ‘does not restrict U.S. Anchor, 7 F.3d at 1000. the long recognized right of [a] trader or manufacturer

engaged in an entirely private business, freely to exercise We accept for the purposes of our analysis that DFA has his own independent discretion as to parties with whom adequately defined a relevant product and geographic he will deal.’ ” Verizon Commc’ns Inc. v. Law Offices of market. We read the complaint to essentially say that the Curtis V. Trinko, LLP (Trinko ), 540 U.S. 398, 408, 124 relevant product market is the retail market for duty free S.Ct. 872, 157 L.Ed.2d 823 (2004) (alteration in original) “beauty products,” and the relevant geographic market is (quoting United States v. Colgate & Co., 250 U.S. 300, comprised of airport duty free stores throughout the 307, 39 S.Ct. 465, 63 L.Ed. 992 (1919)). Moreover, the United States. While Estée Lauder challenges both the Court has “been very cautious in recognizing ... definition of the product market and the definition of the exceptions” to that rule “because of the uncertain virtue of geographic market, we have no occasion to address this forced sharing and the difficulty of identifying and fact-intensive question at this stage because the complaint remedying anticompetitive conduct by a single firm.” Id. wholly fails to allege any truly anticompetitive conduct on

Estée Lauder’s part—no matter how broadly or narrowly [18] At the same time, “[t]he high value that [courts] have the market is defined.4 Because our analysis begins and placed on the right to refuse to deal with other firms does *1265 ends with the first, and most important, element of not mean that the right is unqualified.” Aspen Skiing Co. an attempted monopolization claim, we also decline to v. Aspen Highlands Skiing Corp. (Aspen Skiing ), 472 reach Estée Lauder’s arguments about anticompetitive U.S. 585, 601, 105 S.Ct. 2847, 86 L.Ed.2d 467 (1985). intent and probability of achieving monopoly power. We Thus, a refusal to deal under some circumstances “can find that each of DFA’s allegations of anticompetitive constitute anticompetitive conduct and violate § 2.” conduct is insufficient to state a claim, and accordingly Trinko, 540 U.S. at 408, 124 S.Ct. 872. We come, then, to affirm the district court’s dismissal of the antitrust claims. the first basic question: whether DFA’s refusal to deal Moreover, we conclude that DFA lacks both allegations “fit within existing exceptions or provide a constitutional and antitrust standing to complain about the basis, under traditional antitrust principles, for requirements that Estée Lauder places on DFA’s recognizing a new one.” Id. We conclude that they do not. competitors, because DFA has not alleged that those

restrictions have caused it any injury. DFA claims that its complaint sets forth sufficient facts

yielding an inference of an anticompetitive refusal to deal 4 DFA is not completely clear in its complaint whether it within the meaning of two Supreme Court cases: Aspen is defining the relevant market as the market to sell or Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. to manufacture beauty products to be sold in airport 585, 105 S.Ct. 2847, and Otter Tail Power Co. v. United duty free stores. On the one hand, the complaint alleges States (Otter Tail ), 410 U.S. 366, 93 S.Ct. 1022, 35 that DFA licenses brand names and manufactures their L.Ed.2d 359 (1973). But as we see it, these two cases are

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persuasively distinguishable, and this case provides no clarified that Aspen Skiing embodies only a “limited compelling reason to depart from a business entity’s exception” to the general rule that firms may choose the general “right to deal, or refuse to deal, with whomever it other companies with which they deal. Id. at 409, 124 likes, as long as it does so independently.” Monsanto Co. S.Ct. 872. In Trinko, the plaintiffs alleged that defendant v. Spray–Rite Serv. Corp., 465 U.S. 752, 761, 104 S.Ct. Verizon was statutorily obliged to make its operations 1464, 79 L.Ed.2d 775 (1984). support system available to its competitors, but that Verizon essentially refused to deal with those competitors First, in Aspen Skiing, a system was developed in Aspen, by ignoring or delaying its response to their requests for Colorado at a time when each of its three major ski resorts access. Id. at 402–05, 124 S.Ct. 872; see Covad were independently owned, under which skiers could Commc’ns Co. v. BellSouth Corp. (Covad II ), 374 F.3d purchase an “all-Aspen” pass *1266 that would allow 1044, 1047–48 (11th Cir.2004). The Supreme Court held them to use specially-purchased tickets interchangeably at that the plaintiffs had not stated a refusal to deal claim all the resorts. 472 U.S. at 587–89, 105 S.Ct. 2847. One under Aspen Skiing, characterizing that case as “at or near company, Ski Co., subsequently gained control of three of the outer boundary of § 2 liability.” Trinko, 540 U.S. at the four major resorts, but the fourth, Highlands, 409, 124 S.Ct. 872. The Court held that the Trinko remained independent. Id. at 589–90, 105 S.Ct. 2847. Ski plaintiffs could not state a refusal to deal claim under Co. then unilaterally discontinued the “all-Aspen” pass, Aspen Skiing for two primary reasons. As an initial and subsequently refused to enter into any cooperative matter, the plaintiff in Aspen Skiing had demonstrated arrangement allowing Highlands customers access to any “[t]he unilateral termination of a voluntary (and thus of its resorts. Id. at 592–94, 105 S.Ct. 2847. It also presumably profitable) course of dealing,” which refused to sell lift tickets to Highland, even when “suggested a willingness to forsake short-term profits to Highland offered to pay the market retail price of the achieve an anticompetitive end.” Id. (emphasis in tickets. Id. at 593, 105 S.Ct. 2847. original). By contrast, the Trinko plaintiffs did “not allege that Verizon voluntarily engaged in a course of dealing The Court held that Ski Co. had engaged in with its rivals.” Id. Interpreting this portion of the opinion, anticompetitive conduct by terminating the all-Aspen we have explained, “Trinko now effectively makes the program, emphasizing that Ski Co. had not “merely unilateral termination of a voluntary course of dealing a reject[ed] a novel offer to participate in a cooperative requirement for a valid *1267 refusal-to-deal claim under venture that had been proposed by a competitor. Rather, Aspen.” Covad II, 374 F.3d at 1049. [Ski Co.] elected to make an important change in a pattern of distribution that had originated in a competitive market The Supreme Court also emphasized “pricing behavior,” and had persisted for several years.” Id. at 603, 105 S.Ct. noting that the plaintiff in Aspen Skiing was willing to 2847. The Supreme Court acknowledged that this conduct compensate the defendant at the price its rival charged its was “not necessarily anticompetitive.” Id. at 604, 105 ordinary customers. Trinko, 540 U.S. at 409, 124 S.Ct. S.Ct. 2847. But it raised enough of a question that the 872. By contrast, the Trinko plaintiffs complained about Court was required to consider the effect of Ski Co.’s Verizon’s reluctance to deal at a statutorily set actions on Highlands, the “impact on consumers[,] and “cost-based rate of compensation.” Id. (“Verizon’s whether [the company] ha [d] impaired competition in an reluctance to interconnect at the cost-based rate of unnecessarily restrictive way,” id. at 605, 105 S.Ct. 2847. compensation ... tells us nothing about dreams of The Court noted that customers strongly preferred the monopoly.”). all-Aspen pass, id. at 606–07, 105 S.Ct. 2847, and that Highlands’s market share dropped from approximately [19] In our view, DFA has similarly failed to state a refusal 20% to 11% over the four year period after the pass was to deal claim under Aspen Skiing. For starters, DFA has discontinued, id. at 594–95, 607–08, 105 S.Ct. 2847. not alleged that Estée Lauder unilaterally terminated the Under these circumstances, the Court explained, “[t]he business relationship between the two companies. Rather, jury may well have concluded that Ski Co. elected to the district court found, and we agree, that DFA ceased forgo ... short-run benefits because it was more interested dealing with Estée Lauder of its own accord. DFA argues in reducing competition in the Aspen market over the that this Court must credit the complaint’s allegation that long run by harming its smaller competitor.” Id. at 608, Estée Lauder is responsible for ending the relationship 105 S.Ct. 2847. between the two parties. However, the complaint did not allege that Estée Lauder originally terminated the The Supreme Court’s later opinion in Verizon Commc’ns relationship in 2008. Rather, the complaint used broad Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. language to generally allege that Estée Lauder refused to 398, 124 S.Ct. 872, provides further guidance. Trinko do business with DFA. It says, for example, “[Estée

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Lauder] refused to sell its products to DFA,” and that documents part of the pleading for purposes of Rule Estée Lauder attempted “to isolate and exclude DFA,” 12(b)(6) dismissal.” (quotation omitted)); Maxcess, Inc. v. without specifically mentioning how the parties’ business Lucent Technologies, Inc., 433 F.3d 1337, 1340 n. 3 (11th relationship was terminated. Indeed, the complaint Cir.2005) (per curiam) (stating that a court may consider focuses not on the relationship’s end but on the fact that, documents “central to the plaintiff’s claims and ... while “DFA has approached [Estée Lauder] in an effort to undisputed in terms of authenticity”). resume their ... relationship several times[,] [Estée Lauder] has refused to even discuss this possibility.” Aspen Skiing is also distinguishable from this case in other significant ways. Thus, while the Aspen Skiing Moreover, when Estée Lauder filed its motion to dismiss, plaintiffs demonstrated their willingness to pay the market the district court conducted a hearing. At that proceeding, price for the defendant’s goods, DFA repeatedly asserts in DFA’s counsel admitted that DFA terminated the its complaint that it strongly resisted Estée Lauder’s relationship. The district court asked counsel: “Isn’t it across the board price increases. In this regard, DFA far undisputed that [DFA] initially terminated its relationship more closely resembles the Trinko plaintiffs, with their and then they went back and said, ‘Now we want to insistence that Verizon had to deal with its rivals at cost. restate [sic] our relationship, and [Estée Lauder] refused to restart it[?]” Counsel responded: We are likewise unpersuaded by DFA’s suggestion that the Supreme Court’s decision in Otter Tail applies. [A]fter DFA did not want to Notably, Otter Tail involved “a vertically integrated purchase from [Estée Lauder] monopolist that refuse[d] to deal with a customer to because of the price increase, foreclose competition in a second market.” See Covad you’re right. They went back to Commc’ns Co. v. BellSouth Corp., 299 F.3d 1272, 1289 them. But I would say there’s (11th Cir.2002), vacated, 540 U.S. 1147, 124 S.Ct. 1143, additional facts that would suggest 157 L.Ed.2d 1040 (2004), overruled on other grounds by that the initiative to refuse to deal Covad II, 374 F.3d 1044; see also IIIB Phillip E. Areeda had moved to [Estée Lauder] & Herbert Hovenkamp, Antitrust Law ¶ 772b3, at 205 (3d certainly by 2010.... ed. 2008) (“The defendant [in Otter Tail ] possessed a natural monopoly. This monopoly was partially regulated Because DFA’s own characterization of its complaint at in ways that may have allowed it to operate to the the hearing was that DFA, not Estée Lauder, terminated detriment of consumers through vertical integration. the relationship, its attempt to now argue the opposite is Third, the case ought to be read in light of strong unpersuasive. historical formulations from the common law imposing broad duties to deal on public utilities.”). Here, by But even if we were not persuaded by DFA’s own contrast, DFA has not alleged that Estée Lauder is a description of the termination at the hearing before the monopolist attempting to leverage its power to foreclose district court, DFA referred to the transcript of the competition in a related or secondary market. Rather, Orlando RFP appeal hearing repeatedly in its complaint taken in the light most favorable to DFA, the complaint and attached an excerpt of the transcript as an exhibit. At establishes only that Estée Lauder has captured half of the the Orlando hearing, a representative for DFA noted that market for supplying beauty products to duty free all of the duty free operators had disagreed with Estée operators in U.S. airports. Thus, even if Estée Lauder is Lauder’s proposed price increases. He went on to explain: seeking to move into the sales market, it is not a “DFA was the only company that followed through on its monopolist, much less a vertically integrated monopolist, conviction that the Estée Lauder pricing change was not rendering Otter Tail inapplicable. in keeping with the spirit of customer duty-free savings expectations. And as a consequence, DFA quit offering Estée Lauder products in its stores.” As a document which was referenced in the complaint, and is central to the issue B. of whether DFA adequately alleged anticompetitive conduct, the district court was entitled to consider the DFA also cites as predatory conduct that Estée Lauder transcript and the facts therein. Bickley v. Caremark RX, made false statements about DFA during airport bidding Inc., 461 F.3d 1325, 1329 n. 7 (11th Cir.2006) (“[W]here processes. Disparagement is rarely a basis for finding the plaintiff *1268 refers to certain documents in the attempted monopolization under § 2, because even false complaint and those documents are central to the statements about a single competitor often do not meet the plaintiff’s claim, then the Court may consider the requisite standard of generating harm to competition. See

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Spanish Broad. Sys. of Fla., Inc., 376 F.3d at 1076–77. As we have explained, when a defendant makes false [22] To resolve this case, however, we need not decide statements—even clearly false statements—about a whether the plaintiff must present facts to support each of competitor, “these ... practices might be characterized as these factors, because, at the most basic level, DFA has unsavory, or even illegal under other laws,” but “they do failed to allege that Estée Lauder made any clearly false not give rise to a federal antitrust claim without factual statements. As we see it, a plaintiff alleging allegations specifically addressing how these practices anticompetitive disparagement must allege, at a have harmed competition.” Id. Indeed, many of our sister minimum, statements that were demonstrably false in circuits have adopted a presumption that order to survive a motion to dismiss. Indeed, DFA seems misrepresentations or false statements about a competitor to agree with this baseline requirement, inasmuch as it have a de minimis effect on competition. See, e.g., Lenox urges us to hold that a claim may go forward on MacLaren Surgical Corp. v. Medtronic, Inc., 762 F.3d allegations of deliberate “submission of false information 1114, 1127 (10th Cir.2014); Am. Council of Certified to a decision-making governmental agency.” Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 323 F.3d 366, 370 (6th Cir.2003); *1269 DFA’s complaint identifies three instances of Am. Prof’l Testing Serv., Inc. v. Harcourt Brace disparagement: (1) Estée Lauder sent a letter to the Jovanovich Legal & Prof’l Publ’ns, Inc. (Harcourt), 108 Newark Airport Authority including a list of its dealers F.3d 1147, 1152 (9th Cir.1997); Nat’l Ass’n of Pharm. and its belief that they were quality operators; (2) Estée Mfrs., Inc. v. Ayerst Labs., Div. of/ & Am. Home Prods. Lauder told Boston and Orlando airport officials that it Corp., 850 F.2d 904, 916 (2d Cir.1988); see also did not deal with DFA; and (3) Estée Lauder Mercatus Grp., LLC v. Lake Forest Hosp., 641 F.3d 834, communicated its market share and the fact that it did not 852 (7th Cir.2011) (“[C]laims based on one competitor’s deal with DFA to other duty free operators. Even taking disparagement of another should presumptively be these allegations in the light most favorable to DFA, none ignored.... [A]bsent an accompanying coercive of the statements are false. First, Estée Lauder’s statement enforcement mechanism of some kind, even demonstrably vouching for the quality of its duty free partners neither false commercial speech is not actionable under the refers to DFA nor expresses an opinion about the quality antitrust laws.” (quotations omitted and alteration of its work. Moreover, Estée Lauder does not have a adopted)). relationship with DFA, and there is no allegation that the market share it communicated to its duty free operator [20] These courts generally require a plaintiff alleging customers was inflated or otherwise incorrect. For these disparagement to rebut the presumption by showing the reasons, we are unable to find any allegations of defendant’s statements were “(1) clearly false, (2) clearly disparagement that could offend the antitrust laws in material, (3) clearly likely to induce reasonable reliance, DFA’s complaint. (4) made to buyers without knowledge of the subject matter, (5) continued for prolonged periods, and (6) not [23] Moreover, DFA has failed to allege that any of these readily susceptible to neutralization or other offset by communications harmed competition. Rather, the rivals.” Lenox MacLaren Surgical Corp., 762 F.3d at complaint contains numerous examples of robust 1127; accord Harcourt, 108 F.3d at 1152; Nat’l Ass’n of competition between the duty free *1270 operators to Pharm. Mfrs., 850 F.2d at 916. obtain airport leases. In fact, each of the relevant RFPs resulted in an award to a different operator. DFA itself [21] We agree that these factors are at least relevant to was awarded the Atlanta duty free concessions contract determining whether a defendant engaged in after successfully rebutting claims that it would be unable anticompetitive disparagement of a competitor. As the to sell any Estée Lauder products. Similarly, during the Ninth Circuit has explained, “distinguishing false Orlando RFP, DFA was offered a full and fair opportunity statements on which buyers do, or ought reasonably to, to contest the statements that other duty free operators rely from customary puffing is not easy,” particularly made against it. because most buyers “recognize disparagement as non-objective and highly biased.” Harcourt, 108 F.3d at The complaint also does not allege that DFA is being 1152 (quoting III Phillip Areeda & Donald F. Turner, pushed out of the duty free beauty products market. Antitrust Law ¶ 737b, at 278 (1978)). Moreover, where a Rather, it concedes that DFA was able to develop demand plaintiff complains of isolated rather than systemic for new beauty brands, and continues to sell beauty items disparagement, the effects on the plaintiff are necessarily despite losing access to Estée Lauder products. Finally, speculative and the effects on competition even more so. and perhaps most compellingly, DFA’s strategy of See id. offering a wider array of products than its competitors

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appears to be working. The complaint alleges that DFA violations must be “commenced within four years after currently operates the duty free commercial spaces in the cause of action accrued.” 15 U.S.C. § 15b; see id. § more than half of the airports that possess that space—it is 15. The complaint establishes that DFA was last subject the leaseholder in 13 of the 25 airports. to Estée Lauder’s requirements several years *1271 ago: (1) “display space and inventory demands” in March [24] As we have explained, “[a]lthough damage to a critical 2008; (2) “full line forcing” in March 2008; and (3) competitor may also damage competition in general, [the “tying” fragrances to other products in April 2006. plaintiff] bears the burden of drawing that implication Because DFA did not bring suit until April 26, 2012, any with specific factual allegations.” Spanish Broad. Sys. of claim for damages is barred by the statute of limitations. Fla., Inc., 376 F.3d at 1072–73 (second emphasis added). And “market power alone cannot be sufficient to show the [27] [28] DFA says that even if it cannot state a claim for potential for genuine adverse effects on competition”; the damages, it may still seek injunctive relief. See 15 U.S.C. plaintiff is “required [to make] specific allegations linking § 26 (“Any person, firm, corporation, or association shall market power to harm to competition in that market.” Id. be entitled to sue for and have injunctive relief ... against at 1073; see also Tops Mkts., Inc., 142 F.3d at 97 (“A threatened loss or damage by a violation of the antitrust plaintiff seeking to use market power as a proxy for laws....”). Because DFA is not a customer of Estée adverse effect must show market power, plus some other Lauder, and thus is not subject to any of these ground for believing that the challenged behavior could requirements, we are hard pressed to see how it has harm competition in the market, such as the inherent constitutional standing to challenge them. As the party anticompetitive nature of the defendant’s behavior or the invoking federal jurisdiction, DFA had the burden of structure of the interbrand market.”). Here, it is not demonstrating that it has standing to sue. Mulhall v. enough for DFA to allege that Estée Lauder is the top UNITE HERE Local 355, 618 F.3d 1279, 1286 (11th supplier of duty free beauty products. DFA was required Cir.2010); see also Church v. City of Huntsville, 30 F.3d to link that fact to a competitive harm. 1332, 1336 (11th Cir.1994) ( “[S]tanding requirements ‘are not mere pleading requirements but rather are an [25] Finally, DFA argues that the district court “refused to indispensable part of the plaintiff’s case.’ Therefore, each treat as true the allegations in the Complaint attributing element of standing must be supported ‘with the manner statements by [Estée Lauder]-favored operators to [Estée and degree of evidence required at the successive stages Lauder].” However, DFA did not allege a conspiracy of the litigation.’ ” (quoting Lujan v. Defenders of between Estée Lauder and the operators, nor did it claim Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d any agency relationship between the companies. Rather, 351 (1992))). “[B]ecause the constitutional standing the complaint, taken in the light most favorable to DFA, doctrine stems directly from Article III’s ‘case or simply asserts that “[Estée Lauder] is aware of and has controversy’ requirement, this issue implicates our subject not stopped its favored duty free operators from matter jurisdiction, and accordingly must be addressed as representing to airport authorities that DFA ... cannot a threshold matter regardless of whether it is raised by the meet its financial bids to airports.” These conclusory parties.” Nat’l Parks Conservation Ass’n v. Norton, 324 statements provide no legal basis for attributing the F.3d 1229, 1242 (11th Cir.2003). When analyzing a statements to Estée Lauder. defendant’s “motion to dismiss we must evaluate standing based on the facts alleged in the complaint, and we may not ‘speculate concerning the existence of standing or piece together support for the plaintiff.’ ” Shotz v. Cates, 256 F.3d 1077, 1081 (11th Cir.2001) (quotation omitted). C. [29] [26] The test for Article III standing is by now well settled. DFA’s final claim is that Estée Lauder’s restrictions “First, the plaintiff must have suffered an ‘injury in on its customers’ display space and its inventory fact’—an invasion of a legally protected interest which is requirements are anticompetitive. Although DFA’s (a) concrete and particularized, and (b) actual or complaint seeks damages—and the company argued in its imminent, not conjectural or hypothetical.” Lujan, 504 briefing before this Court that damages might be U.S. at 560, 112 S.Ct. 2130 (quotation omitted). Second, appropriate—DFA’s counsel stated at oral argument that the plaintiff must establish a causal connection between it was abandoning any claim for damages resulting from its injury and the defendant’s conduct. Id. Third, the Estée Lauder’s display space and inventory requirements. plaintiff must show that it is likely—and not merely In any event, to the extent DFA seeks damages on this speculative—that a favorable decision by the court will count, its claim is time barred. An action by a private redress the injury. Id. at 561, 112 S.Ct. 2130. Moreover, party seeking damages based on a defendant’s antitrust

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we have explained that there is an additional element to product brand owners” that its competitors often do not the injury in fact requirement when a plaintiff seeks carry because they do not have enough space. DFA also injunctive relief. Houston v. Marod Supermarkets, Inc., alleges that it is “able to offer more and more prominent 733 F.3d 1323, 1328 (11th Cir.2013). “Because display space to non-[Estée Lauder] brands than [other] injunctions regulate future conduct, a party has standing duty free operators do.” In short, nothing in the complaint to seek injunctive relief only if the party alleges, and suggests that DFA is harmed by Estée Lauder’s ultimately proves, a real and immediate—as opposed to a restrictions on other duty free operators. We therefore merely conjectural or hypothetical—threat of future hold that DFA does not have constitutional standing to injury.” Wooden v. Bd. of Regents of Univ. Sys. of Ga., challenge the display space and inventory requirements. 247 F.3d 1262, 1284 (11th Cir.2001) (quoting Church, 30 F.3d at 1337); see City of Los Angeles v. Lyons, 461 U.S. Because DFA cannot demonstrate that it has Article III 95, 102, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983) ( “[P]ast standing to challenge Estée Lauder’s contractual exposure to illegal conduct does not in itself show a requirements, it plainly follows that it cannot establish present case or controversy regarding injunctive relief ... what our cases have referred to as “antitrust standing.” if unaccompanied by any continuing, present adverse See Palmyra Park Hosp. Inc. v. Phoebe Putney Mem’l effects.” (second alteration in original) (quotation Hosp., 604 F.3d 1291, 1299 (11th Cir.2010) (“To have omitted)). antitrust standing, a party must do more than meet the basic ‘case or controversy’ requirement that would satisfy [30] The fact that DFA may have been injured by the constitutional standing; instead, the party must show that display and inventory requirements in the past—as late as it satisfies a number of prudential considerations aimed at March 2008—cannot be sufficient to establish an *1272 preserving the effective enforcement of the antitrust injury in fact that would support injunctive relief. The laws.” (quotation omitted)). complaint contains no allegation that those restrictions caused any lasting impact or likely future injury, and thus [31] [32] [33] [34] [35] [36] We analyze antitrust standing using a DFA has not met the requirement that it show harm that is two pronged test that “involves consideration of the nexus “actual or imminent.” Lujan, 504 U.S. at 560, 112 S.Ct. between the antitrust violation and the plaintiff’s harm 2130. Absent facts suggesting that former exposure to and whether the harm alleged is of the type for which Estée Lauder’s requirements caused “continuing, present Congress provides a remedy.” Sunbeam Television Corp. adverse effects” on DFA, Estée Lauder’s past conduct v. Nielsen Media Research, Inc., 711 F.3d 1264, 1271 cannot be the basis of a request for injunctive relief. (11th Cir.2013). First, we consider whether the plaintiff Lyons, 461 U.S. at 102, 103 S.Ct. 1660; see Church, 30 has suffered an antitrust injury. Id. “Antitrust injury is F.3d at 1337 (“Logically, a prospective remedy will ‘injury of the type the antitrust laws were intended to provide no relief for an injury that is, and likely will prevent and that flows from that which makes [the] remain, entirely in the past.” (quotation omitted)). defendant [’s] acts unlawful.’ ” Palmyra Park Hosp. Inc., 604 F.3d at 1299 (quoting Brunswick Corp. v. Pueblo DFA claimed at oral argument that it would suffer injury Bowl–O–Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 if it resumes purchasing from Estée Lauder and becomes L.Ed.2d 701 (1977)). When a plaintiff is seeking subject to Estée Lauder’s requirements. This cannot be injunctive relief, this means it “must allege threatened characterized as a “concrete” or “actual” injury in fact injury that would constitute antitrust injury if inflicted because, by its very terms, it has not yet occurred, and upon the plaintiff and the defendant’s *1273 causal indeed may never occur. responsibility for such threatened injury.” Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1452 (11th DFA also suggests that it is injured by the display space Cir.1991). Second, the plaintiff must “be an ‘efficient and inventory requirements because its competitors are enforcer’ of the antitrust laws.” Sunbeam Television still subject to them. But DFA fails to provide any Corp., 711 F.3d at 1271. When only injunctive relief is plausible connection between an injury it has sustained sought, “the dangers of mismanaging the antitrust laws and the restrictions which DFA claims harm its are less pervasive,” Todorov v. DCH Healthcare Auth., competitors. Indeed, DFA alleges in its complaint that it 921 F.2d 1438, 1452 (11th Cir.1991), and accordingly protested the restrictions when it was subject to them “we are less concerned about whether the party would be several years ago. Moreover, DFA draws attention to the the most efficient enforcer of the antitrust laws,” Palmyra ways in which the restrictions—which limit its Park Hosp. Inc., 604 F.3d at 1299–300. Nevertheless, competitors’ ability to offer a wide array of certain factors that the Court typically considers when products—benefit DFA. Specifically, DFA claims to determining whether a plaintiff is an efficient enforcer “obtain[ ] licenses from a number of high-end beauty remain relevant to this Court’s inquiry into whether

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injunctive relief would be appropriate. See Cargill, Inc. v. to the test as one of prudential “standing”—noting that, Monfort of Colorado, Inc., 479 U.S. 104, 111 n. 6, 107 in actuality, it is neither prudential nor an inquiry into S.Ct. 484, 93 L.Ed.2d 427 (1986); Daniel v. Am. Bd. of standing, but an analysis of whether the plaintiff’s Emergency Med., 428 F.3d 408, 437 (2d Cir.2005).5 Thus, “injuries were proximately caused by a defendant’s for example, a plaintiff who has suffered only indirect antitrust violations.” Id. at 1386–87 n. 4. This, the injury, or who alleges speculative damages, may lack Court explained, is a statutory interpretation question antitrust standing to seek an injunction. about “the scope of the private remedy created by Congress” when it drafted the antitrust laws. Id. at 1386–87 (quotation omitted). However, Lexmark is a 5 This Court usually considers six factors in determining Lanham Act case, and this discussion is dicta. We do whether a plaintiff would be an efficient enforcer of the not “lightly cast aside” Supreme Court dicta, Schwab v. antitrust laws: (1) whether the plaintiff has suffered a Crosby, 451 F.3d 1308, 1325 (11th Cir.2006), but direct injury; (2) whether its injury is remote; (3) “[u]nder the prior precedent rule, we are bound to whether other plaintiffs are better suited to bring the follow a prior binding precedent unless and until it is suit; (4) whether the plaintiff’s injuries are speculative; overruled by this court en banc or by the Supreme (5) whether the calculation of damages would be Court.” United States v. Vega–Castillo, 540 F.3d 1235, complex and run the risk of duplicative recoveries; and 1236 (11th Cir.2008) (quotation omitted). In any event, (6) whether the plaintiff could enforce the court’s any impact that Lexmark may have on the notion of judgment. Sunbeam Television Corp., 711 F.3d at 1271 antitrust standing is utterly immaterial in this case, (citing Associated Gen. Contractors of Cal., Inc. v. Cal. because DFA has not established that it has Article III State Council of Carpenters, 459 U.S. 519, 538–45, standing. 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)). When the plaintiff seeks only equitable relief, however, some of these factors—such as the danger of duplicative recoveries, complexity of assessing damages, and the existence of more suitable plaintiffs—are not implicated. Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 111 n. 6, 107 S.Ct. 484, 93 L.Ed.2d 427 *1274 IV. (1986). DFA’s second claim is that its competitors made statements to airport authorities that amount to actionable

false advertising under § 43(a) of the Lanham Act. DFA [37] Again, DFA has not alleged that it suffers any injury argues that Estée Lauder can be held liable for these as a result of Estée Lauder’s restrictions on its statements based on a theory of contributory liability. competitors, much less that it suffers an antitrust injury. Estée Lauder responds that the claim must necessarily fail And even if DFA had plausibly alleged that it sustained both because the Lanham Act’s prohibition on false an antitrust injury, we would still be obliged to find that it advertising does not include a derivative claim based on is not an efficient enforcer of the antitrust laws because it contributory liability and because, even if it did, DFA has is not currently subject to Estée Lauder’s display space not alleged facts sufficient to support such a claim. While and inventory restrictions and has not been for several we agree with DFA that the prohibition on false years. This means that DFA could not enforce any advertising in § 43(a) of the Lanham Act may allow a judgment that we would reach about the requirements, claim based on contributory liability, the complaint does and that any injury to DFA would necessarily be not come close to alleging the necessary facts. Thus, we speculative—something that may or may not occur in the affirm the dismissal of the Lanham Act claim for failure future. Plainly, another duty free operator that currently to state a claim. maintains a relationship with Estée Lauder would be in a far better position than DFA to clarify the contours of Whether § 43(a) of the Lanham Act includes within its Estée Lauder’s restrictions and to point out what harm, if ambit a claim for false advertising based on contributory any, those requirements may cause.6 liability is a question of first impression. DFA has cited

only one case in which a circuit court recognized the 6 The Supreme Court’s recent decision in Lexmark Int’l, possibility that a defendant could be contributorily liable Inc. v. Static Control Components, Inc., ––– U.S. ––––, for a third party’s false advertising. See Societe Des 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014), casts doubt on Hotels Meridien v. LaSalle Hotel Operating P’ship, L.P., the future of prudential standing doctrines such as antitrust standing. In Lexmark, the Supreme Court 380 F.3d 126, 132–33 (2d Cir.2004). Moreover, our declined to adopt the antitrust standing test in the research suggests that while district courts routinely Lanham Act context. Id. at 1385–87, 1391. In the assume that contributory liability claims are available, course of this discussion, the Court questioned referring neither the Supreme Court nor any Court of Appeals has

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explicitly considered and resolved this question. See, e.g., Winback & Conserve Program, Inc., 42 F.3d 1421, 1432 Coach, Inc. v. Sapatis, 994 F.Supp.2d 192, 201 (3d Cir.1994); Hard Rock Cafe Licensing Corp. v. (D.N.H.2014); Merck Eprova AG v. Brookstone Pharm., Concession Servs., Inc., 955 F.2d 1143, 1149 (7th LLC, 920 F.Supp.2d 404, 425 (S.D.N.Y.2013); Merck Cir.1992); see also Tiffany (NJ) Inc. v. eBay Inc., 600 Eprova AG v. Gnosis S.p.A., 901 F.Supp.2d 436, 456 F.3d 93, 106–09 (2d Cir.2010) (assuming, without (S.D.N.Y.2012), aff’d, 760 F.3d 247 (2d Cir.2014); deciding, that Inwood applied to a claim outside the Coach, Inc. v. Farmers Mkt. & Auction, 881 F.Supp.2d manufacturing context). 695, 704 (D.Md.2012); ADT Sec. Servs., Inc. v. Sec. One Int’l, Inc., No. 11–CV–05149 YGR, 2012 WL 4068632, The rationale for allowing contributory trademark at *3 (N.D.Cal. Sept. 14, 2012); Campagnolo S.R.L. v. infringement actions supports recognizing a similar theory Full Speed Ahead, Inc., No. C08–1372 RSM, 2010 WL of liability in the false advertising context. For starters, § 2079694, at *4 (W.D.Wash. May 20, 2010), aff’d, 447 43(a) of the Lanham Act contains two different classes of Fed.Appx. 814 (9th Cir.2011). prohibitions: one banning trademark infringement and one prohibiting false advertising. Each cause of action is a [38] Although we begin any statutory construction by subpart of a single statutory provision, which reads this looking to the plain language of the provision at issue, way: Sebelius v. Cloer, ––– U.S. ––––, 133 S.Ct. 1886, 1893, 185 L.Ed.2d 1003 (2013), contributory liability under the (1) Any person who, on or in connection with any Lanham Act is a judicially developed doctrine, see goods or services, or any container for goods, uses in Optimum Techs., Inc. v. Henkel Consumer Adhesives, commerce any word, term, name, symbol, or device, or Inc., 496 F.3d 1231, 1245 (11th Cir.2007) (noting that any combination thereof, or any false designation of contributory liability actions “stem from the general origin, false or misleading description of fact, or false prohibitory language” of the Act’s trademark or misleading representation of fact, which— infringement provisions). Indeed, in the trademark infringement arena, the Supreme Court has long (A) is likely to cause confusion, or to cause mistake, or recognized that liability “can extend beyond those who to deceive as to the affiliation, connection, or actually mislabel goods.” Inwood Labs., Inc. v. Ives Labs., association of such person with another person, or as to Inc., 456 U.S. 844, 853, 102 S.Ct. 2182, 72 L.Ed.2d 606 the origin, sponsorship, or approval of his or her goods, (1982). This means that when a claim involves trademark services, or commercial activities by another person, or infringement, a manufacturer or distributor can be liable if it “intentionally induces another to infringe a trademark” (B) in commercial advertising or promotion, or “continues to supply its product to one whom it knows misrepresents the nature, characteristics, qualities, or or has reason to know is engaging in trademark geographic origin of his or her or another person’s infringement.” Id. at 854, 102 S.Ct. 2182 (citing William goods, services, or commercial activities, R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 44 shall be liable in a civil action by any person who S.Ct. 615, 68 L.Ed. 1161 (1924)). believes that he or she is or is likely to be damaged by

such act. *1275 Interpreting this language, this Court has found no reason to confine the doctrine to manufacturers, and has 15 U.S.C. § 1125(a). expanded it to cover a wide variety of trademark infringement contexts. Mini Maid Servs. Co. v. Maid These prohibitions are found in the same statutory Brigade Sys., Inc., 967 F.2d 1516, 1522 (11th Cir.1992) provision, and they share the same introductory clause. (“With respect to a franchisor’s liability for the We analyze this structure in light of the core principle that independent infringing acts of its franchisees, we hold “[s]tatutory construction is a holistic endeavor,” Koons that the franchisor may be held accountable only if it Buick Pontiac GMC, Inc. v. Nigh, 543 U.S. 50, 60, 125 intentionally induced its franchisees to infringe another’s S.Ct. 460, 160 L.Ed.2d 389 (2004) (quotation omitted), trademark or if it knowingly participated in a scheme of and that individual provisions are “often clarified by the trademark infringement carried out by its franchisees.”); remainder of the statutory scheme,” United Sav. Ass’n of Bauer Lamp Co. v. Shaffer, 941 F.2d 1165, 1171 (11th Tex. v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. Cir.1991) (“A person who knowingly participates in 365, 371, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988). The furthering the trade dress infringement is liable as a placement of the two prohibitions in the same statutory contributing party.”). Our sister circuits have taken a section—and correspondingly, the fact that the similar approach. See Fonovisa, Inc. v. Cherry Auction, introductory language banning both practices is Inc., 76 F.3d 259 (9th Cir.1996); Am. Tel. & Tel. Co. v. identical—suggests the two causes of action should be

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interpreted to have the same scope. reason for this: the Lanham Act is derived generally and purposefully Reading these two clauses in the same way is reinforced from the common law tort of unfair by the fact that both causes of action were motivated by a competition, and its language unitary purpose. “Section 43(a) of the Lanham Act creates parallels the protections afforded a ‘federal cause of action for unfair competition.’ ” by state common law and statutory Optimum Techs., Inc., 496 F.3d at 1247–48 (quoting torts.... In construing the Act, then, Univ. of *1276 Fla. v. KPB, Inc., 89 F.3d 773, 775 (11th courts routinely have recognized Cir.1996) (per curiam)); see 15 U.S.C. § 1127 (noting that the propriety of examining basic one of the purposes of the Act is “to protect persons tort liability concepts to determine engaged in ... commerce against unfair competition”); the scope of liability. S.Rep. No. 79–1333, at 4 (1946), reprinted in 1946 U.S.C.C.A.N. 1274, 1275 (“There is no essential Am. Tel. & Tel. Co., 42 F.3d at 1433. difference between trade-mark infringement and what is loosely called unfair competition. Unfair competition is Moreover, while the two causes of action are derived the genus of which trade-mark infringement is one of the from the same principles and contained in the same species....”). Both its trademark protections and its statute, the Supreme Court has recognized that the false prohibition on false advertising are “part of the broader advertising provision of the Lanham Act entails broader law of unfair competition that has its sources in English protections. See POM Wonderful LLC v. Coca–Cola Co., common law.” Moseley v. V. Secret Catalogue, Inc., 537 ––– U.S. ––––, 134 S.Ct. 2228, 2234, 189 L.Ed.2d 141 U.S. 418, 428, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003) (2014) (“The Lanham Act’s trademark provisions are the (citation omitted); see Natural Answers, Inc. v. primary means of achieving [the statute’s] ends. But the SmithKline Beecham Corp., 529 F.3d 1325, 1330–31 Act also creates a federal remedy [for false advertising] (11th Cir.2008) (“The intent of [the false advertising] ‘that goes beyond trademark protection.’ The broader provision is to protect ‘commercial interests [that] have remedy is at issue here.”) (quoting Dastar Corp. v. been harmed by a competitor’s false advertising, and [to Twentieth Century Fox Film Corp., 539 U.S. 23, 29, 123 secure] to the business community the advantages of S.Ct. 2041, 156 L.Ed.2d 18 (2003)). It would be odd reputation and good will by preventing their diversion indeed for us to narrow the scope of the false advertising from those who have created them to those who have provision—a cause of action plainly intended to not.’ ” (second and third alterations in original) (quoting encompass a broader spectrum of protection—and hold Phoenix of Broward, Inc. v. McDonald’s Corp., 489 F.3d that it could be enforced only against a smaller class of 1156, 1168 (11th Cir.2007))). defendants. Absent congressional direction, we are reluctant *1277 to limit the statute’s scope in this way. [39] The Supreme Court has clarified that the principles Thus, we hold that a plaintiff may bring a claim for underlying the Lanham Act contemplate liability that contributory false advertising under § 43(a) of the extends beyond direct violators of the trademark Lanham Act. provision of § 43(a). Inwood Labs., Inc., 456 U.S. at 853, 102 S.Ct. 2182; see William R. Warner & Co., 265 U.S. at [40] What, then, must a plaintiff establish in order to state a 530, 44 S.Ct. 615 (“The [defendant manufacturer’s] contributory false advertising claim? First, the plaintiff wrong was in designedly enabling the dealers to palm off must show that a third party in fact directly engaged in the [drug] as that of the [plaintiff].”). Because these same false advertising that injured the plaintiff. Second, the principles motivated the false advertising provision, the plaintiff must allege that the defendant contributed to that same reasoning supports the conclusion that a plaintiff conduct either by knowingly inducing or causing the can state a claim for contributory false advertising. As the conduct, or by materially participating in it. Third Circuit has explained in addressing whether claims based on agency and apparent agency are cognizable [41] In order to establish that a third party engaged in false under § 43(a) of the Lanham Act: advertising, the plaintiff “must plead (and ultimately prove) an injury to a commercial interest in sales or The contributory infringement business reputation proximately caused by the ... cases ... demonstrate that in certain misrepresentations.” Lexmark Int’l, Inc., 134 S.Ct. at instances, secondary, indirect 1395. To prove that the third party’s statements caused liability is a legitimate basis for the requisite injury, we have held that the plaintiff must liability under the federal unfair show: competition statute. There is a good

Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (2015) 2015-2 Trade Cases P 79,257, 25 Fla. L. Weekly Fed. C 1465

(1) the ... statements were false or could be circumstances under which the provision of a misleading; (2) the statements necessary product or service, without which the false deceived, or had the capacity to advertising would not be possible, could support a theory deceive, consumers; (3) the of contributory liability. See *1278 Inwood Labs., Inc., deception had a material effect on 456 U.S. at 854–55, 102 S.Ct. 2182. In determining the consumers’ purchasing whether a plaintiff has adequately alleged facts to support decision; (4) the misrepresented such a claim, we look to whether the complaint suggests a service affects interstate commerce; plausible inference of knowing or intentional and (5) [the plaintiff] has been, or participation, examining “the nature and extent of the likely will be, injured as a result of communication” between the third party and the the false or misleading statement. defendant regarding the false advertising; “whether or not the [defendant] explicitly or implicitly encouraged” the Sovereign Military Hospitaller Order v. Fla. Priory of false advertising; whether the false advertising “is serious Knights Hospitallers, 702 F.3d 1279, 1294 (11th and widespread,” making it more likely that the defendant Cir.2012). “kn[ew] about and condone[d] the acts”; and whether the defendant engaged in “bad faith refusal to exercise a clear [42] The Lanham Act’s false advertising provision allows a contractual power to halt” the false advertising. See Mini plaintiff to base its claim not only on statements that are Maid Servs. Co., 967 F.2d at 1522. literally false, but also on statements that are misleading when considered in their full context. Osmose, Inc. v. The district court identified four allegedly false claims in Viance, LLC, 612 F.3d 1298, 1308 (11th Cir.2010). the complaint, each of which was made by a duty free Although “[s]tatements of opinion are generally not operator to representatives of an airport and each of which actionable” under the Lanham Act, id. at 1311, we have DFA says we should attribute to Estée Lauder. First, suggested that we will treat a statement framed as an Nuance stated in a letter to Atlanta officials: “Given that opinion as one of fact if it “fairly implies a [factual] Estée Lauder brands account for 20% of cosmetic and basis.” See id. (citing Restatement (Third) of Unfair fragrance sales, at least in Orlando, and cosmetic and Competition § 3 cmt. d. (1995) (“Some representations of fragrance sales constitute one of the largest sources of opinion may imply the existence of facts that justify the revenue for duty free stores, a lack of access to Estée opinion....”)). Lauder brands would cast doubt on the validity of DFA’s projected revenue streams.” Second, Travel Retail told [43] [44] Once the plaintiff establishes the elements of a Orlando officials: “[W]e strongly believe that Estée direct false advertising claim against a third party, it must Lauder is a product which you have to sell, also, to allege that the defendant contributed to that conduct. This domestic passengers.” Third, Nuance said during the means that the plaintiff must allege that the defendant had Orlando appeal hearing: “With respect to DFA, I’d like to the necessary state of mind—in other words that it echo Travel Retail’s concerns on DFA’s rents.... DFA “intended to participate in” or “actually knew about” the sales project[ions] are deemed to be unreasonable and not false advertising. See Mini Maid Servs. Co., 967 F.2d at sustainable in light of the history.” Finally, Travel Retail 1522. The plaintiff must also allege that the defendant informed the Orlando Airport Authority: “[F]ailure to actively and materially furthered the unlawful offer the Estée Lauder product line will negatively impact conduct—either by inducing it, causing it, or in some duty free and duty paid sales revenue for both other way working to bring it about. Cf. 1–800 Contacts, international and domestic travelers.”7 DFA argues that it Inc. v. Lens.com, Inc., 722 F.3d 1229, 1249 (10th also alleged that Nuance, in its letter protesting the Cir.2013) (explaining that Inwood establishes liability for Atlanta award, stated “DFA may have made a defendant who “enables a third party” to violate the misrepresentations about its ability to carry Estée Lauder Lanham Act). brands,”8 and we agree that this is an allegedly false claim the district court failed to consider. [45] Analogies from trademark infringement, in which contributory liability is more developed, can be 7 DFA argues that the district court ought not to have instructive. Thus, for example, a plaintiff may be able to considered these quotes, but should have credited the make out the participation prong of a contributory false complaint’s formulations, specifically (1) “carrying advertising claim by alleging that the defendant directly [Estée Lauder] products is required for the success of a controlled or monitored the third party’s false advertising. duty free store” and (2) “DFA’s lack of access to [Estée See Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d Lauder] products will prevent it from being successful, 788, 807 (9th Cir.2007). It is also conceivable that there including being able to meet its projected revenue

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targets.” DFA’s summarized false statements are bidding process for which Estée Lauder was not even indistinguishable from the quotations in substance. And present. More generally, there are no facts to suggest that its claim fares no better if they are substituted for the Estée Lauder commonly exercises any level of control actual statements that the operators made to airport over or involvement in the duty free operators’ conduct authorities. during airport RFP bidding.

[47] [48] In short, although we agree with DFA that a plaintiff may state a claim against a defendant for 8 DFA again argues that we must consider its preferred contributory false advertising, we are unwilling to extend formulation: “DFA did not have the ability to sell the [Estée Lauder] products it had listed in its [Atlanta] the doctrine as far as DFA urges. The mere sale of bid.” The substitution of this phrasing would be products in the course of an ordinary business similarly immaterial. relationship, without more, cannot justify a finding that a defendant induced, encouraged, caused, procured, or brought about false advertising. Contributory false [46] As for the first element, Estée Lauder claims that the advertising claims are cognizable under the Lanham Act, duty free operators did not engage in any false but a plaintiff must allege more than an ordinary business advertising. Estée Lauder urges us to hold that DFA’s relationship between the defendant and the direct false complaint is devoid of any false or misleading statements advertiser in order to plausibly plead its claim. DFA has cognizable under the Lanham Act, but we need not failed to do so here. answer this fact-intensive question. We agree that DFA did not adequately allege Estée Lauder contributed to any of the statements, and thus affirm the district court’s dismissal on this ground. V.

We are unable to find in DFA’s complaint any facts that [49] DFA’s final claim is that Estée Lauder’s direct and would enable the court to draw the reasonable inference indirect involvement in airport RFP processes violated that Estée Lauder induced or knowingly or intentionally Florida’s prohibition against tortious interference with a participated in any of the allegedly false statements made prospective business relationship. Under Florida law, by the *1279 other duty free operators. In its complaint, “[t]he elements of tortious interference with a business DFA based its claim for contributory liability on the fact relationship are ‘(1) the existence of a business that “[Estée Lauder] knew or should have known of the relationship[;] (2) knowledge of the relationship on the False Claims, but [it] continued to supply [Estée Lauder] part of the defendant; (3) an intentional and unjustified product [s] to its favored duty free operators.... In doing interference with the relationship by the defendant; and so, [Estée Lauder] provided its favored duty free (4) damage to the plaintiff as a result of the breach of the operators with the means to continue making the False relationship.’ ” Ethan Allen, Inc. v. Georgetown Manor, Claims....” We cannot see how the mere sale of Estée Inc., 647 So.2d 812, 814 (Fla.1994) (alteration adopted) Lauder products can serve as a basis for holding the (quoting Tamiami Trail Tours, Inc. v. Cotton, 463 So.2d manufacturer liable for any disparaging statements its 1126, 1127 (Fla.1985) (per curiam)). Though the second customers make in the course of their own separate and fourth elements of this test are self-explanatory, the business relations. In our view, selling Estée Lauder first and third require some additional explication. products is too unrelated to the making of the allegedly false or misleading statements to form a basis for [50] As for the first element—the existence of a business liability—under either an inducement or participation relationship—the Supreme Court of Florida has explained theory. that the plaintiff need not allege the existence of an enforceable contract and that the plaintiff can prevail “if Moreover, contrary to DFA’s argument, there are simply the jury finds that an understanding between the parties no facts in the complaint that suggest the existence of would have been completed had the defendant not coordinated action or encouragement, much less interfered.” Id. (quoting Landry v. Hornstein, 462 So.2d inducement, between Estée Lauder and the operators on 844, 846 (Fla.Dist.Ct.App.1985)). “A mere offer to sell, the decision to make the disputed claims to airport however, does not, by itself, give rise to sufficient legal authorities. There has been no allegation that by selling its rights to support a claim of *1280 intentional interference products to the duty free operators, Estée Lauder with a business relationship.” Id. (quoting Landry, 462 monitored, controlled, or participated in operators’ So.2d at 846). statements to airport authorities during a competitive

Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (2015) 2015-2 Trade Cases P 79,257, 25 Fla. L. Weekly Fed. C 1465

[51] [52] The third element, intentional and unjustified interferes with another’s business relations using interference with a business relationship, requires the ordinary business methods [of competition] does plaintiff to allege that “the defendant acted without not interfere by an improper method. But one who justification.” Sec. Title Guarantee Corp. of Balt. v. uses [physical violence], [misrepresentations], McDill Columbus Corp., 543 So.2d 852, 855 [illegal conduct], [threats of illegal conduct], [or] [ (Fla.Dist.Ct.App.1989). This is a fact-intensive inquiry (identify other improper conduct) ] has no that requires “an examination of the defendant’s conduct, privilege to use those methods, and his its motive, and the interests it sought to advance.” Id. interference using such methods is improper. Standard Jury Instructions–Civil Cases (99–1), 778 (quotation omitted). Importantly, however, Florida So.2d 264, 269 (Fla.2000) (footnotes omitted). recognizes a “privilege of interference.” Wackenhut Corp. v. Maimone, 389 So.2d 656, 657–58 (Fla.Dist.Ct.App.1980). This means that where “there is no contract right to have the relation continued, but only Interpreting Florida law, we have said that “when there is an expectancy[,] ... a competitor has the privilege of room for different views” about the propriety of a interference in order to acquire the business for himself.” defendant’s interference with a plaintiff’s business Id.; accord Greenberg v. Mount Sinai Med. Ctr. of relationships, “the determination of whether the Greater Miami, Inc., 629 So.2d 252, 255 interference was improper or not is ordinarily left to the (Fla.Dist.Ct.App.1993). jury.” Mfg. Research Corp. v. Greenlee Tool Co., 693 F.2d 1037, 1040 (11th Cir.1982) (quotation omitted). [53] [54] “If a defendant interferes with a contract in order to However, when plaintiffs have failed to adequately allege safeguard a preexisting economic interest of his own, the improper methods, we *1281 have followed the Florida defendant’s right to protect his own established economic courts and dismissed these claims. See, e.g., Int’l Sales & interest outweighs the plaintiff’s right to be free of Serv., Inc. v. Austral Insulated Prods., Inc., 262 F.3d interference, and his actions are usually recognized as 1152, 1159 n. 1 (11th Cir.2001); Royal Typewriter Co., a privileged and nonactionable.” See Heavener, Ogier Div. of Litton Bus. Sys. v. Xerographic Supplies Corp., Servs., Inc. v. R.W. Fla. Region, Inc., 418 So.2d 1074, 719 F.2d 1092, 1104–05 (11th Cir.1983); see also 1076–77 (Fla.Dist.Ct.App.1982); Sec. Title Guarantee Seminole Tribe of Fla. v. Times Pub. Co., 780 So.2d 310, Corp. of Balt., 543 So.2d at 855 (noting that, as “long as 318 (Fla.Dist.Ct.App.2001) (affirming district court’s improper means are not employed, activities taken to grant of defendant’s motion to dismiss tortious safeguard or promote [a company’s] own financial interference claim). interests are entirely non-actionable.” (quotation and [55] alteration omitted)).9 Indeed, Florida courts have DFA urges us to find that it adequately alleged explained that, even if the plaintiff has an existing, improper methods in its complaint, citing to three terminable-at-will contract, the defendant’s interference to allegations about Estée Lauder’s conduct: (1) Estée protect its economic interests is privileged unless the Lauder represented to airport authorities that DFA could plaintiff alleges “a purely malicious motive” divorced not meet its financial projections; (2) Estée Lauder from any “legitimate competitive economic interest.” See represented to the Atlanta Airport Authority that DFA Heavener, Ogier Servs., Inc., 418 So.2d at 1077. It was unable to sell any Estée Lauder products, implying follows that where the plaintiff alleges only a prospective that DFA did not have outstanding inventory; and (3) business relationship—and thus the plaintiff has a “mere Estée Lauder suggested to airport authorities that DFA expectancy” of a new relationship—the privilege of was not a quality operator. interference similarly bars only interference consisting of malicious conduct. Cf. id. at 1077. As we see it, the problem with each of these allegations is the same: the complaint does not allege that Estée Lauder actually made any of these statements. To be sure, false 9 Florida’s Standard Jury Instructions, though merely statements made “for the purpose of harming [a persuasive, also confirm our understanding of Florida competitor’s] economic interests” can in some instances law. They read, in relevant part: A person who interferes with the business form the basis of a claim for tortious interference. relations of another with the motive and purpose, Londono v. Turkey Creek, Inc., 609 So.2d 14, 18–19 at least in part, to advance [or protect] his own (Fla.1992). But DFA does not allege that Estée Lauder business [or financial] interests, does not interfere ever expressed an opinion on DFA’s financial projections with an improper motive. But one who interferes or its inventory, much less that it conveyed that opinion to only out of spite, or to do injury to others, or for any airport officials. As for the third statement—that DFA other bad motive, has no justification, and his was not a quality operator—DFA asks us to infer this interference is improper. So also, a person who opinion from a letter in which Estée Lauder vouched for

Duty Free Americas, Inc. v. Estee Lauder Companies, Inc., 797 F.3d 1248 (2015) 2015-2 Trade Cases P 79,257, 25 Fla. L. Weekly Fed. C 1465 the quality of other duty free operators. In our view, this privilege of interference encompasses actions taken to is not a reasonable inference from Estée Lauder’s protect a company’s economic interests as long as the statement. That Estée Lauder is satisfied with the quality methods employed were not improper. Sec. Title of its named business partners cannot be read to implicitly Guarantee Corp. of Balt., 543 So.2d at 855; Heavener, disparage the quality of all other unmentioned entities in Ogier Servs., Inc., 418 So.2d at 1076–77. DFA does not the same industry. DFA was not referenced at all in the allege that any of its competitors took action for the sole disputed letter to Newark airport officials, and we are purpose of interfering with DFA’s prospective unwilling to read this silence to make any comment on the relationships with airport authorities. To the contrary, as quality of DFA’s work. DFA acknowledges, each duty free operator was attempting to procure the same airport contract for itself. [56] DFA also cites language from its complaint that Estée Taking the complaint in the light most favorable to DFA, Lauder “encourag[ed] or induc[ed]” other duty free two of its competitors disparaged its sales projections and operators to make misrepresentations to airport business practices during the competitive bidding authorities. We agree that if the complaint adequately processes for both the Orlando International Airport and alleged inducement, this might be sufficient to state a the Hartsfield–Jackson Atlanta International Airport. DFA claim under Florida law. But DFA was required to does not allege that its competitors entered the provide more than “ ‘a formulaic recitation of the competition pretextually, solely for the purpose of elements’ ” of its tortious interference claim. Simpson, harming DFA’s prospective interests. Moreover, there are 744 F.3d at 708 (quoting Twombly, 550 U.S. at 555, 127 simply no facts from which we can infer that the S.Ct. 1955). It was obliged to support its allegation with statements were made out of any motivation other than facts from which a reasonable trier of fact could infer the hope of winning the airport contract. Accordingly, we inducement or encouragement by Estée Lauder. We are affirm the dismissal of the tortious interference claim. unable to find any facts of this kind in DFA’s complaint. No facts in the complaint plausibly suggest that Estée Lauder asked or encouraged any duty free operator to discuss DFA with airport authorities. All that the complaint establishes is that Estée Lauder sold its VI. products to the operators, provided them with truthful information about its market share, and vouched for the In sum, DFA failed to allege a critical element of each of quality of their work. These facts are entirely unrelated to its three claims against Estée Lauder. Accordingly, we inducement, and for that reason are insufficient to raise AFFIRM. DFA’s claim from possible to plausible.

[57] Moreover, even if we were to agree with DFA that its All Citations bare and wholly conclusory statements that Estée Lauder induced or encouraged the duty free operators were 797 F.3d 1248, 2015-2 Trade Cases P 79,257, 25 Fla. L. sufficient to survive a motion to dismiss, we would still Weekly Fed. C 1465 conclude that the complaint is devoid of any allegations of *1282 impropriety. Florida law is clear that the

Sandshaker Lounge & Package Store LLC v. Quietwater..., 602 Fed.Appx. 784...

trademark as applied to an annual music festival, 602 Fed.Appx. 784 where “BUSHWACKER,” as a drink, was a United States Court of Appeals, generic reference for a type of drink sold locally Eleventh Circuit. and at multiple locations, and, as a generic mark, “BUSHWACKER” could not be registered for SANDSHAKER LOUNGE & PACKAGE STORE its usage as an alcoholic drink. Lanham Act, §§ LLC, A Florida Limited Liability Company, 2, 14, 43, 15 U.S.C.A. §§ 1052, 1064, 1125. Plaintiff–Appellant, v. QUIETWATER ENTERTAINMENT INC., a Cases that cite this headnote Florida Corporation, Defendant–Appellee.

No. 14–14481 | Non–Argument Calendar. [2] Trademarks | Particular cases March 19, 2015. A trademark holder, a restaurant, did not make an actual prior use of its “BUSHWACKER” mark in commerce, and thus the restaurant’s Synopsis “BUSHWACKER” mark was subject to Background: Restaurant petitioned for the cancellation cancellation, where the trademark holder and a of the “BUSHWACKER” trademark as applied to an second restaurant began using the mark in annual music festival, based on restaurant’s prior use of commerce simultaneously to identify a festival the mark as an alcoholic drink. The United States District event featuring live music, both parties had used Court for the Northern District of Florida granted the mark in connection with live music events summary judgment to the trademark holder. Restaurant for nearly two decades, until the trademark appealed. holder objected to the second restaurant’s use, and the second restaurant openly held and advertised its annual “Bushwacker Beach Holdings: The Court of Appeals held that: Weekend” featuring live musical performances in plain view of the trademark holder. Lanham [1] restaurant did not own any protectable right in the Act, §§ 2, 14, 43, 15 U.S.C.A. §§ 1052, 1064, “BUSHWACKER” mark, and 1125.

[2] the trademark holder failed to make actual prior use in Cases that cite this headnote commerce of the “BUSHWACKER” mark.

Affirmed in part, reversed in part, and remanded.

[3] Trademarks

Alphabetical listing

BUSHWACKER. West Headnotes (3)

Cases that cite this headnote [1] Trademarks Generic terms or marks

A restaurant did not own any protectable right in the “BUSHWACKER” mark as applied to an alcoholic drink that would allow the restaurant Attorneys and Law Firms to seek cancellation of the “BUSHWACKER” © 2016 Thomson Reuters. No claim to original U.S. Government Works. 49

Sandshaker Lounge & Package Store LLC v. Quietwater..., 602 Fed.Appx. 784...

*785 Robert O. Beasley, Litvak Beasley Wilson & Ball, is the Pensacola Beach boardwalk. Quietwater, owned by Pensacola, FL, for Plaintiff–Appellant. June Guerra, helped construct the boardwalk in the 1980s and has owned or operated several establishments there, James David Smith, J.D. Smith, Law Offices of James including Capt’n Fun’s bar, the Jubilee restaurant, and Smith, Pensacola, FL, for Defendant–Appellee. Bushwacker’s Backside. In 1988 a group of local business owners, including Taylor and Guerra, met to brainstorm Appeal from the United States District Court for the ideas to address the slowdown in beach trade that Northern District of Florida. D.C. Docket No. happened each August. Guerra offered to hold a festival 3:13–cv–00114–MCR–CJK. celebrating the bushwacker drink during the first weekend in August, featuring a “best bushwacker” contest and Before ED CARNES, Chief Judge, HULL and some bands. Taylor again believed that any event that ROSENBAUM, Circuit Judges. drew people to the area would benefit all of the local businesses, and she did not object to the use of the Opinion “bushwacker” name. PER CURIAM: Both Sandshaker and Quietwater scheduled live music events on the first weekend in August 1988 to celebrate Sandshaker Lounge & Package Store appeals the district the bushwacker. Quietwater’s event was unquestionably court’s grant of summary judgment in favor of Quietwater larger and more elaborate, but the testimony and Entertainment. The district court affirmed the Trademark documentary evidence suggest that each party advertised Trial and Appeal Board’s denial of Sandshaker’s petition its own bushwacker celebration that year and most years to cancel Quietwater’s BUSHWACKER trademark. since. Quietwater called its event variously the “Bushwacker Fest,” “Bushwacker Festival,” “Famous Bushwacker Festival,” and “Famous Bushwacker and Music Festival.” Sandshaker called its event “Bushwacker Weekend” or “Bushwacker Beach Weekend.” Both I. companies held their events the same weekend each year. Quietwater’s event took place on the boardwalk and at its For decades until 2004 Linda Taylor owned the bar and restaurants, and Sandshaker’s event took place Sandshaker, a bar on Pensacola Beach. Sometime during across the street at the Sandshaker. Quietwater’s festival the 1970s Taylor traveled to the U.S. Virgin Islands, reached its zenith in 1996 when Three Dog Night played. where she was served a creamy, chocolaty alcoholic *786 drink called a bushwacker.1 When she returned to Florida, In September 2004 Hurricane Ivan struck Pensacola as a Taylor experimented and created her own drink, which Category 3 storm. Local businesses including Quietwater has the consistency of a milkshake and contains rum, properties Jubilee and Bushwacker’s Backside were hit Kahlua, cream of coconut, crème de cacao, and milk. She hard, and both establishments closed their doors soon began selling that concoction under the name after. Worried its remaining facilities might not be “bushwacker” at the Sandshaker in 1977. The drink repaired in time for the 2005 Bushwacker Festival and became hugely popular in the region and soon other that mainland businesses might try to appropriate the nearby beach bars began serving their own versions. event, Quietwater filed an application to register the Taylor did not object to the other bars selling her drink BUSHWACKER mark in the category of “Entertainment because she felt the drink’s popularity would be a rising services in the nature of a festival featuring live musical tide lifting all local boats. groups.” Quietwater did not disclose to the Patent and Trademark Office (PTO) that Sandshaker had 1 Although the word presumably derives from simultaneously used the mark throughout the preceding “bushwhacker,” it is spelled “bushwacker” for all seventeen years. The PTO granted the application and purposes related to the drink. Because this opinion published Quietwater’s registration on February 8, 2005. deals with three closely related and identically named concepts (the drink, the word, and the mark), we will In May 2005 Sonny Campbell bought the Sandshaker. He use the following convention: bushwacker with no set about preparing for the 2005 “Bushwacker Beach quotes for the drink, “bushwacker” in quotes for the Weekend,” but in July Guerra called him and *787 told word, and BUSHWACKER in all caps for the mark. him Sandshaker could not hold its event because Quietwater owned the BUSHWACKER trademark.

Sandshaker Lounge & Package Store LLC v. Quietwater..., 602 Fed.Appx. 784...

In October 2009 Sandshaker filed a petition for 3 We emphasize that our discussion here applies only to cancellation of Quietwater’s BUSHWACKER mark as the BUSHWACKER mark. We express no opinion applied to the music festival. The Trademark Trial and about the HOME OF THE ORIGINAL Appeal Board (TTAB) denied the petition after BUSHWACKER mark that Sandshaker seeks to determining that Sandshaker had no protectable interest in register. the BUSHWACKER mark as applied to the drink and that it was not a prior user of the mark as applied to the music festival. Sandshaker filed a civil action in the United A court reviewing the TTAB’s findings may not reverse States District Court for the Northern District of Florida those findings absent “testimony which in character and seeking to overturn that decision.2 Sandshaker sought amount carries thorough conviction.” Coach House Rest., cancellation of Quietwater’s trademark under 15 U.S.C. Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551, 1557 §§ 1052, 1064, and 1125; damages and an injunction (11th Cir.1991). Far from thoroughly convincing us that under § 1125; and a declaration of Sandshaker’s the TTAB is wrong, the testimony introduced in the common-law right to exclusive use of the district court thoroughly convinces us that the TTAB is BUSHWACKER mark in Sandshaker’s zone of correct that “bushwacker” is a generic term for a reputation. Each of these arguments was premised on the chocolaty frozen drink containing rum and coffee liqueur. theory that Sandshaker owned protectable rights in the Both parties agree that bars throughout the area and BUSHWACKER mark as applied to the drink. On cross beyond make bushwackers. Perhaps most tellingly, motions for summary judgment, the district court ruled in Sandshaker concedes that any new bar opening on favor of Quietwater. This is Sandshaker’s appeal. Pensacola beach could sell a drink using the name “bushwacker” and that it was “a little too late [for 2 Under 15 U.S.C. § 1071, a party dissatisfied with the Sandshaker] to have a problem with that.” The drink TTAB’s decision may either appeal directly to the served at the Sandshaker is merely a *788 species of the United States Court of Appeals for the Federal Circuit genus “bushwacker,” and thus BUSHWACKER is a or file a civil action in a United States District Court. generic mark for the drink. See Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194, 105 S.Ct. 658, 661, 83 L.Ed.2d 582 (1985) (“A generic term is one that refers to the genus of which the particular product is a species.”). Because it is generic as applied to the drink, it may not be registered as a trademark for that usage. See II. id. Nor may Sandshaker appropriate it from the public domain. See Forman, 509 F.3d at 1358. Sandshaker has We review de novo a district court’s grant of summary no protectable right to BUSHWACKER as applied to the judgment. McCullum v. Orlando Reg’l Healthcare Sys., drink. Inc., 768 F.3d 1135, 1141 (11th Cir.2014). [2] We turn now to Quietwater’s contention that it has a [1] Sandshaker’s arguments all stem from its contention protectable interest in the BUSHWACKER mark as that it owns protectable rights in the BUSHWACKER applied to musical performances. When a mark has been mark as applied to the drink and that those rights trump on the Principal Register for less than five years at the any rights Quietwater has in the mark.3 But Sandshaker time of the cancellation petition, “any ground that would does not have any such rights. Generic marks may not be have prevented registration in the first place qualifies as a registered. Welding Servs., Inc. v. Forman, 509 F.3d valid ground for cancellation.” Cunningham v. Laser Golf 1351, 1358 (11th Cir.2007). That prohibition against Corp., 222 F.3d 943, 946 (Fed.Cir.2000); see also 15 federal registration reflects the principle that generic U.S.C. § 1064(1); Coach House, 934 F.2d at 1557 marks are in the public domain and may not be (requiring “valid grounds for discontinuing registration”). appropriated from it. See id. (“Courts have generally held that a term used generically cannot be appropriated from Federal registration protects only trademark rights already the public domain; therefore, even if the name becomes in acquired through adoption and use. See Turner v. HMH some degree associated with the source, a generic mark Publ’g Co., 380 F.2d 224, 228 (5th Cir.1967) (“Under the cannot achieve true secondary meaning.”). The TTAB Lanham Act, registration of a trademark confers only found that BUSHWACKER “appears to be generic for a procedural advantages and does not enlarge the type of drink sold locally and at multiple locations registrant’s rights, for ownership of the trademark rests on throughout Pensacola Beach.” adoption and use, not on registration.”) (citation omitted).4 And trademark rights are appropriated under Florida law

Sandshaker Lounge & Package Store LLC v. Quietwater..., 602 Fed.Appx. 784...

“only through actual prior use in commerce.” Crystal Entm’t & Filmworks, Inc. v. Jurado, 643 F.3d 1313, 1320 6 To the extent the district court’s contrary conclusion on (11th Cir.2011) (quotation marks omitted). Regardless of this point relies on a finding that Sandshaker was who came up with the idea of having a festival to merely advertising its own participation in Quietwater’s celebrate the bushwacker drink, the district court event, that finding is clearly erroneous. See Robinson v. found—and Quietwater concedes—that both parties Tyson Foods, Inc., 595 F.3d 1269, 1273 (11th Cir.2010) began using the mark in commerce simultaneously in ( “[W]e review ... the district court’s findings of fact for August 1988 to identify a festival event featuring live clear error.”); United States v. Rodriguez–Lopez, 363 music. As between Sandshaker and Quietwater, there was F.3d 1134, 1137 (11th Cir.2004) (“For a factual finding to be clearly erroneous, this court, after reviewing all of no prior user. Thus Quietwater did not make “actual prior the evidence, must be left with a definite and firm use in commerce” of the mark. See id. conviction that a mistake has been committed.”) (quotation marks omitted). The record contains clear 4 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 and ample evidence in the form of testimony and (11th Cir.1981) (en banc), we adopted as binding Sandshaker’s advertisements for Sandshaker’s events precedent all decisions of the former Fifth Circuit on Sandshaker’s property that it always considered its handed down before October 1, 1981. musical event a celebration related to but separate from Quietwater’s festival. A finding that Sandshaker’s ads for its own events were actually advertising Quietwater’s festival is akin to a finding that Further, whatever rights Quietwater might have had, its Quietwater’s ads for $1.75 bushwackers sold at its slumber on them rivaled Rip van Winkle’s.5 Both parties restaurants were really advertising Sandshaker’s drinks. used the mark in connection with live music events for nearly two decades, until Quietwater finally objected to 6 Sandshaker’s use in 2005. When the district court *789 It is a “bedrock principle of trademark law that a mark rejected Sandshaker’s trademark claim over the can identify and distinguish only a single commercial BUSHWACKER mark for the drink, it reasoned that source.” Jurado, 643 F.3d at 1320. Because both Sandshaker’s “knowing acquiescence to use of the name companies were using the mark, it never “identif[ied] and by other unrelated establishments” supported a finding distinguish[ed] only a single commercial source” of that “Sandshaker did not have trade identity rights musical celebrations of the bushwacker drink. See id. sufficient to create priority.” True, but that reasoning Quietwater thus never acquired any protectable right to applies with equal force to Quietwater’s claim to its own the BUSHWACKER mark, and its registration is due to mark. If Sandshaker’s failure to enforce its rights killed its be canceled. trademark, Quietwater’s identical failure had the same lethal effect on its trademark. The evidence shows that We AFFIRM the district court’s judgment to the extent throughout the entire relevant time period Sandshaker that it found that Sandshaker did not have protectable openly held and advertised its annual “Bushwacker Beach rights in the BUSHWACKER mark as applied to the Weekend” featuring live musical performances. And it drink. We REVERSE the remainder of the judgment and did so in plain view, across the street from Quietwater’s REMAND for further consideration in light of this properties. opinion.

5 See Washington Irving, Rip Van Winkle and Other American Essays From the Sketch Book 27 (Houghton, Mifflin & Co. 1891) (“Rip’s story was soon told, for All Citations the whole twenty years had been to him but as one night.”). 602 Fed.Appx. 784

Donut Joe’s, Inc. v. Interveston Food Services, LLC, 116 F.Supp.3d 1290 (2015)

owner only presented evidence of at most five 116 F.Supp.3d 1290 instances of consumer confusion over three-year United States District Court, period. 35 U.S.C.A. § 285. N.D. Alabama, Southern Division. 1 Cases that cite this headnote DONUT JOE’S, INC., Plaintiff, v. INTERVESTON FOOD SERVICES, LLC d/b/a Donut Chef, Defendant.

Case No. 2:13–CV–1578–VEH. Attorneys and Law Firms | Signed July 7, 2015. *1290 The Watson Firm, Birmingham, AL, for Plaintiff. Jade E. Sipes, G. Thomas Sullivan, Diane B. Maughan, Jade E. Sipes, Cabaniss Johnston Gardner Dumas & Synopsis O’Neal LLP, Birmingham, AL, for Defendant. Background: After competitor prevailed against trademark owner on trademark infringement claim, competitor moved for award of attorney fees, under Lanham Act. MEMORANDUM OPINION AND ORDER

Holding: The District Court, Virginia Emerson Hopkins, VIRGINIA EMERSON HOPKINS, District Judge. J., held that award of attorney fees was justified as case was exceptional.

I. INTRODUCTION Motion granted. This case is now before the court on a motion for attorney’s fees (“the Motion”) by Interveston Food Services, LLC (“Interveston”). *1291 (Doc. 74). Interveston filed the Motion on May 5, 2015, following the court’s grant of summary judgment in favor of West Headnotes (1) Interveston as to all claims in this action. Donut Joe’s, Inc. v. Interveston Food Servs., LLC, No. 2:13–CV–1578–VEH, 101 F.Supp.3d 1172, 2015 WL [1] Trademarks 1840431 (N.D.Ala. Apr. 22, 2015). In accordance with Exceptional cases; intent or bad faith Federal Rule of Civil Procedure 54(d)(2)(C), which permits the court to “decide issues of liability for fees Competitor that prevailed against trademark before receiving submissions on the value of services,” owner on trademark infringement claim was the Motion seeks only a determination of Donut Joe’s, entitled to award of attorney fees, under Lanham Inc.’s (“Donut Joe’s”) liability for attorney’s fees and Act, on grounds that case was exceptional; other additional fees under § 35(a) of the Lanham Act (15 owner failed to raise questions of material fact U.S.C. § 1117(a)). (Doc. 74 at 1). regarding possession of protectable mark and likelihood of consumer confusion, offered Donut Joe’s has responded in opposition to the motion. extremely weak arguments and failed to present (Doc. 77). Interveston has filed a reply brief. (Doc. 78). any evidence that mark possessed secondary Therefore, the matter is now under submission. For the meaning, and instead argued that trademark following reasons, the court holds that Donut Joe’s is registration automatically precluded summary liable for attorney’s fees in this case. judgment, which was theory that had been rejected by at least five other circuits and was in tension with Eleventh Circuit precedent, and © 2016 Thomson Reuters. No claim to original U.S. Government Works. 53

Donut Joe’s, Inc. v. Interveston Food Services, LLC, 116 F.Supp.3d 1290 (2015)

II. PROCEDURAL HISTORY Beiersdoerfer and Flowers filed a Motion To Dismiss. Donut Joe’s commenced this action by filing a Complaint (Doc. 33). The court granted their motion and dismissed with this court on August 27, 2013. (Doc. 1). The all claims against them on April 24, 2014. (Doc. 43). Complaint alleged federal and state-law claims against Werner Beiersdoerfer; Michael Kenneth Flowers *1292 On January 15, 2015, Interveston, the sole (“Flowers”); Donut Chef; Brock Beiersdoerfer; Heavenly remaining defendant, moved for summary judgment. Donut Co.; and Kimberly Beiersdoerfer. Three (Doc. 54). On April 22, 2015, the court granted summary defendants—Werner Beiersdoerfer, Flowers, and judgment in favor of Interveston on all remaining claims Interveston—answered the Complaint on September 27, and dismissed the case with prejudice. Donut Joe’s, Inc., 2013. (Doc. 7). Attached to their Answer was a 101 F.Supp.3d 1172, 2015 WL 1840431. counterclaim charging Donut Joe’s with breach of contract and fraud. (Id. at 8–17). These three defendants also filed a Motion To Dismiss. (Doc. 8). On that same day, Brock and Kimberly Beiersdoerfer separately filed a III. APPLICABLE LAW Motion To Dismiss. (Doc. 10). On October 11, 2013, The Lanham Act allows courts to award reasonable Donut Joe’s filed the following documents: an Answer to attorney fees to prevailing parties “in exceptional cases.” the defendants’ counterclaims; responses to the two 15 U.S.C. § 1117(a). Historically, the Eleventh Circuit Motions To Dismiss; and a Motion To Dismiss the has defined the Act’s language of “exceptional case” as counterclaims. (Docs. 11–14). “one that can be characterized as malicious, fraudulent, deliberate and willful, or one in which evidence of fraud On December 18, 2013, the court issued a Memorandum or bad faith exists.” Tire Kingdom, Inc. v. Morgan Tire & Opinion concluding that it lacked supplemental Auto, Inc., 253 F.3d 1332, 1335 (11th Cir.2001) (internal jurisdiction over all of the parties’ state-law claims. (Doc. citations and quotation marks omitted). However, a 2014 27). The court accordingly dismissed without prejudice Supreme Court interpreting identical language in the the state-law claims filed by Donut Joe’s and the state-law Patent Act has called this definition of into question. counterclaims filed by Werner Beiersdoerfer, Flowers, and Interveston. (Id. at 12). In Octane Fitness, LLC v. ICON Health & Fitness, Inc., ––– U.S. ––––, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014), On the same date, the court entered a Show Cause Order the Court interpreted the Patent Act’s attorney fee asking Donut Joe’s to remedy certain deficiencies in its provision, which, identically to the Lanham Act, states, Complaint. (Doc. 28). The court particularly noted that “The court in exceptional cases may award reasonable the Complaint did not formally name Interveston as a attorney fees to the prevailing party.” 35 U.S.C. § 285. party. (Id. at 1). It therefore ordered Donut Joe’s to either The Court rejected as “unduly rigid” the Federal Circuit’s file an amended complaint or to explain: standard, which allowed fees to be awarded against a patent holder only if either (1) the patent holder • why the case should not be dismissed for failure to committed misconduct during litigation or securing of the join a necessary party under Federal Rule of Civil patent, or (2) the patent holder brought the litigation in Procedure 19; and subjective bad faith and the litigation was objectively baseless, i.e., so unreasonable that no reasonable litigant • why Donut Joe’s was pursuing federal trademark could believe it would succeed. See Octane Fitness, 134 infringement claims against individual members of a S.Ct. 1749, 1754 (2014) (summarizing the Federal limited liability company rather than against the Circuit’s previous case law). The Court held that this company exclusively. standard was more restrictive than the ordinary meaning of “exceptional,” and instead held: (Id. at 1–2). an “exceptional” case is simply one Donut Joe’s responded to the order by filing an Amended that stands out from others with Complaint on January 1, 2014. (Doc. 29). On January 15, respect to the substantive strength 2014, Donut Joe’s asked the court to dismiss Brock of a party’s litigating position Beiersdoerfer from the action. (Doc. 31). The court (considering both the governing dismissed Brock Beiersdoerfer as a party on January 17, law and the facts of the case) or the 2014. (Doc. 35). On January 28, 2014, the court dismissed unreasonable manner in which the Heavenly Donut Company as a party for failure to serve case was litigated. District courts process. (Doc. 40). On January 15, 2014, Interveston filed may determine whether a case is its Answer to the Amended Complaint. (Doc. 32). Werner “exceptional” in the case-by-case © 2016 Thomson Reuters. No claim to original U.S. Government Works. 54

Donut Joe’s, Inc. v. Interveston Food Services, LLC, 116 F.Supp.3d 1290 (2015)

exercise of their discretion, pre-Octane Fitness standard to remain in effect, considering the totality of the unaltered. (See Doc. 7). circumstances.

Id. at 1756. Not only is § 285 [the Patent Act’s provision] identical The Third and Fourth Circuits have since held that the to § 35(a) [the Lanham Act’s provision], but Congress standard in Octane Fitness also applies to attorney fees referenced § 285 in passing § 35(a). See S.Rep. No. awards under the Lanham Act. Fair Wind Sailing, Inc. v. 93–1400, at 2 (1974), reprinted in 1974 U.S.C.C.A.N. Dempster, 764 F.3d 303, 315 (3d Cir.2014) (“We 7132, 7133.... Moreover, in its explication of the word therefore import Octane Fitness ‘s definition of “exceptional,” the Octane Fitness Court ... noted that ‘exceptionality’ into our interpretation of § 35(a) of the the Lanham Act fee provision is “identical” to § 285 of Lanham Act”); Georgia–Pac. Consumer Products LP v. the Patent Act. Id. We believe that the Court was von Drehle Corp., 781 F.3d 710, 721 (4th Cir.2015), as sending a clear message that it was defining amended (Apr. 15, 2015) (“[W]e conclude that there is no “exceptional” not just for the fee provision in the Patent reason not to apply the Octane Fitness standard when Act, but for the fee provision in the Lanham Act as considering the award of attorneys fees under § 1117(a)”). well. The Eleventh Circuit has not yet considered the Fair Wind Sailing, Inc., 764 F.3d at 315. Additionally, applicability of Octane Fitness to the Lanham Act, but the court recognizes that the standard in Octane Fitness several decisions from the Middle District of Florida have is broader than the previous Eleventh Circuit agreed with the Third and Fourth Circuit that the Octane requirement that a case be “malicious, fraudulent, Fitness standard should also govern motions for attorney deliberate and willful, or one in which evidence of fees under § 1117(a).1 These cases have concluded *1293 fraud or bad faith exists.” Tire Kingdom, 253 F.3d at that the Eleventh Circuit’s previous definition of 1335. “exceptional cases” was more rigid and narrowly focused than the Supreme Court’s standard dictated in Octane Fitness. See, e.g., BMW of N. Am. LLC v. Ismail Cuhadar, IV. ANALYSIS Case No. 6:14–cv–40–Orl–37DAB, 2014 WL 5420133, at As grounds for finding this case to be exceptional, *5 (M.D.Fla. July 10, 2014) (“[t]he Eleventh Circuit Interveston argues that Donut Joe’s position “lacked any standard of defining exceptional as malicious, fraudulent, merit” and that its own position was substantively strong. deliberate and willful cases ... appears to be modified by (Doc. 74 at 9–11). This argument has relevance under the Octane ”). first factor of Octane Fitness, where the court is to consider the substantive strength of a party’s litigating 1 BMW of N. Am. LLC v. Ismail Cuhadar, Case No. position, taking into account both the governing law and 6:14–cv–40–Orl–37DAB, 2014 WL 5420133, at *2–*3 the facts of the case. Octane Fitness, 134 S.Ct. at 1756. In (M.D.Fla. July 10, 2014); RCI TM Corp. v. R & R granting summary judgment against Donut Joe’s, the Venture Grp., LLC, No. 6:13–CV–945–ORL–22, 2015 court found that Donut Joe’s failed to raise questions of WL 668715, at *9 (M.D.Fla. Feb. 17, 2015); High Tech material fact on each of the first two elements of a Pet Products, Inc. v. Shenzhen Jianfeng Elec. Pet Prod. trademark infringement action: the possession of a Co., No. 6:14–CV–759–ORL–22TB, 2015 WL 926023, protectable mark and a likelihood of consumer confusion. at *1 (M.D.Fla. Mar. 4, 2015). Donut Joe’s, Inc., 101 F.Supp.3d at 1182–83, 1185–86, 2015 WL 1840431 at *7, *9.

The Court has not discovered any decisions to the As a comparison, Interveston cites a case from the contrary, i.e., holding that Octane Fitness does not govern Southern District of N.Y., Cross Commerce Media, Inc. v. the interpretation of “exceptional cases” as used in the Collective, Inc., No. 13–CV–2754 KBF, 2014 WL Lanham Act.2 The court agrees with the other courts that 7323419 (S.D.N.Y. Dec. 16, 2014). In that case, the court have considered the question that the standard in Octane awarded attorney fees to the prevailing party on the Fitness also applies to the Lanham Act’s attorney fees grounds that the losing party lacked a protectable mark provision. The court finds particularly instructive the “and never made any real effort to demonstrate following reasoning from the Third Circuit: otherwise.” Id. at *3. Specifically, the court found that the losing party “failed to put forward any real evidence 2 In its brief, Donut Joe’s does not even mention Octane showing that its mark was more than merely descriptive: Fitness; instead, it assumes the Eleventh Circuit’s it failed to submit any marketing materials, survey

Donut Joe’s, Inc. v. Interveston Food Services, LLC, 116 F.Supp.3d 1290 (2015)

research, or even an affidavit supporting suggestiveness.” 1840431 at *9. As to evidence of actual consumer Id. at *1. confusion, Donut Joe’s only presented evidence of, at most, five instances of consumer confusion over a three *1294 Cross Commerce is indeed similar to the present year period. Id. Two of the remaining (and less important) case, where, as discussed in the court’s memorandum factors weighed slightly in Donut Joe’s favor, but, taken opinion accompanying summary judgment, Donut Joe’s as a whole, the factors did not come close to presenting a offered extremely weak arguments to establish that its question of material fact on the likelihood of consumer marks were protectable. Even after Interveston moved for confusion. Id. summary judgment on the ground that Donut Joe’s marks were descriptive and lacked secondary meaning (and were In its response to the pending Motion, Donut Joe’s argues therefore not protectable), Donut Joe’s made no attempt against attorney fees liability only under the previous either to argue that its marks fell into another category Eleventh Circuit standard, and gives no argument under (namely, suggestive or arbitrary) or to present any the standard laid out in Octane Fitness. (See Doc. 77 at 5, evidence that its mark possessed secondary meaning.3 stating “the current standard in the Eleventh Circuit (See Doc. 66 at 18–19). Instead, it relied on the argument applicable to the Lanham Act’s award of attorneys fees is that the mere fact of registration by the Patent and laid down in Tire Kingdom ”). Unfortunately for Donut Trademark Office gave its marks a “presumption of Joe’s, a successful defense under the Tire Kingdom test validity” raising “a factual issue that must be determined only shows that the case was not malicious, fraudulent, by the trier of fact.” (Id. at 17). This argument that deliberate and willful, and that no evidence of fraud or registration automatically precludes summary judgment bad faith exists. 253 F.3d at 1335 (“ ‘an exceptional case’ lacks any legal support, has been rejected explicitly by at is one that can be characterized as malicious, fraudulent, least five other circuits, and is in tension with precedent in deliberate and willful, or one in which evidence of fraud this circuit. See Donut Joe’s, Inc., 101 F.Supp.3d at or bad faith exists”) (internal citations and quotation 1182–83, 2015 WL 1840431 at *7 (summarizing Eleventh marks omitted). This does not relate to the first factor of Circuit precedent on Donut Joe’s argument). Under these Octane Fitness—the strength of the party’s litigating circumstances, the case does indeed qualify as positions—and so Donut Joe’s has not provided any “exceptional” under the Octane Fitness standard. arguments that address that factor

3 Indeed, Donut Joe’s mentioned Interveston’s argument that Donut Joe’s marks lacked secondary meaning and explicitly declined to address it, saying “analysis of this V. CONCLUSION argument is unnecessary.” (Doc. 66 at 19). For all of the forgoing reasons, the court finds that this case is “exceptional” under *1295 the Lanham Act, and that the Motion is therefore due to be GRANTED. The The parties’ positions on the second element of Donut court furthermore ORDERS Interveston to submit Joe’s claim reinforce this conclusion. On that issue—the evidence on the fees incurred and the value and likelihood of consumer confusion—Donut Joe’s made out reasonableness of its services within fourteen (14) days of a slightly stronger case, but its position was still entry of this order. Donut Joe’s will then have seven (7) substantially weaker than Interveston’s on the issue. The days to file any opposition to Interveston’s evidence. court found that the two factors most important to the consumer confusion test weighed heavily against Donut Joe’s. As to strength of the marks, Donut Joe’s marks All Citations were quite weak due to their nature as descriptive marks lacking secondary meaning, as well as widespread 116 F.Supp.3d 1290 third-party use of the elements of Donut Joe’s marks. See Donut Joe’s, Inc., 101 F.Supp.3d at 1185–86, 2015 WL

E.S.Y., Inc. v. Scottsdale Insurance Company, --- F.Supp.3d ---- (2015) 2015 WL 6164666

advertisement of copyright or trade dress, did not bar 2015 WL 6164666 coverage for underlying action; and Only the Westlaw citation is currently available. United States District Court, [6] under Florida law, as predicted by district court, S.D. Florida. knowing violation exclusion, precluding CGL coverage for advertising injuries caused by insureds with E.S.Y., Inc., et al., Plaintiffs, knowledge that act would violate rights of another, did v. not bar coverage for underlying action. Scottsdale Insurance Company, Defendant.

CASE NO. 15–21349–CIV Motion granted in part. | Signed October 14, 2015

West Headnotes (32) Synopsis

Background: Insureds brought action in state court against commercial general liability (CGL) insurer, [1] Federal Civil Procedure seeking declaration that underlying trademark and Presumptions copyright infringement action brought by competitor, an apparel designer and seller of garments, was covered In determining a summary judgment motion, the under advertising injury provision of policy. After court must view all the evidence and all factual removal, insureds moved for summary judgment. inferences reasonably drawn from the evidence

in the light most favorable to the nonmoving party and must resolve all reasonable doubts Holdings: The District Court, Cecilia M. Altonaga, J., about the facts in favor of the non-movant. Fed. held that: R. Civ. P. 56(a), (c).

[1] insureds’ hang tags, which hung off their garments and Cases that cite this headnote provided information to consumers, were

“advertisements” within meaning of advertising injury provision of CGL policy;

[2] insureds’ hang tags were an “advertising idea,” and [2] Federal Civil Procedure thus there was coverage under advertising injury Materiality and genuineness of fact issue provision of CGL policy based on insureds’ use of another’s advertising idea in their advertisement; An issue of fact is material in a summary

[3] judgment motion if it is a legal element of the insureds’ alleged copyright and trademark infringement claim under the applicable substantive law violations gave rise to alleged advertising injury, and thus which might affect the outcome of the case; a injury was covered under advertising injury provision of factual dispute is genuine if the evidence is such CGL policy; that a reasonable jury could return a verdict for the nonmoving party. Fed. R. Civ. P. 56(a), (c). [4] competitor sought damages in underlying copyright and trademark infringement action for advertising injuries it allegedly suffered as result of insureds’ use of hang tags, Cases that cite this headnote and thus injury was covered under advertising injury provision of CGL policy;

[5] infringement exclusion, precluding CGL coverage for advertising injuries arising out of copyright or trademark [3] Federal Civil Procedure infringement unless infringement was in insureds’ Burden of proof

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question of law to be determined by the court. The movant’s initial burden on a motion for summary judgment consists of a responsibility to inform the court of the basis for its motion Cases that cite this headnote and to identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits,

if any, which it believes demonstrate the [7] absence of a genuine issue of material fact. Fed. Insurance R. Civ. P. 56(a), (c). Plain, ordinary or popular sense of language

Under Florida law, insurance contracts must be Cases that cite this headnote construed in accordance with the plain language of the policy.

Cases that cite this headnote [4] Federal Civil Procedure Lack of cause of action or defense

The plain language of summary judgment rule [8] mandates the entry of summary judgment Insurance against a party who fails to make a showing Construction as a whole sufficient to establish the existence of an element essential to that party’s case, and on When interpreting an insurance contract under which that party will bear the burden of proof at Florida law, the insurance policy is read as a trial. Fed. R. Civ. P. 56. whole, with the court endeavoring to give each provision its full meaning and operative effect.

Cases that cite this headnote Cases that cite this headnote

[5] Insurance [9] Policies considered as contracts Insurance Insurance Ambiguity, Uncertainty or Conflict Application of rules of contract construction Insurance Exclusions, exceptions or limitations Under Florida law, an insurance policy is treated Insurance like a contract, and therefore ordinary contract Risks Covered and Exclusions principles govern the interpretation and construction of such a policy. Under Florida law, if insurance policy language is susceptible to more than one reasonable interpretation, one providing coverage and the Cases that cite this headnote other limiting coverage, the insurance policy is considered ambiguous; in that case, the ambiguous provision is construed in favor of the insured and strictly against the drafter.

[6] Insurance Questions of law or fact Cases that cite this headnote

As with all contracts, the interpretation of an insurance contract under Florida law is a

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[10] Insurance Burden of proof Exclusions, exceptions or limitations Under Florida law the insurer has the burden to Under Florida law, where the interpretation of establish that a policy exclusion applies; once an insurance contract involves exclusions to the insurer establishes an exclusion’s insurance contracts, the rule that the policy be applicability, the insured must prove an construed in favor of the insured is even clearer exception to the exclusion. in favor of strict construction against the insurer: exclusionary provisions which are ambiguous or otherwise susceptible to more than one meaning 2 Cases that cite this headnote must be construed in favor of the insured.

Cases that cite this headnote [14] Insurance Pleadings

Under Florida law, an insurer’s duty to defend is [11] Insurance triggered if the allegations of a complaint Function of, and limitations on, courts, in brought against the insured fall within the scope general of the insurer’s duty. Insurance Coverage--in General 1 Cases that cite this headnote Under Florida law, the court may not rewrite a contract of insurance, extending the coverage afforded beyond that plainly set forth in the insurance contract. [15] Insurance Pleadings Cases that cite this headnote Under Florida law, a court looks no further than to the terms of the insurance policy and the allegations of the complaint brought against the insured to determine if the duty to defend is [12] Insurance triggered. Burden of proof

When the parties dispute coverage and Cases that cite this headnote exclusions under an insurance policy, a burden-shifting framework applies under Florida law: a person seeking to recover on an insurance

policy has the burden of proving a loss from [16] causes within the terms of the policy, and if such Insurance proof of loss is made within the contract of Several Grounds or Causes of Action insurance, the burden is on the insurer to establish that the loss arose from a cause that is Under Florida law, if a complaint alleges facts excepted from the policy. partially within and partially outside the scope of insurance coverage, the insurer is obligated to defend the entire suit. 2 Cases that cite this headnote

Cases that cite this headnote

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Under Florida law, in contrast to the insurer’s [17] Insurance duty to defend, the duty to indemnify is Exclusions, exceptions or limitations determined by the facts adduced at trial or Insurance during discovery. In general; standard

As in any other insurance policy interpretation Cases that cite this headnote context under Florida law, doubts as to whether a duty to defend exists are resolved in favor of the insured, and exclusionary clauses in

insurance contracts are to be construed liberally [21] in favor of the insured. Insurance Defamation or disparagement

Cases that cite this headnote Under Florida law, competitor, a seller of garments, did not allege disparagement in its underlying trademark infringement action against insureds, and thus there was no coverage under advertising injury provision of insureds’ [18] Insurance commercial general liability (CGL) insurance Pleadings policy based on publication that disparaged person’s goods, products, or services; In determining whether an insurer has a duty to competitor alleged that insureds’ mark and hang defend under Florida law, the underlying tags on garments confused consumers and complaint is not read strictly: an insurer must infringed on its mark, and although competitor defend a lawsuit against its insured if the did not like that insureds allegedly copied it, underlying complaint, when fairly read, alleges imitation was not disparagement, as there was facts which create potential coverage under the no comparison suggesting that competitor’s policy. brand was inferior to insureds’ brand.

1 Cases that cite this headnote Cases that cite this headnote

[19] Insurance [22] Insurance Insurer’s Duty to Indemnify in General Advertising Injury Insurance In general; standard Insureds’ hang tags, which hung off their garments and provided information to With respect to indemnification under Florida consumers, were “advertisements” within law, because the insurer’s duty to defend is meaning of advertising injury provision of broader than the duty to indemnify, where there commercial general liability (CGL) insurance is no duty to defend, there is no duty to policy under Florida law, where hang tags not indemnify. only provided information to consumers, but were specially designed to have additional function of attracting consumers to the garments 3 Cases that cite this headnote themselves and to insureds’ brand more generally.

Cases that cite this headnote [20] Insurance Insurer’s Duty to Indemnify in General

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Advertising Injury [23] Insurance Advertising Injury An “advertising idea,” within meaning of advertising injury provision of commercial A company’s merely informational notice to the general liability (CGL) insurance policy under public is not an “advertisement” within meaning Florida law, is a concept about the manner a of advertising injury provision of commercial product is promoted to the public. general liability (CGL) insurance policy under Florida law. Cases that cite this headnote

Cases that cite this headnote

[27] Insurance Infringement [24] Insurance Favoring coverage or indemnity; disfavoring Advertising injury provision of commercial forfeiture general liability (CGL) insurance policy provided coverage under Florida law for Under Florida law, ambiguities within an underlying copyright and trademark insurance contract are resolved in favor of infringement action brought by competitor, a coverage. seller of garments, against insureds based on insureds’ alleged use of similar hang tags on their garments, where advertising injury Cases that cite this headnote provision provided coverage for infringing upon another’s copyright or trade dress in advertisement, and competitor alleged copyright infringement and trade dress infringement claims based upon insureds’ advertisement. [25] Insurance Infringement Cases that cite this headnote Under Florida law, insureds’ hang tags, which hung off their garments and provided information to consumers, were an “advertising idea,” and thus advertising injury provision of insureds’ commercial general liability (CGL) [28] Insurance insurance policy provided coverage for Infringement underlying trademark infringement action brought by competitor, alleging that insureds’ Insureds’ alleged copyright and trademark hang tags improperly used its advertising idea; infringement violations gave rise to alleged hang tags not only provided information to advertising injury suffered by competitor, a consumers, but were specially designed to have seller of garments, and thus injury was covered additional function of attracting consumers to under advertising injury provision of insureds’ the garments themselves and to insureds’ brand commercial general liability (CGL) insurance more generally, and hang tags were trade dress, policy under Florida law; competitor claimed which was advertising idea. that insureds’ copyright of its hang tags on garments caused harm to it by creating confusion among its consumers, and copyright Cases that cite this headnote infringement claim was premised not only on sale of products bearing insureds’ mark, but also on particular display of mark on insureds’ hang tags, which were used by insureds as

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advertisements. arising out of copyright or trademark infringement unless infringement was in insureds’ advertisement of copyright or trade Cases that cite this headnote dress, did not bar coverage for underlying trademark and copyright infringement claims brought by competitor, a seller of garments, against insureds; competitor alleged copyright

[29] and trade dress infringement in insureds’ use of Insurance similar hang tags on garments, and although Infringement alleged infringements happened to take place on hang tags which were used as advertisements, Simply selling an infringing product is not they also independently formed basis for trade sufficient to satisfy the causal connection dress infringement claim. requirement of advertising injury provision of commercial general liability (CGL) insurance policy under Florida law; rather, the alleged Cases that cite this headnote misconduct must be committed in an advertisement.

Cases that cite this headnote [32] Insurance Particular Exclusions

Under Florida law, as predicted by district court,

[30] knowing violation exclusion, precluding Insurance commercial general liability (CGL) insurance Infringement coverage for advertising injuries caused by insureds with knowledge that act would violate Competitor, a seller of garments, sought rights of another, did not bar coverage for damages in underlying copyright and trademark underlying trademark and copyright infringement action for advertising injuries it infringement claims brought by competitor, a allegedly suffered as result of insureds’ use of seller of garments, against insureds, although similar hang tags on garments, and thus injury competitor alleged intentional and knowing was covered under advertising injury provision misconduct, where competitor sought actual of insureds’ commercial general liability (CGL) damages for its copyright infringement claim insurance policy under Florida law, where and trademark infringement claims under competitor sought actual damages for trademark Lanham Act, and competitor was not required to infringement claims pursuant to Lanham Act prove intentional conduct to recover those and sought damages for copyright infringement damages. Lanham Trade-Mark Act § 35, 15 claim. Lanham Trade-Mark Act § 35, 15 U.S.C.A. § 1117. U.S.C.A. § 1117.

Cases that cite this headnote Cases that cite this headnote

[31] Insurance Attorneys and Law Firms Infringement Insurance Sagi Shaked, Shaked Law Firm, P.A., Aventura, FL, for Particular Exclusions Plaintiffs.

Under Florida law, infringement exclusion, Kathleen Johnson Maus, Julius Frederick Parker, III, precluding commercial general liability (CGL) Butler Pappas Weihmuller Katz et al, Tallahassee, FL, for insurance coverage for advertising injuries Defendant. © 2016 Thomson Reuters. No claim to original U.S. Government Works. 62

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facts indicate exactly what kind of business E.S.Y. conducts.

ORDER

CECILIA M. ALTONAGA, UNITED STATES A. The Exist Suit DISTRICT JUDGE Exist’s Second Amended Complaint (the “Exist Complaint”) (Exist Suit [ECF No. 29] ) was the operative *1 THIS CAUSE came before the Court on Defendant, complaint in the Exist Suit at the time Plaintiffs’ Scottsdale Insurance Company’s (“Defendant[’s]”) Complaint in the instant case was filed. (See Def.’s SUF ¶ Motion for Final Summary Judgment (“Defendant’s 2; see also Exist Compl.). The court summarized Exist’s Motion”) [ECF No. 21], filed August 18, 2015, along allegations as follows: with an Amended Statement of Undisputed Facts ... (“Defendant’s SUF”) [ECF No. 34], filed September 14, According to the [Exist Complaint], [Exist] is a maker, 2015. On September 2, 2015, Plaintiffs, E.S.Y., Inc. marketer, and seller of garments and uses multiple (“E.S.Y.”) and Yariv Shaked (“Shaked”) (together, trademarks and copyrighted designs throughout the “Plaintiffs”), filed a Second Amended Response ... and United States, including online. [Exist]’s trademarks Cross Motion for Summary Judgment (“Plaintiffs’ include the “Exist Shield Mark,” federally registered Motion”) [ECF No. 30], along with a Statement of with Registration No. 4,675,022, and registered in Undisputed Facts ... (“Plaintiffs’ SUF”) [ECF No. 31]. Florida with Registration No. T14000000643. See ECF Defendant filed a Memorandum in Opposition ... Nos. [29–1] (“For: Shorts; Sweatshirts; T–Shirts; (“Defendant’s Response”) [ECF No. 35]. Neither party Tank–Tops”); [29–2] (“T–Shirts, Tank Tops, Shorts filed a reply brief. The Court has carefully reviewed the Sets, Sweatshirts”). See also ECF No. [29–2] at 5 parties’ written submissions; the Complaint ... (indicating trademarks are used to identify product with (“Complaint”) [ECF No. 1–1]; the record; and applicable “labels and hang tags”). See also ECF No. [292] at law. 8–10 (images of clothes with [Exist]’s labels and hang tags). [Exist] also applied for and received a United States Copyright registration for its design (“the Exist Shield Design”), with Registration No. VA 1908820. See ECF No. [29–3]. I. BACKGROUND *2 [Exist] alleges [Plaintiffs] “began using an identical Defendant issued Plaintiffs1 a commercial general liability or substantially similar mark [ (the “Liquid Energy insurance policy (the “Policy”) providing, among other Shield Mark”) ] ... in connection with their own things, coverage for “advertising injury” liability, competing garments.” ECF No. [29] at 6. [Exist] including defense of claims with the requisite nexus to alleges [Plaintiffs] use labels and hang tags “in such a “advertising injury.” (Def.’s SUF ¶¶ 18–19; Pls.’ SUF ¶¶ manner that its use causes and is causing actual 11–14). Exist, Inc. (“Exist”), an apparel designer, later confusion in the marketplace, or is likely to cause such filed suit against Plaintiffs in this District in case number customer confusion, whereby consumers mistakenly 14–62429–CIV–BLOOM (the “Exist Suit”), which has assume that [Plaintiffs’] products offered under since been administratively closed upon the parties’ [Plaintiffs]’ Shield Mark are associated with or settlement. (See Def.’s SUF ¶¶ 1, 6; Exist Suit [ECF No. sponsored or approved by Exist.” Id. at 7. [Exist] also 88] ). Plaintiffs contend Defendant failed to fulfill its duty alleges [Plaintiffs] “created, sold, manufactured, caused under the Policy to defend them in the Exist Suit. (See to be manufactured, imported and/or distributed fabric generally Compl.; Pls.’ Mot.). As the outcome of this case and/or garments bearing labels or hang tangs that are turns on the allegations and claims in the Exist Suit and identical or substantially similar to [the] Exist Shield the terms of the Policy, the Court addresses those topics Design to numerous parties in the fashion and apparel first. business.” ECF No. [29] at 8–9. [Exist] provides images showing “sale of infringing goods in this 1 The Complaint alleges E.S.Y. does business under the Judicial District.” Id. at 9. See also ECF No. [29–4] at name “Liquid Energy” and Shaked is E.S.Y.’s 1–7 (images of clothes with [Plaintiffs]’ labels and “president/director/officer” (Compl.1), but neither the hang tags). Complaint nor the parties’ statements of undisputed (Exist Suit [ECF No. 58] 1–2 (alterations added)). © 2016 Thomson Reuters. No claim to original U.S. Government Works. 63

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deception....” (Exist. Compl. ¶ 57 (alterations added)). The Exist Complaint asserted seven counts: federal Exist further alleged Plaintiffs’ use of the Liquid Energy copyright infringement (Count I), federal vicarious and/or Shield Mark “constitute[d] false designation of origin, contributory copyright infringement (Count II), federal false or misleading description, and/or false or misleading unfair competition (Count III), federal false designation of representation as to the origin or sponsorship of the origin (Count IV), federal trademark infringement (Count goods.” (Id. ¶ 58 (alteration added)). According to Exist, V), Florida statutory trademark infringement (Count VI), “[s]uch unauthorized use cause [d], and [wa]s likely to and Florida common law unfair competition (Count VII). cause, confusion, mistake, or deception of others, as to the (See Exist Compl.). In the Prayer for Relief, Exist affiliation, connection, or association of [Plaintiffs] with requested, inter alia, injunctive relief, actual damages, Exist, and also cause[d], and [wa]s likely to cause, and treble damages. (See id. Prayer for Relief ¶¶ 1.a, 5, 6). confusion, mistake, or deception as to the origin, sponsorship, or approval of the goods and services of Counts I and II were brought under the Copyright Act, 17 [Plaintiffs] with those of Exist.” (Id. (alterations added; U.S.C. section 101 et seq. Exist sought damages under capitalization omitted)). Count I on the theory Plaintiffs, by making and selling garments with hang tags and labels bearing the Liquid *3 Count V sought damages and injunctive relief for Energy Shield Mark, infringed Exist’s copyright in the trademark infringement of a federally registered mark—a Exist Shield Design, which Exist used on its garments’ violation of Section 32(a) of the Lanham Act, 15 U.S.C. hang tags and labels. (See Exist Compl. Count I). Exist section 1114(1)(a). (See Exist Compl. ¶¶ 68–69). sought damages under Count II on the related theories: (1) According to Exist, Plaintiffs “used in commerce a Plaintiffs were subject to contributory liability because reproduction, counterfeit, copy, or colorable imitation of they “knowingly induced, participated in, aided and that registered mark [ (i.e., the Exist Shield Mark) ] in abetted in and profited from the illegal reproduction connection with the sale, offering for sale, distribution or and/or subsequent sales of” the infringing garments (id. ¶ advertising of goods and services provided by 47); and (2) Plaintiffs were vicariously liable “because [Plaintiffs].” (Id. ¶ 65 (alterations added)). they had the right and ability to supervise the infringing conduct and because they had a direct financial interest in The last two counts of the Exist Complaint were brought the infringing conduct” (id. ¶ 48). under Florida law. As to Count VI, Exist sought damages and injunctive relief under Florida Statute section 495.151 Counts III, IV, and V were brought under the Lanham for trademark infringement on the basis Plaintiffs Act, 15 U.S.C. section 1051 et seq. Under Count III, Exist infringed Exist’s Florida-registered mark. (See Exist claimed Plaintiffs were liable for “federal unfair Compl. Count VI). In Count VII, Exist asserted a claim of competition” on the basis Plaintiffs’ use of the Liquid Florida common law unfair competition, alleging Energy Shield Mark on hang tags and labels was “a false Plaintiffs’ “operation of a business ... offering for sale and or misleading description of fact as to the origin or selling garments bearing labels and hang tags with the sponsorship of [their] goods” and was also a “false infringing [Liquid Energy] Shield Mark [wa]s without association with Exist and Exist goods bearing such Exist’s authorization.” (Id. ¶ 79 (alterations added; Marks.” (Exist Compl. ¶ 53 (alteration added; capitalization omitted)). According to Exist, Plaintiffs capitalization omitted)). Exist further claimed Plaintiffs’ thereby “misappropriat[ed] and trad[ed] upon the use was “likely to cause confusion, mistake, or deception goodwill and business reputation represented by the Exist as to the source of [Plaintiffs]’ goods and [was] likely to Shield Marks.” (Id. ¶ 81 (alterations added; capitalization mislead consumers and retailers that the infringing goods omitted)). [were] authorized, sponsored, endorsed, licensed by, or affiliated with Exist.” (Id. ¶ 54 (alterations added; capitalization omitted)). B. The Policy Under Count IV, Exist sought damages and injunctive The parties’ dispute begins with the Policy’s “advertising relief on the theory Plaintiffs were liable for false injury” coverage provision (the “Coverage Provision”), designation of origin. (See id. ¶¶ 62–63). A claim of false which states: designation of origin, like a claim of unfair competition, is brought under Section 43(a) of the Lanham Act, 15 We will pay those sums that the U.S.C. section 1125(a). For Count IV, Exist alleged insured becomes legally obligated “[Plaintiffs]’ acts ... constitute[d] a false designation of to pay as damages because of origin, which [wa]s likely to cause confusion, mistake or “personal and advertising injury” to which this insurance applies. We © 2016 Thomson Reuters. No claim to original U.S. Government Works. 64

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will have the right and duty to knowledge that the act would violate the rights of another defend the insured against any and would inflict ‘personal and advertising injury’.” (Id. “suit” seeking those damages. (alteration added)). However, we will have no duty to defend the insured against any The other exclusion is the “Infringement Of Copyright, “suit” seeking damages for Patent, Trademark Or Trade Secret” exclusion (the “personal and advertising injury” to “Infringement Exclusion”), which excludes from which this insurance does not coverage: apply. *4 “Personal and advertising injury” arising out of the (Def.’s SUF ¶ 19).2 infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not 2 The coverage provision further limits coverage to include the use of another’s advertising idea in your injury “caused by an offense arising out of your business but only if the offense was committed in the “advertisement”. ‘coverage territory’ during the policy period.” (Def.’s SUF ¶ 19). The parties raise no dispute related to this However, this exclusion does not apply to limitation. infringement, in your “advertisement”, of copyright, trade dress or slogan.

(Id.). The critical term “advertising injury” is defined in the

Policy:

“Personal and advertising injury” means injury, C. Procedural History including consequential “bodily injury”, arising out of On January 29, 2015, Defendant refused Plaintiffs one or more of the following offenses: coverage, including a legal defense, with respect to the * * * Exist Suit. (See Compl. ¶ 8). Plaintiffs thus commenced this action in state court, seeking a declaration:3 (1) the d. Oral or written publication, in any manner, of Policy is valid; (2) the Exist Suit is covered under the material that slanders or libels a person or organization Coverage Provision; (3) Defendant has a duty to defend or disparages a person’s or organization’s goods, Plaintiffs in the Exist Suit; (4) Defendant must indemnify products or services; Plaintiffs if they are found liable in the Exist Suit; and (5) Defendant must pay attorney’s fees and costs in the Exist * * * Suit incurred by Plaintiffs as a result of Defendant’s refusal of coverage. (See id. Counts I, II). Plaintiffs also f. The use of another’s advertising idea in your seek attorney’s fees and costs incurred in bringing this “advertisement”; or action. (See id.). After filing its Answer ... [ECF No. 1–2] in state court, Defendant filed a Notice of Removal4 [ECF g. Infringing upon another’s copyright, trade dress or No. 1], invoking the Court’s diversity jurisdiction. (See id. slogan in your “advertisement”. ¶ 2). The Court agreed it has jurisdiction over this case and denied Plaintiffs’ motion to remand on June 30, 2015. (Id. (alterations added)). (See Order [ECF No. 19] ).

The related term “advertisement” is defined as “a notice 3 The Complaint does not indicate the statute pursuant to that is broadcast or published to the general public or which Plaintiffs seek relief, but given the Complaint specific market segments about your goods, products or was filed in state court, presumably Plaintiffs sought services for the purpose of attracting customers or relief under the Florida Declaratory Judgment Act. supporters....” (Id. (alteration added)). Because the case was removed to federal court based on diversity jurisdiction, however, the Court applies the Two exclusions in the Policy are relevant here. The first is federal Declaratory Judgment Act, 28 U.S.C. section the “Knowing Violation Of Rights Of Another” exclusion 2201. See Incredible Invs., LLC v. Fernandez–Rundle, (the “Knowing Violation Exclusion”), which excludes 984 F.Supp.2d 1318, 1323–24 (S.D.Fla.2013); from coverage “ ‘[p]ersonal and advertising injury’ Garden–Aire Vill. S. Condo. Ass’n Inc. v. QBE Ins. Corp., 774 F.Supp.2d 1224, 1227 (S.D.Fla.2011). caused by or at the direction of the insured with

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of Rule 56 mandates the entry of summary judgment against a party who fails to make a showing sufficient to establish the existence of an element essential to that 4 Defendant’s Notice of Removal is titled party’s case, and on which that party will bear the burden “DEFENDANT, AXIS SURPLUS INSURANCE of proof at trial.” Jones v. UPS Ground Freight, 683 F.3d COMPANY’S NOTICE OF REMOVAL.” 1283, 1292 (11th Cir.2012) (quoting Celotex, 477 U.S. at 322, 106 S.Ct. 2548 (alterations and internal quotation marks omitted)). The parties now cross-move for summary judgment, agreeing judgment is proper as a matter of law because no material facts are disputed. (See Def.’s Mot. 1; Pls.’ Mot. 1). III. ANALYSIS

Defendant argues it had no duty to defend Plaintiffs because the Exist Complaint did not allege Plaintiffs were II. LEGAL STANDARD liable to Exist for “personal and advertising injury,” as defined in the Policy. (See Def.’s Mot. 4–5). Defendant [1] [2]Summary judgment shall be rendered if the also avers, even if Exist did allege “personal and pleadings, the discovery and disclosure materials on file, advertising injury,” the Infringement Exclusion and the and any affidavits show that there is no genuine issue as Knowing Violation Exclusion preclude coverage. (See id. to any material fact and the movant is entitled to judgment 6–8). Given the foregoing, Defendant contends it is as a matter of law. See FED. R. CIV. P. 56(a), (c). In entitled to summary judgment. (See generally id.). making this assessment, the Court “must view all the evidence and all factual inferences reasonably drawn from Plaintiffs insist they, rather than Defendant, are entitled to the evidence in the light most favorable to the nonmoving summary judgment. (See generally Pls.’ Mot.). According party,” Stewart v. Happy Herman’s Cheshire Bridge, Inc., to Plaintiffs, given the Court must resolve any doubt 117 F.3d 1278, 1285 (11th Cir.1997), and “must resolve about Defendant’s duty to defend or indemnify in favor of all reasonable doubts about the facts in favor of the Plaintiffs, each of Defendant’s arguments fails. (See id. non-movant,” United of Omaha Life Ins. Co. v. Sun Life 2–5, 7–9, 10–12). Additionally, Plaintiffs argue the Ins. Co. of Am., 894 F.2d 1555, 1558 (11th Cir.1990). allegations in the Exist Complaint trigger two additional “An issue of fact is material if it is a legal element of the sub-provisions in the definition of “personal and claim under the applicable substantive law which might advertising injury.” (See id. 5–7, 9–10). In response, affect the outcome of the case.” Burgos v. Chertoff, 274 Defendant argues those coverage provisions likewise do Fed.Appx. 839, 841 (11th Cir.2008) (quoting Allen v. not entitle Plaintiffs to the relief they seek. (See Def.’s Tyson Foods Inc., 121 F.3d 642, 646 (11th Cir.1997) Resp. 5–9). (internal quotation marks omitted)). “A factual dispute is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ ” Channa Imps., Inc. v. Hybur, Ltd., No. 07–21516–CIV, 2008 WL A. Insurance Policy Construction 2914977, at *2 (S.D.Fla. July 25, 2008) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 1. General Principles S.Ct. 2505, 91 L.Ed.2d 202 (1986)). [5] [6] [7] [8] [3] [4] As the Court has jurisdiction owing to diversity *5 The movant’s initial burden on a motion for of citizenship, and the parties agree Florida law applies to summary judgment “consists of a responsibility to inform the Policy, the Court applies Florida law. See Rolyn Cos., the court of the basis for its motion and to identify those Inc. v. R & J Sales of Tex., Inc., 671 F.Supp.2d 1314, portions of the pleadings, depositions, answers to 1322 (S.D.Fla.2009) (citation omitted). “Under Florida interrogatories, and admissions on file, together with the law, an insurance policy is treated like a contract, and affidavits, if any, which it believes demonstrate the therefore ordinary contract principles govern the absence of a genuine issue of material fact.” Fitzpatrick v. interpretation and construction of such a policy. As with City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993) all contracts, the interpretation of an insurance contract is (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 a question of law to be determined by the court.” S.Ct. 2548, 91 L.Ed.2d 265 (1986) (alterations and Vozzcom, Inc. v. Beazley Ins. Co., Inc., 666 F.Supp.2d internal quotation marks omitted)). “[T]he plain language

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1321, 1328 (S.D.Fla.2009) (internal quotation marks and the insured fall within the scope of the insurer’s duty. See citations omitted). “[I]nsurance contracts must be Higgins v. State Farm Fire & Cas. Co., 894 So.2d 5, 9–10 construed in accordance with the plain language of the (Fla.2004) (citations omitted). A court looks no further policy.” Id. (alteration added; internal quotation marks than to the terms of the insurance policy and the and citation omitted). Further, the insurance policy is read allegations of the complaint brought against the insured to as a whole, with the Court endeavoring to give each determine if the duty to defend is triggered. See id. “If the provision its full meaning and operative effect. See id. at complaint alleges facts partially within and partially 1329 (citations omitted). outside the scope of coverage, the insurer is obligated to defend the entire suit.” MJCM, Inc. v. Hartford Cas. Ins. [9] [10] [11]If the policy language “is susceptible to more Co., No. 8:09–CV–2275–T–17TBM, 2010 WL 1949585, than one reasonable interpretation, one providing at *4 (M.D.Fla. May 14, 2010) (citation omitted). coverage and the other limiting coverage, the insurance policy is considered ambiguous.” Id. (internal quotation [17] [18]As in any other insurance policy interpretation marks, citations, and alteration omitted). In that case, the context, “[d]oubts as to whether a duty to defend exists “ambiguous provision is construed in favor of the insured are resolved in favor of the insured, and exclusionary and strictly against the drafter.” Id. (internal quotation clauses in insurance contracts are to be construed liberally marks and citations omitted). And where interpretation in favor of the insured.” Id. at *5 (alteration added; “involve[s] exclusions to insurance contracts, the rule is citation omitted). Likewise, the underlying complaint is even clearer in favor of strict construction against the not read strictly: “an insurer must defend a lawsuit against insurer: exclusionary provisions which are ambiguous or its insured if the underlying complaint, when fairly read, otherwise susceptible to more than one meaning must be alleges facts which create potential coverage under [the] construed in favor of the insured.” Sphinx Int’l, Inc. v. policy.” McCreary v. Fla. Res. Prop. & Cas. Joint Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 412 F.3d Underwriting Ass’n, 758 So.2d 692, 695 (Fla. 4th DCA 1224, 1228 (11th Cir.2005) (quoting State Farm Mut. 1999) (alteration added; citation omitted); see also Essex Auto. Ins. Co. v. Pridgen, 498 So.2d 1245, 1248 Ins. Co. v. Big Top of Tampa, Inc., 53 So.3d 1220, 1223 (Fla.1986)). Nevertheless, the Court may not “rewrite a (Fla. 2d DCA 2011) (“A liability insurer has no duty to contract of insurance[,] extending the coverage afforded defend a suit where the complaint on its face alleges facts beyond that plainly set forth in the insurance contract.” which fail to bring the case within the coverage of the AAA Life Ins. Co. v. Nicolas, 603 So.2d 622, 623 (Fla. 3d policy.” (citation omitted)). DCA 1992) (alteration added; citation omitted). [19] [20]With respect to indemnification, because the duty to *6 [12] [13]When the parties dispute coverage and defend is broader than the duty to indemnify, where there exclusions under a policy, a burden-shifting framework is no duty to defend, there is no duty to indemnify. See applies. “A person seeking to recover on an insurance Farrer v. U.S. Fid. & Guar. Co., 809 So.2d 85, 88 (Fla. policy has the burden of proving a loss from causes within 4th DCA 2002) (citation omitted). Further, in contrast to the terms of the policy[,] and if such proof of loss is made the duty to defend, “the duty to indemnify is determined within the contract of insurance, the burden is on the by the facts adduced at trial or during discovery.” Id. insurer to establish that the loss arose from a cause that is (citation omitted). excepted from the policy.” U.S. Liab. Ins. Co. v. Bove, 347 So.2d 678, 680 (Fla. 3d DCA 1977) (alteration added; citations omitted). Thus, Defendant, as the insurer, has the burden to establish a policy exclusion applies. See CDC B. Advertising Injury Builders, Inc. v. Amerisure Mut. Ins. Co., No. As indicated, the Coverage Provision of the Policy states 10–21678–CIV, 2011 WL 4454937, at *11 (S.D.Fla. Aug. Defendant “will pay those sums that the insured becomes 16, 2011) (citations omitted). Once the insurer establishes legally obligated to pay as damages because of ‘personal an exclusion’s applicability, the insured must prove an and advertising injury’ to which this insurance applies. exception to the exclusion. See id. (citation omitted). We will have the right and duty to defend the insured against any ‘suit’ seeking those damages.” (Def.’s SUF ¶ 19). The Policy also defines the term “advertising injury.” (Id.). The Eleventh Circuit interpreted a similar coverage provision under Florida law by applying the following 2. Duty to Defend analytical framework: first, pursuant to the plain language of the definition of “advertising injury,” the insured must [14] [15] [16] Under Florida law, an insurer’s duty to defend is prove an alleged violation “gave rise to an ‘advertising triggered if the allegations of a complaint brought against injury;’ ” and second, if the “advertising injury” definition © 2016 Thomson Reuters. No claim to original U.S. Government Works. 67

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is satisfied, then, pursuant to the plain language of the The operative term here is “disparage.” Disparage “advertising injury” coverage provision, the insured must means “to discredit or bring reproach upon by also prove “there exists a ‘causal connection’ between comparing with something inferior.” Webster’s Third that injury and the ‘advertising activity’ undertaken by” New International Dictionary (unabridged) 653 (1981); the insured. Hyman v. Nationwide Mut. Fire Ins. Co., 304 see also Black’s Law Dictionary 483 (7th ed.1999) F.3d 1179, 1186–87 (11th Cir.2002) (citation omitted).5 In (defining disparage as “[t]o dishonor (something or addition, because the Coverage Provision refers expressly someone) by comparison” or “[t]o unjustly discredit or to “damages,” Plaintiffs must show Exist sought detract from the reputation of (another’s property, damages—as opposed to other kinds of relief—for the product, or business)”). Further, as we have noted in particular advertising injuries as to which a causal previous cases, “disparagement [could] result[ ] from connection is established. See MJCM, 2010 WL 1949585, false comparisons” between products in which the at *6–7. comparison dishonors the product being compared. See, e.g., Skylink Techs., Inc. v. Assurance Co. of Am., 400 5 A third step of the analysis is whether the insured “was F.3d 982, 985 (7th Cir.2005) (citing McNeilab, Inc. v. engaged in ‘advertising activity’ during the policy Am. Home Prods. Corp., 848 F.2d 34, 38 (2d period when the alleged ‘advertising injury’ occurred.” Cir.1988)). Hyman, 304 F.3d at 1187 n. 7 (internal quotation marks and citations omitted). The parties do not dispute this Id. at 599 (alterations in original). Thus, the crux of temporal aspect of the analysis. disparagement is a comparison suggesting another brand is inferior.

*7 Plaintiffs argue the allegations of the Exist Complaint The Eleventh Circuit in Vector Products, Inc. v. Hartford satisfy (a) three different sub-provisions of the Policy’s Fire Insurance Co., 397 F.3d 1316 (11th Cir.2005), definition of “advertising injury” and (b) the other applied Florida law to find insurance coverage under a requirements of the Coverage Provision, thereby similar “disparagement” provision. There, the underlying triggering Defendant’s duty to defend. (See Pls.’ Mot. complaint as to which the insured sought coverage alleged 3–10). the insured’s advertisements made (a) false and deceptive statements of fact and (b) “specific examples of comparisons” suggesting the insured’s product was superior to the “leading brand” (i.e., superior to the plaintiff-competitor’s product). Id. at 1318. Although the 1. Sub–Provision D insurance policy was ambiguous as to whether the advertisement had to refer to the competitor’s name Sub–Provision D includes within the scope of “personal specifically (as opposed to merely calling it the “leading and advertising injury” the offense of “[o]ral or written brand”), the court resolved that ambiguity in favor of the publication, in any manner, of material that slanders or insured, finding the underlying complaint alleged libels a person or organization or disparages a person’s or disparagement. See id. at 1319. organization’s goods, products or services.” (Def.’s SUF ¶ 19 (alteration added)). Plaintiffs argue the Exist In so finding, the court explained it would not have been Complaint alleged slander and libel in addition to sufficient if the insurer had “merely touted its own disparagement. (See Pls.’ Mot. 5–7). Plaintiffs cite no product;” the underlying complaint alleged the insurer legal authority developing the slander and libel argument compared itself to its competitor in order to dishonor or (see id. 5–6), and as it is Plaintiffs’ burden to establish detract from the reputation of the competitor. Id. (citations coverage, the Court declines to address this unsupported omitted); see also Acme United Corp., 214 Fed.Appx. at argument. 600 (“These allegations clearly alleged that Acme’s advertisements drew a comparison between its products [21]Plaintiffs make more of an effort to advance their and stainless steel products and asserted that Acme’s disparagement argument, citing three cases in which products were superior because they contain titanium.”); courts have defined the term “disparage” in various Foliar Nutrients, Inc. v. Nationwide Agribusiness Ins. contexts. (See id. 6–7 (citing cases)). More on point here, Co., No. 1:14–CV–75 (WLS), ––– F.Supp.3d ––––, ––––, however, the Seventh Circuit in Acme United Corp. v. St. 2015 WL 5595523, at *7 (M.D.Ga. Sept. 21, 2015) Paul Fire & Marine Insurance Co., 214 Fed.Appx. 596 (“When Foliar reached out to PFS’ customers to both (7th Cir.2007), found use of the term “disparages” in an undermine PFS’ product and discourage PFS’ customers, insurance policy’s “advertising injury” definition to be under threats of expensive and time-consuming litigation, clear and unambiguous: from engaging in future business with PFS, this arguably © 2016 Thomson Reuters. No claim to original U.S. Government Works. 68

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amounted to oral disparagement of PFS’ goods, products, advertisements. (See Def.’s Mot. 5). or services.”). [23]The Policy defines “advertisement” as “a notice that is *8 Here, while the Liquid Energy Shield Mark and broadcast or published to the general public or specific Plaintiffs’ hang tags allegedly look like the Exist Shield market segments about your goods, products or services Mark and Exist’s hang tags, Plaintiffs’ conduct was not for the purpose of attracting customers or supporters.” alleged to make any express comparison to Exist. To the (Def.’s SUF ¶ 19). While broad, this definition of extent the visual similarity between the marks and tags “advertisement” nevertheless has its limitations. A can be construed as Plaintiffs’ implicit reference to Exist, company’s merely informational notice to the public is nothing about that reference was alleged to dishonor or not an “advertisement.” See Trailer Bridge, Inc. v. Ill. denigrate Exist. Exist may not have liked that Plaintiffs Nat’l Ins. Co., 657 F.3d 1135, 1143 (11th Cir.2011) allegedly copied them, but, at least under Exist’s (finding a news article containing quotations from an allegations, imitation is not disparagement as there was no interview with the insured’s CEO was not an comparison suggesting Exist’s brand was inferior to advertisement because its purpose was simply Plaintiffs’. See Vector Products, 397 F.3d at 1318; Acme informational). A notice that is part of the product itself United Corp., 214 Fed.Appx. at 599. arguably is not an “advertisement” either. (See Def.’s Mot. 5 (citing Bear Wolf, Inc. v. Hartford Ins. Co. of Moreover, while Exist alleged it suffered harm to its Southeast, 819 So.2d 818 (Fla. 4th DCA 2002); reputation by being associated with Plaintiffs (see Pls.’ Farmington Cas. Co. v. Cyberlogic Tech., Inc., 996 Mot. 6), that allegation merely implied Exist believed its F.Supp. 695 (E.D.Mich.1998))). brand was superior to Plaintiffs’. For disparagement to be alleged, Plaintiffs’ alleged misconduct must have Here, on a fair reading of the Exist Complaint, Plaintiffs’ suggested Plaintiffs’ brand was superior to Exist’s. There hang tags, as their name implies, were attached to is thus no coverage here based on a “publication ... that ... Plaintiffs’ garments but were not part of the garments disparages a person’s or organization’s goods, products or themselves—they hung off the garments. (See Exist services.” While the Liquid Energy Shield Mark and Compl. ¶¶ 29–37). And while the hang tags provided Plaintiffs’ hang tags allegedly confused customers and information—at a minimum, identifying the “Liquid infringed the Exist Shield Mark, Plaintiffs’ alleged Energy” brand—the hang tags’ special design presumably misconduct did not disparage Exist. had the additional function of attracting consumers to the garments themselves and to the brand more generally. If the hang tags’ only purpose was to provide information, they would not need such a particular aesthetic.

2. Sub–Provisions F and G *9 By way of contrast, as one knows from common experience, many products do not have fanciful hang tags Sub–Provision F brings within the scope of “personal and and instead have, for example, a plain white tag tucked advertising injury” “[t]he use of another’s advertising idea away inside them or, even more basically, a small price in your ‘advertisement,’ ” whereas Sub–Provision G tag sticker stuck on the base of the product or on some includes “[i]nfringing upon another’s copyright, trade other area the consumer does not readily notice. These dress or slogan in your ‘advertisement.’ ” (Def.’s SUF ¶ types of labels, which likewise are not part of the products 19 (alterations added)). Because coverage under both themselves, are hidden from the consumer’s eye lest they sub-provisions turns in part on whether Plaintiffs show detract from the product’s appeal. The hang tags here the allegations of the Exist Complaint satisfy the term presumably did the opposite—they attracted the “your ‘advertisement,’ ” the Court addresses this issue consumer. Defendant argues the Exist Complaint had no before examining the sub-provisions’ other requirements. allegations the hang tags were used to attract customers or were sufficiently exposed to the public. (See Def.’s Mot. 5). Fairly read, however, the Exist Complaint made those allegations. (See Exist. Compl. ¶¶ 23, 32). “Your ‘Advertisement’ ”

[22]No party disputes the “your” in the phrase “your [24]Of course, the hang tags were not detached from the ‘advertisement’ ” refers to Plaintiffs. Disputed, however, product in the way a billboard or magazine advertisement is Plaintiffs’ contention the “[h]ang tags are a form of is, but the broad definition of “advertisement” in the printed advertisement.” (Pls.’ Mot. 4 (alteration added)). Policy governs. If the hang tags did not clearly fit within According to Defendant, the hang tags are part of the this category, the definition at least is ambiguous with garments themselves and therefore cannot constitute

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respect to the question of the hang tags. Under Florida copied Exist’s hang tags (see Exist Compl. ¶¶ 29–37), the law, such ambiguities are resolved in favor of coverage.6 Exist Complaint alleges “[t]he use of another’s Thus, on a fair reading of the Complaint and a liberal advertising idea in your ‘advertisement.’ ” interpretation of this ambiguous Policy term, the hang tags were advertisements.7 Plaintiffs also argue a product’s trade dress is an “advertising idea” and Exist’s hang tags constitute trade 6 Defendant could have drafted an exclusion removing dress. (See Pls.’ Mot. 9–10). Defendant does not object, the hang tags from the definition of “advertisement,” and Plaintiffs are correct the Exist Complaint is fairly see, e.g., Superformance Int’l, Inc. v. Hartford Cas. Ins. read to allege hang tags are trade dress. See Hyman, 304 Co., 332 F.3d 215, 220 (4th Cir.2003) (noting policy F.3d at 1189 (“Because trade dress may encompass excluded from the definition of “advertisement” “the marketing or packaging designed to draw attention to a design, printed material, information or images product, it can constitute an ‘advertising idea’ ....” contained in, on or upon the packaging or labeling of (alteration added; citation omitted)). The Exist Complaint any goods or products”), but Defendant did not do so. therefore alleges the “use of another’s advertising idea in

your ‘advertisement’ ” for this reason as well.

7 The parties also disagree whether scattered uses of the *10 Sub–Provision G words “advertising” and “marketing” in the Exist Complaint are sufficient to satisfy the term [27]Sub–Provision G includes “[i]nfringing upon another’s “advertisement.” (See Def.’s Mot. 4–5; Pls.’ Mot. 7–8; copyright, trade dress or slogan in your ‘advertisement’ ” Def.’s Resp. 5–7). The Court declines to reach this as a cognizable offense within the definition of “personal issue given its finding the hang tags are advertisements. and advertising injury.” (Def.’s SUF ¶ 19 (alteration added)). There is no question the Exist Complaint asserts a claim of copyright infringement, and Defendant does not specifically contest Plaintiffs’ argument the Exist Complaint states a claim for trade dress infringement (see Sub–Provision F Pls.’ Mot. 8–9). In any event, Plaintiffs are correct Counts [25]Sub–Provision F brings within the scope of “personal III and IV may be interpreted as asserting claims of trade and advertising injury” “[t]he use of another’s advertising dress infringement, given Lanham Act claims of “unfair idea in your ‘advertisement.’ ” (Def.’s SUF ¶ 19 competition” and “false designation of origin” may be (alteration added)). Because the Exist Complaint satisfies interpreted, especially when fairly read in favor of the term “your ‘advertisement,’ ” the question remains coverage, as asserting claims of trade dress infringement. whether the Exist Complaint alleges Plaintiffs “use[d] See Hyman, 304 F.3d at 1186–87 & n. 6 (finding unfair another’s advertising idea.” No party disputes “another” competition claim brought under Section 43(a) of the refers to Exist, and the plain, broad word “use” is not Lanham Act could be construed as either a trade dress disputed either. The parties’ arguments focus instead on infringement claim or false designation of origin claim); the phrase “advertising idea.” According to Plaintiffs, see also Jones v. Fla. Ins. Guar. Ass’n, 908 So.2d 435, Exist’s use of hang tags is an “advertising idea” and Exist 442–43 (Fla.2005) (“It is well settled that an insurer’s alleged Plaintiffs’ hang tags improperly used Exist’s duty to defend its insured against a legal action arises advertising idea. (See Pls.’ Mot. 9–10). when the complaint alleges facts that fairly and potentially bring the suit within policy coverage.” [26]The Policy does not define “advertising idea.” “Yet, (citations omitted)). The allegations of the Exist the Eleventh Circuit, applying Florida law, has construed Complaint satisfy the elements of Sub–Provision G the term to mean ‘any idea or concept related to the because the Exist Complaint clearly claims copyright promotion of a product to the public.’ ” Trailer Bridge, infringement and can be fairly read to support a claim for 657 F.3d at 1143 (quoting Hyman, 304 F.3d at 1188). trade dress infringement. (See Exist Compl. ¶¶ 29–37, “Put another way, ‘[a]n advertising idea is a concept Counts III, IV). about the manner a product is promoted to the public.’ ” Trailer Bridge, 657 F.3d at 1143 (emphasis and alteration in original) (quoting Gemini Ins. Co. v. The Andy Boyd Co., Civil Action No. H–05–1861, 2006 WL 1195639, at C. The Coverage Provision *2 (S.D.Tex. May 3, 2006) (citing Hyman, 304 F.3d at 1188)). For substantially the same reasons a hang tag is an advertisement, it is also an advertising idea. And as the 1. Causal Connection Exist Complaint alleged Plaintiffs’ hang tags improperly © 2016 Thomson Reuters. No claim to original U.S. Government Works. 70

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[28]Similar to the definition in Hyman, the “advertising injury” definition here states advertising injury “means injury ... arising out of one or more of the following offenses....” (Def.’s SUF ¶ 19 (emphasis and alterations added)). By showing the allegations of the Exist 2. Damages

Complaint satisfy the elements of Sub–Provisions F and [30] G, Plaintiffs demonstrate the alleged violations “gave rise The Coverage Provision imposes one last requirement: to an advertising injury.” Hyman, 304 F.3d at 1186–87 Exist must have sought damages for the particular (citation omitted). advertising injuries as to which the causal connection is satisfied. The Policy specifically states Defendant “will The Coverage Provision, however, requires more than just pay those sums that the insured becomes legally obligated an “advertising injury”: like the provision in Hyman, it to pay as damages .... We will have the right and duty to also requires “a causal connection between that injury and defend the insured against any ‘suit’ seeking those the advertising activity undertaken by” Plaintiffs. Id. damages.” (Def.’s SUF ¶ 19 (emphasis and alterations Specifically, the provision states Defendant “will pay added)). Defendant is thus correct injunctive relief is not those sums that the insured becomes legally obligated to adequate. (See Def.’s Mot. 5 (citing MJCM, 2010 WL pay as damages because of ‘personal and advertising 1949585, at *6–7 (finding insurer had no duty to defend injury’ to which this insurance applies.” (Def.’s SUF ¶ 19 under a policy, like the Policy in this case, which imposed (emphasis added)). Plaintiffs therefore must show “the a duty to defend only when damages were sought against injury for which coverage is sought [is allegedly] caused the insured for advertising injury, because the underlying by the advertising itself.” Hyman, 304 F.3d at 1191–92 suit brought against the insured sought only injunctive (alteration added; internal quotation marks and citations relief))). omitted). Defendant analogizes this case to Trailer Bridge (see [29]As Defendant notes (see Def.’s Mot. 5), and as the Def.’s Resp. 7–8), in which the insurance policy required Eleventh Circuit explained, “[s]imply selling an the insurer “to pay any sums that [the insured] became infringing product is not sufficient to satisfy the causal legally obligated to pay as damages because of ‘personal connection requirement.” Hyman, 304 F.3d at 1192 and advertising injury’ and to defend [the insured] against (alteration added; citation omitted). Rather, the alleged any suit seeking such damages.” 657 F.3d at 1137 misconduct “[must] be committed in an advertisement.” (alterations added). As in the present case, the Eleventh Id. (alteration in original; internal quotation marks and Circuit in Trailer Bridge addressed the question of citations omitted). whether, under Florida law, the insurer had a duty to defend the insured in an underlying suit on the basis the *11 Plaintiffs have shown the Exist Complaint satisfies allegations in the underlying suit alleged advertising the causation requirement for the same reason that injury. See id. at 1138. The court held the insurer had no requirement was satisfied in Hyman : Exist claimed duty to defend because the underlying suit was an Plaintiffs’ copying of Exist’s hang tags caused harm to antitrust suit seeking antitrust damages, not damages Exist by creating confusion among Exist’s customers as to incurred because of advertising injury. See id. at 1139. In Exist’s hang tags and Plaintiffs’. (See Exist Compl. ¶¶ so holding, the court rejected the insured’s “convoluted 29–37); see also Hyman, 304 F.3d at 1194 (“Double R’s argument” that, because the underlying complaint alleged publication of advertisements featuring artwork similar to the insured’s CEO made certain statements in an the artwork in Inter–Global’s ads and promoting products interview in a newsletter in furtherance of a price-fixing substantially similar to Inter–Global’s products scheme, the interview was an advertisement, and thus the designated by similar model numbers to Inter–Global’s underlying suit sought damages based on an advertising model numbers [are] sufficient to create a nexus between injury. See id. at 1139, 1143. The argument was far too trade dress infringement and advertising.” (alteration tenuous. added)). The causation requirement is satisfied for the additional reason the copyright infringement claim is Plaintiffs’ argument here is not so tenuous, and indeed, it premised not only on the sale of products bearing the prevails. (See Pls.’ Mot. 4, 11). First, Plaintiffs’ use of the Liquid Energy Shield Mark, which infringes the allegedly hang tags fairly provides the basis of a claim for trade copyright-protected Exist Shield Design, but also on the dress infringement under Counts III and IV, and those particular display of the Liquid Energy Shield Mark on counts seek damages. Count IV explicitly requests Plaintiffs’ hang tags (i.e., Plaintiffs’ advertisements). (See damages (see Exist Compl. ¶ 62), and while Count III Exist Compl. ¶¶ 29–37, Count I). does not expressly indicate the type of relief sought, the Prayer for Relief makes both counts clear enough on this

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issue, at least under a fair reading: Exist sought actual because the underlying complaint asserted a claim of damages pursuant to 15 U.S.C. section 1117—the Lanham Act false advertising in addition to a Lanham Act provision containing the remedies for violations of trademark infringement claim. See id. at *5–6. The court Section 43(a) of the Lanham Act, i.e., the section under rejected that argument, finding the false advertising claim which Counts III and IV are asserted. (See id. Prayer for was “grounded on the alleged improper use of a Relief ¶ 6). trademark,” and so “ ‘arises from’ trademark infringement,” thereby triggering the exclusion. Id. at *6. Second, as explained, Exist’s copyright infringement claim has the requisite causal connection to advertising The Court will not follow Power Corp. because it is injury, and Exist sought damages for that claim. (See id. factually distinguishable in a critical respect. There, ¶¶ 42–43, 45). Plaintiffs have shown Exist sought although the insured established advertising injury, it did damages for the particular advertising injuries as to which so on the basis the alleged infringements happened to be the causal connections are established, and therefore presented in advertisements. See id. at *4–5. For that Plaintiffs have satisfied the requirements of the Coverage reason, among others, the court also found no claim of Provision. trade dress infringement could be discerned. See id. at *6–7. Here, while the alleged infringements happened to take place on hang tags, the hang tags are not just collateral facts—upon a fair reading of the Exist D. Exclusions Complaint, they also independently form the basis for a *12 Because Plaintiffs prove coverage under the Policy, claim of trade dress infringement. the burden shifts to Defendant to show an exclusion bars coverage. See Bove, 347 So.2d at 680. Defendant does not meet its burden.

2. The Knowing Violation Exclusion Defendant argues the Knowing Violation Exclusion also 1. The Infringement Exclusion applies. (See Def.’s Mot. 7–8). That exclusion bars coverage for “ ‘[p]ersonal or advertising injury’ caused by [31]Defendant argues the Infringement Exclusion precludes or at the direction of the insured with knowledge that the coverage. (See Def.’s Mot. 6–7). The first sentence of the act would violate the rights of another and would inflict Infringement Exclusion denies coverage for “advertising ‘personal and advertising injury’.” (Def.’s SUF ¶ 19 injury” “arising out of the infringement of copyright, (alteration added)). The Eleventh Circuit in Vector patent, trademark, trade secret or other intellectual Products addressed a similar exclusion in the context of property rights.” (Def.’s SUF ¶ 19). While this sentence the Lanham Act. There, the insured claimed the insurer arguably would exclude coverage here, the exclusion has had a duty to defend it in an underlying suit alleging false a carve-out that significantly limits the first sentence: advertising in violation of Section 43(a) of the Lanham “this exclusion does not apply to infringement, in your Act as well as state law unfair competition and deceptive ‘advertisement’, of copyright, trade dress or slogan.” (Id.). trade practices law. See Vector Prods., 397 F.3d at As explained in the foregoing discussion of 1317–18. The insurer denied coverage, stating, “[b]ecause Sub–Provision G, the Exist Complaint fairly alleges an allegation of willfulness and knowledge of falsity was copyright and trade dress infringement in Plaintiffs’ incorporated into each count of the [underlying] advertisements; thus, the Infringement Exclusion does not complaint,” it had no duty to defend “based on the bar coverage. exclusions [in the policy] for intent to injure and knowledge of falsity.” Id. at 1319 (alterations added). In Defendant urges the Court to find the exclusion applies response, the insured contended the exclusion did not for the same reason the court excluded coverage in Power preclude coverage because the plaintiff in the underlying Corp. v. Amerisure Insurance Co., No. suit could recover damages on its Lanham Act claims 2:12–cv–192–FtM–29DNF, 2013 WL 4523490 (M.D.Fla. without proving willfulness or knowledge of falsity, Aug. 26, 2013). (See Def.’s Mot. 6). In that case, the which it pleaded in an attempt to obtain treble damages in insured established “advertising injury” coverage based addition to actual damages. See id. The parties in the on allegations it infringed a trademark in its instant case make essentially the same arguments. (See advertisements. See Power Corp., 2013 WL 4523490 at Def.’s Mot. 7–8; Pls.’ Mot. 11–12). *4–5. The insured then argued an infringement exclusion similar to the one in the instant case did not bar coverage *13 The Lanham Act did indeed allow the underlying

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plaintiff in Vector Products to seek actual and treble The court acknowledged “Florida courts have not damages in the manner the insured described, see 397 answered the question presented here, whether there is a F.3d at 1320 n. 2 (citation omitted), but after surveying duty to defend when the underlying complaint contains relevant Florida case law and Eleventh Circuit decisions, factual allegations of knowing, willful, and intentional the court certified the issue to the Florida Supreme Court, acts but the causes of action alleged are not ones for as there was no Florida case law controlling “the fact intentional harms and can be proven without regard to pattern here where a cause of action was pleaded so that knowledge or intent.” Id. at *5. The court also policy exclusions for intent to injure and knowledge of recognized—as the instant case confirms—“[t]his falsity appear to apply, even though the law governing scenario often arises in the context of Lanham Act claims that cause of action makes it a strict liability offense.” Id. where plaintiffs plead intentional conduct in order to at 1320–21. Before the Florida Supreme Court rendered a obtain treble damages, but the plaintiff is not required to decision, however, the parties reached a settlement, prove intentional conduct in order to recover actual leaving the case settled but Florida law unsettled. See damages.” Id. (alteration added; citation omitted). Orlando Nightclub Enterprises, Inc. v. James River Ins. Co., No. 6:07–cv–1121–Orl–19KRS, 2007 WL 4247875, The court held the insurer was obligated to defend the at *7 (M.D.Fla. Nov. 30, 2007) (explaining the procedural insured, despite the allegations of intentional and knowing history of Vector Products ) (citation omitted). misconduct, because the insurer could be held liable in the underlying suit even if the plaintiff in that suit did not The instant case presents the Court with a fact pattern prove its allegations of intent and knowledge. See id. at substantially similar to that in Vector Products : an *5, 9. In so holding, the court explained why its approach underlying suit alleging Lanham Act, Copyright Act, and was correct under Florida law: related state law claims, and an insurance policy exclusion based on the insured’s alleged knowledge its *14 There cannot be a duty to actions would violate the underlying plaintiff’s rights and indemnify without a duty to defend. would inflict advertising injury. Furthermore, the Exist The [opposite] approach ... Complaint alleged “intentional, malicious, willful and provides the possibility that an wanton” misconduct (Exist Compl. ¶ 25), as well as insurer would have to indemnify its knowing violations of Exist’s rights (see id. ¶ 34). Those insured for covered damages allegations are incorporated into each count (see id. ¶¶ 38, without the insurer ever having to 46, 52, 56, 64, 71, 78), and also reiterated in the counts provide a defense to its insured. (see id. ¶¶ 45, 51, 60, 67, 74). Finally, the Exist This standard produces a result Complaint sought actual and treble damages. (See id. which is inconsistent and contrary Prayer for Relief ¶¶ 5, 6). to the fundamental premise of Florida law that the duty to defend At least two other federal courts in Florida have addressed is broader than the duty to this general issue since the Eleventh Circuit’s decision in indemnify. If this Court were to Vector Products, but the courts reached outcomes hold that the duty to defend is arguably in tension with each other. Plaintiffs rely on one determined strictly by allegations of those cases, and Defendant relies on the other. that are unnecessary to a finding of liability, then it would have to In the case Plaintiffs cite, Orlando Nightclub, the insured ignore the actual causes of actions sought to enforce the insurer’s duty to defend it in an alleged, the elements necessary to underlying lawsuit asserting claims of, among other sustain those causes of action, and things, trademark infringement and unfair competition the potential outcomes of a trial under the Lanham Act and Florida common law unfair based on those alleged claims. With competition. See 2007 WL 4247875, at *1. The knowing respect to the principle that the duty violation exclusion in that case had the same language as to defend is broader than the duty the Knowing Violation Exclusion here. See id. at *2. Also to indemnify, it is necessary for a as in this case, the plaintiff in the underlying suit sought court to consider both the actual damages for its Lanham Act claims but additionally allegations and the actual claims sought treble damages on the allegation the insured acted asserted in a complaint to with intent and knowledge—an allegation incorporated determine potential policy coverage into every count of the complaint. See id. at *4. which could give rise to a duty to defend.

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Id. at *9 (alterations added). The court read the underlying complaint as “replete with” allegations of intentional misconduct, and it further found Defendant, in contrast, urges the court to follow the case did “not present a situation in which the insured, CareMedic Systems, Inc. v. Hartford Casualty Insurance having been sued on one theory excluded by the policy, Co., No. 8:06–CV–1185–T–30MSS, 2008 WL 912437 must defend at trial another theory arguably covered by (M.D.Fla. Apr. 1, 2008), which can be read as taking a the policy.” Id. at 209. Yet, despite these findings, it is not different tack. In that case, similar to this one, in light of apparent why the underlying complaint in ABC allegations of willfulness and knowingly false statements, Distributing did not present such a situation—the court the insurer refused to defend its insured in an underlying recognized in passing the general possibility of making a suit “based on the [p]olicy’s exclusions to the duty to claim under the Lanham Act based on unintentional defend for intent to injure and knowledge of falsity.” Id. misconduct, but the court did not adequately explain why at *5 (alteration added). Unlike the instant case and the underlying complaint foreclosed that possibility. As Orlando Nightclub, however, the substantive claims in the Eleventh Circuit later explained in Vector Products, CareMedic were slander. See id. at *1. allegations of intentional misconduct allow a plaintiff to obtain treble damages under the Lanham Act, but a Similar to Plaintiffs here and the insured in Orlando plaintiff nevertheless may recover actual damages under Nightclub, the insured in CareMedic, relying in part on the Lanham Act absent proof of intent. See 397 F.3d at Orlando Nightclub, argued it could be liable for 1320 n. 2 (citing Chanel, Inc. v. Italian Activewear of defamation per se (one of the counts of the complaint) Fla., Inc., 931 F.2d 1472 (11th Cir.1991)). The Court can without proof of malice or falsity, and therefore the duty only assume the underlying complaint in ABC to defend was triggered. See id. at *6. The court rejected Distributing unambiguously pleaded it sought relief this argument as “unpersuasive” and found the insurer’s exclusively on the theory of intentional misconduct. duty to defend was not triggered. Id. at *6–7. The court’s reasoning for dismissing the argument is not entirely *15 This assumption is bolstered by an examination of the clear, although it relied on ABC Distributing, Inc. v. case law upon which the Fifth Circuit relied in reaching Lumbermens Mutual Insurance Co., 646 F.2d 207, 209 its decision. The main case, National Union Fire (5th Cir. Unit B 1981), in which the former Fifth Circuit, Insurance Co. v. Lenox Liquors, Inc., 358 So.2d 533 applying Florida law, found, “[even] if [the underlying (Fla.1977), was subsequently summarized and addressed plaintiff] could have gone to trial on a theory of by the Eleventh Circuit in Vector Products : unintentional [ ] violation ... the insurance company had a right to rely on the averments of the complaint that the In Lenox Liquors, the insurer refused to defend its [insured’s] actions had been intentional.” CareMedic Sys., insured, a liquor store, after the store’s president shot 2008 WL 912437, at *8 (quoting ABC Distrib., 646 F.2d and injured the underlying plaintiff during what the at 209) (alterations in original). store president erroneously believed to be a hold-up. [358 So.2d at 533. The underlying complaint only ABC Distributing, however, is distinguishable from the alleged claims sounding in intentional tort; however, instant case, and thus Defendant’s reliance on CareMedic the parties later reached a settlement in which they fails to persuade. At first glance, the facts in ABC stipulated that it appeared from discovery that the case Distributing are similar to the facts both in this case and would have been tried on a negligence theory rather cases like Orlando Nightclub and CareMedic. The than an as an intentional tort case. Id. at 534. The insured sought a defense from its insurer in an underlying Florida Supreme Court held that a duty to defend only suit in which it faced claims of trademark infringement. arises “where the complaint alleges a state of facts See ABC Distrib., 646 F.2d at 208. The underlying within the coverage of the insurance policy.” Id. at 535 complaint alleged the insured acted intentionally, which (emphasis added). arguably triggered the same type of policy exclusion present in the instant case. See id. The insured contended 397 F.3d at 1320 (alteration added). the exclusion was not triggered because it could be held liable in the underlying suit even without proof of intent, The Eleventh Circuit in Vector Products, however, but the Fifth Circuit rejected that argument on the “strict distinguished Lenox Liquors : “The cause of action stated rule” in Florida law that “[t]he insurance company, in in the Lenox Liquors complaint required an allegation of determining whether it has a duty to defend an action intent; the intent allegation in the case sub judice was against its insured, may rely on the allegations of the superfluous on the issue of liability (though not for treble complaint.” Id. at 208–09 (alteration added). damages).” Id. Lenox Liquors and, by extension, ABC Distributing are distinguishable from the instant case for the same reason.8 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 74

E.S.Y., Inc. v. Scottsdale Insurance Company, --- F.Supp.3d ---- (2015) 2015 WL 6164666

duty to defend, see Farrer, 809 So.2d at 88, and Plaintiffs 8 The other cases upon which the Fifth Circuit relied, do not develop any legal argument explaining why the Capoferri v. Allstate Insurance Co., 322 So.2d 625 duty to indemnify is triggered here, especially considering (Fla. 3d DCA 1975), and Federal Insurance Co. v. the Exist Suit settled. See Power Corp., 2013 WL Applestein, 377 So.2d 229 (Fla. 3d DCA 1979), are 4523490 at *3 n. 6. The Court therefore declines to similarly distinguishable. declare Defendant has any duty to indemnify Plaintiffs, and thus grants Plaintiffs’ Motion only in part—relief which Plaintiffs themselves acknowledge would be [32]Defendant’s reliance on CareMedic thus fails to appropriate. (See Pls.’ Mot. 12). persuade. The Court finds Orlando Nightclub, which was predicated on more recent Florida law, as articulated in Vector Products and Lime Tree Village Community Club Association, Inc. v. State Farm General Insurance Co., 980 F.2d 1402 (11th Cir.1993), much more persuasive. IV. CONCLUSION Accordingly, the Court adopts the approach used in *16 For the foregoing reasons, it is Orlando Nightclub ; under that logic, because the Exist Complaint sought actual damages for its copyright ORDERED AND ADJUDGED that Defendant’s Motion infringement claim and claims under Section 43(a) of the [ECF No. 21] is DENIED; and Plaintiffs’ Motion [ECF Lanham Act, the Knowing Violation Exclusion does not No. 30] is GRANTED in part. Defendant had a duty to bar coverage. defend Plaintiffs in the Exist Suit. A final judgment will be entered by separate order. In sum, Plaintiffs demonstrate coverage, and Defendant fails to prove an exclusion. Consequently, Defendant had DONE AND ORDERED in Miami, Florida, this 14th a duty to defend Plaintiffs in the Exist Suit. day of October, 2015.

E. Indemnification All Citations A few scattered and general statements in Plaintiffs’ Motion indicate Plaintiffs seek a declaratory judgment --- F.Supp.3d ----, 2015 WL 6164666 Defendant also has a duty to indemnify them with respect to liability incurred in the Exist Suit. (See Pls.’ Mot. 1–2, 12). The duty to indemnify, however, is broader than the

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153

784 F.3d 1404 United States Court of Appeals, West Headnotes (10) Eleventh Circuit.

HOME LEGEND, LLC, [1] Copyrights and Intellectual Property Plaintiff–Appellee–Counter Defendant, Trial v. MANNINGTON MILLS, INC., Whether a work is sufficiently original to merit Defendant–Appellant–Counter Claimant, copyright protection is a question of fact. Power Dekor Group Co. Ltd., Consol., Defendant–Appellee. Cases that cite this headnote No. 14–13440. | April 29, 2015.

[2] Copyrights and Intellectual Property Originality of Work; Creativity Synopsis Background: Alleged copyright infringer brought Originality is not novelty; instead, copyrightable declaratory judgment action against copyright owner originality requires only independent creation by seeking declaration that copyright for laminate flooring the author plus a modicum of creativity. design was invalid after owner requested that alleged infringer stop selling the allegedly infringing products. Owner counterclaimed for copyright infringement. The Cases that cite this headnote District Court for the Northern District of Georgia, No. 4:12–cv–00237–HLM, 32 F.Supp.3d 1273, granted summary judgment for alleged infringer on owner’s counterclaim. Owner appealed. [3] Copyrights and Intellectual Property Originality of Work; Creativity

Holdings: The Court of Appeals, Ed Carnes, Chief Judge, Laminate flooring design, which the copyright held that: owner designed to look like rustic wood planks, was not a slavish copy of nature, but expressed [1] flooring design was not a slavish copy of nature, but an idea with a sufficient level of creativity for it expressed an idea with a sufficient level of creativity for it to be protectable by copyright, even though the to be protectable by copyright; expression may not have been highly creative, where owner’s designers used stain, paint, hand [2] flooring design was sufficiently separable from the tools, and digital photography retouching to useful article for it to be copyrightable; express their concept of what a wood plank might look like after years of wear, and [3] flooring design copyright was not directed toward a expressed their concept first on wood, and then process or idea that was not copyrightable, but was scanned it to digital images to use in their directed at artwork that was copyrightable; and flooring product. 17 U.S.C.A. § 102(b).

[4] flooring design was a derivative work given limited copyright protection. Cases that cite this headnote

Reversed and remanded.

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153

and reproductions 1 Cases that cite this headnote Laminate flooring design was a compilation of individual wood plank images expressing original selection and creative coordination of elements sufficient for the design to be [7] copyrightable, even if the individual plank Copyrights and Intellectual Property images were not copyrightable, where designers Pictorial, graphic, and sculptural works used some minimal level of creativity in selecting and arranging planks to digitally scan “Separability” for the purpose of assessing to create the final design that best captured their copyright eligibility of a useful article’s design conception of rustic wood flooring, and means that the design is either physically designers exercised artistic judgment in severable from the utilitarian article or selecting the images they believed looked best conceptually severable. 17 U.S.C.A. § 101. together. 17 U.S.C.A. § 103. 1 Cases that cite this headnote Cases that cite this headnote

[8] Copyrights and Intellectual Property [5] Copyrights and Intellectual Property Pictorial, graphic, and sculptural works Compilations and derivative works; copies and reproductions Laminate flooring design, which copyright owner designed to look like rustic wood planks, A compilation even of uncopyrightable elements was not directed toward a process or idea that is eligible for copyright protection so long as the was not copyrightable, but was directed at compiler independently selects or arranges the artwork that was copyrightable, despite owner’s elements and displays some minimal level of focus in its briefs to the court and its evidence creativity in doing so. 17 U.S.C.A. § 103. on the idea of reproducing the look of rustic hardwood and the process used to obtain that result; owner was not trying to copyright the Cases that cite this headnote process through which it produced the design, but was demonstrating the copyrightable originality by presenting evidence of how it created the design. 17 U.S.C.A. §§ 101, 102.

[6] Copyrights and Intellectual Property Pictorial, graphic, and sculptural works Cases that cite this headnote

Laminate flooring design, which copyright owner designed to look like rustic wood planks, was sufficiently separable from the useful [9] article, namely the flooring to which the owner Copyrights and Intellectual Property applied the design, for it to be copyrightable, Pictorial, graphic, and sculptural works where allegedly infringing flooring manufacturer used a virtually identical copy of The use of a patented process to create an the design in its own flooring, design could be original design does not mean that the design is physically separated from the flooring and other not copyrightable. 17 U.S.C.A. § 102; 35 designs used on same flooring, and design could U.S.C.A. § 101. be conceptually separated from the flooring and used, for example, as a piece of wall art. 17 Cases that cite this headnote U.S.C.A. § 101.

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153

[10] Copyrights and Intellectual Property Compilations and derivative works; copies ED CARNES, Chief Judge: and reproductions

Laminate flooring design, which copyright owner designed to look like rustic wood planks, I. was a derivative work given limited copyright protection, and thus the copyright protection Mannington Mills, Inc. appeals the grant of summary only extended to identical and near-identical judgment in favor of Home Legend, LLC, that copies of the design, where design reflected the Mannington’s registered copyright in its “Glazed Maple” uncopyrightable features of natural wood design is invalid. planks, which are in the public domain, but added a relatively small amount of art to the planks in modifying them to look rustic and worn. 17 U.S.C.A. § 103(b). *1407 A.

1 Cases that cite this headnote Because this is Mannington’s appeal of the grant of summary judgment against it, we view all evidence and draw all reasonable inferences in the light most favorable to Mannington, the non-moving party. See Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir.2012). In that light, the facts are these. Attorneys and Law Firms

*1406 W. Thad Adams, III, Shumaker Loop & Kendrick, Mannington and Home Legend both sell (among other LLP, Charlotte, NC, Edward Hine, Jr., Law Offices of products) laminate wood flooring. Laminate flooring Edward Hine, Jr., PC, Rome, GA, for consists of three functional layers, starting from the Plaintiff–Appellee–Counter Defendant, bottom: a balancing or stabilizing layer, often made of Defendant–Appellee. water-resistant resin; a core board of wood fiber mixed with resin and pressed at high temperatures to form a Sherry H. Flax, Jennifer A. Derose, Robin Leone, Saul strong and solid board; and a transparent wear-resistant Ewing, LLP, Baltimore, MD, Ansel Franklin Beacham, overlay. Because the resulting flooring is not much to III, Samuel L. Lucas, Brinson Askew Berry Seigler look at, laminate flooring manufacturers add a decorative Richardson & Davis, LLP, Rome, GA, for layer called “décor paper” between the core board and the Defendant–Appellant–Counter Claimant. transparent overlay. This décor paper features a piece of two-dimensional artwork and could depict any design Heidi K. Abegg, Webster Chamberlain & Bean, capable of two-dimensional representation, though in Washington, DC, for amicus curiae North American practice the décor paper usually appears to be a typical Laminate Flooring Association, Inc. flooring material like wood or stone that looks better (and costs more) than unadorned laminate flooring. Joshua J. Kaufman, Meaghan H. Kent, Venable, LLP, Washington, DC, for amicus curiae Resilient Floor The copyright at issue in this case covers Mannington’s Covering Institute Toggle Section. décor paper design called “Glazed Maple,” which is a huge digital photograph depicting fifteen stained and Appeal from the United States District Court for the apparently time-worn maple planks. That appearance, Northern District of Georgia. though, is only an appearance. In 2008, three Mannington Before ED CARNES, Chief Judge, JILL PRYOR and employees created the Glazed Maple design not from HIGGINBOTHAM,* Circuit Judges. aged planks but from raw wood. After initial research and * Honorable Patrick E. Higginbotham, United States brainstorming about home decor trends, they decided to Circuit Judge for the Fifth Circuit, sitting by create an aged and rustic look. The team did not seek out designation. an actual aged wood floor from which to create the design but instead “envision[ed what] a floor could look like after” twenty or thirty years, including the effects “age © 2016 Thomson Reuters. No claim to original U.S. Government Works. 78

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153

and wear and patina” might have on the planks. allegedly infringing products. On October 8, 2012, Home Legend responded by filing suit in the district court, The Mannington team began with between fifty and seeking a declaratory judgment that Mannington’s seventy-five raw, smooth-milled white maple planks. copyright was invalid. Mannington counterclaimed for With a selection of hand tools, they added gouges, dents, copyright infringement and moved for a preliminary nail holes, ripples, “chatter marks,” and other surface injunction, a motion that the district court denied.1 imperfections to the wood in an effort to make it look like floorboards that had been walked across for many years. 1 Mannington filed an interlocutory appeal of the order Then, using rags, sponges, and dry brushes, they applied denying its preliminary-injunction motion, but we layers of stain to the planks, more darkly and heavily at dismissed that appeal without prejudice on the joint the edges of the boards to create the appearance of motion of the parties. increased wear in the boards’ centers. And as the team intended, the stain pooled in some of the textured areas they had created, making darker spots on the wood. They At the close of discovery, Home Legend moved for selected and applied more than one stain color. The team summary judgment, arguing that Mannington’s registered chose to accentuate some of the naturally occurring marks Glazed Maple copyright did not cover copyright-eligible and to de-emphasize others, and they used more stain and subject matter. The district court granted summary paint to add effects like shadowing, simulated mineral judgment to Home Legend on three alternative grounds. streaks, and dark spots that were not present on the raw One ground was that Mannington’s Glazed Maple design wood. lacked the requisite originality to be an “original work[ ] of authorship” eligible for copyright protection under 17 Once they were satisfied with these prototype planks, the U.S.C. § 102(a). Another was that the Glazed Maple Mannington team experimented with various selections design was “simply not separable from the functional and arrangements of the boards to choose combinations of element of the flooring,” and that “the 2–D artwork [of planks that the team thought would look good in a home. the Glazed Maple design] would not be marketable if it They then chose about thirty of the planks to photograph were separated from the functional elements of the with a high-resolution digital scanner. One of the team flooring.” On that basis, the district court concluded that members then made more changes to the digital images, the Glazed Maple copyright was a “functional component deleting areas that were “a little heavy,” retouching other of the flooring itself” and therefore not eligible for areas, and altering the contrast where boards were “too copyright. See 17 U.S.C. § 101 (“[T]he design of a useful dark or too light” in comparison with the group as a article, as defined in this section, shall be considered a whole. The team printed out the resulting images, selected pictorial, graphic, or sculptural work only if, and only to fifteen of them, and made a composite of those fifteen the extent that, such design incorporates pictorial, graphic, plank images into a single 120–inch–by–100–inch digital or sculptural features that can be identified separately image—the Glazed Maple design. from, and are capable of existing independently of, the utilitarian aspects of the article.”). The district court’s remaining alternative ground for summary judgment was that Mannington’s copyright was directed to an “idea or process,” namely the process of recreating the appearance *1408 B. of rustic and aged maple planks. See 17 U.S.C. § 102(b) The United States Register of Copyrights registered (“In no case does copyright protection for an original Mannington’s copyright in its Glazed Maple design in work of authorship extend to any idea, procedure, [or] November 2010. The copyright covers the process....”). This is Mannington’s appeal. two-dimensional Glazed Maple design. Although Mannington sells flooring bearing its Glazed Maple design under the name “Time Crafted Maple,” it is the image, not the flooring product, that is the subject of the II. copyright and thus at issue in this case. We review de novo a grant of summary judgment. In September 2012, Mannington discovered that its Hamilton, 680 F.3d at 1318. And as we mentioned above, competitor Home Legend was selling laminate flooring we view all evidence and draw all inferences in the light products with designs that it alleges were “virtually most favorable to the non-moving party. Id. Summary identical in every respect” to the Glazed Maple design. judgment is appropriate only if “the movant shows that Mannington requested that Home Legend stop selling the there is no genuine dispute as to any material fact and the © 2016 Thomson Reuters. No claim to original U.S. Government Works. 79

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153

movant is entitled to judgment as a matter of law.” Fed. 1287 (quotation marks omitted). As the Supreme Court R. Civ. P. 56(a); Hamilton, 680 F.3d at 1318. has noted, “the requisite level of creativity is extremely low; even a slight amount will suffice.” Feist, 499 U.S. at Mannington challenges each of the three alternative 345, 111 S.Ct. at 1287; see also Montgomery v. Noga, grounds that the district court gave as the basis for its 168 F.3d 1282, 1290 (11th Cir.1999) (same). For decision. First, Mannington contends that the Glazed example, we have noted that a photograph of another Maple design is not a slavish copy of a work of nature but artwork, so long as it involved minimal creativity in the instead is an artwork Mannington *1409 created that is “selection of lighting, shading, timing, angle, and film” is sufficiently original to merit copyright protection. Second, sufficiently original for copyright protection. Leigh v. it argues that the artwork is both physically and Warner Bros., Inc., 212 F.3d 1210, 1215 (11th Cir.2000). conceptually separable from the laminate flooring to which it has been applied, and that, as a result, the district court’s ruling that the copyright covered a “useful article” was error. And, third, Mannington contends that the copyright covers the two-dimensional Glazed Maple 1. design, not Mannington’s procedure or process for creating it, and thus the district court’s ruling that the The district court determined that Mannington’s Glazed copyright was directed to an uncopyrightable idea or Maple design was merely “a design depicting or copying process was error. elements found in nature—the look of a rustic, aged wooden floor.” Mannington’s design team began with raw wooden planks, which had naturally occurring wood grain. Because the shape of that wood grain is a product of nature, not of Mannington, it would not be eligible for A. copyright protection. See Feist, 499 U.S. at 346, 111 S.Ct. at 1288 (copyright is “limited to original intellectual [1] Mannington contends that the district court erred when conceptions of the author”) (quotation marks omitted); it found that the Glazed Maple design was not original see also Meshwerks, Inc. v. Toyota Motor Sales U.S.A., enough to be copyright eligible. To qualify for copyright Inc., 528 F.3d 1258, 1265 (10th Cir.2008) (“[W]orks are protection, a work must be original. 17 U.S.C. § 102(a) not copyrightable to the extent they do not involve any (“Copyright protection subsists ... in original works of expression apart from the raw facts in the world.”). Nor is authorship fixed in any tangible medium of expression.”) the rectangular shape of the plank anything but *1410 (emphasis added); Feist Publ’ns v. Rural Tel. Serv. Co., what the plank’s function dictates—and thus that shape is Inc., 499 U.S. 340, 351, 111 S.Ct. 1282, 1290, 113 also not copyrightable. See 17 U.S.C. § 101 (“[T]he L.Ed.2d 358 (1991) (“As we have explained, originality is design of a useful article ... shall be considered a pictorial, a constitutionally mandated prerequisite for copyright graphic, or sculptural work only if, and only to the extent protection.”). Whether a work is sufficiently original to that, such design incorporates ... features that can be merit copyright protection is a question of fact. See BUC identified separately from, and are capable of existing Int’l Corp. v. Int’l Yacht Council Ltd., 489 F.3d 1129, independently of, the utilitarian aspects of the article.”). 1151 (11th Cir.2007) (noting that “[t]he jury’s determination that BUC’s copyrights were valid was And while photographs of natural objects may be original, necessarily based on several factual findings, including it is difficult to imagine that the “selection of lighting, that BUC’s compilation contained original elements of shading, timing, angle, and film” in a scan of a raw wood creative authorship.”). plank—the goal being to duplicate as exactly as possible the appearance of that plank in a digital medium so it [2] Originality is not novelty. Feist, 499 U.S. at 358, 111 could be faithfully reproduced on laminate S.Ct. at 1294. Instead, copyrightable originality requires flooring—would be sufficiently original to support a only “independent creation” by the author “plus a copyright in such an individual image. See Leigh, 212 modicum of creativity.” Id. at 346, 111 S.Ct. at 1288. In F.3d at 1215 (describing those selections as the “elements other words, the originality requirement is a low bar. of artistic craft” protected by a photographer’s copyright); Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 Meshwerks, 528 F.3d at 1265 (“[T]he facts in this case F.2d 821, 824 (11th Cir.1982); see also Feist, 499 U.S. at unambiguously show that Meshwerks did not make any 358, 111 S.Ct. at 1294 (describing the degree of creativity decisions regarding lighting, shading, the background in required as “minimal”). The requirement is that the work front of which a vehicle would be posed, the angle at possess “some creative spark, no matter how crude, which to pose it, or the like—in short, its models reflect humble or obvious.” Feist, 499 U.S. at 345, 111 S.Ct. at none of the decisions that can make depictions of things

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153

or facts in the world, whether Oscar Wilde or a Toyota that the Copyright Office had not acted arbitrarily or Camry, new expressions subject to copyright capriciously when it denied copyright protection to protection.”). Proline for concrete stamp casts “molded from real stone complete with cut marks and defects.” Id. at *17. [3] The Mannington designers did not, however, scan raw That court agreed with the Copyright Office’s wooden planks. Instead the evidence, viewed in the light determination that the casts were mere “slavish copies” most favorable to Mannington, shows that they imagined of “existing stones or rocks.” Id. at *17–18. But this is what a deeply stained maple floor might look like after not Proline. Although rocks and stones are “elements found in nature,” see id., so far as the record shows, years of wear, and then they used stain, paint, hand tools, nature in its boundless invention has yet to produce a and digital photo retouching to express their concept first single “rustic, aged wooden floor” matching the Glazed on wood and then as digital images. Ideas alone are not Maple design. Unlike Proline, Mannington did not protectable. See 17 U.S.C. § 102(b) (“In no case does simply copy a naturally occurring thing. It transformed copyright protection ... extend to any idea....”). But if the the elements found in nature and those dictated by expression of an idea is sufficiently creative, that utility—that is, the raw maple planks—into the expression is protectable. And when the level of creativity expression of its rustic floor idea. in an expression is at issue, testimony about the ideas that informed the expression is evidence of that creativity. Mannington’s idea of a distressed maple floor is not Home Legend, for its part, analogizes Mannington’s protectable, but Mannington’s testimony about that idea creative efforts to the work in the “sweat of the brow” shows that the idea’s expression in the Glazed Maple cases. The decisions in those cases granted broad design was the product of creativity, not a slavish copy of copyrights over the facts themselves in factual nature. Perhaps that expression is not highly creative, but compilations as “a reward for the hard work that went into it does not need to be. The decisions Mannington made in compiling” them. Feist, 499 U.S. at 352, 111 S.Ct. at the location and character of the marks it added to the 1291. But those decisions were abrogated by the boards render its contributions creative enough to hurdle Copyright Act of 1976, which made clear that originality, the low bar of copyrightable originality. See Feist, 499 not labor, was the prerequisite of copyright. See 17 U.S.C. U.S. at 345, 111 S.Ct. at 1287. § 102(a); Feist, 499 U.S. at 352–55, 111 S.Ct. at 1291–93. In Home Legend’s analogy, Mannington’s work creating This case is not like the Tenth Circuit’s decision in the Glazed Maple design was nothing more than mere Meshwerks Inc. v. Toyota Motor Sales U.S.A., Inc., 528 labor, “sweat of the brow” that is not copyrightable. But F.3d 1258 (10th Cir.2008). That court held that the analogy does not fit. Meshwerks’ computer wireframe models of Toyota vehicles lacked protectable originality over the original The effort that creative labor requires does not render the Toyota vehicles. Id. at 1266–67. The key to that holding labor uncreative. Drafting and editing a novel usually was that Meshwerks merely copied Toyota’s work, adding requires months or years of toil over a keyboard. A nothing original to the “unadorned Toyota vehicles—the masterpiece painting may require many preliminary car as car.” Id. at 1265; see also id. at 1264 (“[W]e think studies and countless hours of exacting brushwork. Meshwerks’ models are not so much independent Carving or assembling a sculpture may involve creations as (very good) copies of Toyota’s vehicles.”). backbreaking physical exertion. All of those are examples To determine whether Meshwerks’ models were original, of creative labor that is creative. So is Mannington’s the court asked whether Meshwerks had “an earlier work selection and preparation of raw maple planks to express in mind” when it created its models and the court the rustic-floor idea in the Glazed Maple design. Cf. Feist, answered that Meshwerks did: it had Toyota’s earlier 499 U.S. at 361, 111 S.Ct. at 1296 (describing work in mind. Id. at 1268 (quotation marks omitted). uncopyrightable facts as those that exist in the world Here, by contrast, the evidence shows that Mannington without the intervention of the purported copyright did not have another work in mind. At most, it had in holder). It involved more than mere sweat-of-the-brow mind a genre: rustic flooring. It created a *1411 digital labor. The design did not lack copyrightable originality. artwork in that genre. The creative work was all Mannington’s.2

2 The district court compared the facts of this case with 2. those in Proline Concrete Tools, Inc. v. Dennis, No. 07–cv–2310, 2013 U.S. Dist. Lexis 188384 (S.D.Cal. [4] [5] Mar. 28, 2013) (unpublished). The Proline court ruled And even if copyright did not protect the altered individual plank images, the Glazed Maple design is more © 2016 Thomson Reuters. No claim to original U.S. Government Works. 81

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than that. It is a compilation expressing original selection elements were separated from the artistic elements, and, and creative coordination of elements. A compilation conversely, the 2–D artwork would not be marketable if it even of uncopyrightable elements is eligible for copyright were separated from the functional elements of the protection, 17 U.S.C. § 103, so long as the compiler flooring.” We disagree. First, the conclusion was based independently selects or arranges the elements and not on evidence but on conjecture. Second, the facts of “display[s] some minimal level of creativity” in doing so. this case, viewed in the light most favorable to Feist, 499 U.S. at 358, 111 S.Ct. at 1294; see also id. at Mannington, disprove the non-marketability conjecture. 359, 111 S.Ct. at 1294 (“[T]he vast majority of Mannington’s evidence is that Home Legend sold compilations will pass this test.... [except those in the] flooring decorated with a virtually identical copy of narrow category of works in which the creative spark is Mannington’s Glazed Maple design. If that is true, the utterly lacking or so trivial as to be virtually design has some value; otherwise Home Legend would nonexistent.”). not have copied it. The only obstacle to Mannington demanding payment for the use of its design on other In Feist, the Supreme Court held that a telephone flooring is the district court’s ruling that Mannington directory that listed the name, town, and phone number of lacks protectable rights in its design. every subscriber in a region, and that did so in alphabetical order by name, was not entitled to copyright The district court also reasoned that the Glazed Maple protection because the selection, coordination and design had the function of hiding wear to the floor. arrangement of those preexisting facts was “not only Mannington counters that protection is the purpose of the unoriginal, [but] practically inevitable.” *1412 Id. at 363, “wear layer” of the flooring and that the decorative layer 111 S.Ct. at 1297. Not so here. Mannington’s designers is just that: decorative. But even if placing an otherwise independently selected the planks used in the Glazed copyrightable two-dimensional design on a product serves Maple design, and they exercised “some minimal level of the secondary function of hiding wear or other creativity” in the selection or arrangement of those imperfections in the product, that is not enough to planks. Instead of randomly choosing planks or invalidate the copyright protection for the design. indiscriminately using all of the fifty to seventy-five Hanging an Ansel Adams print over an unsightly water planks, Mannington’s designers exercised their creativity stain on a living room wall might make the print in choosing thirty planks that best captured their “functional” in the same way the district court found the conception of an aged and rustic maple floor. Then, after Glazed Maple design to be, but it would have no effect on those planks were scanned and retouched, the designers the copyright in the work itself. further exercised artistic judgment in selecting the fifteen of those thirty images that they believed looked best [7] The Copyright Act provides protection for pictorial and together. Mannington’s selection and coordination of graphic works, including “two-dimensional ... works of ... those images showed originality sufficient to exceed the applied art.” 17 U.S.C. § 101. It goes on to state, low bar required to sustain a copyright. See Feist, 499 U.S. at 348, 111 S.Ct. at 1289; BellSouth Adver. & Publ’g Such works shall include works of Corp. v. Donnelly Info. Publ’g, Inc., 999 F.2d 1436, 1440 artistic craftsmanship insofar as (11th Cir.1993) (“[A] compiler’s selection, arrangement their form but not their mechanical and coordination, if original are the only protectable or utilitarian aspects are concerned; elements of a factual compilation.”). For this reason too the design of a useful article, as the Glazed Maple design was sufficiently original to be defined in this section, shall be copyrightable. considered a pictorial[ ] [or] graphic ... work only if, and only to the *1413 extent that, such design incorporates pictorial[ ] [or] graphic ... features that can be B. identified separately from, and are capable of existing independently [6] The district court also concluded that the Glazed Maple of, the utilitarian aspects of the design was not copyrightable because it is inseparable article. from a “useful article”—namely the flooring to which Mannington applied the design. The court reasoned that neither the flooring nor the Glazed Maple design would Id. (emphasis added). Separability for the purpose of be marketable without the other: “Certainly, the laminate assessing copyright eligibility of a useful article’s design flooring would not be marketable if its functional means that the design is “either physically severable from

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the utilitarian article or conceptually severable.” Norris combining digital images of fifteen maple planks, stained Indus., Inc. v. Int’l Tel. & Tel. Corp., 696 F.2d 918, 923 to appear time worn and combined in a specific design. (11th Cir.1983) (emphasis added). The Glazed Maple See 17 U.S.C. §§ 101 & 102. design at issue here meets both tests: it is both physically and conceptually severable from the Time Crafted Maple 3 We also reject Home Legend’s argument that flooring to which Mannington applied it. The flooring and Mannington’s patents protecting methods for finishing the design are physically severable: the evidence shows wood imply that its copyright in a design depicting that Mannington sells otherwise identical flooring that finished wood must also be directed toward those same uses décor paper other than the Glazed Maple design. The methods. The use of a patented process to create an interchangeability of the paper designs in the original design does not mean that the design is not manufacturing process necessarily implies that the design copyrightable. Our intellectual property system and the flooring to which Mannington applies it are recognizes one set of protections for inventions including processes (the patent laws) and another set of physically separate objects. protections for art and writings (the copyright laws). The two may be related but they are distinct. See U.S. The Glazed Maple design is also conceptually severable Const. art. I, § 8, cl. 8 (authorizing Congress to grant from use as a decoration on Mannington’s flooring. The “Authors and Inventors” protection for both “Writings design might as easily be applied to wallpaper or as the and Discoveries”); compare 17 U.S.C. § 102 veneer of a picture frame. One amicus even suggests that (copyrightable subject matter), with 35 U.S.C. § 101 nothing (save perhaps good taste) prevents the “Glazed (inventions patentable). Maple image from being printed, framed, and hung on a wall as art.” Brief of Amicus Curiae Resilient Floor Covering Institute in Support of Appellant at 20. This is obviously true, as it is of any two-dimensional image. Because the design is both physically and conceptually severable from the flooring to which Mannington applied III. it, the district court erred when it determined the design was an uncopyrightable useful article. Mannington’s work is sufficiently original to qualify for copyright protection. That protection is unaffected by the design’s use as décor paper on Mannington’s laminate flooring. And Mannington’s copyright in that work covers the two-dimensional image the registration says it covers, C. not the process by which the image was created.

Finally, the district court found that “the Copyright [in the [10] Mannington owns a valid copyright, even if the Glazed Maple design] is more accurately directed toward protection that copyright affords it is not particularly a process or idea, which is not a proper subject for strong. Because much of the expression in Mannington’s copyright protection.” The court’s reasoning for this finished Glazed Maple design still reflects the conclusion was that “[a]lthough the Copyright at issue is uncopyrightable features of each plank—features like the for 2–D artwork, Mannington’s response brief and the shape of the natural underlying wood grain and the majority of its evidence focus on the idea of reproducing plank’s shape, both of which are in the public the look of rustic hardwood and natural wood grain, and domain—Mannington’s copyright gives it the limited on the process that Mannington used to obtain that result.” protection of a derivative work. Warren Publ’g, Inc. v. Microdos Data Corp., 115 F.3d 1509, 1515 n. 16 (11th [8] [9] Mannington focused its evidence and arguments on Cir.1997) (“A creative work is entitled to the most its process for creating the image because Home Legend’s protection, followed by a derivative work, and finally by a primary challenge to the validity of Mannington’s compilation.”). The copyright protects only the original copyright was the contention that the design lacked elements contributed by Mannington. See 17 U.S.C. § copyrightable originality. Mannington showed 103(b) (“The copyright in a ... derivative work extends copyrightable originality by presenting evidence about only to the material contributed by the author of such how it created the design by altering the natural work, as distinguished from the preexisting material appearance of the wood. That does not mean that employed in the work....”). This limited protection and the Mannington tried to copyright the process through which restricted opportunities for creativity inherent in the genre it produced the design.3 The copyright protects only the of faux-aged floorboards mandate a copyright that specific two-dimensional digital artwork design that extends (as Mannington concedes) only to identical and Mannington registered, a design *1414 that it created by near-identical copies of the Glazed Maple design—to © 2016 Thomson Reuters. No claim to original U.S. Government Works. 83

Home Legend, LLC v. Mannington Mills, Inc., 784 F.3d 1404 (2015) 2015 Copr.L.Dec. P 30,760, 114 U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153 copies made, for example, by photographing the design from Mannington’s Time Crafted Maple flooring and REVERSED and REMANDED. making trivial color alterations. Mannington would have no copyright-infringement claim against someone who used processes like Mannington’s to make his own aged-maple designs, so long as those final designs were All Citations his own expressions, not copies of Mannington’s work. 784 F.3d 1404, 2015 Copr.L.Dec. P 30,760, 114 The district court’s judgment declaring that Mannington’s U.S.P.Q.2d 1644, 25 Fla. L. Weekly Fed. C 1153 copyright is invalid is due to be reversed and the case remanded for further proceedings consistent with this opinion.

Katz v. Google Inc., 802 F.3d 1178 (2015) 2015 Copr.L.Dec. P 30,821, 116 U.S.P.Q.2d 1060, 43 Media L. Rep. 2337...

The statutory factors as to whether a use of a 802 F.3d 1178 copyrighted work is fair use under the Copyright United States Court of Appeals, Act are not to be treated in isolation from one Eleventh Circuit. another; rather, they are all are to be explored, and the results weighed together, in light of the Raanan KATZ, an individual, Plaintiff–Appellant, purposes of copyright. 17 U.S.C.A. § 107. v. GOOGLE INC., a Delaware corporation, Defendant, Cases that cite this headnote Irina Chevaldina, an individual, Defendant–Appellee.

No. 14–14525 | [2] Copyrights and Intellectual Property Non–Argument Calendar. Fair use and other permitted uses in general | Sept. 17, 2015. The factor in determining whether a use of a copyrighted work is fair use under the Copyright Act of the purpose and character of the allegedly infringing work requires consideration of: (1) Synopsis whether the use serves a nonprofit educational Background: Businessman who held copyright to candid purpose, as opposed to a commercial purpose; photograph of himself brought action against blogger, and (2) the degree to which the work is a alleging copyright infringement in use of photograph on transformative use, as opposed to a merely blog. The United States District Court for the Southern superseding use, of the copyrighted work. 17 District of Florida, James Lawrence King, J., 2014 WL U.S.C.A. § 107. 4385690, adopted the report and recommendation of Chris McAliley, United States Magistrate Judge, 2014 WL 2815496, and granted summary judgment for Cases that cite this headnote blogger. Businessman appealed.

Holdings: The Court of Appeals held that: [3] Copyrights and Intellectual Property Pictorial, graphic, and sculptural works [1] use of photograph was noncommercial and transformative; Blogger’s use of a candid photograph of a businessman, who held the copyright to the [2] use was primarily factual; and photograph, in her posts was noncommercial and transformative, as required for use to be fair [3] use did not materially impair businessman’s incentive use under the Copyright Act; blog’s purpose was to publish the work. to deter others from conducting business with businessman, and blogger used unflattering aspects of photograph to ridicule and satirize his Affirmed. character. 17 U.S.C.A. § 107.

Cases that cite this headnote

West Headnotes (7)

[1] Copyrights and Intellectual Property [4] Copyrights and Intellectual Property Fair use and other permitted uses in general Fair use and other permitted uses in general

Katz v. Google Inc., 802 F.3d 1178 (2015) 2015 Copr.L.Dec. P 30,821, 116 U.S.P.Q.2d 1060, 43 Media L. Rep. 2337...

The factor in determining whether a use of a copyrighted work is fair use under the Copyright Act of the nature of the copyrighted work recognizes that there is a hierarchy of copyright [7] Copyrights and Intellectual Property protection in which original, creative works are Pictorial, graphic, and sculptural works afforded greater protections than derivative works or factual compilations; in evaluating this Blogger’s use of a candid photograph of a factor, courts consider: (1) whether the work businessman, who held the copyright to the was previously published, and (2) whether the photograph, in her posts did not materially work is primarily creative or factual. 17 impair businessman’s incentive to publish the U.S.C.A. § 107. work, as required for use to be fair use under the Copyright Act; businessman obtained the copyright and initiated infringement lawsuit Cases that cite this headnote specifically to prevent photograph’s publication. 17 U.S.C.A. § 107(4).

Cases that cite this headnote [5] Copyrights and Intellectual Property Pictorial, graphic, and sculptural works

Blogger’s use of a candid photograph of a businessman, who held the copyright to the photograph, in her posts was primarily factual, Attorneys and Law Firms as required for use to be fair use under the Copyright Act; photograph was published prior *1180 Alan J. Kluger, Michael B. Chesal, Jorge Delgado, to blogger’s use of it, it was a candid photograph Todd Alan Levine, Kluger Kaplan Silverman Katzen & in a public setting, and photographer did not Levine, PL, Joshua Evan Saltz, Peretz Chesal & attempt to convey ideas or emotions, or Herrmann, PL, Miami, FL, for Plaintiff–Appellant. influence businessman’s pose or expression. 17 Robert John Borrello, Herman Joseph Russomanno, III, U.S.C.A. § 107. Russomanno & Borrello, PA, Michael Terrell Davis, Benedict P. Kuehne, Law Office Of Benedict P. Kuehne, Cases that cite this headnote PA, Miami, FL, Marc A. Burton, Richard J. Burton, The Burton Law Firm, Peter Jay Solnick, Solnick Law Firm, PA, Aventura, FL, for Defendant–Appellee.

Appeal from the United States District Court for the [6] Copyrights and Intellectual Property Southern District of Florida. Fair use and other permitted uses in general Before TJOFLAT, WILSON and BLACK, Circuit For the factor in determining whether a use of a Judges. copyrighted work is fair use under the Copyright Opinion Act of the effect of the use upon the potential market for or value of the copyrighted work, the PER CURIAM: central question is whether, assuming that everyone engaged in the conduct of the defendant, the use would cause substantial Raanan Katz holds the copyright to a candid photograph economic harm such that allowing the conduct (the Photo) of himself in which his tongue protrudes would frustrate the purposes of copyright by askew from his mouth. Katz considers the Photo materially impairing the defendant’s incentive to unflattering and embarrassing.1 Irina Chevaldina copied publish the work. 17 U.S.C.A. § 107(4). the Photo into several scathing blog posts she wrote about Katz and his business practices. Katz appeals the district court’s grant of summary judgment to Chevaldina on his Cases that cite this headnote © 2016 Thomson Reuters. No claim to original U.S. Government Works. 86

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copyright infringement claims, brought pursuant to 17 2012, post about Katz’s preparation for a deposition, U.S.C. § 501. Katz argues the district court erred in Chevaldina cropped Katz’s face and superimposed it finding Chevaldina was entitled to summary judgment against a cartoon dunce hat. based on her affirmative defense that her use of the Photo constituted fair use under 17 U.S.C. § 107. Upon review, On June 3, 2012, Magriso assigned all of his rights in the we affirm. Photo to Katz. Katz then filed a complaint against Chevaldina alleging direct copyright infringement.2 The 1 We make no independent determination as to whether parties filed cross-motions for summary judgment. The the Photo is unflattering or embarrassing. Construing magistrate judge entered a Report and Recommendation the evidence in the light most favorable to Katz for the (R & R) that recommended granting summary judgment purposes of summary judgment, however, we accept to Chevaldina because her use of the Photo constituted Katz’s own characterizations of the Photo as fair use. Katz timely filed objections to the R & R. The aesthetically displeasing. district court overruled the objections, adopted the R & R, and granted summary judgment to Chevaldina. Katz timely appealed.

2 Katz’s original complaint also named Google Inc. as a defendant for contributory copyright infringement. Katz I. BACKGROUND filed an amended complaint omitting Google Inc. as a defendant, but retaining the direct copyright Katz is a minority investor in the Miami Heat basketball infringement claim against Chevaldina. team and a commercial real estate tycoon who owns and operates shopping centers through corporate entities collectively known as RK Centers. In February 2011,

Seffi Magriso, a professional photographer, took a photograph of Katz while Katz was standing courtside at a basketball practice in Jerusalem. The Photo is a candid II. STANDARD OF REVIEW headshot of Katz in which his eyebrows are arched sharply upwards and his tongue is sticking out of his We review de novo a district court’s grant of summary mouth. In Katz’s opinion, the Photo is “ugly,” judgment, viewing all facts and reasonable inferences in “embarrassing,” and “compromising.” *1181 Haaretz, an the light most favorable to the nonmoving party. Beal v. Israeli newspaper, published the Photo online in an article Paramount Pictures Corp., 20 F.3d 454, 458–59 (11th about Katz’s interest in buying the Hapoel Jerusalem Cir.1994). “Summary judgment is proper when there is no basketball team. genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Id.; see Chevaldina is a disgruntled former tenant in one of Katz’s Fed.R.Civ.P. 56(a). shopping centers. She found the Photo through a Google image search. Chevaldina created a blog devoted to sharply criticizing Katz and the business practices of RK Centers. From May 3, 2011, to September 24, 2012, Chevaldina published 25 blog posts that reproduced the III. DISCUSSION Photo and criticized Katz. Chevaldina reproduced the Photo in her blog posts in three ways: (1) copied in its The only issue in this appeal is whether Chevaldina’s use unaltered, original state; (2) accompanied by sharply of the Photo in her blog posts constitutes fair use, as a worded captions; or (3) cropped and pasted into mocking matter of law, under Section 107 of the Copyright Act. cartoons. For example, in a September 18, 2011 blog post Under Section 107, “[n]otwithstanding the provisions of where the Photo was copied in its unaltered, original state, sections 106 and 106A, the fair use of a copyrighted work Chevaldina lambasted Katz for allegedly ripping off a ... for purposes such as criticism, comment, news “young American Jewish single mother of [a] special reporting, teaching (including multiple copies for needs child,” calling him “the most immoral human-being classroom use), scholarship, or research, is not an in the world.” In a September 12, 2012, blog post, infringement of copyright.” 17 U.S.C. § 107. Chevaldina criticized Katz’s litigation strategies as [1] frivolous and copied the Photo with a caption across In deciding whether a defendant’s use of a work Katz’s chest that says, “HE RIPPED–OFF SPECIAL constitutes fair use, courts must weigh the following four NEEDS LITTLE JEWISH GIRL.” In a February 19, factors: (1) the purpose and character of the allegedly © 2016 Thomson Reuters. No claim to original U.S. Government Works. 87

Katz v. Google Inc., 802 F.3d 1178 (2015) 2015 Copr.L.Dec. P 30,821, 116 U.S.P.Q.2d 1060, 43 Media L. Rep. 2337...

infringing use; (2) the nature of the copyrighted work; (3) the amount of the copyrighted work used; (4) and the Katz argues the Photo served a primarily commercial effect of the use on the potential market or value of the purpose because, in a March 4, 2012, blog post, copyrighted work. Id. These four statutory factors are not Chevaldina said she was “in the process of writing a book to be treated in isolation from one another. See Campbell ‘Why RK Centers Was The Wrong Choice.’ ” Thus, Katz *1182 v. Acuff–Rose Music, Inc., 510 U.S. 569, 578, 114 argues, Chevaldina used the Photo to advertise for S.Ct. 1164, 1170–71, 127 L.Ed.2d 500 (1994). Rather, commercial book sales. Chevaldina’s reference to her they are “[a]ll are to be explored, and the results weighed intention to write a book about her experiences with Katz together, in light of the purposes of copyright.” Id., 510 does not alone, however, transform the blog post into a U.S. at 578, 114 S.Ct. at 1171. Based on our weighing of commercial venture. Overall, the blog post retains her the factors discussed below, the district court did not err educational purpose of lambasting Katz and deterring in granting summary judgment to Chevaldina because her others from conducting business with him. See March 4, use of the Photo in each blog post constituted fair use.3 2012 Blog Post (“I hope my book will help ambitious We discuss each factor in turn. people in their dream to be successful without selling the[ir] soul to the [d]evil.”). Moreover, the link between 3 Katz argues the district court erred by failing to Chevaldina’s commercial gain and her copying of the perform a “work-by-work” analysis of the blog posts, Photo was attenuated given that Chevaldina never wrote a see Cambridge Univ. Press v. Patton, 769 F.3d 1232, book nor made any profits whatsoever. See Swatch Grp. 1259 (11th Cir.2014), and instead analyzed only the Mgmt. Servs. Ltd. v. Bloomberg L.P., 756 F.3d 73, 83 (2d blog posts containing altered versions of the Photo. Cir.2014) (discounting commercial nature of use where This argument lacks merit. In the R & R adopted by the “the link between the defendant’s commercial gain and its district court, the magistrate judge outlined all 25 copying is attenuated such that it would be misleading to allegedly infringing blog posts, and noted that its characterize the use as commercial exploitation” finding of fair use applied to each post. Therefore, the district court did, in fact, perform the required (quotations and alterations omitted)). “work-by-work” analysis. The district court was not required to write a prolix, unwieldy opinion with 25 Chevaldina’s use of the Photo was also transformative. A separate sections devoted to each alleged instance of use is transformative when it “adds something new, with a infringement. further purpose or different character, altering the first with new expression, meaning, or message.” See Campbell, 510 U.S. at 579, 114 S.Ct. at 1171. Chevaldina’s use of the Photo was transformative because, in *1183 the context of the blog post’s A. Purpose and Character of the Work surrounding commentary, she used Katz’s purportedly [2] The first factor—the purpose and character of the “ugly” and “compromising” appearance to ridicule and allegedly infringing work—requires consideration of “(1) satirize his character. See Swatch, 756 F.3d at 84 (“Courts whether the use serves a nonprofit educational purpose, as often find such uses [of faithfully reproduced works] opposed to a commercial purpose; and (2) the degree to transformative by emphasizing the altered purpose or which the work is a transformative use, as opposed to a context of the work, as evidenced by the surrounding merely superseding use, of the copyrighted work.” Peter commentary or criticism.”); A.V. ex rel. Vanderhye v. Letterese & Assocs., Inc. v. World Inst. of Scientology iParadigms, LLC, 562 F.3d 630, 639 (4th Cir.2009) (“The Enters., 533 F.3d 1287, 1309 (11th Cir.2008) (quotation use of a copyrighted work need not alter or augment the omitted). The district court did not err in concluding work to be transformative in nature.”); Suntrust Bank v. Chevaldina’s use of the work was both noncommercial Houghton Mifflin Co., 268 F.3d 1257, 1270 (11th and transformative. Cir.2001) (finding transformative use where work was “principally and purposefully a critical statement”). [3] Every use of the Photo on the blog was of a primarily educational, rather than commercial, character. Chevaldina’s use of the Photo was noncommercial and Chevaldina unabashedly criticized and commented on the transformative. Accordingly, the first factor weighs in dealings of Katz, his businesses, and his lawyers. favor of fair use. Chevaldina’s blog posts sought to warn and educate others about the alleged nefariousness of Katz, and she made no money from her use of the photo. See 17 U.S.C. § 107 (designating “criticism” and “comment” as fair B. Nature of the Copyrighted Work [4] use). The second fair use factor—the nature of the copyrighted work—“recognizes that there is a hierarchy © 2016 Thomson Reuters. No claim to original U.S. Government Works. 88

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of copyright protection in which original, creative works meaning at all—than a work such as a text or musical are afforded greater protections than derivative works or composition, where bits and pieces can be excerpted factual compilations.” Suntrust, 268 F.3d at 1271. In without losing all value.” Fitzgerald, 491 F.Supp.2d at evaluating this factor, courts consider (1) whether the 188; see Seltzer v. Green Day, Inc., 725 F.3d 1170, 1178 work was previously published and (2) whether the work (9th Cir.2013) ( “[U]nlike an episode of the Ed Sullivan is primarily creative or factual. See Harper & Row show or a book manuscript, [a drawing] is not Publishers, Inc. v. Nation Enters., 471 U.S. 539, 563–64, meaningfully divisible.”). 105 S.Ct. 2218, 2232, 85 L.Ed.2d 588 (1985). The district court did not err in finding the third factor [5] There is no dispute that the Photo was published prior was neutral as applied to the blog posts incorporating the to Chevaldina’s use. As such, the time of publication Photo. Though ten blog posts reproduced the Photo in its weighs in favor of fair use. See Kelly v. Arriba Soft Corp., entirety and without alteration, to copy any less of the 336 F.3d 811, 820 (9th Cir.2003) (holding publication of image “would have made the picture useless to images on internet before defendant’s copying favored [Chevaldina’s] story” that Katz is a predatory commercial fair use). landlord. See Núñez v. Caribbean Int’l News Corp., 235 F.3d 18, 24 (1st Cir.2000). As such, the third factor The district court did not err in finding the Photo was neither weighs for nor against a finding of fair use. primarily a factual work. “The law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy.” Harper & Row, 471 U.S. at 563, 105 S.Ct. at 2232. Photography is an art form that may require D. Effect of the Use on the Potential Market for the Work the photographer to make many important creative [6] The fourth factor is “the effect of the use upon the decisions. See Leibovitz v. Paramount Pictures Corp., 137 potential market for or value of the copyrighted work.” 17 F.3d 109, 116 (2d Cir.1998) (stating a photographer “is U.S.C. 107(4). The “central question” is whether, entitled to protection for such artistic elements as the assuming that everyone engaged in the conduct of the particular lighting, the resulting skin tone on the subject, defendant, the use “would cause substantial economic and the camera angle that she selected”). The Photo, harm such that allowing [the conduct] would frustrate the however, is merely a candid shot in a public setting, and purposes of copyright by materially impairing [the there is no evidence in the record that Magriso, the defendant’s] incentive to publish the work.” Cambridge photographer, attempted to convey ideas, emotions, or in Univ. Press v. Patton, 769 F.3d 1232, 1276 (11th any way influence Katz’s pose, expression, or clothing. Cir.2014). See Fitzgerald v. CBS Broad., Inc., 491 F.Supp.2d 177, 188 (D.Mass.2007) (concluding candid photograph of [7] The district court did not err in finding Chevaldina’s mobster leaving police station was a primarily factual use of the Photo would not materially impair Katz’s work). While Magriso’s photojournalistic timing was incentive to publish the work. Katz took the highly fortuitous (at least from Chevaldina’s perspective), this unusual step of obtaining the copyright to the Photo and alone was not enough to make the creative gilt of the initiating this lawsuit specifically to prevent its Photo predominate over its plainly factual elements. publication. Katz profoundly distastes the Photo and seeks to extinguish, for all time, the dissemination of his The Photo was previously published and primarily “embarrassing” countenance. Due to Katz’s attempt to factual. The second factor therefore weighs in favor of utilize copyright as an instrument of censorship against fair use. unwanted criticism, there is no potential market for his work. While we recognize that even an author who disavows any intention to publish his work “has the right to change his mind,” see Monge v. Maya Magazines, Inc., C. Amount of the Work Used 688 F.3d 1164, 1181 (9th Cir.2012) (quotation omitted), The third factor is “the amount and substantiality of the the likelihood of Katz changing his mind about the Photo portion used in relation to the copyrighted work as a is, based on the undisputed evidence in the record, whole.” 17 U.S.C. § 107(3). A court must ask whether the incredibly remote. Since there is no evidence defendant has “helped [herself] overmuch to the Chevaldina’s use of the Photo had or would have any copyrighted work in light of the purpose and character of impact upon any actual or potential market, the fourth the use.” Peter Letterese & Assocs., 533 F.3d at 1314 factor weighs in favor of fair use. (quotation omitted). This factor “weighs less when considering a photograph—where all or most of the work often *1184 must be used in order to preserve any © 2016 Thomson Reuters. No claim to original U.S. Government Works. 89

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IV. CONCLUSION 4 We also deny Katz’s motion to strike Chevaldina’s supplemental authorities. Three factors in our fair use inquiry—the purpose and character of the work, the nature of the work, and the effect of the use on the potential market—weigh in favor of Chevaldina. The amount and substantiality of the work AFFIRMED. is neutral. After weighing all four factors, our analysis tilts strongly in favor of fair use. The district court did not err in granting summary judgment to Chevaldina because All Citations every reasonable factfinder would conclude the inclusion of the Photo in her blog posts constituted fair use. 802 F.3d 1178, 2015 Copr.L.Dec. P 30,821, 116 U.S.P.Q.2d 1060, 43 Media L. Rep. 2337, 25 Fla. L. For the foregoing reasons, we affirm the district court’s Weekly Fed. C 1632 4 grant of summary judgment to Chevaldina.

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

795 F.3d 1255 [5] sufficient evidence supported jury’s determination that United States Court of Appeals, publishing services company recklessly disregarded the Eleventh Circuit. possibility that it might be infringing;

YELLOW PAGES PHOTOS, INC., [6] collections of stock photos each were works for Plaintiff–Counter Defendant–Appellee, purposes of computing statutory damages; and v. ZIPLOCAL, LP, Defendant–Counter Claimant, [7] creator invited any inconsistency in jury’s award of $1 Yellow Pages Group, LLC, Defendant–Appellant. in actual damages and zero dollars in statutory damages against publisher. Nos. 14–13401, 14–13355. | July 30, 2015. Affirmed.

Synopsis Background: Creator of stock photographs tailored to the West Headnotes (32) yellow pages industry brought breach of contract and

publisher and publishing services company, claiming that [1] Federal Civil Procedure publisher’s transfer of creator’s stock photographs to the In general; injury or interest publishing services company violated the terms of the

parties’ purchase agreement, and that publishing services Standing is the threshold question in every company used the creator’s stock photographs without a federal case, determining the power of the court license. Following jury verdict in favor of creator, the to entertain a suit. United States District Court for the Middle District of Florida, Richard A. Lazzara, J., 2014 WL 2920660, entered judgment for creator. Publishing services Cases that cite this headnote company appealed, and creator cross-appealed.

Holdings: The Court of Appeals, Coogler, District Judge, [2] Federal Civil Procedure sitting by designation, held that: In general; injury or interest

[1] publishing services company had standing to challenge In essence the question of standing is whether validity and interpretation of contract between creator and the litigant is entitled to have the court decide publisher on appeal; the merits of the dispute or of particular issues; a

[2] litigant is so entitled only when he has such a sufficient evidence supported jury’s determination that personal stake in the outcome of the controversy agreement between creator and publisher consisted of to assure that concrete adverseness which both a site license purchase agreement and an end user sharpens the presentation of issues upon which license agreement; the court so largely depends.

[3] sufficient evidence supported jury’s determination that all photos licensed to publisher were governed an end Cases that cite this headnote user license agreement;

[4] in a matter of apparent first impression, willful copyright infringement encompasses reckless disregard of the possibility that one’s actions are infringing a [3] Federal Civil Procedure copyright; In general; injury or interest

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Federal Civil Procedure In general; injury or interest Causation; redressability The requirement that a party establish its A plaintiff must meet three requirements in standing to litigate applies not only to plaintiffs order to establish Article III standing: injury in but also defendants. fact, that is, a harm that is both concrete and actual or imminent, not conjectural or hypothetical, causation, that is, a fairly traceable Cases that cite this headnote connection between the alleged injury in fact and the alleged conduct of the defendant, and redressability, that is, a substantial likelihood

that the requested relief will remedy the alleged [7] injury in fact. U.S.C.A. Const. Art. 3, § 2, cl. 1. Copyrights and Intellectual Property Contracts relating to copyrights

1 Cases that cite this headnote Publishing services company had standing to assert arguments relating to the validity and interpretation of a contract between creator of stock photographs and phone book publisher, as a defense to creator’s copyright infringement [4] Federal Civil Procedure claims on appeal of a judgment against Rights of third parties or public publishing services company, even though publishing services company was not a party to To establish standing, a litigant ordinarily must the contract, where publishing services company assert his own legal rights and interests, and had a concrete and actual interest in avoiding a cannot rest his claim to relief on the legal rights judgment being entered against it on creator’s or interests of third parties; this general copyright infringement claim, and publishing prohibition on a litigant’s raising another services company’s interest would be directly person’s legal rights is a prudential standing affected by the outcome of the appeal. doctrine, not derived from Article III. U.S.C.A. Const. Art. 3, § 2, cl. 1. Cases that cite this headnote

1 Cases that cite this headnote

[8] Federal Courts Taking case or question from jury; judgment [5] Federal Civil Procedure as a matter of law In general; injury or interest Federal Courts Court of Appeals reviews the denial of a motion Necessity of Objection; Power and Duty of for a judgment as a matter of law de novo and Court applies the same standards as the district court.

The obligation on the court to examine its own jurisdiction, including whether the parties have Cases that cite this headnote standing, continues at each stage of the proceedings.

1 Cases that cite this headnote [9] Federal Courts Taking case or question from jury; judgment as a matter of law

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law only if the facts and inferences point are entered into by the same parties, at the same overwhelmingly in favor of one party, such that time, concerning the same transaction or subject reasonable people could not arrive at a contrary matter, they are generally construed together as verdict. a single contract.

Cases that cite this headnote Cases that cite this headnote

[10] Federal Courts [13] Copyrights and Intellectual Property Taking case or question from jury; judgment Licenses in general as a matter of law Under Florida law, sufficient evidence On review of motion for judgment as matter of supported jury’s determination that all 10,411 law, Court of Appeals will not second-guess the photos of stock photo creator, which were jury or substitute the Court’s judgment for its licensed to phone book publisher, were judgment if its verdict is supported by sufficient governed by an agreement reflected in both a evidence. site license purchase agreement and an end user license agreement, as would preclude contract defense of publishing services company hired by Cases that cite this headnote publisher to creator’s claims of copyright infringement, where the first set of images, which was stored on a harddrive, was accompanied by a copy of the license

[11] agreement, each future set of images, which Copyrights and Intellectual Property were stored on compact discs mailed to Licenses in general publisher, was accompanied by an identical copy of the license agreement, and each disc Under Florida law, sufficient evidence was accepted by a corporate officer with the supported jury’s determination that the authority to bind publisher. agreement between creator of stock photographs and phone book publisher consisted of both a site license purchase agreement and an end user Cases that cite this headnote license agreement, as would preclude contract defense of publishing services company hired by publisher to creator’s claims of copyright infringement, where both creator and publisher entered into both agreements at the same time, [14] Contracts both creator and publisher stated that their Necessity of assent relationship was governed by the purchase Contracts agreement and the license agreement, and terms Acceptance varying from offer in the purchase agreement lacked a definition, without reference to the license agreement. Florida law provides that a valid contract is formed, notwithstanding a deviation from the offeror’s designated mode of acceptance, if there Cases that cite this headnote was a meeting of the minds and the offer was indeed accepted.

1 Cases that cite this headnote [12] Contracts Construing instruments together

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[15] Contracts Amount of recovery; multiple infringements Acceptance varying from offer Sufficient evidence supported jury’s Under Florida law, an offeror is free to waive a determination that publishing services company designated mode of acceptance for a contract. recklessly disregarded the possibility that it might be infringing on creator’s copyrights to stock photos, as required to award increased 1 Cases that cite this headnote statutory damages for each work found to be infringing, where publishing services company admitted to knowingly using the photos without receiving authorization to use the photos,

[16] publishing services company continued to use Copyrights and Intellectual Property the photos after the commencement of the Statutory Damages; Minimum Award copyright infringement action, and publishing services company had a policy of not conducting Under the Copyright Act, an owner may elect to any due diligence to determine whether it had a recover statutory damages in lieu of any other right to use the photos that it received. 17 form of monetary relief. 17 U.S.C.A. § U.S.C.A. § 504(c)(1, 2). 504(c)(1).

Cases that cite this headnote Cases that cite this headnote

[20] [17] Federal Civil Procedure Copyrights and Intellectual Property Letters rogatory from without the United Statutory Damages; Minimum Award States

Copyright Act’s statutory damages provision is “Letters rogatory” are the means by which a designed to discourage wrongful conduct. 17 court in one country requests a court of another U.S.C.A. § 504(c)(1). country to assist in the production of evidence located in the foreign country. Cases that cite this headnote 1 Cases that cite this headnote

[18] Copyrights and Intellectual Property Statutory Damages; Minimum Award [21] Criminal Law Depositions Willful copyright infringement, as would permit Federal Civil Procedure an increase in the amount of statutory damages Letters rogatory from without the United for each infringed work under the Copyright States Act, encompasses reckless disregard of the possibility that one’s actions are infringing a Federal courts have authority to issue letters copyright. 17 U.S.C.A. § 504(c)(1, 2). rogatory in civil and criminal cases.

Cases that cite this headnote 1 Cases that cite this headnote

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Letters rogatory from without the United States Cases that cite this headnote Federal Courts Depositions and discovery

The decision whether to issue letters rogatory [25] lies within the discretion of the district court and Federal Courts is reviewed for an abuse of that discretion. Reception of Evidence

Court of Appeals will only overturn an 1 Cases that cite this headnote evidentiary ruling if the moving party establishes a substantial prejudicial effect; a prejudicial effect is demonstrated when the moving party shows that the error probably had a substantial influence on the jury’s verdict. [23] Federal Courts Preliminary proceedings; depositions and discovery Cases that cite this headnote

Even assuming that the District Court’s abused its discretion in denying a motion of creator of stock photos to issue letters rogatory to depose a [26] Canadian affiliate of publishing services Copyrights and Intellectual Property company, in creator’s copyright infringement Admissibility action against publishing services company, the denial did not prejudice creator’s substantial District court did not abuse its discretion in rights, as required to warrant grant of a new excluding evidence that a publishing services trial, where there was no evidence that company provided a Canadian affiliate with publishing services company transferred any of copyrighted stock photos that the affiliate used creator’s copyrighted images to the Canadian in print and online advertisements, as the affiliate. evidence was pure speculation and thus was too attenuated to be relevant in a copyright infringement action brought by the creator of the Cases that cite this headnote stock photos, where creator testified that he had no direct knowledge that publishing services company transferred copyrighted stock photos to other parties, and creator admitted that the photos could have come from other sources that [24] Federal Civil Procedure had a license to use creator’s copyrighted Letters rogatory from without the United images. Fed.Rules Evid.Rule 401, 28 U.S.C.A. States Federal Courts Preliminary proceedings; depositions and Cases that cite this headnote discovery

The issuance of letters rogatory is a discovery issue, and a party is not entitled to a new trial for [27] an alleged discovery violation unless it shows Copyrights and Intellectual Property that the denial of access to evidence was Compilations and derivative works; copies prejudicial to its substantial rights, which and reproductions requires a showing of a reasonable probability Copyrights and Intellectual Property that, had the evidence been disclosed to the Amount of recovery; multiple infringements party, the result of the proceeding would have been different. Collections of stock photos, which were organized by heading name, constituted compilations under the Copyright Act, and thus © 2016 Thomson Reuters. No claim to original U.S. Government Works. 95

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each compilation, rather than each individual infringement action against phone book image contained therein, was a work, for the publisher was invited by creator, and thus could purposes of computing statutory damages in not be addressed on appeal, where creator left copyright infringement action against publishing the determination of the amount of statutory services company, even though there were some damages to the jury, and, in response to a jury instances in which a single photo was sold, question, agreed that the district court should tell where the photo collections were developed the jury that it could find the amount of statutory after the creator selected a specific heading for damages to be zero. 17 U.S.C.A. § 504(c)(1). the collection, the photos were registered as collections with the Copyright Office, and the photos were almost exclusively distributed as Cases that cite this headnote collections. 17 U.S.C.A. § 504(c)(1).

1 Cases that cite this headnote [31] Copyrights and Intellectual Property Statutory Damages; Minimum Award

If a party demands to recover statutory damages [28] Copyrights and Intellectual Property instead of actual damages and profits under the Trial Copyright Act in a copyright infringement Federal Courts action, a jury must determine the actual amount Mixed questions of law and fact in general of statutory damages under the Copyright Act, in order to preserve the substance of the The issue of what constitutes a work for common-law right of trial by jury. 17 U.S.C.A. statutory damages purposes under the Copyright § 504(c). Act is a mixed question of law and fact, and the Court of Appeals reviews the district court’s application of the law to the facts de novo. Cases that cite this headnote

Cases that cite this headnote

[32] Copyrights and Intellectual Property Statutory Damages; Minimum Award

[29] Federal Courts The plaintiff may make its election between Estoppel to Allege Error; Invited Error actual and statutory damages under the Copyright action in a copyright infringement Offering a “fallback” position in mere response action at any time before final judgment is to an issue raised by the opposing party does not rendered. 17 U.S.C.A. § 504(c). equate to inviting the district court’s error so as to waive review of the issue on appeal. Cases that cite this headnote

Cases that cite this headnote

Attorneys and Law Firms [30] Federal Courts Particular errors *1259 John Todd Timmerman, C. Philip Campbell, Jr., Duane Allan Daiker, Jeffrey Bruce Fabian, Mindi Marie Any inconsistency between a jury’s award of $1 Richter, Shumaker Loop & Kendrick, LLP, Tampa, in actual damages and zero dollars in statutory *1260 FL, for Plaintiff–Counter Defendant–Appellee. damages in creator of stock images’ copyright © 2016 Thomson Reuters. No claim to original U.S. Government Works. 96

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David Jon Wolfsohn, Robert M. Palumbos, Jeffrey S. “headings”—that generally corresponded to yellow pages Pollack, Duane Morris, LLP, Philadelphia, PA, Karen C. headings, such as “Plumbers,” “Roofers,” “Attorneys,” or Kline, Duane Morris, LLP, Boca Raton, FL, C. Douglas “Landscape.” In Moore’s words, Mcdonald, Jr., Carlton Fields Jorden Burt, PA, Tampa, FL, for Defendant–Appellant. [S]ince I was going to provide imagery specifically to the yellow Nancy E. Brandt, Spencer Munns, Bogin Munns & pages industry, the idea was to Munns, PA, Orlando, FL, James A. Scott, Jr., Bogin develop images such that when Munns & Munns, S. Daytona, FL for Defendant–Counter they were looking for the image Claimant. and the heading and the artwork requested, everything has the same Appeals from the United States District Court for the vernacular. And so efficiencies can Middle District of Florida. be made by okay, I can go here and Before MARTIN and ROSENBAUM, Circuit Judges, and I’ll have 50 of these, a hundred of * COOGLER, District Judge. these different looks. * The Honorable L. Scott Coogler, United States District Judge for the Northern District of Alabama, sitting by [Doc. 423 at 66.] Moore also explained that the stock designation. photos were not redundant in that every photo could be used by a publisher: “[T]hey were shot in such a way that each image could be used to its fullest.... What we wanted to do was have ten different photos of this, not one guy Opinion ten ways. We need ten guys one way.” [Id. at 65–67.]

COOGLER, District Judge: In March of 2004, Moore met with John Woodall (“Woodall”), the CEO of phone book publisher Ziplocal,

LP (“Ziplocal”), then called Phone Directories Company. Yellow Pages Group, LLC appeals from a $123,000 Woodall found Moore’s product interesting because it judgment against it in favor of Yellow Pages Photos, Inc., consisted of a large number of “images of things following a jury verdict in a copyright infringement trial. organized by Yellow Page headings.” [Doc. 425 at 40–41, Yellow Pages Photos, Inc. cross appeals, arguing that it is 77.] As Woodall put it, “I had never seen at that point a entitled to a new trial on damages due to the alleged error collection organized the way that we actually did of the district court in several of its discovery, business, which was *1261 dealing with businesses by evidentiary, and procedural rulings. After careful review heading.” [Id. at 41.] At that meeting, Moore and Woodall of the record and briefs of the parties, and having the reached an agreement for the use of YPPI’s photos. benefit of oral argument, we affirm the district court on YPPI’s contract with Ziplocal consisted of two all issues raised on appeal. documents, the terms of which were agreed to during the

meeting. The first was titled “Site License Purchase

Agreement” (“SLPA”). The second was titled “End User License Agreement” (“EULA”). I. The SLPA is a one-page, bullet-pointed document signed on March 15, 2004, by Moore and Woodall that provided, among other things, that for the price of $875 per A. CD–ROM disk, “[Ziplocal] agrees to purchase all current titles as well as all new relevant headings as they become The facts presented at trial are as follows. In the late available, up to the first 200 Headings. YPPI will ship 1–2 1990s, Trent Moore (“Moore”), an amateur photographer headings per month.” [Joint Trial Exhibit 2.] The SLPA and former owner of a yellow pages ad production thus contemplated an initial purchase of a license to use, company, founded Yellow Pages Photos, Inc. (“YPPI”), and delivery of, YPPI’s photos that were then available, to create and license stock photographs tailored to the followed by additional purchases and deliveries of an yellow pages industry. YPPI set out to create stock photos additional 120 headings over time. The SLPA provided that were relevant to the directory industry from a subject for an unlimited number of “authorized users” of the matter perspective. By 2004, YPPI owned a library of photos, and although it permitted Ziplocal to use any type over 4,000 copyrighted photos that for efficiency were of “server or information system [necessary] to facilitate grouped into collections—also referred to throughout as © 2016 Thomson Reuters. No claim to original U.S. Government Works. 97

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multiple user simultaneous access,” it required Ziplocal to attached to the disks.” [Doc. 424 at 58.] Lee Lott, the protect the photos from “unauthorized distribution to Director of Production and later the Vice President of unlicensed users.” [Id.] The SLPA, which refers to itself Operations at Ziplocal, testified that “[The EULA] was internally as “this agreement,” also refers to another basically put in with his CDs when he sent them in a agreement called “the license agreement.” [Id.] Both package. So it was there all the time.” [Doc. 425 at Moore and Woodall testified that this reference to “the 189–90.] Moore testified that he never changed the terms license agreement” was to the EULA. There was no of the EULA. testimony to the contrary, and no dispute the SLPA was a binding contract between YPPI and Ziplocal. Yellow Pages Group, LLC (“YPG”) was not a party to either the SLPA or the EULA. YPG and Ziplocal did not The EULA is a two-page, unsigned document that start doing business until six years later, in 2010, when contained terms in addition to, and that expanded upon, YPG sold its phone books to Ziplocal and subcontracted the terms of the SLPA, including the following, relative to with Ziplocal so that YPG’s employees could provide the use and transfer of photos: “[Ziplocal] may not support in producing Ziplocal’s phone books. YPG transfer these images to any outside parties or individuals employees assembled and paginated the digital pages to unless authorized by YPPI. All users must be Employees prepare them for printing, modified existing ads by of [Ziplocal].” [Joint Trial Exhibit 20.] The EULA also updating phone numbers and addresses, and created new limited the number of users of the photos to 40, indicated ads, tasks that Ziplocal had previously done in-house. The that opening the package containing the photos “indicates relationship between Ziplocal and YPG was governed by your acceptance of the terms and conditions set forth,” an Outsourcing Agreement signed in November 2010. and stated that “if you do not agree with these conditions The agreement provided that any work performed by YPPI does not grant license and you should return the YPG for Ziplocal would not infringe third-party unopened packages within 10 days for a full refund.” [Id.] intellectual property rights. As part of their agreement, Ziplocal provided YPG with digital copies of its phone Moore testified that there were two contracts because, books that included photos that had been licensed from “There’s the purchase agreement which details, you YPPI. In updating those books, YPG used some of know, things like how many CDs or images are going to YPPI’s licensed photos. YPPI was never asked to consent be purchased and there’s a license agreement that details to any transfer of its photos by Ziplocal to YPG, or to the the restrictions and use.” [Doc. 424 at 19.] Woodall’s use of its photos by YPG. In any event, and as Moore testimony was also that both the SLPA and EULA were admitted at trial, Ziplocal’s outsourcing to YPG resulted contracts of YPPI and Ziplocal and that the EULA was in YPPI’s photos being used as intended under the SLPA, simply “the detail of the license agreement behind the which was only in Ziplocal publications. [Doc. 424 at [SLPA].” [Doc. 425 at 44.] Notwithstanding persistent 225–26.] cross examination, Woodall repeated over and over that the EULA was an agreement between YPPI and Ziplocal. In 2011, YPPI discovered that Ziplocal outsourced its [Id. at 98–100.] Moore and Woodall also testified that the graphics functions to YPG, and that YPG was using SLPA and EULA were agreed to contemporaneously. YPPI’s photos without a license. YPPI sent Ziplocal a Moore stated that “when I consummated the deal with cease and desist letter, containing a copy of the EULA, John Woodall, [the SLPA and EULA] were together.” which required all “users” of YPPI’s photos to be [Doc. 424 at 19–20.] Woodall testified that he saw the employees of Ziplocal’s. When YPG was notified of the SLPA and EULA around the same time. [Doc. 425 at 44.] particular ads that YPPI thought were infringing, Ziplocal and YPG removed them from the next edition of the At their meeting in March 2004, Moore gave Woodall a phone books, substituting photos licensed from another hard drive with the first 4,000 photos, or 80 collections, company, Getty Images, for YPPI’s photos. Moore on it. In April 2004, Moore sent the first CD of additional testified that it took many months to identify which of his photos to Ziplocal, and the package contained the EULA. photos he thought YPG and Ziplocal were infringing From 2004 to 2009, Ziplocal made payments and received because he had to compare them to his master set, and in installments more collections of photos, until it had that he was working on identifying infringing photos right acquired YPPI’s entire *1262 library of 10,411 photos up until the time of trial. On April 9, 2012, YPPI grouped into 178 headings organized by subject matter. commenced this action. Ziplocal and YPG were still using Each time Moore sent a new collection of around 50 YPPI’s photos to build ads after the commencement of photos burned onto a CD, he would enclose the EULA in the lawsuit. the packaging. Moore testified that “[e]ach time I delivered images, there would be a license agreement

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B. Ziplocal breached “its contract” with YPPI. The jury then filled in a blank to award YPPI zero dollars on its breach YPPI filed a two-count complaint, for breach of contract of contract claim. In response to further questions, the against Ziplocal, and for infringement against both jury found both Ziplocal and YPG to be willful infringers Ziplocal and YPG under the United States Copyright Act of YPPI’s copyrights and that 123 of YPPI’s 178 works of 1976, 17 U.S.C. § 101, et seq. After the claims had been infringed. The jury then awarded one dollar in survived cross motions for summary judgment, the case actual damages and zero dollars in statutory damages was tried to a jury from March 17 to 27, 2014. YPPI against Ziplocal, and zero dollars in actual damages and contended at trial that its contract with Ziplocal was $123,000 in statutory damages against YPG. Finally, the comprised of two documents, the SLPA and the EULA, jury found that Ziplocal was a contributory infringer to that both the SLPA and the EULA prohibited transfer of YPG’s copyright infringement and awarded $100,000 in YPPI’s photos and restricted use of the photos to actual damages and zero dollars in statutory damages to employees of Ziplocal, and that the terms of both the YPPI on the contributory infringement claim. SLPA and EULA were breached when Ziplocal transferred photos to, and permitted use of the photos by, After trial, Ziplocal and YPG renewed their motions for a YPG. On the other hand, Ziplocal and YPG claimed that judgment as a matter of law, which were denied by the only the SLPA was the operative contract between the district court. YPPI made its election between actual and parties, *1263 and that the EULA was invalid. In Ziplocal statutory damages, as it was authorized to do under the and YPG’s view, since their conduct did not violate the Copyright Act, electing to recover 1) $100,001.00 in terms of the SLPA, they could not have infringed YPPI’s actual damages from Ziplocal and 2) $123,000.00 in copyrights. statutory damages from YPG. YPPI filed a motion for attorneys’ fees and nontaxable and taxable costs, seeking During trial, both parties requested that, before the case over $2 million. The district court denied YPPI’s motion was submitted to the jury, the district court decide, based without prejudice, pending the outcome of this appeal. on the evidence introduced at trial, how many individual YPG timely appealed the district court’s denial of its photos constituted a “work” as that term is defined in the post-trial renewed motion for a judgment as a matter of Copyright Act for purposes of computing statutory law to this Court. Ziplocal also appealed, but its appeal damages. The court ruled that each of YPPI’s 178 was dismissed for want of prosecution. YPPI cross collections of photos relating to phone directory subject appealed several of the district court’s discovery, matter such as “Appliances,” “Attorneys,” etc., was a evidentiary, and procedural rulings. We have jurisdiction work for statutory damages purposes, rejecting YPPI’s pursuant to 28 U.S.C. § 1291. contention that each of its 10,411 individual photos was a work. The court reached this conclusion by considering how YPPI arranged the photos for marketing purposes, noting that Moore had testified that the purpose for grouping his photo collections by subject matter heading, II. rather than marketing individual photos, was for customer appeal and efficiency. The court also considered how YPPI registered the photos with the Copyright Office, A. under the 178 titles, grouping various title collections together on 44 different registration applications, how it YPG argues that it is entitled to a judgment as a matter of delivered the photos to Ziplocal, in that the SLPA law for several reasons, *1264 the first being that the provided that YPPI would sell “up to the first 200 SLPA permitted Ziplocal to outsource the use of YPPI’s Headings” initially and would subsequently “ship 1–2 photos to YPG, irrespective of the EULA’s prohibition on headings per month,” and how it described the photos in transferring photos to non-employees, and as such, YPG’s its complaints as collections, pointing out that YPPI did assistance to Ziplocal in publishing its phone books by not take the position until it filed its Third Amended using YPPI’s photos was not copyright infringement. Complaint that each photograph constituted a single work. Alternatively, YPG contends that even if the EULA could override the SLPA, it is still entitled to a judgment as a At the close of the evidence, the court used YPPI’s matter of law because the EULA was invalid for several proposed jury instructions and verdict form in submitting reasons: Ziplocal did not give consideration for it, YPPI the case to the jury. In response to questions on the did not present evidence that each EULA accompanying verdict form, the jury first found by a preponderance of the attached CD of photos was accepted by someone at the evidence that “the EULA is a valid and binding Ziplocal with authority to bind the company, and YPPI contract between YPPI and Ziplocal.” It then found that © 2016 Thomson Reuters. No claim to original U.S. Government Works. 99

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did not prove that the EULA applied to any of the 123 outcome of the controversy to assure that concrete works the jury found YPG infringed. Finally, YPG adverseness which sharpens the presentation of issues contends that it is entitled to a judgment as a matter of law upon which the court so largely depends.” Baker v. Carr, because it believes that YPPI did not present evidence 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 that it acted willfully in infringing YPPI’s copyrights. As (1962). A plaintiff must meet three requirements in order explained further in this opinion, the jury’s verdict is not to establish Article III standing: injury in fact—“a harm due to be disturbed for any of the reasons set forth by that is both concrete and actual or imminent, not YPG. conjectural or hypothetical,” causation—“a fairly traceable connection between *1265 the alleged injury in fact and the alleged conduct of the defendant,” and redressability—“a substantial likelihood that the requested relief will remedy the alleged injury in fact.” Vt. 1. Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 1861–62, 146 L.Ed.2d 836 (2000) Before addressing YPG’s arguments, we must take up (internal quotation marks, citations and alterations YPPI’s contention that YPG lacks standing to make omitted). To establish standing, a litigant ordinarily “must several of those arguments in this appeal. See Doe No. 1 assert his own legal rights and interests, and cannot rest v. United States, 749 F.3d 999, 1003 (11th Cir.2014) his claim to relief on the legal rights or interests of third (“We review de novo whether we have jurisdiction ... parties.” Warth, 422 U.S. at 499, 95 S.Ct. at 2205. This before addressing the merits.”). “general prohibition on a litigant’s raising another person’s legal rights” is a “prudential standing” doctrine, In addressing YPPI’s claims, the jury had to determine “not derived from Article III.” Lexmark Int’l, Inc. v. Static what documents constituted the contract between YPPI Control Components, Inc., ––– U.S. ––––, 134 S.Ct. and Ziplocal (i.e., just the SLPA, or the EULA as well), 1377, 1386, 188 L.Ed.2d 392 (2014). “[T]his obligation what the terms of the contract were, and whether Ziplocal on the court to examine its own jurisdiction,” including breached its contract with YPPI, before it could address whether the parties have standing, “continues at each whether YPG and Ziplocal infringed YPPI’s copyrights. stage of the proceedings....” Cuban Am. Bar Ass’n, Inc. v. Because Ziplocal has no pending appeal, YPPI asserts Christopher, 43 F.3d 1412, 1422 (11th Cir.1995). that YPG, not a party to the contract between Ziplocal and YPPI, and nowhere arguing that it is an intended [6] YPPI’s assertion that YPG lacks “standing” is third-party beneficiary of the contract, lacks “standing” to problematic because YPG advances its interpretation of assert arguments relating to the validity and interpretation the SLPA and the EULA not as a plaintiff in pursuit of a of the SLPA or the EULA. YPPI’s contention is based contract claim—indeed, YPG has no breach of contract primarily on this Court’s previous holding that if a claim—but in its defense against the copyright plaintiff is not an intended third-party beneficiary of a infringement claim levied against it by YPPI. To be sure, contract, the plaintiff lacks standing to sue under the the requirement that a party establish its standing to contract and that, consequently, the court lacks litigate applies not only to plaintiffs but also defendants. jurisdiction. See Interface Kanner, LLC v. JPMorgan See Arizonans for Official English v. Arizona, 520 U.S. Chase Bank, N.A., 704 F.3d 927, 932–33 (11th Cir.2013). 43, 64, 117 S.Ct. 1055, 1067, 137 L.Ed.2d 170 (1997) However, as explained below, YPPI’s jurisdictional (stating that “[s]tanding to sue or defend is an aspect of argument is misplaced, as YPG without question the case-or-controversy requirement” and “[s]tanding to possesses standing to litigate this appeal. defend on appeal in the place of an original defendant, no

[1] [2] [3] [4] [5] less than standing to sue, demands that the litigant possess “[T]he core component of standing is an a direct stake in the outcome”) (emphasis added and essential and unchanging part of the case-or-controversy internal quotation marks omitted). Nonetheless, the issue requirement of Article III.” Lujan v. Defenders of of standing in civil litigation normally arises in the Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 2136, 119 context of the plaintiff’s standing to sue, and not in the L.Ed.2d 351 (1992). Accordingly, standing “is the defendant’s standing to defend against suit. See 13A threshold question in every federal case, determining the Charles Alan Wright & Arthur R. Miller, Federal power of the court to entertain the suit.” Warth v. Seldin, Practice and Procedure § 3531 (3d ed.2014) (noting that 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 the party focused upon is “almost invariably the plaintiff” (1975). “In essence the question of standing is whether and that “ordinarily the role of defendants is considered the litigant is entitled to have the court decide the merits only in determining whether they have caused the injury of the dispute or of particular issues.” Id. A litigant is so complained of and whether an order directed to them will entitled only when he has “such a personal stake in the

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

redress that injury”). For example, the cases relied upon caused them to lose rental income, and a money judgment by YPPI for determining whether YPG has established against either the FDIC or Chase would redress their loss. standing in this case are cases in which the plaintiff’s Id. at 603–04. She rejected the FDIC’s argument, writing: standing to sue on a contract was challenged, not the defendant’s standing to assert a defense. See, e.g., The FDIC’s counterargument that Interface Kanner, 704 F.3d at 932. The concept of the non-third-party beneficiaries cannot defendant’s standing does not typically arise because the interpret and enforce a contract requirement that a defendant possess standing is almost against the understanding of the always satisfied by the plaintiff’s claim for relief against contracting parties improperly tries that defendant. After all, any defendant against whom to stretch a question of contract law relief is sought will generally have standing to defend due into a dubious principle of to its exposure to an adverse judgment, the threat of constitutional law. Non-third-party which is imminent. beneficiaries to contracts usually cannot show that they have [7] In the instant case, the justiciable controversy before suffered an injury to a legally the Court is whether YPG infringed YPPI’s copyrights in protected interest because contract its photos. YPG meets the requirement that it possess law does not recognize and standing to litigate this controversy, as it has a concrete compensate non-third-party and actual interest in avoiding a judgment being entered beneficiaries for the injuries that against it on YPPI’s copyright infringement claim, an they often suffer when a interest that will be directly affected by the outcome of contracting party fails to comply this appeal. YPG unquestionably has standing. with a contract. But when jurisdiction is otherwise proper, Moreover, whether YPG can assert a defense to YPPI’s there is no inherent bar prohibiting copyright infringement claim based on a particular a stranger to a contract from asking interpretation of the SLPA and the EULA is simply not an the court to interpret a contract that issue of “standing” in the same sense *1266 that the term has bearing on its case. “standing” is used in resolving a challenge to a plaintiff’s ability to pursue a claim. This point is illustrated in Excel Id. at 604. Similarly here, having already determined that Willowbrook, L.L.C. v. JP Morgan Chase Bank, National YPG has standing, there is no jurisdictional bar to YPG Association, 758 F.3d 592 (5th Cir.2014), where Judge asking this Court to interpret YPPI’s licensing agreement Edith Brown Clement observed in her concurrence that a with Ziplocal. That agreement precipitated the copyright litigant’s request that a court interpret a third-party infringement claim YPPI now asserts against YPG, and contract in a manner favorable to its interests is not a whether YPG will be absolved of liability or made to pay matter of that litigant’s Article III standing but is instead a the damages award depends in part on this Court’s question of contract law. Id. at 604. In that case, the interpretation of the agreement at issue. Judge Clement’s owners (the “Landlords”) of tracts of land that had been conclusion in Excel Willowbrook that the Landlords did leased to a bank before its failure brought actions to not have a standing problem is exceptionally persuasive enforce the leases against the purchaser of the bank’s given our facts, considering that the non-third party assets (“Chase”). Id. at 595–96. The Landlords sought to beneficiaries asking the court to interpret the contract in enforce the leases by virtue of the FDIC’s conveyance of Excel Willowbrook actually initiated the litigation, while the failed bank’s assets and liabilities to Chase. Id. The here, YPG offers its interpretation of the SLPA and the FDIC argued that the Landlords lacked standing to EULA as a defendant—YPG is only in court because interpret or enforce the contract of conveyance between YPPI put it there. Cf. Culhane v. Aurora Loan Serv. of the FDIC and Chase because they were neither parties to Neb., 708 F.3d 282, 290 (1st Cir.2013) (while noting that it nor intended third-party beneficiaries. Id. at 596. The “[i]t is true that a nonparty who does not benefit from a court held that the Landlords were not intended contract generally lacks standing to assert rights under third-party beneficiaries but that they nonetheless that contract,” making clear that a debtor “could challenge possessed standing by virtue of their privity of estate with an assignment as a defense upon being haled into court by Chase. Id. at 599–600. Judge Clement observed separately the assignee seeking to collect on her debt”) (citing 6A that the Landlords made the requisite showing to C.J.S. Assignments § 132 (2012)). Simply put, the rule demonstrate the injury, causation, and redressability from Interface Kanner preventing a non-party from *1267 components of standing because the assignment of the enforcing a contract by seeking damages or specific leases from the failed bank to the FDIC to Chase directly performance under the contract is not applicable in the

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

instant case. Here, YPG is not seeking to enforce rights it and determine its validity. See id. Similarly, in Quanta believes it has under the SLPA and the EULA but is Computer, Inc. v. LG Electronics, Inc., 553 U.S. 617, 128 merely asking the Court to interpret a contract that has S.Ct. 2109, 170 L.Ed.2d 996 (2008), LG had licensed a some bearing on its defense to YPPI’s copyright patent portfolio to Intel, who in turn sold computer infringement claim. YPG’s chosen defense is not a matter chipsets to Quanta. *1268 Id. at 623–24, 128 S.Ct. at of jurisdictional consequence. 2114. The Supreme Court addressed the doctrine of “patent exhaustion,” which provides that the initial Finding no standing problem, we pause to satisfy authorized sale of a patented item terminates all patent ourselves that YPG can nonetheless assert its defense rights to that item. Id. at 625, 128 S.Ct. at 2115. That even though it was not in privity of contract with YPPI.1 doctrine enabled Quanta, who was sued for patent To the extent that this issue is properly before us, we find infringement, to argue that the license between LG and that YPG may do so. Outsiders to contracts have Intel was such that the downstream users of LG’s successfully asked courts to interpret those contracts for products were permitted to use the products for their various purposes. For example, courts have allowed intended use without a license. Id. at 628, 128 S.Ct. at defendants to rely on written contracts, to which they 2117. The Court had to interpret the license between LC were neither parties nor intended beneficiaries, in support and Intel to decide the case as to Quanta. Like the “first of their defenses, and have rejected, pursuant to the parol sale” doctrine, the “patent exhaustion” doctrine enabled evidence rule, the contracting parties’ testimony, which downstream users who were not parties to initial contracts contradicted the written terms of the contract. See United to make arguments about the validity of those contracts. States v. Ivey, 414 F.2d 199, 203 (5th Cir.1969) (in a In sum, we also see no reason based upon contract law taxpayer suit against the United States to recover income why YPG should not be permitted to assert its arguments. taxes paid, allowing the United States to rely on a contract We now turn to YPG’s appeal. between a cotton grower and his agent, to which the United States was not a party, as evidence to support its 1 While it could be said that this issue is inherent in defense that certain monies received by the grower YPPI’s position that YPG lacks standing because it is pursuant to the contract were advances or loans and not not a party to the contract between YPPI and Ziplocal, partial sales proceeds, and thus taxable);2 Clark v. United YPPI did not articulate this issue as we do here. To the States, 341 F.2d 691, 693 (9th Cir.1965) (similarly extent it was not waived, we address its merits. allowing the United States to rely on the written terms of a third-party employment contract between the plaintiff-taxpayer and his employer as evidence that 2 In Bonner v. City of Prichard, 661 F.2d 1206, 1209 income taxes were properly owed and stating, “The (11th Cir.1981) (en banc), this Court adopted as dispositive issue is the agreement. It is immaterial that the binding precedent all Fifth Circuit decisions issued litigation which gives rise to the issue is between a party before October 1, 1981. to the writing and a stranger.”). Further, when intellectual property doctrines are at issue, defendants charged as

infringers often assert defenses involving the validity and

interpretation of licenses to which the defendants were not parties. For example, in UMG Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir.2011), the doctrine of 2. “first sale” embodied in § 109(a) of the Copyright Act was at issue, meaning that if a copyrighted work is sold [8] [9] [10] We review the denial of a motion for a judgment rather than licensed, the copyright owner’s copyright as a matter of law de novo and apply the same standards rights are exhausted and the downstream purchaser who as the district court. Skye v. Maersk Line, Ltd. Corp., 751 uses the work is not an infringer. Id. at 1179–80 (citing 17 F.3d 1262, 1265 (11th Cir.2014). We will reverse the U.S.C. § 109(a)). The defendant in that case argued that district court’s denial of a motion for a judgment as a under the first sale doctrine, he was not an infringer of the matter of law “only if the facts and inferences point plaintiff’s copyrights because the plaintiff’s agreement overwhelmingly in favor of one party, such that with the original recipients of its promotional CDs was reasonable people could not arrive at a contrary verdict.” properly characterized as a sale rather than a license. Id. at Id. (quotation marks omitted). “We will not second-guess 1179. The court interpreted the copyright owner’s the jury or substitute our judgment for its judgment if its agreements with the original recipients of the CDs as a verdict is supported by sufficient evidence.” Id. (quotation sale, rather than a license, ruling for the defendant. Id. at marks omitted). 1180. This required the court to interpret that agreement

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[11] [12] YPG’s first contention is that the SLPA permitted “unlicensed users,” and “the license agreement” were not Ziplocal to outsource the use of YPPI’s photos to defined in the SLPA, and the jury was instructed that contractors like YPG, irrespective of the EULA’s there was a dispute between YPPI and Ziplocal as to the prohibition on transferring photos to non-employees, and meaning of these terms. The jury heard that YPPI’s as such, YPG’s assistance to Ziplocal in publishing its position was that these particular terms in the SLPA phone books by using YPPI’s photos was not copyright should be construed consistently with the EULA to mean infringement. However, the jury’s verdict to the contrary that “authorized users” in the SLPA means “employees of is supported by sufficient evidence.3 As the district court [Ziplocal],” “unlicensed users” in the SLPA means instructed the jury, there was a dispute between YPPI and outside parties or individuals who are not employees of Ziplocal as to what constituted the contract—YPPI Ziplocal, “unauthorized distribution” means transfer of claimed the contract was comprised of both the SLPA and the photos without authorization by YPPI, and the term the EULA together, while Ziplocal claimed that only the “the license agreement” in the SLPA refers to the EULA. SLPA was the contract, and that the EULA was invalid. If these constructions were adopted by the jury, the SLPA Pursuant to YPPI’s theory, if the jury found that the could, on its face, have been found to prohibit the use of EULA was a valid and binding contract of Ziplocal’s, it YPPI’s photos by non-employees, just as the EULA does, must be construed together with the SLPA, because where which is even referenced in the SLPA as “the license multiple agreements are entered into by the same parties, agreement.” See Quix Snaxx, 710 So.2d at 153 (“Where a at the same time, concerning the same transaction or writing expressly refers to and sufficiently describes subject matter, they are generally construed together as a another document, the other document, or so much of it as single contract. Florida contract law supports YPPI’s is referred to, is to be interpreted as part of the writing.”). theory. See Quix Snaxx, Inc. v. Sorensen, 710 So.2d 152, Sufficient evidence was presented to support these 153 (Fla.Dist.Ct.App.1998); Clayton v. Howard Johnson constructions as argued by YPPI, such as the actions of Franchise Sys., Inc., 954 F.2d 645, 648 (11th Cir.1992). Ziplocal over the years in continuing to accept, pay for, There was sufficient evidence presented to support and use each collection of photos sent by YPPI, each time YPPI’s theory that the SLPA and the EULA should be in packaging containing a EULA. In sum, the evidence construed together. For example, the testimony of not supports the jury’s conclusion that Ziplocal breached its only YPPI’s president, Moore, but also Ziplocal’s contract—consisting of the SLPA and EULA president, Woodall, was that they reached an agreement in together—with YPPI by transferring YPPI’s photos to March 2004 that consisted of both the SLPA and the YPG. EULA. [Docs. 424 at 19 (Moore’s testimony); 425 at 44, 98–100 (Woodall’s testimony, i.e., that the EULA was an agreement of YPPI and *1269 Ziplocal and that the EULA was simply the “license agreement behind the [SLPA]”).] Both Moore and Woodall also testified that 3. that the SLPA and the EULA were agreed to at the same [13] time. [Docs. 424 at 19–20 (Moore’s testimony); 425 at 44 Nor do we find merit in any of YPG’s contentions that (Woodall’s testimony).] Moreover, the jury never heard it was entitled to a judgment as a matter of law because any testimony that Woodall rejected or refused to enter the EULA was an invalid contract. YPG first argues that into the EULA. there was no benefit provided to Ziplocal by the EULA that it did not already get through the SLPA, and the EULA actually contained more restrictive provisions than 3 YPPI asserts in its response brief that YPG waived this the SLPA. To the contrary, there was a legally sufficient particular argument by not first asserting it at the close evidentiary basis for the jury to conclude that there was of all of the evidence in its motion for a judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a). We consideration for the EULA. As noted in the previous assume, without deciding, that YPG properly preserved section, a reasonable jury could have construed the SLPA this argument because we find that YPG’s argument and EULA together as one contract, a finding that was fails substantively. supported by the evidence at trial. Because there was consideration for the SLPA, in the form of Ziplocal paying YPPI for the photos and promising to abide by the Further, the district court charged the jury that in deciding contract restrictions, there was consideration for the the meaning of the disputed terms of the contract, it EULA as well, which was even referenced in the SLPA as should consider how the parties acted before and after the “the license agreement.” Indeed, as YPPI delivered more contract was created. Terms in the SLPA such as photos for years after the initial agreement between “authorized users,” “unauthorized distribution,” Moore and Woodall, each time accompanied by the EULA, Ziplocal continued to pay. YPG has not

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

demonstrated a lack of evidence of consideration such initially delivered on March 15, 2004, by YPPI to that the judgment in favor of YPPI would be brought into Ziplocal. YPG argues that the EULA could not have question. applied to this initial delivery of photos, because the photos were on a hard drive as opposed to a CD, and the YPG next contends that the EULA is invalid because it EULA was not affixed to the hard drive, as it was to the was not agreed to by anyone with authority to bind subsequent CD shipments. YPG’s argument again Ziplocal for shipments of photos subsequent to the first disregards the testimony at trial that led the jury to delivery of the initial hard drive to Woodall in April 2004. construe the SLPA together with the EULA, rather than Again, there was *1270 sufficient evidence presented for each in isolation, and YPG does not dispute that the the jury to conclude otherwise. Woodall testified that the SLPA applies to all 10,411 photos. Moreover, Moore EULA was an agreement of Ziplocal and that he agreed to testified that the EULA governed all 10,411 of the photos its terms. Moore’s testimony that the terms of the EULA at issue in this lawsuit. Moore also testified that he and never changed after the initial meeting in March 2004, Woodall agreed to the terms of the EULA when he was uncontroverted at trial. Woodall, as Ziplocal’s delivered the hard drive containing the initial set of president, unquestionably had authority to commit photos with the EULA, on March 15, 2004. Woodall’s Ziplocal to those terms. The jury also heard testimony that testimony confirmed this agreement, in that he stated that Mr. Lott, the Director of Production and later the Vice the EULA was the “license agreement behind the President of Operations at Ziplocal, received the EULA [SLPA],” that the EULA was an agreement of YPPI and with each additional CD shipment, and that after Mr. Lott Ziplocal, and that he saw the two agreements at around left Ziplocal, Geri Suster, the former Chief Operating the same time. [Doc. 425 at 44, 98–100.] YPG’s argument Officer at Ziplocal, also received the EULA with that the EULA could not have applied to the initial additional CD shipments. YPG argues that there was no delivery of photos because there was no package with an showing that Mr. Lott or Ms. Suster was authorized to attached EULA containing a CD for Ziplocal to open, a agree to the terms of the EULA when they opened the specific mode of acceptance set forth in the EULA, packages. However, given that Woodall was aware that disregards the intent of YPPI and Ziplocal to reach an Mr. Lott was receiving CD shipments on behalf of agreement on March 15, 2004, and for it to apply to the Ziplocal, this argument is without merit. See Computel, initial 4,000 photos. Florida *1271 law provides that a Inc. v. Emery Air Freight Corp., 919 F.2d 678, 683 (11th valid contract is formed, notwithstanding a deviation from Cir.1990) (a principal is bound by the acts of his agent the offeror’s designated mode of acceptance, if there was where the principal is informed and approved of the act).4 a meeting of the minds and the offer was indeed accepted. Further, the jury heard nothing to indicate that Woodall See Caldwell v. Snyder, 949 So.2d 1048, 1050 ever rejected or refused to enter into the EULA, but it did (Fla.Dist.Ct.App.2006) (offer accepted even though receive evidence that he was aware that Mr. Lott was cashier’s check was provided instead of wire transfer or receiving and using the photos. Therefore, Mr. Lott’s cash as required by “non-negotiable conditions”). Further, continued acceptance of the EULA with shipments was the offeror is free to waive a designated mode of binding on Ziplocal, just as the same is true for Ms. Suster acceptance. See id. In any event, the EULA does not after she took over Mr. Lott’s position. YPG has failed to provide that opening a package containing a CD with an demonstrate how the evidence points in its favor such to attached EULA is the only way to accept the EULA. In necessitate a reversal of the judgment in favor of YPPI. sum, the only testimony at trial was that there was a meeting of the minds as to the terms that would govern all 4 There was also a question raised at trial about who photos delivered to Ziplocal by YPPI on the first day and actually opened the mail for Mr. Lott. When asked “Do thereafter, and that the SLPA and EULA contained those you know who from [Ziplocal] would have received terms. There was sufficient evidence for the jury to those shipments,” Woodall answered, “It would have conclude that all 10,411 photos licensed to Ziplocal were come directly to either Janice Riggs, the vice president governed by the agreement reflected in the SLPA and the of production; Lee Lott, the production manager, or EULA. Charlene Davis, his assistant.” [Doc. 425 at 48–49.] If officers of Ziplocal delegated authority to agents within their company to open mail for them, they are bound by the acts of those agents as if they had opened the mail themselves. See Computel, 919 F.2d at 683. 4.

[16] [17] [18] YPG’s final contention is that it is entitled to a [14] [15] YPG also asserts that there was no evidence judgment as a matter of law because there was no presented that the EULA governed the first 4,000 photos evidence presented at trial supporting the jury’s finding

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that it willfully infringed YPPI’s copyrights. The as encompassing more than just “knowing” Copyright Act entitles a copyright owner to recover actual infringements. damages suffered, as well as any profits made by the defendant, that are the result of the infringement. 17 Graper, 756 F.3d at 394–95 (footnote omitted). We agree U.S.C. § 504(b). However, under § 504(c)(1) of the Act, with the Fifth Circuit and others that willful copyright an owner may elect to recover statutory damages in lieu infringement under § 504(c)(2) encompasses reckless of any other form of monetary relief. The Copyright Act’s disregard of the possibility that one’s actions are statutory damages provision is designed to discourage infringing a copyright. wrongful conduct. F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233, 73 S.Ct. 222, 225, 97 L.Ed. [19] There were sufficient facts at trial to support a finding 276 (1952). The range of statutory damages is between of willful infringement based on YPG’s reckless disregard $750 and $30,000 for each infringed work, 17 U.S.C. § for the possibility that it might be infringing on YPPI’s 504(c)(1), but the Act also allows “the court in its copyrights. Michelle Meloy, a senior manager in YPG’s discretion [to] increase ... award[s] of statutory damages” directory services department and former Creative in cases involving willful infringement to $150,000 per Services Manager, admitted that YPG never received work, id. § 504(c)(2). This Court has stated that authorization to use YPPI’s photos. Notwithstanding this willfulness under the Copyright Act “means that the lack of authorization, Ms. Meloy testified that YPG defendant ‘knows his actions constitute an infringement; continued building new advertisements with YPPI’s the actions need not have been malicious.’ ” Cable/Home photos into 2013, after this litigation began. She also Commc’n Corp. v. Network Prods., Inc., 902 F.2d 829, testified that YPG transferred YPPI’s photos to third 851 (11th Cir.1990) (quoting Broadcast Music, Inc. v. parties, such as when YPG aided a third-party company in Xanthas, Inc., 855 F.2d 233, 236 (5th Cir.1988)). creating and publishing video ads for one of Ziplocal’s Numerous other circuits have held that a finding of customers, to be used in one of Ziplocal’s publications. willfulness under the Copyright Act is also appropriate She stated that when YPG helped create these ads, it did where a defendant recklessly disregarded the possibility not follow any specific measures to regulate what photos that it was infringing a copyright. See Graper v. it was taking from Ziplocal’s customer folders, nor did it Mid–Continent Cas. Co., 756 F.3d 388, 394–95 & n. 7 provide third party companies with any parameters (5th Cir.2014); N.A.S. Import, Corp. v. Chenson Enters., regarding how the photos could be used. The evidence Inc., 968 F.2d 250, 252 (2d Cir.1992) (holding that a showed that YPG only began swapping out YPPI’s photos finding of “reckless disregard of the copyright holder’s from ads after it was caught using the photos without a rights (rather than actual knowledge of infringement) license. YPG’s Director of Legal Affairs, Treena Cooper, suffices to warrant [an] award of enhanced damages”); also testified that YPG did not conduct any due diligence Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, to determine whether it had a right to use the photos 1020–21 (7th Cir.1991) (holding that the term “willful” received from Ziplocal, and in fact YPG had “no idea” encompasses the “reckless disregard of the copyright who owned the photos. [Doc. 426 at 151.] Ms. Cooper owner’s right”); RCA/Ariola Intern., Inc. v. Thomas & testified that “it wasn’t a concern” of YPG what the Grayston Co., 845 F.2d 773, 779 (8th Cir.1988) (holding source of the images it was receiving from Ziplocal was. that “willfully” under the Copyright Act encompasses [Id.] YPG’s Vice President of Business Solutions, reckless disregard). As opined by the Fifth Circuit Court Gregory Shearer, also testified that YPG had no of Appeals, knowledge of any license agreement between Ziplocal and YPPI “because frankly it wouldn’t have made any Although the Supreme Court has not directly addressed difference to us.” [Id. at 175–81.] YPG argues that the definition of “willful” under the Copyright Act, willfulness is negated because outsourcing is common in “the general rule [is] that a common law term in a the industry, so YPG had no reason to know that statute comes with a common law meaning, absent performing outsourcing work using photos received from anything pointing another way.” Safeco Ins. Co. of Ziplocal would infringe the copyrights of others. YPG America v. Burr, 551 U.S. 47, 58, 127 S.Ct. 2201, 167 further argues that there was no evidence YPG knew of L.Ed.2d 1045 (2007) (internal citation omitted). the license agreement between Ziplocal and YPPI, and Because the common law *1272 construction of the YPG’s outsourcing agreement with Ziplocal stated that term “willful” covers behavior that is “wanton” or the work performed would not infringe on any copyrights. “reckless[,]” the “standard civil usage” should as well. However, according to YPG’s own witnesses, YPG was Id. Thus, when “willfulness is a statutory condition of not only fully aware that permission is required to use civil liability, [it] cover [s] not only knowing violations copyrighted photos, but it would not have made any of a standard, but reckless ones as well.” Id. Safeco difference whether YPG knew about Ziplocal’s license mandates that we interpret “willful” under § 504(c)(2) from YPPI or not, because YPG was not at all concerned © 2016 Thomson Reuters. No claim to original U.S. Government Works. 105

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about the source of the photos it was receiving from process as “complicated, dilatory, and expensive.” Societe Ziplocal. This evidence is more than sufficient to support Nationale Industrielle Aerospatiale v. U.S. Dist. Ct. for a finding of willful copyright infringement under the the S. Dist. of Iowa, 482 U.S. 522, 531, 107 S.Ct. 2542, Copyright Act. 2549, 96 L.Ed.2d 461 (1987). The decision whether to issue letters rogatory lies within the discretion of the In sum, we reject YPG’s challenge to the sufficiency of district court and is reviewed for an abuse of that the evidence to support a verdict that it infringed YPPI’s discretion. El–Mazain, 664 F.3d at 517 (citing United copyrights. Accordingly, we affirm the district court’s States v. Liner, 435 F.3d 920, 924 (8th Cir.2006)). Several denial of YPG’s renewed motion for a judgment as a other circuits have held that there must be “good reason” matter of law. to deny the request for the issuance of letters rogatory, at least when the request is made pursuant to Fed.R.Civ.P. 28(b). See Complaint of Bankers Trust Co., 752 F.2d 874, 890 (3rd Cir.1984) (“Although we do not dispute that it may be proper to refuse the issuance of a commission or B. letters rogatory, there are cases in which courts have indicated that there must be some ‘good reason’ justifying We turn now to YPPI’s cross appeal, in which it contends the denial of this particular type of judicial assistance.”) that it is entitled to a *1273 new trial on damages due to (citing Zassenhaus v. Evening Star Newspaper Co., 404 alleged error in several of the district court’s rulings: the F.2d 1361, 1364 (D.C.Cir.1968)).5 Nonetheless, when a court’s denial of YPPI’s request during discovery to issue request to issue letters rogatory is overly broad or unlikely letters rogatory to Canadian authorities to depose a to lead to the discovery of relevant evidence, district Canadian affiliate of YPG; its refusal to allow YPPI to courts retain discretion to refuse to issue them. See e.g., admit evidence at trial of the Canadian affiliate’s alleged El–Mezain, 664 F.3d at 518 (holding that the district court use of YPPI’s photos; its decision that each of YPPI’s 178 did not abuse its discretion in refusing to issue letters collections of photos, rather than each of YPPI’s 10,411 rogatory to Israeli authorities to review approximately individual photos, is a “work” for purposes of computing *1274 2,000 boxes of material to search for exculpatory statutory damages under the Copyright Act; and its denial evidence because the hope that the evidence would reveal of YPPI’s request that it alter the jury’s statutory damages favorable evidence was merely speculative and the award against Ziplocal after trial. For the following request was thus a “fishing expedition”); United States v. reasons, YPPI’s arguments lack merit and thus do not Rosen, 240 F.R.D. 204, 215 (E.D.Va.2007) (factors warrant a new trial on damages. counseling against issuance of the letters rogatory were that the proffered testimony was not exculpatory and was cumulative of testimony from other witnesses available in the United States, the inherent delay in the letters rogatory 1. process, and the fact that the testimony was not necessary to ensure a fair trial). [20] [21] Letters rogatory are the means by which a court in one country requests a court of another country to assist in 5 The “good reason to deny” standard originates from the the production of evidence located in the foreign country. 1963 amendments to Fed.R.Civ.P. 28(b). Prior to 1963, See United States v. El–Mezain, 664 F.3d 467, 516–17 Rule 28(b) read in part, “A commission or letters (5th Cir.2011). Federal courts have authority to issue rogatory shall be issued only when necessary and letters rogatory in civil and criminal cases. See United convenient, on application and notice, and on such States v. Staples, 256 F.2d 290, 292 (9th Cir.1958); terms and with such directions as are just and appropriate.” The 1963 amendment deleted the words United States v. Steele, 685 F.2d 793, 809 (3d Cir.1982). “only when necessary and convenient” from that For example, Rule 28 of the Federal Rules of Civil sentence. See 8A Charles Alan Wright & Arthur R. Procedure allows for depositions to be taken in foreign Miller, Federal Practice and Procedure § 2083 (3d countries. Fed.R.Civ.P. 28(b) provides that a letter of ed.2014) (stating that “[a]lthough this change was not request (“whether or not captioned a ‘letter rogatory’ ”) explained in the Committee Note, it seems clear that the may be issued: 1) “on appropriate terms after an discretion the courts formerly had in deciding whether application and notice of it;” and 2) “without a showing to issue a commission or letters rogatory has been that taking the deposition in another manner is considerably reduced”). impracticable or inconvenient.” Fed.R.Civ.P. 28(b)(1)-(2).

[22] The Supreme Court has described the letters rogatory Over a year into discovery, YPPI asked the district court

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to issue letters rogatory to the appropriate Canadian showing of “a reasonable probability that, had the authorities to depose Yellow Pages Group Corp. evidence been disclosed to the defense, the result of the (hereinafter “YPG Canada”), a Canadian affiliate of YPG proceeding would have been different.” Id. (quotation that also publishes phone directories. YPPI’s motion, filed marks omitted). “[A] reasonable probability is shown pursuant to Fed.R.Civ.P. 28(b), sought to depose a YPG where the nondisclosure could reasonably be taken to put Canada designee on all of the sources of its photos used in the whole case in such a different *1275 light as to all of its phone directories, on all of the company’s undermine confidence in the jury verdict.” Id. (quotation salespeople and graphic artists, and on all third parties marks omitted). Here, YPPI was not prejudiced by its used by the company for advertisement production. It also inability to conduct discovery from YPG Canada. After sought a corporate designee on the relationship of YPG YPPI’s motion was denied, the discovery it took from Canada with three other non-parties: Canpages, Inc., a YPG confirmed that YPG had not transferred any of company that YPG Canada had acquired in 2010 and that YPPI’s photos to YPG Canada, and that YPG Canada had was also a licensee of YPPI’s, Volt Information Sciences, not used YPG to make the video ads in question. YPG’s Inc., also a licensee of YPPI’s, and YPG Directories, corporate designee, Ms. Meloy, testified that data was not LLC. The associated document requests sought all transferred from YPG to YPG Canada and that YPG agreements between YPG Canada and other third parties Canada built its own video ads without the help of YPG, such as Canpages, and copies of all Canpages phone either by using its own production team or by utilizing directories, regardless of whether they contained YPPI’s outside vendors. She stated that she had no knowledge as photos. YPPI sought this nearly unfettered access to YPG to the source of the photos that were appearing in YPG Canada because it argued that YPG builds ads for not Canada’s ads. Indeed, millions of pages of documents only Ziplocal but also YPG Canada, and YPPI’s photos were produced by YPG in this case, none of which were showing up in YPG Canada’s publications, such as evidenced such a transfer of photos to YPG Canada. We in videos located on YPG Canada’s website. Since YPG therefore cannot say that the evidence sought would have Canada was not one of YPPI’s licensees, YPPI believed “cast the case in a different light, thereby undermining that YPG was illegally transferring YPPI’s photos to YPG confidence in the verdict.” Id. at 518. Accordingly, the Canada for use in its ads. YPG and Ziplocal opposed the district court did not abuse its discretion in failing to issue request, arguing that it was overbroad and irrelevant letters rogatory to the Canadian authorities to depose YPG because it amounted to YPPI’s attempt to discover Canada.6 infringement activities on the part of YPG Canada, who was not sued or otherwise mentioned in any of YPPI’s 6 We note that we reach the same conclusion even if the complaints. The district court refused to issue letters breadth of the district court’s discretion in this matter is rogatory to the Canadian authorities, finding that any circumscribed by the “good reason to deny” standard as information that YPPI needed could be gathered within pronounced by several other courts of appeal. See the confines of the United States. Complaint of Bankers Trust Co., 752 F.2d at 889–90, Zassenhaus, 404 F.2d at 1364. YPPI now argues that the district court’s denial of its motion to issue letters rogatory to depose YPG Canada prejudiced it to the extent that a new trial on damages is warranted. YPPI believes that had it been able to depose YPG Canada, it would have discovered that YPG or Ziplocal had transferred some of YPPI’s photos to YPG 2. Canada for its use, and if it had been able to present [25] evidence to the jury that YPG or Ziplocal had allowed the YPPI’s second argument on cross appeal is that the use of YPPI’s photos by another party, that it would have district court should have allowed it to present at trial undermined YPG and Ziplocal’s defense at trial that there Moore’s testimony that photos appearing on YPG was no “real” damage in this case because Ziplocal Canada’s website could be from YPG. We review a merely transferred YPPI’s photos to YPG for use in district court’s evidentiary rulings for an abuse of Ziplocal’s phone directories and for no other purpose. discretion. Burchfield v. CSX Transp. Inc., 636 F.3d 1330, 1333 (11th Cir.2011). We will only overturn an [23] [24] The issuance of letters rogatory is a discovery evidentiary ruling if the moving party establishes a issue, and a party is not entitled to a new trial for an substantial prejudicial effect. Id. A prejudicial effect is alleged discovery violation unless it shows that the denial demonstrated when the moving party shows that the error of access to evidence was prejudicial to its substantial “probably had a substantial influence on the jury’s rights. El–Mezain, 664 F.3d at 517. This requires a verdict.” Id. (quotation marks omitted).

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Prior to trial, YPG asked the district court to preclude wasting time, or needlessly presenting cumulative YPPI from introducing any evidence at trial of the use of evidence”). Further, YPG Canada was not a party in the YPPI’s photos by YPG Canada. YPPI had listed several action. In YPG Canada’s absence, the jury could easily print and online video ads that were published by YPG have confused YPG with YPG Canada, and tagged YPG Canada on its exhibit list. YPG pointed out that Ms. with alleged extraterritorial infringement by YPG Canada. Meloy, its corporate designee, had denied at deposition See United States v. Dohan, 508 F.3d 989, 993 (11th that any of the ads or videos were prepared by YPG or Cir.2007) (stating that “[d]istrict courts are well within that YPG Canada obtained YPPI’s photos from YPG, and their discretion to exclude even relevant evidence” for the that YPPI had no other evidence that YPG Canada reasons enumerated in Fed.R.Evid. 403). obtained any of its photos from YPG. During trial, the court allowed YPPI to make a proffer regarding the evidence it sought to admit. During the proffer, Moore identified a series of ads published by YPG Canada that contained YPPI’s photos. Moore testified that it was his 3.

belief that the YPPI photos appearing on YPG Canada’s [27] website could have been transferred to YPG Canada from YPPI’s third argument is that the district court erred in YPG. However, he admitted that he had no direct ruling that each of its 178 collections of photos organized knowledge of YPG’s transfer of photos to outside parties. by heading name, rather than each of its 10,411 individual He also admitted that the photos could have come from photos, was a “work” for the purpose of computing other sources, such as Canpages, a company acquired by statutory damages under § 504(c)(1) of the Copyright Act. YPG Canada that had also licensed photos from YPPI. Section 504(c)(1) allows for statutory damages based on The district court excluded Moore’s testimony, stating each “work” infringed. See 17 U.S.C. § 504(c)(1) that it was too speculative to be considered by the jury. (providing that “the copyright owner may elect, at any time before final judgment is rendered, to recover, instead YPPI now argues that it was prejudiced by the district of actual damages and profits, an award of statutory court’s exclusion of this evidence because a centerpiece damages for all infringements involved in the action, with of YPG and Ziplocal’s defense was the lack of evidence respect to any one work”). That section then immediately that YPPI’s photos were used for anything other than states that “all the parts of a compilation ... constitute one Ziplocal products. YPPI believes *1276 that had the jury work.” Id. § 504(c)(1). The Copyright Act defines a been made aware of the further redistribution of the “compilation” as “a work formed by the collection and photos to YPG Canada, and the use of the photos in YPG assembling of preexisting materials or of data that are Canada’s ads, it would have awarded a higher damages selected, coordinated, or arranged in such a way that the amount. resulting work as a whole constitutes an original work of authorship.” Id. § 101. The term “compilation” includes [26] The district court did not abuse its discretion in “collective works,” which are defined as works “such as a excluding the evidence. Moore’s testimony was pure periodical issue, anthology, or encyclopedia, in which a speculation, and thus too attenuated to be relevant. See number of contributions, constituting separate and R.M.R. ex rel. P.A.L. v. Muscogee Cty. Sch. Dist., 165 independent works in themselves, are assembled into a F.3d 812, 817 n. 9 (11th Cir.1999) (“Abuse of discretion collective whole.” Id. By taking the position that its is the proper standard when reviewing a district court’s 10,411 individual photos are each separate works, YPPI decision to exclude evidence as irrelevant under Federal presumably seeks to raise the statutory damages award in Rule of Evidence 401.”). Despite conducting discovery this case from $123,000 to a minimum of $1.5 million and for two years, YPPI uncovered no evidence that YPG a potential maximum of $300 million. See id. § transferred YPPI’s photos to YPG Canada. To the 504(c)(1)-(2) (providing for a range of statutory damages contrary, Ms. Meloy’s testimony was that YPG had not between $750 and $30,000 for each infringed work and made any such transfers. As such, the jury would have authorizing a court to increase the award of statutory had to reach the opposite conclusion based solely on damages to a maximum of $150,000 per infringed work in Moore’s conjecture. Moore’s speculation had no cases of willful infringement).

probative value and as such would have been substantially [28] outweighed by the unfair prejudicial impact to YPG. See *1277 This Court has not previously determined the Fed.R.Evid. 403 (even relevant evidence may be excluded standard by which it reviews a district court’s “if its probative value is substantially outweighed by a determination of what constitutes a work for statutory danger of one or more of the following: unfair prejudice, damages purposes under the Copyright Act. At least one confusing the issues, misleading the jury, undue delay, other circuit has concluded that the review is de novo. See Bryant v. Media Right Prod., Inc., 603 F.3d 135, 140 (2d

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Cir.2010) (holding that the “question of whether a work applications. As noted on the registrations, each collection constitutes a ‘compilation’ for the purposes of statutory of photos was taken by the same photographer, shared the damages ... is a mixed question of law and fact” and same subject matter, and was published on the same date. therefore reviewed “de novo ”) (citing Gamma Audio & For example, one such copyright registration lists 50 Video, Inc. v. Ean–Chea, 11 F.3d 1106, 1116 (1st photos for “Golf”-related ads, all taken by “Trent Moore,” Cir.1993)). We hold that this issue is a mixed question of and all published together on “1–Mar–2001.” Another law and fact, and we review the district court’s lists 66 photos for “Auto Repair and Crashes”-related ads, application of the law to the facts de novo. all taken by “Richard Lawless,” and all published together on “02/03/2009.” The photos in each group share a title, In deciding that each of YPPI’s 178 collections was the e.g., “Golf” or “Auto Repair and Crashes 3.” Where the relevant work, the district court found that each collection registration form called for a “Title of This Work,” YPPI was a “compilation” of photos under 17 U.S.C. §§ listed the heading *1278 names for the photos covered, 504(c)(1) and 101. The factual record supports that not individual photos. conclusion. First, Moore’s own testimony supports the collective nature and purpose of YPPI’s photos organized Not only did Moore create, market, and register his by subject matter heading. Moore testified that the entire photos as collections organized by subject matter heading, purpose of grouping his photo collections by subject he almost exclusively distributed them as collections to matter—rather than marketing individual photos—was his customers, on hard drives, CDs or DVDs, or through a customer appeal and efficiency. He stated that YPPI’s web-portal, always organized by heading so that they customers were publishers of phone directories, and their were searchable “by key word, category, or collection artists liked being able to search for photos to include in name.” [Doc. 423 at 76–78.] Further, YPPI’s SLPA with ads by specific subject matter. Indeed, to make his photos Ziplocal provided that YPPI “will ship 1–2 headings per relevant and marketable, Moore spent “a lot of years” month” and contemplated that Ziplocal would “purchase working with customers “to determine what headings all current titles as well as all new relevant headings as generate revenue and what headings generate usage.” they become available, up to the first 200 headings.” [Doc. 423 at 67–68.] Once Moore selected a heading, he [Joint Trial Exhibit 2.] would develop the photo collections around it. Using a “Food” heading for an example, Moore testified that, once [29] Finally, we find telling that YPPI’s own complaints the heading was selected, the next step was to have the described each of the 178 collections as a “Work[ ].” photographer produce the associated photo collection. [Id. Each complaint alleged that YPPI “created and produced at 68.] In other words, the heading drove the collection of a series of photographic images as follows,” which was the photos, not the other way around. In every sense, then, followed by a list of each collection of photos by heading each of Moore’s 178 headings is compilation as defined name, and then alleged that each “series of images is in the Act because each is a collection of photos that collectively referred to in this Complaint as the ‘Works.’ ” Moore and YPPI “selected, coordinated, or arranged” in a [See Complaint, doc. 1 at ¶ 17; First Amended Complaint, way that results in “an original work of authorship.” See doc. 39–1 at ¶ 17; Second Amended Complaint, doc. 56 at 17 U.S.C. § 101. ¶ 18; Third Amended Complaint, doc. 248 at ¶ 15.] Because YPPI chose to create, market, deliver, register, The manner in which Moore registered his photos with and describe the photos as collections, not as individual the Copyright Office—as collections rather than as photos, this Court is convinced that infringement of each individual photos—also supports the conclusion that the collection should result in only one statutory damage 178 headings, and not the 10,411 individual photos, are award.7 the “works” in this case. Although the manner of copyright registration is not dispositive of the works 7 We reject YPG’s argument that YPPI should not issue, this Court has previously considered it to be at least prevail on this claim because YPPI invited the district a relevant factor. See MCA Television Ltd. v. Feltner, 89 court’s error in its works determination by arguing in F.3d 766, 769 (11th Cir.1996). As Moore put it, the alternative that each of its 178 collections customers “bought collections. And I registered my constituted a work. YPPI’s primary argument to the images the same way.... you get images. You register district court was always that each of its 10,411 photos them in a group. And so they wanted the relevance of was as separate work, but it also posited as a secondary having multiple images.” [Doc. 424 at 265–66.] Moore “fallback” position that if the district court rejected that argument, that it should find that each of its 178 registered each of his 178 photo collections with the collections is a work, rather than find that each of its 44 Copyright Office under their heading titles, grouping copyright registrations is a work or that the entire various title collections together on 44 registration library of photos is one work, as argued by Ziplocal.

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Offering such a “fallback” position in mere response to copyrights are not distinct works unless they can ‘live an issue raised by the opposing party does not equate to their own copyright life’ ” in reaching the conclusion inviting the district court’s error so as to waive review that the copyright owner could not receive a separate of the issue on appeal. Cf. United States v. Frank, 599 statutory damage award for each separate picture of F.3d 1221, 1240 (11th Cir.2010) (the doctrine of Mickey Mouse and Minnie Mouse in different poses, invited error applies when a defendant affirmatively because each picture did not have independent requests or stipulates to a particular point, which is then economic value) (quoting Stigwood, 530 F.2d at 1105). adopted by the court). However, the United States Court of Appeals for the Second Circuit declined to adopt the independent economic value test to an album of songs in Bryant v.

Media Right Productions, Inc., 603 F.3d at 140–42, We are not persuaded, as YPPI argues, that this Court’s stating, “The [Copyright] Act specifically states that all previous opinion in MCA Television Ltd. v. Feltner, parts of a compilation must be treated as one work for supra, should change our conclusion. In Feltner, this the purpose of calculating statutory damages. This Court agreed with other circuits that have held that each language provides no exception for a part of a episode of a syndicated television series was a separate compilation that has independent economic value, and work and not part of a compilation because each had the Court will not create such an exception.” Id. at 142. “independent economic value and is, in itself, viable.” 89 The Second Circuit distinguished its prior decision in F.3d at 769 (citing Gamma, 11 F.3d at 1116; Robert Stigwood, 530 F.2d at 1105, where it had “held that each separately copyrighted song from the musical Stigwood Grp., Ltd. v. O’Reilly, 530 F.2d 1096, 1105 (2d Jesus Christ Superstar could be the subject of a Cir.1976); Walt Disney Co. v. Powell, 897 F.2d 565, 569 separate statutory award because each song could ‘live (D.C.Cir.1990)). In support, the Court noted that [its] own copyright life.’ ” Bryant, 603 F.3d at 142 n. 7 regardless of “the decision of a distributor of television (quoting Stigwood, 530 F.2d at 1104–05) (alteration in programs to sell television series as a block, rather than as original). The Second Circuit explained that, in individual shows,” each episode was “produced Stigwood, it had been “awarding statutory damages independently from the other episodes,” was “aired pursuant to the Copyright Act of 1909, which provided independently from preceding and subsequent episodes,” for a separate statutory damage award ‘for each and was “individually copyrighted” by the owner. Id. The infringement that was separate,’ ” and not under the Copyright Act of 1976, in which “[t]he one-award Court rejected the argument that the episodes were part of restriction for compilations was introduced.” Id. an anthology, and thus the entire series was one collective work subject to only one award, because each episode had an individual plot, and it was not necessary to view the episodes in chronological order. Id. at 769–70. In Although this Court held that the particular television reaching that conclusion, the Court relied upon Twin episodes in Feltner were separate works because they Peaks Productions, Inc. v. Publications, International, could each “live their own copyright life,” 89 F.3d at 769, Ltd., 996 F.2d 1366, 1381 (2d Cir.1993), where the we certainly do not read the Feltner decision as Second Circuit had reached the *1279 same result with foreclosing the application of 17 U.S.C. § 504(c)(1)’s respect to each episode of a television series even though directive that “all parts of a compilation ... constitute one each succeeding episode continued a single plot line. Id. work” for all cases. Instead, this Court in Feltner at 770.8 evaluated real world conditions related to how the episodes were created, produced, aired, and registered with the Copyright Office, to find that each episode had 8 At least three other circuits have adopted the an economic value independent from the other episodes, “independent economic value” test as articulated by this Court in Feltner. See Gamma, 11 F.3d at 1116–17 and thus were not part of a compilation or collective (applying what that court described as a “functional” work. 89 F.3d at 769. An application of the same factors test to hold that each episode of a television show, considered in Feltner to YPPI’s photos supports our although released on videotape as part of a complete conclusion that each of YPPI’s 10,411 individual photos series, could be the subject of a separate statutory does not have independent economic value for statutory damage award because each episode could be rented damages purposes. As described more fully above, Moore and viewed separately and each was separately created his photos for the sole purpose of being organized produced); Columbia Pictures Television v. Krypton into collections based on the subject matter of the photos, Broad. of Birmingham, Inc., 106 F.3d 284, 295 (9th e.g., “Golf,” “Roofing,” “Plumbers,” and he marketed Cir.1997) (same), rev’d on other grounds sub nom. Feltner v. Columbia Pictures Television, Inc., 523 U.S. them as such for easy searchability by phone book 340, 118 S.Ct. 1279, 140 L.Ed.2d 438 (1998); Walt publishing customers. In other words, the photos’ Disney Co., 897 F.2d at 569 (opining that “separate usefulness and economic value is derived from their collective nature, not their individuality. The Feltner

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court also considered that the television episodes were photographer, for a single purpose, and subject to a single registered individually, unlike here, where they were license agreement, was one work). One exception, upon registered as collections under their heading name, and which YPPI heavily relies, is Playboy Enterprises, Inc. v. grouped together on 44 registration applications. YPPI Sanfilippo, No. 97–0670–IEG (LSP), 1998 WL 207856 argues that because group registration is permitted under (S.D.Cal. Mar. 24, 1998), where the district court applied regulations promulgated by the Copyright Office, see 37 the independent economic value test to find that each of C.F.R. § 202.3, the fact that Moore registered his photos 7,475 separate copyrighted photos at issue were separate in groups should not indicate that the photos are a works for statutory damages purposes. Id. at *5. There, compilation under *1280 17 U.S.C. § 504(c)(1). See the infringer copied thousands of copyrighted photos from Gamma Audio, 11 F.3d at 1117 (holding that registering Playboy, which he offered for sale via a website. Id. at *1. copyrights as multiple works on a single registration form When Playboy sought statutory damages for each of the does not preclude the owner from collecting an award of photos copied, the infringer attempted to argue that since statutory damages for the infringement of each individual the photos were collectively displayed in only 27 of work). However, 37 C.F.R. § 202.3(b)(10), covering Playboy’s copyrighted magazines, each magazine “[g]roup registration of published photographs,” provides constituted a singular violation, but not each photo. Id. at that to be eligible for group registration, the “same *5. In awarding statutory damages for each of the 7,475 person” must have taken all of the photos, see id. § photos, the court found: 202.3(b)(10)(ii), and the photos must have been published in similar circumstances, i.e. “within the same calendar [A]lthough each of these images year,” and if “published on the same date” the common may have appeared in a singular date of publication “must be identified,” see id. § issue of one of plaintiff’s 202.3(b)(10)(iii)-(iv). If anything, these requirements copyrighted publications, these reinforce the conclusion that the headings and photos images are subject to re-use and associated with them are collective works. redistribution in accordance with various licensing arrangements. We act consistently with Feltner in finding that, under the Furthermore, each image represents independent economic value test, Moore’s 10,411 a singular and copyrightable effort individual photos equate to 178 compilations and 178 concerning a particular model, works under 17 U.S.C. § 504(c)(1). We note that photographer, and location. The numerous district courts have applied the independent fact that many of these images economic value test to find that groups of photos should appeared together should not be collectively treated as compilations under § 504(c)(1) detract from the protection afforded of the Copyright Act and thus a single work for statutory to each individual *1281 effort. damages purposes. See Greenberg v. Nat’l Geographic Furthermore, defendant marketed Soc’y, No. 97–3924–CIV, 2003 WL 25841579, at *3, each one of these images *5–6 (S.D.Fla. Feb. 18, 2003) (applying the independent separately. Based on these economic value test to the plaintiff’s 64 photos to find circumstances, the Court finds it that they only represented four works for statutory appropriate to award statutory damages purposes because they had been compiled into damages for each separate image four National Geographic articles and registered by the under § 504(c)(1). plaintiff in the Copyright Office as belonging to those four “collective works”); Tang v. Putruss, 521 F.Supp.2d Id. 600, 609–10 (E.D.Mich.2007) (although noting that the Sixth Circuit had not indicated what analysis courts are to Unlike the photos in Playboy that were copyrighted and use in determining whether a group of photos constitutes marketed individually, Moore’s photos were always a single work, applying the independent economic value registered and marketed as collections. YPPI’s collections test to find that a series of photos of models wearing a line of photos are more like the series of photos in Greenberg, of dresses taken at a single session, by a single Tang, and Coogan, which were taken of one subject, by photographer, for a single purpose, i.e. to advertise the one photographer, at a single session. Indeed, YPPI’s clothing line, was a single work); Coogan v. Avnet, Inc., retrospective attempts to highlight the singular aspects of No. CV040621PHXSRB, 2005 WL 2789311, at *5–6 its photos are not persuasive. It argues that the photos (D.Ariz. Oct. 24, 2005) (applying the independent were taken by four different photographers: Trent Moore, economic value test to find that a series of photos taken of Richard Lawless, Richard Suggs, and Heather Rossick, a company’s CEO at a single session, by a single and consist of multiple objects and models in multiple

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

settings. However, while YPPI used four different separate advertisements, diminishes the importance of the photographers to create its entire library over the years, fact that YPPI’s entire business strategy was to distribute for each individual collection organized by subject matter and publish the photos collectively, so that customers that is at issue in this lawsuit, only a single photographer could access and search them collectively. Courts was ever used, as confirmed in YPPI’s copyright applying the independent economic value test have registrations. Further, Moore testified that he took most of considered the way the owner marketed his work product the photos and personally edited each one. Additionally, as relevant to the determination of the number of works at while, for instance, all of the 50 to 100 photos categorized issue, and we think rightly so. See Coogan, 2005 WL and sold under the heading of “Roofers” may depict 2789311, at *5 (“Unlike the photographs at issue in different models and settings, each photo obviously is Playboy, there is no evidence in the record that Plaintiff relevant to inclusion in ads about the roofing industry and marketed the images to the public separately.”); Playboy, was marketed and sold for that purpose. 1998 WL 207856, at *5 (“Furthermore, the defendant marketed each one of these images separately.”).11 YPPI also points to some instances where it sold its photos individually, but the record reveals that such 10 While YPPI would occasionally offer per-image prices 9 instances are outliers. In any event, if the dispositive to customers, virtually all of those customers would factor for whether a work has an independent economic buy access to the entire inventory of photos collections, value is whether it can conceivably be sold on its own, on a collective basis via YPPI’s web portal, before Congress’s express mandate in 17 U.S.C. § 504(c)(1) that selecting various groups of images to download. [Doc. “all parts of a compilation [are to] constitute one work” 423 at 115–25.] would be rendered meaningless, as the very definition of a collective work in the Copyright Act—“a periodical issue, anthology, or encyclopedia, in which a number of 11 We acknowledge that the Court in Feltner assigned contributions, constituting separate and independent little relevance to how the distributor of the television works in themselves, are assembled into a collective programs chose to sell the series, i.e., as a block rather whole,” see id. § 101—presupposes that each individual than as individual shows, in its determination that each work in the collection has independent value. For this episode could stand alone. 89 F.3d at 769. However, at reason, we believe that the independent economic value issue in Feltner were episodes with individual plot lines test does not begin and end with an inquiry into whether a that were produced, aired, and copyrighted separately, separate unit in a multi-work project could possibly have evidence of their independent value despite the fact that some independent economic value if sold separately. it was customary in the industry to sell episodes as a block series. We don’t think Feltner ‘s reasoning suggests that we must simply ignore the overwhelming 9 For instance, Moore testified that “there was a guy in evidence in this case that Moore’s photos were Louisiana who loved his advertising so much he called marketed as collections. the company and wanted an image for other stuff. So yeah, I’ve sold by image.” [Doc. 423 at 114–15.]

Finally, YPPI’s argument that this Court should disregard the way it described its 178 collections of photos in its We are also not persuaded by YPPI’s insistence that the complaints is not well taken. YPPI’s description of its 178 photos compiled under a heading only become useful collections as “Works” is an admission by a party, akin to when a customer selects a particular photo to build an ad. witness testimony or any other evidence the district court To the contrary, Moore testified about the collective could have used in determining the works issue.12 usefulness of the headings: they allowed the customer to search by subject matter relevant to their business, and the 12 After YPG began arguing that each of YPPI’s 10,411 multiple photos under that heading gave the customer photographs could not be considered a work, YPPI flexibility to choose between different “looks” for the amended its complaint to allege for the first time that its same subject. According to Moore, the very idea at the photos were “distributed both individually and in heart of his business was to provide customers with an collections,” citing as the reason for the amendment the integrated collection of photos, whose chief value came discovery of additional facts in discovery. [See Third from being “heading specific” and sharing the “same Amended Complaint, Doc. 248 at ¶ 15.] The district vernacular.” [Doc. 423 at 66.] Neither the fact that YPPI court properly noted that this was a significant change would sometimes offer per-photo prices rather than in YPPI’s legal theory as to what constituted a work, which was wholly unrelated to the discovery of per-collection prices to customers,10 nor *1282 that its additional facts. photos were eventually used individually to create

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

the actual or statutory damages as determined by the jury. This, however, was no ordinary case.

In sum, because YPPI created, marketed, published, Despite 17 U.S.C. § 504(c)(1)’s instruction that statutory registered, and repeatedly described its photos as 178 damages must be awarded “in a sum of not less than collections under 178 headings organized by subject $750” for each work infringed, the jury awarded zero matter, we affirm the district court’s decision to treat each dollars in statutory damages for Ziplocal’s willful direct collection as a compilation, subject to only one award of infringement of 123 of YPPI’s copyrighted works. The statutory damages. jury awarded YPPI only one dollar in actual damages against Ziplocal on the direct infringement claim. Clearly, YPPI was not happy with having to choose between nothing on one hand and one dollar on the other hand, so 4. it requested that the district court address the jury’s inconsistent statutory awards. Although YPPI is correct [30] YPPI’s final argument on cross appeal does not that a court may in appropriate instances correct a jury’s involve YPG. YPPI argues that the district court erred damages verdict when it falls below the minimum amount when it refused to address an apparent inconsistency required by law, see U.S. E.E.O.C. v. Massey Yardley between the jury awarding $123,000 in statutory damages Chrysler Plymouth, Inc., 117 F.3d 1244, 1252–53 (11th against YPG and nothing in statutory damages against Cir.1997), principles of invited error require YPPI to now Ziplocal. YPPI argues that the jury’s statutory damages be bound by the jury’s statutory damages award and bar award against Ziplocal of zero dollars should be at least us from reviewing YPPI’s claim on appeal. See United $750 for each work it found Ziplocal directly infringed, States v. Ross, 131 F.3d 970, 988 (11th Cir.1997) (“It is a which would total $92,250 for 123 infringed works.13 As a cardinal rule of appellate review that a party may not result, YPPI asserts that this Court should reverse and challenge as error a ruling or other trial proceeding remand for the district court to conduct a trial on the issue invited by that party.”) (quotation marks omitted). The of damages alone. [Reply Brief of YPPI at 29.] doctrine of invited error “stems from the common sense view that where a party invites the trial court to commit error, he cannot later cry foul on appeal.” United States v. 13 We note that Ziplocal never filed a brief in response to Brannan, 562 F.3d 1300, 1306 (11th Cir.2009). YPPI’s argument, but this fact alone does not warrant reversal, as YPPI argues. The only sanction authorized by the federal rules for an appellee’s failure to file a Here, YPPI elected to present both actual and statutory response brief is the refusal to hear the nonfiling damages theories to the jury, so it could then choose the appellee at oral argument. See Fed. R.App. P. 31(c) (an higher award. Indeed, the court chose to read YPPI’s appellee who failed to file a brief will not be heard at proposed jury instructions to the jury, stating: oral argument, except by permission of the Court). Now, plaintiff may recover actual or statutory damages. And I’ll *1283 [31] [32] A prevailing plaintiff may not recover both define those terms now for you. actual and statutory damages under the Copyright Act: Plaintiff is entitled to recover any statutory damages recovery is “instead of actual damages actual damages suffered because of and profits.” 17 U.S.C. § 504(c)(1). “[I]f a party so the infringement. Actual damages demands, a jury must determine the actual amount of means the amount of money statutory damages under § 504(c) in order ‘to preserve the adequate to compensate plaintiff substance of the common-law right of trial by jury.’ ” for the injury to the market value of Feltner, 523 U.S. at 355, 118 S.Ct. at 1288 (quoting Tull the copyrighted work caused by the v. United States, 481 U.S. 412, 426, 107 S.Ct. 1831, 1841, infringement.... Now, plaintiff also 95 L.Ed.2d 365 (1987)) (internal quotation marks seeks a statutory damage award. omitted). The plaintiff may make its election between Statutory damages are damages that actual and statutory damages “ ‘at any time before final are established by the Congress in judgment is rendered.’ ” Jordan v. Time, Inc., 111 F.3d the Copyright Act. The purposes 102, 104 (11th Cir.1997) (quoting 17 U.S.C. § 504(c)). are to compensate the copyright Ordinarily, when the issue of damages in this type of case owner, penalize the infringer and is tried to a jury, and the plaintiff is successful in making deter future copyright law out its claim, the plaintiff would simply choose between violations. The amount awarded

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must be between $750 and $30,000 should put an amount for actual and statutory for each copyrighted work that you damages—amount for statutory damages. If that happens, find to be infringed unless one of we think we’d like to have that clear for the jury.” [Doc. the exceptions applies and I’ll 429 at 119.] Counsel for Ziplocal and YPG then objected, explain later. claiming: “It’s their form. The form is clear. You’ve already read the instructions.” [Id. at 119–120.] We note [Doc. 429 at 107–08.] This wording follows the Eleventh here that we do not find that YPPI’s submission of the Circuit Pattern Jury Instructions as well as the rule that jury instructions and verdict form invited the error of YPPI was entitled to either actual or statutory damages, which YPPI complains. First, YPPI’s jury instruction and but not both. *1284 See Eleventh Circuit Civil Pattern verdict form submission generally followed this Circuit’s Jury Instructions, No. 9.30 (2013); 17 U.S.C. § 504(c)(1). Pattern Instruction and accurately stated the law: under § The district court also chose the verdict form drafted and 504(c), a copyright owner is entitled to an award of only submitted by YPPI. The verdict form asked in Question actual damages or statutory damages, but not both. No. 4 whether the jury found by a preponderance of the Second, YPPI specifically requested an additional evidence that Ziplocal had infringed any of YPPI’s instruction clarifying that the jury should find both copyrights. [Doc. 422.] The jury placed an “x” in the statutory and actual damages, so YPPI could later elect. In blank for “Yes.” On the same page of the verdict form, part, the invited error doctrine serves to prevent a party Question No. 6, the question on damages against Ziplocal, from building error into the record and later capitalizing provided: on that error. Here, that purpose is not served since YPPI’s instruction and verdict form were not incorrect If you answered “Yes” to No. 4, that Plaintiff Yellow statements of the law, and, in any case, when the district Pages Photos, Inc. should be awarded: court could still do something about it, YPPI attempted to correct that aspect of the problem that it now appeals. $______in actual damages or Nevertheless, even assuming without deciding that the $______in statutory damages. district court erred in declining to give further instructions to the jury, we decline to review the district court’s [Doc. 422 (emphasis added).] The use of “or” between the decision not to adjust the statutory award for Ziplocal’s two types of damages could have led the jury to conclude direct infringement to at least $750 for each work either 1) that it should determine both actual and statutory infringed because YPPI did invite error regarding that damages so that a decision could later be made by the issue in another regard. More specifically, *1285 the jury plaintiff between the two amounts (and this is certainly submitted a question to the court during its deliberations, what the law requires), or 2) that it should determine an asking whether it could award “actual damages to one and amount for actual or statutory damages, but not both. The statutory damages to the other?” [Doc. 430 at 4.] The problem is that the pattern jury instruction, as well as the court read this question as referring to “actual damages to verdict form, could have been clearer on this point. The one defendant and statutory damages to the other,” instruction could perhaps have been clarified by telling referring to YPG and Ziplocal. [Id.] When the court the jury that if it finds infringement on the part of a inquired of YPPI’s counsel what the answer to this defendant, then it is required to determine an amount to question should be, YPPI’s counsel at first noted that he award the plaintiff for both statutory damages against that believed that the jury was “supposed to put actual and defendant in an amount no less than $750 for each work statutory damages calculations in both blanks.” [Id. at 5.] that it found was infringed as well as an amount for actual But upon reflection, YPPI’s counsel decided that the jury damages. The jury could also have been specifically told could indeed award only statutory damages to one that one or the other would ultimately be awarded to the defendant and only actual damages to the other, meaning plaintiff, but not both. Here, the jury ultimately completed that YPPI agreed that the jury’s statutory damages award the verdict form in Question No. 6 and awarded YPPI could indeed be zero dollars as to one of the defendants. actual damages (albeit one dollar) and no statutory When asked what the answer should be to the jury’s damages. question, YPPI’s counsel answered: “Yes. Okay. We would say yes, Your Honor. That’s okay.” [Id. at 6–7.] In YPPI points out that immediately after the court agreeing that the jury could indeed award zero dollars in instructed the jury and explained the verdict form, its statutory damages against one or the other of the counsel requested that the court clarify for the jury that, if defendants, YPPI waived the argument that such an award the jury found infringement, it should put down an was legal error. amount for both actual and statutory damages, stating: “I’m not sure it was entirely clear to the jury that they

Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (2015) 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977...

This situation is similar to that in United States v. Fulford, this was after the jury had already deliberated based, in 267 F.3d 1241 (11th Cir.2001), where the part, on the agreement of all counsel, including YPPI’s, defendant-appellant argued that the district court gave an that the jury should be told that it could indeed award no erroneous supplemental instruction in response to a jury statutory damages to one or the other of the defendants. question during deliberation. Id. at 1247. The trial court See Fulford, 267 F.3d at 1247 (rejecting the defendant’s read the jury’s question into the record and engaged in a argument that his acceptance of the court’s supplemental lengthy colloquy with the parties. Id. At the end of the instruction did not render it invited error because, five colloquy, the court read its proposed supplemental hours later, his counsel requested an additional instruction instruction, confirming with the parties that the instruction *1286 based on subsequent research, because the was acceptable to them before instructing the jury. Id. The subsequent attempt to submit an additional instruction defendant’s attorney responded that the instruction was “has no bearing on [the defendant’s] earlier unconditional “acceptable to us.” Id. When the defendant later attempted acceptance of the court’s instruction”). In post-trial to overturn the verdict by arguing that the supplemental briefing, YPPI again asked the court to correct the jury’s instruction was erroneous, the court held that it did not statutory damages award and to assess statutory damages have to reach the question whether the instruction was against Ziplocal on YPPI’s direct infringement claim “in plain error because the error was invited by the defendant. no less than the statutory minimum amount of $750 per Id. at 1247. Similarly here, YPPI expressly agreed to the work infringed, for a total of no less than $92,250.” The supplemental instruction by stating, “Yes. Okay. We court declined, finding that YPPI had invited the error. would say yes, Your Honor. That’s okay.” [Doc. 430 at Having submitted the determination of the amount of 6–7.] Having agreed to the proposed instruction in statutory damages to the jury and then having agreed that response to the jury’s question, indicating that the jury the district court should tell the jury that it could find that could award zero dollars in statutory damages to one amount to be zero, YPPI cannot now complain that the defendant, YPPI has waived its right to challenge that jury returned a verdict finding that amount. YPPI was left award on appeal.14 to elect between the actual and statutory amounts determined by the jury. 14 The Court notes that here, the jury also found Ziplocal to be guilty of contributory copyright infringement and awarded YPPI $100,000 in actual damages and zero dollars in statutory damages against Ziplocal on that claim. After trial, YPPI elected to recover $100,001 in III. actual damages from Ziplocal, in lieu of statutory damages of zero dollars. Had YPPI made the same We affirm the district court on all issues raised on appeal. argument with regard to the statutory damages award on the contributory infringement claim, namely that AFFIRMED. that the jury’s award of zero dollars in statutory damages on that claim was error, our ruling on invited error would also apply. However, nothing we say here affects YPPI’s election of actual damages against All Citations Ziplocal on the contributory infringement claim. 795 F.3d 1255, 2015 Copr.L.Dec. P 30,802, 92 Fed.R.Serv.3d 869, 115 U.S.P.Q.2d 1977, 25 Fla. L. After the verdict was read, counsel for YPPI did assert Weekly Fed. C 1444 that it was “inconsistent” for the jury to award zero dollars in statutory damages against Ziplocal. However,

Olem Shoe Corp. v. Washington Shoe Corp., 591 Fed.Appx. 873 (2015) 2015 WL 136552, 2015 Copr.L.Dec. P 30,711

[1] there was no evidence that competitor actually knew it 591 Fed.Appx. 873 was infringing company’s copyrights, as required to This case was not selected for publication in West’s establish willful infringement; Federal Reporter. See Fed. Rule of Appellate Procedure 32.1 generally [2] competitor’s designs for women’s rain boots were governing citation of judicial decisions issued on or strikingly similar to company’s designs, as required to after Jan. 1, 2007. See also U.S. Ct. of App. 11th Cir. support finding of copyright infringement; Rule 36-2. United States Court of Appeals, [3] district court did not abuse its discretion by denying Eleventh Circuit. competitor’s motion for relief from judgment; and

OLEM SHOE CORPORATION, a Florida [4] district court did not abuse its discretion by declining to corporation, Plaintiff–Counter, impose sanctions on company based on alleged Defendant–Appellee, Cross Appellant, misrepresentation in sworn statement. Robert Olemberg, Isaac Olemberg, Nieves Olemberg, Plaintiffs, v. Affirmed. WASHINGTON SHOE CORPORATION, a Washington corporation, Defendant–Counter, Claimant–Appellant, Cross Appellee. Olem Shoe Corporation, a Florida corporation, Plaintiff–Counter, Defendant–Appellant, West Headnotes (4) Robert Olemberg, et al., Plaintiffs–Counter, Defendants, v. [1] Copyrights and Intellectual Property Washington Shoe Corporation, a Washington Intent or purpose corporation, Defendant–Counter, Claimant–Appellee. There was no evidence that competitor actually Olem Shoe Corporation, a Florida corporation, knew it was infringing shoe company’s Plaintiff–Counter, Defendant–Appellant, copyrights for women’s rain boots designs, as Robert Olemberg, et al., Plaintiffs–Counter, required to establish willful infringement. 17 Defendants, U.S.C.A. § 504(c)(2). v. Washington Shoe Corporation, a Washington corporation, Defendant–Counter, 1 Cases that cite this headnote Claimant–Appellee.

Nos. 12–11227, 12–11356, 13–14728. | Jan. 12, 2015. [2] Copyrights and Intellectual Property Pictorial, graphic, and sculptural works

Competitor’s zebra and dots designs for Synopsis women’s rain boots were strikingly similar to Background: Shoe company brought copyright shoe company’s zebra and dots designs, as infringement action against competitor. The United States required to support finding of copyright District Court for the Southern District of Florida entered infringement, given that a comparison of summary judgment, ruling that competitor infringed photographs of the boots revealed that company’s copyrights, although not willfully. Parties competitor’s design was virtually identical to cross-appealed. that of company’s.

1 Cases that cite this headnote Holdings: The Court of Appeals, Eaton, J., held that:

Olem Shoe Corp. v. Washington Shoe Corp., 591 Fed.Appx. 873 (2015) 2015 WL 136552, 2015 Copr.L.Dec. P 30,711

Schefer, P.A., Hollywood, FL, Jesus Sanchelima, Sanchelima & Associates, P.A., Coral Gables, FL, for Plaintiff–Counter, Defendant–Appellee, Cross Appellant.

[3] Copyrights and Intellectual Property Peter John Shakula, II, Wood Phillips, Chicago, IL, Judgment Timothy B. McCormack, McCormack Intellectual Property Law Business Law P.S., Seattle, WA, Michael District court did not abuse its discretion by Ross Tein, Lewis Tein, PL, Coconut Grove, FL, for denying competitor’s motion for relief from Defendant–Counter, Claimant–Appellant, Cross Appellee. judgment in copyright infringement action brought by shoe company relating to designs for Appeals from the United States District Court for the women’s rain boots, ruling that competitor Southern District of Florida. D.C. Docket No. infringed company’s copyrights; motion was 1:09–cv–23494–PCH. premised on alleged misrepresentations in sworn Before MARTIN, Circuit Judge, and EATON,* Judge, and statements, but the purported misrepresentations HINKLE,** District Judge. were unnecessary to district court’s finding of * Honorable Richard K. Eaton, United States Court of infringement, which was based on striking International Trade Judge, sitting by designation. similarity of competitor’s and company’s designs. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. ** Honorable Robert L. Hinkle, United States District Judge for the Northern District of Florida, sitting by 1 Cases that cite this headnote designation.

Opinion [4] Federal Civil Procedure Summary judgment motions and affidavits EATON, Judge:

District court did not abuse its discretion by declining to impose sanctions on shoe company **1 In this copyright case, Washington Shoe Company1 in copyright infringement action against seeks reversal of the District Court’s summary judgment competitor based on alleged misrepresentation ruling that Olem Shoe Corporation did not willfully in sworn summary judgment statement that infringe its copyrights. By its cross-appeal, Olem seeks competitor had access to women’s rain boots reversal of the Court’s holding that it infringed designed by company based on wide Washington Shoe’s copyrights, although not willfully. dissemination of the boots that had taken place Olem also asserts that the District Court abused its “for years”; district court reasonably concluded discretion by denying its Rule 60(b)(3) motion for relief that competitor had not conclusively proven that from the judgment and its related Rule 56(h) motion for the “for years” statement was false, and district sanctions. court reasonably determined that the statement had not been submitted in bad faith. Fed.Rules 1 Although the caption for this case and the docket refer Civ.Proc.Rule 56(h), 28 U.S.C.A. to “Washington Shoe Corporation,” Washington Shoe, in its corporate disclosures and other papers, refers to itself as “Washington Shoe Company.” Cases that cite this headnote

Because we find no error in the District Court’s holdings, we affirm.

Attorneys and Law Firms

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Washington Shoe designs and sells women’s rain boots, the same supplier that had supplied [its] polka dots boot including the Zebra Supreme boots and the Ditsy Dots design,” and “to prudently avoid problems, Olem boots.2 *876 In the Fall of 2009 and early 2010, counsel voluntarily stopped selling [its] zebra-like stripe boot for Washington Shoe sent Olem cease-and-desist letters design.” After learning that the United States Copyright claiming infringement of copyrights for the designs of Office could not locate the work submitted with the Washington Shoe’s Zebra Supreme and Ditsy Dots boots. application for the Ditsy Dots design copyright Although the letters were accompanied by photographic registration, Olem filed an action for a declaration of representations of the boots, they did not identify, by non-infringement of copyrights and Washington Shoe registration number, the copyrighted designs themselves. counterclaimed to obtain relief for copyright After receiving the first letter, Olem contacted its infringement and other state and federal claims. intellectual property counsel, who then wrote Washington Thereafter, on November 10, 2010, Washington Shoe Shoe’s counsel attempting to identify the designs that filed corrective supplementary copyright registrations Washington Shoe claimed to have copyrighted: to address issues raised by Olem, and by an advisory opinion issued by the Copyright Office, with respect to 2 In addition to claiming copyright protection for the both the Ditsy Dots and Zebra Supreme designs. designs of these two boots, Washington Shoe claims **2 On summary judgment, the District Court dismissed rights for its Rose Zebra Supreme design, the parent all claims against Olem except for those for copyright work of the Zebra Supreme design. Although the infringement. As to those claims, the Court granted District Court ultimately granted summary judgment to summary judgment to Washington Shoe for copyright Washington Shoe with respect to copyright infringement, but granted summary judgment to Olem on infringement of both the Zebra Supreme and Rose Washington Shoe’s claims of willful copyright Zebra Supreme designs, because Washington Shoe infringement. Following a trial on damages, the jury could not “show actual damages/profits as a result of or attributable to an infringement of Rose Zebra Supreme returned a verdict in Washington Shoe’s favor for independently,” the District Court treated the two $27,395.40, of which $6,334.34 was for infringement of designs as “one work” for purposes of awarding the Zebra Supreme work and the remainder was damages. Here, we similarly treat the two designs as attributable to infringement of the Ditsy Dots design. one work, “Zebra Supreme,” because, as the District Court stated, “infringement of the Rose Zebra Supreme Washington Shoe appealed the judgment to this Court and design was based on the infringement of ... Zebra Olem cross-appealed. While the appeals were pending, Supreme.” Olem filed its motions for relief from the judgment and for sanctions. The appeals were then stayed pending the outcome of Olem’s motions. The District Court denied Olem’s motions on September 16, 2013, Olem appealed With respect to the merits of your client’s claims, that denial on October 15, *877 2013,3 and the stay was however, you have provided us very little information lifted on October 18, 2013. On November 12, 2013, Olem to assess them and advice [sic] our client. While you moved to consolidate its appeals. On November 27, 2013, have enclosed to your letter four pictures, there is little the motion was granted and the appeals were else. For example, we do not have a copyright consolidated. certificate under which you would be claiming your client’s exclusive copyright rights nor a description of 3 Although Olem also includes the Magistrate Judge’s the features of the alleged product trade dress that have report and recommendation and the Order Denying acquired secondary meaning and thus become Motion to Strike in its notice of appeal, it does not protectable. address them in the arguments put forward in its brief, aside from its point that because “the Magistrate Judge We will appreciate receiving more information did not conduct an evidentiary hearing to determine regarding your client’s claims so we can formulate a whether the declarations were the product of meaningful response to your letter. carelessness or a ‘conscious scheme to mislead the Court[,]’ [t]here is no evidentiary basis for that On November 9, 2009, Olem received a response from conclusion.” Because Olem either does not address, or Washington Shoe identifying the copyright registration does not support by making arguments and citing certificate number only for the Ditsy Dots design. authorities, any issues it has with the Magistrate Judge’s report and recommendation or the Order Absent from the response was a sample of the Denying Motion to Strike, any such issues are waived. copyrighted design. “In abundance of caution,” Olem See Hamilton v. Southland Christian Sch., Inc., 680 cancelled a shipment of its polka dotted boots and then, F.3d 1316, 1319 (11th Cir.2012) (“A passing reference after identifying “a zebra-like stripe boot design from

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to an issue in a brief is not enough, and the failure to civil law generally calls a person reckless who acts or (if make arguments and cite authorities in support of an the person has a duty to act) fails to act in the face of an issue waives it.” (citations omitted)). unjustifiably high risk of harm that is either known or so obvious that it should be known.” (citing W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 34, at 213–14 (5th ed.1984); Restatement (Second) of Torts § 500 (1965))). Although the difference between “possibility” and “high likelihood” may not be large, for II. purposes of *878 this opinion, we adopt the latter standard. Indeed, this is the standard urged by In reaching its decision that Olem had infringed Washington Shoe: Washington Shoe’s copyrights, but had not done so willfully, the District Court noted that neither the parties **3 Under this standard, in its nor the Court had identified “any Eleventh Circuit cases analysis of the recklessness of the ... establishing the standard for willfulness in copyright ... infringer, the District Court should infringement cases.” Although this Court stated in have determined if there was an Cable/Home Communication Corp. v. Network “objectively high likelihood” that Productions, Inc. that “ ‘[w]illfully,’ in the context of Olem infringed, and then section 504(c)(2),4 means that the defendant ‘knows his determined if the risk was either actions constitute an infringement,’ ” Cable/Home known to Olem, or so obvious that Commc’n Corp. v. Network Prods., Inc., 902 F.2d 829, the risk should have been known to 851 (11th Cir.1990) (emphasis added) (citations omitted) Olem. (quoting Broad. Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 236 (5th Cir.1988)), it is apparent that, based on the Washington Shoe argues that, although the District Court facts of that case, the holding did not reach the question of correctly granted summary judgment on the copyright reckless disregard. infringement claims, the issue of willfulness should have gone to the jury. The significance of the ruling is that, 4 The Cable/Home Communication Court was referring should Washington Shoe ultimately elect to seek statutory to section 504 of the Copyright Act of 1976, which is a rather than actual damages, those statutory damages could provision on remedies for copyright infringement. See be enhanced by a finding of willfulness.5 See 17 U.S.C. § 17 U.S.C. § 504. Specifically, section 504(c)(1) 504(c)(2). provides for the election of statutory damages and subsection (c)(2) allows “the court in its discretion [to] increase ... award[s] of statutory damages” in cases 5 Under 17 U.S.C. § 504(a), a copyright owner is entitled involving willful infringement. See id. § 504(c)(1), (2). to recover the “owner’s actual damages and any additional profits of the infringer,” or, in lieu of actual damages, the copyright owner may elect to recover statutory damages. “The election between actual and Thus, the District Court adopted a rule from the Second statutory damages is to be made ‘at any time before Circuit, that willfulness can be found where a party final judgment is rendered’ ” and “once a timely “recklessly disregarded the possibility” that it was election is made to receive statutory damages[,] all infringing a copyright. See Kepner–Tregoe, Inc. v. Vroom, questions regarding actual and other damages are 186 F.3d 283, 288 (2d Cir.1999) (quoting Twin Peaks rendered moot.” Jordan v. Time, Inc., 111 F.3d 102, Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1382 104 (11th Cir.1997) (quoting 17 U.S.C. § 504(c)). It (2d Cir.1993)). In patent cases, however, the standard to follows that, ordinarily, if an election to receive statutory damages is not made prior to final judgment, establish willful infringement requires a patentee to show the election is waived. In this case, however, the parties “that the infringer acted despite an objectively high stipulated, prior to the trial on actual damages, that likelihood that its actions constituted infringement of a Washington Shoe would be able to elect statutory valid patent ... [and to] also demonstrate that this damages later, after appeal, if the willfulness objectively-defined risk ... was either known or so determination were to be reversed. obvious that it should have been known to the accused The amount of statutory damages recoverable by the infringer.” See In re Seagate Tech., LLC, 497 F.3d 1360, copyright owner is set forth in section 504(c), which 1371 (Fed.Cir.2007) (citing Safeco Ins. Co. of Am. v. provides that “the copyright owner may ... recover ... Burr, 551 U.S. 47, 68, 127 S.Ct. 2201, 2215, 167 L.Ed.2d a sum of not less than $750 or more than $30,000 as the court considers just.” 17 U.S.C. § 504(c)(1). 1045 (2007)); see also Farmer v. Brennan, 511 U.S. 825, Subsection (c)(2) allows “the court in its discretion 836, 114 S.Ct. 1970, 1978, 128 L.Ed.2d 811 (1994) (“The © 2016 Thomson Reuters. No claim to original U.S. Government Works. 119

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[to] increase the award ... to a sum of not more than provided nothing from which Olem could have $150,000” if it finds “that infringement was determined that the claim was legitimate. committed willfully.” Id. § 504(c)(2). 6 While Washington Shoe argues in its brief that “[t]he sending of the cease and desist letters is ... evidence We review de novo the District Court’s grant of summary that Olem knew there [was] someone asserting a judgment, applying “the same legal standards as those copyright against them, and that there may [have been] an infringement issue with the Olem boots,” that controlled the [D]istrict [C]ourt.” Indus. Partners, presumably, it is the receipt of the cease-and-desist Ltd. v. CSX Transp., Inc., 974 F.2d 153, 155 (11th letters by Olem that arguably constitutes meaningful Cir.1992) (citing Martin v. Baer, 928 F.2d 1067, 1070 evidence. (11th Cir.1991)). Summary judgment must be granted when “the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to **4 In addition, Olem’s behavior after receiving the judgment as a matter of law.” Fed.R.Civ.P. 56(a). letters—stopping shipments and contacting Washington

Shoe through its attorney to request more As an initial matter, it is clear that the evidence to which information—demonstrates that it took steps to determine Washington Shoe points does not create a triable issue of whether Washington Shoe’s assertions were true. Indeed, fact with regard to actual knowledge that Olem’s boots as it turned out, Washington Shoe found it necessary to infringed Washington Shoe’s copyrights. That is, there is file supplementary copyright registrations in order to no evidence that Olem knew of Washington Shoe’s correct issues with both the Ditsy Dots and Zebra copyrights and chose to violate them. See Cable/Home Supreme design copyrights that had been raised by the Commc’n, 902 F.2d at 851 (holding that statutory award advisory opinion issued by the Copyright Office. Thus, by district court for willful copyright infringement was based on Olem’s receipt of the cease-and-desist letters, a not an abuse of discretion where there was “no doubt that reasonable jury could find that Washington Shoe had [the infringer] knew that [the] program within [a] ... chip asserted a claim of copyright infringement, but could not was copyrighted and that he not only assisted in the find that Olem had sufficient credible information to production of pirate chips by giving funds and equipment provide “an objectively high likelihood” that it was ... but also that he openly publicized and encouraged the infringing Washington Shoe’s copyrights. purchase of these pirate chips as well as others ... in

blatant defiance of the copyright laws”). Further, we also Washington Shoe next contends that the “evidence of ... find that the evidence to which Washington Shoe points similarity, particularly evidence that the boots are does not raise a genuine issue of material fact with respect identical, is a signpost that objectively increases the to willful infringement based on reckless disregard. probability of infringement.” Here, however, more than a

signpost is needed. That Olem’s boots are similar, indeed, As to this evidence, Washington Shoe first claims that the as shall be seen, strikingly similar, to those of Washington District Court should have found that its cease-and-desist Shoe does not necessarily give rise to the inference that letters, the first of which was sent in the Fall *879 of Olem recklessly disregarded the likelihood that it was 2009, provide evidence that Olem recklessly disregarded infringing Washington Shoe’s copyrights. That is, while the risk that it was infringing Washington Shoe’s striking similarity may be the basis for finding that a work copyrights. In effect, Washington Shoe is arguing that has been copied, it is not evidence that Olem’s state of Olem’s receipt6 of the letters gave rise to an inference that mind was that of reckless disregard of the risk that it was Olem willfully infringed Washington Shoe’s copyrights. violating copyrights when it purchased and sold the We agree with the District Court, however, that the infringing boots. This is because striking similarity can be receipt of the cease-and-desist letters does not create a used as a substitute for actual evidence of copying, but triable issue of fact with regard to the question of says little about the state of mind of the copier, i.e., that it willfulness because, as Washington Shoe concedes, “[i]t willfully disregarded the rights of a copyright holder. See is ... uncontroverted that the initial letters did not include Robert Bosch, LLC v. Pylon Mfg. Corp., 719 F.3d 1305, reference to copyright registration numbers, or deposit 1322 (Fed.Cir.2013) (Moore, J., concurring-in-part and copies.” Thus, although Washington Shoe may have dissenting-in-part) (arguing that, in the patent context, an claimed that it held the copyrights to the boots’ designs, “accounting” does not include a determination of willful the initial letters, which had no copyright registration infringement because “[a]n ‘accounting’ entails numerical numbers, and the follow-up letters, which included calculations, not an inquiry into a party’s state of mind in registration numbers for claimed patents but no samples the face [of] an objectively high risk of infringement”); of the designs Washington Shoe claimed were infringed, Boisson v. Banian Ltd., 280 F.Supp.2d 10, 16 © 2016 Thomson Reuters. No claim to original U.S. Government Works. 120

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(E.D.N.Y.2003) (“It is Plaintiff’s contention that the to point to any specific existing work ... on which [its] striking similarity between the copyrighted quilt and the works were based, created, or otherwise derived.” infringing *880 quilts warrants a finding of willfulness. Washington Shoe reasons that “[t]he fact that [Olem] Acceptance of this argument, however, would turn all found no existing works increases the probability that the infringements into willful infringements, which is clearly works are original to Washington Shoe, and hence beyond the scope of the law.”). increases the possibility of infringement.” Put another way, Washington Shoe is arguing that a jury could find Washington Shoe’s assertion that the similarity of Olem’s that, because Olem was unaware of the source of the boot designs to those of Washington Shoe “makes it more boots it sold, it should have known that it was infringing likely that the work was copied” is, of course, true. Washington Shoe’s copyrighted designs, and therefore, Washington Shoe has indicated no authority, however, Olem willfully infringed. This argument, too, is that supports its argument that the similarity of the unpersuasive because it imputes a state of mind of designs is evidence that the copying was willful. reckless disregard to any party that purchases and sells a Generally, establishing a reckless state of mind in a product without specific knowledge of the source of its copyright case requires a showing that the infringer design. possessed particular knowledge from which willfulness could be inferred, such as evidence demonstrating that the [1] Because there is no evidence in the record indicating infringer was given samples of the copyrighted work prior that Olem actually knew it was infringing Washington to producing the infringing work. See Yurman Design, Shoe’s copyrights and because the evidence cited by Inc. v. PAJ, Inc., 262 F.3d 101, 112, 113 (2d Cir.2001) Washington Shoe does not raise a genuine issue of (finding “a sufficient basis for an inference by the jury material fact with respect to reckless disregard, the that the infringements were willful” and that “the jury was District Court did not *881 err in granting summary free ... to find that [the defendant]’s ignorance was due to judgment to Olem on the issue of willfulness. recklessness,” given evidence that the defendant had Accordingly, we affirm as to this issue. received actual samples of the plaintiff’s jewelry from a store prior to selling jewelry that violated the plaintiff’s copyrights, and that the defendant had knowledge of the plaintiff’s product line and “fail[ed] to investigate the possibility of intellectual property violations after” being III. told its product was similar to the plaintiff’s (citations omitted)). Thus, in this case, the similarity between the Following Washington Shoe’s willfulness appeal, Olem boots does not create a triable issue of fact with regard to cross-appealed the District Court’s holding that it had willfulness on the part of Olem. infringed Washington Shoe’s copyrights. Thereafter, Olem made its 60(b)(3) and 56(h) motions based on 7 **5 Washington Shoe also points to Olem’s sourcing of alleged misrepresentations in sworn statements filed in its boots from China as evidence of reckless disregard. support of Washington Shoe’s summary judgment Washington Shoe thus argues that “[t]he fact that the motion. Fed.R.Civ.P. 60(b)(3); Fed.R.Civ.P. 56(h). boots and artwork were not designed by Olem coupled According to Olem, these misrepresentations were relied with the fact that the designs and boots were sourced in upon by the District Court in its finding that Olem had China increases the probability of infringement,” “access” to the Zebra Supreme boots based on wide reasoning that “it is ... well known that China is a source dissemination of the boots that had taken place “for of infringing goods.” Although Washington Shoe notes years.” The relevance of this conclusion is that “access,” that Olem did not design its boots and purchased them when combined with the District Court’s conclusion that from China, it does not point to any record evidence to Olem’s zebra pattern was “substantially similar” to substantiate its claim that these facts “increase[ ] the Washington Shoe’s Zebra Supreme design, was important 8 probability of infringement” such that a jury could infer to the finding of copying in the District Court’s initial that Olem acted recklessly. This argument, if effective, summary judgment opinion. would impute reckless disregard to any company purchasing and selling products from China that it did not 7 The sworn statements to which Olem refers were made design itself that turned out to be copyrighted by another. in an affidavit by Karl Moehring, Chief Financial Thus, it is unpersuasive. Officer and owner of Washington Shoe, and in a declaration by Robert M. Moehring, president and owner of Washington Shoe. Both Karl and Robert Finally, in support of its willfulness argument, Moehring “attested in their declarations that ‘[t]he Washington Shoe suggests as evidence Olem’s “inability Ditsy Dots and Zebra Supreme boots ha[d] been a huge

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commercial success, selling at national retailers such as in its Order on Cross–Motions for Summary Judgment. Target® stores.’ ” “Robert Moehring further stated that Summary judgment was later granted to Washington ‘[t]he Zebra Supreme boots ha[d] been available across Shoe with respect to the Rose Zebra Supreme design in the country in Target® stores for years.’ ” a separate Order on Supplemental Cross–Motions for Summary Judgment.

8 In order to establish copyright infringement,

Washington Shoe had to prove, first, that it had ownership of a valid copyright with respect to its works and, second, that Olem copied “constituent elements of the work[s] that [were] original.” See Feist Publ’ns, *882 1. Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 1296, 113 L.Ed.2d 358 (1991) (citing As an initial matter, we find that Washington Shoe’s Harper & Row, Publishers, Inc. v. Nation Enters., 471 copyrights for the Ditsy Dots, Zebra Supreme, and Rose U.S. 539, 548, 105 S.Ct. 2218, 2224, 85 L.Ed.2d 588 Zebra Supreme designs are valid and thus, that the first (1985)). Proof of copying could have been established element of copyright infringement—ownership of a valid either by the introduction of direct evidence to that copyright—is satisfied.10 Pursuant to 17 U.S.C. § 410(c), effect or by using indirect evidence to show (1) that Olem had “access” to Washington Shoe’s copyrighted works and that Olem’s works were “substantially 10 Olem argues that Washington Shoe was not entitled to similar” to the copyrighted works or (2) by bring its copyright infringement actions, and thus, that demonstrating that Olem’s works were “strikingly Olem is entitled to summary judgment on those claims, similar” to Washington Shoe’s copyrighted works. See, because Washington Shoe did not disclose to the e.g., Progressive Lighting, Inc. v. Lowe’s Home Ctrs., Copyright Office that all three designs at issue were Inc., 549 Fed.Appx. 913, 918 (11th Cir.2013) (citing created by the modification of prior works, which Olem Original Appalachian Artworks, Inc. v. Toy Loft, Inc., maintains renders its copyright registrations invalid. In 684 F.2d 821, 824 (11th Cir.1982)); Baby Buddies, Inc. other words, Olem argues that Washington Shoe’s v. Toys “R ” Us, Inc., 611 F.3d 1308, 1315 (11th copyrights are invalid because all of the preexisting Cir.2010); Corwin v. Walt Disney Co., 475 F.3d 1239, work leading to the designs may not have been 1253 (11th Cir.2007); Palmer v. Braun, 287 F.3d 1325, disclosed to the Copyright Office. The Copyright 1329–30 (11th Cir.2002) (citing Suntrust Bank v. Office, however, has construed its statute to require Houghton Mifflin Co., 268 F.3d 1257, 1265–66 (11th disclosure only when “a substantial amount of the Cir.2001); Leigh v. Warner Bros., Inc., 212 F.3d 1210, material incorporated in the derivative work is in the 1214 (11th Cir.2000)). public domain or has been registered or published previously.” See U.S. Copyright Office, The Compendium of U.S. Copyright Office Practices § 626.01(a) (2d ed.1984) (amended 1988). This construction merits deference under Skidmore v. Swift & Co., 323 U.S. 134, 65 S.Ct. 161, 89 L.Ed. 124 (1944) as the copyright law is “highly detailed” and it is A. apparent that the Copyright Office “can bring the benefit of specialized experience to bear on the subtle **6 A finding of copyright infringement requires proof of questions in this case.” See United States v. Mead “(1) ownership of a valid copyright, and (2) copying of Corp., 533 U.S. 218, 235, 121 S.Ct. 2164, 2175, 150 constituent elements of the work that are original.” Baby L.Ed.2d 292 (2001). Thus, none of Washington Shoe’s Buddies, Inc. v. Toys “R ” Us, Inc., 611 F.3d 1308, 1315 copyrights at issue were rendered invalid because all (11th Cir.2010) (quoting Feist Publ’ns, Inc. v. Rural Tel. preexisting work was not identified.

Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 1296, 113 L.Ed.2d 358 (1991)) (internal quotation marks omitted). Because the evidence establishes both of these elements, we affirm the District Court’s grant of summary judgment the certificate of a registration made before or within to Washington Shoe on the copyright infringement five years after first publication of the work shall claims.9 constitute prima facie evidence of the validity of the copyright and of the facts stated in the certificate. The evidentiary weight to be accorded the certificate of a 9 As to the Ditsy Dots and Zebra Supreme designs, the registration made thereafter shall be within the District Court granted summary judgment to Washington Shoe on the copyright infringement claims discretion of the court. 17 U.S.C. § 410(c). Thus, Washington Shoe’s

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certificates of registration create a rebuttable that led the District Court to find copyright infringement presumption that the copyrights for its Ditsy Dots, of Washington Shoe’s Zebra Supreme boot design. Zebra Supreme, and Rose Zebra Supreme designs are valid. See Montgomery v. Noga, 168 F.3d 1282, 1289 By its Rule 60(b)(3) and 56(h) motions, Olem claimed (11th Cir.1999) (citing 17 U.S.C. § 410(c) (1994)) that, by presenting testimony in the form of sworn (finding that production of a certificate of copyright statements that the Zebra Supreme boots had been sold registration gave rise to a rebuttable presumption that “in Target® stores for years,” Washington Shoe had copyright was valid). Because Olem has failed to show intentionally and fraudulently made misrepresentations to that Washington Shoe’s designs are not protectable, it the District Court in bad faith and that those has failed to rebut this presumption of validity. See id. misrepresentations had “singularly permitted the [District] at 1291 (finding that the district court did not clearly err Court to find access based upon wide dissemination.” in rejecting the defendants’ argument that a computer Olem argued that, as a result of Washington Shoe’s program was unprotectable because the defendants did misrepresentations, it was entitled to relief from the final not meet their burden of showing that modifications the judgment and the summary judgment orders, and it plaintiff made to the computer program were not further sought sanctions, including attorney’s fees and sufficiently original to support a valid copyright in a costs, dismissal of Washington Shoe’s copyright claims, subsequent version as a derivative work). This leaves and entry of judgment in its favor.11 only the element of copying to be discussed. 11 Olem also urged the District Court to hold Washington Shoe in contempt “and that the Court award such other relief as it deems equitable and just.” 2. As to copying, in its initial summary judgment opinion, the District Court found that Olem’s boot designs were The District Court referred Olem’s motions to a substantially similar to Washington Shoe’s copyrighted Magistrate Judge who held a non-evidentiary hearing and designs and that Olem had access to those designs. issued a report and recommendation. The Magistrate “Access requires proof of ‘a reasonable opportunity to Judge found “no evidence of a deliberate scheme by view’ the work in question.” Corwin v. Walt Disney Co., Washington Shoe to ... create [a] misrepresentation.” 475 F.3d 1239, 1253 (11th Cir.2007) (quoting Herzog v. Nonetheless, the Magistrate Judge recommended that the Castle Rock Entm’t, 193 F.3d 1241, 1249 (11th Cir.1999)) District Court review its summary judgment ruling to (citing Ferguson v. Nat’l Broad. Co., 584 F.2d 111, 113 determine if the record supported a finding of wide (5th Cir.1978)). In some instances, proof that a copyright dissemination. holder’s work was “widely disseminated” has been held to constitute circumstantial evidence of access. See, e.g., After receiving the Magistrate Judge’s report and L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d recommendation, the District Court considered Olem’s 841, 846–47 (9th Cir.2012) (citing Three Boys Music Rule 60(b)(3) and Rule 56(h) motions. Importantly, in its *883 Corp. v. Bolton, 212 F.3d 477, 482 (9th Cir.2000)); opinion, the District Court, in addition to deciding these Boisson v. Banian, Ltd., 273 F.3d 262, 270 (2d Cir.2001) motions on their own, treated them as a motion to (citing 4 Melville B. Nimmer & David Nimmer, Nimmer reconsider its initial summary judgment opinion. Thus, on Copyright, § 13.02[A] (2001)); Peel & Co. v. Rug the District Court took another look at the reasons for its Mkt., 238 F.3d 391, 397 (5th Cir.2001); Selle v. Gibb, 741 finding that Olem had infringed Washington Shoe’s F.2d 896, 901 (7th Cir.1984) (citations omitted). copyrights.

**7 When determining that Olem had access to In doing so, the District Court first noted that it continued Washington Shoe’s designs, the District Court considered to find access based on wide dissemination. As to Olem’s and relied on the “evidence of wide dissemination” misrepresentation claims with respect to the availability presented by Washington Shoe in the sworn statements. of the Zebra Supreme design “for years,” the District The District Court noted that, by the sworn statements, Court found that a purchase order was “indicative of a Washington Shoe had offered testimony that the “ ‘Ditsy sale date prior to ... September 28, 2009”12 and, because Dots and Zebra Supreme [boots had] been a huge the sworn statements were dated March 11, 2010 and commercial success, selling at national retailers such as March 7, 2011, it was at least some evidence that the “for Target stores[,]’ and [that] Zebra Supreme boots [had] *884 years” statement was not false.13 The Court also been available in Target stores ‘for years.’ ” For Olem, it addressed the alleged misrepresentation regarding Target was the finding of access, through sales at Target stores, stores, and found that, “[a]lthough the Zebra Supreme

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boot was not available at Target brick-and-mortar stores, competent to find striking similarity in the absence of ... there was access through wide dissemination based on reliable expert testimony.” Based on this reconsideration, the availability of the Zebra Supreme boot at the District Court then found that the Zebra Supreme Target.com.”14 Thus, the District Court reaffirmed its boots and Olem’s zebra pattern boots were strikingly finding of access. similar as a matter of law and thus that copying could be presumed. See MPD Accessories B.V. v. Urban Outfitters, 12 At trial, relying on documented sales of Zebra Supreme No. 12 Civ. 6501(LTS)(KNF), 2014 WL 2440683, at *6 boots to the retailer Target, Karl Moehring testified that (S.D.N.Y. May 30, 2014) (“Where works are strikingly Washington Shoe began selling the Zebra Supreme similar, separate proof of access for copying is design on September 28, 2009, providing the basis for unnecessary.”). Thus, the District Court concluded that “a Olem’s claim that the “for years” statements, made finding of access [was] unnecessary because the Zebra March 11, 2010 and March 7, 2011, were false. Supreme boots and Olem[’s] ... zebra pattern boots [were] strikingly similar.”

We affirm the District Court’s holding that it was 13 The sworn statement of Robert Moehring was served competent to make a finding of striking similarity15 and “March 11, 2010, approximately five months after” September 28, 2009, and Karl Moehring’s affidavit we find that Washington Shoe, with regard to both its “was dated March 7, 2011, approximately one year ... Ditsy Dots design and its Zebra Supreme design, has after” Robert Moehring’s sworn statement. “establish[ed] copying by demonstrating that [its] original work[s] and the ... infringing work[s] are strikingly similar.” Corwin, 475 F.3d at 1253 (quoting Calhoun v. Lillenas Publ’g, 298 F.3d 1228, 1232 n. 6 (11th 14 The District Court noted that “[t]he inclusion of the Cir.2002)) (internal quotation marks omitted). Google maps screenshot” showing Target brick-and-mortar store locations submitted by Washington Shoe in support of its claim that the Ditsy 15 See Jenkins v. Jury, No. 5:07–cv–133–Oc–GRJ, 2009 Dots and Zebra Supreme boots were widely WL 1043965, at *4 & n. 24 (M.D.Fla. Apr. 16, 2009) disseminated “was relevant to the issue of access as it (finding sculptures “strikingly similar” and noting that pertained to the Ditsy Dots design because the Ditsy “expert testimony ... [was] unnecessary ... because this Dots boots, unlike the Zebra Supreme boots, were sold [was] not a ‘technical’ field in which the trier of fact at Target brick-and-mortar stores.” Thus, because the [would] not [be] able to make [such a] determination” Ditsy Dots boots actually were sold at Target (internal quotation marks omitted) (quoting Kent v. brick-and-mortar stores, the claimed misrepresentations Revere, No. 84–798–CIV–ORL–18, 1985 WL 6453, at were relevant only to the Court’s finding as to the *7 (M.D.Fla. Oct. 28, 1985))). Zebra Supreme design.

*885 “Striking similarity exists where the proof of **8 The District Court next considered its findings on similarity in appearance is ‘so striking that the summary judgment relating to the striking similarity possibilities of independent creation, coincidence and between the designs. Here, the Court noted that, in its prior common source are, as a practical matter, initial summary judgment opinion, it had found “that the precluded.’ ” Corwin, 475 F.3d at 1253 (quoting Selle, patterned designs on the face of the boots [were] indeed 741 F.2d at 901) (citing 4 M. Nimmer & D. Nimmer, strikingly similar,” but did “not reach this conclusion as a Nimmer on Copyright § 13.02[B] (2005)). Where two matter of law” because, (1) given its finding of access, it works are “essentially” or “virtually identical,” they are did not need to find striking similarity, only substantial strikingly similar and, thus, the copying element is similarity, in order to find that the designs had been satisfied. See Segrets, Inc. v. Gillman Knitwear Co., 207 copied, and (2) it mistakenly concluded that expert F.3d 56, 62 (1st Cir.2000) (finding sweater design had testimony was required to find striking similarity as a been copied where “[t]he geometric patterns, the matter of law. stitching, and the number and arrangement of the buttons all appear[ed] identical” and “[m]any of the patterns in After taking a second look at the applicable law and at the the [infringing] sweater [were] strikingly similar to those boots themselves, however, the District Court concluded found in the intricate [copyrighted] design, and the that it had been correct when it observed in a footnote in patterns [were] arranged in a similar order”); Kent v. its initial summary judgment opinion “that the Zebra Revere, No. 84–798–CIV–ORL–18, 1985 WL 6453, at *7 Supreme boots and Olem[’s] zebra pattern boots were (M.D.Fla. Oct. 28, 1985). That being said, “works need strikingly similar, but incorrect that the Court was not not be exactly identical to be strikingly similar.” See Kent, © 2016 Thomson Reuters. No claim to original U.S. Government Works. 124

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1985 WL 6453, at *7 (emphasis added) (citing Testa v. in its initial summary judgment opinion, determined that Janssen, 492 F.Supp. 198, 203 (W.D.Pa.1980)). it had been copied by Olem as a result of its access and substantial similarity findings. Subsequently, in its order **9 In its initial summary judgment opinion, the District denying Olem’s motions for relief from judgment and for Court held that the Ditsy Dots design had been copied sanctions, the District Court continued to find that the based on findings of access and substantial similarity. The Zebra Supreme design had been copied based on access Court first found access based on wide dissemination and substantial similarity, but further found copying of because, “[g]iven that [the] Ditsy Dots ... boots were sold the Zebra Supreme design based on striking similarity, as nationwide at stores such as Target and could have been well. viewed at trade shows that both companies attended, ... Olem[’s] employees had a reasonable opportunity to view With respect to the Zebra Supreme design, in its initial the boots....” As to similarity, the Court determined that summary judgment opinion, the District Court found Olem’s dots design was substantially similar16 to the Ditsy Olem’s zebra pattern substantially similar to Washington Dots design because “an average lay observer would Shoe’s design. The District Court did so after comparing recognize the alleged copy as having been appropriated “undisputed photographs” of both companies’ designs from the copyrighted work.” See Baby Buddies, 611 F.3d from four different angles and observing “distinct patterns at 1315 (“To determine whether an allegedly infringing common to both compan[ies’] boot designs,” which the work is substantially similar to a copyrighted work, we Court described as follows: ask whether ‘an average lay observer would recognize the alleged copy as having been appropriated from the From the toe pointing right view, copyrighted work.’ ” (quoting Oravec v. Sunny Isles both show a black triangular shape Luxury Ventures, L.C., 527 F.3d 1218, 1224 (11th at the top of the boot resembling an Cir.2008)) (internal quotation marks omitted)). In making arrowhead pointing left. Moving this determination, the District Court found that “no vertically down the boot below the features of Olem [’s] ... dots pattern [were] recognizably arrowhead, both show a series of distinguishable from Washington Shoe’s Ditsy Dots alternating black and white wavy pattern” and noted that, “[t]o the naked eye, it appear[ed] lines of different thicknesses. that Olem ... use[d] proportionately equivalent big dots Continuing to move down and small dots that [were] the same as those used by vertically, this series of lines leads Washington Shoe.” See Appendix infra. Having examined into a wavy elliptical shape in the photographs of the boots, we agree, and further find that center of the boot. Immediately Olem’s dots design and Washington Shoe’s Ditsy Dots below, there is another series of design are “virtually identical” and thus strikingly similar. alternating black and white wavy Therefore, whether based on a finding of access combined lines of different thicknesses. with substantial similarity or on a finding that the boot Immediately below these lines is a designs are strikingly similar, we affirm the District black diamond-shaped object Court’s finding that Olem copied the Ditsy Dots design. enclosing another ellipse. See Appendix infra. Immediately below the diamond shape, a final series of wavy lines 16 The District Court did not later reconsider its finding follow vertically down until that the Ditsy Dots boots had been copied by Olem reaching the toe of the boot. based on access and substantial similarity. Thus, the District Court did not find that Olem’s dots design was **10 The District Court then noted that “the strikingly similar to Washington Shoe’s Ditsy Dots distinguishing characteristics of the pattern such as the design. Presumably, this was because the allegedly arrowhead, diamond[,] and ellipse are distinct and misleading sworn statements only implicated the Zebra common to each from the front and toe pointing right Supreme design and thus did not disturb the Court’s finding of access with regard to the Ditsy Dots design. views.” The Court thus found that the two designs were Upon inspection of the two designs, we note, however, substantially similar because “an average lay observer that Olem’s dots design is strikingly similar to would recognize the alleged copy as having been Washington Shoe’s Ditsy Dots design. See Appendix appropriated from the copyrighted work.” infra. When deciding Olem’s Rule 60(b)(3) and 56(h) motions, however, the District Court reconsidered its similarity *886 As to the Zebra Supreme design, the District Court, finding from its initial summary judgment opinion and

Olem Shoe Corp. v. Washington Shoe Corp., 591 Fed.Appx. 873 (2015) 2015 WL 136552, 2015 Copr.L.Dec. P 30,711

found Olem’s zebra design to be strikingly similar to District Court did not abuse its discretion, and affirm its Washington Shoe’s Zebra Supreme design because, given denial of Olem’s Rule 60(b)(3) motion. that “the two boots [were] virtually identical, the commonalities that supported a finding of substantial similarity also support[ed] a finding of striking similarity.” C. [2] We find that Olem’s zebra design is indeed strikingly similar to Washington Shoe’s Zebra Supreme design. A **11 Although we have not previously stated the comparison of the photographs of the boots reveals that appropriate standard of review for the denial of a Rule Olem’s design is “virtually identical” to that of 56(h) motion for sanctions, other courts have applied an Washington Shoe, and as such we find that Olem has abuse of discretion standard in this context. See, e.g., copied Washington Shoe’s Zebra Supreme design. See Hunt v. Branch Banking & Trust Co., 480 Fed.Appx. 730, Appendix infra. Thus, as with the Ditsy Dots boots, there 732 (4th Cir.2012) (citing Miltier v. Beorn, 896 F.2d 848, is no genuine issue of material fact as to whether Olem 855 (4th Cir.1990)). Further, we review decisions copied Washington Shoe’s copyrighted design and, concerning other Rule 56 motions for abuse of discretion. therefore, with respect to both boot designs, summary Jackson v. Cintas Corp., 425 F.3d 1313, 1316 (11th judgment on the issue of copying was appropriate. Cir.2005) (citing Fla. Power & Light Co. v. Allis Chalmers Corp., 893 F.2d 1313, 1315 (11th Cir.1990)) (applying abuse of discretion standard to denial of discovery under Rule 56(f)). Thus, the denial of Olem’s Rule 56(h) motion for sanctions will be reviewed for an B. abuse of discretion.

As to Olem’s motion for relief from the judgment, we [4] We find that the District Court did not abuse its review the denial of a Rule 60(b)(3) motion for abuse of discretion by declining to impose sanctions on discretion. Cox Nuclear Pharmacy, Inc. v. CTI, Inc., 478 Washington Shoe because the Court reasonably F.3d 1303, 1314 (11th Cir.2007) (citing Frederick v. concluded, based on evidence presented by Washington Kirby Tankships, Inc., 205 F.3d 1277, 1287 (11th Shoe, that Olem had not conclusively proven that the “for Cir.2000)). To successfully bring a Rule 60(b)(3) motion, years” statement was false. Additionally, although the the movant must “prove[ ] by clear and convincing “Target stores” statements turned out to be false, the evidence that an adverse party has obtained the verdict District Court reasonably exercised its discretion in through fraud, misrepresentation, *887 or other concluding that the statements had not been submitted in misconduct” and “must also show that the conduct bad faith and that there was access to the Zebra Supreme prevented the losing party from fully and fairly presenting design through the availability of the Zebra Supreme boot his case or defense.” Frederick, 205 F.3d at 1287 (citing at Target.com. Accordingly, we affirm the District Scutieri v. Paige, 808 F.2d 785, 794 (11th Cir.1987); Court’s denial of Olem’s Rule 56(h) motion for sanctions. Rozier v. Ford Motor Co., 573 F.2d 1332, 1339 (5th Cir.1978)).

[3] The issue on appeal is whether the District Court abused its discretion by denying Olem’s Rule 60(b)(3) IV. motion for relief from the judgment. The motion was premised on the alleged misrepresentations in the sworn We affirm the District Court’s grant of summary statements of Robert and Karl Moehring. Because the judgment on the copyright infringement claims in all misrepresentations in the sworn statements, if, in fact, respects. We also affirm the District Court’s denial of there were any, were unnecessary to the District Court’s Olem’s motions for relief from the judgment and for finding of infringement, we agree with the Court that sanctions. Olem did not show either that the verdict was obtained through misrepresentation or that it was prevented from AFFIRMED. fully and fairly presenting its case. In other words, because the Court, after taking a second look, found infringement of the Zebra Supreme design based on APPENDIX striking similarity, the sworn statements had no bearing on the outcome of the case. Therefore, we find that the

Olem Shoe Corp. v. Washington Shoe Corp., 591 Fed.Appx. 873 (2015) 2015 WL 136552, 2015 Copr.L.Dec. P 30,711

591 Fed.Appx. 873, 2015 WL 136552, 2015 Copr.L.Dec. P 30,711

All Citations

Karlson v. Red Door Homes, LLC, 611 Fed.Appx. 566 (2015) 2015 WL 2117247, 2015 Copr.L.Dec. P 30,763

computer-generated illustrations of architectural 611 Fed.Appx. 566 plans, and to sell and relicense illustrations to United States Court of Appeals, third-party clients; owner created illustrations at Eleventh Circuit. company’s request and delivered them to company, owner testified that when he created Keith KARLSON, Plaintiff–Counter illustrations for company, he understood that Defendant–Appellant, company was going to use illustrations in v. product line it was selling to homebuilders, and RED DOOR HOMES, LLC, SMA Operations owner stated that he knew that company was Management, LLC, RDH Advising, LLC, going to sell or provide his illustrations to Defendants–Counter Claimants–Appellees. clients along with company’s plans and services and that he gave company clear permission to do No. 14–12371. so. 17 U.S.C.A. §§ 101, 204(a). | May 7, 2015. Cases that cite this headnote

Synopsis Background: Copyright owner brought action against alleged infringer, alleging copyright infringement, breach [2] Copyrights and Intellectual Property of contract, and conversion based on their use of owner’s Licenses in general computer-generated illustrations of architectural plans. The United States District Court for the Northern District Under Alabama law, copyright owner’s of Alabama, 2012 WL 1747845, entered summary post-delivery copyright declaration was not judgment for alleged infringer. Owner appealed. The enforceable as part of his agreement with Court of Appeals, 553 Fed.Appx. 875, vacated and company for nonexclusive license to use and remanded.The District Court, 18 F.Supp.3d 1301, entered distribute his computer-generated illustrations of summary judgment for company. Owner appealed. architectural plans; each time owner sent company invoice for illustrations he had already delivered, it was too late for him to modify Holdings: The Court of Appeals held that: parties’ agreement with respect to scope of license for previously delivered works. [1] owner impliedly granted alleged infringer nonexclusive license to use and distribute his illustrations, and Cases that cite this headnote

[2] owner’s post-delivery copyright declaration was not enforceable as part of his license agreement with company.

Attorneys and Law Firms Affirmed. *567 Timothy Paul Pittman, Patrick O’Neal Miller, Dick & Miller PC, Huntsville, AL, for Plaintiff–Counter Defendant–Appellant.

West Headnotes (2) Will Hill Tankersley, Jr., Thomas Richard Debray, Jr., Ed R. Haden, Amelia Killebrew Steindorff, Balch & Bingham, LLP, Birmingham, AL, for [1] Copyrights and Intellectual Property Defendants–Counter Claimants–Appellees. Licenses in general Appeal from the United States District Court for the Copyright owner impliedly granted company Northern District of Alabama. D.C. Docket No. nonexclusive license to use and distribute his 5:11–cv–01511–IPJ. © 2016 Thomson Reuters. No claim to original U.S. Government Works. 131

Karlson v. Red Door Homes, LLC, 611 Fed.Appx. 566 (2015) 2015 WL 2117247, 2015 Copr.L.Dec. P 30,763

Before MARCUS, ROSENBAUM, and GINSBURG,* Door Homes, LLC, and he is currently the Director of Circuit Judges. Product Development there. That entity provides support * Honorable Douglas H. Ginsburg, United States Circuit to developers and homebuilders, such as marketing, Judge for the District of Columbia, sitting by purchasing, estimating, drafting, designing, and designation. accounting. It aims mainly to provide software estimates and building packages to developers and homebuilders through license agreements. The licensees receive proprietary planning *568 and ordering software and the Opinion ability to access rendered home plans and designs.

PER CURIAM: In April 2008, Miller began ordering renderings from Karlson on behalf of Red Door. Karlson testified that when he created a rendering for Red Door, he understood **1 Keith Karlson appeals from the district court’s order that Red Door was going to use his rendering in a product granting summary judgment to Red Door Homes, LLC, line it was selling to homebuilders—in other words, that SMA Operations Management, LLC, and RDH Advising, his rendering would be presented to potential homebuilder LLC (collectively, “Red Door”), in his action for clients and offered as part of the assets and services that copyright infringement, breach of contract, and Red Door was advertising to those clients. Karlson further conversion. Karlson claims that Red Door unlawfully sold conceded that, before he sent any renderings to Miller, he and relicensed his computer-generated illustrations of understood that Red Door intended to take his renderings architectural plans, or renderings, to third parties. The and sell them to clients, or that Red Door would provide district court found that Karlson impliedly granted to Red the renderings to others. And, Karlson acknowledged that Door a nonexclusive license to use and distribute the he understood that if Red Door found a willing client, his renderings, a finding that it determined disposed of all of renderings would be sold to the client. In addition, Karlson’s claims. For the reasons that follow, we affirm. Karlson explained that he understood that Red Door would not be building homes; instead, the clients to whom the renderings were provided were going to build homes. Significantly, Karlson testified that he gave Red Door “clear permission” to sell clients his renderings along with I. Red Door’s plans and services. But, Karlson contends, he believed he would get paid each time Red Door did. Karlson is a self-employed artist who makes renderings of homes—colored illustrations of what homes will look like **2 From April 2008 through November 2009, Red Door when built—from architectural plans. In the normal placed twenty-three separate orders from Karlson, and course of Karlson’s business dealings, a customer sends Karlson created approximately 130 renderings for Red Karlson an email with attachments containing certain Door. Karlson emailed twenty-three separate invoices to architectural plans. Karlson uses a computer, a camera, Miller for the renderings, sending each invoice sometime and Photoshop software to create a rendering, and then after he created and delivered to Miller the relevant emails the customer back, sending the rendering to the renderings. Red Door paid each and every one of these customer as an email attachment. He later emails the invoices. customer an invoice for the work, and he is paid one fee per rendering. The bottom of each email invoice contained a “Copyrights Declaration,” drafted by Karlson, which Karlson met Patrick Miller, an architectural home plan Karlson never discussed with Miller. The declaration designer, in 1998. Miller would frequently ask Karlson to provided that, with the delivery of the renderings in the create renderings of Miller’s home designs and plans if invoice, Karlson transferred to Red Door “a limited one of Miller’s homebuilder clients requested such copyright to reproduce the artwork ... in unlimited renderings. In or around 2005, Karlson and Miller formed quantities on any media ..., royalty-free, but only for use a business together for the purpose of licensing their directly by [Red Door]....” It provided that the “copyright existing stock of previously created designs and may not be transferred to, or utilized for the benefit of, renderings. Miller would sell drafting and design another business entity without [Karlson’s] expressed consultation to homebuilders, and he would refer the permission.” It further provided, “By using the artwork in homebuilders to Karlson to obtain renderings. any way, [Red Door] hereby agree[s] to these terms and limitations to the copyrights transferred to [Red Door] In 2008, Miller became a minority shareholder of Red

Karlson v. Red Door Homes, LLC, 611 Fed.Appx. 566 (2015) 2015 WL 2117247, 2015 Copr.L.Dec. P 30,763

with delivery of [Red Door’s] artwork.” Notably, Karlson entitled to judgment as a matter of law. See Fed.R.Civ.P. had never before placed a copyright declaration on any 56(a). invoice that he had emailed to Miller; but, for the first time in all of his dealings with Miller, he included the copyright declaration in the invoice emails for the work he did on behalf of Red Door. Nor had Karlson ever before received any royalty payments from Miller or III. Miller’s employers for renderings. The Copyright Act provides a copyright owner with the Around October or November 2009, Karlson discovered exclusive right to copy, distribute, or display his work. that Red Door had made what he believes were See 17 U.S.C. § 106; MacLean Assocs., Inc. v. Wm. M. impermissible, undisclosed distributions of his renderings. Mercer–Meidinger–Hansen, Inc., 952 F.2d 769, 778 (3d He wrote an email to Miller in which he explained that he Cir.1991). A copyright owner can transfer copyright thought he would be getting paid each time Red Door ownership through the grant of an exclusive license, but transferred a rendering to a client. He also asked Red the grant must be in writing. See 17 U.S.C. §§ 101, Door to pay him royalty fees based upon the number of 204(a); MacLean Assocs., 952 F.2d at 778. Alternatively, builders the artwork benefitted and the number of a copyright owner may allow another to use the renderings those builders used. copyrighted material without transferring ownership in the material through the grant of a nonexclusive license. Miller responded that Red Door could not agree to See Kennedy v. Nat’l Juvenile Det. Ass’n, 187 F.3d 690, Karlson’s terms, as it would not be a wise business model 694 (7th Cir.1999). With an implied nonexclusive license, for Red Door. In response, Karlson demanded that Red “the copyright owner ... permits the use of a copyrighted Door inform third parties using his artwork to work in a particular manner.” I.A.E., Inc. v. Shaver, 74 immediately cease and desist. Miller replied that Red F.3d 768, 775 (7th Cir.1996). The grant of a nonexclusive Door would respond in a timely and professional manner, license does not require a writing under the Copyright most likely by removing the renderings from its website Act, and it may occur orally or may be implied from the and brochures and replacing them with a new set of copyright owner’s conduct. Latimer v. Roaring Toyz, Inc., renderings. 601 F.3d 1224, 1235 (11th Cir.2010); see 17 U.S.C. §§ 101, 204(a). *569 Karlson applied for copyright protection for the renderings and was issued a Certificate of Copyright Because an implied nonexclusive license can provide an Registration effective December 18, 2009. On January 26, affirmative defense to a claim of copyright infringement, 2010, Red Door internally informed personnel, via email, the alleged infringer bears the burden to show that such an that Karlson’s renderings would be removed from the implied nonexclusive license exists. Latimer, 601 F.3d at website and replaced as soon as possible. The email 1235. “An implied license is created when one party (1) explained that Red Door had found another source of creates a work at another’s request; (2) delivers the work renderings from which it clearly obtained the unlimited to that person; and (3) intends that the person copy and rights to use the artwork, and it expected to have the new distribute the work.” Id. Courts examine the totality of the renderings within two weeks. Red Door asserts that it parties’ conduct to evaluate intent. See Estate of Hevia v. informed its licensees by telephone calls in early 2010 to Portrio Corp., 602 F.3d 34, 41 (1st Cir.2010). no longer use Karlson’s renderings. Though Karlson asserts that Red Door continues to use his renderings, We have instructed, “In determining whether an implied whether this is correct is unclear from the record. license exists, a court should look at objective factors evincing the party’s intent, including deposition testimony and whether the copyrighted material was delivered without warning that its further use would constitute copyright infringement.” Wilchombe, 555 F.3d at 956 II. (internal quotation marks and citation omitted). An implied nonexclusive license may be limited in scope, and **3 We review a district court’s grant of summary a defendant commits copyright infringement if he exceeds judgment de novo, viewing all evidence and drawing all the scope of the license. Latimer, 601 F.3d at 1235. So, inferences in favor of the nonmoving party. Wilchombe v. courts must focus on objective evidence revealing the TeeVee Toons, Inc., 555 F.3d 949, 956 (11th Cir.2009). intent of the parties both to determine whether an implied Summary judgment is appropriate where there is no license exists and, if so, to determine *570 the scope of genuine issue of material fact and the moving party is the license. Id. “[A]n implied license will be limited to a

Karlson v. Red Door Homes, LLC, 611 Fed.Appx. 566 (2015) 2015 WL 2117247, 2015 Copr.L.Dec. P 30,763

specific use only if that limitation is expressly conveyed each customer paid separately for the renderings; (3) he when the work is delivered.” Id. drafted and included a notice of limited copyright in each of the twenty-three separate invoices he emailed to Miller; **4 [1] Here, we agree with the district court that Karlson and (4) he immediately applied for copyright protection impliedly granted Red Door a nonexclusive license to use and emailed Red Door upon discovering that it had been and distribute his renderings.1 It is undisputed that relicensing his renderings to clients for their own copying Karlson created the renderings at Red Door’s request and and distribution. delivered them to Red Door. With respect to Karlson’s intent, the record shows that Karlson knew that Red Door We find Karlson’s arguments unavailing. First, though would be using and distributing his work to clients. He Karlson claims that he never authorized any customer to testified that when he created renderings for Red Door, he relicense his renderings to third parties without additional understood that Red Door was going to use the renderings compensation, he provides no evidence of any in the product line it was selling to homebuilders and that circumstance in which he denied such authorization to a his renderings would be presented to potential clients and customer. Second, nor does Karlson present any evidence offered as a part of the assets and services Red Door that in his prior dealings with Miller, he was ever paid advertised to those clients. He also stated that he knew more than once for a rendering. Karlson did not provide that Red Door was going to “sell or provide” his any evidence of any situation in which he received renderings to clients along with Red Door’s plans and multiple payments for his renderings, and he testified that services and that he gave Red Door “clear permission” to he never before received any royalty payments from do so.2 Miller or Miller’s employers for renderings he sold to them. 1 For the purposes of this discussion, we assume without deciding, as the district court did, that Karlson holds *571 Third, though Karlson included a copyright valid copyrights in his renderings. declaration in his email invoices through which he purportedly intended to limit the scope of Red Door’s use of his renderings, each and every invoice pertained to only renderings that Karlson had previously delivered to 2 In a prior appeal in this case, this Court stated in the Red Door. But an implied license is “limited to a specific factual background section of the opinion that Red use only if that limitation is expressly conveyed when the Door “licensed Karlson’s illustrations to third parties without Karlson’s knowledge or permission.” Karlson work is delivered.” Latimer, 601 F.3d at 1235 (emphasis v. Red Door Homes, LLC, 553 Fed.Appx. 875, 876 added); see also Wilchombe, 555 F.3d at 956 (explaining (11th Cir.2014) (per curiam). We do not read this that the court looks at “objective factors evincing the statement as a factual finding, as the Court in that party’s intent, including ... whether the copyrighted decision did not address the facts or the merits of material was delivered without warning that its future use Karlson’s claims. See id. at 876–78. Instead, the Court would constitute copyright infringement”) (internal merely remanded the case to the district court because quotation marks and citation omitted) (emphasis added). the parties had not had the opportunity to address the Because there is no evidence that Karlson intended to implied nonexclusive license issue below: the district limit the scope of Red Door’s use of his renderings at the court had decided Karlson’s claims on that ground sua sponte without giving adequate notice to the parties. Id. time that he delivered the renderings, he could not have, at 876. Thus, the Court’s statement was not meant to as a matter of law, limited the scope of the nonexclusive constitute a finding, but rather recited Karlson’s license he granted. allegations to give context to the Court’s decision. **5 Finally, the fact that Karlson emailed Red Door demanding additional payment and applied for copyright Karlson argues that, though he may have granted a protection immediately upon discovering that Red Door nonexclusive license to Red Door to use and distribute his had been relicensing his renderings to customers is, at renderings, he intended any such license to be limited in best, weak, if any, evidence of Karlson’s intent when he scope so that Red Door could not sell and relicense his created and delivered the renderings. renderings to clients. In support of this position, Karlson asserts the following: (1) he had never authorized any For these reasons, we find that the scope of the customer to license his renderings to third parties without nonexclusive license that Karlson impliedly granted to additional compensation in the past; (2) he had an Red Door was not limited to the use and distribution of eight-year course of performance with Miller whereby his renderings, but also included the right to sell and Miller’s customers ordered renderings from Karlson, and relicense the renderings to third-party clients. We

Karlson v. Red Door Homes, LLC, 611 Fed.Appx. 566 (2015) 2015 WL 2117247, 2015 Copr.L.Dec. P 30,763

conclude that the district court properly granted summary license his renderings, its selling and relicensing of his judgment to Red Door on Karlson’s renderings *572 was not wrongful or illegal.4 copyright-infringement claim. 3 Karlson asserts the conversion claim under Alabama law.

IV. 4 We note that Red Door argues that Karlson’s The district court also properly granted summary conversion claim is preempted by the Copyright Act, judgment to Red Door on Karlson’s breach-of-contract which preempts certain state-law claims. See 17 U.S.C. and conversion claims. § 301(a); Utopia Provider Sys., Inc. v. Pro–Med Clinical Sys., L.L.C., 596 F.3d 1313, 1325 (11th [2] Karlson’s breach-of-contract claim turns on whether his Cir.2010). We do not opine on this issue because we post-delivery copyright declaration is enforceable as part find that Karlson’s claim for conversion fails regardless of whether it may also be preempted. of the parties’ agreement. It is not. Through the copyright declaration in each of the invoices, Karlson attempted to materially alter the terms of the parties’ agreement regarding the scope of a nonexclusive license that he had already impliedly granted. But, as discussed previously, to limit the grant of a nonexclusive license to a specific use, V. a copyright owner must expressly convey the limitation when the work is delivered. See Latimer, 601 F.3d at For the foregoing reasons, we affirm the district court’s 1235. Thus, each time Karlson emailed an invoice for grant of summary judgment to Red Door on all of renderings he had already delivered, it was too late for Karlson’s claims. him to modify the parties’ agreement with respect to the scope of the license for the previously delivered works. Because the copyright declaration could not have become part of the parties’ agreement, Red Door could not have breached the terms in the copyright declaration. AFFIRMED.

Karlson’s conversion claim similarly fails. Karlson argues that Red Door’s selling and relicensing of his renderings constituted conversion because it was an illegal All Citations assumption of ownership. Under Alabama law,3 a conversion is “a wrongful taking or a wrongful detention 611 Fed.Appx. 566, 2015 WL 2117247, 2015 or interference, an illegal assumption of ownership, or an Copr.L.Dec. P 30,763 illegal use or misuse of another’s property.” Horne v. TGM Assocs., L.P., 56 So.3d 615, 628 (Ala.2010) (quotation marks and citation omitted). Here, because Karlson impliedly granted Red Door the right to sell and

State of Alabama

Alabama Law Institute

Right of Publicity Act

March 2015

ALABAMA LAW INSTITUTE www.ali.state.al.us Alabama State House Law Center Suite 207 Room 326 11 South Union Street Post Office Box 861425 Montgomery, Alabama 36130 Tuscaloosa, Alabama 35486 (334) 242-7411 (205) 348-7411 FAX (334) 242-8411 FAX (205) 348-8411

Alabama Law Institute

Right of Publicity Act

March 2015

Chairman Will Hill Tankersley

ADVISORY COMMITTEE Hunter Adams Jim Pewitt Lee Armstrong Harlan Prater Michael Douglas Barry Ragsdale Bernard Harwood Cooper Shattuck Harriet Ivy Thomas Thagard George Kobler Trip Umbach Loren Lancaster Lance Wilkerson Rebekah McKinney Alex Wyatt

PREFACE

The Alabama Law Institute presents to the Bench and Bar of Alabama, for consideration and constructive criticism, the following proposed act.

Alabama has long recognized a common law right of publicity or the ability to exercise appropriate commercial control over one’s name or likeness. Presently, this right is part of the tort of invasion of privacy.

This bill would statutorily define this right, the elements and scope of liability for its infringement, define the remedies available, and set forth defenses.

This bill would provide that there is a right of publicity in any indicia of identity of every person which endures for the life of the person and for fifty-five years after death. This right is freely transferable and descendable.

This bill would further provide for liability for persons who wrongfully use another person’s indicia of identity whether or not for profit. This bill would also provide for defenses from liability under certain circumstances.

This bill would provide that if a person can establish by substantial evidence that his or her right of publicly has been violated would be entitled to a statutory damage in the amount of $5,000 or actual damages at his or her election and any other damages available under Alabama law.

Will Hill Tankersley served as chairman and as the principal reporter of the drafting committee for the Institute.

Othni J. Lathram Director

March 2015

Right of Publicity Act

Section 1. Definitions and Scope

As used in this chapter, the following terms shall have the following meanings, respectively, unless the context clearly indicates otherwise:

INDICIA OF IDENTITY. “Indicia of Identity” include those attributes of a Person that serve to identify that Person to an ordinary, reasonable viewer or listener, including but not limited to, name, signature, photograph, image, likeness, voice, or a substantially similar imitation of one or more of those attributes.

PERSON. A “Person” is a natural person or a deceased natural person.

RIGHT OF PUBLICITY. There is a “Right of Publicity” in any

Indicia of Identity (both singular and plural) of every Person, whether or not famous, which right endures for the life of the

Person and for fifty-five (55) years after his or her death, whether or not the Person commercially exploits the right during his or her lifetime. The right is freely transferable and descendible, in whole

1 or in part, and shall be considered property of a decedent’s estate unless otherwise transferred.

Comment

This Act repeals only prior inconsistent common law on the unauthorized commercial use of a Person’s Indicia of Identity, and no other form of the common law “right of privacy” is preempted hereby.

Section 2. Elements

Liability for Infringement of Right of Publicity.

(a) Except as provided herein, any Person or entity who uses or causes the use of a Person’s Indicia of Identity, on or in products, goods, merchandise, or services entered into commerce in this

State, or for purposes of advertising or selling, or soliciting purchases of, products, goods, merchandise, or services, or for purposes of fund-raising or solicitation of donations, or for false endorsement, without consent shall be liable under this chapter to such Person, or to a holder of such Person’s rights.

(b) Liability may be found under this section without regard to whether the use is for profit or not for profit.

Comment

This Act is not intended to reach incidental, non-commercial and non-fundraising activities such as mere inclusion in group photographs or postings.

Section 3. Defenses

The Right of Publicity in this chapter shall not circumscribe the right to freedom of expression granted by the First Amendment to the United States Constitution and the Constitution of Alabama art.

I, § IV.

Any action brought under this Act must be commenced within two years from the act or omission giving rise to the claim; provided that if the cause of action is not discovered and could not reasonably have been discovered within such period, then the action may be commenced within six months from the date of such discovery or the date of discovery of facts which would reasonably lead to such discovery, whichever is earlier; provided further, that in no event may the action be commenced more than four years after such act or omission giving rise to the claim.

Those who lawfully obtain authorized products containing Indicia of Identity are not liable under this section for their resale of such products.

Comment

Nothing in this Act will allow for an abridgement of free speech rights under the First Amendment of the United States Constitution and the Constitution of Alabama art. I, § IV. Protected uses may include, without limitation, plays and other theatrical performances and works; books, poems, and other literary works; films, documentaries, and other works of visual art; radio and television programs (excluding embedded commercial advertisements); magazine and newspaper articles, news reports, sports broadcasts or accounts, and other presentations having a current or historical public interest (excluding embedded commercial advertisements); musical compositions; and works of art.

Allison v. Vintage Sports Plaques, 136 F.3d 1443 (11th Cir. 1998) (adopting first sale doctrine defense in a right of publicity case).

Section 4. Remedies

A plaintiff, who establishes by substantial evidence that his or her

Right of Publicity has been violated, shall be eligible to receive the following damages, remedies, and relief:

A. Monetary Relief. The measure of damages shall be:

(1) (A) Statutory damages in the amount of five

thousand dollars ($5,000) per case, or (B) compensatory

damages, including defendant’s profits derived from such

use. Plaintiff shall, within a reasonable time after the close

of discovery, elect whether to claim statutory damages or to

instead receive such monetary relief as the fact finder may

independently determine to award in accordance with this

section; and

(2) Any other damages available under Alabama

law, including punitive damages. An election of statutory

damages does not preclude the recovery of punitive

damages if such damages are available under Alabama law.

B. Injunctive Relief. A violation of the statute is deemed to constitute irreparable harm for the purposes of injunctive relief.

Comment

The “per case” reference above only applies to a right of publicity claim and not to damages from other claims that may be part of the same case.

S. 1890 (Referred-in-House) Page 1 of 16

114TH CONGRESS 2D SESSION

S. 1890

IN THE HOUSE OF REPRESENTATIVES

APRIL 11, 2016

Referred to the Committee on the Judiciary

AN ACT

To amend chapter 90 of title 18, United States Code, to provide Federal jurisdiction for the theft of trade secrets, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the “Defend Trade Secrets Act of 2016”.

SEC. 2. FEDERAL JURISDICTION FOR THEFT OF TRADE SECRETS.

(a) IN GENERAL.—Section 1836 of title 18, United States Code, is amended by striking subsection (b) and inserting the following:

“(b) PRIVATE CIVIL ACTIONS.—

“(1) IN GENERAL.—An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.

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“(2) CIVIL SEIZURE.—

“(A) IN GENERAL.—

“(i) APPLICATION.—Based on an affidavit or verified complaint satisfying the requirements of this paragraph, the court may, upon ex parte application but only in extraordinary circumstances, issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.

“(ii) REQUIREMENTS FOR ISSUING ORDER.—The court may not grant an application under clause (i) unless the court finds that it clearly appears from specific facts that—

“(I) an order issued pursuant to Rule 65 of the Federal Rules of Civil Procedure or another form of equitable relief would be inadequate to achieve the purpose of this paragraph because the party to which the order would be issued would evade, avoid, or otherwise not comply with such an order;

“(II) an immediate and irreparable injury will occur if such seizure is not ordered;

“(III) the harm to the applicant of denying the application outweighs the harm to the legitimate interests of the person against whom seizure would be ordered of granting the application and substantially outweighs the harm to any third parties who may be harmed by such seizure;

“(IV) the applicant is likely to succeed in showing that—

“(aa) the information is a trade secret; and

“(bb) the person against whom seizure would be ordered—

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“(AA) misappropriated the trade secret of the applicant by improper means; or

“(BB) conspired to use improper means to misappropriate the trade secret of the applicant;

“(V) the person against whom seizure would be ordered has actual possession of—

“(aa) the trade secret; and

“(bb) any property to be seized;

“(VI) the application describes with reasonable particularity the matter to be seized and, to the extent reasonable under the circumstances, identifies the location where the matter is to be seized;

“(VII) the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person; and

“(VIII) the applicant has not publicized the requested seizure.

“(B) ELEMENTS OF ORDER.—If an order is issued under subparagraph (A), it shall—

“(i) set forth findings of fact and conclusions of law required for the order;

“(ii) provide for the narrowest seizure of property necessary to achieve the purpose of this paragraph and direct that the seizure be conducted in a manner that minimizes any interruption of the business operations of third parties and, to the extent possible, does not interrupt the legitimate business operations of the person accused of misappropriating the trade secret;

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“(iii) (I) be accompanied by an order protecting the seized property from disclosure by prohibiting access by the applicant or the person against whom the order is directed, and prohibiting any copies, in whole or in part, of the seized property, to prevent undue damage to the party against whom the order has issued or others, until such parties have an opportunity to be heard in court; and

“(II) provide that if access is granted by the court to the applicant or the person against whom the order is directed, the access shall be consistent with subparagraph (D);

“(iv) provide guidance to the law enforcement officials executing the seizure that clearly delineates the scope of the authority of the officials, including—

“(I) the hours during which the seizure may be executed; and

“(II) whether force may be used to access locked areas;

“(v) set a date for a hearing described in subparagraph (F) at the earliest possible time, and not later than 7 days after the order has issued, unless the party against whom the order is directed and others harmed by the order consent to another date for the hearing, except that a party against whom the order has issued or any person harmed by the order may move the court at any time to dissolve or modify the order after giving notice to the applicant who obtained the order; and

“(vi) require the person obtaining the order to provide the security determined adequate by the court for the payment of the damages that any person may be entitled to recover as a result of a wrongful or excessive seizure or wrongful or excessive attempted seizure under this paragraph.

“(C) PROTECTION FROM PUBLICITY.—The court shall take appropriate action to protect the person against whom an order under this paragraph is directed from publicity, by or at the

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behest of the person obtaining the order, about such order and any seizure under such order.

“(D) MATERIALS IN CUSTODY OF COURT.—

“(i) IN GENERAL.—Any materials seized under this paragraph shall be taken into the custody of the court. The court shall secure the seized material from physical and electronic access during the seizure and while in the custody of the court.

“(ii) STORAGE MEDIUM.—If the seized material includes a storage medium, or if the seized material is stored on a storage medium, the court shall prohibit the medium from being connected to a network or the Internet without the consent of both parties, until the hearing required under subparagraph (B)(v) and described in subparagraph (F).

“(iii) PROTECTION OF CONFIDENTIALITY.—The court shall take appropriate measures to protect the confidentiality of seized materials that are unrelated to the trade secret information ordered seized pursuant to this paragraph unless the person against whom the order is entered consents to disclosure of the material.

“(iv) APPOINTMENT OF SPECIAL MASTER.—The court may appoint a special master to locate and isolate all misappropriated trade secret information and to facilitate the return of unrelated property and data to the person from whom the property was seized. The special master appointed by the court shall agree to be bound by a nondisclosure agreement approved by the court.

“(E) SERVICE OF ORDER.—The court shall order that service of a copy of the order under this paragraph, and the submissions of the applicant to obtain the order, shall be made by a Federal law enforcement officer who, upon making service, shall carry out the seizure under the order. The court may allow State or local law enforcement officials to participate, but may not permit the applicant or any agent of the applicant to participate in the seizure. At the request of law enforcement officials, the court may allow a technical expert who is

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unaffiliated with the applicant and who is bound by a court- approved non-disclosure agreement to participate in the seizure if the court determines that the participation of the expert will aid the efficient execution of and minimize the burden of the seizure.

“(F) SEIZURE HEARING.—

“(i) DATE.—A court that issues a seizure order shall hold a hearing on the date set by the court under subparagraph (B)(v).

“(ii) BURDEN OF PROOF.—At a hearing held under this subparagraph, the party who obtained the order under subparagraph (A) shall have the burden to prove the facts supporting the findings of fact and conclusions of law necessary to support the order. If the party fails to meet that burden, the seizure order shall be dissolved or modified appropriately.

“(iii) DISSOLUTION OR MODIFICATION OF ORDER. —A party against whom the order has been issued or any person harmed by the order may move the court at any time to dissolve or modify the order after giving notice to the party who obtained the order.

“(iv) DISCOVERY TIME LIMITS.—The court may make such orders modifying the time limits for discovery under the Federal Rules of Civil Procedure as may be necessary to prevent the frustration of the purposes of a hearing under this subparagraph.

“(G) ACTION FOR DAMAGE CAUSED BY WRONGFUL SEIZURE.—A person who suffers damage by reason of a wrongful or excessive seizure under this paragraph has a cause of action against the applicant for the order under which such seizure was made, and shall be entitled to the same relief as is provided under section 34(d)(11) of the Trademark Act of 1946 (15 U.S.C. 1116(d)(11)). The security posted with the court under subparagraph (B)(vi) shall not limit the recovery of third parties for damages.

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“(H) MOTION FOR ENCRYPTION.—A party or a person who claims to have an interest in the subject matter seized may make a motion at any time, which may be heard ex parte, to encrypt any material seized or to be seized under this paragraph that is stored on a storage medium. The motion shall include, when possible, the desired encryption method.

“(3) REMEDIES.—In a civil action brought under this subsection with respect to the misappropriation of a trade secret, a court may—

“(A) grant an injunction—

“(i) to prevent any actual or threatened misappropriation described in paragraph (1) on such terms as the court deems reasonable, provided the order does not—

“(I) prevent a person from entering into an employment relationship, and that conditions placed on such employment shall be based on evidence of threatened misappropriation and not merely on the information the person knows; or

“(II) otherwise conflict with an applicable State law prohibiting restraints on the practice of a lawful profession, trade, or business;

“(ii) if determined appropriate by the court, requiring affirmative actions to be taken to protect the trade secret; and

“(iii) in exceptional circumstances that render an injunction inequitable, that conditions future use of the trade secret upon payment of a reasonable royalty for no longer than the period of time for which such use could have been prohibited;

“(B) award—

“(i) (I) damages for actual loss caused by the misappropriation of the trade secret; and

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“(II) damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss; or

“(ii) in lieu of damages measured by any other methods, the damages caused by the misappropriation measured by imposition of liability for a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret;

“(C) if the trade secret is willfully and maliciously misappropriated, award exemplary damages in an amount not more than 2 times the amount of the damages awarded under subparagraph (B); and

“(D) if a claim of the misappropriation is made in bad faith, which may be established by circumstantial evidence, a motion to terminate an injunction is made or opposed in bad faith, or the trade secret was willfully and maliciously misappropriated, award reasonable attorney’s fees to the prevailing party.

“(c) JURISDICTION.—The district courts of the United States shall have original jurisdiction of civil actions brought under this section.

“(d) PERIOD OF LIMITATIONS.—A civil action under subsection (b) may not be commenced later than 3 years after the date on which the misappropriation with respect to which the action would relate is discovered or by the exercise of reasonable diligence should have been discovered. For purposes of this subsection, a continuing misappropriation constitutes a single claim of misappropriation.”.

(b) DEFINITIONS.—Section 1839 of title 18, United States Code, is amended—

(1) in paragraph (3)—

(A) in subparagraph (B), by striking “the public” and inserting “another person who can obtain economic value from the disclosure or use of the information”; and

(B) by striking “and” at the end;

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(2) in paragraph (4), by striking the period at the end and inserting a semicolon; and

(3) by adding at the end the following:

“(5) the term ‘misappropriation’ means—

“(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

“(B) disclosure or use of a trade secret of another without express or implied consent by a person who—

“(i) used improper means to acquire knowledge of the trade secret;

“(ii) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was—

“(I) derived from or through a person who had used improper means to acquire the trade secret;

“(II) acquired under circumstances giving rise to a duty to maintain the secrecy of the trade secret or limit the use of the trade secret; or

“(III) derived from or through a person who owed a duty to the person seeking relief to maintain the secrecy of the trade secret or limit the use of the trade secret; or

“(iii) before a material change of the position of the person, knew or had reason to know that—

“(I) the trade secret was a trade secret; and

“(II) knowledge of the trade secret had been acquired by accident or mistake;

“(6) the term ‘improper means’—

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“(A) includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means; and

“(B) does not include reverse engineering, independent derivation, or any other lawful means of acquisition; and

“(7) the term ‘Trademark Act of 1946’ means the Act entitled ‘An Act to provide for the registration and protection of trademarks used in commerce, to carry out the provisions of certain international conventions, and for other purposes, approved July 5, 1946 (15 U.S.C. 1051 et seq.) (commonly referred to as the ‘Trademark Act of 1946’ or the ‘Lanham Act’)’.”.

(c) EXCEPTIONS TO PROHIBITION.—Section 1833 of title 18, United States Code, is amended, in the matter preceding paragraph (1), by inserting “or create a private right of action for” after “prohibit”.

(d) CONFORMING AMENDMENTS.—

(1) The section heading for section 1836 of title 18, United States Code, is amended to read as follows:

“§ 1836. Civil proceedings”.

(2) The table of sections for chapter 90 of title 18, United States Code, is amended by striking the item relating to section 1836 and inserting the following:

“1836. Civil proceedings.”.

(e) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to any misappropriation of a trade secret (as defined in section 1839 of title 18, United States Code, as amended by this section) for which any act occurs on or after the date of the enactment of this Act.

(f) RULE OF CONSTRUCTION.—Nothing in the amendments made by this section shall be construed to modify the rule of construction under section 1838 of title 18, United States Code, or to preempt any other provision of law.

(g) APPLICABILITY TO OTHER LAWS.—This section and the amendments made by this section shall not be construed to be a law

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pertaining to intellectual property for purposes of any other Act of Congress.

SEC. 3. TRADE SECRET THEFT ENFORCEMENT.

(a) IN GENERAL.—Chapter 90 of title 18, United States Code, is amended—

(1) in section 1832(b), by striking “$5,000,000” and inserting “the greater of $5,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided”; and

(2) in section 1835—

(A) by striking “In any prosecution” and inserting the following:

“(a) IN GENERAL.—In any prosecution”; and

(B) by adding at the end the following:

“(b) RIGHTS OF TRADE SECRET OWNERS.—The court may not authorize or direct the disclosure of any information the owner asserts to be a trade secret unless the court allows the owner the opportunity to file a submission under seal that describes the interest of the owner in keeping the information confidential. No submission under seal made under this subsection may be used in a prosecution under this chapter for any purpose other than those set forth in this section, or otherwise required by law. The provision of information relating to a trade secret to the United States or the court in connection with a prosecution under this chapter shall not constitute a waiver of trade secret protection, and the disclosure of information relating to a trade secret in connection with a prosecution under this chapter shall not constitute a waiver of trade secret protection unless the trade secret owner expressly consents to such waiver.”.

(b) RICO PREDICATE OFFENSES.—Section 1961(1) of title 18, United States Code, is amended by inserting “sections 1831 and 1832 (relating to economic espionage and theft of trade secrets),” before “section 1951”.

SEC. 4. REPORT ON THEFT OF TRADE SECRETS OCCURRING ABROAD.

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(a) DEFINITIONS.—In this section:

(1) DIRECTOR.—The term “Director” means the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.

(2) FOREIGN INSTRUMENTALITY, ETC.—The terms “foreign instrumentality”, “foreign agent”, and “trade secret” have the meanings given those terms in section 1839 of title 18, United States Code.

(3) STATE.—The term “State” includes the District of Columbia and any commonwealth, territory, or possession of the United States.

(4) UNITED STATES COMPANY.—The term “United States company” means an organization organized under the laws of the United States or a State or political subdivision thereof.

(b) REPORTS.—Not later than 1 year after the date of enactment of this Act, and biannually thereafter, the Attorney General, in consultation with the Intellectual Property Enforcement Coordinator, the Director, and the heads of other appropriate agencies, shall submit to the Committees on the Judiciary of the House of Representatives and the Senate, and make publicly available on the Web site of the Department of Justice and disseminate to the public through such other means as the Attorney General may identify, a report on the following:

(1) The scope and breadth of the theft of the trade secrets of United States companies occurring outside of the United States.

(2) The extent to which theft of trade secrets occurring outside of the United States is sponsored by foreign governments, foreign instrumentalities, or foreign agents.

(3) The threat posed by theft of trade secrets occurring outside of the United States.

(4) The ability and limitations of trade secret owners to prevent the misappropriation of trade secrets outside of the United States, to enforce any judgment against foreign entities for theft of trade secrets, and to prevent imports based on theft of trade secrets overseas.

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(5) A breakdown of the trade secret protections afforded United States companies by each country that is a trading partner of the United States and enforcement efforts available and undertaken in each such country, including a list identifying specific countries where trade secret theft, laws, or enforcement is a significant problem for United States companies.

(6) Instances of the Federal Government working with foreign countries to investigate, arrest, and prosecute entities and individuals involved in the theft of trade secrets outside of the United States.

(7) Specific progress made under trade agreements and treaties, including any new remedies enacted by foreign countries, to protect against theft of trade secrets of United States companies outside of the United States.

(8) Recommendations of legislative and executive branch actions that may be undertaken to—

(A) reduce the threat of and economic impact caused by the theft of the trade secrets of United States companies occurring outside of the United States;

(B) educate United States companies regarding the threats to their trade secrets when taken outside of the United States;

(C) provide assistance to United States companies to reduce the risk of loss of their trade secrets when taken outside of the United States; and

(D) provide a mechanism for United States companies to confidentially or anonymously report the theft of trade secrets occurring outside of the United States.

SEC. 5. SENSE OF CONGRESS.

It is the sense of Congress that—

(1) trade secret theft occurs in the United States and around the world;

(2) trade secret theft, wherever it occurs, harms the companies that own the trade secrets and the employees of the companies;

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(3) chapter 90 of title 18, United States Code (commonly known as the “Economic Espionage Act of 1996”), applies broadly to protect trade secrets from theft; and

(4) it is important when seizing information to balance the need to prevent or remedy misappropriation with the need to avoid interrupting the—

(A) business of third parties; and

(B) legitimate interests of the party accused of wrongdoing.

SEC. 6. BEST PRACTICES.

(a) IN GENERAL.—Not later than 2 years after the date of enactment of this Act, the Federal Judicial Center, using existing resources, shall develop recommended best practices for—

(1) the seizure of information and media storing the information; and

(2) the securing of the information and media once seized.

(b) UPDATES.—The Federal Judicial Center shall update the recommended best practices developed under subsection (a) from time to time.

(c) CONGRESSIONAL SUBMISSIONS.—The Federal Judicial Center shall provide a copy of the recommendations developed under subsection (a), and any updates made under subsection (b), to the—

(1) Committee on the Judiciary of the Senate; and

(2) Committee on the Judiciary of the House of Representatives.

SEC. 7. IMMUNITY FROM LIABILITY FOR CONFIDENTIAL DISCLOSURE OF A TRADE SECRET TO THE GOVERNMENT OR IN A COURT FILING.

(a) AMENDMENT.—Section 1833 of title 18, United States Code, is amended—

(1) by striking “This chapter” and inserting “(a) IN GENERAL. —This chapter”;

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(2) in subsection (a)(2), as designated by paragraph (1), by striking “the reporting of a suspected violation of law to any governmental entity of the United States, a State, or a political subdivision of a State, if such entity has lawful authority with respect to that violation” and inserting “the disclosure of a trade secret in accordance with subsection (b)”; and

(3) by adding at the end the following:

“(b) IMMUNITY FROM LIABILITY FOR CONFIDENTIAL DISCLOSURE OF A TRADE SECRET TO THE GOVERNMENT OR IN A COURT FILING.—

“(1) IMMUNITY.—An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—

“(A) is made—

“(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and

“(ii) solely for the purpose of reporting or investigating a suspected violation of law; or

“(B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

“(2) USE OF TRADE SECRET INFORMATION IN ANTI- RETALIATION LAWSUIT.—An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual—

“(A) files any document containing the trade secret under seal; and

“(B) does not disclose the trade secret, except pursuant to court order.

“(3) NOTICE.—

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“(A) IN GENERAL.—An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.

“(B) POLICY DOCUMENT.—An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.

“(C) NON-COMPLIANCE.—If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.

“(D) APPLICABILITY.—This paragraph shall apply to contracts and agreements that are entered into or updated after the date of enactment of this subsection.

“(4) EMPLOYEE DEFINED.—For purposes of this subsection, the term ‘employee’ includes any individual performing work as a contractor or consultant for an employer.

“(5) RULE OF CONSTRUCTION.—Except as expressly provided for under this subsection, nothing in this subsection shall be construed to authorize, or limit liability for, an act that is otherwise prohibited by law, such as the unlawful access of material by unauthorized means.”.

(b) TECHNICAL AND CONFORMING AMENDMENT.—Section 1838 of title 18, United States Code, is amended by striking “This chapter” and inserting “Except as provided in section 1833(b), this chapter”.

Passed the Senate April 4, 2016.

Attest: JULIE E. ADAMS, Secretary

https://www.congress.gov/114/bills/s1890/BILLS-114s1890rfh.xml 4/26/2016