AMY LEE SULLIVAN, d/b/а DESIGN KIT, Plaintiff-Appellee, Cross-Appellant, v. FLORA, INC., Defendant-Appellant, Cross-Appellee.
Nos. 17-2241 & 18-2534
United States Court of Appeals For the Seventh Circuit
Argued February 8, 2019 — Decided August 21, 2019
Before FLAUM, BARRETT, and SCUDDER, Circuit Judges.
Appeals from the United States District Court for the Western District of Wisconsin. No. 3:15-cv-298 — William M. Conley, Judge.
SCUDDER,
Amy Sullivan, a graphic design artist, produced a series of 33 illustrations for Flora, Inc., an herbal supplement company, to use in two advertising campaigns. Upon noticing that Flora was using the illustrations in other ads, Sullivan brought suit for copyright infringement and opted to pursue statutory damages. She did so to maximize her potential payout by classifying each of her 33 illustrations as “one work” within the meaning of
On appeal Flora challenges the district court‘s ruling on statutory damages and separate rulings on two additional defenses to liability asserted at trial. While procedural shortcomings defeat these latter two challenges, Flora is right that the district court committed error in permitting separate awards of statutory damages unaccompanied by any finding that each or any of the 33 illustrations constituted “one work” within the meaning and protection of
I
Flora, Inc. manufactures herbal supplement and health products. In 2013, looking to produce advertisements for two new products, “7-Sources” and “Flor-Essence,” the company contacted freelance production specialist Joseph Silver to develop two animated videos. Unbeknownst to Flora, Silver then contacted Amy Sullivan, a Wisconsin-based graphic design artist, to develop illustrations that would then be animated for use in the advertisements. In Sullivan‘s written agreement with Silver, she granted Flora exclusive rights to her illustrations in the two specified advertising campaigns.
Over the following months, Silver and Sullivan corresponded to develop the illustrations. Silver made suggestions on color, style, and text, while also offering rough outlines and sketches to guide Sullivan‘s work. For her part, Sullivan used digital design software to create the ultimate illustrations, sometimes incorporating Silver‘s suggestions and other times not. Flora used Sullivan‘s illustrations in its final advertisements for the two product lines.
At some point in the summer or fall of 2013, Sullivan noticed that Flora was using her illustrations to promote other product lines. Exactly when the unauthorized use occurred is unclеar. What the record shows for certain is that, on October 16, 2013, Sullivan sent Flora a letter complaining of copyright infringement. At that
When settlement negotiations failed, Sullivan sued Flora for copyright infringement in the Western District of Wisconsin. The Copyright Act allows a plaintiff to choose to recover either statutory damages or actual damages. See
Flora contended that Sullivan‘s 33 illustrations fell into one of two compilations (corresponding with the company‘s two advertising campaigns in which the illustrations appeared and also aligning with the two copyright registrations) and thus
The district court addressed the issue pretrial. It did so by focusing on Sullivan‘s copyright applications. The certificates from the U.S. Copyright Office showed that Sullivan had registered each of the 33 illustrations in two applications, with the illustrations grouped to correspond with Flora‘s two advertised product lines. The Copyright Act and its implementing regulations allow the registration of multiple works this way. See
Trial proceeded in three phases. In phase one, the court tasked the jury with determining whether Sullivan was the sole author of the copyrighted works, or instead whether Silver was a joint author capable of granting his own rights to Flora. In phase two, the jury considered
The jury ruled in Sullivan‘s favor at each phase. In phases one and two, the jury determined that Flora hаd copied and used Sullivan‘s illustrations willfully and without authorization and furthermore that the works were not joint works but instead belonged to Sullivan alone. At phase three, the jury awarded $3,600,000 in statutory damages, finding that Flora willfully infringed on each of Sullivan‘s 33 individual illustrations. The jury also found $143,500 in actual damages, which Sullivan declined in favor of the larger statutory award.
II
Flora‘s main contention on appeal is that the district court committed legal error in determining that Sullivan could collect statutory damages for infringement on each of the 33 illustrations as separate works. Sullivan urges us to avoid the issue on the basis that Flora waived any challenge to the damages award by not expressly objecting to the district court‘s jury instruction. We cannot аgree. While Flora could have objected, the fairest reading of the record is that the company—throughout the litigation—had made its position on statutory damages abundantly clear, including by briefing the issue during the pretrial proceeding that resulted in the district court‘s determinative ruling. The law required no more in this circumstance. See Dresser Industries, Inc., Waukesha Engine Div. v. Gradall Co., 965 F.2d 1442, 1450 (7th Cir. 1992) (explaining that the failure to object to a jury instruction embodying a legal determination “may be disregarded if the party‘s position had previously been clearly made to the court and it is plain that a further objection would be unavailing“). So we proceed to the merits.
A
The scope of statutory damages available to Sullivan turns on
[T]hе copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.
By its terms,
In copyright law, a “work“—as its name implies—reflects an original expression, whether in the form of art, literature, music, or another tangible medium of expression,
The district court began and ended its analysis of the statutory damages question with this same observation. It put its ruling on the scope of statutory damages this way:
Based on the undisputed fact that plaintiff registered her two illustration collections as a collective or group work under
17 U.S.C. § 408(c)(1) and37 C.F.R. § 202.3(b)(4)(i) , and that that identification appears appropriate—or, at least, defendant [Flora] has failed to explain why the copyrighted works do not appropriately fall within that designation—the court conclude[s] that the copyrighted works are collective works, in which contributions, constituting separate and individual works in themselves, are assembled into a collective whole.
(Dkt. 240 at 1) (emphasis in the original). The court reinforced its ruling when instructing the jury on the scope of statutory damages it could award Sullivan upon findings of infringement by Flora, explaining that “for purposes of considering a statutory damages award, you may consider each illustration in the 7 Sources illustration collection and the Flor-Essence illustration collection as an independent, copyrighted work.”
The district court drifted off course in seeing the 33 illustrations as “collective works” without first asking, as
The knot untangles by returning to the language of
Identifying the right question is easier than knowing the right answer, though. And this is where we benefit from not being the first court to consider the scope of statutory damages available under
B
Other circuits seem to follow one of two approaches in answering the question presented, though the dividing lines are far from absolute. Start with the Second Circuit and its decision in Bryant v. Media Right Prods., Inc., 603 F.3d 135 (2d Cir. 2010). The case entailed allegations of infringement on two copyrighted music albums, each with ten songs, and the parties disputing whether statutory damages should be measured on a per-album or per-song basis. The court observed that each song had separate copyright protection and, in addition to being sold as part of an album, could be purchased individually through retailers like iTunes. See id. at 138. Even when bought individually, however, the songs remained part of and indeed were produced and marketed as an album. That fact resolved the statutory damages question because, as the court saw it, “[a]n album falls within the Act‘s expansive definition of compilation.” Id. at 140. “Based on a plain reading of the statute,” the reasoning followed, “infringement of an album should result in only one statutory damage award.” Id. at 141. More to it, the court emphasized, the “[Copyright] Act [in
In so holding, the Second Circuit distinguished its prior decision in Twin Peaks Productions v. Publications International, where the court held that eight distinct statutory damages awards were available for infringement on the copyrighted scripts of eight tеlevision episodes that the defendant later combined into a single book. 996 F.2d 1366, 1381 (2d Cir. 1993). Separate awards of statutory damages were appropriate in Twin Peaks, the Bryant court subsequently explained, because “the plaintiff had issued the works separately, as independent television episodes,” and it was “the defendant [who] printed eight teleplays from the series in one book.” 603 F.3d at 141. Even though each episode of Twin Peaks contributed to the drama‘s broader plot, which unfolded over the course of a season, the fact remained that the episodes aired at separate times and, in this way, stood on their own enough to avoid being grouped with the other episodes and thus considered a compilation within the meaning of the Copyright Act. The upshot, then, was that the plaintiff in Twin Peaks was entitled to eight separate statutory damage awards for each infringed episode. See Twin Peaks, 996 F.2d at 1381; see also WB Music Corp. v. RTC Communication Grp., Inc., 445 F.3d 538, 540–41 (2d Cir. 2006) (following the same approach and reversing the district court‘s limitation of а plaintiff‘s statutory damages on a per-album basis).
The Second Circuit‘s approach—embodied, as we see it, in its most recent decision in Bryant—gives controlling weight to the last sentence of
Recognizing this limitation, most other circuits have interpreted
The First Circuit explained that such a substantive economic inquiry better reflected the value of each episode and gave effect to not only the language Congress used in
The Ninth, Eleventh, and D.C. Circuits follow the First Circuit‘s approach. See, e.g., VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 747 (9th Cir. 2019) (adhering to its discussion in Columbia Pictures Television, Inc. v. Krypton Bd. of Birmingham, Inc., 259 F.3d 1186 (9th Cir. 2001) and explaining that “the question of whether something—like a photo, television episode, or so forth—has ‘independent economic valuе’ informs our analysis of whether the photo or episode is a work” within the meaning of
The Fourth Circuit is the only other circuit to have considered the question presented. Its answer came with mixed signals, following the Second Circuit‘s approach in Bryant but suggesting different facts may fit with a different construction of
C
The question at the heart of the Second Circuit‘s more limited approach in Bryant—which focuses on whether the copyright holder marketed and distributed the multiple protected works as individual works or as a compendium of works (like, for example, an album)—is certainly relevant to the inquiry we believe Congress has required in
The inquiry and fact finding demanded by
Our analysis must end here, though, as the record as it presently stands does not allow us to resolve as a factual matter whether all or part of Sullivan‘s 33 illustrations are separate works with distinct and discernable value or part of two broader compilations. The district court did not ask (or put to the jury) the questions we see as necessary for resolving the statutory damages question. See VHT, Inc., 918 F.3d at 748 (remanding on similar reasoning for additional fact finding).
This error requires us to vacate the judgment in Sullivan‘s favor. Our doing so in no way calls the jury‘s findings of infringement into question. On remand the district court will have ample flexibility to structure the proceedings to enable the requisite findings pertinent to statutory damages.
III
Invoking an altogether different provision of the Copyright Act, Flora advances a separate and independent challenge to the jury‘s statutory damages award based on the timing of the company‘s infringement on Sullivan‘s copyrighted works. The district court determined that Flora waived this challenge by raising it much too late at trial. We agree.
Neither the district court nor jury ever considered the timing bar imposed by
The district judge reacted to Flora‘s raising this
As the district court saw it, then, Flora waited to pursue and raise its newfound
We see no error in the district court‘s conclusion, in no small part because
It is hard to see what happened here any other way than the district judge put it: for whatever reason, strategic or inadvertent, Flora waited to raise its timing-of-infringement defense until the jury had already found infringement, leaving the trial record altogether missing evidence on precisely when the infringement began—the lynchpin inquiry under
IV
Flora‘s final effort on appeal to avoid liability comes in its contention that the district court erred in not setting aside
Joint authorship is a defense to copyright infringement. See Janky v. Lake County Convention and Visitors Bureau, 576 F.3d 356, 361 (7th Cir. 2009). The defense, as its name implies, turns on whether two or more authors jointly created the work in question. If so, they hold undivided interests in the work and the underlying rights are shared and not exclusive to one or the other authors. See
Throughout the pretrial proceedings, Flora sought to show that Joseph Silver‘s contributions to Sullivan‘s illustrations resulted in joint authorship, which in turn would have allowed Silver to authorize Flora‘s use of the illustrations, eliminating the basis for infringement. A copyright owner cannot infringe its own work. Flora continued to advance the joint authorship defense at trial, moving, for example, on day two for judgment as a matter of law on the issue. See
But Flora nеver renewed its challenge at any point after the jury returned its verdict in Sullivan‘s favor. And therein lies the problem. Flora insists on appeal that the district court erred in not keeping the joint authorship question from the jury and failing to grant its Rule 50(a) motion on the issue. Yet this contention runs headlong into the well-settled precept that “a court of appeals may not award judgment due to insufficiency of the evidence where no Rule 50(b) motion was filed after the verdict.” Fuesting v. Zimmer, Inc., 448 F.3d 936, 938 (7th Cir. 2006); see also Lexington Ins. Co. v. Horace Mann Ins. Co., 861 F.3d 661, 669 (7th Cir. 2017) (making clear that for a party to seek judgment on appeal, “the requesting party must not only have filed a motion under Rule 50(a), but must also have renewed that motion under Rule 50(b)“).
The demands of Rule 50(b) serve a sound purpose. As the Supreme Court has emphasized, the “determination of whether a new trial should be granted or a judgment entered under Rule 50(b) calls for the judgment in the first instance of the judge who saw and heard the witnesses and has the feel of the case which no appellate printed transcript can impart.” Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 401 (2006). This explains why our caselaw is unyielding in requiring a party who believes a jury‘s verdict lacks a sufficient evidentiary basis to raise that challenge in the district court. It is not enough to rest on having made a pre-verdict sufficiency-of-evidence challenge under Rule 50(a).
To excuse its failure to move under Rule 50(b) following the jury‘s adverse verdict, Flora argues that we have discretion on appeal to consider pure questions of law. But the question of jоint authorship is not a pure question of law: answering whether two or more individuals or entities contributed enough to a work to result in joint authorship requires consideration of
Even if Flora had not waived its joint authorship challenge, we would be quick to conclude that the jury reasonably found Sullivan was the sole author of the 33 illustrations in question. The jury received evidence of the contributions of both Silver and Sullivan and viewed both of the copyright registrations submitted solely in Sullivan‘s name. The district court also properly instructed the jury that “[a] ‘joint work’ is a work that two or more persons prepared with the intention that their contributions be merged into inseparable elements of a single work.” This instruction mirrored the Copyright Act‘s definition of a “joint work.” See
Asked whether a preponderance of the evidence demonstrated that the copyrighted illustrations were joint works, the jury answered in the negative, finding that Sullivan was the sole author. We cannot say this was an unreasonable result in light of the evidence presented. See Collins v. Kibort, 143 F.3d 331, 335 (7th Cir. 1998) (explaining that we will “overturn a jury verdict for the plaintiff only if we conclude that no rational jury could have found for the plaintiff“).
V
We conclude with a brief word in response to Sullivan‘s cross appeal challenging the district court‘s refusal to award attorneys’ fees. Our review is limited to whether the district court‘s ruling reflected an abuse of discretion. See Gastineau v. Wright, 592 F.3d 747, 748 (7th Cir. 2010).
The Copyright Act affords a district court discretion in awarding attorneys’ fees to the prevailing party in an infringement case. See
In denying Sullivan‘s fee application, the district court reasoned well within the discretion afforded by Congress. Considering the factors outlined in Fogerty, the court saw the case as close on the merits and hard fought by the parties. From there the district court underscored that Sullivan had won a substantial verdict that would be costly for Flora to satisfy and that, when balancing the totality of what occurred in the litigation, an additional award of fees was neither required nor appropriate, especially in light of the reasonableness of the joint authorship defense Flora pressed at trial. Or, in the district court‘s own words, “no further compensation or deterrence in the form of an attorneys’
* * *
For these reasons, we AFFIRM in part and otherwise VACATE the judgment in Sullivan‘s favor and REMAND to the district court for further proceedings consistent with this opinion.