MICHEL KECK v. MIX CREATIVE LEARNING CENTER, L.L.C.; JACQUELINE P. KENNEALLY; DOES 1 THROUGH 10 INCLUSIVE
No. 23-20188
United States Court of Appeals for the Fifth Circuit
September 18, 2024
Before JONES, SMITH, and HO, Circuit Judges.
EDITH H. JONES, Circuit Judge:
Defendant-Appellee Mix Creative Learning Center is an art studio that offers art lessons to children. In 2020, Mix Creative began selling “art kits” online so students could learn at home during the pandemic. One of these kits reproduced artworks from Plaintiff-Appellant Michel Keck‘s Dog Art series. Keck sued Mix Creative and its proprietor for copyright and trademark infringement and sought enhanced statutory damages for willful infringement. The district court found that the fair use defense to copyright infringement applied and granted summary judgment to Mix Creative on the copyright claim. It also granted summary judgment to Mix Creative on the trademark claim, although Mix Creative had not sought summary judgment on that claim. Following summary judgment, the district court awarded fees and costs to Mix Creative under
We conclude that (i) the fair use defense to copyright infringement applies since Mix Creative‘s use was transformative and unlikely to cause harm to markets for Keck‘s copyrighted works; (ii) any error in the district court‘s sua sponte grant of summary judgment on the trademark claim was harmless; and (iii) the district court did not abuse its discretion in either fee ruling. The district court‘s judgment is AFFIRMED.
I. BACKGROUND
Michel Keck is a multi-media artist who has registered the works from her Dog Art series with the United States Copyright Office. She has also registered her name, “Michel Keck,” with the United States Patent and Trademark Office.
Defendant Jacqueline Kenneally is the sole proprietor of Mix Creative Learning Center. Mix Creative is an art studio in Houston, Texas, that has offered children‘s art lessons since 2005. In 2020, Mix Creative
When Defendants were notified of Keck‘s lawsuit, they immediately stopped selling the Keck-inspired kits and removed the category of art kits from Mix Creative‘s website.
Keck‘s complaint asserted copyright and trademark claims and sought enhanced statutory damages for willful infringement. After discovery, the parties filed cross-motions for summary judgment, neither of which briefed the trademark claims. At a hearing on the motions, the district court granted summary judgment to Defendants on the issue of enhanced damages, finding no evidence of willful infringement, but also granted summary judgment to Keck on all affirmative defenses apart from fair use and innocent infringement. In a written order that followed, the district court granted summary judgment to Defendants on copyright fair use as well as trademark fair use. Although neither party‘s motion had addressed the trademark claim, the court stated its understanding that, during the motion hearing, both рarties “expressed that their arguments [on the copyright claims] also appl[ied] to Plaintiff‘s trademark claims.”
After prevailing on summary judgment, Defendants moved for fees and costs under
On appeal, Keck contends that the district court erred by granting summary judgment to Defendants on copyright fair use and by granting summary judgment sua sponte without prior notice on her trademark claim. She also challenges the fee award to Defendants. Defendants cross-appeal, arguing that the district court erred by refusing to hold Keck‘s attorneys jointly and severally liability for fees and costs.
II. DISCUSSION
We address copyright fair use before turning to the trademark claim and fee award.
A. Copyright Fair Use
The district court granted summary judgment in favor of Defendants based on the affirmative defense of copyright fair use. Summary judgment rulings are reviewed de novo by this court. Baker v. Am. Airlines, Inc., 430 F.3d 750, 753 (5th Cir. 2005). Keck argues that the district court erred in weighing the fair use factors, particularly the first and fourth. We disagree.
The fair use doctrine is an “equitable rule of reason which permits courts to avoid rigid application of thе copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.” Stewart v. Abend, 495 U.S. 207, 236 (1990) (citations and internal quotation marks omitted). It is codified as an affirmative defense to copyright infringement at
- (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
- (2) the nature of the copyrighted work;
- (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
- (4) the effect of the use upon the potential market for or value of the copyrighted work.
The district court found that the first and fourth factors favored Defendants, whereas the second and third factors favored Keck.1 As the parties do, we focus our discussion on the first and fourth factors.
1.
The “central question” of the first factor, the “purpose and character of the use,” is “whether the new work merely supersede[s] the objects of the original creation . . . (supplanting the original), or instead adds something new, with a further purpose or different character.” Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508, 527-528 (2023) (internal quotation marks omitted) (quoting Campbell, 510 U.S. at 579). This factоr “relates to the problem of substitution—copyright‘s bête noire.” Id. at 528. A use that has a purpose or character similar to that of the original copyrighted work is more likely to serve as a substitute for the original; the same is not true of a use that has a further purpose or different character. Id.
“A use that has a further purpose or different character is said to be
An “additional ‘element of the first factor‘” is whether the use is commercial or nonprofit in nature. Id. at 531 (quoting Campbell, 510 U.S. at 584). Although the commercial nature of a use disfavors finding for defendants on the first factor, it is “not dispositive.” Id. Instead, “it is to be weighed against the degree to which the use has a further purpose or different character.” Id. The “justification for the use” is also a relevant consideration. Id. “In a broad sense, a use that has a distinct purpose is justified because it furthers the goal of copyright, namely, to promote the progress of science and the arts, without diminishing the incentive to create.” Id. A use may also be justified in a “narrower sense,” when “copying is reasonably necessary to achieve the user‘s new purpose,” as with a parody of an original work. Id. at 532.
The district court correctly found that the first factor weighed in Defendants’ favor. Although Mix Creative is a commercial enterprise, its use of Keck‘s copyrighted works was transformative, as the art kits had an educational purpose that wаs significantly different from the original, decorative purpose of Keck‘s dog-themed artworks. Along with printed images of the artworks, the kits included lesson plans, PowerPoint slides with Keck‘s biographical information, and materials for students to create their own art, inspired by Keck‘s. As the district court observed, Mix Creative “drew on Plaintiff‘s art not for its inherent expressive value but for what it, accompanied by materials and instruction in art theory and history, could teach students.” Mix Creative is, after all, a learning center, not a gallery or print shop. Moreover, because Mix Creative‘s art kits were designed and sold to inspire students to create their own art, its use of Keck‘s artwork was also “justified” in the broad sense mentioned above. See id.
Keck argues that the Supreme Court‘s recent decision in Andy Warhol Foundation v. Goldsmith shows that Mix Creative‘s use was in fact not transformative. We disagree. In Warhol, photographer Lynn Goldsmith took a black and white portrait photograрh of Prince in 1981 for Newsweek magazine, which she registered with the Copyright Office and subsequently licensed to other magazines. She alleged that the Andy Warhol Foundation infringed her copyright in 2016 by licensing Andy Warhol‘s silkscreen adaptation of her photograph (titled “Orange Prince“) to Condé Nast for a special edition magazine following Prince‘s death. Id. at 516-19. As Keck notes, the Warhol Court focused on the Foundation‘s “specific
In arguing otherwise, Keck attempts to frame the specific use by Mix Creative as “the online, e-commerce sales of Kеck‘s entire works.” This framing oversimplifies Warhol‘s inquiry into objectives and fails to distinguish the commercial-nature inquiry from the more nuanced inquiry into whether a secondary use has a further purpose or different character. Keck also contends that the district court‘s interpretation of the purpose of the art kits as educational was subjective rather than objective. See id. at 544 (stating that “the subjective intent of the user (or the subjective interpretаtion of a court) [does not] determine the purpose of the use“). But there is no issue of subjective interpretation here. Purely objective considerations of Mix Creative‘s business model and the materials in the art kits are enough to discern their distinct, educational purpose.
The first factor favors Defendants.
2.
The fourth factor considers “the effect of the use upon the potential market for or value of the copyrighted work.”
As the district court correctly found, the fourth factor favors Defendants. We share the district court‘s difficulty in imagining “how the usе of Plaintiff‘s art for children‘s art lessons devalues her pieces’ market worth. The widespread use of Plaintiff‘s art for educational lessons would likely, if anything, increase her name recognition and commercial value.” This court came to a similar conclusion in Bell v. Eagle Mountain, 27 F.4th at 325 (“If anything, the properly attributed quotation of a short passage from Winning Isn‘t Normal might bolster interest in the book; it is free advertising.“). The transformative nature of Mix Creative‘s use also supports a conclusion against market harm. As the Warhol Court observed, “A secondary use that is more different in purpose and character is less likely to usurp demand for the original work or its derivatives.” 598 U.S. at 536 n.12; see also Campbell, 510 U.S. at 591 (“[W]hen . . . the second use is transformative, market substitution is at least less certain, and market harm may not be so readily inferred.“).
Keck contends that Defendants failed to adduce sufficient evidence about relevant markets to satisfy their burden of proof on this factor. This is incorrect. Kenneally‘s sworn declaration attests that Defendants are “not in the business of selling art works or reproductions of art by well-known artists” and that Mix Creative uses artists’ works for educational purposes only. This evidence simply confirms what is obvious from Defendants’ business model, that Mix Creative does not participate in the same markets as Keck.
Keck also argues that she presented evidence of hаrm to markets for derivatives of her works, but the proffered evidence is nothing more than “Defendants’ own sales for derivative uses of Keck‘s artwork.” This court has written that “we cannot recognize a ‘theoretical market for licensing the very use at bar.‘” Bell, 27 F.4th at 325 (quoting Swatch Group Mgmt. Services Ltd. v. Bloomberg L.P., 756 F.3d 73, 91 (2d Cir. 2014)). We instead consider whether there is a “‘traditional, reasonable, or likely to be developed market[]’ for licensing the kind of use at issue.” Id. (internal citation omitted). Keck offerеd no evidence that such a market exists or could reasonably be expected to develop. As Defendants put it, “There is no evidence in the record that Ms. Keck has any licensees for her artwork at issue for purposes of providing interactive ‘teaching tool’ products for art lessons to children, or any similar products . . . .” This court found a similar argument persuasive in Bell. Id. (“Bell is unable to allege that anyone has ever purchased a license before posting the WIN Passage on social media . . . .“).
Finally, Keck contends that the district court failed to consider whether hypothetical “widespread use of the work in the same infringing fashion” as that of Mix Creative would harm the relevant markets. This argument fails, too. Widespread use cannot have an impact on markets that do not exist and are unlikely to be developed, as is the case with derivativе “teaching tool” products here, for the reasons just stated. Keck‘s further contention that Mix Creative‘s use, if widespread, would harm the market for reproductions of her artwork defies common sense. Kenneally, through Mix Creative, allegedly infringed Keck‘s copyrights by simply copying online images of Keck‘s artworks and printing them on paper for inclusion in the kits. It is implausible that printing publicly available images in this manner would negatively impact the market for professional reproductions of an artist‘s work.
The fourth factor favors Defendants. Accordingly, because the two most important statutory factors governing fair use favor Defendants, the district court correctly rejected Keck‘s copyright claim.
B. Trademark Claim
Neither party briefed the trademark claim below, but the district court sua sponte granted summary judgment to Defendants after it evidently concluded from an exchange during the motion hearing that the parties agreed that their arguments on copyright fair use applied to the trademark claim as well. Although trademark and copyright claims are governed by different standards,2 Keck did not emphasize this in the district court but rather conceded that the trademark and copyright claims were interchangeable.
“While district courts may grant summary judgment sua sponte they must first give the parties ‘notice and a reasonable time to respond.‘” D‘Onofrio v. Vacation Publications, Inc., 888 F.3d 197, 210 (5th Cir. 2018) (first citing Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 28 F.3d 1388, 1397 (5th Cir. 1994), then quoting
At thе summary judgment hearing on the parties’ cross-motions, the district court asked counsel for each side about the trademark claim. Counsel for Defendants responded that he had “presume[d]” that the trademark and copyright claims were one and the same because, in his understanding, the trademark was “embedded” in the copyrighted art. The court asked counsel for Keck, “Is that how you see it?” to which counsel responded, “Yes your hоnor.” Keck‘s counsel then confirmed that the court did not “need to deal with something for the trademark.”
The above exchange amounts to a concession by Keck that the trademark and copyright claims were interchangeable. Counsel may not now, on appeal, abandon that concession on which the district court relied. Cf. Smith v. United States, 328 F.3d 760, 770 (5th Cir. 2003) (“A party‘s concession of an issue means the issue is waived and may not be revived.“). Given the concession, moreover, we conclude that any failure by the district court to expressly notify Keck that it would rule on the trademark claim in its forthcoming order was harmless. This is essentially identical to one of the situations in which this court has found harmless error in the past, i.e., when “the nonmoving party admits that he has no additional evidence anyway.” See Leatherman, 28 F.3d at 1398.
C. Fees
Finally, the district court awarded $102,404 in fees to Defendants under
This court reviews fee awards under the deferential abuse of discretion standard. Virgin Records Am., Inc. v. Thompson, 512 F.3d 724, 725 (5th Cir. 2008). “A trial court abuses its discretion in awarding or refusing to award attorney‘s fees when its ruling is based on an erroneous view of the law or a clearly erroneous assessment of the evidence.” Id. (citation omitted).
Although this issue is closer, neither did the district court abuse its discretion by refusing to hold Higbee & Associates jointly and severally liable for the fee award under
III. CONCLUSION
The judgment of the district court is AFFIRMED.