In a recent copyright infringement case about making and distributing copies of a painting, the Seventh Circuit Court of Appeals in Ali v. Final Call, Inc. (7th Cir., Aug. 10, 2016, No. 15-2963) held that the district court misstated the elements of a prima facie copyright infringement claim and erroneously shifted to plaintiff the burden of proving that copies made and distributed by the defendant were unauthorized. The opinion identifies some important pitfalls for copyright litigators, and offers some preventative guidance for those who make copies of or distribute the creative works of others. [See THE TAKE-AWAYS below.]
Here are the basic facts:
Plaintiff Ali is an artist. In 1983, Ali painted a portrait of Minister Louis Farrakhan (“Minister Farrakhan painting”), for which Farrakhan paid Ali $5,000. Ali registered his copyright in the painting in 1997. Defendant The Final Call (a newspaper for the Nation of Islam) sells various posters and prints. The Final Call sold lithographs titled Allah’s Star of Guidance that featured a reproduction of Ali’s Minister Farrakhan painting.
Ali sued The Final Call for copyright infringement, alleging he never authorized The Final Call to create or distribute the Star of Guidance prints or lithographs. The Final Call argued that Ali’s commission with Louis Farrakhan included permission to make copies, which in turn, authorized creation and distribution of the Star of Guidance lithographs.
The parties waived a jury, and the case was tried to the court. The district court identified the key issue as “whether in agreeing to the commission with Minister Farrakhan back in 1983, Ali agreed to give the right to create and distribute the Star of Guidance prints.” It found that Ali had authorized the creation and distribution of the Star of Guidance prints/lithographs, based primarily on a letter Ali had sent in 2008 that said, in part, “The commission awarded by the minister for his oil and litho entitled The Star of Guidance…” Noted the district court, “That very plainly says in Mr. Ali’s own letter that the commission with Minister Farrakhan included lithographs and prints.” Ali tried to explain that the letter was taken out of context, but the court discounted his explanations.
On appeal, Ali argued that the district court had misstated the elements of a prima facie copyright infringement claim and erroneously shifted to him the burden of proving that the copies were unauthorized. The Seventh Circuit agreed, and reversed the district court’s judgment.
In summary, the Seventh Circuit Court of Appeal reasoned as follows:
To establish a prima facie case of copyright infringement, Ali only had to prove two things: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. The district court, however, also required Ali to prove that the copying was unauthorized. That was error, because the defendant (The Final Call) has the burden of proving affirmative defenses like authorization (e.g., license). Therefore, unless The Final Call could prove an affirmative defense (e.g., authorization to make and distribute copies), it was liable for copyright infringement.
[For more on establishing a prima facie case and burdens of proof, see Allocation of the Burdens of Proof – Burden of Producing Evidence.]
The Final Call did assert affirmative defenses of implied license (authorization) and laches [albeit late, as discussed in THE TAKE-AWAYS below]. However, believing that it was plaintiff’s burden to show that the copies were unauthorized, The Final Call decided to withdraw its affirmative defenses at the pretrial conference. Because defenses had been waived, the Seventh Circuit held the district court had improperly relied on a waived implied license defense and an unasserted first-sale defense when the district court ruled in favor of The Final Call at trial.
Even if the defenses could properly be considered, the Seventh Circuit found that The Final Call failed to carry the burden of proving the elements of either defense at trial.
An implied license defense requires the defendant to prove that: (1) a person (the licensee) requested the creation of a work, (2) the creator (the licensor) made that particular work and delivered it to the licensee who requested it, and (3) the licensor intended that the licensee-requestor copy and distribute his work. The Final Call did not prove an implied license because (1) Farrakhan commissioned the portrait, not The Final Call, (2) Ali made the work Farrakhan requested and delivered it to Farrakhan, not The Final Call, and (3) no evidence showed that Ali intended for The Final Call to copy and distribute his work. And even assuming Farrakhan may have had an implied license, no evidence showed that Farrakhan ever attempted to transfer a license to The Final Call.
Under the first sale doctrine, “once a given copy has been sold, its owner may do with it as he pleases (provided that he does not create another copy or a derivative work).” The Final Call’s evidence, however, failed to prove that the lithographs at issue were from a batch of authorized copies.
While there are many sub-issues throughout the Seventh Circuit’s opinion, here are some important take-aways from Ali v. Final Call, Inc.:
As the first take-away, the burdens should now be clear:
To establish a prima facie case of copyright infringement, the plaintiff must prove two things: (1) ownership of a valid copyright (registered) in the work, and (2) copying of constituent elements of the work that are original.
If the plaintiff presents a prima facie case, the defendant has the burden to prove the elements of its affirmative defenses, such as the first sale doctrine, or authorization to make or sell another’s work, whether by express or implied license (or otherwise).
Another take-away concerns jury instructions. While this was a court trial and didn’t involve a jury, lawyers and judges sometimes consult jury instructions as fairly solid statements of current law. Interestingly here, the Seventh Circuit traced the district court’s error, in part, to the Seventh Circuit’s pattern jury instructions. Instruction No. 12.2.1 states:
To succeed on his claim, Plaintiff must prove the following things:
1. [Describe the work] is the subject of a valid copyright;
2. Plaintiff owns the copyright; and
3. Defendant copied protected expression in Plaintiff’s copyrighted work.
I will explain what these terms mean…
Instruction No. 12.5.1 COPYING, appears to explain what “copied protected expression” means, and includes this bracketed language:
[In determining whether Plaintiff has proved copying, you may consider evidence that … Defendant had authority from Plaintiff to copy Plaintiff’s work.]
That bracketed language in Instruction No. 12.5.1 COPYING created confusion for the district court as to whether plaintiff Ali had to disprove authorization as part of his burden of proving there was “copying,” or whether authorization was solely an affirmative defense that The Final Call had the burden of proving.
[It is worth noting that the comments for use of Instruction No. 12.5.1 COPYING state, “This instruction should be used only when the plaintiff seeks to prove copying inferentially. If the plaintiff offers only direct evidence of copying, then this instruction is unnecessary.” Here, Ali and The Final Call had stipulated that the “Star of Guidance” contained the protected expression from the “Minister Farrakhan painting.” In other words, Ali was not seeking to prove copying by inference.]
Nevertheless, the Ali v. Final Call opinion should prompt an evaluation of pattern jury instructions for copyright cases in all of the federal circuits. For instance, one conceivably could make the same mistake based on certain portions of the Ninth Circuit’s Jury Instructions. Instruction No. 17.0 includes “without authority” within its statement on LIABILITY FOR INFRINGEMENT, as follows:
One who [reproduces] [distributes] [performs] [displays] [uses] [prepares derivative works from] a copyrighted work without authority from the copyright owner during the term of the copyright infringes the copyright.
Similarly, in Instruction 17.4 COPYRIGHT INFRINGEMENT—ELEMENTS—OWNERSHIP AND COPYING, the first sentence references “without the owner’s permission”:
Anyone who copies original elements of a copyrighted work during the term of the copyright without the owner’s permission infringes the copyright.
The Ninth Circuit jury instructions, however, do have separate and distinct instructions for the defenses of implied license [No. 17.24 COPYRIGHT—AFFIRMATIVE DEFENSE – IMPLIED LICENSE] and the first sale doctrine [No. 17.25 COPYRIGHT—AFFIRMATIVE DEFENSE—FIRST SALE], which should make it clear that those are affirmative defenses that the defendant has the burden of proving.
Other take-aways from this case concern the importance of the pretrial conference and pretrial order.
As explained in DeliverMed Holdings, LLC v. Schaltenbrand (7th Cir. 2013) 734 F.3d 616, 628, the parties rely on the pretrial conference to inform them precisely what is in controversy, the pretrial order is treated as superseding the pleadings and establishes the issues to be considered at trial. In order to preserve the pretrial order’s usefulness in focusing the parties’ efforts, a claim or theory not raised in the pretrial order should not be considered by the fact-finder (i.e., the judge in a bench trial or the jury in a jury trial).
The U.S. Supreme Court also has emphasized the importance of the pretrial order. As stated in Rockwell Intern. Corp. v. U.S. (2007) 549 U.S. 457, 474, “[C]laims, issues, defenses, or theories of damages not included in the pretrial order are waived even if they appeared in the complaint and, conversely, the inclusion of a claim in the pretrial order is deemed to amend any previous pleadings which did not include that claim.” Thus, even an entirely new claim or defense in a pretrial order will be deemed to amend the previous pleadings to state the new claim or defense.
Here, The Final Call did not assert any affirmative defenses in response to the original Complaint or the First Amended Complaint. And when plaintiff Ali filed a Second Amended Complaint, The Final Call did not file an answer asserting the defenses of implied license and laches until many months later. By then, The Final Call’s answer was untimely, fact discovery had long-since closed, and Ali had filed a summary judgment motion that was fully briefed for decision by the court. That prompted Ali to file a motion to strike The Final Call’s newly asserted affirmative defenses as untimely and prejudicial.
The district court never ruled on Ali’s motion to strike, however, because The Final Call withdrew the affirmative defenses (implied license and laches) at the pretrial conference. The Final Call argued that it was Ali’s burden to prove the copies were unauthorized. And it did not seem to matter, because at the Pretrial Conference, the district court judge said, “[I]f it turns out that lack of authorization is the plaintiff’s burden, then…the defendant can certainly — regardless of whether the defendant has waived irrevocably the ability to assert affirmative defenses, he can certainly make that argument against one of the elements of your claim.”
When the Seventh Circuit ultimately determined that the defendant has the burden of proving defenses such as implied license and the first sale doctrine, The Final Call’s withdrawal of its affirmative defenses at the pretrial conference turned out to be the “nail in the coffin.”
Nevertheless, the Seventh Circuit’s opinion went on to analyze and explain how The Final Call had not proved the elements of implied license or first sale. That analysis (in the final paragraphs of the opinion) highlights another key take-away:
By not clarifying whether it has the burden of proving a particular defense early in a case, a defendant may miss out on the opportunity to discover facts, and to identify, prepare, and call witnesses at trial that can establish facts supporting each element of its affirmative defenses.
As a final take-away from Ali v. Final Call, those who make or distribute copies of other’s works should be prepared to prove their right to do so by creating and maintaining records that show authorization or other defenses – even if it was many years ago. As the Seventh Circuit noted, “if there is evidence of a license, it is most likely to be in the possession of the purported licensee.”