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Running on Empty: ‘Stang’ With No Anthropomorphic Characteristics Isn’t Copyrightable Character

by | Jun 5, 2025 |

The US Court of Appeals for the Ninth Circuit affirmed a district court’s denial of copyright protection for a car that had a name but no anthropomorphic or protectable characteristics. Carroll Shelby Licensing, Inc. v. Denice Shakarian Halicki et al., Case No. 23-3731 (9th Cir. May 27, 2025) (Nguyen, Mendoza, JJ.; Kernodle Dist. J., sitting by designation).

In 2009, Denice Shakarian Halicki and Carroll Shelby Licensing entered into a settlement agreement resolving a lawsuit concerning Shelby’s alleged infringement of Halicki’s asserted copyright interest in a Ford Mustang known as “Eleanor,” which appeared in a series of films dating back to the 1970s. Under the agreement, Shelby, a custom car shop, was prohibited from producing GT-500E Ford Mustangs incorporating Eleanor’s distinctive hood or headlight design. Shortly thereafter, Shelby licensed Classic Recreations to manufacture “GT-500CR” Mustangs, a move Halicki viewed as a breach of the settlement agreement. Halicki contacted Classic Recreations and demanded it cease and desist in the production of the GT-500CRs.

Shelby filed a lawsuit alleging breach of the settlement agreement and seeking declaratory relief. Halicki counterclaimed for copyright infringement and breach of the agreement. Following a bench trial, the district court ruled in Shelby’s favor on both the breach and infringement claims but declined to grant declaratory relief. Shelby appealed.

The Ninth Circuit began by addressing whether “Eleanor” qualified for copyright protection as a character under the Copyright Act. Although the act does not explicitly list characters among the types of works it protects, the Ninth Circuit has recognized that certain characters may be entitled to such protection. The applicable standard, articulated in 2015 by the Ninth Circuit in DC Comics v. Towle, sets forth a three-pronged test, under which the character must:

  • Have “physical as well as conceptual qualities”
  • Be “sufficiently delineated to be recognizable as the same character whenever it appears” with “consistent, identifiable character traits and attributes”
  • Be “especially distinctive” and have “some unique elements of expression.”

The Ninth Circuit concluded that Eleanor failed to satisfy any of the three prongs of the Towle test. As to the first prong, the Court found that Eleanor functioned merely as a prop and lacked the anthropomorphized qualities or independent agency associated with protectable characters. Regarding the second prong, the Court noted that Eleanor’s appearance varied significantly across the films in terms of model, colors, and condition. Under the third prong, the Court found that Eleanor lacked the distinctiveness necessary to elevate it beyond the level of a generic sports car commonly featured in similar films. Thus, the Court concluded that Eleanor did not qualify as a character, let alone a copyrightable one.

The Ninth Circuit next turned to the parties’ settlement agreement. While California law permits the use of extrinsic evidence to aid in contract interpretation, the Court found the language sufficiently unambiguous to render such evidence unnecessary. Notably, the parties did not include “Eleanor” as a defined term in the agreement, and the term was used in varying contexts throughout the document, conveying different meanings [...]

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Plausibly Alleging Access Requires More Than Social Media Visibility

by | May 29, 2025 |

The US Court of Appeals for the Ninth Circuit affirmed a district court’s dismissal of a copyright action, finding that the plaintiff failed to plausibly allege either that the defendant had “access” to the work in question merely because it was posted on social media, or that the accused photos were substantially similar to any protectable elements of plaintiff’s photographs. Rodney Woodland v. Montero Lamar Hill, aka Lil Nas X, et al., Case No. 23-55418 (9th Cir. May 16, 2025) (Lee, Gould, Bennett, JJ.)

The dispute arose between Rodney Woodland, a freelance model and artist, and Montero Lamar Hill, also known as Lil Nas X, a well-known musical artist. Woodland alleged that Hill infringed on his copyright by posting photographs to his Instagram account that bore a striking resemblance to images Woodland had previously posted. Woodland claimed that the arrangement, styling, and overall visual composition of Hill’s photos closely mirrored his own, asserting that these similarities constituted unlawful copying of his original work.

Woodland’s original images had been publicly shared on his Instagram account, where he maintained a modest following. He did not allege any direct contact or interaction with Hill or his representatives, nor did he claim that Hill had acknowledged or referenced his work. Instead, Woodland’s claim rested on the contention that the similarities between the two sets of photographs were so substantial that copying could be inferred. In his complaint, Woodland asserted that Hill had access to his publicly posted images and that the degree of similarity supported a finding of unlawful copying. The district court dismissed the complaint, holding that Woodland failed to plausibly allege either access or substantial similarity. Woodland appealed.

The Ninth Circuit affirmed, agreeing with the district court that Woodland failed to satisfy the pleading standard necessary to survive a motion to dismiss. The Ninth Circuit explained that to state a viable claim for copyright infringement, a plaintiff must alleged both the fact of copying and the unlawful appropriation of protected expression. The Court found that Woodland failed to establish either element.

The Ninth Circuit considered two principal legal issues:

  • Whether Woodland sufficiently alleged that Hill had access to Woodland’s copyrighted works
  • Whether the photographs posted by Hill were substantially similar to Woodland’s photographs in their protectable elements under copyright law

On the issue of access, the Ninth Circuit found that the merely alleging availability of Woodland’s photos on Instagram did not, by itself, plausibly demonstrate that Hill had seen them. The Court noted that in the era of online platforms, “the concept of ‘access’ is increasingly diluted.” And while that might make it easier for plaintiffs to show “access,” there must be a showing that the defendants had a reasonable chance of seeing that work under the platform’s policies. The mere fact that Hill used Instagram and Woodland’s photos were available on the same platform raised only a “bare possibility” that Hill viewed the photos. Woodland had not plausibly alleged that Hill “followed, liked, or otherwise interacted” with Woodland’s posts [...]

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Paint It White: No Sovereign Immunity in Economic Espionage Case

by | May 8, 2025 |

The US Court of Appeals for the Ninth Circuit affirmed a district court’s denial of foreign sovereign immunity to a Chinese company accused of stealing trade secrets related to the production of proprietary metallurgy technology. United States v. Pangang Grp. Co., Ltd., Case No. 22-10058 (9th Cir. Apr. 29, 2025) (Wardlaw, Collins, Bress, JJ.)

Pangang is a manufacturer of steel, vanadium, and titanium. E.I. du Pont de Nemours (DuPont) had a proprietary chloride-route technology used for producing TiO₂, a valuable white pigment used in paints, plastics, and paper. Pangang allegedly conspired with others to obtain DuPont’s trade secrets related to TiO₂ production through economic espionage in order to use the stolen information to start a titanium production plant in China. The US government filed a criminal lawsuit.

In defense, Pangang invoked the Foreign Sovereign Immunities Act (FSIA) and federal common law, arguing that it was entitled to foreign sovereign immunity from criminal prosecution in the United States because it was ultimately owned and controlled by the government of the People’s Republic of China (PRC). In a prior appeal, the Ninth Circuit had found that Pangang failed to make a prima facie showing that it fell within the FSIA’s domain of covered entities. On remand, the district court again rejected Pangang’s remaining claims of foreign sovereign immunity, including its claims based on federal common law.

While the appeal was pending, the Supreme Court’s 2023 decision in Turkiye Halk Bankasi v. United States clarified that common law, not the FSIA, governs whether foreign states and their instrumentalities are entitled to foreign sovereign immunity from criminal prosecution in US courts. This led to a rebriefing of the present appeal to focus on the now-controlling issues concerning the extent to which Pangang enjoys foreign sovereign immunity under federal common law. Under federal common law, an entity must satisfy two conditions to enjoy foreign sovereign immunity from suit:

  • It must be the kind of entity eligible for immunity.
  • Its conduct must fall within the scope of the immunity conferred.

The Ninth Circuit concluded that Pangang did not make a prima facie showing that it exercised functions comparable to those of an agency of the PRC and therefore was not eligible for foreign sovereign immunity from criminal prosecution. The Court also found that “[t]he mere fact that a foreign state owns and controls a corporation is not sufficient to bring the corporation within the ambit of [sovereign immunity].” Since Pangang’s commercial activities were not governmental functions, there was no evidence that sovereign immunity should be applied. Therefore, the Ninth Circuit affirmed the district court’s denial of the motion to dismiss based on sovereign immunity.



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Damages on Default Judgment Not Barred by Absence of Precise Amount in Complaint

by | May 8, 2025 |

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court decision, allowing collection of actual damages in a default judgment where the complaint only sought damages “in an amount to be determined at trial.” AirDoctor, LLC v. Xiamen Qichuang Trade Co., Ltd., Case No. 24-215 (9th Cir. Apr. 11, 2025) (Friedland, J.) (Berzon, Kennelly JJ., concurring) (per curiam).

AirDoctor produces and sells air purification products, including branded filters designed specifically for its machines. In 2022, AirDoctor discovered that Xiamen Qichuang Trade had sold tens of thousands of unauthorized replacement filters that were marketed as compatible with AirDoctor products. These filters were allegedly labeled with AirDoctor’s registered trademarks, including AIRDOCTOR and ULTRAHEPA, without permission. AirDoctor asserted that these actions constituted trademark infringement, false advertising, and unfair competition under the Lanham Act and related state laws.

AirDoctor filed a complaint seeking injunctive relief and monetary damages “in an amount to be determined at trial.” Xiamen did not respond or appear in the litigation, and the court entered a default judgment against it. AirDoctor subsequently moved for approximately $2.5 million in actual damages, calculated based on the number of infringing units sold, along with $50,000 in attorneys’ fees and costs. The district court entered a default judgment in Air Doctor’s favor but declined to award damages or attorneys’ fees. The court reasoned that Fed. R. Civ. Pro 54(c) barred monetary relief in default judgments unless the complaint demanded a specific sum. Since AirDoctor’s complaint did not include a precise dollar amount, the court concluded that granting the requested monetary relief would exceed what was demanded in the pleadings and thus violate Rule 54(c). AirDoctor appealed.

The issue before the Ninth Circuit was whether the district court erred in interpreting Rule 54(c) to prohibit an award of actual damages in a default judgment where the complaint requested “damages in an amount to be determined at trial” but did not specify a fixed damages amount. Xiamen did not appear on appeal either.

The Ninth Circuit reversed, concluding that Rule 54(c) does not require a complaint to state a specific sum of damages for a court to award actual damages after a default judgment. The Court emphasized that the rule’s purpose is to prevent awards that are fundamentally different in kind or amount from those for which the defendant had been put on notice by the complaint, not to deny recovery when the type of relief was clearly identified, even if the amount was not. The Court noted that AirDoctor had clearly requested actual damages in its complaint and had indicated that the precise amount would be determined later, which was sufficient to give Xiamen fair notice of the relief sought. Relying on its 1974 decision in Henry v. Sneiders, the Court reaffirmed that actual damages may be awarded in default cases even if the complaint does not state a dollar figure, as long as the damages are of the same kind as those demanded.

The Ninth Circuit clarified that Rule [...]

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Sour Grapes: Attorney’s Oral Agreement Might Be Okay if Fair, Just, and Fully Advised

by | Feb 27, 2025 |

The US Court of Appeals for the Ninth Circuit found that a district court erred in declaring on summary judgment that an attorney had no ownership interest in a winery because the alleged agreement was made orally. The Ninth Circuit explained that there were triable issues of fact as to whether the attorney could rebut the presumption against oral agreements by showing that the transaction was fair and just and that the client was fully advised. Schrader Cellars, LLC v. Roach, Case Nos. 23-15862; -15990 (9th Cir. Feb. 21, 2025) (Smith, Bennett, Johnstone, JJ.)

Fred Schrader is the former owner of Schrader Cellars (Cellars). Robert Roach is a Texas attorney who claims to have entered into an oral agreement with Schrader regarding the creation of another company, RBS LLC, which Roach asserts has an ownership interest in Cellars. After Schrader sold Cellars in 2017, Roach sued Schrader in Texas state court, claiming that the sale was improper. In 2021, Cellars filed a lawsuit in the US District Court for the Northern District of California, seeking, among other things, a declaration that Roach did not have any ownership interest in Cellars. Roach asserted various counterclaims.

The district court granted summary judgment on Cellars’ request for declaratory relief and dismissed Roach’s counterclaims. The case proceeded to trial on Cellars’ remaining claim for breach of fiduciary duty. The district court instructed the jury that, as a matter of law, Roach had breached his fiduciary duties to Cellars, so the jury decided only the issue of harm. The jury found that Roach’s breach of fiduciary duty had harmed Cellars during the limitations period but did not award damages because of the “litigation privilege defense.” Roach appealed the summary judgment order.

The Ninth Circuit found that the district court erred in granting Cellars summary judgment. Roach argued that the district court erred in declaring that he had no ownership interest in Cellars via the purported RBS agreement. At summary judgment, Cellars argued that even if Roach’s version of the RBS oral agreement existed, Roach could not enforce it because it violated California Rules of Professional Responsibility, which require written advisories and disclosures. Relying on this provision, the district court concluded that even if an oral argument existed, it was unenforceable, and Roach therefore could not have any ownership interest in Cellars. The district court noted that although “[a]n attorney may rebut the presumption of undue influence by showing that ‘the dealing was fair and just,’ and ‘the client was fully advised[,]’ . . . Roach has made no such effort to rebut this presumption.”

The Ninth Circuit found that the district court erred because there were triable issues of fact concerning whether Roach rebutted the presumption regarding the alleged breach of his client duties. The Court explained that not only did Roach expressly argue fairness before the district court, but the basic facts of the case (when viewed in the light most favorable to Roach) demonstrated that the transaction was fair and just and that [...]

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Religious Texts, Copyrights, and Estate Law: A Case of Strange Bedfellows

by | Feb 13, 2025 |

The US Court of Appeals for the Ninth Circuit affirmed in part and reversed in part a case involving a deceased religious leader who owned the copyrights to works reflecting his teachings. The Court found that the copyrighted works were not works for hire under copyright law, that the leader therefore had the right to license his copyrights, and that the subsequent owner of the copyrights (not a statutory heir) also had the right to terminate licenses. Aquarian Foundation, Inc. v. Bruce Kimberley Lowndes, Case No. 22-35704 (9th Cir. Feb. 3, 2025) (Hawkins, McKeown, de Alba, JJ.)

Aquarian Foundation is a nonprofit religious organization founded by Keith Milton Rhinehart. During his time as the leader of Aquarian, Rhinehart copyrighted his spiritual teachings. An Aquarian member, Bruce Lowndes, claimed that he obtained a license from Rhinehart in 1985. Upon Rinehart’s death in 1999, he left his estate, including interests in copyrights, to Aquarian. In 2014, Aquarian discovered that Lowndes was uploading Rhinehart’s teachings online and sent Lowndes takedown requests pursuant to the Digital Millennium Copyright Act (DMCA). In 2021, Aquarian sent Lowndes a letter terminating Lowndes’ license and sued Lowndes for copyright infringement, trademark infringement, and false designation of origin.

After a bench trial, the district court concluded that Rhinehart’s works were not works for hire under either the 1909 or the 1976 Copyright Act, so Rhinehart had the authority to grant Lowndes an unrestricted license. The district court also found that Aquarian did not have the authority to terminate the license as a nonstatutory heir and should have given Lowndes two years notice. The district court denied attorneys’ fees. Both parties appealed the district court’s ruling on ownership and attorneys’ fees, and Aquarian appealed the ruling on its lack of authority to terminate the license.

The Ninth Circuit, finding no clear error, affirmed the district court’s holding that Rhinehart’s works were not works for hire under either the 1909 or the 1976 Copyright Act. Under the 1909 Act’s “instance and expense” test, the Court found that “the creation and maintenance of the works was Rhinehart’s purview, and not the church’s domain.” Under the 1976 Act, which applies agency law, the Court similarly found that Rhinehart’s creation of the works was outside the scope of his employment as Aquarian’s president and secretary. Therefore, under either act, Rhinehart’s works were not works for hire, making Rhinehart the copyright owner. The Ninth Circuit affirmed the district court’s finding that as owner, Rhinehart had authority to grant the license to Lowndes. The Court also found that Lowndes’ license to “use copyrighted materials ‘without restriction’” referenced “a coming World Wide Network,” so Lowndes did not breach the license by posting the works online.

The Ninth Circuit also affirmed that the testamentary transfer of copyrights to Aquarian was permitted by both the 1909 and 1976 Copyright Acts: “Both the 1909 and 1976 Copyright Acts allow for the transfer of a copyright by will. 17 U.S.C. § 42 (repealed) (providing that copyrights ‘may be bequeathed by will’); [...]

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Untwisting the Fixation Requirement: Flexible Rules on Moveable Sculptures

by | Jan 23, 2025 |

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court’s dismissal of a claim of copyright infringement for kinetic and manipulable sculptures, finding that movable structures were sufficiently “fixed” in a tangible medium for copyright purposes. Tangle, Inc. v. Aritzia, Inc., et al., Case No. 23-3707 (9th Cir. Jan. 14, 2024) (Koh, Johnstone, Simon, JJ.)

Tangle, a toy company, holds copyright registrations for seven kinetic and manipulable sculptures, each made from 17 or 18 identical, connected 90-degree curved tubular segments. These sculptures can be twisted or turned 360 degrees at the joints, allowing for various poses. Aritzia, a lifestyle apparel brand, used similar sculptures in its retail store displays, leading Tangle to file a lawsuit alleging copyright and trade dress infringement. Aritzia’s sculptures were larger, were a different color, and had a chrome finish.

The Copyright Act requires that a work of authorship be “fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). At the pleading stage, the district court concluded that the sculptures were not fixed and thus dismissed Tangle’s copyright claim. The district court also dismissed the trade dress claim for failure to provide adequate notice of the asserted trade dress. Tangle appealed.

While the Ninth Circuit agreed with the district court’s dismissal of the trade dress claim, it disagreed with the district court’s ruling on the copyright claim. Comparing the kinetic, movable sculptures to music, movies, and dance, the Court found that Tangle’s dynamic sculptures were entitled to copyright protection and that Tangle adequately alleged valid copyrights in its sculptures. The Court held that the works’ ability to move into various poses did not, by itself, support the conclusion that they were not “fixed” in a tangible medium for copyright purposes.

The Ninth Circuit held that under the “extrinsic test” test, which looks at “the objective similarities of the two works, focusing only on the protectable elements of the plaintiff’s expression,” as set forth in the Court’s 2018 decision in Rentmeester v. Nike, Tangle plausibly alleged copying of its protected works by alleging that the creative choices it made in selecting and arranging elements of its copyrighted works were substantially similar to the choices Aritzia made in creating its sculptures.

Since Aritzia failed to dispute that Tangle had properly alleged copying, the Ninth Circuit stated that Tangle only needed to show that the sculptures were substantially similar to prove infringement. Applying its 2004 decision in Swirsky v. Carey, the Ninth Circuit explained that “substantial similarity can be found in a combination of elements, even if those elements are individually unprotected.”

The Ninth Circuit found that the copyrighted and accused sculptures were similar enough to the ordinary observer to constitute infringement because both were comprised of identical, connected 90-degree curved tubular segments that could be twisted and manipulated to create many different poses. The Court further explained that the vast range of possible expressions could afford the sculptures broad copyright protection.



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Lager Than Life: $56 Million Verdict in Beer Trademark Dispute Still on Tap

by | Jan 16, 2025 |

The US Court of Appeals for the Ninth Circuit upheld a $56 million trial verdict in a trademark dispute, finding that the evidence supported the jury’s conclusion that a beer company’s rebranding of one its beers infringed a competitor’s trademark. Stone Brewing Co., LLC v. Molson Coors Beverage Company USA LLC, Case No. 23-3142 (9th Cir. Dec. 30, 2024) (Graber, Friedland, Bumatay, JJ.) (nonprecedential).

Stone Brewing sued Molson Coors in 2018 alleging that Molson changed its packaging of Keystone Light to emphasize the word “stone” in its “Own the Stone” marketing campaign, and that this change infringed Stone Brewing’s trademarks and caused consumer confusion. Molson raised a variety of defenses, all of which were rejected. A jury found infringement and ultimately awarded Stone Brewing $56 million. Molson appealed.

Molson argued that the district court erred in finding that the four-year laches clock did not bar Stone Brewing’s Lanham Act claims. The Ninth Circuit found that the laches clock began running in 2017 when Molson launched the “Own the Stone” campaign, to which all of Stone Brewing’s claims related. The Court noted that prior to 2017, Molson never referred to Keystone as anything other than Keystone in its packaging, marketing, or advertising materials, and specifically never broke up the product name “Keystone” and used the term “Stones” to refer to the number of beers in a case (“30 stones”) or as a catch phrase (e.g., “Hold my Stones”). Thus, the Court found that Stone Brewing brought the suit within the four-year statute of limitations period.

Molson also argued that the district court erred in refusing to set aside the jury verdict on the ground that Molson had a superior interest in the STONE mark. Stone Brewing applied to register the STONE mark in 1996, and the Ninth Circuit found there was substantial evidence that Molson did not approve production of packaging that used “Stone” before that date.

Molson argued that the district court erred in refusing to set aside the jury verdict on likelihood of confusion. The Ninth Circuit disagreed, explaining that Stone Brewing provided evidence from which a jury could plausibly conclude there was “actual confusion” by distributors and customers who thought that Stone Brewing sold Keystone Light. The Court noted that Molson expressly de-emphasized “Keystone” and instead highlighted “Stone” in its 2017 product refresh. The Court also explained that both brands compete in the same beer space, use the same marketing and distribution channels, and are relatively inexpensive products, all of which allowed the jury to plausibly conclude that Molson’s 2017 product refresh of Keystone Light was likely to cause consumer confusion.

Molson also challenged the damages award. At trial, Stone Brewing sought damages in three categories:

  • $32.7 million for past lost profits
  • $141.4 million for future lost profits
  • $41.8 million for corrective advertising.

The jury returned a verdict of $56 million in general damages, which was about one quarter of the requested damages, but did not indicate what amount came from each category. Molson argued that [...]

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Equity Is Neither a “Good” Nor a “Service” Under Lanham Act

by | Jan 16, 2025 |

The US Court of Appeals for the Ninth Circuit affirmed a district court’s decision that, in terms of trademark use in commerce, corporate equity is not a “good” or “service” under the Lanham Act. LegalForce RAPC Worldwide, PC v. LegalForce, Inc., Case No. 23-2855 (9th Cir. Dec. 27, 2024) (Thomas, Wardlaw, Collins, JJ.) (Collins, J., concurring).

LegalForce RAPC Worldwide is a California corporation that operates legal services websites and owns the US mark LEGALFORCE. LegalForce, Inc., is a Japanese corporation that provides legal software services and owns the Japanese mark LEGALFORCE.

Both parties had discussions with the same group of investors. After those meetings, LegalForce Japan secured $130 million in funding, while LegalForce USA received nothing. Thereafter, LegalForce USA brought several claims against LegalForce Japan, including a trademark infringement claim. To support its case, LegalForce USA cited LegalForce Japan’s expansion plan, a trademark application for the mark LF, website ownership, and the use of LEGALFORCE to sell and advertise equity shares to investors in California.

The district court dismissed claims related to the website for lack of personal jurisdiction and dismissed claims related to the US expansion plan, trademark application, and alleged software sales in the United States as unripe. The district court dismissed the trademark infringement claims related to the efforts to sell equity shares for failure to state a claim. The court found that advertising and selling equity cannot constitute trademark infringement because it is not connected to the sale of goods or services, and the case did not present justification for extraterritorial application of the Lanham Act. LegalForce USA appealed.

To state a claim for trademark infringement under the Lanham Act, plaintiffs must show that:

  • They have a protectible ownership interest in the mark, or for some claims, a registered mark
  • The defendant used the mark “in connection with” goods or services
  • That use is likely to cause confusion. 15 U.S.C. § 1114(1)(a), § 1125(a).

The Ninth Circuit agreed with the district court that LegalForce Japan had not used LegalForce USA’s mark “in connection with” goods or services, and thus LegalForce USA failed to state a claim for which relief could be granted.

The Ninth Circuit concluded that using LEGALFORCE to advertise and sell equity failed to satisfy the requirement that a defendant used the mark in connection with goods or services. Referring to the U.C.C., the Court explained that corporate equity is “not a good for purposes of the Lanham Act, because it is not a movable or tangible thing.” Equity is also not a service because it is not a performance of labor for the benefit of another. There is no “another” involved because those who buy LegalForce Japan equity are owners and so they are not legally separate “others.”

The Ninth Circuit also agreed with the district court that LegalForce Japan’s services in Japan did not satisfy the “in connection with” goods or services requirement under the Lanham Act. To determine when a statute applies extraterritorially, courts invoke the 2023 Supreme Court
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Interoperability Doesn’t Imply Derivative Work

by | Jan 9, 2025 |

The US Court of Appeals for the Ninth Circuit explained that to be a derivative work, a program interoperative with another must actually incorporate aspects of the underlying work. The Court further ruled that licensees of a copy of a computer program are not “owners” of the copy and therefore are not entitled to make copies for the purposes permitted by 17 U.S.C. § 117(a). Oracle International Corp. v. Rimini Street, Inc., Case No. 23-16038 (9th Cir. Dec. 16, 2024) (Bybee, Bumatay, Bennett, JJ.)

Rimini provides third-party support for Oracle software and is a direct competitor with Oracle in the software support services market. For more than a decade, Oracle and Rimini have been involved in what the Ninth Circuit describes as a “pitched copyright war.” This latest battle relates to changes Rimini made to its business model after a district court determined that Rimini had infringed Oracle’s copyrights. Rimini developed a new process for servicing customers using Oracle software and sought a declaratory judgment that its revised process did not infringe Oracle’s copyrights. Oracle counterclaimed for copyright infringement and Lanham Act violations.

The district court found that Rimini created infringing derivative works because its new process interacted and was usable with Oracle software. The district court found that Rimini violated Oracle’s PeopleSoft and Database licensing agreements and made several statements violating the Lanham Act. The court struck Rimini’s affirmative defense to copyright infringement under 17 U.S.C. § 117(a), granted Oracle summary judgment that Rimini infringed Oracle’s copyrights, and issued a permanent injunction against Rimini. Rimini appealed.

Derivative Works

The Ninth Circuit disagreed with the district court’s analysis of Rimini’s new process, noting that the district court focused on an “interoperability test,” which does not exist under the text of the Copyright Act or in precedent. In effect, the district court’s test would find that if a product interoperates with a preexisting copyrighted work, then it must be derivative. The Ninth Circuit explained that while the Copyright Act uses broad language to describe derivative works, the derivative work must actually incorporate the underlying work. For Rimini’s new process to be a derivative work, it must incorporate Oracle’s copyrighted work, either literally or nonliterally. The Court found that just because Rimini’s new process interacted with Oracle’s software, that was insufficient to find it was a derivative work.

Affirmative Defense: Section 117(a)

The Copyright Act permits an owner of a copy of a computer program to make a copy or adaptation of that program for certain purposes under 17 U.S.C. § 117(a). The Ninth Circuit vacated the district court’s ruling, striking Rimini’s affirmative defense under Section 117(a), because the district court erred in determining whether Oracle’s customers “owned” a copy of Oracle’s software, PeopleSoft. The Court explained that to determine whether a party is an “owner of a copy” of a computer program, the courts look to whether the party has “sufficient incidents of ownership” over the “copy” of the software, in view of the totality of the parties’ agreement. Factors that [...]

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