Divine Dharma Meditation Intl. v. Ioles ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 23 2021
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
DIVINE DHARMA MEDITATION No. 19-55264
INTERNATIONAL INC.; et al.,
D.C. No. 8:16-cv-00226-DFM
Plaintiffs-Appellants,
v. MEMORANDUM*
INSTITUTE OF LATENT ENERGY
STUDIES,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Douglas F. McCormick, Magistrate Judge, Presiding
Argued and Submitted August 5, 2021
Pasadena, California
Before: PAEZ, CALLAHAN, and HURWITZ, Circuit Judges.
Divine Dharma Meditation International (“Divine Dharma”) sued the
Institute of Latent Energy Studies (“the Institute”) for copyright infringement of a
painting of Dasira Narada, a historical figure who developed certain meditation
techniques. Both non-profit organizations operate meditation centers that practice
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
and teach Narada’s techniques.
A jury found that the Institute made “fair use” of Divine Dharma’s
copyrighted work, an affirmative defense to copyright infringement. The district
court denied Divine Dharma’s post-trial motion under Federal Rule of Civil
Procedure 50(b) for judgment as a matter of law, concluding that the jury’s fair use
finding was “reasonably within the record.” Divine Dharma appealed, arguing that
the district court erred by not making an independent analysis of the legal aspects
of the fair use determination. Divine Dharma argues that under the correct
analysis, it is entitled to a judgment that the Institute’s use of the painting was not
fair use.
We defer to the jury’s findings of underlying facts, but review de novo
whether those facts establish fair use of a copyrighted work. Google LLC v.
Oracle Am., Inc., 141 S. Ct. 1183, 1200 (2021). “Because the verdict form . . . did
not ask the jury to articulate its fact findings in any detail, we must assume that
they jury resolved all factual issues relating to the historical facts in favor of the
verdict.” Oracle Am., Inc. v. Google LLC, 886 F.3d 1179, 1195 (Fed. Cir. 2018),
overruled on other grounds by Google, 141 S. Ct. 1183. “We must then review the
subsidiary and controverted findings of historical fact for substantial evidence.”
Id.In determining whether the Institute’s use of the copyrighted work was “fair
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use,” we consider the four factors in 17 U.S.C. § 107. On balance, we conclude
that the factors weigh in favor of a finding of fair use and affirm.
1. The first fair use factor is “the purpose and character of the use, including
whether such use is of a commercial nature or is for nonprofit educational
purposes.” 17 U.S.C. § 107(1). There is no evidence that the Institute’s use was
transformative. Minor alterations to the copyrighted work through the
manipulation of color and various elements of the painting do not alter its
“expression, meaning, or message,” Campbell v. Acuff-Rose Music, Inc., 510 U.S.
569, 597 (1994), and the Institute uses the work for the “same intrinsic purpose” as
Divine Dharma, Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d
1110, 1117 (9th Cir. 2000) (quoting Weissmann v. Freeman, 868 F.2d 1313, 1324
(2d Cir. 1989)).
Substantial evidence, however, does support the jury’s implied finding that
the Institute’s use of the copyrighted work was not commercial. There is no
evidence that the Institute profited from the use of the copyrighted work by
growing its membership or attracting donations. Cf. Worldwide Church, 227 F.3d
at 1118.
The jury was not instructed that it could consider whether the defendant
acted in bad faith as part of its fair use assessment. Apart from the lack of any
instruction on bad faith, the Supreme Court has minimized the relevance of bad
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faith as part of the first factor, Google, 141 S. Ct. at 1204, and we conclude it plays
no significant role here
We find the first factor on balance to be neutral, weighing neither for nor
against a finding of fair use.
2. The second fair use factor is the nature of the copyrighted work. 17 U.S.C.
§ 107(2). Substantial evidence does not support an implied finding that the
copyrighted work was informational, rather than creative. See Worldwide Church,
227 F.3d at 1118; Hustler Magazine, Inc. v. Moral Majority, Inc., 796 F.2d 1148,
1153–54 (9th Cir. 1986). The second factor weighs against fair use.
3. The third fair use factor is the amount and substantiality of the portion of the
copyrighted work used by the infringing work. 17 U.S.C. § 107(3). Substantial
evidence does not support the jury’s implied finding that the infringing work used
only “as much as necessary” for its intended use. See Kelly v. Arriba Soft Corp.,
336 F.3d 811, 820–21 (9th Cir. 2003). The infringing work shares an
overwhelming number of identical characteristics as the copyrighted work. The
third factor weighs against a finding of fair use.
4. The fourth fair use factor asks what effect the allegedly infringing use has on
the “potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4).
We consider (1) the degree of market harm caused by the alleged infringer’s
actions, and (2) “whether unrestricted and widespread conduct of the sort engaged
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in by the defendant would result in a substantially adverse impact on the potential
market for the original.” Campbell, 510 U.S. at 590 (cleaned up). Substantial
evidence supports the jury’s implied finding that the Institute’s infringement had
no significant effect upon the potential market or value of Divine Dharma’s work.
There was no evidence that Divine Dharma lost any licensing potential, members,
or otherwise suffered any substantial adverse impact in the market for the original
work because of the Institute’s use. Divine Dharma stipulated that it had no
evidence of monetary damages and testified that its membership grew by 60,000 to
70,000 in the five years preceding the trial. This factor weighs in favor of a
finding of fair use.
5. The fair use doctrine is an “equitable rule of reason,” Stewart v. Abend, 495
U.S. 207, 236 (1990) (quoting Sony Corp. of Am. v. Universal City Studios, Inc.,
464 U.S. 417, 448 (1984)), and the non-exhaustive list of factors in § 107 are
weighed together in light of the purposes of copyright. Campbell, 510 U.S. at577–78. The first factor weighs neither for nor against finding fair use. The
second factor, which “typically has not been terribly significant,” Dr. Seuss Enters.
L.P. v. Penguin Books USA, Inc., 109 F.3d 1394, 1402 (9th Cir. 1997), weighs
against finding fair use. The third factor also weighs against finding fair use. The
fourth factor, the “single most important element of fair use,” Harper & Row
Publ’rs, Inc. v. Nation Enters., 471 U.S. 539, 566 (1985), weighs in favor of
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finding fair use. Together, the factors weigh in favor of a finding of fair use.
Thus, the district court did not err in denying Divine Dharma’s Rule 50(b) motion.
AFFIRMED.
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