Inhale, Inc. v. Starbuzz Tobacco, Inc. ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
INHALE, INC., a California No. 12-56331
Corporation,
Plaintiff-Appellant, D.C. No.
2:11-cv-03838-
v. ODW-FFM
STARBUZZ TOBACCO, INC., a
California Corporation; WAEL ORDER AND
SALIM ELHALAWANI, an individual AMENDED
residing in California, OPINION
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
Otis D. Wright, II, District Judge, Presiding
Argued and Submitted
November 4, 2013—Pasadena, California
Filed January 9, 2014
Amended June 3, 2014
Before: Diarmuid F. O’Scannlain, Susan P. Graber,
and Carlos T. Bea, Circuit Judges.
Order;
Opinion by Judge O’Scannlain;
Concurrence by Judge Bea
2 INHALE, INC. V. STARBUZZ TOBACCO, INC.
SUMMARY*
Copyright
The panel filed (1) an order amending its opinion,
denying petitions for rehearing and rehearing en banc, and
granting a request for an award of attorneys’ fees; and (2) an
amended opinion affirming the district court’s summary
judgment and award of attorneys’ fees in favor of the
defendant in an action under the Copyright Act.
The panel held that the shape of a hookah water container
was not entitled to copyright protection. The panel held that
the container, a useful article, was not copyrightable because
it did not incorporate sculptural features that could be
identified separately from, and were capable of existing
independently of, the container’s utilitarian aspects.
Adopting the reasoning of the Copyright Office, the panel
held that whether an item’s shape is distinctive does not
affect conceptual separability. The panel also held that the
district court did not abuse its discretion in awarding
attorneys’ fees to the defendant under 17 U.S.C. § 505. The
panel awarded attorneys’ fees for the appeal in an amount to
be determined by the district court.
Concurring in part, Judge Bea wrote that he concurred
with the majority’s opinion, except for the part of Part II.C
that discusses the level of deference owed to the Copyright
Office’s interpretations of the Copyright Office. Judge Bea
wrote that because the statute was not ambiguous, it was
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
INHALE, INC. V. STARBUZZ TOBACCO, INC. 3
unnecessary to look to the Copyright Office for further
guidance.
COUNSEL
Louis F. Teran, SLC Law Group, Pasadena, California,
argued the cause and filed the briefs for Plaintiff-Appellant.
Natu J. Patel, The Patel Law Firm, P.C., Irvine, California,
argued the cause and filed the brief for Defendants-Appellees.
ORDER
The opinion filed January 9, 2014, and published at
739 F.3d 446, is amended as follows:
On slip opinion page 8, after and
before the beginning of Part III, add the following as a new
paragraph:
28 F.3d 971, 977 (9th
Cir. 1994). In addition, we emphasize that Inhale does not
argue that the imagery on the container is copyrightable. Our
opinion should not be understood to affect the
copyrightability of “[p]ictorial, graphic, and sculptural
works,” 17 U.S.C. § 101, that may be affixed to or made part
of a container.>.
An amended opinion is filed concurrently with this order.
With this amendment, the panel has voted unanimously
to deny the petition for rehearing and the petition for
rehearing en banc. The full court has been advised of the
petition for rehearing en banc, and no judge has requested a
vote on whether to rehear the matter. Fed. R. App. P. 35.
The petition for rehearing and the petition for rehearing
en banc are DENIED. No further petitions for panel
rehearing or for rehearing en banc will be entertained.
Starbuzz’s request for an award of attorneys’ fees under
17 U.S.C. § 505 is GRANTED. We award attorneys’ fees
incurred in responding to the petition for rehearing and
rehearing en banc to Starbuzz in an amount to be determined
by the district court on remand.
INHALE, INC. V. STARBUZZ TOBACCO, INC. 5
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether the shape of a hookah water
container1 is entitled to copyright protection.
I
Inhale, Inc. claims copyright protection in the shape of a
hookah water container that it first published on August 29,
2008 and registered with the United States Copyright Office
on April 21, 2011. At both the time of publication and the
time of registration, the container included skull-and-
crossbones images on the outside.
Less than a month after registration, Inhale sued Starbuzz
Tobacco, Inc. and Wael Salim Elhalawani (collectively,
“Starbuzz”) for copyright infringement. Inhale claimed that
Starbuzz sold hookah water containers that were identical in
shape to Inhale’s container. The allegedly infringing
containers did not contain skull-and-crossbones images.
After determining that the shape of the water container is not
copyrightable, the district court granted summary judgment
in favor of Starbuzz.
1
A “hookah” is a device for smoking tobacco. It contains coals that
cause the tobacco to smoke. A user’s inhalation through a tube causes the
smoke to travel through water, which cools and filters the smoke, before
it reaches the user. The water is held in a container at the base of the
hookah.
6 INHALE, INC. V. STARBUZZ TOBACCO, INC.
II
Because “ownership of a valid copyright” is an element
of copyright infringement, Feist Publ’ns, Inc. v. Rural Tel.
Serv. Co., 499 U.S. 340, 361 (1991), summary judgment was
appropriate if the shape of Inhale’s hookah water container is
not copyrightable.
A
The parties agree that Inhale’s hookah water container is
a “useful article.” As “the design of a useful article,” the
shape of the container is copyrightable “only if, and only to
the extent that, [it] incorporates . . . sculptural features that
can be identified separately from, and are capable of existing
independently of, the utilitarian aspects of the” container.
17 U.S.C. § 101 (defining “[p]ictorial, graphic, and
sculptural works”); id. § 102(a)(5) (granting copyright
protection to “pictorial, graphic, and sculptural works”).
This statutory standard is satisfied by either physical or
conceptual separability. See 1 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright § 2.08[B][3], at 2-99–2-100
(2011). Inhale does not argue that the container’s shape
satisfies the requirements of physical separability. Thus, we
consider only conceptual separability.
B
Relying on Poe v. Missing Persons, 745 F.2d 1238 (9th
Cir. 1984), Inhale argues that conceptual separability is a
question of fact. Inhale’s reliance on Poe is misplaced. Poe
decided that whether an item is a useful article is a factual
INHALE, INC. V. STARBUZZ TOBACCO, INC. 7
question. Id. at 1241–42. But usefulness is distinct from
separability.
In Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068 (9th Cir.
2000), we ruled that the shape of a vodka bottle was not
separable from its utilitarian features. Rather than treat
separability as a question for the jury, we conducted our own
analysis. See id at 1080. (“[T]he district court did not identify
any artistic features of the bottle that are separable from its
utilitarian ones. We also find none.”). In Fabrica Inc. v. El
Dorado Corp., 697 F.2d 890 (9th Cir. 1983), we affirmed a
district court’s directed verdict in favor of a copyright
defendant on the ground that the allegedly infringed work
was not copyrightable. We assessed separability ourselves.
See id. at 893 (“There is no element of the folders that can be
separated out and exist independently of their utilitarian
aspects.”).
Our precedent suggests that whether a useful article has
conceptually separable features is a mixed question of law
and fact. See Pullman-Standard v. Swint, 456 U.S. 273, 289
n.19 (1982) (describing mixed questions of law and fact as
those “in which the historical facts are admitted or
established, the rule of law is undisputed, and the issue is
whether the facts satisfy the statutory standard”). Because
both parties agree that the hookah water container is a useful
article that holds water within its shape, all that is left is the
application of the legal standard to those facts. Thus, whether
the shape of the container is conceptually separable is a
conclusion that we review de novo. See Mathews v. Chevron
Corp., 362 F.3d 1172, 1180 (9th Cir. 2004) (“Mixed
questions of law and fact are reviewed de novo; however, the
underlying factual findings are reviewed for clear error.”).
8 INHALE, INC. V. STARBUZZ TOBACCO, INC.
C
Relying in part on Ets-Hokin, the district court ruled that
the container’s shape is not conceptually separable from its
utilitarian features. In Ets-Hokin, we held that the shape of a
vodka “bottle without a distinctive shape” was not
conceptually separable. See 225 F.3d at 1080. Attempting to
distinguish this case from our precedent, however, Inhale
emphasizes the distinctive shape of its hookah water
container. Therefore, we must determine whether
distinctiveness of shape affects separability.
When interpreting the Copyright Act, we defer to the
Copyright Office’s interpretations in the appropriate
circumstances.2 See Richlin v. Metro-Goldwyn-Mayer
Pictures, Inc., 531 F.3d 962, 972–73 (9th Cir. 2008); Batjac
Prods. Inc. v. GoodTimes Home Video Corp., 160 F.3d 1223,
1230–31 (9th Cir. 1998) (deferring to the Register’s
interpretation in an internal manual, Compendium of
Copyright Office Practices). Because Chevron deference
does not apply to internal agency manuals or opinion letters,
we defer to the Copyright Office’s views expressed in such
2
“Courts have twisted themselves into knots trying to create a test to
effectively ascertain whether the artistic aspects of a useful article can be
identified separately from and exist independently of the article’s
utilitarian function.” Masquerade Novelty, Inc. v. Unique Indus., 912 F.2d
663, 670 (3d Cir. 1990). Under some interpretations of 17 U.S.C. § 101,
distinctiveness of shape would be relevant. See, e.g., Brandir Int’l, Inc.
v. Cascade Pac. Lumber Co., 834 F.2d 1142, 1145 (2d Cir. 1987) (asking
whether “design elements can be identified as reflecting the designer’s
artistic judgment exercised independently of functional influences”). We
think § 101 is sufficiently ambiguous to justify deference to administrative
interpretations. See High Sierra Hikers Ass’n v. Blackwell, 390 F.3d 630,
638–39 (9th Cir. 2004).
INHALE, INC. V. STARBUZZ TOBACCO, INC. 9
materials “only to the extent that those interpretations have
the ‘power to persuade.’” See Christensen v. Harris Cnty.,
529 U.S. 576, 587 (2000).
In an opinion letter and an internal manual, the Copyright
Office has determined that whether an item’s shape is
distinctive does not affect separability. See Letter from
Nanette Petruzzelli, Assoc. Register, U.S. Copyright Office,
to Jeffrey H. Brown, attorney for MSRF, Inc., Re: Fanciful
Ornamental Bottle Designs 1–9, Control No. 61-309-9525(S),
April 9, 2008. That determination was based on the principle
that “analogizing the general shape of a useful article to
works of modern sculpture” is insufficient for conceptual
separability. Compendium of Copyright Office Practices II
(Compendium II) § 505.03. Although Inhale’s water
container, like a piece of modern sculpture, has a distinctive
shape, “[t]he shape of the alleged ‘artistic features’ and of the
useful article are one and the same.” Id.
Because the Copyright Office’s reasoning is persuasive,
we adopt it for this case. The shape of a container is not
independent of the container’s utilitarian function—to hold
the contents within its shape—because the shape
accomplishes the function. The district court correctly
concluded that the shape of Inhale’s hookah water container
is not copyrightable.3
3
That the Copyright Office issued a certificate of registration to Inhale
does not contradict this conclusion. Because Inhale’s application included
skull-and-crossbones images on the container, the certificate of
registration does not show that the Copyright Office considers the shape
of the container copyrightable.
10 INHALE, INC. V. STARBUZZ TOBACCO, INC.
In summary, we hold that any part of a container that
merely accomplishes the containing is not copyrightable. We
do not mean to suggest that, in some other case, no elements
of a container “can be identified separately from, and are
capable of existing independently of,” the container.
17 U.S.C. § 101. Here, though, Inhale does not argue in its
opening brief that the exterior shape of the drooping ring is
conceptually separable because the interior shape of the
hookah does not protrude into the ring. Instead, its theory is
that the hookah’s “outer skin,” from top to bottom, can be
peeled away and analyzed separately. Therefore, its
argument in the petition for rehearing, that the exterior shape
of the drooping ring is uniquely separable, is waived. See
Greenwood v. Fed. Aviation Admin., 28 F.3d 971, 977 (9th
Cir. 1994). In addition, we emphasize that Inhale does not
argue that the imagery on the container is copyrightable. Our
opinion should not be understood to affect the
copyrightability of “[p]ictorial, graphic, and sculptural
works,” 17 U.S.C. § 101, that may be affixed to or made part
of a container.
III
A
Exercising its discretion under 17 U.S.C. § 505, the
district court awarded $111,993 in attorneys’ fees to Starbuzz.
The district court considered the five, non-exclusive factors
listed in Jackson v. Axton: “[1] the degree of success
obtained; [2] frivolousness; [3] motivation; [4] objective
unreasonableness (both in the factual and legal arguments in
the case); and [5] the need in particular circumstances to
advance considerations of compensation and deterrence.”
25 F.3d 884, 890 (9th Cir. 1994) (citation omitted). In ruling
INHALE, INC. V. STARBUZZ TOBACCO, INC. 11
that the factors favored an award to Starbuzz, the district
court relied on, among other things, Starbuzz’s “total success
on the merits” and the need for deterrence of “similarly
frivolous claims against innocent Defendants.”
The district court did not abuse its discretion because “the
reasons given by the district court in this case are well-
founded in the record and are in keeping with the purposes of
the Copyright Act,” Fantasy, Inc. v. Fogerty, 94 F.3d 553,
560 (9th Cir. 1996). A successful defense furthers the
purposes of the Copyright Act just as much as a successful
infringement suit does. See Fogerty v. Fantasy, Inc.,
510 U.S. 517, 527 (1994) (“[D]efendants who seek to
advance a variety of meritorious copyright defenses should be
encouraged to litigate them to the same extent that plaintiffs
are encouraged to litigate meritorious claims of
infringement.”).
B
Starbuzz also requests attorneys’ fees for this appeal
under 17 U.S.C. § 505. Section 505 gives us the same
discretion that it gave to the district court. See Disenos
Artisticos E Industriales, S.A. v. Costco Wholesale Corp.,
97 F.3d 377, 382 (9th Cir. 1996). We award attorneys’ fees
incurred in the defense of this appeal to Starbuzz in an
amount to be determined by the district court. See Fantasy,
94 F.3d at 561 (“[W]e conclude that fees are warranted under
§ 505 inasmuch as it served the purposes of the Copyright
Act for Fogerty to defend an appeal so that the district court’s
fee award would not be taken away from him.”).
12 INHALE, INC. V. STARBUZZ TOBACCO, INC.
IV
For the foregoing reasons, we affirm the district court’s
grant of summary judgment and award of attorneys’ fees to
Starbuzz. We award attorneys’ fees for this appeal in an
amount to be determined by the district court.
AFFIRMED AND REMANDED.
BEA, Circuit Judge, concurring in part:
I concur with the majority’s opinion, except for the part
of Part II.C which discusses the level of deference owed to
the Copyright Office’s interpretations of the Copyright Act.
The text of 17 U.S.C. § 101 does not suggest that
“distinctiveness” is an element of separability. Because the
statute is not ambiguous in this respect, it is unnecessary to
look to the Copyright Office for further guidance.
Once we start engrafting administrative interpretation to
our opinions, there is a tendency to look elsewhere than the
text of the enactments of Congress. This misplaces the power
of enactment of laws from the legislative to the administrative
branch and is contrary to my concept of the separation of
powers.