Case: 11-12769

Date Filed: 08/30/2011

Page: 1 of 67

Case No. 11-12769-A

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
_____________________________ KERNEL RECORDS OY, Plaintiff-Appellant v. TIMOTHY Z. MOSLEY P/K/A TIMBALAND; UMG RECORDINGS, INC.; INTERSCOPE-GEFFEN-A&M, A DIVISION OF UMG RECORDINGS, INC, D/B/A INTERSCOPE, D/B/A GEFFEN; MOSLEY MUSIC, LLC; UNIVERSAL MUSIC GROUP DISTRIBUTION, CORP.; NELLY FURTADO; EMI MUSIC PUBLISHING, EMI BLACKWOOD MUSIC, INC.; VIRGINIA BEACH MUSIC, WB MUSIC CORP., AND WARNER CHAPPELL MUSIC, INC., Defendant-Appellees ________________ ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA ___________________ PRINCIPAL BRIEF OF PLAINTIFF-APPELLANT KERNEL RECORDS OY ___________________ Richard S. Busch KING & BALLOW 315 Union Street, Suite 1100 Nashville, Tennessee 37201 Tel: (615) 259-3456 Fax: (615) 248-2860

Case: 11-12769

Date Filed: 08/30/2011

Page: 2 of 67

CERTIFICATE OF INTERESTED PARTIES Pursuant to Federal Rule of Appellate Procedure 26.1 and Eleventh Circuit Rule 26.1, Appellant states there are no changes to the previously filed Certificate of Interested Parties.

i

Case: 11-12769

Date Filed: 08/30/2011

Page: 3 of 67

STATEMENT REGARDING ORAL ARGUMENT Appellant requests oral argument. The district court‘s decision conflicts with other authority on this subject. No Circuit has interpreted the definition of ―United States work‖ in 17 U.S.C. § 101. This case presents an important issue regarding the United States‘ treaty obligations under the Berne Convention for the Protection of Literary and Artistic Works. CERTIFICATE OF TYPE SIZE AND STYLE This brief contains 13,770 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). This brief has been prepared in a proportionally spaced typeface using Times New Roman in 14-point font.

ii

Case: 11-12769

Date Filed: 08/30/2011

Page: 4 of 67

TABLE OF CONTENTS Certificate of Interested Parties ...................................................................................i Statement Regarding Oral Argument ....................................................................... ii Certificate of Type Size and Style ............................................................................ ii Table of Contents ..................................................................................................... iii Table of Citations ....................................................................................................... v Statement Regarding Jurisdiction .............................................................................. 1 Statement of the Issue on Appeal............................................................................... 1 Statement of the Case................................................................................................. 2 Statement of Facts ...................................................................................................... 4 Standard of Review .................................................................................................... 7 Summary of the Argument......................................................................................... 7 Argument.................................................................................................................... 8 I. The District Court Plainly Misinterpreted the definition of ―United States work‖ under 17 U.S.C. § 101. ......................................................................... 8 A. The District Court‘s interpretation of ―United States work‖ fails as a matter of statutory interpretation. ........................................................ 10 The District Court‘s interpretation of ―United States work‖ conflicts with Congress‘s intent in bringing United States law into conformity with the Berne Convention. ................................................................. 15

B.

II.

This Court Should Follow the Rationale Set forth in Moberg that publication on a foreign website is not publication ―in‖ the United States...................... 21

iii

Case: 11-12769

Date Filed: 08/30/2011

Page: 5 of 67

III.

The District Court erred in dismissing Kernel‘s case based on lack of registration because 17 U.S.C. § 411 is merely a ―time related directive.‖....................................................................................................... 28 The District Court erred in failing to allow amendment or supplement to Kernel‘s complaint to account for a later-acquired copyright registration. .................................................................................................... 35 A. The District Court abused its discretion in finding that Kernel could not show ―good cause‖ to amend its complaint under Rule 16(b)(4). ...................................................................................... 36 The District Court abused its discretion in refusing to grant leave to amend Kernel‘s complaint under Rule 15(b). ..................................... 40

IV.

B.

V.

The District Court erred by resolving a material dispute of fact over the meaning of the term ―disk magazine.‖ .......................................................... 48 Nelstar Publishing was not an indispensible party for the purposes of granting a permanent injunction. ................................................................... 55

VI.

Conclusion ............................................................................................................... 55 Certificate of Service ............................................................................................... 57

iv

Case: 11-12769

Date Filed: 08/30/2011

Page: 6 of 67

TABLE OF CITATIONS Auto-Owners Ins. Comp. v. Ace Electrical Serv. Inc., 648 F. Supp. 2d 1371 (M.D. Fla. 2009) ........................................................ 37 Baby Buddies, Inc. v. Toys ―R‖ Us, Inc., 611 F. 3d 1308 (11th Cir. 2010) ...................................................................... 7 Best Canvas Products & Supplies, Inc. v. Ploof Truck Lines, Inc. 713 F. 2d 618 (11th Cir. 1993) ...................................................................... 41 Blackmer v. United States, 284 U.S. 421 (1932)....................................................................................... 25 Dolan v. United States, 130 S. Ct. 2533 (2010)............................................................................passim Dussouy v. Gulf Coast Investment Corp., 660 F. 2d 594 (5th Cir. 1991) ........................................................................ 41 Eberhart v. United States, 546 U.S. 12 (2005)......................................................................................... 29 EEOC v. Arabian American Oil Co., 499 U.S. 244 (1991)....................................................................................... 25 Espey v. Wainwright, 734 F. 2d 748 (11th Cir. 1994) ...................................................................... 41 Fed. Reserve Bank of Atlanta v. Thomas, 220 F. 3d 1235 (11th Cir. 2000) .................................................................... 15 Foley Bros., Inc. v. Filardo, 336 U.S. 281 (1949)....................................................................................... 25 Foman v. Davis, 371 U.S. 178 (1962)...........................................................................41, 42, 43 Goldstein v. California, 412 U.S. 546 (1973)....................................................................................... 31 v

Case: 11-12769

Date Filed: 08/30/2011

Page: 7 of 67

Grayson v. Kmart Corp., 79 F. 3d 1086 (11th Cir. 1996) ...................................................................... 41 Herzog v. Castle Rock Entm‘t, 193 F. 3d 1241 (11th Cir. 1999) ...................................................................... 4 J. McIntyre Mach., Ltd. V. Nicastro, 131 S. Ct. 2780 (2011)................................................................................... 27 Kontrick v. Ryan, 540 U.S. 443 (2010)....................................................................................... 29 Moberg v. 33T LLC, 666 F. Supp 2d 415 (D. Del. 2009) ........................................................passim M.G.B. Homes, Inc. v. Ameron Homes, Inc., 903 F. 2d 486 (11th Cir. 1990) ...............................................................passim Morrison v. National Australia Bank, Ltd., 130 S. Ct. 2869 (2010).............................................................................25, 26 Murray v. The Charming Betsy, 6 U.S. (2 Cranch) 64 (1804) .......................................................................... 20 Palmer v. Braun, 376 F. 3d 1254 (11th Cir. 2004) .................................................................... 26 Positive Black Talk, Inc. v. Cash Money Records, Inc., 394 F. 3d 357 (5th Cir. 2004) ............................................................42, 43, 44 Reed Elsevier v. Muchnik, 130 S. Ct. 1237 (2010).............................................................................28, 42 Reyes-Gaona v. N.C. Growers Ass‘n, 250 F. 3d 861 (4th Cir. 2001) ........................................................................ 12 Sale v Haitian Centers Council, Inc., 509 U.S. 155 (1993)....................................................................................... 26 Shotz v. City of Plantation, vi

Case: 11-12769

Date Filed: 08/30/2011

Page: 8 of 67

344 F. 3d 1161 (11th Cir. 2003) .................................................................... 11 Smith v. Sch. Bd., 487 F. 3d 1361 (11th Cir. 2007) ...................................................................... 7 Smith v. United States, 507 U.S. 197 (1993)....................................................................................... 25 Sosa v. Airprint Systems, Inc., 133 F. 3d 1417 (11th Cir. 1998) ..............................................................36, 37 United Sav. Assn. v. Timbers of Inwood Forest Assocs., 484 U.S. 365 (1988)....................................................................................... 12 United States v. Castro, 837 F. 2d 441 (11th Cir. 1988) ...................................................................... 12 United States v. Fisher, 289 F. 3d 1329 (11th Cir. 2002) .................................................................... 11 United States v. James Daniel Good Real Property, 510 U.S. 43 (1993)......................................................................................... 29 United States v. Montalvo-Murillo, 495 U.S. 711 (1990).................................................................................30, 33 United States v. Steele, 147 F. 3d 1316 (11th Cir. 1998) .................................................................... 11 World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980)....................................................................................... 26

STATUTES 17 U.S.C. § 101 .................................................................................................passim 17 U.S.C. § 407(b) ................................................................................................... 32 17 U.S.C. § 408(a) ................................................................................................... 32 vii

Case: 11-12769

Date Filed: 08/30/2011

Page: 9 of 67

17 U.S.C. § 408(b) ................................................................................................... 32 17 U.S.C. § 411(a) ............................................................................................passim 17 U.S.C. § 412 ........................................................................................................ 31 18 U.S.C. § 3142(f) .................................................................................................. 33 18 U.S.C. § 3663A(a)(1) .......................................................................................... 30 18 U.S.C. § 3664(d)(5)............................................................................................. 29 U.S. Const. Art. I, § 8............................................................................................... 30 BOOKS Omni Complete Catalog of Computer Software (1984) .......................................... 54

CONGRESSIONAL DOCUMENTS 134 Cong. Rec. H10096 (daily ed. Oct. 12, 1988) .................................................. 16 134 Cong. Reg. S14544 (daily ed. Oct. 5, 1988)............... ...................................... 17 Berne Convention Implementation Act, Pub. L. No. 100-568 ..........................16, 20 H.R. Rep. No. 7083, 59th Cong. 2d Sess. ................................................................ 32 H.R. Rep. No. 2222, 60th Cong., 2d Sess. ............................................................... 30 U.S. Copyright Office, Annual Report of the Register of Copyrights (2007)......... 32

FEDERAL RULES OF CIVIL PROCEDURE Fed. R. Civ. P. 15(a)................................................................................................. 36 Fed. R. Civ. P. 15(b) ................................................................................................ 41 viii

Case: 11-12769

Date Filed: 08/30/2011

Page: 10 of 67

Fed. R. Civ. P. 16(b) ................................................................................................ 36 Fed. R. Civ. P. 16(b)(4)............................................................................................ 36

LAW REVIEWS 92 Minn. L. Rev. 1724 (2008) ...........................................................................23, 24

ix

Case: 11-12769

Date Filed: 08/30/2011

Page: 11 of 67

STATEMENT REGARDING JURISIDICTION This is an appeal from the District Court‘s grant of summary judgment to the defendants. The District Court had federal question jurisdiction under 28 U.S.C. § 1331. The District Court‘s Final Order was entered on June 7, 2011. Doc. No. 241. Appellant filed a timely notice of this appeal on June 14, 2011. Doc. Nos. 242 and 244. This Court has jurisdiction under 28 U.S.C. § 1291. STATEMENT OF THE ISSUE ON APPEAL Whether the District Court improperly classified the work ―Acid Jazzed Evening‖ as a ―United States work‖ under definition 1(C) of 17 U.S.C. § 101, thus making it subject to the registration requirement of 17 U.S.C. § 411(a), even though the work was first published in 2002 in Australia, a ―treaty party‖ whose term of protection was shorter than the United States. Whether the District Court erred in refusing to allow amendment or supplementation of Kernel‘s Complaint when Kernel had sought and received a Copyright registration before the entry of final judgment. Whether the District Court erred by resolving a material dispute of fact in ruling that publication on a ―disk magazine‖ meant publication ―on the Internet.‖ Whether the District Court erred by holding it could not issue a permanent injunction unless all copyright owners were joined in a single action.

1

Case: 11-12769

Date Filed: 08/30/2011

Page: 12 of 67

STATEMENT OF THE CASE This case concerns the unlawful and unauthorized copying of the sound recording and musical arrangement ―Acid Jazzed Evening‖ (―AJE‖) created by Norwegian computer musician Glenn Rune Gallefoss (―Gallefoss‖) in 2002, into the song ―Do It‖ released by Nelly Furtado on her 2006 album Loose. Doc. No. 241 at 2-3. After discovering the unauthorized copying of AJE into ―Do It,‖ Gallefoss assigned all transferable rights to Plaintiff-Appellant Kernel Records Oy (―Kernel‖), a Finnish Corporation, on August 16, 2007. Id. at 3. Kernel filed this suit in the Southern District of Florida on June 6, 2009. Doc. No. 1. Before the defendants answered, Kernel amended its complaint and added additional defendants and claims on February 9, 2010. Doc. No. 63. The defendant-

appellees to this case are the performers, writers, producers, publishers and record labels associated with commercial exploitation of ―Do It.‖ Doc. No. 241 at 3. Kernel did not obtain a United States copyright registration for the work before filing this action because AJE was first published in Australia, and, therefore, Kernel believed such registration was not required under 17 U.S.C. § 411(a). Kernel relied on this exemption from registration in both the Complaint and Amended Complaint. See Doc. Nos. 1 and 63.

2

Case: 11-12769

Date Filed: 08/30/2011

Page: 13 of 67

This reliance was unchallenged by the defendants during discovery, which closed on May 14, 2010. Doc. No. 110. The defendants filed four motions to dismiss, none of which were on this issue. See Doc. Nos. 9, 20, 74 and 83. Due to the pendency of one of these motions to dismiss, the defendants first filed their Answers on May 26, 2010, two weeks after the close of discovery. Doc. Nos. 127, 128, 129, 130 and 131. It was at this time, for the first time, defendants raised the issue of lack of copyright registration, among numerous affirmative defenses. See id. Summary judgment motions were filed just two days later, on May 28, 2010, including the Motion of Defendants Timothy Z. Mosley and Mosley Music LLC, which sought dismissal for failure to comply with the registration requirement of 17 U.S.C. § 411(a). See Doc. No. 138. Although the merits of the case had been briefed to the Court, and the Magistrate Judge requested and held oral argument specifically on issues he stated he believed important, which did not include the lack of copyright registration, the Magistrate Judge dismissed Kernel‘s claim without prejudice after over nine months of consideration, based on: (1) a novel (and erroneous) reading and

interpretation of the definition of United States work in 17 U.S.C. § 101 and the registration requirement of 17 U.S.C. § 411(a); and (2) a refusal to allow Kernel to amend or supplement its Complaint, since Kernel had acquired a copyright

3

Case: 11-12769

Date Filed: 08/30/2011

Page: 14 of 67

registration once the Court finally indicated, in a preliminary decision, it believed such registration was required. STATEMENT OF FACTS It is undisputed that the first publication of AJE was on a ―disk magazine‖ in Australia in 2002. Doc. No. 241 at 3. The District Court held that disk magazine meant publication ―on the Internet‖ from the disk magazine‘s web site in Australia, while Kernel presented facts to show that ―disk magazine‖ meant ―magazine on a computer disk.‖ See Section V, infra. Summary Judgment briefing was completed on July 6, 2010. Two and a half months later, on September 23, 2010, in response to the defendants‘ request to continue the trial date, which had already been re-scheduled for November 1, 2011, the District Court continued all deadlines until further order of the Court. Doc. No. 218. On September 27, 2010, sua sponte, the Magistrate Judge set a hearing specifically on whether AJE qualified as a sound recording under the Copyright Act and whether the District Court could grant a permanent injunction without all copyright owners being defendants to the action. Doc. No. 219. The hearing was held in front of Magistrate Judge Torres on October 28, 2011. True to the Court‘s Order, the only issues discussed were those noticed for hearing:

4

Case: 11-12769

Date Filed: 08/30/2011

Page: 15 of 67

So about a month prior, as we were working on the issues raised in the pending motions, there was a motion for enlargement of time for something. Knowing there was a November 1st trial date and the amount of time it would have taken to prepare for trial, at that point I issued an order that somewhat froze things based upon our then inclination on the pending motions which was to grant them for a variety of reasons. As we were putting pen to paper, so to speak, issues arose that I thought, in the interests of completeness and accuracy, required further exploration, and so that’s why we set this for hearing. So depending, of course, on the outcome of where we are today, I recognize that the November 1st trial date may no longer be realistic, but we can see where we are. Transcript of October 28, 2010 Hearing at 4:3-17. After a lengthy discussion of the issues, the Court ended the hearing having seemingly resolved the issues it had regarding summary judgment: Okay. All right. I will get you a ruling on the pending legal issues very shortly, and then obviously, depending upon how that works out, then we will set a status conference. Just telephonic. Nobody has to fly down. We will set a telephonic status conference to come up with a game plan if, in fact, further proceedings need to be done here. Id. at 120:13-19. Section 411 was not mentioned at all by the Court or counsel. Had the Court been concerned with Kernel‘s lack of registration, the entire oral argument would have been moot, since that issue would have made any discussion of the merits unnecessary. As a result, Kernel had no reason to believe the Court had not resolved this issue in its favor. 5

Case: 11-12769

Date Filed: 08/30/2011

Page: 16 of 67

A ruling was not issued shortly after the hearing nor did the Court rule on the issues argued there. Five months later, on March 31, 2011, the Court issued a ―preliminary order‖ indicating it would later grant summary judgment against Kernel on the issue of lack of registration because AJE was first published on the Internet, a factual assertion which Kernel contested. Doc. No. 227. Although it disagreed with the legal and factual bases of the Court‘s ruling, in order to moot the point and proceed to the merits of the case, Kernel immediately moved to register its rights in AJE with the Copyright Office, and on April 1, 2011 (the next day after the Court issued it preliminary order) moved the Court for a stay of its final order and reconsideration. Doc. No. 230. Before the Court considered Kernel‘s motion, Kernel received a Copyright Registration on April 29, 2011 for the musical arrangement and sound recording of AJE having Registration Number SR 671-728. Doc. No. 235-1. On May 5, 2011, Kernel then moved to amend its complaint solely to add its copyright registration. Doc. No. 235. The Court issued its final order and denied Kernel‘s Motion to Amend on June 13, 2011. Doc. No. 241. The District Court‘s ruling makes new law regarding what constitutes publication in the United States and what constitutes a United States work under 17 U.S.C. § 101. Not only was this ruling unprecedented, but it represents a break from the existing case law and scholarship on the issue, and directly contradicts the 6

Case: 11-12769

Date Filed: 08/30/2011

Page: 17 of 67

Berne Convention, the very treaty the United States was enacting when it amended 17 U.S.C. § 411 to its current form. Indeed, the District Court‘s ruling brings an entire class of works under the registration requirement of United States Copyright law that were never contemplated by Congress—every work that had the Internet as its place of first publication, regardless of whether the host server is outside of the United States. STANDARD OF REVIEW This Court reviews the District Court‘s grant of summary judgment de novo construing all facts in the light most favorable to Appellant, the non-moving party. Baby Buddies, Inc. v. Toys “R” Us, Inc., 611 F.3d 1308, 1314 (11th Cir. 2010). This Court reviews the District Court‘s denial of Appellant‘s Motion to Amend its Complaint for abuse of discretion. Smith v. Sch. Bd., 487 F.3d 1361, 1366 (11th Cir. 2007). SUMMARY OF THE ARGUMENT Section 411(a) of the Copyright Act, 17 U.S.C. § 411, provides that no infringement of a ―United States work‖ may be instituted until it is registered with the United States Copyright Office. The Copyright Act specifically enumerates how a published work qualifies as a United States work in 17 U.S.C. § 101 based on the term of protection in each ―treaty party‖ where the work is published. The District Court ruled that the work at issue was published in every country in the 7

Case: 11-12769

Date Filed: 08/30/2011

Page: 18 of 67

world simultaneously, including treaty parties with shorter terms of protection than the United States. Since this sort of publication is not one of the specifically enumerated definitions in 17 U.S.C. § 101, AJE is not a United States work. This conclusion is supported by a plain reading of the statute and its legislative history. Further, as soon as the District Court indicated it was inclined to rule that the work at issue was a United States work, Kernel promptly sought and received a copyright registration and moved to amend or supplement its Complaint. The Court should have allowed that amendment because Kernel met the burden under the Federal Rules, because 17 U.S.C. § 411(a) does not deprive the Court of its jurisdiction or adjudicative power, and because this Court has held that allowing amendment to cure a defect under 17 U.S.C. § 411(a) is allowable. See M.G.B. Homes v. Ameron Homes, 903 F.2d 1486, 1489 (11th Cir. 1990). Finally, in an interlocutory order, the District Court ruled that all copyright owners needed to be present in the action in order for the court to issue a permanent injunction. This conclusion is unsupported by case law and should be reversed. ARGUMENT I. The District Court Plainly Misinterpreted the definition of “United States work” under 17 U.S.C. § 101. The District Court dismissed Kernel‘s case for failure to comply with the copyright registration requirement of 17 U.S.C. § 411(a). Order, Doc. No. 241 at 8

Case: 11-12769

Date Filed: 08/30/2011

Page: 19 of 67

22-23.

Section 411(a) provides, in relevant part, that no suit for copyright

infringement of a ―United States work‖ may be instituted until it is registered with the United States Copyright Office. 17 U.S.C. § 411(a). For purposes of 17 U.S.C. § 411, a work is a ―United States work‖ only if (1) in the case of a published work, the work is first published — (A) in the United States; (B) simultaneously in the United States and another treaty party or parties, 1 whose law grants a term of copyright protection that is the same as or longer than the term provided in the United States; (C) simultaneously in the United States and a foreign nation that is not a treaty party; or (D) in a foreign nation that is not a treaty party, and all of the authors of the work are nationals, domiciliaries, or habitual residents of, or in the case of an audiovisual work legal entities with headquarters in, the United States[.] 17 U.S.C. § 101 (emphasis added). The District Court held both that AJE was first published on the Internet by virtue of it being placed on a website hosted in Australia, despite Kernel‘s evidence to the contrary, and that first publication on the Internet constitutes simultaneous publication in the United States and all other nations around the world that have Internet service. Doc. No. 241 at 22-23. Based on this conclusion,

1

A ―treaty party‖ is a country or intergovernmental organization other than the United States that is a party to an international agreement. 17 U.S.C. § 101. 9

Case: 11-12769

Date Filed: 08/30/2011

Page: 20 of 67

the District Court ruled that AJE was a United States work under Definition 1(C) and subject to the registration requirement of 17 U.S.C. § 411(a). Id. As

demonstrated below, this conclusion was, for numerous reasons, a plain error of statutory interpretation and is in direct conflict with Congress‘s expressly stated intent. A. The District Court’s interpretation of “United States work” fails as a matter of statutory interpretation.

Since the District Court determined AJE was published simultaneously in every country in the world that had Internet access by virtue of being first published on the Internet from a website based in Australia, Doc. No. 241 at 1, 16, it was, by the District Court‘s own logic, published in: (1) treaty parties whose term of protection was the same as or longer than the term provided in the United States (―longer-term parties‖); (2) treaty parties whose term of protection was shorter than the United States (―shorter-term parties‖); (3) non-treaty parties; 2 and

The District Court never mentions which ―non-treaty party‖ the work was published in simultaneously in August 2002 by virtue of the Internet. The list of the countries which had no copyright treaties in common with the United States as of August 2002 is relatively short and populated by developing countries: Afghanistan, Bhutan, Comoros, Eritrea, Ethiopia, Iran, Iraq, North Korea, Micronesia, Montenegro, Nepal, Samoa, San Marino, Syria, Turkmenistan, Uzbekistan and Yemen. See U.S. Copyright Office, Circular No. 38A, International Copyright Relations of The United States (2010), available at <http://www.copyright.gov/circs38a.pdf>.
2

The District Court‘s opinion, and indeed the record itself, is utterly silent on the Internet‘s availability in any of these countries in 2002, even though the Internet‘s 10

Case: 11-12769

Date Filed: 08/30/2011

Page: 21 of 67

(4) the United States. As discussed below, this conclusion means, without a doubt, that AJE cannot be a United States work because its first publication includes countries beyond those included in any of the expressed statutory definitions in Sections 1(A)-(D) of 17 U.S.C. § 101. The District Court‘s conclusion that AJE was a United States work under Definition 1(C) violates the basic canons of statutory interpretation. To illuminate statutory intent, the Eleventh Circuit applies the traditional tools of statutory construction. Shotz v. City of Plantation, 344 F.3d 1161, 1167 (11th Cir. 2003). Though malleable, the methodology is subject to certain rules. Id. ―The first rule in statutory construction is to determine whether the ‗language at issue has a plain and unambiguous meaning with regard to the particular dispute.‘‖ United States v. Fisher, 289 F.3d 1329, 1337-38 (11th Cir. 2002). The Court must presume

Congress meant what it said. United States v. Steele, 147 F.3d 1316, 1318 (11th Cir. 1998) (en banc). As stated by the Supreme Court:

availability and accessibility in these countries is absolutely essential to the District Court‘s holding. The District Court assumes, without any basis, that Internet access is freely available in each of them. However, some of these countries filter what websites can be viewed within their borders. See, e.g., Ian Black, How Iran is filtering out dissent, GUARDIAN.CO.UK, June 30, 2009, <http://www.guardian.co.uk/technology/2009/jun/30/internetcensorship-iran> (accessed on August 14, 2011) and Tom Zeller Jr., In North Korea, the Internet is only for a few, NEW YORK TIMES, October 22, 2006, <http://www.nytimes.com/2006/10/22/technology/22iht-won.3251122.html> (accessed on August 16, 2011). 11

Case: 11-12769

Date Filed: 08/30/2011

Page: 22 of 67

Statutory construction . . . is a holistic endeavor. A provision that may seem ambiguous in isolation is often clarified by the remainder of the statutory scheme--because the same terminology is used elsewhere in a context that makes its meaning clear, or because only one of the permissible meanings produces a substantive effect that is compatible with the rest of the law United Sav. Assn. v. Timbers of Inwood Forest Assocs., 484 U.S. 365, 371 (1988). A general guide to statutory construction states ―that the mention of one thing implies the exclusion of another; expressio unius est exclusio alterius.‖ United States v. Castro, 837 F.2d 441, 442 (11th Cir. 1988). Put another way, ―where a law expressly describes a particular situation to which it shall apply, what was omitted or excluded was intended to be omitted or excluded.‖ Reyes-Gaona v. N.C. Growers Ass’n, 250 F.3d 861, 865 (4th Cir. 2001). The statute specifies four ways a published work qualifies as a United States work, three of which are relevant to the inquiry herein. A work is a United States work under Definition 1(A) if it is first published in the United States; under Definition 1(B) if it is first published simultaneously in the United States and a longer-term party or parties; and under Definition 1(C) if it is published in the United States and a non-treaty party. 17 U.S.C. § 101. Definition 1(D) is

inapplicable as it is undisputed the author of AJE, Gallefoss, is not a national, domiciliary, or habitual resident of the United States.

12

Case: 11-12769

Date Filed: 08/30/2011

Page: 23 of 67

The District Court ruled that AJE was a United States work under Definition 1(C). This was an error because, according to the District Court, AJE had been published in other countries with whom the United States has copyright treaties (―treaty parties‖), a category omitted from Definition 1(C) under 17 U.S.C. § 101. Definition 1(C) specifically enumerates only simultaneous publication in the United States and a non-treaty party; thus, publication in a treaty party is outside of Definition 1(C). Under the canon expressio unius est exclusio alterius, the Court should not add additional places of publication beyond those that were expressed. Since a published work can ―only‖ qualify as a United States work if it meets a situation described in Definitions 1(A)-(D), AJE is not a United States work. The District Court seemingly understood the exclusion of additional places of publication not explicitly enumerated with respect to Definition 1(B), writing: AJE does not qualify as a ―United States work‖ under § 101(1)(B) because at the time of first publication in 2002, Australia‘s term of copyright protection (the life of the author plus 50 years) was not the same or longer than the term of protection provided in the United States (the life of the author plus 70 years). Doc. No. 241 at 6, n.5 (internal citation omitted); see also Doc No. 172 at 11, n. 11 for the term of protection in Australia in 2002. Thus, the District Court properly excluded AJE from Definition 1(B) because, under the expressio unius canon, it correctly realized that works published in the United States, in a longer-term party, and in a shorter-term party were not covered by 1(B). The District Court correctly 13

Case: 11-12769

Date Filed: 08/30/2011

Page: 24 of 67

understood that Definition 1(B) only applied to works published simultaneously in the United States and a longer-term party or parties, the places of publication expressly enumerated in the definition. Even looking beyond the expressio unius canon, though, it is clear from the statutory scheme that each clause of the definition of United States work must stand alone and be read separately. Were this not the case, Definition 1(A) (first published in the United States) would swallow Definitions 1(B) (first published simultaneously in the United States and a longer term party) and 1(C) (first published simultaneously in the United States and non-treaty party) because in order to fit Definitions 1(B) and 1(C), the works must be ―first published in the United States‖ (Definition 1(A)). Clearly, Congress did not intend this absurdity. Congress specified that a work was a United States work ―only if‖ it met the definitions in 17 U.S.C. § 101. A work published in a country not included in each individual definition was, therefore, intentionally omitted. In other words, and by way of example, consider a work published simultaneously on the Internet, or otherwise, in 2002 in the United States, Australia (a shorter-term party), Germany (a longer-term party), and Iraq (a non-treaty party). Such a work does not qualify under Definition 1(A) because it includes publication outside the United States; does not qualify under Definition 1(B)

14

Case: 11-12769

Date Filed: 08/30/2011

Page: 25 of 67

because it includes publication in a shorter-term party (Australia);3 and does not qualify under Definition 1(C) because it includes publication in ―treaty parties‖ (Germany and Australia). Since the District Court ruled that AJE was published in every country with Internet access, and those publications were in locations outside of the specific situations enumerated in the individual definitions of ―United States work,‖ AJE is not a United States work subject to the registration requirement of 17 U.S.C. § 411(a). B. The District Court’s interpretation of “United States work” conflicts with Congress’s intent in bringing United States law into conformity with the Berne Convention.

Properly reading and interpreting the definition of United States work alone should lead this Court to find that AJE is not a United States work subject to the registration requirement of 17 U.S.C. § 411(a). If this Court finds the statutory language is ambiguous, though, it may examine extrinsic materials, including legislative history, to determine Congressional intent. Fed. Reserve Bank of

Atlanta v. Thomas, 220 F.3d 1235, 1239 (11th Cir. 2000). The legislative history makes absolutely clear that Congress did not intend works first published on the Internet to be considered United States works because Congress intended the
3

Various countries still adhere to ―life of author plus 50 years.‖ See, e.g., China <http://beijing.usembassy-china.org.cn/copyright.html> and Canada <http://lawslois.justice.gc.ca/eng/acts/C-42/page-5.html#h-6> 15

Case: 11-12769

Date Filed: 08/30/2011

Page: 26 of 67

definitions of United States work to track the language of the Berne Convention for the Protection of Literary and Artistic Works (―Berne Convention‖), under which the United States would not be considered the ―country of origin‖ for AJE. In 1988, Congress passed the Berne Convention Implementation Act (the ―BCIA‖), Pub. L. No. 100-568, 102 Stat. 2853, 2857, which amended certain provisions in the Copyright Act to bring United States law into compliance with the Berne Convention. Specifically, Congress sought to amend United States law to comply with Article 5(2) of the Berne Convention which provides, ―the enjoyment and the exercise of [the] rights [guaranteed by Berne] shall not be subject to any formality.‖ Prior to the BCIA‘s passage, § 411(a) read, ―no action for infringement of the copyright in any work shall be instituted until registration of the copyright claim has been made in accordance with this title.‖ 17 U.S.C. § 411(a) (1978). Registration with the Copyright Office was an absolute prerequisite to suit regardless of the country of origin of a work. The House and Senate differed on whether § 411(a) was a prohibited formality under Article 5(2) of the Berne Convention. The House bill maintained the current law regarding registration as a prerequisite to a lawsuit, while the Senate bill eliminated the registration requirement entirely. See 134 Cong. Rec. H10096 (daily ed. Oct. 12, 1988). 16

Case: 11-12769

Date Filed: 08/30/2011

Page: 27 of 67

The Senate was concerned that by signaling to the other Berne nations that the United States‘ registration requirement was permitted under Article 5(2), those nations would be emboldened to impose truly onerous registration requirements on United States‘ authors. See 134 Cong. Rec. S14544 (daily ed. October 5, 1988). Discussions between the houses of Congress developed the ―two-tier‖ system eventually passed that is currently in the law today. Under the House/Senate compromise, works whose country of origin was a foreign nation adhering to the Berne Convention were exempt from the registration prerequisite; all other works remain subject to § 411(a)‘s registration requirement. See id. Although not as simple as eliminating the registration requirement completely, the Senate found: [The amendment creating a two-tier system] establishes a workable test for determining which works may be the subject of infringement actions without prior registration with the Copyright Office. The amendment includes a provision clearly defining the circumstances under which the country of origin of a Berne Convention work is and is not the United States. This definitional provision tracks the definition of “country of origin” found in Article 5(4) of Berne. Id. (emphasis added). Thus, it is clear that the amendment creating the two-tier system currently in place in the Copyright Act was intended to track the language of the ―country of origin‖ section of the Berne Convention, which provides that the country of origin shall be considered to be: 17

Case: 11-12769

Date Filed: 08/30/2011

Page: 28 of 67

(a) in the case of works first published in a country of the Union, that country; in the case of works published simultaneously4 in several countries of the Union which grant different terms of protection, the country whose legislation grants the shortest term of protection; (b) in the case of works published simultaneously in a country outside the Union and in a country of the Union, the latter country; Berne Convention Art. 5(4) (as amended on September 28, 1979) (emphasis added). Article 5(4) of the Berne Convention establishes two general rules for works published in multiple places simultaneously: if published in multiple Berne countries, the work‘s country of origin is the country with the shorter term; if published in a single Berne country and a non-Berne country, the country of origin is the Berne country. Thus, reusing the example mentioned, supra, for a work simultaneously first published in 2002 in the United States, Australia, Germany and Iraq, the county of origin under Berne would be Australia, because Australia was a country of the Berne Union and had the shortest term of protection. The Senate Statement is absolutely clear that the adoption of the Berne framework was intended:

4

Under the Berne Convention, a work is considered simultaneously published if it was published in two or more countries within thirty days of its first publication. Berne Convention Art. 3(4). The District Court held ―simultaneous‖ meant ―existing or occurring at the same time: exactly coincident,‖ based on the dictionary definition. Doc. No. 241 at 18. The distinction is not relevant here, but given Congress‘s intent to track the Berne Convention, the Berne definition was probably intended. 18

Case: 11-12769

Date Filed: 08/30/2011

Page: 29 of 67

Obviously, works first published in the United States are works of United States origin. So are works simultaneously first published in the United States and in a non-Berne country. Conversely, works first published solely in a foreign Berne member nation are not works of United States origin. The country of origin of works simultaneously first published in the United States and in another Berne member nation is determined by reference to the term of protection granted by the laws of the two nations to the class of work in question. If the term of protection granted by U.S. law is shorter or the same as the term granted by the other nation in question, the work‘s country of origin is the United States. Otherwise, the work’s country of origin is not the United States. 134 Cong. Rec. at S14555 (emphasis added). Under the framework of Article 5(4) of the Berne Convention, then, AJE would not be considered a United States work if it was considered to be published simultaneously in every country where the Internet was accessible—its country of origin would be whichever country had the shortest term of copyright protection at the time of publication. The Senate also realized that determining the precise country of origin of a work was unnecessary under the amended § 411; all that is necessary is determining whether the United States is or is not the country of origin. Id. The final version of the BCIA memorializes this structure, by defining a ―Berne Convention work‖ as a work that was ―first published in a nation adhering to the Berne Convention, or was simultaneously first published in a nation adhering to the Berne Convention and in a foreign nation that does not adhere

19

Case: 11-12769

Date Filed: 08/30/2011

Page: 30 of 67

to the Berne Convention.‖ See Pub. L. No. 100-568, 102 Stat. 2853, 2857 § 4 (emphasis added). The ―country of origin‖ of a Berne Convention work section in the BCIA mirrors the current Copyright Act‘s definition of ―United States work‖ in § 101, with ―nation adhering to the Berne Convention‖ in the place of ―treaty party.‖ See id. Thus, under the law as it existed after the passage of the BCIA, a work published in every country was expressly and unarguably not subject to the registration requirement of § 411(a). When these provisions were amended again as a part of the Digital Millennium Copyright Act, the definition of ―Berne Convention Work‖ was eliminated because Congress expanded the § 411(a) exemption to other copyright treaties. See Pub. L. 105-304, 112 Stat. 2860 § 102(a)(2) (1998). While Congress did expand the works exempted under § 411(a) beyond those of the Berne Convention, there is no evidence Congress reversed course and sought to violate the Berne Convention in doing so, exactly what the District Court‘s Order does. Even aside from the explicit statements made by the Senate and the previous structure of the Act, § 411(a) should be read as being consistent with the Berne Convention, unless such a reading is impossible. See Murray v. The Charming Betsy, 6 U.S. (2 Cranch) 64, 118, 2 L. Ed. 208 (1804) (―an act of Congress ought never to be construed to violate the law of nations, if any other possible 20

Case: 11-12769

Date Filed: 08/30/2011

Page: 31 of 67

construction remains . . .‖)

The District Court‘s interpretation unnecessarily

creates a conflict between United States law and the very treaty the United States was attempting to implement. Congress undoubtedly did not intend to create such a conflict, particularly when Congress was expressly seeking to avoid a conflict between § 411(a) and the Berne Convention. When considering the definition of United States work in light of the legislative history, it is clear that Congress did not intend works such as AJE to be subject to the registration requirement of § 411(a). II. This Court Should Follow the Rationale Set Forth in Moberg that Publication on a Foreign Website is Not Publication “in” the United States. The District Court recognized that only one case had previously addressed the issue presented here: Moberg v. 33T LLC, 666 F. Supp. 2d 415 (D. Del. 2009). Doc. No. 227 at 2. While the District Court frames its opinion as a disagreement with Moberg, Moberg did not deal with the statutory interpretation engaged in above. The Moberg Court considered the work at issue in reference to Definition 1(B) because the length of copyright protection was the same as or longer in Germany than that of the United States. Moberg, 666 F. Supp. 2d at 419, n. 7. Under the District Court‘s analysis in the instant case, the fact that the website was based in Germany is irrelevant as Internet publication is simultaneously published in every jurisdiction. 21

Case: 11-12769

Date Filed: 08/30/2011

Page: 32 of 67

The Moberg Court realized that equating posting of material on a foreign website with publishing a work in the United States would distort the purposes of the Copyright Act and the Berne Convention. While the District Court focuses on whether a work uploaded to the Internet is ―published,‖ the more-proper inquiry is whether the publication happened ―in‖ the United States. In Moberg, the plaintiff was a professional photographer living in Sweden. Moberg, 666 F. Supp. 2d at 418. The plaintiff‘s photographs showed up in 2007 on some United States-based websites. Id. Moberg filed suit in the United States against the operator of these websites alleging violations of the Copyright Act. Id. Moberg had never registered his copyright in the United States. Id. at 419. The defendants in Moberg took a similar position to what the defendants here have argued with respect to posting foreign works on the Internet: Defendants contend that plaintiff‘s photographs, which were created undisputably outside the United States, are United States works because when they were posted on a German website, they were ―published‖ simultaneously in Germany and in the United States. [citation to 17 U.S.C. § 101]. Defendants argue that it is “well settled that Internet publications are published everywhere simultaneously, regardless of the location of the server hosting the website.” (Def. Br. at 7.) Therefore, because the posting of a photograph on a website simultaneously ―publishes‖ the photograph ―everywhere,‖ including the United States, it is a ―United States work,‖ and as such, it must be registered prior to filing suit for infringement. Moberg v. 33T LLC, 666 F. Supp. at 419 (emphasis added).

22

Case: 11-12769

Date Filed: 08/30/2011

Page: 33 of 67

The Moberg court disagreed that it was ―well settled‖ that Internet publications are published everywhere simultaneously for purposes of the Copyright Act. Id. at 420. The court observed that no court had assessed the correlation between posting of foreign copyrighted works on a foreign website and the copyright holder‘s ability to file suit for infringement in the United States pursuant to the United States Copyright Act. Id. However, it found a highly persuasive law review article on the issue.5 The court stated that the determination of whether the photographs were United States works depended on the resolution of two issues: (1) whether the posting of the photographs on the Internet was considered ―publishing,‖ and if so (2) whether ―publishing‖ on the Internet caused the photographs to be published only in the country where the host server of Internet site is located, or in every country around the world simultaneously. Moberg, 666 F. Supp. at 421. On the first of the two issues the court stated: ―the question of whether an Internet posting constitutes publication under U.S. law and the Berne Convention remains

5

In his law journal article, ―Toward a Functional Definition of Publication in Copyright Law,‖ 92 Minn. L. Rev. 1724, 1749 (2008), Thomas Cotter considered, inter alia, the interrelation between the Copyright Act, the Berne Convention, and the Internet, and what constitutes ―publication.‖ Moberg v. 33T LLC, 666 F. Supp. 2d 415, 420 (D. Del. 2009). 23

Case: 11-12769

Date Filed: 08/30/2011

Page: 34 of 67

unresolved.‖ Id. at 422. 6 First, the court reviewed the defendants‘ statement that it is well settled that ―Internet publications are published everywhere

simultaneously‖ and concluded the issue was far from settled. Id. at 420. The defendants had cited two cases that the court believed only made the observation that the ―Internet is located in no particular geographical location and it is available to anyone worldwide.‖ Id. The court noted that the fact that defendants did not cite to any case that directly supported their position evidenced the lack of any court‘s consideration of the issues, let alone consensus on it. Id. The court agreed with Professor Cotter that the determination of country of origin is not so simple, as that determination hinges on whether the work is ―published,‖ and if so, ―where the work is ‗published.‘‖ Id. The Moberg court then squarely rejected the idea that photographs became ―U.S. works‖ subject to United States registration requirements because they were simultaneously posted online in Germany and the United States. It stated that such an outcome would ―overextend and pervert the United States copyright laws, and would be contrary to the Berne Convention.‖ Id. at 420. Ultimately, the Moberg court concluded:
6

In making this observation the court was informed by the careful analysis done by Professor Cotter where he concluded that: ―[o]n balance, despite some commonsense appeal to the notion that works transmitted over the Internet are necessarily published, and despite a plausible textual basis for reaching this result, it is hardly obvious that this result would be desirable.‖ 92 Minn. L. Rev. 1724, 1787-88 (2008). 24

Case: 11-12769

Date Filed: 08/30/2011

Page: 35 of 67

Thus, if the publishing of plaintiff‘s photographs on the German website simultaneously caused them to be published in the United States, and such publication transformed the work into a United States work, plaintiff would be subjected to the very formalities that the Berne Convention eschews. To hold otherwise would require an artist to survey all the copyright laws throughout the world, determine what requirements exist as preconditions to suits in those countries should one of its citizens infringe on the artist‘s rights, and comply with those formalities, all prior to posting any copyrighted image on the Internet. The Berne Convention was formed, in part, to prevent exactly this result Id. at 422-23. The District Court criticizes the Moberg Court‘s result for being ―policy driven,‖ but fails to acknowledge that the Moberg approach was driven by common sense and foreign authors‘ expectations—even if placing materials on a website constitutes ―publication‖ under 17 U.S.C. § 101 such publication must still occur ―in the United States‖ to be considered a United States work. The Supreme Court in Morrison v. National Australia Bank, Ltd. has recently reiterated: It is a ―longstanding principle of American law ‗that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.‘‖ EEOC v. Arabian American Oil Co., 499 U. S. 244, 248 (1991) (―Aramco”) (quoting Foley Bros., Inc. v. Filardo, 336 U. S. 281, 285 (1949)). This principle represents a canon of construction, or a presumption about a statute‘s meaning, rather than a limit upon Congress‘s power to legislate, see Blackmer v. United States , 284 U. S. 421, 437 (1932). It rests on the perception that Congress ordinarily legislates with respect to domestic, not foreign matters. Smith v. United States, 507 U. S. 197 , n. 5 (1993). Thus, ―unless there is the affirmative intention of the Congress clearly expressed‖ to give a statute extraterritorial 25

Case: 11-12769

Date Filed: 08/30/2011

Page: 36 of 67

effect, ―we must presume it is primarily concerned with domestic conditions.‖ Aramco, supra, at 248 (internal quotation marks omitted). The canon or presumption applies regardless of whether there is a risk of conflict between the American statute and a foreign law, see Sale v. Haitian Centers Council, Inc., 509 U. S. 155, 173–74 (1993). When a statute gives no clear indication of an extraterritorial application, it has none. Morrison v. Nat’l Austl. Bank Ltd., 130 S. Ct. 2869, 2877-78 (2010) (emphasis added). The Eleventh Circuit has expressly recognized this principle already as it applies to the Copyright Act. See Palmer v. Braun, 376 F.3d 1254, 1258 (11th Cir. 2004) (―[F]ederal copyright law has no extraterritorial effect, and cannot be invoked to secure relief for acts of infringement occurring outside the United States.‖). A ruling that placing material on a foreign website constitutes publication in the United States is in direct conflict with the analysis required to determine whether an action occurs in a specific forum for personal jurisdiction purposes. As the Supreme Court has also recently reiterated: This Court has stated that a defendant‘s placing goods into the stream of commerce ―with the expectation that they will be purchased by consumers within the forum State‖ may indicate purposeful availment. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980) (finding that expectation lacking). But that statement does not amend the general rule of personal jurisdiction. It merely observes that a defendant may in an appropriate case be subject to jurisdiction without entering the forum-itself an unexceptional proposition--as where manufacturers or distributors ―seek to serve‖ a given State‘s market. Id., at 295, 100 S. Ct. 559, 62 L. Ed. 2d 490. The principal inquiry in cases of this sort is whether the defendant’s activities manifest an intention to 26

Case: 11-12769

Date Filed: 08/30/2011

Page: 37 of 67

submit to the power of a sovereign. In other words, the defendant must ―purposefully avai[l] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.‖ J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. 2780, 2788 (2011) (emphasis added). The ruling of the District Court creates an unnecessary exception to the prohibition on extra-territorial application of the Copyright Act solely for the purposes of the definition of ―United States work‖ under 17 U.S.C. § 101. Every foreign author who first publishes his work on the Internet will have been deemed to have created a ―United States work‖ regardless of their intention about whether the work will be disseminated in the United States. This would include foreign authors publishing works in foreign languages regarding events occurring entirely outside the United States such as the revolution in Libya or the tsunami in Japan. At the same time, the United States will not accept jurisdiction over these categories of ―United States works‖ unless their authors meet the United States‘ jurisdictional requirements. For instance, two foreign authors may dispute the authorship of a work created entirely outside the United States but first published on the Internet. Under the rationale of the District Court, this work is a United States work subject to the registration requirement; however, absent a connection to the United States, a United States court would not accept jurisdiction over their suit. In fact, neither the defendants nor the District Court cited a single case where

27

Case: 11-12769

Date Filed: 08/30/2011

Page: 38 of 67

merely posting something on the Internet in a foreign nation, without more, subjected a person to United States law. Ultimately, given the importance of the Berne Convention and other copyright treaties to international copyright law, this Court should hold that ―published‖ in 17 U.S.C. § 101 means ―published within the territorial jurisdiction of the United States.‖ Any other definition would, as the Moberg court concluded, ―overextend and pervert the United States copyright laws, and would be contrary to the Berne Convention.‖ Moberg, supra. III. The District Court erred in dismissing Kernel’s case based on lack of registration because 17 U.S.C. § 411 is merely a “time related directive.” Section 411(a) of the Copyright Act, which provides that no infringement action involving a United States work ―shall be instituted until . . . registration of the copyright claim has been made,‖ is a species of ―time-related directive‖ and should not be interpreted as a bar to a Court hearing an infringement suit if complied with at a later time. As Kernel did ultimately comply with the

registration requirement before judgment was entered against it, the District Court should not have dismissed this case. The registration requirement of ―§ 411(a) does not restrict a federal court‘s subject-matter jurisdiction‖ to adjudicate a copyright infringement case. Reed Elsevier v. Muchnik, 130 S. Ct. 1237, 1249 (2010). In the same term that the Supreme Court decided Reed Elsevier, the Court also addressed ―time-related 28

Case: 11-12769

Date Filed: 08/30/2011

Page: 39 of 67

directives‖—―rules that do not limit a court‘s jurisdiction, but rather regulate the timing of motions or claims brought before the court.‖ Dolan v. United States, 130 S. Ct. 2533, 2538 (2010). These rules ―seek to promote the orderly process of litigation by requiring that the parties take certain procedural steps at certain specified times.‖ Henderson v. Shinseki, 562 U.S. __, No. 09-1036, 6 (2011). ―Unless a party points out to the court that another litigant has missed such a deadline, the party forfeits the deadline‘s protection.‖ Dolan, 130 S. Ct. at 2538 (citing Kontrick v. Ryan, 540 U.S. 443, 454-456 (2010); Eberhart v. United States, 546 U.S. 12, 19 (2005) (per curiam)). In Dolan v. United States, the Supreme Court considered several factors in holding that a 90-day deadline in the Mandatory Victims Restitution Act of 1996, 18 U.S.C. § 3664(d)(5), (the ―MVRA‖) ―does not deprive a judge or other public official of the power to take the action to which the deadline applies if the deadline is missed.‖ Dolan, 130 S. Ct. at 2538. Applying the logic of Dolan to the instant case, the Court should have allowed Kernel‘s later registration to cure the 411(a) defect. The Dolan Court considered several factors. First, where a statute ―does not specify a consequence for noncompliance with its timing provisions, federal courts will not in the ordinary course impose their own coercive sanction.‖ Id. at 2539 (quotations omitted) (citing United States v. James Daniel Good Real Property, 29

Case: 11-12769

Date Filed: 08/30/2011

Page: 40 of 67

510 U.S. 43, 63 (1993); United States v. Montalvo-Murillo, 495 U.S. 711, 722 (1990)). Like the MVRA, the Copyright Act does not ―specify a consequence for noncompliance‖ with the registration requirement of § 411(a). Second, the court considers the substantive purpose upon which the statutory text places primary importance. Dolan, 130 S. Ct. at 2539. The MVRA places primary importance upon imposing restitution upon those convicted of certain federal crimes. Id. (quoting 18 U.S.C. § 3663A(a)(1) (―notwithstanding any other provision of law, when sentencing a defendant convicted of [a specified] offense . . . , the court shall order . . . that the defendant make restitution to the victim of the offense‖)). The Copyright Act places primary importance on the protection of the rights of copyright owners ―because [such] policy is believed to be for the benefit of the great body of people in that it will stimulate writing and invention to give some bonus to authors and inventors.‖ H.R. Rep. No. 2222, 60th Cong., 2d Sess. (Report on the Copyright Act of 1909). Indeed, the Act‘s constitutional basis of authority states that ―The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.‖ U.S. Const. art. I, § 8. The Constitution outlines both the goal that Congress may try to achieve (to promote the progress of science and useful arts) and the means by which they may 30

Case: 11-12769

Date Filed: 08/30/2011

Page: 41 of 67

accomplish it (by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries). Goldstein v. California, 412 U.S. 546, 555 (1973). While the registration requirement does impose a burden on authors, the Copyright Act was undisputedly enacted for their benefit. Third, whether the ―Act‘s procedural provisions reinforce this substantive purpose.‖ Dolan, 130 S. Ct. at 2539. In Dolan, the Court found that the

procedural deadline for filing claims of restitution ―is primarily designed to help victims of crime secure prompt restitution rather than to provide defendants with certainty as to the amount of their liability.‖ Id. at 2540 (emphasis in original). Similarly, 411(a)‘s registration requirement does reinforce the substantive purpose of the Copyright Act (protecting the rights of copyright holders) in that it places on record a verifiable account of the date and content of the work in question, so that in the event of a legal claim, such as the instant case of infringement, the copyright owner can produce a copy of the work from an official government source. Timely registration also enables authors to seek additional remedies not available to untimely registrants. See 17 U.S.C. § 412. It is,

however, axiomatic that registration does not provide copyright protection, and that a registration of copyright signifies nothing more than the Copyright Office‘s decision to register the work. See 17 U.S.C. § 408(a).

31

Case: 11-12769

Date Filed: 08/30/2011

Page: 42 of 67

Congress certainly did not include 411(a)‘s registration requirement in the Copyright Act to provide infringement defendants with an affirmative defense. Instead, 411(a)‘s registration requirement is primarily intended to serve broader public and governmental interests; in that, registration of creative works confers significant benefits on the Library of Congress and the public. See H.R. Rep. No. 7083, 59th Cong., 2d Sess. 8 (1907). The copy of the work that a registration applicant must deposit with the Copyright Office or the Library of Congress is ordinarily transferred to the collections of the Library of Congress. 17 U.S.C. §§ 407(b), 408(b). The registration system therefore serves as a major source of the Library‘s acquisitions. See U.S. Copyright Office, Annual Report of the Register of Copyrights, Fiscal Year Ending September 30, 2007, at 13-14, 16 (Sept. 30, 2007). The protection of potential infringers figures nowhere in the Copyright Act‘s reasoning. Fourth, the Court considered whether there is the potential that the missed deadline would operate as a forfeiture, depriving a court of the power to award relief to the plaintiff. Dolan, 130 S. Ct. at 2540. In Dolan, the Court held that treating the MVRA‘s 90-day deadline as ―depriving the sentencing court of the power to order restitution would harm those--the victims of crime--who likely bear no responsibility for the deadline‘s being missed and whom the statute also seeks to benefit.‖ Id. 32

Case: 11-12769

Date Filed: 08/30/2011

Page: 43 of 67

The Copyright Act‘s purpose is to protect the creative works of authors. Reading § 411(a) as a mandatory requirement before filing suit, instead of a timerelated directive, would harm the authors of creative works, those ―whom the statute also seeks to benefit‖ by denying them the right to bring an infringement suit before they have complied with § 411(a). Id. Indeed, the District Court in the instant case believed the registration requirement to be more significant than a timely adjudication of the case on the merits. Fifth, whether similar statutes have been interpreted similarly. Dolan, 130 S. Ct. at 2540. Aside from Dolan, the Supreme Court has also interpreted other statutes with deadlines similar to the Copyright Act as time-related directives and has held that failure to comply with these rules is not grounds for dismissal. For example, in United States v. Montalvo-Murillo, 495 U.S. 711 (1990), the Court considered the Bail Reform Act of 1984, which states that a ―judicial officer shall hold a hearing‖ to determine whether to grant bail to an arrested person and that ―hearing shall be held immediately upon the person‘s first appearance before the judicial officer.‖ 18 U.S.C. § 3142(f). The judicial officer in Motalvo-Murillo missed this deadline, but the Court held that the judicial officer need not release the detained person. Montalvo-Murillo, 495 U.S. at 717. Rather, ―once the

Government discovers that the time limits have expired, it may [still] ask for a

33

Case: 11-12769

Date Filed: 08/30/2011

Page: 44 of 67

prompt detention hearing and make its case to detain based upon the requirements set forth in the statute.‖ Id. at 721. The Court reasoned that ―a failure to comply‖ with the hearing deadline ―does not so subvert the procedural scheme . . . as to invalidate the hearing.‖ Id. at 717. Missing the deadline did not diminish the strength of the Government‘s interest in preventing release to avert the likely commission of crimes--the very objective of the Act. Id. at 720. Section 411(a) of the Copyright Act should be interpreted similarly. An author‘s failure to register its copyright with the Copyright Office prior to bringing an infringement suit ―does not so subvert the procedural scheme‖ of the Copyright Act as to invalidate the author‘s claim of infringement. To the contrary, to hold that § 411(a) requires an infringement suit to be dismissed for failure to register beforehand would subvert the Copyright Act‘s overall purpose of protecting the rights of authors by erecting an unnecessary, procedural hurdle in front of victims of copyright infringement on their way to court. Sixth, whether any harm that a missed deadline might have caused can be mitigated. Dolan, 130 S. Ct. at 2542. Any harm that might be caused by not complying with § 411(a) can be easily mitigated by allowing the infringement plaintiff to register his copyright at anytime over the course of the lawsuit. The defendants suffer no prejudice, and the plaintiff gains no advantage. 34

Case: 11-12769

Date Filed: 08/30/2011

Page: 45 of 67

Conversely, if § 411(a) is interpreted as a mandatory prerequisite to an infringement suit, the damage to a copyright infringement plaintiff is great because the plaintiff‘s suit must be dismissed, and the infringement defendant potentially escapes years of infringement damages, even if the suit was filed timely. Thus, to interpret § 411(a) as a mandatory prerequisite to filing suit provides dire consequences to plaintiffs and gives defendants a perverse incentive to escape liability for damages by dragging litigation out and raising the issue of § 411(a) registration at the last moment. IV. The District Court erred in failing to allow amendment or supplement to Kernel’s complaint to account for a later-acquired copyright registration. As soon as the District Court indicated it was inclined to rule AJE was a United States work on March 31, 2011, Doc. No. 227, Kernel diligently moved to obtain a registration with the Copyright Office. Kernel received a registration certificate on April 29, 2011. Doc. No. 235-1. Kernel then promptly moved to amend or supplement its Amended Complaint on May 5, 2011, with registration in hand. Doc. No. 235. On June 13, 2011, after considering the motions for

summary judgment for eleven months, after only mentioning the registration issue on March 31, 2011, and without mentioning it at all during the oral argument, the District Court denied Kernel‘s request to amend with reasoning that was unnecessarily punitive to Kernel. 35

Case: 11-12769

Date Filed: 08/30/2011

Page: 46 of 67

Under Federal Rule of Civil Procedure 15(a), a party seeking to amend its complaint after it previously has amended the complaint, or after a responsive pleading has been filed, may amend the complaint ―only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.‖ Fed. R. Civ. P. 15(a). Where a party‘s motion to amend is filed after the deadline for such motions, as delineated in the court‘s scheduling order, the party must show good cause as to why leave to amend the complaint should be granted. See Fed. R. Civ. P. 16(b); Sosa v. Airprint Systems, Inc., 133 F.3d 1417, 1419 (11th Cir. 1998) (per curiam). In the same order dismissing its case, the District Court denied Kernel‘s Motion for Leave to Amend on June 6, 2007. Doc. No. 241 at 23. The District Court rejected both Kernel‘s argument that it could show good cause for allowing an amendment under Rule 16(b)(4) and that leave to amend should be granted under Rule 15(a). Id. at 23-27. Both of these findings were an abuse of the District Court‘s discretion. A. The District Court abused its discretion in finding that Kernel could not show “good cause” to amend its complaint under Rule 16(b)(4).

Federal Rule of Civil Procedure 16(b)(4) provides that the complaint may be amended after the scheduling order deadline for amending the pleadings has passed upon a showing of good cause. Fed. R. Civ. P. 16(b)(4); see also Sosa, 133 F.3d at 36

Case: 11-12769

Date Filed: 08/30/2011

Page: 47 of 67

1418. The key to establishing ―good cause‖ under Rule 16 for an amendment to the complaint is to demonstrate diligence. Auto-Owners Ins. Comp. v. Ace

Electrical Serv. Inc., 648 F. Supp. 2d 1371, 1375 (M.D. Fla. 2009) (citing Sosa, 133 F.3d at 1419). The Eleventh Circuit uses three factors to evaluate a plaintiff‘s diligence in seeking an amendment to its complaint: (1) whether the plaintiff failed to ascertain facts prior to filing the complaint and to acquire information during the discovery period; (2) whether the information supporting the proposed amendment was available to the plaintiff; and (3) even after acquiring information, whether the plaintiff delayed in asking for the amendment. Auto-Owners Ins. Comp., 648 F. Supp. 2d at 1375. The District Court concluded Kernel had not been diligent because Kernel did not move promptly to register its copyright once the defendants raised it as a defense in their Answers. Doc. No. 241 at 25-26. Specifically, the District Court wrote: We reject Plaintiff‘s argument that it could not have anticipated a possible need for registration prior to our March 31, 2011 ruling. Plaintiff was on notice nearly a year earlier that copyright registration (or lack thereof) was an issue in the case. Specifically, in May 2010 Defendants raised lack of copyright registration as a defense in their Answers. [D.E. 127 at 10]. Defendants then argued in their summary judgment papers, also filed in May 2010, that AJE was published online, was a ―United States work‖ subject to the § 411(a) precondition for filing suit, and that Moberg should not control our resolution of the issue. [D.E. 137 at 2-12]. Even if registration was not an issue in the case before May 2010, these filings injected it front 37

Case: 11-12769

Date Filed: 08/30/2011

Page: 48 of 67

and center. Plaintiff had ample opportunity between May 2010 and March 2011 to seek registration and amendment to the complaint. Doc. No. 241 at 25-26. The District Court‘s rationale is specious. The defendants first raised the lack of registration defense after the close of discovery and two days before the summary judgment motions were due, see Doc. No. 241 at 23 n. 10, even though they had filed additional motions to dismiss on other subjects, see Doc. Nos. 9, 20, 74 and 83. Had the defendants not raised this defense at literally the last possible moment, it would have potentially been waived. See Section III, supra. Moreover, the defendants‘ late disclosure of this defense prevented Kernel from taking any discovery on this issue, namely discovering the defendants‘ ―disk magazine‖ theory, discussed, infra. Any attempt to register AJE by Kernel based on the defendants‘ Answers would have occurred after the deadline for amending pleadings set forth in the scheduling order. While the District Court chastises Kernel for not moving sooner, there was literally nothing precedential to support the manner in which the District Court ultimately ruled. While foreign plaintiffs can always register to ensure compliance with § 411(a), that is undisputedly not the scheme Congress legislated. Most importantly, though, the only substantive event in the year in between the defendants raising lack of registration as a defense and the District Court dismissing Kernel‘s case was a hearing on October 28, 2010, after the District 38

Case: 11-12769

Date Filed: 08/30/2011

Page: 49 of 67

Court had already considered the parties‘ summary judgment submissions for over four months. The District Court did not even seem to have § 411(a) on its mind when it called the parties in for a hearing on the summary judgment motions. See Transcript of October 28, 2010 Hearing at 4:3-17 (quote in full, supra). The entirety of that hearing was spent arguing whether the SID file was a sound recording under the Copyright Act and the remainder addressed the ―necessary party‖ issue discussed in Section VI, infra. The District Court‘s suggestion that amendment would have been proper had Kernel sought registration sooner is, again, specious. Had Kernel scrambled to head off every issue raised in the defendants‘ motions for summary judgment after the close of discovery, undoubtedly such efforts would have been taken in a negative light by the District Court and the defendants. Procedurally, Kernel would have faced the exact same standards that it faced before the Court with the added admission that Kernel did not even believe the legal arguments it was making, when, as stated, nothing in case law or scholarship suggested that Kernel had been incorrect. Had the District Court raised this issue at the hearing held over five months earlier, Kernel would have moved sooner. Finally, the District Court puts much stock in Kernel‘s failure to consider that it might disagree with Moberg v. 33T LLC, 666 F. Supp. 2d 415 (D. Del. 2009), admittedly the only case to directly address the issues presented in the case. 39

Case: 11-12769

Date Filed: 08/30/2011

Page: 50 of 67

Doc. No. 241 at 26. As discussed below, not only would the District Court have to disagree with Moberg, but also with law review scholarship, and the District Court would have to resolve the clear factual dispute over the meaning of the term ―disk magazine.‖ See Section V, infra. The District Court admits that ―[t]he issue is difficult and unsettled‖ and ―appears to be an issue of first impression, at least in this Circuit,‖ Doc. No. 227 at 2, yet in denying Kernel‘s Motion to Amend, it implies that Kernel should have anticipated this ruling. Undergirding the Court‘s logic seems to be the proposition that Kernel should have sought registration rather than attempt to proceed under the exemption from registration under § 411(a) for foreign works. Regardless, Kernel had a registration in hand within 30 days of the Court‘s first mention. The District Court‘s Order has set a trap for foreign plaintiffs. Foreign plaintiffs should not be punished for attempting to rely on the exemption granted them by Congress, and should be allowed to amend their Complaint once they obtain registration, especially if the district court makes new law. The very

unsettled nature of this issue was reason alone for finding that Kernel‘s lack of registration had good cause. B. The District Court abused its discretion in refusing to grant leave to amend Kernel’s complaint under Rule 15(b).

―District Courts have only limited discretion to deny a party leave to amend the pleadings. Thus, the court is constrained to allow a plaintiff leave to amend 40

Case: 11-12769

Date Filed: 08/30/2011

Page: 51 of 67

unless there is substantial countervailing reason.‖ Grayson v. Kmart Corp., 79 F.3d 1086, 1110 (11th Cir. 1996) (citing Espey v. Wainwright, 734 F.2d 748, 750 (11th Cir. 1994); Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594 (5th Cir. 1981)). In determining whether to grant leave to amend, the court may consider undue delay, bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and the futility of the amendment. Id. (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Amendments may even occur during or after trial. Fed. R. Civ. P. 15(b). With respect to Rule 15(a), the Eleventh Circuit has stated: The decision whether to grant leave to amend is committed to the sound discretion of the trial court. Best Canvas Products & Supplies, Inc. v. Ploof Truck Lines, Inc., 713 F.2d 618 (11th Cir. 1993). However, ―‗[d]iscretion‘ may be a misleading term, for rule 15(a) severely restricts the judge‘s freedom, directing that leave to amend ‗shall be freely given when justice so requires.‘‖ Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 597 (5th Cir. 1991). This policy of Rule 15(a) in liberally permitting amendments to facilitate determination of claims on the merits circumscribes the exercise of the trial court‘s discretion; thus, ―[u]nless there is a substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial.‖ Id. at 598. Espey, 734 F.2d at 750. The Eleventh Circuit has also blessed a district court‘s allowance of an amendment rather than dismissal and re-filing. In M.G.B. Homes, Inc. v. Ameron Homes, Inc., the Southern District of Florida allowed a copyright infringement plaintiff to amend its complaint to allege copyright registration after the court had 41

Case: 11-12769

Date Filed: 08/30/2011

Page: 52 of 67

already dismissed the plaintiff‘s case entirely for failure to register.

M.G.B.

Homes, Inc. v. Ameron Homes, Inc., 903 F. 2d 486, 1488-89 (11th Cir. 1990) (11th Cir. 1990). On appeal, the Eleventh Circuit noted that ordinarily the proper way to proceed would have been for the plaintiff to file an entirely new complaint instituting an entirely new case, as opposed to filing an amended complaint continuing the same case. Id. at 1489. However, the Eleventh Circuit, citing Foman v. Davis, found that it would be ―contrary to the spirit of the Federal Rules of Civil Procedure for decisions on the merits to be avoided on the basis of such mere technicalities.‖ Id. (emphasis added) (citing Foman v. Davis, 371 U.S. 178, 181 (1962)). The Eleventh Circuit specifically found that just such an amendment did not prejudice the defendants. M.G.B. Homes, 903 F.2d at 490. The Eleventh Circuit found error only in that the district court was technically without subject matter jurisdiction to rule on the plaintiff‘s motion for leave to amend since the plaintiff had not registered its copyright prior to filing its original case. Id. at 1490. However, this concern has since been abrogated by the Supreme Court in Reed Elsevier, Inc. v. Muchnik, 130 S. Ct. 1237 (2010). Other circuit and district courts have expressly extended the principle espoused in M.G.B. Homes. For example, in Positive Black Talk, Inc. v. Cash Money Records, Inc., 394 F.3d 357, 366 (5th Cir. 2004), the Fifth Circuit picked up on the reasoning of the Eleventh Circuit in M.G.B. Homes. Positive Black Talk, 42

Case: 11-12769

Date Filed: 08/30/2011

Page: 53 of 67

Inc., 394 F.3d at 366. In that case, the Fifth Circuit cited M.G.B. Homes as an example of a court finding that ―a plaintiff who files a copyright infringement lawsuit before registering with the Copyright Office may cure the § 411 defect by subsequently amending or supplementing its complaint once it has registered the copyright.‖ Id. at 365. Further, following the reasoning of M.G.B. Homes, the Fifth Circuit found that ―[t]he notion that the supplemental pleading cures the technical defect, notwithstanding the clear language of § 411, is consistent with the principle that technicalities should not prevent litigants from having their cases heard on the merits.‖ Compare id. at 366 with M.G.B. Homes, 903 F.2d at 1489 (citing Foman v. Davis 371 U.S. 178, 181 (1962)). The approach of M.G.B. Homes and Positive Black Talk is most consistent with 17 U.S.C. § 411(a) being a time-related directive, as discussed above. In distinguishing M.G.B. Homes and Positive Black Talk, the District Court focused, erroneously in Kernel‘s view, on the fact that it had already indicated that it was inclined to dismiss Kernel‘s case before Kernel sought registration and amendment. Doc. No. 241 at 25. As a threshold matter, an inclination and

preliminary ruling are not a final decision, and a final judgment had not been rendered when Kernel obtained its registration and moved to amend.

43

Case: 11-12769

Date Filed: 08/30/2011

Page: 54 of 67

Further, while M.G.B. Homes and Positive Black Talk did not have this factual component, in no previous cases had the plaintiffs sought to rely on the exemption provided foreign plaintiffs under § 411(a), only to have that basis undercut on summary judgment. If the courts were willing to look past plaintiffs openly flouting the registration requirement, it makes no sense for the courts to punish a foreign plaintiff who was making a good faith argument that registration was not required. Until the District Court issued its preliminary order, Kernel was proceeding on the exemption provided in § 411(a); when the Court preliminarily ruled that exemption did not apply, Kernel moved with all deliberate speed to comply. Finally, the District Court‘s statements at the end of its opinion lack even a credible basis in fact. The District Court found that: Defendants would be prejudiced by allowing amendment to the complaint at this juncture. Having obtained summary judgment in their favor, Defendants have a right for this litigation to end. Moreover, allowing this amendment exposes Defendants to approximately two years‘ worth of damages that they might otherwise avoid under the statute of limitations if the case is dismissed and Plaintiff files a new action. That is hardly lack of prejudice. Doc. No. 241 at 32 (emphasis added). The problems with the District Court‘s reasoning are manifest. First,

although the District Court wrote that the defendants ―have a right for this

44

Case: 11-12769

Date Filed: 08/30/2011

Page: 55 of 67

litigation to end,‖ the Court expressly acknowledges that the case can be re-filed7 and the ―end‖ of the litigation is the instant appeal on an issue of first impression, in which the defendants are by no means guaranteed success. Not only can the case be re-filed, but the District Court strongly suggested that the case be filed in a different district court in front of a judge who would have no familiarity with the facts of the case.8 Such a new case filing would entail a new scheduling order being entered and discovery beginning anew. It is impossible to see how such a series of events would spare the defendants any hardship or expense or save any judicial resources. In point of fact, the re-filing would be wasteful to both the parties and the judicial system, particularly when one considers that the case was already fully briefed before this District Court on the merits, and, had the District Court allowed an amendment, it

7

The District Court‘s dismissal was without prejudice. See, e.g., M.G.B. Homes, 903 F.2d at 1489. Indeed, one of the reasons this Court condoned the amendment in M.G.B. Homes was that it did not make sense to cause a case to be dismissed only to be formalistically re-filed. The most judicially economical route the District Court could have taken would have been to allow amendment. Then the Court could have heard the case on the merits. Regardless of the Court‘s decision, all the issues in this case could have been heard in one appeal.
8

The District Court suggested New York. Doc. No. 241 at 32. However, many of these same defendants moved successfully to transfer venue in a copyright infringement case filed in New York to Florida because the ―the core operative events, parties, witnesses and documents relevant to this action are located to a substantially greater extent in the Southern District of Florida than in‖ the Southern District of New York. See Saregama India, Ltd. v. Taylor, No. 07 Civ. 7601, 2008 U.S. Dist. LEXIS 6217 (S.D.N.Y. Jan. 28, 2008). 45

Case: 11-12769

Date Filed: 08/30/2011

Page: 56 of 67

could have reached those merits. Paradoxically, the District Court ruled that it would be more economical to start the case again than for it to rule on the merits of the case. The Court‘s underlying premise is also flawed—having avoided making a decision on the merits of Kernel‘s case, nothing about the Court‘s decision shows the defendants ―deserve‖ the case to end. The Court specifically declined to hold that the defendants were not liable for copyright infringement. It is utterly

inexplicable that the District Court would hold that the defendants deserved the case to end more than Kernel deserves its case to be heard on the merits. The defendants here deserve no more for this case to end than a burglar deserves to be set free on a technicality. Regardless of the end result, the burglar has not shown worthiness. Further, the District Court says the defendants will be prejudiced by not being able to avoid two years of damages if amendment is granted. Again, this defies logic—while the defendants will certainly not be benefited by the District Court allowing amendment to the complaint, they will have suffered no prejudice because they will be liable for no more in damages than they would have been had the Court not dismissed the case without prejudice. The defendants would be in the exact same position they were already in prior to the District Court‘s putative dismissal. It is Kernel that will be prejudiced because, in any new lawsuit, the 46

Case: 11-12769

Date Filed: 08/30/2011

Page: 57 of 67

defendants will obviously claim that the statute of limitations runs from the time of the new lawsuit, and does not relate back to the filing of this lawsuit. In any event, the defendants will only be required to pay damages if they are ultimately found to be infringers, and aiding the defendants in profiting from infringement is not one of the goals of the Copyright Act. The District Court has essentially ruled that if the defendants are not given an opportunity to potentially profit from their infringement, they will be prejudiced. Even more, though, almost a full year of the damages that the defendants would potentially be able to avoid would be due to time that the District Court spent deciding the Motions for Summary Judgment themselves (summary judgment briefing was completed at the beginning of July 2010 and the Court‘s final decision came out at the beginning of June 2011). Kernel played no role in causing this delay. Viewed through this lens, the District Court‘s denial of

Kernel‘s Motion to Amend is a gift to the defendants should they be found liable for infringement. In light of the circumstances, the District Court‘s failure to allow amendment of Kernel‘s complaint solely to include a copyright registration is an abuse of discretion.

47

Case: 11-12769

Date Filed: 08/30/2011

Page: 58 of 67

V.

The District Court erred by resolving a material dispute of fact over the meaning of the term “disk magazine.” At the core of this issue is the method of first publication of Gallefoss‘s SID

file. Kernel has, since the first filing in this case, maintained that AJE was first published on a ―disk magazine‖ based in Australia called Vandalism News # 39. See Doc. 1 ¶ 17. Kernel maintains and has always maintained that ―disk magazine‖ means a physical computer disk, as the words themselves would imply. The defendants and the District Court have treated the term as being wholly fanciful and unmoored to the plain meanings of the words which comprise it. Raising the issue first at the summary judgment stage, the defendants attacked that contention, claiming based on a single exchange with Gallefoss that ―disk magazine‖ meant ―on the Internet.‖ The District Court ignored the contrary evidence and, instead, agreed with the defendants that ―disk magazine‖ meant ―on the internet,‖ which allowed it to reach the simultaneous, worldwide publication theory discussed above. Summary judgment may be entered only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The moving party has the burden of meeting this standard. Herzog v. Castle Rock Entm’t, 193 F.3d 1241, 1246 (11th Cir. 1999). Courts are to review the evidence and all factual inferences therefrom in the light most favorable to the non-moving 48

Case: 11-12769

Date Filed: 08/30/2011

Page: 59 of 67

party. Id. All reasonable doubts about the facts should be resolved in favor of the non-moving party. Id. ―If the record presents factual issues, the court must not decide them; it must deny the motion and proceed to trial.‖ Id. Rather than recognize the ambiguity on the record regarding the term ―disk magazine,‖ the District Court shifted the burden to Kernel to clear up that ambiguity. Doc. No. 234 at 10-11. This was improper. The defendants and the District Court rely on one section of testimony by Gallefoss in his February 2010 deposition to determine that AJE was first published on the internet: Q: Now, you indicated that the first publication of your version of ―Acid Jazz‖ was posted on this Australian – A: Disk magazine. Q: – online magazine, correct? A: Yeah, that‘s the first – I gave it to the disk magazine, yes, so it was first used in that disk magazine. Q: And then after that you posted it on this High Voltage site; is that correct? A: I didn‘t post it. Someone else did. Q: Who did that? A: I don‘t know. Maybe the people who work for the High Voltage SID collection. Q: And they may have just gained access to it from the online magazine? A: Yeah. 49

Case: 11-12769

Date Filed: 08/30/2011

Page: 60 of 67

Q: And then posted it themselves? A: They took it from the disk magazines. See Doc. No. 241 at 8 (emphasis added). The ambiguities in this section of testimony alone should not support summary judgment for the defendants regarding Internet publication. With regard to the first question, the transcript indicates that the witness and defendants‘ counsel were speaking at the same time and the witness answers before counsel says ―online magazine.‖ The witness consistently refers to the place of publication as being a ―disk magazine.‖ It is the defendants‘ counsel who say ―online

magazine,‖ a term that was never defined either by counsel or the witness.9 In fact, one of the definitions of ―online‖ is ―available or operating on a computer or computer network.‖ DICTIONARY.COM,

<http://dictionary.reference.com/browse/online> (last visited August 16, 2011) (emphasis added). The District Court considers the witness‘s failure to correct the defendants‘ counsel on an unrelated question as tantamount to his affirmative

9

The witness is a non-native English speaker who has lived his entire life in Norway speaking Norwegian. For this reason alone, the defendants‘ counsel should have been extra careful in making sure her definitions of words matched the witnesses if she intended to rely on his testimony for summary judgment. Instead, counsel asked no foundational questions (e.g. ―What is a disk magazine?‖ or ―What is an online magazine?‖) nor any follow up questions (e.g. ―What was the URL for Vandalism News when it was posted online in 2002?‖) None the less, the District Court found this isolated, confusing exchange to be dispositive. 50

Case: 11-12769

Date Filed: 08/30/2011

Page: 61 of 67

testimony that first publication was on the Internet. The defendants‘ counsel also never asks the witness what he means by ―disk magazine‖ or whether Vandalism News was on the Internet in 2002 (the time of publication) or merely an ―online magazine‖ at the present date. As explained below, the witness probably thought the term ―disk magazine‖ was clear to counsel as involving a computer disk. If the witness believes that the defendants‘ counsel understood the term ―disk magazine,‖ there would be no reason to affirmatively state that the publication was not on the Internet as the witness affirmatively stated ―disk magazine‖ several times. Later in the same deposition Gallefoss stated: My attempt was to make this sound, this music composition as small as possible, as I said earlier, so it would fit in the disk magazine demonstration. So I had to rearrange the arpeggio—or the chords and the arpeggios to save memory. Doc. No. 171-1 at 101:7-12 (emphasis added). On these facts alone, there is a material dispute of fact regarding the first publication of AJE. If AJE were first published on the Internet, there would be no concern over the size of the file because the Internet does not have a practical size limitation. Gallefoss, an

experienced computer musician, arranged his work in such a way as to save space for its manner of publication, a concern that would not exist on the Internet. Even if the Court felt, as it did, that Gallefoss had affirmatively testified there was a

51

Case: 11-12769

Date Filed: 08/30/2011

Page: 62 of 67

publication on the Internet, his testimony regarding saving memory strongly suggests there was also a physical publication. While seemingly recognizing this contradiction, neither the defendants nor the District Court offer any explanation on why Gallefoss‘s testimony conflicts with their version of first (and sole) publication on the Internet. See Doc. No. 24110. The District Court read any ambiguity out of the exchange from Gallefoss‘s deposition and ignored Gallefoss‘s clear statements that he made the file size small to ―fit‖ on a disk magazine. Id. at 10-11 (finding Gallefoss‘s testimony that first publication was online to be ―clear‖). In support of Kernel‘s motion for summary judgment, Gallefoss gave a declaration which stated that the place of first publication was a ―magazine published on a computer disk in Australia called Vandalism News. . .‖10 Doc. No. 143-4 ¶ 23. This testimony is consistent with Gallefoss‘s deposition testimony that he tried to keep the file size small so that it would ―fit in the disk magazine demonstration.‖ Doc. No. 171-1 at 101:7-12. Kernel submitted evidence that the disks for Commodore 64 computers held very small amounts of data by modern
10

The District Court erroneously said this declaration was given in opposition to the defendants‘ motion for summary judgment. Doc. No. 241 at 9. In point of fact, the declaration was submitted to the District Court in support of Kernel‘s Motion for Summary Judgment. Doc No. 140. All of these documents were submitted on May 28, 2010 virtually contemporaneously. The implication that Gallefoss was changing his testimony in light of the defendants‘ arguments is unfounded. 52

Case: 11-12769

Date Filed: 08/30/2011

Page: 63 of 67

standards—at most around 1/3rd of a megabyte.

See Doc. No. 236-1.

The

defendants never disputed the memory limitations of the Commodore 64 disk. The District Court refused to see the conflict between this evidence and the Internet publication theory. The District Court and the defendants also make much of Kernel‘s production of the online archive of the contents of the original disk magazine. See Doc. No. 241 at 11. The District Court refused to consider the actual contents of the Internet printout Kernel had produced. Consistent with this disk publication, the website which hosts the archive of Vandalism News #39 contains a discussion of the publication being on a ―disc.‖ See Doc. Nos. 236-2 and 236-3. A ―User

Comment‖ on the website dated January 30, 2008 (well before the filing of this lawsuit) says, ―The disc bugged on the real machine as well, you have to load the menu separately.‖ See id. (emphasis added). If the only publication were on the Internet, users would not be discussing a ―disc.‖ Although this printout was properly submitted at the summary judgment stage, the District Court brushes it aside as not properly in evidence. Doc. No. 241 at 10. The website further states that ―CSDb (Commodore 64 Scene Database) is a website which goal is to gather as much information and material about the scene around the commodore 64 computer - the worlds [sic] most popular home computer throughout time. Here you can find almost anything which was ever 53

Case: 11-12769

Date Filed: 08/30/2011

Page: 64 of 67

made for the commodore 64, and more is being added every day.‖ See Doc. Nos. 236-2 and 236-3 (emphasis added). The website makes no claim that Vandalism News #39 was originally published on it and, in fact, speaks to gathering and adding materials which were first published in other places. This is entirely consistent with the disk magazine not being first published on the Internet. The comments also all date from 2008, strongly suggesting that Vandalism News # 39 was not at that website since 2002. Finally, and most importantly, the term ―disk magazine‖ has been used since at least the early 1980s to mean a magazine published on a computer disk. See Doc. No. 236-4, Owen Davies, ed., OMNI COMPLETE CATALOG SOFTWARE, p. 418 (1984).
OF

COMPUTER

The section on disk magazines is replete with

references to actual computer disks: ―So far, publishers have chosen to lay out their disk magazines in two basic ways. Some are simply disks with a collection of programs; others more directly imitate print magazines.‖ See id. (emphasis added). There is absolutely no evidence that Gallefoss was using the term ―disk magazine‖ in an unconventional way to mean ―Internet publication.‖ Simply put, the witness used the term ―disk magazine‖ in the way it has been used by people familiar with computers—as a magazine published on a disk. The District Court and the defendants have chosen to read the word ―disk‖ out of the term ―disk magazine‖ and give it the new definition ―website,‖ for which they have 54

Case: 11-12769

Date Filed: 08/30/2011

Page: 65 of 67

no support. ―Disk magazine‖ has a commonly understood definition and the District Court simply ignored it. Given the clear dispute of material fact regarding this issue, the District Court could not have ruled that first publication of AJE was on the Internet. VI. Nelstar Publishing was not an indispensible party for the purposes of granting a permanent injunction. Separate and apart from the District Court‘s final order, the District Court had ruled that without every co-owner of the copyright present in the suit, it could not issue a permanent injunction against any defendant. See Doc. No. 195 at 2734. The District Court denied Kernel‘s motion for reconsideration on this point as moot in its Final Order. See Doc. No. 241. Due to word limitations, Kernel may only briefly mention this point, but it is clear that a Court may grant a permanent injunction without all copyright owners joined to the action. See Doc. Nos. 206 and 212. Not a single other case has held otherwise. CONCLUSION For the foregoing reasons, the Order of the District Court should be reversed.

55

Case: 11-12769

Date Filed: 08/30/2011

Page: 66 of 67

Respectfully submitted this 29th Day of August, 2011.

s/Richard S. Busch Richard S. Busch KING & BALLOW 1100 Union Street Plaza 315 Union Street Nashville, TN 37201 Telephone: (615) 259-3456 Facsimile: (615) 726-5417 Attorneys for Kernel Records Oy

56

Case: 11-12769

Date Filed: 08/30/2011

Page: 67 of 67

CERTIFICATE OF SERVICE I hereby certify that I have on this day, served via first class U.S. Mail a true copy of the foregoing Principal Brief of Plaintiff-Appellant Kernel Records Oy on the following:

Karen L. Stetson, Esq. Jonathan L. Gaines, Esq. Gray Robinson, P.A. 1221 Brickell Avenue Suite 1600 Miami, Florida 33131 Telephone: (305) 416-6880 Facsimile: (305) 416-6887 This 29th day of August, 2011. KING & BALLOW s/Richard S. Busch

57

Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.