of copyright law to Hyperlinks
District of Indiana
Batesville Serv. Inc. v. Funeral Depot Inc.
Entry on pending motions
This case presents a number of questions about the application of copyright
law to advertising materials for caskets, especially the use of those
advertising materials on the internet. Plaintiffs Batesville Services, Inc.
and Batesville Casket Company, Inc. allege that defendant Funeral Depot,
Inc. has infringed their copyrights in a number of advertising photographs
used to market Batesville® caskets. Both sides have moved for summary
judgment. Defendant Funeral Depot has also moved to dismiss for lack of
subject matter jurisdiction, and plaintiffs have moved to strike an
economist's affidavit offered by defendant. As explained below, the court
denies defendant's motions and denies plaintiffs' motion to strike. The
court grants plaintiffs' motion for summary judgment on the fair use, misuse
of copyright, fraud and improper registration, and antitrust defenses, but
denies plaintiffs' motion in all other respects.
following background facts are undisputed for purposes of the pending
motions. Plaintiff Batesville Casket Company, Inc. sells caskets and other
funeral products and services. Plaintiff Batesville Services, Inc. is an
affiliated company that owns many intellectual property assets and licenses
them to Batesville Casket. To help market its caskets, Batesville Casket has
created lithographs of many of its caskets. Each lithograph includes a
photograph of the casket and text describing the casket and its features.
Batesville Casket distributes these lithographs to its authorized dealers at
Defendant Funeral Depot operates a website called funeraldepot.com through
which it offers to sell caskets, including Batesville® caskets. Funeral
Depot is not an authorized dealer of Batesville® caskets. If a customer
orders a Batesville® casket from Funeral Depot, Funeral Depot arranges to
buy the desired casket from an authorized dealer and arranges for shipment
from that dealer to the local funeral home chosen by the customer. Price
mark-ups in the casket business are high enough so that this method of
distribution can provide the consumer with a competitive price that is
profitable for Funeral Depot.
marketing caskets through its website, Funeral Depot has sought to have
photographs of the caskets available to internet shoppers. As of March 2001,
Funeral Depot was displaying at least some photographs of Batesville®
caskets on its website. The display included a disclaimer stating that the
Batesville name and images were "trademark" protected property of
Hillenbrand Industries, which is the parent of Batesville Casket.
July 2001, plaintiffs sent a cease-and-desist letter to Funeral Depot. In
response, Funeral Depot removed the photographic images from its own
website. However, Funeral Depot then displayed the images on a website
called americanmemorialcenters.com and then on a website called
casketsnow.com. While the images were on the casketsnow.com website, they
could not be viewed directly by visitors to that site. They could be viewed
only by going to the funeraldepot.com website and clicking on a link from
2001 or early 2002, Funeral Depot's principal Dean Magliocca spoke to James
Rudolph, the principal of Veterans Cremation and Burial Society ("Veterans
Society"). Veterans Society is an authorized dealer of Batesville® caskets.
Veterans Society had a website, but at that time it did not display images
of caskets for sale. Magliocca and Rudolph agreed that Funeral Depot would
pay the expenses of modifying the Veterans Society website so that the
images of Batesville® caskets would be displayed on it. Magliocca/Funeral
Depot paid a third party to digitize the photographic images for the
Veterans Society website. Magliocca also determined the layout of the casket
web pages. Funeral Depot determines the prices of caskets shown on these
Veterans Society web pages and controls changes to those web pages.
Funeral Depot then modified its own website so that small, low-resolution
"thumbnail" images of Batesville® caskets were linked to the appropriate
casket pages on the Veterans Society website. Now, when a shopper on the
funeraldepot.com website clicks on a thumbnail image of a Batesville®
casket, the shopper is linked to a much larger image on a casket page on the
Veterans Society website. Although the linked casket web pages are part of
the Veterans Society website, they actually display the Funeral Depot phone
number. The relationship to Veterans Society is shown in the web address at
the top of the screen and in a small text display at the bottom of the page
stating: "All images are being shown through Veterans Burial and Cremation
Web Site, an authorized Batesville reseller and licensed funeral home." The
casket web pages also have a link labeled "Back to Main Gallery." Clicking
on that link returns the viewer to the Funeral Depot website.
Plaintiffs contend that both the past and present arrangements violate their
valid copyrights in the photographs in question. Funeral Depot contends that
plaintiffs have not properly registered the photographs for copyright
protection and that the use of the photographs is protected by defenses of
accord and satisfaction, license, fair use, copyright misuse, fraud on the
copyright office, and violation of federal antitrust laws. Funeral Depot has
also argued that the use of links on the internet can never amount to
copyright infringement. Additional facts are stated below, keeping in mind
the applicable standard for the relevant motion, including which side's
motion for summary judgment is at issue.
Subject Matter Jurisdiction
First, however, the court must turn to subject matter jurisdiction. Section
411(a) of the Copyright Act, 17 U.S.C. § 411(a), provides in relevant part
that "no action for infringement of the copyright in any United States work
shall be instituted until registration of the copyright claim has been made
in accordance with this title." Defendant Funeral Depot argues that the
court has no jurisdiction over the subject matter of this copyright case
because plaintiffs did not properly register the copyrights on the
photographs in question.
court disagrees. Pursuant to 28 U.S.C. § 1338(a), the court has subject
matter jurisdiction over these claims arising under the copyright laws.
Proper registration is a condition precedent to a suit, as required under 17
U.S.C. § 411(a), but the arguable failure to satisfy a condition precedent
does not affect the court's subject matter jurisdiction. Cf.
Zipes v. Trans World Airlines, Inc.,
455 U.S. 385, 393-94 (1982) (holding unanimously that timely filing of EEOC
charge under Title VII of Civil Rights Act of 1964 was only a condition
precedent to suit, not a jurisdictional requirement);
Altheimer & Gray v. Sioux Mfg. Corp.,
983 F.2d 803, 813 (7th Cir. 1992) (failure to exhaust tribal remedies in
suit against tribal entity does not undermine subject matter jurisdiction);
Babrocky v. Jewel Food
773 F.2d 857, 864 (7th Cir. 1985) (requirement under Title VII that scope of
EEOC charge limit the scope of subsequent complaint is a condition precedent
with which litigants must comply rather than component of subject matter
seeking dismissal for lack of jurisdiction, Funeral Depot relies on
copyright infringement cases stating that the court's "jurisdiction"
depended on whether the plaintiff had properly registered the copyright.
Mgmt. Systems, Ltd. v. Berkshire Information Systems, Inc.,
307 F. Supp. 2d 521, 526 (S.D.N.Y. 2004) ("The registration requirement is
jurisdictional; a lack of registration bars an infringement claim.");
Foraste v. Brown University,
248 F. Supp. 2d 71, 76 (D.R.I. 2003) ("Copyright registration is a condition
precedent and a jurisdictional prerequisite to the filing of an infringement
84 F. Supp. 2d 522, 524 (S.D.N.Y. 2000) ("That either a copyright must be
registered or an application brought is a jurisdictional prerequisite to the
filing of an infringement action."). These statements are part of a series
of copyright opinions that have spoken of "jurisdiction" without focusing on
the difference between conditions precedent to suit and those issues that
actually affect the court's subject matter jurisdiction, its power to decide
the case. As the Supreme Court has acknowledged, such loose uses of the term
are not uncommon.
455 U.S. at 395 (acknowledging Supreme Court's own prior "scattered
references to the timely-filing requirement as jurisdictional," but holding
that requirement was only a non-jurisdictional condition precedent).
Seventh Circuit has cautioned that the word "jurisdictional" can have
multiple meanings, including such "weak" use as referring to a condition
Kanar v. United States,
118 F.3d 527, 529-30 (7th Cir. 1997); accord,
Steel Co. v. Citizens for a Better Environment,
523 U.S. 83, 90 (1998) ("'Jurisdiction,' it has been observed, 'is a word of
many, too many, meanings,'"), quoting
United States v. Vanness,
85 F.3d 661, 663, n. 2 (D.C. Cir. 1996). In general, whether a condition
precedent has been satisfied does not affect the court's subject matter
jurisdiction in the strong sense of that term.
455 U.S. at 393. If an issue is jurisdictional in the strong sense, it means
that the defect is not waivable, that the court has an obligation to raise
the issue on its own, and that the court (not a jury) resolves disputed
questions of fact material to the issue. See
Ruhrgas AG v. Marathon Oil Co.,
526 U.S. 574, 583 (1999) (defects not waivable); accord,
Papa v. Katy Industries, Inc.,
166 F.3d 937, 943 (7th Cir. 1999) (status as covered "employer" under
employment discrimination laws is not jurisdictional, so court is not trier
of fact), and
Sharpe v. Jefferson
148 F .3d 676, 678 (7th Cir. 1998) (same).
Supreme Court explained in
Steel Co. v. Citizens for a Better Environment
that courts must distinguish between whether a claim under federal law is a
winner and whether the court has jurisdiction over the claim: "Dismissal for
subject matter jurisdiction because of the inadequacy of the federal claim
proper only when the claim is so insubstantial, implausible, foreclosed by
decisions of this Court, or otherwise completely devoid of merit as not to
federal controversy." 523 U.S. at 89. Under this standard, whether
properly registered their photographs for copyright protection is a
precedent to prevailing on the merits of their claims. It is not a matter
this court's subject matter jurisdiction, which is granted by 28 U.S.C. §
Defendant Funeral Depot's motion to dismiss for lack of subject matter
jurisdiction is hereby denied.
Accord and Satisfaction
Defendant Funeral Depot has raised the affirmative defense of accord and
satisfaction as to claims arising before July 23, 2001, and has moved for
summary judgment on the defense. Funeral Depot relies on what it describes
as its compliance with a cease-and-desist demand from plaintiffs. Before
July 2001, Funeral Depot had posted copies of plaintiffs' casket photographs
on Funeral Depot's own website. An attorney for plaintiffs sent a
cease-and-desist letter on July 23, 2001 demanding that Funeral Depot remove
the images from its website. Funeral Depot removed the images from
funeraldepot.com, but then moved them to a different website that Funeral
Depot controlled, called "casketsnow.com." Funeral Depot later made the
arrangements with Veterans Society discussed below. Plaintiffs made no
further demands and took no other action before filing this lawsuit in 2002.
the party asserting the defense of accord and satisfaction, Funeral Depot
has the burden of coming forward with evidence that would allow a jury to
find its elements, including objective manifestations of intent to resolve
the dispute on agreed terms. See
Fifth Third Bank of Southeastern Indiana v. Bentonville Farm
629 N.E.2d 1246, 1249 (Ind. App. 1994) ("As a contract, accord and
satisfaction requires a meeting of the minds or evidence that the parties
intended to agree to an accord and satisfaction."), citing
Erie Co. v. Callahan Co.,
184 N.E. 264, 266 (Ind. 1933), and
Kucel v. Walter E. Heller & Co.,
813 F.2d 67, 70 (5th Cir. 1987).1
Plaintiffs' letter did not promise anything at all in exchange for Funeral
Depot's compliance with its demand to remove plaintiffs' images from Funeral
Depot's website. The letter did not promise not to sue; it simply demanded
compliance with plaintiffs' view of Funeral Depot's legal obligations. There
is no evidence that plaintiffs communicated an offer of any kind. The court
assumes that Funeral Depot hoped its compliance would avoid a lawsuit, but
that hope was not based on any explicit promise,
any objective manifestation of intent by plaintiffs that they would take no
further action if Funeral Depot complied. Nor is there any evidence that
Funeral Depot communicated to plaintiffs any understanding that compliance
would avoid a lawsuit or other consequences for the alleged copyright
violations. Plaintiffs have not moved for summary judgment on this defense
themselves, but in any event Funeral Depot is not entitled to summary
judgment on the defense of accord and satisfaction as applied to claims
arising before July 23, 2001.2
Scope of Implied License to Veterans Society
responding to the cease and desist letter of July 2001, Funeral Depot
eventually made other arrangements. Its website now contains links to the
Veterans Society website for full-size photographs of Batesville® caskets.
Veterans Society is an authorized Batesville® casket dealer. Plaintiffs
provided the photographs to Veterans Society for its use. Like any other
Batesville® dealer, Veterans Society is authorized to use those photographs
for at least some purposes.
of plaintiffs' copyright claims based on Funeral Depot's links to the
Veterans Society website - for direct, vicarious, and contributory
infringement - are built on the assumption that Veterans Society is itself
violating plaintiffs' rights by posting the photographs on its website in
ways that help Funeral Depot promote its business. There is no written
license agreement between plaintiffs and Veterans Society. It is
nevertheless clear that Veterans Society has an implied license to use the
photographs, at least as part of its own marketing efforts. The central
issue is whether plaintiffs have licensed Veterans Society to use the
copyrighted photographs as they are now being used.
Funeral Depot argues that the evidence shows that plaintiffs' policy is to
permit authorized dealers to use the photographs as long as they are used to
sell Batesville® caskets and as long as the dealer's name is displayed on
the website. Veterans Society's use falls within those boundaries. In
response, plaintiffs contend that Veterans Society has an implied license to
use the photographs only to promote its own business. Plaintiffs also
contend that Veterans Society has violated the terms of this implied license
by using the photographs to promote Funeral Depot's business. In support of
this position, plaintiffs refer to their own stated policy, which they say
limits authorized dealers' use of copyrighted images to uses that promote
the dealers' own businesses. There is no evidence, however, that plaintiffs
Veterans Society to change the current arrangements, let alone that
plaintiffs have taken more decisive steps to force a change in Veterans
Society's practices. There also is no evidence that the plaintiffs' internal
policy was ever communicated to Veterans Society.
Implied non-exclusive copyright licenses can provide a complete defense to a
charge of copyright infringement.
I.A.E., Inc. v. Shaver,
74 F.3d 768, 775- 76 (7th Cir. 1996) (affirming finding that license defense
had been established, and noting that a non-exclusive license "may even be
implied from conduct" ); see also
John G. Danielson, Inc. v. Winchester-Conant Properties, Inc.,
322 F.3d 26, 40 (1st Cir. 2003) (discussing implied copyright licenses but
finding no implied license). In response, plaintiffs cite cases stating that
implied licenses should be construed narrowly and that they do not include a
right to sub-license to others. See,
Play Media Systems, Inc. v. America Online, Inc.,
171 F. Supp. 2d 1094, 1099 (C.D. Cal. 2001). These general statements in
favor of narrow construction cannot resolve this issue as a matter of law,
though, and Funeral Depot is not asserting that it has a sub-license to use
the photographs. It contends instead that the implied license permits
Veterans Society to use the photographs precisely as they are now being used
- on Veterans Society's own website, for the mutual benefit of Funeral Depot
and Veterans Society.
Plaintiffs also rely on
Electronic Publishing Co. v. Zalytron Tube Corp.,
376 F.2d 592 (2d Cir. 1967), for the proposition that a manufacturer who
prepares and distributes advertising materials (rather than a publisher of
those advertising materials) retains copyrights over the advertising
materials. Assuming that is true, the case says nothing about the scope of
an implied license. Perhaps
would be on point if a catalog publisher were suing Funeral Depot, but it
does not answer the question here about the relevant scope of the implied
license to Veterans Society.
scope of the implied license is a question of fact. The facts here could
lead a reasonable jury to find that Veterans Society's implied license
allows the current use of the images in question on Veterans Society's own
website. First, the absence of a written license agreement makes it
difficult to determine as a matter of law, at least, the scope of the
license that undoubtedly exists. The fact that a license can be implied from
conduct is critical to the issue. Under plaintiffs' theory of the case, they
could revoke at any time the implied license to Veterans Society, whatever
its terms might be. Plaintiffs could use that power to insist that Veterans
Society revise its website in a way that satisfies plaintiffs. Plaintiffs
have not taken either step, presumably for business reasons, such as
maintaining good relationships with their dealers in general and with this
dealer in particular.
Regardless of their reasons, plaintiffs' failure to take those steps is
evidence that tends to prove that Veterans Society is not violating the
terms of its implied license by allowing Funeral Depot to display its
telephone number on the web pages with the licensed images. That evidence,
plus the absence of any written license agreement, shows that there are
genuine issues of material fact concerning Funeral Depot's license defense.
Neither side is entitled to prevail as a matter of law on Funeral Depot's
Funeral Depot also contends that its use of the Batesville® casket
photographs is "fair use" of copyrighted material, so that Funeral Depot is
protected from liability by 17 U.S.C. § 107. Both sides have moved for
summary judgment on the fair use defense. The relevant facts are undisputed.
The court concludes that the undisputed facts show that the fair use defense
is not available. The court grants plaintiffs' motion on the defense and
denies defendant's motion on the defense.
Copyright Act was amended in 1976 to recognize what had been a judicial
doctrine of fair use. The Act now provides in relevant part:
Notwithstanding the provisions of sections 106 and 106A, the fair use of a
copyrighted work, including such use by reproduction in copies or
phonorecords or by any other means specified by that section, for purposes
such as criticism, comment, news reporting, teaching (including multiple
copies for classroom use), scholarship, or research, is not an infringement
of copyright. In determining whether the use made of a work in any
particular case is a fair use the factors to be considered shall include -
the purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes;
the nature of the copyrighted work;
the amount and substantiality of the portion used in relation to the
copyrighted work as a whole; and
the effect of the use upon the potential market for or value of the
fact that a work is unpublished shall not itself bar a finding of fair use
if such finding is made upon consideration of all the abovefactors.
U.S.C. § 107. The statutory factors are not intended to be an exhaustive
list of relevant factors.
Harper & Row Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 549 (1985);
Chicago Bd. of Education v. Substance, Inc.,
354 F.3d 624, 629 (7th Cir. 2003) ("the four factors . . . are not
exhaustive and do not constitute an algorithm that enables decisions to be
ground out mechanically").
first factor weighs against the fair use defense. Funeral Depot uses
plaintiffs' photographs for its own commercial purposes. This fact is not
controlling by itself and gives rise to no presumption against the defense.
Still, this fact tends to weigh against the defense, at least as compared to
educational uses or criticism, comment, news reporting, or research.
Campbell v. Acuff-Rose
510 U.S. 569, 579 (1994).
More significant under this first factor is the question whether defendant
made "transformative" use of the images, to use the Supreme Court's language
borrowed from Judge Leval in
Toward a Fair Use Standard,
103 Harv.L.Rev. 1105, 1111 (1990). The undisputed facts show there was no
transformative use of plaintiffs' images here. Funeral Depot added nothing
to the works and created nothing new. Funeral Depot simply copied the images
and uses them for precisely the same purpose for which plaintiffs originally
developed them: to sell the products that appear in the photographs. In the
Campbell v. Acuff-Rose Music,
Funeral Depot's use of the images "merely supersedes the objects of the
original creation." 510 U.S. at 579. In the language of the Seventh Circuit
Ty, Inc. v. Publications International, Ltd.,
292 F.3d 512, 517-18 (7th Cir. 2002), Funeral Depot's copying is
"substitutional" rather than "complementary," meaning that the factor weighs
substantially against the fair use defense. Accord,
Davis v. The Gap, Inc.,
246 F.3d 152, 174-76 (2d Cir. 2001) (use of plaintiff's distinctive jewelry
in commercial advertising was not "transformative" use but superseded use of
original in order to avoid paying royalty).
Funeral Depot relies on
Kelly v. Arriba Soft Corp.,
336 F.3d 811 (9th Cir. 2003), which held in relevant part that it was fair
use of an artist's photographs to post small, low-resolution "thumbnail"
images of those photographs on the defendant's website, which searched the
internet and helped consumers find where they could buy the images it found.
336 F.3d at 815. The case is readily distinguishable from this one. The
photographs used in this case are high resolution, and they are not being
made available for merely informational purposes, as was the case in
at 818-19. The images in this case are being made available for Funeral
Depot's own sales purposes as substitutes for plaintiffs' photographs rather
than as a complement to them.
Funeral Depot also argues that its use of plaintiffs' images is
transformative because it is using them "to improve consumer access to
information already available for free on the Internet, to help consumers
find the same caskets but at a lower price than they could expect to pay to
an Authorized Funeral Home." Def. Br. at 16. That noble capitalist motive,
however, does not mean that defendant's use of the images is
"transformative." They are still the same images, being used for the same
purpose of selling caskets. Funeral Depot has not cited any case treating
such use as "transformative," and the court sees nothing transformative
about it. Funeral Depot's copying of the photographs "merely supersedes" the
original work and adds little if anything that is new and copyrightable in
its own right. See
Castle Rock Entertainment, Inc. v. Carol Publishing Group, Inc.,
150 F.3d 132, 142 (2d Cir. 1998) (describing presence or absence of such
"transformative" use as the most critical aspect of first statutory factor),
Acuff-Rose Music, Inc.,
510 U.S. at 579. The first factor thus weighs heavily against the fair use
second statutory factor is the nature of the copyrighted work. Plaintiffs'
photographs are commercial advertising materials, as distinct from artistic
creations, for example. See
Kelly v. Arriba Soft,
336 F.3d at 820 (distinguishing between creative works and those that are
more "fact-based"). Photographs used in advertising may still be protected
by copyright. "A picture is none the less a picture, and none the less a
subject of copyright, that it is used for an advertisement."
Bleistein v. Donaldson Lithographing Co.,
188 U.S. 239, 251 (1903). A party who holds a copyright on advertising
materials is entitled to enforce the copyright laws against unauthorized
copying that is not protected by a defense.
Harbor Motor Co., Inc. v. Arnell Chevrolet-Geo, Inc.,
265 F.3d 638, 644 (7th Cir. 2001) (reinstating jury verdict finding
copyright infringement in
Electronic Publishing Co. v. Zalytron Tube Corp.,
376 F.2d 592, 592 (2d Cir. 1967) (advertisers were entitled to prohibit use
of copyrighted advertising materials in advertising by downstream
merchants). This factor is essentially neutral on Funeral Depot's fair use
third statutory factor is the amount and substantiality of the portion of
the copyrighted work used in relation to the copyrighted work as a whole.
Thisfactor weighs against the fair use defense. There is no
rule against copying a work as a whole if that is necessary for the fair
Chicago Bd. of Education,
354 F.3d at 629, citing
Sony Corp. of America v. Universal City Studios, Inc.,
464 U.S. 417, 449-50 (1984) (consumer's copying of entire television show on
tape to enable later private viewing is fair use). Such complete copying,
however, tends to weigh against fair use. In this case, Funeral Depot copied
the photographs as a whole. Its copying has gone well beyond, for example,
the "handful of screen shots" used to illustrate a video game in comparative
advertising of video game equipment, which was held to be fair use in
Sony Computer Entertainment America,
Inc. v. Bleem, LLC,
214 F.3d 1022 (9th Cir. 2000). Funeral Depot argues that it was entitled to
make such complete copies in order to provide valuable information to
consumers. Funeral Depot's reliance on
Kelly v. Arriba Soft
its approval of the use of low-resolution thumbnail images of copyrighted
photographs cannot be extended to the high-resolution images defendant has
copied from plaintiffs.
fourth factor is the effect of the use upon the potential market for or
value of the copyrighted work. This factor tends to weigh in favor of the
fair use defense because there is no market for the copyrighted work itself.
Plaintiffs simply give the photographs to their authorized dealers. There is
no secondary or downstream market.
Funeral Depot's principal argument for fair use falls outside the
nonexclusive list of statutory factors. The argument is that there has been
a market failure in the retail market for caskets and that Funeral Depot's
copying of plaintiffs' photographs serves the greater consumer good of
helping consumers buy caskets more cheaply. Funeral Depot relies on the
Seventh Circuit's decision in
Ty, Inc. v. Publications International,
292 F.3d 512 (7th Cir. 2002), in which the court held that a publisher was
entitled to take and publish its own photographs of the plaintiff's "Beanie
Baby" products for use in a catalog sold to collectors. Funeral Depot
that an otherwise infringing use of a copyrighted work is fair use when it
serves to promote competition in the marketplace. Def. Br. at 21.
most obvious and basic difference between this case and
that the defendant in
took its own photographs and published its own photographs. Plaintiffs in
this case agree that Funeral Depot is entitled to take its own photographs
of Batesville® caskets and to use them for its own advertising purposes.
That process, however, would be expensive and time-consuming. Funeral Depot
prefers to take the easier and cheaper approach of copying plaintiffs' own
photographs. Nothing in
suggests that the court would have been willing to allow the defendant
simply to copy the plaintiffs' own photographs to prepare its own competing
Funeral Depot has called to the court's attention the long-known information
about the ability of funeral homes and casket manufacturers to extract
premium prices from consumers shopping for caskets and funeral sources at
times of grief, emotional distress, and great urgency. In economic terms,
grieving families visiting funeral homes to shop for caskets and related
services face high "search costs." See Harrington Affidavit,
discussed below in Part X. Assuming those points as facts for purposes of
summary judgment, however, does nothing for the copyright issues in this
case. Antitrust laws and other consumer protection laws regulate the funeral
industry. Those laws enable Funeral Depot to function as it does by offering
caskets at lower retail prices, presumably to the annoyance of plaintiffs
and other casket manufacturers, and especially to the annoyance of other
casket dealers and funeral homes. Funeral Depot is free to buy and sell
caskets and to advertise its services, using its own and licensed
advertising materials. It is not entitled to copy plaintiffs' copyrighted
materials wholesale merely to save itself the trouble of preparing its own
advertising materials, even if consumers might benefit from its activities.
They would benefit equally if Funeral Depot avoided copying and simply
created its own advertising materials.
Funeral Depot also suggests that its use of plaintiffs' photographs is
actually helpful to plaintiffs - by promoting more sales of Batesville®
caskets. Funeral Depot buys caskets from authorized Batesville® dealers.
Even if the retail price is lower than in funeral homes, there is no
indication that the prices paid to Batesville Casket are any lower. Whether
the argument is persuasive or not, it's an argument better suited to
negotiations between the business managers than to a court required to apply
the law. To the extent that plaintiffs have valid copyrights, they are
entitled to enforce those rights even if they do not correctly perceive
their own best economic interests.
"Fair use is a mixed question of law and fact."
Harper & Row Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 560 (1985). It may be resolved on summary
judgment if and only if a reasonable trier of fact could reach only one
Ty, Inc. v. Publications Intern. Ltd.,
292 F.3d at 516. Based on the parties' briefs
evidentiary submissions, the court finds no genuine issue of fact material
fair use defense. The facts about Funeral Depot's use of the plaintiffs'
photographs in their entirety for purposes of defendant's own marketing
undisputed. The sum of the statutory factors shows that Funeral Depot is
copying plaintiffs' entire images for its own commercial purposes, not for
comparative purposes but essentially to save itself the trouble of doing its
work to prepare advertising materials for the caskets it sells to the
not fair use, and the court is not aware of any case treating such bald
such purposes as fair use.
Under Funeral Depot's theory, any copyrighted advertising material would be
available for other competitors to use. For example, a used car dealership
selling used Fords would be entitled to copy Ford's original advertising
materials to save itself the trouble of taking its own photographs and doing
its own layout work. The result would effectively nullify copyright
protection for advertising materials. Because the relevant facts are
undisputed, the court can and in this case should resolve the issue as a
matter of law. See
Chicago Bd. of Educ. v.
354 F.3d 624, 629 (7th Cir. 2003) (affirming summary judgment for plaintiff
and rejecting fair use defense);
Castle Rock Entertainment, Inc. v. Carol
Pub. Group, Inc.,
150 F.3d 132, 146 (2d Cir. 1998) (affirming summary judgment rejecting fair
use defense where all four statutory factors weighed against it);
Angeles News Service v. Reuters Television Intern., Ltd.,
149 F.3d 987, 994-95 (9th Cir. 1998) (affirming summary judgment
for plaintiff by rejecting fair use defense where one of four statutory
factors favored defense);
Corp. v. Network Productions, Inc.,
902 F.2d 829, 844-45 (11th Cir. 1990) (affirming summary judgment for
plaintiff by rejecting fair use defense where none of four statutory factors
favored defense). The court grants plaintiffs' motion for summary judgment
on the fair use defense.
Funeral Depot raises another issue in defense of its current arrangements,
under which the Funeral Depot website provides links to the casket web pages
on the Veterans Society's website. Funeral Depot argues that such links can
never amount to a copyright violation. In support of this view, Funeral
Ticketmaster Corp. v. Tickets.com, Inc.,
2000 WL 525390, *2 (C.D. Cal. 2000), and
Bernstein v. J.C. Penney, Inc.,
1998 WL 906644 (C.D. Cal. 1998). The court finds that this argument and
these authorities do not resolve this issue as a matter of law.
one on-line broker of tickets for sporting and entertainment events sued
another similar broker. The plaintiff alleged that the defendant gathered
information from plaintiff's website about events for which plaintiff had
exclusive rights to sell tickets. Then, when a prospective buyer visited the
defendant's website and found information about such an event, the defendant
included a link from its website to an "interior" page of the plaintiff's
website where the customer could quickly (i.e.,
bypassing lots of advertising) buy the desired tickets from plaintiff. In
the course of denying a motion to dismiss the copyright infringement claim
because the plaintiff alleged actual copying, the court observed:
a similar analogy, the hyperlink to the interior web page (whatever it may
do for the unfair competition or interference claims) does not allege
Further, hyperlinking does not itself involve a violation of the Copyright
Act (whatever it may do for other claims) since no copying is involved. The
customer is automatically transferred to the particular genuine web page of
the original author. There is no deception in what is happening. This is
analogous to using a library's card index to get reference to particular
items, albeit faster and more efficiently.
Ticketmaster Corp. v. Tickets.Com, Inc.,
2000 WL 525390, *2.
the plaintiff was a photographer who alleged that a foreign website
contained infringing copies of two of his photographs of actress Elizabeth
Taylor. He sued a perfume company who used Taylor as a spokeswoman and whose
website contained a hyperlink to a website with information about her films,
which in turn linked to the foreign website with the allegedly infringing
copies of plaintiff's photographs of Taylor. The district court granted a
motion to dismiss the copyright claim against the perfume manufacturer, for
the claim was based on the ability of internet users to follow links that
eventually might take them to an infringing photograph posted by someone
else in another country.
show that it may be difficult to prove copyright infringement or
contributory infringement from the use of hyperlinks. Indeed, hyperlinks are
essential to the operation of the internet for a host of legitimate
purposes. The host of a website who establishes a link to another site that
may be interesting to the host's website visitors does not undertake any
general duty to police whether the linked sites contain any material
infringing the copyrights of others.
not, however, by their own terms come close to embracing the sweeping
rule that Funeral Depot advocates on summary judgment.
Also instructive here is
Intellectual Reserve, Inc. v. Utah Lighthouse Ministry, Inc.,
75 F. Supp. 2d 1290 (D. Utah 1999). There the defendants had been posting
plaintiff's copyrighted materials on their own website. After the defendants
were ordered to remove them, they placed a notice on their website that the
materials were online, gave addresses of websites containing the materials
been ordered to remove, and posted e-mails on their website that encouraged
browsing those websites. 75 F. Supp. 2d at 1292. The district court found
this evidence showed that plaintiff was likely to prevail on the merits of a
contributory copyright infringement. The court went on to order defendants
stop encouraging internet users to visit the infringing websites.
decision shows that in extreme cases, even encouraging browsing of
infringing websites can violate the copyright laws. From that conclusion, it
is easy to allow room for liability for defendants who deliberately
encourage use of infringing websites by establishing links to those sites.
This is not a case where Funeral Depot merely found some useful material
elsewhere on the internet and encouraged its shoppers to link to those
sites. Instead, Funeral Depot actively secured control of the contents of
the Veterans Society website and modified the website to use it for its own
purposes. Viewed in the light reasonably most favorable to plaintiffs, the
evidence shows Funeral Depot's extensive involvement in the display of
so-called "casket gallery" on the Veterans Society website did not exist
until Funeral Depot created those pages. Funeral Depot designed the
allegedly infringing web pages. It paid for those web pages. And it still
controls those infringing web pages and changes to them. The casket web
pages display Funeral Depot's phone number rather than Veterans Society's
number. Funeral Depot's control over the casket web pages is so complete
that the owner of the Veterans Society was not aware of any changes to the
casket portion of the website. These facts are unusual enough to take this
case out of the general principle that linking does not amount to copying.
These facts indicate a sufficient involvement by Funeral Depot that could
allow a reasonable jury to hold Funeral Depot liable for copyright
infringement or contributory infringement, if infringement it is. The
possibility of copyright infringement liability on these unusual facts
showing such extensive involvement in the allegedly infringing display
should not pose any broad threat to the use of hyperlinks on the internet.
Copyright law recognizes an equitable defense for copyright misuse, which
can bar enforcement of an otherwise valid copyright against otherwise
unlawful copying. The defense "prevents copyright holders from leveraging
their limited monopoly to allow them control of areas outside the monopoly."
Technologies of WI, LLC v. WIREdata, Inc.,
350 F.3d 640, 647 (7th Cir. 2003), quoting
A & M Records, Inc. v. Napster, Inc.,
239 F.3d 1004, 1026-27 (9th Cir. 2001).
a variation on its principal theme, Funeral Depot argues that plaintiffs are
misusing their copyrights because they are using them to try to control the
resale market for their Batesville® caskets. Funeral Depot contends that
plaintiffs have no genuine interest in protecting copyrights in the
photographs of their caskets, which they distribute for free to authorized
dealers. The result of copyright enforcement, says Funeral Depot, would be
to "prop up the funeral home monopoly in the sale of caskets." Def. Br. at
Notwithstanding this rhetoric, the undisputed evidence shows that plaintiffs
are entitled to summary judgment on the defense of copyright misuse. The
differences between this case and the leading case on the misuse defense,
Lasercomb America, Inc. v. Reynolds,
911 F.2d 970 (4th Cir. 1990), show as much. In
the holder of a copyright to software offered licenses for the software, but
only on the condition that the licensee agree for 99 years not to develop
and sell any competing -
software. The Fourth Circuit reversed a district court decision rejecting
the misuse defense and held that misuse had been established as a matter of
979. The Fourth Circuit explained that the test was not whether the
non-competition terms of the leases violated federal antitrust laws, "but
whether the copyright is being used in a manner violative of the public
policy embodied in the grant of a copyright."
978. The court recognized that a copyright of course entitles the holder to
prohibit copying. The misuse arose from the plaintiff's attempt to use its
copyright on a particular expression of an idea "to control competition in
an area outside the copyright,
the idea of computer-assisted die manufacture, regardless of whether such
conduct amounts to an antitrust violation." 911 F.2d at 979.
This case is entirely different. The public policy embodied in copyright law
does not allow the owner to prohibit others from offering their own
expressions of an unprotected idea or subject matter. Yet that public policy
certainly allows the copyright holder to prohibit copying of his own
Inc. v. Napster, Inc.,
239 F.3d at 1027 (affirming rejection of copyright misuse defense in case
alleging that on-line file-sharing violated copyrights in songs: "There is
no evidence here that plaintiffs seek to control areas outside of their
grant of monopoly. Rather, plaintiffs seek to control reproduction and
distribution of their copyrighted works, exclusive rights of copyright
holders."). Plaintiffs in this case are making no attempt to prohibit
Funeral Depot from taking its own photographs of Batesville® caskets. Nor
are plaintiffs seeking to prohibit Funeral Depot from using its own
photographs to market those caskets in the downstream market. Assuming that
plaintiffs' copyrights are otherwise valid and enforceable, plaintiffs are
entitled to prohibit copying of their copyrighted materials, just as Funeral
Depot is entitled to hire its own photographer to take its own photographs
for use in its own advertising. Funeral Depot has come forward with no
evidence from which a reasonable trier of fact could find copyright misuse.
Plaintiffs are entitled to summary judgment on this defense.
Defective Registration and Fraud on the Copyright Office
Funeral Depot has pled as a defense that plaintiffs' copyrights are invalid
as a result of alleged fraud on the copyright office. The issue is closely
related to the issue of proper registration posed by Funeral Depot's
jurisdictional motion. Both sides have moved for summary judgment on the
defense. Funeral Depot contends that plaintiffs have admitted that when they
finally got around to registering the 118 lithographs, the deposit copies
were not the same as the originals. In its initial briefs on the subject,
Funeral Depot also contended that plaintiffs failed to inform the Copyright
Office that there were at least some differences between the originals and
the deposit copies. Plaintiffs came forward with their Exhibit D, a letter
to the Copyright Office informing it that there were some minor differences.
Thus, Funeral Depot argued in its reply brief for a
rule that any discrepancies between the originals and the deposit copies
invalidate the registrations.
issue here stems from the fact that plaintiffs had been distributing the
lithographs in question since the 1970s without putting copyright notices on
them. When concerns arose about Funeral Depot's activities on the internet,
plaintiffs in July 2001 secured from the photographer who took the
photographs an assignment of any copyrights in the photographs. On September
24, 2002, plaintiffs submitted applications to register approximately 301
"casket lithographs" for copyright protection. Each lithograph contained
both a photograph and text. Plaintiffs informed the Copyright Office that in
many instances the year in the copyright notice was not the same as the year
the work was first published, and that the enclosed deposits were
"identical, or virtually identical, to the prints that were first
published." Pl. Ex. D.
Because plaintiffs gave that notice to the Copyright Office, and because the
registrations were issued, Funeral Depot appears in its reply brief to have
abandoned any argument that plaintiffs deliberately misled the Copyright
Office. In any event, to avoid summary judgment on the fraud defense,
Funeral Depot would have to come forward with evidence that would allow a
jury to find that plaintiffs intended to deceive the Copyright Office on
some material matter and that the Copyright Office (or perhaps Funeral
Depot) relied to its detriment on the intentional deception. See,
Data General Corp. v. Grumman Systems Support Corp.,
36 F.3d 1147, 1161 & n.24 (1st Cir. 1994) (collecting cases). Especially in
light of Plaintiffs' Exhibit D, there is no such evidence.
Funeral Depot argues in its reply brief for a
rule: if the deposit copies are not perfect copies of the original, then the
registration is invalid. The parties have not directed the court to Seventh
Circuit decisions on the issue. Funeral Depot finds support for its
Geoscan, Inc. v. Geotrace
226 F.3d 387, 393 (5th Cir. 2000). The case involved software used to
interpret seismic patterns in exploring for oil and natural gas. The
plaintiff had registered the software by submitting a deposit of the first
ten lines and the last ten lines of the source code for each program.4
problem, however, was that the plaintiff had submitted not the original
source code but later versions of the source code. 226 F.3d at 393. The
Fifth Circuit concluded: "the deposit was not a complete copy of the
original source code, thus [plaintiff] had not fulfilled all the statutory
formalities necessary to register its copyright and have 'ownership' in its
software for the purposes of a copyright infringement claim."
Fifth Circuit appears to have adopted the view that if there is any
difference at all between the original and the deposit copies, then the
registration is invalid and the copyright may not be enforced. The Fifth
Circuit did not cite any direct support for that view.
closest support it cited was
Kodadek v. MTV Networks, Inc.,
152 F.3d, 1209, 1210 (9th Cir. 1998), which was one example of some colorful
and unsavoury cases in which plaintiffs have claimed that they were the
originators of highly successful Hollywood figures, though they alas no
longer had any originals that pre-dated the successful films or other
the plaintiff claimed to have originated the characters "Beavis and
Butthead" two years before they appeared on television. Other examples
Seiler v. Lucasfilm, Ltd.,
808 F.2d 1316 (9th Cir. 1986), in which the plaintiff claimed to have
created the "Imperial Walkers" of the movie
The Empire Strikes Back
three or four years before the movie was released. In both cases, the
plaintiffs claimed they unfortunately no longer had their original drawings.
Instead, plaintiffs claimed, after the successful release of the film or
television show, they had "reconstructed" their original drawings and had
submitted them to the Copyright Office for registration. The Ninth Circuit
affirmed summary judgment for the defendants in both cases, finding that
recognizing such belated reconstructions would be an open invitation to
fraud. In both cases, the Ninth Circuit indicated that the deposit copies
could not be reconstructions of the originals but needed to be copies that
were "virtually identical" to the originals.
152 F.3d at 1212;
808 F.2d at 1322.
present purposes, the important point is that the Ninth Circuit cases did
not say "identical," but "virtually identical," which allows for a little
the Ninth Circuit explained that the copy requirement means "that any 'copy'
deposited as part of an application for a certificate of copyright
registration must be virtually identical to the original and must have been
produced by directly referring to the original." 152 F.3d at 1212.
the Fifth Circuit seems to have taken this line of reasoning even further,
to the point that any difference between the original and the deposit copy
must invalidate the registration. As shown above, however, the Fifth Circuit
did not offer support for that extension of
contrast, the First Circuit has taken a more flexible approach to
differences between deposit copies and originals. In
Data General Corp. v.
Grumman Systems Support Corp.,
36 F.3d 1147, 1163 (1st Cir. 1994), the First Circuit affirmed a plaintiff's
verdict for copyright infringement. The court held that the district judge
had properly instructed the jury that immaterial, inadvertent errors in the
deposit copies "do not impeach the validity and effect of the registration."
The First Circuit reached that conclusion after reviewing the
well-established law to the effect that such errors in the application for
registration do not invalidate it. The court saw no reason to treat errors
in deposit copies any differently. The court observed: "We conclude that
there is no support in law or reason for a rule that penalizes immaterial,
inadvertent errors in a copyright deposit."
Dynamic Solutions, Inc. v. Planning & Control, Inc.,
646 F. Supp. 1329, 1341 (S.D.N.Y. 1986), the copyright owner had deposited
revised versions of its software and was unable to specify the differences
between the original and the revised versions. The district court found
that, in the absence of intent to deceive the Copyright Office and without
evidence that the differences were material, the unidentified differences
did not invalidate the copyright registration. The court therefore granted a
preliminary injunction against the defendant's
infringement of the copyright on the software.
This court finds that the approach in
more persuasive than the
rule, which would not tolerate any discrepancies, regardless of intent or
materiality. The more recent copies of lithographs that plaintiffs submitted
as deposit copies in this case cannot be compared to the highly suspicious
The originals and the later copies are documents that plaintiffs have been
using in the ordinary course of their business for years. Viewed in the
light reasonably most favorable to plaintiffs, a reasonable trier of fact
could find that any differences between the originals and the deposit copies
were immaterial and that neither the Copyright Office nor Funeral Depot
relied upon them. Accordingly, Funeral Depot's motion for summary judgment
on this issue is
Even when the evidence in this record is viewed in the light reasonably most
favorable to Funeral Depot, a reasonable jury could not find intent to
deceive the Copyright Office, materiality, or reliance by either the
Copyright Office or defendant, yet a jury would need to be able to find all
three to find in favor of Funeral Depot. The undisputed evidence shows that
plaintiffs alerted the Copyright Office to the existence of minor
differences between the originals and the deposit copies, and the Copyright
Office issued the registrations. Accordingly, plaintiffs are entitled to
summary judgment on the defense of fraud on the Copyright Office and
Funeral Depot has pled as a defense that plaintiffs, by bringing this suit
to attempt to enforce their claimed copyrights, have violated the federal
ShermanAct, 15 U.S.C. § 1
Plaintiffs have moved for summary judgment on thatdefense, arguing that
their pursuit of this litigation is protected by the
doctrine of antitrust law, which protects even anti-competitive effortsto
petition the government, including the courts. The
doctrineprotects plaintiffs' pursuit of this copyright litigation as long as
the lawsuit is not"objectively baseless," which would require Funeral Depot
to prove (1) that "noreasonable litigant could realistically expect success
on the merits," and (2) thatthe plaintiff intended to use the process of the
litigation, as opposed to itsoutcome, as an anticompetitive weapon.
Professional Real Estate Investors, Inc. v
Columbia Pictures Industries, Inc.,
508 U.S. 49, 60-61 (1993) (affirming summary judgment by rejecting antitrust
claim based on copyright suit that was supported by "probable cause").
Funeral Depot has not tried to support its antitrust defense, and the court
therefore grants plaintiffs' motion for summary judgment as to the antitrust
Motion to Strike Dr. Harrington's Report
support of its own motion for summary judgment and in opposition to
plaintiffs' motion, Funeral Depot has offered an affidavit from David E.
Harrington on the issue of fair use. Dr. Harrington is an economist who has
studied the funeral services industry extensively. He has opined that
consumers benefit substantially from internet sites that allow them to shop
for caskets and other funeral products and services. He is an advocate for
greater competition in those markets. More specific to this case, and
contrary to plaintiffs' argument, he has opined that Funeral Depot's use of
and links to plaintiffs' photographs of caskets on internet sites is helpful
to consumers. Harrington Aff. ¶¶ 11, 14, 15, & 24. Pursuant to Rule 702 of
the Federal Rules of Evidence, plaintiffs have moved to strike Dr.
Harrington's affidavit because it is not reliable and would not be helpful
to a trier of fact.
Harrington's report offers a detailed account of how consumers can benefit
from the competition that Funeral Depot provides. In essence, making
information available on the internet dramatically lowers the search costs
for consumers, who might otherwise have to make multiple visits to funeral
homes to learn about the market choices available to them. Dr. Harrington
offers very little, however, by way of support for his defense for Funeral
Depot's decisions first to copy plaintiffs' photographs and then to use
links to the Veterans Society website, which Funeral Depot arguably
controls. In Paragraph 14, Dr. Harrington refers to "a smattering of
evidence" that some consumers are visiting funeral homes armed with better
information, though he does not explain why a consumer needs access to
copyrighted photographs to obtain that benefit. In Paragraph 15, Dr.
Harrington offers only speculation and a heroic leap to his conclusion about
the value of copyright infringement:
Over the last five years, funeral homes
have almost surely
experienced an increase in the number of consumers coming in armed with
pictures and prices of caskets they found on the Internet.
Many of these pictures
would have come
from Funeral Depot's website, which has received more than four hundred
thousand hits from visitors, a number which reflects the much lower cost of
visiting websites than funeral homes. The benefits to funeral consumers of
information gleaned from the Internet will be greater if - in [Wisconsin
funeral director] Mark Krause's words - the products and prices are for
In other words,
consumers[ ] benefit if Internet firms like Funeral Depot are allowed to
display pictures of Batesville caskets on their websites or via links to
authorized Batesville dealers who are part of their network.
Emphasis added. The last sentence deserves close attention. Dr. Harrington
does not opine that the benefit to consumers depends in any way on the use
of photographs that infringe plaintiffs' copyrights. He does not offer any
support for the conclusion that consumers are better off if Funeral Depot is
allowed simply to copy plaintiffs' copyrighted photographs for posting on
its own website, as compared to the non-infringing alternative of having
Funeral Depot take and publish its own photographs. With respect to links to
authorized Batesville dealers, Dr. Harrington does not address the principal
issue here related to linking, which is whether Funeral Depot is entitled in
effect to obtain control over an authorized dealer's website.5
these reasons, the court concludes that Dr. Harrington's affidavit does not
present a genuine issue of fact as to Funeral Depot's fair use defense.
There is no doubt, however, that Dr. Harrington's report provides useful and
reliable background information, and the court declines to strike the report
from the record. Plaintiffs' motion to strike is denied.
the reasons stated above, defendant's motion to dismiss is hereby denied,
and defendant's motion for summary judgment is also denied. Plaintiffs'
motion to strike is hereby denied. Plaintiffs' motion for summary judgment
is granted on the fair use, misuse of copyright, fraud and improper
registration, and antitrust defenses, but is denied in all other respects.
Date: November 10, 2004
DAVID F. HAMILTON, JUDGE
United States District Court
Southern District of Indiana
David F. Hamilton
1 Under Indiana law as summarized in Sedona Development
Group, Inc. v. Merrillville Road Ltd. P'ship, 801 N.E.2d 1274, 1278 n.1 (Ind.
App. 2004), the defense of accord and satisfaction requires proof that: (1)
there is a good faith dispute; (2) the sum in dispute is not liquidated; (3)
there is consideration; (4) there is a meeting of the minds or evidence that
the parties intended to agree to an accord and satisfaction; and (5) there
is a performance of the contract. Plaintiffs' response to the motion for
summary judgment challenges Funeral Depot's ability to satisfy the fourth
element, upon which Funeral Depot has the burden of proof.
2 Plaintiffs continue to seek damages for the earlier use
of their photographs on the funeraldepot.com and casketsnow.com websites,
though Funeral Depot's alleged infringement seems not to have damaged
plaintiffs at all and Funeral Depot's sales of Batesville caskets were
modest (gross revenues in the five-figures). As a result of these modest
claims for damages, the license and linking issuesdiscussed below based on
the Veterans Society links could not resolve the entirecase.
3 For purposes of deciding this issue on defendant's
motion for summary judgment, the court must assume that the Veterans
Society's use of plaintiffs' photographs is not authorized by plaintiffs.
4 Regulations have included special provisions that do
not always require that complete copies of computer programs be submitted
with the copyright registration. See 37 C.F.R. § 202.20(c)(2)(vii).
5 If Funeral Depot were creating links to independent
dealer websites that´display plaintiffs' copyrighted photographs of caskets,
the case might be closer to the Ticketmaster case discussed above, 2000 WL
525390. Instead, however, it is offering links to the Veterans Society
website with pages that Funeral Depot designed, with prices that Funeral
Depot selected, and with Funeral Depot's telephone number.