Anthony Johnson v. Storix, Inc. ( 2017 )

FILED
NOT FOR PUBLICATION
DEC 19 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ANTHONY J. JOHNSON, No. 16-55439
Plaintiff-counter- D.C. No.
defendant-Appellant, 3:14-cv-01873-H-BLM
v.
MEMORANDUM*
STORIX, INC., a California Corporation,
Defendant-counter-claimant-
Appellee.
Appeal from the United States District Court
for the Southern District of California
Marilyn L. Huff, District Judge, Presiding
Submitted December 5, 2017**
Pasadena, California
Before: D.W. NELSON and REINHARDT, Circuit Judges, and STEEH,***
District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable George Caram Steeh III, United States District Judge
for the Eastern District of Michigan, sitting by designation.
Anthony Johnson (“Johnson”) appeals the judgment in favor of Storix, Inc.
(“Storix”) after a 5-day jury trial in his copyright infringement action, denial of his
summary judgment motion, denial of his motion for a new trial, and award of
attorney’s fees to Storix. We review a denial of summary judgment de novo.
Perfect 10, Inc. v. CCBill L.L.C., 488 F.3d 1102, 1109 (9th Cir. 2007). For a
summary judgment ruling to be appealable after a full trial on the merits, the denial
must involve an “error of law that, if not made, would have required the district
court to grant the motion.” FBT Productions, LLC v. Aftermath Records, 621 F.3d
958, 963 (9th Cir. 2010). In reviewing a denial of a motion for a new trial, we
review interpretations of the Copyright Act de novo. See Perfect 10, Inc., 488 F.3d
at 1109. We review jury instructions de novo for statements of law and under an
abuse of discretion standard with respect to their formulation. SEIU v. Nat’l Union
of Healthcare Workers, 718 F.3d 1036, 1047 (9th Cir. 2013). We also “review a
district court’s decision to grant or deny attorney’s fees under the Copyright Act
for abuse of discretion.” Perfect 10, Inc., 488 F.3d at 1109. We AFFIRM in part,
REVERSE in part, and REMAND.
On March 15, 2004, Johnson signed a 2003 Annual Report (“Annual
Report”) he personally drafted that memorialized the transfer of “all assets” to
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Storix. The Annual Report stated: “All assets from Storix Software were
transferred to Storix Inc., as of its incorporation as of February 24, 2003.”
Johnson argues that the district court erred in denying his motion for
summary judgment and motion for a new trial because the Annual Report does not
satisfy Section 204(a) of the Copyright Act as a matter of law. The Copyright Act
provides that “a transfer of copyright ownership, other than by operation of law, is
not valid unless an instrument of conveyance, or a note or memorandum of the
transfer is in writing and signed by the owner of the rights conveyed.” 17 U.S.C. §
204(a). Section 204(a) can be satisfied by an oral assignment that is later
confirmed in writing. Jules Jordan Video, Inc. v. 144942 Canada Inc., 617 F.3d
1146, 1156 (9th Cir. 2010); Valente-Kritzer Video v. Pinckney, 881 F.2d 772, 775
(9th Cir. 1989) (“If an oral transfer of a copyright license is later confirmed in
writing, the transfer is valid.”).
The writing does not require any “magic words . . . Rather, the parties’
intent as evidenced by the writing must demonstrate a transfer of the copyright.”
Radio Television Espanola S.A. v. New World Entm’t, Ltd., 183 F.3d 922, 927 (9th
Cir. 1999) (citing Melville B. Nimmer & David Nimmer, Nimmer on Copyright, §
10.03[A][2] at 10-37 [“As with all matters of contract law, the essence of the
inquiry here is to effectuate the intent of the parties.”]). As such, the writing does
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not “have to be the Magna Carta; a one-line pro forma statement will do.” Id.
(citations omitted); see also SCO Grp., Inc. v. Novell, Inc., 578 F.3d 1201, 1212
(10th Cir. 2009) (“Section 204(a), by its terms, imposes only the requirement that a
copyright transfer be in writing and signed by the parties from whom the copyright
is transferred; it does not on its face impose any heightened burden of clarity or
particularity.”).
The Annual Report qualified as a “note or memorandum” that was signed by
Johnson and memorialized a transfer of assets. See 18 U.S.C. § 204(a). Contrary
to Johnson’s assertions, the form of a signature and contemporaneity of the writing
are not dispositive. First, Section 204(a) does not necessitate the form of the
signature to be in the transferor’s personal capacity. The purpose of Section
204(a)’s writing requirement is to prevent inadvertent transfers and fraudulent
claims of copyright ownership. Magnuson v. Video Yesteryear, 85 F.3d 1424,
1428-29 (9th Cir. 1996). That concern is virtually absent when Johnson himself
admitted to writing and signing the Annual Report that memorialized a transfer of
at least some assets to his own wholly-owned company. Johnson conceded that a
transfer of some assets did occur, including computers, desks, supplies, and
“whatever was necessary to continue doing business as Storix, the same thing that I
was doing as Storix Software.”
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Similarly, Konigsberg Intern. Inc. v. Rice, 16 F.3d 355 (9th Cir. 1994) does
not require a contemporaneous writing under these facts. Magnuson, 85 F.3d at
1429 n.1 (stating that the issue in Konigsberg was tardiness, not
contemporaneousness, and “to the extent that some language in Konigsberg might
be interpreted as requiring a contemporaneous writing even under the facts of this
case, it is clearly dicta.”); see also Barefoot Architect, Inc. v. Bunge, 632 F.3d 822,
828 (3d Cir. 2011) (“[T]ext of the statute . . . clearly allows for a subsequent
writing to effectuate an earlier oral transfer, it does not specify a time period during
which the writing must be consummated.”). Unlike the writing in Konigsberg, the
Annual Report provided a “reference point” to the exact date of the transfer. See
id. (noting that the problem in Konigsberg was that “it was ‘not the type of writing
contemplated by [S]ection 204’” because it did not provide a “reference point for
the parties’ [] disputes”).
Johnson also argues that his motion for a new trial should have been granted
because the interpretation of Section 204(a) was not an issue for the jury. But for
Johnson’s assertion that the term “all assets” did not include the copyright to SBA,
the Annual Report satisfied Section 204(a)’s writing requirement. Both parties
offered extrinsic evidence to prove the meaning of “all assets.” See 2 Patry on
Copyright § 5:111 (“After-the-fact writings should serve . . . as a reference point, a
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springboard from whence the parties’ actual intent may be verified . . . Extrinsic
evidence of the parties’ intent may play an important role.”). Extrinsic evidence
that is offered to interpret the terms of a writing are for the jury. Cachil Dehe Band
of Wintun Indians of Colusa Indian Cmty. v. California, 618 F.3d 1066, 1077 (9th
Cir. 2010) (When there is “extrinsic evidence supporting competing interpretations
of ambiguous contract language the court may not use the evidence to interpret the
contract as a matter of law, but must instead render the evidence to the factfinder
for evaluation of its credibility”); see Welles v. Turner Entm’t Co., 503 F.3d 728,
737 (9th Cir. 2007) (remanding to district court because the intention of parties’
copyright transfer was ambiguous, “and because the contract’s interpretation may
turn on the credibility of extrinsic evidence.”). Thus, the jury was properly tasked
with interpreting the term at issue.
Given the foregoing, the jury instructions correctly stated that the term “all
assets” could include copyright ownership and that the jury could use extrinsic
evidence to interpret the meaning of the term. Therefore, the district court did not
err in denying Johnson’s motion for a new trial on the basis that the jury
instructions were an incorrect statement of law.
The district court did not abuse its discretion in awarding fees to Storix
because it gave “‘substantial weight’ to the objective reasonableness of [Johnson’s]
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position but did not rely exclusively on it, and thus the Supreme Court’s recent
decision in Kirtsaeng v. John Wiley & Sons, Inc. does not require a different
result.” Choyce v. SF Bay Area Indep. Media Ctr., 669 F.App’x 863, 865 (9th Cir.
2016). The district court properly relied on other factors that outweighed its
findings that Johnson’s claims were not objectively unreasonable or frivolous:
Johnson’s motivation, the degree of Defendant Storix’s success, and the need to
advance considerations of compensation and deterrence. See Omega S.A. v. Costco
Wholesale Com., 776 F.3d 692, 695-96 (9th Cir. 2015).
While the district court did not abuse its discretion in choosing to award fees
to Storix, we find that the amount of the award was unreasonable. “Even though a
district court has discretion to choose how it calculates fees, we have said many
times that it abuses that discretion when it uses a mechanical or formulaic approach
that results in an unreasonable reward.” In re Bluetooth Headset Prod. Liab. Litig.,
654 F.3d 935, 944 (9th Cir. 2011) (citations and quotations omitted); see also Fox
v. Vice, 563 U.S. 826, 839 (2011) (“The essential goal in shifting fees … is to do
rough justice, not to achieve auditing perfection.”). Because Johnson’s claims
were neither unreasonable nor frivolous, the amount of $543,704 was excessive.
See Kirtsaeng v. John Wiley & Sons, Inc., 136 S. Ct. 1979, 1988 (2016) (holding
that courts must give substantial weight to the objective reasonableness of losing
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party’s position when awarding fees). Further, Johnson, who is now pro se, is an
individual plaintiff, rather than another company. See Lieb v. Topstone Indus.,
Inc., 788 F.2d 151, 156 (3d Cir. 1986) (“The relative financial strength of the
parties is a valid consideration” in determining “what amount is reasonable”).
“While we do not pass judgment on what the award should be, § 505 demands that
it be reasonable.” Woodhaven Homes & Realty, Inc. v. Hotz, 396 F.3d 822, 824
(7th Cir. 2005) (quotations omitted); see also Yellow Pages Photos, Inc. v.
Ziplocal, LP, 846 F.3d 1159, 1165 (11th Cir. 2017) (“At the end of the day, the
substantive reasonableness of the amount awarded is the touchstone of our
evaluation of a district court’s award of fees and costs.”). We therefore reverse the
fee award and remand to the district court to reconsider the amount.
AFFIRMED in part, REVERSED in part, and REMANDED. Each
party shall bear its own costs.
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