CDN Inc. v. Kapes

• Decision Date: 02 December 1999
• Docket Number: No. 98-55555,98-55555
• Parties: (9th Cir. 1999) CDN INC., a California corporation, Plaintiff-Appellee, v. KENNETH A. KAPES, an individual d/b/a Western Reserve Numismatics, Defendant-Appellant. Office of the Circuit Executive
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1256

197 F.3d 1256 (9th Cir. 1999)

CDN INC., a California corporation, Plaintiff-Appellee, v. KENNETH A. KAPES, an individual d/b/a Western Reserve Numismatics, Defendant-Appellant. No. 98-55555

Office of the Circuit Executive

U.S. Court of Appeals for the Ninth Circuit

Argued and Submitted September 27, 1999

Decided December 2, 1999

COUNSEL: Bob Clark, Jr. (argued), Los Angeles, California, for the defendant-appellant.

Gary Phillips (argued), Beverly Hills, California, for the plaintiff-appellee.

Appeal from the United States District Court for the Central District of California; Edward Rafeedie, District Judge, Presiding. D.C. No.CV-97-01125-ER

Before: Diarmuid F. O'Scannlain, Ferdinand F. Fernandez, and Thomas G. Nelson, Circuit Judges.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether prices listed in a wholesale coin price guide contain sufficient originality to merit the protection of the copyright laws.

I

Kenneth Kapes operates a coin business, Western Reserve Numismatics, in Ohio. In response to many inquiries he received regarding the price of coins, Kapes developed "The Fair Market Coin Pricer," which listed on his internet web page the retail prices of many coins. In order to generate the prices he listed, Kapes used a computer program he developed to create retail prices from wholesale prices. The exact process is unclear, but Kapes acknowledges using appellee CDN, Inc.'s wholesale price lists.

CDN publishes the Coin Dealer Newsletter, a weekly report of wholesale prices for collectible United States coins, as well as the Coin Dealer Newsletter Monthly Supplement and the CDN Quarterly. The Newsletter, or "Greysheet" as it is known in the industry, includes prices for virtually all collectible coins and is used extensively by dealers. In December 1996, CDN discovered the existence of Kapes' internet site and list of current retail prices. CDN filed a complaint on February 21, 1997 in the U.S. District Court for the Central District of California, alleging that Kapes infringed CDN's copyrights by using CDN's wholesale prices as a baseline to arrive at retail prices. The complaint asked the court to determine that Kapes infringed its copyright and to enjoin Kapes from future infringement.

Kapes responded that although the subject works contained some original copyrightable subject matter, he did not copy any of it. Kapes also asserted various affirmative defenses including license, unclean hands, and estoppel. On December 17, 1997, the parties executed a "Stipulation to Waive Trial in Lieu of Case Dispositive Cross-Motions for Summary Judgment." ("Stipulation") The Stipulation provided that "the dispositive issue in this copyright infringement case is whether the prices listed in plaintiff's copyrighted wholesale coin price guides comprise copyrightable subject matter under Section 102 of the 1976 Copyright Act (17 U.S.C.S 102)." The parties agreed that the "issue of copyrightability may effectively be presented to the Court by cross-motions for summary judgment which, once argued and ruled upon, will dispose of the case in its entirety."

In accordance with the stipulation, the parties filed crossmotions for summary judgment, which the district court heard on February 2, 1998. After reciting the parties' stipulation that the issue of copyrightability was dispositive of the case, the court ruled that CDN's "prices are original creations, not uncopyrightable facts." By order entered February 9, 1998, the court granted CDN's motion for summary judgment and denied that of Kapes. The court enjoined Kapes from infringing CDN's copyright.

Kapes timely appealed.

II

As an initial matter it is important to clarify the scope of this appeal. To make out a claim for copyright infringement, a plaintiff must show: (1) ownership of a valid copyright and (2) copying by the defendant of protectable elements of the work. See Smith v. Jackson, 84 F.3d 1213, 1218 (9th Cir. 1996); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 548 (1985). Although CDN's original complaint alleged infringement, the parties in their stipulation agreed that the dispositive issue in this infringement case was whether the prices are copyrightable subject matter. By enter ing into this stipulation, Kapes effectively admitted to having copied CDN's work.

Nevertheless, Kapes attempts to raise several issues in his appeal beyond that of copyrightability. This he cannot do for he is bound by the stipulation. Because stipulations serve both judicial economy and the convenience of the parties, courts will enforce them absent indications of involuntary or uninformed consent. See United States v. McGregor, 529 F.2d 928, 931 (9th Cir. 1976). No claim that the stipulation should not be enforced has been made here. Thus the stipulation bars any litigation over copying, the second prong of an infringement action.

The stipulation also prevents Kapes from raising on appeal the affirmative defenses--license, unclean hands, and estoppel--originally raised in his answer to CDN's complaint.

An appellate court will not consider issues not properly raised before the district court. See Crawford v. Lungren, 96 F.3d 380, 389 n.6 (9th Cir. 1996). The " `withdrawal of an objection is tantamount to a waiver of an issue for appeal.' " Slaven v. American Trading Transp. Co., Inc., 146 F.3d 1066, 1069 (9th Cir. 1998) (quoting United States v. Manarite, 44 F.3d 1407, 1419 n.18 (9th Cir. 1995)). In Slaven, the appellant first raised several objections to a settlement agreement. See id. at 1069. It then unconditionally signed a stipulation agreeing to the proposed settlement. See id. When the appellant tried to object to the settlement on appeal, the court held that it had waived its right to challenge the agreement by signing the stipulation. See id. Likewise, by stipulating that the sole issue in this case is the copyrightability of the prices, Kapes waived the affirmative defenses he initially asserted and the issue of whether he copied CDN's prices. Thus the sole issue in this appeal, and the only one presented to the district court for decision, is whether the prices are copyrightable. ¹

III

The Constitution gives Congress the power "To promote the Progress of Science . . . by securing for limited Times to Authors . . . the exclusive Right to their . . . Writings." U.S. Const. art. 1, S 8, cl. 8. Accordingly, Congress has granted copyright protection to "original works of authorship," 17 U.S.C. S 102(a), as well as "compilations. " Id. at S 103(a). The copyright in a compilation "extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work . . . ." Id. at S 103(b).

Discoverable facts, like ideas, are not copyrightable. But compilations of facts are copyrightable even where the underlying facts are not. See Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344 (1991). The distinction between facts and non-facts, and between discovery and creation, lies at the heart of this case. The essential ingredient present in creations, but absent in facts, is originality, "the sine qua non of copyright." Id. at 345. Subject matter created by and original to the author merits copyright protection. Items not original to the author, i.e., not the product of his creativity, are facts and not copyrightable. In Feist, the issue was whether white page listings of telephone numbers qualified for copyright protection as compilations. The Court held that they did not. In order to warrant protection, compilations and other works must contain a minimal amount of originality or creativity. See id. at 361. The white page listings, which included everyone within a geographical area and were arranged alphabetically, did not. See id. at 362-63. Thus they could be copied in their entirety despite the time and effort spent to compile them.

Appellant's attempt to equate the phone number listings in Feist with CDN's price lists does not withstand close scrutiny. First, Kapes conflates two separate arguments: (1) that the listing, selection, and inclusion of prices is not original enough to merit protection; and (2) that the prices themselves are not original creations. Whether CDN's selection and arrangement of the price lists is sufficiently original to merit protection is not at issue here. CDN does not allege that Kapes copied the entire lists, as the alleged infringer had in Feist. Rather, the issue in this case is whether the prices themselves are sufficiently original as compilations to sustain a copyright. Thus Kapes' argument that the selection is obvious or dictated by industry standards is irrelevant.

Although the requirement of originality is a constitutional one inherent in the grant to Congress of the power to promote science and the useful arts, the required level of originality is "minimal." Feist, 499 U.S. at 358. The telephone listings did not qualify because they fell into the "narrow category of works in which the creative spark is utterly lacking or so trivial as to be virtually nonexistent." Id. at 359. The numbers themselves were given by the phone company. Their selection (or rather universal inclusion) and arrangement in alphabetical order were too obvious to be original. Nevertheless, "the requisite level of creativity is extremely low; even a slight amount will suffice. The vast majority of works make the grade quite easily, as they possess some creative spark, `no matter how crude, humble or obvious' it might be." Feist, 499 U.S. at 345 (quoting 1 M. Nimmer & D. Nimmer, Copyright S 1.08[C][1] (1990)). This spark glows in CDN's prices, which are compilations of data chosen and weighed with creativity and judgment.

Here, the district court, explicitly referencing Feist, held that the prices in CDN's guides are not facts, they are "wholly the product of [CDN's] creativity. The evidence indicates that the plaintiff uses its...