533 F.3d 1287 (11th Cir. 2008), 05-15129, Peter Letterese And Associates, Inc. v. World Institute Of Scientology Enterprises,

Docket Nº:05-15129.
Citation:533 F.3d 1287, 87 U.S.P.Q.2d 1563
Party Name:PETER LETTERESE AND ASSOCIATES, INC., a Florida corporation, Plaintiff-Appellant, v. WORLD INSTITUTE OF SCIENTOLOGY ENTERPRISES, INTERNATIONAL, Religious Technology Center, Inc., Church of Scientology International, Inc., all California corporations, Church of Spiritual Technology, Defendants-Appellees.
Case Date:July 08, 2008
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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533 F.3d 1287 (11th Cir. 2008)

87 U.S.P.Q.2d 1563

PETER LETTERESE AND ASSOCIATES, INC., a Florida corporation, Plaintiff-Appellant,

v.

WORLD INSTITUTE OF SCIENTOLOGY ENTERPRISES, INTERNATIONAL, Religious Technology Center, Inc., Church of Scientology International, Inc., all California corporations, Church of Spiritual Technology, Defendants-Appellees.

No. 05-15129.

United States Court of Appeals, Eleventh Circuit.

July 8, 2008

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[Copyrighted Material Omitted]

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David Lee Hoffman, Law Offices of David L. Hoffman, Valencia, CA, Raymond T. Nimmer, University of Houston Law Ctr., Houston, TX, for Plaintiff-Appellant.

Helena Kempner Kobrin, Moxon & Kobrin, Los Angeles, CA, Elizabeth Brooks Honkonen, Michael Nachwalter, Kenny Nachwalter Seymour Arnold Critchlow & Spector, Thomas John Meeks, Matthew Thomas Davidson, Zuckerman, Spaeder, Miami, FL, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT, HULL and BOWMAN,[*] Circuit Judges.

TJOFLAT, Circuit Judge:

The parties in this case disagree over the scope of copyright protection in a book about sales techniques authored by the late Leslie Achilles “Les" Dane. Peter Letterese & Associates, Inc. (“PL&A" ), the exclusive licensee of the copyright in Dane's book, claims that three entities affiliated with the Church of Scientology have been infringing its copyright by incorporating portions of the book into their instructional course materials, and seeks declaratory and injunctive relief. On cross-motions for summary judgment, the district court assumed that the infringement was occurring as alleged but ruled for defendants. The court did so on two alternative grounds: the infringement was permissible under the fair use doctrine; and PL&A's suit was barred by laches.

PL&A now appeals. We uphold the district court's decision as to three claims, but find error in the court's application of the fair use doctrine and the laches defense to a remaining claim. We therefore affirm, in part, and vacate and remand, in part.

The organization of this opinion proceeds as follows. Part I presents the factual background and procedural history of the case. Part II affirms the grant of summary judgment with respect to two claims alleging that defendants' instructional courses-in and of themselves-constitute infringing derivative works, but concludes with respect to two remaining claims that there is a general issue of material fact as to whether the course materials are substantially similar to Dane's book. Part III explains the contours of fair use, and concludes that it is merited as to some, but not all, of defendants' uses of the book. Part IV considers the applicability of the defense of laches in a copyright infringement suit, a question of first impression in this circuit. Part V concludes.

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I.

A.

The copyrighted work in question is a book by Les Dane entitled Big League Sales Closing Techniques (“Big League Sales " ). The introduction to the book claims that its descriptions of “specific techniques and true cases" collectively “pinpoint[ ] the most effective, miracle closes" in sales. The balance of the book presents these sales techniques through Les Dane's recounting of personal anecdotes, from which the titles of techniques (both good and bad) are drawn. The book repeatedly returns to the “one basic theme" that each sales prospect is clad in a “brick overcoat" of fear, and that the well-prepared salesman will know how to identify different “bricks" (sources of sales resistance) and eliminate them.

The book was originally published in 1971 by the Parker Publishing Company 1 and duly registered in April 1971 in compliance with the formalities of the Copyright Act of 1909, 35 Stat. 1075, 17 U.S.C. § 1 et seq. (1976 ed.). Under the copyright law then in effect, Les Dane was entitled to an initial 28-year term of copyright protection and the right to renew for an additional 28-year term. 17 U.S.C. § 24.

Shortly thereafter, L. Ron Hubbard, the founder of the Church of Scientology (“the Church" ) and a prolific writer in his own right, took a shine to Big League Sales and recommended that it be used to train Scientology “registrars," who sell Scientology books and services to Church members. The Hubbard Communications Office disseminated a number of policy letters regarding the teaching of salesmanship techniques and skills from the book, and in 1972 the Church began to create a number of courses for training registrars.

The Church developed materials for use in these courses, including “checksheets" and “drill sheets." A checksheet is a step-by-step list of the actions that a student is required to take to complete a course, such as the completion of reading assignments and the performance of various practical exercises, including sales drills. Students form pairs, or “twins," to perform the sales drills-generally involving some form of roleplay-which are described on drill sheets accompanying the checksheet. While these courses assigned readings from Big League Sales (among other writings), the Church did not make copies of the book itself; students would either borrow or purchase the book for their study.

It is undisputed that Les Dane knew of the Church's use of Big League Sales and participated in such use. Beginning in the mid-1980s, the Church hired Les Dane to travel to Scientology churches in the United States and abroad to deliver seminars to registrars and others on the application of the sales techniques in his book. In these seminars, Les Dane occasionally referred to the sales drills and supervised the practice of those drills.

Defendants in this action are three entities affiliated with the Church: the Church of Scientology International, Inc. (“CSI" ), the World Institute of Scientology Enterprises International, Inc. (“WISE" ), and the Church of Spiritual Technology (“CST" ). CSI has been the mother church of Scientology since 1981.2 Among other duties, CSI creates materials for use in staff training courses. Of these courses, there are two main types which include the

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study of Big League Sales ; courses typified by the Professional Registration Course and the Organization Executive Course, which were both compiled in 1991. CSI encourages Church staff members to take these courses as part of their training for certain positions in Church organizations.3 The staff members complete the courses at their own pace in course rooms provided by CSI, and their progress is monitored and assisted by a course supervisor. However, the course supervisor does not lecture or add to the substantive material of the course. In exchange for taking one of these courses, each staff member signs a promissory note for the “donation amount of the course." In the event that the staff member subsequently fails to serve out the duration of his staff contract, the promissory note becomes due to the Church organization as “a debt for the services that he took while on staff."

WISE, also formed in 1981, is a membership organization for businessmen and professionals who seek to apply Hubbard's administrative technologies to secular organizations. WISE creates and sells packs of course material on this subject, and licenses some of its members to provide business consulting services using WISE materials. From 1983 until June 2004, WISE sold for a flat price of $75 a Sales Course pack which taught the sales techniques from Big League Sales . The relevant sections of the checksheets and drills used in the Sales Course vary somewhat in content and organization from the corresponding materials used in the Professional Registration Course and the Organization Executive Course.4

CST was created in 1982 to receive the bulk of the estate of Hubbard, including his intellectual property rights. (Hubbard died in 1986.) Its mission is to preserve Scientology scriptures, which consist of the written and spoken word of Hubbard as well as films concerning religious training and the administration of Scientology services. CST acquired the copyrights to Hubbard's works in 1993 and has since licensed the rights to use those works to CSI, WISE, and other affiliated entities. Though CST has claimed not to have reviewed any of WISE and CSI's course materials, it had the right to review the WISE materials pursuant to the license agreement.

Peter Letterese, a principal of PL&A, was an off-and-on member of the Church for approximately two decades beginning in 1973. In addition to serving as a registrar, Letterese held several positions in Church organizations. He accordingly studied Big League Sales in several courses, including the Organization Executive Course. During the late 1980s and early 1990s, Letterese was also a member of WISE; as such, he was licensed to sell WISE courses.

On December 31, 1993, while Letterese was still a member in good standing in the Church, PL&A acquired the exclusive rights to Les Dane's literary works (including the right of enforcement) through a written contract with the heirs of the Dane estate, including Les Dane's widow, Lois “Betty" Dane. These rights extended through the renewal term. PL&A also purchased the outstanding rights of Prentice Hall in 1994. PL&A subsequently withdrew Big League Sales from the market; it has been out of print since 1994.

The Church “declared," or excommunicated, Letterese in July 1994 for violating

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certain Church policies. Nonetheless, Letterese continued to regard himself as a Scientologist. In July 1995...

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