CCC Information Services, Inc. v. Maclean Hunter Market Reports, Inc.

• Decision Date: 05 December 1994
• Docket Number: D,No. 1312,1312
• Citation: 44 F.3d 61
• Parties: , 1994 Copr.L.Dec. P 27,328, 33 U.S.P.Q.2d 1183 CCC INFORMATION SERVICES, INC., Plaintiff-Appellee, v. MACLEAN HUNTER MARKET REPORTS, INC., Defendant-Appellant, Creative Automation Co., Defendant. ocket 93-7687.
• Court: U.S. Court of Appeals — Second Circuit

Page 61

44 F.3d 61

63 USLW 2375, 1994 Copr.L.Dec. P 27,328,

33 U.S.P.Q.2d 1183

CCC INFORMATION SERVICES, INC., Plaintiff-Appellee, v. MACLEAN HUNTER MARKET REPORTS, INC., Defendant-Appellant Creative Automation Co., Defendant.

No. 1312, Docket 93-7687.

United States Court of Appeals Second Circuit.

Argued March 2, 1994.

Decided Dec. 5, 1994.

Stephen M. Feldman, Washington, DC (David Kolker, Spiegel & McDiarmid, Washington, DC), Thomas P. Sarro and Brewster Taylor, Larson and Taylor, Arlington, VA, for defendant-appellant.

Monica L. Thompson, Chicago, IL (James J. Casey, Keck, Mahin & Cate, Chicago, IL and Lawrence H. Lissitzyn, Reid & Riege, Hartford, CT), for appellee.

James F. Rittinger and Mark A. Fowler, New York City (Satterlee Stephens Burke & Burke), on the brief for amici curiae.

Before: KEARSE, PIERCE, and LEVAL, Circuit Judges.

LEVAL, Circuit Judge:

The appellant, publisher of a compendium of its projections of used car valuations, seeks to establish copyright infringement on the part of a competitor, which copied substantial portions of appellant's compendium into the computer data base of used car valuations it offers to its customers. Arising in the wake of the Supreme Court's decision in Feist Publications, Inc. v. Rural Telephone Serv. Co., 499 U.S. 340, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991), this appeal raises the question of the scope of protection afforded by the copyright law to such compilations of informational matter. Finding no infringement, the district court granted summary judgment to the appellee. In our view, the copyright law offers more substantial protection to such compilations than envisioned in the district court's ruling. We therefore reverse.

Background

The Red Book. The appellant is Maclean Hunter Market Reports, Inc. ("Maclean"). Since 1911, Maclean, or its predecessors, have published the Automobile Red Book--Official Used Car Valuations (the "Red Book"). ¹ The Red Book, which is published eight times a year, in different versions for each of three regions of the United States (as well as a version for the State of Wisconsin), sets forth the editors' projections of the values for the next six weeks of "average" versions of most of the used cars (up to seven years old) sold in that region. ² These predicted values are set forth separately for each automobile make, model number, body style, and engine type. Red Book also provides predicted value adjustments for various options and for mileage in 5,000 mile increments.

The valuation figures given in the Red Book are not historical market prices, quotations, or averages; nor are they derived by mathematical formulas from available statistics. They represent, rather, the Maclean editors' predictions, based on a wide variety of informational sources and their professional judgment, of expected values for "average" vehicles for the upcoming six weeks in a broad region. The introductory text asserts, "You, the subscriber, must be the final judge of the actual value of a particular vehicle. Any guide book is a supplement to and not a substitute for expertise in the complex field of used vehicle valuation."

CCC's computer services. Appellee CCC Information Services, Inc. ("CCC"), is also in the business of providing its customers with information as to the valuation of used vehicles. Rather than publishing a book, however, CCC provides information to its customers through a computer data base. Since at least 1988, CCC has itself been systematically loading major portions of the Red Book onto its computer network and republishing Red Book information in various forms to its customers. ³

CCC utilizes and resells the Red Book valuations in several different forms. CCC's "VINguard Valuation Service" ("VVS") provides subscribers with the average of a vehicle's Red Book valuation and its valuation in the NADA Official Used Car Guide (the "Bluebook"), the other leading valuation book, published by the National Automobile Dealers Association ("NADA"). The offer of this average of Red Book and Bluebook satisfies a market because the laws of certain states use that average figure as a minimum for insurance payments upon the "total loss" of a vehicle. CCC's "Computerized Valuation Service" ("CVS"), while it primarily provides its subscribers with CCC's independent valuation of used cars, also provides customers with the Red Book/Bluebook average and the Red Book values standing alone.

It is uncontested that CCC earns significant revenues through the sale of its services, in which it both directly and indirectly resells the figures it copies every few weeks from the Red Book. As the court found below, since 1988 numerous Red Book customers have canceled their subscriptions, opting instead to purchase CCC's services. Op. at 25 (JA 665).

Proceedings below. CCC brought this action in 1991, seeking, inter alia, a declaratory judgment that it incurred no liability to Maclean under the copyright laws by taking and republishing material from the Red Book. Maclean counterclaimed alleging infringement. CCC then pleaded various affirmative defenses, including that it used the Red Book for its intended purpose, fair use, and that the Red Book has come into the public domain as the result of its adoption in state statutes regulating the amount of insurance payments. CCC also made various contentions based on waiver, estoppel, consent, and untimeliness.

Both sides moved for summary judgment, and the motions were referred for report and recommendation to Magistrate Judge Arthur H. Latimer. Magistrate Judge Latimer recommended to the district court that CCC's motion for summary judgment be granted. Judge Latimer found (1) that the Red Book employed no originality or creativity in the selection, coordination or arrangement of data, and therefore did not constitute a protected "original work of authorship," 17 U.S.C.A. Sec. 101 (West 1977); (2) that the Red Book valuations were facts, or interpretations of facts, and were, therefore, not protected by copyright; (3) that, even if the entries were not facts, copyright protection was nonetheless precluded by the doctrine of "merger of idea and expression," because each entry in the Red Book is an idea--the idea of the value of the particular vehicle--and that idea is necessarily communicated by a dollar figure; and (4) that the Red Book had been placed in the public domain by being "incorporated into governmental regulations." District Judge Nevas then "approved, adopted and ratified" the Magistrate Judge's recommended ruling, and judgment was entered in CCC's favor. Endorsement at JA 671.

Discussion

1. Does the Red Book manifest originality so as to be protected by the copyright laws? The first significant question raised by this appeal is whether Maclean holds a protected copyright interest in the Red Book. CCC contends, and the district court held, that the Red Book is nothing more than a compilation of unprotected facts, selected and organized without originality or creativity, and therefore unprotected under the Supreme Court's teachings in Feist. We disagree.

The Copyright Act of 1976 explicitly confers limited protection on compilations. Section 103(a) specifies that "[t]he subject matter of copyright ... includes compilations," which are defined by Section 101 as assemblies of data "selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship"; Section 103(b) makes clear that the protection in a compilation "extends only to the material contributed by the author of such work ... and does not imply any exclusive right in the preexisting material." 17 U.S.C.A. Secs. 101-103 (West 1977).

In Feist, the Supreme Court ruled that originality is an essential element of copyright protection, and that toil, or "sweat of the brow," expended in collecting information does not justify conferring copyright protection on a compilation of facts; rather, protection attaches only if the selection, coordination, or arrangement exhibit originality, so that "the resulting work as a whole constitutes an original work of authorship." 17 U.S.C.A. Sec. 101 (West 1977). Concluding that a white pages telephone directory, consisting of an alphabetical listing of the names, towns of residence, and telephone numbers of all the subscribers in the area of the telephone company's franchise (as required by state law), "lack[ed] the requisite originality," 499 U.S. at 364, 111 S.Ct. at 1297, the Court held that the white pages were not within the protection of the copyright, and could therefore freely be copied by the publisher of another telephone directory without infringement.

Notwithstanding its conclusion with respect to such a telephone directory, the Court emphasized that

[o]riginal, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity. To be sure, 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.

Id. at 345, 111 S.Ct. at 1287 (citations omitted). The Court repeatedly stressed that the required level of originality is minimal, and that most compilations, merely by exercising some independent choice in the coordination, selection, or arrangement of data, will pass the test. ⁴ The telephone directory failed because it was found to be completely devoid of originality.

The protection of compilations is consistent with the objectives of the copyright law, which are, as dictated by the Constitution, to promote the advancement of knowledge and learning by giving authors economic incentives (in the form of exclusive rights to their creations) to labor on creative, knowledge-enriching works. U.S. Const. art. 1,...