Mulcahy v. Cheetah Learning LLC

• Decision Date: 19 October 2004
• Docket Number: No. 03-3112.,03-3112.
• Citation: 386 F.3d 849
• Parties: Rita MULCAHY, Plaintiff-Appellee, v. CHEETAH LEARNING LLC; Jeff Schurrer, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

386 F.3d 849

Rita MULCAHY, Plaintiff-Appellee, v. CHEETAH LEARNING LLC; Jeff Schurrer, Defendants-Appellants.

No. 03-3112.

United States Court of Appeals, Eighth Circuit.

Submitted: May 10, 2004.

Filed: October 19, 2004.

Appeal from the United States District Court for the District of Minnesota, Paul A. Magnuson, J Christopher K. Larus, argued, Minneapolis, MN, for appellant.

Susan M. Robiner, argued, Minneapolis, MN, for appellee.

Before LOKEN, Chief Judge, BRIGHT and SMITH, Circuit Judges.

LOKEN, Chief Judge.

This is a copyright dispute between two organizations that offer competing courses to prepare students to pass the Project Management Professional (PMP) Exam given by the Project Management Institute (PMI). Rita Mulcahy filed the lawsuit, claiming copyright infringement and unfair competition by Cheetah Learning LLC and by Jeff Schurrer, an instructor who distributed allegedly infringing materials to Cheetah students. The district court granted Mulcahy partial summary judgment and a permanent injunction on her claim that defendants infringed her copyrighted work, PMP Exam Prep. Cheetah and Schurrer appeal. We conclude there are genuine issues of material fact regarding whether PMP Exam Prep infringes PMI's exclusive right to prepare derivative works based on its preexisting copyrighted work and whether PMP Exam Prep is a fair use of that work. Accordingly, we reverse the grant of partial summary judgment and vacate the permanent injunction.

I. Background.

Established in 1969, PMI is a not-for-profit association for project management professionals (PMPs) that now "supports over 100,000 members in 125 countries worldwide." As part of its continuing and seemingly successful effort to establish project management as a true profession, PMI first offered a PMP certification exam in 1984 and first published a work entitled Project Management Body of Knowledge in 1987. In 1996, PMI published a superseding copyrighted work entitled Guide to the Project Management Body of Knowledge, which we will refer to as the PMBOK. PMI advertises that the PMBOK is approved by the American National Standards Institute and is "[t]he foundation document for project management training and/or education." PMI's PMP exam has been "based upon" the PMBOK during the period relevant to this dispute. However, the PMBOK's introductory statement of purpose suggests that it serves as a desk reference work for practicing project managers as well as a "consistent structure" for PMI's certification of PMPs. There is no testimony by a PMI representative in the summary judgment record, nor does the record reveal whether PMI has copyrighted PMP exam materials.

PMI certification has come to be viewed as an important credential, creating a market for textbooks and courses that prepare aspiring PMPs to pass the PMI exam. PMI website materials in the record suggest that PMI, colleges and universities, and numerous private vendors have entered this market. Because PMI bases the PMP exam on the PMBOK, a comprehensive reference work, it is hard to imagine that a vendor could devise a successful course teaching students to pass the PMP exam without using — or plagiarizing — the PMBOK. In this regard, PMI's copyright notice in the front of the PMBOK advises:

All rights reserved. Permission to republish in full is granted freely. No part of this work may be reproduced or transmitted in any form ... without prior written permission of the publisher.

Likewise, a PMI website warns:

Anyone wishing to use excerpts from the PMBOK Guide must obtain written permission to do so and pay the appropriate permission fee, where applicable. This includes PMI members, PMI Components and PMI Registered Education Providers.

Mulcahy is an expert in the field of project management who offers test preparation courses and materials to teach students to pass the PMP exam. To this end, Mulcahy wrote and copyrighted PMP Exam Prep. The book begins with materials specifically focused on passing the PMP exam that have no counterparts in the PMBOK, such as sections entitled "An Overview of the Exam," "Types of Questions on the Exam," "How to Study for the Exam," and "Tricks for Taking the Exam." However, the subsequent sections, which are entitled "The Materials" and take up 150 of the work's 165 pages, track the PMBOK's organization of the project management "knowledge areas" and reproduce or condense the materials presented in the PMBOK. Although PMP Exam Prep states that it is "intended to work hand-in-hand" with the PMBOK, and the record includes a PMI website that says, "Get Rita's book," whether PMI authorized Mulcahy to use excerpts from the PMBOK in her work is a disputed issue of fact.

Cheetah offers a variety of exam preparation and professional training courses. Founder Michelle LaBrosse testified that she uses "a unique educational model which utilizes dietary control, yoga meditative techniques, color recognition, state conditioning and psych-acoustics to accelerate the learning process." In 2000, Cheetah retained Eric Nielsen to develop the substantive content for a PMP exam preparation course. Cheetah began offering the four-day course in September 2001, using the PMBOK as the "primary reference" and also distributing to students loose-leaf materials called the Candidate Notetaker. LaBrosse was soon advised of significant similarities between Cheetah's Candidate Notetaker and Mulcahy's PMP Exam Prep. LaBrosse compared the two works and informed Mulcahy's attorney that she "had revised Cheetah's course materials to remove what I believed to be the allegedly infringing content." Unsatisfied, Mulcahy filed this lawsuit. Nielsen testified that he used PMP Exam Prep and other reference works in preparing the Cheetah course materials and sample test questions.

Ruling on the parties' cross motions for summary judgment, the district court granted Mulcahy summary judgment on her copyright infringement claim, concluding that (i) Mulcahy's copyright is valid because PMP Exam Prep does not infringe PMI's copyright in the PMBOK, (ii) alternatively, PMP Exam Prep is a fair use of the PMBOK, and (iii) Cheetah's course materials are substantially similar to PMP Exam Prep and therefore infringe Mulcahy's copyright as a matter of law. The court broadly enjoined defendants from "using, copying, selling, distributing, or displaying" specific Cheetah materials created between August 2001 and September 2002 and all other materials "substantially similar to any edition" of PMP Exam Prep.¹ Though copyright damage issues remain unresolved, we have jurisdiction to review the court's grant of a permanent injunction. 28 U.S.C. § 1292(a)(1). If summary judgment was improvidently granted on Mulcahy's claim of copyright infringement, the permanent injunction must be vacated. See Randolph v. Rodgers, 170 F.3d 850, 856 (8th Cir.1999).

II. Discussion.

Two elements are required to establish copyright infringement, ownership of a valid copyright and copying of original elements of the work. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). Here, we need only consider the first element because we agree with defendants that the district court erred in concluding as a matter of law that PMP Exam Prep is not an unauthorized derivative of the PMBOK and that any copying of the PMBOK in PMP Exam Prep was a "fair use" within the meaning of 17 U.S.C. § 107.²

A. Unauthorized Derivative. The statutory rights of a copyright owner include the exclusive right "to prepare derivative works based upon the copyrighted work." 17 U.S.C. § 106(2). The Copyright Act broadly defines a derivative work as —

a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.

17 U.S.C. § 101. One who violates the copyright owner's right to create derivative works is an infringer. See 17 U.S.C. § 501(a).

A derivative work may itself be copyrighted if it has the requisite originality. However, "the copyright is limited to the features that the derivative work adds to the original." Pickett v. Prince, 207 F.3d 402, 405 (7th Cir.2000); see Stewart v. Abend, 495 U.S. 207, 223, 110 S.Ct. 1750, 109 L.Ed.2d 184 (1990). Moreover, because the owner of the original copyright has the exclusive right to prepare derivative works, the creator of an original derivative work is only entitled to a copyright if she had permission to use the underlying copyrighted work. See 17 U.S.C. § 103(a); Dam Things from Denmark v. Russ Berrie & Co. Inc., 290 F.3d 548, 563 (3d Cir.2002); Gracen v. Bradford Exch., 698 F.2d 300, 302 (7th Cir.1983). Thus, if the PMP Exam Prep is an unauthorized derivative work of the PMBOK, Mulcahy's copyrights are invalid.

The district court did not discuss the concept of a derivative work. It simply concluded that PMP Exam Prep does not infringe PMI's copyright in the PMBOK because, while the two works have "many substantive details in common," they are not substantially similar "in substance, purpose, presentation, and functionality." The court applied the two-part test for determining substantial similarity adopted by this court in diverse copyright infringement cases such as Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 120 (8th Cir. 1987), Schoolhouse, Inc. v. Anderson, 275 F.3d 726, 729 (8th Cir.2002), and Taylor Corp. v. Four Seasons Greetings, LLC, 315 F.3d 1039, 1043 (8th Cir.2003).

While substantial similarity is the test we use in determining copyright infringement, here the issue is whether Mulcahy's book is a derivative work. In general, the two tests are similar. In the words of a leading copyright treatise, "Unless sufficient of the pre-existing work is contained in the later work so as to constitute the latter an...