Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc.

• Decision Date: 22 January 1999
• Docket Number: Docket No. 98-7842
• Citation: 166 F.3d 65
• Parties: 1999 Copr.L.Dec. P 27,858, 49 U.S.P.Q.2d 1516, 27 Media L. Rep. 1171 NIHON KEIZAI SHIMBUN, INC., Plaintiff-Counter-Defendant-Appellee, v. COMLINE BUSINESS DATA, INC., Yoshinobu Okuma, Hiroyuki Takagi, Haruhisa Morimoto, also known as Hal, Defendants-Counter-Claimants-Appellants, Terry Silveria, Defendant.
• Court: U.S. Court of Appeals — Second Circuit

Page 65

166 F.3d 65

1999 Copr.L.Dec. P 27,858, 49 U.S.P.Q.2d 1516,

27 Media L. Rep. 1171

NIHON KEIZAI SHIMBUN, INC., Plaintiff-Counter-Defendant-Appellee, v. COMLINE BUSINESS DATA, INC., Yoshinobu Okuma, Hiroyuki Takagi, Haruhisa Morimoto, also known as Hal Defendants-Counter-Claimants-Appellants Terry Silveria, Defendant.

Docket No. 98-7842.

United States Court of Appeals Second Circuit.

Argued Aug. 24, 1998.

Decided Jan. 22, 1999.

Norman H. Zivin, Cooper & Dunham LLP (Donna A. Tobin, of counsel), New York, NY, for Defendants-Appellants.

Victor H. Polk, Jr., Bingham Dana, LLP, Boston, MA (Gary A. Adler, Bingham Dana Murase, New York, NY, on the brief), for Plaintiff-Appellee.

Before: MESKILL, WALKER, and SACK, Circuit Judges.

JOHN M. WALKER, JR., Circuit Judge:

Defendants Comline Business Data, Inc., Yoshinobu Okuma, Hiroyuki Takagi, and Haruhisa Morimoto appeal from the June 3 1998 judgment entered in the United States District Court for the Southern District of New York. After a bench trial, Judge Denise L. Cote found that defendants had infringed the copyrights and trademark of plaintiff Nihon Keizai Shimbun, Inc. For the following reasons, we affirm in part, reverse in part, and remand for reconsideration of damages in light of this opinion.

BACKGROUND

Nihon Keizai Shimbun ("Nikkei") is a Japanese corporation that publishes financial, business and industry news. Nikkei publishes the Japanese newspapers Nihon Keizai Shimbun, Nikkei Kinyu Shimbun, Nikkei Sangyo Shimbun, and Nikkei Ryutsu Shimbun, as well as an English newspaper, the Nikkei Weekly. Nikkei sells these newspapers around the world, in their original languages and in translation. Nikkei also makes many of its Japanese articles available in English through wire services, an English language website, and a licensing agreement with LEXIS/NEXIS.

Defendant Comline Business Data, Inc. gathered news articles from a variety of sources and sold "abstracts"--or, less charitably, rough translations--of those articles to its customers. Comline editors selected the articles and forwarded them to "abstractors" or "translators," sometimes pre-editing them to a desired length. The abstractors translated the stories into English; Comline "rewriters" then edited the abstracts into a consistent style. The district court found that it took a total of approximately 36 minutes per piece for Comline to convert a news article into a Comline abstract. Comline published about 17,000 abstracts in 1997, approximately one-third of which were derived from Nikkei news sources.

In August of 1997, Nikkei began to file periodic applications for United States copyright registration of its news articles. Nikkei also holds certain registered United States trademarks, including "Nikkei" and "Nikkei Weekly." On January 29, 1998, Nikkei filed this action against Comline and the three officers named in the caption alleging that Comline's abstracts unlawfully infringed Nikkei's copyrights and its "Nikkei" trademark.

The district court conducted a two-day bench trial. Comline's principal defenses were that it had copied only facts that were not subject to copyright, and that in any event its abstracts constituted fair use. In a detailed decision issued from the bench, the district court rejected Comline's fair use argument and found that Comline had infringed 22 of Nikkei's articles. The district court awarded Nikkei statutory damages of $220,000, attorney's fees of $200,000, and a declaratory judgment that the 22 abstracts were infringements; in addition, the district court permanently enjoined Comline from publishing abstracts that were substantially similar to Nikkei articles. The district court also found that Comline had infringed the "Nikkei" trademark and enjoined Comline from using the mark. The defendants appealed.

DISCUSSION

Defendants argue that: (1) Comline's abstracts did not infringe Nikkei's copyrights because they only copied unprotected facts; (2) Comline's abstracts constituted fair use of Nikkei's copyrighted works; (3) the use of "Nikkei" as a reference to the source of the abstracts was not a trademark use, and therefore did not infringe Nikkei's trademark; (4) the district court abused its discretion in awarding statutory damages on the copyright claim; (5) the district court abused its discretion in awarding attorney's fees; (6) the district court's injunction is an unconstitutional prior restraint; (7) the principles of laches and acquiescence bar any relief for Nikkei; and (8) the district court lacked personal jurisdiction over defendants Okuma and Takagi.

I. Copyright Infringement

The Copyright Act of 1976, 17 U.S.C. §§ 101-803, grants copyright holders the exclusive rights to "reproduce the copyrighted work in copies" and to "prepare derivative works based upon the copyrighted work." Id. at § 106. To sustain a claim of copyright infringement, a plaintiff must demonstrate first that a copyrighted work was actually copied, and second, that the copying amounted to an improper or unlawful appropriation. See Castle Rock Entertainment, Inc. v. Carol Publ'g Group, Inc., 150 F.3d 132, 137 (2d Cir.1998); Laureyssens v. Idea Group, Inc., 964 F.2d 131, 139-40 (2d Cir.1992). After proving that the copyrighted work was actually copied, a plaintiff must establish that the copying was improper or unlawful by showing that the second work bears a "substantial similarity" to protected expression in the copyrighted work. Repp v. Webber, 132 F.3d 882, 889 (2d Cir.1997), cert. denied, --- U.S. ----, 119 S.Ct. 52, 142 L.Ed.2d 40 (1998); Laureyssens, 964 F.2d at 140.

Defendants do not dispute the element of actual copying. Comline worked directly from Nikkei's news articles in creating its news abstracts. The only question presented is whether Comline's abstracts evidenced a substantial similarity to any protected expression in the Nikkei articles and thus amounted to an unlawful or improper appropriation of Nikkei's copyright. We review the district court's finding of "substantial similarity" de novo, employing our own comparison of the works in our analysis. See Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1002 (2d Cir.1995); Fisher-Price, Inc. v. Well-Made Toy Mfg. Corp., 25 F.3d 119, 123 (2d Cir.1994).

A. Substantial Similarity

Defendants argue that the only similarity between their abstracts and Nikkei's articles is that they report the same unprotected facts. That copyright does not extend to facts is a "most fundamental axiom of copyright law." Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). The reason for this rule is that the law of copyright is founded on originality of expression--facts, by their nature, are never original to an author. See id. at 347, 111 S.Ct. 1282. Compilations of facts, however, may be protected by copyright because they can display originality in their selection, arrangement or presentation of facts. See id. at 348, 111 S.Ct. 1282. Descriptions of facts afford even more room for originality. The question, then, is not simply whether Comline copied from Nikkei's articles, but whether they copied expression original to Nikkei. See id. at 361, 111 S.Ct. 1282.

The standard test in determining substantial similarity is the "ordinary observer test": whether an average lay observer would overlook any dissimilarities between the works and would conclude that one was copied from the other. See Knitwaves, 71 F.3d at 1002; Fisher-Price, 25 F.3d at 123. Where the work at issue contains both protectible and unprotectible elements, the test must be "more discerning," excluding the unprotectible elements from consideration. See Knitwaves, 71 F.3d at 1002-03. Here, Comline had every right to republish the facts contained in Nikkei's articles; in determining substantial similarity, we must look only to the original elements in Nikkei's presentation of those facts. The appropriate inquiry is whether "the copying is quantitatively and qualitatively sufficient" to support a finding of infringement. Ringgold v. Black Entertainment Television, Inc., 126 F.3d 70, 75 (2d Cir.1997).

The district court determined that Nikkei's registered, copyrighted articles had been infringed by the corresponding Comline abstracts. Judge Cote relied primarily on Wainwright Sec. Inc. v. Wall St. Transcript Corp., 558 F.2d 91 (2d Cir.1977), which found that the defendant infringed the plaintiff's copyrights by summarizing its analytical financial reports, even though the summaries credited the plaintiff as a source. In Wainwright, we held that even though there can be no copyright in the news itself, copyright does protect "the manner of expression, the author's analysis or interpretation of events, the way he structures his material and marshals facts, his choice of words, and the emphasis he gives to particular developments." Id. at 95-96.

Comparing the 22 Comline abstracts to the 22 Nikkei articles, the district court found that Comline had used "the same structure and organization, follow [ed] the same chronological and substantive grouping of facts, and result[ed] in the same conclusions or resolutions, and in addition often employ[ed] identical phraseology and word choice." Judge Cote concluded that the abstracts displayed a substantial similarity to the protectible elements of the articles, and therefore infringed Nikkei's copyrights.

Our own examination of the Comline abstracts and Nikkei articles compels the same conclusion reached by the district court with regard to most of the abstracts. The Comline abstracts appear to be direct, if not word-for-word, translations of the Nikkei articles, edited only for clarity. The average Comline abstract uses about two-thirds of the protectible material in the corresponding Nikkei article. The abstracts track the information in the articles sentence by sentence, in sequence; only occasionally do the abstracts combine two Nikkei sentences, divide a...