Peteski Prods., Inc. v. Rothman

• Citation: 264 F.Supp.3d 731
• Decision Date: 30 August 2017
• Docket Number: CIVIL ACTION NO. 5:17–CV–00122–JRG
• Parties: PETESKI PRODUCTIONS, INC., Plaintiff, v. Leah ROTHMAN, Defendant.
• Court: United States District Courts. 5th Circuit. United States District Court of Eastern District Texas

264 F.Supp.3d 731

PETESKI PRODUCTIONS, INC., Plaintiff,

v.Leah ROTHMAN, Defendant.

CIVIL ACTION NO. 5:17–CV–00122–JRG

United States District Court, E.D. Texas, Texarkana Division.

Signed August 30, 2017

Carl Christof Butzer, Jackson Walker LLP, Dallas, TX, David Folsom, Jackson

Walker LLP, Texarkana, TX, Nancy Wells Hamilton, Charles L. Babcock, Jackson Walker LLP, Houston, TX, George L. McWilliams, Texarkana, TX, for Plaintiff.

Amanda Aline Abraham, The Roth Law Firm, Marshall, TX, Dalia R. Khalili, Matern Law Group, PC, Manhattan Beach, CA, for Defendant.

MEMORANDUM OPINION AND ORDER

RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Leah Rothman's ("Defendant" or "Rothman") Motion to Dismiss or Alternatively for Summary Judgment (Dkt. No. 10) ("the Motion"). Having considered the Motion, and for the reasons set forth below, said Motion is hereby DENIED with respect to fair use and, sua sponte , summary judgment is GRANTED in favor of Plaintiff on the issue of fair use.

I. Background

Rothman worked for Plaintiff Peteski Productions, Inc. ("Plaintiff" or "Peteski") as a Segment Director for The Dr. Phil Show from 2003 to early 2015. (Dkt. No. 10 at 2.) In April 2015, Rothman sued Peteski and Dr. Phil McGraw in California state court for false imprisonment, intentional infliction of emotional distress, retaliation, and wrongful termination. (Dkt. No. 32–1; Dkt. No. 32–2.) Before filing her state court action, Rothman attempted to document a "bona fide example of Dr. McGraw's conduct for her lawsuit" (Dkt. No. 10 at 2) by recording, using her iPhone, a nine-second clip of Dr. McGraw from a larger archive of unaired footage from his eponymous television show. (Dkt. No. 10–2 at ¶ 8; Dkt. No. 32–5 at 218:25–220:18.) However, as part of her employment Rothman had agreed, among other things, "to keep confidential and never disclose, use, [or] misappropriate ... any statements or comments concerning Dr. Phil McGraw, the Dr. Phil show, or any of his/its Confidential Information." (Dkt. No. 32 at 10–12.)

On May 9, 2017, Peteski obtained a registered copyright in the nine seconds of video that Rothman recorded from The Dr. Phil Show archives. (Dkt. No. 1–1.) On June 15, 2017, Peteski filed this lawsuit against Rothman alleging infringement of that registered copyright. (Dkt. No. 1.) Defendant filed the instant Motion to Dismiss or Alternatively for Summary Judgment on July 10. (Dkt. No. 10.) In the Motion, Defendant sought to dismiss for improper venue, lack of personal jurisdiction, and for failure to state a claim, or alternatively for summary judgment that her copying was fair use. (Id. )

On July 12, 2017, Defendant filed an emergency motion seeking a partial stay of this case so that the Court could address her fair use defense before assessing the propriety of venue or personal jurisdiction and before permitting any discovery. (Dkt. No. 17.) In granting this motion, the Court also, at Defendant's request and based on the need to consider evidence outside the complaint in evaluating Rothman's fair use defense, converted the underlying motion to dismiss with respect to fair use into a motion for summary judgment on Rothman's fair use defense. (Dkt. No. 26.) Consequently, this opinion addresses only Rothman's claim of fair use.

II. Legal Standard

A. Fair Use

"[A]nyone who ... makes a fair use of [a] work is not an infringer of the copyright with respect to such use." Sony Corp. of Am. v. Universal City Studios, Inc. , 464 U.S. 417, 433, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). This principle has been recognized since "the infancy of copyright protection" as a "necessary" tool for "fulfill[ing] copyright's very purpose." Campbell v. Acuff–Rose Music, Inc. , 510 U.S. 569, 575, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). "Since its beginnings, the doctrine of fair use has been refined, honed, and clarified in many Court decisions." Triangle Publ'ns, Inc. v. Knight–Ridder Newspapers, Inc. , 626 F.2d 1171, 1174 (5th Cir. 1980). However, at the most basic level fair use is a "rule of reason fashioned by Judges to balance the author's right to compensation for his work, on the one hand, against the public's interest in the widest possible dissemination of ideas and information, on the other." Id. (internal quotation marks omitted).

Congress codified fair use as an affirmative defense to copyright infringement at 17 U.S.C. § 107. See Triangle Publ'ns , 626 F.2d at 1174 ; Campbell , 510 U.S. at 590, 114 S.Ct. 1164. In doing so, "Congress ... in no way intended to depart from Court-created principles" of fair use. Triangle Publ'ns , 626 F.2d at 1174.

Under § 107, courts consider at least four statutory factors in evaluating fair use:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

17 U.S.C. § 107. None of these factors are exclusive or dispositive, Campbell , 510 U.S. at 584, 114 S.Ct. 1164, but "[c]ourts have generally placed most emphasis on the fourth factor." Triangle Publ'ns , 626 F.2d at 1175. But see Campbell , 510 U.S. at 579, 114 S.Ct. 1164 ("[T]he more transformative the new work, the less will be the significance of other factors ....").

B. Summary Judgment

A motion for summary judgment is properly granted only if there is no genuine issue as to any material fact. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is "genuine" if the evidence presented, viewed in the light most favorable to the nonmoving party, would permit a reasonable jury to find for the nonmoving party. Id. However, such evidence, whether it is offered by the movant to satisfy their initial burden or by the nonmovant to defeat a properly supported motion for summary judgment, may not consist entirely of "conclusory allegations" or "unsubstantiated assertions." Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994). Likewise, such evidence must be "capable of being ‘presented in a form that would be admissible in evidence.’ " LSR Consulting, LLC v. Wells Fargo Bank, N.A. , 835 F.3d 530, 534 (5th Cir. 2016) (emphasis in original).

"Fair use is a mixed question of law and fact, which means that it may be resolved on summary judgment if a reasonable trier of fact could reach only one conclusion—but not otherwise." Ty, Inc. v. Publ'ns Int'l Ltd. , 292 F.3d 512, 516–17 (7th Cir. 2002) (internal quotation marks and citations omitted) (citing Harper & Row Publishers, Inc. v. Nation Enters. , 471 U.S. 539, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) ; Narell v. Freeman , 872 F.2d 907, 910 (9th Cir.1989) ; Ass'n of Am. Med. Colls. v. Cuomo , 928 F.2d 519, 524 (2d Cir.1991) ). "However, where the district court has ‘acts sufficient to evaluate each of the statutory factors,’ it may conclude as a matter of law that the challenged use is not a protected fair use."

Castle Rock Entm't v. Carol Publ'g. Grp., Inc. , 955 F.Supp. 260, 267 (S.D.N.Y. 1997) (Sotomayor, J.), aff'd Castle Rock Entm't, Inc. v. Carol Publ'g.Grp., Inc. , 150 F.3d 132 (2d Cir. 1998). This is particularly true where there is no genuine dispute with respect to the facts necessary to evaluate each factor. See Fisher v. Dees , 794 F.2d 432, 436 (9th Cir. 1986) ("The parties dispute only the ultimate conclusions to be drawn from the admitted facts. Because, under Harper & Row , these judgments are legal in nature, we can make them without usurping the function of the jury.").

III. Discussion

A. Applicability of Fair Use

At the outset, Plaintiff argues that "as a threshold matter, fair use is not an available defense because Rothman admits that she stole the Work." (Dkt. No. 32 at 2.) In support of its position, Plaintiff primarily relies on the Supreme Court's statement in Harper & Row that "[f]air use presupposes good faith and fair dealing." 471 U.S. at 562, 105 S.Ct. 2218 (internal quotation marks omitted).

Plaintiff's reliance on Harper & Row is unavailing for several reasons. First, in Harper & Row , the Supreme Court did not end its analysis of fair use based on the fact that the defendant had "purloined" the underlying work. Id. at 563, 105 S.Ct. 2218. Instead, the Court assessed each factor, giving weight to the unpublished nature of the underlying work, the fact that the amount taken was the "heart" of the work, and the effect that the use had on the market for the work. Id. at 561–568, 105 S.Ct. 2218. Second, the Supreme Court returned to its earlier statement that fair use "presupposes good faith and fair dealing" in Campbell , 510 U.S. at 585 n.18, 114 S.Ct. 1164. There, the Court left at best unresolved the role that bad faith plays in fair use. Id. ("[R]egardless of the weight one might place on the alleged infringer's state of mind ... [e]ven if good faith were central to fair use, 2 Live Crew's actions do not necessarily suggest that they believed their version was not fair use ...." (citing Harper & Row , 471 U.S. at 562, 105 S.Ct. 2218 )). Third, numerous courts have found that bad faith is not dispositive of fair use. See, e.g., NXIVM Corp. v. Ross Inst. , 364 F.3d 471, 479 (2d Cir. 2004) ; Monge v. Maya Magazines, Inc. , 688 F.3d 1164, 1173 n.6 (9th Cir. 2012) ; Am. Inst. of Physics v. Winstead PC , No. 3:12-cv-1230, 2013 WL 6242843, at *12 (N.D. Tex. Dec. 3, 2013) (discussing the exact cases relied on by Plaintiff here and concluding that they "do not stand for the proposition that the acquisition of the original work must be in good faith" (internal quotation marks omitted)). Finally, the Supreme Court and Congress have consistently rejected presumptions and per se rules in the context of fair use. See Campbell , 510 U.S. at 594, 114 S.Ct. 1164 ("It was error for the Court...