La Resolana Architects v. Clay Realtors

• Decision Date: 26 July 2005
• Docket Number: No. 04-2127.,04-2127.
• Citation: 416 F.3d 1195
• Parties: LA RESOLANA ARCHITECTS, PA, a New Mexico Professional Association, Plaintiff-Appellant, v. CLAY REALTORS ANGEL FIRE, a New Mexico corporation, Lance K. Clay, an individual, Gary Plante, an individual, and Angel Fire Home Design, a New Mexico corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

416 F.3d 1195

LA RESOLANA ARCHITECTS, PA, a New Mexico Professional Association, Plaintiff-Appellant, v. CLAY REALTORS ANGEL FIRE, a New Mexico corporation, Lance K. Clay, an individual, Gary Plante, an individual, and Angel Fire Home Design, a New Mexico corporation, Defendants-Appellees.

No. 04-2127.

United States Court of Appeals, Tenth Circuit.

July 26, 2005.

Kevin Lynn Wildenstein, Southwest Intellectual Property Services, LLC, Albuquerque, NM, for Plaintiff-Appellant.

Randy S. Bartell, Montgomery & Andrews PA, Santa Fe, NM, for Defendant-Appellee Angel Fire Design (Daniel J. Behles, Albuquerque, NM, for Defendants-Appellees Lance K. Clay, Gary Plante, and Clay Realtors Angel Fire, with him on the brief).

Before LUCERO and TYMKOVICH,

Circuit Judges, and BLACKBURN,^* District Judge.

TYMKOVICH, Circuit Judge.

The Copyright Act of 1976 requires authors to register their works with the federal Copyright Office in order to be entitled to the Act's protections against copyright infringement. Two conflicting interpretations of the Act's registration requirement have been upheld by circuit courts: 1) registration occurs when the copyright owner submits an application for registration to the copyright office, or, conversely 2) registration occurs when the copyright office actually approves or rejects the application. We hold that the second interpretation is correct. The Copyright Office must approve or reject the application before registration occurs or a copyright infringement action can be brought.

Plaintiff-Appellant, La Resolana Architects, PA (La Resolana), appeals the dismissal of its copyright infringement suit against Defendants-Appellees, Clay Realtors Angel Fire, Lance K. Clay, Gary Plante, and Angel Fire Home Design (Clay Realtors). We take jurisdiction pursuant to 28 U.S.C. § 1291, and, finding La Resolana's application for copyright registration had not yet been approved when the litigation commenced, we affirm.

I. BACKGROUND

In late 1996 and early 1997, a representative of La Resolana, a Santa Fe architecture firm, met with representatives from Clay Realtors about developing townhouses in Angel Fire, New Mexico. The La Resolana representative allegedly showed Clay Realtors some architectural drawings and plans La Resolana had created specifically for the Angel Fire project. Ultimately, however, the parties never reached an agreement regarding the drawings, never contracted to do business together, and went their separate ways.

In October 2003, a La Resolana representative familiar with the drawings was in Angel Fire, New Mexico, visiting another building site. While there, he saw townhouses being sold by Clay Realtors that looked strikingly similar to those depicted in the architectural drawings developed by La Resolana in 1997.

Shortly thereafter, on November 6, 2003, La Resolana applied to register the copyrighted drawings with the Copyright Office. La Resolana sent the requisite applications, fees, and deposits to the Copyright Office. Upon receiving confirmation that the Copyright Office had received their materials, but before receiving confirmation that the Copyright Office registered the copyrights, La Resolana sued Clay Realtors for copyright infringement. The suit was docketed on November 20, 2003.

On March 8, 2004, Clay Realtors moved to dismiss the complaint arguing that La Resolana could not sue for copyright infringement until it obtained a certificate of copyright registration from the Copyright Office. La Resolana responded by attaching a March 10, 2004 letter from the Copyright Office indicating that all necessary materials had been received, the copyrights had been approved for registration on January 22, 2004, and the effective registration date was November 19, 2003. However, the Copyright Office had not yet issued La Resolana a certificate of copyright registration.

Finding the March 10 letter was not admissible evidence, the district court concluded that the drawings were not registered. Since the court therefore lacked jurisdiction over the copyright infringement action, it dismissed the case without prejudice.

II. ANALYSIS

Federal courts have exclusive jurisdiction over disputes arising under the Copyright Act of 1976. See 28 U.S.C. § 1338(a). As with any federal statute, Congress controls if and when courts attain subject matter jurisdiction in a dispute. It is axiomatic that subject matter jurisdiction, which gives courts the power to adjudicate cases, cannot be waived. Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224 (10th Cir.2004). "Where a party attacks the factual basis for subject matter jurisdiction, the court does not presume the truthfulness of factual allegations in the complaint, but may consider evidence to resolve disputed jurisdictional facts." Id. We review de novo the district court's subject matter jurisdiction as well as its grant of a motion to dismiss. See Montgomery v. City of Ardmore, 365 F.3d 926, 935 (10th Cir.2004).

A. Copyright Law

Our review in this case starts with the statutory scheme created by the Copyright Act of 1976, and its legislative history found at 1976 U.S.C.C.A.N. (90 Stat.) 2541 (codified at 17 U.S.C. §§ 101, et seq.) (the Act or Title 17).

1. Historical Background

The Constitution authorizes Congress to regulate copyright protection. U.S. Const. art I, § 8. Prior to the passage of the Act, copyright law consisted of a confusing mix of federal and state laws that differed greatly depending on the state and whether a work was published or unpublished. See H. Rep. No. 94-1476, at 129, reprinted in 1976 U.S.C.C.A.N. 5659, 5744. A primary purpose of the Act was to improve this state of affairs. Thus, "[i]nstead of a dual system of `common law copyright' for unpublished works and statutory copyright for published works, [Congress] adopt[ed][in 1976] a single system of Federal statutory copyright from creation." Id. As a result of the Copyright Act of 1976, "all legal . . . rights within the general scope of copyright [law] . . . [became] governed exclusively" by Title 17 of the United States Code. 17 U.S.C. § 301(a). By creating a new, single federal system, Congress preempted all state copyright law. See H. Rep. No. 94-1476, at 130, reprinted in 1976 U.S.C.C.A.N. 5659, 5746 ("The intention of section 301 is to preempt and abolish any rights under common law or statutes of a State that are equivalent to copyright").

In its effort to simplify copyright law, Congress made it easier to obtain copyright protection by recognizing that a copyright exists the moment an original idea leaves the mind and finds expression in a tangible medium, be it words on a page, images on a screen, or paint on a canvass. See 17 U.S.C. § 102(a) ("Copyright protection subsists . . . in original works of authorship fixed in a tangible medium").

Congress's streamlining of copyright law did not end at the creation of copyrights, though. In addition to eliminating statutory formalities in obtaining a copyright, Congress also created a single, centralized, federal registration system.

2. Registration

Under the Act, registering a copyright is a relatively simple and inexpensive process.¹ Registering a copyright requires the submission of three items to the copyright office: 1) a deposit (i.e., photocopy) of the work to be copyrighted, 17 U.S.C. § 408(b); 2) an application to register a copyright, 17 U.S.C. § 409(1)-(11); and 3) a fee, 17 U.S.C. § 708. Once a copyright owner files the requisite deposit, application, and fee, the Register of Copyrights examines the work to determine copyrightability:

(a) When, after examination, the Register of Copyrights determines that . . . the material deposited constitutes copyrightable subject matter . . ., the Register shall register the claim and issue to the applicant a certificate of registration.

(b) In any case in which the Register of Copyrights determines that . . . the material deposited does not constitute copyrightable subject matter or that the claim is invalid for any other reason, the Register shall refuse registration. . . .

17 U.S.C. § 410(a), (b) (emphasis added).

Congress made sure, however, that the registration system did not extinguish the automatic creation and recognition of copyrights. In fact, 17 U.S.C § 408(a) explicitly states that "registration is not a condition of copyright infringement." In addition, the registration system is completely voluntary. See id. ("[T]he owner of copyright . . . may obtain registration of the copyright") (emphasis added).

3. Remedies

Although Congress established a voluntary registration system, it created incentives for copyright owners to register their copyrights. To this end, certain benefits flow only to those who register their copyright. The most significant benefit to registering copyrights under the Act is the issue raised in this appeal—the right to enforce a copyright in federal court in an infringement suit. 17 U.S.C. § 411(a).²

Infringement suits are the mechanism through which other important incentives and remedies created by Title 17 operate. For example, when actual damages are difficult to ascertain or a work has seemingly little extrinsic value, statutory damages are available under 17 U.S.C. § 504. Equally important in the litigation context, under § 410 a certificate of registration is prima facie evidence of the validity of the copyright. For copyright owners hesitant to engage in the long and expensive process of litigation, attorney's fees for prevailing parties are also recoverable under 17 U.S.C. § 505. Finally, and perhaps most important, a registrant can obtain an injunction against an infringer under 17 U.S.C. § 502. To obtain these remedies, though, a federal court must have jurisdiction to hear a suit for infringement.

B. Federal Court Jurisdiction Under Title 17

1. The Plain Language of the Statutes

Turning to the question of federal jurisdiction under the Copyright Act, we start with the language of ...