TD Bank N.A. v. Hill, 16-2897
| Citation | 928 F.3d 259 |
| Decision Date | 01 July 2019 |
| Docket Number | No. 16-2897,16-2897 |
| Parties | TD BANK N.A. v. Vernon W. HILL, II, Appellant |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
This case marks the latest chapter in the bitter feud between Commerce Bank, which has since merged with TD Bank, and its former CEO, Vernon W. Hill, II. See generally Hill v. TD Bank, NA , 586 F. App'x 874 (3d Cir. 2014) ; Commerce Bancorp, LLC v. Hill , No. 08-cv-5628, 2010 WL 2545166 (D.N.J. June 18, 2010). Beset by acrimony, TD Bank filed this copyright lawsuit against Hill, alleging that a portion of his 2012 book infringes a neglected manuscript that Hill co-authored while CEO of Commerce Bank. In enjoining Hill from publishing or marketing his book, the District Court concluded that TD Bank owned the copyright under a letter agreement and that Hill’s book irreparably violated the Bank’s "right to not use the copyright." App. 9. In this denouement, we resolve certain open questions in our Circuit concerning employees’ rights to their artistic creations and the proper exercise of equitable discretion.
We conclude that, although the agreement between the parties did not vest initial ownership of the copyright in the Bank by purporting to designate the manuscript a work "for hire," it did transfer any ownership interest Hill possessed to TD Bank. As a result, Hill’s co-ownership defense, like his other defenses, fails. As for the imposition of injunctive relief, however, we cannot accept the District Court’s sweeping conclusions, which would justify the issuance of an injunction in every copyright case. Instead of employing "categorical rule[s]" that would resolve the propriety of injunctive relief "in a broad swath of cases," courts should issue injunctive relief only if the moving party makes a sufficient showing that such relief is warranted under the particular circumstances of that case. eBay Inc. v. MercExchange, LLC , 547 U.S. 388, 393–94, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). Accordingly, we will vacate the District Court’s permanent injunction.
Described by American Banker as "the closest thing that the staid banking industry has to a rock star," App. 1157, Vernon W. Hill, II headed Commerce Bank from its launch as a single "store" in 1973 until June 2007, a few months before TD Bank acquired it for approximately $8.5 billion. Hill built Commerce Bank in the highly saturated commercial banking industry by emphasizing customer loyalty through initiatives such as extended hours, quick account openings, and free perks at branches. His success also brought him personal acclaim, including articles in The Wall Street Journal , American Banker , The Guardian , The Philadelphia Inquirer , and The Daily Telegraph .
As CEO of Commerce Bank, Hill reported to the Board of Directors and handled the day-to-day management of the Bank’s affairs, including reviewing the Bank’s finances, visiting its stores, and handling real estate and insurance matters. Under his employment agreement with Commerce Bank, Hill had "primary responsibility for all operations of Commerce and its subsidiaries ..., provided that such duties are consistent with his present duties," and agreed to "devote his full time and best efforts to the business and affairs of Commerce and its subsidiaries." App. 803. Notwithstanding this commitment, however, the Agreement allowed Hill to pursue "outside activities," which the Agreement did not define. App. 803.
In 2006, Hill decided to write a book about his business philosophy and more than 30-year tenure at the Bank. Seeing this as a marketing opportunity, Commerce Bank supported the endeavor by hiring a business book author, Robert Andelman, to collaborate with Hill in drafting the manuscript. Hill exchanged some emails about the project during weekdays but primarily worked on the project during evenings and weekends. Other Commerce Bank employees sometimes assisted, for example, by answering Andelman’s inquiries and providing feedback about the manuscript. The final manuscript, completed in 2007, recounts Commerce Bank’s history and business model from Hill’s perspective. Resembling both an autobiography and a marketing tool, the 2007 manuscript included both a personal dedication to Hill’s wife and "the entire Commerce team," App. 834, and a $20 gift certificate to open an account at Commerce Bank.
Commerce Bank spearheaded the publication efforts by entering into an agreement with Portfolio, a division of Penguin Books. In this publishing agreement, Commerce Bank, which is defined as the "Author," represented and warranted that it was the exclusive owner of all rights conveyed in the manuscript:
The Author [i.e., Commerce Bank] hereby represents and warrants ... that Vernon Hill is the sole author of the Work; that the Work is or will be Vernon Hill’s next book length work ...; that the Author is the sole and exclusive owner of all rights granted to the Publisher in this Agreement and has not assigned, pledged or otherwise encumbered the same; ... that the Author has full power to enter into this Agreement and to make the grants herein contained.
App. 1142. For his part, Vernon Hill signed a letter to Portfolio that referred to an attached copy of the publishing agreement and provided:
I hereby unconditionally guarantee, promise and agree with the Publisher, its successors and assigns that the Author [i.e., Commerce Bank] will, in all respects, faithfully perform and fulfill all obligations of the Agreement on its part to be performed and fulfilled at the time and in the manner therein provided. I also unconditionally guarantee that the Work is a work made for hire within the meaning of the United States Copyright Law and that the Author is the owner of copyright in the Work and has full power and authority to enter into the Agreement.
App. 1139. Both this letter agreement and the publishing agreement contain New York choice-of-law provisions.
But the best laid schemes of mice and men often go awry: The relationship between Hill and Commerce Bank soured, culminating in Hill’s termination and TD Bank’s acquisition of Commerce Bank. See Hill , 586 F. App'x at 877. As a result, the 2007 manuscript was never published, and by April 2008, Commerce Bank terminated the publishing agreement with Portfolio.
As the years progressed, however, Hill sought to make use of certain portions of the manuscript. By July 2010, Hill had debuted his next commercial banking venture, Metro Bank UK. The bank’s launch, the first in Great Britain for over a century, garnered significant press coverage on both sides of the Atlantic. Capitalizing on this comeback, Hill co-authored another book with Andelman—this one describing Hill’s experiences founding Metro Bank UK, the British banking system, and Hill’s pet insurance company, Petplan USA. The book, entitled FANS! Not Customers: How to Create Growth Companies in a No-Growth World , became available in November 2012 through online booksellers such as Amazon and barnesandnoble.com. Hill also publicized the book’s launch through interviews, including with Jim Cramer, the host of Mad Money on CNBC, and with a columnist for the Philadelphia Inquirer .
The plot thickened when this new endeavor came to the attention of TD Bank. Having shelved the 2007 manuscript for years, the Bank suddenly registered it with the Copyright Office and sent take-down demands to twenty retailers alleging that Hill’s book infringed its copyright. Shortly thereafter, it filed suit in the District of New Jersey for copyright infringement.
As the litigation progressed, discovery revealed that TD Bank had little actually at stake: TD Bank admitted that, at most, 16% of the book infringed the 2007 manuscript, and that it has never published the 2007 manuscript or any competing work and has no interest in doing so.
Nonetheless, in its summary judgment opinion, the District Court concluded that, because the letter agreement "deem[ed] the work to be a work made for hire," it was in fact a work for hire, vesting the copyright in the 2007 manuscript with Commerce Bank as Hill’s employer. App. 35 n.10. Rejecting Hill’s infringement defenses, the District Court determined that Hill had copied expressive content that was not unprotectable under the merger and scène-à-faire doctrines. And Hill’s copying, the District Court held, was not fair use because Hill did not repurpose the copied portion; the original manuscript was unpublished; and Hill’s infringement would likely result in "some impairment" to the market for the 2007 manuscript "should TD Bank ever choose to publish [it]." App. 48 (emphasis omitted). But the District Court declined to issue an injunction, explaining that TD Bank had failed to show a likelihood of continued infringement and had not addressed at all the adequacy of legal remedies or the balance of hardships.
Hill faced his peripeteia in this litigation a year later. Confronted with evidence of Hill’s continued promotion of the 2012 book and distribution of complimentary copies at a local chamber of commerce event, the District Court enjoined Hill from "publish[ing], market[ing], distribut[ing] or sell[ing]" the 2012 book. App. 4. This conduct, the District Court found, irreparably harmed TD Bank by depriving it of the "right to not use the copyright." App. 9. Hill timely appealed.
There is no final judgment in this case because the District Court has stayed TD Bank’s request for infringer’s profits under 17 U.S.C. § 504(b) pending the outcome of this appeal. See Marshak v. Treadwell , 240 F.3d 184, 190–92 (3d Cir. 2001) ; 28 U.S.C. § 1291. Thus, we have jurisdiction only over the District Court’s "grant[ ]" of a permanent injunction under 28 U.S.C. § 1292(a)(1).2 See Marshak , 240 F.3d at 190. Before reaching the merits of Hill’s appeal, we must first address TD Bank’s contention that this appeal is moot and that we lack jurisdiction to consider the...
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