Filed: Sep. 23, 2020
Latest Update: Sep. 23, 2020
Summary: RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 20a0309p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT HILLER, LLC, + Plaintiff-Appellee, ¦ ¦ ¦ v. > No. 19-6115 ¦ ¦ SUCCESS GROUP INTERNATIONAL LEARNING ALLIANCE, ¦ LLC, et al., ¦ Defendants, ¦ ¦ CLOCKWORK IP, LLC, ¦ ¦ Intervenor-Appellant. ¦ + Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 3:17-cv-00743—Jon Phipps McCalla, District Judge. Argued: August
Summary: RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 20a0309p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT HILLER, LLC, + Plaintiff-Appellee, ¦ ¦ ¦ v. > No. 19-6115 ¦ ¦ SUCCESS GROUP INTERNATIONAL LEARNING ALLIANCE, ¦ LLC, et al., ¦ Defendants, ¦ ¦ CLOCKWORK IP, LLC, ¦ ¦ Intervenor-Appellant. ¦ + Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 3:17-cv-00743—Jon Phipps McCalla, District Judge. Argued: August ..
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RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 20a0309p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
HILLER, LLC, ┐
Plaintiff-Appellee, │
│
│
v. > No. 19-6115
│
│
SUCCESS GROUP INTERNATIONAL LEARNING ALLIANCE, │
LLC, et al., │
Defendants, │
│
CLOCKWORK IP, LLC, │
│
Intervenor-Appellant.
│
┘
Appeal from the United States District Court
for the Middle District of Tennessee at Nashville.
No. 3:17-cv-00743—Jon Phipps McCalla, District Judge.
Argued: August 6, 2020
Decided and Filed: September 23, 2020
Before: SUHRHEINRICH, GIBBONS, and BUSH, Circuit Judges.
_________________
COUNSEL
ARGUED: Brad R. Newberg, MCGUIRE WOODS LLP, Tysons, Virginia, for Appellant.
Jeffrey J. Catalano, FREEBORN & PETERS LLP, Chicago, Illinois, for Appellee. ON BRIEF:
Brad R. Newberg, MCGUIRE WOODS LLP, Tysons, Virginia, Lucy Jewett Wheatley, Brian D.
Schmalzbach, MCGUIRE WOODS LLP, Richmond, Virginia, for Appellant. Jeffrey J.
Catalano, FREEBORN & PETERS LLP, Chicago, Illinois, Jason P. Stearns, FREEBORN
& PETERS LLP, Tampa, Florida, for Appellee.
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 2
_________________
OPINION
_________________
SUHRHEINRICH, Circuit Judge. Appellant Clockwork IP, LLC intervened in this
copyright case to claim that it—not the plaintiff and registered copyright holder Hiller, LLC1—
owned the allegedly-infringed work, a customer-service training guide for HVAC technicians
(the Guide). The jury rejected Clockwork’s sole request for relief: a declaration invalidating
Hiller’s copyright in the Guide.
Clockwork makes two arguments on appeal.2 First, Clockwork contends that the district
court erred by denying its motion for judgment as a matter of law because no reasonable juror
could have found that Hiller owns a copyright in any part of the Guide. Second, Clockwork
asserts that the district court improperly instructed the jury that Hiller could hold a copyright in
the Guide, even though it contained Clockwork-copyrighted material, so long as that material did
not “pervade[] the entire work.”
Clockwork is wrong on both points. The jury reasonably concluded that Hiller created
enough original material to gain copyright protection,3 and the district judge correctly instructed
the jury that the Guide’s incorporation of some Clockwork-copyrighted content did not
invalidate Hiller’s copyright in the Guide’s original parts. We affirm.
I. BACKGROUND
Hiller, LLC provides plumbing, heating, cooling and electrical services (referred to
collectively as home services) to residential and commercial customers. Jimmy Hiller, Sr. began
his career as a plumber’s apprentice and founded Hiller as a one-man operation in 1990. Hiller
1Hiller,
LLC is distinct from its owner, Jimmy Hiller, Sr. All uses of “Hiller” in this opinion refer to the
LLC, not to Mr. Hiller.
2The defendant in the action below, Success Group International, also appealed, but later settled its dispute
with Hiller and voluntarily dismissed its appeal before the briefing stage.
3As discussed below, Hiller’s copyright may not cover everything in the Guide, but we have not been asked
to define the scope of Hiller’s copyright, only to review the jury’s conclusion that it exists.
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 3
grew to be the largest home-services company in Tennessee, employing roughly 400 service
technicians.
In 1999, Hiller began paying a monthly fee to be a “member” of Success Group
International, an organization that offers management advice and customer-service training to
home-services companies. At that time, a company called Clockwork Home Services, Inc.
owned Success Group, and Success Group conducted training courses using manuals
copyrighted by Clockwork (the Manuals). Hiller sent its employees to those courses, and they
had access to the Manuals.
In 2014, Clockwork (by that time operating as Clockwork IP, LLC) sold Success Group
to a collection of investors doing business as Aquila Investment Group, LLC. Rebecca Cassel
(a former Clockwork employee) led Aquila’s efforts, and she convinced Jimmy Hiller, Sr. to
invest in Aquila as well. As a part of the transaction, Clockwork retained ownership of the
copyrights in the Manuals but granted Aquila a perpetual license to use the Manuals in the
normal course of Success Group’s training business.
In March of 2015, Hiller hired a company called the Bob Pike Group to create the Guide.
Hiller planned to use the Guide (instead of the Manuals) to train its technicians how to conduct a
service appointment (referred to in the industry as a call). Jimmy Hiller, Sr. hoped that Pike
could design training materials that were “more interactive” and “more engaging” than the
Manuals.
Pike had no expertise in the home-services industry, so it could not create the Guide
without first learning the practices that Hiller wanted to teach its employees. To do so, Pike
conducted a two-day workshop designed to elicit Hiller’s goals, its “metrics for success,” and the
“behaviors required to achieve these metrics.” Pike employee Vicki Lind and a Pike
subcontractor named Janice Horne led the workshop. Jimmy Hiller, Sr., Hiller’s director of
training Mitch Mobley, and other Hiller employees attended the meeting on behalf of Hiller.
Rebecca Cassel attended on behalf of Aquila and Success Group. The workshop participants
referred to at least one of the Manuals for ideas during the workshop.
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 4
Horne began by asking the participants to brainstorm the objectives of the Guide,
including the techniques that make up a successful service call. They wrote their ideas on 4x6
notecards, and then, as a group, “decided what to leave in, what to cross off, and the most
important concepts.” The group then organized the behaviors under discrete headings, which
became a “roadmap” for the project. Someone took pictures of the arrangement of notecards,
and, from those pictures, Pike created an outline for the Guide.
Based on that outline, Horne constructed the Guide. The Guide is 117 pages long. Its
first section, “Need to Know” sets out the six steps to a successful service call: (1) prepare for
the call, (2) set the tone, (3) diagnose issue, (4) get approval, (5) do the work, and (6) close. The
second section, “Nice to Know,” contains a glossary of industry terms, “sample scripting” for
typical interactions with customers, and technical diagrams about whether to repair or replace an
appliance.
For some passages of the Guide, Horne simply incorporated content generated at the
design workshop. For example, in the “prepare for the call” section, Horne listed four steps:
(1) prepare self, (2) prepare truck, (3) review service history, and (4) confirm directions. These
headings correspond closely to a list created at the design workshop.
For other sections, Horne asked Hiller for content to fill the gaps left after the design
workshop. In August of 2015, for example, Horne asked Hiller for a “[l]ist of 10-12 words (or
phrases) to lose and what [the technicians] should use instead.” In October, she asked for
examples of “objections that would be typical coming from the customer” and “[e]xamples of
Sincere [sic] compliments.” Some of this gap-filling content was taken directly from the
Manuals. For example, much of the “sample scripting” is lifted word-for-word. In addition, the
Guide includes a graphic meant to juxtapose the cost of keeping a current appliance with the cost
of replacing it instead. That graphic was taken from the Manuals.
Horne also added original text in the Guide’s section regarding communication skills.
For example, the Guide contains a graphic describing four personality types and their
corresponding traits. Horne created that passage based on her knowledge of “DISC,” which is
“a personality profile that’s common in the work world.”
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 5
When Horne completed the textual content of the Guide, one of Pike’s graphic designers
added pictures and made final revisions to the formatting and layout. Pike delivered the final
version of the Guide in December of 2015 and later assigned its copyright in the Guide to Hiller.
The events giving rise to this lawsuit occurred not long after completion of the Guide. In
January of 2016, Success Group (led by Rebecca Cassell) conducted a class called “Service
Essentials” using a workbook that closely resembled the Guide. In June of 2016, Hiller ended its
Success Group membership, and Jimmy Hiller, Sr. sold his shares in Aquila. In July, Hiller’s
attorneys demanded that Success Group stop using the Service Essentials workbook. In March
of 2017, Hiller registered its copyright in the Guide, and in April Hiller sued Success Group and
Rebecca Cassel for copyright infringement. In December of 2017, Clockwork moved to
intervene in the case, alleging that “Clockwork . . . is the owner of the intellectual property that
Hiller claims has been infringed by Defendants Success Group International Learning Alliance,
LLC . . . and Rebecca Cassel” and seeking declaratory relief to that effect. The district court
granted Clockwork’s motion to intervene.
The district court conducted a jury trial over the course of seven days in March of 2019.
The jury heard testimony from (among others) Jimmy Hiller, Sr., Rebecca Cassel, Janice Horne,
and Clockwork’s vice president of training, Lance Sinclair. The jury reviewed the Guide, the
Manuals, and the allegedly infringing Success Group workbook. The jury concluded that Hiller
had a valid copyright in the Guide and that the Success Group workbook copied protected
elements of the Guide. The jury rejected Clockwork’s request for declaratory relief invalidating
Hiller’s copyright. Clockwork moved for a judgment notwithstanding the verdict, which the
district court denied.
II. ANALYSIS
A. Sufficient evidence supports the jury’s verdict that Hiller owns a copyright in the
Guide.
Clockwork argues that the district court should have granted its motion for judgment as a
matter of law, which sought a declaration that Hiller does not own a copyright in any part of the
Guide. That argument is two-pronged. First, Clockwork asserts that the Guide lacks
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 6
independently created material, which is required to meet the Copyright Act’s originality
requirement. Second, Clockwork contends that Hiller should lose its copyright because the
Guide contains content taken from the Manuals.
1. Standard of Review
To prevail in its challenge to the district court’s denial of its motion for judgment as a
matter of law under Federal Rule of Civil Procedure 50(b), Clockwork must establish that,
viewing the evidence in the light most favorable to Hiller, reasonable minds could “come to but
one conclusion” in Clockwork’s favor. Sykes v. Anderson, 625 F.3d 294, 305 (6th Cir. 2010).
2. The jury reasonably determined that the Guide contains enough
originality to establish copyright protection.
Clockwork argues that the Guide lacks the originality necessary to confer a copyright.
As discussed below, the jury could reasonably have found that the Guide contains enough
originality in its selection and organization to meet the originality threshold for copyright
protection.
“To qualify for copyright protection, a work must be original to the author.” Feist
Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 345 (1991) (citing Harper & Row,
Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 547–549 (1985)). “Original, as the term is
used in copyright, means only that the work was independently created by the author (as opposed
to copied from other works), and that it possesses at least some minimal degree of creativity.”
Id. “[T]he requisite level of creativity is extremely low; even a slight amount will suffice. The
vast majority of works make the grade quite easily, as they possess some creative spark, ‘no
matter how crude, humble or obvious’ it might be.”
Id. Even a work that contains “no
protectable written expression . . . meets the constitutional minimum for copyright protection if it
features an original selection or arrangement.”
Id. at 348 (citing Harper &
Row, 471 U.S. at
547).
The Guide contains original material (i.e., content created independently by or on behalf
of Hiller). For example, page 11 of the Guide features a graphic depiction of the six steps that
Hiller wants its technicians to follow:
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 7
The man in the picture frame represents the first step, “Prepare for the Call.” The next five steps
are depicted by corresponding pictures in a clockwise orientation arranged around a ship’s wheel
that is crossed by the label “Communication.” Janice Horne and Pike’s graphic designer Sandy
DuFault chose these images to represent the six-step process identified during the two-day
design workshop that Pike conducted for Hiller.
Likewise, page 15 of the Guide offers four steps meant to help the technician “Prepare for
the Call.” The four steps are: “Prepare Self,” “Prepare Truck,” “Review Service History,” and
“Confirm Directions.” Under “Prepare Self,” the Guide lists two subcomponent steps and one
blank space for notes. Under “Prepare Truck” is the following fill-in-the-blank exercise:
Under “Review Service History” are seven blank spaces with a two-column heading labelled
“What?” and “Why?” Under “Confirm Directions” are three blank spaces for notes. Similarly,
page 37 of the Guide provides three steps that will help the technician “Set the Tone,” with each
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 8
step including some combination of subcomponent steps, fill-in-the-blank sentences, and empty
spaces for notes. Again, Janice Horne and Sandy DuFault created these graphic depictions based
on information selected and organized at the design workshop.
Taken together, the Guide’s choices regarding selection and organization meet the
originality threshold for copyright protection. See Feist, 499 U.S. at 345. These choices are
“creative” in the sense that they show inventiveness and imagination. See Creative, OXFORD
ENGLISH DICTIONARY (3d ed. 2010). And these elements were “independently created” on
behalf of Hiller by Janice Horne and Sandy DuFault. See
Feist, 499 U.S. at 345.
For those reasons, the jury reasonably concluded that Hiller owns a valid copyright with
respect to the Guide, which would extend copyright protection to any original parts of the Guide
that did not incorporate copyright-protected elements of the Manuals.
3. The jury reasonably concluded that Hiller’s copyright covers original
portions of the Guide, even if other portions of the Guide were
authored by Clockwork.
Clockwork asserts that Hiller cannot own a copyright in the Guide because the Guide
incorporated content from Clockwork’s Manuals. However, for the reasons below, the jury
could reasonably have found that, although the Guide contains content taken from the Manuals,
Hiller nevertheless holds a copyright in the parts of the Guide that do not copy from the Manuals.
As the district court instructed the jury, “[c]opyright protection does not extend to all the
elements of a copyrighted work.” The “non-covered elements” that fall outside of copyright
protection include “a[ny] portion of the work that is not original to the author.” Id.; see 17
U.S.C. § 103(b) (“The copyright in [preexisting material] extends only to the material
contributed by the author of such work, as distinguished from the preexisting material employed
in the work.”). Based on that standard, the district court asked the jury to determine whether
Success Group “copied the protected components of the [Guide].” As to Clockwork’s claim, the
jury was only asked to determine whether Clockwork had “proven by a preponderance of the
evidence that it [i.e., Clockwork] owns the copyright of the Technician Guide [i.e., the Guide].”
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 9
Applying those instructions, the jury reasonably found that Hiller maintained a valid
copyright in the Guide, which would extend copyright protection to the Guide’s original content
(for example, the original passages described in the previous section) but would not cover the
content taken from the Manuals.4
Clockwork argues that Hiller’s unauthorized incorporation of Clockwork-copyrighted
material should completely invalidate Hiller’s copyright in the Guide. Clockwork bases that
argument on the section of the Copyright Act that grants an author the exclusive right to create
derivative works. See 17 U.S.C. § 106(2) (“[T]he owner of copyright has the exclusive right[]
. . . to prepare derivative works based upon the copyrighted work.”). A derivative work is one
that is “based upon one or more preexisting works, such as a translation, musical arrangement,
dramatization, fictionalization, motion picture version, sound recording, art reproduction,
abridgment, condensation.” § 101.
However, even if the jury determined that the Guide is a derivative work, 5 Hiller would
still retain its copyright in any discrete parts of the Guide that were not copied from the Manuals.
See § 103(a) (“[P]rotection for a work employing preexisting material in which copyright
subsists does not extend to any part of the work in which such material has been used
unlawfully.” (emphasis added)).
Clockwork asserts that Hiller should lose all copyright protection because the entire
Guide is based on Clockwork’s “copyrighted system.” However, as the jury was instructed,
“[c]opyright law does not give an author the right to prevent others from copying or using the
underlying ideas contained in the author’s work, such as procedures, processes, systems,
4Because Success Group settled with Hiller and dropped its appeal, we will not parse the Guide to decide
precisely what parts are copyright protected.
5The jury had strong reasons to find that the Guide is not a derivative work, even if the Guide was based on
the same system described by the Manuals. When a work is based on unprotected elements of a prior work (such as
the underlying idea or system), it is not derivative of that work. See 1 MELVILLE B. NIMMER & DAVID NIMMER,
NIMMER ON COPYRIGHT § 3.01(Matthew Bender, Rev. Ed. 2020) (“Th[e] reference to ‘preexisting works’ [in the
definition of derivative work], as compared with the reference to ‘preexisting materials’ in the coordinate definition
of a ‘compilation’ implies that a derivative work, unlike a compilation, must incorporate that which itself is the
subject of copyright.”); see also Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1080 (9th Cir. 2000) (holding that a
photograph of a vodka bottle was not derivative of the bottle because the design of the bottle was a “utilitarian
object that cannot be copyrighted”).
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 10
methods of operation, concepts, principles, or discoveries.” Accord § 102 (“In no case does
copyright protection for an original work of authorship extend to any idea, procedure, process,
system, method of operation, concept, principle, or discovery, regardless of the form in which it
is described, explained, illustrated, or embodied in such work.”). Many of the similarities
between the Guide and the Manuals—such as advising technicians to “park on the street,”
establish “eye contact,” wear “shoe covers,” and use “premium tools”—are not protectable under
copyright law, either because they are short phrases, see 37 C.F.R. § 202.1, or because the
underlying ideas are “merged” with their expression, see Lexmark Int’l, Inc. v. Static Control
Components, Inc.,
387 F.3d 522, 535 (6th Cir. 2004) (noting that under the merger doctrine,
“[w]here the ‘expression is essential to the statement of the idea,’ or where there is only one way
or very few ways of expressing the idea, . . . copyright protection does not exist because granting
protection to the expressive component of the work necessarily would extend protection to the
work’s uncopyrightable ideas as well.” (internal citations omitted) (quoting CCC Info. Servs.,
Inc. v. Maclean Hunter Mkt. Reports, Inc.,
44 F.3d 61, 68 (2d Cir. 1994)) (citing Warren Publ’g,
Inc. v. Microdos Data Corp.,
115 F.3d 1509, 1519 n.27 (11th Cir. 1997); Gates Rubber Co. v.
Bando Chem. Indus., Ltd.,
9 F.3d 823, 838 (10th Cir. 1993))).
Accordingly, the jury reasonably concluded that Hiller had copyright protection over any
original parts of the Guide that did not incorporate copyright-protected content from the
Manuals.
B. The district court’s jury instructions correctly apply the law to this case.
Clockwork alternatively seeks a new trial based on the district court’s instruction to the
jury that “[a] copyright is invalid where unauthorized preexisting material pervades the entire
work or [the work] is inextricably intertwined with the preexisting material,” which according to
Clockwork might have resulted in a verdict “based on a non-viable legal theory.” Clockwork
argues that the author of an unauthorized derivative work forfeits all copyright protection in the
work, regardless of whether preexisting material “pervades” it.
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 11
1. Standard of Review
To be granted a new trial based on allegedly erroneous jury instructions, Clockwork must
show that the “instructions, taken as a whole, are misleading or give an inadequate understanding
of the law.” Miami Valley Fair Hous. Ctr., Inc. v. Connor Grp., 725 F.3d 571, 579 (6th Cir.
2013) (quoting Jones v. Federated Fin. Reserve Corp.,
144 F.3d 961, 966 (6th Cir. 1998).
2. The district court properly instructed the jury that Hiller would completely
lose its copyright in the Guide only if unauthorized Clockwork material
“pervaded” the Guide.
Clockwork asserts that the district court erred by instructing the jury that “[w]here use of
unauthorized preexisting material pervades the entire work . . . , copyright protection may not be
granted.”
That instruction correctly follows directly from two sections of the Copyright Act. First,
section 106 gives the author of an original work the exclusive right to create new works that are
derivative of (i.e. “based on”) that work. 17 U.S.C. § 106(2). Accordingly, when a person
creates a derivative work without the original author’s permission, that person has unlawfully
used the original work. Second, section 103 provides that a work can be copyrighted even if it
unlawfully incorporates preexisting material, but protection for such a work “does not extend to
any part of the work in which such material has been used unlawfully.” § 103(a). The district
court’s “pervades” instruction is a logical corollary of these two principles: Hiller would lose all
copyright protection in the Guide only if content from Clockwork’s Manuals ran throughout
every “part” of the Guide, or in other words “pervaded” it.
In most cases regarding derivative works, that instruction would be unnecessary because
the determination that a work is derivative would necessarily imply that the preexisting work
“pervades” the derivative. See Pickett v. Prince, 207 F.3d 402, 407 (7th Cir. 2000) (finding that
an original work (the graphic symbol used by the artist Prince) “clearly ‘pervade[d]’” two
derivative works (guitars that were shaped like that symbol) and noting that “[i]f it did not, the
guitars might not be derivative works”). That is, in most cases, a work that “adapts” or “recasts”
No. 19-6115 Hiller, LLC v. Success Group Int’l, et al. Page 12
another work without permission would contain no discrete “parts” that did not unlawfully use
the original work.6
However, because the Guide contains discrete parts, some of which are clearly not based
on protected elements the Manuals, the district court properly instructed the jury that it could
find that Hiller maintained a copyright in some parts of the Guide even if other parts copied from
the Manuals without authorization.7
For these reasons, we affirm.
6Clockwork relies on other cases involving derivatives that, like the guitar in Pickett, obviously are
pervaded by the original work. See Keeling v. Hars, 809 F.3d 43 (2d Cir. 2015) (live-action parody of the movie
Point Break); U.S. Auto Parts Network, Inc. v. Parts Geek, LLC,
692 F.3d 1009, 1013 (9th Cir. 2012) (updated
version of a software program).
7Clockwork also argues that the district court erred by allowing the jury to find that Hiller had
authorization to incorporate content from the Manuals. However, because the jury could reasonably have found that
Hiller had a copyright in the original parts of the Guide even if it lacked authorization to incorporate content from
the Manuals, any such error would have been harmless.
