TD BANK N.A.
VERNON W. HILL, II, Appellant
Argued: October 22, 2018
Appeal from the United States District Court for the District
of New Jersey (D.C. No. 1-12-cv-07188) Honorable Robert B.
Kugler, U.S. District Judge
M. Leming, Esq. Michael J. Miles, Esq. William M. Tambussi,
Esq. [Argued] Brown & Connery Lori E. Lesser, Esq.
Simpson Thacher & Bartlett Counsel for Plaintiff-Appellee
T.D. Bank N.A.
M. Barbone, Esq. Edwin J. Jacobs, Jr., Esq. Michael F. Myers,
Esq. Jacobs & Barbone Howard S. Hogan, Esq. [Argued]
Gibson Dunn & Crutcher Counsel for Defendant-Appellant
Vernon W. Hill, II
Phillip R. Malone, Esq. Ashwin Aravind Dylan I. Scher
Stanford Law School Juelsgaard Intellectual Property and
Innovation Clinic, Mills Legal Clinic Jeffery T. Pearlman,
Esq. University of Southern California Gould School of Law
Counsel for Amici Intellectual Property Law Professors
Before: KRAUSE, COWEN, and FUENTES, Circuit Judges
KRAUSE, CIRCUIT JUDGE.
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 Fed.Appx. 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
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 (2006). Accordingly, we will
vacate the District Court's permanent injunction.
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.
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.
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.
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
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.
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
Fed.Appx. at 877. As a result, the 2007 manuscript was never
published, and by April 2008, Commerce Bank terminated the
publishing agreement with Portfolio.
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.
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
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.
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.
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). 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 District
Court's summary judgment ruling, even to the extent that
it served as the necessary predicate for the permanent
injunction. We reject both arguments.
first contends that this appeal is moot because Hill released
a revised version of the book about a month after the
District Court issued the injunction and, as TD Bank posits
in a footnote to its appellate brief, "the July 7, 2016
Kindle version [of Hill's book] . . . does not infringe
on the 2007 manuscript." Appellee's Br. 3 n.1.
Compliance with an injunction can moot an appeal if there is
no "reasonable expectation" that the injunction
will govern the enjoined party's future conduct or
otherwise injure him. Bell v. Wolfish, 441 U.S. 520,
543 n.25 (1979); see Harris v. City of Philadelphia,
47 F.3d 1311, 1326 (3d Cir. 1995); 13B Charles Alan Wright et
al., Federal Practice & Procedure §
3533.2.2 (3d ed. 2018). Yet TD Bank's footnote conceding
that the July 7, 2016 Kindle version does not infringe the
2007 manuscript hardly constitutes the broad
"unconditional and irrevocable" covenant not to sue
that is needed to moot a case. See Already, LLC v. Nike,
Inc., 568 U.S. 85, 93 (2013) (applying the
voluntary-cessation doctrine). Even if we accept the footnote
as legally binding, it applies only to "the July 7, 2016
Kindle version." Appellee's Br. 3 n.1. In fact, at
oral argument, TD Bank's counsel refused to concede that
any other version of the revised book complied with the
injunction, demanding twice that Hill first
"certif[y]" that he will not publish, distribute,
or otherwise market the 2012 book (which sounds much like a
consent decree). Third Cir. Arg. Recording at 57:48-58:06,
58:38-58:50. The record also reflects that the Bank
sent two letters asserting that the rewritten book may still
contain copyrighted content; the latter letter threatened to
bring contempt sanctions against Hill. Hill, meanwhile,
continues to profess his intention "to share the earlier
book." Appellant's Reply Br. 3.
Bank's other arguments on appeal are inconsistent with
its assertion that this case is moot. For instance, the Bank
urges us not to vacate the permanent injunction if we
conclude that this appeal is moot, see United States v.
Munsingwear, Inc., 340 U.S. 36, 39 (1950), because doing
so would "permit the infringing 2012 Book to become
available." Appellee's Br. 3 n.3. That is to say, TD
Bank does believe the injunction meaningfully constrains
Hill's future conduct. And, in the same brief as its
footnote concession, TD Bank accuses Hill of
"continu[ing] to infringe TD Bank's copyright in the
2007 Manuscript" even "after the entry of
the PI order." Appellee's Br. 24 n.12. TD Bank's
motion to supplement the record reiterates these allegations,
citing material that supposedly "evidences the District
Court's prescience in finding that Mr. Hill was likely to
continue infringing TD Bank's copyright."
Appellee's Mot. Suppl. R. at 8 (Apr. 25, 2018).
cannot have it both ways: Hill cannot be both a continuing
infringer and fully compliant with the permanent injunction.
As there is at least a reasonable likelihood that the
injunction controls Hill's future conduct, this appeal is
not moot. See Bell, 441 U.S. at 543 n.25.
Scope of the Appeal
next contends that this Court lacks jurisdiction to consider
the merits of the non-appealable summary judgment order-even
to the extent that the permanent injunction order rests on
its determination of ownership and liability-because Hill did
not separately identify the summary judgment order in his
notice of appeal. We are unpersuaded.
interlocutory jurisdiction under § 1292(a)(1)
encompasses matters "inextricably linked" with the
issuance of a permanent injunction. Marshak, 240
F.3d at 190; Kershner v. Mazurkiewicz, 670 F.2d 440,
449 (3d Cir. 1982) (en banc). Applying this standard, we have
previously reviewed summary judgment orders that made the
determination of liability necessary for the issuance of a
permanent injunction. See, e.g., Doeblers'
Pa. Hybrids, Inc. v. Doebler, 442 F.3d 812, 819 (3d Cir.
2006); Cureton v. NCAA, 198 F.3d 107, 113 (3d Cir.
1999). Although we acquire jurisdiction only over orders
specified or "fairly inferred" in the notice of
appeal, we construe such notices liberally. Wiest v.
Lynch, 710 F.3d 121, 127 (3d Cir. 2013) (citation
omitted). To that end, we have held that we may review an
unspecified order if (1) it is connected to those specified
in the notice of appeal, (2) the intent to appeal the
unspecified order is "apparent," and (3) the
appellee is not prejudiced. Id. at 127; Polonski
v. Trump Taj Mahal Assocs., 137 F.3d 139, 144 (3d Cir.
did not separately identify the summary judgment order in his
notice of appeal. Insofar as this was error, it is
understandable because Hill cannot directly appeal the
summary judgment order under § 1292(a)(1). At a minimum,
the summary judgment order falls within those unspecified
orders that we may consider on appeal. See Wiest,
710 F.3d at 127. The summary judgment order established two
fundamental prerequisites for issuing a copyright
injunction-namely, TD Bank's ownership of the copyright
and Hill's liability for infringement. The District Court
also made repeated references in its permanent injunction
opinion to its summary judgment decision, including
incorporating by reference that order's rendition of the
undisputed facts. Nor can TD Bank seriously claim that the
failure to specify the summary judgment order prejudiced it,
as the record is complete and the Bank had notice of-and
fully briefed-the ownership and liability issues.
conclusion is buttressed by the Second Circuit's decision
in Shakhnes v. Berlin, 689 F.3d 244 (2d Cir. 2012),
which held that the appellate court had jurisdiction to
review the district court's grant of partial summary
judgment, even though it was not specifically listed in the
notice of appeal from a permanent injunction. Id. at
250 n.3. The summary judgment decision, the Second Circuit
stressed, was "the principal legal basis" for
issuing the permanent injunction and "[a]ny doubt"
should have been dispelled by the injunction opinion's
reference to the prior order. Id. We concur and
conclude that our jurisdiction extends to the District
Court's summary judgment decision, inasmuch as that
decision resolved ownership of the copyright and Hill's
review the District Court's grant of summary judgment de
novo, Brownstein v. Lindsay, 742 F.3d 55, 64 (3d
Cir. 2014), and its grant of a permanent injunction for abuse
of discretion, Doeblers' Pa. Hybrids, 442 F.3d
at 819. A district court abuses its discretion if its
decision rests on an incorrect legal standard, a clearly
erroneous factual finding, or a misapplication of the law to
the facts. Id. We may affirm on any basis supported
by the record, even if it departs from the District
Court's rationale. Erie Telecomms., Inc. v. City of
Erie, 853 F.2d 1084, 1089 & n.10 (3d Cir. 1988).
prevail at summary judgment, TD Bank needed to establish
that: (1) it possessed exclusive rights in the 2007
manuscript, and (2) Hill's 2012 book copied protected
expression without privilege. Feist Publ'ns, Inc. v.
Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The Bank
then needed to show that the District Court should exercise
its discretion to award permanent injunctive relief.
eBay, 547 U.S. at 391. We address each requirement
Exclusive Rights in the 2007 Manuscript
and Hill dispute whether the Bank exclusively owns the
copyright in the 2007 manuscript. Hill claims that his
contributions to the work make him at least a joint author,
in which case TD Bank could not sue him for copyright
infringement. See Brownstein v. Lindsay, 742 F.3d
55, 68 (3d Cir. 2014); Cortner v. Israel, 732 F.2d
267, 271 (2d Cir. 1984). TD Bank does not dispute that Hill
made an artistic contribution sufficient to secure authorial
rights but contends that Commerce Bank exclusively owned the
work through the letter agreement that Hill signed or because
it satisfied the traditional agency criteria for determining
whether a work falls within the scope of employment. Although
the meaning of authorship has bedeviled philosophers and
writers for centuries, see, e.g., Immanuel Kant,
Critique of Judgment 174-88 (Werner S. Pluhar trans.,
1987) (1790), we can resolve it here based on the Copyright
Act and controlling precedent. Hill's co-ownership
defense founders if: (1) the Copyright Act's statute of
limitations bars the defense, (2) TD Bank exclusively owns
the manuscript under the letter agreement, or (3) Hill
created it within the scope of his employment under
agency-law principles. We consider these issues seriatim.
The Copyright Act's Three-Year Statute of Limitations
Does Not Apply to Hill's Co-Ownership Defense
addressing the merits of Hill's co-ownership defense, we
must address TD Bank's argument that the Copyright
Act's three-year statute of limitations prevents us from
even considering it. Typically, a statute of limitations aims
to "keep stale litigation out of the courts," not
to bar the "consideration of a particular defense"
in timely litigation. United States v. W. Pac. R.R.
Co., 352 U.S. 59, 72 (1956). Hence, the Copyright
Act's three-year statute of limitations does not preclude
a defendant in an infringement action from raising an
ownership defense.Pritchett v. Pound, 473 F.3d 217,
220 (5th Cir. 2006); Burne Hogarth v. Edgar Rice
Burroughs, Inc., 342 F.3d 149, 163-64 (2d Cir. 2003); 3
Melville B. Nimmer & David Nimmer, Nimmer on
Copyright § 12.05 (2018) (hereinafter Nimmer on
Copyright) (observing that the Copyright Act's
statute of limitations "has no purchase when a plaintiff
attempts to invoke [it] . . . to defeat a defendant's
position of being the pertinent author," because it
operates only as a defense against claims or counterclaims).
This rule holds true even if the defendant also brings an
untimely ownership counterclaim. Burne Hogarth, 342