Affirmed in part, reversed in part, and remanded by published opinion. Judge GREGORY wrote the opinion in which Judge MICHAEL and Senior Judge MICHAEL joined.
GREGORY, Circuit Judge:
Xoom, Inc. ("Xoom") filed suit in federal district court against Imageline, Inc. ("Imageline"), seeking relief under federal and state law for alleged violations of the Copyright Act of 1976 ("Copyright Act") and interference with contractual rights. In response, Imageline filed a counterclaim alleging copyright infringement, false advertising, unfair competition, and business conspiracy. Subsequently, Xoom filed motions for partial summary judgment and summary judgment, which the district court granted. Imageline appealed to this Court. For the reasons that follow, we affirm in part and remand to the district court.
Imageline introduced PicturePak SuperBundle ("SuperBundle") on CD-ROM in 1994. SuperBundle contained 1,580 individual electronic clip-art images in CGM, WMF, and EPF formats. Imageline registered the art, text, and packing design for CD-ROM and diskette media with the United States Copyright Office ("Copyright Office").
In 1998, Imageline sent a letter to Xoom advising that it was infringing Imageline's copyrights by: (i) sublicensing certain Imageline clip-art images to other software publishers; (ii) including certain Imageline clip-art images in Xoom's own CD software products; and (iii) making certain Imageline clip-art images available for free downloading from Xoom's website. Each Web Clip Empire Product that Xoom distributed included statements that: (i) the "web clips" were "copyright cleared"; (ii) Xoom's clip-art images were "proprietary"; and (iii) Xoom commissioned artists around the world, most on an exclusive basis, to develop web objects.
Xoom filed suit against Imageline in district court, seeking relief under both federal and state law. The complaint sought injunctive and declaratory relief based on the Copyright Act, money damages based on interference and conspiracy to interfere with contractual rights,
In a written opinion issued on April 5, 1999, the district court granted partial summary judgment in favor of Xoom on Motion No. 2, issued a stay in the case, and limited possible statutory damages to one award per registration. On April 19, 2001, the district court granted summary judgment in favor of Xoom with respect to Imageline's counterclaims of false advertising and unfair competition. In a final order entered on January 7, 2002, the court disposed of all counts in Xoom's complaint and Imageline's counterclaim. Imageline timely filed this appeal.
A district court's award of summary judgment is reviewed de novo. See A.T. Massey Coal Co., Inc. v. Massanari, 305 F.3d 226, 235 (4th Cir.2002). To the extent there are issues of law in dispute, those questions will also be reviewed de novo. See Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505, 512 (4th Cir.2002).
Imageline asserts that the district court erred: (1) in finding that it did not hold copyright in the individual clip-art images or in the computer program creating the images found in SuperBundle and Master
Imageline's counterclaim alleged that Xoom infringed Imageline's copyright in the individual clip-art images contained in SuperBundle and Master Gallery. The issue on appeal centers around the question of whether Imageline effectively registered its copyright in the materials it claims Xoom infringed. Copyright registration is a jurisdictional prerequisite to bringing an action for infringement under the Copyright Act. See 17 U.S.C. § 411(a) (1996); Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 658 (4th Cir.1993). The district court found that Imageline had no basis for litigating claims of infringement with respect to the individual images because, as registered, the copyright claims were only in the works as a whole and not in the individual images. Imageline appeals to this Court, asserting that its copyright registration of SuperBundle and Master Gallery extended to the individual clip-art images contained in both products and in the computer programs used to create those images. We examine each of these assertions in turn.
Imageline argues that it registered, and therefore owned, copyright in the individual clip-art images through its copyright registrations of SuperBundle and Master Gallery as compilations or derivative works. We decline to make a determination of whether the individual clip-art images were effectively registered through the registrations of SuperBundle and Master Gallery and find that Imageline's registration of SuperBundle and Master Gallery was sufficient to provide copyright protection to the underlying preexisting works of each.
In the instant case, Imageline created SuperBundle and Master Gallery, both compilations or derivative works, and the underlying works which those products encompassed. The Second Circuit held, in Morris v. Bus. Concepts, Inc., 259 F.3d 65, 68 (2d Cir.2001), that where an owner of a collective work also owns the copyright for a constituent part of that work, registration of the collective work is sufficient to permit an infringement action of the constituent part. Similarly, in 1997, a district court in Kansas held that registration of a derivative work is sufficient to allow an
Based on this holding, we do not address the issue of whether the registration of the products covered the individual clip-art images. If Xoom improperly used any copyrightable image contained in SuperBundle and Master Gallery, new or preexisting, that usage would give rise to potential statutory damages.
Imageline also asserts that it holds copyright in the computer programs that created the WMF formatted images upon which Xoom allegedly infringed.
Circular 61 requires the applicant to deposit computer source code in order to obtain copyright in computer programs. Imageline states that the creation of the WMF images was not original; rather, those images were created using commercially available products from companies such as Microsoft and Adobe. Thus, Imageline asserts that it could not, and was not required to, deposit the source code because it does not own copyright in the programs used to create the source code.
Circular 61 does waive the requirement for a deposit of source code when the code contains copyrightable authorship. However,
Under the Copyright Act, "[T]he copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action.... For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work." 17 U.S.C. § 504(c)(1) (1996). Imageline asserts that, contrary to the district court's finding, the language of the Copyright Act does not bar multiple awards for statutory damages when one registration includes multiple works. While Imageline's assertion is true, we find that, given the facts of the instant case, Imageline is only entitled to a maximum of two awards of statutory damages.
As we held above, infra pp. 283-284, Imageline's registration of SuperBundle and Master Gallery covered, for the purposes of this action, the products in their entirety and the underlying preexisting works contained therein in which Imageline also owned copyright. Although parts of a compilation or derivative work may be "regarded as independent works for other purposes[,]" for purposes of statutory damages, they constitute one work. H.R.Rep. No. 94-1476, at 162 (1976). Because both SuperBundle and Master Gallery can be classified as either compilations or derivative works, we find that, for purposes of determining statutory damages under Section 504(c)(1), the registrations of SuperBundle and Master Gallery constitute a total of two works (one for each registration of the compilation or derivative work).
In a separate motion, Imageline sought relief in the district court for violations of § 43 of the Lanham Trademark Act ("Lanham Act"). Imageline asserted that Xoom violated the Lanham Act by making statements regarding the copyright
To recover damages under the Lanham Act, Imageline must first establish that there has been a Lanham Act violation, then must prove actual damages and a causal link between those damages and the Lanham Act violation. 15 U.S.C. §§ 1117, 1125 (1998); Black & Decker (U.S.) Inc. v. Pro-Tech Power Inc., 26 F.Supp.2d 834, 863 (E.D.Va.1998) ("To recover damages for false advertising, a plaintiff `must prove both actual damages and a causal link between [the defendant's] violation and those damages.'" (citations omitted)). In the instant case, we assume that a Lanham Act violation has occurred, and now turn to an examination of whether Imageline has satisfied its evidentiary burden to warrant an award of damages.
In determining damages under the Lanham Act, the plaintiff bears the burden of proving a causal connection between its harms and the defendant's profits. See 15 U.S.C. § 1125 (1998); Otis Clapp & Son, Inc. v. Filmore Vitamin Co., 754 F.2d 738, 745 (7th Cir.1985) ("[T]he plaintiff may not recover if he fails to prove that the defendant's actions caused the claimed harm." (citations omitted)). Imageline's alleged damages are "loss of goodwill, diminution in the value of Imageline's artwork and of Imageline's graphic image library, and loss of income." However, the record contains no evidence that Imageline suffered actual damages. Further, even if there was evidence of actual damages, Imageline does not prove a causal link between its damages and Xoom's actions. Because there is no evidence of actual damages or a causal link between actual damages and Xoom's actions, we find that Imageline failed to satisfy its burden under 15 U.S.C. § 1117 and therefore has no sustainable claim under the Lanham Act. Accordingly, we affirm the district court's grant of summary judgement on the Lanham Act claim in favor of Xoom.
For the foregoing reasons, we affirm in part, reverse in part, and remand to the district court for a determination of statutory damages.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED