TD Bank NA v. Vernon Hill, II
928 F.3d 259 (2019)
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Rule of Law:
A plaintiff seeking a permanent injunction for copyright infringement is not entitled to a presumption of irreparable harm and must instead satisfy the traditional four-factor test for equitable relief, demonstrating actual irreparable injury that cannot be compensated by legal remedies.
Facts:
- Vernon Hill, while CEO of Commerce Bank, co-authored a manuscript in 2006 about his business philosophy and tenure at the bank.
- Hill's employment agreement required his 'full time and best efforts' but allowed for undefined 'outside activities'; he primarily worked on the manuscript during evenings and weekends, with some assistance from bank employees.
- In 2007, Commerce Bank entered into a publishing agreement in which the bank was defined as the 'Author' of the manuscript.
- Hill signed a separate letter agreement addressed to the publisher in which he guaranteed that the manuscript was a 'work made for hire' and that Commerce Bank was the owner of the copyright.
- After Hill's termination and TD Bank's acquisition of Commerce Bank, the 2007 manuscript was never published.
- In 2012, Hill published a new book titled 'FANS! Not Customers,' which incorporated approximately 16% of the material from the unpublished 2007 manuscript.
Procedural Posture:
- TD Bank sued Vernon Hill in the U.S. District Court for the District of New Jersey for copyright infringement.
- The District Court granted summary judgment for TD Bank, ruling that the bank owned the copyright under the work-for-hire doctrine and that Hill had infringed upon it.
- The District Court subsequently granted TD Bank's motion for a permanent injunction, which prohibited Hill from publishing, marketing, distributing, or selling his 2012 book.
- Hill, as the appellant, appealed the District Court's grant of the permanent injunction to the U.S. Court of Appeals for the Third Circuit, with TD Bank as the appellee.
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Issue:
Does a finding of copyright infringement create a presumption of irreparable harm sufficient to justify a permanent injunction without a full analysis of the traditional four-factor equitable test?
Opinions:
Majority - Judge Krause
No. A finding of copyright infringement does not create a presumption of irreparable harm, and a court must exercise its discretion consistent with traditional principles of equity by applying the four-factor test before issuing a permanent injunction. The Supreme Court's decision in eBay v. MercExchange, a patent case, abrogates the Third Circuit's prior presumption of irreparable harm in copyright cases. Here, the district court abused its discretion by issuing an injunction based on a categorical rule—the violation of TD Bank's 'right to not use the copyright'—rather than a particularized showing of irreparable harm. Applying the four-factor test, the court found: (1) TD Bank suffered no irreparable injury as it had no plans to publish the work; (2) adequate remedies at law, such as monetary damages, existed; (3) the balance of hardships was neutral; and (4) the public interest in accessing the work weighed against the injunction, especially since the copyright was being used to suppress speech rather than protect a commercial interest. Although the district court erred in finding the manuscript was a 'work for hire' simply by contract, it correctly found TD Bank owned the copyright because the letter agreement operated as a valid assignment of Hill's rights.
Concurring-in-part-and-dissenting-in-part - Judge Cowen
No. The permanent injunction should be vacated, but the majority erred in affirming the summary judgment on copyright ownership based on an assignment theory. TD Bank expressly waived the assignment argument during discovery when it admitted in a response to a request for admission that the letter agreement 'is not an assignment.' The court should not decide the case on an issue the party intentionally relinquished. Furthermore, even if the argument were not waived, the letter agreement is too ambiguous to constitute an unmistakable present transfer of copyright ownership, as it repeatedly uses the term 'guarantee' and is framed around the distinct legal theory of work-for-hire. Therefore, the summary judgment on the threshold issue of ownership should be vacated and remanded for further proceedings.
Analysis:
This decision officially aligns the Third Circuit with other federal circuits that have applied the Supreme Court's eBay v. MercExchange framework to copyright law, formally abolishing the long-standing presumption of irreparable harm for copyright infringement. The ruling reinforces that a permanent injunction is an extraordinary remedy, not an automatic consequence of proving infringement, and requires a rigorous, fact-specific analysis of the traditional equitable factors. By weighing the public interest in access to expressive works against a copyright holder's non-commercial motive to suppress speech, the court signals that the purpose behind the enforcement of a copyright can be a significant factor in shaping the remedy.
