Addressing for the first time the issue of whether a presumption of irreparable harm should apply in copyright infringement cases, the US Court of Appeals for the Third Circuit held that it did not, aligning the rule for copyright cases with the existing rule in patent cases. The Court vacated a permanent injunction and remanded for further proceedings. TD Bank N.A. v. Hill, Case No. 16-2897 (3d Cir. July 1, 2019) (Krause, J) (Cowen, J, concurring in part and dissenting in part).

At the end of his more-than-30-year tenure as CEO of Commerce Bank, Vernon W. Hill, II, co-authored a book about his experiences. Commerce hired the co-author and entered into a publishing agreement that defined Commerce as the “author” and “exclusive owner of all rights conveyed in the manuscript.” Additionally, Hill signed a letter to the publishing company in which Commerce was defined as the “author” of the work, and which stated that Hill “unconditionally guarantee[d] that the Work is a work made for hire within the meaning of the United States Copyright Law.” The manuscript, however, was never published, as Hill left Commerce in 2007 just a few months before it was purchased by TD Bank.

In 2012, Hill released a book focused largely on his post-Commerce business ventures, but which allegedly incorporated parts of the 2007 manuscript. When Hill’s book came to TD Bank’s attention, it applied to register the 2007 manuscript with the US Copyright Office and sued Hill for copyright infringement.

The district court granted summary judgment for TD Bank, finding that per Hill’s signed letter, Commerce owned the copyright as a work for hire. A year later, after TD Bank presented evidence that Hill was continuing to promote his book, the district court issued a permanent injunction enjoining Hill from publishing, marketing, distributing or selling the 2012 book. Hill appealed.

The Third Circuit agreed with the district court that TD Bank owned the copyright, but for different reasons. The Third Circuit reasoned that TD Bank was the owner of the copyright not through the work-for-hire doctrine, but because the agreement operated as an assignment

The Third Circuit vacated the permanent injunction, however, holding that eBay Inc. v. MercExchange, LLC (which rejected the presumption of irreparable harm in patent infringement cases) also applied to copyright infringement cases: “[A] court considering the propriety of a copyright injunction should no longer place a ‘thumb on the scales’ in favor of injunctive relief. . . . Irreparable harm in copyright cases ‘must be proven, not presumed.’”

Four factors are commonly used to evaluate whether a permanent injunction should be granted:

• Whether the moving party will suffer irreparable injury
• Whether there is an adequate remedy available at law for that injury
• The balance of hardships
• Public interest considerations

The Third Circuit found that three of the four factors favored Hill, and the outlying factor (the balance of hardships) was equal.

The Court held that Hill’s continued infringement, which “depriv[ed] [TD Bank] of the ‘right to not use the copyright’” was insufficient for irreparable harm: “Holding that a violation of ‘the right to not use the copyright’ necessarily amounts to irreparable harm would not only resurrect the presumption of irreparable harm, but make it irrebuttable.”

With respect to the second factor, the Court held that monetary relief was still sufficient even where, “as here, an accused infringer distributes an infringing product for free and the copyright holder makes no use of a work.”

Additionally, the public interest factor weighed in Hill’s favor since TD Bank admitted that it had no intention of publishing or licensing the copyrighted work, and the injunction prevented the public from access to Hill’s book. Moreover, the injunction “inflicted a far more subtle and insidious harm . . . by placing Hill in jeopardy of a contempt finding for sharing anything that ‘sounds too much like himself.’”

Judge Cowen concurred with the majority’s decision to vacate the permanent injunction, but dissented from its conclusion that TD Bank owned the copyright, arguing that TD Bank had waived the assignment issue and Hill’s letter failed “to convey an unmistakable intent to effect a present transfer” of his interest in the manuscript.