I Dig Texas v. Creager

98 F.4th 998
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 12, 2024
Docket23-5046
StatusPublished
Cited by11 cases

This text of 98 F.4th 998 (I Dig Texas v. Creager) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
I Dig Texas v. Creager, 98 F.4th 998 (10th Cir. 2024).

Opinion

Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS April 12, 2024

Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _______________________________________

I DIG TEXAS, LLC,

Plaintiff Counterclaim Defendant - Appellee,

v. No. 23-5046

KERRY CREAGER,

Defendant - Appellant,

CREAGER SERVICES, LLC,

Defendant Counterclaimant Third-Party Plaintiff - Appellant,

v.

THOMAS MAREK; MARY MAREK,

Third-Party Defendants - Appellees.

DIGITAL JUSTICE FOUNDATION,

Amicus Curiae. __________________________________________

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA (D.C. No. 4:22-CV-00097-CVE-JFJ) __________________________________________ Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 2

Evan W. Talley (Douglas J. Sorocco, Jim V. John, and Jacob Oliphant with him on the briefs), Dunlap Codding, P.C., Oklahoma City, Oklahoma, for Appellants.

Zachary A.P. Oubre (Ronald T. Shinn Jr. with him on the briefs), McAfee & Taft, Oklahoma City, Oklahoma, for Appellees.

Andrew Grimm, Digital Justice Foundation, Omaha, Nebraska, for Amicus Curiae. __________________________________________

Before BACHARACH, McHUGH, and MORITZ, Circuit Judges. ___________________________________________

BACHARACH, Circuit Judge. ___________________________________________

This appeal involves advertisements pitting competitors against each

other. In the pertinent advertisements, one seller targeted consumers

wanting to buy American-made products. To target these consumers, the

seller used copyrighted photographs of a competitor’s products to

underscore their connection to China. These advertisements led to claims

under the Copyright Act and the Lanham Act.

The Copyright Act allows monetary relief when the improper use of

copyrighted images leads to damages or profits. See Part 3(c), below. The

profits can be either direct or indirect. See Part 3(c), below. Here the claim

involves indirect profits. To recover, the claimant needed to show a nexus

between the improper use of copyrighted images and profits. See Part 3(c),

below. The question here is whether the claimant could make that showing

without tying the copyrighted images to any of the infringer’s profits. We

2 Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 3

answer no because the absence of a proven nexus would require us to

speculate about the possibility of any profits from use of the copyrighted

images.

The advertisements also led to claims under the Lanham Act. These

claims mainly involve the advertisements encouraging consumers to buy

products that are American-made. At issue is the truth or falsity of the

characterization of products as American-made. Is a boast about American-

made products literally false when the business assembles products in the

United States but uses some foreign components? We answer no because

the boast itself is ambiguous.

1. I Dig Texas uses copyrighted photographs to advertise.

This appeal involves competition between distributors of

construction equipment called skid steer attachments. 1 One company calls

itself I Dig Texas and sells attachments called Texas Post Drivers. A

1 The parties state that

 “[s]kid steers are construction equipment used for various purposes such as digging or hauling materials” and

 the parties sell attachments to the skid steers, “such as auger attachments, brush cutter attachments, and post driver attachments.”

Appellants’ App’x vol. II, at 230 n.1; see also id. at 404.

3 Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 4

competitor, Creager Services, sells attachments called Montana Post

Drivers.

I Dig Texas tried to appeal to consumers’ preference for American-

made products. To do so, I Dig Texas used Creager’s photographs of

Montana Post Drivers:

These products are made in China.

4 Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 5

I Dig Texas promoted its products by discouraging consumers from

buying products, like Creager’s, that had been made in China. So I Dig

Texas advertised by combining Creager’s photographs of its skid steer

attachments with text imploring consumers to buy products that had been

made in the United States rather than in China:

2. The district court grants summary judgment to I Dig Texas on Creager’s federal claims.

In district court, Creager claimed that (1) the use of these

photographs had constituted copyright infringement and (2) the

accompanying text had misrepresented the origin of I Dig Texas’s

products. For these claims, Creager argued that

 the use of its photographs had violated the Copyright Act and

 the misrepresentations had violated the Lanham Act.

5 Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 6

In addition, Creager asserted state-law claims for deceptive trade practices,

tortious interference, and unfair competition. I Dig Texas had also asserted

its own state-law claims for deceptive trade practices, tortious interference

with business relations, unfair competition, and defamation. The district

court granted summary judgment to I Dig Texas on Creager’s federal

claims and remanded all of the state-law claims to state court.

3. Creager failed to present evidence of any profit from the use of its photographs.

The elements of a claim for copyright infringement are

 the plaintiff’s ownership of a valid copyright and

 the defendant’s violation of an exclusive ownership right.

Diversey v. Schmidly, 738 F.3d 1196, 1204 (10th Cir. 2013). In district

court, I Dig Texas sought summary judgment on this claim based on an

affirmative defense (fair use) and a failure to establish a nexus between

profits and the use of Creager’s photographs.

a. We consider the possibility of affirming based on Creager’s failure to establish a nexus.

The district court relied on I Dig Texas’s affirmative defense of fair

use and declined to address the existence of a nexus between the use of

Creager’s photographs and the making of a profit. But we have discretion

to consider affirming based on the failure to prove a nexus if this “ground

[is] adequately supported by the record.” Elkins v. Comfort, 392 F.3d 1159,

6 Appellate Case: 23-5046 Document: 010111031168 Date Filed: 04/12/2024 Page: 7

1162 (10th Cir. 2004). To determine whether to exercise this discretion, we

consider whether

 the parties briefed the issue here and in district court,

 the issue involves a question of law rather than fact, and

 the parties had an opportunity to develop the record.

Id.

All these factors support consideration. The parties briefed the issue

of a nexus both here and in district court. Because this issue arises on

summary judgment, the court’s inquiry involves a question of law on the

existence of a genuine dispute of material fact. Wise v. DeJoy, 71 F.4th

744, 752 (10th Cir. 2023). To answer that inquiry, we have a fully

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