Case: 20-20523 Document: 00515975891 Page: 1 Date Filed: 08/12/2021
`
`United States Court of Appeals
`for the Fifth Circuit
`
`
`No. 20-20523
`
`
`Di Angelo Publications, Incorporated,
`
`
`United States Court of Appeals
`Fifth Circuit
`
`FILED
`August 12, 2021
`
`Lyle W. Cayce
`Clerk
`
`
`
`
`Jentry Kelley,
`
`
`
`
`
`Plaintiff—Appellant,
`
`versus
`
`Defendant—Appellee.
`
`Appeal from the United States District Court
`for the Southern District of Texas
`USDC No. 4:20-CV-115
`
`
`
`Before Higginbotham, Southwick, and Engelhardt, Circuit
`Judges.
`Patrick E. Higginbotham, Circuit Judge:
`
`This appeal brings a variation on the often-thorny question of whether
`a claim involving a copyright arises under federal law. If Di Angelo
`Publications’ claim to a copyright requires a construction of copyright law,
`there is exclusive federal jurisdiction; but if its claim calls only upon contract
`law, jurisdiction lies with the Texas courts. The district court determined
`that only contract law applied and dismissed Di Angelo’s claim for want of
`federal jurisdiction. Finding federal jurisdiction, we reverse and remand.
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 2 Date Filed: 08/12/2021
`
`No. 20-20523
`
`I.
`
`The dispute centers on a book titled “Hooker to Looker; a makeup
`guide for the not so easily offended” (the “Book”). Jentry Kelley, a makeup
`artist with her own cosmetics business, first approached Di Angelo’s
`principal, Sequoia Schmidt, with the idea of publishing the Book to promote
`Kelley’s business. In June 2015, the parties signed a publishing contract (the
`“Contract”) in which Di Angelo agreed to publish and distribute Kelley’s
`then-unwritten Book, with Kelly receiving 50 percent of the net royalties.
`Kelley provided Di Angelo with an initial, three-page manuscript, detailing
`her background in cosmetics and outlining the Book’s topics. According to
`Di Angelo, it then wrote the Book for Kelley while “communicating and/or
`collaborating with Kelley” during the drafting process. This process
`allegedly included Di Angelo’s creation, selection, and arrangement of the
`images appearing in the Book. Nonetheless, the Book Di Angelo distributed
`lists only Jentry Kelley as the holder of the copyright.
`
`Di Angelo published the Book and sold the initial 1,000-copy print
`run. Kelley then asked Di Angelo to prepare an updated or revised version of
`the Book for sale. Di Angelo alleges that it had prepared the updated work for
`print when it discovered that Kelley was attempting to work directly with Di
`Angelo’s printer, in violation of the Contract, to reduce the costs she would
`incur selling the revised edition.
`
`Shortly after unsuccessful overtures to the printer, in November 2018,
`Kelley filed a complaint in Harris County, Texas, claiming that Di Angelo
`intentionally misled her regarding the costs of publishing her Book and
`overcharged her for publishing services. Relevant here, Kelley alleged that
`she “is the sole owner of all copyrights, trademark rights, trade secret rights,
`concepts and other intellectual property . . . in the Book.” She further alleged
`that Di Angelo “did not develop any intellectual property or other rights in
`
`2
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 3 Date Filed: 08/12/2021
`
`No. 20-20523
`
`connection with the Book” and that Di Angelo’s contrary assertions were
`false. At the summary judgment stage, Kelley asked the Harris County court
`to rescind her Contract with Di Angelo as a penalty for the alleged
`misrepresentations. Di Angelo counterclaimed for breach of contract, sworn
`account, quantum meruit, and a judgment declaring “that Kelley failed to
`substantially perform under the Contract.” Among other things, Di Angelo
`alleged that “Kelley has prevented Di Angelo from selling the 2nd edition and
`making a profit therefrom.” The Harris County action is still pending.
`
`Di Angelo filed this case in the Southern District of Texas in January
`2020. According to Kelley, the filing came on the heels of a November 2019
`ruling in Harris County that granted summary judgment to Kelley on certain
`Di Angelo counterclaims
`including the declaratory
`judgment claim.
`Di Angelo’s federal complaint asserts a single claim for relief, titled
`“Declaratory Judgment Of Authorship and Copyright Ownership of the
`Book and Its Update/Sequel.” Specifically, Di Angelo seeks a declaration
`that it “owns copyrights in the [B]ook and its update and those copyrights
`include among other rights, the right of Di Angelo Publications to control the
`printing and distribution of the [B]ook [,] its update,” and any derivative
`works.
`
`Di Angelo alleges that it “acquired copyrights in the [B]ook” and its
`update by “writing, editing, planning and taking all photographs and making
`all illustrations, and planning, designing, and arranging the layout of the
`[B]ook.” Elsewhere in its complaint, Di Angelo alleges that it “wrote the
`[B]ook, planned and illustrated the [B]ook, prepared the layout for the
`[B]ook,” as well as “planned, took or made, and formatted all of the
`photographs and illustrations in the [B]ook.” Apart from these allegations,
`much of Di Angelo’s complaint describes the contract dispute Kelley
`initiated in state court. Di Angelo contends that an actual controversy has
`arisen between the parties because Kelley has asserted exclusive ownership
`
`3
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 4 Date Filed: 08/12/2021
`
`No. 20-20523
`
`of all rights in the Book and its update and seeks rescission of the Contract,
`which if granted, would give Kelley sole control over the Book’s sale and
`distribution absent a declaration of Di Angelo’s copyrights.
`
`Kelley moved to dismiss Di Angelo’s declaratory relief claim under
`Rules 12(b)(1) and 12(b)(6). Kelley argued that the claim did not give rise to
`federal jurisdiction because it was premised solely on her alleged breach of
`the Contract, a controversy governed by Texas law. Kelley further argued the
`federal filing as an end-run around rulings against Di Angelo in the Harris
`County case. Kelley went on to argue that Di Angelo’s claim would fail on its
`merits because the Contract conclusively established that Kelley alone
`authored the Book. Di Angelo responded that its claim was distinct from any
`claims or counterclaims asserted in state court because it was premised on a
`dispute over who wrote the Book, not on the terms of the Contract. In Di
`Angelo’s view, resolution of this authorship dispute requires the district
`court to interpret federal copyright law, including the definitional and
`ownership provisions in 17 U.S.C. §§ 101 & 201, which the state court lacks
`jurisdiction to address.
`
`The district court agreed with Kelley on the jurisdictional question
`and granted the motion to dismiss.1 Although the district court acknowledged
`that certain ownership claims require interpretation of the Copyright Act,2 it
`determined that here “the disputed ownership and authorship of the Book
`hinges on the terms of the Contract.”3 The district court explained that while
`the “Contract does not explicitly provide for ownership of copyrights,” it
`
`
`
`1 Di Angelo Publ’ns, Inc. v. Kelley, No. CV H-20-115, 2020 WL 5884659, at *3 (S.D.
`Tex. Aug. 28, 2020).
`2 Id. at *2 (citing Goodman v. Lee, 815 F.2d 1030, 1031 (5th Cir. 1987)).
`3 Id. at *2.
`
`4
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 5 Date Filed: 08/12/2021
`
`No. 20-20523
`
`“refers to Kelley as the author of the Book.”4 The district court further noted
`that Di Angelo’s complaint was heavy on contract-related allegations
`including that “Kelley acted ‘contrary to the terms of the contract’” and that
`“the Contract . . . provides Kelley a buyout option of Di Angelo’s rights.”5
`As Di Angelo’s claim sounded in contract, the dispute did not require
`construction of the Copyright Act and, thus, did not arise under federal law.6
`The district court declined to reach Kelley’s arguments that Di Angelo failed
`to state a claim under Rule 12(b)(6) or that the court should abstain from
`hearing the dispute while the Harris County case was pending.7 Di Angelo
`appealed.
`
`II.
`
`We review a district court’s decision to dismiss under Rule 12(b)(1)
`de novo.8 Di Angelo, as the party asserting federal jurisdiction, has the
`burden of “alleg[ing] a plausible set of facts establishing jurisdiction.”9
`Where, as here, “the district court rules on jurisdiction without resolving
`factual disputes . . . we consider the allegations in the plaintiff’s complaint as
`true and review whether the district court’s application of the law is
`correct.”10 Generally, we affirm a dismissal under 12(b)(1) only if “‘it
`
`
`
`4 Id.
`5 Id.
`6 Id.
`7 Id. at n.10.
`8 In re S. Recycling, L.L.C., 982 F.3d 374, 379 (5th Cir. 2020).
`9 Laufer v. Mann Hosp., L.L.C., 996 F.3d 269, 271 (5th Cir. 2021).
`10 Id. at 271-72 (internal quotations omitted).
`
`5
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 6 Date Filed: 08/12/2021
`
`No. 20-20523
`
`appears certain that the plaintiff cannot prove any set of facts in support of
`his claim that would entitle plaintiff to relief.’”11
`
`The parties agree that there is federal jurisdiction over Di Angelo’s
`declaratory judgment claim only if it raises an issue arising under copyright
`law.12 A claim arises under copyright law in three circumstances: “‘[1] if the
`complaint is for a remedy expressly granted by the Act . . . or [2] asserts a
`claim requiring constructi[on] of the Act, . . . or, [3] at the very least and
`perhaps more doubtfully, presents a case where a distinctive policy of the Act
`requires that federal principles control the disposition of the claim.’”13 Only
`the second of these—construction of the Copyright Act—is implicated
`here.14
`
`
`
`11 See Williams On Behalf of J.E. v. Reeves, 954 F.3d 729, 734 (5th Cir. 2020)
`(quoting Gilbert v. Donahoe, 751 F.3d 303, 307 (5th Cir. 2014)).
`12 Additionally, the Declaratory Judgment Act requires an actual controversy
`before a plaintiff like Di Angelo can seek declaratory relief. See 28 U.S.C. § 2201(a). In the
`intellectual property context, this requires a showing that “the declaratory plaintiff has a
`real and reasonable apprehension of litigation and . . . the declaratory plaintiff has engaged
`in a course of conduct that brings it into adversarial conflict with the declaratory
`defendant.” Tex. v. W. Pub. Co., 882 F.2d 171, 175 (5th Cir. 1989). Kelley does not dispute
`that an actual controversy exists between the parties, and the district court seems to have
`assumed that one existed. Regardless, Di Angelo is likely correct that the requisite
`controversy exists: Kelley alleged in Harris County that she “is the sole owner of all
`copyrights . . . in the Book,” and Di Angelo has alleged that it “is preparing to publish the
`material that is subject to [Kelley’s] copyright.” W. Pub. Co., 882 F.2d at 176.
`13 Goodman, 815 F.2d at 1031 (quoting T. B. Harms Co. v. Eliscu, 339 F.2d 823, 826
`(2d Cir. 1964)).
`
`14 See Di Angelo Publ’ns, 2020 WL 5884659, at *2 (“Di Angelo does not assert its
`claim involves copyright infringement or statutory royalties or that this is a case where a
`distinctive policy of the Act requires that federal principles control. [] Therefore, the Court
`turns to whether Di Angelo’s complaint asserts a claim that requires construction of the
`Copyright Act.”) (internal quotations omitted).
`
`6
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 7 Date Filed: 08/12/2021
`
`No. 20-20523
`
`Di Angelo argues that resolving the dispute over who owns the
`copyrights in the Book and its update requires reference to federal copyright
`law. Claims of ownership in a copyright do not invariably arise under
`copyright law. It is well established that where a party holds a copyright by
`virtue of an assignment or similar contractual arrangement, state law is
`determinative of ownership.15 But claims of copyright ownership grounded
`in authorship touch on federal concerns. Section 201(a) of the Copyright Act
`provides that “[c]opyright in a work protected under this title vests initially
`in the author or authors of the work.”16 “An author gains ‘exclusive rights’
`in her work immediately upon the work’s creation, including rights of
`reproduction, distribution, and display,” and thus registration is not a
`prerequisite to an author holding a copyright.17
`
`As early as 1987, we held in Goodman v. Lee “that exclusive federal
`district court jurisdiction exists in an action for a declaratory judgment to
`establish joint authorship of a copyrighted work” because such a claim
`“clearly involves the application and interpretation of the copyright
`ownership provisions.”18 Since Goodman, our sister courts of appeals have
`
`
`
`15 See T.B. Harms, 339 F.2d at 828 (“[T]he federal grant of a patent or copyright
`has not been thought to infuse with any national interest a dispute as to ownership or
`contractual enforcement turning on the facts or on ordinary principles of contract law.”).
`16 17 U.S.C. § 201.
`17 Fourth Est. Pub. Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881, 887 (2019);
`see also Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 165 (2010) (“[N]either § 1331, which
`confers subject-matter jurisdiction over questions of federal law, nor § 1338(a), which is
`specific to copyright claims, conditions its jurisdictional grant on whether copyright
`holders have registered their works before suing for infringement.”).
`18 Goodman, 815 F.2d at 1031-32 (emphasis added). Contrary to Kelley’s
`suggestion, the Copyright Act’s lack of a definition of authorship does not defeat the
`conclusion that authorship claims require construction of the Act. As our sister court
`noted, such a position is “without merit” because it rests on “the mistaken impression that
`
`7
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 8 Date Filed: 08/12/2021
`
`No. 20-20523
`
`reached a consensus: competing authorship claims require “the application
`of the Copyright Act” and thus state a federal claim.19 Indeed, this appears
`to be the unanimous view among the courts of appeal that have squarely
`addressed the question.20 Courts have reached this conclusion in a variety of
`circumstances, including cases involving claims for declaratory judgment21
`and cases where at least some portion of the parties’ business relationship
`was covered by an adjacent contract.22 Importantly, neither the presence of a
`related contract nor contract claims is dispositive of whether a valid copyright
`claim has been pled. As the Second Circuit explained, the T.B. Harms test—
`the basis for each aforementioned decision—“obviated the need for courts
`
`
`
`courts ‘construe’ only those terms already defined in a statute.” Merchant v. Levy, 92 F.3d
`51, 55-56 (2d Cir. 1996).
`19 See, e.g., Severe Recs., LLC v. Rich, 658 F.3d 571, 582 (6th Cir. 2011) (“[W]e now
`join our sister circuits and adopt the “prevailing view that disputed claims about whether
`there is co-authorship require[s] application of the Copyright Act[,]” which is a dispute
`properly adjudicated in federal court.”) (internal citation omitted); Cambridge Literary
`Props., Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co. KG., 510 F.3d 77, 86 (1st Cir. 2007)
`(“All of the federal circuit courts of appeal that have addressed the issue, including this
`one, agree that a determination of copyright ownership based on a disputed allegation of
`co-authorship presents a federal question that arises under, and must be determined
`according to, the Copyright Act.”) (collecting cases); Gaiman v. McFarlane, 360 F.3d 644,
`652–53 (7th Cir. 2004); Merchant, 92 F.3d at 55 (citing 3 Melville B. Nimmer &
`David Nimmer, Nimmer on Copyright, § 12.01[A] at 12–13 (1994)) (“better
`view” that “in an action for a declaratory judgment to establish the plaintiff as the
`defendant’s co-author and for an accounting based thereon, . . . federal jurisdiction is
`exclusively [sic]”); Sullivan v. Naturalis, Inc., 5 F.3d 1410, 1414 (11th Cir. 1993).
`20 Severe Recs., LLC, 658 F.3d at 582 (quoting Cambridge Literary Props., 510 F.3d
`at 86) (“All of the federal circuit courts of appeal that have addressed the issue . . . agree
`that a determination of copyright ownership based on a disputed allegation of co-authorship
`presents a federal question that arises under, and must be determined according to, the
`Copyright Act.”).
`21 See, e.g., Severe Recs., LLC, 658 F.3d at 582; Merchant, 92 F.3d at 55.
`22 See, e.g., Sullivan, 5 F.3d at 1414 (reversing district court’s determination that
`plaintiffs’ claim arose only under contract law).
`
`8
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 9 Date Filed: 08/12/2021
`
`No. 20-20523
`
`to determine at the outset of litigation whether copyright claims were
`incidental to contract claims.”23 Instead, what counts under T.B. Harms is
`“what is alleged on the face of the complaint.”24
`
`Although Di Angelo muddles its complaint with contract allegations
`aplenty, it also alleges that it “acquired copyrights in the [B]ook” by
`“writing, editing, planning and taking all photographs and making all
`illustrations, and planning, designing, and arranging the layout of the
`[B]ook.” Di Angelo alleges that it made these same contributions both to the
`original Book and its update. Although the complaint uses neither the term
`“joint work” nor “co-author,” it is nigh impossible to read Di Angelo’s
`allegations that it “wrote the [B]ook . . . and illustrated the [B]ook” while
`“communicating and/or collaborating with Kelley” without concluding that
`Di Angelo
`is alleging, at minimum, co-authorship of the Book.25
`Consequently, Di Angelo’s complaint appears to state a cognizable copyright
`claim.
`
`Kelley contends that this is merely an appearance and that the
`question of authorship sounds in contract, not federal law. It bears repeating
`that the Contract never expressly vests a copyright or any intellectual
`
`
`
`23 Bassett v. Mashantucket Pequot Tribe, 204 F.3d 343, 349 (2d Cir. 2000).
`24 Id.
`25 In fact, Di Angelo seems to be pursuing the even bolder argument that it alone
`was the author, so it alone owns the copyrights in the Book. This despite Di Angelo’s own
`allegations, acknowledging that Kelley made some contributions to the Book. Evidence also
`indicates that the copyright for the Book is formally registered to Kelley. These issues
`pertain more to the merits than to the limited jurisdictional question on appeal, but it bears
`noting that even a copyright registered to Kelley would not preclude Di Angelo from
`claiming to be a co-author: “A copyright registration, standing alone, does not serve as
`repudiation of joint authorship because coauthors are not expected to investigate the
`copyright register for competing registrations.” 18 Am. Jur. 2d Copyright and Literary
`Property § 69.
`
`9
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 10 Date Filed: 08/12/2021
`
`No. 20-20523
`
`property right in either party. But, as Kelley points out, the Contract
`addresses her as the “author.” From this, she concludes that the Contract
`plainly does not contemplate the ghostwriting arrangement alleged by
`Di Angelo. Indeed, the district court listed the Contract’s references to
`Kelley as the “author” among its reasons for concluding that Di Angelo had
`pled only a contractual claim.26 At this stage, we are not persuaded that the
`term “author” carries the determinative significance Kelley assigns it.
`
`Put simply, neither the Contract’s use of “author” nor its more
`general terms preclude Di Angelo from adducing facts that would make it a
`statutory author for purposes of 17 U.S.C. § 201(a). The Contract does not
`define author, and the word’s common meaning can apply to multiple parties
`who collaboratively engage in producing one creative work, a possibility
`expressly contemplated by copyright law.27 And contrary to Kelley’s
`suggestion, the terms of the Contract lend some support to the notion that
`the Book would be produced collaboratively.
`
`In addition to traditional editing, proofing, and distribution services,
`the Contract specifies that Kelley paid Di Angelo for services described as
`“manuscript development” and “elaboration on [the] base manuscript.”
`The Book is no tome, but at 124 pages, it grew considerably from the three-
`page manuscript Kelley originally submitted. On this limited record, it is
`plausible to infer that the manuscript’s transformation into a book of sorts is
`attributable, at least partially, to the “development” and “elaboration”
`services expressly provided for in the Contract. In this sense, the Contract
`
`
`
`26 Di Angelo Publ’ns, 2020 WL 5884659, at *2.
`27 See 17 U.S.C. § 101 (defining “joint work” as “a work prepared by two or more
`authors with the intention that their contributions be merged into inseparable or
`interdependent parts of a unitary whole”).
`
`10
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 11 Date Filed: 08/12/2021
`
`No. 20-20523
`
`itself permits the inference that the parties’ envisioned Di Angelo making
`substantive contributions to the work.
`
`But the Contract may not even be the final word on the matter. We
`note that the document lacks a merger or integration clause, thus allowing for
`the possibility that the parties’ agreement extended beyond the terms which
`they reduced to writing.28 Accordingly, the Contract alone is not dispositive
`of the jurisdictional question.
`
`In a similar vein, the rights Di Angelo seeks to vindicate through a
`declaratory judgment invite further comment. Di Angelo seeks a declaration
`of its copyright so that it may control the “use,” “printing and distribution
`of the [B]ook and its update.” Although these are rights the holder of a
`copyright would enjoy,29 they also seem to be rights that Di Angelo enjoys
`under the Contract, the terms of which dictate that Kelley shall not “proceed
`with business ventures that directly or indirectly affect the business services
`Di Angelo Publications is providing.” If Di Angelo could vindicate the same
`rights without reference to copyright law, then one might question whether
`the claim truly arises under copyright law or whether the federal proceeding
`ought to be stayed in favor of the earlier-filed state lawsuit. But viewing the
`allegations in the light most favorable to Di Angelo, we conclude that at least
`some of the rights referenced in Di Angelo’s complaint are not co-extensive
`with its rights under the Contract. Specifically, rights in the Book’s update
`are not expressly addressed by the Contract’s terms.
`
`
`
`28 See, e.g., Digby v. Texas Bank, 943 S.W.2d 914, 929 (Tex. App. El Paso 1997, writ
`denied) (holding that when parties neglect to include a merger clause, Texas courts are not
`precluded from considering extrinsic evidence).
`29 See 17 U.S.C. § 106.
`
`11
`
`

`

`Case: 20-20523 Document: 00515975891 Page: 12 Date Filed: 08/12/2021
`
`No. 20-20523
`
`Although that document contains a passing reference to a second print
`run of the original Book, none of the agreement’s terms deal with the
`possibility of an update or revision to the Book, such as the one Di Angelo
`allegedly prepared before the parties’ breakdown in relations. Thus, a
`declaration of Di Angelo’s copyright in the updated work could permit it to
`exercise rights with respect to that work that it would not enjoy under the
`Contract. For instance, a declaration could allow Di Angelo to profit from the
`Book’s update, which according to its state court complaint, Kelley currently
`prevents it from doing.
`
`III.
`
`The district court confined its dismissal order to the jurisdictional
`question, and the parties generally limited their briefing and oral arguments
`to this issue, so we limit our holding accordingly. At the same time as we hold
`that Di Angelo’s claim necessarily implicates 17 U.S.C. § 201, it bears
`mentioning that subsection (a)’s definition of “Initial ownership” is not the
`only portion of that statute with apparent relevance to the facts at hand.
`Subsection (b), which defines “Works made for hire,” may address the
`merits disputes to which the parties allude. We leave to the parties and the
`district court the applicability of this section.
`
`We VACATE the district court’s order dismissing Di Angelo’s
`declaratory judgment claim and REMAND the case for further proceedings
`consistent with this opinion.
`
`12
`
`