In the
`United States Court of Appeals
`For the Seventh Circuit
`____________________
`Nos. 12‐3773 & 12‐3774
`DELIVERMED HOLDINGS, LLC, et al.,
`
`Plaintiffs‐Appellants,
`
`v.
`
`MICHAEL SCHALTENBRAND, JOEY SIDDLE, and MEDICATE
`PHARMACY, INC.,
`
`Defendants‐Appellees.
`____________________
`
`Appeals from the United States District Court for the
`Southern District of Illinois.
`Nos. 3:10‐cv‐684 & 3:10‐cv‐685 — J. Phil Gilbert, Judge.
`____________________
`
`ARGUED MAY 28, 2013 — DECIDED OCTOBER 7, 2013
`____________________
`
`Before EASTERBROOK, WILLIAMS, and HAMILTON, Circuit
`Judges.
`WILLIAMS, Circuit Judge. Mark Swift, Michael Schal‐
`tenbrand, and Joey Siddle entered into an informal partner‐
`ship arrangement in which they agreed to operate a mail‐
`order pharmacy and to divide any profits they earned
`among themselves according to agreed‐upon percentages.
`Over the next four years, the partners used this lack of struc‐
`
`
`United States Court of Appeals
`For the Seventh Circuit
`____________________
`Nos. 12‐3773 & 12‐3774
`DELIVERMED HOLDINGS, LLC, et al.,
`
`Plaintiffs‐Appellants,
`
`v.
`
`MICHAEL SCHALTENBRAND, JOEY SIDDLE, and MEDICATE
`PHARMACY, INC.,
`
`Defendants‐Appellees.
`____________________
`
`Appeals from the United States District Court for the
`Southern District of Illinois.
`Nos. 3:10‐cv‐684 & 3:10‐cv‐685 — J. Phil Gilbert, Judge.
`____________________
`
`ARGUED MAY 28, 2013 — DECIDED OCTOBER 7, 2013
`____________________
`
`Before EASTERBROOK, WILLIAMS, and HAMILTON, Circuit
`Judges.
`WILLIAMS, Circuit Judge. Mark Swift, Michael Schal‐
`tenbrand, and Joey Siddle entered into an informal partner‐
`ship arrangement in which they agreed to operate a mail‐
`order pharmacy and to divide any profits they earned
`among themselves according to agreed‐upon percentages.
`Over the next four years, the partners used this lack of struc‐
`
`
`
`2
`
`Nos. 12‐3773 & 12‐3774
`
`ture to conceal their efforts to enrich themselves at the ex‐
`pense of their business. When the partners had a fundamen‐
`tal disagreement over the direction of their venture, one
`partner, Swift, caused two lawsuits to be filed against his
`other partners, Schaltenbrand and Siddle. The cases were
`consolidated and over the next two‐and‐a‐half years, lawyers
`for the partners racked up attorneys’ fees attempting to sort
`out the precise parameters of the oral agreement among the
`partners. Ultimately, the district court listened to fourteen
`days of testimony before ruling against Swift on most of his
`claims.
`Swift and his allies (whom he paid to file suit against his
`partners) now appeal the trial court’s ruling. They contend
`that the district court erred in issuing a declaratory judg‐
`ment invalidating a copyright registration that Swift’s mar‐
`keting company, DeliverMed Holdings, LLC, obtained for a
`logo used by the partnership. We must agree with Swift on
`this issue. We have no problem with the district court’s find‐
`ing that Swift misrepresented a material fact in DeliverMed’s
`application to register a copyright in the logo. But the district
`court erred in invalidating DeliverMed’s copyright registra‐
`tion without first consulting the Register of Copyrights as to
`the significance of the inaccurate information Swift know‐
`ingly provided. Because the Copyright Act requires courts to
`perform this curious procedure before invalidating a regis‐
`tration because of a fraud on the Copyright Office, we re‐
`verse this part of the court’s judgment and remand for fur‐
`ther proceedings.
`We affirm the remainder of the district court’s judgment.
`We are not persuaded by DeliverMed’s challenge to the dis‐
`trict court’s award of attorneys’ fees to Schaltenbrand and
`
`
`
`Nos. 12‐3773 & 12‐3774
`
`3
`
`Siddle for their successful defense of DeliverMed’s copyright
`infringement claim. Infringement defendants are presump‐
`tively entitled to such fees and Swift’s deliberate efforts to
`deceive the Copyright Office serve only to solidify the case
`for the court’s award. Furthermore, we will not overturn the
`district court’s finding that Swift failed to prove Schal‐
`tenbrand and Siddle breached their obligation to provide
`him with a share of the partnership’s profits. Although Swift
`maintains that he was entitled to more than the over $1 mil‐
`lion he received in distributions from an unprofitable ven‐
`ture, he has not provided any reliable basis to show a defi‐
`ciency between what he received and what he was owed.
`Finally, Swift raises a number of fraud claims on appeal but
`he waived them by declining to include them in the final
`pretrial order in this case.
`I. BACKGROUND
`Mark Swift had an idea. Swift’s marketing firm, Deliv‐
`erMed Holdings LLC, specialized in helping pharmacies at‐
`tract new customers for their mail‐order pharmacy services.
`With the marketing skills he used to help DeliverMed’s cli‐
`ents, Swift believed he could create his own successful mail‐
`order pharmacy business. But Swift could not do this alone.
`He needed a partner, a pharmacy that would service the cus‐
`tomers that he identified and solicited. This joint venture
`would then, Swift hoped, secure a lucrative contract with the
`State of Illinois to provide mail‐order pharmacy services to
`Medicaid patients.
`Swift eventually found a pharmacy willing to partner
`with him. In spring 2005, Swift got in touch with an ac‐
`quaintance of his named Joey Siddle. Siddle told Swift that
`Siddle’s boss, Michael Schaltenbrand, was interested in a
`
`
`
`4
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`Nos. 12‐3773 & 12‐3774
`
`business relationship. Schaltenbrand was the president and
`owner of Medicate Pharmacy, Inc., a retail pharmacy com‐
`pany with two Southern Illinois locations. In discussions
`with Schaltenbrand, Swift outlined his vision for Medicate
`and DeliverMed. Essentially, Swift suggested that Medicate
`would deliver mail‐order services to customers that Deliv‐
`erMed found using various marketing strategies.
`In July 2005, Swift, Schaltenbrand, and Siddle entered in‐
`to an oral general partnership agreement creating a joint
`venture along the lines Swift proposed. The partnership had
`a specific purpose: to develop a list of mail‐order pharmacy
`customers, provide services to those customers, divide the
`profits from that business, and eventually sell the book of
`customers to another pharmacy. The partners agreed to use
`income from the business to reimburse DeliverMed and
`Medicate for any costs resulting from pursuing the partner‐
`ship’s business. Any remaining profits were to be split
`among the partners according to agreed‐upon percentages.
`The partnership enjoyed early success as its partners
`worked together for the good of their new venture. Just as
`Swift hoped, the partnership secured a contract with the
`State of Illinois to provide mail‐order services to Medicaid
`patients. With Swift’s consent, Medicate began using the De‐
`liverMed name to identify the mail‐order services that the
`pharmacy provided to Illinois Medicaid patients and other
`customers on behalf of the partnership.
`Soon after the partnership started gaining steam, howev‐
`er, the partners began exploiting their informal arrangement
`for personal gain. Swift, Siddle, and Schaltenbrand repeated‐
`ly requested (and received) profit distributions that far ex‐
`ceeded the amounts to which they were entitled under the
`
`
`
`Nos. 12‐3773 & 12‐3774
`
`5
`
`agreement. Despite the fact that the partnership was a mon‐
`ey‐losing enterprise, the partners continually found the
`funds for distributions. For example, evidence presented to
`the district court indicated that, from 2005 to 2009, the part‐
`nership operated at a net loss of over $400,000. During this
`same period, however, Swift, Schaltenbrand, and Siddle re‐
`ceived nearly $4 million in combined distributions. Swift
`even persuaded Schaltenbrand to take out loans to facilitate
`these unjustified payments to the partners. For his part,
`Swift concealed his excessive demands (which he knew had
`no basis in the actual profitability of the partnership) by
`commingling them with DeliverMed’s requests for cost re‐
`imbursements. Swift and Schaltenbrand each became aware
`of the other’s excessive distributions, but neither of them
`cared. So long as each partner was able to obtain his own un‐
`justified share of partnership funds, no one made a fuss.
`In between raids of partnership coffers, the partners oc‐
`casionally found time to tend to their mail‐order pharmacy
`business. In 2008, Swift decided that the partnership needed
`a logo to market its services. Swift retained an advertising
`company, Deeter Associates, for help in designing the logo.
`After discussing the matter with Swift, Linda Deeter, the Ex‐
`ecutive Vice President of Deeter Associates, asked an inde‐
`pendent graphic designer, Allan Kovin, to design the logo.
`Deeter entered into an oral agreement with Kovin to design
`the logo as an independent contractor. The agreement did
`not contemplate a transfer of copyright in the logo to Swift,
`DeliverMed, or the partnership. Although Swift and Linda
`Deeter provided some direction and ideas as to the logo de‐
`sign, Kovin was the sole creator of the DeliverMed logo, a
`graphic depiction of a house and a pestle. Beginning in
`summer 2008, Medicate began using the house and pestle
`
`
`
`6
`
`Nos. 12‐3773 & 12‐3774
`
`logo to identify the mail‐order services it provided on behalf
`of the partnership.
`After an intra‐partnership dispute over the direction of
`the business, relations among the partners reached a break‐
`ing point in summer 2009. A split formed within the partner‐
`ship: DeliverMed and Swift had one plan for the joint ven‐
`ture while Medicate, Schaltenbrand, and Siddle had another.
`The two sides attempted to resolve their differences but were
`unsuccessful.
`Anticipating the partnership’s demise, Swift began taking
`steps to secure a resolution that was favorable to his inter‐
`ests. On September 1, 2009, Swift’s attorney sent a letter to
`Schaltenbrand indicating that Swift was amenable to a pur‐
`ported request from Schaltenbrand to dissolve the partner‐
`ship. When Schaltenbrand and Siddle declined to initiate
`dissolution proceedings in response to the letter, Swift set
`out to destroy the partnership’s mail‐order operation and
`force his partners to the bargaining table. For example, Swift
`diverted incoming customer calls away from the partner‐
`ship’s phone lines. At Swift’s direction, callers were connect‐
`ed either to Swift’s personal cell phone or to a rival mail‐
`order pharmacy. Swift later jeopardized the partnership’s fi‐
`nancing by falsely informing its lender that he and Deliv‐
`erMed had initiated involuntary bankruptcy proceedings
`against Medicate. In addition, Swift also arranged for the
`partnership’s customers to be contacted and encouraged to
`fill their prescriptions with other pharmacies.
`On February 2, 2010, Swift filed suit against Schal‐
`tenbrand, Siddle, and Medicate (collectively, “Defendants”),
`asserting a litany of federal and state‐law claims (“Swift Ac‐
`tion”). Among other claims, Swift alleged that his partners
`
`
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`Nos. 12‐3773 & 12‐3774
`
`7
`
`breached the partnership agreement by failing to provide
`Swift with the share of the partnership’s profits to which he
`was entitled. A month later, DeliverMed, Deeter Associates,
`and Linda Deeter (collectively, “DeliverMed Plaintiffs”) filed
`suit against Defendants asserting several trademark in‐
`fringement claims arising out of Medicate’s use of the Deliv‐
`erMed name and the “house and pestle” logo (“DeliverMed
`Action”). The DeliverMed Plaintiffs filed suit at Swift’s be‐
`hest—Deeter Associates and Linda Deeter signed a contract
`with Swift in which they agreed to file suit in exchange for a
`cash payment and reimbursement of litigation expenses.
`Sometime after causing the DeliverMed Action to be
`filed, Swift attempted to enlist the help of the United States
`Copyright Office in this dispute. On April 1, 2011, Deliv‐
`erMed, at Swift’s direction, submitted an application to reg‐
`ister a copyright in the “house and pestle” logo used by the
`partnership. The application stated that Linda Deeter was
`the author of the logo and that she transferred her copyright
`to DeliverMed by written agreement. But Swift knew that no
`such agreement existed at the time he filed the application.
`Although Linda Deeter did sign a transfer of ownership
`agreement, she only did so on April 8, 2011, a week after
`Swift filed DeliverMed’s registration application. The Copy‐
`right Office issued a certificate of registration in the logo list‐
`ing DeliverMed as the copyright owner by virtue of a writ‐
`ten transfer. Soon after, DeliverMed amended its complaint
`to add a claim for copyright infringement. In response, De‐
`fendants filed a counterclaim seeking a declaratory judg‐
`ment invalidating DeliverMed’s copyright registration.
`After conducting a fourteen‐day bench trial of the consol‐
`idated cases, the district court issued a 64‐page recitation of
`
`
`
`8
`
`Nos. 12‐3773 & 12‐3774
`
`its findings of fact and conclusions of law. In the DeliverMed
`Action, the court found against the DeliverMed Plaintiffs on
`all causes of action, including their claim for copyright in‐
`fringement. With respect to the copyright action, the court
`concluded that DeliverMed, Linda Deeter, and Deeter Asso‐
`ciates had not shown that they owned a copyright in the
`logo. Without this showing, the court ruled they could not
`maintain a suit for infringement as a matter of law. Alterna‐
`tively, the court found that the actual owner of the copyright,
`graphic designer Kovin, had transferred a nonexclusive li‐
`cense to Defendants to use the logo in connection with
`providing mail‐order pharmacy services on behalf of the
`partnership.
`The district court also awarded Defendants a declaratory
`judgment invalidating DeliverMed’s copyright registration
`for the logo. In invalidating the logo registration, the court
`relied upon its factual findings that Swift made knowing
`material misrepresentations in DeliverMed’s registration ap‐
`plication to the Copyright Office. The court further ordered
`DeliverMed to pay Defendants’ attorneys’ fees that they in‐
`curred in litigating the copyright infringement claim.
`In the Swift Action, the court ruled against Swift on most
`of his claims. With respect to Swift’s breach of contract claim
`related to his profit distributions, the court concluded that
`Swift failed to satisfy his burden of proof regarding “the
`magnitude of any profits the [partnership] had, the distribu‐
`tions made to Swift … or the insufficiency of those distribu‐
`tions when compared to those promised in the [] partnership
`agreement.” Alternatively, the court concluded that Swift
`was not entitled to any partnership profits after September 1,
`2009, because Swift wrongfully dissociated himself from the
`
`
`
`Nos. 12‐3773 & 12‐3774
`
`9
`
`partnership on that date. In ruling against Swift, the court
`cited its “serious[] question[s]” regarding his “credibility in
`all areas of his testimony.”
`The DeliverMed Plaintiffs and Swift now appeal certain
`aspects of the district court’s ruling.
`II. ANALYSIS
`On appeal, Swift and the DeliverMed Plaintiffs1 present a
`number of issues for our review. The DeliverMed Plaintiffs
`contend that the district court erred in invalidating Deliv‐
`erMed’s copyright registration based on findings that Swift
`knowingly misrepresented facts in DeliverMed’s application
`for registering a copyright in the “house and pestle” logo.
`The DeliverMed Plaintiffs also maintain that the district
`court erred by awarding attorneys’ fees to Defendants for
`their successful defense of the copyright infringement claim.
`In the Swift Action, Swift argues that the district court erred
`in concluding that Defendants did not breach the partner‐
`ship agreement by failing to pay Swift his appropriate share
`of the partnership’s profits. Swift also challenges the district
`
`1 A short time before oral argument in this case, Defendants filed a Sug‐
`gestion of Bankruptcy alerting us to the fact that DeliverMed Holdings,
`LLC had filed for Chapter 7 bankruptcy. According to the docket sheet,
`DeliverMed’s bankruptcy case closed on August 15, 2013. Order Closing
`Case and Discharging Trustee, In re DeliverMed Holdings, LLC, No. 13‐
`17744 (Bankr. N.D. Ill. Aug. 15, 2013), ECF No. 16; see also In re Consol.
`Indus. Corp., 397 F.3d 524, 527 (7th Cir. 2005) (federal court may take ju‐
`dicial notice of bankruptcy court orders). Because the automatic stay of
`actions against the debtor ends at the close of its bankruptcy case, 11
`U.S.C. § 362(c)(2)(A), we are confident that DeliverMed’s bankruptcy has
`no effect on the disposition of this appeal.
`
`
`
`10
`
`Nos. 12‐3773 & 12‐3774
`
`court’s conclusion that he abandoned other fraud claims by
`failing to include them in the final pretrial order. We discuss
`each of these issues in turn below.
`A. District Court Erred in Invalidating DeliverMed’s
`Copyright Registration
` The DeliverMed Plaintiffs challenge the district court’s
`invalidation of DeliverMed’s copyright registration based on
`a finding that Swift knowingly misrepresented material facts
`in his registration application. When reviewing a bench trial,
`we review de novo the district court’s legal conclusions. See
`Johnson v. West, 218 F.3d 725, 729 (7th Cir. 2000). A district
`court’s findings of fact, and its application of the law to those
`facts, are reviewed for clear error. Furry v. United States, 712
`F.3d 988, 992 (7th Cir. 2013). “A finding is clearly erroneous
`only when this court ‘is left with a definite and firm convic‐
`tion that a mistake has been committed.’” Cohen Dev. Co. v.
`JMJ Props., 317 F.3d 729, 735 (7th Cir. 2003) (quoting Bowles v.
`Quantum Chem. Co., 266 F.3d 622, 630 (7th Cir. 2001)). Clear
`error may be found if “the trial judge’s interpretation of the
`facts is implausible, illogical, internally inconsistent or con‐
`tradicted by documentary or other extrinsic evidence.” Fur‐
`ry, 712 F.3d at 992 (quoting EEOC v. Sears Roebuck & Co., 839
`F.2d 302, 309 (7th Cir. 1988)).
`As a general matter, and with exceptions not relevant
`here, the Copyright Act provides that a copyright holder
`must register its copyright in a work with the United States
`Copyright Office before filing suit for infringement. 17
`U.S.C. § 411(a); Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154,
`157 (2010). But an infringement plaintiff cannot satisfy this
`precondition by duping the Copyright Office into issuing a
`certificate of registration based on a false claim of copyright
`
`
`
`Nos. 12‐3773 & 12‐3774
`
`11
`
`ownership. To prevent plaintiffs from abusing the registra‐
`tion process in this way, the Copyright Act allows for the in‐
`validation of registrations obtained by knowing misrepre‐
`sentations of material facts. See 17 U.S.C. § 411(b)(1)(A)–(B).
`As stated in the statute, a registration will not support the
`pursuit of an infringement action if (1) the registrant includ‐
`ed “inaccurate information … on the application for copy‐
`right registration with knowledge that it was inaccurate;”
`and (2) “the inaccuracy of the information, if known, would
`have caused the Register of Copyrights to refuse registra‐
`tion.” Id.; see also Therasense, Inc. v. Becton, Dickinson & Co.,
`649 F.3d 1276, 1295 (Fed. Cir. 2011).
`Following the bench trial of the DeliverMed Action, the
`district court invalidated DeliverMed’s copyright registration
`for the “house and pestle” logo because the company (at
`Swift’s direction) knowingly made material misrepresenta‐
`tions in its registration application. The court identified two
`such misstatements: (1) that Linda Deeter was the author of
`the logo (and thus owner of a valid copyright interest in it);
`and (2) that Linda Deeter transferred her copyright in the
`logo to DeliverMed by written agreement.
`The DeliverMed Plaintiffs now argue that the district
`court clearly erred in finding that Swift deliberately misrep‐
`resented these facts. In briefing this issue, the parties focus
`their attention on whether Swift knew that Linda Deeter was
`not the author of the logo when submitting his application.
`Given Swift’s limited knowledge of the process used to cre‐
`ate the logo and his minimal understanding of copyright
`principles, the DeliverMed Plaintiffs maintain, the evidence
`did not support such a finding.
`
`
`
`12
`
`Nos. 12‐3773 & 12‐3774
`
`But even if we agree that Swift did not knowingly mis‐
`represent that Linda Deeter was the author, we would still
`uphold the trial court’s finding that Swift knowingly includ‐
`ed inaccurate information in DeliverMed’s registration ap‐
`plication. The DeliverMed Plaintiffs have not provided any
`evidence to contradict the court’s determination that Swift
`knowingly lied about the existence of a written ownership
`transfer agreement between DeliverMed and Linda Deeter.
`Although they eventually executed a transfer agreement,
`this happened a week after DeliverMed filed its registration
`application. The fact that the parties later entered into an
`agreement does not transform Swift’s earlier misrepresenta‐
`tion into a true statement. See, e.g., Ass’n Benefit. Servs. v.
`Caremark Rx, Inc., 493 F.3d 841, 853 (7th Cir. 2007) (“A claim
`for fraud … requires a showing that, at the time the fraudulent
`statement was made, it was an intentional misrepresentation.”)
`(emphasis in original).
`Although we have no problem upholding the trial court’s
`ultimate factual finding, we asked the parties to file supple‐
`mental briefing on whether the district court made a legal
`error when invalidating DeliverMed’s copyright registration.
`Among other innovations, the most recent amendments to
`the Copyright Act instituted a new procedure for courts con‐
`fronted with a registration allegedly obtained by knowing
`misstatements in an application. See generally Prioritizing Re‐
`sources and Organization for Intellectual Property Act of
`2008 (“PRO IP Act”), Pub. L. No. 110–403, § 101, 122 Stat.
`4256, 4257‐58. Recall that the Copyright Act provides for the
`invalidation of registrations where the registrant knowingly
`misrepresented information in his application and “the inac‐
`curacy of the information, if known, would have caused the
`Register of Copyrights to refuse registration.” 17 U.S.C.
`
`
`
`Nos. 12‐3773 & 12‐3774
`
`13
`
`§ 411(b)(1)(A)–(B). Instead of relying solely on the court’s
`own assessment of the Register’s response to an inaccuracy,
`the statute obligates courts to obtain an opinion from the
`Register on the matter:
`In any case in which inaccurate information … is al‐
`leged, the court shall request the Register of Copy‐
`rights to advise the court whether the inaccurate in‐
`formation, if known, would have caused the Register
`of Copyrights to refuse registration.
`17 U.S.C. § 411(b)(2). In one of the few instances in which it
`was called upon to deliver its opinion to a federal court, the
`Register described the purpose of this mechanism:
`17 U.S.C. § 411(b)(2) was amended to ensure that no
`court holds that a certificate is invalid due to what it
`considers to be a misstatement on an application
`without first obtaining the input of the Register as to
`whether the application was properly filed or, in the
`words of § 411(b)(2), “whether the inaccurate infor‐
`mation, if known, would have caused the Register of
`Copyrights to refuse registration.”
`Response of the Register of Copyrights to Request Pursuant
`to 17 U.S.C. § 411(b)(2) at 10–11, Olem Shoe Corp. v. Wash.
`Shoe Co., No. 1:09‐cv‐23494 (S.D. Fla. Oct. 14, 2010); see also
`United States Copyright Office, Annual Report of the Regis‐
`ter of Copyrights: Fiscal Year Ending September 30, 2009, 34
`(2009) available at http://www.copyright.gov/reports/annual/
`2009/ar2009.pdf (“The [PRO IP] Act … amended section 411
`… by adding subsection (b) to create a new procedure …
`that requires courts to seek the advice of the Copyright Of‐
`
`
`
`14
`
`Nos. 12‐3773 & 12‐3774
`
`fice on issues that may involve fraud on the Copyright Of‐
`fice.”).
`In this case, the parties did not ask the district court to
`consult the Register before invalidating DeliverMed’s regis‐
`tration. Instead, the court relied upon its own speculation
`that “had the application contained truthful information as
`to … the facts supporting DeliverMed’s claim to ownership,
`the Copyright Office would have rejected DeliverMed’s ap‐
`plication.” The district court’s reasoning seems consistent
`with the Register’s practice. See 37 C.F.R. § 202.3(c) (“An ap‐
`plication for copyright registration may be submitted by …
`the owner of any exclusive right in a work, or the duly au‐
`thorized agent of any such … owner”); U.S. Copyright Of‐
`fice, Compendium II: Copyright Office Practices, § 606.03
`(1988) (“The Copyright Office will refuse to register a claim
`when it has knowledge that the applicant is not authorized
`to submit the claim.”). But under section 411(b)(2), a court
`still must request a response from the Register before com‐
`ing to a conclusion as to the materiality of a particular mis‐
`representation. See generally Lopez v. Davis, 531 U.S. 230, 241
`(2001) (noting Congress’s use of the word “‘shall’ to impose
`discretionless obligations”). By granting a declaratory judg‐
`ment invalidating DeliverMed’s copyright registration with‐
`out following the statutorily mandated procedure, the dis‐
`trict court made a legal error.
`Given that the parties did not raise this provision at trial
`(or on appeal, at least until we asked for supplemental brief‐
`ing on the matter), this was an understandable oversight.
`Ordinarily, we would decline to address this issue because
`the DeliverMed Plaintiffs failed to raise it in their opening
`brief. See, e.g., United States v. Hook, 195 F.3d 299, 310 (7th Cir.
`
`
`
`Nos. 12‐3773 & 12‐3774
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`15
`
`1999). But ignoring a clear statutory directive due to the in‐
`advertence of the parties would defeat the purpose of 17
`U.S.C. § 411(b)(2) and deprive the Register of its right to
`weigh in on precisely this issue. See 17 U.S.C. § 411(b)(2); Re‐
`sponse of the Register of Copyrights to Request Pursuant to
`17 U.S.C. § 411(b)(2) at 10–11, Olem Shoe, No. 1:09‐cv‐23494
`(“17 U.S.C. § 411(b)(2) was amended to ensure that no court
`holds that a certificate is invalid due to what it considers to
`be a misstatement on an application without first obtaining
`the input of the Register.”).
`Under these unique circumstances, we vacate the court’s
`declaratory judgment invalidating DeliverMed’s copyright
`registration in the “house and pestle” logo and remand for
`further proceedings. On remand, if Defendants desire to
`pursue the declaratory judgment action further, the district
`court must ask the Register whether it would have refused
`DeliverMed’s application had it been aware that DeliverMed
`had no written ownership transfer agreement at the time of
`its application.2 After receiving that advisory opinion, the
`court may then determine whether to invalidate Deliv‐
`erMed’s registration for the logo.3
`
`
`2 In addition, the district court should ensure the Register is aware of its
`ruling (unchallenged by the parties) that Linda Deeter had no copyright
`in the logo that she could transfer to DeliverMed. Instead, the court de‐
`termined that Kovin, as designer of the logo, was the sole copyright
`owner and did not transfer his interest to Deeter or any of the other De‐
`liverMed Plaintiffs.
`3 The DeliverMed Plaintiffs also argue that the district court erred by
`failing to assess the degree of prejudice Defendants suffered as a result of
`Swift’s misrepresentation to the Copyright Office. Prejudice has no rele‐
`
`
`
`
`16
`
`Nos. 12‐3773 & 12‐3774
`
`Given its obvious potential for abuse, we must strongly
`caution both courts and litigants to be wary of using this de‐
`vice in the future. See, e.g., Olem Shoe Corp. v. Wash. Shoe Co.,
`No. 09‐cv‐23494, 2010 U.S. Dist. LEXIS 143590, at *6 n.4 (S.D.
`Fla. Sep. 3, 2010) (noting section 411(b)(2)’s potential as a
`“weapon to delay the proceedings in district court”). Alt‐
`hough the statute appears to mandate that the Register get
`involved “[i]n any case in which inaccurate information [in
`an application for copyright registration] is alleged,” 17
`U.S.C. § 411(b)(2), input need not be sought immediately af‐
`ter a party makes such a claim. Instead, courts can demand
`that the party seeking invalidation first establish that the
`other preconditions to invalidity are satisfied before obtain‐
`ing the Register’s advice on materiality. In other words, a lit‐
`igant should demonstrate that (1) the registration application
`included inaccurate information; and (2) the registrant
`knowingly included the inaccuracy in his submission to the
`Copyright Office. 17 U.S.C. § 411(b)(1)(A). Once these re‐
`quirements are met, a court may question the Register as to
`whether the inaccuracy would have resulted in the applica‐
`tion’s refusal. Aside from minimizing the risk that parties
`would use this provision as a delay tactic, this approach has
`the added benefit of an endorsement from the Register. See
`Response of the Register of Copyrights to Request Pursuant
`to 17 U.S.C. § 411(b)(2) at 12, Olem Shoe, No. 1:09‐cv‐23494
`(“[B]efore asking the Register whether she would have re‐
`fused to register a copyright … a court should feel free to de‐
`
`vance to the fraud on the Copyright Office inquiry. Section 411(b)(1) only
`directs courts to consider whether the registrant knowingly misstated a
`material fact in his application. 17 U.S.C. § 411(b)(1)(A)–(B).
`
`
`
`Nos. 12‐3773 & 12‐3774
`
`17
`
`termine whether there is in fact a misstatement of fact.”).
`When faced with this situation in the future, courts should
`tread carefully and employ this mechanism only when nec‐
`essary.
`B. District Court Did Not Err in Awarding Attorneys’
`Fees to Defendants
`DeliverMed also challenges the district court’s award of
`attorneys’ fees to Defendants in connection with their suc‐
`cessful defense of the DeliverMed Plaintiffs’ copyright claim.
`The Copyright Act grants district courts the discretion to
`award attorneys’ fees to the prevailing party in a copyright
`infringement suit. 17 U.S.C. § 505. We review attorneys’ fees
`awards under an abuse of discretion standard. JCW Invs.,
`Inc. v. Novelty, Inc., 482 F.3d 910, 920 (7th Cir. 2007).
`We see no abuse of discretion here. As a consequence of
`their successful defense of an infringement suit, Defendants
`are entitled to a “very strong” presumption in favor of re‐
`ceiving attorneys’ fees. Assessment Techs. of Wis., LLC v. Wire
`Data, Inc., 361 F.3d 434, 437 (7th Cir. 2004). This presumption
`is designed to ensure that an infringement defendant does
`not abandon a meritorious defense in situations in which
`“the cost of vindication exceeds the private benefit to the
`party.” Id. “For without the prospect of such an award, [an
`infringement defendant] might be forced into a nuisance set‐
`tlement or deterred altogether from exercising [its] rights.”
`Id. DeliverMed has not provided us with any reason to rebut
`this presumption. Indeed, the fact that Swift deliberately lied
`to the Copyright Office lends additional support to the
`
`
`
`18
`
`Nos. 12‐3773 & 12‐3774
`
`court’s award.4 See Fogerty v. Fantasy, Inc., 510 U.S. 517, 539
`n.19 (1994) (listing “the need in particular circumstances to
`advance considerations of compensation and deterrence”
`among factors courts should consider when considering
`whether to award fees under § 505). We affirm the district
`court’s order requiring DeliverMed to pay Defendants’ rea‐
`sonable attorneys’ fees incurred in defending against the De‐
`liverMed Plaintiffs’ copyright suit.
`C. Swift Did Not Satisfy Burden of Proof on Breach of
`Contract Claim Related to Distributions
`We turn now to the Swift Action. Swift argues that the
`district court erred in ruling against him on his breach of
`contract claim arising out of Defendants’ purported failure to
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