Gener-Villar v. ADCOM Group, Inc.

United States Court of Appeals
For the First Circuit

Nos. 04-2194
04-2212

FRANK GENER-VILLAR, d/b/a GENER ADVERTISING,

Plaintiff, Appellant,

v.

ADCOM GROUP, INC.; DEBBIE ALONSO; SUPERMERCADOS MR. SPECIAL,
INC.; SANTOS ALONSO-MALDONADO,

Defendants, Appellees.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. Pérez-Giménez, U.S. District Judge]

Before

Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Lipez, Circuit Judge.

Edelmiro Salas González, with whom José Luis Ramírez de León
was on brief, for appellant.
Ramon L. Walker Merino, with whom Walker Merino Law Office was
on brief, for appellees.

August 4, 2005
 Per Curiam. These appeals involve a copyright

infringement claim stemming from a dispute over commercial graphic

images produced by appellant under a contract with appellee Adcom.

The parties had litigated the ownership of the images themselves in

the Puerto Rico Circuit Court of Appeals. That court held that, as

a matter of Puerto Rico law, the actual images belonged to Adcom.

Appellant then obtained a copyright to the images and brought this

federal action. The district court found that, under the doctrine

of res judicata, the federal action was precluded by the earlier

Puerto Rico court judgment, and granted summary judgment for the

defendant. That ruling was erroneous. Res judicata does not apply

because the Puerto Rico court did not have (and did not purport to

have) jurisdiction over any potential federal copyright claims. We

therefore vacate the judgment.

We also address an issue concerning our local appellate

rules relating to the need for English translations of the Puerto

Rico court decisions relied upon by the parties. While those rules

were not complied with in this case, we find that sanctions are not

appropriate given all the circumstances of the proceedings.

I.

Frank Gener-Villar ("Gener") is a graphic artist. He

contracted with Adcom, an advertising agency, to prepare images and

advertising and promotional materials to use in Adcom's ads for its

clients, including Supermercados Mr. Special. The photographs and

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digital images were stored on computers owned by Gener but located

at Adcom facilities. The contract did not specify who retained the

copyright to the images.

On February 22, 2000, Adcom terminated the contract and

demanded that Gener turn over the images. He refused, and Adcom

seized his computers. Gener then filed a "grievance" before a

magistrate in the Investigations section of the San Juan Judiciary

Center, seeking a provisional adjudication of the dispute under 32

P.R. Laws Ann. §§ 2871-2877 (authorizing magistrates to

provisionally decide certain controversies). The court ordered

that the disputed images be removed from Gener's computers, copied

to diskettes, and deposited with the court under seal pending

litigation over the ownership of the images.

Adcom filed an action in the Puerto Rico Court of First

Instance, seeking, inter alia, a declaration that it was the owner

of the works contained on the disk on the basis of its contract

with Gener. Adcom also argued that it held the copyright to the

images under the doctrine of a "work made for hire." See 17 U.S.C.

§§ 101, 201(b).1 Gener responded that Adcom's claim was for

1
The difference between ownership of the images themselves and
the ownership of the copyright to the images is essentially the
difference between owning the physical object and owning the
intellectual property rights underlying it. "Ownership of a
copyright . . . is distinct from ownership of any material object
in which the work is embodied. Transfer of ownership of any
material object, including the copy . . . in which the work is
first fixed, does not of itself convey any rights in the
copyrighted work embodied in the object . . . ." 17 U.S.C. § 202.

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economic rights deriving from the images, and thus the Puerto Rico

law claim was preempted by federal copyright law and the Puerto

Rico court lacked jurisdiction. See 17 U.S.C. § 301(a)

(preemption); 28 U.S.C. § 1338(a) (exclusive federal jurisdiction).

We pause to explain this jurisdictional issue because it

is central to understanding both how the Puerto Rico courts viewed

the case and how we apply the doctrine of res judicata. If an

action "aris[es] under" federal copyright law, the federal courts

have exclusive jurisdiction. 28 U.S.C. § 1338(a). Determining

precisely which actions "arise under" copyright law, and therefore

fall within exclusive federal jurisdiction, "poses among the

knottiest procedural problems in copyright jurisprudence." 3-12 M.

Nimmer & D. Nimmer, Nimmer on Copyright § 12.01[A] (2001). In

Royal v. Leading Edge Prods., Inc., 833 F.2d 1 (1st Cir. 1987), we

explained:

It is settled beyond peradventure that an
action does not "arise under" the federal
copyright laws merely because it relates to a
product that is the subject of a copyright.
The question of whether the suit "arises
under" the copyright law is considerably more
sophisticated. The most frequently cited test
is that formulated by the Second Circuit,
along the lines that:

an action "arises under" the
Copyright Act if and only if the

For example, a collector who buys a painting from an artist may
hang it in his house or sell it to a third party. However, the
collector does not acquire, solely by buying the painting, the
right to make and distribute prints of it.

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 complaint is for a remedy
expressly granted by the Act,
e.g., a suit for infringement
. . ., or asserts a claim
requiring construction of the
Act, . . ., or, 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. The
general interest that
copyrights, like all other forms
of property, should be enjoyed
by their true owner is not
enough to meet this last test.

Id. at 2 (quoting T.B. Harms Co. v. Eliscu, 339 F.2d 823, 828 (2d

Cir. 1964) (Friendly, J.)) (citation omitted; alterations in

original).

The Court of First Instance hypothesized that if Adcom

indeed held the copyright to the images pursuant to the "work made

for hire" doctrine, Adcom's copyright-based ownership claim would

arise under copyright law and the entire case would be outside the

jurisdiction of the Puerto Rico courts. Conversely, if Adcom did

not hold the copyright to the images under that doctrine, the

contractual claim over the images themselves would not be preempted

and the court would have jurisdiction to decide it. See Adcom

Group, Inc. v. Gener, No. KPE-00-0640, slip op. at 7-8, 14 (P.R.

Ct. of First Instance May 4, 2000) (certified translation) ("Adcom

I").

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 Thus, the Puerto Rico trial court began its analysis by

determining whether Adcom held the copyright under the "work made

for hire" doctrine. The court concluded that, because Gener was an

independent contractor and the images at issue did not fall into

certain specific categories, the images did not constitute "work

made for hire" under federal copyright law. See Adcom I at 12-14.2

It did, however, credit Adcom's contractual argument, and held that

"all the graphic artworks commissioned by [Adcom] from [Gener]

during the effective period of the contract belong to [Adcom]."

Id. at 22.

The court was careful to emphasize the limited nature of

its holding. In response to Gener's argument that Adcom's claim

fell within exclusive federal jurisdiction, the court explained

that the action (as narrowed and construed by the court) did not

arise under federal copyright law because it was "not based on a

claim for an author's economic rights, but on the delivery of a

computer disk over which[] [Adcom] alleges having an ownership

right due to having paid for the information contained in it." Id.

at 19. The court emphasized this point again towards the end of

its opinion:

[W]e are not adjudicating the possible
intellectual original ownership which [Gener]
may have with regard to the works in

2
It also discussed the Puerto Rico intellectual property
doctrine of "moral rights," which is not at issue here and which we
will not discuss further.

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 controversy . . . . What we are saying is
that [Gener], by means of a contract,
transmitted to [Adcom] the graphic artworks
requested in exchange for a payment, with
[Adcom] then becoming the owner of the same.

Id. at 23.

Gener appealed to the Puerto Rico Circuit Court of

Appeals. That court largely repeated the trial court's reasoning.

See Adcom Group, Inc. v. Gener, No. KLAN-00-00775 (P.R. Ct. App.

Mar. 30, 2001) (certified translation) ("Adcom II"). After an

extensive analysis, it concluded that the "work made for hire"

doctrine did not apply, and that the Puerto Rico courts had

jurisdiction over the suit. See id. at 10-11. It agreed with the

trial court's analysis that the suit concerned ownership of the

actual images, not intellectual property rights:

As was correctly pointed out by the judge from
the [trial court], we don't have before us a
claim for an author's patrimonial rights, but
a claim for the delivery of a computer
diskette over which [Adcom] alleges having
rights due to having paid for the information
contained in it.

Id. at 13. Finally, it affirmed the trial court's ultimate

determination that "the work performed by [Gener], by virtue of his

contract with [Adcom], belongs to the latter." Id. at 14.3

That summer, Gener applied for a copyright to the images.

In March 2003, he filed a federal copyright infringement action in

3
Although the record is not clear, it appears that Gener
sought further review in the Puerto Rico Supreme Court, which
declined to review the judgment of the Circuit Court of Appeals.

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the United States District Court for the District of Puerto Rico

against Adcom, Supermercados Mr. Special, and their respective

presidents.4 The defendants asserted a long list of affirmative

defenses, most notably res judicata, and moved for summary judgment

on numerous grounds, focusing mainly on res judicata. Gener

responded, in part, that the Puerto Rico and federal claims lacked

sufficient identity because the Puerto Rico courts could not (and

did not purport to) resolve any federal copyright questions. In

Gener's view, the Puerto Rico court's discussion of the "work made

for hire" doctrine was solely for the purpose of determining

whether its jurisdiction was preempted or not.

The district court granted the motion for summary

judgment on the grounds of res judicata. It noted Gener's argument

that the Puerto Rico court lacked jurisdiction to determine who had

the copyright to the images, but explained:

[T]he state court did properly exercise its
authority to interpret the terms of the
contract and determine that the suit did not
involve copyright law. In fact, the state
court described at length why it did not
believe copyright law applied to Plaintiff's
claims. Thus, the state court was able to
establish jurisdiction and determine the
ownership issue relying solely on the contract
between the parties.

4
Purely for simplicity and brevity, we refer to defendants-
appellees collectively as "Adcom," in part because the non-Adcom
parties presented no independent argument for summary judgment
below but rather simply joined in Adcom's motion.

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Gener-Villar v. Adcom Group, Inc., No. 03-1306, slip op. at 3

(D.P.R. June 29, 2004). It dismissed the action with prejudice.

Gener moved to alter or amend the judgment under Fed. R. Civ. P.

59(e), repeating his argument that the Puerto Rico court only

adjudicated ownership of the images themselves and not of the

intellectual property rights thereto, but the district court denied

the motion. Gener then timely appealed.

II.

We review a district court's grant of summary judgment de

novo. Burke v. Town of Walpole, 405 F.3d 66, 75 (1st Cir. 2005).

The district court's sole stated basis for granting summary

judgment for defendants was res judicata. Since federal courts

accord a Puerto Rico judgment the same preclusive effect as would

a Puerto Rico court, see 28 U.S.C. § 1738, we apply Puerto Rico res

judicata law.

In Puerto Rico, as in most jurisdictions, the term "res

judicata" is often used to refer to either of two distinct but

related doctrines. The first doctrine (known variously as claim

preclusion, merger and bar doctrine, or simply res judicata)

"generally binds parties from litigating or relitigating any

[claim] that was or could have been litigated in a prior

adjudication and prevents claim splitting." Futura Dev. Corp. v.

Centex Corp., 761 F.2d 33, 42 (1st Cir. 1985). The second doctrine

(known as issue preclusion or collateral estoppel) "forecloses

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relitigation in a subsequent action of a fact essential for

rendering a judgment in a prior action between the same parties,

even when different causes of action are involved." Texaco P.R.,

Inc. v. Medina, 834 F.2d 242, 245 (1st Cir. 1987). The district

court based its analysis entirely on claim preclusion, and the

parties do the same on appeal. Consequently, so do we. See Fleet

Nat'l Bank v. Gray (In re Bankvest Capital Corp.), 375 F.3d 51,

69-70 (1st Cir. 2004) (analyzing only the branch of res judicata

doctrine argued by the parties).

Puerto Rico accords claim preclusive effect to a prior

decision when "between the case decided by the sentence and that in

which the same is invoked, there [is] the most perfect identity

between the things, causes, and persons of the litigants, and their

capacity as such." 31 P.R. Laws Ann. § 3343. While "courts

typically have refrained from interpreting the phrase 'perfect

identity' literally" and "nominal differences between two actions

[do not] undermine the preclusive effect of a commonwealth court

ruling," Cruz v. Melecio, 204 F.3d 14, 19 (1st Cir. 2000), genuine

differences between two actions will defeat preclusion.

Furthermore, a decision has claim preclusive effect only if it was

"rendered by a court with proper jurisdiction." Felix Davis v.

Vieques Air Link, 892 F.2d 1122, 1124 (1st Cir. 1990). Gener

challenges the identity of the Puerto Rico and federal actions,

arguing that the Puerto Rico action did not arise under federal

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copyright law, and he could not have brought the present copyright

infringement action in the Puerto Rico court because, under 28

U.S.C. § 1338(a), the Puerto Rico court would have lacked subject

matter jurisdiction.

We agree. The Circuit Court of Appeals specifically

construed Adcom's Puerto Rico action as arising under Puerto Rico

law. It carefully emphasized that the case was not "a claim for an

author's patrimonial rights, but a claim for the delivery of a

computer diskette." Adcom II at 13. It quoted approvingly the

trial court's statement that "'[w]e are dealing with a controversy

of a contractual nature for which this Court does have

jurisdiction.'" Id. (quoting Adcom I at 19); see also Adcom I at

23 (repeating that court was "not adjudicating the possible

intellectual original ownership which [Gener] may have with regard

to the works in controversy").

To be sure, Adcom argued in the Puerto Rico court that

"it has a right over the information in controversy in light of the

doctrine of work made for hire," and the Puerto Rico court

expressly concluded that the work made for hire doctrine did not

entitle Adcom to the copyright to the images. Adcom II at 7, 10.

But the entire purpose of that discussion was to illustrate that

Adcom's contractual claims were separate from any copyright issues

and were within the Puerto Rico courts' jurisdiction. As we

understand it, the Puerto Rico court's "work made for hire"

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analysis was solely for the purpose of determining whether the

Puerto Rico court had jurisdiction or not. The court discussed

that doctrine to explain why Adcom's complaint did not arise under

copyright law, which might have caused the entire action to fall

under exclusive federal jurisdiction.5 Gener's argument that the

entire case should be dismissed because it arose under federal

copyright law did not actually transform the case into one that

arose under federal copyright law; rather, the Puerto Rico court

carefully separated out the Puerto Rico law claims and adjudicated

only those claims.

Indeed, Adcom never clearly explains what either was, or

should have been, litigated or decided in the Puerto Rico courts

with preclusive effect in this case. If Adcom means that the

entire dispute should have been aired before the Puerto Rico court,

and any claims that could have been (but were not) raised in the

Puerto Rico court are barred, the argument fails because Gener's

infringement claim could not have been raised in the Puerto Rico

court:

[C]laim preclusion generally does not apply
where [the] plaintiff was unable to rely on a
certain theory of the case or to seek a
certain remedy because of the limitations on
the subject matter jurisdiction of the courts
. . . . If state preclusion law includes this

5
We need not decide whether the Puerto Rico court's analysis
of federal copyright preemption law was precisely correct because,
in any event, the Puerto Rico court viewed its jurisdiction as
limited to Puerto Rico law claims.

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 requirement of prior jurisdictional competency
. . . a state judgment will not have claim
preclusive effect on a cause of action within
the exclusive jurisdiction of the federal
courts.

Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 382

(1985) (internal quotation marks and citation omitted; second

alteration in original); see also RX Data Corp. v. Dep't of Soc.

Servs., 684 F.2d 192, 198 (2d Cir. 1982) ("[A]n action for

copyright infringement lies within the exclusive jurisdiction of

the federal courts. Since the [state court] could not have heard

the claim for copyright infringement, [plaintiff] is not barred

from bringing it in federal court.") (citation omitted).

Finally, while Adcom argued numerous alternative grounds

for summary judgment below, it argues on appeal only claim

preclusion. Consequently, the other issues that Adcom argued below

are not properly before us in these appeals, and it would be

inappropriate to reach them. Cf. United States v. Moran, 393 F.3d

1, 12 (1st Cir. 2004) (in certain circumstances, an appellee must

raise alternative bases for affirming a favorable judgment or risk

waiver). Accordingly, we vacate the judgment on the basis that res

judicata does not bar the action, without expressing any view on

whether either party might eventually be entitled to summary

judgment on other grounds.

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 III.

We think it appropriate, to forestall unnecessary

difficulties in future appeals, to address an issue involving our

own rules and our need for English translations of Puerto Rico

court decisions relied on by the parties.

Very briefly, summary judgment was ordered for Adcom on

the basis of Puerto Rico court decisions that were submitted to the

district court in Spanish. Gener filed a motion requesting the

court to order Adcom to file English translations of these

decisions for the purpose of compiling an appellate record, but the

motion was denied. The impact of the Puerto Rico decisions was

critical to our review on appeal, and we therefore ordered Adcom to

produce certified translations of them.

Our rules require that such translations be part of the

record on appeal for the very reason that we were obliged to order

their submission; we cannot effectively review a judgment that

relies on non-English materials. Under these rules, "[i]f an

unpublished . . . opinion of another court is cited" by a party for

an authorized purpose, including "support [of] a claim of res

judicata," "a copy of the opinion or disposition must be included

in an accompanying addendum or appendix." lst Cir. R. 32.3(b),

(a)(1), (a)(3). If that decision is not in English, another local

rule specifies that "[t]he court will not receive documents not in

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the English language unless translations are furnished." lst Cir.

R. 30(d).

Although we have made clear that the parties may not

disregard such rules with impunity, see Deniz v. Municipality of

Guaynabo, 285 F.3d 142, 148 (lst Cir. 2002), we do not feel that

this is a situation calling for sanctions. Understandably, but

unfortunately, the focus of court and parties in dealing with

Gener's motion was on precedent and argument concerning the need to

provide translations of non-English evidence. Gener's motion and

Adcom's opposition were framed in these terms. In this context,

the district court may have concluded that the requested

translations were non-evidentiary materials and thus outside that

precedent, overlooking counsel's separate obligation to provide the

appellate court with translations of unpublished court decisions

supporting the claim of res judicata.

Adcom points out that it was never ordered to submit a

translation, and Gener, while vigorously arguing as we have noted,

did not invoke the rules explicitly requiring such translations.

Nor did Gener seek from us an order for translations with extended

time for briefing. All things considered, we deem sanctions

inappropriate here.

Judgment vacated. Remanded for further proceedings

consistent with this opinion.

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