Premier Dealer Servs., Inc. v. Allegiance Administrators, LLC

RECOMMENDED FOR PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 24a0039p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

┐

PREMIER DEALER SERVICES, INC.,

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Plaintiff-Appellee, │

> No. 23-3394

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v. │

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ALLEGIANCE ADMINISTRATORS, LLC, │

Defendant-Appellant. │

┘

Appeal from the United States District Court for the Southern District of Ohio at Columbus.

No. 2:18-cv-00735—Edmund A. Sargus, Jr., District Judge.

Argued: February 1, 2024

Decided and Filed: February 26, 2024

Before: SUTTON, Chief Judge; CLAY and BLOOMEKATZ, Circuit Judges.

_________________

COUNSEL

ARGUED: Andrew E. Samuels, BAKER & HOSTETLER LLP, Columbus, Ohio, for

Appellant. Scott R. Thomas, HEMMER WESSELS MCMURTRY PLLC, Ft. Mitchell,

Kentucky, for Appellee. ON BRIEF: Andrew E. Samuels, BAKER & HOSTETLER LLP,

Columbus, Ohio, for Appellant. Scott R. Thomas, HEMMER WESSELS MCMURTRY PLLC,

Ft. Mitchell, Kentucky, Gregory J. Krabacher, EPSTEIN BECKER GREEN, Columbus, Ohio,

for Appellee.

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OPINION

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SUTTON, Chief Judge. Premier Dealer Services competes with Allegiance

Administrators to manage car dealers’ loyalty programs, an arrangement used to service cars

after the dealer sells them. The terms and conditions of the programs appear on loyalty

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 2

certificates that dealers use to enroll buyers. When Allegiance obtained the account of a former

Premier client, it incorporated Premier’s Lifetime Powertrain Loyalty Program certificates into

its own plan. Premier sued Allegiance for using its copyrighted certificates. The district court

held that Allegiance infringed Premier’s copyright, ordered Allegiance to disgorge any profits

from using the certificates, and awarded Premier attorney’s fees. We affirm.

I.

A car dealer’s business usually does not end when a customer leaves the lot. Buyers need

to service their vehicles over time, and dealers like to capture this cradle-to-grave business.

“Loyalty programs” satisfy both goals by providing the buyer a place to service the car and by

giving the seller the business. Unlike the warranties provided by manufacturers and the service

contracts that car owners must purchase out of pocket, car dealers offer loyalty programs for free

to capture this repeat business. A loyalty program contains two components. In one direction,

car buyers must continue to pay dealers for oil changes, tire rotations, and other routine

maintenance at intervals spelled out in the plan. In the other direction, if a covered part turns

defective, the plan requires the dealer to cover the cost to repair or replace it.

This case concerns one such plan, the Lifetime Powertrain Loyalty Program. Premier

Dealer Services, a developer and administrator of automobile dealers’ aftermarket products,

created the plan. As with most of these plans, the dealer promises to repair defects in a car’s

engine and transmission as long as the owner brings the vehicle to the dealer for required

maintenance. Car dealers purchase access to the program from Premier and give it away as a

promotion. When an owner brings a car back to the dealer for a powertrain repair, for example,

the dealer initiates a claim by contacting Premier. Premier verifies that the plan covers the claim

and that the owner has performed all required maintenance at the dealership. Once Premier

approves the claim, the dealership sends an invoice to Premier, which pays the claim.

As part of the program, Premier designed a loyalty certificate for dealers to provide to car

owners. The two-page certificate collects the owner’s personal information and sets out the

Program’s terms and conditions. Premier created this certificate in 2008 and registered it for

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copyright protection in 2012. That same year, it also registered a second certificate, largely the

same as the first. A copy of that certificate appears as Appendix A to this opinion.

In 2008, Premier sold access to the program to Tricor Automotive Group, a Canadian

corporation that develops dealership programs on behalf of approximately 250 dealer-owners.

Tricor marketed the program to its members under its own brand and trained them on its

operation. Premier received $40 (in Canadian dollars) every time a dealer provided a certificate

to a car buyer in exchange for administering the program. As part of the agreement, Premier

modified its copyrighted loyalty certificate for Tricor’s Canadian market. It made cosmetic

changes such as replacing miles with kilometers and states with provinces, but it otherwise left

the terms the same. Tricor’s contract with Premier acknowledged that the form belonged to

Premier and could not be disclosed or sold to anyone.

In 2018, after a decade of working with Premier, Tricor hired Allegiance to administer its

aftermarket programs, including the Lifetime Powertrain Loyalty Program. Allegiance checked

whether its new client needed a loyalty certificate. Tricor replied that it would continue to use its

existing Lifetime Powertrain Loyalty Program certificates and provided Allegiance with a copy.

Allegiance noticed that the certificate listed a website and American P.O. box and asked whether

it belonged to another company. Tricor’s representative explained that Premier previously

administered the program and that Allegiance should insert its own information. Allegiance

substituted its contact information and kept the remainder of the certificate the same. The first

page of that certificate appears as Appendix B to this opinion. Allegiance, like Premier, received

$40 Canadian every time a dealer issued a certificate.

Premier sued Allegiance for infringing the copyrighted certificate. The district court

granted summary judgment to Premier, reasoning that the certificate’s “dull” subject matter did

not preclude it from being original or from otherwise obtaining copyright protection. R.128 at

19–22. After a bench trial on damages, the court awarded Premier $441,239 of Allegiance’s

profits and enjoined Allegiance from infringing the copyright. The court awarded Premier

$577,736 in attorney’s fees.

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 4

II.

Copyright protection. The Constitution allows Congress to grant authors exclusive

copyrights over their works. U.S. Const. art. I, § 8, cl. 8. The copyright statute extends this

protection to “original works of authorship fixed in any tangible medium of expression.”

17 U.S.C. § 102(a). If an author registers a copyright within five years of its first publication, it

receives a statutory presumption of validity. Id. § 410(c); see RJ Control Consultants, Inc. v.

Multiject, LLC, 981 F.3d 446, 454 (6th Cir. 2020). Any copying of original materials counts as

infringement. See Varsity Brands, Inc. v. Star Athletica, LLC, 799 F.3d 468, 476 (6th Cir. 2015).

One way to rebut the presumption of validity is to show that the work is not original. See id.

Originality has a low threshold, requiring only that the author “independently created” a

work with “some minimal degree of creativity.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc.,

499 U.S. 340, 345 (1991). Authors fulfill originality’s requirement of minimal creativity by

making “non-obvious choices” from “among more than a few options.” ATC Distrib. Grp., Inc.

v. Whatever It Takes Transmission & Parts, Inc., 402 F.3d 700, 707 (6th Cir. 2005) (quoting

Matthew Bender & Co. v. W. Publ’g Co., 158 F.3d 674, 682 (2d Cir. 1998)). The author’s

choices must evince some “inventiveness and imagination,” Hiller, LLC v. Success Grp. Int’l

Learning All., LLC, 976 F.3d 620, 627 (6th Cir. 2020), but not necessarily artistic merit, see

Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251–52 (1903). Alongside choices

about style and setting, this creative spark may arise from decisions about what materials to

include and how to organize them. See ATC Dist., 402 F.3d at 711–12 & 711 n.7; Ross, Brovins

& Oehmke, P.C. v. Lexis Nexis Grp., 463 F.3d 478, 484 n.3 (6th Cir. 2006); see also Experian

Info. Sols., Inc. v. Nationwide Mktg. Servs. Inc., 893 F.3d 1176, 1184–85 (9th Cir. 2018)

(selecting, arranging, or coordinating facts may be creative).

Most works will satisfy this low standard of creativity, no matter how humdrum the

subject matter. Feist, 499 U.S. at 345. Consider a few recent examples. A testing company

evinced sufficient creativity in its workforce-development technical manuals by choosing to

divide such skills as “Reading for Information” into subskills and arranging them by skill level.

ACT, Inc v. Worldwide Interactive Network, Inc., 46 F.4th 489, 500–02 (6th Cir. 2022). A guide

for training HVAC technicians satisfied this requirement because its author made such creative

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choices as delineating four steps to prepare for service calls and including fill-in-the-blank

problems. Hiller, 976 F.3d at 626–27. Physician credentialing forms proved sufficiently

creative by eliminating some of the questions that competitors asked and rearranging others in a

unique way. S. Credentialing Support Servs., L.L.C. v. Hammond Surgical Hosp., L.L.C., 946

F.3d 780, 783–84 (5th Cir. 2020).

This modest threshold comes with at least three qualifications. One is that copyright

protection does not extend to facts that already exist in the world, even if no one has discovered

or published them. Feist, 499 U.S. at 347; see 17 U.S.C. § 102(b); see also Mazer v. Stein, 347

U.S. 201, 217 (1954) (distinguishing copyrights from patents). A copyright extends only to an

author’s original expression of those facts, such as their selection, ordering, and arrangement.

Feist, 499 U.S. at 347–48. So it is that an author may not obtain a copyright with respect to the

unyielding principles of arithmetic or the physics of gravity. But the author may obtain a

copyright in a math or physics textbook with respect to its problems and answer keys. Baker v.

Selden, 101 U.S. 99, 103–04 (1879). The author of an autobiography may not obtain copyright

protection over the facts of his life. But he may protect the way he describes them in his

memoirs. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 563–64 (1985).

A second qualification, known as merger, arises when there is only a single way to

express a given set of facts. Kohus v. Mariol, 328 F.3d 848, 856 (6th Cir. 2003); see generally 4

Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.03[B][3] (2024). If copyright

protection extended to those expressions, the first author to create a work would prevent others

from expressing the underlying idea. See Murray Hill Publ’ns, Inc. v. Twentieth Century Fox

Film Corp., 361 F.3d 312, 318 n.2 (6th Cir. 2004). Consider the example of a company deciding

where to list a new part in its catalog. The only way for it to express the idea that the part

belongs to a certain category—say, gaskets and not sealing rings—is to list it under that

category. ATC Dist., 402 F.3d at 707. Copyright law does not impede other companies from

expressing that idea by listing the part in an identical way. Id. at 707–08.

A third qualification, the one directly at issue today, is known as “scenes a faire”—

settings, in other words, that must be done. Cain v. Universal Pictures Co., 47 F. Supp. 1013,

1017 (S.D. Cal. 1942) (Yankwich, J.) (coining this phrase to describe this aspect of copyright

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 6

law). Scenes a faire arise when the expectations of an industry or subject matter require an

author to express facts in a certain way, rendering only a few choices “feasible in that setting”

even if alternatives theoretically remain. Lexmark Int’l, Inc. v. Static Control Components, Inc.,

387 F.3d 522, 538 (6th Cir. 2004), abrogated on other grounds by eBay Inc. v. MercExchange,

L.L.C., 547 U.S. 388, 392–94 (2006); see Ross, 463 F.3d at 485. The author’s choice to select

the obvious approach over less functional alternatives does not qualify as minimally creative.

See ATC Dist., 402 F.3d at 711–12. In determining whether an industry’s standards and

practices tolerate sufficient creativity in the expression of facts, expert testimony “is desirable, if

not required.” RJ Control, 981 F.3d at 458; see Lexmark, 387 F.3d at 539–40 (evaluating

dueling expert reports about the feasibility of software alternatives); see also Feist, 499 U.S. at

363 (citing industry association’s amicus brief about standards).

Take the white pages section of what once occupied a central place in every home: a

three-dimensional phonebook. It collects the facts of residential telephone numbers and

addresses and expresses them alphabetically by the last name of the homeowner. The

phonebook could have chosen a different expression for those facts by, say, grouping them by

street name. See Feist, 499 U.S. at 358, 362–63. But alphabetical order has become “so

commonplace that it has come to be expected as a matter of course” and is “practically

inevitable.” Id. at 363. This expected expression of the facts, as a result, falls short of even the

“de minimis quantum of creativity” required for copyright protection. Id.

Measured by these guidelines and requirements, Allegiance’s challenge to the originality

of Premier’s copyright falls short. Premier registered its loyalty forms for copyright within five

years of first using them by filing them in the U.S. Copyright Office located in the Library of

Congress. They thus presumptively receive copyright protection unless Allegiance rebuts the

presumption that Premier possesses a valid copyright.

What, one might initially wonder, are these automobile loyalty certificates doing in the

Library of Congress? Surely this is not what Samuel Johnson had in mind when he said, “The

chief glory of every people arises from its authors.” 1 Samuel Johnson, A Dictionary of the

English Language x (1755). Probably not. But the long-accepted policy of the copyright laws is

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 7

that they protect all manner of works—mundane and lofty, commercial and non-commercial,

even the dull and workaday—so long as they satisfy the modest imperatives of originality.

The loyalty certificates amount to original expression under this test. They are “original

to the author,” Feist, 499 U.S. at 345, because Premier designed them “in-house” and

“independent of forms used by competitors,” R.101-1 at 8. And they presumptively possess a

“minimal creative spark,” Feist, 499 U.S. at 363, by showing some “inventiveness and

imagination,” Hiller, 976 F.3d at 627. The copyright covers a particular auto maintenance

program, the customized expression and organization of which places the certificates beyond the

kinds of highly abstracted descriptions typical of uncopyrightable facts and ideas. See Kohus,

328 F.3d at 855. The run-of-the-mine subject matter of the certificates does not detract from

Premier’s creative choices in crafting them. To see why, compare the organization of Premier’s

certificates to the rival certificates that Allegiance included in the record and that we have

included as Appendix C. Premier’s certificates include a distinct section on eligibility that

covers different categories of required maintenance, including a selection of different mileage

options between required oil changes. The other form lacks a distinct section on eligibility or

maintenance, and it provides a single oil change standard above the signature line. Premier’s

offering of a menu of different mileage options, together with its choice to arrange the form with

that section, evinces more creativity than simply moving headers or rearranging identical

sections. See ATC Dist., 402 F.3d at 711; cf. S. Credentialing, 946 F.3d at 784 (reasoning that

the “distinctive arrangement” of business rivals’ competing forms shows originality).

The content of these certificates also expresses the idea of covering damage to a car in

different ways. Premier’s certificates define several categories of covered parts, some of which

depend on whether the part suffered damage resulting from “mechanical failure to an internally

lubricated part.” R.100-1 at 3. The other company lists different parts under the single heading

of “Engine” and offers to expand coverage to other components in the event of “mechanical

failure . . . caused by the above-listed parts.” R.101-7 at 4. Choices about how to select and

group categories and subcategories suffice to establish creativity. See ACT, Inc., 46 F.4th at

500–02 (finding skill and subskill classification and arrangement minimally creative).

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The juxtaposition between Premier’s creative expression in the body of the certificates

and the unoriginal top half of the front page, which merely provides spaces for the dealer to

record the car buyer’s information, helps to illustrates the originality of the body of the

certificates. See 37 C.F.R. § 202.1(c) (excluding blank forms from copyright). Premier had

some choices over what information to request—such as by asking for the vehicle purchase date

and odometer reading, but not its color—but such categories prove obvious in the automotive

context and required no creative spark to select. See Utopia Provider Sys., Inc. v. Pro-Med

Clinical Sys., L.L.C., 596 F.3d 1313, 1322–24 (11th Cir. 2010); see also Kregos v. Associated

Press, 937 F.2d 700, 708–09 (2d Cir. 1991) (distinguishing uncopyrightable blank forms that use

obvious headings from copyrightable forms whose headings satisfy originality). The remaining

three-quarters of the certificates, however, go beyond such obvious information collection to

provide details about the workings of the program itself. See M.M. Bus. Forms Corp. v. Uarco,

Inc., 472 F.2d 1137, 1139 (6th Cir. 1973).

The doctrines of uncopyrightable ideas, merger, and scenes a faire do not excuse

Allegiance’s imitation. Premier’s certificate expresses the idea of a particular type of loyalty

program, and comparison of Premier’s form to the others in the record shows that companies can

choose different ways to express that idea. The record also lacks any evidence about external

constraints on the expression of these loyalty certificates. At summary judgment, Allegiance did

not submit any testimony or affidavits from industry insiders or expert witnesses that car owners

or dealers expect these forms to look a certain way or to include the same terms or conditions.

See Kohus, 328 F.3d at 856 (explaining that external considerations include “standard industry

practices” and professional organization standards).

Allegiance, last of all, copied the certificates. This case presents “rare[]” direct evidence

of copying, Fogerty v. MGM Grp. Holdings Corp., Inc., 379 F.3d 348, 352 (6th Cir. 2004), as no

one in the case disputes.

All elements considered, the district court correctly ruled that Allegiance violated

Premier’s copyright in the loyalty program certificates.

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 9

Allegiance tries to counter this conclusion in several ways. It maintains that the district

court mistakenly reasoned that originality always trumps the scenes a faire doctrine. But that is

not what the district court said or did. It recognized that Premier’s timely copyright registration

shifted the burden to Allegiance to “rebut the copyright’s presumptive validity.” R.128 at 16. It

explained that scenes a faire represents one exception to originality. See Kohus, 328 F.3d at 856.

And it determined that the record failed to establish that any “requirements of insurance

companies” or similar constraints dictated how Premier expressed the details of its plan. R.128

at 18. In the absence of that expert testimony or other expert evidence at summary judgment, it

properly concluded this chain of reasoning by holding that Allegiance failed to rebut the

presumption that Premier enjoys a valid copyright.

The concepts underlying scenes a faire and merger, we appreciate, sometimes bear on the

threshold originality of the copyright and sometimes are best viewed through the lens of an

affirmative defense. As in Feist itself, a court may treat these principles as crucial to the initial

question of originality. 499 U.S. at 358 (“[T]he principal focus should be on whether the

selection, coordination, and arrangement [of a fact-based work] are sufficiently original to merit

protection.”). At other times, it may make more sense to think about these doctrines as distinct

underlying affirmative defenses to infringement, perhaps when an infringer copies only part of

an original work. See, e.g., Kregos, 937 F.2d at 705; Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d

1068, 1082 (9th Cir. 2000). That a copyright concept may go to the validity of a copyright in the

first instance does not preclude it from operating as a defense to infringement in other instances.

See Lexmark, 387 F.3d at 537–39. As the Copyright Office itself recognizes, “scènes à faire

cannot be registered by themselves,” but works containing scenes a faire qualify for copyright

registration “provided that the work as a whole contains a sufficient amount of original

expression.” U.S. Copyright Off., Compendium of U.S. Copyright Office Practices § 313.4(I)

(3d ed. 2021); see also id. § 313.3(B) (listing examples where the Office “refuse[d] to register

the claim” due to merger). Consider again the white pages. If that compilation consisted of

nothing but a list of numbers, such an expected arrangement would not qualify as minimally

creative in the first instance. See Feist, 499 U.S. at 363; see also Southco, Inc. v. Kanebridge

Corp., 390 F.3d 276, 288–89 (3d Cir. 2004) (Becker, J., concurring) (“The scènes à

faire doctrine, therefore, dispels the notion that there was the requisite originality in [the

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author’s] selection of characteristics and values to merit copyright protection.”). An author

perhaps might obtain a valid copyright registration by tacking on original content to that

compilation, such as a foreword. Feist, 499 U.S. at 361. But the resulting “thin” copyright

would protect only those original additions from copying, not the listings themselves. Id. at 349;

cf. Atari Games Corp. v. Oman, 888 F.2d 878, 886 (D.C. Cir. 1989) (Ginsburg, J.).

In this instance, any distinction between using scenes a faire as a threshold defense to

originality or as an affirmative defense to infringement does not make a difference. Even the

courts that treat scenes a faire only as an affirmative defense have cautioned that this doctrine

still does not permit the infringer to produce work “virtually identical” to the original. Incredible

Techs., Inc. v. Virtual Techs., Inc., 400 F.3d 1007, 1014–15 (7th Cir. 2005); see Apple Comput.,

Inc. v. Microsoft Corp., 35 F.3d 1435, 1444, 1446–47 (9th Cir. 1994). No one denies that

Allegiance’s certificates copy Premier’s certificate, save for a few minor points of contact

information. No matter how a court understands the doctrine of scenes a faire, Allegiance still

had to produce evidence that external constraints dictated how Premier created its certificate.

See RJ Control, 981 F.3d at 458; cf. Automated Sols. Corp. v. Paragon Data Sys., Inc., 756 F.3d

504, 520 (6th Cir. 2014). Allegiance did not offer any such evidence.

Allegiance, it is true, provided the district court with another company’s forms that

resemble Premier’s certificates. But similarity by itself does not suffice to demonstrate scenes a

faire. Expert testimony usually is needed to show that convention and the setting of the work

constrained the author’s choices. Confirming the point, similar works still receive copyright

protection so long as they are original to the author and satisfy the minimal threshold of

creativity. Feist, 499 U.S. at 345–46. Identical “stock or standard phrases” in the end give rise

to scenes a faire only if they “necessarily follow from a common theme or setting.” RJ Control,

981 F.3d at 458 (quoting Lexmark, 387 F.3d at 535).

The scattered similarities in parts of these forms, often due to their coverage of the same

subject matter as opposed to a required convention, do not undermine their creative features.

Consider an example that Allegiance identifies: the certificates’ similarities and differences

when it comes to service intervals. Yes, the wording of each one largely parallels the other given

the imperative of covering a common subject—how often the owner must obtain service of the

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car. But Premier’s form includes that language as part of a section on “eligibility” that offers

multiple checkboxes for different mileage options. R.100-1 at 3. The other company, by

contrast, expresses this condition as a take-it-or-leave-it “responsibility” without any mechanism

for customization. R.101-7 at 3. The existence of such substantive variation within the industry

undercuts Allegiance’s claims that external constraints determined the content of Premier’s

certificates. See S. Credentialing, 946 F.3d at 784.

There is another way, Allegiance adds, that external constraints limited Premier’s

expressiveness. Insurance companies review the certificates and require the inclusion of “some

language.” R.91-1 at 26. But this reality does not show that insurers have deprived

administrators of their flexibility when crafting loyalty certificates “as a whole.” Lexmark, 387

F.3d at 538. Even legally compliant expressions of facts may possess the modest creativity

needed to qualify as original. As one court helpfully put the point: “Although laws and hospital

policies dictate the contents of the credentialing forms, Southern Credentialing’s unique selection

and arrangement of information exhibit creative expression.” S. Credentialing, 946 F.3d at 784;

see SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms., Inc., 211 F.3d 21, 25,

29 (2d Cir. 2000).

Allegiance also offers testimony from a former Premier contractor who claimed that the

company drew upon “decades of prior underwriting work” in choosing to “model[]” its

certificate on other existing programs. R.162-1 at 4. And it refers to the report of an auto service

and finance expert who explained that dealers often dictate identical language and coverage to

administrators. But Allegiance never introduced these sources into the summary judgment

record. It thus has forfeited the invocation of them today. See Fed. R. Civ. P. 56(c).

Nor does it make a difference that Allegiance urged the district court to reconsider its

summary judgment ruling on the basis of this new evidence. The district court denied that

motion because it raised new legal theories and new evidence that were both available at the time

of summary judgment. Allegiance did not challenge the decision on appeal.

Disgorgement. Even if Allegiance faces copyright liability, it claims that the district

court miscalculated the profits from the infringement that Allegiance is required to disgorge.

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A copyright owner may recover actual damages and “any profits of the infringer that are

attributable to the infringement and are not taken into account in computing the actual damages.”

17 U.S.C. § 504(b). A burden-shifting process frames the lost-profits calculation.

ECIMOS, LLC v. Carrier Corp., 971 F.3d 616, 634 (6th Cir. 2020). The copyright owner

initially must provide evidence of the infringer’s gross revenue. Id. The gross-revenue

calculation must bear a “reasonable relationship” or “relevance” to the infringement, but the

plaintiff does not have to demonstrate strict causation. Balsley v. LFP, Inc., 691 F.3d 747, 769 &

n.6 (6th Cir. 2012). The revenue figures suffice if they correspond to the product containing the

infringing work, such as a magazine that reprints a copyrighted image. Id. at 770.

Once the plaintiff makes this showing, the infringer must show what part of its gross

revenues did not result from the infringement. See ECIMOS, 971 F.3d at 635. It may do so by

offering proof of its “deductible expenses” as well as the “elements of profit attributable to

factors other than the copyrighted work.” 17 U.S.C. § 504(b). The calculation of expenses and

allocation of profits, no surprise, are fact driven. See Bridgeport Music, Inc. v. Justin Combs

Publ’g, 507 F.3d 470, 484 (6th Cir. 2007). If “plausible evidence” supports a finding, we will

not second guess it. ECIMOS, 971 F.3d at 637.

This statutory burden-shifting corresponds to the reality that the infringer usually

possesses the information necessary to provide the victim a fair share of the profits. See

Singletary Constr., LLC v. Reda Home Builders, Inc., 815 F. App’x 892, 907 (6th Cir. 2020)

(Murphy, J., concurring in part); see also Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S.

390, 399, 408 (1940). Because the victim of infringement cannot readily extend its own

experience to calculate the infringer’s costs, the statute requires the infringer to account for its

actual expenses. See Thoroughbred Software Int’l, Inc. v. Dice Corp., 488 F.3d 352, 360–61

(6th Cir. 2007).

So too for the allocation of profits. Copyright plaintiffs may not always compete head-

to-head with the infringer and so can fail to appreciate all the other inputs that contribute to gross

revenues and profits. Once the plaintiff has identified a final product containing the infringing

work, the statute assigns the burden of allocating profit to the infringer, who possesses every

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incentive to identify as many alternative contributors to its profits as it can. Cf. Sheldon,

309 U.S. at 407–08.

The district court’s disgorgement award hewed to this process. Premier, as an initial

matter, met its burden of showing the gross revenues for Allegiance’s infringement of the

certificate. The certificates rest at the core of what Tricor hired Allegiance to do. They set forth

the terms and conditions of the loyalty program, and car dealers enrolled buyers with

Allegiance’s administration system using the certificates to collect their registration information.

Allegiance in turn received $40 Canadian every time a dealer issued a certificate to the buyer.

As Premier’s expert testified, his calculation of Allegiance’s gross revenues came out “very

close” to a back-of-the-envelope estimation that multiplies the number of loyalty certificates

issued by $40 Canadian. R.255 at 32. The district court found that, after adjusting for exchange

rates, Allegiance earned $1,279,280 from administering the Lifetime Powertrain Program

between April 2018 and April 2022.

After that, the district court found that Allegiance could deduct $838,041 in costs, leaving

a profit of $441,239. The court acknowledged that Allegiance thought that none of this profit

could be attributed to the infringing certificates because it simply administered these plans for

Tricor, the ultimate beneficiary of any infringement. But the court reasonably concluded that

Allegiance’s arguments did not satisfy its burden of showing its own profitability figures; they

just went to Premier’s showing of gross revenues. Because Allegiance failed to carry its burden

of allocating profits, the court fairly required it to pay this amount. No clear error occurred.

Allegiance replies that this analysis confuses the “words on the [loyalty] Certificate[s]”

with the “administration services” that Allegiance performed. Appellant’s Br. 31–32. Because

buyers do not review the certificate’s text before enrolling in the program and do not enroll in the

program before purchasing a car, Allegiance claims Premier failed to satisfy its burden of

relating Allegiance’s revenue from the loyalty program to its infringement of the certificates’

text. See R.189-2 at 2 (stating in Allegiance’s expert report that fees for administration relate to

the “fair market value for the administration services” and not “the language or style of the form

used”). But this argument asks too much of Premier. The statute places a low burden on the

victim of the infringement to explain “why that [gross revenue] number is related to the

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 14

infringement” without requiring a “causal connection.” Balsley, 691 F.3d at 769 n.6, 770 n.7.

Any burden of proving causation instead falls on Allegiance, which must prove in the second

phase of the burden-shifting framework how much of its profits stemmed from activity unrelated

to the infringement. Id.

To our knowledge and to the knowledge of the parties, we have never required a plaintiff

to limit gross revenues to the infringing expression. Few infringers will be so bold as to resell

the infringed work by itself. Revenues from magazine sales reasonably relate to the inclusion of

an infringing photograph, id. at 770–71, and revenues from a factory’s output reasonably relate

to quality-control software that end-consumers never use, ECIMOS, 971 F.3d at 623–25, 636.

So too here. Allegiance sold administrative services to Tricor and received $40 Canadian in

compensation each time a dealer issued a certificate. The gross revenue figures correspond to

that income stream alone, excluding other products that Allegiance administered for Tricor. On

this record, Premier had no obligation to refine its scope further. See id. at 636 (limiting

revenues to single factory); Balsley, 691 F.3d at 770.

Allegiance claims that a few out-of-circuit district court cases have emphasized causation

at the plaintiff’s stage of the burden-shifting process. But they do not offer meaningful parallels

to this case. One of them involved a pipe replacement company that infringed the copyrighted

contract form of a rival firm. Phx. Renovation Corp. v. Rodriguez, 461 F. Supp. 2d 411, 414

(E.D. Va. 2006). The plaintiff calculated how much the infringer had earned from jobs that

began by signing the contract. But the court declined to shift the burden as the plaintiff had not

shown any customers hired the defendant because of that form. Id. at 421–23. In the second

case, a bank infringed a copyrighted mortgage form. Homeowner Options for Mass. Elders, Inc.

v. Brookline Bancorp, Inc., No. 09-11790-NMG, 2012 WL 3136786, at *1–2 (D. Mass. July 31,

2012). Those cases both imposed a legal standard of causation higher than the relationship test

that we have adopted. Balsley, 691 F.3d at 769 & n.6. No matter whether Premier has shown

that car buyers, dealers, or Tricor contracted with Allegiance because it had copied Premier’s

expression, Premier satisfied its burden of establishing that Allegiance’s revenues reasonably

relate to its use of the certificate.

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 15

Shifting gears, Allegiance challenges the district court’s factual findings about the

operation of its program, claiming they are internally inconsistent. We disagree. The district

court accurately described the “final product sold” by Allegiance as the Lifetime Powertrain

Loyalty Program. R.241 at 6. Although it stated that the certificate was “not part of the final

product sold,” it accurately explained that Allegiance “used [the certificate] to administer the

program” and that the certificate formed “one small part of the final product” akin to other inputs

that never reach the ultimate consumer. Id.; cf. ECIMOS, 971 F.3d at 636.

Allegiance adds that the findings lack specificity because the district court did not cite

trial evidence about how this program operated or about Allegiance’s role in it. Not so. All that

the court needed to do was find facts sufficient to give us an “understanding of the basis” for its

decision, and we may assume the district court drew reasonable inferences from its findings.

Solis v. Laurelbrook Sanitarium & Sch., Inc., 642 F.3d 518, 530 (6th Cir. 2011) (quotation

omitted). The court’s orders met these modest requirements.

Attorney’s fees. Allegiance challenges the district court’s award of statutory attorney’s

fees to Premier. We review that decision for an abuse of discretion. Balsley, 691 F.3d at 771.

Under copyright law, a district court “in its discretion may allow the recovery of full

costs,” which includes “a reasonable attorney’s fee to the prevailing party.” 17 U.S.C. § 505.

District courts determine whether to do so based on the totality of the circumstances: the

unreasonableness of the infringement, the unreasonableness of any litigation behavior, the need

to deter future infringement, the frivolity or not of the lawsuit, and any suspect motivations in

defending the challenge. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994).

The district court did not abuse its discretion in awarding these fees. In considering

Allegiance’s litigation position, the court found that its arguments about the infringer’s burden in

disgorgement calculations unreasonably ignored our precedent, and it found unreasonable

Allegiance’s “late hour” challenges to the summary judgment decision. R.266 at 13–15. The

court then concluded that the goal of deterrence also supported a fee award given that Allegiance

had continued to profit from Premier’s copyright even after the summary judgment, and the

company suggested that it would continue to do so absent a permanent injunction.

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Allegiance claims that the district court could not rely on the rationale of deterrence once

it enjoined Allegiance from infringing this copyright. But the Supreme Court declined to

endorse all-or-nothing approaches to deterrence when it observed that courts must consider this

factor “in particular circumstances.” Fogerty, 510 U.S. at 534 n.19. A case-by-case approach

makes considerable sense in the equitable setting of injunctions. The district court had a

legitimate basis to believe that an injunction by itself would not deter Allegiance from continuing

to infringe on Premier’s certificate. Allegiance had continued to infringe on the certificate

during the litigation and had suggested that it would keep doing so.

Allegiance adds that the district court erred by finding that Allegiance took an

unreasonable position on disgorgement. But the case law explains that plaintiffs possess a

burden only to show a reasonable relationship between infringement and gross revenues.

Balsley, 691 F.3d at 769. A district court does not abuse its discretion in characterizing as

unreasonable arguments that are contrary to settled law. See Coles v. Wonder, 283 F.3d 798,

803–04 (6th Cir. 2002). Nor was that finding clearly erroneous. Allegiance supports its claim

about ambiguous precedent with a single district court opinion. Yet even that opinion correctly

explained that the plaintiff could “not establish that the revenues are reasonably related to

infringement.” Satija v. Permanent Gen. Assurance Corp. of Ohio, No. 1:13-CV-00082, 2014

WL 1514240, at *5 (N.D. Ohio Apr. 16, 2014).

Allegiance claims that the court erred when it described several of Allegiance’s motions

as unreasonable because they were untimely and amounted to thinly veiled attempts to relitigate

summary judgment. Because the district court had a ring-side seat to the parties’ litigation

strategies and positions, we will not lightly disturb its discretion in this area. See Bridgeport

Music, Inc. v. Dimension Films, 410 F.3d 792, 809–10 (6th Cir. 2005) (amended opinion).

Allegiance gives no reason why we should second guess the district court’s determination that

Allegiance needlessly delayed filing its motion for reconsideration.

We affirm.

No. 23-3394 Premier Dealer Servs., Inc. v. Allegiance Adm’rs, LLC Page 17

Appendix A. Premier’s Copyrighted Certificate

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Appendix B. Allegiance’s Certificate

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Appendix C. Comparison Certificate

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