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Southern Credentialing Support Services, L.L.C. v. Hammond Surgical Hospital, L.L.C.

United States Court of Appeals, Fifth Circuit

January 9, 2020

SOUTHERN CREDENTIALING SUPPORT SERVICES, L.L.C., Plaintiff-Appellee Cross-Appellant
v.
HAMMOND SURGICAL HOSPITAL, L.L.C., doing business as Cypress Pointe Surgical Hospital; HAMMOND SURGICAL HOSPITAL MANAGEMENT COMPANY, L.L.C., Defendants-Appellants Cross-Appellees

          Appeals from the United States District Court for the Eastern District of Louisiana

          Before OWEN, Chief Judge, and HAYNES and COSTA, Circuit Judges.

          GREGG COSTA, CIRCUIT JUDGE

         A plaintiff must usually prove damages to recover in a lawsuit. But to encourage compliance, some laws provide automatic damages. The Copyright Act of 1976 is an example. It has a provision allowing a copyright holder to elect statutory damages-in an amount the court sets between $750 and $30, 000 per infringed work, rising to a possibility of $150, 000 per work for willful infringement-instead of actual damages. See 17 U.S.C. § 504.

         Statutory damages are not available, however, in all copyright cases. A plaintiff cannot recover statutory damages, and sometimes more importantly, attorney's fees, for "any infringement" a defendant commences before the plaintiff registered the copyright. 17 U.S.C. § 412. That limitation encourages authors to register their works quickly, allowing potential infringers to readily determine whether a work is protected. Mason v. Montgomery Data, Inc., 967 F.2d 135, 144 (5th Cir. 1992).

         We have interpreted section 412 to bar statutory damages even for a defendant's postregistration copying of a plaintiff's map if copying also occurred before registration. Id. The question this case poses is whether that bar also applies when the defendant engages in a different type of infringement after registration. For example, what if a defendant distributes the work after registration rather than continuing with the earlier copying?

         I.

         In 2010, Southern Credentialing Support Services began providing health care credentialing services to Hammond Surgical Hospital. Credentialing is a process doctors must complete to practice at hospitals. Doctors submit basic application forms, which are common across facilities, as well as delineation of privileges forms, which differ for each institution to reflect hospital policies as well as state and federal regulations. Credentialing service providers verify the information doctors provide.

         Some companies, like Southern Credentialing, try to obtain a competitive advantage by designing custom forms for their clients. Southern Credentialing created two packets of forms for Hammond: an initial credentialing application packet and a recredentialing packet. The initial packet was 83 pages long, which included 8 base documents common to all credentialing applications, several forms required by law, and 33 specialty-specific delineations. The recredentialing packet was 113 pages long, consisting of an original reapplication packet, the 8 base documents, and the 33 specialty-specific delineations.

         In 2013, Southern Credentialing stopped providing credentialing services to Hammond. Hammond soon contracted with another company for credentialing services. The forms that the new provider used contained fifty pages that were identical to Southern Credentialing's forms. From 2013 until 2017, doctors would register on the new provider's website and access the application through a password-protected portal. By 2017, the new provider had posted the documents in a way that enabled anyone who knew where to look for the forms on its website to access them without a password.

         When it was working with Hammond, Southern Credentialing had not registered any copyrights in its application packets. On learning that Hammond was still using its forms after the companies had parted ways, Southern Credentialing registered a copyright for the original packet in February 2014 and the recredentialing packet in July 2014.

         A few days after registering the second copyright, Southern Credentialing sent an email to Hammond asserting that Hammond's ongoing use of the credentialing forms infringed Southern Credentialing's copyrights. Hammond responded that the forms were not eligible for copyright protection and asked Southern Credentialing to identify which documents it believed were protected. Additional exchanges between the parties did not resolve the dispute.

         So Southern Credentialing filed this suit. It claimed that Hammond infringed its copyrights over the initial and reapplication packets. Southern Credentialing sought summary judgment, which the district court granted as to the existence of the copyrights and infringement.

         To determine damages, the district court held a bench trial. During the trial, Southern Credentialing elected statutory damages. The court held that it could award statutory damages despite section 412's bar because the defendant's post-2017 internet distribution of the packets was "different in kind" from its pre-2017 infringing activity. After determining that Hammond's infringement was not willful, it awarded Southern Credentialing $5, 000 ($2, 500 for each packet). The court also ruled that Southern Credentialing was entitled to attorney's fees and costs, though it ...


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