Chapter 13: Remedies
The Copyright Act provides remedies in the form of injunctive and monetary relief for copyright owners that prevail in infringement actions, as well as potentially an award of attorney’s fees (which are available for both prevailing plaintiffs and defendants). In particular, § 502 authorizes courts to “grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” Section 503 authorizes the court to, “as part of a final judgment or decree, … order the destruction or other reasonable disposition of all copies or phonorecords found to have been made or used in violation of the copyright owner’s exclusive rights.”
Section 504 provides for two forms of money damages: (1) the copyright owner’s actual damages, as well as any additional profits of the infringer not taken into account in computing the actual damages; or (2) statutory damages. Note that the plaintiff has to choose one or the other—the plaintiff cannot ask for both actual damages/profits and statutory damages. Courts generally have a great deal of discretion under the statute to determine the appropriate amount of statutory damages in any individual case. Currently, § 504(c) allows for statutory damages ranging from $750 to $30,000 per infringed work, “as the court considers just.” If the copyright owner can prove that the “infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000” per work. On the other hand, in a case of innocent infringement, where the infringer is able to prove that it “was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200” per work.
Statutory damages allow for an award of substantial damages to a copyright owner, even under circumstances in which the copyright owner is unable to establish the amount of actual damages or the infringer’s profits. The broad discretion afforded by the statute allows courts to assess an amount of statutory damages that will not only provide restitution to the copyright owner, but also punish the infringer and hopefully deter future infringing conduct. Statutory damages can function as a form of punitive damages, particularly in cases of willful infringement.
In order to be eligible for statutory damages, the copyright owner must register the work prior to the infringement (or, alternatively, within three months of publication), one of the important benefits of prompt registration. On the other hand, the statute provides that publication of a work along with adequate notice precludes an infringer from asserting “innocent infringement” in order to reduce an award of statutory damages, thereby incentivizing publication with notice.
Section 505 authorizes the court to “award a reasonable attorney’s fee to the prevailing party,” which can be either the copyright owner or the accused infringer.
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Some things to consider when reading Frank Music I:
- This decision addresses the standard for awarding actual damages to a prevailing copyright owner.
- Frank Music II, which appears later in this casebook, addresses the “infringer’s profits” remedy for copyright infringement.
Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc. (Frank Music I)
772 F.2d 505 (9th Cir. 1985)
FLETCHER, Circuit Judge:
This copyright infringement suit arises out of defendants’ use of five songs from plaintiffs’ dramatico-musical play Kismet in a musical revue staged at defendant MGM Grand Hotel in 1974–76. After a bench trial, the district court found infringement and awarded the plaintiffs $22,000 as a share of defendants’ profits. Plaintiffs appeal and defendants cross-appeal. We affirm in part, reverse in part, and remand.
I. FACTS
[Editor’s note:1 Plaintiffs are the copyright owners and authors of Kismet, a dramatico-musical work. MGM, Inc. under license produced a musical motion picture version of Kismet. Beginning April 26, 1974, MGM Grand presented a musical revue entitled Hallelujah Hollywood in the hotel’s Ziegfeld Theatre. Hallelujah Hollywood was largely created by an employee of MGM Grand, Donn Arden, who also staged, produced and directed the show. The show comprised ten acts, four billed as “tributes” to MGM motion pictures. Act IV was entitled “Kismet,” and was a tribute to the MGM movie of that name. It was based almost entirely on music from Kismet, and used characters and settings from that musical. Act IV “Kismet” was performed approximately 1700 times, until July 16, 1976, when, under pressure resulting from this litigation, MGM Grand substituted a new Act IV.]
II. DISCUSSION
[The court affirmed the district court’s conclusion that defendants infringed plaintiffs’ copyrights in Kismet.]
B. Recovery for Infringement
The Copyright Act of 19092 provided three forms of recovery to a plaintiff whose copyright had been infringed: actual damages, infringer’s profits, or statutory “in lieu” damages. The Act provided for recovery of “such damages as the copyright proprietor may have suffered due to the infringement, as well as all the profits which the infringer shall have made from such an infringement….” 17 U.S.C. § 101(b) (1970).
A court making an award for copyright infringement must, if possible, determine both the plaintiff’s actual damages and the defendant’s profits derived from the infringement. In this circuit, we have construed section 101(b) of the 1909 Act as allowing recovery of the greater of the plaintiff’s damage or the defendant’s profits,3
1. Actual Damages
“Actual damages” are the extent to which the market value of a copyrighted work has been injured or destroyed by an infringement. In this circuit, we have stated the test of market value as “what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs’ work.”
The district court declined to award actual damages. The court stated that it was “unconvinced that the market value of plaintiffs’ work was in any way diminished as a result of defendant’s infringement.” We are obliged to sustain this finding unless we conclude it is clearly erroneous. Fed.R.Civ.P. 52(a).
Plaintiffs contend the district court’s finding is clearly erroneous in light of the evidence they presented concerning the royalties Kismet could have earned in a full Las Vegas production. Plaintiffs did offer evidence of the royalties Kismet had earned in productions around the country. They also introduced opinion testimony, elicited from plaintiff Lester and from Kismet’ s leasing agent, that a full production of Kismet could have been licensed in Las Vegas for $7,500 per week. And they introduced other opinion testimony to the effect that Hallelujah Hollywood had destroyed the Las Vegas market for a production of plaintiffs’ Kismet.
In a copyright action, a trial court is entitled to reject a proffered measure of damages if it is too speculative. Although uncertainty as to the amount of damages will not preclude recovery, uncertainty as to the fact of damages may. It was the fact of damages that concerned the district court. The court found that plaintiffs “failed to establish any damages attributable to the infringement.” (emphasis in original). This finding is not clearly erroneous.
Plaintiffs offered no disinterested testimony showing that Hallelujah Hollywood precluded plaintiffs from presenting Kismet at some other hotel in Las Vegas. It is not implausible to conclude, as the court below apparently did, that a production presenting six minutes of music from Kismet, without telling any of the story of the play, would not significantly impair the prospects for presenting a full production of that play. Based on the record presented, the district court was not clearly erroneous in finding that plaintiffs’ theory of damages was uncertain and speculative.
[Editor’s note: The court remanded to the district court for reconsideration of the amount of profits attributable to the infringement and for consideration of whether defendants Donn Arden and Metro–Goldwyn–Mayer, Inc. should be liable in addition to MGM Grand Hotel, Inc.]
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Check Your Understanding – Frank Music I
Question 1. Which of the following will preclude a prevailing copyright owner from being awarded actual damages?
Some things to consider when reading Frank Music II:
- This was the decision of the appeal after remand of Frank Music I. It addresses the standard for awarding the “infringer’s profits” to a prevailing copyright owner.
- Courts require plaintiffs to establish the amount of damages/profits with some level of precision, but some degree of imprecision is inevitable and permitted. We see this principle play out in Frank Music I and II.
Frank Music Corp. v. Metro-Goldwyn-Mayer Inc. (Frank Music II)
886 F.2d 1545 (9th Cir. 1989)
FLETCHER, Circuit Judge:
In Frank Music Corp. v. Metro–Goldwyn–Mayer, Inc., 772 F.2d 505 (9th Cir.1985) (Frank Music I ), we affirmed the district court’s holding that defendants infringed plaintiffs’ copyright in the dramatico-musical play Kismet, but remanded for reconsideration of the amount of profits attributable to the infringement and for consideration of whether defendants Donn Arden and Metro–Goldwyn–Mayer, Inc. (MGM, Inc.) should be liable in addition to MGM Grand Hotel, Inc. (MGM Grand). On remand, the district court awarded plaintiffs $343,724 against MGM Grand, dismissed the action against MGM, Inc. and Arden, and awarded plaintiffs $115,000 in attorney’s fees. Plaintiffs appeal and defendants cross-appeal. We affirm in part, reverse in part, and remand.
I. FACTS
The facts are fully set out in Frank Music I, 772 F.2d at 509–11. We reiterate only selectively. Plaintiffs are the copyright owners and authors of Kismet, a dramatico-musical work. MGM, Inc. under license produced a musical motion picture version of Kismet. Beginning April 26, 1974, MGM Grand presented a musical revue entitled Hallelujah Hollywood in the hotel’s Ziegfeld Theatre. Hallelujah Hollywood was largely created by an employee of MGM Grand, Donn Arden, who also staged, produced and directed the show. The show comprised ten acts, four billed as “tributes” to MGM motion pictures. Act IV was entitled “Kismet”, and was a tribute to the MGM movie of that name. It was based almost entirely on music from Kismet, and used characters and settings from that musical. Act IV “Kismet” was performed approximately 1700 times, until July 16, 1976, when, under pressure resulting from this litigation, MGM Grand substituted a new Act IV.
Plaintiffs filed suit, alleging copyright infringement, unfair competition, and breach of contract. In Frank Music I, we affirmed the district court’s conclusion that the use of Kismet in Hallelujah Hollywood was beyond the scope of MGM Grand’s ASCAP license and infringed plaintiffs’ copyright. In this appeal, the parties focus on the adequacy of damages and attorney’s fees.
II. DISCUSSION
A. Apportionment of Profits
1. Direct Profits
In Frank Music I, we upheld the district court’s conclusion that the plaintiffs failed to prove actual damages arising from the infringement, but vacated the district court’s award of $22,000 in apportioned profits as “grossly inadequate,” and remanded to the district court for reconsideration.
On remand, the district court calculated MGM Grand’s net profit from Hallelujah Hollywood at $6,131,606, by deducting from its gross revenues the direct costs MGM Grand proved it had incurred. Neither party challenges this calculation.
In apportioning the profits between Act IV and the other acts in the show, the district court made the following finding:
Act IV of “Hallelujah Hollywood” was one of ten acts, approximately a ten minute segment of a 100 minute revue. On this basis, the Court concludes that ten percent of the profits of “Hallelujah Hollywood” are attributable to Act IV.
Plaintiffs assert that this finding is in error in several respects. First, they point out that on Saturdays Hallelujah Hollywood contained only eight acts, not ten, and that on Saturdays the show ran only 75 minutes, not 100. Second, Act IV was approximately eleven and a half minutes long, not ten. Because the show was performed three times on Saturdays, and twice a night on the other evenings of the week, the district court substantially underestimated the running time of Act IV in relation to the rest of the show.
If the district court relied exclusively on a quantitative comparison and failed to consider the relative quality or drawing power of the show’s various component parts, it erred. However, the district court’s apportionment based on comparative durations would be appropriate if the district court implicitly concluded that all the acts of the show were of roughly equal value. Cf. Frank Music I, 772 F.2d at 518 (“Each element contributed significantly to the show’s success, but no one element was the sole or overriding reason for that success.”) While a more precise statement of the district court’s reasons would have been desirable, we find support in the record for the conclusion that all the acts in the show were of substantially equal value.
The district court went on to apportion the parties’ relative contributions to Act IV itself:
The infringing musical material was only one of several elements contributing to the segment. A portion of the profits attributable to Act IV must be allocated to other elements, including the creative talent of the producer and director, the talents of performers, composers, choreographers, costume designers and others who participated in creating Act IV, and the attraction of the unique Ziegfeld Theatre with its elaborate stage effects…. While no precise mathematical formula can be applied, the Court concludes that … a fair approximation of the value of the infringing work to Act IV is twenty-five percent.
The district court was correct in probing into the parties’ relative contributions to Act IV. Where a defendant alters infringing material to suit its own unique purposes, those alterations and the creativity behind them should be taken into account in apportioning the profits of the infringing work. However, the district court appears to have ignored its finding in its previous decision that defendants used not only the plaintiffs’ music, but also their lyrics, characters, settings, and costume designs, recreating to a substantial extent the look and sound of the licensed movie version of Kismet.
While it was not inappropriate to consider the creativity of producers, performers and others involved in staging and adapting excerpts from Kismet for use in Hallelujah Hollywood, the district court erred in weighing these contributions so heavily. In performing the apportionment, the benefit of the doubt must always be given to the plaintiff, not the defendant. And while the apportionment may take into account the role of uncopyrightable elements of a work in generating that work’s profits, the apportionment should not place too high a value on the defendants’ staging of the work, at the expense of undervaluing the plaintiffs’ more substantive creative contributions. Production contributions involving expensive costumes and lavish sets will largely be taken into account when deducting the defendants’ costs. Indeed, defendants concede that had they produced Kismet in toto, it would have been proper for the district court to award 100% of their profits, despite their own creative efforts in staging such a production.
The district court found that defendants’ staging of the Kismet excerpts was highly significant to Act IV’s success. While we believe that a defendant’s efforts in staging an infringing production will generally not support more than a de minimis deduction from the plaintiff’s share of the profits, we cannot say the district court’s conclusion that the defendants’ contributions were substantial in this case is clearly erroneous. We recognize that there will be shows in which the attraction of the costumes, scenery or performers outweighs the attraction of the music or dialogue. On the other hand, a producer’s ability to stage a lavish presentation, or a performer’s ability to fill a hall from the drawing power of her name alone, is not a license to use freely the copyrighted works of others.
We conclude that apportioning 75% of Act IV to the defendants grossly undervalues the importance of the plaintiffs’ contributions. Act IV was essentially Kismet, with contributions by the defendants; it was not essentially a new work incidentally plagiarizing elements of Kismet. A fairer apportionment, giving due regard to the district court’s findings, attributes 75% of Act IV to elements taken from the plaintiffs and 25% to the defendants’ contributions.
2. Indirect Profits
In Frank Music I, we held that the plaintiffs were entitled to recover, in addition to direct profits, a proportion of ascertainable indirect profits from defendants’ hotel and gaming operations attributable to the promotional value of Hallelujah Hollywood. The district court considered the relative contributions of Hallelujah Hollywood and other factors contributing to the hotel’s profits, including the hotel’s guest accommodations, restaurants, cocktail lounges, star entertainment in the “Celebrity” room, the movie theater, Jai Alai, the casino itself, convention and banquet facilities, tennis courts, swimming pools, gym and sauna, and also the role of advertising and general promotional activities in bringing customers to the hotel. The district court concluded that two percent of MGM Grand’s indirect profit was attributable to Hallelujah Hollywood. In light of the general promotion and the wide variety of attractions available at MGM Grand, this conclusion is not clearly erroneous.
III. CONCLUSION
We vacate the damages award. We conclude that the proper apportionment entitles plaintiffs to 9% of the direct profits from Hallelujah Hollywood. We affirm the district court’s finding as to the percentage of indirect profits attributable to Hallelujah Hollywood.
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Check Your Understanding – Frank Music II
Question 1. In a case in which a court awards the infringer’s profits to a prevailing copyright owner, what is the appropriate amount?
Some things to consider when reading Warner Bros. I:
- The importance under the 1909 Act of formalities: notice and renewal. In particular, note that Warner Bros. forfeited some of its copyrights into the public domain by failing to comply with the formalities of providing notice with publication and copyright renewal.
- The court’s discussion of the relationship between common law and statutory copyright, and the public domain, under the 1909 Act.
- The court’s discussion of copyright in characters. Understand why it is that the court rejected the defendant’s argument that the plaintiff’s copyright in the characters had entered the public domain.
- The court’s discussion of the right of the public to make derivative works of works that are in the public domain, and how this can be limited by the existence of related works that are covered by copyright.
- The nature of the permanent injunction issued by the district court, and the 8th Circuit’s rationale for ordering a modification of the injunction.
- On Jan. 1, 2024, the copyright expired on the original Mickey Mouse from the 1928 cartoon film Steamboat Willie. To what extent is Mickey Mouse now in the public domain and available for uses such those engaged in by the defendants in this case, i.e., licensed for uses of tee shirts, mugs, etc.?
Warner Bros. Entm’t v. X One X Prods. (Warner Bros. I)
644 F.3d 584 (8th Cir. 2011)
GRUENDER, Circuit Judge.
A.V.E.L.A., Inc., X One X Productions, and Art–Nostalgia.com, Inc. (collectively, “AVELA”) appeal a permanent injunction prohibiting them from licensing certain images extracted from publicity materials for the films Gone with the Wind and The Wizard of Oz, as well as several animated short films featuring the cat-and-mouse duo “Tom & Jerry.” The district court issued the permanent injunction after granting summary judgment in favor of Warner Bros. Entertainment, Inc., Warner Bros. Consumer Products, Inc., and Turner Entertainment Co. (collectively, “Warner Bros.”) on their claim that the extracted images infringe copyrights for the films. For the reasons discussed below, we affirm in part, reverse in part, and remand for appropriate modification of the permanent injunction.
I. BACKGROUND
Warner Bros. asserts ownership of registered copyrights to the 1939 Metro–Goldwyn–Mayer (“MGM”) films The Wizard of Oz and Gone with the Wind. Before the films were completed and copyrighted, publicity materials featuring images of the actors in costume posed on the film sets were distributed to theaters and published in newspapers and magazines. The images in these publicity materials were not drawn from the film footage that was used in the films; rather, they were created independently by still photographers and artists before or during production of the films. The publicity materials, such as movie posters, lobby cards, still photographs, and press books, were distributed by the original rights-holder, MGM’s parent company Loew’s, Inc., and did not comply with the copyright notice requirements of the 1909 Copyright Act. Warner Bros. also asserts ownership of registered copyrights to various animated Tom & Jerry short films that debuted between 1940 and 1957. Movie posters and lobby cards for these short films also were distributed without the requisite copyright notice. As a result, Warner Bros. concedes that it has no registered federal copyrights in the publicity materials themselves.4
AVELA has acquired restored versions of the movie posters and lobby cards for The Wizard of Oz, Gone with the Wind, and several Tom & Jerry short films. From these publicity materials, AVELA has extracted the images of famous characters from the films, including Dorothy, Tin Man, Cowardly Lion, and Scarecrow from The Wizard of Oz; Scarlett O’Hara and Rhett Butler from Gone with the Wind; and the eponymous Tom and Jerry. AVELA licenses the extracted images for use on items such as shirts, lunch boxes, music box lids, and playing cards, and as models for three-dimensional figurines such as statuettes, busts, figurines inside water globes, and action figures. In many cases, AVELA has modified the images, such as by adding a character’s signature phrase from the movie to an image modeled on that character’s publicity photograph. In other cases, AVELA has combined images extracted from different items of publicity material into a single product. In one example, a publicity photograph of Dorothy posed with Scarecrow serves as the model for a statuette and another publicity photograph of the “yellow brick road” serves as the model for the base of that same statuette.
Warner Bros. sued AVELA, claiming that such use of the extracted images infringes the copyrights for the films. Warner Bros. also asserted claims of, inter alia, trademark infringement and unfair competition. AVELA contended that the distribution of the publicity materials without copyright notice had injected them into the public domain, thus precluding any restrictions on their use. On cross-motions for summary judgment, the district court granted summary judgment to Warner Bros. on the copyright infringement claim and denied summary judgment to both parties on the trademark infringement and unfair competition claims.
The district court’s analysis did not require it to determine expressly whether the publicity materials had reached the public domain. Instead, the district court held that, even if the images were extracted from public domain materials, AVELA’s practice of modifying the extracted images for placement on retail products constituted infringement of the film copyrights. Warner Bros. averred that it would not assert the copyrights against unaltered reproductions of individual items of publicity material, eliminating any need to resolve whether the publicity materials were in the public domain.
Based on the finding of copyright infringement, the district court separately entered a permanent injunction against all use of the publicity material images, except for exact duplication of individual items of publicity material. AVELA appeals the entry of the permanent injunction.
II. DISCUSSION
A. Copyright Ownership
[The court concluded that Warner Bros. had established ownership of valid copyrights in the movies and animated shorts.]
B. The Public Domain Nature of the Publicity Materials
Because our analysis differs from that of the district court, we find it necessary to determine whether the publicity materials reached the public domain.
Whether a work entered the public domain prior to January 1, 1978, the effective date of the 1976 Copyright Act, must be determined according to copyright law as it existed before that date, under the 1909 Copyright Act. Under the 1909 Copyright Act, one who created an artistic work held a common law copyright in that work until “publication” occurred. If the publication complied with the notice requirements of the 1909 Copyright Act, the common law copyright was replaced with a federal statutory copyright, but a publication without the prescribed notice resulted in the forfeiture of any copyright. In other words, the general rule under the 1909 Copyright Act is that a work published in the United States without the statutorily required copyright notice fell into the public domain, precluding forever any subsequent copyright protection of the published work.
[The court concluded that the publicity materials for The Wizard of Oz and Gone with the Wind, as well as for the Tom & Jerry short films, were published without notice and thus are in the public domain.]
C. Copyright Infringement and the Right to Make Use of Public Domain Materials
The elements of copyright infringement are (1) ownership of a valid copyright and (2) copying of original elements of the copyrighted work. As discussed above, Warner Bros. has established ownership of valid copyrights in the movies and animated shorts. Copying can be shown either by (1) direct evidence of copying, or (2) access to the copyrighted material and substantial similarity between the AVELA work and the copyrighted work. There is no dispute that AVELA had access to the films in question, each of which has a long history of popularity. In addition, there is no dispute that the images in the AVELA works are substantially similar to the images in the copyrighted films, as they are in fact images of the same people in the same costumes (or, in the case of Tom and Jerry, of the same cartoon characters). The only remaining question is whether AVELA has appropriated original elements of the films or solely elements that are in the public domain.
Warner Bros. does not challenge the products that are exact reproductions of an entire item of publicity material. Instead, Warner Bros. contends that AVELA has extracted images from the public domain materials and used them in new ways that infringe the copyrights in the associated films. AVELA admits that it has used the images in new ways (and indeed has applied for its own copyrights for such derivative works), but it counters that there is no limitation on the public’s right to modify or make new works from public domain materials.
AVELA is correct that, as a general proposition, the public is not limited solely to making exact replicas of public domain materials, but rather is free to use public domain materials in new ways (i.e., to make derivative works by adding to and recombining elements of the public domain materials). “[W]here a work has gone into the public domain, it does in fact follow that any individual is entitled to develop this work in new ways.” Pannonia Farms, Inc. v. USA Cable, 2004 WL 1276842, at *9 & n. 20 (S.D.N.Y. June 8, 2004) (rejecting the theory that the plaintiff’s copyrights in nine original Sherlock Holmes stories gave the plaintiff the exclusive right to make derivative works featuring the Holmes and Dr. Watson characters because fifty-plus earlier stories already had reached the public domain). Nevertheless, this freedom to make new works based on public domain materials ends where the resulting derivative work comes into conflict with a valid copyright.
For example, in Silverman v. CBS Inc., 870 F.2d 40 (2d Cir.1989), a number of pre–1948 Amos ‘n’ Andy radio scripts had entered the public domain. However, CBS held valid copyrights in a number of post–1948 radio scripts and, arguably, in a later television series. In 1981, Silverman began developing a Broadway musical version of Amos ‘n’ Andy, and CBS alleged that his script infringed its copyrights. Like AVELA here, Silverman argued that because the pre–1948 Amos ‘n’ Andy scripts were in the public domain, he was free to make any derivative work he wished featuring the Amos ‘n’ Andy characters. The court disagreed, holding that derivative works based on the public domain scripts still would infringe to the extent they used “any further delineation of the characters contained in the post–1948 radio scripts and the television scripts and programs, if it is ultimately determined that these last items remain protected by valid copyrights.” Id. at 50; see also Pannonia Farms, 2004 WL 1276842, at *9 (noting that although the characters of Sherlock Holmes and Dr. Watson were in the public domain based on fifty-plus public domain original stories, a new work that incorporated “character traits newly introduced” by the nine later original stories still under copyright would infringe those copyrights).
In other words, if material related to certain characters is in the public domain, but later works covered by copyright add new aspects to those characters, a work developed from the public domain material infringes the copyrights in the later works to the extent that it incorporates aspects of the characters developed solely in those later works. Therefore, we must determine (1) the apparent scope of the copyrights in the later works (here, the films), (2) the scope of the material dedicated to the public in the publicity materials, which correspondingly limits the scope of the film copyrights, and (3) the scope into which each of AVELA’s images falls. If an AVELA work falls solely within the scope of the material dedicated to the public, there can be no infringement liability under the film copyrights. On the other hand, if some portion of an AVELA work falls outside the scope of the material dedicated to the public, but within the scope of the film copyrights, AVELA is liable for infringement.
1. The Scope of the Film Copyrights
It is clear that when cartoons or movies are copyrighted, a component of that copyright protection extends to the characters themselves, to the extent that such characters are sufficiently distinctive. See, e.g., Gaiman v. McFarlane, 360 F.3d 644, 661 (7th Cir.2004) (“[A] stock character, once he was drawn and named and given speech [in a comic book series] … became sufficiently distinctive to be copyrightable.”); Olson v. Nat’l Broad. Co., Inc., 855 F.2d 1446, 1452 (9th Cir.1988) (holding that “copyright protection may be afforded to characters visually depicted in a television series or in a movie” for “characters who are especially distinctive”); Metro–Goldwyn–Mayer, 900 F.Supp. at 1296 (holding that plaintiffs’ copyrighted James Bond films established a copyright in the character of James Bond). The district court thoroughly and accurately applied this principle to the instant case, and the parties do not contest the district court’s analysis. We agree with the district court’s conclusion that Dorothy, Tin Man, Cowardly Lion, and Scarecrow from The Wizard of Oz, Scarlett O’Hara and Rhett Butler from Gone with the Wind, and Tom and Jerry each exhibit “consistent, widely identifiable traits” in the films that are sufficiently distinctive to merit character protection under the respective film copyrights. See Rice v. Fox Broad. Co., 330 F.3d 1170, 1175 (9th Cir.2003).
AVELA correctly points out that the scope of copyright protection for the characters in the films The Wizard of Oz and Gone with the Wind is limited to the increments of character expression in the films that go beyond the character expression in the books on which they were based. While true, this has little practical effect in the instant case, as a book’s description of a character generally anticipates very little of the expression of the character in film.
The film actors’ portrayals of the characters at issue here appear to rely upon elements of expression far beyond the dialogue and descriptions in the books. AVELA has identified no instance in which the distinctive mannerisms, facial expressions, voice, or speech patterns of a film character are anticipated in the corresponding book by a literary description that evokes, to any significant extent, what the actor portrayed. Put more simply, there is no evidence that one would be able to visualize the distinctive details of, for example, Clark Gable’s performance before watching the movie Gone with the Wind, even if one had read the book beforehand. At the very least, the scope of the film copyrights covers all visual depictions of the film characters at issue, except for any aspects of the characters that were injected into the public domain by the publicity materials.
2. The Scope of the Material Dedicated to the Public
AVELA contends that the injection of the publicity materials into the public domain simultaneously injected the film characters themselves into the public domain. To the extent that copyright-eligible aspects of a character are injected into the public domain, the character protection under the corresponding film copyrights must be limited accordingly.
As an initial matter, we reject AVELA’s contention that the publicity materials placed the entirety of the film characters at issue into the public domain. The isolated still images included in the publicity materials cannot anticipate the full range of distinctive speech, movement, demeanor, and other personality traits that combine to establish a copyrightable character. See, e.g., Metro–Goldwyn–Mayer, 900 F.Supp. at 1296 (citing “various character traits that are specific to Bond—i.e. his cold-bloodedness; his overt sexuality; his love of martinis ‘shaken, not stirred;’ his marksmanship; his ‘license to kill’ and use of guns; his physical strength; [and] his sophistication,” rather than his visual appearance alone, as establishing the copyrightability of the character). Nevertheless, the publicity materials could have placed some aspects of each character’s visual appearance into the public domain.
Because we must rely solely on visual characteristics, the individuals shown in the publicity materials establish “characters” for copyright purposes only if they display “consistent, widely identifiable” visual characteristics. The Walker case is instructive in this regard. There, the plaintiff asserted his copyright in a comic strip entitled “Mr. Bob Spongee, The Unemployed Sponge” against the producers of the animated television series “SpongeBob SquarePants.” Walker v. Viacom Int’l, Inc., 2008 WL 2050964 (N.D. Cal. May 13, 2008). The plaintiff had created sponge dolls based on his comic strip and placed advertisements in a newspaper. Because these materials revealed “little to no information about Mr. Bob Spongee’s personality or character traits,” the court could look only to his visual appearance for distinctiveness. The court held that in such a situation, a consistent visual appearance throughout the materials was a prerequisite for character protection. Because of variations in the sponge’s clothing, color, eye and nose shape, and hair among the comic strip, dolls, and advertisements, the plaintiff’s copyright did not create any character protection.
Therefore, we must determine if any individual is depicted with consistent, distinctive visual characteristics throughout the various publicity materials. If so, those consistent visual characteristics define the “copyrightable elements” of that film character, which were injected into the public domain by the publicity materials. If not, then there are no visual aspects of the film character in the public domain, apart from the publicity material images themselves.
With respect to the cartoon characters Tom and Jerry, we note that on the spectrum of character copyrightability, the category of cartoon characters often is cited as the paradigm of distinctiveness. The record indicates that the Tom & Jerry publicity materials consist of just one public domain movie poster for each copyrighted short film, and the visual characteristics of Tom and Jerry in the first poster, for Puss Gets the Boot (released in 1940), are quite different from the characters popularly recognized as Tom and Jerry today. In addition, the first poster by itself reveals no distinctive character or visual traits, but only visual characteristics typical to cats and mice. As a result, the first poster is essentially a generic cat-and-mouse cartoon drawing that cannot establish independently copyrightable characters.
Meanwhile, the copyrighted short film that immediately followed the first poster revealed Tom and Jerry’s character traits and signature antagonistic relationship. With the benefit of these strong character traits, the first short film was sufficient to establish the copyrightable elements of the Tom and Jerry characters as depicted therein. In such a situation, each subsequent movie poster could inject into the public domain only the increments of expression, if any, that the movie poster itself added to the already-copyrighted characters from previously released Tom & Jerry films. Because they derive from a work still covered by statutory copyright, the underlying characters of Tom and Jerry are not in the public domain until the copyrights in the Tom & Jerry short films begin to expire.
In contrast to Tom & Jerry, the record is clear that a veritable blitz of publicity materials for Gone with the Wind and The Wizard of Oz was distributed prior to the publication of each film. However, with respect to Gone with the Wind, the publicity material images are far from the cartoon-character end of the spectrum of character copyrightability. There is nothing consistent and distinctive about the publicity material images of Vivian Leigh as Scarlett O’Hara and Clark Gable as Rhett Butler. They certainly lack any cartoonishly unique physical attributes, and neither one is shown in a consistent, unique outfit and hairstyle. As a result, the district court correctly held that the publicity material images for Gone with the Wind are no more than “pictures of the actors in costume.” Indeed, if the publicity material images from Gone with the Wind were sufficient to inject all visual depictions of the characters Scarlett O’Hara and Rhett Butler into the public domain, then almost any image of Vivian Leigh or Clark Gable would be sufficient to do so as well. Therefore, the only images in the public domain are the precise images in the publicity materials for Gone with the Wind.
The characters in The Wizard of Oz lie closer to the cartoon-character end of the spectrum. There are many stylized aspects to the visual appearances of Scarecrow, Tin Man, and Cowardly Lion, and they perhaps might be considered as live-action representations of cartoon characters. Dorothy, while not so thoroughly stylized, wears a somewhat distinctive costume and hairstyle. However, a close examination of the record reveals that these potentially distinctive visual features do not appear in a consistent fashion throughout the publicity materials. For example, in the publicity materials, Judy Garland as Dorothy sometimes wears a red dress and bow and black slippers, rather than the distinctive blue dress and bow and ruby slippers of the film, and her hairstyle also varies. From image to image, Scarecrow’s costume color ranges from yellow to blue to black, Cowardly Lion’s from light yellow to very dark brown, and Tin Man’s from shiny silver to a dull blue-gray. Moreover, there are publicity material images in which other stylized elements of the characters’ costumes and faces are significantly different from the look used in the film. For example, in some images Tin Man’s face appears metallic, and in others it appears flesh-colored. If the publicity material images for The Wizard of Oz were held to establish the visual elements of copyrightable characters, their scope would encompass almost any character who wears a scarecrow or lion costume, and a wide range of little girl and silver robotic costumes as well, creating an unacceptable result:
If a drunken old bum were a copyrightable character, so would be a drunken suburban housewife, a gesticulating Frenchman, a fire-breathing dragon, a talking cat, a Prussian officer who wears a monocle and clicks his heels, a masked magician, Rice v. Fox Broadcasting Co., 330 F.3d 1170, 1175–76 (9th Cir.2003), and, in Learned Hand’s memorable paraphrase of Twelfth Night, “a riotous knight who kept wassail to the discomfort of the household, or a vain and foppish steward who became amorous of his mistress.” Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2d Cir.1930). It would be difficult to write successful works of fiction without negotiating for dozens or hundreds of copyright licenses, even though such stereotyped characters are the products not of the creative imagination but of simple observation of the human comedy.
Gaiman, 360 F.3d at 660.
We conclude that the characters’ visual appearances in the publicity materials for The Wizard of Oz do not present the requisite consistency to establish any “copyrightable elements” of the film characters’ visual appearances. Therefore, once again, the only images in the public domain are the precise images in the publicity materials for The Wizard of Oz.
3. AVELA’s Use of the Public Domain Images
We held above that no visual aspects of the film characters in Gone with the Wind and The Wizard of Oz are in the public domain, apart from the images in the publicity materials themselves. Therefore, any visual representation that is recognizable as a copyrightable character from one of these films, other than a faithful copy of a public domain image, has copied “original elements” from the corresponding film. We must examine the AVELA products based on The Wizard of Oz and Gone with the Wind to determine which ones display increments of expression of the film characters beyond the pictures of the actors in costume in the publicity materials. The AVELA products in the record can be analyzed in three categories.
The first category comprises AVELA products that each reproduce one image from an item of publicity material as an identical two-dimensional image. While Warner Bros. does not challenge the reproduction of movie “posters as posters (or lobby cards as lobby cards),” it does challenge the reproduction of a single image drawn from a movie poster or lobby card on T-shirts, lunch boxes, music box lids, or playing cards, for example. We read the district court’s permanent injunction to follow Warner Bros.’s distinction, forbidding all uses except the reproduction of items of publicity material “in their entirety.” However, no reasonable jury could find that merely printing a public domain image on a new type of surface (such as a T-shirt or playing card), instead of the original surface (movie poster paper or lobby card paper), adds an increment of expression of the film character to the image. Similarly, Warner Bros. presents no reasoned argument as to why the reproduction of one smaller contiguous portion of an image from an item of publicity material, rather than the entirety of the image from that item, would add an increment of expression of the film character. As a result, products that reproduce in two dimensions any one portion of an image from any one item of publicity material, without more, do not infringe Warner Bros.’s copyright. For products in this category, we reverse the grant of summary judgment to Warner Bros. with respect to The Wizard of Oz and Gone with the Wind and direct the entry of summary judgment for AVELA. We also vacate the permanent injunction to the extent it applies to products in this category.
The second category comprises AVELA products that each juxtapose an image extracted from an item of publicity material with another image extracted from elsewhere in the publicity materials, or with a printed phrase from the book underlying the subject film, to create a new composite work. Even if we assume that each composite work is composed entirely of faithful extracts from public domain materials, the new arrangement of the extracts in the composite work is a new increment of expression that evokes the film character in a way the individual items of public domain material did not. For example, the printed phrase “There is no place like home” from the book The Wizard of Oz and a publicity material image of Judy Garland as Dorothy, viewed side by side in uncombined form, are still two separate works, one literary and one a picture of an actor in costume. In contrast, a T-shirt printed with the phrase “There’s no place like home” along with the same image of Judy Garland as Dorothy is a new single work that evokes the film character of Dorothy much more strongly than the two separate works. Because the increments of expression added to the public domain materials by the films are protectable, one making a new work from public domain materials infringes if he copies these protectable increments. Like the juxtaposition of an image and a phrase, a composite work combining two or more separate public-domain images (such as Judy Garland as Dorothy combined with an image of the Emerald City) also adds a new increment of expression of the film character that was not present in the separate images. Accordingly, products combining extracts from the public domain materials in a new arrangement infringe the copyright in the corresponding film. We affirm the district court’s grant of summary judgment to Warner Bros. with respect to The Wizard of Oz and Gone with the Wind and the permanent injunction for this category of products.
The third category comprises AVELA products that each extend an image extracted from an item of publicity material into three dimensions (such as statuettes inside water globes, figurines, action figures, and busts). Many of these products also include a juxtaposition of multiple extracts from the public domain materials, and such composite works infringe for the reasons explained in the preceding paragraph. Even where the product extends a single two-dimensional public domain image into three dimensions, a three-dimensional rendering must add new visual details regarding depth to the underlying two-dimensional image. (As a simple illustration, it is impossible to determine the length of someone’s nose from a picture if they are looking directly at the camera.) Of course, even more visual details must be added if the two-dimensional image is transformed into a fully realized figure, as most three-dimensional AVELA products are. (Otherwise, for example, the back of each figurine character would be blank.) Much of this visual information is available in the feature-length films, where the characters are observable from a multitude of viewing angles.
In depositions, the AVELA licensees who developed the action figures, figurines, water globes, and busts made no pretense that they were not guided by their knowledge of the films. Instead, they indicated that, while each three-dimensional design began with an image from the public domain photo stills and movie posters, the goal was to create a product recognizable as the film character. The only reasonable inference is that the details added to establish perspective and full realization were chosen to be consistent with the film characters. As a result, the addition of visual details to each two-dimensional public domain image to create the three-dimensional product makes impermissible use of the “further delineation of the characters contained in” the feature-length films. Accordingly, we also affirm the district court’s grant of summary judgment to Warner Bros. with respect to The Wizard of Oz and Gone with the Wind and the permanent injunction for this category of products.
We also held above that the characters of Tom and Jerry are not in the public domain. In addition, because the characters achieved copyright protection through the short films before all but the first movie poster entered the public domain, and the later movie posters necessarily exhibit those characters, even the use of any movie poster but the first requires Warner Bros.’s authorization. Warner Bros. has granted such authorization to the extent it has averred that it will not challenge the reproduction of movie “posters as posters (or lobby cards as lobby cards).”
Therefore, AVELA may use the first Tom & Jerry poster, for the short film Puss Gets the Boot, in the fashion described above for the publicity materials for Gone with the Wind and The Wizard of Oz. Accordingly, with respect to Tom & Jerry products based on the first publicity poster, we modify the district court’s grant of summary judgment and the permanent injunction to be consistent with the three categories of products described above for Gone with the Wind and The Wizard of Oz. With respect to all later Tom & Jerry posters, AVELA is authorized to make faithful reproductions, but not to reproduce those movie poster images on other products or to make derivative works based on Tom and Jerry. Accordingly, we affirm the grant of summary judgment to Warner Bros. and the permanent injunction crafted by the district court with respect to all other Tom & Jerry products.
III. CONCLUSION
For the foregoing reasons, we affirm in large part the district court’s grant of summary judgment to Warner Bros. on the issue of copyright infringement and the resulting permanent injunction. We reverse with respect to one category of AVELA products, and we vacate in corresponding part the permanent injunction entered by the district court. We remand for modification of the permanent injunction and further proceedings consistent with this opinion.
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Check Your Understanding – Warner Bros. I
Question 1. Once a copyrighted work enters the public domain, are members of the public free to use elements of the work in their own new creations?
Question 2. Can a film character be copyrighted?
Question 3. According to the Eighth Circuit in Warner Bros. I, what activities should the permanent injunction issued against the defendants encompass?
Some things to consider when reading Warner Bros. II:
- Five years after the Eighth Circuit affirmed the permanent injunction against AVELA in Warner Bros. I, the court issued the following decision affirming the district court’s award of statutory damages.
- 17 U.S.C. 504(c) provides for statutory damages as follows:
(c) Statutory Damages.—
(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, . . . in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.
(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200. The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107, if the infringer was: (i) an employee or agent of a nonprofit educational institution, library, or archives acting within the scope of his or her employment who, or such institution, library, or archives itself, which infringed by reproducing the work in copies or phonorecords; or (ii) a public broadcasting entity which . . . infringed by performing a published nondramatic literary work or by reproducing a transmission program embodying a performance of such a work.
- As noted in the introduction to this section of the casebook, in order to be eligible for statutory damages the copyright owner must register the work either prior to the infringement or within three months of publication. Statutory damages allow for an award of substantial damages to a copyright owner, even under circumstances in which the copyright owner is unable to establish the amount of actual damages or infringer profits. Courts have broad discretion to assess statutory damages at a level intended to punish the infringer and deter others from engaging in infringing conduct, functioning as a form of punitive damages.
Warner Bros. Entm’t v. X One X Prods. (Warner Bros. II)
840 F.3d 971 (8th Cir. 2016)
GRUENDER, Circuit Judge.
[Editor’s note: In its final order, the district court granted statutory damages under the Copyright Act in the amount of $10,000 per infringed copyright (257 copyrights for a total award of $2,570,000).]
AVELA argues that the $2,570,000 statutory damages award is disproportionate to the offense, insufficiently reasoned, and in violation of this court’s ruling in the previous appeal. AVELA fails to establish that this is the case.
We review damages awarded under the Copyright Act for clear error. The Supreme Court long ago declared that damages awarded pursuant to a statute violate due process only if they are so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.
The district court’s award of $10,000 per infringed work is not clearly erroneous. In Capitol Records, Inc. v. Thomas–Rasset, 692 F.3d 899 (8th Cir. 2012), this court upheld a statutory damages award of $9,250 per infringed work (for a total of $222,000) as consistent with due process, emphasizing the intentionally discretionary nature of statutory damages.5 Although the absolute amount of the award, not just the amount per violation, is relevant to whether the award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable, the total award of $2.57 million in the present case is not obviously unreasonable. As the district court explained, “This case has had a tortured and laborious discovery history,” in which AVELA’s intransigence rendered calculating actual damages impossible due to missing or inaccurate records. Importantly, the district court noted that over the many years of litigation (now a decade), AVELA did not cease the infringing activity at any time. That the district court therefore considered a substantial damages award necessary to deter future infringement and provide sufficient restitution to the copyright holder is not clearly erroneous. Additionally, while the total award in this case far exceeds the total award in Capitol Records, the defendant in that case was an individual sharing music files on a peer-to-peer network. AVELA’s activities are far more extensive, and the amount awarded per infringed work is well within the statutory range of $750 to $30,000. 17 U.S.C. § 504(c)(1). As a result, the award in this case is not obviously unreasonable.
Finally, the statutory damages award does not contravene this court’s decision in the prior appeal. The distinctions we drew between categories of activities that do and do not constitute copyright infringement do not bear on how a court determines the appropriate amount of statutory damages for those activities that did constitute infringement. The Copyright Act structures awards of statutory damages on the basis of each copyrighted work infringed, not on the basis of each instance of infringement. See 17 U.S.C. § 504(c)(1) (“[T]he copyright owner may elect … to recover … an award of statutory damages for all infringements involved in the action, with respect to any one work … in a sum of not less than $750 or more than $30,000 as the court considers just.”). We affirmed in the prior appeal that AVELA infringed each of Warner’s copyrights in The Wizard of Oz, Gone With the Wind, and Tom and Jerry cartoons in at least some respect. Accordingly, the district court did not contravene this court’s decision by awarding damages on a per work basis.
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Check Your Understanding – Warner Bros. II
Question 1. Which of the following was a valid justification for the amount of statutory damages awarded by the district court in Warner Bros. II?
Question 2. In a hypothetical case involving a single copyrighted work that was infringed by the defendant on 1000 separate occasions, which of the following awards of statutory damages would be within the range allowed by statute (assume that the infringement was not willful or innocent)?
Some things to consider when reading Capitol Records:
- This is a case involving unauthorized file sharing on the peer-to-peer network KaZaA. Which of the exclusive rights of the copyright owner are potentially infringed by file sharing? Which right(s) were found to be infringed in this case?
- The means by which the copyright owner detected and proved copyright infringement.
- The specific details of the district court’s permanent injunction, and the basis on which the appellate court held that the injunction must be modified.
- The amount of statutory damages awarded, and why the appellate court upheld it.
- The unresolved controversy as to whether simply making copyrighted works available to the public violates a copyright owners’ exclusive right to distribution under 17 U.S.C. § 106(3), regardless of whether actual distribution has been shown.
Capitol Records, Inc. v. Thomas-Rasset
692 F.3d 899 (8th Cir. 2012)
COLLOTON, Circuit Judge.
This appeal arises from a dispute between several recording companies and Jammie Thomas–Rasset. There is a complicated procedural history involving three jury trials, but for purposes of appeal, it is undisputed that Thomas–Rasset willfully infringed copyrights of twenty-four sound recordings by engaging in file-sharing on the Internet. After a first jury found Thomas–Rasset liable and awarded damages of $222,000, the district court granted a new trial on the ground that the jury instructions incorrectly provided that the Copyright Act forbids making sound recordings available for distribution on a peer-to-peer network, regardless of whether there is proof of “actual distribution.” A second jury found Thomas–Rasset liable for willful copyright infringement under a different instruction, and awarded statutory damages of $1,920,000. The district court remitted the award to $54,000, and the companies opted for a new trial on damages. A third jury awarded statutory damages of $1,500,000, but the district court ultimately ruled that the maximum amount permitted by the Due Process Clause of the Fifth Amendment was $54,000 and reduced the verdict accordingly. The court also enjoined Thomas–Rasset from taking certain actions with respect to copyrighted recordings owned by the recording companies.
The companies appeal two aspects of the remedy ordered by the district court. They object to the district court’s ruling on damages, and they seek an award of $222,000, which was the amount awarded by the jury in the first trial. In a cross-appeal, Thomas–Rasset argues that any award of statutory damages is unconstitutional, and urges us to vacate the award of damages altogether.
For reasons set forth below, we conclude that the recording companies are entitled to the remedies they seek: damages of $222,000 and a broadened injunction that forbids Thomas–Rasset to make available sound recordings for distribution. But because the verdicts returned by the second and third juries are sufficient to justify these remedies, it is unnecessary for this court to consider the merits of the district court’s order granting a new trial after the first verdict. Important though the “making available” legal issue may be to the recording companies, they are not entitled to an opinion on an issue of law that is unnecessary for the remedies sought or to a freestanding decision on whether Thomas–Rasset violated the law by making recordings available.
I.
Capitol Records, Inc., Sony BMG Music Entertainment, Arista Records LLC, Interscope Records, Warner Bros. Records, and UMG Recordings, Inc., are recording companies that own the copyrights to large catalogs of music recordings. In 2005, they undertook to investigate suspected infringement of these copyrights. MediaSentry, an online investigative firm hired by the recording companies, discovered that an individual with the username “tereastarr” was participating in unauthorized file sharing on the peer-to-peer network KaZaA.
During the relevant time period, KaZaA was a file-sharing computer program that allowed its users to search for and download specific files from other users. KaZaA users shared files using a share folder. A share folder is a location on the user’s computer in which the user places files—such as audio or video recordings—that she wants to make available for other users to download. KaZaA allowed its users to access other users’ share folders, view the files in the folder, and download copies of files from the folder.
MediaSentry accessed tereastarr’s share folder. The investigative firm determined that the user had downloaded copyrighted songs and was making those songs available for download by other KaZaA users. MediaSentry took screen shots of tereastarr’s share folder, which included over 1,700 music files, and downloaded samples of the files. But MediaSentry was unable to collect direct evidence that other users had downloaded the files from tereastarr. MediaSentry then used KaZaA to send two instant messages to tereastarr, notifying the user of potential copyright infringement. Tereastarr did not respond to the messages. MediaSentry also determined tereastarr’s IP address, and traced the address to an Internet service account in Duluth, Minnesota, provided by Charter Communications. MediaSentry compiled this data in a report that it prepared for the recording companies.
Using the information provided by MediaSentry, the recording companies, through the Recording Industry Association of America (RIAA), issued a subpoena to Charter Communications requesting the name of the person associated with tereastarr’s IP address. Charter informed the RIAA that the IP address belonged to Jammie Thomas–Rasset. The RIAA then sent a letter to Thomas–Rasset informing her that she had been identified as engaging in unauthorized trading of music and inviting her to contact them to discuss the situation and settle the matter. Thomas–Rasset contacted the RIAA as directed in the letter and engaged in settlement conversations with the organization. The parties were unable to resolve the matter.
In 2006, the recording companies sued Thomas–Rasset, seeking statutory damages and injunctive relief for willful copyright infringement. They alleged that Thomas–Rasset violated their exclusive right to reproduction and distribution under 17 U.S.C. § 106 by impermissibly downloading, distributing, and making available for distribution twenty-four copyrighted sound recordings.
A jury trial was held in October 2007. At trial, Thomas–Rasset conceded that “tereastarr” is a username that she uses regularly for Internet and computer accounts. She admitted familiarity with and interest in some of the artists of works found in the tereastarr KaZaA account. She also acknowledged that she wrote a case study during college on the legality of Napster—another peer-to-peer file sharing program—and knew that Napster was shut down because it was illegal. Nonetheless, Thomas–Rasset testified that she had never heard of KaZaA before this case, did not have KaZaA on her computer, and did not use KaZaA to download files. The jury also heard evidence from a forensic investigator that Thomas–Rasset removed and replaced the hard drive on her computer with a new hard drive after investigators notified her of her potential infringement. The new hard drive did not contain the files at issue.
At the close of evidence, the district court instructed the jury that one who reproduces or distributes a copyrighted work without license infringes the copyright. The court’s instructions defined “reproduction” to include “[t]he act of downloading copyrighted sound recordings on a peer-to-peer network.” The court also instructed that the act of “making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown.” The jury found Thomas–Rasset liable for willful infringement and awarded the recording companies statutory damages of $9,250 per work, for a total of $222,000.
Thomas–Rasset moved for a new trial or, in the alternative, for a remittitur, arguing that the size of the jury’s statutory damages award violated her rights under the Due Process Clause. The United States intervened to defend the constitutionality of the statute on statutory damages, 17 U.S.C. § 504(c). The recording companies also filed a post-trial motion, seeking to amend the judgment to include an injunction enjoining Thomas–Rasset from infringing the recording companies’ copyrights by “using the Internet or any online media distribution system to reproduce (i.e., download) any of Plaintiffs’ Recordings, to distribute (i.e., upload) any of Plaintiffs’ Recordings, or to make any of Plaintiffs’ Recordings available for distribution to the public.”
Several months later, the district court sua sponte raised the issue whether it erred by instructing the jury that making sound recordings available for distribution on a peer-to-peer network violates a copyright owners’ exclusive right to distribution, “regardless of whether actual distribution has been shown.” The parties filed supplemental briefs in which the recording companies defended the court’s instruction and Thomas–Rasset argued that the court erred when it instructed the jury on the “making available” issue. After a hearing, the district court granted Thomas–Rasset’s motion for a new trial on this alternative ground, holding that making a work available to the public is not “distribution” under 17 U.S.C. § 106(3). The issue whether making copyrighted works available to the public is a right protected by § 106(3) has divided the district courts. Compare, e.g., Atl. Recording Corp. v. Howell, 554 F.Supp.2d 976, 981–84 (D.Ariz.2008), and London–Sire Records v. Doe 1, 542 F.Supp.2d 153, 176 (D.Mass.2008), with Motown Record Co. v. DePietro, No. 04–CV–2246, 2007 WL 576284, at *3 (E.D.Pa. Feb. 16, 2007), and Warner Bros. Records, Inc., v. Payne, No. W–06–CA–051, 2006 WL 2844415, at *3 (W.D.Tex. July 17, 2006).
The district court convened a second trial in June 2009, at which the recording companies produced substantially the same evidence of Thomas–Rasset’s liability. At this trial, however, Thomas–Rasset attempted to deflect responsibility by suggesting for the first time that her children and former boyfriend might have done the downloading and file-sharing attributed to the “tereastarr” username. The court again instructed the jury that reproduction or distribution constituted copyright infringement. But this time, the court omitted reference to making works available and instructed the jury that “[t]he act of distributing copyrighted sound recordings to other users on a peer-to-peer network, without license from the copyright owners, violates the copyright owners’ exclusive distribution right.” The jury again found Thomas–Rasset liable for willful infringement, and awarded the recording companies statutory damages of $80,000 per work, for a total of $1,920,000.
Following the second trial, Thomas–Rasset filed a post-trial motion in which she argued that any statutory damages award would be unconstitutional in her case, but in the alternative that the court should reduce the jury’s award either through remittitur or based on the Due Process Clause. The district court declined to rule on the constitutional issue and instead remitted damages to $2,250 per work, for a total of $54,000, on the ground that the jury’s award was “shocking.” The recording companies declined the remitted award and exercised their right to a new trial on damages.
A third trial was held in November 2010, and the only question for the jury was the amount of statutory damages. The jury awarded the recording companies statutory damages of $62,500 per work, for a total of $1,500,000.
Thomas–Rasset then moved to alter or amend the judgment, again arguing that any statutory damages award would be unconstitutional, but alternatively that the district court should reduce the award under the Due Process Clause. The district court granted Thomas–Rasset’s motion and reduced the award to $2,250 per work, for a total of $54,000. The court ruled that this amount was the maximum award permitted by the Due Process Clause. The district court also entered a permanent injunction against Thomas–Rasset, but refused to include language enjoining her from “making available” copyrighted works for distribution to the public.
The recording companies appeal the judgment of the district court, arguing that the district court erred in (1) granting a new trial based on the “making available” instruction in the first trial, and (2) holding that the Due Process Clause limits statutory damages to $2,250 per infringed work. They request that we reinstate and affirm the first jury’s $222,000 award, and remand with instructions to grant an injunction prohibiting Thomas–Rasset from making the copyrighted works available to the public. Thomas–Rasset cross-appeals, arguing that even an award of the minimum statutory damages authorized by the Copyright Act would be unconstitutional.
II.
For the reasons set forth below, we conclude that when the district court entered judgment after the verdict in the third trial, the court should have enjoined Thomas–Rasset from making copyrighted works available to the public, whether or not that conduct by itself violates rights under the Copyright Act. We also conclude that statutory damages of at least $222,000 were constitutional, and that the district court erred in holding that the Due Process Clause allowed statutory damages of only $54,000.
A.
After the third trial, the district court entered an injunction that prohibits Thomas–Rasset from “using the Internet or any online media distribution system to reproduce (i.e., download) any of Plaintiffs’ Recordings, or to distribute (i.e., upload) any of Plaintiff’s Recordings.” The recording companies urged the district court to amend the judgment to enjoin Thomas–Rasset from making any of their sound recordings available for distribution to the public through an online media distribution system. The district court declined to do so on the ground that the Copyright Act does not provide an exclusive right to making recordings available. The court further reasoned that the injunction as granted was adequate to address the concerns of the companies. We review the grant or denial of a permanent injunction for abuse of discretion.
We conclude that the district court’s ruling was based on an error of law. Even assuming for the sake of analysis that the district court’s ruling on the scope of the Copyright Act was correct, a district court has authority to issue a broad injunction in cases where “a proclivity for unlawful conduct has been shown.” See McComb v. Jacksonville Paper Co., 336 U.S. 187, 192 (1949). The district court is even permitted to enjoin certain otherwise lawful conduct where the defendant’s conduct has demonstrated that prohibiting only unlawful conduct would not effectively protect the plaintiff’s rights against future encroachment. If a party has violated the governing statute, then a court may in appropriate circumstances enjoin conduct that allowed the prohibited actions to occur, even if that conduct standing alone, would have been unassailable.
Thomas–Rasset’s willful infringement and subsequent efforts to conceal her actions certainly show a proclivity for unlawful conduct. The recording companies rightly point out that once Thomas–Rasset makes copyrighted works available on an online media distribution system, she has completed all of the steps necessary for her to engage in the same distribution that the court did enjoin. The record also demonstrates the practical difficulties of detecting actual transfer of recordings to third parties even when a party has made large numbers of recordings available for distribution online. The narrower injunction granted by the district court thus could be difficult to enforce.
For these reasons, we conclude that the district court erred after the third trial by concluding that the broader injunction requested by the companies was impermissible as a matter of law. An injunction against making recordings available was lawful and appropriate under the circumstances, even accepting the district court’s interpretation of the Copyright Act. Thomas–Rasset does not resist expanding the injunction to include this relief. We therefore will direct the district court to modify the judgment to include the requested injunction.
B.
On the question of damages, we conclude that a statutory damages award of $9,250 for each of the twenty-four infringed songs, for a total of $222,000, does not contravene the Due Process Clause. The district court erred in reducing the third jury’s verdict to $2,250 per work, for a total of $54,000, on the ground that this amount was the maximum permitted by the Constitution.
The Supreme Court long ago declared that damages awarded pursuant to a statute violate due process only if they are “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.” St. Louis, I. M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67 (1919). Under this standard, Congress possesses a wide latitude of discretion in setting statutory damages. Williams is still good law, and the district court was correct to apply it.
Thomas–Rasset urges us to consider instead the “guideposts” announced by the Supreme Court for the review of punitive damages awards under the Due Process Clause. When a party challenges an award of punitive damages, a reviewing court is directed to consider three factors in determining whether the award is excessive and unconstitutional: “(1) the degree of reprehensibility of the defendant’s misconduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the punitive damages award; and (3) the difference between the punitive damages awarded by the jury and the civil penalties authorized or imposed in comparable cases.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 418 (2003); see also BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574–75 (1996).
The Supreme Court never has held that the punitive damages guideposts are applicable in the context of statutory damages. Due process prohibits excessive punitive damages because “elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment, but also of the severity of the penalty that a State may impose.” This concern about fair notice does not apply to statutory damages, because those damages are identified and constrained by the authorizing statute. The guideposts themselves, moreover, would be nonsensical if applied to statutory damages. It makes no sense to consider the disparity between “actual harm” and an award of statutory damages when statutory damages are designed precisely for instances where actual harm is difficult or impossible to calculate. Nor could a reviewing court consider the difference between an award of statutory damages and the “civil penalties authorized,” because statutory damages are the civil penalties authorized.
Applying the Williams standard, we conclude that an award of $9,250 per each of twenty-four works is not “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.” Congress, exercising its wide latitude of discretion,” set a statutory damages range for willful copyright infringement of $750 to $150,000 per infringed work. 17 U.S.C. § 504(c). The award here is toward the lower end of this broad range. As in Williams, “the interests of the public, the numberless opportunities for committing the offense, and the need for securing uniform adherence to [federal law]” support the constitutionality of the award.
Congress’s protection of copyrights is not a “special private benefit,” but is meant to achieve an important public interest: “to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 429 (1984). With the rapid advancement of technology, copyright infringement through online file-sharing has become a serious problem in the recording industry. Evidence at trial showed that revenues across the industry decreased by fifty percent between 1999 and 2006, a decline that the record companies attributed to piracy. This decline in revenue caused a corresponding drop in industry jobs and a reduction in the number of artists represented and albums released.
Congress no doubt was aware of the serious problem posed by online copyright infringement, and the numberless opportunities for committing the offense, when it last revisited the Copyright Act in 1999. To provide a deterrent against such infringement, Congress amended § 504(c) to increase the minimum per-work award from $500 to $750, the maximum per-work award from $20,000 to $30,000, and the maximum per-work award for willful infringement from $100,000 to $150,000.
Thomas–Rasset contends that the range of statutory damages established by § 504(c) reflects only a congressional judgment “at a very general level,” but that courts have authority to declare it “severe and oppressive” and “wholly disproportioned” in particular cases. The district court similarly emphasized that Thomas–Rasset was “not a business acting for profit, but rather an individual consumer illegally seeking free access to music for her own use.” By its terms, however, the statute plainly encompasses infringers who act without a profit motive, and the statute already provides for a broad range of damages that allows courts and juries to calibrate the award based on the nature of the violation.
In holding that any award over $2,250 per work would violate the Constitution, the district court effectively imposed a treble damages limit on the $750 minimum statutory damages award. The district court based this holding on a “broad legal practice of establishing a treble award as the upper limit permitted to address willful or particularly damaging behavior.” Any “broad legal practice” of treble damages for statutory violations, however, does not control whether an award of statutory damages is within the limits prescribed by the Constitution. The limits of treble damages to which the district court referred, such as in the antitrust laws or other intellectual property laws, represent congressional judgments about the appropriate maximum in a given context. They do not establish a constitutional rule that can be substituted for a different congressional judgment in the area of copyright infringement. Although the United States seems to think that the district court’s ruling did not question the constitutionality of the statutory damages statute, the district court’s approach in our view would make the statute unconstitutional as applied to a significant category of copyright infringers. The evidence against Thomas–Rasset demonstrated an aggravated case of willful infringement by an individual consumer who acted to download and distribute copyrighted recordings without profit motive. If an award near the bottom of the statutory range is unconstitutional as applied to her infringement of twenty-four works, then it would be the rare case of noncommercial infringement to which the statute could be applied.
Thomas–Rasset’s cross-appeal goes so far as to argue that any award of statutory damages would be unconstitutional, because even the minimum damages award of $750 per violation would be “wholly disproportioned to the offense” and thus unconstitutional. This is so, Thomas–Rasset argues, because the damages award is not based on any evidence of harm caused by her specific infringement, but rather reflects the harm caused by file-sharing in general. The district court similarly concluded that “statutory damages must still bear some relation to actual damages.” The Supreme Court in Williams, however, disagreed that the constitutional inquiry calls for a comparison of an award of statutory damages to actual damages caused by the violation. Because the damages award is imposed as a punishment for the violation of a public law, the Legislature may adjust its amount to the public wrong rather than the private injury, just as if it were going to the state. The protection of copyrights is a vindication of the public interest, and statutory damages are by definition a substitute for unproven or unprovable actual damages. For copyright infringement, moreover, statutory damages are designed to discourage wrongful conduct, in addition to providing restitution of profit and reparation for injury.
Thomas–Rasset highlights that if the recording companies had sued her based on infringement of 1,000 copyrighted recordings instead of the twenty-four recordings that they selected, then an award of $9,250 per song would have resulted in a total award of $9,250,000. Because that hypothetical award would be obviously excessive and unreasonable, she reasons, an award of $222,000 based on the same amount per song must likewise be invalid. Whatever the constitutionality of the hypothetical award, we disagree that the validity of the lesser amount sought here depends on whether the Due Process Clause would permit the extrapolated award that she posits. The absolute amount of the award, not just the amount per violation, is relevant to whether the award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable. The recording companies here opted to sue over twenty-four recordings. If they had sued over 1,000 recordings, then a finder of fact may well have considered the number of recordings and the proportionality of the total award as factors in determining where within the range to assess the statutory damages. If and when a jury returns a multi-million dollar award for noncommercial online copyright infringement, then there will be time enough to consider it.
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Check Your Understanding – Capitol Records
Question 1. True or false: A court is not permitted to enter an injunction against a copyright infringer that encompasses conduct that by itself does not violate any rights under the Copyright Act and is otherwise lawful.
Question 2. Which of the following limits the discretion of a district court in determining the amount of statutory damages to award in a case in which liability for copyright infringement has been established?
Some things to consider when reading Am. Soc’y for Testing & Materials:
- The bulk of this decision appeared earlier in the fair use section of this casebook. The following excerpt addresses the issuance of injunctions.
- Note the importance of equitable considerations in determining whether an injunction is warranted, and if warranted, the appropriate scope of that injunction.
Am. Soc’y for Testing & Materials v. Public.Resource.Org, Inc.
82 F.4th 1262 (D.C. Cir. 2023)
Katsas, Circuit Judge.
. . .
III
Finally, the plaintiffs contend that the district court abused its discretion by refusing to enjoin Public Resource after finding that it had infringed the copyrights for the 32 standards not incorporated by reference into law. We disagree.
The Copyright Act provides that a district court “may … grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement.” 17 U.S.C. § 502(a). Such language gives the court “considerable discretion” in deciding whether to issue an injunction. Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858, 865 (Fed. Cir. 1984) (interpreting analogous language in the Patent Act). Thus, the Supreme Court has “consistently rejected invitations to replace traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright has been infringed.” eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 392–93 (2006).
One important equitable consideration is whether the defendant “has ceased its infringing conduct and shows no inclination to repeat the offense.” Reader’s Digest Ass’n v. Conservative Digest, Inc., 821 F.2d 800, 807 (D.C. Cir. 1987). If so, a court may decline to enter an injunction. See id. (defendants had ceased infringing trade dress, and district court “had ample reason to find that they did not intend to infringe again”); Harolds Stores, Inc. v. Dillard Dep’t Stores, Inc., 82 F.3d 1533, 1555 (10th Cir. 1996) (“When there is no probability or threat of continuing infringements, injunctive relief is ordinarily inappropriate.” (citing 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 14.06[B] (1995))).
Here, the district court reasonably declined to enter an injunction. Public Resource promptly removed from its website the 32 standards found not to have been incorporated into law. Moreover, the district court found that Public Resource intends “to only post documents that have been incorporated into law,” and the plaintiffs do not challenge this finding as clearly erroneous. Nor do they point to any instance where Public Resource intentionally posted a standard knowing that it had not been incorporated. So, an injunction is unlikely to serve any useful purpose. And as the district court explained, the public would be greatly disserved by an injunction barring distribution of any of the 32 standards which may later be incorporated by reference into law.
The plaintiffs object that Public Resource has continued to post additional standards since this lawsuit began. This misses the point—what Public Resource intends to continue is its permissible practice of posting incorporated standards for educational purposes. The plaintiffs also cite cases where a defendant ceased infringement after being “caught red-handed” yet would likely attempt future infringement if the threat of punishment disappeared. Walt Disney Co. v. Powell, 897 F.2d 565, 568 (D.C. Cir. 1990). But as noted above, the plaintiffs give us no reason to think that Public Resource will post unincorporated standards again absent an injunction.
For these reasons, the district court reasonably exercised its discretion in declining to award injunctive relief.
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Check Your Understanding – Am. Soc’y for Testing & Materials
Question 1. Under what circumstances is it appropriate for a court to decline to enter an injunction in a case in which liability for copyright infringement has been established?
Some things to consider when reading Columbia Pictures:
- This decision appears in the section of this casebook pertaining to the distribution right and first sale doctrine. The following excerpt addresses the court’s decision to award statutory damages.
- Note the discretion afforded judges in determining the amount of statutory damages to assess.
Columbia Pictures Indus., Inc. v. Garcia
996 F. Supp. 770 (N.D. Ill. 1998)
ASPEN, Chief Judge.
. . .
B. Damages
The plaintiffs have elected, as is their right, to receive statutory damages in accordance with 17 U.S.C. § 504(a)(2) and (c)(1). This entitles them to recover between $500 and $20,000 for each infringement, and in an effort to avoid creating material issues of fact on willfulness, the plaintiffs asked for the $500 minimum for the purposes of this motion. Garcia responds that his infringement was innocent, an assertion which he believes creates a genuine issue of material fact since 17 U.S.C. § 504(c)(2) gives us discretion to reduce the infringement award to $200 per infringement where “the infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright.” In support, Garcia swears that he did not personally duplicate the tapes (and that he did not have the equipment necessary to do so) and that he bought them from third parties.
Section 504(c)(2) makes the reduction of the statutory damages entirely discretionary, and even if Garcia could “sustain the burden of proving” that his infringement was innocent, we would decline to reduce the damages. Garcia possessed a large number of unauthorized copies (133) of a large number of movies (102), a fact which we believe belies his innocent infringer claim. In addition, the plaintiffs have presented substantial evidence that unauthorized videotapes are easily distinguishable from authorized videotapes, and as the proprietor of a video rental business, Garcia should have recognized (if he did not actually know) that his tapes were fakes. In short, Garcia cannot persuade us to reduce his damages. He infringed the copyrights of 102 movies, and we grant the plaintiffs their requested damages: $500 per infringement, for a total of $51,000.
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Check Your Understanding – Columbia Pictures
Question 1. True or false: The maximum amount of statutory damages in a case involving innocent infringement is $200 per infringed work?
Some things to consider when reading EMI Christian Music Grp.:
- This decision appeared earlier in the DMCA safe harbor section of this casebook. The following excerpts address statutory damages.
- The questions for the court are whether to (1) allow only one award of statutory damages where the copyrights to the sound recording and to the musical composition are owned by separate plaintiffs, and (2) allow separate statutory damages awards for songs that issued as singles, even if those songs were also made available on albums.
EMI Christian Music Grp., Inc. v. MP3tunes, LLC
844 F.3d 79 (2d Cir. 2016)
LOHIER, Circuit Judge:
. . .
C. Statutory Damages
The plaintiffs also challenge the District Court’s decision to allow only one award of statutory damages where the copyrights to the sound recording and to the musical composition are owned by separate plaintiffs. Section 504(c) of Title 17 provides that a “copyright owner may elect … to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work” in an amount of up to $30,000 if the infringer acted innocently or of up to $150,000 if the infringer acted willfully. For the purposes of § 504(c) , all the parts of a compilation or derivative work constitute one work. A derivative work is “a work based upon one or more preexisting works, such as a … sound recording.” 17 U.S.C. § 101. If “there are several different versions of plaintiff’s work, each of which commands a separate copyright,” but “the defendant’s work incorporates material covered by each of those copyrights,” the Copyright Act “provides for but a single statutory damages award.” 5 Nimmer on Copyright § 14.04[E][1][b].
As noted, the District Court held that the plaintiffs could recover only one statutory damages award for a musical composition and its corresponding sound recording, even where the composition and the recording were owned by separate plaintiffs. In doing so, it agreed with those district courts that have concluded that infringement of a musical composition and its corresponding sound recording entitles a plaintiff to only one statutory damages award. Other courts, meanwhile, have explained that multiple statutory damages can be awarded when the copyrights to the sound recording and the musical composition are owned by different plaintiffs.
A plain reading of the Copyright Act’s text supports the District Court’s conclusion. See Patry on Copyright § 22:186 (“Sound recordings are defined in section 101 as a species of derivative work of the underlying musical composition, and, as such, both fall within the one work, one award rule for statutory damages that only award[s] for infringement of both works … regardless of whether there are different owners.”).
Both the House Report and the Senate Report accompanying the Copyright Act reinforce this point:
Subsection (c)(1) [of 17 U.S.C. § 504] makes clear … that, although they are regarded as independent works for other purposes, “all the parts of a compilation or derivative work constitute one work” for th[e] purpose [of assessing statutory damages]. Moreover, although the minimum and maximum amounts are to be multiplied where multiple “works” are involved in the suit, the same is not true with respect to multiple copyrights, multiple owners, multiple exclusive rights, or multiple registrations. This point is especially important since, under a scheme of divisible copyright, it is possible to have the rights of a number of owners of separate “copyrights” in a single “work” infringed by one act of a defendant.
In our view, then, Congress did not intend for separate statutory damages awards for derivative works such as sound recordings, even when the copyright owner of the sound recording differs from the copyright owner of the musical composition.
In sum, the District Court’s decision to permit only one award of statutory damages for the musical composition and corresponding sound recording comports with both the plain text and the legislative history of the Copyright Act. We therefore affirm that part of the judgment.
. . .
[Editor’s note: One of the defendants (Robertson) also challenged the District Court’s award of statutory damages.]
i. Statutory Damages
Robertson claims that the District Court’s award of multiple statutory damages for music singles and the albums on which they appear was error. As previously noted, statutory damages are awarded for infringement of each copyrighted “work.” 17 U.S.C. § 504(c). Several of the songs relevant to the trial were issued both as singles and as part of albums. The District Court instructed the jury that, so long as the plaintiffs proved that “on the date of infringement, each individual sound recording at issue in this case was available for purchase as a single,” it could issue multiple statutory damages awards for singles that appeared on the same album. The jury found that each song was available for purchase as a single on the date of infringement.
Materials that are sold as part of a compilation, such as songs on an album, ordinarily are not deemed separate works for the purpose of determining statutory damages. But when a copyright holder or publisher issues material on an independent basis, the law permits a statutory damages award for each individual work. See Twin Peaks Prods., Inc. v. Publ’ns Int’l, Ltd., 996 F.2d 1366, 1381 (2d Cir. 1993). In other words, our focus is on whether the plaintiff—the copyright holder—issued its works separately, or together as a unit. For these reasons, we conclude that the District Court properly allowed separate statutory damages awards for songs that the plaintiffs issued as singles, even if those songs were also made available on albums.
And there was evidence at trial that all the songs in question were made available as singles on the date of infringement. For example, an EMI and Capitol Records executive testified that, with the exception of tracks by Bob Seger and the Beatles, as well as one track by Pink Floyd, EMI’s entire catalog was available for download and sale as singles, and that this amounted to “95 to 98 percent of our total catalogue available.” Based on this and other evidence, the District Court did not err in upholding the jury’s verdict of statutory damages.
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Check Your Understanding – EMI Christian Music Grp.
Question 1. True or false: In a case in which copyrights to a musical composition and its corresponding sound recording are owned by separate plaintiffs, only one award of statutory damages is allowed.
Some things to consider when reading Ventura Content:
- This decision appeared earlier in the DMCA safe harbor section of this book. The following excerpt addresses an award of attorney’s fees.
Ventura Content, Ltd. v. Motherless, Inc.
885 F.3d 597 (9th Cir. 2018)
KLEINFELD, Senior Circuit Judge:
. . .
The district court did not abuse its discretion by denying an award of attorney’s fees to Motherless. Among the factors bearing on the exercise of discretion are “(1) the degree of success obtained; (2) frivolousness; (3) motivation; (4) the objective unreasonableness of the losing party’s legal and factual arguments; and (5) the need, in particular circumstances, to advance considerations of compensation and deterrence.”6
The district court noted that Ventura’s claim was neither objectively unreasonable nor frivolous because prior Ninth Circuit precedent had not directly addressed several arguments that Ventura raised. Ventura’s motivation was not improper, nor was there a need to deter the claims that Ventura made. It had, after all, been the victim of copyright infringement and sued parties that played a role in the infringement. It was thwarted only because of the complexities of the safe harbor rules that had not yet been fully explicated in the case law.
__________
Some things to consider when reading Glacier Films:
- The court’s discussion of copyright trolls and the proliferation of peer-to-peer internet piracy suits.
- The Ninth Circuit’s admonishment of the district court for basing its denial of attorney’s fees on its view of BitTorrent litigation in general and the conduct of the plaintiff’s counsel in other suits, rather than the plaintiff’s case against this particular defendant.
- The so-called “Fogerty factors,” which guide the court’s discretion in determining whether to award attorney’s fees, originated in Fogerty v. Fantasy, Inc., a 1994 Supreme Court decision. The Fogerty factors afford courts wide latitude to award attorney’s fees based on the totality of circumstances in a case.
Glacier Films (USA), Inc. v. Turchin
896 F.3d 1033 (9th Cir. 2018)
McKEOWN, Circuit Judge:
This appeal stems from one of the many copyright infringement lawsuits filed against individuals who unlawfully download and distribute movies online. As digital pirates increasingly use BitTorrent and other peer-to-peer networks to share media, copyright holders have pressed the courts for recourse. These suits are not without controversy: many involve “copyright trolls” who buy up copyrights to adult films and then sue masses of unknown BitTorrent users for illegally downloading pornography.7 This one is different: a film production company sued a single user who illegally downloaded and distributed repeatedly American Heist, a Hollywood action movie.
An important remedy under the Copyright Act provides that courts “may” award attorney’s fees to a prevailing party in an infringement action. In Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), the Supreme Court laid out factors to guide discretion in whether to award fees. Because the district court did not faithfully apply the “Fogerty factors” in this meritorious BitTorrent action, we reverse and remand for consideration of an award of reasonable attorney’s fees. The court’s denial of fees under the present circumstances—based on a one-size-fits-all disapproval of other BitTorrent suits—requires a remand.
BACKGROUND
For context, we discuss the proliferation of peer-to-peer Internet piracy suits before clicking through to the specifics of this case.
PEER-TO-PEER INTERNET PIRACY SUITS
Peer-to-peer networking involves a decentralized infrastructure whereby each participant in the network … acts as both a supplier and consumer of information resources. In other words, “peers” download content from fellow peers, while leaving their own folders of digital content available for others to download. One type of peer-to-peer networking involves the BitTorrent protocol, in which a file is broken up into smaller pieces from various peers and then reassembled upon completion of a download. With BitTorrent, each user is both downloading and uploading several different pieces of a file from and to multiple other users. Peer-to-peer networks like BitTorrent are ideally suited for sharing large files, a feature that has led to their adoption by, among others, those wanting access to pirated media, including music, movies, and television shows.
Digital piracy of copyrighted materials on peer-to-peer networks can have severe financial consequences for copyright holders. As one member of Congress put it:
Under U.S. law, stealing intellectual property is just that—stealing. It hurts artists, the music industry, the movie industry, and others involved in creative work. And it is unfortunate that the software being used—called “file sharing,” as if it were simply enabling friends to share recipes, is helping create a generation of Americans who don’t see the harm.
Privacy and Piracy: the Paradox of Illegal File Sharing on Peer-To-Peer Networks and the Impact of Technology on the Entertainment Industry: Hearing Before the S. Comm. on Governmental Affairs, 108th Cong. 10–14 (2003) (statement of Sen. Levin); see also id. at 1–2 (statement of Sen. Boxer) (asserting that “downloading copyrighted works is theft” and “is a real problem”).
To combat losses from peer-to-peer file sharing, copyright holders have filed a spate of lawsuits against infringers in federal courts across the country.
Facing a “large number of similar peer-to-peer copyright infringement cases,” in March 2016 the United States District Court for the District of Oregon sought a practical solution and established special procedural rules in a “Case Management Order.” Among other things, the Order allows copyright holders to seek limited discovery from an Internet Service Provider to establish a potential infringer’s identity, directs that holders must alert potential defendants of the availability of pro bono counsel to defend against infringement claims, and limits holders to suing one alleged BitTorrent infringer at a time.
GLACIER’S LAWSUIT IN OREGON
Glacier Films (USA), Inc. and Glacier Films 1, LLC (collectively, “Glacier”) hold valid and enforceable copyrights in the film American Heist. Scheduled for widespread theatrical release in January 2015, Heist instead leaked prematurely on BitTorrent, where it became a top downloaded (i.e., pirated) movie. According to Glacier, over 100,000 Internet Protocol (“IP”) addresses illegally downloaded and exchanged the copyrighted film on BitTorrent.
Tracking one such infringing IP address to Oregon, Glacier brought suit in district court against the John Doe owner and subpoenaed records from Comcast to ascertain the Doe’s identity. Glacier selected that particular IP address because the user distributed the film 80 times and was associated with over 700 other titles. When records revealed Andrey Turchin as the owner of the IP address, Glacier sent two letters seeking his participation in determining who downloaded the movie. After Turchin proved non-responsive, Glacier obtained leave to depose him. At his deposition, Turchin admitted to downloading copyrighted content with that IP address, right up until the day before his deposition.
Glacier amended its complaint to name the avid BitTorrent user as the single defendant and sent Turchin a letter advising him of the district court’s pro bono program so that he could obtain assistance in filing a responsive pleading. After nearly three months of attempting to contact Turchin, Glacier filed a motion for default. The court appointed pro bono counsel filed an answer raising various affirmative defenses, denying liability, and seeking costs and attorney’s fees. On that same day, Turchin provided Glacier with a Rule 68 Offer of Judgment in which Turchin offered to pay $2,501 to Glacier in exchange for Glacier’s agreement that the sum would satisfy all debts and obligations related to the suit, including any claim for damages, costs and attorney’s fees. A few days later, Turchin filed an amended answer removing five of the seven affirmative defenses, but continuing to deny liability and maintaining his own request for costs and fees.
After conferring, the parties reached a stipulated consent judgment. Per the agreement, Turchin stipulated to the “allegations that give rise to liability for the infringement of [Glacier’s] rights” and to $750 in statutory damages. The court permanently enjoined Turchin from using the Internet to reproduce, copy or publish American Heist, and ordered him to immediately delete any unlicensed copies of the movie in his possession. The parties agreed that “any award of reasonable attorneys fees shall be determined by the [c]ourt in accordance with 17 U.S.C. § 505 and pursuant to [Federal Rule of Civil Procedure] 54.” Glacier moved for costs of $791.70 and attorney’s fees totaling $4,833.35. The court awarded costs to Glacier but denied any attorney’s fees.
ANALYSIS
The Copyright Act, coupled with extensive precedent from both the Supreme Court and our court, lay the foundation for our analysis. The statute states simply that the district court “may … award a reasonable attorney’s fee to the prevailing party as part of the costs.” 17 U.S.C. § 505. Although the court enjoys wide latitude to award attorney’s fees based on the totality of circumstances in a case, its discretion must remain tethered to judicial guideposts.
The Supreme Court in Fogerty provided a nonexclusive list of factors for courts to consider in making a fee determination: “frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” We have added factors that “may be considered” and “need not all be met”: the degree of success obtained in the litigation, the purposes of the Copyright Act, and “whether the chilling effect of attorney’s fees may be too great or impose an inequitable burden on an impecunious [litigant].” Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 675 (9th Cir. 2017). We recently re-affirmed our commitment to these factors, but emphasized that district courts should “accord substantial weight to” the “reasonableness of [the] losing party’s legal and factual arguments.” Shame On You Prods., Inc. v. Banks, 893 F.3d 661, 666 (9th Cir. 2018).
I. THE DISTRICT COURT ABUSED ITS DISCRETION IN APPLYING THE FACTORS
Although the court properly cited all of the Supreme Court and Ninth Circuit factors, it focused on three—“minimal success” in the litigation, the lack of need for further deterrence, and the goals of the Copyright Act. The court’s analysis was infused with criticism of other BitTorrent cases as well as a critique of Glacier’s counsel in other file sharing litigation. While we understand that prolific BitTorrent litigation has taxed the courts and that the District of Oregon has adopted a sensible way to manage its dockets, individual cases nonetheless deserve to be judged on their own merits and not saddled with a blanket indictment against peer-to-peer copyright litigation. The sheer volume of suits should not preordain a court’s fee determination in any one suit. Nor should an individual client, such as Glacier, be penalized for the tactics of its counsel in other cases.
For these and the more specific reasons explained below, we conclude that the court misapplied the factors on which it focused while omitting analysis of other factors that may counsel toward an award of fees—including the unreasonableness of the losing party’s (Turchin’s) conduct.
A. THE DEGREE OF SUCCESS IN THE LITIGATION
The district court noted that Glacier’s suit was “not frivolous,” but went on to conclude that its success was “minimal.” In fact, Glacier’s infringement suit against Turchin was a “total success.” Glacier alleged that Turchin copied and distributed American Heist through a public BitTorrent network without Glacier’s permission; Turchin’s actions infringed on Glacier’s exclusive rights under the Copyright Act; and Turchin’s conduct was “willful, intentional, in disregard of and indifferent to [Glacier’s] rights with the intent to deprive [Glacier] of income and cause [Glacier] harm.” Turchin stipulated to those facts giving rise to liability and to $750 in statutory damages for violating the Copyright Act. Despite Glacier’s complete victory, the district court did not weigh the degree of success in the litigation in Glacier’s favor; instead, the court twisted total triumph into a conclusion that “the degree of success in each of these BitTorrent copyright cases is minimal.”
The court’s reasons for reaching this unexpected outcome lack support in the law and the record. To begin, the court observed that “the $750 statutory damage award Defendant has agreed to pay is low in relation to the amount of attorney fees Plaintiffs have accrued ($4,833.45), to achieve that result.” This is a flawed premise that mixes and matches actual success with the determination of a reasonable fee award. Actual success in an infringement action involves establishing the defendant’s liability. An award of a “reasonable” attorney’s fee requires a separate determination of an amount, which may consider the hours worked among other factors.
The court did not cite any precedential authority that a small (and agreed upon) amount of statutory damages is a reflection of “minimal success.” To the contrary, we have expressed concern that a small award for damages, without fees, may be insufficient to deter future copyright infringements such as the one at issue here.
The Seventh Circuit has gone so far as to announce a “presumptive entitlement” to fees for a “prevailing party in a copyright case in which the monetary stakes are small.” Gonzales v. Transfer Techs., Inc., 301 F.3d 608, 610 (2002). We do not adopt such a presumption because doing so would collide with Supreme Court guidance and is not consistent with the statute. Nevertheless, the policy rationale underlying the presumption—that “willful infringements involving small amounts of money” may not be “adequately deterred” absent an award of fees—is a principle that bears on the calculus of whether to award fees.
As a factual matter, we consider it curious that the district court focused on the $750 statutory damages amount. In doing so, the district court elided that Turchin offered to pay Glacier $2,501 in exchange for Glacier’s agreeing that the sum would satisfy all debts and obligations related to Glacier’s lawsuit, including any claim for damages, costs and attorney’s fees. That Glacier’s counsel rejected the $2,501 offer in favor of $750 in stipulated damages and the opportunity for costs and fees hardly reveals “minimal success” in the litigation; rather, it underscores a belief that Glacier had a strong legal case for costs and fees.
Next, the court reasoned that because American Heist had been illegally downloaded over 100,000 times and this suit yielded an injunction against only one infringer, “that result is de minimis in relation to the serious online piracy problem Plaintiffs seek to combat.” This conclusion makes little sense in light of the district court’s Case Management Order, which allows copyright holders to sue only one BitTorrent infringer at a time. Under that Order, an injunction against one infringer is the best possible result Glacier could have achieved in this suit. An assertion that “lots of other people are doing it, too” is not a persuasive equitable principle and does not counsel toward a denial of fees. Instead, we see dissonance between the district court’s citation to the large number of infringers and its conclusion that fees are unnecessary as a deterrent.
B. DETERRENCE
Overall, the district court did not appropriately weigh the interests of deterrence and compensation. The court asserted without support that a “financial penalty” of $1,500 (consisting of the costs and the agreed statutory damages) “is sufficient to deter [Turchin], as well as others, from illegally downloading movies in the future.” The record belies this contention.
In fact, Turchin continued to use BitTorrent to pirate copyrighted content even after he received notice that he might be at risk of legal penalties—right up until the day before his deposition. Turchin was “associated with” 700 pirated titles, an amount that may be worth more in economic value than $1,500. An avid BitTorrent user like Turchin may rationally decide that the risk of being caught and sued for $1,500 is worth the price of admission for access to unlimited media.
Further, the district court identified various BitTorrent cases with stipulated consent judgments of over $8,000 that settled before Turchin continued to download copyrighted titles. If those larger judgments did not deter Turchin and his peers from using BitTorrent, why would a “penalty” a fraction of that size deter willful infringements in the future? The district court’s assertion does not add up.
We recognize that new technologies have strained application of certain sections of the Copyright Act, but the attorney’s fee provision is not one of them. In fact, in recognition of the ubiquity of file sharing and the need to enhance deterrence, in 1999, Congress increased available statutory damages: raising minimum damages from $500 to $750, maximum damages for non-willful infringements from $20,000 to $30,000, and maximum damages for willful infringements from $100,000 to $150,000. One need look no further than the statutory title to see what Congress had in mind: The Digital Theft Deterrence and Copyright Damages Improvement Act. As one member of Congress stated at the time: “Copyright piracy … is flourishing in the world. With the advanced technologies available and the fact that many computer users are either ignorant of the copyright laws or simply believe that they will not be caught or punished, the piracy trend will continue” absent increased penalties. By passing the Deterrence Act, Congress specifically acknowledged that consumer-based, noncommercial use of copyrighted materials constituted actionable copyright infringement and contemplated that suits like this were within the Act.
In raising the stakes for unlawful digital file-sharing, however, Congress left the attorney’s-fees provision intact. Given that congressional choice, it is not logical to resolve that statutory damages alone sufficiently deter this species of copyright infringement—while making fees categorically unavailable. If now, almost two decades after the Deterrence Act, copyright trolls and mass filings present a further public policy issue, then Congress should step in. Meanwhile, we must judge each case on its own merits.
C. THE GOALS OF THE COPYRIGHT ACT
The goal of the Copyright Act is “to promote creativity for the public good.” Fogerty, 510 U.S. at 524 (“The primary objective of the Copyright Act is to encourage the production of original literary, artistic, and musical expression for the good of the public.”). Inherent in the Act’s purpose is that a copyright holder has always had the legal authority to bring a traditional infringement suit against one who wrongfully copies. In the Internet Age, such suits have served as a teaching tool, making clear that much file sharing, if done without permission, is unlawful, and apparently have had a real and significant deterrent effect.
This is not a case of the infringer creating something new and incorporating a copyrighted element into that new, creative work. See Williams v. Gaye, 885 F.3d 1150, 1177 (9th Cir. 2018) (affirming the denial of fees in an infringement award involving the 2013 Robin Thicke and Pharrell Williams song “Blurred Lines” and the 1977 Marvin Gaye song “Got to Give It Up”). Rather, this case is the digital equivalent of standing outside the neighborhood Redbox—or Blockbuster Video, for fans of history—and giving away copies of the movie for free. Nevertheless, the district court did not analyze whether Turchin’s conduct furthers or frustrates the goals of the Copyright Act.
Nor did the district court find that Glacier acted contrary to those goals in this particular case. Instead, its decision rested on a view that awarding “attorney fees in this case would only contribute to the continued overaggressive assertion and negotiation of” other copyright claims. Apparently, the court saw the fact that Glacier’s counsel had filed 300 copyright actions against BitTorrent infringers as an “overaggressive assertion[ ] of copyright claims,” which counseled toward a denial of fees.
The court based its decision on generalizations about other BitTorrent cases, not on the totality of circumstances in this case. It is revealing that the court observed that another district court had denied fees in a “similar BitTorrent copyright case,” despite the fact that the other case is quite dissimilar. In Countryman Nevada, LLC v. DOE, copyright holders “conducted th[e] litigation in a manner calculated to increase the opposing party’s costs.” 193 F.Supp.3d 1174, 1182 (D. Or. 2016). Unlike Turchin, the alleged infringer downloaded the movie by accident, “promptly conduct[ed] an investigation,” admitted liability, and offered to settle without asserting spurious defenses. The copyright holders refused to settle unless the infringer paid $8,500, even after the infringer claimed financial hardship.
The district court nonetheless lumped the present case together with the worst of “these BitTorrent copyright cases,” even though it shares none of the unsavory characteristics. Here, Glacier did not “demand thousands of dollars to settle a claim … where the infringing defendant admits early in the case that they illegally downloaded the movie.” The company did not seek a confidential or uncounseled settlement not subject to court approval, or “pursue particularly vulnerable individuals.” Nor is Glacier a quintessential “copyright troll”—a term defined by the district court as an entity “more focused on the business of litigation than on selling a product or service or licensing their [copyrights] to third parties to sell a product or service.” Glacier produced American Heist, a Hollywood feature film with a substantial budget and a recognizable cast, including Hayden Christensen, Adrien Brody, and Jordana Brewster. The company prepared the film for widespread North American theatrical release. When that fell through—in part, Glacier contends, because of illegal downloads before the release date—Glacier released the movie on DVD and Blu-Ray and licensed the movie for legal, commercial download on services such as Amazon. Glacier’s production and marketing of artistic content shares little resemblance to entities hiding in the shadows, buying the copyrights to pornographic films (without creating anything), and seeking settlements from crowds of John Does embarrassed that they were “caught” downloading tawdry titles. See AF Holdings, 752 F.3d at 992–93 (describing the “modus operandi” of a copyright troll).
D. OBJECTIVE UNREASONABLENESS AND FRIVOLOUSNESS
District courts do not necessarily need to analyze all of the factors set out in the cases, as those factors are discretionary and non-exclusive. But in misapplying the three factors on which it focused, the court passed over a factor that “carries significant” or “substantial weight.” Notably, the district court never once mentioned the unreasonableness of the losing party’s (Turchin’s) factual and legal position. Instead, the court referred only to the prevailing party’s (Glacier’s) position, confirming that “a copyright holder’s action against an individual BitTorrent copyright infringer is not frivolous under the Copyright Act.”
We emphasize the reasonableness factor because “[w]hen a litigant … is clearly correct, the likelihood that he will recover fees from the opposing (i.e., unreasonable) party gives him an incentive to litigate the case all the way to the end. The holder of a copyright that has obviously been infringed has good reason to bring and maintain a suit even if the damages at stake are small.” Kirtsaeng, 136 S.Ct. at 1986. The Supreme Court’s guidance squarely addresses the present case.
The failure to analyze Turchin’s conduct in the litigation is particularly problematic because his actions added to Glacier’s attorney’s fees. Although an infringer with no reasonable defense has every reason to give in quickly, before each side’s litigation costs mount, Turchin delayed resolution of this case for nearly eight months from when he was first notified of Glacier’s claims. Because Turchin did not respond to letter inquiries, Glacier needed to seek leave to subpoena Turchin for a deposition. There, Turchin admitted to regularly using BitTorrent to download content. Notwithstanding those admissions, Turchin did not file a responsive pleading for almost three months, causing Glacier to file a notice of default in May 2016. Only then did Turchin file an answer.
Despite having previously admitted to regularly using BitTorrent to download media without permission and conceding that he downloaded American Heist, Turchin denied liability, sought costs and fees from Glacier, and asserted seven baseless affirmative defenses. For example, Turchin argued that “[a]ny downloading or uploading of the copyrighted work was permitted by the doctrine of fair use” and that the film was not eligible for copyright protection under the doctrine of scenes a faire. But, in fact, this was not “a close and difficult case.” Seltzer v. Green Day, Inc., 725 F.3d 1170, 1181 (9th Cir. 2013). The district court, however, never considered the unreasonableness of Turchin’s positions.
II. ON REMAND, THE DISTRICT COURT MUST ASSESS THE SPECIFICS OF THIS CASE
In sum, based on a generally unfavorable view of other BitTorrent litigation, the district court abused its discretion by denying fees without assessing the particulars of this case. The court’s analysis of whether fees are warranted should be based on Glacier’s case against Turchin—and not on the court’s view of BitTorrent litigation in general or on the conduct of Glacier’s counsel in other suits. To be sure, the unfortunate facts of other BitTorrent cases may well warrant a denial of fees in certain cases. But an approach that furthers the goals of the Copyright Act considers the facts of a given case, weighs the appropriate factors, and makes a fee determination based on the conduct of both parties.
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Check Your Understanding – Glacier Films
Question 1. Under what circumstances is it appropriate for a court to award attorney’s fees to a prevailing party in a copyright infringement lawsuit?
Some things to consider when reading Cobbler Nevada:
- In this decision the Ninth Circuit affirms a district court’s award of attorney’s fees to a defendant sued for copyright infringement.
- What could the plaintiff have done in this case to avoid the award of attorney’s fees?
- Do you see any way for the plaintiff to enforce its copyright in the face of this sort of infringement?
Cobbler Nevada, LLC v. Gonzales
901 F.3d 1142 (9th Cir. 2018)
McKEOWN Circuit Judge
In this copyright action, we consider whether a bare allegation that a defendant is the registered subscriber of an Internet Protocol (“IP”) address associated with infringing activity is sufficient to state a claim for direct or contributory infringement. We conclude that it is not.
After tracing infringement of its copyrights to a particular IP address, Cobbler Nevada, LLC filed suit against the John Doe IP address for direct and contributory copyright infringement. Cobbler Nevada soon discovered that the IP address was registered to Thomas Gonzales, who operated an adult foster care home. Cobbler Nevada then amended its complaint to name Gonzales as the sole defendant, alleging that he directly infringed by copying and distributing copyrighted works himself or, in the alternative, contributed to another’s infringement by failing to secure his internet connection.
The district court properly dismissed Cobbler Nevada’s claims. The direct infringement claim fails because Gonzales’s status as the registered subscriber of an infringing IP address, standing alone, does not create a reasonable inference that he is also the infringer. Because multiple devices and individuals may be able to connect via an IP address, simply identifying the IP subscriber solves only part of the puzzle. A plaintiff must allege something more to create a reasonable inference that a subscriber is also an infringer. Nor can Cobbler Nevada succeed on a contributory infringement theory because, without allegations of intentional encouragement or inducement of infringement, an individual’s failure to take affirmative steps is internet connection is insufficient to state a claim.
BACKGROUND
Cobbler Nevada holds copyrights in the film The Cobbler, a magic realism film that features “[a] cobbler, bored of his everyday life, [who] stumbles upon a magical heirloom that allows him to become other people….” The Cobbler, IMDB, https://www.imdb.com/title/tt3203616/ (last visited July 26, 2018). Like a number of major motion pictures scheduled for theatrical release, The Cobbler has been the subject of unauthorized downloading and distribution (i.e., pirating) through BitTorrent networks. See generally Glacier Films (USA), Inc. v. Turchin, 896 F.3d 1033, 1035–36 (9th Cir. 2018) (providing background on piracy via peer-to-peer BitTorrent networks). According to Cobbler Nevada, there have been over 10,000 instances of infringing activity of The Cobbler traced to Oregon alone.
Cobbler Nevada identified an IP address located in Portland, Oregon, that had downloaded and distributed The Cobbler multiple times without authorization. Cobbler Nevada filed suit against the unknown holder of the IP address—named in the complaint as Doe-24.21.136.125— for direct and contributory copyright infringement. Records subpoenaed from Comcast identified Thomas Gonzales as the subscriber of the internet service associated with the IP address.
After several attempts to reach Gonzales, Cobbler Nevada’s counsel finally connected with Gonzales via telephone. Once counsel learned that the internet service was accessible to both residents and visitors at an adult care home, he concluded that “it does not appear that [Gonzales] is a regular occupant of the residence or the likely infringer.” Due to confidentiality concerns, Gonzales refused to share the names or work schedules of the individuals living and working in the home without a court order. Although the district court granted leave to depose Gonzales, the deposition revealed no new information regarding the identity of the actual infringer.
Nevertheless, Cobbler Nevada filed a First Amended Complaint and named Gonzales as the sole defendant. Cobbler Nevada alleged that Gonzales “copied and distributed” The Cobbler or, in the alternative,“facilitated and promoted the use of the internet for the infringing of [Cobbler Nevada’s] exclusive rights under the Copyright Act” by failing to “reasonably secure, police and protect” the use of his internet service. Cobbler Nevada also claimed that Gonzales “ha[d] been sent over 400 notices of infringing activity,” yet “failed and refused to take any action whatsoever and either continued to infringe by using BitTorrent to download and distribute copyrighted content or continued to allow infringing activity after such notices.”
The only facts in support of Cobbler Nevada’s direct infringement claim were that Gonzales was “the subscriber of the IP address used to download or distribute the movie, and that he was sent notices of infringing activity to which he did not respond.” Relying on the magistrate judge’s reasoning that these allegations were “not enough” to state a claim because there were no facts connecting Gonzales to the infringing activity, the district court dismissed the direct infringement claim without prejudice.
The district court also dismissed the contributory infringement claim, which rested on the theory that Gonzales failed to stop infringement by others after being notified of such infringement. The court wrote that liability arises by “actively encouraging … infringement through specific acts,” and not by mere failure to take affirmative steps to prevent infringement. Cobbler Nevada’s failure to allege that Gonzales “promoted, encouraged, enticed, persuaded, or induced another to infringe any copyright, let alone [Cobbler Nevada’s] copyright,” sunk the claim.
The district court gave Cobbler Nevada three weeks to file an amended complaint. Instead of amending its claims against Gonzales, Cobbler Nevada filed a Second Amended Complaint in which, once again, it named the Doe IP address as the sole defendant. No new factual allegations were added. The magistrate judge ordered Cobbler Nevada to show cause why the Second Amended Complaint should not be dismissed for failure to cure the deficiencies identified in the court’s dismissal of the First Amended Complaint, or for failure to identify the unknown party in a timely manner pursuant to Federal Rule of Civil Procedure 4(m). Less than a week later, Cobbler Nevada filed a notice of voluntary dismissal.
Gonzales then filed a motion requesting entry of judgment dismissing the case and for attorney’s fees for the contributory infringement claim. The district court granted the motion and awarded Gonzales attorney’s fees of $17,222.40 and costs of $252.20.
ANALYSIS
I. The District Court Properly Dismissed Cobbler Nevada’s Direct Infringement Claim Without Prejudice
Although copyright owners can often trace infringement of copyrighted material to an IP address, it is not always easy to pinpoint the particular individual or device engaged in the infringement. Internet providers, such as Comcast or AT & T, can go so far as to identify the individual who is registered to a particular IP address (i.e., an account holder) and the physical address associated with the account, but that connection does not mean that the internet subscriber is also the infringer. The reasons are obvious—simply establishing an account does not mean the subscriber is even accessing the internet, and multiple devices can access the internet under the same IP address. Identifying an infringer becomes even more difficult in instances like this one, where numerous people live in and visit a facility that uses the same internet service. While we recognize this obstacle to naming the correct defendant, this complication does not change the plaintiff’s burden to plead factual allegations that create a reasonable inference that the defendant is the infringer.
The only connection between Gonzales and the infringement was that he was the registered internet subscriber and that he was sent infringement notices. To establish a claim of copyright infringement, Cobbler Nevada “must show that [it] owns the copyright and that the defendant himself violated one or more of the plaintiff’s exclusive rights under the Copyright Act.” Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). Cobbler Nevada has not done so.
II. The District Court Properly Dismissed Cobbler Nevada’s Contributory Infringement Claim With Prejudice
A claim for contributory infringement requires allegations that the defendant is “one who, with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another.” Fonovisa v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996). Cobbler Nevada’s contributory infringement claim is premised on a bare allegation that Gonzales failed to police his internet service. This perfunctory allegation, without more, does not sufficiently link Gonzales to the alleged infringement.
At the outset, we recognize that Gonzales’s position—a subscriber to internet service—does not fit cleanly within our typical contributory liability framework, which often involves consumer-facing internet platforms. Nevertheless, it is no leap to apply the framework of similar technology-based cases to our analysis of Gonzales’s liability.
In Sony Corp. of America v. Universal City Studios, Inc., the Supreme Court held that liability for another’s infringement cannot arise from the mere distribution of a product that is “widely used for legitimate, [non-infringing] purposes.” The Court later refined the standard for liability, holding that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Grokster, 545 U.S. at 919. In essence, the limitation of liability in Sony—premised on a refusal to impute intent to a defendant based solely on knowledge that a product might be used for infringement—does not apply “where evidence … shows statements or actions directed to promoting infringement.” The Court was clear, however, that “in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses.”
Although circuit courts approach contributory liability through varying lenses, our circuit has identified two strands of liability following Sony and Grokster: “actively encouraging (or inducing) infringement through specific acts” or “distributing a product distributees use to infringe copyrights, if the product is not capable of ‘substantial’ or ‘commercially significant’ noninfringing uses.”
Turning to the first strand, Cobbler Nevada’s complaint lacks any allegations that Gonzales “actively encouraged or induced infringement through specific acts.” Because a “failure to take affirmative steps to prevent infringement” alone cannot trigger liability, Grokster, 545 U.S. at 939 n.12, Cobbler Nevada failed to “state a claim to relief that is plausible on its face,” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
Nor does the second strand implicate Gonzales. Providing internet access can hardly be said to be distributing a product or service that is not “capable of substantial” or “commercially significant noninfringing uses.”
We note that Cobbler Nevada’s theory both strays from precedent and effectively creates an affirmative duty for private internet subscribers to actively monitor their internet service for infringement. Imposing such a duty would put at risk any purchaser of internet service who shares access with a family member or roommate, or who is not technologically savvy enough to secure the connection to block access by a frugal neighbor. This situation hardly seems to be one of “the circumstances in which it is just to hold one individual accountable for the actions of another.”
III. The District Court Did Not Abuse its Discretion By Awarding Attorney’s Fees
The Copyright Act states that the district court “may … award a reasonable attorney’s fee to the prevailing party as part of the costs….” 17 U.S.C. § 505. Gonzales is the “prevailing party” because Cobbler Nevada’s contributory infringement claim was dismissed with prejudice. In awarding fees to Gonzales, the district court acted within its discretion.
The court enjoys wide latitude to award attorney’s fees based on the totality of circumstances in a case, though “its discretion must remain tethered to judicial guideposts.” Glacier Films, 896 F.3d at 1037 (quoting Kirtsaeng v. John Wiley & Sons, Inc., 136 S.Ct. 1979, 1985 (2016) ). To guide the district court’s discretion, the Supreme Court and our court have provided a “nonexclusive” list of factors for courts to consider in making a fee determination. Id.; see also Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994).
The district court properly applied the Supreme Court’s “Fogerty factors” to the particulars of this case. To begin, the court focused on the objective unreasonableness of the losing party’s litigating position, a factor that carries “substantial weight.” Specifically, the court flagged as unreasonable Cobbler Nevada’s decision to name Gonzales as the defendant, even after concluding that Gonzales was not “a regular occupant of the residence or a likely infringer.” The court also considered deterrence: it reasoned that awarding fees would deter Cobbler Nevada from an “overaggressive pursuit of alleged infringers without a reasonable factual basis” while encouraging defendants with valid defenses to defend their rights. See Fogerty, 510 U.S. at 534 n.19. The court’s rationale is in keeping with the purposes of the Copyright Act.
On the whole, the district court considered the facts of this case, weighed the appropriate factors, and made a fee determination based on the conduct of both parties. We thus uphold the fee determination.
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Check Your Understanding – Cobbler Nevada
Question 1. “Deterrence” is one of the Fogerty factors courts consider when exercising their discretion in the award of attorney’s fees in copyright cases. What exactly is an award of attorney’s fees intended to “deter”?
FOOTNOTES:
1 This summarized version of the facts is taken from Frank Music Corp. v. Metro-Goldwyn-Mayer Inc., 886 F.2d 1545 (9th Cir. 1989) (Frank Music II), which appears later in this casebook.
2 Applicable here since the actions complained of all occurred prior to January 1, 1978. See Copyright Revision Act of 1976, Pub.L. No. 94–533, § 112, 90 Stat. 2541, 2600; Kamar International, Inc. v. Russ Berrie & Co., 752 F.2d 1326, 1329 (9th Cir.1984). The citations to the Copyright Act contained in this opinion are to the 1909 Act, unless otherwise indicated.
3 Under the current Copyright Act, 17 U.S.C. § 504, a prevailing plaintiff is entitled to recover both 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.” (emphasis added)
4 Some of the still photographs for The Wizard of Oz and a few of the movie posters for the Tom & Jerry films complied with copyright notice provisions, but those copyrights were not timely renewed.
5 Editor’s note: Capitol Records, Inc. v. Thomas–Rasset appears later in this casebook.
6 Seltzer v. Green Day, Inc., 725 F.3d 1170, 1180–81 (9th Cir. 2013) (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)).
7 See, e.g., AF Holdings, LLC v. Does 1–1058, 752 F.3d 990, 992 (D.C. Cir. 2014); In re BitTorrent Adult Film Copyright Infringement Cases, 296 F.R.D. 80, 82 (E.D.N.Y. 2012).
