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The new fuzzy logic of copyright damages

What’s all this about the Supreme Court and copyright damages?

So we got that part over with.  Now, I have written a bit about the first-sale aspects of prior iterations of the Kirtsaeng case, and a bit about copyright damages, myself.  Now, however, thanks to the Supreme Court, it’s two great tastes in one candy bar!  So here’s part of what Rajit Kapur of Banner & Witcoff has to say (footnotes omitted):

KapurRajit-53433-4414_CYesterday, the U.S. Supreme Court ruled in Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375, that it is appropriate for a court to give substantial weight to the reasonableness of a losing party’s position when deciding whether to award attorney’s fees in a case brought under the Copyright Act as long as “all other relevant factors” are taken into account. In delivering this opinion for a unanimous Court, Justice Kagan essentially adopted a more flexible and expansive version of the approach advocated for by Wiley (the copyright owner), which primarily turned on whether a losing party’s arguments were objectively reasonable. . .

After Kirtsaeng lost at trial, the case ultimately reached the Supreme Court, which ruled in a 6-3 decision that Kirtsaeng’s actions did not constitute copyright infringement because Wiley’s exclusive rights in the textbooks that Kirtsaeng obtained abroad were exhausted under the “first sale” doctrine. In the three years that have passed since the Supreme Court’s previous ruling, the case has returned to the district court, where Kirtsaeng is now seeking an award of attorney’s fees from Wiley.

Under U.S. copyright laws, a “court may […] award a reasonable attorney’s fee to the prevailing party as part of the costs.” The Supreme Court previously addressed this section of the copyright laws in Fogerty v. Fantasy Inc., 510 U.S. 517, 29 USPQ2d 1881 (1994). In Fogerty, the Court held that “[p]revailing plaintiffs and prevailing defendants are to be treated alike, but attorney’s fees are to be awarded to prevailing parties only as a matter of the court’s discretion.” The Court also discussed in Fogerty several “nonexclusive” factors that “may be used to guide courts’ discretion” in deciding whether to award attorney’s fees, “so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner.”

In the proceedings below, both the district court and the Second Circuit denied Kirtsaeng’s bid for attorney’s fees. In doing so, they followed Second Circuit precedent that places “substantial weight” on the “objective reasonableness” factor — which asks whether the non-prevailing party’s claims were “objectively reasonable” — relative to the other factors discussed in Fogerty.

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The Nutty Ninth

Originally posted 2007-12-21 11:32:26. Republished by Blog Post Promoter

Michael Atkins:

The Ninth Circuit yesterday addressed the question: “whether an award of statutory damages for trademark counterfeiting under 15 U.S.C. § 1117(c) precludes an award of attorney’s fees under 15 U.S.C. § 1117(b).” Reversing the Central District of California in the case of K and N Engineering, Inc. v. Bulat, the Ninth Circuit found that it does. . . .

This seems like a strange result. Injured trademark owners opt for statutory damages because counterfeiters don’t keep records needed for the injured owners to prove damages or the counterfeiters’ profits. If a counterfeiter keeps good records, Section 1117(b) generally enables the injured trademark owner to obtain a judgment for “three times such profits or damages, whichever is greater, together with a reasonable attorney’s fee….” But if a counterfeiter doesn’t keep good records, the injured owner only gets statutory damages? I suppose the statute says what it says, but from a policy standpoint, this conclusion makes no sense.

Michael is right on. This ridiculous holding is contrary to many cases, including one I was involved in, Louis Vuitton Malletier v. Veit. What are these guys thinking?!

UPDATE:  For what they’re thinking, read the insightful comments below from Ryan Fountain, the successful attorney for the appellants.

Money for nothing

Originally posted 2012-06-21 10:41:43. Republished by Blog Post Promoter

Manhattan view, June 2011 - 12Dead horse?  You’d think so.  Copyright statutory damages, that is.  We’ve been there, and done that, right?

Not according to Larry Zerner, who says the calls are still coming in:

Because my firm will sometimes handle copyright infringement cases on a contingency fee basis, I often get phone calls that go something like this.

Caller: I would like to sue someone for copyright infringement.

Me: Okay.  What did they do?

Caller: They took a picture of mine and put it on their website.

Me: Are you a professional photographer?

Caller: No.  But I registered the photograph with the Copyright Office. So now they owe me $150,000.  Right? . . . Right?

This seems to be where the confusion comes in.

Well, see, that just means people aren’t reading the right blogs before picking up the phone!  More:

[M]any people assume that I will jump at the chance to represent them on a contingency fee basis, because I will certainly be able to get a jury to award damages of $150,000 The problem is that they are not looking at the case realistically.  Reader, ask yourself this question. If you were on a jury and had to decide statutory damages on a case where the sole infringement was that a photograph was put up on a website, are you going to give that photographer $150,000.  Probably not.

He’s right, of course.  Except when he’s wrong.  But, no, he’s right.

Best of 2009: “Infinity Dollars” — IP damages and the jury, Part 1

JuryA lot of people, including judges, lawyers and civilians, don’t seem to really understand what statutory damages are all about.  They are not supposed to be a windfall (discussed more here).  But just tell that to the jury that awarded “infinity dollars” — practically — to the Lords of Music for what was indeed knowing copyright infringement of two dozen songs, and to the person on whose head the jury just laid that award.

I’m not an “information wants to be free” nutter, and musical compositions aren’t “information” anyway except to the most heartless utilitarian, but Stan Schroeder (presumably no nutter either, but probably to my left on this issue) hits it right on the head:

Ten Years of LIKELIHOOD OF CONFUSION®

In one of the most ridiculous verdicts I’ve seen, the jury decided that Jammie Thomas-Rasset, the first woman who was charged with copyright infringement and offered to settle but decided to fight the RIAA, is guilty and owes the recording industry 1.92 million dollars, or $80,000 per song.

As we mentioned in our original article, Jammie’s case was full of holes, and she probably would have done better if she had just settled with the RIAA. But what’s striking here is the amount of money awarded to the recording industry for infringing the copyright for just one song.

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Righthaven – Media Bloggers Association files amicus brief

I’ve written a little bit about the Righthaven lawsuits before.  Now, as reported in the Las Vegas Sun, on behalf of the Media Bloggers Association I’ve helped write something that could matter, namely this amicus brief, the laboring oar of which was manned by Marc Randazza and J. Malcolm DeVoy out of Randazza’s shop:

The focus is on the propriety and scope of copyright statutory damages in the situation.

UPDATE:  They opposed; we replied.

Best of 2013: The superheroes of trademarks

Originally published on April 15, 2013.Del MonteWhat could be more superheroic, after all, than splitting one trademark into two sources of origin?

Maybe trying to make some sense out of how courts award relief in trademark infringement claims.

You think I’m talking about the SUPERHERO “trademark”?  No, not that again!  (Not for now.)

The issue, brought to my attention by Pamela Chestek, is Del Monte v. Del Monte — technically, Fresh Del Monte Produce Inc. v. Del Monte Foods Co., et. al, a slightly different story from that involving the DC-Marvel litigation-intimidation-powered duopoly over the non-trademark English word “superhero.”  Pamela quotes from the relevant recent Southern District opinion:

This is the second trial between the two companies entitled to use the Del Monte brand and trademark. [Defendant] DMC is the successor to the original Del Monte, which in 1989 spun off its fresh fruit division. That division became [plaintiff] Fresh, which focuses on selling fresh fruit products, and DMC has since focused on distributing preserved, rather than fresh, produce. In splitting up the business, Del Monte also divided the rights to use the Mark in a license agreement between DMC and Fresh’s predecessor. DMC sold Fresh the rights — often to the exclusion of DMC’s own rights — to use the Mark on certain products primarily comprising fresh fruit and vegetables, while DMC largely retained the exclusive right to use the Mark on preserved produce.

Two federal court trials and twenty-four years later, however, the parties still disagree about the meaning of the License Agreement.

As Pamela says, “When you have two businesses using the same trademark in such closely related fields, it’s a guarantee for litigation as they each edge up to the line trying to sell as much as possible — there is no such thing as taking a conservative position on market share.”  That’s putting it mildly.  And she asks the million dollar question, as follows:

Oy vey. I know, for some business reasons it was advisable to split the company, there was (and is) a lot of goodwill in the mark, not granting a license would have significantly impaired the success of the new business, they couldn’t put too many restrictions on the new company’s use of the mark or it would reduce the value of the new company, and on and on. I’m sure it seemed like a good idea at the time; I wonder what the parties think of it now. And I titled this post “two owners” for a reason — is this really a licensor-licensee relationship or in effect a concurrent use agreement?

To some extent I guess it is what it is, and labels be darned, but after all trademarks are all about labels, and perhaps here there is a distinction between the two.  It wasn’t obvious to me what that distinction would be, but, as you will see, it is obvious to more knowledgeable people.

First, a detour, though not unrelated, at least conceptually.   Read More…

Copyright injunctions Рplus ̤a change

Morning in ManhattanLast summer I mentioned the new law in the Ninth Circuit — or, as I insisted, the clarification of the existing law — to the effect that a copyright plaintiff is not entitled to a presumption of irreparable harm, and thus an injunction, merely upon a finding of infringement.

David Kalow and Milton Springut point out in the New York Law Journal that this has been the law in the Second Circuit since the 2010 decision in Salinger v. Colting — reported on here for other reasons.  These lads usually represent plaintiffs, but their article is well balanced and worth taking a look at.  Despite their typical position in copyright litigation, they’re not too broken up about this development, as they explain:

[I]n both copyright and trademark cases, the Second Circuit held that once likelihood of success was shown, there arose a presumption of irreparable harm. Thus, as a practical matter, a trademark or copyright owner seeking a preliminary injunction had to focus on proving a strong likelihood of success on the merits. Once proven, and absent unusual circumstances (most usually delay in seeking relief), entry of a preliminary injunction was almost routine. . . .

Ostensibly, Salinger appears to be a major change, adding significant new burdens for a copyright or trademark plaintiff seeking a preliminary injunction. However, a review of the decided cases in the Second Circuit since Salinger reveals that generally the new standard is of little practical difference. Once likelihood of success on the merits is shown, it is usually an easy matter to prove the other factors. We discuss each of the three Salinger factors (aside from likelihood of success), what is required to meet them, and how courts have found them to be satisfied.

Yep, that’s how it usually works out.  Plaintiffs don’t get a free pass on irreparable harm, but once plaintiffs have proved infringement, there aren’t too many situations where they can’t prove harm too.

What is interesting about the analysis in the article, and a little troubling, is that it seems to confirm just what a defendant’s lawyer would expect:   Read More…

The superheroes of trademarks

Del MonteWhat could be more superheroic, after all, than splitting one trademark into two sources of origin?

Maybe trying to make some sense out of how courts award relief in trademark infringement claims.

You think I’m talking about the SUPERHERO “trademark”?  No, not that again!  (Not for now.)

The issue, brought to my attention by Pamela Chestek, is Del Monte v. Del Monte — technically, Fresh Del Monte Produce Inc. v. Del Monte Foods Co., et. al, a slightly different story from that involving the DC-Marvel litigation-intimidation-powered duopoly over the non-trademark English word “superhero.”  Pamela quotes from the relevant recent Southern District opinion:

This is the second trial between the two companies entitled to use the Del Monte brand and trademark. [Defendant] DMC is the successor to the original Del Monte, which in 1989 spun off its fresh fruit division. That division became [plaintiff] Fresh, which focuses on selling fresh fruit products, and DMC has since focused on distributing preserved, rather than fresh, produce. In splitting up the business, Del Monte also divided the rights to use the Mark in a license agreement between DMC and Fresh’s predecessor. DMC sold Fresh the rights — often to the exclusion of DMC’s own rights — to use the Mark on certain products primarily comprising fresh fruit and vegetables, while DMC largely retained the exclusive right to use the Mark on preserved produce.

Two federal court trials and twenty-four years later, however, the parties still disagree about the meaning of the License Agreement.

As Pamela says, “When you have two businesses using the same trademark in such closely related fields, it’s a guarantee for litigation as they each edge up to the line trying to sell as much as possible — there is no such thing as taking a conservative position on market share.”  That’s putting it mildly.  And she asks the million dollar question, as follows:

Oy vey. I know, for some business reasons it was advisable to split the company, there was (and is) a lot of goodwill in the mark, not granting a license would have significantly impaired the success of the new business, they couldn’t put too many restrictions on the new company’s use of the mark or it would reduce the value of the new company, and on and on. I’m sure it seemed like a good idea at the time; I wonder what the parties think of it now. And I titled this post “two owners” for a reason — is this really a licensor-licensee relationship or in effect a concurrent use agreement?

To some extent I guess it is what it is, and labels be darned, but after all trademarks are all about labels, and perhaps here there is a distinction between the two.  It wasn’t obvious to me what that distinction would be, but, as you will see, it is obvious to more knowledgeable people.

First, a detour, though not unrelated, at least conceptually.  Pamela links to Marty Schwimmer’s commentary on the case, which focuses on the all-important question in the decision of whether the facts could support a finding of willful infringement such as to justify the award of legal fees.  Marty expresses some surprise that what seems to have been pretty willful infringement wasn’t found willful enough to qualify as an “exceptional case” under the Lanham Act’s fee-shifting provisions (few are, of course).  There is also a link to a piece by Rebecca Tushnet (but the direct link to it doesn’t work), where she analyzes the case at length, also noting, in part, an odd bit about the court’s decision not to award prejudgment interest:

 And while we’re noting the Alice-in-Wonderland quality of trademark analysis, chew on this as a reason to deny prejudgment interest: “notwithstanding the difficulty in measuring Fresh’s injuries, any financial harm to Fresh has been adequately compensated by the jury award. No more is needed.”  Damages are adequate, except when they’re not, because trademark.  Got it!

Yes, because trademark, as usual.  (Actually, lots of interest was awarded, including prejudgment interest under New York’s obscene N.Y. C.P.L.R. § 5001, which provides for prejudgment interest in breach of contract actions at a fixed annual rate of 9% (not compounded, however).  Just not certain kinds of prejudgment interest.)  What Rebecca, growing more and more charmingly cynical about this whole business as the years go by, meant by “damages are adequate, except when they’re not,” is the court’s explanation of a question I’ve had myself:  Is a permanent injunction necessary where, as here, there is a pretty good damage calculation available, and the complained-of conduct has ceased (and its lawfulness has been adjudicated)?   Read More…

Default of da system? Or, “Tally Ho!”

Via this patently entertaining post I was alerted to this somewhat more analytical one by Venkat Balasubramani, with Eric Goldman riding shotgun, decrying the $100 million default judgment entered in favor of Hermès:

We’ve blogged repeatedly about trademark owners obtaining ex parte orders that provide extraordinarily broad relief, ranging from domain name seizures to orders directing search engines and social networks to “delist” or “deindex” certain websites. In the run-up to SOPA’s introduction and consideration, it seemed relevant to keep track of what relief courts were willing to order under current law that overlapped with SOPA. Hermès recently initiated a similar case. In a breathtakingly short amount of time, Hermès filed its complaint, obtained a temporary restraining order and then an injunction, and finally obtained a judgment . . . in the amount of one hundred million dollars. (!!)

. . .

What’s most striking about this case is how the court grants astronomical damages without any supporting evidence of actual damages. Usually when someone asks for damages, even in a default judgment setting, the court has a prove-up hearing and requires the party put forthsome evidence in support of their claim for damages. Granted, the evidence may not be subject to the rigorous examination of an adversarial proceeding, but the court is still supposed to take an independent look at the request for damages and make sure it’s kosher. (See, for example the Seventh Circuit’s decision in e360 v. Spamhaus: “Spamhaus off the hook for $11 million judgment.”) Here, there was no evidence of damages whatsoever. A party’s failure to “participate in litigation” or comply with court orders is sometimes used as a basis for a harsh award in the form of sanctions, but a court will almost always give someone a chance and warn them before coming down on them. A party’s failure to respond to lawsuit documents that were emailed to them–particularly where there’s no proof even that the documents have been received by the defendants–is not the type of scenario where courts typically smack defendants for frustrating the judicial process.

Yeah, well.  They do, actually, and even in less justifiable circumstances.  But not usually this much.

Is there a real difference, however?  Isn’t the real question is how big a meaningless, symbolic bit of press-release-fodder does the judge want to give the plaintiff here?  Heck, when I got the $3 million for LVMH in the Veit case,* they were pretty pleased back at the office.  It’s a kind of sport!  Tally ho!

You know when I ask questions like that what’s going to happen, right?  Well, I always like to see if I can piggyback on someone even smarter than I am.  That’s usually Eric Goldman:

OK, so Hermès gets a big, empirically indefensible, uncollectable damages award ex parte. Um…yay…?

Can someone please explain to me how an award like this does any good for anyone? If anything, I think outcomes like this breed disrespect for trademark owners and for the judicial system. Trademark owners look like greedy SOBs making such pie-in-the-sky demands using procedural shortcuts that almost certainly negate any possibility of opposition.

Ooh, almost!  Yes.  Everything Venkat and Eric say is right.  Judges give out these default judgment dollars like they’re giving out Pez candies.  And here’s the last little point, though — another reason why it matters:  Because this judgment represents a new order of magnitude in the inflationary process by which judges and juries in IP cases involving no proof of damages get to what I’ve called infinity dollar verdicts.

And beyond bringing this entire process into disrepute, those things are no game.  They ruin real people’s lives.

* Please, it’s not all about me (any more than any other blogging is), and I’m not name-dropping. I am trying to establish credibility among those few readers — those who came in late — who might think I am merely a bomb-tosser.  Merely.

Also, it’s all about me.

Oy, Tenenbaum

A while ago I wrote a little piece linking to Doug Lichtman’s exploration of the Tenenbaum copyright case, which Harvard law professor Charles Nesson said would be a “a public referendum not only on the music industry’s efforts to enforce copyright through these direct-infringer suits, but also on the copyright rules that make the industry litigation possible.”

Well, I hope he wasn’t counting the judge, or the jury, as part of the “public.” Now it’s over, or at least the not-such-a-referendum part.  It didn’t go such a good way, though, for Tenenbaum.  This came down on Friday:

Judge Nancy Gertner has ruled against alleged unauthorized file sharer Joel Tenenbaum today, ruling that he is liable for copyright infringement.
Just yesterday, Tenenbaum confessed to illegally sharing 30 tracks through Limewire and other P2P clients . . .
“Notwithstanding the protestations of Tenenbaum’s counsel, Tenenbaum’s statement plainly admits liability on both downloading and distributing, does so in the very language of the statute (no ‘making available’ ambiguity) and does so with respect to each and every sound recording at issue here,” wrote Judge Gertner . . .

Well, that would be a tough formula to beat.  Which makes the following even less surprising:

After just three hours of deliberations, a jury has ruled that convicted pirate Joel Tenenbaum has willfully infringed on copyrights, and has awarded the RIAA and the media companies $675,000 USD, $22,500 for each of the 30 songs he admitted to sharing.
In some ways, Tenenbaum should be grateful, as the jury could have awarded up to $150,000 in penalties per track. In the recent ruling against Jammie Thomas-Rasset, the jury awarded the RIAA $1.92 million USD, on only 24 tracks.
Tenenbaum’s Harvard Law professor Charles Nesson added of the decision: “It’s a bankrupting award.”

I know the feeling, only when I hit the wall I didn’t think I was driving head-first into a statutory brick wall as Tenenbaum was here.  My client actually had the law on its side, plus humble old LIKELIHOOD OF CONFUSION®. Whereas Tenenbaum seemed to have, well, Professor Nesson, fighting fiercely.

I’m still trying to figure out exactly what the secret stragety was, or is, here.

On the other hand, the RIAA was ecstatic with the jury’s decision.

Yeah, they’ll do that every time!

Okay, does the referendum begin now?  And if so, does that stay execution of the judgment?  I sure hope so.  But I wouldn’t rely on your voting on it.