IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks - March 23, 2012

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Table of Contents

 Ouellette v. Viacom Int'l, Inc., USDC D. Montana, March 13, 2012

 Click here for a copy of the full decision.
 

  • District court dismisses with prejudice plaintiff’s claim of misrepresentation of copyright infringement under the Digital Millennium Copyright Act, holding that plaintiff’s complaint failed to adequately plead that defendant failed to evaluate the fair use doctrine or that defendant had actual knowledge that plaintiff’s videos made fair use of defendant’s copyrighted materials.

Pro se plaintiff brought suit against defendant Viacom alleging that Viacom’s takedown notices falsely accused him of copyright infringement, in violation of the Digital Millennium Copyright Act (DMCA) and wrongfully directed website hosts to remove plaintiff’s videos, in which he critiqued various video programs produced by defendant using clips from those copyrighted programs. Plaintiff asserted that his videos did not infringe on defendant’s copyrights because his use of those works was fair use.

On defendant’s motion for judgment on the pleadings, the district court dismissed plaintiff’s complaint against Viacom with prejudice, holding that that plaintiff’s factual allegations in support of his misrepresentation claim were insufficient and conclusory. In his complaint, plaintiff alleged that despite his fair use of Viacom's copyrighted material, Viacom issued a takedown notice asserting a claim of copyright infringement every time he posted a video critique. He also alleged that when he responded by serving a counter notice on the web hosts, and the web hosts properly processed his counter notices, Viacom allegedly then admitted – in actions not words – that plaintiff’s video constituted fair use, yet Viacom often issued multiple copyright infringement claims relative to certain of plaintiff’s videos and refused to stop “harassing” him with false infringement claims. Plaintiff also contended that Viacom used "scanning software" to identify copyright infringements on the internet, failed to use human oversight to prevent that software from misidentifying fair use videos, and had not established an appropriate system to quickly process false copyright claims against fair use videos.

As the court explained, the DMCA imposes liability on a copyright owner that fails to make a good faith assertion of a copyright infringement in a takedown notice. A copyright owner who knowingly and materially misrepresents that material is infringing is liable for damages incurred by the alleged infringer. The “good faith” requirement is measured by a subjective standard, and liability exists only if the copyright owner acted in bad faith, making "a knowing misrepresentation," rather than "an unknowing mistake,” even where the copyright owner may have acted unreasonably. Because fair use of copyrighted material does not constitute copyright infringement, to make a good faith assertion of infringement, a copyright owner must evaluate whether the allegedly infringing material makes fair use of the copyright. According to the court, a knowing misrepresentation exists where a copyright owner issues a takedown notice even though it knows that the use of copyrighted material clearly qualifies as fair use. Properly pled allegations that plausibly suggest that a copyright owner acted in bad faith by issuing a takedown notice without properly considering the fair use doctrine may be sufficient to state a misrepresentation claim.

Accepting all of plaintiff’s factual allegations as true and, because he acted pro se, liberally construing the allegations in the light most favorable to him, the court found that plaintiff’s complaint did not present any facts plausibly suggesting that Viacom actually knew plaintiff had made fair use of its copyrighted material, and that Viacom acted with the requisite subjective bad faith in issuing the takedown notices. Plaintiff merely alleged that his use of defendant’s copyrighted materials constituted fair use, but did not plead any of the facts underlying that assertion (the purpose and character of his use of defendant’s works, the nature of those works, the amount and substantiality of the materials he used, and the effect of his use on the potential market for, or value of, the copyrighted works). Without those allegations, no factual basis existed to establish either that plaintiff’s use qualified as fair use or that Viacom had actually knowledge that it did.

The court also rejected as insufficient plaintiff’s allegations that Viacom "admitted" fair use of its copyrighted materials through its acts, but not its words. While the allegations implied that Viacom acted in bad faith, inferences and implications based on conduct alone are insufficient, and allegations describing actions that could merely be parallel to, or consistent with, conduct that would give rise to liability are not sufficient because they only raise the "mere possibility of misconduct," not the plausibility of that conduct. The court likewise found insufficient plaintiff’s allegations regarding defendant’s use of scanning software. Although plaintiff suggested that the scanning software misidentifies fair-use videos, the complaint asserted no factual allegations making it plausible that Viacom had actual knowledge of the software's alleged deficiencies. Defendant’s alleged failure to use human oversight with the scanning software alone did not make it plausible that Viacom had actual knowledge that the software failed to identify fair use of its copyrighted material. The court concluded that plaintiff’s allegations did not plausibly suggest that Viacom had actual knowledge that it was making a misrepresentation of plaintiff’s alleged copyright infringements in its takedown notices, and that defendant was entitled to judgment as a matter of law. Because the court had reviewed plaintiff complaint in the course of considering his previous motion to proceed in forma pauperis, and had advised plaintiff of the subjective bad faith requirement for pleading his misrepresentation claim, and plaintiff’s amended complaint failed to plead sufficient facts to satisfy the subjective standard, the court declined to allow plaintiff an additional opportunity to amend and dismissed the complaint with prejudice.

 

Overton v. Health Communications, Inc., USDC W.D. Wisconsin, March 9, 2012
 Click here for a copy of the full decision.

  • District court grants plaintiff’s request to allow jury to render alternative verdicts – one for statutory damages and one for actual damages – in copyright infringement action, noting that at least three other courts in other circuits have followed this approach.

Plaintiff Patrick Overton submitted jury instructions that requested that the jury render alternative verdicts – one for statutory damages and one for actual damages – for alleged copyright infringement. After considering the parties’ arguments on the issue, the court noted that “there appears to be no definitive answer as to the plaintiff’s right to proceed in the this manner,” but nonetheless granted the plaintiff’s request.

Section 504(c)(1) of the Copyright Act allows a plaintiff to elect statutory damages “at any time before final judgment is rendered.” In addition, in Feltner v. Columbia Pictures Television, Inc., the U.S. Supreme Court also held that the Seventh Amendment provides the right to jury trial on all issues pertinent to an award of statutory damages. The court seemed troubled by allowing a jury to render alternative damage awards from which a plaintiff may then choose. A plaintiff must normally choose its theory of recovery before submission to the jury, and “there is certainly a risk of jury confusion as to how to separate these two damages calculations, and at least a hint of potential prejudice to the defendants, who may be required to argue two or more potentially inconsistent theories of defense to plaintiff’s damage claims at the same time.”

The court noted, however, that requiring a plaintiff to elect before trial among the two forms of damages would frustrate the statute, because case law has held that when a plaintiff elects statutory damages he waives the right to later elect actual damages. The court held that “as a practical matter, the best way to satisfy the dictates of the copyright statute and Feltner is to require the jury to enter alternative verdicts.” The court noted that at least three other courts have followed this approach. (See Bridgeport Music, Inc. v. UMG Recordings, Inc., 585 F.3d 267, 273 (6th Cir. 2009); Kiva Kitchen & Bath Inc. v. Capital Distrib. Inc., 319 Fed. Appx. 316, 320 (5th Cir. 2009); Cotter v. Christus Gardens, Inc., No. 99-5996, 2000 WL 1871698, at *2 (6th Cir. Dec. 12, 2000)). The court attached the amended jury instructions “in an attempt to set out, as clearly as possible, the jury’s role in deciding alternative damages.”



For more information, please contact Jonathan Zavin at jzavin@loeb.com or at 212.407.4161.

Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.

Published In: Civil Procedure Updates, Civil Remedies Updates, Intellectual Property Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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