IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks -- July 12, 2013

Table of Contents

Sony BMG Music Entertainment v. Tenenbaum, USCA, First Circuit, June 25, 2013
Click here to download a PDF of the full decision.

  • First Circuit affirms judgment in favor of recording companies, holding that statutory damage award of $675,000 for willfully infringing 30 copyrighted songs did not violate defendant’s constitutional right to due process.

Joel Tenenbaum illegally downloaded and distributed as many as 5,000 songs over the span of several years, despite warnings from his father, his college, and the plaintiffs, a group of recording companies. Plaintiffs sued Tenenbaum, and a jury awarded damages of $675,000, representing $22,500 for each of 30 songs that Tenenbaum had illegally distributed. Although this award represented only 15 percent of the $150,000 maximum statutory damage award available for each willful infringement, Tenenbaum appealed, contending that the award was excessive and deprived him of his constitutional right to due process of law.

At the outset, the First Circuit panel affirmed the district court’s determination that the U.S. Supreme Court’s decision in St. Louis, I.M. & S. Ry. Co. v. Williams, established the proper standard for evaluating the constitutionality of a statutory damages award. The court declined Tenenbaum’s invitation to apply the Supreme Court’s more recent decision in BMW of North America v. Gore, in which the court held that an excessive award of punitive damages may violate due process. Emphasizing the difference between statutory and punitive damages, the First Circuit observed that Gore was animated by the principle that civil defendants must receive fair notice of the severity of the potential penalties for their actions. The First Circuit concluded that the Gore guideposts should not extend to constitutional review of statutory damage awards under the Copyright Act. First, the court stated that the fair notice concerns underpinning Gore simply do not exist in the copyright context, as the statute itself provides notice of the scope of the potential award. Second, the court noted that a comparison between the award and the harm to the plaintiff cannot logically apply to an award of statutory damages, because a plaintiff seeking statutory damages under the Copyright Act need not prove actual damages. Finally, the court indicated that the Gore guideposts, which require a comparison between the award and the authorized civil and criminal penalties, would lead to a nonsensical comparison of a civil award to itself because an award of statutory damages is “by definition” an authorized civil penalty.

In Williams, the Supreme Court held that a statutory damage award violates due process only “where the penalty prescribed is so severe and oppressive as to be wholly disproportional to the offense and obviously unreasonable.” Applying this standard, the court considered the purpose of statutory damages under the Copyright Act — which includes deterrence of wrongful conduct — as well as the egregiousness of Tenenbaum’s behavior. The court observed that the evidence presented at trial confirmed that Tenenbaum’s activities led to the same type of harm that Congress foresaw when it enacted the Copyright Act’s statutory damages provision: loss of the value of plaintiffs’ copyrights, reduced income and profits, and job losses. The court further observed that Tenenbaum’s conduct — making thousands of songs available illegally despite numerous warnings — was exactly what Congress was seeking to deter when it amended the statutory damages provision in 1999 to increase the range of statutory damages. Accordingly, the First Court upheld the $675,000 award.

Thale v. Apple Inc., U.S.D.C., N.D. California, June 26, 2013
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  • District court grants partial summary judgment in favor of defendant Apple, Inc., on plaintiff photographer’s claim for indirect profits, finding that plaintiff failed to establish required causal nexus between Apple’s alleged unauthorized use of her copyrighted photograph in an iPhone commercial and Apple’s profits attributable to the alleged infringement.

Plaintiff Taea Thale, a professional photographer, brought suit against Apple, Inc., for copyright infringement, alleging Apple’s unauthorized use of one of her copyrighted photographs in a commercial. According to the complaint, Thale took a photograph of the band “She & Him,” registered the photo with the Copyright Office, and licensed it for limited use in magazines or on posters to promote appearances of the band. Without Thale’s knowledge or consent, Apple incorporated the photo into a national television commercial for the iPhone 3GS that aired from April 5 through April 18, 2010. The photo was on-screen for no more than five seconds of the 30-second commercial, which was one of nine commercials for the iPhone that aired during the same time period.

Thale sought to recover Apple’s profits attributable to the infringement under Section 504(b) of the Copyright Act. Apple moved for partial summary judgment dismissing Thale’s indirect profits claim, asserting that Thale could not establish a causal nexus between Apple’s alleged infringement and its profits from sales of the iPhone.

The district court noted that, in the Ninth Circuit, a copyright plaintiff who seeks indirect profits under Section 504(b) of the Copyright Act bears the burden of proffering “some evidence” to establish a triable issue of fact as to whether the infringement “at least partially caused the profits that the infringer generated as the result of the infringement.” The district court found that Thale’s evidence — that her photograph was the “centerpiece” of the commercial, that it was selected “precisely” because it promoted Apple’s intended image, and that it was “favorably received” — was not material to whether Apple’s use of the image actually influenced consumers and caused Apple’s revenues. Because Thale failed to show nonspeculative evidence that Apple’s sales resulted from use of her photo, the court granted Apple’s motion for partial summary judgment and dismissed Thale’s indirect damages claim.

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.

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Loeb & Loeb LLP on:

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