In Erickson Productions, Inc. v. Kast, --- F.3d --- (9th Cir. 2019) the Ninth Circuit vacated a jury verdict of $450,000 for three photographs on Atherton Trust's website. The Ninth Circuit: 1. vacated the verdict of vicarious liability; 2. upheld the verdict of contributory liability but vacated the "willfulness" finding that permitted the statutory damages to be enhanced from $30,000 per infringement to $150,000.
The Ninth Circuit addressed a question of first impression for it and any other circuit court: is avoidance of licensing fees by unauthorized copying a "direct financial benefit" sufficient to sustain vicarious liability as a matter of law? The Ninth Circuit answered "no".
Defendant Kast hired a website design company and oversaw its development of his website. Three photos provided by the website design company were published without authority of the copyright holder, photographer Erickson. Kast testified that he had no knowledge that the photographs were not licensed and the record supported his position that the website development company had agreed to provided licensed photographs to him.
Vicarious Liability for Copyright Infringement. To prove vicarious liability, a plaintiff must demonstrate defendant 1. has the right and ability to supervise the infringing conduct and 2. a direct financial interest in the infringing activity.
Photographer Jim Erickson argued that Kast received three "direct" financial benefits from use of the unauthorized photos: 1. enhanced attractiveness of the website to draw visitors; 2. avoidance of licensing fees; and 3. Kast launched his website faster.
The Ninth Circuit rejected each of these rationales. Importantly, the Ninth Circuit noted that if the direct infringer's avoiding license fees alone were sufficient to impose vicarious liability, the requirement of a "direct financial benefit" for vicarious liability would be rendered meaningless because direct infringers avoid license fees in every case that licenses are for sale.
Jury Instructions on Willfulness For Contributory Infringement Liability. The Ninth Circuit upheld Kast's liability for contributory infringement. A party engages in contributory copyright infringement when it 1. has knowledge of another's infringement and 2. either (a) materially contributes to or (b) induces that infringement. Absent a finding of willfulness, the jury may award statutory damages in a sum of not less than $750 nor more than $30,000" per work. However, where copyright infringement is "willful" Section 504 of the Copyright Act permits a court to increase the statutory damages award up to $150,000 per infringed work.
To prove willfulness under the Copyright Act, the plaintiff must show (1) that the defendant was actually aware of the infringing activity, or (2) that the defendant's actions were the result of reckless disregard for, or willful blindness to, the copyright holder's rights.
However, the jury had been instructed to find willfulness if the defendant "should have known that those acts infringed plaintiffs' copyrights".
The Ninth Circuit found the "should have known" language to be erroneous because it imposes liability for mere negligence, a less culpable state of mind than "willfulness".
I discuss vicarious and contributory infringement in Copyright Litigation Handbook (Thomson Reuters West 2018-2019) Chapter 7: Drafting the Infringement Complaint. Check out the table of contents here.
Copyright law, fine art and navigating the courts. Attorney and AuthorCopyright Litigation Handbook (Thomson Reuters Westlaw 2018-2019) by Raymond J. Dowd