Copyright Law - Fourth Circuit - Throwing The Book At A Tattoo Parlor?

Registering Compilation Copyrights, Copyrights in Tattoos, Breach of License Agreement, Copyright Infringement, Damages, Statutory Damages, Statutory Damages for Compilation Copyrights, Actual Damages

Tattoo Art Incorporated v. TAT International LLC, 2012 WL 6098085 (4^th Cir. 2012)



Ancient Art Tattoo Studio by J.D. Crowe

www.tattoo-art.com

 Tattoo artist created images for tattoo stencils and inspirations for tattoo designs and licensed them to tattoo parlor.  Images were compiled in 24 books of 50 sheets, each of which contained several images.  License covered a number of years with royalty payments and minimum guarantee.  Parlor breached by failing to pay and account for royalties.  Following termination of license agreement, parlor recolored the images and continued to use, sell and reproduce the images.  The Fourth Circuit affirmed the trial court’s award of damages for breach of contract and failure to pay royalties of $18,000.  In addition, the trial court found each of the 24 books to be a “compilation copyright” because only one copyright registration was filed for each book.  Accordingly, for the period following the termination of the license agreement, the Court affirmed the trial court’s allowance 24 awards statutory damages per registered compilation for a total additional award of $480,000.  The Court rejected appellant’s argument that the Copyright Act required an election of remedies between actual and statutory damages where actual damages occurred during the license period and statutory damages covered only post-termination infringements.

To read Judges Traxler, Wilkinson, and Agee's decision, click here.

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SDNY - Copyright Licensee Bears Burden of Proving Authorized Use of Copyrighted Works

In Elsevier N.V. v. United HealthGroup, Inc, 2011 WL 1002659 (SDNY March 7, 2011), Judge William Pauley denied Elsevier's motion for summary judgment. Elsevier licensed its database to defendant for the use of 50 employees. Elsevier's spreadsheets indicated that many unauthorized employees potentially accessed the articles. But who has the burden of proof? Here is the court's answer:

The central question in this litigation is whether the persons within the UHG organization who accessed ScienceDirect were Authorized Users. Elsevier contends those individuals were not authorized because all domestic employees of UHG were actually employed by UHCS, an entity not licensed to access ScienceDirect. (Pl.'s 56.1 Stmt. ¶¶ 7, 9; Dunnegan Decl. Ex. J: Klein Decl. ¶ 11.) From that contention, Elsevier asserts that since UHG's domestic employees outnumber its foreign employees, it is more likely than not that any access of ScienceDirect through the Ingenix IP Address, including the Articles at issue here, occurred as a result of activities by unauthorized, domestic UHCS employees. But that is not sufficient for summary judgment.

Elsevier has not met its burden of proving the specific acts of copyright infringement. Jorgensen, 351 F.3d at 51; see also Kelly v. L.L. Cool J., 145 F.R.D. 32, 36, n. 3 (S.D.N.Y.1992) (citing cases dismissing “[b]road, sweeping allegations of infringement” with no specific allegations). Elsevier asks the Court to look at the distribution of domestic and foreign subsidiaries in Defendants' entire enterprise and make a judgment about the probability that two individual acts of computer access took place in the United States. Even if true, as Elsevier asserts, that only 26 of UHG's 225 subsidiaries are based outside the United States, (Transcript of Oral Argument dated Oct. 8, 2010 at 11-12), Elsevier offers no evidence or reason to suggest that the blunt ratio of domestic to foreign subsidiaries in Defendants' enterprise should be applied to the specific downloads at issue on this motion. At best, the Master Spreadsheet entries show that each download was made from a different computer with a different “cookie.” (Lendi Reply Decl. ¶ 6.) But at this point in the case, Elsevier is unable to offer evidence of the identities or locations of the individuals who downloaded the Articles.

Further, Elsevier's theory on this motion is at odds with the terms of the Agreement, which specifically authorized Ingenix employees or independent contractors located in Basking Ridge, NJ to access the ScienceDirect database. (Agreement § 1.2, Schedule 2.) While domestic UHG “employees” may contract with UHCS, that does not foreclose the possibility they also work for Ingenix. This is buttressed by Klein's sworn statement that “employees in the enterprise are employed by [UHCS], and assigned to work for various companies in the enterprise.” (Dunnegan Decl. Ex. J: Klein Decl. ¶ 11.) Thus, a material issue of fact exists whether the individuals who downloaded the Articles were working for Ingenix and were one of the 50 Authorized Users at the time they accessed the Science Direct database.
On the other hand, Defendants contend they were authorized to access the ScienceDirect database under the Agreement and that Elsevier has the burden to prove that the individuals who downloaded the Articles were not authorized. While the copyright owner bears the burden of proving that a defendant's license does not apply in cases where “only the scope of the license is at issue,” Bourne v. Walt Disney Co., 68 F.3d 621, 631 (2d Cir.1995), the question here is whether the infringer had any license at all. Thus, the general rule-that defendant bears the burden of proving possession of a license-applies. See Bourne, 68 F.3d at 631 (citing Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.01.) A defendant may not “merely assert the existence of a license without evidence supporting defendant's position that the license covers the use in question; without such evidence, defendant cannot be said to have met its burden ...”. William F. Patry, Patry on Copyright ( “Patry” ) § 5:133. It is undisputed that the Agreement was in effect at the time the Articles were downloaded. But Defendants have not offered any evidence that the individuals who downloaded the Articles worked for Ingenix and were covered by its license or that the Articles were downloaded through any other authorized means.

Nor is it unfair in these circumstances to place the burden of discovering the identities of the individuals who downloaded the Articles on Defendants. Not only are Defendants in the best position to know such information, Ingenix was obligated to use “reasonable efforts” to prevent unauthorized use (Agreement § 3.2), which should include keeping track of the identities of those individuals who access ScienceDirect from the Ingenix IP Address.

Full decision below:

Elsevier v United Health Group SDNY

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Copyright Injunctions - Fruit of the Infringing Tree Doctrine (Ch 11)

Chapter 5 of 17 U.S.C. provides for remedies for victims of copyright infringement. Section 502 permits injunctions:

§ 502. Remedies for infringement: Injunctions
(a) Any court having jurisdiction of a civil action arising under this title may, subject to the provisions of section 1498 of title 28, grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.
(b) Any such injunction may be served anywhere in the United States on the person enjoined; it shall be operative throughout the United States and shall be enforceable, by proceedings in contempt or otherwise, by any United States court having jurisdiction of that person. The clerk of the court granting the injunction shall, when requested by any other court in which enforcement of the injunction is sought, transmit promptly to the other court a certified copy of all the papers in the case on file in such clerk’s office.

Although the statute appears to give courts wide discretion in determining what terms of an injunction are reasonable, courts have narrowly tailored the available relief. The majority view is set forth in Kepner-Tregoe, Inc. v. Leadership Software, 12 F.3d 527 (5th Cir. 1994). That case was a "reverse-engineering case" in which a substantially similar infringing copy of licensed materials was created by a licensee. Then the licensee "surgically removed" infringing portions. The district court found, and the Fifth Circuit affirmed, that this "child of the infringement" could be enjoined from distribution because it still retained substantially similar selection and arrangement. But the Circuit court unequivocally struck down any attempts of the district court to enjoin future distribution of versions that might be non-infringing. A number of courts have struck down attempts to punish the infringer's "head start" gained by making infringing intermediate copies. See Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772 (5th Cir. 1999); Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000). The Fifth Circuit made clear in Kepner-Tregoe that even if a licensee breached a license agreement by engineering its own competing software, that portion of the license agreement forbidding such activity might be void because such contracts are preempted by the Copyright Act. 12 F.3d at 538 citing Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 268-70 (5th Cir. 1988). Overreaching with your copyright, such as using it to protect uncopyrightable devices, is "copyright misuse" and is grounds for striking down an injunction. See, e.g., Alcatel, supra.

A plaintiff may have success in getting courts to enjoin non-copyrightable benefits or "fruits" gained from its infringing actions. See, e.g., Epic Metals Corp. v. Souliere, 181 F.3d 1280 (11th Cir. 1999). However, the majority of cases reject this approach, particularly in the area of reverse engineering where an infringing copy was made to develop a competing product or compatible device. See, e.g., Kepner-Tregoe.

Practice Tip for Lawyers: In seeking an injunction, there is a temptation to ask for the moon. A narrowly-tailored request for relief that focuses on actual infringing activities and copies stands a greater likelihood of being granted. Overreaching, even where supported by contractual language may backfire and subject you to claims of copyright misuse, particularly where the contract contravenes the Copyright Act.