Copyright Law - Eighth Circuit: Will Scorched Earth Copyright Owner Be Burned By Infringer's Bankruptcy?

Copyrights and Bankruptcy,  Non-Dischargeability of Copyright Infringement Judgment in Bankruptcy, Attorneys Fees, Statutory Damages, Effect of Filing Proof of Claim on Right to Jury Trial

Pearson Education, Inc. v. Almgren, 685 F.3d 691 (8^th Cir. July 13, 2012).  MBA student finds “solution” books to his textbooks on the internet.  After using them, has the bright idea of posing as a professor to obtain more solutions books from Plaintiff publisher.  Obtains the books and sells them on a website earning $5,000.  Publisher, without sending cease and desist letter, sues in New York and engages in scorched earth litigation.  MBA student declares bankruptcy.  Publisher files proof of claim.  Publisher then seeks jury trial on statutory damages and attorneys fees.  Court awards minimum statutory damages and denies attorneys fees.  Statutory damages are declared nondischargeable in bankruptcy.  As a matter of first impression: because bankruptcy is a court of equity, Publisher waived right to a jury trial by filing a proof of claim.  Denial of attorneys fees in toto affirmed.  Publisher could probably have stopped the activity with a cease and desist letter.  Publisher’s “spare no expenses” litigation tactics unreasonable.

www.dunnington.com
 Purchase Copyright Litigation Handbook 2012-2013 by Raymond J. Dowd from West here  

Is Copyright Infringement Dischargeable in Bankruptcy?

In Re Therese Pearman, 432 B.R. 495 (D. New Jersey June 23, 2010) struggled with precisely this issue.  Ms. Pearman wrote a poem grieving her grandparents' death.  It was entered in a national competition and won. Then her poem was published in "Chicken Soup for the Christian Soul". She complained and was paid a $500 licensing fee. Years later she found out that someone else was using her poem. She sued for copyright infringement.

But it turns out that someone else wrote the poem in the 1960s.  The accused infringer turned around and sued her demanding sanctions. She declared bankruptcy. In analyzing whether the claims against her were dischargeable in bankruptcy the court analyzed first whether or not her actions were willful. The court concluded that they were.

But the court then went on to the second portion of its analysis in determining whether the alleged debt qualified as an exception to discharge in bankruptcy. To qualify for the exception the injury must also be "malicious".  The court found that the injury was not malicious and thus did not qualify as an exception to discharge in bankruptcy under Section 523(a) (6) of the Bankruptcy Code.

So the answer is "sometimes" and a higher "malice" standard must be satisfied.  See In re Barboza, 545 F.3d 702 (9th Cir. 2008).

Purchase Copyright Litigation Handbook from West here