Wednesday, February 27, 2008

Copyright Owners Can Get Satisfaction, But Only Once

The Rolling Stones kvetched about gettin' no satisfaction, although no one believed they came ever up short. The Eleventh Circuit is concerned about satisfaction too, and of copyright owners. It concluded, on February 25th that copyright owners should be satisfied, but only once. The case is BUC International Corp. v. International Yacht Council Ltd., 2008 WL 482159, Docket No. 05-16151, available here.

The court of appeals had previously affirmed a jury verdict of $1,598,278 in actual damages for infringement of plaintiff's used boat price guide, 489 F.3d 1129 (11th Cir. 2007)(There was an alternate award of $1,098,ooo in statutory damages). Several weeks before trial, plaintiff had entered into a confidential settlement agreement with some of the co-defendants. One co-defendant paid plaintiff $290,000. Two others paid, through their insurance companies, $500,000. The present appeal was from a decision by the district court declining to reduce the final judgment by the settlement amounts against the defendants who went to trial under the "one-satisfaction rule." Rule 60(b)(5) of the Federal Rules of Civil Procedure allows a court to relieve a part from a final judgment if "the judgment has been satisfied, released, or discharge." See also 60(b)(6). The one-satisfaction rule has its roots in general tort principles, and is designed to limit awards to one payment for a single injury ; the rule sweeps in amounts received from settling joint tortfeasors.

The one-satisfaction rule is different from contribution. Contribution concerns the ability of one defendant to demand that another, co-defendant who is jointly liable pony up for damages too. Under copyright law, a plaintiff may collect the entire amount from one defendant, so it is easy to see why such a defendant might seek contribution from other defendants. But the Copyright Act does not contain any provisions providing for contribution, and not surprisingly, the courts are uniform in holding that no such rights exist as a matter of federal law. See, e.g., Elektra Entertainment Group, Inc. v. Santangelo, 2008 WL 461536 (S.D.N.Y. February 15, 2008); Pure Country Weavers, Inc. v. Bristar, Inc., 410 F. Supp. 2d 439, 448 (W.D. N.C. 2006); Equity Builders and Contractors, Inc. v. Russell, 406 F. Supp. 2d 882, 885-886 (N.D. Ill. 2005); Artista Records, Inc. v. Flea World, Inc., 356 F. Supp. 2d 411, 416 (D.N.J. 2005); Christopher Phelps & Associates, Inc. v. Galloway, 2005 WL 4169714 (W.D. N.C. 2005); Lehman Brothers, Inc. v. Wu, 294 F. Supp. 2d 504 (S.D. N.Y. 2003); Johnston v. Smith, 1997 WL 584349 (N.D. Ga. 1997). But see the dictum in Salton, Inc. v. Philips Domestic Appliances Personal Care B.V., 39 F.3d 871, 877 (7th Cir. 2004), dismissed in Equity Builders, 406 F. Supp. 2d at 885 n.1 as referring to the context of joinder of indispensable parties, and Interscope Records, Inc. v. Duty, 2006 WL 988086, at *2 9D. Az. April 14, 2006)(stating in dictum that defendant "may have" a "viable" contribution claim).

What about state law? In two opinions, federal courts have rejected state claims of contribution for damages paid for copyright infringement, holding such rights may exist only under the Copyright Act; since the Copyright Act does not provide such a right, the claim was rejected. Lehman Brothers, Inc. supra, and Johnston. See also Yash Raj Films (USA) v. Kumar, 2006 WL 2463532 (E.D. N.Y. 2006) (denying leave to file third-party complaint for contribution, noting Lehman Bros. and Johnston); Polygram Intern. Pub., Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1334 (D. Mass. 1994), where Judge Keeton noted tentative agreement that there is no right of contribution. These rejections did not use preemption as the decisional ground, but no other basis seem apparent: if state law did not provide for such relief, the court would have dismissed on that basis.

What about the one-satisfaction rule? In its decision two days ago, the Eleventh Circuit held that it does apply to copyright infringement actions, citing Screen Gems-Columbia Music, Inc. v. Metlis & Lebow Corp., 453 F.2d 552, 553-554 (2d Cir. 1072), and therefore reversed and remanded, writing: "To hold otherwise would allow a plaintiff to recover multiple times for a single injury, frustrating this elementary principle of tort law in a manner we cannot imagine envisioned by Congress." 2008 WL 482159, at *5.

2 comments:

Ethan A said...

(Re: the 'right to contribution' aspect of the post) The absence of a right under federal law controls for preemption purposes over state law? Hmmm, that sounds suspiciously familiar - perhaps like the preepmtion issues arising in recent 'sound-alike' claims raised by the Ramones.

William Patry said...

Do I get credit for being consistent?