Monday, March 10, 2008

Orcas and Statutory Damages

Jonathan Smith is the owner of an unusual copyright: During a performance at Sea World on March 4, 1987, two orcas attacked Smith, a trainer. An audience member, Mr. Chiang-Shek, recorded the performance (and thus the Attack) using a camcorder. The video is approximately five minutes long. Mr. Chiang-Shek visited Smith in the hospital, gave him a copy of the Video and assigned the copyright to him. Such a nice guy! (See Smith v. NBC Universal, 524 F.Supp.2d 315 (S.D.N.Y.,2007)).

Smith filed suit against NBC Universal, MG Perin Inc., Universal Television Networks and twenty unknown persons for copyright infringement and for various violations of state law. .
On February 28, 2008, Judge Scheindlin issued an opinion on the measure of statutory damages, a topic of great interest lately, given the so-called Pro-IP’s efforts to change the way such damages may be awarded. Judge Scehindlin’s opinion comes to the correct result, in my view, and maybe for the right reasons, but it also contains a discussion of the issue, from Nimmer, that I find baffling.

Smith argued that one of the defendant’s (MG Perin) should be liable for a separate award because it authorized another (Universal Television Networks, UTN) to broadcast the clip. Here is how the court initially framed the liability:

Smith is entitled to two statutory damage awards only if (1) MG Perm independently infringed Smith's copyright (as opposed to simply contributing to UTN's infringement) and (2) the statute authorizes two awards for two infringements of the copyright on one work. Regardless of the number of infringements of Smith's copyright, because there is only one work at issue and the defendants are jointly and severally liable for any infringement, Smith is entitled to only one award of statutory damages.

MG Perin and UTN are jointly and severally liable for the infringement of his video, and he is thus entitled to one award.

So far so good: there was joint and several liability, hence one award. Had the court stopped there, I would have no posting today. But for better or worse, the court went on in dicta (no, no, don’t!), and that’s where the trouble lies:

An example from Nimmer on Copyright cited by Smith supports defendants' position: A complaint alleges that theaters A, B, and C all broadcast the plaintiff's movie without permission. If they have no relationship with each other, damages would not be joint and several. However, if D distributed the movie to all three, D would be jointly and severally liable with each of them. “There will, therefore, be three sets of statutory damages which may be awarded, as to each of which D will be jointly liable for at least the minimum of $250. However, D's participation will not create a fourth set of statutory damages.” …

Nimmer suggests that a plaintiff in this situation could file multiple actions to recover multiple statutory damages awards (assuming that the distributor's actions constituted an independent violation of the copyright). He concludes that because of this danger, there might be an argument that for purposes of judicial economy, a plaintiff should be allowed multiple awards in situations where res judicata would not bar the subsequent action. However, he notes that factors to consider would include whether the facts of the separate claims are “ ‘related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage.’ “ He further notes that recovery would be barred “[i]f the infringing acts complained of in the second action constitute a part of the same infringing transaction that was the subject of a first action ....“ Even if this were the law in this circuit, Smith's claim fails this test. His claims against MG Perin and UTN are related in time, space, origin, and motivation, are convenient to try together, and business understanding suggests that they are a single claim.

I don’t get the A,B,C,D, example: I would have thought that all parties being jointly and severally liable there is only one award. Nimmer appears to take the position that A is jointly and severally liable with D, but not with B or C; that B is jointly and severally liable with D, but not with A or C; and that C is jointly and severally liable with D but not with A or B. That doesn't make sense to me under the facts of Smith, and Judge Scheindlin agrees I think, disagreeing with Nimmer, I think. Here’s what the House report says:

Where the infringements of one work were committed by a single infringer acting individually, a single award of statutory damages would be made. Similarly, where the work was infringed by two or more joint tortfeasors, the bill would make them jointly and severally liable for an amount in the $ 250 to $ 10,000 range. However, where separate infringements for which two or more defendants are not jointly liable are joined in the same action, separate awards of statutory damages would be appropriate.

I see no support in the statute or the legislative history for Nimmer’s view that there are two categories of joint and several liability, or for his judicial economy argument, or for his “time, space, or motivatation” argument. The only issue is whether there is joint and several liability among the defendants: if so, that’s it, one award and that result has nothing to do with whether the same or different rights are violated. This principle is expressed in the 1976 committee reports: "[W]here separate infringements for which two or more defendants are not jointly liable are joined in the same action, separate awards of statutory damages would be
appropriate," the key being the italicized "separate."

Section 504(c) does not define joint and several liability, relying instead on common law principles, and those principles are not limited by whether each defendant engaged in the exact same act, but rather whether defendants acted in concert. Put more colloquially, while there is joint liability for things jointly done, there is several liability for things done separately, regardless of whether there is one suit or two, and regardless of the number of rights violated. So, if D is the cause of infringing acts done by A,B, and C there is joint and several liability among A-D, as Judge Scheindlin found. What matters is whether the defendants acted in concert, not whether separate rights have been violated by each defendant. Whether defendants acted in concert is determined by the facts and general tort principles, not by fancy sounding tests.


Anonymous said...

I'm having problems with the first part of the opinion. It seems to me that both MG Perin and UTN infringed the copyright. MG Perin infringed the distribution right, while UTN infringed the display/performance right. Perhaps the argument is that MG Perin only contributed to UTN's public distribution, and thus is only contributorily liable for infringement as opposed to being a direct infringer. But, there is still the issue of reproduction of the copyrighted work, which MG Perin surely did in order to allow UTN to broadcast the clip. Thus, it seems to me that both are direct infringers and liable as such. So, the copyright holder should be entitled to two separate awards.

The court holds that MG Perin and UTN are jointly and severally liable, which seems to encourage this type of behavior. Each should be liable for the full amount of statutory damages. I agree with Nimmer that if MG Perin had given the video to multiple networks for broadcast, each network would be liable for separate damages. To not hold so would encourage an infringer to simply distribute the video amongst a multitude of networks and split the cost of the statutory damages among all of them. However, I still believe that MG Perin violated a different 106 right than the network and should be liable for such, while the network should liable for the 106 rights it violated. Maybe I'm missing something. I am still in law school you know.

Any help?

William Patry said...

Hey Anon, none of this false modesty about being a mere law student. In earlier drafts of the blog (it may come as a surprise to some that there are ever drafts of the blog), I had discussed the contributory infringement issue. But I don't see why if there is direct or secondary, that still impacts on the number of awards. Where is it written that joint or several liability hinges on such differences?

Anonymous said...

Hooray! Are the rotating bio pictures back?

Anonymous said...

I'm not trying to be modest, I'm just a little bit lost on the issue. From my understanding, if the infringement is secondary, then it is still one infringement action because the contributory infringer did not directly infringe the work, but helped another to directly infringe the work. However, if the infringment is direct, then there are two separate infringement actions. In my opinion, MG Perin infringed directly by distributing/making copies of the video AND contributorily infringed by helping UTN to directly infringe by performing/displaying the video. If MG Perin directly and indirectly infringed, it should be liable independently for its direct infringement AND be jointly liable with UTN for its contributory infringement. Thus, there should be two separate awards. Right?