Opinion
Civil Action No. 3:00-CV-0042-AH
April 16, 2003
MEMORANDUM OPINION AND ORDER PURSUANT TO F.R.C.P. 52(a)
On March 31, 2003, pursuant to the consents of the parties, the provisions of 28 U.S.C. § 636(c), and the District Court's Special Order No. 3-204 filed on April 19, 2002 reassigning the above styled and numbered action to the undersigned Magistrate Judge , this case came on for a non-jury trial on Plaintiff's copyright claims and his supplemental state law claims. Plaintiff David Sefton (hereinafter "Plaintiff" or "Sefton") appeared in person and through counsel. However, neither of the two remaining named Defendants, Bentley Ives ("Ives") or James Gurkin ("Gurkin"), appeared.
On April 19, 2001, following the resignation of Magistrate Judge Jane Boyle, and the new consents of Gurkin, Ives, and Sefton filed on April 29, 2000, May 7, 2000, and May 15, 2002, respectively, Chief Judge A. Joe Fish reassigned the instant case to the undersigned Magistrate Judge.
The court notes that on July 5, 2000, Chief Judge A. Joe Fish entered an interlocutory default judgment against Defendants Webbworld, Inc. ("Webbworld") and Gurkin for their respective failures to answer or otherwise respond to Sefton's Complaint. However, on November 21, 2001, Judge Boyle, the Judge to whom the instant case had originally been transferred by Chief Judge Fish pursuant to the consents of each of the parties, vacated the interlocutory default judgment against Gurkin. As such, Gurkin and Ives were the only remaining Defendants in the instant case when consents were executed.
The court notes that on the day trial was to commence it received a fax transmission purporting to be from Defendants Ives and Gurkin wherein both indicated that they would not be appearing for trial. ( See Court's Ex. 1). Further, prior to the trial date, Ms. Nancy Spencer, one of the court's deputies, received a telephone call from a person who identified himself as Defendant Gurkin and advised that he would not be attending the trial of the instant case.
I. Procedural History
After the parties consented to the undersigned's jurisdiction, see n. 1, supra, the court granted Plaintiff's Second Motion for Summary Judgment for Vicarious Liability against Bentley Ives in its Order filed on September 27, 2002. On March 28, 2003, the court entered a similar order on Plaintiff's Motion for Summary Judgment for Vicarious Liability against James Gurkin. In the court's respective orders the issues of damages to be awarded, as well as Plaintiff's supplemental state law claims, were reserved pending consideration of the evidence presented during trial.II. Damages and State law claims
Based upon the credible evidence presented at trial, including the testimony and documentary evidence admitted into evidence, the court makes the following findings of fact and conclusions of law:
At trial Plaintiff offered his exhibits in the form of 1099 individually marked pages, in two looseleaf binders, plus additional separate documents marked sequentially as 1100 et. seq. At the conclusion of the testimony, in response to the court's inquiry, Plaintiff's counsel advised that the court's review of the documents in the looseleaf binders could be limited to those pages specifically referred to during Plaintiff's testimony.
A. Factual Background 1. Sefton's conduct
Sefton is a professional photographer as well as a certified public accountant. In connection with his work as a photographer he has photographed numerous historical landmarks, as well as various landscapes, which he has sold and/or licensed in various contexts, including selling limited edition reproductions of his award-winning photographs.
Plaintiff testified that he endeavored to create a new photograpic genre which he referred to as a "girl-next-door" format. According to Plaintiff, this new genre included taking "glamour" or "soft-R-rated" photographs, which depicted both partially-clothed as well as totally nude models. However, as conceived of by Plaintiff, his "girl-next-door" photographs would contrast with those appearing in adult magazines such asPlayboy and Penthouse because his photographs would create the impression that they had been taken by a non-professional photographer, with little regard for elements such as lighting and composition, essentially giving the appearance that one might expect from an amateur photographer.
In developing this "girl-next-door" concept, Sefton solicited a number of female students from the University of Texas at Austin and from Southwest Texas State University in San Marcos, Texas, to pose for him. The photographs derived from these modeling sessions comprised Plaintiff's "College Girls of Austin Texas" ("College Girls") collection which he, in turn, copyrighted. ( See Order filed on March 28, 2003 at pp. 6-7).
In order to derive commercial benefit from the College Girls collection, Sefton and his wife, LeAnn Collins ("Collins"), created an Internet website, which they designated as "Wildchild.com" ("Wildchild"), to display his copyrighted collection, and invited Internet customers to access and download any of his digital images for a monthly subscription fee of $9.95.
In order to place these pictures on his Internet website, Sefton, apparently, scanned the pictures onto his computer using a computer hardware device through which the same were digitized (i.e., converted the pictures from tangible objects into binary computer code). See Playboy Enterprises, Inc. v. Webbworld, Inc., 991 F. Supp. 543, 549 (N.D. Texas 1997), aff'd, 168 F.3d 486 (5th Cir. 1999). Accordingly, hereinafter, the court will refer to the same as "images."
In an effort to increase the number of subscriptions to the Wildchild website, Sefton posted (i.e., uploaded) a portion of the digital images comprising his College Girls collection on various Internet newsgroups related to adult-oriented materials. When placed on these newsgroups, the images posted by Sefton could be viewed by Internet users visiting those particular newsgroups for a period of between five (5) to fifteen (15) minutes, after which the browser — the program employed by a particular user's computer to traverse the Internet-defaulted, rendering the images inaccessible for further viewing. ( See Pl.'s Trial Ex. pp. 19-36 (list of images which Sefton uploaded to Internet newsgroups)). In pursuing this course of conduct, Sefton hoped to garner sufficient interest in his posted images to entice Internet users to visit the Wildchild website and pay the monthly subscription fee, enabling them to view and download full-sized images from his College Girls collection.
The Internet contains numerous newsgroups. Generally speaking, a newsgroup is limited to a specific subject area, and in this case the newsgroups on which Sefton placed his images were those which dealt with adult-oriented, sexually-explicit content.
The conduct of Defendants Ives and Gurkin has already been addressed in the court's orders on Plaintiff's respective motions for summary judgment for vicarious copyright infringement against Defendants.
The previous findings of the court, as reiterated in the testimony of David Sefton and as amplified by his testimony and the documentary evidence presented on March 31, 2003, establish that both Defendants Ives and Gurkin made capital purchases of equipment for Webbworld, Inc. ("Webbworld"), and that each owned a 25% interest in Webbworld and shared in the profits derived from its business.
Brian Ellis, another of Webbworld's owners, created a software program which scanned Internet newsgroups and downloaded files contained thereon onto Webbworld's computer servers. Ellis selected adult-oriented newsgroups for scanning and downloading.
No later than early November 1996, Webbworld, with the full knowledge of Defendants, began operating an Internet website designated as "Netpics.com" ("Netpics"). The photographic images downloaded by Ellis' software program were, in turn, placed on the Netpics website. As compared to the newsgroups to which Sefton posted his images from the College Girls collection which permitted a maximum of fifteen (15) minutes of free viewing, Plaintiff's copyrighted images which were placed on the Netpics website could be viewed for up to fourteen (14) days without charge.
On December 2, 1996, Playboy Enterprises, Inc. ("PEI") filed a copyright infringement action against Webbworld, Inc., Defendants Gurkin and Ives, and Mr. Ellis in this court in Cause No. 3-96-CV-3222-H. On December 9, 1996, the court in that action entered a temporary restraining order against the Defendants, followed by a preliminary injunction entered on January 6, 1997. In each order, the court forbade Defendants from directly or indirectly infringing PEI's copyright and trademark registrations.
In approximately November or December of 1996, Sefton received e-mails from potential customers who expressed an interest in his images, which they had apparently viewed on the Netpics website. Upon receiving this information, Sefton personally visited the Netpics website and found some of his images from his "Linda" series, bearing the Wildchild name, displayed in close proximity to images which appeared to constitute child pornography. In early December of 1996, Sefton sent an e-mail to an "Annie Creelman," the individual listed on the Netpics website as the customer service contact, to complain about the apparent infringement of his copyrighted images.
For additional facts relating to, inter alia, the process by which Sefton's images came to appear on Netpics, as well as Defendants Ives and Gurkin's ownership of Webbworld, see Order filed on March 28, 2003.
This "series" appears to be a subset of images contained in Sefton's College Girls collection, as a number of the images contained therein have file names which include either the prefix "LIN" or the name "Linda."( See Pl.'s Trial Ex. pp. 20, 21-33).
According to the deposition testimony of Brian Ellis, proffered as a trial exhibit by Sefton, "Annie Creelman" was a fictitious pseudonym used by various individuals associated with Netpics, including Gurkin. ( See Pl's Trial Ex. pp. 183-84 ("Ellis' Dep.")). According to his Affidavit, which he proffered as a trial exhibit, Sefton sent no less then three (3) e-mails to representatives of Netpics, all of which were ignored. (Pl's Trial Ex. p. 695 ("Sefton's Aff") at ¶ 15).
On February 13, 1997, Webbworld's operation of the Netpics website effectively ceased as a result of the seizure of its equipment in a raid by the Fort Worth, Texas police department on charges of child pornography. ( See Order filed September 27, 2002; Pl.'s Trial Ex. p. 218 ("Ives' Dep.")). Sefton testified that he and Collins personally inspected the computer servers which had been seized from Webbworld, during which they found and verified that 837 of Sefton's images were stored on the servers' hard drives. Collins printed each of these images and, thereafter, made a videotape in which she displayed, in rapid succession, each of these images. ( See Order filed March 28, 2003 at p. 7, n. 10). Sefton testified that Collins, under his supervision, then carefully analyzed the videotape she had made and noted that 283 separate images of his copyrighted materials appeared on the Netpics computer servers. ( See Pl.'s Trial Ex. p. 1114). Sefton further related that Collins noted that a number of those 283 images appeared more than once, some appearing up to seven times, and that the total number of such images equaled 734. ( Id. at 1114) Sefton also testified that he never authorized Webbworld or Defendants, either by licensing or otherwise, to reproduce, display, or distribute any of his copyrighted images.
A list of these images was presented at trial. ( See Pl's Trial Ex. pp. 19-34).
The fact that a single image appeared more than once is attributable to the fact that Ellis' software program downloaded the copyrighted images from multiple newsgroups on which Sefton had posted the same.
B. Damages 1. Copyright Damages
Sefton seeks to recover his actual damages arising from the infringement of his copyrighted images, as well as Webbworld's profits attributable thereto, pursuant to 17 U.S.C. § 504(b) , rather than statutory damages pursuant to section 504(c). Sefton presents several theories in support of his claim for actual damages which are addressed seriatim.
Section 504(b) provides, in pertinent part, that a plaintiff "is entitled to recover the actual damages suffered by him . . . as a result of the infringement, and any profits of the infringer attributable to the infringement . . . ." (emphasis added.). Further, a plaintiff "is required to present proof only of the infringer's gross revenue, and the infringer is required to prove [its] deductible expenses and the elements of profit attributable to factors other than the copyrighted work."
Plaintiff has established that both Defendants acted willfully in infringing his copyrighted images in their operations of Webbworld and its Netpics website. "Willfulness" is a component of Section 504(c)(2) where statutory damages, as distinguished from actual damages, see § 504(b), are sought. As such, the issue of willfulness is irrelevant to Sefton's claims for actual damages.
a. Royalty/licensing fees
In the course of his testimony, Sefton related instances in which he had sold specific, limited edition photographs for substantial sums, as well as those in which he had licensed certain of his images for use by third-parties in exchange for royalties based on the third-parties' gross revenues related thereto. He also testified about how other professional photographers marketed their photographic images in a similar manner.
The court declines to compute Plaintiff's damages under a royalty/licensing fee model. The court finds that Sefton never attempted to derive any financial benefit from the College Girls collection by offering to license the images contained therein to third-parties in consideration for royalties. In fact, the sole commercial exploitation of these images appears to have been to make the collection available on the Wildchild website both for viewing and downloading in exchange for a monthly fee of $9.95. Further, although the copies of Sefton's copyrighted images, which he offered into evidence, are of a poor quality, they are sufficiently legible to demonstrate that Plaintiff succeeded in making them appear to be amateurish. Indeed this is but another reason for finding that any attempt by Sefton to market these images on a royalty/licensing fee basis would have been fruitless.
b. Defendants' profits (i.e., gross revenues)
Section 504(b) permits a copyright holder to recover his actual damages and any profits of the infringer attributable to the infringement. ( See n. 13, supra). Plaintiff testified that Webbworld grossed $500,000 per month during its operation of Netpics. However, notwithstanding the fact that he is a certified public accountant, he has offered no documentary support for this assessment.
It is undisputed that Plaintiff's copyrighted images were only a small portion of the total images which Webbworld harvested from Internet newsgroups dealing with sexually-explicit material. It is equally clear that pictures belonging to other well-known photographers, as well as copyrighted materials from Playboy Enterprises, were among the images which appeared on the Netpics website, to say nothing of the substantial quantities of other images depicting, among other things, child pornography, which resulted in the seizure of all of Webbworld's equipment by the Fort Worth police. In light of the foregoing circumstances, the court finds that Plaintiff has failed to produce competent, admissible evidence with respect to the gross profits of Webbworld during the period that his copyrighted images were infringed. Further, even if the court were to accept Plaintiff's testimony regarding Webbworld's monthly gross profits, he is not entitled to recover any part of the same because he has failed to prove that portion of Webbworld's gross profits which were attributable to Defendants' infringement of his copyrighted images. See, e.g., Vane v. The Fair, Inc., 676 F. Supp. 133, 137 (E.D. Tex. 1987), aff'd sub nom. Estate of Vane v. The Fair, Inc., 849 F.2d 186 (5th Cir. 1988), cert. denied, 488 U.S. 1008, 109 S.Ct. 792 (1989).
Sefton testified that approximately twenty (20) to thirty (30) percent of the images he and Collins found on Webbworld's computer servers included child pornography.
c. Plaintiff's actual damages
As compared to the limited viewing time, provided to a prospective subscriber, of Plaintiff's copyrighted images which he posted on certain Internet newsgroups, the images — once harvested and placed on the Netpics website — remained available for up to fourteen (14) days, thereby eroding Internet users' desire to subscribe to Plaintiff's Wildchild website to view and download the same.
Sefton testified that he experienced a significant decline in the number of monthly subscriptions to his Wildchild website during the period that his copyrighted images were available on the Netpics website, and that following the termination of the Netpics operation his monthly subscriptions immediately increased.
Sefton further testified that he suffered financial losses of approximately $100,000 during the period that his copyrighted images appeared on the Netpics website. Although he proffered no documentary evidence in support of this claim, as the sole owner of the copyrighted materials and of the Wildchild website, and particularly where neither of the Defendants challenged the accuracy of his computations or methods of calculating such damages, the court finds that Plaintiff suffered actual damages in the amount of $100,000, which he is entitled to recover from Defendants pursuant to 17 U.S.C. § 504(b).
C. Other claims and causes of action
In addition to his claim for copyright infringement by Ives and Gurkin, for which the court has already granted summary judgment in favor of Sefton, see p. 2, supra, he has also alleged two additional federal causes of action, unfair competition under section 43(a) of the Lanham Act, see 15 U.S.C. § 1125(a), and trademark dilution under section 1125(c) of Title 15, as well as state law causes of action for unfair competition; misappropriation; business disparagement; and dilution. ( See, e.g., Pl.'s Compl.).
In light of the court's finding that Sefton is entitled to recover actual damages in the amount of $100,000, it is unnecessary to determine (1) whether his state law claims are preempted by federal law, or (2) whether he would otherwise be entitled to damages under his alternatively pled causes of actions.
III. Attorney's fees
In an action brought pursuant to 17 U.S.C. § 504, the court has discretion to award attorney's fees. Id. at § 505. The court finds that Plaintiff is entitled to recover his attorney's fees based upon Defendants' indiscriminate and intentional unlawful harvesting of copyrighted materials, including those owned by Plaintiff, and placing of the same on the Netpics web site, without permission or authorization from Plaintiff.
Following trial in this action, Plaintiff filed his Motion for Attorney's Fees. Defendants will be given fifteen (15) days from the date of this Memorandum Opinion and Order to file affidavits or declarations, under penalty of perjury, which constitute competent evidence contradicting the evidence presented in support of Plaintiff's motion.
IV. Conclusion
For the foregoing reasons, the court finds that Plaintiff Sefton is entitled to recover $100,000 from Defendants Ives and Gurkin, jointly and severally, for their infringement of Sefton's copyrighted images.
A copy of this Memorandum Opinion and Order shall be transmitted to counsel for Plaintiff and to Defendants Ives and Gurkin.