Opinion
No. 04 Civ 6139 (RMB)(KNF).
January 23, 2006
REPORT AND RECOMMENDATION
TO THE HONORABLE RICHARD M. BERMAN, UNITED STATES DISTRICT JUDGE I. INTRODUCTION
Plaintiff U2 Home Entertainment, Inc. ("U2") brought this action against China Video, Inc. ("China Video"), Qin Lin ("Lin"), and John Does III-V (collectively "defendants") to recover damages for the unauthorized duplication, importation, and/or distribution by the defendants of the plaintiff's copyrighted feature motion pictures and television programs. The plaintiff's claims are brought pursuant to the Copyright Act, 17 U.S.C. §§ 101 et. seq., and the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a).
Upon the defendant China Video's failure to file an answer or otherwise respond to the complaint, your Honor ordered that a default judgment be entered against it. Moreover, your Honor ordered that China Video, its employees, agents, and those acting in concert with it, be permanently enjoined from infringing upon the plaintiff's copyrighted works and from using the plaintiff's trade names and trademarks unlawfully. Thereafter, your Honor referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded against defendant China Video.
The plaintiff concedes that China Video is the only defendant upon whom proper service of the amended complaint was effected. Thus, your Honor granted the plaintiff's motion for default judgment against China Video only. Accordingly, the recommendation contained in this writing is made with respect to defendant China Video only.
The Court directed U2 to serve and file proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action, and its attorney's fees. The Court also directed China Video to serve and file any opposing memoranda, affidavits and exhibits, as well as, any alternative findings of fact and conclusions of law it deemed appropriate. China Video did not file anything in opposition to U2's submissions.
The plaintiff's submissions aver that it is entitled to recover statutory damages in an amount of $128,250 for China Video's infringement of the plaintiff's copyrighted motion pictures and television programs.
II. BACKGROUND
When a defendant defaults in an action, by failing to plead or otherwise defend against a complaint, the defendant is deemed to have admitted every well-pleaded allegation of the complaint except those relating to damages. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). In addition, the plaintiff is entitled to all reasonable inferences from the evidence presented. See Au Bon Pain Corp. v. Artect, Inc., et al., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the submissions made by the plaintiff, the complaint filed in the instant action, and the Court's review of the entire court file in this action, the following findings of fact are made:
U2 is the exclusive United States distributor of certain Asian language feature motion pictures and television programs which are protected under the copyright laws of the United States. The plaintiff distributes its products to video outlets in the United States in the form of videocassettes, laser discs, video compact discs ("VCD"), and digital versatile discs ("DVD"). U2 is the owner or exclusive licensee in the United States of registered trademarks which are affixed to legitimate copies of the motion pictures and television programs at issue in the instant action.
China Video owns, operates and/or has a financial interest in a videotape and videodisc retail store located at 288 Broome Street, New York, New York ("288 Video"). The store distributes Asian language motion pictures and television programs.
During the past three years, China Video has engaged in, or authorized the illegal and unauthorized importation and duplication of certain of the plaintiff's copyrighted works. On August 9, 2004, the plaintiff filed the summons and complaint in the instant action. Two days later, the court issued an Order of Seizure which permitted the plaintiff to cause the seizure and impoundment, from 288 Video, of unauthorized copies of the plaintiff's motion pictures and television programs, as well as the seizure of equipment used to duplicate the plaintiff's copyrighted works. As a result of the court's Order of Seizure, 902 unauthorized copies of the plaintiff's motion pictures and television programs as well as, 66 pieces of equipment used for copying videocassettes and DVDs were seized from 288 Video.
As a consequence of China Video's unlawful conduct, U2 has suffered and continues to suffer economic damages from the loss of value of its copyrights.
III. CONCLUSIONS OF LAW
A default judgment in an action establishes liability, but is not a concession of damages. See Cappetta v. Lippman, 913 F. Supp. 302, 304 (S.D.N.Y. 1996) (citing Flaks v. Koegel, 504 F.2d 702, 707 [2d Cir. 1974]). Damages must be established by the plaintiff in a post-default inquest. See id. In conducting an inquest, a court need not hold a hearing "as long as it [has] ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). The court may rely on affidavits or documentary evidence in evaluating the fairness of the sum requested. See Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993).
Statutory Damages
China Video's liability to the plaintiff for violations of the Copyright Act and the Lanham Act has been established by its default in this action. Therefore, the only matters for the Court to determine are the type and amount of damages, if any, the plaintiff is entitled to recover from China Video. An infringer of a copyright is liable for either the copyright owner's actual damages and any additional profits the infringer has garnered, or statutory damages. See 17 U.S.C. § 504. U2 has elected to recover statutory damages pursuant to 17 U.S.C. § 504(c). In accordance with that provision of the law, statutory damages may be awarded "with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation derivative work constitute one work." 17 U.S.C. § 504(c)(1).
The plaintiff is also entitled to recover damages under the Lanham Act. See 15 U.S.C. § 1117. However, the plaintiff does not request damages under the Lanham Act.
In addition, a court may award enhanced damages of up to $150,000 per infringing work if the court determines that the infringement was committed willfully. See 17 U.S.C. § 504(c)(2). In the instant action, the plaintiff has asked that any award of statutory damages be made at an amount at the low end of the range set forth in 17 U.S.C. § 504(c)(1). Therefore, although the Court is satisfied, based on the record evidence, that U2 demonstrated that the defendant's infringement was willful, no award of enhanced damages is being recommended.
Statutory damages are calculated based on number of copyrighted works infringed, and not on the number of times the defendant engaged in infringing conduct. See Twin Peaks Productions, Inc. v. Publications Intern., Ltd., 996 F.2d 1366, 1381 (2d Cir. 1993).
U2 contends that each of its 10 motion pictures and each of the 385 episodes of its 22 copyrighted television series should be considered individual works for the purpose of calculating statutory damages. However, U2 has advised the Court that, due to the large number of protected works at issue, it purposes that the court award statutory damages based solely upon China Video's infringement of U2's 10 protected motion pictures and its infringement of 161 of U2's protected television works that are depicted on 199 of the 902 videocassettes that were seized pursuant to the court's order. Under the plaintiff's proposal, the amount of statutory damages would be calculated based on 171 of U2's protected works.
The plaintiff arrives at the total number of protected television works as follows: "Love and Again," 3 works based on 3 videocassettes confiscated (20 episodes on the videocassettes); "Virtues of Harmony," 130 works based on 130 videocassettes confiscated (327 episodes on the videocassettes); "Into the Sun," 2 works based on 2 episodes (20 videocassettes); "New Incarnation," 20 works based on 20 videocassettes confiscated (30 episodes on the videocassettes); and "Radio Stories Forever Heart," 6 works based on 6 episodes (13 videocassettes). Using its proposed formula, the plaintiff arrives at 161 protected television works. To this number, it adds the 10 motion pictures for which it seeks to recover statutory damages from the defendant.
Section 504(c) of the Copyright Act does not define the term "work"; therefore, it offers no guidance to a court that is determining how that term should be applied when fixing statutory damages in the context of an infringement involving, inter alia, various episodes of a protected television series. However, in Twin Peaks, the Second Circuit addressed the issue of whether episodes of a television series may be considered works under 17 U.S.C. § 504(c). In that case, unlike the situation in the case at bar, both the written television episodes, as well as the television series itself, had been individually registered and assigned copyright numbers. See Twin Peaks, 996 F.2d at 1381. The Second Circuit determined that each episode of the television series should be considered an individual work when calculating statutory damages.
Although the Second Circuit has not addressed the specific issue raised by U2: whether individual television episodes, which are not separately copyrighted but, rather, are part of a copyrighted television series, may be considered individual works for the purpose of calculating statutory damages, the First Circuit Court of Appeals has.
In Gamma Audio Video, Inc. v. Ean-Chea, 11 F.3d 1106 (1st Cir. 1993), the court found that, in light of the holding inTwin Peaks, each episode of a copyright-protected television series may be counted as an individual work in calculating statutory damages, regardless of whether each episode of the television series has its own copyright registration number. In reaching this conclusion, the court noted that there is no "language in either the [copyright] statute or the corresponding regulations that precludes a copyright owner from registering the copyrights in multiple works on a single registration form while still collecting an award of statutory damages for the infringement of each work's copyright." Id. at 1117.
Although the holding in Gamma is not binding in this circuit, the Court finds Gamma persuasive and applicable to the facts of the instant action because the plaintiff's copyright-protected television programs, which are akin to American soap operas, implicate hundreds of unique episodes, which appear in a series format, as was the case in both Twin Peaks and Gamma. Therefore, the Court finds that, in the case at bar, each episode should be deemed a protected work and, furthermore, in the circumstance of this case, the 171 protected works, proposed by the plaintiff for use by the court in calculating the amount of statutory damage to award, is an appropriate number of protected works upon which to calculate the amount of statutory damages due to the plaintiff from China Video.
In the instant action, the plaintiff requests that the court award it, for each protected work infringed, $750, the minimum amount of statutory damages that can be awarded, per infringed work. The Court finds that an award of the minimum amount of statutory damages, $750 per infringed work, is reasonable and appropriate based on: (a) China Video's unlawful duplication and distribution of the plaintiff's copyrighted works; (b) China Video's failure to appear in this action; and (c) the Court's interest in deterring China Video and others from engaging in infringing behavior in the future. See Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110, 1117 (2d Cir. 1986); Fallaci v. The New Gazette Literary Group, 568 F. Supp. 1172, 1173 (S.D.N.Y. 1983).
Therefore, the Court finds that an award to the plaintiff of statutory damages in the amount of $128,250 ($750 X 171) is warranted.
IV. RECOMMENDATION
For the reasons set forth above, the Court recommends that U2 be awarded $128,250, plus post-judgment interest in an amount to be calculated by the Clerk of Court pursuant to 28 U.S.C. § 1961(a).
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Plaintiff shall serve defendant China Video with a copy of this Report and Recommendation and submit proof of service to the court.
V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Richard M. Berman, United States District Judge, 40 Centre St., Room 201, New York, New York 10007, and to the chambers of the undersigned, 40 Centre St., Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Berman. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).