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finding willful infringement where defendant was "a multi-national publishing company that publishes over 200 magazine releases a year" and "[a]s such . . . is or should be familiar with copyright law and particularly with the general practices of securing permission before reproducing copyrighted works"
Summary of this case from EMI ENTERTAINMENT WORLD, INC. v. KAREN RECORDS, INC.Opinion
98 Civ. 7448 (RCC).
August 15, 2001
OPINION AND ORDER
Plaintiff Viacom International Inc. ("Viacom") brought this action against Fanzine International, Inc. ("Fanzine"), alleging copyright infringement, federal and common law unfair competition, trademark infringement and dilution. By Order dated July 5, 2000 (the "Partial Summary Judgment Order"), then-presiding Judge Kimba Wood granted summary judgment to Viacom on its copyright infringement and federal unfair competition claims. Viacom Int'l Inc. v. Fanzine Int'l, Inc., 98 Civ. 7448 (KMW), 2000 WL 1854902 (S.D.N.Y. July 12, 2000). The case was reassigned to this Court, and Viacom now moves for the following monetary and injunctive relief: (1) a permanent injunction prohibiting Fanzine from making any use of the copyrighted works it was found to have infringed in the Partial Summary Judgment Order, and from engaging in acts of unfair competition; (2) an award of enhanced statutory damages under the Copyright Act based upon Fanzine's willful copyright infringement; (3) an award of Fanzine's profits due to Fanzine's acts of unfair competition; (4) an award of Viacom's reasonable attorneys' fees and costs under the Copyright Act and the Lanham Act; and (5) an amendment to the Partial Summary Judgment Order holding Fanzine liable for state common law unfair competition pursuant to Fanzine's stipulation. In addition, Viacom also seeks summary judgment on its federal trademark infringement claim. Viacom's motions are unopposed. For the reasons set forth below, Viacom's motions are granted.
I. BACKGROUND
The background of this dispute has been set forth in Judge Wood's Partial Summary Judgment Order, so this Court will only briefly summarize the relevant facts here. Fanzine creates, among other things, single and multi-page publications that appeal to children. Viacom operates the children's cable television programming service, Nickelodeon. Fanzine reproduced characters from the Nickelodeon shows "Rugrats," "Hey Arnold!," "AAAhh!!! Real Monsters," "Blue's Clues" and "CatDog" in two of its publications: (1) a single-sheet publication entitled "Kids TV Stars," which contains eight panels on each side when unfolded (the "single-sheet product"); and (2) a 32-page publication, also entitled "Kids TV Stars" (the "32-page product").
Fanzine was able to copy these images through the use of slides obtained from Nickelodeon's publicity department. Bruce Schoengood, whose firm had been hired by Fanzine to design the above-mentioned publications, telephoned the Nickelodeon publicity department and represented that he was working on a children's publication as a graphic designer. After inquiring whether Nickelodeon could supply any material, Schoengood received a publicity package the next day containing the slides. Fanzine proceeded to use the slides without any further communication with Nickelodeon.
Judge Wood granted summary judgment to Viacom on its copyright infringement claim, rejecting Fanzine's arguments that it had an implied license, or alternatively, that its reproductions constituted fair use.Viacom Int'l Inc., 2000 WL 1854903 at *3 Judge Wood also deemed Fanzine to have waived all other arguments against a finding of liability on the unfair competition claim because Fanzine elected to address only the copyright claim in its briefing. Id. at *7. The Court thus concluded that Fanzine was liable for unfair competition as well. Id. Judge Wood then invited the parties to submit proposals as to how to dispose of the remaining claims in the action. Id. The case subsequently was transferred to this Court, and Viacom filed unopposed motions seeking summary judgment on its federal trademark infringement claim as well as certain monetary and injunctive relief.
II. DISCUSSION
A. Trademark Infringement
Viacom owns various copyright and trademark registrations for the Nickelodeon shows "Rugrats," "Hey Arnold!," "AAAhh!!! Real Monsters," "Blue's Clues" and "CatDog," as well as the characters therein. See Martinsen Decl. ¶¶ 6-24; Pl. Rule 56.1 Statement ¶¶ 12, 25, 33, 43, 53. Fanzine's single-sheet product contains the "Rugrats" trademark on its cover and the "Rugrats," "Real Monsters" and "Hey Arnold" trademarks on the other panels. See Pl. Ex. 1. Likewise, the 32-page product contains the "Rugrats" trademark on the cover and the "Rugrats," "CatDog," "Blue's Clues" and "Real Monsters" trademarks on the interior pages. See Pl. Ex. 2. Viacom asserts that Fanzine had no authority to use those trademarks and that summary judgment in its favor is warranted on its trademark infringement claim.
Summary judgment is appropriate only where no genuine issues of material fact remain for trial, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The moving party bears the initial burden of proof on such a motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Facts, and all inferences therefrom, must be viewed in a light most favorable to the non-movant. Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, 182 F.3d 157, 160 (2d Cir. 1999). If the moving party meets its burden, then the non-movant must set forth specific facts showing that there is a genuine issue for trial. Anderson, 477 U.S. at 250. A grant of summary judgment is appropriate when no rational jury could find in favor of the non-moving party because there is no genuine issue of material fact based on the evidence in the record or the substantive law. Gallo v. Prudential Residential Servs., Ltd., 22 F.3d 1219, 1224 (2d Cir. 1994).
In order to make out a claim of trademark infringement, Viacom must demonstrate that Fanzine used Viacom's registered trademarks in a manner that "is likely to cause confusion." 15 U.S.C. § 1114 (1). Courts in this Circuit look to the following factors, set forth in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961), in order to determine whether there is a likelihood of confusion: (1) the strength of the mark; (2) the degree of similarity between the two marks; (3) the proximity of the products; (4) the likelihood that the prior owner will bridge the gap; (5) actual confusion; (6) the defendant's good faith in adopting its mark; (7) the quality of the defendant's product; and (8) the sophistication of the buyers. See Time, Inc. v. Petersen Publ'g Co. L.L.C., 173 F.3d 113, 117 (2d Cir. 1999).
Based upon the undisputed evidence submitted by Viacom, the Polaroid factors weigh in Viacom's favor. First, Viacom has strong marks. Because Viacom's marks are registered, they are entitled to a presumption of distinctiveness, which Fanzine has made no efforts to rebut. See Sara Lee Corp. v. Aris Indus., Inc., No. 00 Civ. 5649 (LMM), 2001 WL 607005, at *3 (S.D.N.Y. Jan. 4, 2001); Rolex Watch U.S.A., Inc. v. Jones, 99 Civ. 2359 (DLC), 2000 WL 1528263, at *2 (S.D.N.Y. Oct. 13, 2000). It is also undisputed that Fanzine used Viacom's marks without alteration and that Fanzine's products are very similar to and directly competitive with Viacom's licensed consumer products. See Taxter Decl. ¶¶ 10-14; Taxter Reply Decl. ¶ 11. There is also evidence that Fanzine's reproductions lack the crispness and quality of Viacom's licensed products. See Taxter Decl. ¶¶ 12-14.
The "strength" of a mark refers to the mark's distinctiveness, i.e. its power to identify the source of a product. Time, Inc., 173 F.3d at 117.
Moreover, as to the issue of Fanzine's "good faith," this Court is cognizant that Fanzine already has been found liable to Viacom for copyright infringement and unfair competition. Indeed, Judge Wood stated in the Partial Summary Judgment Order that:
In sum, defendant's conduct has all the hallmarks of unlawful infringement, not fair use. On the continuum between the "good faith" and "fair dealing" of the "true scholar," and the "chiseler who infringes a work for personal profit," any reasonable juror would place defendant in the company of the chiseler.Viacom Int'l Inc., 2000 WL 1854903 at *7 (citation omitted).
Finally, although Viacom has presented no evidence pertinent to the remaining factors — actual confusion and the sophistication of the buyer — the Court does note that the products are targeted to children. Id. at 6. However, even absent any findings on these two factors, the balance of the Polaroid test tips decidedly in Viacom's favor, particularly as Fanzine has offered no opposition to Viacom's motion. Thus, summary judgment is appropriate in Viacom's favor on its federal trademark infringement claim.
B. Monetary and Injunctive Relief
The Court will address Viacom's various requests in turn.
1. Permanent Injunction
Viacom first requests, in light of the Partial Summary Judgment Order holding Fanzine liable for copyright infringement and unfair competition, that this Court enjoin Fanzine from making any further use of the copyrighted works at issue and from engaging in acts of unfair competition. Both the Copyright Act and the Lanham Act authorize injunctive relief. See 17 U.S.C. § 502; 15 U.S.C. § 1116 (a). Moreover, the fact that Fanzine distributed the 32-page product after receiving notice of Viacom's objections to the single-sheet product suggests that a permanent injunction is necessary in order to prevent future behavior. Perkins Supp. Decl. ¶ 2. Thus, Viacom's request is granted.
2. Enhanced Statutory Damages Under the Copyright Act
Second, Viacom seeks an award of enhanced statutory damages under the Copyright Act. The copyright law in effect at the time this action was commenced provides that a prevailing plaintiff may recover (1) its actual damages as well as any additional profits of the infringer, or (2) statutory damages per work of not less than $500 dollars and not more than $20,000. 17 U.S.C. § 504 (1996). Moreover, if the infringement was committed willfully, the Court may increase the award of statutory damages to a sum of not more than $100,000. Id. Viacom argues that such an enhancement, up to the maximum available, is warranted here.
The 1999 amendments to the Copyright Act increased the statutory damage range to between $750 and $30,000 and increased the maximum amount for willful infringements to $150,000. See 17 U.S.C. § 504 (1996 Supp. 2001). Congress provided that the increased amounts "shall apply to any action brought on or after the date of the enactment of this Act [Dec. 9, 1999] . . . ." Id. Historical Statutory Notes, "Effective and Applicability Provisions;" see also National Football League v. Prime Time 24 Joint Venture, 131 F. Supp.2d 458, 472 n. 13 (S.D.N.Y. 2001). Because the instant action was commenced in 1998, Viacom may not recover the increased sums available under the 1999 amendments.
The defendant's conduct is considered willful if "the defendant had knowledge that his conduct represented infringement or perhaps recklessly disregarded the possibility." Kepner-Tregoe, Inc. v. Vroom, 186 F.3d 283, 288 (2d Cir. 1999) (citing Twin Peaks Prods., Inc. v. Publications Int'l, Ltd., 996 F.2d 1366, 1382 (2d Cir. 1993)). Based upon the evidence presented by Viacom, which is unchallenged by Fanzine, the reasonable inference is that Fanzine knew that its actions constituted infringement.
First, Fanzine has been sued at least two other times for copyright infringement within a span of one year. See Tristar Pictures, Inc. v. Fanzine Int'l Inc., No. 97-8996 (C.D. Cal., filed Dec. 8, 1997); Ragdoll Productions (UK) Ltd. v. Fanzine Int'l Inc., No. 98-8001 (S.D.N.Y., filed Nov. 6, 1998); Pl. Rule 56.1 Statement ¶¶ 58-64. In the Tristar action, the plaintiff alleged that Fanzine obtained press materials from the movie "Starship Troopers" and incorporated the copyrighted material into its publications. Pl. Ex. 5 ¶ 9. The Court entered a default judgment of $67,336.08 against Fanzine. Pl. Rule 56.1. Statement ¶¶ 60-62. Tristar's allegations are thus taken to be true. See Transatlantic Marine Claims Agency, Inc., v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997) ("It is, of course, ancient learning that a default judgment deems all the well-pleaded allegations in the pleadings to be admitted.").
Despite the adverse judgment in the Tristar case, Fanzine subsequently engaged in strikingly similar conduct here, suggesting that Fanzine knew or should have known that its actions constituted infringement. See Twin Peaks Prods., 996 F.2d at 1382 (affirming finding of willfulness based in part on defendant's substantial litigation history); Lauratex Textile Corp. v. Alton Knitting Mills Inc., 519 F. Supp. 730, 733 (S.D.N.Y. 1981) (finding that prior copyright infringement actions filed against the defendant provided "one more indication that the business of encroaching upon others' copyrights is not unfamiliar to the defendant").
Second, upon becoming aware Fanzine's single-sheet product, Viacom sent Fanzine a cease-and-desist letter on September 2, 1998. Perkins Supp. Decl. ¶ 2. Fanzine responded by letter dated September 8, 1998, claiming that its product constituted "fair use" and that Nickelodeon intended its publicity materials be republished. Id. Ex. B. at 1-2. Judge Wood found that these defenses were "meritless" and that the fair use claim was "frivolous." Viacom Int'l Inc., 2000 WL 1854903 at *3, 5. Moreover, Fanzine went on to publish the 32-page product. Thus, Fanzine continued to engage in infringing activities despite having been placed on notice of Viacom's objections. See Castle Rock Entm't v. Carol Publ'g Group, Inc., 955 F. Supp. 260, 267 (S.D.N.Y. 1997) (finding willfulness where defendant continued to publish and distribute infringing book after receiving a specific warning), aff'd, 150 F.3d 132 (2d Cir. 1998);Broadcast Music, Inc. v. R. Bar of Manhattan, Inc., 919 F. Supp. 656, 660 (S.D.N.Y. 1996) (finding willfulness where defendants received protest letters but did not cease conduct).
Finally, the Court notes that Fanzine itself is a multi-national publishing company that publishes over 200 magazine releases per year. Maiello Aff. ¶ 2. As such, Fanzine is or should be familiar with copyright law and particularly with the general practice of securing permission before reproducing copyrighted works. See Castle Rock Entm't, 955 F. Supp. at 267 (finding willfulness where the defendant book publisher was a sophisticated corporation with knowledge of the copyright laws). Given the foregoing evidence, the Court finds that Fanzine's copyright infringement was willful.
The Court concludes that a substantial damage award is necessary to deter Fanzine from committing future infringements, particularly as Fanzine has continued to engage in such conduct despite its prior litigation history. Moreover, the Court believes that such an award also will serve to deter other potential infringers. See Fitzgerald Publ'g Co., Inc. v. Baylor Publ'g Co., Inc., 807 F.2d 1110, 1117 (2d Cir. 1986) (noting that courts may consider the deterrent effect on others besides the defendant in setting copyright damages). Thus, in the absence of any opposition from Fanzine, the Court will award enhanced statutory damages in the amount of $100,000 for each of the five works infringed, for a total of $500,000.
3. Recovery of Defendant's Profits Under the Lanham Act
Viacom also seeks disgorgement of defendant's profits pursuant to the Lanham Act. See 15 U.S.C. § 1117 (a). Such relief is generally available on a discretionary basis upon a finding that the defendant acted in bad faith. See International Star Class Yacht Racing Ass'n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 753 (2d Cir. 1996) (citations omitted), cert. denied, 531 U.S. 873 (2000). The evidence presented by Viacom with respect to Fanzine's willfulness, in combination with Fanzine's default on the present motion, also compels this Court to conclude that Fanzine acted in bad faith.
The Court notes that Viacom already has been granted enhanced statutory damages on its copyright claim. As a general rule, a plaintiff seeking compensation for the same injury under different legal theories is only entitled to one recovery. Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490; 497 (2d Cir. 1995); see also Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 720 (2d Cir. 1992) (holding that a party "may not obtain a double recovery where the damages for copyright infringement and trade secret misappropriation are coextensive"); Lyons Partnership, L.P. v. AAA Entertainment Inc., No. 98 Civ. 9475, 1999 WL 1095608, at *4 (S.D.N.Y. 1999) ("[T]he Second Circuit has repeatedly held that even if a plaintiff prevails on separate legal claims, each of which may be said to protect different if related interests, he may not obtain full compensation twice for the same economic injury.")
However, the Court may award damages under both the Lanham Act and the Copyright Act where the latter serve a purpose other than disgorgement of a defendant's profit. See Lyons P'ship L.P., 1999 WL 1095608 at *9-10 (holding that separate awards under the Lanham Act and the Copyright Act are permissible where the copyright damages serve a purpose other than compensation); see also Gidatex, S.r.L. v. Campaniello Imports, Ltd., 82 F. Supp.2d 136, 146 (S.D.N.Y. 2000) (construing jury award of profits under both federal and state law to serve separate purposes of deterrence and compensation so as not to constitute double recovery). This Court explicitly awarded Viacom enhanced statutory damages for its deterrence value. Thus, the Court concludes that a disgorgement award in order to compensate Viacom would be proper, particularly where, as here, the defendant has failed to put forth any opposition to Viacom's request.
Under the Lanham Act, in order to calculate profits, the plaintiff need only prove the amount of the defendant's sales revenues. 15 U.S.C. § 1117 (a). According to the undisputed evidence, Fanzine garnered revenues of $48,693.78 from the sale of 31,826 copies of the single-sheet product. Fanzine's sale of 36,751 copies of the 32-page product generated revenues of $75,339.55. Perkins Supp. Decl. ¶ 10. Moreover, because Fanzine has not put forth any evidence as to its deductible expenses, Viacom is entitled to recover the total amount of $124,033.33. See Lyons P'ship L.P., 1999 WL 1095608 at *7 (holding that where "defendants have defaulted on the current application for monetary compensation, they have necessarily foregone their opportunity to prove those expenses").
4. Attorneys' Fees and Costs
Section 505 of the Copyright Act allows the Court to award the prevailing party its attorneys' fees and costs. 17 U.S.C. § 505. The Supreme Court has set forth a number of non-exclusive factors to guide the Court's discretion, including "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in the particular circumstances to advance considerations of compensation and deterrence." Matthew Bender Co. v. West Publ'g Co., 240 F.3d 116, 121 (2d Cir. 2001) (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n. 19 (1994)). of these, the "objective unreasonableness" factor is accorded substantial weight. Id. at 121-22.
Here, Judge Wood already has characterized Fanzine's copyright infringement defenses as "meritless." Viacom Int'l Inc., 2000 WL 1854903 at *3. Indeed, Judge Wood granted summary judgment to Viacom despite Fanzine's claim to an implied license because "no reasonable juror could conclude that the parties manifested mutual assent to a licensing agreement giving defendant unfettered, and free, permission to commercially exploit its characters through publications of the sort at issue here." Id. Moreover, Judge Wood termed Fanzine's fair use defense "frivolous" and stated that its argument "strains credulity." Id. at *5-6. Thus, it is clear that Fanzine's position was objectively unreasonable.
In addition, there is substantial uncontradicted evidence of Fanzine's bad faith. See Matthew Bender Co., 240 F.3d at 125 ("[B]ad faith in the conduct of the litigation is a valid ground for an award of fees."). Fanzine repeatedly ignored Viacom's discovery requests for Fanzine's revenue information. Perkins Supp. Decl. ¶¶ 4-5, 7. Indeed, Fanzine delayed over nine months in producing that information. Id. ¶ 10. Fanzine failed to produce its President, Robert Maiello, for a scheduled deposition, even though plaintiff's counsel had confirmed the date by letter the previous week. Id. ¶ 9. On another occasion, Fanzine's counsel failed to appear before this Court for a conference, an appearance that had been set on the record at a prior conference with counsel in attendance. Id. ¶¶ 13-14. Finally, despite indicating to the Court that Fanzine opposed Viacom's request for summary judgment and other relief, thus necessitating the instant motions, Fanzine failed to submit any response thereto. Id. ¶ 15.
Given the foregoing considerations, the Court concludes that an award of attorneys' fees and costs is warranted here pursuant to 17 U.S.C. § 505. Viacom shall submit to the Court within 10 days from the date of this Opinion and Order a final calculation of its fees and costs, including those incurred in making the instant motions.
Because this Court is awarding fees and expenses pursuant to the Copyright Act, the Court need not consider Viacom's alternate argument that fees and expenses are likewise appropriately awarded under the Lanham Act.
5. Common Law Unfair Competition Stipulation
Fanzine has conceded that its liability for state common law unfair competition follows from Judge Wood's finding of liability on the federal unfair competition claim. See Letter from Michael Levine to Judge Wood of 7/24/00, at 5. Thus judgment in Viacom's favor is appropriate on this claim as well.
III. CONCLUSION
For the foregoing reasons, Viacom's motion for summary judgment on its federal trademark infringement claim is granted. Viacom also is entitled to judgment in its favor on its common law unfair competition claim, as stipulated to by Fanzine. As for monetary relief, the Court awards Viacom enhanced statutory damages under the Copyright Act in the total amount of $500,000 as well as disgorgement of Fanzine's profits under the Lanham Act in the total amount of $124,033.33. In addition, Viacom may recover reasonable attorneys' fees and costs in an amount to be determined. Finally, the Court will issue a permanent injunction in accordance with this Opinion and Order. Viacom is thus directed to submit, with notice to the defendant, a proposed judgment incorporating the relief set forth herein within 10 days from the date of this Opinion and Order. SO ORDERED.
Viacom also is directed to inform the Court whether or not it wishes to proceed on its federal and state dilution claims.