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Buzz-sawed: Give Copyright Credit or Face Statutory Damages, Fees, Costs

by | Aug 26, 2020 |

The US Court of Appeals for the Second Circuit affirmed a district court’s award of statutory damages where the defendant knowingly distributed a photograph without first getting permission to use the photograph. Gregory Mango v. BuzzFeed, Inc., Case No.19-446 (2nd Cir. Aug.13, 2020) (Park, J.).

Gregory Mango, a freelance photographer, sued BuzzFeed, an online media company, under the Digital Millennium Copyright Act (DMCA), for using one of his photographs in a news article without first obtaining his permission and crediting him. Mango asserted copyright infringement, alleging that BuzzFeed removed or altered the copyright management information (CMI), a violation under the DMCA. Mango sought statutory damages of $30,000 for his copyright infringement claim, $5,000 for his DMCA claim, and attorney’s fees. BuzzFeed argued that it could not be held liable under the DMCA because there was no evidence that it knew its conduct would lead to future, third-party infringement of Mango’s copyright.

The photo at issue was of Raymond Parker, who was the lead figure in a discrimination lawsuit filed by federal prosecutors in New York. The New York Post licensed the photo and published it, including Mango’s name in an attribution known as “gutter credit.” A few months later, BuzzFeed published an article about Parker and used Mango’s photo. The BuzzFeed journalist did not ask for permission to use the photo; instead, he listed the name of Parker’s attorneys’ law firm in the gutter credit. The journalist, a six-year veteran at BuzzFeed, had written more than 1,000 articles for the company, all of which included a photograph, and it was his custom to give credit to the photographers by “name or by photo outlet.” However, in this case, he asked the law firm for a photo of Parker but ultimately downloaded the photo from the New York Post website himself and attributed the photo to the law firm.

Prior to a bench trial, BuzzFeed stipulated to liability on the copyright infringement claim. The district court noted that under “Section 1202(b)(3) of the DMCA, plaintiffs must prove (1) actual knowledge … that CMI was removed and/or altered without permission and (2) constructive knowledge … that such distribution will induce, enable, facilitate or conceal an infringement.” The court found that Mango’s gutter credit constituted CMI and that BuzzFeed knew that the CMI had been removed and altered without permission, rejecting the journalist’s claims that he had believed he obtained permission and that BuzzFeed had reasonable grounds to know that such removal and distribution was infringement. The court found BuzzFeed liable on both claims and awarded Mango $8,750 in statutory damages and $65,132 in attorney’s fees. BuzzFeed appealed.

The Second Circuit determined that the district court correctly applied the DMCA in the case, finding that the journalist had distributed Mango’s photo knowing that his gutter credit had been removed or altered without Mango’s permission and distributed it with a gutter credit of the law firm, knowing that doing so would conceal that he did not have permission to use the photo.

BuzzFeed argued [...]

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Copyright Board Ordered to Take a New Look at Streaming Services Rate Structure

by | Aug 26, 2020 |

Reversing the Copyright Royalty Board’s (Board) determination of a revised rate structure governing musical works, the US Court of Appeals for the District of Columbia Circuit concluded that the Board reached a final structure without providing adequate notice. George Johnson v. Copyright Royalty Bd., Case No. 2019-1028 (D.C. Cir. Aug. 7, 2020) (Millett, J.).

Every five years, the Board holds a proceeding to determine the royalty rate and terms for reproducing and distributing musical works, where interested stakeholders are permitted to present evidence and argument. At issue in Johnson is the Board’s decision, made after a five-week evidentiary hearing, setting the compulsory rate for the right to reproduce and distribute recordings of copyrighted musical works, known as a mechanical license, through streaming services for the period of January 1, 2018, to December 31, 2022.

Before the Board’s determination, depending on the type of service provided, the service provider owed a royalty based on a formula that considered two factors: (1) the service provider’s revenue associated with the particular offering, known as the “revenue prong,” and (2) the royalties paid by the service provider to sound recording copyright holders, known as the “total content cost prong.” For some streaming service offerings, the royalty was subject to a mechanical floor, and for some, the total content cost prong was subject to a cap. The Board’s final determination uncapped the total content cost prong and decided to phase in, for all categories over five years, a 15.1% revenue rate and a 26.2% total content cost rate, both higher than prior rates. Streaming services Amazon, Google, Pandora and Spotify, along with copyright owners and pro se songwriter George Johnson, appealed various aspects of the ruling.

On appeal, the challenges ran the gamut of administrative arguments: among others, that the Board’s decision was improperly retroactive, that the Board failed to give proper notice before settling on the rate structure in its final determination and fixed rates arbitrarily and capriciously, that it rejected certain evidence without an adequate explanation, and that it made certain changes to its decision without statutory authority to do so.

Although the D.C. Circuit found most of these arguments unavailing, it was convinced of a few, warranting remand to the Board for further proceedings. Primarily, the Court concluded that the Board failed to provide proper notice that it would uncap the total content cost prong combined with a significant increase in the mechanical royalty license rate. Specifically, the Court held that the Board’s ultimate rate structure, while adopting pieces from various proposals (some of which were never even offered at or before the hearing), was not within the zone of reasonably contemplated outcomes. By eliminating the cap on total content cost for all categories and increasing the royalty rates, the mechanical royalty licenses would be subject to the copyright owners’ unchecked market power.

The D.C. Circuit found two other errors. First, the relevant stakeholders had a settlement history from which the Board could draw conclusions regarding an appropriate rate structure. Nonetheless, the [...]

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“Salacious” Content Doesn’t Bar Discovery in Copyright Infringement Suit

by | Jul 30, 2020 |

The US Court of Appeals for the District of Columbia Circuit preserved discovery options for copyright owners fighting online piracy when it reversed the district court’s refusal to allow a subpoena of an alleged online infringer’s internet service provider. The DC Circuit found that the district court abused its discretion by relying heavily on the copyright owner’s litigation history and the nature of its films rather than the relevant legal standards under the Federal Rules of Civil Procedure. Strike 3 Holdings, LLC v. John Doe, Subscriber Assigned IP Address 73.180.154.14 (DC Cir. July 14, 2020) (Rao, J.).

Strike 3 is a producer and online distributor of adult films. Like most of its industry peers, the company faces significant online piracy that is often facilitated by peer-to-peer file sharing. To combat this infringement, Strike 3 regularly files copyright infringement lawsuits against “John Doe” defendants based on the internet protocol (IP) address (and the associated physical address) tied to an online infringer’s illegal file sharing and downloads.

In 2018, Strike 3 filed a copyright infringement lawsuit against the IP address 73.180.154.14 John Doe subscriber located in the District of Columbia after the IP address was associated with 22 instances of infringement in the course of one year. To properly identify the defendant and serve the complaint, Strike 3 also filed a Rule 26(d)(1) motion seeking leave to subpoena Comcast, the subscriber’s internet service provider, for records identifying the John Doe IP address subscriber. But, in applying a multifactor balancing test adopted by the US Court of Appeals for the Second Circuit in Arista Records v. Doe, the district court denied Strike 3’s discovery motion on grounds that Strike 3’s need for the subpoenaed information was outweighed by defendant’s right to be anonymous, which the court found to be notably relevant given the risk of defendant misidentification and the “particularly prurient pornography” at issue.

On appeal, the DC Circuit acknowledged the district court’s broad discretion over the structure, timing and scope of discovery. In Strike 3’s case, however, the DC Circuit found that three aspects of the lower court’s analysis were an abuse of this broad discretion.

First, it was improper and “not supported by the relevant legal standards” for the district court to treat the pornographic content of Strike 3’s copyrighted works as relevant to its entitlement to early discovery. None of the supporting case law suggests that a potentially non-infringing defendant’s privacy interests vary depending on the content of the copyrighted work at issue. The Court warned that a plaintiff’s ability to defend its copyrights cannot turn on a court’s subjective view of the copyrighted material, and held that the content of a copyrighted work is per se irrelevant to a Rule 26(d)(1) motion seeking discovery to identify an anonymous infringer.

The district court’s second abuse of discretion was in its conclusion that, even if the discovery request was granted, Strike 3 could not “identify a copyright infringer who can be sued” for purposes of stating a plausible claim against the [...]

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Fifth Circuit Drills Down to Details in Drilling Database Disagreement

by | Jul 15, 2020 |

In a wide ranging opinion, the US Court of Appeals for the Fifth Circuit held that copying unimportant database schema from a proprietary database did not constitute infringement. The Court also held that where the technological measure that the defendant allegedly circumvented did not effectively control access to the work, there was no Digital Millennium Copyright Act (DMCA) violation. Moreover, the Court found error in not treating the defendant as the sole prevailing party on the copyright and DMCA claims for purposes of attorneys’ fees, notwithstanding plaintiff’s success on other claims. Digital Drilling Data Systems, LLC v. Petrolink Services, Inc., Case No. 19-20116 (5th Cir. July 2, 2020) (Duncan, J.).

Digital Drilling Data Systems (Digidrill) provides software used in oil drilling operations. Digidrill’s software collects data from underground sensors in order to help above-ground operators steer the drill. Digidrill’s systems compile the data into a database that is accessible through a variety of programs, including Digidrill’s DataLogger software. DataLogger includes a security feature that allows access only if a certain USB key is inserted in the computer running the software.

One of Digidrill’s competitors was Petrolink Services. Concerned about losing a large customer to Digidrill, Petrolink obtained a laptop running DataLogger along with the USB key. It soon realized that the database storing the data used by DataLogger was accessible without the USB key. Because Digidrill had not changed certain default settings, all that was required to gain access was a commonly known default administrator username and password. Petrolink then designed a program to copy data from the Digidrill database, including relevant portions of the database schema.

Digidrill sued Petrolink for copyright infringement, DMCA violation and unjust enrichment. The district court entered summary judgment against Digidrill on its copyright infringement and DMCA claims. The district court allowed the unjust enrichment claim to go to trial, where the jury awarded damages to Digidrill. Petrolink then sought fees and costs as a prevailing party under the Copyright Act and DMCA, which the district court denied because both parties had prevailed on some claims. Both parties appealed.

The Fifth Circuit affirmed the summary judgment against Digidrill on its copyright and DMCA claims. As for the copyright claim, the Court cited its own precedent and noted that “[T]o prove copyright infringement, a plaintiff must establish (1) ownership of a valid copyright; (2) factual copying; and (3) substantial similarity.” The only element at issue here was the third prong, substantial similarity.

Digidrill contended that even though Petrolink copied only 5% of DataLogger’s copyrighted schema, a reasonable trier of fact might nevertheless have found substantial similarity due to the “qualitative importance” of that small copied portion. The Fifth Circuit rejected Digidrill’s qualitative importance argument, concluding that there was no record evidence establishing the importance of the copied schema to the DataLogger program as a whole. Thus, “[W]hile the question of substantial similarity typically should be left to the factfinder, summary judgment may be appropriate if the court can conclude . . . that no reasonable juror [...]

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More Than a Feeling: No Fees for Frivolous Claim Where “Perceived Wrongs Were Deeply Felt”

by | Jul 1, 2020 | ,

Addressing the appropriateness of the district court’s decision to deny attorneys’ fees relating to a copyright claim it labeled “frivolous,” the US Court of Appeals for the Seventh Circuit affirmed the denial, despite the strong presumption in favor of awarding fees. Timothy B. O’Brien LLC v. Knott, Case No. 19-2138 (7th Cir. June 17, 2020) (Flaum, J).
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Advertising Falls within Commercial Activity Exception to Sovereign Immunity

by | Jun 18, 2020 |

The US Court of Appeals for the Second Circuit affirmed a district court’s denial of a motion to dismiss a copyright infringement suit on the ground of sovereign immunity, holding that advertising activity in the United States on behalf of a sovereign government falls within the commercial activity exception to sovereign immunity. Pablo Star Ltd. v. Welsh Gov’t, Case No. 19-1262 (2d Cir. June 8, 2020) (Lynch, J.).

Pablo Star is a company registered under the laws of Ireland and the United Kingdom. The Welsh government is a political subdivision of the United Kingdom. Pablo Star sued the Welsh government, along with multiple New-York-based media companies working with the Welsh government, for copyright infringement. Pablo Star alleged infringement of its copyrights in photographs that the Welsh government used in online and printed materials advertising Welsh-themed events in New York and promoting tourism to Wales. The Welsh government moved to dismiss, asserting sovereign immunity under the Foreign Sovereign Immunities Act (FSIA), which provides for presumptive immunity of a foreign state in federal court. The district court denied the motion to dismiss, holding that the commercial activity exception to the FSIA applied because the acts of the Welsh government that resulted in Pablo Star’s claims constituted commercial activity, and the activity had substantial contact with the United States. The Welsh government sought an interlocutory appeal.

The Second Circuit affirmed, finding that the Welsh government abrogated its sovereign immunity by engaging in commercial activity that had substantial contact with the United States. On the commercial activity prong, the Court rejected the argument that the Welsh government’s conduct was governmental, rather than commercial, because it promoted tourism to Wales. The Court explained that an activity is deemed commercial based on its nature rather than its purpose. Activity is commercial if a foreign state performs the types of actions typical of a private party engaging in commerce. A state’s motives, including motives without profit or to fulfill sovereign objectives, are irrelevant. The Welsh government’s assertion that it acted as a sovereign government to promote Welsh culture and tourism conflated the act with its purpose. The broader characterization of promoting tourism also did not distinguish the activity from functions regularly undertaken by private entities because the profit motive was irrelevant. Because the publication of advertising materials is an activity regularly performed by private-sector businesses, the court affirmed the district court’s conclusion that the Welsh government engaged in commercial activity.

The Second Circuit also distinguished Pablo Star’s claims from those in cases where sovereign immunity applied. Claims dismissed on the ground of sovereign immunity lacked a sufficient nexus between a party’s injury and the governmental entity’s commercial activity. They instead stemmed from functions unique to government, such as detention and punishment or the employment of civil service personnel. Pablo Star’s copyright infringement claim, by contrast, directly resulted from the Welsh government’s commercial conduct, including its unauthorized use of photographs in advertising materials promoting Welsh culture and tourism.

On the substantial contact prong, the Second Circuit agreed that the [...]

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Copyright Office, Not Courts, Determines Validity of Registrations Containing Inaccurate Information

by | Jun 10, 2020 |

With the validity of a copyright registration at issue, the US Court of Appeals for the Ninth Circuit reversed and remanded a district court’s judgment after a jury trial and award of attorney’s fees in favor of the plaintiff in a copyright infringement action, holding that the district court was required to request the Register of Copyrights to advise whether inaccurate information, if known, would have caused the Register to refuse registration of the plaintiff’s asserted copyright. Unicolors, Inc. v. H&M Hennes & Mauritz, L.P., (9th Cir. May 29, 2020) (Bea, J.).

The appeal to the Ninth Circuit arose from a copyright infringement action brought by Unicolors, a company that creates designs for use on textiles and garments, against the global fast-fashion retail giant, H&M Hennes & Mauritz (H&M). After a jury found substantial similarity between a design created by Unicolors in 2011 and a design printed on a skirt and jacket sold by H&M four years later, the Ninth Circuit was tasked with examining the threshold issue of whether Unicolors actually holds a valid copyright registration for the 2011 design, which is a precondition to bringing its copyright infringement suit.

The garment design that Unicolors claimed to be infringed by H&M is one of 31 separate designs comprising a “single-unit registration.” To register a collection of works as a “single unit” under the Copyright Act, however, the works must have been first sold or offered for sale in “a single unit of publication.” On this point, H&M argued that the collection of works identified in Unicolors’s asserted copyright registration were sold separately instead of together and at the same time, which required the court to find Unicolors’s copyright registration invalid.

In its examination of the “rarely disputed” issue of whether a copyright is properly registered, the Ninth Circuit found the district court’s rationale for denying H&M’s petition to be “flawed.” First, the Court flatly rejected the district court’s requirement that H&M demonstrate that Unicolors intended to defraud the Copyright Office at the time of its application filing, and pointed to the Ninth Circuit’s 2019 ruling in Gold Value Int’l Textile, Inc. v. Sanctuary Clothing, LLC, where it clarified that there is no such intent-to-defraud requirement for copyright registration invalidation (and in doing so, rejected a series of Ninth Circuit cases that imply an opposite conclusion).

Second, the Ninth Circuit concluded that the plain meaning of “single unit,” under the Copyright Act’s provision for the registration of a collection of published works as a single unit, requires that the registrant first published the works in a singular, bundled collection. Therefore, the Court explained that the district court further erred in concluding that Unicolors’s application for copyright registration did not contain inaccuracies despite the inclusion of the company’s own designated “confined designs,” which, according to testimony and evidence in the proceeding, were sold separately and exclusively to individual customers and were not first sold together and at the same time with the rest of the works in the single unit registration.

With this underlying [...]

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Prayer for Declaratory Relief Invokes Copyright Act and Available Attorneys’ Fees

by | May 28, 2020 |

Vacating the district court’s order denying a defendant’s recovery of attorneys’ fees under the Copyright Act, the US Court of Appeals for the Ninth Circuit held that, even when asserted as a claim for declaratory relief, any action that turns on the existence and potential infringement of a valid copyright invokes the Copyright Act and therefore gives the district court discretion to award reasonable attorneys’ fees pursuant to § 505 of the Copyright Act. Doc’s Dream, LLC v. Dolores Press, Inc. and Melissa Scott, Case No. 18-56073 (9th Cir. May 6, 2020) (Callahan, J.).

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Chalk One Up to the Knock-Off

by | May 27, 2020 | ,

Addressing issues of design patent infringement, copyright infringement, trade dress infringement and unfair competition, the US Court of Appeals for the Federal Circuit affirmed a district court’s grant of summary judgment on all claims. Lanard Toys Limited v. Dolgencorp LLC, Ja-Ru, Inc., Toys “R” Us-Delaware, Inc., Case No. 2019-1781 (Fed. Cir. May 14, 2020) (Lourie, J.).

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Copyright Damages Limited to Three Years Before Lawsuit Filing

by | May 27, 2020 |

Addressing a myriad of issues relating to copyright law, the US Court of Appeals for the Second Circuit found that the discovery rule applies for statute of limitations purposes in determining when copyright claims accrue, but damages are limited to three years before filing of the lawsuit. Sohm v. Scholastic Inc., Case Nos. 10-2110, -2445 (2d Cir. May 12, 2020) (Sullivan, J.).

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