Class 17 Copyright, Winter, 2010 Enforcement Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago Copyright © Randal C. Picker. All Rights Reserved.

September 17, 2015Copyright © Randal C. Picker2 Sec. 501: Infringement of copyright n (a) u Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 121 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be.

September 17, 2015Copyright © Randal C. Picker3 Sec. 501: Infringement of copyright n (b) u (b) The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411 [requiring registration before suit], to institute an action for any infringement of that particular right committed while he or she is the owner of it.

Possible Remedies n Actions to Management the Infringement u Sec. 502: Injunctions u Sec. 503: Impounding and destroying u Sec. 509: Seizure and forfeiture September 17, 2015Copyright © Randal C. Picker4

Possible Remedies n Criminal Sanctions u Sec. 506 Sec. u Title 18, Chapter 113: Stolen PropertyChapter w 18 USC 2319 w 18 USC 2319A w 18 USC 2319B September 17, 2015Copyright © Randal C. Picker5

September 17, 2015Copyright © Randal C. Picker6 Sec. 504: Damages n (a) In General. u Except as otherwise provided by this title, an infringer of copyright is liable for either ‑‑ w (1) the copyright owner’s actual damages and any additional profits of the infringer, as provided by subsection (b); or w (2) statutory damages, as provided by subsection (c).

September 17, 2015Copyright © Randal C. Picker7 Sec. 504: Damages n (b) Actual Damages and Profits. u The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

September 17, 2015Copyright © Randal C. Picker8 Sec. 504: Damages n (c) Statutory Damages. u (1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, 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 or derivative work constitute one work.

September 17, 2015Copyright © Randal C. Picker9 Sec. 504: Damages u (2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.

September 17, 2015Copyright © Randal C. Picker10 Statutory Damages at Work n UMG Recordings v. MP3.com (2000 WL (SDNY 2000)) u “Weighing not only the foregoing factors but all the other relevant favors put before the Court, the Court concludes, and hereby determines, that the appropriate measure of damages is $25,000 per CD. If defendant is right that there are no more that 4,700 CDs for which plaintiffs qualify for statutory damages, the total award will be approximately $118,000,000; but, of course, it could be considerably more or less depending on the number of qualifying CDs determined at the final phase of the trial scheduled for November of this year.”

Statutory Damages at Work n Capital v. Jammie Thomas-Rasset u January 22, 2010 Remittitur OrderOrder u February 8, 2010 Filing by PlaintiffsPlaintiffs u Commentary: Feb 9, 2010: ars technica Commentary September 17, 2015Copyright © Randal C. Picker11

September 17, 2015Copyright © Randal C. Picker12 Davis v. The Gap n Core Facts u Davis designs “nonfunctional jewelry worn over the eyes in the manner of eyeglasses” u His Onoculii line of jewelry has been worn by entertainers

September 17, 2015Copyright © Randal C. Picker13 Davis v. The Gap u Pictures of those entertainers wearing the jewelry had appeared in Vogue, Women’s Wear Daily, Fashion Market, In Fashion, The New York Times, The New York Post, and The Village Voice u He was also once paid a $50 fee by Vibe magazine in connection with a picture of Sun Ra wearing the jewelry

September 17, 2015Copyright © Randal C. Picker14 Davis v. The Gap u Davis said that he had earned $10,000 from sale of the jewelry u Gap shoots an ad; Gap supplies the clothes; the subjects bring the accessories (jewelry, watches, eyeglasses)

September 17, 2015Copyright © Randal C. Picker15 Davis v. The Gap u As to the ad, “[t]he central figure, at the apex of the V formation, is wearing Davis’s highly distinctive Onoculii eyewear; he peers over the metal disks directly into the camera lens” u The ad appears in magazines, including W, Vanity Fair, Spin, Details and Entertainment Weekly, with estimated circulation of 2.5 million

September 17, 2015Copyright © Randal C. Picker16 Davis v. The Gap u Davis sees ad; asks Gap whether they want to carry his jewelry; they decline u Davis sues w Wants $2.5 million, representing licensing fees Gap would have paid w Some of Gap’s profits w $10 million in punitive damages

September 17, 2015Copyright © Randal C. Picker17 Davis v. The Gap n What is the violation, if any? n If Davis’s copyright has been violated, how much money should he get?

September 17, 2015Copyright © Randal C. Picker18 Applying Sec. 504(b) n Assessing Davis’s Damages u Figuring out the markets u Jewelry sales: reduction in sales of eye jewelry? u Licensed uses: reduction in fees for use of the goods in promotion

September 17, 2015Copyright © Randal C. Picker19 Applying Sec. 504(b) u Who pays whom? w Product placement: how much does Coke pay to be on American Idol? u What is the relationship between the 2 nd Circuit’s analysis of lost licensing fees as damages and the approach that the Supreme Court has taken on 107(4) in Campbell and Harper & Row?

September 17, 2015Copyright © Randal C. Picker20 From Davis’s Website n u “The Onoculii Designs are the world renowned wearable art eyewear designs that have won their place in fashion history. Hand made of brass, silver and gold, these designs continue to excite the fashion world with their incredibly original creation. Famous faces who adorn On’s award winning designs are Thomas Mapfumo, Vernon Reid, Cat Coore, Luther Thomas and Rosario Dawson. On’s creations have accessorized shows for Jean-Paul Gaultier, ROVA ( Iesha Sekou, Moshood and Queen Bilquiys just to name a few.”

September 17, 2015Copyright © Randal C. Picker21 Appling Sec. 504(b) n Assessing Gap’s Profits u The Statute w “In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.”

September 17, 2015Copyright © Randal C. Picker22 Applying Sec. 504(b) u Gross Revenues w Total revenues for Gap? For eyewear and accessories? Attributable to the ad campaign?

September 17, 2015Copyright © Randal C. Picker23 Interaction of Damages and Profits n Sec. 504(b) u “The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.” n Take a standard case of unlicensed use

September 17, 2015Copyright © Randal C. Picker24 Interaction of Damages and Profits n Questions u Does the copyright owner get the fee that would have been paid for consensual use of the work and profits attributed to the use? u Or does the consensual license fee already internalize those profits and hence the consensual fee takes those profits into account?

September 17, 2015Copyright © Randal C. Picker25 Interaction of Damages and Profits n Hypo u Evidence in Davis v. The Gap shows w Gap profits with an ad without the jewelry: $1000 w Gap profits (exclusive of paying Davis) with an ad with the jewelry: $5000 w Davis would have taken $100 as a fee for use of jewelry in ad n Does Davis get $100? $4000? $4100?

September 17, 2015Copyright © Randal C. Picker26 Frank v. MGM n Core Facts u MGM Grand Hotel puts on a musical review u Ten Acts w 100 minutes most nights, 75 minutes on Sat w Kismet: 11 minutes, with six minutes of songs n What violation and why?

September 17, 2015Copyright © Randal C. Picker27 Frank v. MGM n Identifying Markets Again u Las Vegas market for a full-licensed production of a revival of the 1953 Broadway musical? u The licensee fee market?

September 17, 2015Copyright © Randal C. Picker28 Measuring Profits n Sec. 504(b) Again u Revenues less infringer’s proven expenses u “Elements of profit attributable to factors other than the copyrighted work”

September 17, 2015Copyright © Randal C. Picker29 Doing the Numbers at the MGM Grand n Finding Profits from the Show u Gross Revenues$24,191,690 u Cost w Direct $18,060,084 w Indirect $3,641,960 u Net Profits$2,489,646 n Is this what MGM owes Frank?

September 17, 2015Copyright © Randal C. Picker30 Three Issues n 1. Joint Production and Costs u To what extent should we attribute joint costs—the indirect costs—to this particular show? n 2. Joint Production and Profits u Suppose show is a loss leader, so that MGM can make money on gambling u How do we calculate profits?

September 17, 2015Copyright © Randal C. Picker31 Three Issues n 3. Allocating Profits from Mix of Infringing and Non-Infringing Work u Pro rata: 100 minutes of show, 11 minutes of Kismet: 11/100 of the profits? u Market test: After dropping Kismet, profits continued as before, so Kismet didn’t contribute to profits?