Opinion
No. MJG-97-1470
February 1, 2002
MEMORANDUM AND ORDER
The Court has before it Defendants' Motion to Strike Jury Demand and the materials submitted relating thereto. The Court finds that a hearing is unnecessary.
In the instant case, Plaintiff is seeking damages pursuant to 17 U.S.C. § 504 (a)(1) which permits recovery for
It appears that Plaintiff cannot recover statutory damages in the instant case because the infringement preceded copyright registration. 17 U.S.C. § 412 (1).
The copyright owner's actual damages and any additional profits of the infringer, as provided by [ 17 U.S.C. § 504 (b).]
Plaintiff is making no claim for his actual damages. Rather, Plaintiff's damage claim is only for "profits of the infringer that are attributable to the infringement." 17 U.S.C. § 504 (b). Plaintiff has demanded a trial by jury of all issues. Defendants contend that there is no right to a jury trial on the issue of the amount of damages to be awarded with regard to the profits of the infringer. Thus, the parties seek a ruling on the question of whether Plaintiff is entitled to trial by jury of his claim to recover the "profits of the [Defendants] that are attributable to the infringement" of his copyright in the Shield Drawing under 17 U.S.C. § 504 (a)(1), (b). There appears to be no definitive answer to the question presented in the precedents of the Supreme Court or the United States Court of Appeals for the Fourth Circuit.
The Court finds the decision of Judge Cederbaum in Daisy Group, Ltd. v. Newport News, Inc., 999 F. Supp. 548, 550-52 (S.D.N.Y. 1998) (a trademark, not copyright, case) to provide a well written statement of the pertinent principles. As expressed therein:
The Seventh Amendment guarantees the right to trial by jury "[i]n Suits at common law." This language has been construed to require a jury trial in those actions, including actions created by statute, that are analogous to "Suits at common law" brought in the English law courts prior to the adoption of the Seventh Amendment. See Tull v. United States, 481 U.S. 412, 417 (1987).
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To determine whether a particular action will resolve legal rights, a court should "examine both the nature of the issues involved and the remedy sought." [Chauffeurs, Teamsters and Helpers, Local No. 391 v. Terry, 494 U.S. 558, 564 (1990)].
The first step is to compare the action to 18th century actions brought in the courts of England before the merger of law and equity. The second step is to "examine the remedy sought and determine whether it is legal or equitable in nature." Id. The second step, the Supreme Court has instructed, "is the more important." Id.
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[Under the Supreme Court decision in Dairy Queen, Inc. v. Wood, 369 U.S. 469, (1962)] an action for trademark infringement is legal. . . .
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The second, "more important" step of Tull and Terry is to determine whether the remedy sought is more legal than equitable in nature. The Second Circuit has explained that there are three distinct bases for an award of profits for a violation of the Lanham Act. Profits are available where (1) the defendant has been unjustly enriched; (2) the plaintiff has sustained damages from the infringement; or (3) such an award is necessary to deter a willful infringer from doing so again. [George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1537 (2nd Cir.) cert. denied 506 U.S. 987 (1992).] Thus, an award of profits may serve as restitution for unjust enrichment, as "a rough proxy measure of plaintiff's damages," or "to protect the public at large . . . [from] fraud regarding the source and quality of consumer goods and services." Id. at 1538-1539.
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In this case, it is evident that Daisy seeks profits as a rough proxy measure of its damages.
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Daisy seeks profits as a "surrogate for damages," an alternative measure of damages because of the difficulty of proving actual lost sales. See [Oxford Indus., Inc. v. Hartmarx Corp., 15 U.S.P.Q.2d 1648, 1654 (N.D. Ill. 1990).]
This type of remedy is fundamentally compensatory and legal in nature. Indeed, an award of profits on this theory still requires a plaintiff to "establish its general right to damages." Basch, 968 F.2d at 1539. Therefore, a claim for an infringer's profits as a proxy for damages "is more analogous to a suit for damages" than to an equitable action, Oxford Indus., 15 U.S.P.Q.2d at 1654, and entitles the plaintiff to a jury trial.
It is appropriate to consider the instant case in light of Judge Cederbaum's opinion in Daisy.
The first step of the Tull and Terry analysis appears to lead to the conclusion that Plaintiff's claim for copyright infringement is legal in nature. See Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 348-49 (1998).
Nevertheless, the second, "more important" step of the Tull and Terry analysis appears to lead to the conclusion that the specific claim for damages presented is equitable in nature. Plaintiff is not seeking to use the infringer's profits as a surrogate measure of, or proxy for, his actual damages. Nor does the instant case present any necessity or justification for an award to deter a willful infringer from doing so again. Rather, it appears that Plaintiff seeks an award of the infringer's profits as restitution for unjust enrichment. Such claim for disgorgement of profits is equitable in nature. Feltner at 352.
Accordingly, if now required definitely to resolve the issue, the Court would likely hold that the Plaintiff here is not entitled to trial by jury. However, the Court is not required to render a final decision at the present stage. Nor would it be sound judicial case management to do so.
The question presented is one as to which reasonable arguments can be made on both sides. The Court must recognize that there is a possibility that an appellate court might analyze the case so as to rule that Plaintiff would be entitled to a trial by jury. Hence, it is possible that the parties would bear the expense of a bench trial and, after appeal, have to retry the case to a jury.
The sound practice, and one which this Court has followed in cases presenting analogous situations, is to have the trial proceed simultaneously as a bench and jury trial. The jury will return a verdict. If, in light of the nature of the case as presented at trial and the then state of the precedents, the Court concludes that Plaintiff was not entitled to a jury trial, the Court will render a bench decision. If the Court's bench decision is less favorable to Plaintiff than the jury verdict, the Plaintiff can appeal on the ground that the Court should have entered judgment based on the jury verdict. Should an appellate court rule that Plaintiff had been entitled to a jury trial, there would be no need for a retrial of the case since judgment could be entered based on the jury verdict.
See Vodusek v. Bayliner Marine Corp., 71 F.3d 148, 152 (4th Cir. 1995).
If the Court's decision were the same as the jury verdict, the jury trial issue would be moot. If the Court's decision were more favorable to Plaintiff than the jury verdict, the Court would then have to consider whether the Defendant would be entitled to demand that the jury verdict would control.
For the foregoing reasons:
1. Defendants' Motion to Strike Jury Demand is DENIED.
2. The case shall proceed to trial before a jury and, simultaneously, as a bench trial.
3. The Court shall:
a. Determine, post trial, whether Plaintiff is entitled to a jury trial.
b. If so, Judgment would be based on the jury verdict.
c. If not, the Court would render a decision.
SO ORDERED.