Opinion
CV-01-2187 (PG)
January 31, 2003
ORDER
Plaintiffs, heirs to a deceased composer, filed suit against a number of music industry record producers, alleging infringement of copyrights in musical compositions. Presently before the Court is Plaintiffs' Motion in Support of Entry of Default Judgment against Defendant Sonolux, Inc. (Docket #29.) Plaintiffs seek actual and statutory damages pursuant to 17 U.S.C. § 504 (Supp. 2002). Plaintiff also seeks injunctive relief under 17 U.S.C. § 502 (1996) as well as attorney's fees pursuant to 17 U.S.C. § 505 (1996). Testimony on damages was taken from Plaintiffs at a hearing on January 24, 2003. Defendant Sonolux, Inc. did not appear for the hearing or make any submissions. For the reasons discussed below, the Court GRANTS Plaintiffs' Motion.
I. BACKGROUND
Plaintiffs Maria Venegas Hernandez, Rafael Venegas Hernandez, Guillermo Venegas Hernandez, Yeramar Venegas Velazques (collectively "Venegas Plaintiffs") and Guillermo Venegas Lloveras, Inc. seek damages from Defendant Sonolux, Inc. for copyright infringement. The Venegas Plaintiffs, sole heirs to composer Guillermo Venegas Lloveras's songs and music, transferred their ownership interest in the works to Guillermo Venegas Lloveras, Inc. The United States Copyright Office issued a copyright to the corporation for these songs on October 23, 2000. Alleging willful copyright infringement by Defendants Sony, Sony Disco and Sonolux, Inc., Plaintiffs filed suit on September 6, 2001. (Docket #1.) The Sony Defendants were subsequently dismissed from the case on July 2, 2002 for improper service of process. (Docket #19.) Defendant Sonolux, Inc. failed to answer Plaintiffs' complaint and the Clerk entered default against Sonolux on January 24, 2002. (Docket #5.)
II. DISCUSSION
At the outset, the Court notes that after the entry of default, it must accept as true all well-pleaded factual allegations in the complaint. See Quirindongo Pacheco v. Rolon Morales, 953 F.2d 15, 16 (1st Cir. 1992);Video Cafe. v. De Tal, 961 F. Supp. 23, 25 (D.P.R. 1997). Consequently, Defendant's infringement of the copyright in violation of the Copyright Act of 1976, 17 U.S.C. § 106 (1996), has been established and all that remains is for the Court to determine the appropriate measure of damages. See Video Cafe, 961 F. Supp. at 25 (noting that upon entry of default, the "only issue remaining for consideration is the amount of damages"); A N Music Corp. v. Venezia, 733 F. Supp. 955, 957 (E.D. Pa. 1990) (recognizing infringement liability on the basis of plaintiff's complaint). At the January 24 hearing, Plaintiffs presented evidence of nineteen instances of infringement by Defendant Sonolux, Inc. regarding the songs "Desde Que Te Marchaste" and "No Me Digan Cobarde." Plaintiffs now seek actual damages as to one of the infringing events and statutory damages as to the remaining eighteen instances of infringement. Plaintiff also requests that Sonolux, Inc. be enjoined from further infringement in addition to seeking attorney's fees.
A. Damages
The Federal Rules of Civil Procedure provide that when entering a judgment of default, a court may conduct a hearing to "determine the amount of damages." Fed.R.Civ.P. 55(b)(2). In making this determination, district courts have considerable discretion. Jones v. Winnepesaukee Realty, 990 F.2d 1, 4 (1st Cir. 1993). However, a court should consider evidence sufficient to provide an "adequate reference base" for any award of damages before entering judgment. Morley Music Co. v. Dick Stacey's Plaza Motel, Inc., 725 F.2d 1, 3 (1st Cir. 1983); see also Transatl. Marine Claims Agency v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (noting that a district court should establish damages with "reasonable certainty"). Because Plaintiff seeks both statutory and actual damages from Defendant Sonolux, Inc., the Court addresses each request in turn.
1. Statutory Damages
A copyright owner may elect to request a statutory damages award in lieu of actual damages for all infringements with respect to any one work. 17 U.S.C. § 504 (c)(1) (Supp. 2002). The Court may award statutory damages "in a sum of not less than $750 or more than $30,000 as the court considers just." Id. Additionally, where the copyright owner has established that the 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." Id. Statutory damages may be awarded only for violations occurring after the registration of the infringed copyright. 17 U.S.C. § 412 (1) (1996).
Within these restrictions, the Court retains discretion over the measure of damages. A N Music, 733 F. Supp. at 958 (citing F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 231-32 (1952)). When considering how much to award under section 504(c), the Court may examine a number of factors, including: (1) the expenses saved and profits reaped by Defendant; (2) revenues lost by the Plaintiffs; (3) the value of the copyright; (4) the deterrent effect upon Defendant and others; (5) whether Defendant's conduct was innocent or willful; and (6) whether Defendant has cooperated in providing records from which to assess the value of the infringing material. Video Cafe, 961 F. Supp. at 26 (citing Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110, 1117 (2d Cir. 1986)).
In the present case, Plaintiffs alleged in the complaint that Sonolux, Inc. "knowingly and willfully" infringed their rights. (See Compl. at ¶ 17 (Docket #1).) They further asserted at the hearing that eighteen works manufactured, distributed or sold in the United States have infringed upon the copyright after October 23, 2000. Plaintiffs maintain that the works have been distributed by Sonolux, Inc. doing business under various labels, including "Sonolux," "Sonolux Records," "Sonolux USA" and "Sonolux South America." However, Plaintiff provides no evidence that the label "Sonolux South America" is associated with Defendant other than that the two share a common mailing address. This averment is based on information obtained from the webpage www.rimoteca.com. (See Mot. for Default J. at App. A, Ex. 5 (Docket #29).)
While Sonolux, Inc. is a Delaware corporation with its principle place of business in Coral Gables, Florida, Sonolux, S.A. is a Columbian Corporation with its principle place of business in Bogota, Columbia. Although the label "Sonolux South America" may be affiliated with Sonolux, Inc., an equally, if not more, plausible relationship may also exist with Sonolux, S.A. Plaintiffs' complaint in this matter alleges infringement only by "Sonolux Records" and "Sonolux, Inc.," making no reference to Sonolux, S.A. Moreover, service of the complaint was perfected only upon the Coral Gables, Florida address. (See Docket #3.) Accordingly, the Court finds that Plaintiffs have failed to show that Sonolux, Inc. was doing business as "Sonolux South America." Therefore, the Court declines to award damages for the two infringing works produced solely under the label "Sonolux South America."
Although maintaining that Sonolux, Inc. is a "self-managing branch company" of Sonolux, S.A., Plaintiffs acknowledge that the two are separate corporate entities and fail to present any reasons why the Court should look beyond the distinct corporate identities. (See Mot. for Default J. at 2 (Docket #29).)
As to the remaining 16 works, little or no evidence has been presented regarding the value of Plaintiffs' copyright, revenues lost by Plaintiffs or profits gained by Defendant. However, these omissions are largely due to Defendant's failure to answer the complaint in this matter. Noting the willful nature of Defendant's conduct as well as the potential to discourage future infringement, the Court finds that an award of $100,000 for each of the 16 works, or a total of $1,600,000, represents a fair measure of damages in this case. See Schwartz-Liebman Textiles v. Last Exit Corp., 815 F. Supp. 106, 107 (S.D.N.Y. 1992) (awarding statutory damages based upon estimations of copyright value). This amount will sufficiently protect Plaintiffs' proprietary rights and notice Defendant of the need to respect copyright protections in the future.
2. Actual Damages and Profits
As an infringer, Defendant is liable for the copyright holder's actual damages as well as any profits it may have gained as a result of the infringement, provided the profits are not already included in the actual damages requested. 17 U.S.C. § 504 (b) (Supp. 2002). To establish nonduplicative profits under section 504(b), the copyright owner must present proof of the infringer's gross revenues. The infringer bears the burden of proving any deductible expenses or profits not attributable to the copyrighted work. Id.
Here, Plaintiffs maintain that they have proven Defendant's gross revenue for the record "Sentimientos" by Charlie Zaa. Distributed under the "Sonolux" label, the record contains portions of "Desde Que Te Marchaste." Plaintiffs have presented evidence that the compact disc retails for $13.98. They further assert that "Sentimientos" has had sales in excess of 4.5 million copies and, thus, claim gross revenue of $62,910,000. Although only 10 tracks appear on the record, Plaintiffs request 25% of the gross revenue, or $15,727,500, in nonduplicative profits.
The calculation of damages pursuant to section 504(b) does not require mathematical precision. Bruce v. Weekly World News, Inc., 310 F.3d 25, 31 (1st Cir. 2002); Kleier Advertising v. John Deery Motors, Inc., 834 F. Supp. 311, 314 (N.D. Iowa 1993). However, damages based on "unduly speculative" claims are unavailable under the provision. Bruce, 310 F.3d at 31; see also Johnson v. Jones, 149 F.3d 494, 507 (6th Cir. 1998);Pfanenstiel Architects Inc. v. Chouteau Petroleum Co., 978 F.2d 430, 432 (8th Cir. 1992); Abeshouse v. Ultragraphics, Inc., 754 F.2d 467, 470 (2d Cir. 1985). Requests for nonduplicative infringer profits are speculative where the record does not contain evidence of actual sales or a plaintiff fails to put on expert testimony regarding sales figures. See Bruce, 310 F.3d at 31 n. 5; Abeshouse, 754 F.2d at 470; Schwartz-Liebman Textiles, 815 F. Supp. at 108.
Although the record in the present case is not devoid of evidence regarding sales of "Sentimientos," Plaintiffs' argument turns on a sales figure provided by a purported Sonolux publicist appearing in a newspaper clipping. Neither the year nor the source of the clipping is provided. The piece contains no indications of the source of the 4.5 million figure other than a reference to a Sonolux publicist. Moreover, Plaintiff made no effort to put on expert testimony to substantiate the sales figure or to verify that Defendant did in fact profit $13.98 from each sale, The clipping hardly represents proof of the "infringer's gross revenue" as required by section 504(b). Because Plaintiffs have not presented sufficient evidence of actual sales nor made an effort to establish sales through expert testimony, the Court denies Plaintiffs' request for nonduplicative profits as unduly speculative. See Bruce, 310 F.3d at 31 n. 5 (admonishing plaintiff for assuming that defendants profited from the whole retail price of an infringing publication without presenting supporting expert testimony); Schwartz-Liebman Textiles, 815 F. Supp. at 108 (noting that estimations of actual sales are too speculative to support an award of actual damages or profits).
The passage, entitled "The newest from Zaa is coming" reads:
Columbian Singer Charlie Zaa began recording of his third album which will include unpublished romantic themes and other successful songs, such as "La Pollera Colora" (The red skirt), Alberto Saladin, publicist of the Sonolux label informed yesterday. The album, which is still to be titled, is in its third week of recording. It is produced by Emilio Estefan and Jose Antonio Molina. Saladin said that in this new material, which is expected to be on the market early in 2000, Charlie Zaa will sound like a "Latin Harry Connick, Jr." The 25 year old Zaa, became famous by rejuvenating boleros of Ecuadorian singer Julio Jaramillo through his debut album launched in 1996, titled "Sentimientos." With that recording he reached sales of over 4.5 million copies. Afterwards, with his album titled "Un Segundo Sentimiento," Zaa was again successful.
B. Injunctive Relief
A court may "grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502 (a) (1996). The right to an injunction attaches where the copyright holder has established past infringement and the likelihood of future infringements. A N Music Corp., 733 F. Supp. at 957;Stone City Music v. Santillanes, 702 F. Supp. 249, 250 (D. Or. 1988).
In the present case, Plaintiffs have established Defendant's liability. Moreover, Defendant's continuing distribution of the copyrighted music and its failure to respond to Plaintiffs' requests for a licensing arrangement, or even to acknowledge the suit, demonstrates an on-going threat to the copyright. Thus, the Court enjoins Defendant from producing, manufacturing, distributing or selling any copyrighted musical compositions for which Plaintiffs are the owners of the copyright. The injunction shall remain in effect until Defendant and Plaintiffs enter a licensing arrangement with respect to the copyrighted works.
C. Attorney's Fees
Section 505 of the Copyright Act provides for the award of costs and attorney's fees in an infringement action at the discretion of the trial court. 17 U.S.C. § 505 (1996). However, fees may only be awarded for services performed after the registration of the infringed copyright.See 17 U.S.C. § 412 (1) (1996). Additionally, there is no presumption in favor of awarding fees to a prevailing plaintiff under the statute.Lotus Dev. Corp. v. Borland Int'l, 140 F.3d 70, 72 (1st Cir. 1998) (citing Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). Rather, courts may consider a number of factors in awarding fees intended to further the underlying purpose of the Copyright Act and encourage the production of original literary, artistic and musical expression for the public good. Id. at 73. Included among the factors are the frivolousness of the request, the motivation of the parties, the objective unreasonableness of the claims presented and the need to advance considerations of compensation and deterrence. Id.
Plaintiffs have submitted billing records for time expended after the registration of their copyright and request an award of $10,707.25 in attorney's fees. In light of Defendant's continuing violation of Plaintiffs' copyright and the need to deter such violations in the future, the Court orders that fees in the amount of $10,707.25 be awarded to Plaintiffs.
III. CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs' Motion in Support of Entry of Default Judgment. The Court further AWARDS $1,600,000 in damages and $10,707.25 in attorney's fees to Plaintiffs. Defendant is ENJOINED from producing, manufacturing, distributing or selling any copyrighted musical compositions owned by Plaintiffs unless and until Defendant and Plaintiffs enter a licensing arrangement with respect to those works. Judgment in the total amount of $1,610,707.25 shall be entered AGAINST Defendant Sonolux, Inc. and in FAVOR of all Plaintiffs.
IT IS SO ORDERED.