Opinion
18-CV-2318 (LGS) (BCM)
11-18-2022
JOINT STOCK COMPANY "CHANNEL ONE RUSSIA WORLDWIDE," Plaintiff, v. RUSSIAN TV COMPANY INC., et al, Defendants.
LORNA G. SCHOFIELD, UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION TO THE HONORABLE LORNA G. SCHOFIELD
BARBARA MOSES, UNITED STATES MAGISTRATE JUDGE.
Plaintiff Joint Stock Company "Channel One Russia Worldwide" (Channel One) brought this action against defendants Russian TV Company, Inc. (Russian TV), SR Express Consulting Inc. d/b/a Techstudio, Servernaya Inc., ESTIDesign, Inc., and their owner, Steven Rudik, alleging violations of, inter alia, §§ 605(a) and 605(e)(4) of the Federal Communications Act (FCA), 47 U.S.C. §§ 605(a), 605(e)(4). After discovery, the parties agreed to a summary trial of the FCA claims before the Honorable Lorna G. Schofield, United States District Judge. On September 22, 2021, Judge Schofield issued Amended Findings of Fact and Conclusions of Law (the Findings) determining that defendants violated FCA § 605(a) by rebroadcasting plaintiff's television programming (the Programming), without authorization, from March 15, 2015 until at least August 2020. See Joint Stock Co. "Channel One Russia Worldwide" v. Russian TV Co., 2021 WL 4341053, at *3-4 (S.D.N.Y. Sept. 22, 2021) (hereafter, Russian TV Co.), reconsideration denied, 2021 WL 5233322 (S.D.N.Y. Nov. 9, 2021). However, plaintiff failed to establish that defendants' conduct was "willful," and failed to show that they violated FCA § 605(e)(4). Id. at *4-6.
Plaintiff seeks statutory damages, permanent injunctive relief, and costs, including attorneys' fees, pursuant to FCA §§ 605(e)(3)(B) and 605(e)(3)(C)(i)(II). See Russian TV Co., 2021 WL 4341053, at *7-8. In the Findings, Judge Schofield "reserve[d] on the question of the appropriate amount, if any, of damages, attorneys' fees and costs," id. at *7, and referred those issues issue to me for report and recommendation. (Dkt. 293.) On October 6, 2021, Judge Schofield circulated a draft permanent injunction (the Draft Injunction) for comment by the parties. (Dkt. 298.) By letter dated October 12, 2021 (Pl. Ltr.) (Dkt. 305), plaintiff requested a more restrictive injunction. Defendants consented to the entry of the Draft Injunction as written. (Dkt. 306.) Thereafter, Judge Schofield expanded my reference to include the appropriate scope and language of the permanent injunction. (Dkts. 315, 317.)
On October 12, 2021, I denied plaintiff's request to conduct post-trial damages discovery. See Tr. of Oct. 12, 2021 Conf. (Tr.) (Dkt. 307) at 22-23. Thereafter, I advised the parties that since they had already tried both liability and damages, my recommendation would be "based upon the existing evidentiary record." (Dkt. 319.)
On December 17, 2021, plaintiff filed a memorandum of law (Pl. Mem.) (Dkt. 322) and the Declaration of Hardin P. Rowley (Rowley Decl.) (Dkt. 323), attaching various documents that were either previously submitted during the summary trial proceedings or prepared by counsel based on such documents. On January 14, 2022, defendants filed an opposition memorandum (Def. Mem.) (Dkt. 326) and the Declaration of Lindsay E. Hogan (Hogan Decl.) (Dkt. 328), which also attached documents previously submitted during the summary trial proceedings. On January 21, 2022, plaintiff filed a reply memorandum (Pl. Reply Mem.) (Dkt. 329).
After careful review of the record, I recommend that plaintiff be awarded a total of $1,149,000 in statutory damages, together with attorneys' fees and costs to be determined after further proceedings. I further recommend that the Court enter a permanent injunction in the form annexed hereto.
I. BACKGROUND
Plaintiff produces Russian-language television programming (the Programming), which it broadcasts via satellite in the Russian Federation and licenses to various nonparties to distribute in the United States. Russian TV Co., 2021 WL 4341053, at *1. One of plaintiff's licensed distributors, nonparty Kartina Digital GmbH (Kartina), was authorized to sell "access codes" that permitted consumers to view Channel One's Programming (as well as programming licensed to Kartina by other broadcasters) via internet protocol television (IPTV), using their mobile devices, computers, set-top boxes (STBs) and smart TVs. Id. at *1-2.
Russian TV, which is one of several IPTV companies controlled by Rudik, operates a website through which defendants provide "access to the Programming in the United States in exchange for a subscription fee." Russian TV Co., 2021 WL 4341053, at *1. From January 2011 through February 2017, defendants purchased 53,374 access codes from Kartina, which Russian TV lawfully resold to its subscribers, along with STBs that subscribers could connect to their TVs and an "RTV App" that subscribers could download. Id. at *2. The codes "provided access for specified periods of time - of up to a year - to a bundling of Russian-language programming including the Programming." Id. at *3.
Defendants purchased "18,311 3-day, 31,888 1-month, 200 3-month and 2,975 1-year access codes" from Kartina. Russian TV Co., 2021 WL 4341053, at *2; see also Declaration of Steven Rudik (Rudik Decl.), attached to the Rowley Declaration as Exhibit 1 (Dkt. 323-1), ¶ 5.
Kartina broke off its business relationship with defendants in March 2017, after which "it would no longer sell its access codes to Russian TV." Russian TV Co., 2021 WL 4341053, at *2. Although Russian TV could still resell the Kartina-sourced access codes it had on hand, id. at *3, by July 2019, all but one of those codes had expired. Id. That code expired on August 9, 2019. See Hogan Decl. Ex. H, at 2 (email from Kartina, dated July 17, 2019, confirming that all of the authorized access codes it sold to Russian TV had already expired, except for "the last," which "shall expire on 09.08.2019"); Russian TV Co., 2021 WL 4341053, at *7 ("Defendants have not had the right to rebroadcast the Programming since at least September 2019, with the expiration of the last of the Kartina access codes Defendants purchased.").
In context, it is evident that Kartina's personnel used European dating conventions, writing dates in day/month/year format. See Hogan Decl. Ex. H, at 2. Therefore, according to Kartina, the last authorized code expired on August 9, 2019.
Defendants also obtained access codes from three unlicensed vendors - Apeiron Global Services, Inc. (Apeiron), Digital Services LLC (Digital Services) and Digital Security Networks Ltd. Russian TV Co., 2021 WL 4341053, at *2. Defendants began purchasing access codes from Digital Services as early as June 2014, and from Apeiron as early as September 2016. See Rowley Decl. Ex. 7 (Dkt. 323-7) (vendor invoices). From 2015 to 2018, defendants purchased a total of 6,575 access codes from these unlicensed vendors, 3,452 of which were "Kartina access codes," but all of which "resulted in unauthorized retransmissions" when used by Russian TV's subscribers, because the non-Kartina vendors were "not licensed or authorized by Plaintiff to distribute the Programming or sell access codes to view the Programming." Russian TV Co., 2021 WL 4341053, at *2-3. The parties provide no information concerning the duration of the access codes obtained from the unlicensed vendors.
Russian TV "has admitted to having at least 1,964 subscribers who can view Russian-language television programming through Russian TV's website, STBs, computers, mobile devices and Smart TVs." Russian TV Co., 2021 WL 4341053, at *2. Those 1,964 subscribers are listed on an Excel spreadsheet (the List) produced in discovery. See Rudik Decl. Ex. 4 (Dkt. 323-2). The document lists each subscriber's name, the date on which the subscription began, the model of STB provided, and a price. The dates range from April 7, 2013 to August 28, 2018. Of the 1,964 listed subscribers, 609 "began their subscriptions before March 15, 2015, the last date within the three-year limitations period" applicable to § 605(a) claims. Russian TV Co., 2021 WL 4341053, at *4. The remaining 1,355 listed subscribers began their subscriptions between March 15, 2015 and August 28, 2018. Id. No end date is provided for any of the listed subscriptions. Thus, although defendants' "unauthorized broadcasts continued until at least August 2020," id. at *7, the List -standing alone - sheds no light on how many subscribers (continuing or new) Russian TV had during the last two years of its unlawful activity. However, the trial record contains other evidence on this point. On September 19, 2019, at deposition, Rudik testified as follows:
Rudik describes the List as showing Russian TV's "sales of STBs." Rudik Decl. ¶ 12. If Russian TV had subscribers who did not purchase STBs, they are not captured on the List.
Q. How many subscribers does Russian TV Company have?
A. It fluctuates every day, but on average it's around a thousand.
Declaration of Samuel A. Blaustein (Dkt. 262) Ex. C (Rudik Dep. Tr.) (Dkt. 262-5), at 194:10-13.
II. DISCUSSION
A federal trial court may award statutory damages for violations of FCA § 605(a) "in a sum of not less than $1,000 or more than $10,000" for "each violation," as the court "considers just." 47 U.S.C. § 605(e)(3)(C)(i)(II). If the court finds that a violation was "committed willfully and for purposes of direct or indirect commercial advantage or private financial gain, it may increase the award "by an amount of not more than $100,000 for each violation." Id. § 605(e)(3)(C)(ii). Conversely, if the court finds that the violator "was not aware and had no reason to believe that his acts constituted a violation of this section," it may reduce the award to "a sum of not less than $250." Id. § 605(e)(3)(C)(iii). The court may also "grant temporary and final injunctions on such terms as it may deem reasonable[.]" Id. § 605(e)(3)(B)(i). Whether or not the court awards damages or injunctive relief, it "shall direct the recovery of full costs, including awarding reasonable attorneys' fees" to a prevailing plaintiff. Id. § 605(e)(3)(B)(iii).
Channel One seeks $19,640,000 in statutory damages, arguing that each of the 1,964 subscribers on the List should be counted as a separate violation of § 605(a), and that anything less than the maximum award of $10,000 per non-willful violation would "incentivize[] IPTV piracy in contravention of the FCA's stated purpose." Pl. Mem. at 1-2. Defendants argue that any award should be "minimal," and in "no event" higher than $20,000, because only 1,355 of the subscribers on the List were "exclusively within the limitations period," because only a "minute percentage" of the access codes at issue were "unauthorized non-Kartina codes," and because defendants "reasonably believed all their conduct was lawful," permitting the Court to reduce the per-violation award to $250. Def. Mem. at *1-2.
A. Number of Violations
Section 605(e)(3)(C)(i)(II), which authorizes statutory damages for "each violation" of § 605(a), "does not clearly define 'violation'; instead it is up to the court to decide which acts constitute a single violation." Ent. By J & J, Inc. v. Ramsarran, 2002 WL 720480, at *2 (E.D.N.Y. Mar. 11, 2002). In this Circuit, case law has substantially filled the statutory gap. In cases involving "the showing of an event on a single night," such as when a tavern shows a prizefight without a license, the courts typically assess damages for "one violation" of § 605(a), regardless of how many patrons watch the fight. Garden City Boxing Club, Inc. v. Flor de Luna Corp., 2009 WL 2399118, at *3 (E.D.N.Y. Aug. 5, 2009). In cases involving the use of cable decoders or other "descrambling devices" to intercept programming without paying for it, "a violation occurs each time a device is purchased and installed," Cmty. Television Sys., Inc. v. Caruso, 284 F.3d 430, 435 (2d Cir. 2002), regardless of how many times the device is used. Id. at 435-36. Where, as here, the case involves unlawful IPTV streaming, which provides multiple subscribers with continuous access to unauthorized programming, "the Court may count each subscriber to the unlawful streaming service as one violation of § 605(a)," regardless of the length of time each subscription was active. Joint Stock Co. Channel One Russia Worldwide v. Infomir LLC, 2019 WL 8955234, at *15 (S.D.N.Y. Oct. 25, 2019) (hereafter Panorama), report and recommendation adopted sub nom. Joint Stock Co. "Channel One Russia Worldwide" v. Infomir LLC, 2020 WL 1467098 (S.D.N.Y. Mar. 26, 2020); accord Joint Stock Co. "Channel One Russia Worldwide" v. Infomir LLC, 2022 WL 2530456, at *22 (S.D.N.Y. Mar. 9, 2022) (hereafter S.K. Management).
The court may, however, consider the number of patrons present when determining the appropriate dollar amount of the award for that single violation. Garden City Boxing Club, 2009 WL 2399118, at *3 (collecting cases).
In Panorama and S.K. Management, defendants' conduct was entirely illegal; that is, every subscriber was provided with "pirated" programming, via IPTV, in violation of FCA § 605(a). Panorama, 2019 WL 8955234, at *2; S.K. Management, 2022 WL 2530456, at *1. Here, however, defendants sold a mix of authorized and unauthorized access codes. See Russian TV Co., 2021 WL 4341053, at *2. The Court must therefore determine not only how many subscribers Russian TV had during the relevant period, but also how many of those subscribers were provided with at least one unauthorized access code, from an licensed vendor, after March 15, 2015. Each such subscriber is properly counted as a separate violation of § 605(a) for purposes of calculating statutory damages under § 605(e)(3)(C)(i)(II).
In making these determinations, I begin with the familiar principle that it is the plaintiff's burden to establish damages with "reasonable certainty." Boyce v. Soundview Tech. Grp., Inc., 464 F.3d 376, 391 (2d Cir. 2006) (quoting Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 496 (2d Cir.1995)), see also Cottam v. Glob. Emerging Cap. Grp., LLC, 2021 WL 1222120, at *5-6 (S.D.N.Y. Mar. 31, 2021) (Schofield, J.) (denying recovery after damages trial where plaintiff established the "fact" of damages but did not present evidence from which those damages could be estimated to a "reasonable certainty"). Although Boyce and Cottam were contract cases, the same principle is properly applied in cases seeking statutory damages for violations of FCA § 605(a) - even where the defendant has defaulted, thereby depriving the plaintiff of damages-related discovery. See, e.g., Panorama, 2019 WL 8955234, at *12; J & J Sports Prods., Inc. v. James, 2018 WL 3850731, at *6 n.12 (E.D.N.Y. July 25, 2018), report and recommendation adopted sub nom. J&J Sports Prods., Inc. v. James, 2018 WL 3848921 (E.D.N.Y. Aug. 13, 2018).
In Panorama (an IPTV streaming case), the statutory damages award was based on the documented number of subscribers that defaulted defendant Panorama had in May 2017. 2019 WL 8955234, at *15. The court rejected plaintiffs' speculation that Panorama had even more subscribers during the years 2012-2016, for which there were no records. "Although the Court has considerable discretion in the amount of statutory damages it awards per subscriber, it is not at liberty to presume tens of thousands of subscribers into existence." Id. In James (a prizefight case involving a single § 605(a) violation), the court calculated the damage award for that violation on a "flat fee" basis rather than accept plaintiff's contention (unsupported by any evidence) that the per-person licensing fee for the broadcast would have been $100: "Without any evidence or legal authority sanctioning the use of $100.00 for calculating damages under FCA 605, I cannot assume with a reasonable certainty that Plaintiff's calculation is correct." 2018 WL 3850731, at *6 n.12.
Invoking the "wrongdoer rule," plaintiff argues that Russian TV "bears the burden of demonstrating which of the 1,964 RTV subscribers [on the List] should be discounted," but "cannot do so" because defendants' records do not show "which subscribers were using which access codes from April 2015 to August 2020[.]" Pl. Mem. at 4. Plaintiff misunderstands the wrongdoer rule, which relaxes - but does not reverse - the burden of proof as to damages. Boyce, 464 F.3d at 392; Fed. Ins. Co. v. Mertz, 2016 WL 164618, at *4 (S.D.N.Y. Jan. 12, 2016). Where the rule applies, "it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate." Mertz, 2016 WL 164618, at *4 (quoting Story Parchment Co. v. Paterson Parchment Co., 282 U.S. 555, 563 (1931)). Even with the benefit of the wrongdoer rule, damages may not be determined "by mere speculation or guess." Id.
I now consider what "just and reasonable inference" can be drawn from the evidence in the trial record as to the number of Russian TV subscribers who were provided with at least one unauthorized access code, from an licensed vendor, after March 15, 2015.
1. The 609 Early Subscribers on the List
Neither side has submitted any evidence as to how many of the 609 Russian TV subscribers whose subscriptions commenced from April 7, 2013 to March 14, 2015 remained subscribers on and after March 15, 2015. Common sense suggests that some of them maintained their subscriptions past that date. However, plaintiff has failed to provide any information, whether drawn from Russian TV's records or sourced externally (for example, industry data concerning average customer loyalty to streaming services), that could provide a "stable foundation for a reasonable estimate," Boyce, 464 F.3d at 392, for how many of the 609 early subscribers still had active accounts within the applicable three-year limitations period. Therefore, rather that resort to "speculation or guess," Mertz, 2016 WL 164618, at *4, I will exclude those 609 subscribers entirely from the count of violations.
2. The Remaining 1,355 Subscribers on the List
The remaining 1,355 subscribers on the List all had active accounts within the applicable limitations period. This does not mean, however, that all of them were provided with unauthorized access codes, from unlicensed vendors, in violation of FCA § 605(a). Plaintiff asks the Court to assume that conclusion because defendants cannot demonstrate which subscribers got which codes. Pl. Mem. at 4-5. But this is not a "just and reasonable inference," Mertz, 2016 WL 164618, at *4, where the evidence shows that defendants purchased 53,374 authorized access codes from Kartina and only 6,575 unauthorized access codes from unlicensed vendors during roughly the same period.
Nor did the Court find "1,355 violations," as plaintiff claims. Pl. Mem. at 4. In the Findings, Judge Schofield relied on the 1,355 subscriptions that were purchased on or after March 15, 2015 as evidence that there were some violations of FCA § 605(a) within the limitations period, Russian TV Co., 2021 WL 4341053, at *7, but left it to me to consider "how to measure the number of violations when Defendants engaged in both authorized and unauthorized transactions." Id.
Defendants, for their part, assert that "only five percent of all the access codes distributed to RTV's subscribers were unauthorized non-Kartina access codes," and argue that "this Court should quantify the total number of violations in the same proportion." Def. Mem. at 4. The proportionality principle that defendants propose is sensible. However, the Court has already found that almost 11% of defendants' documented access code purchases (6,575 out of 59,950) were from unlicensed vendors, and when resold "resulted in unauthorized retransmissions." Russian TV Co., 2021 WL 4341053, at *3. I therefore estimate that 149 subscribers - 11% of the 1,355 subscribers who signed up for Russian TV's IPTV service between March 15, 2015 and August 28, 2018 - were provided with unauthorized access codes, sourced from unlicensed vendors, in violation of FCA § 605(a).
3. The One Thousand Subscribers as of September 19, 2019
Although the List sheds no light on defendants' subscriber base after August 28, 2018, Rudik testified clearly that Russian TV still had "around a thousand" subscribers on September 19, 2019. Rudik Dep. Tr. at 194:10-13. This was 41 days after the expiration of the last authorized access code that defendants purchased from Kartina. Hogan Decl. Ex. H, at 2; see also Russian TV Co., 2021 WL 4341053, at *3-4. Consequently, all of those subscribers were using the unauthorized access codes that defendants sourced from unlicensed vendors, in violation of FCA § 605(a). Moreover, defendants would continue to transmit plaintiff's Programming, using the unauthorized access codes, for another year. Russian TV Co., 2021 WL 4341053, at *7.
4. Total Estimated Violations
As shown above, the trial record permits a "just and reasonable inference," Mertz, 2016 WL 164618, at *4, that defendants provided unauthorized access codes to approximately 149 Russian TV subscribers between March 15, 2015 and August 18, 2018, and shows conclusively that defendants provided unauthorized access codes to all of the "around a thousand" subscribers with open accounts as of September 19, 2019. Rudik Dep. Tr. at 194:10-13. I therefore estimate that on and after March 15, 2015 - that is, within the applicable limitations period - a total of at least 1,149 Russian TV subscribers were provided with unauthorized access codes, sourced from unlicensed vendors, in violation of FCA § 605(a).
I recognize that my estimate risks double-counting an unknown number of the 149 subscribers whose subscriptions began between March 15, 2015 and August 28, 2018, because some of those subscriptions may have remained active on September 19, 2019. On the other hand, my estimate fails entirely to capture three other groups of subscribers, some or all of whom were also provided with unauthorized access codes: (a) those who began their subscriptions before March 15, 2015 and were still subscribers after that date (at which point some of them were likely provided with unauthorized access codes, which defendants began purchasing in 2014); (b) those who began their subscriptions after August 28, 2018 but closed their accounts before September 19, 2019 (most of whom were likely provided with unauthorized access codes, because Kartina stopped selling authorized access codes to defendants in March 2017); and (c) those who began their subscriptions after September 19, 2019 (all of whom were necessarily provided with unauthorized access codes, because the Kartina access codes that defendants previously purchased had long since expired). I therefore conclude that plaintiff has established with "reasonable certainty," Boyce, 464 F.3d at 391, that defendants provided at least 1,149 subscribers with unauthorized access codes, sourced from unlicensed vendors, in violation of FCA § 605(a). I further conclude, for the reasons discussed above, that each such subscriber is properly counted as a separate violation of § 605(a) for purposes of calculating statutory damages under § 605(e)(3)(C)(i)(II). See S.K. Management, 2022 WL 2530456, at *22; Panorama, 2019 WL 8955234, at *15.
B. Amount Per Violation
Once the court has estimated the number of subscribers who were sold unauthorized programming via IPTV in violation of FCA § 605(a), the dollar amount of the damages award, per subscriber, "rests within the sound discretion of the court." S.K. Management, 2022 WL 2530456, at *22 (quoting Time Warner Cable of New York City v. Taco Rapido Rest., 988 F.Supp. 107, 111 (E.D.N.Y. 1997)). In exercising its discretion, the court may consider, among other things, "the market value of the rights infringed and the revenue lost by plaintiff - i.e., the unpaid licensing fee." Joe Hand Prods., Inc. v. Rossi, 2022 WL 3903596, at *2 (S.D.N.Y. Aug. 30, 2022) (quoting G&G Closed Cir. Events, LLC v. Batista, 2021 WL 293150, at *2 (S.D.N.Y. Jan. 28, 2021)). The court may also consider "the deterrent effect that damages might have on the infringer and third parties," id., although some courts view deterrence as a factor only when considering enhanced damages for willful violations. See, e.g., J & J Sports Prods., Inc. v. Rodriguez, 2007 WL 3217526, at *4 (S.D.N.Y. Oct. 29, 2007) ("the punitive or deterrent nature of the regulatory scheme lies in the enhancement and not in the award of actual or statutory damages").
In S.K. Management, where both liability and damages were presented to the court on summary judgment, I recommended that defendant S.K. Management be assessed statutory damages for its violations of FCA § 605(a) in the amount of $1,000 for each of its 1,833 subscribers. 2022 WL 2530456, at *22. Although this was the "low end of the range," there was no evidence that S.K. Management's subscribers commercialized their subscriptions or used them for anything beyond personal viewing, and plaintiff made "no showing" as to its foregone license fees or any other actual losses. Id. Similarly, in Panorama, the defaulted defendant was assessed damages of $1,000 for each of its 4,241 subscribers under FCA § 605(e)(3)(C)(i)(II) where there was no evidence of downstream violations; that is, there was "no evidence that Panorama's subscribers commercialized their unlawful access or otherwise used it for anything other than personal viewing." 2019 WL 8955234, at *15. Cf. DISH Network LLC v. Kaczmarek, 2021 WL 4485870, at *2-3 (E.D.N.Y. Sept. 30, 2021) (awarding statutory damages of $2,000 against Mr. and Ms. Defoe for each of the seven "seeder accounts" that the Defoes opened with DISH for the benefit of a foreign co-defendant, Kaczmarek, who then "advertised, packaged, and sold" access to those accounts to multiple downstream consumers without authorization).
In both Panorama, 2019 WL 8955234, at *15, and S.K. Management, 2022 WL 2530456, at *22, I assessed an additional penalty of $1,000 per subscriber in "enhanced damages" after determining that defendants' conduct was willful, thus doubling the total award.
Here, as in Panorama and S.K. Management, there is no evidence of downstream violations by defendants' subscribers. And although Channel One asserts that it has "lost revenue, market share, and goodwill to RTV's piracy," Pl. Mem. at 9, it has not presented any evidence quantifying (or even estimating) such losses. These factors militate in favor of a per-violation award at the low end of the range. I note as well that even at $1,000 per violation, the recommended statutory damages award will come to $1,149,000 (exclusive of attorneys' fees and costs), which is "a sum significant enough to send a signal to others who are engaged - or contemplating engagement - in similar [misconduct]." Panorama, 2019 WL 8955234, at *16.
Plaintiff's arguments in favor of a significantly higher per-subscriber award are not persuasive. Channel One urges the Court to apply the "aggravating factors" set out in Kingvision Pay-Per-View, Ltd. v. El Rey Del Bistec Y Caridad, Inc., 2001 WL 1586667, at *2 (S.D.N.Y. Dec. 12, 2001): "[R]epeated violations over an extended period of time; substantial unlawful monetary gains; significant actual damages to plaintiff; defendant's advertising for the intended broadcast of the event; [and] defendant's charging a cover charge or charging premiums for food and drinks." See Pl. Mem. at 8 ("RTV meets all of these aggravating factors."). But the purpose of the Kingvision factors is to assist the court in "determining whether [the] defendant's conduct is subject to enhanced damages for willfulness." Kingvision, 2001 WL 1586667, at *2. Here, the Court has already determined that the conduct was not willful and that no enhanced damages will be assessed. Russian TV Co., 2021 WL 4341053, at *5. Moreover, while proof of "substantial unlawful monetary gains" by a defendant could also be relevant to the assessment of the basic statutory award under § 605(e)(3)(C)(i)(II), plaintiff has failed to make the necessary showing here.Consequently, I see no basis for assessing more than $1,000 per violation.
Plaintiff asserts that Russian TV "earned at least $7 million dollars from 2014-17," and, by extrapolation, that it "would have earned approximately $5.25 million from 2018-20." Pl. Mem. at 8. The $7 million that defendants took in during the years 2014-17, however, included (a) revenue earned before March 15, 2015, outside of the applicable limitations period, see Rowley Decl. Ex. 6 (Dkt. 323-6) (Paypal and Stripe revenues from 2014-17); (b) revenue earned by selling authorized access codes, as well as equipment, to Russian TV subscribers; and (c) revenue earned by affiliated nonparties, such as Polish TV Company, which had a much larger customer base than Russian TV but did not offer plaintiff's Programming and is not accused of any wrongdoing. See Def. Mem at 7-8; Rudick Decl. ¶ 28 & Ex. 8 (Dkt. 323-5). A revenue summary prepared by Rudik himself reflects that Russian TV earned $2,204,373 from 2015 through 2018, of which $314,988 (14%) was linked to the unlicensed vendors. Rudik Decl. ¶ 21 & Ex. 5 (Dkt. 323-3). Rudik did not provide any revenue figures for 2019 or 2020 (by which time Russian TV was wholly dependent on the unlicensed vendors for access codes).
Nor do I see any basis for reducing the per-violation award to $250, as defendants request. The statute permits a court to do so, in its discretion, only upon finding that the violator "was not aware" and "had no reason to believe that his acts constituted a violation" of § 605(a). 47 U.S.C. § 605(e)(3)(C)(iii). Typically, this subsection has been invoked for the benefit of individual consumers who innocently misunderstood the limits of their satellite TV subscriptions. See, e.g., DIRECTV, LLC v. Perugini, 2015 WL 450804, at *2 (M.D. Pa. Feb. 3, 2015) (assessing $250 against pizzeria owner/cook who used his personal DirecTV receiver to watch the news at work, on a screen not visible to patrons); J & J Sports Prods., Inc. v. Pombo, 984 F.Supp.2d 1042, 1047 (E.D. Cal. 2013) (assessing $250 against the Pombos, who paid the extra license fee to watch a pay-per-view boxing match at home, invited friends and family to join them, and at the last minute moved the party to a semi-private room at their pizza restaurant, taking their DirecTV box with them for the evening). Defendants here, by contrast, were operating a business, and used the unauthorized access codes in that business to generate revenue. Rudik Decl. Ex. 5.
Moreover, while Judge Schofield found that defendants' conduct was not willful, see Russian TV Co., 2021 WL 4341053, at *5, lack of willfulness merely insulates a defendant from enhanced damages under § 605(e)(3)(C)(ii); it does not automatically entitle him to reduced damages under § 605(e)(3)(C)(iii). Rudik was unable to confirm that any of the unlicensed vendors were authorized to sell access to the Programming, Russian TV Co., 2021 WL 4341053, at *5, and unwilling to cease using the unauthorized codes even after suit was filed. On these facts, it would be inappropriate to reduce the award of statutory damages below the range set forth in § 605(e)(3)(C)(i)(II). I therefore conclude that statutory damages in the amount of $1,149,000 -$1,000 for each of defendants' estimated 1,149 violations of FCA § 605(a) - would be just.
C. Injunction
The Draft Injunction would permanently enjoin and restrain defendants from:
. . . broadcasting, rebroadcasting, transmitting, or Distributing the Programming unless (i) the parties to this action in the future otherwise agree in writing, or (ii) Defendants have contracted to do so with a counterparty, and Plaintiff has authorized the counterparty to transfer or convey to third parties, such as Defendants, the right to broadcast, rebroadcast, transmit, or Distribute the Programming. Defendants shall bear the burden of confirming such authorization and shall bear the risk of failing to do so.
Plaintiff complains that this language would make it too easy for Rudik or one of his businesses to once again rebroadcast the Programming "under the claim he was authorized by some third party." Pl. Ltr. at 2. Therefore, plaintiff argues, it is not enough to place the burden on defendants to confirm such authorization; the injunction should "expressly require Channel One's written authorization for any future use of its Programming by Defendants," id., or, in the alternative, impose an affirmative reporting requirement on defendants, directing them to inform Channel One within five business days of entering into any rebroadcast contract and "provide a copy of the contract to Channel One." Id. at 3. Additionally, plaintiff requests that the Court enjoin defendants from utilizing Channel One's marks. Id. at 4.
Because plaintiff did not try its trademark claims, much less obtain any ruling as to trademark infringement, it is not entitled to injunctive relief with respect to its marks. See Starter Corp. v. Converse, Inc., 170 F.3d 286, 300 (2d Cir. 1999) (vacating injunction that went "beyond the scope of the issues tried in the case").
Plaintiff's concern that the Draft Injunction does not completely shut the door on informal business arrangements such as those that gave rise to this lawsuit is understandable. Defendants' arrangements with the unlicensed vendors - which ultimately proved to be unlawful - were difficult for Channel One to uncover and no doubt expensive for it to litigate. The purpose of an injunction, however, is to prohibit unlawful conduct, not lawful conduct that makes a plaintiff nervous. See Allstar Mktg. Grp., LLC v. AFACAI, 2021 WL 2555636, at *3 (S.D.N.Y. June 22, 2021) ("[I]njunctive relief must be narrowly tailored to address the specific legal violation, and cannot burden lawful activity."). Nor should this Court be in the position of policing an injunction that contains reporting requirements or similar affirmative obligations, the breach (or suspected breach) of which could lead to contempt proceedings whether or not defendants again violated the Federal Communications Act. Consequently, I recommend only small adjustments to the language of the Draft Injunction, as set forth on the recommended permanent injunction annexed hereto.
D. Costs and Attorneys' Fees
When an "aggrieved party" prevails under the FCA, the court "shall direct the recovery of full costs," including "reasonable attorneys' fees," to that party. 47 U.S.C. § 605(e)(3)(B)(iii).
Plaintiff has not yet filed a fee application. It is hereby directed to do so within 14 days after the District Judge rules on my recommendations as to damages and injunctive relief. The application must be supported by contemporaneous time records, properly authenticated, that show, for each attorney or other timekeeper, the date of service, the hours expended, the nature of the work performed, and the hourly (or other) rate actually charged to and paid by the client for that work, as well as admissible evidence documenting all expenses for which reimbursement is sought. Because Kartina was "at least partially funding this litigation on behalf of Plaintiff," Russian TV Co., 2021 WL 4341053, at *1, plaintiff must also address whether fees and expenses paid by a nonparty are compensable pursuant to § 605(e)(3)(B)(iii). Defendants may respond within 14 days after the application is filed, and plaintiff may file a reply within 7 days after the response is filed.
Prior to briefing the damages issues, the parties proposed, and I agreed, that the fee application should await the outcome of the damages dispute. See Tr. at 24-25.
III. CONCLUSION
For the reasons set forth above, I recommend, respectfully, that a money judgment be entered against defendants, jointly and severally, in the amount of $1,149,000, together with the recommended permanent injunction annexed hereto.
NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this report and recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Hon. Lorna G. Schofield at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Schofield. Failure to file timely objections will preclude appellate review. See Thomas v. Arn, 474 U.S. 140, 155 (1985); Frydman v. Experian Info. Sols., Inc., 743 Fed.Appx. 486, 487 (2d Cir. 2018); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).
[RECOMMENDED] PERMANENT INJUNCTION
WHEREAS, Plaintiff Joint Stock Company "Channel One Russia Worldwide," ("Plaintiff" or "Channel One") commenced this action on March 19, 2018;
WHEREAS, Plaintiff broadcast various channels (the "Channels") originating in the Russian Federation;
WHEREAS, on September 22, 2021, this Court found Defendants Russian TV Company, Inc., SR Express Consulting Inc. d/b/a Techstudio, Steven Rudik, Servernaya Inc., and ESTIDesign Inc. (collectively "RTV" or "Defendants") in violation of Section 605(a) of the Federal Communications Act, 47 U.S.C. § 605(a) (ECF 292);
WHEREAS, 47 U.S.C. § 605(e)(3)(B)(i) permits the Court to "grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain violations of subsection [605](a)";
WHEREAS, "Programming" means the channels broadcast by Channel One in the Russian Federation and rebroadcast in the countries throughout the world, including Perviy Kanal (domestic version of Channel One), Channel One Russia Worldwide, Dom Kino, Muzika Pervogo, Vremya:dalekoe i blizkoe, Carousel International, Telekafe or any other channel that Channel One may in the future broadcast via any medium;
WHEREAS, "Distribute" or "Distributing" means to deliver or assist in delivering the Programming to U.S. consumers by any technological means, including via internet protocol television, over the top, cable, satellite, or radio; and
WHEREAS, the term "Defendants" includes the named Defendants in this action as well as their parents, subsidiaries, affiliates, predecessors, successors, divisions, operating units, principals, officers, directors, shareholders, employees, attorneys, members, agents, heirs, representatives, spin-offs, and future assigns; it is hereby
ORDERED that Defendants are permanently enjoined and restrained from broadcasting, rebroadcasting, transmitting, or Distributing the Programming unless (i) the parties to this action in the future otherwise agree in writing, or (ii) Defendants have contracted in writing to do so with a counterparty which has been authorized in writing by Plaintiff to transfer or convey to third parties, including Defendants, the right to broadcast, rebroadcast, transmit, or Distribute the Programming. Defendants shall bear the burden of confirming such written authorization and shall bear the risk of failing to do so. It is further
ORDERED that this Court shall retain jurisdiction for the limited purpose of enforcement of this injunction.