Opinion
1:22-CV-1225-RP
09-13-2023
MOTIONWARE ENTERPRISES, INC., Plaintiff, v. THE INDIVIDUALS, BUSINESS ENTITIES, AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON EXHIBIT 1, Defendants.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
DUSTIN M. HOWELL, UNITED STATES MAGISTRATE JUDGE
TO: THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE
Before this Court are Plaintiff's Motion for Entry of Default Judgment and Permanent Injunction filed on April 18, 2023. Dkt. 49. The District Court referred the motion to the undersigned Magistrate Judge for Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1), Federal Rule of Civil Procedure 72 and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas.
I. BACKGROUND
The following facts are uncontroverted. Plaintiff Motionware Enterprises, Inc., is engaged in the business of designing, creating, distributing, and retailing an adjustable socket for wrenches. Motionware is the owner of all right, title, and interest in and to U.S. Copyright Registration No. VA0002307073 for the “SocketPro Product Pictures 2010” photographs. Motionware is also the owner of all right, title, and interest in and to U.S. Copyright Registration No. PAU0004138379 for the “SPR-Video 11.2010” video (the Video Copyright, along with the Photo Copyright, are the “Registrations”). Motionware has expended considerable resources advertising, marketing, and promoting its Product via the copyrighted works subject to the Registrations, and these efforts have resulted in substantial sales of Motionware's Product, as well as accumulation of invaluable consumer goodwill. Dkt. 49-3. Motionware discovered that Defendants were using the Photographs and Video in connection with the sale of Products on the Infringing Webstores, and Motionware confirmed that Defendants were offering the Products for sale to U.S. and Texas residents. Id.
Motionware brought this action on November 19, 2022, Dkt. 1, against the 431 Defendants listed in Exhibit 1 to the Complaint, seeking relief against Defendants for copyright infringement through their promotion, advertising, marketing, distribution, offering for sale, and sale of products using Plaintiff's copyrighted photographs via online stores on various e-commerce platforms, such as Alibaba, AliExpress, Amazon, Bonanza, DHgate, eBay, Etsy, Joom, Walmart, and Wish. Motionware sought discovery from the Marketplaces immediately upon issuance of the TRO, Dkt. 8, in an attempt to properly identify each of the Defendants, and Motionware thereafter incorporated the information provided by the Marketplaces into its requested summonses. Dkt. 30. All of these summonses were issued by the Clerk for service on Defendants. Dkt. 31.
After holding a hearing on the matter, the District Court issued a preliminary injunction on February 8, 2023, Dkt. 28, extending the relief ordered in the TRO. Motionware also filed its Motion for Alternative Service of Process on November 19, 2022. Dkt. 4. Exercising its authority under Federal Rule of Civil Procedure 4(f)(3), the Court granted Motionware's Motion for Alternative Service of Process on December 1, 2022. Dkt. 12. Motionware thereafter served each of the Defaulting Defendants on February 28, 2023, via email pursuant to the Court's order. None of the Defaulting Defendants filed a responsive pleading. Motionware filed its Request for Clerk's Entry of Default on March 22, 2023. Dkt. 39. The Clerk thereafter entered default against the Defaulting Defendants on April 18, 2023. Dkt. 48. Motionware has subsequently voluntarily dismissed several Defendants from this cause of action since the Clerk's Entry of Default was entered. Motionware now moves for default judgment and a permanent injunction against the remaining Defendants.
Motionware argues that the requirements for entry of a default judgment have been met and that the Court should enter Judgment on Plaintiff's claims of copyright infringement against the remaining Defaulting Defendants. Motionware asserts that Defendants were acting willfully, and that therefore it should be awarded damages in the amount of $150,000 per defendant pursuant to 17 U.S.C. § 504(c)(2); a permanent injunction should be entered pursuant to 17 U.S.C. § 502(a) permanently enjoining Defaulting Defendants from further infringement; and an award of costs and reasonable attorney's fees should be entered pursuant to 17 U.S.C. § 505. Motionware's motion is unopposed.
II. LEGAL STANDARD
Under Rule 55 of the Federal Rules of Civil Procedure, federal courts have the authority to enter a default judgment against a defendant that has failed to plead or otherwise defend itself. Fed.R.Civ.P. 55(a)-(b). That said, “[d]efault judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). A party is not entitled to a default judgment simply because the defendant is in default. Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Rather, a default judgment is generally committed to the discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977).
In considering Motionware's motion, the Court must determine: (1) whether default judgment is procedurally warranted; (2) whether Motionware's complaint sets forth facts sufficient to establish that it is entitled to relief; and (3) what form of relief, if any, Motionware should receive. United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986 , 548 F.Supp.2d 381, 384 (W.D. Tex. 2008); see also J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 813 (N.D. Tex. 2015) (using the same framework).
III. ANALYSIS
A. Procedural Requirements
To determine whether entry of a default judgment is procedurally warranted, district courts in the Fifth Circuit consider six factors: “(1) whether material issues of fact are at issue; (2) whether there has been substantial prejudice; (3) whether the grounds for default are clearly established; (4) whether the default was caused by a good faith mistake or excusable neglect; (5) the harshness of a default judgment; and (6) whether the court would think itself obliged to set aside the default on the defendant's motion.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
On balance, the Lindsey factors weigh in favor of entering a default judgment against the remaining Defendants. Because Defendants have not filed responsive pleadings, there are no material facts in dispute. See Nishimatsu Const. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact.”). Defendants' failure to appear and respond has halted the adversary process, prejudicing Motionware's interest in pursuing its claim for relief. See J & J Sports, 126 F.Supp.3d at 814 (“Defendants' failure to respond threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests.”) (citation and quotation marks omitted).
The grounds for default are established: Defendants were properly served through alternative service and have failed to appear and participate at all, much less timely file a responsive pleading. There is no indication that the default was caused by a good faith mistake or excusable neglect. The Court is not aware of any facts that would obligate it to set aside the default if challenged by Defendants. The Court therefore finds that default judgment is procedurally warranted.
B. Sufficiency of Motionware's Complaint
Default judgment is proper only if the well-pleaded factual allegations in Motionware's complaint establish a valid cause of action. Nishimatsu Constr. Co., 515 F.2d at 1206. By defaulting, a defendant “admits the plaintiff's well-pleaded allegations of fact.” Id. In determining whether factual allegations are sufficient to support a default judgment, the Fifth Circuit employs the same analysis used to determine sufficiency under Rule 8. Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The factual allegations in the complaint need only “be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Wooten, 788 F.3d at 498 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). While “detailed factual allegations” are not required, the pleading must present “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
Motionware asserts causes of action against Defendants for Copyright Infringement. Dkt. 1. The Copyright Act affords a copyright owner the exclusive rights to authorize and do the following: (1) reproduce the copyrighted work in copies; (2) prepare derivative works based on the copyrighted work; (3) distribute copies of the copyrighted work to the public; (4) perform the copyrighted work publicly; (5) display the copyrighted work publicly; and (6) for sound recordings, perform the copyrighted work publicly by digital transmission. 17 U.S.C. § 106. A violation of these rights constitutes an infringement of the owner's copyright. 17 U.S.C. § 501. A plaintiff must generally prove two elements to establish copyright infringement: “‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'” BWP Media USA, Inc. v. T & S Software Assocs., Inc., 852 F.3d 436, 439 (5th Cir. 2017) (quoting Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)).
Motionware pleads it owns a valid copyright in the Registrations. Copyrightable subject matter is defined by the Copyright Act as: (1) original (2) works of authorship (3) “fixed in any tangible medium of expression.” See 17 U.S.C. § 102(a); see also Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S.Ct. 1002, 1008 (2017). To meet the originality requirement all that is required is independent creation plus “at least some minimal degree of creativity.” Feist Publ'ns, Inc., 499 U.S. at 345. The “works of authorship” requirement explicitly includes “pictorial, graphic, and sculptural works.” 17 U.S.C. § 102(a). A work is “fixed” in a “tangible medium of expression” when its embodiment in a copy, by or under the authority of the author, is sufficiently stable to permit it to be perceived for more than transitory duration. 17 U.S.C. § 101.
Motionware pleads that it created the Photographs and Video in 2010 and has used the Photographs and Video it wholly created to sell its Product all over the world. Dkt. 3-1. Motionware has established it independently created the Photographs and Video and used at least a “minimal level of creativity” to do so. See Feist Publ'ns, Inc., 499 U.S. at 358. Motionware's Photographs and Video also meet the 17 U.S.C. § 102(a) work of authorship requirement because they are pictorial and audiovisual works. 17 U.S.C. § 102(a)(5), (6). Because Motionware's Photographs and Video are pictorial and audiovisual works that are physically embodied and can be perceived, they are sufficiently “fixed in a tangible medium of expression.” 17 U.S.C. § 101. Moreover, it is generally accepted that ownership of a copyright certificate of registration constitutes prima facie evidence that “the copyright is valid and that the registrant owns the copyright.” Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th Cir. 2004). Based on its pleadings, the undersigned finds that Motionware owns a valid copyright in its Registrations. Dkt. 2-3.
Additionally, Motionware has established copying. A plaintiff must make two showings to prove actionable copyright infringement: (1) that the defendant actually used the copyrighted material to create the allegedly infringing work; and (2) that the allegedly infringing work is “substantially similar” to protectable elements of plaintiff's work. Gen. Universal Sys., 379 F.3d at 141-42. A plaintiff can prove actual copying by direct or circumstantial evidence. Armour v. Knowles, 512 F.3d 147, 152 (5th Cir. 2007).
When bringing a circumstantial case of actual copying, “a plaintiff must prove that: (1) the defendant had access to the copyrighted work before creation of the infringing work; and (2) the works contain similarities that are probative of copying.” Id. “The combined existence of access to the copyrighted work and similarities between the two works establishes the assumption as a matter of law that copying in fact occurred.” Id. A plaintiff establishes access by proving that the defendant “had a reasonable opportunity to view the copyrighted work” before creating the allegedly infringing work. Id. at 153. Once access is established, the plaintiff must show that the works, “when compared as a whole, are adequately similar to establish appropriation.” Gen. Universal Sys., 379 F.3d at 141.
The circumstantial evidence supports a finding of copying. The evidence shows that Motionware's Photographs and Video were available on the internet, and that the Infringing Photographs are identical. Additionally, the works are “substantially similar.” Substantial similarity requires a comparison between the plaintiff's work and the infringing copy to determine whether a layman would view the works as “substantially similar.” Nola Spice Designs, L.L.C. v. Haydel Enterprises, Inc., 783 F.3d 527, 550 (5th Cir. 2015). Motionware has shown that the copies bear a substantial similarity to the “protected aspects” of its work. See id.; see also Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 548 (1985). A side-byside comparison shows that the Infringing Photographs are substantially similar to the protected aspects of Motionware's Photographs and Video. The undersigned finds that the Defaulting Defendants copied the constituent elements of Motionware's Photographs and Video that are original to Motionware.
The Defaulting Defendant's copying and public display of Motionware's Photographs and Video violate Motionware's exclusive rights pursuant to 17 U.S.C. § 501. The well-pleaded allegations in Motionware's Original Complaint establish that the Defaulting Defendants' acts constitute copyright infringement in violation of 17 U.S.C. §§ 101 et seq., and because the Defaulting Defendants have failed to respond in this matter, the Court must accept the allegations contained in the Complaint as true. Fed.R.Civ.P. 8(b)(6).
Accordingly, the undersigned finds that default judgment should be entered against each of the non-settling Defaulting Defendants with respect to Plaintiff's allegations of copyright infringement in violation of 17 U.S.C. §§ 101, et seq.
C. Relief
Federal Rule of Civil Procedure 54(c) states that “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c). In other words, the relief prayed for in a complaint defines the scope of relief available on default judgment. Id. A defendant's default concedes the truth of the allegations of the complaint concerning the defendant's liability, but not damages. United States v. Shipco Gen. Inc., 814 F.2d 1011, 1014 (5th Cir. 1987). Ordinarily, damages will not be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts. United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979). However, when the amount of damages or costs can be determined with certainty by reference to the pleadings and supporting documents, and when a hearing would not be beneficial, a hearing is unnecessary. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). Finding the amount of damages can be determined with certainty by reference to the pleadings, the undersigned finds that a hearing is not necessary.
D. Damages
The Copyright Act confers broad discretion to district courts in determining which form of recovery is more equitable-one based on actual damages and profits, or one based on a reasonable estimate of damages within the boundaries of the statute. F.W. Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 224-25 (1952). In other words, the district court's conception of what is fair given the totality of circumstances serves as a framework for the damages awarded. L.A. Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 106-07 (1919).
Motionware has chosen to pursue statutory damages rather than actual damages. As authorized by 17 U.S.C. § 504(c)(1), the Court has the power to award statutory damages of “not less than $750 or more than $30,000 as the court considers just” for each infringed work. Mason v. Montgomery Data, Inc., 967 F.2d 135, 143 (5th Cir. 1992). Furthermore, the Court may increase this amount up to $150,000 per infringed work if it determines that a defendant acted willfully. See 17 U.S.C. § 504(c)(2). A defendant has acted willfully if it knowingly engaged in the infringing conduct. Id. Motionware seeks the maximum statutory damages of $150,000 against each Defaulting Defendant. Dkt. 49, at 12. Motionware bases this on the fact that Defendants have not appeared in this action and asks the Court to grant the maximum relief available.
Motionware argues that “the Defaulting Defendants have been using the Infringing Photographs on the Infringing Webstores without Plaintiff's authorization, which demonstrates that Defaulting Defendants had knowledge that their activities infringed on Plaintiff's rights, or at least shows that the Defaulting Defendants were willfully blind, or acted with reckless disregard to Plaintiff's rights.” Dkt. 49, at 13. A defendant acts willfully “if he knows his actions constitute an infringement; the actions need not have been malicious.” Broad. Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 236 (5th Cir. 1988). Copyright infringement also may be willful where a defendant acted with reckless disregard for plaintiff's rights. See Graper v. Mid-Continent Cas. Co., 756 F.3d 388, 394-95 (5th Cir. 2014). Given that the record shows that the Defaulting Defendants used the infringing photos to sell and market products that were similar to Motionware's products, the undersigned agrees with Motionware that Defaulting Defendants' infringing reproduction of Motionware's protected images was willful.
While the undersigned agrees that Motionware is entitled to statutory damages and indeed, is obliged to award damages for each infringed work, it finds that Motionware's requested damages of $150,000 for each infringed photo and video per Defendant is excessive. R A Guthrie Co., Inc. v. Boparai, No. 4:18-CV-080-ALM-KPJ, 2021 WL 1148957, at *14 (E.D. Tex. Mar. 1, 2021), report and recommendation adopted, No. 4:18-CV-080-ALM-KPJ, 2021 WL 1141667 (E.D. Tex. Mar. 25, 2021) (stating that in most cases in the Fifth Circuit “rarely [do statutory damages awards] reach the statutory maximum of $150,000 per infringed work” and “[t]o the Court's best knowledge, there has only been one case in which a district court in the Fifth Circuit awarded the maximum award of $150,000 per infringement”).
“Among the numerous factors considered by the courts in setting statutory damage amounts are the expenses saved and profits reaped by the infringer; the deterrent effect of the award on a defendant and on third parties; and the infringer's state of mind in committing the infringement.” Playboy Enters., Inc. v. Webbworld, Inc., 991 F.Supp. 543, 560 (N.D. Tex. 1997). In this case, Motionware has presented no evidence regarding any expenses saved or profits reaped by the Defaulting Defendants. Motionware relies on the state of mind of the Defendants, relying on the fact they used the Infringing Photographs, and the potential deterrent effect. Accordingly, relying on Motionware's pleadings and motion for default judgment, the undersigned finds that granting Motionware $5,000.00 in statutory damages per infringed work for each Defaulting Defendant is reasonable.
E. Attorney's Fees
Motionware also seeks to recover its reasonable and necessary attorney's fees and costs. Dkt. 49, at 16. Pursuant to 17 U.S.C. § 505, “the court in its discretion may allow the recovery of full costs by or against a party... the court may also award reasonable attorneys' fee to pay the prevailing party as part of the costs.” 17 U.S.C. § 505. The factors considered when deciding to award attorney's fees include the “frivolousness, motivation, objective unreasonableness (both in factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Fogerty v. Fantasy, Inc., 510 U.S. 517, 535 (1994). Fee awards in copyright infringement cases are the rule rather than the exception and should be awarded routinely. See Positive Black Talk, Inc. v. Cash Money Records, Inc., 394 F.3d 357, 381 (5th Cir. 2004); Canopy Music Inc. v. Harbor Cities Broad., Inc., 950 F.Supp. 913, 917-18 (E.D. Wis. 1997) (awarding attorney's fees award on a motion for default judgment). In view of the willful nature of the Defendants' infringement and their failure to defend or otherwise participate in this action, leading to unjustified delays and increased costs and fees, an award of reasonable costs and attorney's fees is appropriate.
The undersigned recommends granting Motionware its fees and costs in full. Upon entry of a final judgment, Motionware is the prevailing party in this action and is advised that it must file a separate motion for attorney's fees once default judgment is granted by the District Court.
F. Request for Permanent Injunctive Relief
Motionware also requests injunctive relief. To obtain injunctive relief, the movant must prove four elements: (1) likelihood of success on the merits; (2) irreparable injury absent the injunction; (3) the harm suffered outweighs any harm the opposing party may experience from the injunction; and (4) the injunction will not impair public interest. Enrique Bernat F., S.A. v. Guadalajara, Inc., 210 F.3d 439, 442 (5th Cir. 2000).
In this case, each of these factors weighs in favor of Motionware and against Defendants. Defendants have willfully infringed on Motionware's Registered Copyrights. The Court previously found these factors in favor of Motionware when it entered the preliminary injunction in this matter. Dkt. 28. The undersigned finds that for the same reasons upon which the District Court based its finding injunctive relief was warranted, Motionware has carried its burden on each of the four factors warranting permanent injunctive relief on this same basis.
IV. RECOMMENDATION
In accordance with the foregoing discussion, the undersigned RECOMMENDS that the District Court GRANT Plaintiff Motionware Enterprises, Inc.'s Motion for Entry of Default Judgment and Permanent Injunction. Dkt. 49. Motionware should be awarded statutory damages in the amount of $5,000.00 for each infringed work against each Defaulting Defendant, reasonable costs and attorney's fees and court costs. Further, the Defaulting Defendants should be permanently enjoined from using, reproducing, or displaying Motionware's registered and copyrighted photographic works. The referral of this case should now be CANCELED.
V. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).