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holding that § 109 does not apply to foreign manufactured goods imported into the United States
Summary of this case from John Wiley & Sons Inc. v. KirtsaengOpinion
07-Civ-2423 (SHS).
May 13, 2008
OPINION ORDER
Plaintiffs, holders of copyrights in numerous educational textbooks, have moved for summary judgment on their claims of copyright infringement against pro se defendants Jun Liao and Zhengshu Gu. Because the evidence demonstrates that there are no genuine issues of material fact and plaintiffs are entitled to judgment as a matter of law, plaintiffs' motion is granted upon the failure of defendants to respond to the motion and an independent review of the record by the Court.
I. PROCEDURAL POSTURE
Plaintiffs Pearson Education, Inc., John Wiley Sons, Inc., Thompson Learning Inc., and The McGraw-Hill Companies, Inc. alleged in the amended complaint in this action that defendants Jun Liao, Zhengshu Gu, and Justin Li purchased various copyrighted educational books that were both manufactured and intended for sale outside the United States (the "Foreign Editions") and then resold them within the United States on internet bookselling sites using the store name "Readmate" without the permission of plaintiffs, who hold the copyrights to the books. Plaintiffs allege that this constitutes a violation of copyright law. An attorney filed notices of appearance and answers to the amended complaint on behalf of Liao and Gu. In their answers, Liao and Gu denied plaintiffs' allegations and asserted that any resale of plaintiffs' educational books was lawful pursuant to the "first sale" exception to copyright protection codified at 17 U.S.C. § 109(a). They also asserted a statute of limitations defense.
Subsequent to the filing of a second amended complaint which dropped Justin Li as a defendant and replaced plaintiff Thompson Learning Inc. with Cengage Learning Inc., Liao and Gu's attorney moved to withdraw with their consent. By order dated January 18, 2008, that motion was granted and defendants were given until February 29, 2008 to retain a new attorney. The order stated that if defendants had not retained counsel by that date, the case would proceed with defendants acting pro se. To date, no new attorney has made an appearance on defendants' behalf and defendants have failed to respond to the second amended complaint.
On February 29, 2008, defendants Liao and Gu participated in a pretrial conference by telephone. Plaintiffs requested, and the Court established, a briefing schedule for plaintiffs to move for summary judgment. See Order dated February 29, 2008. Plaintiffs then moved for summary judgment on their copyright claims and served a "Notice to Pro Se Litigants Opposing Motion for Summary Judgment" pursuant to Local Rule 56.2 at the same time. That notice informed Liao and Gu of the pendency of the motion for summary judgment and warned them that if they failed to respond with admissible evidence, the Court could accept plaintiffs' factual assertions as true and enter judgment in plaintiffs' favor without trial.
After Liao and Gu failed to respond to the motion, the Courtsua sponte issued an order noting that defendants had failed to respond to the motion, extending their time to oppose the motion until April 25, 2008, "urg[ing]" them to respond, and informing them that if they failed to respond, "the Court may accept plaintiffs' factual allegations as true and judgment may then be entered in plaintiffs' favor without a trial dismissing this action and awarding $126,750.00 in statutory damages to plaintiffs and permanently enjoining defendants from further infringing plaintiffs' copyrights" See Order dated April 10, 2008. In a letter dated April 22, 2008, defendants informed the Court of their desire to have a trial but did not otherwise respond to plaintiffs' summary judgment motion.
II. STANDARD OF REVIEW
The party that moves for summary judgment has the burden to establish that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). When deciding the motion, a court must resolve all ambiguities and draw all reasonable inferences in the non-movant's favor. Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003). If the non-moving party does not respond to the motion, the Court may accept as true the moving party's factual statements. See S.D.N.Y. L. Civ. R. 56.1(c); Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004); Holtz v. Rockefeller Co., Inc., 258 F.3d 62, 72 (2d Cir. 2001). Even if the motion is unopposed, however, a court may not grant summary judgment unless it determines that the moving party is entitled to judgment as a matter of law. Vermont Teddy Bear Co., 373 F.3d at 242.
In addition, where one party is proceeding pro se, the court reads the pro se party's papers liberally and interprets them to raise the strongest arguments they suggest. Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994). Despite this liberal interpretation, however, a "bald assertion," unsupported by evidence, cannot overcome a properly supported motion for summary judgment. Carey v. Crescenz, 923 F.2d 18, 21 (2d Cir. 1991).
III. FACTS
The undisputed facts of record are as follows: Plaintiffs hold the copyrights in the 169 educational textbooks that are the subject of this lawsuit. (Decl. of John Garry in Support of Plaintiffs' Motion for Summary Judgment ("Garry Decl.") ¶ 3 Ex. A; Decl. of Patrick Murphy in Support of Plaintiffs' Motion for Summary Judgment ("Murphy Decl.") ¶ 3 Ex. B; Decl. of William Sampson in Support of Plaintiffs' Motion for Summary Judgment ("Sampson Decl.") ¶ 3 Ex. C; Decl. of Bonnie Beacher in Support of Plaintiffs' Motion for Summary Judgment ("Beacher Decl.") ¶ 3 Ex. D.) Each copyright has been registered with the United States Copyright Office. (Id.) Each textbook is issued in both a United States edition and a Foreign Edition. (Garry Decl. ¶ 5; Murphy Decl. ¶ 4; Sampson Decl. ¶ 5; Beacher Decl. ¶ 5.) The Foreign Editions are substantially identical in content to the United States editions but are produced using inferior ink, paper, and binding material. (Id.) The Foreign Editions are manufactured outside of the United States and are intended by plaintiffs for sale exclusively outside the United States. (Id.)
Pearson Education, Inc. holds 127 of the copyrights, John Wiley Sons, Inc. holds seven, Cengage Learning Inc. holds ten, and The McGraw-Hill Companies, Inc. holds twenty-five.
Defendants Jun Liao and Zhengshu Gu have engaged in the business of purchasing Foreign Editions of the subject works and reselling them through internet based bookselling sites such as www.abebooks.com. (Decl. of William Dunnegan in Support of Plaintiffs' Motion for Summary Judgment ("Dunnegan Decl.") ¶¶ 5-12; Declaration of Laura Scileppi in Support of Plaintiffs' Motion for Summary Judgment ("Scileppi Decl.") ¶¶ 3-5.) Within the three years preceding the commencement of this action, defendants sold at least one copy of a Foreign Edition of 168 of the 169 subject works within the United States. (Exs. I, J, K L to Dunnegan Decl.) One hundred sixty-six of the 168 sales occurred after the effective date of the relevant copyright registration. (Id.) Each of those 166 sales was defendants' first sale of the work in question. (Id.)
Civil actions seeking copyright remedies are barred unless "commenced within three years after the claim accrued." 17 U.S.C. § 507(b); Estate of Burne Hogarth v. Edgar Rice Burroughs, Inc., 342 F.3d 149, 163 (2d Cir. 2003). Evidence submitted by plaintiffs reveals that defendants sold a copy of a work entitled "The Intel Microprocessors" on August 21, 2003, more than three years prior to the commencement of this action. (Ex. I to Dunnegan Decl. at 8.) Pearson holds the copyright to this work. (Id.) Nothing in the record indicates that defendants sold any other copy of this work at any later date. Therefore, plaintiffs have not demonstrated entitlement to judgment as a matter of law with respect to this work. However, because the evidence demonstrates that defendants sold copies of Foreign Editions of each of the remaining subject works during the three year period prior to the commencement of this action, the statute of limitations does not act as a bar to claims arising from sales of the remaining 168 works.
Two of the sales occurred prior to the effective date of copyright registration. Specifically, defendants sold "Introduction to the Design Analysis of Algorithms" on August 2, 2005 and "New Perspectives on Computer Concepts" on January 19, 2006. (Ex. I to Dunnegan Decl. at 9; Ex. K to Dunnegan Decl. at 1.) Copyrights for those works were registered on March 6, 2006 and February 21, 2007, respectively. (Id.) The copyrights are held by Pearson and Cengage respectively. (Id.)
IV. ANALYSIS
A. Liability for Copyright Infringement
"A claim of copyright infringement under federal law requires proof that (1) the plaintiff had a valid copyright in the work allegedly infringed and (2) the defendant infringed the plaintiff's copyright by violating one of the exclusive rights that 17 U.S.C. § 106 bestows upon the copyright holder." Island Software Computer Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 260 (2d Cir. 2005) (internal quotation omitted). Among the exclusive rights enumerated in section 106 is the right to "distribute copies . . . of the copyrighted work to the public by sale." 17 U.S.C. § 106(3).
A copyright holder's exclusive right to sell copies of a work is tempered, however, by 17 U.S.C. § 109(a). That provision embodies the "first sale" doctrine and states that, notwithstanding the exclusive distribution rights provided to the copyright holder under section 106(3), "the owner of a particular copy" of a copyrighted work "is entitled, without the authority of the copyright owner, to sell . . . that copy." 17 U.S.C. § 109(a); see also Walt Disney Prods. v. Basmajian, 600 F. Supp. 439, 442 (S.D.N.Y. 1984) ("[W]here the copyright owner sells or transfer[s] a particular copy of his copyrighted work, he divests himself of the exclusive right in that copy and the right to sell passes to the transferee."). In other words, "once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution." Quality King Distributors, Inc. v. L'anza Research Intern., Inc., 523 U.S. 135, 152, 118 S. Ct. 1125 (1998); Lingo Corp. v. Topix, Inc., No. 01-civ-2863 (RMB), 2003 WL 223454, at *4 (S.D.N.Y. Jan. 31, 2003).
However, the first sale doctrine does not necessarily protect persons who purchase copies of copyrighted works outside the United States and then import them into the United States for resale. Lingo Corp., 2003 WL 223454, at *4. Section 602(a) of Title 17 provides that "[i]mportation into the United States, without the authority of the owner of copyright . . . of copies . . . of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies . . . under section 106."
Recognizing that application of the first sale defense to all cases would vitiate section 602(a), courts have held that where the copy in question was manufactured abroad, section 109(a) does not provide a defense to a copyright infringement claim. See e.g., BMG Music v. Perez, 952 F.2d 318, 319 (9th Cir. 1991) ("The first sale doctrine in 17 U.S.C. § 109(a) does not, however, provide a defense to infringement under 17 U.S.C. § 602 for goods manufactured abroad."); see also Parfums Givenchy, Inc., v. Drug Emporium, Inc., 38 F.3d 477, 482 n. 8 (9th Cir. 1994); Lingo Corp., 2003 WL 223454, at *4; Summit Tech. v. High-Line Med. Instruments Co., 922 F. Supp. 299, 312 (C.D. Cal. 1996) ("[T]he courts appear to be in agreement in one respect: sales abroad of foreign manufactured United States copyrighted materials do not terminate the United States copyright holder's exclusive distribution rights in the United States under §§ 106 and 602(a)." (internal quotation marks omitted)); CBS v. Scorpio Music Distribs. Inc., 569 F. Supp. 47, 49-50 (E.D. Pa. 1983), aff'd without opinion, 738 F.2d 421 (3d Cir. 1984). Indeed, because a first sale defense only applies to the sale of copies that are "lawfully made under this title," 17 U.S.C. § 109(a), the resale in the United States of copies manufactured outside the United States is not protected under the terms of the statute. See Quality King, 523 U.S. at 148; Lingo Corp. 2003 WL 223454, at *4; Scorpio, 569 F. Supp. at 49-50.
The undisputed facts in this record demonstrate that plaintiffs hold valid copyrights in the works that are the subject of this lawsuit. The record also reveals that Liao and Gu have violated plaintiffs' exclusive right to "distribute copies . . . of the copyrighted work[s] to the public" in violation of 17 U.S.C. §§ 106(3) and 602(a) by purchasing copies of plaintiffs' textbooks that were manufactured abroad and subsequently selling them within the United States without the permission of the copyright holders. Therefore, summary judgment is granted as to plaintiffs' claims of copyright infringement.
B. Remedies
1. Damages
Pursuant to 17 U.S.C. § 504(c),
[a] 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 . . . in a sum of not less than $750 or more than $30,000 as the court considers just.
Where multiple works are infringed, a court must award damages for each of the "separate, individual works which were the subject of a defendant's infringing activities." Arclightz and Films Pvt. Ltd. v. Video Palace Inc., 303 F. Supp. 2d 356, 361 (S.D.N.Y. 2003). Plaintiff has elected to seek statutory damages and has requested that the Court award the minimum amount of $750 for each of the 168 works infringed. (Mem. in Support of Plaintiffs' Motion for Summary Judgment at 6). However, pursuant to 17 U.S.C. § 412, a plaintiff generally may not recover statutory damages for any infringement commenced before the effective date of a copyright's registration. See also Troll Co. v. Uneeda Doll Co., 483 F.3d 150, 158 (2d Cir. 2007). The evidence submitted by plaintiffs reveals that two of the infringements complained of occurred prior to the effective date of the relevant copyright registrations. See supra n. 3. Therefore, plaintiffs have not carried their burden of demonstrating entitlement as a matter of law to statutory damages with respect to those two works. The remaining 166 infringements indisputably commenced after the effective date of the relevant registrations. Therefore, the court awards plaintiffs statutory damages of $750 for each of the 166 works infringed for a total statutory damage award of $124,500. Specifically, plaintiff Pearson Education, Inc. is awarded $93,750 for infringement of 125 of its copyrights, plaintiff John Wiley Sons, Inc. is awarded $5,250 for infringement of seven of its copyrights, plaintiff Cengage Learning Inc. is awarded $6,750 for infringement of nine of its copyrights, and plaintiff The McGraw-Hill Companies, Inc. is awarded $18,750 for infringement of twenty-five of its copyrights.
Although plaintiffs have identified 169 acts of copyright infringement, one of the sales complained of occurred more than three years prior to the commencement of this action as discussedsupra at n. 2. Thus, plaintiffs have not carried their burden of demonstrating entitlement to judgment as a matter of law with respect to that infringement.
2. Injunctive Relief
Pursuant to 17 U.S.C. § 502(a) a court has discretion to grant injunctive relief "on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a). "[P]ermanent injunctions are generally granted where liability has been established and there is a threat of continuing infringement." U2 Home Entm't, Inc. v. Fu Shun Wang, 482 F. Supp. 2d 314, 319 (E.D.N.Y. 2007) (internal quotation and citations omitted); see also Richard Feiner Co. v. Turner Entm't Co., No. 96-civ-1472, 1998 WL 78180, at *2 n. 2 (S.D.N.Y. Feb. 24, 1998); cf. Silverstein v. Penguin Putnam, Inc., 368 F.3d 77, 84 (2d Cir. 2004). The Court finds that injunctive relief is justified, at a minimum, by the large number of copyright violations involved in this case which establish a threat of continuing infringement.
V. CONCLUSION
Because there is no genuine issue of material fact and plaintiffs are entitled to judgment as a matter of law, summary judgment is granted to plaintiffs as to their claims of copyright infringement. The Court awards statutory damages of $124,500 to plaintiffs as described above, permanently enjoins defendants from infringing the copyrighted works at issue in this litigation, and dismisses plaintiffs' remaining claims.
Plaintiffs' motion for summary judgment is addressed solely to their claims of copyright infringement. Plaintiffs also seek the dismissal of their own claims for trademark infringement and unfair competition, (Plaintiffs' Proposed Final Judgment and Permanent Injunction at 3), presumably to accelerate the entry of a final judgment in this action.
SO ORDERED: