Opinion
04-CV-4402 (RJD)(JMA).
September 13, 2005
Harvey Shapiro, Esq., New York, NY, Attorney for Plaintiffs.
REPORT AND RECOMMENDATION
By order dated July 25, 2005, the above captioned action was referred to me by the Honorable Raymond J. Dearie for a report and recommendation on plaintiff's application for damages against defaulting defendants "John Does I Through V" d/b/a/ "Go Go Mall". Plaintiff's claim was brought under the Copyright Act, Title 17 U.S.C. § 101, et seq., and Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), for defendants' unauthorized duplication, importation and distribution of copyrighted motion pictures, the distribution rights to which plaintiff owns exclusively. Based on my consideration of plaintiff's affidavit and documentation, I respectfully recommend that damages be awarded to plaintiff in the sum of $189,000. In addition, I recommend that the Court order a permanent injunction against defendants from any and all future infringements of plaintiff's licensed, copyrighted feature motion pictures and television series and against the use of plaintiff's trademark.
I. BACKGROUND
"Where, as here, `the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.'" Chen v. Jenna Lane, Inc., 30 F. Supp.2d 622, 623 (S.D.N.Y. 1998) (quoting C. Wright, A. Miller M. Kane, 10A Fed. Prac. Proc. Civ. 3d § 2688 at 58-59 (3d ed. 1998).Plaintiff, U2 Home Entertainment, Inc., is a business engaged in licensing Asian language feature motion picture and television programming produced in Asia and distributed in the United States (Dkt. No. 1:10/13/04 Compl.). Plaintiff is the sole and exclusive licensee in the United States for the importation, reproduction and distribution of certain feature motion picture and television programming produced in Asia. Id. Plaintiff has registered these films and television programming with the United States Copyright Office. Id. Additionally, plaintiff owns a registered trademark for Tai Seng Video Marketing Inc. Id.
Plaintiff hired Perry Yuen, a private investigator, to survey defendants' store, Go Go Mall, located at 36-57 Main Street, Flushing, New York, for suspected sales of unauthorized video discs. Id. (Dkt No. 3: 10/13/04 Order of Seizure, Perry Yuen Aff.) Yuen visited Go Go Mall on July 9, 2004, at which time he observed approximately 700 video compact discs ("VCD") and digital video discs ("DVD") on display for sale. Id. Yuen estimated that 25% of the VCDs and DVDs on sale at Go Go Mall were plaintiff's licensed titles. Id. Yuen purchased four discs from Go Go Mall: (i) Good Times, Bed Times, (ii) Love on the Rocks, (iii) Magic Kitchen, and (iv) Diva, ah hey! Id. Plaintiff provided the copyright certificates of registration issued by the United States Copyright Office for each of the four films. Id. Based on Yuen's observations and purchases, plaintiff applied for an ex parte Order of Seizure.
On October 14, 2004, the District Court granted plaintiff's ex parte application for an Order of Seizure, which provided for the seizure of unauthorized copies of plaintiff's motion pictures from Go Go Mall as well as any equipment being used to create such unauthorized copies. Id. On October 30, 2004, plaintiff's representatives and court appointed investigators went to the Go Go Mall store to execute the Order of Seizure (Dkt No. 7: 06/15/05 Mot. for Default J., Alan Huie Aff.). At that time, they seized 422 unauthorized copies of plaintiff's motion pictures.Id. Plaintiff provided the Court with the copyright registration numbers and the numbers of works infringed for each of the works seized. Id. In total, the works purchased by Yuen and the works seized comprised 252 separate works, either theatrical motion pictures or episodes of television series, subject to United States copyright registrations. Id.
A court appointed investigator served defendants with the complaint on October 30, 2004, simultaneous to carrying out the Order of Seizure (Dkt No. 7: 06/15/05 Mot. for Default J.). Defendants failed to file an answer or otherwise move with respect to the complaint and the time to do so has expired. Id. To date, defendants have failed to make an appearance. As a result, this Court (Dearie, J.) granted a default judgment against John Does I-V d/b/a Go Go Mall and referred the matter to me to conduct an inquest and to make a report and recommendation regarding the appropriate measure of plaintiff's damages (Dkt No. 11: 07/25/05).
II. DISCUSSION
Defendants' default amounts to an admission of liability. Thus, all of the well-pleaded allegations in plaintiff's complaint pertaining to defendants' violations of the Copyright Act are deemed true; plaintiff, however, must prove damages before the entry of final default judgment. Credit Lyonnais Sec., Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). The Court is "obligated to `establish damages with a reasonable certainty,' and not `just accept [plaintiffs'] statement of the damages.'"Chaman Lal Setia Exps. Ltd. v. Sawhney, 2002 U.S. Dist. LEXIS 14228, *15 (S.D.N.Y. July 31, 2002) (Fox, M.J.), quoting Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). Defendants can contest amounts asserted by plaintiff at a hearing on damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) ("Damages, which are neither susceptible of mathematical computation nor liquidated as of the default, usually must be established by plaintiff in an evidentiary proceeding in which the defendant has the opportunity to contest the amount"); see also Credit Lyonnais Sec., 183 F.3d at 155 ("Even when a default judgment is warranted based on a party's failure to defend, the allegations in the complaint with respect to the amount of damages are not deemed true").
Thus, the District Court must conduct an inquiry in order to ascertain the amount of damages with reasonable certainty. See Transatlantic Marine, 109 F.3d at 108. Rule 55(b)(2) of the Federal Rules of Civil Procedure provides that when granting a default judgment, if "it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence . . . the court may conduct such hearings or order such references as it deems necessary and proper." The Second Circuit has held that, under Rule 55(b)(2), "it is not necessary for the District Court to hold a hearing, as long as it ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine, 109 F.3d at 111 (internal quotations omitted); see also Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993) (not necessary to hold a hearing to assess post-default damages where the court relied on affidavits and documentary evidence); Fustok v. ContiCommodity Serv., Inc., 873 F.2d 38, 40 (2d Cir. 1989) ("[I]t is not necessary for the District court to hold a hearing, as long as it ensured that there was a basis for the damages specified in a default judgment").
Plaintiff presented evidence of Go Go Mall's copyright violations in the Order of Seizure and Order to Show Cause (Dkt No. 3), which included the Perry Yuen and Alan Huie affidavits, the Copyright Certificate of Registration forms for with the five motion pictures Yuen purchased at defendants' store, the Century Home Entertainment Copyright Registration List, and the New Image Audio and Video Copyright Registration List. Additionally, plaintiff's Notice of Motion for Default Judgment included a second Alan Huie affidavit, which detailed the seizure of plaintiff's infringed copyrighted material from defendants' store, and a list of the motion pictures, TVB and Tai Seng Series seized with corresponding registration numbers for each individual work.
This document, created by plaintiff on September 29, 2004, lists all the titles, translated into English, licensed to Century Home Entertainment and includes the corresponding copyright registration numbers and dates.
This document, created by plaintiff on August 3, 2004, lists all the titles, translated into English, licensed to New Image Audio and Video and includes the episode numbers and the corresponding copyright registration number.
Plaintiff's documentation establishes that defendants had in their possession at the Go Go Mall store 422 unauthorized copies of plaintiff's motion pictures. These copies included 252 separate works, either theatrical motion pictures or episodes of television series, subject to United States copyright registrations.
A. Statutory Damages
Pursuant to 17 U.S.C. § 504(c)(1),
[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, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just.
The Court may also award statutory damages where actual damages are difficult to prove. Original Appalachian Artworks v. Yuil Int.'l Trading Corp., et al., 5 U.S.P.Q.2d 1516 (S.D.N.Y. 1987);Pret-A-Printee, Ltd. v. Allton Knitting Mills, Inc., 218 U.S.P.Q. 150, 154 (S.D.N.Y. 1982).
As a result of U2 Entertainment's inability to quantify defendants' sales of VCDs and DVDs containing infringing copyrighted material exclusively licensed to plaintiff for importation, duplication, and distribution, plaintiff has appropriately elected to recover statutory damages pursuant to 17 U.S.C. § 504(c)(1).
In Fitzgerald Pub. Co. v. Baylor Pub. Co., 807 F.2d 1110, 1116 (2d Cir. 1986), the Second Circuit held that the district court has "broad discretion in awarding statutory damages. In arriving at its award, the court may consider various factors, such as "the expenses saved and profits reaped by the [d]efendants, the revenues lost by the [p]laintiffs, the value of the copyright, the deterrent effect of the award on other potential infringers, and factors relating to individual culpability." Stevens v. Aeonian Press, Inc., 2002 WL 31387224 (S.D.N.Y.) at *1.
Plaintiff seeks the minimum statutory award for each work infringed, $750. 17 U.S.C. § 504(c)(1). Under the current statute, "the unit of damages inquiry" has shifted "from the number of infringements to the number of works [infringed upon]."Antenna Television v. Aegean Video Inc., 1996 WL 298252 at *11 (E.D.N.Y.) (citation omitted). Thus, in determining the number of violations, "the court need only sum the number of separate, individual works which were the subject of a defendant's infringing activities." Id. With regard to plaintiff's motion pictures, both the statute and the case law support an award of $750 for each individual work infringed. See Basic Books, Inc. V. Kinko's Graphics Corp., 758 F. Supp. 1522, 1545 (S.D.N.Y. 1991) (court awarded statutory damages for each published work photocopied by the defendant, and did not base damages on the number of reproductions made).
Plaintiff also requests the minimum statutory award for each individual episode of the TVB and the Tai Seng Series, although the copyright registration is based on each series as a whole and not the individual episodes. Plaintiff characterized each series as akin to an American soap opera, with ongoing plot-lines and character development. A statutory damage award for each episode of a television series infringed is appropriate.See Twin Peaks Prod., Inc. v. Publ'n Int'l, Ltd., 996 F.2d 1366, 1381 (2d Cir. 1993) (finding that "the author of eight scripts for television episodes is not limited to one award of statutory damages just because he or she can continue the plot line from one episode to the next and hold the viewer's interest without furnishing a resolution").
Defendants packaged plaintiff's TVB Series to include more than one episode. For example, "A Recipe for the Heart" included episodes 1-20 and a separately sold disk included episodes 21-25. (Dkt No. 7) Plaintiff requests that the court treat the first set as twenty separate works allowing for twenty statutory awards, and the second set of episodes as five separate works providing for five statutory awards. Defendants packaged the Tai Seng Series as doubles. For example, "The Legend of the Treasure Basin" disc included episodes 1-2. Id. Plaintiff requests that the Court treat this disc as containing two distinct works, justifying two separate statutory awards for infringement.
Notwithstanding that certain episodes are part of one copyright registration, statutory damages may be awarded for each individual episode. See Antenna Television, 1996 WL 298252 at *11. The First Circuit, in Gamma Audio and Video, Inc. v. Ean-Chea, 11 F.3d 1106 (1st Cir. 1993), expanded the holding ofTwin Peaks Prod. to allow statutory awards for "works" that included episodes not individually copyrighted. The First Circuit held that while multiple episodes may be filed under one copyright and considered one work for purposes of registration, the episodes may still be considered individual works for purposes of statutory damages. Gamma Audio and Video, 11 F.3d at 1115-18. While First Circuit decisions are not binding on this Court, the Second Circuit has not rejected this expansion of Twin Peaks Prod., and this Court finds the application of Gamma Audio and Video to the facts in the present case to be both persuasive and appropriate. Twin Peaks Prod., 996 F.2d at 1381.
Defendants' reproduction of copyrighted movies and television episodes is reprehensible and unfortunately a far too common and easily accomplished method of infringement given the technological advances of our day, which facilitate "burning" motion pictures and television shows onto inexpensive, writable DVDs and marketing them for a significantly lower price than can those who have had to bear the costs of filming, production, marketing, retail packaging, and/or licensing fees. Defendants' actions clearly hurt plaintiff. Defendants denied U2 Entertainment its rightful profit by providing indiscriminate consumers with an alternate source for their home entertainment that is less expensive, incentivizing them to forego purchasing the legitimately duplicated and distributed product.
Plaintiff only requests the minimum statutory amount, despite making a strong argument for willfulness, which would have allowed the court to grant increased statutory damages and costs, as well as attorney's fees. See 17 U.S.C. § 505; Fogerty v. Fantasy, Inc., 510 U.S. 517, 535 n. 19 (1994) (holding that the Copyright Act provides for attorney's fees for either prevailing plaintiff or defendant in the court's discretion);Kepner-Tregoe, Inc. v. Vroom, 186 F.3d 283, 289 (2d Cir. 1999) (finding that the court's award of attorney's fees under the Copyright Act was justified based on a finding of willfulness and was in line with the statutory goal of deterrence); Fallaci v. New Gazette Literary Corp, 568 F. Supp. 1172, 1174 (S.D.N.Y. 1983). Thus, the statutory minimum is all the Court should grant. In sum, plaintiff has demonstrated $189,000 in total statutory damages, and I recommend that U2 Entertainment, Inc. be awarded this amount.
This sum was derived by multiplying the 252 works infringed (both motion pictures and the TVB and Tai Seng Series) by the minimum statutory award of $750.00.
B. Injunction
1. Copyright Infringements
Pursuant to 17 U.S.C. § 502(a),
[a]ny court having jurisdiction of a civil action arising under this title may . . . grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.
The court may also, in its discretion, grant plaintiff an injunction, not only for future infringements of the works at issue, but also against future works, "which may not now be copyrighted or even in existence. . . ." Basic Books, 758 F. Supp. at 1542; see also Encyclopaedia Britannica Educ. Corp. v. Crooks, 542 F. Supp. 1156, 1187-88 (W.D.N.Y. 1982) (holding that "equity dictates" that an injunction be granted where there was a danger of future infringement). Where a court perceives a "significant threat that [defendant] would continue to infringe, particularly given [defendant's] historic willful blindness to copyright law," the court may exercise that discretion. Basic Books, 758 F. Supp. at 1542. See also Lauratex Textile Corp. v. Allton Knitting Mills Inc., 519 F. Supp. 730, 731 (S.D.N.Y. 1981) (permanent injunction granted because of strong probability that defendants would continue to infringe plaintiff's copyright).
The ease in which defendants can reproduce U2 Entertainment's licensed products, demonstrated by the sheer number of DVDs and VCDs seized on a single day at the Go Go Mall store, establishes the need for a permanent injunction against defendants' activities. The Go Go Mall is not a licensed corporation with any authority to do business in New York. Thus, there is little to stop defendants John Doe I-V from relocating their business, opening in another name or even the same, and continuing their practice of marketing reproduced DVDs and VCDs exclusively licensed to plaintiff. Thus, I recommend that a permanent injunction be granted against the defendants to enjoin them from any and all reproductions of plaintiff's licensed feature motion pictures and television programming.
2. Trademark Infringements
Plaintiff also seeks an injunction under the Lanham Act § 43(a), 15 U.S.C. § 1125(a), against defendants' wrongful use of plaintiff's trademarks. In Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 79, the Second Circuit held that an injunction was appropriate in a trademark action when the use of the trademark created confusion in the mind of the purchaser. That confusion can be premised on the likelihood that the public will be misled into believing that defendant is distributing products "vouched for" or sponsored by plaintiff or that the owner "otherwise approved the use of the trademark." Warner Bros., 658 F.2d at 79, citing Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200 (2d Cir. 1979).
Defendants' use of plaintiff's trademark in this case creates clear confusion. Plaintiff submitted copies of the fronts and backs of the DVD cases purchased by investigator Yuen (Order of Seizure, Yuen Aff.) Each of those cases in and of themselves are remarkably confusing, from seemingly inexplicable references to James Bond and apparent copying from Disney movie jackets, the DVD cases are at best sloppily prepared products. While most consumers who frequent the Go Go Mall are likely indifferent to the legitimacy of the trademarks gracing the DVDs they purchase at a discount price, for an unsuspecting consumer, the appearance of plaintiff's trademark on poor quality DVD cases and unlicensed reproductions of films and television series could have a negative effect on the consumer's perception of plaintiff's product. Thus, I recommend that a permanent injunction against defendants, enjoining their use of plaintiff's trademark, should be granted.
III. CONCLUSION
For the above reasons, I respectfully recommend that the plaintiff be awarded $189,000 in damages against the defendants. In addition, I recommend that the Court order a permanent injunction against defendants preventing any and all future infringements of plaintiff's licensed, copyrighted feature motion pictures and television series and against the use of plaintiff's trademark.
Any objections to this Report and Recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within ten (10) days of receipt of this Report. Failure to file objections within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e).
SO ORDERED.