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Copyright “one satisfaction rule” explained

Feb 12th, 2015 | By | Category: Copyright Litigation

Copyright Litigation Basics – Affirmative Defenses to Infringement

defenses to copyright infringement one satisfaction rule

Introduction

BitTorrent mass copyright lawsuits continue to make front page news.  Companies like Malibu Media are responsible for many of the copyright infringement lawsuits being filed in the Federal Courts in the United States.  The lawsuits claim that copyright adult pornography has been illegally downloaded on social media websites such as BitTorrent which offers peer-to-peer file sharing to the “swarm.”  But what do you do when you have been named as a “John Doe” defendant and your ISP is seeking to turn over your name and internet address (IP address) to these types of Plaintiff’s (which many refer to as “Copyright trolls”)?  Do you file a motion to quash a subpoena?  Do you settle on whatever terms they are willing to offer you?  Do you defend the lawsuit in COurt by raising legal defenses?  This blog post explores some of these legal issues.

Combatting allegations of joint copyright infringement

In the mass joinder copyright cases, Plaintiff’s are suing naming John Doe’s as Defendants and claiming that defendants are liable for their losses due to downloading copyrighted software without paying for it.  In other words, charging Defendants with being copyright pirates and suing each for the losses.  In these types of cases, a Plaintiff will often claim that Defendants are “jointly and severally liable.”  In this case, one might wonder how a Plaintiff can recover multiple times (either with a judgment or settlement) for a single injury.  This is where the Courts need to step in and make sure a Plaintiff cannot just use the Courts as a collection arm for their company and collect multiple times (i.e. obtain a “windfall”) for the same injury.

“Courts have a duty to protect the innocent citizens of this district from this sort of legal shakedown, even though a copright holder’s rights may be infringed by a few deviants”  See Ingenuity 13 No. 2:12-cv-08333-ODW-JC (C.D. Cal 2012).  BCF No. 28 (Order vacating prior early discovery orders and order to show cause).

In mass joinder lawsuits, the Plaintiff is alleging concert of action, and that Defendants are jointly and severally liable for their infringinement of copyright.  As such, if they recover from one Defendant, they should not be allowed to shakedown other Defendants in the same lawsuit.  See Arist 784 F. Supp. 2d 313.  Prevents a windfall to Plaintiff’s (cannot recover multiple damages for the same injury).

17 U.S.C. 504(c)(1) – statutory damages for Defendants acting in concert = liability is “joint and several”

This code section states:

(c) Statutory Damages.— (1) Except as provided by clause (2) of this subsection, the 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. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

“Under § 504(b) of the Copyright Act, 17 U.S.C. § 504(b), “[t]he copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.”
“The Copyright Act allows recovery of actual damages, in addition to the infringer’s profits, in recognition that some types of infringement inflict more harm to the copyright owner than the benefit reaped by the infringer, for example, where the infringer’s minimal use forecloses a broader market, see Cream Records, Inc. v. Jos. Schlitz Brewing Co., 754 F.2d 826, 827–28 (9th Cir.1985), or where the copyright owner’s provable profit margin is greater than the infringer’s, see Robert R. Jones Assocs., Inc. v. Nino Homes, 858 F.2d 274, 281 (6th Cir.1988).”

See Kleier Adver., Inc. v. John Deery Motors, Inc., 834 F. Supp. 311, 314 (N.D. Iowa 1993).

When a Plaintiff in a copyright infringement seeks statutory damages for joint and several liability, they should not be allowed to recover twice from the same injury form multiple defendants as is done when trying to seek the identity of an ISP subscriber and extract a settlement out of each.

Cannot recover twice from same injury

In the Kleier Adver., Inc. v. John Deery Motors, Inc., 834 F. Supp. 311, 314 (N.D. Iowa 1993) the Court noted:

upholding calculation of actual damages based on loss of profits copyright owner would have earned but for defendant’s infringement and evidence of owner’s usual profit margin. The copyright owner can only recover once for each infringement. 17 U.S.C. § 504(a). Instead of seeking actual damages under § 504(b), the copyright owner suing an infringer may elect statutory damages under § 504(c).  Here, Kleier has elected to seek actual damages.”
The Court continued:
“Kleier seeks prejudgment interest as part of its damage award. The Eighth Circuit Court of Appeals has not addressed this question in a copyright infringement action, but other circuits have upheld prejudgment interest in this context. Kleier has properly asked for and calculated prejudgment interest.”

In a BitTorent swarm copyright case, once the 150k cap settlement amount is reached (in the same case, or possibly even looking at earlier cases filed by a Plaintiff) Plaintiff’s recovery should be capped out from any further recovery from another John Doe Defendant.  Look at earlier cases and earlier settlements – Example, AF Holdings LLC v. Harrris CV-12-02144 (Arizona). The right to elect statutory damages is not intended to provide a Plaintiff with a windfall recovery. See 677 F.Supp 740

The one satisfaction rule should be raised as an affirmative defense

For example, in one illegal download of adult pornography case, the Court denied Plaintiff’s motion to strike this defense in Malibu Media, LLC v. Zumbo (2:13-cv-729-JES (Fla 2014).  The rule is discussed in other cases such as Milicevich v. Sacramento Med. Ctr., 155 Cal. App. 3d 997, 1002-03, 202 Cal. Rptr. 484, 486-87 (Ct. App. 1984) which held:

“The single satisfaction rule is not based upon the effect of the judgment itself, which, in any event, does not preclude pursuit of joint or concurrent tortfeasors. Rather, the rule in Fletcher is “designed to prevent double recovery.  This rule is equitable in its nature, and … its obvious purpose is to prevent unjust enrichment.” (Prosser. Joint Torts and Several Liability……..Plaintiff is only entitled to a single recovery of full compensatory damages for a single injury.”

Contact a Copyright Lawyer

 If you are involved in BSA or SIIA software audits, facing a cease and desist letter alleging copyright infringement, or involved in an adult pornographic image, video, or other illegal copyright infringement case, contact one of our federal copyright attorneys to discuss your case.  We are skilled negotiators and litigators.  We can file and defend federal copyright lawsuits.  Call (877) 276-5084 or fill out the contact form below for a free case review.  We will get back to you normally within the hour.

 

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We are a business and civil litigation firm with a focus on copyright infringement cases involving illegal movie downloads (torrent cases such as London Has Fallen, ME2 Productions and Malibu Media defense), software audits (ex. Microsoft audits, SPLA, Autodesk audit notification letter, Siemens PLM defense, SIIA, Adobe and Business Software Alliance defense) and other software vendors threatening piracy and infringement. We also handle cases involving internet law, anti-SLAPP, media law, right of publicity, trademarks & domain name infringement, and we have a niche practice area handling California BRE licensing disputes, accusations, subpoena response, statement of issues and investigations. We have offices in San Francisco, Beverly Hills, Newport Beach, San Diego & Phoenix, Arizona and accept federal copyright and trademark cases nationwide. All content on our website is general legal information only and not a substitute for legal advice, and should not be relied upon. Decisions to hire counsel should not be based on advertising alone. Blogs, videos and podcasts are authored by Steve Vondran, Esq. unless otherwise noted. We can be reached at (877) 276-5084.

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