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finding that no hearing was necessary prior to an award of the minimum $750.00 per work where defendant defaulted and his acts of infringement were deemed admitted
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Civil Action No. 3:03-CV-2018-L.
August 2, 2004
FINDINGS, CONCLUSIONS, RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Pursuant to the District Court's Order of Reference, filed June 3, 2004, Plaintiffs' Motion for Entry of Default Against Defendant Cedric Lyons and Brief in Support, filed May 26, 2004, was referred to this Court for hearing, if necessary, and to submit proposed findings and recommendations for disposition of the motion. Defendant failed to file a timely response.
The Court held a hearing on this matter on June 21, 2004, at 10:00 a.m. Defendant did not personally appear as ordered, but his counsel was present. On June 22, 2004, based on the motion, the oral arguments, and the applicable law, the Court recommended that Plaintiffs' motion be granted and default judgement be entered against Defendant after determination of damages, costs, and fees. The Court ordered Plaintiffs to submit applications for damages, costs, reasonable expenses, and attorneys' fees, as well as a proposed form of judgment, no later than July 6, 2004. On that day, Plaintiffs' filed their Motion for Assessment of Damages and Costs and Brief in Support. Because Defendant again failed to respond, the Court RECOMMENDS that Plaintiffs' proposed damages be entered against Defendant as follows: $6000.00 in statutory damages, an injunction prohibiting Defendant from further infringement, costs of $205.00, attorneys' fees of $5697.63, and post-judgment interest at the current rate, as calculated on the date judgment is entered, until all costs and damages are paid.
I. BACKGROUND
The complete background to this case is set forth in the Findings, Conclusions, Recommendations of the Magistrate Judge, issued June 22, 2004, in which the Court recommended that default judgment be entered in this case after determination of damages and costs. Capitol Records, Inc. v. Lyons, No. Civ. A.3:03-CV-2018-L, 2004 WL 1418796 (N.D. Tex. June 23, 2004). The Court will only recite a brief background at this time.
This is an action for copyright infringement arising from Defendant Cedric Lyons' alleged unauthorized copying and distribution of Plaintiffs' copyrighted sound recordings. (Rec. at 1.) Plaintiffs, major recording companies who own copyrights in sound recordings, allege that Defendant, without their permission, downloaded the recordings, distributed the recordings, and/or made the recordings available for distribution to others. (Rec. at 2; Pl.'s Mot. of Damages/Costs at 1.) Plaintiffs only brought charges on eight sound recordings even though they claim Defendant committed hundreds of infringements. (Pl.'s Mot. of Damages/Costs at 3.)
Despite Plaintiffs' efforts to contact Defendant, as well as the warnings and orders by the Court, Defendant has not acknowledged discovery requests, deadlines, and hearings. (Rec. at 2.) On May 26, 2004, Plaintiffs filed a Motion for Entry of Default Against Defendant Cedric Lyons based on Defendant's failure to serve responses to discovery requests in accordance with the Court's order. (Rec. at 3.) By Order dated June 4, 2004, the Court set a hearing on the motion for June 21, 2004, ordered a written response, and ordered that Defendant appear in person at the hearing. Id. The Court also directed the Clerk of Court to serve the Order on Defendant at his home address via certified mail, return receipt requested, and regular mail. Id.
Defendant and his counsel failed to respond or appear at the hearing. Id. The docket did not reflect the filing of a return receipt, but it also did not show that the regular mail was returned as undeliverable. Id. On June 22, 2004, the Court recommended that Plaintiffs' motion be granted and default judgment be entered against Defendant after determination of damages, costs, and fees. Id. at 8.
In its recommendation, the Court ordered Plaintiffs to submit an application for damages, costs, reasonable expenses, and attorney's fees, as well as a proposed form of judgment, no later than July 6, 2004. Id. On that date, Plaintiffs filed an application seeking the following remedies provided by the Copyright Act:
(a) an injunction prohibiting Defendant from further infringing Plaintiffs' copyrighted sound recordings through use of any online media distribution system;
(b) statutory damages in the amount of $750 for each of the eight copyrighted sound recordings Defendant infringed, for a total award of $6,000;
(c) an award of Plaintiffs' costs, including reasonable attorney's fees; and
(d) an award of post-judgment interest.
By Order dated July 7, 2004, the Court directed Defendant to file a response to the application for damages no later than July 21, 2004. (Order at 1.) Defendant again failed to respond in accordance with the Court's Order.
II. ANALYSIS
Federal Rule of Civil Procedure 54(c) states that "a judgment by default shall not be different in kind from or exceed in amount that prayed for in the demand for judgment. Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings." FED. R. CIV. P. 54(c). Damages may 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). Where the amount of damages and/or costs can be determined with certainty by reference to the pleadings and supporting documents and where a hearing would not be beneficial, a hearing is unnecessary. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993).A. Statutory Damages
Plaintiffs seek statutory damages for their copyright infringement claims. They request $750.00 for each of the eight copyrighted sound recordings Defendant infringed, for a total award of $6000.00. (Pl.'s Mot. of Damages/Costs at 3.) Plaintiffs believe the following admissions entitle them to these damages:
By Order dated May 6, 2004, the Court deemed admitted Plaintiffs' requests for admission because Defendant failed to respond by the response deadline or to appear at the hearing on the motion to compel responses.
• Defendant used the screen name "cedkan" while connected to an online media distribution system.
• Defendant downloaded each of the Plaintiffs' copyrighted sound recordings at issue in this lawsuit onto a computer hard drive using an online media distribution system.
• When Defendant downloaded each of these sound recordings onto a computer hard drive, he knew they were copyrighted.
• Plaintiffs never authorized Defendant to copy or download the pertinent sound recordings onto a computer hard drive.
• On or before the date of the filing of the Complaint in this action, Defendant made these sound recordings available to the public via an online media distribution system.
• Plaintiffs never authorized him to make the sound recordings available to be downloaded or copied onto the computer hard drive of any other person.
• After Defendant received the Complaint in this action, he continued to download sound recordings to a computer hard drive using an online media distribution system, and he continued to make at least some of the Plaintiffs' sound recordings available via an online media distribution system.
• Exhibit B of Plaintiffs' Complaint lists the material Defendant made available within the last three years.
• Each Plaintiff owns the copyright in the respective sound recordings at issue in this lawsuit.
(Pl.'s Mot. of Damages/Costs at 5-6.)
Once copyright infringement has been found, "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 . . . in a sum of not less than $750 or more than $30,000 as the court considers just." 17 U.S.C. § 504(c)(1). Furthermore, if the Court finds that "the infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200," but if the Court finds "that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000." 17 U.S.C. § 504(c)(2). However, because Defendant failed to cooperate in discovery, as well as comply with court orders regarding discovery, the admissions that the Court deemed admitted prevent Defendant from meeting the criteria for a reduction in damages.
Under § 504(c), the trial court is bound by the rule that it must award damages according to the number of separate and independent works infringed. Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 237 (5th Cir. 1988). The amount awarded must also be within the statutory limits. Golden Torch Music Corp. v. Lichelle's Inc., Civ.A. No. W-86-CA-005, 1987 WL 14543, at *4 (W.D. Tex. Jan. 26, 1987). However, the damages to be assessed are within the broad discretion of the trial court. Id. If the copyright owner has established infringement but offers no proof of actual damages, the owner is entitled to the minimum amount of damages for each copyright infringement. Id. (citing Universal Statutory Corp. v. Gaines, 310 F.2d 647 (5th Cir. 1962)).
In this case, Plaintiffs only seek the statutory minimum of $750.00 for each recording. While it is true that the damages in this case are neither liquidated nor capable of mathematical calculation, it is not necessary for the Court to hold a hearing as long as it ensures that there is a basis for the damages specified in a default judgment. See FED. R. CIV. P. 55(b)(2) (" If, in order to enable the court to enter judgment . . . it is necessary to take an account or to determine the amount of damages . . . the court may conduct such hearings or order such references as it deems necessary and proper . . .) (emphasis added); James, 6 F.3d at 310 (stating that the court relied on affidavits, documentary evidence, and the judge's personal knowledge of the record gained during the years of involvement in the case); Fustock v. ContiCommodity Serv., Inc., 873 F.2d 38, 40 (2d Cir. 1989) (same); United Artists Corp., 605 F.2d at 857 (stating that the damage award was in error because there was no basis for awarding the copyright owner more than the minimum without a hearing or an affidavit to establish the necessary facts).
The Court finds that Plaintiffs have established a basis for the requested damages. Plaintiffs have shown that Defendant copied and distributed Plaintiffs' copyrighted sound recordings without authorization. These unauthorized acts have been deemed admitted by the Court. Plaintiffs only seek the minimum statutory award for infringement. Defendant did not file a response contesting the amount of damages requested by Plaintiffs. Thus, an evidentiary hearing is not required. The Court recommends that Plaintiffs be awarded $750.00 per infringement, for a total statutory damages award of $6000.00.
B. Permanent Injunction
Plaintiffs next seek to enjoin Defendant from "further infringing Plaintiffs' copyrighted sound recordings through use of any online media distribution system." (Pl.'s Mot. of Damages/Costs at 3.) Plaintiffs alleged in their Complaint that Defendant would continue to infringe on their copyrights "unless enjoined and restrained by this Court." (Compl. at 4.) They point to the fact that Defendant has not appeared in this action and continues to infringe on Plaintiffs' copyrights even after initiation of the suit. (Pl.'s Mot. of Damages/Costs at 7.) Plaintiffs seek the entry of the following injunction:
Defendant shall be and hereby is enjoined from directly or indirectly infringing Plaintiff's rights under federal or state law in the Copyrighted Recordings and any sound recording, whether now in existence or later created, that is owned or controlled by Plaintiffs (or any parent, subsidiary, or affiliate record label of Plaintiffs) ("Plaintiffs' Recordings"), including without limitation by using the Internet or any online media distribution system to reproduce (i.e., download) any of Plaintiffs' Recordings, or to make any of Plaintiffs' Recordings available for distribution to the public, except pursuant to a lawful license or with the express authority of Plaintiffs. Defendant shall also destroy all copies of Plaintiffs' Recordings that Defendant has downloaded onto any computer hard drive or server without Plaintiffs' authorization and shall destroy all copies of those downloaded recordings transferred onto any physical medium or device in Defendant's possession, custody or control.
(Compl. at 4-5; Pl.'s Mot. of Damages/Costs at 8-9.)
Section 502(a) of the Copyright Act states: "Any 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." 17 U.S.C. § 502(a). Permanent injunctive relief is never lightly given. Playboy Enter., Inc. v. Webbworld, Inc., 991 F. Supp. 543, 561 (N.D. Tex. 1997) (Sanders, J.), aff'd, 168 F.3d 486 (5th Cir. 1999) (citing Posada v. Lamb County, Tex., 716 F.2d 1066, 1070 (5th Cir. 1983)). However, when a copyright infringement occurs, a copyright proprietor is entitled to an injunction prohibiting further infringing performances, Jobete Music Co., Inc. v. Hampton, 864 F. Supp. 7, 9 (S.D. Miss. 1994), as long as the owner satisfies the requirements.
To establish entitlement to permanent injunctive relief, the party seeking the injunction must demonstrate the following: (1) actual success on the merits, (2) no adequate remedy at law, (3) the threatened injury outweighs any damage to the defendant, and (4) the injunction will not disserve the public interest. Arista Records, Inc. v. Kabani, No. Civ. 3:03-CV-1191-H, 2004 WL 884445, at *4 (N.D. Tex. Apr. 23, 2004) (Sanders, J.) (citing DSC Communications Corp. v. DGI Tech., Inc., 81 F.3d 597, 600 (5th Cir. 1996)). In short, an injunction is appropriate if liability has been established and if there is a substantial likelihood of further infringement of plaintiffs' copyrights. Fermata Intern. Melodies, Inc. v. Champions Golf Club Inc., 712 F. Supp. 1257, 1262 (S.D. Tex. 1989), aff'd, 915 F.2d 1567 (5th Cir. 1990).
Defendant's failure to answer Plaintiffs' Complaint makes a decision on the merits impractical, if not impossible. Elektra Entm't Group, Inc. v. Bryant, No. CV 03-6381GAF (JTLX), 2004 WL 783123, at *5 (C.D. Cal. Feb. 13, 2004). However, the finding of default against Defendant satisfies the element of success on the merits. Arista Records, Inc. v. Beker Enter., Inc., 298 F. Supp. 2d 1310, 1314 (S.D. Fla. 2003); see also Arista Records, Inc., 2004 WL 884445 (finding success on the merits after granting Plaintiffs' motion for default).
Furthermore, there is no adequate remedy at law because Defendant's failure to comply with court orders and requests demonstrates the fact that he does not take this matter seriously. See Arista Records, Inc., 2004 WL 884445 (stating that the defendant's failure to appear after a certain period and failure to provide the court and counsel with forwarding address or telephone or fax number made an injunction appropriate). Plaintiffs have suffered a great and irreparable injury that cannot be fully compensated or measured in money. Arista Records, Inc., 298 F. Supp. 2d at 1314. Because Defendant has not refrained from the unauthorized activity even after the initiation of the action, it is unlikely that any legal remedy will deter him. Without an injunction, Plaintiffs copyrighted recordings, past and future, would remain vulnerable to copyright infringement by Defendant. See id.
Additionally, any damage to Defendant is outweighed by the injury to the Plaintiffs. Defendant has wilfully and repeatedly infringed on Plaintiffs' copyrights. See Jobete Music Co., Inc., 864 F. Supp. at 9 (stating that an injunction was appropriate where the Defendant continued to infringe the plaintiff's copyright). Defendant has admitted to downloading the recordings on to the hard drive of his computer. (Pl.'s Mot. of Damages/Costs at 5; Order on Mot. to Compel at 2.) He has also admitted to making these sound recordings available to the public via an online media distribution system. (Pl.'s Mot. of Damages/Costs at 6; Order on Mot. to Compel at 2.) This is done "by storing a file or content on his computer hard drive in a manner such that the file or content could be accessed by members of the public and/or other users of an online media distribution system." (Pl.'s Mot. of Damages/Costs at 6.) Once the file or content is accessed and the transfer is complete, the requesting user and source user have identical copies of the file, and the requesting user may also start sharing the file with others. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 259 F. Supp. 2d 1032-33 (C.D. Cal. 2003). Multiple transfers to other users, or from other users, may occur simultaneously to and from a single user's computer. Id. at 1033. Defendant's conduct aids in subjecting Plaintiffs' works to continuous infringement by others.
Finally, injunctions are regularly issued pursuant to the mandate of Section 502 because the "public interest is the interest in upholding copyright protections." Autoskill, Inc. v. Nat'l Educ. Support Sys., Inc., 994 F.2d 1476, 1499 (10th Cir. 1993). It is virtually axiomatic that the public interest can only be served by upholding copyright protections and, correspondingly, preventing the misappropriation of the skills, creative energies, and resources which are invested in the protected work. Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3d Cir. 1983). An injunction is necessary to preserve the integrity of the copyright laws which seek to encourage individual efforts and creativity by granting valuable enforceable rights. Atari Inc. v. Am. Philips Consumer Electric Corp., 672 F.2d 607, 620 (7th Cir. 1982). The injunction will not harm the public interest, but rather, serve it.
All four factors are satisfied in this action, which warrants the issuance of a permanent injunction. Because Defendant has knowingly infringed and shared Plaintiffs' copyrighted works, and no evidence has been presented showing that Defendant has ceased the unauthorized activities, the injunction is proper in order to prevent him from further downloading and distributing the copyrighted material. Without an injunction, Plaintiffs' copyrighted sound recordings would remain vulnerable to continuous infringement. "Because Plaintiffs continually create new works — works that would be vulnerable to infringement if the injunction were limited to existing works, and that would require new litigation to redress each future infringement — the requested injunction follows standard practice in copyright cases by covering works to be created in the future." Arista Records, Inc., 298 F. Supp. 2d at 1315. Also, destroying the recordings that were obtained without authorization will ensure that Defendant is unable to distribute them via the online media distribution system. The Court recommends issuing an injunction with the terms proposed by Plaintiffs.
C. Attorney's Fees and Costs
Because of Defendant's continuous disregard of this suit, Plaintiffs have incurred costs and attorneys' fees in prosecuting their claim. (Pl.'s Mot. of Damages/Costs at 10.) Plaintiffs seek $205 in costs and $5,697.63 in attorneys' fees for a total of $5,902.63. (Pl.'s App. at 2). Plaintiffs have provided copies of the attorneys' billing records for legal services through June 2004. These records itemize time spent on this case, details regarding the specific work performed, the charges for that time, and the firm's out-of-pocket expenses. Id. at 4-34.
Section 505 of the Copyright Act provides that "the court in its discretion may allow the recovery of full costs by or against any party . . . the court may also award a reasonable attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505. Plaintiffs have submitted affidavits detailing where the costs were incurred as well as the time and rates of the attorneys. See Alameda Films SA de CV v. Authors Rights Restoration Corp., Inc., 331 F.3d 472, 484-85 (5th Cir. 2003) (denying district court's award of attorney's fees and costs because party seeking the award did not submit documentation of the full costs and reasonable fees, but rather just relied on testimony of a man who had reviewed the files of the attorneys that represented the party seeking the award).
Although attorney's fees are awarded in the trial court's discretion, they are the rule rather than the exception and should be awarded routinely. Micromanipulator Co. v. Bough, 779 F.2d 255, 259 (5th Cir. 1985). Courts have frequently awarded plaintiffs their full costs and attorney's fees in order to: (1) deter future copyright infringement; (2) ensure that all holders of copyrights which have been infringed will have equal access to the court to protect their works; and (3) penalize the losing party and compensate the prevailing party. Arista Records, Inc., 298 F. Supp. 2d at 1315. Although not a precondition to an award of attorney's fees, a showing of willfulness provides further justification for such an award. See Gonzalez v. Transfer Tech., Inc., 301 F.3d 608 (7th Cir. 2002) ("The smaller the damages, provided there is a real, and especially a willful, infringement, the stronger the case for an award of attorneys' fees."); Arista Records, Inc., 298 F. Supp. 2d at 1316.
Plaintiffs are entitled to the reasonable fees and costs incurred because they have been forced to assume additional charges due to Defendant's failure to appear in this action. This is a serious matter which Defendant has taken very lightly. It is important that owners of copyrights are able to protect their work. Plaintiffs have moved to compel discovery responses, have appeared at hearings, and have filed this motion for default judgment because Defendant has ignored the Court's orders and authority. Defendant does not appear to be deterred by the suit; therefore, the payment of attorneys' fees and costs will help to further punish his actions. The Court finds that the affidavits show that the costs and fees incurred are reasonable under the circumstances of the case, and therefore, recommends that Plaintiffs be awarded the full amount requested.
III. RECOMMENDATION
Because Defendant has failed to appear in the action, the Court has granted default in this action. Based on Plaintiffs' Motion for Assessment of Damages and Costs and Defendant's failure to respond, the Court recommends that judgment be entered against Defendant in accordance with the terms set forth by Plaintiffs. Accordingly, the Court
RECOMMENDS that Plaintiffs be awarded statutory damages of $750.00 per infringement for a total of $6000.00. It further
RECOMMENDS that Plaintiffs be awarded an injunction prohibiting Defendants from further infringing Plaintiffs' copyrighted sound recordings through use of any online media distribution system. It further
RECOMMENDS that Plaintiffs be awarded costs of $205.00 and attorneys' fees of $5,697.63. It also
RECOMMENDS that Plaintiffs be awarded post-judgment interest at the current rate, as calculated on the date judgment is entered, until all damages and costs are paid by Defendant.