Opinion
06 Civ. 6204 (CM) (KNF).
July 18, 2007
REPORT RECOMMENDATION
I. INTRODUCTION
Masterfile Corporation ("Masterfile") brought this action against J.V. Trading (Glendale) Ltd. ("J.V.") to recover damages for the defendant's infringement of the plaintiff's copyrighted photographic images. The plaintiffs claims are brought pursuant to the Copyright Act, 17 U.S.C. §§ 101, et seq.
Upon the defendant's failure to file an answer or otherwise respond to the complaint, the Honorable Richard C. Casey ordered that a judgment by default be entered against it. Thereafter, Judge Casey referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded against the defendant.
After the Honorable Richard C. Casey passed away, this case was assigned to your Honor.
The Court directed the plaintiff to serve and file proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action, and its attorney's fees. The Court also directed the defendant to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law it deemed appropriate. The defendant did not file anything in opposition to the plaintiff's submissions.
The plaintiff's submissions aver that it is entitled to recover statutory damages in an amount of $44,800 for the defendant's infringement of the plaintiff's eight copyrighted photographic images and $2,016.91 for attorney's fees and costs that it incurred in litigating the action.
II. BACKGROUND
When a defendant defaults in an action, by failing to plead or otherwise defend against a complaint, the defendant is deemed to have admitted every well-pleaded allegation of the complaint except those relating to damages. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). In addition, the plaintiff is entitled to all reasonable inferences from the evidence presented. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Based upon the submissions made by the plaintiff, the complaint filed in the instant action, and the Court's review of the entire court file in this action, the following findings of fact are made.
The plaintiff is an independent stock photography company. It licenses reproduction rights in existing photographic images to users for a fee. The defendant sells and distributes Asian food products. The defendant maintains a website for advertising and promoting its products.
On or about January 6, 2005, the plaintiff learned from PicScout, an online searching service it employs, that the defendant was displaying eight of the plaintiff's copyrighted photographic images on J.V.'s website. Thereafter, on or about February 14, 2005, the plaintiff notified the defendant of its unauthorized use of the images. Upon receiving no response from the defendant, the plaintiff sent a second notice to the defendant on March 8, 2005. Two days later, the plaintiff received an e-mail message from Michael Zhang ("Zhang") claiming the defendant no longer existed. On March 21, 2005, the plaintiff sent a third notice to the defendant. In its third notice to the defendant, the plaintiff offered the defendant an opportunity to enter into a retroactive license agreement with it for the use of the eight photographic images. On or about March 24, 2005, Masterfile received a second e-mail message from Zhang alleging the defendant's website was designed by a Canadian company. Sometime between April and May 2005, the plaintiff's photographic images were removed from the defendant's website. The plaintiff contends that its photographic images were displayed on the defendant's website, without authorization, from June 1, 2002, through April or May 2005.
The plaintiff holds valid copyright registrations for the eight photographic images.
III. CONCLUSIONS OF LAW
A default judgment in an action establishes liability, but is not a concession of damages. See Cappetta v. Lippman, 913 F. Supp. 302, 304 (S.D.N.Y. 1996) (citing Flaks v. Koegel, 504 F.2d 702, 707 [2d Cir. 1974]). Damages must be established by a plaintiff in a post-default inquest. See id. In conducting an inquest, a court need not hold a hearing "as long as it [has] ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). The court may rely on affidavits or documentary evidence in evaluating the fairness of the sum requested. See Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993).
Statutory Damages
The plaintiff has elected to recover statutory damages from the defendant pursuant to 17 U.S.C. § 504. The relevant provision of that statute follows:
[T]he 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.17 U.S.C. § 504(c)(1).
Once a plaintiff elects to recover statutory damages, pursuant to 17 U.S.C. § 504(c), a court has broad discretion in awarding the specific amount of statutory damages. See Fitzgerald Publ'g Co. v. Baylor Publ'g, 807 F.2d, 1110, 1116 (2d Cir. 1986). In determining an award, a court may consider a variety of factors, including: the expenses saved and profits reaped by the defendant; the value of the copyright; the deterrent effect of the award on other potential infringers; the innocence or willfulness of the infringer's conduct; whether the defendant has cooperated in providing records from which to assess the value of the infringing materials produced; and the potential of the award for discouraging the defendant. See id. at 1117.
In the instant action, the plaintiff requests an award of $5,600 from the defendant for each of the eight infringed photographic images. The plaintiff contends that had the defendant entered into a license agreement with it, for the use of the eight photographic images, the plaintiff would have received approximately $1,000, per image, during the relevant time period. Moreover, although the plaintiff has not requested damages based on the defendant's willful conduct, as provided for in 17 U.S.C. § 504(c)(2), willfulness is relevant to the Court's analysis, see id., and has been demonstrated by: (1) J.V.'s knowledge of its infringing conduct; and (2) its delay in removing the plaintiff's photographic images from its website for several months after it received notice from the plaintiff that the photographic images were copyright-protected. The plaintiff also contends an award of $5,600, per image, will deter the defendant from future infringing conduct.
The Court finds that an award of $5,600 for each of the eight infringed photographic images is appropriate. This amount will compensate the plaintiff for its loss, which was approximately $3,000 per image, and will deter the defendant, as well as the public, from engaging in infringing conduct. See Van Der Zee v. Greenidge, No. 03 Civ. 8659, 2006 WL 44020, at *2 (S.D.N.Y. Jan. 6, 2006) (awarding $6,000 in statutory damages per infringed photograph, which was double the fee plaintiff would have received had the defendant entered into a licensing agreement with the plaintiff to use the copyrighted photographs).
The retroactive license fee that the plaintiff offered the defendant, in March 2005, was approximately $1,000, per year, for each of the plaintiff's eight photographic images. Therefore, had the defendant entered into a retroactive license agreement with the plaintiff, the plaintiff would have received approximately $3,000 from the defendant, for each of the plaintiff's eight photographic images, during the relevant time period.
Injunctive Relief
In addition to monetary relief, the plaintiff seeks a permanent injunction barring the defendant from infringing the plaintiff's copyright-protected photographic images in the future. Section 502(a) of the Copyright Act provides for injunctive relief:
Any court having jurisdiction of a civil action arising under this title may, subject to the provisions of section 1498 of title 28, 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.
To obtain a permanent injunction, a plaintiff must demonstrate (1) actual success on the merits and (2) irreparable harm. See e.g., Gucci America, Inc. v. Duty Free Apparel, Ltd., 286 F. Supp. 2d 284, 290 (S.D.N.Y. 2003). "[A]n injunction is an 'extraordinary remedy' which ordinarily should not be granted where a plaintiff has not proven a probability or threat of continuing or additional infringements." Dolori Fabrics, Inc. v. Limited, Inc., 662 F. Supp. 1347, 1358 (S.D.N.Y. 1987) (citation omitted).
In the instant case, the plaintiff has established success on the merits of its Copyright Act claims by virtue of the defendant's default. See Cotton, 4 F.3d at 181. However, since the defendant removed the plaintiff's copyrighted photographic images from the its website, there is no continuing violation of the plaintiff's copyrights. Furthermore, the plaintiff has failed to demonstrate any probability that the defendant will engage in infringing conduct in the future. Accordingly, the Court finds the plaintiff is not entitled to a permanent injunction.
Attorney's Fees and Costs
Section 505 of the Copyright Act provides that the court may, in its discretion, award full costs to a prevailing party in a civil copyright action. Costs may include reasonable attorney's fees. See 17 U.S.C. § 505. An award of attorney's fees is appropriate where a defendant infringes a plaintiffs copyright willfully. See Kepner-Tregoe, Inc. v. Vroom, 186 F.3d 283, 289 (2d Cir. 1999). Here, in light of the willful nature of the infringement by the defendant, an award of costs and attorney's fees is appropriate.
When fixing the appropriate amount to be awarded for attorney's fees, the Second Circuit Court of Appeals has directed that the "presumptively reasonable fee" method be employed. Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, ___ F.3d ___, 2007 WL 2004106, at *6 (2d Cir. July 12, 2007). To determine what a presumptively reasonable fee is, a court has to decide upon a reasonable hourly rate, bearing in "mind all of the case-specific variables that [the Second Circuit] and other courts have identified as relevant to the reasonableness of attorney's fees." Id. at *7. These variables include: "(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to acceptance of the case; (5) the attorney's customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the "undesirability" of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases." Arbor Hill, 2007 WL 2004106, at *4, n. 3 (citing Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-719 [5th Cir. 1974]). In the final analysis, a reasonable hourly rate is "the rate a paying client would be willing to pay." Id. at *7.
In the Second Circuit, a party seeking an award of attorney's fees must support that request with contemporaneous time records that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Attorney fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154.
In prosecuting this action against the defendant, the plaintiff engaged the services of the law firm Cowan, DeBaets, Abrahams Sheppard, LLP. Zehra J. Abdi, Esq. ("Abdi"), an attorney with the law firm, submitted an affidavit setting forth: (a) the billing rate at which she and Nancy Wolff, Esq. ("Wolff"), a partner at the law firm, performed legal services for the plaintiff; and (b) information about their professional backgrounds and experiences.
Contemporaneous time records were also submitted to the Court. The time records indicate that the plaintiff incurred attorney's fees for 13.7 hours of work Abdi performed, at an hourly rate of $100, prior to January 1, 2007, and at an hourly rate of $135, after January 1, 2007, and for .4 hours of work performed by Wolff, at an hourly rate of $320.
Based upon the factors identified in Arbor Hill, which the Court has considered, the Court's review of the submissions by the plaintiff, which identify the services performed by counsel, the Court's understanding of the hourly rates charged by private law firms in the community, and the Court's understanding that corporate clients, like the plaintiff, often negotiate with their attorneys to pay the lowest fee necessary to litigate their case effectively, see Arbor Hill, 2007 WL 2004106, at *7, the Court finds that: (1) the above-noted hourly rates are reasonable, and (2) $1,495.50 in attorney's fees were reasonably incurred by the plaintiff in prosecuting this action against the defendant. Accordingly, granting the plaintiff's request for an award of attorney's fees is appropriate.
The plaintiff also requests an award for costs, in the amount of $521.41. In support of its request, the plaintiff has submitted records for the expenses that it incurred in prosecuting this action. These costs consist of: filing fees; process service fees; legal research fees; and Federal Express shipping fees. The Court finds these costs are reasonable. Accordingly, permitting the plaintiff to recover $521.41, for its costs, is also appropriate.
IV. RECOMMENDATION
For the reasons set forth above, the Court recommends that the plaintiff be awarded $44,800, plus post-judgment interest, in an amount to be calculated by the Clerk of Court pursuant to 28 U.S.C. § 1961(a), and attorney's fees and costs in the amount of $2,016.91.
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The plaintiff shall serve the defendant with a copy of this Report and Recommendation and submit proof of service to the court.
V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Colleen McMahon, United States District Judge, 500 Pearl St., Room 640, New York, New York 10007, and to the chambers of the undersigned, 40 Centre St., Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge McMahon. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).