Court Denies Emotional Distress Damages for Copyright Infringement

In an October 19, 2015 ruling, Judge Paul A. Englemayer ruled that emotional distress damages are not recoverable for copyright infringement.  The pro se plaintiff had asserted a separate claim for "mental anguish," contending that "he has 'suffered from feelings of distress, anxiety and depression, which interferes with his creative ability, hinders his inspiration to write and consequently stagnates his income'" because of the defendants' infringement of his song.  Judge Engelmayer construed "this allegation, although presented as a claim for liability, to describe a category of alleged damages," and ruled that "such damages fall outside the remedies statutorily authorized for copyright infringement."

Court Awards Statutory Copyright Infringement Damages of $750 Per Infringement

In a May 22, 2014 ruling, Judge Paul A. Engelmayer granted the plaintiffs’ unopposed motion to award statutory copyright damages of $750 for each of three copyrights that the defendant had previously been found to infringe. Although the Court did not reach the issue of whether the infringement was innocent, Judge Engelmayer wrote that the $750 award was justified irrespective of the innocence of the infringement. The Court also dismissed the plaintiffs’ motion to voluntarily dismiss with prejudice their remaining claims, finding that a dismissal with prejudice will benefit, not harm, the defendant.

Court Dismissed Patent and Trademark Infringement Claims on Exhaustion and First Sale Grounds

In an April 23, 2014 ruling, Judge Paul A. Engelmayer dismissed the plaintiff’s patent infringement claims on the grounds of exhaustion and dismissed the trademark infringement claims because the goods at issue were genuine even if they had been sold in unauthorized markets. With regard to patent exhaustion, there was no dispute that the patented goods had been purchased from the patent owner exhausting the patent protection, although the plaintiff contended that they had been sold in violation of contractual restrictions. Relying on the Supreme Court’s decision in Quanta Computer, Inc. v. LG Elecs., Inc., 553 U.S. 617 (2008), Judge Engelmayer ruled that the patent protection was exhausted despite the contractual breach, writing that “Quanta precludes the argument that any failure by a party to abide by any contractual condition in an agreement involving a patented device will revive an otherwise exhausted patent so as to permit the patentholder to sue for infringement, as opposed to, e.g., breach of contract.”

The Court dismissed the plaintiff’s trademark-related claims on analogous grounds of the “first sale doctrine.” Judge Engelmayer wrote that there can be no trademark infringement if genuine goods are at issue even if those goods are sold in violation of contractual restrictions.

In a follow up May 7, 2014 ruling, Judge Engelmayer declined to exercise supplemental jurisdiction over the remaining state law claims, and dismissed the entire action.

Court Granted Defendant’s Motion In Limine and Plaintiff’s Motion To Amend The Complaint, and Denied Plaintiff’s Motion To Preclude Expert Testimony in Connection with Plaintiff’s Copyright Infringement Claims.

In a March 18, 2014 Opinion and Order, Judge Paul A. Engelmayer: (1) granted defendant Monster Energy Company’s motion in limine; (2) granted the plaintiff Beastie Boys’ motion for leave to file its proposed Amended Complaint; and (3) denied the Beastie Boys’ motion to preclude certain expert testimony in the plaintiff’s copyright infringement and Lanham Act action.

Defendants sought to exclude videos other than the allegedly infringing video at issue. In considering the motion in limine, court found that the plaintiff offered little more than the ostensibly infringing videos in support of its argument that the defendant’s conduct in this case was willful. The court reasoned that the jury, told only of the fact of these other alleged violations of the plaintiff’s rights, would be given no reliable means whatsoever to assess whether the defendant acted willfully in connection with the video at issue. Accordingly, defendant’s motion in limine to preclude the plaintiff from presenting evidence the alleging infringing videos at trial was granted.

Court Denied in Part, and Granted in Part, Defendant Monster Energy Company’s Motion To Preclude Plaintiff Beastie Boys’ Expert Witness Concerning Music Licensing.

In a March 6, 2014 Opinion and Order, the Honorable Paul A. Engelmayer denied defendant Monster Energy Company’s motion to preclude plaintiff Beastie Boys’ expert witness. The plaintiff intended to offer expert testimony from Lisa Thomas concerning the fair market value of (1) a license to use the musical composition and sound recordings included in the allegedly infringing video and (2) the implied endorsement allegedly created by defendant’s use of plaintiffs’ names and trademarks in the video. The defendant moved to preclude Thomas’s testimony from trial.

“Federal Rule of Evidence 702 grants an expert witness testimonial latitude unavailable to other witnesses, provided that (1) ‘the testimony is based on sufficient facts or data,’ (2) ‘the testimony is the product of reliable principles and methods,’ and (3) ‘the expert has reliably applied the principles and methods to the facts of the case.’” “The proponent of expert testimony has the burden of establishing by a preponderance of the evidence that the admissibility requirements of Rule 702 are satisfied.” The Court’s task “is to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field.” “A trial judge should exclude expert testimony if it is speculative or conjectural or based on assumptions that are so unrealistic and contradictory as to suggest bad faith.” Additionally, “an expert opinion requires some explanation as to how the expert came to his conclusion and what methodologies or evidence substantiate that conclusion.” Pursuant to Rule 403, the Court may also exclude evidence if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Important here, “[a] minor flaw in an expert’s reasoning or a slight modification of an otherwise reliable method will not render an expert’s opinion per se inadmissible.” “The judge should only exclude the evidence if the flaw is large enough that the expert lacks good grounds for his or her conclusions.” “This limitation on when evidence should be excluded accords with the liberal admissibility standards of the federal rules and recognizes that our adversary system provides the necessary tools for challenging reliable, albeit debatable, expert testimony.”

The defendant did not dispute Thomas’ expertise in music licensing, nor did it take issue with the five factors that Thomas stated, in her experience, usually affect the negotiated value of a music license. Instead, the defendant disputed her application of those factors to the facts at hand.

In the main, the Court found defendant’s objections were without merit, or went to the credibility of Thomas’s testimony, which were to be tested not by preclusion but by “[v]igorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof,” which “are the traditional and appropriate means of attacking shaky but admissible evidence.”

The defendant did have one trenchant objection to Thomas’s report and testimony. Thomas estimated the fair market value of an appropriate license based on a perpetual term of use. But the measure of damages must be based on “the use the infringer made,” not unrealized risks created by the infringer’s use. Thomas’s decision to value the license and implied endorsement based on a perpetual term of use, when the law requires her to use a five-week term of use, was not a “minor flaw.” Rather, “the flaw is large enough” that, while it remained a basis for her report, the report “lacks good grounds for [its] conclusions.” This flaw, however, was eminently correctable, the court ruled. Thomas was allowed to render a prompt, revised opinion, that valued the license based on a factually defensible assumption as to the term of use.

In a subsequent May 7, 2014 ruling,  Judge Engelmayer again refused to prohibit Thomas from testifying.  The defendant argued that Thomas's estimate of damages was so vague as to be illusory.  The Court wrote that Thomas "is not fairly to be faulted for acknowledging that inherent uncertainty in estimating the value of a unique, intangible good.  In acknowledging that uncertainty, Thomas, in fact, keeps company with the Second Circuit, which, when it first approved the method of measuring a copyright holder's actual damages through the fair market value of a hypothetical license fee, recognized the difficulty of that exercise."  The Court did, however, did preclude Thomas from testifying about the settlement of a widely-publicized dispute between the Beastie Boys and toymaker GoldieBlox under Federal Rule of Evidence 403.  Judge Engelmayer wrote that "the confusion and delay occasioned by introduction of evidence as to the GoldieBlox Settlement would substantially outweigh -- indeed, it would overwhelm -- the limited probative value of the GoldieBlox testimony."

Court Permits Email Sevice of Summons and Complaint

In a January 28, 2014 ruling, Judge Paul A. Engelmayer granted plaintiff Richard Noble’s motion for email service on the defendants, which consist of “a number of websites and individuals” that “are party of an intertwined, opaque online T-Shirt-selling enterprise that has sold T-Shirts bearing the ‘Bo Knows” photograph [of Bo Jackson], in violation of Noble’s rights” in the copyright of the photograph. Judge Engelmayer noted that alternative service was permitted under New York CPLR § 308(5) where traditional service is impractical, and ruled that “Noble has more than shown the impracticability of traditional service – he has shown that actual prior attempt, performed with due diligence, have been unsuccessful.” The Court also found that email service comports with Due Process because “Noble has served the defendants at email addresses that they listed on their websites and on confirmation emails sent to [Noble’s] lawyer, Edward Greenberg, after Greenberg purchased T-Shirts from defendants.” Judge Engelmayer was “persuaded that these emails are likely to reach the defendants. As a result, the email service comports with the requirements of due process.”

Court Dismisses Third Party Claim Seeking to Shift Blame for Copyright Infringement

In a November 4, 2013 ruling, Judge Paul A. Engelmayer granted summary judgment dismissing with prejudice the third party complaint of defendant Monster Energy Company against a disk jockey known as "Z-Trip" arising from The Beastie Boys' copyright infringement and Lanham Act claims against Monster Energy over a remix made by Z-Trip that included four Beastie Boys songs and that Monster Energy used in a promotional video.  The Beastie Boys sued Monster Energy for copyright infringement and a Lanham Act violation, and Monster Energy asserted a third party claim against Z-Trip for breach of contract and fraud in falsely representing that Z-Trip and Monster Energy had permission to use the Beastie Boys songs.

The underlying facts, briefly, are as follows:  In connection with their promotion of an upcoming album, the Beastie Boys authorized Z-Trip to make a Megamix of their older music, and to post it on his website for free download.  Monster Energy later hired Z-Trip to DJ at an event sponsored by Monster Energy, and recorded the event for a promotional video.  There were some brief conversations and email exchanges between a Monster employee and Z-Trip about what music Monster Energy could use for the video.  Z-Trip suggested the Beastie Boy Megamix, which was available for free download, but there was no discussion about permission or clearance to use the music.  The Monster Energy employee assumed from the mention of the free download that the Megamix was available for use in Monster Energy's promotional video.

Heightened Pleading Standard Applies to Patent Invalidity Counterclaims

In an August 7, 2013 ruling, Judge Paul A. Engelmayer granted-in-part the motion to strike certain affirmative defenses and to dismiss counterclaims of non-infringement and invalidity in plaintiff Orientview Technologies LLC's patent infringement action against Seven for All Mankind, LLC ("7FAM").  Most notably, the Court ruled that an invalidity counterclaim must meet the heightened pleading standards under Twombly  and Iqbal.  In dismissing the invalidity counterclaim under Fed. R. Civ. P. 12(b)(6), Judge Engelmayer noted the split in the cases about whether the relaxed pleading standard for patent infringement cases or the more rigorous Twombly and Iqbal standards applied, and held that "in the absence of any directive that claims of invalidity, like claims of direct infringement, should be measured under a different standard than almost all other claims in this Circuit are, the Court declines to do so." 

Regarding the affirmative defenses, while the motion was pending the parties agreed that two of the defenses at issue, concerning indirect infringement which was not alleged by plaintiff and injunctive relief which plaintiff had not sought, are not relevant to the case, and the Court struck them as "immaterial" under Fed. R. Civ. P. 12(f).  Plaintiff challenged a third affirmative defense, that the scope of the patent-in-suit was not broad enough to encompass the defendant's conduct, on the ground that it was duplicative of another defense that the defendant has not infringed any claim.  In denying the motion, Judge Engelmayer noted that courts have broad discretion in deciding motions to strike and that such motions are generally disfavored.  The Court found that to "the extent Overview argues that the defense is redundant, its retention poses no risk of prejudice to Overview which is already obligated to defend itself against" the supposedly duplicative defense and the non-infringement counterclaim.