Decision of Note: <b>Copyright Ruling On Suit Time, Damages</b>

In a case with several notable aspects, the U.S. Court of Appeals for the Ninth Circuit held that under Sec. 507(b) of the Copyright Act of 1976, a plaintiff can file suit for alleged infringements that occur more than 3 years before the filing of the complaint, as long as the plaintiff didn't, or reasonably couldn't have, discovered the allegedly infringing activity within the Act's 3-year limitation period. Polar Bear Productions Inc. v. Timex Corp., 03-35188. Polar Bear filed suit claiming that Timex had used beyond a licensing term the promotional footage produced for Timex by the plaintiff.

In addition to its filing-period ruling, the Ninth Circuit reaffirmed the principle that to recover actual damages and the infringer's attributable profits under 17 U.S.C. 504(b), a plaintiff must establish a causal link between infringement and the economic recovery sought. The appeals court then found sufficient evidence of lost licensing fees but called Polar Bear's claim of lost profits based on an alleged inability to fund the production of copies of the footage for individual sales too “pie-in-the-sky.” According to the court, “Although it is hypothetically possible that Polar Bear's business venture would have been more successful if it had greater access to cash, Timex's failure to pay license fees for the use of the footage was not the cause of Polar Bear's inability to put 10,000 copies of [the promotional footage] 'PaddleQuest' on the market. … Importantly, in 1995 Polar Bear had no knowledge of Timex's infringement and certainly could not have relied upon the prospect of payment for Timex's use of 'Paddle-Quest.' Indeed, had Polar Bear been aware of Timex's infringement at that time, its copyright claims would be barred under the 3-year limit imposed by 17 U.S.C. '507(b).”

“For indirect profits,” the court then noted, “a copyright owner is required to do more initially than toss up an undifferentiated gross revenue number; the revenue stream must bear a legally significant relationship to the infringement.” (Section 504(b) states on the surface that a copyright plaintiff must present proof only of an infringer's gross revenue; the infringer then must show deductible expenses and the portion of profit attributable to factors other than the plaintiff's work.) In this case, the appeals court emphasized that Polar Bear had failed to present substantial evidence of a causal link between Timex's use of the promotional footage and any enhanced prestige to Timex's line of watches.

The Ninth Circuit also ruled, in an issue of first impression that prejudgment interest is available under the 1976 Copyright Act. The appeals court had previously held the same for the Copyright Act of 1909.

In a case with several notable aspects, the U.S. Court of Appeals for the Ninth Circuit held that under Sec. 507(b) of the Copyright Act of 1976, a plaintiff can file suit for alleged infringements that occur more than 3 years before the filing of the complaint, as long as the plaintiff didn't, or reasonably couldn't have, discovered the allegedly infringing activity within the Act's 3-year limitation period. Polar Bear Productions Inc. v. Timex Corp., 03-35188. Polar Bear filed suit claiming that Timex had used beyond a licensing term the promotional footage produced for Timex by the plaintiff.

In addition to its filing-period ruling, the Ninth Circuit reaffirmed the principle that to recover actual damages and the infringer's attributable profits under 17 U.S.C. 504(b), a plaintiff must establish a causal link between infringement and the economic recovery sought. The appeals court then found sufficient evidence of lost licensing fees but called Polar Bear's claim of lost profits based on an alleged inability to fund the production of copies of the footage for individual sales too “pie-in-the-sky.” According to the court, “Although it is hypothetically possible that Polar Bear's business venture would have been more successful if it had greater access to cash, Timex's failure to pay license fees for the use of the footage was not the cause of Polar Bear's inability to put 10,000 copies of [the promotional footage] 'PaddleQuest' on the market. … Importantly, in 1995 Polar Bear had no knowledge of Timex's infringement and certainly could not have relied upon the prospect of payment for Timex's use of 'Paddle-Quest.' Indeed, had Polar Bear been aware of Timex's infringement at that time, its copyright claims would be barred under the 3-year limit imposed by 17 U.S.C. '507(b).”

“For indirect profits,” the court then noted, “a copyright owner is required to do more initially than toss up an undifferentiated gross revenue number; the revenue stream must bear a legally significant relationship to the infringement.” (Section 504(b) states on the surface that a copyright plaintiff must present proof only of an infringer's gross revenue; the infringer then must show deductible expenses and the portion of profit attributable to factors other than the plaintiff's work.) In this case, the appeals court emphasized that Polar Bear had failed to present substantial evidence of a causal link between Timex's use of the promotional footage and any enhanced prestige to Timex's line of watches.

The Ninth Circuit also ruled, in an issue of first impression that prejudgment interest is available under the 1976 Copyright Act. The appeals court had previously held the same for the Copyright Act of 1909.