Establishing Copyright Damages When Party Moves for Summary Judgment

In opining on actual damages, Dash's expert Michael Einhorn cited song-licensing fees that several other artists received from the use of their compositions at Wrestlemania XXIV. Einhorn then calculated Dash's actual damages at a maximum of $3,000. As to WWE's profits from the alleged infringement, Einhorn examined WWE's Wrestlemania XXIV profit streams, the net value of Mayweather's appearance to WWE and the financial worth of “Yep” to that event. Einhorn then calculated that $541,521 of WWE's Wrestlemania XXIV net profits were attributable to Dash's “Tony Gunz Beat.” Einhorn further calculated that $480,705 of Mayweather's net profits from the pay-per-view appearance were due to Dash's beat track. Less the $3,000 in calculated actual damages, Einhorn opined that Dash was entitled to $1,019,226 from the defendants. (Einhorn said he didn't obtain enough information to offer a damages calculation for the use of “TGB” on RAW.)

But citing the parties' revenues stipulation, the district court granted summary judgment for the defendants and ordered that the case be closed. The district court ruled that Dash had failed to carry his initial burden of proof of a casual connection between the defendants' net profits and the use of Dash's music track. As to actual profits, the district court found Einhorn's $3,000 market value to be too speculative, considering Dash's lack of income from his music, and the success differences between Dash and the artists that Einhorn included in the actual damages determination.

Looking at Dash's claim for actual damages, the appeals court cited the Second Circuit's view that, though the Copyright Act doesn't define “actual damages,” they are to be “broadly construed to favor victims of infringement.” See, On Davis v. The Gap Inc., 246 F.3d 152 (2d Cir. 2001). Citing both Second and Ninth Circuit precedent, the Fourth Circuit observed that generally, using an objective analysis, “'the primary measure of recovery is the extent to which the market value of the copyrighted work at the time of the infringement has been injured or destroyed by the infringement.'” See, e.g., Fitzgerald Publ'g Co. Inc. v. Baylor Publ'g Co. Inc., 807 F.2d 1110 (2d Cir. 1986), and Mackie v. Reiser, 296 F.3d 909 (9th Cir. 2002). Market value measures may include a copyright owner's financial loss from infringement, or relevant licensing fees based on an objective willing buyer/willing seller standard.

The Fourth Circuit then found that the Mayweather defendants/appellees had met their summary judgment burden of demonstrating there was no genuine issue of material fact as to actual damages. According to the appeals court, “Appellees satisfied this initial burden by providing the district court with Dash's admission that he had never commercially exploited TGB, with copies of Dash's income tax returns from 2003 to present (none of which reflect income related to the sale or licensing of any musical composition), and with Dash's failure to offer any other proof that he had previously sold one of his beats.”

After noting that “wrestling shows have become a very important venue for the performance and synchronization of music,” Einhorn's report stated that the factors for determining fair market value of a music use license can include “previous popularity of the work, reputation of songwriter, the presence of a released sound recording, and the possibility of a new recording in the studio.” But Einhorn didn't look at comparable Wrestlemania song licenses or agreements with Mayweather that address song valuation. Instead, Dash's expert examined Wrestlemania XXIV licenses for songs from several established artists: Fuel, Red Hot Chili Peppers and Snoop Dogg (two licenses for the latter). Here, Einhorn acknowledged, “Neither Y[ep] nor [TGB] were commercial[ly] released at any previous time,” while the four songs that the expert considered had each been previously released by a major record company and involved master use rights licensed to WWE for the sound recordings.

Einhorn had also considered work- for-hire agreements for artists to create new music for Wrestlemania XXIV but, the appeals court observed, “without any mention of how or whether the benchmark work-for-hire contracts factored into his analysis and without revisiting the maximal sum assigned to TGB based on the four benchmark licensing contracts he had previously reviewed.”

The Fourth Circuit then concluded that “referencing TGB's maximal value without any actual mention of a minimum value” or even one that could be implied made Einhorn's report too speculative for determining actual damages. The appeals court did qualify its finding by recognizing that “it may be difficult or impossible for a first-timer, such as Dash, to identify” comparable works. “Accordingly,” the appeals court continued, “so long as a copyright holder's entitlement to lost licensing fees is not based on 'undue speculation,' '504(b) does not require summary judgment of such a claim simply because it is based on non-comparable benchmarks.” But the copyright holder can't rely only on non-comparable works to carry his burden of proof, the appeals court cautioned.

Finally, to be awarded a defendant's attributable profits from infringement, a copyright owner needs to show a reasonable connection between the infringement and those profits. The Fourth Circuit noted that “in order for a conceivable connection to exist, the connection between the infringement and the revenues must be 'at least hypothetically possible.'”

But, for example, the appeals court found “it 'defies credulity that a consumer would purchase' home videos of Wrestlemania XXIV simply to hear 'Yep' played when Mayweather entered the ring '” Thus, the court concluded in affirming summary judgment in favor of Mayweather and WWE, “Dash has rested his case on the fact that those revenues derive from products that peripherally include infringing content. This is insufficient.”

Stan Soocher is Editor-in-Chief of The Intellectual Property Strategist's sibling newsletter,'Entertainment Law & Finance. A tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus, he can be reached at [email protected] or via www.stansoocher.com.

Section 504(b) of the Copyright Act allows a copyright owner to obtain both the owner's actual damages as well as an infringer's profits attributable to the infringed work that weren't included in the actual damages award. What are the burdens of proof when a copyright infringement plaintiff seeks this recovery after a pre-trial summary judgment motion has been filed? How does an expert's report work into this? These issues were recently examined in a lengthy opinion from the U.S. Court of Appeals for the Fourth Circuit. Dash v. Mayweather, 12-1899. This article primarily discusses the court's analysis of the expert witness report.

The case involved a copyright infringement suit by musician Anthony Lawrence Dash that alleged his “Tony Gunz Beat (TGB)” track was used without his permission as the basis for entry music for boxer Floyd Mayweather Jr. at two World Wrestling Entertainment (WWE) events ' the pay-per-view Wrestlemania XXIV and on the weekly TV show RAW. The song that was broadcast was titled “Yep,” which added lyrics written by Mayweather and Cory Harris to Dash's beat track.

After Dash sued Mayweather and WWE in the U.S. District Court for the District of South Carolina, the parties stipulated that Dash had “adduced no evidence that the playing of the 'Yep' song at Wrestlemania XXIV or the Aug. 24, 2009 RAW show increased any of the WWE revenue streams ' beyond that which would have existed without the song 'Yep.'” In addition, Dash and the defendants filed a joint motion requesting the district court to rule on his '504 damages claim prior to a liability determination.

In opining on actual damages, Dash's expert Michael Einhorn cited song-licensing fees that several other artists received from the use of their compositions at Wrestlemania XXIV. Einhorn then calculated Dash's actual damages at a maximum of $3,000. As to WWE's profits from the alleged infringement, Einhorn examined WWE's Wrestlemania XXIV profit streams, the net value of Mayweather's appearance to WWE and the financial worth of “Yep” to that event. Einhorn then calculated that $541,521 of WWE's Wrestlemania XXIV net profits were attributable to Dash's “Tony Gunz Beat.” Einhorn further calculated that $480,705 of Mayweather's net profits from the pay-per-view appearance were due to Dash's beat track. Less the $3,000 in calculated actual damages, Einhorn opined that Dash was entitled to $1,019,226 from the defendants. (Einhorn said he didn't obtain enough information to offer a damages calculation for the use of “TGB” on RAW.)

But citing the parties' revenues stipulation, the district court granted summary judgment for the defendants and ordered that the case be closed. The district court ruled that Dash had failed to carry his initial burden of proof of a casual connection between the defendants' net profits and the use of Dash's music track. As to actual profits, the district court found Einhorn's $3,000 market value to be too speculative, considering Dash's lack of income from his music, and the success differences between Dash and the artists that Einhorn included in the actual damages determination.

Looking at Dash's claim for actual damages, the appeals court cited the Second Circuit's view that, though the Copyright Act doesn't define “actual damages,” they are to be “broadly construed to favor victims of infringement.” See, On Davis v. The Gap Inc., 246 F.3d 152 (2d Cir. 2001). Citing both Second and Ninth Circuit precedent, the Fourth Circuit observed that generally, using an objective analysis, “'the primary measure of recovery is the extent to which the market value of the copyrighted work at the time of the infringement has been injured or destroyed by the infringement.'” See , e.g. , Fitzgerald Publ'g Co. Inc. v. Baylor Publ'g Co. Inc. , 807 F.2d 1110 (2d Cir. 1986), and Mackie v. Reiser, 296 F.3d 909 (9th Cir. 2002). Market value measures may include a copyright owner's financial loss from infringement, or relevant licensing fees based on an objective willing buyer/willing seller standard.

The Fourth Circuit then found that the Mayweather defendants/appellees had met their summary judgment burden of demonstrating there was no genuine issue of material fact as to actual damages. According to the appeals court, “Appellees satisfied this initial burden by providing the district court with Dash's admission that he had never commercially exploited TGB, with copies of Dash's income tax returns from 2003 to present (none of which reflect income related to the sale or licensing of any musical composition), and with Dash's failure to offer any other proof that he had previously sold one of his beats.”

After noting that “wrestling shows have become a very important venue for the performance and synchronization of music,” Einhorn's report stated that the factors for determining fair market value of a music use license can include “previous popularity of the work, reputation of songwriter, the presence of a released sound recording, and the possibility of a new recording in the studio.” But Einhorn didn't look at comparable Wrestlemania song licenses or agreements with Mayweather that address song valuation. Instead, Dash's expert examined Wrestlemania XXIV licenses for songs from several established artists: Fuel, Red Hot Chili Peppers and Snoop Dogg (two licenses for the latter). Here, Einhorn acknowledged, “Neither Y[ep] nor [TGB] were commercial[ly] released at any previous time,” while the four songs that the expert considered had each been previously released by a major record company and involved master use rights licensed to WWE for the sound recordings.

Einhorn had also considered work- for-hire agreements for artists to create new music for Wrestlemania XXIV but, the appeals court observed, “without any mention of how or whether the benchmark work-for-hire contracts factored into his analysis and without revisiting the maximal sum assigned to TGB based on the four benchmark licensing contracts he had previously reviewed.”

The Fourth Circuit then concluded that “referencing TGB's maximal value without any actual mention of a minimum value” or even one that could be implied made Einhorn's report too speculative for determining actual damages. The appeals court did qualify its finding by recognizing that “it may be difficult or impossible for a first-timer, such as Dash, to identify” comparable works. “Accordingly,” the appeals court continued, “so long as a copyright holder's entitlement to lost licensing fees is not based on 'undue speculation,' '504(b) does not require summary judgment of such a claim simply because it is based on non-comparable benchmarks.” But the copyright holder can't rely only on non-comparable works to carry his burden of proof, the appeals court cautioned.

Finally, to be awarded a defendant's attributable profits from infringement, a copyright owner needs to show a reasonable connection between the infringement and those profits. The Fourth Circuit noted that “in order for a conceivable connection to exist, the connection between the infringement and the revenues must be 'at least hypothetically possible.'”

But, for example, the appeals court found “it 'defies credulity that a consumer would purchase' home videos of Wrestlemania XXIV simply to hear 'Yep' played when Mayweather entered the ring '” Thus, the court concluded in affirming summary judgment in favor of Mayweather and WWE, “Dash has rested his case on the fact that those revenues derive from products that peripherally include infringing content. This is insufficient.”

Stan Soocher is Editor-in-Chief of The Intellectual Property Strategist's sibling newsletter,'Entertainment Law & Finance. A tenured Associate Professor of Music & Entertainment Industry Studies at the University of Colorado's Denver Campus, he can be reached at [email protected] or via www.stansoocher.com.