How Defendant's Prior Conduct Can Impact Copyright Cases

To prove “willfulness,” the plaintiff must demonstrate: “(1) that the defendant was actually aware of the infringing activity, or (2) that the defendant's actions were the result of 'reckless disregard' for, or 'willful blindness' to, the copyright holder's rights.” Unicolors Inc. v. Urban Outfitters Inc., 853 F.3d 980 (9th Cir. 2017).

When looking to an infringer's state of mind, courts consider several factors. These include: “whether the infringer was on notice that the copyrighted work was protected; whether the infringer had received warnings of the infringements; as well as whether the infringer had experience with previous copyright ownership, prior lawsuits regarding similar practices, or work in an industry where copyright is prevalent.” Marshall v. Marshall, 08 CV 1420 (E.D.N.Y. 2012), aff'd, 504 F. Appx. 20 (2d Cir. 2012).

Numerous courts have held that prior lawsuits and settlements support a finding of willfulness. See, e.g., Stevens v. Aeonian Press Inc., 00 Civ. 6330 (S.D.N.Y. 2002) (finding willful infringement based on evidence that included “records of other lawsuits filed against Defendants for similar activities, and a settlement entered into with respect to one such action”).

Notably, there is no requirement that the prior litigation have a relationship with the case at bar. Courts have taken into account previous copyright infringement (and other) lawsuits brought against the defendants by different plaintiffs and concerning different matters. In CoStar Realty Information Inc. v. RealMassive Inc., 1:15-cv-440 (W.D.Tex. 2015), a case in which the authors' firm represented the plaintiff. CoStar brought suit charging that RealMassive's website, displaying real estate listings and photographs, had in significant part been copied from other websites without authorization and displayed CoStar's copyrighted photographs. RealMassive sought to strike one section of the complaint, which alleged that RealMassive's co-founder had been involved — directly and indirectly — in previous intellectual property lawsuits and had made public comments hostile to intellectual property rights.

Through a previous venture, RealMassive's co-founder played a role in two prior lawsuits brought by Craigslist, which alleged, among other things, violations of website terms of use, the Digital Millennium Copyright Act (DMCA; http://1.usa.gov/1W4wece), 17 U.S.C. §1201 et seq., the Lanham Act, and the Computer Fraud and Abuse Act (CFAA http://bit.ly/Jz0c3n), 18 U.S.C. §1030. He had been deposed in both cases, but a defendant in only one of the two. Separately, the co-founder had publicly questioned the “fairness” of laws that protected CoStar's intellectual property. In the CoStar case, the defendants argued that the suit in which the cofounder had been a defendant had not alleged copyright infringement; that both suits ended in default judgments; and that the earlier lawsuits concerned different parties and industries as well as different claims.

The CoStar court was “not convinced” by the defendants' arguments. It observed that “[e]ven if, as Defendants contend, McClure was never found liable for violation of copyright law in the prior suits involving him, the prior suits could certainly support a conclusion that he was aware of copyright law and his obligations thereunder.” The Texas district court cited the Fifth Circuit's rejection of a challenge to a statutory damages award when the defendant “[was] not unfamiliar with [] copyright laws.” Lance v. Freddie Records Inc., 92-7561 (5th Cir. 1993) (unpublished decision) (“Perhaps most importantly, the district court found that Freddie Records was not a neophyte in the music industry. Rather, this was an organization with over 20 years in the music business. Consequently, it was quite familiar with the applicable copyright laws. The finding of willful copyright infringement is adequately supported by the record, and is not clearly erroneous.”).

Among other decisions that have endorsed the principle that, even where different plaintiffs brought the prior suits, a history of copyright infringement or similar allegations supports a willfulness determination are Steinmetz v. Houghton Mifflin Harcourt Publishing Co., 14-1937 (E.D.Pa. 2014) (collecting cases and permitting discovery of “settlements by defendant of unrelated claims” but refusing to compel the defendant to search files and produce non-filed claims or settlement agreements of those claims) and EMI Entertainment World Inc. v. Karen Records Inc., 806 F. Supp. 2d 697 (S.D.N.Y. 2011) (“Defendants do not appear to dispute that they had been sued on several previous occasions, including once by EMI, regarding unpaid royalties”), vacated on other grounds, S.D.N.Y. 2013.

Other willfulness cases have found a defendant's familiarity with intellectual property law to be relevant, even in the absence of prior litigation. See, e.g., Viacom International Inc. v. Fanzine International Inc., 98 Civ. 7448 (S.D.N.Y. 2001) (willful infringement where defendant was “a multi-national publishing company that publishes over 200 magazine[s] per year” and accordingly “is or should be familiar with copyright law and particularly with the general practice[s] of securing permission before reproducing copyrighted works”) and Castle Rock Entertainment v. Carol Publishing Group Inc., 955 F. Supp. 260 (S.D.N.Y. 1997) (evidence of willfulness where the defendant's publisher “testified that his company has had experience with the copyright laws, and that he is familiar with the requirements of those laws”), aff'd, 150 F.3d 132 (2d Cir. 1998); and Peer International Corp. v. Luna Records Inc., 887 F. Supp. 560 (S.D.N.Y. 1995) (“Moreover, as an author of musical compositions himself and an experienced musical publisher for about 10 to 12 years, who distributed all the major labels of Spanish music, [defendant's] conduct in ignoring the revocation of [plaintiff's] license[] demonstrates if not actual knowledge, reckless disregard for plaintiff'[s] copyrights.”).

In the Copyright Act's statutory damages scheme, a defendant's proof of “innocent infringement” lowers the floor on minimum statutory damages in the same way a plaintiff's proof of “willful infringement” raises the damages ceiling. See, 17 U.S.C. §504(c)(2). In order to rebut the innocent infringement affirmative defense, a plaintiff may rely on the same types of prior conduct that would support a willfulness finding. See, e.g., Boz Scaggs Music v. KND Corp., 491 F. Supp. 908 (D.Conn. 1980) (“[T]he defendants' conduct cannot be termed innocent. They had been sued once before for copyright infringement and although that case was settled, Dawson admits that since then he has been fully aware of the need to obtain the permission of a copyright owner before broadcasting that owner's composition on the radio.”).

Contributory infringement supports the imposition of copyright liability on a person who is not a direct infringer, but who has knowledge of the infringing activity and induces or materially contributes to the infringing conduct. In the Second Circuit, as well as most courts, “[t]he knowledge standard is an objective one; contributory infringement liability is imposed on persons who 'know or have reason to know' of the direct infringement.” Arista Records LLC v. Doe 3, 604 F.3d 110 (2d Cir. 2010). Also see, Parker v. Google Inc., 422 F. Supp. 2d 492 (E.D.Pa. 2006) (knowledge requirement includes “both those with actual knowledge and those who have reason to know of direct infringement), aff'd, 242 F. Appx. 833 (3d Cir. 2007); In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003) (endorsing constructive knowledge); and Fahmy v. Live Nation Entertainment Inc., 2:14-cv-01158 (C.D.Calif. 2015) (“In the Ninth Circuit, the knowledge requirement for contributory copyright infringement … include[s] both those with actual knowledge and those who have reason to know of direct infringement …. However, more than a generalized knowledge by the [defendant] of the possibility of infringement is required”).

Courts also impose contributory liability when there has been “willful blindness.” See, e.g., Broadcast Music Inc. v. Wexford INR LLC, 1:12-CV-1253 (N.D.N.Y. 2014) (ignoring BMI's letters and telephone calls, while performing musical compositions without authorization, constituted “willful blindness”).

For the purpose of contributory infringement, a defendant's knowledge may be established by evidence that, among other things, the defendant had previously been informed that it was publishing infringing content, or where it had “enforced intellectual property rights in other instances.” A&M Records Inc. v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001). “Evidence of actual and constructive knowledge may be found in cease-and-desist letters, officer and employee statements, promotional materials, and industry experience.” Smith v. BarnesandNoble.com LLC, 12-CV-4374 (S.D.N.Y. 2015) (quoting Capitol Records LLC v. ReDigi Inc., 934 F.Supp.2d 640 (S.D.N.Y. 2013).

Accordingly, in cases of contributory infringement, evidence of prior (mis)conduct, and prior industry experience, can help establish the knowledge requirement.

Under 17 U.S.C. §502(a), a court 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). Federal courts consider a copyright defendant's prior conduct, including past litigation, in weighing an award of injunctive relief. For example, in Flyte Tyme Tunes v. Miszkiewicz, 715 F. Supp. 919 (E.D.Wis. 1989), the district court found injunctive relief appropriate because prior lawsuits had not deterred the infringement which, unless restrained, would continue. See also, Broadcast Music Inc. v. McDade & Sons Inc., 928 F. Supp.2d 1120 (D.Ariz. 2013) (“Because Defendants received numerous calls, letters and cease and desist notices from BMI but did not cease infringement, a permanent injunction is warranted to prevent future copyright violations”).

Reviewing prior misconduct when evaluating the need for injunctive relief is not, of course, confined to the copyright context. However, when combined with the willingness of courts to consider a defendant's past in the context of liability (for contributory infringement), damages (as warranting enhanced statutory damages) and attorney fees, the copyright case is one context where the judicial system is particularly willing to learn, and apply, the lessons of a defendant's history.

*****
Nicholas Boyle is a partner with Williams & Connolly in Washington, DC. A co-chair of the law firm's Unfair Competition and Trade Secrets practice group, Boyle handles a wide variety of litigation, with an emphasis on complex civil cases with an international component. He can be reached at [email protected]. Richard Olderman is a veteran appellate attorney with the firm who has litigated hundreds of civil and criminal cases in federal and state courts of appeals. He can be reached at [email protected]. This article originally appeared in The Intellectual Property Strategist, an LJN sibling publication of Entertainment Law & Finance.