The opinion of the court was delivered by: Kevin Thomas Duffy, District Judge.
Plaintiff Michael Sidney Luft commenced this copyright
infringement action in November 1985 against defendants Crown
Publishers, Inc. ("Crown"), Audiofidelity Enterprises, Inc.,
and Dante Pugliese (incorrectly named in this action as
"Daniel" Pugliese.) A default judgment was entered by me in
January 1988. Luft subsequently settled the action against
Crown and has been unable to proceed against Audiofidelity
because it is stayed in bankruptcy at this time. Pursuant to
the January 1988 default judgment, an inquest on damages was
held before Magistrate Judge James C. Francis IV on August 31,
1989. Familiarity with those proceedings is assumed. On January
17, 1990, I entered judgment in favor of Luft and against
Pugliese in the amount of $102,147.64 which constitutes
statutory damages, attorney's fees, and costs.
Luft is the sole and exclusive owner of the copyrights for 26
one-hour television programs known as "The Judy Garland Show"
("the Shows"). Copyrights for the Shows were duly registered
with the Register of Copyright.
Until August 1988, Pugliese was the president of
Audiofidelity, a publicly traded New Jersey corporation.
Audiofidelity purportedly purchased the master recordings at
issue in this case (containing performances of the singer Judy
Garland) from George Tucker pursuant to a written agreement
dated June 1, 1983. Tucker purported to have obtained his
rights at a sheriffs sale of the property at issue. Luft,
however, gave notice of his rights in the copyrighted materials
to Pugliese sometime in 1984. Apparently, Audiofidelity
manufactured, distributed, and sold record and tape productions
which consisted of copies of material performed on the Shows
and protected by Luft's copyrights after notice was given.*fn1
Pugliese maintains that he should not be held jointly and
severally liable for Audiofidelity's infringement because he
was a mere shareholder of the corporation, not a proper party
to alert for potential infringement and, in any event, he did
not receive proper notice of the infringement. I disagree.
Although Magistrate Judge Francis IV found that Pugliese was
not a wilful infringer, he was knowledgeable of the
infringement and moderately at fault therefore. After having
received a letter notifying of the possibility of infringement,
Pugliese, the once president and not mere shareholder of
audiofidelity disregarded the notice, never having thoroughly
researched the title.
Indeed, in response to my query of Pugliese's counsel at
trial whether he would rest on his laurels after having
received letter notification of a potential cloud on title for
property that he otherwise thought that he owned, counsel
conceded that he would have researched the matter further,
attempting to clear such title defect. Pugliese never accorded
the same import to Luft's notice where he well should have
taken claims of potential infringement seriously.
All participants of a copyright infringement are jointly and
severally liable. Chappell & Co. v. Frankel, 285 F. Supp. 798,
800 (S.D.N.Y. 1968). "All persons and corporations who
participate in, exercise control over, or benefit from the
infringement are jointly and severally liable as copyright
infringers." Sygma Photo News, Inc. v. High Soc. Magazine,
Inc., 778 F.2d 89, 92 (2d Cir. 1985). Likewise a company
president who supervises the selection, manufacture,
distribution and sale of infringing recordings is jointly and
severally liable for damages caused by the infringement.
Chappell & Co. v. Frankel, 285 F. Supp. at 800-01.
Nonetheless, Pugliese avers that since he was one of many
officers of a publicly traded corporation, did not exercise
total sole control of its operations, nor personally benefitted
from Audiofidelity's actions any more than any other
shareholders would, he should not be held liable for any
damages or attorneys fees awarded to Luft resulting from
Audiofidelity's actions. These assertions are incomplete.
Indeed, Pugliese negotiated the purchase of the infringing
recordings, and he supervised their manufacture, distribution,
and sale. Moreover, there is no indication that he profited the
same as other shareholders in the corporation. Pugliese had a
65 percent interest in the corporation and he was
president. Surely, he benefitted from the profitability of
selling the infringing materials. See RCA/Ariola International,
Inc. v. Thomas & Grayston Co., 845 F.2d 773 (8th Cir. 1988)
("prerequisites for vicarious liability for copyright
infringements are: (1) the right and ability to supervise the
infringing activity; and (2) an obvious and direct financial
interest in exploitation of copyrighted materials.") After
being notified of a problem with title to the recordings,
Pugliese should have immediately researched this issue.
Instead, he chose to continue the manufacture of infringing
materials. Accordingly, Pugliese is a joint tortfeasor, jointly
and severally liable for damages.
Finally, Pugliese argues that it is an untenable result to
hold an officer of a major corporation liable on the basis that
one letter directed to that officer was sufficient to alert the
officer as to a corporate wrong. Audiofidelity is not a fortune
500 company with several subsidiaries. At trial, it was adduced
that it had as few as thirty or forty employees. Therefore, the
notice provided Pugliese, an officer who was integrally
associated with the corporation and its involvement in
fostering the infringements, was sufficient to alert
Audiofidelity of its corporate wrongdoing. Audiofidelity's
infringement, occurring after notice was provided to Pugliese,
is thus chargeable to Pugliese as a joint and several
For the foregoing reasons, judgment in favor of Luft stands
and Pugliese may be held accountable for having to pay the
judgment that might have otherwise been lodged against
Audiofidelity had it not been stayed in bankruptcy.
Additionally, reasonable attorneys fees are awarded Luft in
connection with this litigation. Luft is hereby ordered ...