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GETAPED.COM, INC. v. CANGEMI

February 28, 2002

GETAPED.COM, INC., PLAINTIFF,
V.
SHELLY CANGEMI, JOHN SHIELDS, AND SKI & CYCLE HUT, DEFENDANTS.



The opinion of the court was delivered by: Hellerstein, District Judge.

OPINION AND ORDER MODIFYING REPORT AND RECOMMENDATION

The Honorable Ronald L. Ellis, U.S.M.J., after conducting an inquest on damages, issued a Report and Recommendation ("R & R") dated December 12, 2001 and filed December 13, 2001. After de novo review of the record and consideration of objections, see 28 U.S.C. § 636(b)(1), I hold that the R & R is modified in the respects discussed below, and instruct the Clerk of Court to grant judgment for the plaintiff in the modified amount.

Background

According to the allegations of the complaint and the record of inquest, plaintiff Getaped.com, Inc. ("Getaped") created a website at www.getaped.com to sell Go-Ped ® brand motorized scooters (the "Getaped site"). Plaintiff spent 400 hours or more over an eight-week period designing and creating the source code for the Getaped site, which went "live"*fn1 on the Internet in December 1999. As with most websites, the Getaped site has undergone several modifications. Plaintiff registered one of the modified versions of the Getaped site — a version which first went live on July 15, 2000 — with the United States Copyright Office on August 14, 2000.

From at least early summer 2000, defendants copied the Getaped website by posting identical source code at their own sites, www.buyaped.com and www.23water.com. Getaped claims that the replication of the Getaped site at defendants' sites infringed its copyright and diverted traffic and sales from its site.

Default judgment on liability was entered against defendants John Shields and Ski & Cycle Hut on January 23, 2001. Defendant Shelly Cangemi was never served and was dismissed without prejudice on March 6, 2001. The issue before Judge Ellis, and reviewed here, is the extent of damages to which Getaped is entitled for the defendants' infringement. Judge Ellis took proofs from the plaintiff on the issue of damages, and heard objections from the defendants, who finally appeared in the damages portion of the suit. After consideration of the evidence and the arguments, Judge Ellis concluded that plaintiff was entitled to $1,050.00 in damages. I hold that Judge Ellis erred in his interpretations of material propositions of law, and that plaintiffs correct recovery should be $30,000 in statutory damages, plus attorney's fees and costs.

Discussion

Under the Copyright Act, plaintiff is entitled, at its own election, to either (1) actual damages and the infringer's profit, or (2) statutory damages, for defendants' infringement. 17 U.S.C. § 504. The Court may also award attorney's fees and costs. 17 U.S.C. § 505. Both statutory damages and attorney's fees and costs are unavailable if "(1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work." 17 U.S.C. § 412.

Judge Ellis concluded that plaintiff was entitled neither to statutory damages nor attorney's fees. He reasoned that plaintiffs source code was an "unpublished work" for purposes of the Copyright Act, see 17 U.S.C. § 101, and, because defendants' copyright infringement commenced before the August 14 registration, plaintiff therefore was not entitled to statutory damages by virtue of Section 412. On the issue of actual damages, Judge Ellis found that plaintiff had failed to prove that its decline in sales was caused by defendants' infringement, and awarded instead a license fee of $1,050 as damages. I disagree with Judge Ellis' holdings.

I. Damages

A. Statutory Damages

As Judge Ellis determined, whether plaintiff is entitled to statutory damages depends on whether plaintiffs source code for the Getaped site was "published" according to the Copyright Act's definition of that word. If the source code was "published," Getaped is entitled to elect statutory damages in lieu of actual damages because it registered its work within the three-month grace period permitted by 17 U.S.C. § 412(2). If the source code was not published, Getaped is subject to the limitations of 17 U.S.C. § 412(1) and cannot recover statutory damages because defendants' infringement commenced before the date of plaintiffs registration.

"Publication" is a technical term under the Copyright Act and is defined as "the distribution of copies . . . of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending," or the "offering to distribute copies . . . to a group of persons for purposes of further distribution . . . or public display."*fn2 17 U.S.C. § 101. The definition also points out that "[a] public performance or display of a work does not of itself constitute publication." Id. "To `display' a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process." Id.

Judge Ellis determined that Getaped had not "published" its website, but, rather, merely "displayed" it. In coming to this conclusion, Judge Ellis implicitly distinguished between posting a website or webpage (what Getaped did) and posting music files, software or photographs on a webpage. The latter has been held in numerous instances to constitute publication. See, e.g., A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001) (uploading music files to the internet for others to copy violates copyright holder's exclusive publication right); State v. Perry, 83 Ohio St.3d 41, 697 N.E.2d 624, 628 (1998) (in finding a state statute preempted by the Copyright Act, noting that "[p]osting software on a bulletin board where others can access and download it is distribution," i.e., publication); Playboy Enterprises, Inc. v. Chuckleberry Pub., Inc., 939 F. Supp. 1032, 1039 (S.D.N.Y. 1996) (uploading content on internet and inviting users to download it violates exclusive publication right); Playboy Enterprises, Inc. v. Russ Hardenburgh, Inc., 982 F. Supp. 503, 513 (N.D.Ohio 1997) (defendants violated plaintiffs exclusive publication right by moving subscriber-uploaded photographs to common bulletin ...


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