United States District Court, W.D. New York
September 2, 2005.
QUILLED CREATIONS, LLC, Plaintiff,
SCRAPCUTS, LLC AND EMILY D. JOHNSON, Defendants.
The opinion of the court was delivered by: CHARLES SIRAGUSA, District Judge
DECISION & ORDER
The Court previously entered judgment for plaintiffs based on
defendants' default in this copyright action. Now pending before
the Court is the question of damages. Following a hearing and
submission of additional affidavits, the Court determines that
plaintiff is entitled to: (1) $150,000 in enhanced statutory
damages; (2) $3,973.98 for defendants' unpaid invoices; and (3)
$13,605.27 for attorney's fees and costs.
Quilled Creations is owned and operated by David Bartkowski
("Bartkowski"). His company creates quilling*fn1 kits
("kit"), which contain a twelve-page instruction pamphlet in a folder. (Bartkowski Decl. March 1, 2005 ¶ 3.) The folder is
printed in color on the outside, and on the inside are a ruler
and instructions for making basic quilling shapes. (Id.) The
content on the inside of the kit is the same for every kit.
(Id.) The twelve page instruction pamphlet is specific to the
subject matter. (Id.) Most kits are theme kits that cost $8.95.
(Id. ¶ 2.) There is also a larger beginner kit that costs
Relevant to this lawsuit, Bartkowski, on behalf of Quilled
Creations, had registered eight theme kits and one beginner kit
with the U.S. Copyright Office. (Id. ¶ 5) Bartkowski incurred
substantial time and expense in writing, designing, and printing
these pamphlets. (Id. ¶ 4.) "For example, the instructions for
basic shapes, which are printed inside the folder, represent
forty hours of work in creating the images, photography,
developing the copytext, formatting, layout and review," and
"[i]n all, Quilled Creations kits represent many months of work.
It has taken two full years to develop our market and renew
interest in this age old craft." (Id. ¶ 4.) Quilled Creations
has been selling kits since 2002. (Id. ¶ 7.)
In June 2003, Quilled Creations began a wholesale relationship
with defendants Scrapcuts, LLC ("Scrapcuts"), whose owner is
Emily Johnson ("Johnson"). Quilled Creations sold quilling kits
to Scrapcuts at wholesale 50% off retail less an additional
10%. Over the following nine months, it sold 3,009 kits to
Scrapcuts for a total of $18,170.02 at wholesale price.
(Bartkowski Decl. March 1, 2005 ¶ 8.)
In November 2003, Bartowski became aware that defendants had
copied artwork from the Quilled Creations website and that they
were using it on their website, passing it off as their own
creation. (Id. ¶ 11.) Bartkowski wrote Johnson an email to
object, and Johnson replied that her web designer would take care of it in a
few days. (Id.) However, defendants never corrected the
situation, and Bartkowski terminated the business relationship
with them in February 2004. (Id. ¶ 9.) At that time, defendants
still owed Quilled Creations $3,973.98 for the last three
shipments. (Id. ¶ 12.)
In a June 9, 2003, email correspondence to Bartkowski, Johnson
acknowledged that Quilled Creations products were, in fact,
copyrighted (Id. at Ex. C.) On March 17, 2004, Bartkowski wrote
defendants and demanded "that [Johnson] cease using all Quilled
Creations artwork." (Id.) As of March 1, 2005, defendants are
still using the copyrighted material. (Id.)
In July 2004, Bartkowski learned that defendants were selling
reproductions of the Quilled Creations quilling kits. (Id. ¶
13.) In that regard, he discovered that a Scrapcuts' logo
appeared on the instructions which accompanied the reproductions.
Further, it was apparent that these instructions had been copied
from those contained in the Quilled Creations' kits. Moreover, on
the copied instructions, there was a Scrapcuts copyright dated
2003 that indicating that defendants' copyright infringement has
been ongoing since that time. (Id. ¶ 14.)
On August 11, 2004, Bartkowski's attorney, Michael Law, Esq.,
sent a lengthy letter to defendants demanding that they cease and
desist the copyright infringement. (Id. ¶ 15; Ex. H.) As of
September, 2004, defendants have not responded to Mr. Law's
letter and have continued to sell the quilling kits over the
Internet, even after being served with a summons and complaint in
this action. (Id.)
On August 25, 2004, Bartkowski asked Aimee Repp ("Repp"), an
acquaintance of his family, to place an order with Scrapcuts for
three kits. (Id. ¶ 16-17). Bartkowski thought that by then, Johnson would have used up her stock of Quilled
Creations kits. Repp asserts she did so and that she received
from Scrapcuts instructional booklets that had obviously had the
staples removed*fn2 and that the booklets had been
reassembled incorrectly. (Repp Dec. ¶ 3.) For example, Repp
received the Christmas kit with four pages of the Christmas Kit
instructions stapled together with eight pages of the Birthday
Kit instructions. (Id.) When Repp complained of the error,
Johnson stated, via email, "[a]ll of the Christmas Kits we had
here in stock were misprinted." (Id. ¶ 4) Johnson claimed that
the problem was due to the supplier. (Id.) Johnson, in her
email to Repp, stated, "I do have a photocopy that I can send you
it isn't as nice as the original printed look, but has the
instructions you need." (Repp Dec. ¶ 4.)
Bartkowski commenced this action on August 11, 2004 seeking to
enjoin defendants from infringing on Quilled Creations'
copyrights and to recover damages from that infringing activity.
Defendants were served on September 8, 2004 and are in default.
On January 7, 2005, the Court entered an Order enjoining
defendants from infringing on Quilled Creations' copyrights. In
the original complaint, plaintiff sought either its own damages
plus defendants' profits, or statutory damages. (Compl. at
10-11.) However, in the March 1, 2005 declaration by Edmund
Baird, an associate of plaintiff's counsel, Michael Law,
Bartkowski abandoned his claim for actual damages and requested
only a statutory award. (Baird Decl. March 1, 2005.)
Pursuant to 17 U.S.C. § 504, plaintiff is entitled to either
its own damages plus defendants' profits, or statutory damages. The statute reads in
pertinent part as follows:
(c) Statutory damages.
(1) Except as provided by clause (2) of this
subsection, the copyright owner may elect, at any
time before final judgment is rendered, to recover,
instead of actual damages and profits, an award of
statutory damages for all infringements involved in
the action, with respect to any one work, for which
any one infringer is liable individually, or for
which any two or more infringers are liable jointly
and severally, in a sum of not less than $750 or more
than $30,000 as the court considers just. For the
purposes of this subsection, all the parts of a
compilation or derivative work constitute one work.
(2) In a case where the copyright owner sustains the
burden of proving, and the court finds, that
infringement was committed willfully, the court in
its discretion may increase the award of statutory
damages to a sum of not more than $150,000. . . .
17 U.S.C. § 504(c).
The Second Circuit in N.A.S. Import Corp. v. Chenson
Enterprises, Inc., 968 F.2d 250 (2d Cir. 1992), outlined the
considerations for accessing statutory damages pursuant to
17 U.S.C. § 504(c)(2). It held that if the district court determines
that defendants' infringement was, in fact, willful, then the
court can award enhanced statutory damages. The maximum penalty
for enhanced statutory damages is $150,000. As stated in N.A.S.
Import, knowledge of infringement "need not be proven directly
but may be inferred from defendant's conduct." Id. at 252.
Additionally, the Second Circuit held that "`reckless disregard
of the copyright holder's rights (rather than actual knowledge of
infringement) suffices to warrant award of the enhanced
damages.'" Id. (quoting RCA/Ariola Intern., Inc. v. Thomas &
Grayston Co., 845 F.2d 773, 779 (8th Cir. 1988)).
Based on the evidence submitted, the Court determines that
plaintiff has shown his entitlement to the enhanced statutory
damages. The Court finds that there is conclusive evidence that
defendants did engage in willful misconduct. In addition to the
evidence of Johnson's repeated and flagrant infringements, Johnson herself
acknowledged her knowledge of plaintiff's copyright through her
email correspondence with Bartkowski. (Bartkowski Decl. March 1,
2005 ¶ 10-11.) Additionally, Johnson asked Bartkowski, via email,
if he would remove Quilled Creations' email address from the
pamphlets included in the kits that Johnson had ordered. (Id.)
In that request, Johnson reassured Bartkowski that Quilled
Creations' copyright information would remain on the pamphlets.
(Id.) Defendants also ignored Bartkowski's repeated requests
that they stop using the copyrighted material (id. ¶ 10-11,
15), as well as plaintiff's counsel's August 2004 demand that
defendants stop their infringing conduct (Id. ¶ 15; Ex. H).
The Court also looks to N.A.S. Import for the factors to be
considered in determining the amount of statutory damages, which
may in its discretion be awarded. The Second Circuit held that
the purpose of statutory damages are "to compel restitution of
profit and reparation for injury but also [are] designed to
discourage wrongful conduct." Id. at 252.
Here defendants' conduct was flagrant. Defendants were well
aware of their infringing actions, and yet continued to illegally
sell Quilled Creations' copyrighted materials. Since defendants
have defaulted, there is no means by which the Court may
determine the amount of defendants' profits, or, consequently,
plaintiff's losses, as a result of the infringing conduct.
However, considering that one of the purpose of statutory damages
is discouragement of wrongful conduct, the Court determines, in
its discretion, that the circumstances of this case show that the
maximum amount of enhanced damages is appropriate here.
Additionally, Bartkowski also seeks, and is of course also
entitled, to recover the $3,973.98 due on outstanding invoices.
(Bartkowski Dec. ¶ 9,21.) Further, he seeks legal fees pursuant to 17 U.S.C. § 505, which states,
In any civil action under this title, the court in
its discretion may allow the recovery of full costs
by or against any party other than the United States
or an officer thereof. Except as otherwise provided
by this title, the court may also award a reasonable
attorney's fee to the prevailing party as part of the
17 U.S.C. § 505 (2005).
Courts in the Second Circuit apply the Lodestar Method, which
"calculates attorneys' fees by multiplying hours reasonably
expended against a reasonable hourly rate; courts may use their
discretion to increase the lodestar by applying a multiplier
based on factors such as the riskiness of the litigation and the
quality of the attorneys." Wal-Mart Stores, Inc. v. Visa U.S.A.,
Inc., 396 F.3d 96, 123 n. 27 (2d Cir. 2005).
Bartkowski has submitted proof of $13,385.77 in legal fees.
(Baird Decl. June 10, 2005.) After review of the submissions, the
Court has determined that the requested fees are reasonable and
acceptable under the Lodestar Method.
Based on conclusive evidence that defendants engaged in willful
copyright infringement, Bartkowski is awarded $150,000 in
enhanced statutory damages, $3,973.98 for unpaid invoices and
$13,385.77 in attorney's fees. The Clerk is, therefore, directed
to enter judgment for plaintiff as outlined above and to close
IT IS SO ORDERED.
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