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Emi Entertainment World, Inc v. Karen Records

August 26, 2011

EMI ENTERTAINMENT WORLD, INC.,
PLAINTIFF,
v.
KAREN RECORDS, INC., KAREN PUBLISHING INC., BIENVENIDO RODRIGUEZ, ISABEL RODRIGUEZ AND FIDEL HERNANDEZ, DEFENDANTS.



The opinion of the court was delivered by: Richard J. Holwell, District Judge:

MEMORANDUM OPINION AND ORDER

The Court has granted partial summary judgment to plaintiff EMI Entertainment World, Inc. ("EMI") in this copyright infringement action. See EMI Entm't World, Inc. v. Karen Records, Inc., 603 F. Supp. 2d 759 (S.D.N.Y. 2009) ("EMI I"). The Court granted summary judgment with respect to EMI's claims that certain sales on or after January 14, 2002 by defendants Karen Records, Inc. and Karen Publishing, Inc., (together, the "Karen Defendants") of albums containing four musical compositions infringed EMI's copyrights in those compositions. See id. at 770. In connection with EMI's request for statutory damages, the Court directed the parties to make "supplemental submissions addressing the actual number of infringing sales that occurred" on or after January 14, 2002. Id. For the following reasons, the Court finds that Defendants willfully infringed EMI's copyrights in the four musical compositions at issue and awards EMI $25,000 for infringement of each composition for which all defendants shall be jointly and severally liable.

BACKGROUND

The background of this action is set forth in detail in EMI I, familiarity with which is presumed.

EMI is a music publisher that owns copyrights in the four musical compositions at issue here: Cuando Acaba el Placer, Corazon Partio, Fuiste Mia un Verano, and La Colegiala. EMI obtains royalty payments through the Harry Fox Agency ("HFA") for those compositions and others whose copyrights it owns. The Karen Defendants are record companies owned by individual defendants Isabel Rodriguez and her husband Bienvenido Rodriguez (together with the Karen Defendants, "Defendants") that released records between 1999 and 2001 containing the four compositions at issue.

Those releases were not the beginning of the parties' dispute regarding royalty payments pursuant to the compulsory license system of the Copyright Act. As early as September 1997, HFA sent the Karen Defendants a letter terminating its compulsory licenses for compositions not at issue here. Less than a year later, other copyright owners brought suit against the Karen Defendants for copyright infringement based on unpaid royalties. See Nicolosi v. Karen Publ'g Co., No. 98 Civ. 3843 (WHP) (S.D.N.Y.). As part of a settlement of that suit, HFA audited the Karen Defendants' books and concluded that the Karen Defendants owed HFA-represented publishers over $500,000 in unpaid royalties. In 2000, based on that audit, EMI and Peer International Corp., another music publisher, brought suit against the Karen Defendants for copyright infringement based on unpaid royalties. See Peer Int'l Corp. v. Karen Publ'g Co., No. 00 Civ. 4599 (LAP) (S.D.N.Y.). The parties reached a settlement of that suit but were unable to reach agreement on the amount of unpaid royalties owed by the Karen Defendants.

On October 26, 2004, HFA sent the Karen Defendants a letter complaining that the Karen Defendants continued to owe royalties for numerous compositions, including the four compositions at issue here. (See Dec. of C. Badavas, Mar. 14, 2008 ("Badavas Dec."), Ex. HH (the "October 26 Letter").) The letter indicated that, unless the Karen Defendants cured these deficiencies within 30 days, their licenses for the compositions would be terminated.

EMI filed this suit on January 14, 2005. Following discovery, in March and April of 2008 the parties filed cross-motions for summary judgment. In EMI I, the Court granted summary judgment with respect to EMI's claims that (a) EMI terminated the Karen Defendants' compulsory licenses to Cuando Acaba el Placer, Corazon Partio, and Fuiste Mia un Verano (the "Licensed Compositions"); and (b) that the Karen Defendants never obtained a license to La Colegiala. Under the Copyright Act, "[s]uch termination renders either the making or the distribution, or both, of all phonorecords for which the royalty has not been paid, actionable as acts of infringement." 17 U.S.C. § 115(c)(6). Accordingly, the Court held that all sales on or after January 14, 2002-the beginning of the statute of limitations period-of albums containing the Licensed Compositions "infringed EMI's copyrights, provided that Karen did not pay EMI or Harry Fox a statutory royalty for those sales." EMI I, 603 F. Supp. 2d at 770. In addition, the Court held that all sales on or after January 14, 2002 of an album containing La Colegiala "infringed EMI's copyrights." Id.

However, the Court denied EMI's motion for summary judgment to the extent that EMI sought statutory damages for willful infringement. Noting that "'statutory damages cannot be divorced from economic reality,'" but that "[t]he current record . . . does not indicate with any certainty how many infringing sales occurred during the periods the Court has identified," the Court directed the parties to make "supplemental submissions addressing the actual number of infringing sales that occurred" on or after January 14, 2002. Id. at 769-70 (quoting Yurman Studio, Inc. v. Castaneda, Nos. 07 Civ. 1241, 07 Civ. 7862, 2008 WL 4949775, at *3 (S.D.N.Y. Nov. 19, 2008)).

LEGAL STANDARD

"Once an act of infringement under the Copyright Act has been proven, a plaintiff may, in lieu of an award of actual damages and profits, request that statutory damages under 17 U.S.C. § 504(c) be awarded." Island Software and Comp. Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 262 (2d Cir. 2005).*fn1 "If the plaintiff so elects, the district court will grant anywhere between $750 and $30,000 for each copyright infringed." Id. at 262-63. "If the defendant's infringement was willful, however, the district court may also, in its discretion, enhance the statutory damages award to as much as $150,000 per infringed work." Id. at 263.

The Copyright Act affords a trial court "wide discretion . . . in setting the amount of statutory damages." Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., Inc., 807 F.2d 1110, 1116 (2d Cir. 1986). In exercising its discretion, a trial court takes into account "the expenses saved and the profits reaped by the infringers"; "the revenues lost by the plaintiff"; "the value of the copyright"; "the potential for discouraging the defendant" and "the deterrent effect on others besides the defendant." Id. at 1117. In addition, "whether the defendant's conduct was innocent or willful" is also relevant, see id., because statutory damages "serve the Copyright Act's twofold purpose of compensation and deterrence." RSO Records, Inc. v. Peri, 596 F. Supp. 859, 862 (S.D.N.Y. 1984).

"To prove 'willfulness' under the Copyright Act, the plaintiff must show (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." Island Software and Comp. Serv., Inc., 413 F.3d at 263 (quotation marks omitted). Thus, "a court need not find that an infringer acted maliciously to find willful infringement." Fitzgerald Pub. Co., Inc., 807 F.2d at 1115. Rather, the Second Circuit "decisions clearly recognize that, even in the absence of evidence establishing the infringer's actually knowledge of infringement, a plaintiff can still prove willfulness by proffering circumstantial evidence that gives rise to an inference of willful conduct." Island Software and Comp. Serv., Inc., 413 F.3d at 264. "Nevertheless, "at the summary judgment stage, although an inference of constructive knowledge or reckless conduct seems the better of the possible inferences that can be drawn," the court "must still draw all inferences in favor of the non-moving party." Id.

DISCUSSION

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