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Keeling v. New Rock Theater Productions, LLC

United States District Court, Second Circuit

May 23, 2013



THOMAS P. GRIESA, District Judge.

This is a copyright dispute between plaintiff Jaime Keeling and defendants Eve Hars, Ethan Garber, and their production company, New Rock Theater Productions, LLC. The work at issue is a theater production called Point Break LIVE!

A jury trial was concluded in this case on December 7, 2012. The jury found in Keeling's favor, concluding that

• Keeling is the sole-owner of Point Break LIVE!
• Point Break LIVE! was a parody, and thus made fair use of the film Point Break
• All three defendants infringed Keeling's copyright (though not willfully)
• Keeling suffered $50, 000 in actual damages
• Defendants' profits over five years of infringing activity totaled $200, 000[1]

The Copyright Act provides that a copyright holder is entitled to recover both her actual damages and all of the profit earned from the infringing activity. 17 U.S.C. § 504. Accordingly, judgment was entered in Keeling's favor on January 10, 2013 in the amount of $250, 000.

Ethan Garber now moves for a new trial or remittitur on damages, amendment to the judgment on the issue of Garber's joint liability, and a new trial on vicarious liability.

Garber's motions are denied in every respect but one. A new trial will be held to determine whether Garber eventually made a genuine attempt to stop New Rock's infringing productions of Point Break LIVE! And if so, when did this occur, and what percentage of defendants' profits was earned after that point?



The court may set aside a jury's verdict and grant a new trial if the jury's decision is against the weight of the evidence and is either seriously erroneous or a miscarriage of justice. The court may engage in its own weighing of the evidence and its own assessment of witnesses' credibility but should only disturb the jury's verdict when it was "egregious" and, should only rarely substitute its own judgment of a witness' credibility for the jury's. Raedle v. Credit Agricole Indosuez , 670 F.3d 411, 418 (2d Cir. 2012) cert. denied, 133 S.Ct. 789 , 184 L.Ed.2d 582 (U.S. 2012).

Garber's alternative proposal, conditional remittitur, is subject to a similarly high standard. Where a jury's award was not caused by any specific, discernible error, conditional remittitur is appropriate only when the award is so high as to shock the judicial conscience and constitute a denial of justice.' Lore v. City of Syracuse , 670 F.3d 127, 177 (2d Cir. 2012). If a jury's award meets this standard, it should only be reduced to the maximum amount that the court would uphold as not excessive. Id. at 180.

Here the issue is the jury's calculation of Keeling's damages, which consists of two components - actual damages and profits. See 17 U.S.C. § 504(b). Garber challenges the jury's determination of both Keeling's actual damages and its determination of Hars's profit from the infringing activity.

A copyright holder's actual damages are typically conceived of as a reasonable royalty or license fee. This is designed to reflect the amount that the copyright holder could have received had she and the infringer negotiated and reached an agreement to allow the infringer to use the copyrighted materials legally. It is important to note that, to prevent abuse, this amount is to reflect an objective fair market value for the work, not the amount the copyright holder might actually have demanded. See On Davis v. The Gap Inc. , 246 F.3d 152, 165-167 (2d Cir. 2001).

A copyright holder is also entitled to disgorgement of the infringer's profits from the infringing activity. In calculating profits, the Copyright Act provides that the copyright holder need prove only the infringer's gross revenue. It is up to the infringer to then prove her offsetting expenses. 17 U.S.C. § 504(b). If the infringer's evidence leaves any doubt of her offsetting expenses and, thus, profit, those doubts must be resolved in the copyright holder's favor and against the infringer. In Design v. K-Mart Apparel Corp. , 13 F.3d 559, 564 (2d Cir. 1994); Gaste v. Kaiserman , 863 F.2d 1061, 1070 (2d Cir. 1988).


The parties appear to agree that the evidence supports the jury's determination that a reasonable royalty for Keeling's work could come in the form of a percentage of gross profits. Given that defendants' undisputed profits were approximately $1 million, and the jury awarded $50, 000 in actual damages, it is apparent that the jury concluded that a reasonable royalty would have been 5%. The question is simply whether the evidence supports this conclusion, or whether, as Garber urges, 2.5% would be the highest reasonable rate.

The 5% figure is supported by at least two pieces of evidence. First, it was undisputed at trial that Keeling and defendants had actually entered into an agreement that allowed defendants to use Keeling's intellectual property. That agreement permitted use of the same work and in the same manner as the infringing activity, though it covered only a single production. It provided a royalty rate of $1, 500 or 5% (whichever was greater) with an option to renew. Second, Keeling testified that, in preparing the license agreement just described, she conducted research and found that 5% was a reasonable rate.

In support of the 2.5% rate, Garber turns to another agreement entered into between defendants and Chris Taylor, owner of the rights to the film Point Break from which Point Break LIVE! was derived. The evidence at trial showed that this agreement allowed defendants to make use of the film Point Break on an unlimited basis in exchange for a royalty rate of 2.5% of gross revenue and $15, 000 paid up front.

Garber contends that this latter agreement was more representative of the true objective value of Keeling's work because, unlike the Keeling agreement, it was not limited to a specific time and venue and it was the product of more formal and sophisticated negotiations than those that took place between Keeling and defendants. Keeling points out, however, that this agreement does not cover the same work. The Taylor agreement allowed defendants to use the film from which Point Break LIVE! was derived but any hypothetical agreement with Keeling would have covered the script of Point Break LIVE! itself. The Keeling agreement, on the other hand, actually covered the work at issue.

Given this difference, it is difficult to say with any certainty that the Taylor agreement was better evidence of a reasonable royalty. Much less can one conclude that the jury's apparent decision to follow the 5% rate set in the Keeling agreement is "seriously erroneous, " that it ...

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