Schmitt v. VAG Group, Inc. et al

Filing 21

Findings & Recommendation: Plaintiff's Motion for Default Judgment 10 should be Granted and plaintiff should be awarded a total monetary award, including an enhancement for defendants' willfulness, of $9,800, as well as injunctive relief and attorney's fees and costs. Objections to the Findings and Recommendation are due by 12/17/2009. Signed on December 2, 2009 by Magistrate Judge Dennis J. Hubel. (hubel2, )

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON MICHAEL SCHMITT dba MICHAEL SCHMITT PHOTOGRAPHY, an individual, ) ) ) ) Plaintiff, ) ) v. ) ) VAG GROUP, INC., a foreign ) corporation and VAG PERFOR) MANCE, LLC, a foreign limited ) liability company, ) ) Defendant. ) ) Michael Schmitt Michael Schmitt Photography 1420 NW Lovejoy Unit 627 Portland, OR 97209 Plaintiff Pro Se HUBEL, Magistrate Judge: Plaintiff Michael Schmitt, dba Michael Schmitt Photography, brings this action against defendants VAG Group, Inc. and VAG Performance, LLC, for copyright infringement. An Order of Default Plaintiff now No. CV-09-380-HU FINDINGS & RECOMMENDATION was entered against defendants on June 26, 2009. moves for entry of default judgment. 1 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I recommend that the motion be granted and that plaintiff be awarded $9,800 in damages. In support of the motion, plaintiff submits a declaration and several exhibits. In addition, I conducted a prima facie hearing on plaintiff's motion on November 16, 2009, at which plaintiff produced additional exhibits and presented testimony. Based on all of the evidence presented both in writing and at the hearing, I make the following findings and recommendation. I. Liability To prevail on a claim of copyright infringement, plaintiff must establish ownership of a valid copyright and copying of constituent elements of the work that are original. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 360 (1991); see also Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1159 (9th Cir. 2007) (two requirements for prima facie case of direct copyright infringement are proof of ownership of the allegedly infringed material and proof that the alleged infringers violated at least one exclusive right granted to copyright holders under 17 U.S.C. § 106). Pursuant to 17 U.S.C. § 410(c), registration of the copyrighted works is prima facie evidence of the validity of the copyright. Under 17 U.S.C. § 106, copyright holders have display Display of a copyrighted photograph on a Perfect 10, 508 and distribution rights. webpage can violate a copyright holder's rights. F.3d at 1160. Based on the Order of Default, the well-pled factual allegations in the Complaint are taken as true. Fair Housing of Thus, the Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). record establishes the following facts: 2 - FINDINGS & RECOMMENDATION Plaintiff, an individual 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and citizen of Oregon doing business under the assumed business name Michael Schmitt Photography, is a photographer and owner of the copyright in a series of four photographic images at issue in this action. The copyright in the images was registered on or A copy of the copyright Certificate of Copies of the images Defendants VAG about October 24, 2008. Registration is Exhibit 1 to the Complaint. themselves are in Exhibit 2 to the Complaint. Group, Inc., a corporation, and VAG Performance, LLC, a limited liability company (referred to collectively in the Complaint as "Vital"), were formed under the laws of New York and have a principal place of business there. apparel and equipment. In 2005, Schmitt began a business relationship with InSport International, Inc. ("InSport"), an Oregon corporation that sold athletic apparel. Schmitt twice contracted with InSport in 2005 to take photographs of people in athletic poses and then licensed the photographs to InSport for use in marketing. The marketing Defendants sell athletic included use on InSport's website (www.insport.com). On or about November 25, 2005, defendants acquired InSport and continued to operate the InSport website to sell athletic apparel under the InSport name. Defendants also continued to use Schmitt's photographs to market the apparel under the InSport name. About one year later, on November 17, 2006, Schmitt contracted with defendants for a third time to take photographs. Schmitt licensed those photographs to defendants for marketing purposes. Under the terms for of two the license, defendants had use of the and photographs years. Schmitt remained the owner copyright holder of the photographs. Exhibit 3 to the Complaint is 3 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a copy of the invoice/license granting defendants the use of the photographs. On or about December 27, 2007, InSport dissolved and defendants acquired all interests, assets, and liabilities of InSport, including Schmitt's license to InSport. Defendants continued selling athletic apparel under the InSport name at the InSport website and continued using the photographs to market athletic apparel on the InSport website under the terms of Schmitt's license. On or about November 17, 2008, the two-year license to use the four photographic images at issue here, lapsed. renewed. On or about December 1, 2008, Schmitt learned that defendants were still using the four images on the InSport website to market athletic apparel even though the original two-year license with InSport had lapsed. Schmitt promptly notified defendants that they were infringing on Schmitt's copyright. Schmitt sent a proposed It was not invoice which included a license allowing defendants to continue to use the images, but the parties did not resolve the dispute over defendants' infringement. Defendants' unauthorized use of the photographs ceased on January 28 or 29, 2009. Defendants have not paid Schmitt for use of the images after the expiration of the license. the sole owner of the images. Schmitt is, and at all times was, He did not and has not authorized defendants to use the images after the expiration of the license. Based on these facts, plaintiff has established defendants' liability for copyright infringement of the photographs. Plaintiff has demonstrated his ownership of the images and defendants' 4 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 unauthorized display of them. II. Relief Requested A. Money Damages 17 U.S.C. § 504(a), an infringer is liable to a Under copyright owner for either actual or statutory damages. Plaintiff elects statutory damages. The amount of statutory damages is to be "not less than $750 or more than $30,000 as the court considers just." the 17 U.S.C. § 504(c)(1). has wide "If statutory damages are elected, in determining the amount of court discretion statutory damages to be awarded, constrained only by the specified maxima and minima." Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1101 Additionally, in a (N.D. Cal. 2003) (internal quotation omitted). 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)(2). Plaintiff seeks a statutory damages award of $10,000 to $15,000 per image, inclusive of an enhancement for defendants' willful infringement. I first address the award per image without considering the enhancement. The record shows that before plaintiff submitted the invoice and license for the images at issue in this case, plaintiff submitted two other invoices for work done for defendants. Invoice #20374, dated April 27, 2005, was for a total of $14,900, including costs of digital processing, casting, models, stylist, etc. Pltf's Trial Exh. 1 at p. 3. The usage/license agreement was for two Id. years of unlimited use for up to thirty images. Invoice #20385-B, dated November 2, 2005, has total expenses 5 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 of $13,854.92, again including such costs as digital processing, casting, models, stylist, etc. Id. at p. 4. The usage/license agreement was also for two years, unlimited use, for up to thirtyone images. Id. On November 17, 2006, plaintiff issued Invoice #20449B to defendants for another photo shoot, with total costs of $9,300. Id. at p. 5. this lawsuit. This photo shoot produced the four images at issue in The usage/license agreement provides for two years Id. of unlimited use for up to thirty-four images. In February 2008, plaintiff discovered that defendants were using, on the InSport website, images licensed by plaintiff to defendants in 2005, beyond the licensing date. Id. at p. 8. On February 19, 2008, plaintiff sent an email to Mark Keegan at InSport notifying him of the out-of-license use of six images. Id. Plaintiff told Keegan that the license for these images expired in November 2007. Id. As plaintiff explained in the prima facie hearing, he valued InSport as a customer and thus, was willing to tolerate defendants' continued use of the images as long as plaintiff received some type of compensation. Plaintiff told Keegan in the February 19, 2008 email to "[f]eel free to keep using these images and I will send an invoice for their use or you can let me know when they will be taken off the web site at what point we can talk about a fair usage price for the six images up until that point. If you are still using these images for hang tags or display please let me know and we can work out an agreement for that usage as well." Id. On April 21, 2008, plaintiff sent another email to Keegan about defendants' continued out-of-license use of the six images. 6 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Id. at p. 9. By this time, plaintiff had discovered that defendants were actually using ten of plaintiff's image out-oflicense. invoice Id. for the With this email, plaintiff attached a proposed out-of-license use. Id. This new invoice expressly noted that the ten images had been originally licensed in April 2005 in Invoice #20374, and in November 2005 in Invoice #20385B. images Id. The job in the proposed invoice is described as ten on Id. the InSport website, past the usage license used agreement. The allowed use in the proposed invoice was web use only until November 2008, or a period of approximately six to seven months. Id. The total requested was $950, or $95 per image. In the prima facie hearing, plaintiff explained that he deliberately proposed a very low price for each image in an effort to be paid for the images while preserving the work relationship he had with InSport. Plaintiff further explained this in a June 9, Id. at p. 10. 2008 letter to Keegan and Linda Pincus of InSport. By that time, defendants were using eleven out-of-license images on the InSport website. Id. Plaintiff attached another new invoice to this letter, seeking payment of $125 per image, for eleven images, for a total of $1,375, for web use until November 2008. Id. at p. 12. In the letter, plaintiff explained that "[t]his invoice reflects a need to get paid something for this extended use, but not to charge a large amount that fair market value would dictate. Jupiter Media, who[m] I am represented by, would charge I have enjoyed working with you mid $500.00 range for this usage. InSport over the years and hope the relationship can continue with New Balance." Id. In the April 21, 2008 email to Keegan, and in the June 9, 2008 7 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 letter to Keegan and Pincus, plaintiff alerted defendants to the November 2008 expiration of the license for the images taken in November 2006 and licensed to defendants in Invoice #20449B. at pp. 9, 10. Id. Accordingly, on December 1, 2008, plaintiff wrote to Keegan and Maureen Kingsepp with InSport, to request payment for the eleven images previously noted as being used out-of-license by InSport, and to add that defendants were now using four additional images out-of-license. Id. at p. 15. Plaintiff enclosed another proposed invoice for the now fifteen images being used out-oflicense on defendants' website. Id. at p. 16. There, plaintiff sought $290 per image for the four images at issue in this case, for two months' usage up to January 15, 2009. Id. He also sought the same per image price for the other eleven images he had previously addressed with defendants. Id. He noted that usage for up to one year would be $390 per image. Id. In the December 1, 2008 letter, plaintiff stated that the invoice was "fair and balanced." Id. at p. 15. He noted that he was charging a "book price" for the web use until January 15, 2009. Id. Finally, he added that four of the images were registered with the copyright office, entitling plaintiff to collect attorney's fees and statutory damages for defendants' copyright infringement. Id. He suggested that a typical infringement charge was ten times the amount he was requesting in the invoice and thus, defendants could owe $11,600 for the four images, plus attorney's fees. Id. Plaintiff explained at the prima facie hearing that the "book price" he referred to was the "bare minimum" his agency, Jupiter Images, would charge in a basic "stock sale." He testified that the invoice enclosed with the December 1, 2008 letter was fair and 8 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 balanced, but generous to defendants. Plaintiff was trying to entice defendants to pay plaintiff something and to stop using his images out-of-license. In addition to the evidence regarding plaintiff's business relationship with InSport, plaintiff submits exhibits showing more general information about prices for stock photographs and payments he received from other customers for such photographs. At the prima facie hearing, plaintiff explained that "stock" images or photographs are available to any purchaser, typically from a company that has thousands available and which can be used for hundreds of purposes. Plaintiff currently works with a company called Getty Images, which bought Jupiter Images, the company plaintiff previously worked with. Getty Images will offer plaintiff's images for sale as "stock" images or photographs which means that a customer can purchase the image, through Getty, for either a "rights managed" (meaning a restricted) use, or an unrestricted use. Plaintiff testified that with stock purchases, a customer can select a stock image from the Getty Images website and obtain a license for its use that day. While the customer may not receive a unique image specifically designed for that customer, certain risks and costs, such as production costs, are eliminated in stock sales. Plaintiff further explained that he considers the post-license use of his images by a client for whom he has performed a custom shoot, equivalent to stock photography. As examples of past stock photography sales, plaintiff submits evidence of payment in April 2007 of $536 per image for five images, for six months' "non-protected" website use by an 9 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 advertising company. Pltf's Trial Exh. 2 at p. 1. In April 2008, plaintiff received $500 for the use of an image on one banner in a retail running equipment store, for up to two years. Id. at p. 2. In October 2007, plaintiff received $2,450 for the stock sale to a small Portland business of a couple of images of its founder or chief executive officer. Id. at p. 3. Id. The usage was unlimited, In April 2006, plaintiff and for an unlimited amount of time. received $500 for one day use of a stock photograph in the Boston marathon as course signage. Id. at p. 4. Other examples of plaintiff's image sales are found in Plaintiff's Trial Exhibit 2. Additionally, plaintiff submits "Licensing Guide" information from the American Society of Media Photographers stating that there are only two factors to consider when pricing a license for stock photographs: the uniqueness of the image and the terms of the Pltf's Trial Exh. 2 at p. 8. At the prima license, or the use. facie hearing, plaintiff testified that in his opinion, a third factor is what the market will bear. The American Society of Media Photographers also publishes a list of pricing resources for its members. Id. at p. 9. One recommended resource is a software program called "Foto Quote Pro 6" which offers Id. pricing guides for stock and assignment photography. Under that program, the middle price range for an image used in a catalog-type website, for three months, with a model's release, and occupying up to one-quarter of a computer screen, is $927, with the low-range beginning at $695 and the highrange going up to $1,390. Id. at p. 11. Finally, in support of his damages award, plaintiff submits evidence of a recent settlement of a lawsuit by Getty Images 10 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 against a business which had used a single photographic image from Getty's on-line image library without authorization. Id. at p. 13. The settlement was for approximately £2000 British pounds, or approximately $3,310 United States dollars. Id. The exhibit does Plaintiff also not reveal the length of the unauthorized use. Id. submits a copy of a boilerplate license agreement offered by Getty Images for Getty Images products for "Editorial, Rights-Managed and Rights-Ready Image and Footage." Id. at pp. 13-14. That agreement contains a provision in which Getty Images reserves the right to charge the licensee five times the standard license fee for unauthorized use of licensed material. Id. at p. 14. Based on the written evidence and plaintiff's testimony, I recommend concluding that the appropriate amount of statutory damages, before consideration of any alleged willfulness by defendants, is $490 per image for the approximate 2.5 months defendants used the images after the license expired. The most relevant evidence in the record establishing damages are the emails and letters written to defendant in 2008 in which plaintiff first sought payment for the out-of-license use of eleven photographs1, and then sought payment for those eleven photographs plus the four at issue in this case. At the prima facie hearing, plaintiff testified that the ten images referenced in his April 21, 2008 email to Keegan were not materially different from the four images at issue here. Plaintiff stated that all of the images had the same intrinsic value to the As described above, when plaintiff began corresponding with defendants about the out-of-license use of these images, there were six at issue, then ten, and finally eleven. 11 - FINDINGS & RECOMMENDATION 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 InSport website, although the four at issue in this case were larger and were with InSport clothing. In April 2008, plaintiff was willing to accept payment of $95 per image for six to seven months of use on the InSport website. In June 2008, plaintiff was willing to accept $125 per image for five months of use on the InSport website. Plaintiff's testimony that these prices were artificially low in an attempt to preserve his working relationship with defendants is completely credible. were he not offering at the Nonetheless, in June 2008, he noted that a time, good would price, charge Jupiter $500 per Media, image his for representative approximately five months' use. Thus, plaintiffs' evidence shows that the fair market value absent consideration of plaintiff's attempt to keep his relationship with defendants intact, was approximately $250 per image for 2.5 months' use. Additionally, in December 1, 2008, plaintiff sought only $290 per image for the period November 18, 2008, to January 15, 2009. Although plaintiff was still attempting to offer defendants a good deal, there is no indication that by this time, with defendants now using an additional four images out-of-license, that plaintiff was still seeking to preserve his working relationship with defendants. Notably, he states that he is prepared to take legal action for copyright infringement if he is not paid by December 16, 2008. He also notes that should he pursue a copyright infringement action, defendants could be liable for attorney's fees. Plaintiff's evidence of pricing for stock images in other contexts has little bearing on the instant case. The uses of many of the other images are distinguishable from the webpage use by 12 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 defendants here. For example, the payment for the image on a retail store banner is not analogous to the payment for unlimited use of an image on a webpage. The same can be said for the payment for use of an image on race course signage, or for use in a catalog. Of the evidence relied on by plaintiff in Plaintiff's Trial Exhibit 2, the most closely related is the April 2007 payment of $536 per image for six months' "non-protected" website use by an advertising company. 2.5 months of usage. Although the "Foto Quote Pro 6" software suggests a mid-range price of $925 for three months' use of a similar image, the software also indicates that the low-range is approximately $695 per image. Given the payments actually requested by plaintiff from defendants for use of various images after the licenses expired, and the other relevant evidence of plaintiff's payments for use of other stock photographs by other customers, even $695 seems too high, and, using plaintiff's own factor of "what the market will bear," the $695 price appears to be more than what his business relationship with defendants would support. Thus, I select a per This would amount to approximately $233 for image price of $490 as being the appropriate amount of statutory damages. This figure is halfway between the $290 per image that plaintiff requested from defendants on December 1, 2008, and the $695 low-end price suggested by "Foto Quote Pro 6." statutory damages award is $1,960. B. Enhancement for Willfulness The initial As noted above, the statute allows for enhanced damages for willfulness. Plaintiff has successfully established that defendants' out-of-license use of the four images at issue in this 13 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 case, was willful. The evidence shows that beginning in April 2008, approximately seven months before the license for these four images expired, plaintiff notified defendants of the November 2008 expiration date. Plaintiff notified defendants again in June 2008. With both of these communications, plaintiff attached a proposed invoice which generally noted that plaintiff's photographs were copyrighted. Then, in December 2008, plaintiff wrote to defendants to inform them that they were now using the four images past the license expiration date. images were copyrighted. January 2009. "Willful copyright infringement, for purposes of the award of statutory damages, requires the defendant's knowledge that his conduct constitutes copyright infringement." Jackson, 255 F. Supp. at 1101 (citing Columbia Pictures Tel. v. Krypton Broadcasting of Birmingham, Inc., 106 F.3d 284, 293 (9th Cir. 1997) (vacated on other grounds)). The evidence demonstrates that defendant knew of He also expressly stated that these four Defendants' use persisted until late the expiration of the license, knew that the four images were copyrighted, but nonetheless continued to use them on the website for approximately two additional months. In his motion for default judgment, plaintiff requests that the damages be tripled as a penalty for defendants' willfulness. Given that defendants were notified of the expiration of the license seven months ahead of time, and nonetheless continued using the images, there is no explanation for defendants' conduct other than defendants' blatant disregard for, and infringement of, plaintiff's rights in the images. I conclude that enhancing the underlying damages award five times is a more appropriate sanction 14 - FINDINGS & RECOMMENDATION 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 for defendants' willful conduct in this case. Multiplying the initial award of $1,960 times five produces a total damages award of $9,800. C. Injunctive Relief A court may grant injunctive relief to "prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a). Plaintiff notes that although defendants have removed the infringing images from their website, defendants retain the means to continue to infringe in the future. request be Thus, I recommend that the injunctive relief and that defendants and their directors, granted officers, employees, and representatives be permanently enjoined from any further use of plaintiff's four images on defendants' InSport website located at www.insport.com. D. Fees & Costs Under Plaintiff seeks an award of costs and attorney's fees.2 17 U.S.C. § 505, the court, in its discretion, may allow the recovery of costs and attorney's fees to the prevailing party. In deciding whether to award fees, the court considers "certain factors, including (1) the degree of success obtained; (2) frivolousness; (3) motivation; (4) objective unreasonableness (both in the factual and legal arguments in the case); and in particular circumstances to advance (5) the need of considerations compensation and deterrence." Halicki Films, LLC v. Sanderson Sales & Marketing, 547 F.3d 1213, 1230 (9th Cir. 2008) (internal quotation and brackets omitted). Although plaintiff is currently pro se, he was formerly represented by counsel in this action and incurred attorney's fees and costs in prosecuting this litigation. 15 - FINDINGS & RECOMMENDATION 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2009. I recommend that plaintiff be awarded reasonable fees and costs. Under Federal Rule of Civil Procedure 54(d)(2), and Local Rule 54, plaintiff shall file a request for fees and costs within fourteen days of the entry of judgment by the Article III District Court Judge. CONCLUSION Plaintiff's motion for default judgment (#10) should be granted and plaintiff should be awarded $2,450 per image for defendants' willful infringement of plaintiff's photographs ($490 per image multiplied by five for willfulness), for a total monetary award of $9,800 (four images multiplied by $2,450). Plaintiff's request for injunctive relief should be granted, as should his request for an award of reasonable attorney's fees and costs. SCHEDULING ORDER The Findings and Recommendation will be referred to a district judge. Objections, if any, are due December 17, 2009. If no objections are filed, then the Findings and Recommendation will go under advisement on that date. If objections are filed, then a response is due December 31, When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement. IT IS SO ORDERED. Dated this 2d day of December , 2009. /s/ Dennis James Hubel Dennis James Hubel United States Magistrate Judge 16 - FINDINGS & RECOMMENDATION

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