Curtis v. Illumination Arts, Inc.
33 F. Supp. 3d 1200
W.D. Wash.2014Background
- Plaintiffs (authors/illustrator) had publishing agreements (1989–1992) with Illumination Arts, Inc. (IAI) and related IAP; royalties were paid through 2009 but then stopped. Plaintiffs terminated the contracts in 2011 and demanded return of unsold inventory and audits. Defendants continued to publish and distribute the books thereafter.
- Plaintiffs sued for breach of contract and willful copyright infringement (filed June 8, 2012). The court previously granted partial summary judgment on liability and entered a permanent injunction; it later entered default as a discovery sanction.
- The court held an evidentiary hearing under Fed. R. Civ. P. 55(b)(2) to determine whether to enter default judgment and to fix damages. Plaintiffs sought statutory damages (maximum per work), contract damages, and attorneys’ fees.
- Key facts for damages: unpaid royalties shown ($11,165.76 total); Defendants returned inventory valued at cost ($4,464.27) which plaintiffs must buy under contract; court pierced corporate veil to hold IAI, IAP, and Mr. Thompson jointly/severally liable for contract damages.
- Court found infringement willful, weighed factors for statutory damages, and assessed attorney’s fees under the Copyright Act and fee awards under Rule 37.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default judgment should be entered as sanction for discovery abuses | Plaintiffs argued default judgment is warranted given repeated, willful noncompliance with discovery and prior court orders | Defendants contested some admissions and sought reconsideration; generally failed to comply with orders | Court granted default judgment after applying Eitel factors; default was proper given willfulness and prejudice to plaintiffs |
| Measure of contract damages and offset for returned inventory | Curtis, Aldrich, Currier sought unpaid royalties (total $11,165.76) and argued offset should not swallow recovery | Thompson sought offsets for returned books and some materials at cost | Court awarded unpaid royalties $11,165.76 minus allowed offset for returned books at cost $4,464.27; contract damages = $6,701.49. No offset for promotional items/scans (insufficient record) |
| Statutory damages for willful copyright infringement (amount) | Plaintiffs sought maximum statutory damages ($150,000 per work; $450,000 total) because infringement was willful and Defendants continued distribution after termination | Defendants argued context (prior license, business decline) and contested proportionality of maximum award | Court found willfulness but awarded $50,000 per work ($150,000 total), reasoning statutory damages should be substantial but proportionate given limited proof of profits/lost revenues and contractual/licensing history |
| Award of attorney's fees and expenses | Plaintiffs sought fees under 17 U.S.C. §505 and Rule 37; submitted lodestar support and asked leave to supplement post-Nov 23, 2013 fees | Defendants challenged reasonableness of some discovery and fee accrual but offered little substantiation | Court awarded previously-ordered Rule 37 sanctions ($15,695.00 and $9,676.00) and §505 fees through Nov. 23, 2013 ($23,782.10); permitted plaintiffs to supplement for fees incurred after that date |
Key Cases Cited
- Dreith v. Nu Image, Inc., 648 F.3d 779 (9th Cir. 2011) (district courts may enter default as a sanction for discovery abuse)
- Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406 (9th Cir. 1990) (sanctioning authority including default for discovery misconduct)
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (factors for evaluating default-judgment motions)
- TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 (9th Cir. 1987) (treat well-pleaded allegations as true after default; plaintiff must prove damages)
- F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228 (1952) (statutory damages to be determined by what is just in the particular case)
- Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332 (9th Cir. 1990) (consideration of statutory damages and willfulness)
- Danjaq LLC v. Sony Corp., 263 F.3d 942 (9th Cir. 2001) (definition of willful copyright infringement)
- Smith v. Jackson, 84 F.3d 1213 (9th Cir. 1996) (factors for awarding attorney’s fees under the Copyright Act)
- Kerr v. Screen Extras Guild, Inc., 526 F.2d 67 (9th Cir. 1975) (factors relevant to lodestar/fee determinations)
- Milene Music, Inc. v. Gotauco, 551 F. Supp. 1288 (D.R.I. 1982) (discussion of statutory damages factors and weight given to profits/lost revenues)