2021 DNH 26
D.N.H.2021Background
- D’Pergo created and published (2003–2006) a copyrighted Photograph of its custom guitar necks/headstock; Sweetwater copied and used the Photograph in a 2004 online "Electric Guitar Buying Guide."
- D’Pergo’s owner discovered the use in 2015, later registered the Photograph, contacted Sweetwater in 2016, and Sweetwater removed the Photograph; D’Pergo sued in December 2017 for copyright infringement and consumer-protection violations.
- The court previously granted D’Pergo judgment as a matter of law on liability for copyright infringement; only damages remain for the jury to decide under 17 U.S.C. § 504.
- Central legal question: whether § 504(b) permits recovery of an infringer’s gross revenues absent a showing that those revenues are causally linked to the infringement (i.e., whether plaintiff must prove a causal nexus before disgorgement/apportionment occurs).
- Sweetwater filed three motions in limine: (1) exclude evidence of indirect profits (profits from sales of other products allegedly promoted by the Photograph); (2) exclude profits generated more than three years before suit; and (3) admit evidence of each party’s conduct after learning of the Photograph.
- Rulings: the court held that D’Pergo must prove a causal nexus between the infringement and the gross revenue figure it presents (jury will be so instructed); denied the motions to exclude indirect profits and to exclude profits older than three years; granted the motion to admit post-notification conduct evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 504(b) requires plaintiff to show causal nexus between infringement and gross revenue before recovery of profits | D’Pergo: § 504(b)’s language requires plaintiff only to present gross revenue; that triggers a rebuttable presumption and shifts apportionment to defendant | Sweetwater: plaintiff must show gross revenue is reasonably related to the infringement; otherwise plaintiff could recover unrelated corporate revenues | Court: plaintiff must show a legally significant causal nexus between infringement and the gross revenue figure presented; if shown, defendant bears apportionment burden |
| Whether evidence of "indirect" profits (sales of other products allegedly promoted by the Photograph) should be excluded | D’Pergo: may introduce expert evidence linking Buying Guide viewers to subsequent purchases; meets minimal burden to present causal link | Sweetwater: any nexus is too speculative given Photograph was one of thousands of images and not a sold product | Court: denied exclusion; plaintiff’s expert provides minimally sufficient causal link to present to jury; attacks go to weight, not admissibility |
| Whether evidence of profits generated more than three years before filing must be excluded as irrelevant under Petrella | D’Pergo: discovery-rule accrual makes suit timely and permits recovery for earlier profits tied to infringements discovered within three years | Sweetwater: Petrella and Sohm read to limit damages to three-year lookback regardless of discovery-rule timeliness | Court: denied exclusion; Petrella does not impose a separate three-year damages bar where discovery rule makes the claim timely; evidence of older profits is relevant |
| Whether post-notification conduct of each party is admissible | D’Pergo: its conduct is admissible but Sweetwater’s post-notification conduct should be excluded as prejudicial | Sweetwater: both parties’ conduct is admissible background/context to the infringement and damages issues | Court: granted admission of both parties’ post-notification conduct as context; any improper arguments may be objected to at trial |
Key Cases Cited
- Jane Doe No. 1 v. Backpage.com, LLC, 817 F.3d 12 (1st Cir. 2016) (requires linking infringement to a discrete portion of infringer’s profits)
- Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700 (9th Cir. 2004) (upheld indirect-profits award where expert tied revenues from trade shows to continued use of infringing material)
- Davis v. The Gap, Inc., 246 F.3d 152 (2d Cir. 2001) (gross revenue must be reasonably related to the infringement)
- William A. Graham Co. v. Haughey, 646 F.3d 138 (3d Cir. 2011) (plaintiff must prove gross revenues and establish causal nexus before apportionment)
- Andreas v. Volkswagen of Am., Inc., 336 F.3d 789 (8th Cir. 2003) (distinguishes direct vs. indirect profits; plaintiff must show it profited from the infringing material at all)
- Mackie v. Reiser, 296 F.3d 909 (9th Cir. 2002) (threshold inquiry into legally sufficient causal link for indirect profits; exclude when too speculative)
- Taylor v. Meirick, 712 F.2d 1112 (7th Cir. 1983) ("gross revenue" means revenue from sale of infringing product)
- Univ. of Colo. Found., Inc. v. Am. Cyanamid Co., 196 F.3d 1366 (Fed. Cir. 1999) (plaintiff bears burden to show connection between revenues and infringement)
- John G. Danielson, Inc. v. Winchester-Conant Props., Inc., 322 F.3d 26 (1st Cir. 2003) (discussed § 504 but did not decide nexus issue presented here)
- Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (2014) (explained statute-of-limitations accrual and separate-accrual rule; did not impose a standalone three-year damages bar where discovery rule makes suit timely)
- Sohm v. Scholastic, Inc., 959 F.3d 39 (2d Cir. 2020) (interpreted Petrella as imposing a three-year damages lookback; court here respectfully disagreed with that reading)