948 F.3d 261
5th Cir.2020Background
- EIG publishes Oil Daily and licenses access; KA partner James Baker purchased a subscription (2004) and repeatedly shared access internally and with third parties, often renaming files "123" to conceal copying.
- EIG sued KA in 2014 for copyright infringement and later added DMCA §1202 claims for alteration of copyright management information (CMI); KA asserted defenses including mitigation, unclean hands, and equitable estoppel.
- District court granted summary judgment against KA on estoppel and unclean hands but allowed a mitigation defense to proceed; KA unsuccessfully moved for referral to the Copyright Office under 17 U.S.C. §411(b).
- At a 2017 jury trial, the jury found 1,646 infringements and 425 CMI alterations, but concluded EIG unreasonably failed to mitigate (could have avoided most infringements/alterations); jury awarded $15,000 for 39 infringed works and $2,500 for each of the 425 DMCA violations.
- District court vacated recovery for infringements and DMCA violations the jury found avoidable, awarded EIG $585,000 for the 39 works, and awarded EIG attorney’s fees; on appeal, the Fifth Circuit addressed whether failure to mitigate is a complete defense to statutory damages and other ancillary issues.
Issues
| Issue | Plaintiff's Argument (EIG) | Defendant's Argument (KA) | Held |
|---|---|---|---|
| Whether failure to mitigate is a complete defense to statutory copyright damages under §504(c) | Mitigation may be a factor in setting the amount but cannot bar liability for statutory damages | Mitigation is a complete defense; if plaintiff unreasonably failed to prevent infringement, statutory damages should be precluded | Mitigation is not a complete defense; plaintiff may still recover statutory damages though mitigation is a relevant factor |
| Whether failure to mitigate is a complete defense to DMCA §1203 statutory damages | Same as for copyright: mitigation cannot fully bar statutory DMCA damages | Mitigation should preclude DMCA statutory damages where plaintiff could have prevented CMI alterations | Mitigation is not a complete defense to DMCA statutory damages; statutory damages may still be awarded |
| Whether the district court erred in denying KA’s §411(b) motion to refer registrations to the Copyright Office | EIG: district court may determine knowing inaccuracy before referral; registrations were accurate | KA: §411(b) requires referral whenever inaccurate information is alleged | Court affirmed district court: referral discretionary; no clear error in finding EIG did not knowingly include inaccuracies and Oil Daily registrations were proper |
| Whether KA was entitled to recover post-offer attorney’s fees under Rule 68 because EIG obtained a less favorable judgment than KA’s $5M offer | EIG: Rule 68(d) costs exclude post-offer attorney’s fees unless fees would have been properly awardable to offeree under substantive statute (and only prevailing parties recover fees) | KA: Marek allows recovery of post-offer attorney’s fees as part of Rule 68 costs if the statute authorizes fees as costs generally | Court agreed with Marek’s limits: non-prevailing parties generally cannot recover attorney’s fees under Rule 68 where the substantive statute awards fees only to prevailing parties; district court’s application stands but mooted by vacatur on damages |
Key Cases Cited
- Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U.S. 663 (Sup. Ct.) (laches barred by statutory limitations; separate-accrual rule and remedial-phase considerations)
- Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228 (Sup. Ct.) (statutory damages may deter and sanction beyond compensation)
- Douglas v. Cunningham, 294 U.S. 207 (Sup. Ct.) (statutory damages where actual damages or profits are difficult to prove)
- DeliverMed Holdings, LLC v. Schaltenbrand, 734 F.3d 616 (7th Cir.) (courts may decide inaccuracy before seeking Register’s advice under §411(b))
- Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255 (11th Cir.) (statutory damages serve deterrent purpose)
- Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007 (9th Cir.) (statutory damages can be punitive/deterrent for willful infringement)
- Marek v. Chesny, 473 U.S. 1 (Sup. Ct.) (Rule 68 costs include only those costs properly awardable under the substantive statute)