498 F. App'x 341
4th Cir.2012Background
- Tattoo Art licensed TAT to use its tattoo flash designs to create stencils for airbrushed tattoos; the License Agreement was signed Dec 2005, with a 3-year initial term and annual minimum royalties of $6,000 plus 12.5% of gross sales of licensed articles; TAT was to provide quarterly reports and make quarterly payments; Tattoo Art reserved the right to terminate for breach; post-termination, TAT could dispose of on-hand inventory for 12 months but not continue sales if terminated for breach; TAT stopped royalty payments in late 2006 and altered Tattoo Art designs for display, removing copyright notices; Tattoo Art terminated the license in May 2009 and sued for breach of contract and copyright infringement; district court granted Tattoo Art partial summary judgment on liability and held damages at trial; willful infringement and statutory damages were addressed with a 24-book infringing set and a $20,000 per-book award for a total of $480,000.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the License Agreement allowed oral modifications | Tattoo Art argues the written agreement controls; no valid oral modification. | TAT contends oral modifications occurred post-signature reflecting expanded rights. | Merger clause precludes oral modifications; no valid modifications. |
| Whether TAT infringed copyright by altering designs | Altered coloring exceeded license scope and infringed after grant. | Alterations were within marketing use under license. | Alterations outside license; infringement occurred; post-termination use also infringed. |
| What is the proper measure and amount of statutory damages | Should be substantial given willfulness and multiple infringements. | Damages should be proportionate and within statutory range; not excessive. | 24 infringements; $20,000 per book within range; total $480,000, not an abuse of discretion. |
| Whether equitable estoppel defeated infringement | N/A | Estoppel defenses should bar infringement. | Estoppel not shown; no basis to defeat summary judgment. |
| Whether damages could include both actual and statutory for infringement | May recover statutory damages for infringement and actual damages for breach separate. | May not double-recover for same infringement. | Actual damages for breach and statutory damages for infringement ratified; no double recovery. |
Key Cases Cited
- Gilliam v. American Broadcasting Cos., Inc., 538 F.2d 14 (2d Cir. 1976) (licensee may not exceed granted license scope; editing may infringe)
- Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417 (U.S. 1984) (exclusive rights include reproduction and display)
- N.Y. Times Co. v. Tasini, 533 U.S. 483 (U.S. 2001) (public display rights under copyright)
- ITO FCA, Inc. v. MegaTrans Logistics, Inc., 322 F.3d 928 (7th Cir. 2003) (licensee infringes by exceeding scope of license)
- Xoom, Inc. v. Imageline, Inc., 323 F.3d 279 (4th Cir. 2003) (for statutory damages, a compilation counts as one work)
- Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010) (context of statutory damages; limitations on damages interpretations)
- Lyons Partnership, L.P. v. Morris Costumes, Inc., 243 F.3d 789 (4th Cir. 2001) (review of statutory damages within the statutory range for abuse of discretion)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003) (proportionality not applied to statutory damages within range)
- BMW of N. America, Inc. v. Gore, 517 U.S. 559 (U.S. 1996) (constitutional limits on punitive damages; not applicable to statutory damages)
- Temkin v. Frederick County Comm’rs, 945 F.2d 716 (4th Cir. 1991) (summary judgment standards referenced)