Bouchat v. Bon-Ton Dept. Stores, Inc.Bouchat v. Bon-Ton Dept. Stores, Inc.
Marc E. Ackerman, WHITE & CASE, New York, New York, for Appellees.
OPINION
MICHAEL, Circuit Judge:
This is the latest in a series of appeals in copyright infringement cases arising out of the design and use of the logo for the Baltimore Ravens football team. In
I.
A.
In November 1995 the National Football League announced that the Cleveland Browns team was moving to Baltimore. The Browns name, however, was to be left in Cleveland, which required the relocated team to select a new name. Bouchat, an amateur artist who worked as a security guard in Baltimore, sketched several logos illustrating names (including the Ravens) being considered by the newly arrived team. On December 5, 1995, Bouchat drew a logo with a shield bearing the letter B and held by a raven (the Shield drawing). In March 1996 the Ravens name was officially chosen, and the NFL‘s marketing arm, NFLP, hired artists to begin logo design. On April 1 or 2, 1996, Bouchat faxed his Shield drawing to the Maryland Stadium Authority with a note asking the authority‘s chairman to send the drawing to the Ravens’ owner. The note said that if the Ravens used his logo, Bouchat wanted a letter of recognition and an autographed helmet. After the Ravens had access to Bouchat‘s drawing, NFLP‘s artists created a logo called the Flying B. The Flying B depicted a winged shield bearing the letter B, and this logo bore a remarkable resemblance to Bouchat‘s Shield drawing. The Ravens team presented the Flying B to the public for the first time in June 1996, and the team used this logo until the end of the 1998 season. During the time the Flying B was the team logo, the NFLP licensed it as part of a package of all NFL team logos to hundreds of manufacturers and retailers for use on Ravens merchandise. The team never gave Bouchat the recognition letter or autographed helmet he had requested. On July 25, 1996, Bouchat registered the Shield drawing with the U.S. Copyright Office.
In May 1997 Bouchat filed a copyright infringement action against the Ravens and NFLP in the U.S. District Court for the District of Maryland, Bouchat v. Baltimore Ravens, Inc. (Bouchat I), No. MJG-97-1470. He alleged that the Flying B infringed his copyright in the Shield drawing and that the defendants had earned profits from licensing the infringing work. The district court bifurcated the case into liability and damages phases. The jury in the liability phase found that the Ravens and NFLP had infringed Bouchat‘s copyright, and we affirmed in an interlocutory appeal. Bouchat v. Baltimore Ravens, Inc., 228 F.3d 489 (4th Cir. 2000), amended by and reh‘g en banc denied by 241 F.3d 350 (4th Cir.), cert. denied, 532 U.S. 1038 (2001).
In Bouchat I‘s damages phase Bouchat sought recovery under
B.
In the meantime, Bouchat brought four additional actions, which are the subject of this appeal, against several hundred “downstream defendants” for copyright infringement: Bouchat v. Champion Prods., Inc., No. MJG-99-1576 (D. Md.) (Bouchat II); Bouchat v. Baltimore Ravens Ltd. P‘ship, No. MJG-01-0647 (D. Md.) (Bouchat III); Bouchat v. K-Mart Corp., No. MJG-01-1996 (D. Md.) (Bouchat IV); and Bouchat v. 7-Eleven, Inc., No. MJG-03-2229 (D. Md.) (Bouchat V). Bouchat describes these downstream defendants as “NFL-related entities . . . who utilized the infringing work in advertisements, publishers of game day magazines, broadcast and media entities which licensed the use of the infringing logo,” and makers of video games, trading cards, and other products that displayed the Ravens’ Flying B. Appellant‘s Br. at 4-5. All of the downstream defendants used the logo with permission from NFLP, and NFLP required all of its licensees to submit proposed logo use to NFLP for approval. (Because every downstream defendant used the logo with either direct or indirect authorization from NFLP, we will refer to all of the downstream defendants as “licensees.“). The district court held these four related cases in abeyance while it dealt with Bouchat I.
When Bouchat I concluded in the district court, litigation resumed in Bouchat II through V with Bouchat and the licensees cross-moving for summary judgment. The district court decided the summary judgment motions in a published opinion, Bouchat v. Champion Products, Inc., 327 F. Supp. 2d 537 (D. Md. 2003). First, the court held that NFLP virtually represented the licensees in Bouchat I. The licensees were accordingly bound by the Bouchat I finding that their use of the Flying B infringed Bouchat‘s copyright, and the district court granted partial summary judgment in favor of Bouchat on the issue of liability. Id. at 544. Second, the district court held that Bouchat was precluded from relitigating the issue of whether any of the licensees’ merchandising profits were attributable to the infringement of Bouchat‘s copyrighted work because the Bouchat I jury conclusively resolved that claim against him. Id. at 545-46. Third, the district court rejected Bouchat‘s argument that he is entitled to an award of statutory damages from each of the licensees who used the infringing Flying B. Specifically, the court ruled that the judgment in Bouchat I precluded Bouchat from obtaining any statutory damages in the later litigation. Id. at 549. The court reasoned in the alternative that even if
II.
A copyright owner in a civil infringement action may elect one of two types of damages: (1) actual damages and “any additional profits of the infringer” or (2) statutory damages.
A.
“The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages.”
The related doctrines of claim preclusion and issue preclusion “relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication.” Allen v. McCurry, 449 U.S. 90, 94 (1980). A subsequent claim is precluded when (1) the judgment in the prior action was final and on the merits; (2) the parties in the two actions are identical or in privity; and (3) the
The first element (a prior final judgment on the merits) is not disputed. The final judgment in Bouchat I, which we affirmed on appeal, was on the merits, and the district court was empowered to render that judgment. The second element (identical parties or privies) is also not disputed. Bouchat does not appeal the district court‘s determination that the Ravens and NFLP virtually represented the licensees in Bouchat I. This determination is important to Bouchat because it prompted the district court‘s conclusion that the licensees were bound by Bouchat I‘s finding that the Ravens and NFLP infringed the copyright, which means that NFLP‘s licensees were also infringers. Champion Prods., 327 F. Supp. 2d at 543-44. In embracing this much of the district court‘s decision, Bouchat effectively concedes that the licensees were in privity with the Ravens and NFLP for claim preclusion purposes, since virtual representation is a recognized category of privity. See Martin v. Am. Bancorporation Ret. Plan, 407 F.3d 643, 651 (4th Cir. 2005).
Evaluation of the third element (identical claims), which is contested, calls for more extended discussion. The requirement that the claims in the first and subsequent actions be identical is met if “the new claim arises out of the same transaction or series of transactions as the claim resolved by the prior judgment.” Meekins v. United Transp. Union, 946 F.2d 1054, 1058 (4th Cir. 1991). We have recognized that the word “transaction”
in the claim preclusion context connotes a natural grouping or common nucleus of operative facts. Among the factors to be considered in deciding whether the facts of the current and prior claims are so woven together that they constitute a single claim are their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes.
Pittston Co. v. United States, 199 F.3d 694, 704 (4th Cir. 1999) (citations and punctuation omitted).
There are several actions here — Bouchat I on the one hand and Bouchat II, IV, and V on the other — but there is only a single nucleus of operative facts, satisfying the third element of claim preclusion. In the latter actions, Bouchat II, IV, and V, Bouchat asserts claims against the commercial users of the Ravens logo, whether they displayed the logo in broadcast coverage of Ravens games, produced Ravens merchandise, or sold that merchandise to ordinary consumers. In Bouchat I Bouchat sought to hold NFLP and the Ravens accountable for these very same acts that infringed his copyright. The complaint in Bouchat I is clear on this point. It alleged that NFLP “licensed third parties to use the logos and trade/service marks of the Baltimore Ravens in connection with a variety of merchandise and promotional activities directly associated” with the Ravens. Complaint at 2-3, ¶ 4, Bouchat I, No. MJG-97-1470 (D. Md. filed May 1, 1997). The Bouchat I complaint further alleged:
Since June 5, 1996, if not before, Defendants [the Ravens and NFLP] have been reproducing, distributing, promoting and offering for sale illegal and unauthorized copies of the subject works in the form of Baltimore Ravens’ logos and/or trade/service marks to promote their business enterprises . . . . Defendants have licensed the use of the subject works . . . to third parties for the sale and merchandising of products and thereby have derived profits from the use of the subject works.
Id. at 7, ¶ 11. While Bouchat I focused on the licensor‘s conduct, and Bouchat II, IV,
That Bouchat did not seek actual damages in Bouchat I but now seeks such damages from the licensees does not alter our conclusion that the claims in Bouchat‘s cases are identical. The relief Bouchat seeks for the licensees’ commercial use of the infringing logo is “woven together,” Pittston, 199 F.3d at 704, with the relief he sought against the Bouchat I defendants. While Bouchat‘s reasons for not presenting any evidence of actual damages and focusing on infringement profits in Bouchat I may have been perfectly sound, that is of no moment here. Cf. Bouchat I, 346 F.3d at 527 n.1 (Widener, J., dissenting) (explaining why “it is likely that Bouchat‘s actual damages, if any, were nominal.“). In seeking infringement profits against the Ravens and NFLP, Bouchat asserted a right to recovery under
As we have explained, Bouchat I and Bouchat II, IV, and V all arise from a common series of transactions, so the claims are identical. The three requirements of claim preclusion are therefore satisfied. Accordingly, the district court correctly granted judgment in favor of the licensees because Bouchat is precluded from obtaining actual damages against them.
We do not suggest that Bouchat was legally obligated to join the licensees as defendants in the first action. In other words, we do not create a rule of mandatory joinder, for it remains settled that a copyright holder may exercise discretion in suing as many co-infringers as he chooses. Salton, Inc. v. Philips Domestic Appliances & Pers. Care, B.V., 391 F.3d 871, 877 (7th Cir. 2004); Robbins Music Corp. v. Alamo Music, Inc., 119 F. Supp. 29, 31 (S.D.N.Y. 1954). It is equally well established, however, that when an injured person sues joint tortfeasors in successive actions, preclusion principles determine the effect of the first judgment on the later actions. Restatement (Second) of Torts § 884 (1979). This rule invites the application
B.
Bouchat argues in the alternative that the district court erred in holding that he is not entitled to statutory damages. A copyright owner may be able to choose statutory damages instead of actual damages and infringement profits. When this option is available, the Copyright Act allows
an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just.
The registration requirement is important to the statutory scheme. A person registers by filing a form with the U.S. Copyright Office. Registration promotes orderly resolution of copyright disputes because it creates a permanent record of the protected work, putting the world on constructive notice of the copyright owner‘s claim. Johnson v. Jones, 149 F.3d 494, 505 (6th Cir. 1998). While the predecessor statute did not allow any relief for copyright violations that occurred before registration and publication, id., the 1976 Act reversed that. Now
a copyright owner whose work has been infringed before registration [is] entitled to the remedies ordinarily available in infringement cases: an injunction on terms the court considers fair, and his actual damages plus any applicable profits not used as a measure of damages. However, section 412 [denies] any award of the special or ‘extraordinary’ remed[y] of statutory damages . . . where infringement of copyright in an unpublished work began before registration.
H.R. Rep. No. 94-1476, at 158 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5774. By making registration a precondition for the “extraordinary remed[y]” of statutory damages, Congress sought to motivate speedy registration. Johnson, 149 F.3d at 505.
Bouchat registered his copyright on July 25, 1996. NFLP‘s infringement began the month before, in June 1996. Consequently, NFLP was not individually liable to Bouchat for statutory damages. We confirmed
Although NFLP violated the copyright for the first time in June 1996 (when it first exhibited the Flying B to the public and authorized Ravens merchandise), NFLP may have continued to violate the copyright long after July 25, 1996, when Bouchat registered. The post-registration activities make no difference. In using the word “commenced,”
NFLP‘s battalion of licensees — not NFLP itself — are the defendants in the cases before us today. Nevertheless, the district court held that the date on which NFLP first infringed was the date on which the infringement by the licensees commenced because NFLP approved all of the licensees’ infringing acts. Champion Prods., 327 F. Supp. 2d at 551-52. Bouchat argues that the correct approach would have been to treat the date on which each individual licensee first violated Bouchat‘s copyright as the date that licensee‘s infringement commenced under
Section 412 cannot be read in isolation. That section, which defines the registration prerequisite for statutory damages awards, must be read in harmony with
Again, in an action against NFLP as “one infringer . . . liable individually,”
Of course, NFLP is not a party in today‘s cases, and none of the licensees appear responsible for NFLP‘s initial act of infringement since none aided in designing the Flying B. But these factors do not change the analysis. Section 504(c)(1) speaks of “infringers,” not parties. Because a statutory damages award covers “all infringements involved in the action . . . for which” infringers are liable,
The following hypothetical illustrates our holding. Suppose that in January 1997, several months after Bouchat registered his copyright, a sweatshirt manufacturer, M Corp., printed a batch of Ravens sweatshirts bearing the Flying B pursuant to an NFLP license. Production of the sweatshirts violated Bouchat‘s exclusive right to “re-produce the copyrighted work in copies,”
Our holding flows from the statute‘s plain language. Moreover, our holding has the added benefit of respecting Congress‘s purpose for enacting
III.
For the foregoing reasons, we affirm the judgments in Bouchat II, III, IV, and V that deny Bouchat‘s requests under the Copyright Act for actual or statutory damages.
AFFIRMED
NIEMEYER, Circuit Judge, concurring:
I concur in the good opinion of my colleague writing for the court, recognizing that Bouchat, in seeking to avail himself of his victory in Bouchat I, has conceded that the downstream defendants he has named in the related cases before us are in privity with the defendants in Bouchat I. Therefore, the downstream defendants benefit from the preclusive effects of Bouchat I insofar as Bouchat has pursued the same claims against them as privies. And we now hold that he has, because the same transaction and occurrence underlies all Bouchat‘s lawsuits.
But absent Bouchat‘s concession, made for understandable strategic reasons, we would face almost irresolvable issues presented by this multi-party licensing infringement case. While the Copyright Act addresses adequately the single infringement of a work, it is not susceptible to a straightforward application when multiple infringements by multiple parties arise from a single work.
The Copyright Act strives to be complete and comprehensive by creating causes of action at the subatomic level. Yet in doing so, the Act loses focus on the bigger picture. In granting an author a separate “exclusive right” in every reproduction, derivative preparation, distribution, performance, display, and digital audio transmission of his work, see
Thus, when the “Village Book Store” sells a copy of a book containing a photograph that infringes on a photographer‘s work, the photographer has a cause of action against the book store. And if the photographer so elects, he may claim, in lieu of actual damages, statutory damages of “not less than $750 or more than $30,000 as the court considers just.”
Relying on
A crowning layer of complexity is added if the photographer files first against the publisher and elects to seek actual damages and thereafter sues the book stores, seeking statutory damages. The Act would seem to limit the photographer only by requiring that he make his election of remedies in the specific action “at any time before final judgment is rendered.” See
Even as the Copyright Act seems to encourage claim splitting and manipulation of the litigation process, federal judicial policy encourages resolving in one action all claims arising out of a transaction or occurrence. See, e.g.,
These questions, I believe, demonstrate that the Copyright Act pulls in tension from traditional joinder and claim preclusion policies and tends to undermine good judicial administration aimed at efficiency and justice. As a consequence, this case easily could have presented the fundamental but difficult issue whether a copyright owner must join all related infringers — from the original copier to the downstream licensees — in a single infringement action, or whether he has the prerogative to proceed piecemeal against the gamut of infringers. Today, however, we do not resolve these nettlesome issues because of the peculiar circumstances created by Bouchat‘s desire to leverage his win in Bouchat I into a claim for statutory damages in the cases before us now. Yet these issues will arise with increasing frequency — especially in view of advanced technology for copying and transmitting data, which facilitates massive infringements — and therefore Congress should reconsider them soon to define a more workable balance.