371 F.3d 883 | 6th Cir. | 2004
Before: GUY and GILMAN, Circuit Judges; BARZILAY,
Judge. [*] UNITED STATES COURT OF APPEALS _________________ FOR THE SIXTH CIRCUIT _________________ COUNSEL ARGUED: Richard S. Busch, KING & BALLOW, B RIDGEPORT M USIC , I NC .; (cid:88) Nashville, Tennessee, for Appellants. R. Horton Frank III, (cid:45) W ESTBOUND R ECORDS , I NC ., STEWART, ESTES & DONNELL, Nashville, Tennessee, for (cid:45) Plaintiffs-Appellants, Appellee. ON BRIEF: Richard S. Busch, D’Lesli M. Davis, (cid:45) Nos. 03-5003/5656 KING & BALLOW, Nashville, Tennessee, for Appellants. (cid:45) > S OUTHFIELD M USIC , I NC .; R. Horton Frank III, STEWART, ESTES & DONNELL, (cid:44) Nashville, Tennessee, for Appellee. N INE R ECORDS , I NC ., (cid:45) Plaintiffs, (cid:45) _________________ (cid:45) (cid:45) v. OPINION (cid:45) _________________ (cid:45) D IAMOND T IME , L TD ., (cid:45) RALPH B. GUY, JR., Circuit Judge. Plaintiffs, Bridgeport Defendant-Appellee, (cid:45) Music, Inc., and Westbound Records, Inc., appeal from the (cid:45) decision granting summary judgment to defendant Diamond (cid:45) I RVING L ORENZO , d/b/a DJ Irv Time, Ltd., a copyright clearance company, on their claims of (cid:45) Music; TVT M USIC , I NC .; common law negligence and copyright infringement (cid:45) involving the use of samples in the rap release “4 My Click.” TVT R ECORDS , I NC ., a/k/a (cid:45) Plaintiffs argue that the district court erred both in finding Tee Vee Toons, (cid:45) these claims were barred by the applicable statutes of Defendants. (cid:45) limitations and in rejecting equitable estoppel as a basis to (cid:78) avoid the limitations bar. In a separate appeal, plaintiffs challenge the post-judgment award of attorney fees and
Appeal from the United States District Court nontaxable costs to Diamond Time as a prevailing defendant for the Middle District of Tennessee at Nashville. under 17 U.S.C. § 505. No other parties or claims are before No. 01-00702—Thomas A. Higgins, District Judge. Argued: April 28, 2004 Decided and Filed: June 18, 2004 [*] The Honorab le Judith M. Barzilay, Judge for the United States Court
of International Trade, sitting by designation. 1 Nos. 03-5003/5656 Bridgeport Music, Inc. v. 3 4 Bridgeport Music, Inc. v. Nos. 03-5003/5656 Diamond Time, et al. Diamond Time, et al. us. [1] After review of the record and the applicable law, we Diamond Time’s business included sample clearance find no error and affirm. services, which refers to the process of obtaining permission to use a sample in a new musical work. According to
I.
Diamond Time’s website, it offered sample clearance services in two phases. The first included locating the copyright
The claims against Diamond Time, a copyright clearance owners, requesting permission to use the sample, and company, were initially asserted in a complaint filed May 4, negotiating the fees for its use. The second phase, called 2001. That original complaint alleged nearly 500 counts “Licensing/Contract Administration,” included negotiating against approximately 800 defendants for copyright agreeable terms with the copyright holders; issuing a Usage infringement and other state law claims based on music Report confirming the terms and requesting a formal written sampling. “Sampling,” common in rap, hip-hop, and urban agreement; and overseeing the trafficking, execution, and music, typically involves making a digital copy from a master payment of those agreements. sound recording and using a piece in the making of a new work. Sound recordings and their underlying musical
Catherine Carapella, Diamond Time’s representative, compositions are separate works with their own distinct testified that when engaged to perform clearance services, copyrights. Bridgeport Music, Inc. v. Still N The Water Diamond Time’s practice was to contact the proprietor or Publ’g , 327 F.3d 472, 475 n.3 (6th Cir.), cert. denied , 124 S. owner of the copyrights in the material its client wanted to Ct. 399 (2003). use, identify itself and the client on whose behalf it was
acting, describe the proposed use and ask for terms on which The amended complaint, filed after the district court it would permit the use. The owner would normally advise severed the initial pleading into 476 separate actions, alleged Diamond Time of its terms and Diamond Time would seek that the rap CD single “4 My Click” sampled from the the consent of its client. This would end phase one, at which composition “The Most Beautifullest Thing In the World time Diamond Time’s client would decide how it wanted to (Green Eyed Remix)” (“The Most”), and from both the proceed. The client then dictated what phase two services, if composition and sound recording “Funky Worm.” Bridgeport any, it would have Diamond Time undertake. Music claims to own copyrights in both music compositions, while Westbound Records claims to hold a copyright in only On January 24, 1995, TVT Records released the CD single the sound recording “Funky Worm.” [2]
containing three versions of “4 My Click” by the rap artists known as Cash Money Click. TVT Records owned the sound recording “4 My Click,” while TVT Music and DJ Irv Music each held a 50% interest in the composition “4 My Click.” [1] Southfield Music and Nine Records do not appeal. In the wake of
TVT Records had a policy of requiring clearance of all a settlement with TVT M usic and TVT Records, Bridgeport and samples in its releases and depended on the “creative types” W estbound voluntarily dismissed the ap peal against all defendants except Diamond Time. to identify any samples in a new recording. TVT Records
hired Diamond Time to handle clearance of the sample from [2] Although it appe ars that the district co urt only p artially reso lved
questions concernin g the ownership interests of Bridgeport and W estbound Records, we assume for purposes of this appeal that Bridgeport and W estbo und hold the copyrights they claim in “T he M ost” and “Funky W orm.” Nos. 03-5003/5656 Bridgeport Music, Inc. v. 5 6 Bridgeport Music, Inc. v. Nos. 03-5003/5656
Diamond Time, et al. Diamond Time, et al. “The Most” in “4 My Click.” Diamond Time maintains that stated: “Jane: Joan @ PolyGram has quoted 50% © pro-rata it was not asked to obtain clearance for use of any other with Bridgeport. Is this o.k. with you? Please advise so we sample in “4 My Click.” can wrap this matter up quickly. Zomba Music (who has
some publishing on this as well) has agreed to go pro-rata. In January 1995, on the same day that “4 My Click” was Thanks! Drea.” Under this, also handwritten, is Peterer’s response: “Ok, Jane Peterer, 11-20-95.” [4] On November 27, released, TVT Records obtained permission to use the sample “The Most” in “4 My Click” from Songs of Polygram. On 1995, Kaplon sent Peterer a Usage Report confirming the October 3, 1995, Diamond Time representative Drea Kaplon terms offered; indicating that Diamond Time’s client, TVT wrote to Jane Peterer, the administrator for Bridgeport Music, Records, was proceeding in reliance on the quote; and seeking permission from Bridgeport to use the sample from requesting that Peterer prepare and forward a formal the composition “The Most.” [3] The letter states that she was
agreement directly to TVT Records. unaware, until this matter was well into the licensing On December 10, 1995, Peterer sent a formal agreement, process, that Zomba Music could only give clearance on called a Release and Agreement, directly to TVT Records for the “green-eyed” version of “The Most Beautifullest signature by TVT Music and DJ Irv Music. Under that co- Thing In The World” and that Bridgeport Music was a publishing agreement, Bridgeport would receive an 8.33% co-publisher on this song along with Zomba Music and interest in the composition “4 My Click.” Peterer sent PolyGram Music. Kaplon a copy of the cover letter relating to this agreement on
the belief that Diamond Time would continue to participate Accordingly, enclosed please find a cassette of both the until the formal agreement and mechanical licenses were new and sampled song for your review. We would like signed. Peterer placed a copy of that letter in a file of to obtain clearance for the use of “The Most Beautifullest “pending matters,” where it remained until her deposition in Thing In The World (Green-eyed version)” in “4 My June 2002. Click” from Bridgeport Music on a pro-rata basis with both Zomba and PolyGram Music as per the
On the same day that the Release and Agreement was sent writer/publisher splits listed in the draft of the Zomba to TVT Records, Peterer faxed a separate request to Kaplon Publishing Agreement. asking for information that was needed to prepare the
mechanical license for TVT Records. Kaplon did not respond Jane, I look forward to your response so that we may to that request. Diamond Time maintains that its involvement finalize this in a timely manner. Please call me should in the clearance process for “4 My Click” ceased once the you have any questions. Usage Report had been sent. Plaintiffs dispute this, arguing On November 20, 1995, Kaplon made a handwritten note on a copy of this letter and faxed it to Peterer. Kaplon’s note [4] Peterer claimed that if she had been aware of the alleged samp le
from “Funky Wo rm,” she would have demanded a higher percentage of ownership in “4 M y Click” for B ridgeport as well as p ayment to W estbound for use of the sound recording. Plaintiffs indicate that, despite [3] Peterer was authorized to negotiate and agree to terms on which having been provided a tape of “4 My Click,” they only discovered the
permission to use Bridgeport’s copyrighted material would be granted. alleged sample from “Funky Worm” in preparing to file this action. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 7 8 Bridgeport Music, Inc. v. Nos. 03-5003/5656
Diamond Time, et al. Diamond Time, et al. that Diamond Time “dropped the ball” and failed to complete statement for the artist Cash Money Click was prepared its assignment from TVT Records to oversee the trafficking through December 31, 1998, in order to be sure that it and execution of the formal agreement. The district court did included all sales and returns. TVT Records stated, however, not attempt to resolve this dispute. [5]
that it did not receive any returns or unsold copies after April 1997. Plaintiffs argued that there must have been sales
Whatever the extent of the services Diamond Time had because the online service All Music Guide reported that “4 been engaged to provide in this case, Peterer admitted that she My Click” was still “in print” as of August 2000. Granting had no further written correspondence about “4 My Click” summary judgment to the TVT defendants, the district court with either TVT Records or Diamond Time. The only contact found plaintiffs had failed to present evidence that any sales Peterer claimed to have had occurred in several telephone or returns had occurred after May 4, 1998. Plaintiffs’ appeal conversations with Kaplon relating to “4 My Click” and other
from that decision was voluntarily dismissed as a result of a matters, during which Peterer urged Kaplon to see that the settlement reached between plaintiffs and the TVT Agreement was signed. Peterer claims that she relied on defendants. Kaplon’s assurances that she would “get the deal finalized.” There is, however, no indication of when these conversations Diamond Time sought summary judgment on the grounds took place. that it committed no acts of direct or contributory
infringement, that it owed no duty on which the negligence On September 5, 1996, TVT Records issued a Deletion claim could be based, that the negligence claim was Notice for a number of titles, including “4 My Click,” which preempted by the Copyright Act, and that both the copyright meant that no further copies would be manufactured or sold. infringement and negligence claims were barred by the The notice advised that requests for return of any of the listed respective three-year statutes of limitations. Over plaintiffs’ products had to be made in writing no later than November 4,
opposition, the district court granted summary judgment to 1996, and that the products had to be received by TVT Diamond Time on statute of limitations grounds. Records no later than January 10, 1997. The profit and loss
Judgment was entered November 5, 2002, and plaintiffs appealed. On March 26, 2003, the district court granted Diamond Time’s post-judgment motion for attorney fees and [5] Carapella testified that TV T Rec ords had a mod ified arrangement
costs as a prevailing defendant under 17 U.S.C. § 505. with Diamo nd Time under which Diam ond T ime would provide phase Bridgeport Music, Inc. v. Irving Lorenzo , 255 F. Supp.2d 795 one sample clearance services for a fee of $2 00 and wo uld end its phase (M.D. Tenn. 2003). Plaintiffs appealed from that order as two work with the issuance of the Usage Reports for a fee of $40 each. She conceded, however, that she had no personal knowledge of the well. clearance work done on “4 My Click.” In add ition, when Ka plon left Diamond Tim e in 19 97, no one took over her responsibilities until
II.
sometime in 1999. Diamond Time’s physical file conc erning “4 M y Click” was destroyed in September 2000, along with other files from
The district court’s decision granting summary judgment is samp le clearances from 1991 through 1995, to save on storage costs. reviewed de novo . Smith v. Ameritech , 129 F.3d 857, 863 Diamond Tim e was able to produce a co mpu ter-gene rated tracking grid for “4 My Click” which noted that Zomba had “waived phase two,” but (6th Cir. 1997). Summary judgment is appropriate when did not no te as to B ridgeport or Polygram either that phase two was
there are no genuine issues of material fact in dispute and the “waived” or that the jo b was “done.” Nos. 03-5003/5656 Bridgeport Music, Inc. v. 9 10 Bridgeport Music, Inc. v. Nos. 03-5003/5656
Diamond Time, et al. Diamond Time, et al. moving party is entitled to judgment as a matter of law. F ED . F.2d 11, 11 (6th Cir. 1981) (per curiam); Mount v. Book-of- R. C IV . P. 56(c). In deciding a motion for summary the-Month Club, Inc. , 555 F.2d 1108, 1110-11 (2d Cir. 1977). judgment, the court must view the evidence and reasonable
Contributory infringement occurs when one, “with inferences in the light most favorable to the nonmoving party. knowledge of the infringing activity, induces, causes or Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. materially contributes to the infringing conduct of another.” 574, 587 (1986). The nonmoving party may not rest on his Gershwin Publ’g Corp. v. Columbia Artists Mgmt., Inc. , 443 pleadings, but must come forward with evidence from which F.2d 1159, 1162 (2d Cir. 1971); see also Ellison v. Robertson , a rational trier of fact could find in his favor. Anderson v. 357 F.3d 1072, 1076 (9th Cir. 2004). Liability for Liberty Lobby, Inc. , 477 U.S. 242, 249 (1986).
contributory infringement is based on the defendant’s A. Copyright Infringement relationship to the direct infringement. Ez-Tixz, Inc. v. Hit- Tix, Inc. , 919 F. Supp. 728, 732-33 (S.D.N.Y. 1996). There Plaintiffs disavowed any claim that Diamond Time can be no contributory infringement without a direct committed direct acts of infringement, but argued that infringement. Matthew Bender & Co. v. West Publ’g. Co. , Diamond Time was liable instead as a contributory infringer 158 F.3d 693, 706 (2d Cir. 1998); Subafilms, Ltd. v. MGM- because its failure to shepherd the clearance process through Pathe Communications Co. , 24 F.3d 1088, 1092 (9th Cir. execution of the written Release and Agreement materially 1994). contributed to the direct infringement by the TVT defendants. The district court did not determine whether the evidence 1. Statute of Limitations could support a finding that Diamond Time was a Conceding that Diamond Time took no actions within the contributory infringer, concluding instead that any such claim period, plaintiffs argue for the first time on appeal that their was barred by the statute of limitations because “there [was]
claims against Diamond Time are not time-barred because no evidence in the record that defendant Diamond Time TVT Records committed acts of direct infringement within engaged in any acts whatsoever regarding ‘4 My Click’ after the limitations period to which Diamond Time’s earlier May 4, 1998.” conduct materially contributed. The short answer is that the A civil action under the Copyright Act must be district court found plaintiffs had failed to present evidence of “commenced within three years after the claim accrued.” any direct infringement by TVT within three years preceding 17 U.S.C. § 507(b). A cause of action accrues when a the filing of the complaint. Without proof of direct plaintiff knows of the infringement or is chargeable with such infringement, there can be no liability for contributory knowledge. Roley v. New World Pictures, Ltd. , 19 F.3d 479, infringement. 481 (9th Cir. 1994). Because each act of infringement is a Even if there was evidence of direct infringement within the distinct harm, the statute of limitations bars infringement
period, however, plaintiffs may not “piggy back” Diamond claims that accrued more than three years before suit was filed Time’s conduct from outside the period onto the alleged but does not preclude infringement claims that accrued within direct infringement of another within the period. Just as the statutory period. Id ; Stone v. Williams , 970 F.2d 1043, claims against a direct infringer who commits no acts within 1049-50 (2d Cir. 1992); Hoste v. Radio Corp. of Am. , 654
the three-year limitations period are time barred, claims Nos. 03-5003/5656 Bridgeport Music, Inc. v. 11 12 Bridgeport Music, Inc. v. Nos. 03-5003/5656 Diamond Time, et al. Diamond Time, et al. against a contributory infringer who commits no acts within Cir. 1994), and declined to follow the lead of the Seventh the limitations period are also time barred. This is not a new Circuit in Taylor v. Meirick , 712 F.2d 1112, 1118-19 (7th Cir. proposition, as the discussion in Mount v. Book-of-the-Month 1983). The defendant in Makedwde , Lyman Jones, Club makes clear. participated in the alleged copyright infringement but
completely terminated his connection to the infringing There, the publisher of the plaintiff’s book sent proof defendants outside the three-year limitations period. The copies to the defendant Book-of-the-Month Club so it could plaintiff reasoned that claims against Jones should not be time decide if it wanted to adopt the work for the club. The barred because his actions outside the period led to defendant gave the copy to someone it hired to read incoming subsequent acts of infringement by others within the period. work, who turned it over to a friend, David McKibbin. Rejecting this argument and following the lead of Hoste , McKibbin, in turn, allegedly infringed the copyright in the
Stone , and Roley , the court concluded Jones could only be book by copying material in a pamphlet he wrote on the same held liable for his acts of infringement committed within three subject. The pamphlet continued to be sold within the years before suit was filed. Makedwde , 37 F.3d at 182. limitations period. The Second Circuit concluded that claims against the book club were barred by the statute of Similarly, we find no error in the district court’s limitations, explaining: determination that the copyright infringement claims are
barred by the statute of limitations absent a showing that We need not consider whether defendant could escape defendant should be equitably estopped from relying on the liability simply because the reader to whom it sent the limitations bar. proofs of plaintiff’s work was an independent contractor. In any case the claim is foreclosed by limitations. Even 2. Equitable Estoppel if defendant participated in an infringement through the
Equitable estoppel, sometimes referred to as fraudulent sending on of the proofs to McKibbin, that event concealment, is invoked in cases where the defendant takes occurred in the Fall of 1955, almost twenty years before active steps to prevent the plaintiff from suing in time, such this action was begun. There is no proof or allegation of as by hiding evidence or promising not to plead the statute of any further connection of Book-of-the-Month with limitations. Hentosh v. Herman M. Finch Univ. , 167 F.3d McKibbin’s pamphlet. Unless the statute’s running has 1170, 1174 (7th Cir. 1999); EEOC v. Ky. State Police Dep’t , been tolled or prolonged, the claim is undoubtedly long 80 F.3d 1086, 1095 (6th Cir. 1996); Cada v. Baxter since time-barred.
Healthcare Corp. , 920 F.2d 446, 450-51 (7th Cir. 1990). 555 F.2d at 1110. Application of equitable estoppel “‘should be premised on a defendant’s improper conduct as well as a plaintiff’s actual Although plaintiffs deny it, their argument rests essentially and reasonable reliance thereon.’” Hentosh , 167 F.3d at 1174 on a “continuing wrong” theory. That is, they argue that the (citation omitted). defendant’s conduct outside the limitations period contributed to direct infringement by another party within the limitations In the district court, plaintiffs asserted fraudulent period. The Fifth Circuit rejected a similar argument in concealment as the basis for equitable estoppel. Hill v. Makedwde Publishing Co. v. Johnson , 37 F.3d 180, 182 (5th United States Dep’t of Labor , 65 F.3d 1331, 1335 (6th Cir. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 13 14 Bridgeport Music, Inc. v. Nos. 03-5003/5656
Diamond Time, et al. Diamond Time, et al. 1995); Prather v. Neva Paperbacks, Inc. , 446 F.2d 338, 340- from relying on the limitations period as a bar to their claims 41 (5th Cir. 1971). On appeal, however, plaintiffs have of copyright infringement. shifted their equitable estoppel claim to argue that defendant’s
B. Negligence misconduct “lulled [them] into believing that it was not necessary for [them] to commence litigation.” Cerbone v.
The parties agree that New York law applies to plaintiffs’ ILGWU , 768 F.2d 45, 50 (2d Cir. 1985). See also Buttry v. common law negligence claim against Diamond Time. The Gen. Signal Corp. , 68 F.3d 1488, 1493 (2d Cir. 1995); Netzer statute of limitations for negligence claims under New York v. Continuity Graphic Assocs., Inc. , 963 F. Supp. 1308, 1316- 18 (S.D.N.Y. 1997). [6] law is three years from accrual of the cause of action. N.Y.
C.P.L.R. § 214 (McKinney 1996). Without deciding whether there was a duty or whether such a claim would be preempted Specifically, plaintiffs contend that they were lulled into by the Copyright Act, the district court found any such claim delaying suit by the assurances Peterer received during was long barred by the statute of limitations. several telephone conversations with Kaplon at unspecified times after December 10, 1995. To invoke equitable estoppel,
This negligence claim rested on the theory that Diamond a plaintiff must “demonstrate that his ignorance is not Time owed a legal duty to plaintiffs that arose from a “dual attributable to a lack of diligence on his part.” Netzer , 963 F. agency” relationship analogous to that of a real estate agent Supp. at 1316. Accepting for purposes of this appeal that working for both buyer and seller, or an insurance broker Kaplon said more than once that she would see the written working for both the insurer and the insured. Out of this agreement was signed, nothing at all happened after the alleged “dual agency” relationship, plaintiffs argue, arose a Agreement was sent to TVT Records on December 10, 1995. legal duty, owed to the copyright holders, to complete the Plaintiffs cannot establish that it was reasonable to rely on clearance process and to notify the copyright holders when its these empty assurances to forego litigation until more than involvement in the clearance process concluded. Plaintiffs five years after the Agreement had been forwarded to TVT for assert that the following passage represents an implicit signature. See , e.g. , Buttry , 68 F.3d at 1494; Weber v. Geffen finding that such a duty arose in this case. Records, Inc. , 63 F. Supp.2d 458, 466-67 (S.D.N.Y. 1999) (no equitable estoppel because plaintiff had unreasonably
The plaintiffs allege that Ms. Peterer contacted Diamond relied on an “unexceptional string of empty promises” to Time on or about December 10, 1995, requesting specific remedy infringements and protracted negotiations to information needed to prepare the mechanical licenses implement those promises). Accordingly, plaintiffs failed to for use of “Most,” and that Diamond Time never demonstrate that Diamond Time should be equitably estopped responded. The Court finds that Bridgeport’s cause of action accrued shortly thereafter. Bridgeport was clearly put on notice that Diamond Time was no longer working [6] At one point, plaintiffs seem to argue that the “Funky Worm”
on its behalf to procure the signed agreements when samp le was fraudulently concealed. The claims against Diamond Time, Diamond Time failed to respond to its request for however, rest on its failure to get the agreement signed concerning the use necessary information. Adding a generous period of time of the sample from “The Most” in “4 My Click.” Plaintiffs, who bear the burden of proof, presented no evidence that could lead one to conclude for Diamond Time to respond, the Court finds that the Diamond Time either knew of, or unde rtook to clear, any sample other
negligence claim accrued on or about January 10, 1996, than “T he M ost” in “4 My Click.” Nos. 03-5003/5656 Bridgeport Music, Inc. v. 15 16 Bridgeport Music, Inc. v. Nos. 03-5003/5656
Diamond Time, et al. Diamond Time, et al. and that the limitations period for the negligence claim of discretion. Coles v. Wonder , 283 F.3d 798, 804 (6th Cir. expired January 10, 1999. 2002); Murray Hill Publ’ns, Inc. v. ABC Communications,
Inc. , 264 F.3d 622, 639 (6th Cir. 2001). A district court The only fair reading of this discussion is that the district abuses its discretion when it relies on clearly erroneous court assumed without deciding that a duty could be factual findings, improperly applies the law, or uses an established, and found that any negligence claim based on erroneous legal standard. Adcock-Ladd v. Sec’y. of Treasury , such a duty would be barred by the statute of limitations. 227 F.3d 343, 349 (6th Cir. 2000). This conclusion is further supported by the district court’s observation in the order awarding attorney fees and costs that: The Copyright Act provides that the court in its discretion “The plaintiffs have never cited any case law with analogous may allow the award of costs and reasonable attorney fees to facts from which the Court could conclude that any legal duty the prevailing party in civil suits under the Act. 17 U.S.C.
§ 505. [7] Plaintiffs argue at the outset that Diamond Time is of care was owed to the plaintiffs by the defendant, who was hired by a third party to perform its clearance work.” not a prevailing party because it did not “prevail” on the issue Bridgeport , 255 F. Supp.2d at 798 n.2. of preemption or the question of duty with respect to the
common law negligence claim. First, when a defendant Similarly, we need not decide whether New York law succeeds in having summary judgment entered in its favor on would recognize a legal duty owed to plaintiffs in this case. the copyright infringement claims asserted against it, that Whether or not plaintiffs could ultimately prevail on their defendant can only be described as having “prevailed.” negligence claim against Diamond Time, such a claim would Second, the district court properly deducted 20% of the be barred because it was filed more than three years after it reasonable attorney fees incurred in this action to account for would have accrued. In the alternative, plaintiffs again rely fees incurred in defense of the common law negligence claim. on equitable estoppel to argue that the representations
Finally, as noted earlier, the district court did not decide the allegedly made by Kaplon “induced” or “lulled” them into issues of preemption or duty in granting summary judgment believing that litigation was not necessary. For the same to Diamond Time. reasons discussed earlier, we find that plaintiffs failed to demonstrate that Diamond Time should be equitably estopped The discretion to grant attorney fees in copyright from asserting the statute of limitations with respect to their infringement cases is to be exercised in an evenhanded claim of negligence. Accordingly, we affirm the district manner with respect to prevailing plaintiffs and prevailing court’s grant of summary judgment to Diamond Time. defendants, and in a manner consistent with the primary
purposes of the Copyright Act. Fogerty v. Fantasy, Inc. , 510 III. U.S. 517 (1994). The Supreme Court squarely rejected what Having affirmed the district court’s decision on the merits, we turn to plaintiffs’ further appeal from the decision [7] awarding $64,371.23 in attorney fees and $963.00 in
“In any civil ac tion under this title, the court in its discretion may nontaxable costs in favor of Diamond Time and against allow the recovery of full costs by or a gainst any party other than the Bridgeport and Westbound, jointly and severally. The district United States or an officer thereof. Except as otherwise provided by this title, the court may also award a reasonable attorney’s fee to the court’s decision to award costs and fees is reviewed for abuse prevailing party as part of the costs.” 17 U.S.C. § 505. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 17 18 Bridgeport Music, Inc. v. Nos. 03-5003/5656 Diamond Time, et al. Diamond Time, et al. it called the “dual standard” under which prevailing plaintiffs A. Decision to Grant Attorney Fees recovered attorney fees as a matter of course but prevailing
The district court in this case correctly observed that defendants were required to show the claims were frivolous because the Fogerty factors are nonexclusive, not every factor or were brought in bad faith. Id . at 534. At the other must weigh in favor of the prevailing party and other factors extreme, the Court also rejected the view that § 505 was may be considered as well. Concluding that attorney fees and intended to enact the “British Rule” of automatic recovery of costs should be granted to Diamond Time “in the interest of attorney fees by the prevailing party. Id . Thus, the Court justice and in furtherance of the objectives of the Copyright explained that “‘[t]here is no precise rule or formula for Act,” the district court explained that: making these determinations,’ but instead equitable discretion should be exercised ‘in light of the considerations we have
the following factors . . . weigh in favor of an award: identified.’” Id . (quoting Hensley v. Eckerhart , 461 U.S. 424, 436-37 (1983)). [8] (1) the plaintiffs’ litigation strategy that resulted in suing
defendants against which they had little hope of recovering; (2) the plaintiffs’ motivation for failing to
In closing, the Fogerty Court identified several dismiss stale claims; (3) the interest in deterring further nonexclusive factors that may be considered in making litigation of stale claims; and (4) the inherent weakness awards to prevailing parties, as long as the factors are in the plaintiffs’ copyright claims against this defendant. “faithful to the purposes of the Copyright Act and are applied These factors dictate that the plaintiffs should be made to to prevailing plaintiffs and defendants in an evenhanded answer for litigating this action, and the original action manner.” Id . at 534 n.19. Those factors include from whence it spawned, in a fashion that contributed to “frivolousness, motivation, objective unreasonableness (both the multiplication of fees amongst all the parties and in the factual and in the legal components of the case) and the
resulted in an administrative morass for the Court. need in particular circumstances to advance considerations of compensation and deterrence.” Id. (quoting Lieb v. Topstone
One of the consequences of the plaintiffs’ choice to sue Indus., Inc. , 788 F.2d 151, 156 (3d Cir. 1986)). hundreds of defendants all at the same time, regardless of the strength of the individual claims, was that the plaintiffs’ dragnet inevitably swept up parties against whom they had little or no chance of succeeding. Such
524 and 527. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 19 20 Bridgeport Music, Inc. v. Nos. 03-5003/5656
Diamond Time, et al. Diamond Time, et al. While the Court did not reach the merits of the resources, timely filing of legal action against them contributory infringement claim, the significance of the would increase the chance that the case is decided on the statute of limitations defense to this and numerous other merits of the claim and not subject to the vagaries of Bridgeport cases must be underscored. Many of the missing documents, faulty recollections and absent songs in question were released in the early and mid witnesses. 1990's. Many of these cases involve license agreements The plaintiffs’ failure to weed out stale claims means that were initially negotiated between the plaintiffs and that there remain in these cases numerous claims and defendants during this same time period. Yet the defendants that will never make it to trial. The Court plaintiffs waited long after the three-year statute of must infer from the plaintiffs’ actions that these claims limitations to bring suit. The Court found in this case
remain for the sole purpose of extracting a settlement that the last contact between Diamond Time and the based on the cost of litigating further. This is not an plaintiffs was in December 1995, more than five years objective to be promoted under the Copyright Act; to the before the plaintiffs brought suit. This is not the only contrary, the Court sees an opportunity here to deter Bridgeport case where the plaintiffs’ claims were further misuse of the Court’s resources and encourage the defeated by their failure to act promptly to protect their prompt dismissal of clearly stale claims in the hundreds rights.
of Bridgeport cases that remain before this Court. The plaintiffs complained repeatedly that the dilatory 255 F. Supp.2d at 798-99 (footnotes omitted). practices of the music industry, resulting in license agreements never or belatedly being signed and
Plaintiffs accuse the district court of “palpable hostility” payments never or belatedly being made, allowed the toward the legitimate copyright claims asserted in other defendants in these cases to abuse the plaintiffs’ position Bridgeport cases, in which no discovery has even been as a small company and flagrantly use their copyrighted conducted, and an intention to punish plaintiffs for bringing works without proper compensation. The plaintiffs claim all of their claims together. While the district court certainly that they did not bring suit in a more timely fashion did not mince words, the harsh criticism of the plaintiffs’ because these practices kept them from enforcing their litigation strategy was clearly focused on the resulting failure rights. The Court sees little merit to this argument (and of plaintiffs to weed out stale claims against defendants like in fact wholly rejected in this case the argument that Diamond Time. [9] these practices amounted to a legal justification for avoiding the statute of limitations).
Urging that we reverse the award, plaintiffs compare this case to Murray Hill , where the district court granted attorney If their copyrights are as valuable as the plaintiffs claim, then it behooves them to police their rights and seek legal redress in a timely fashion, especially where [9] their opponents are huge entertainment conglomerates Plaintiffs complain that the harsh criticism makes them doubt that that may not respond to any other pressure than the threat they are being treated evenhandedly with the defendant. Of course,
Fo gerty was concerned that courts be evenhanded in their treatment of of a suit. And in the case of those defendants like prevailing plaintiffs and prevailing defendants; not losing plaintiffs and Diamond Time that have limited operations or financial prevailing defend ants. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 21 22 Bridgeport Music, Inc. v. Nos. 03-5003/5656 Diamond Time, et al. Diamond Time, et al. fees to the prevailing defendant because the plaintiff’s claims Supp.2d at 799. Although plaintiffs deny such motivation, were “utterly devoid of merit” and the voluminous case was the district court certainly had a basis to infer that the burdensome to both the defendant and the court. 264 F.3d at litigation was undertaken and prosecuted in a fashion that 639. This court reversed, without much discussion, would multiply the fees and encourage nuisance settlement. concluding that the case presented unsettled questions of law We can find no clear error in this regard. and one or more colorable claims of infringement. Id . at 640. Finally, the district court explicitly relied on deterrence, a When a plaintiff has advanced a reasonable, yet unsuccessful factor that has an unusual role in this case. Despite plaintiffs’ position, an award of attorney fees to the prevailing defendant hyperbole about the district court’s desire to “close the generally does not promote the purposes of the Copyright courthouse door” to its legitimate, albeit novel, copyright Act. Matthew Bender & Co. , 240 F.3d 116, 122 (2d Cir.
infringement theories, the district court was concerned with 2001); Lotus Dev. Corp. v. Borland Int’l, Inc. , 140 F.3d 70, deterring misuse of the court’s resources and encouraging the 75 (1st Cir. 1998) (In close infringement cases, “the need to prompt dismissal of clearly stale claims in the hundreds of encourage meritorious defenses is a factor that a district court pending Bridgeport cases. Given the common origin of the may balance against the potentially chilling effect of pending cases and the possibility that similar strategies and imposing a large fee award on a plaintiff[] who . . . may have motivations may be at work with respect to at least some of advanced a reasonable, albeit unsuccessful, claim.”).
the asserted claims, deterrence is a particularly relevant factor In this case, however, there can be no doubt that the district in this case weighing in favor of an award of attorney fees. court found it was objectively unreasonable for plaintiffs to B. Reasonableness of Award have argued that the claims against Diamond Time were not time barred. In commenting on the factual and legal
Finally, having determined that an award of attorney fees weakness of the plaintiffs’ contributory infringement claims, was warranted, the district court made an independent review the district court clearly criticized the plaintiffs’ decision to of the billing statements and determined that the initial sue hundreds of defendants at once without regard to the strength of the various claims. [10] “lodestar” amount, representing reasonable attorney fees
incurred by Diamond Time in this case, was $80,464.04. That amount was then reduced by 20% to account for fees In addition, the district court inferred from the way the case incurred with respect to the negligence claim only. As a was commenced and the fact that plaintiffs continued to result, the district court awarded $64,371.23 in attorney fees prosecute this case against Diamond Time that the claims to Diamond Time. remained “for the sole purpose of extracting a settlement based on the cost of litigating further.” Bridgeport , 255 F.
Plaintiffs do not challenge the calculation of this amount, but argue that it is unreasonable because it does not account for the defendant’s unwillingness to settle. The district court oral offer to settle for “a very minimal amount,” we find no
First, plaintiffs argue that the district court “obviously abuse of discretion in the district court’s refusal to reduce the overlooked” the short declaration submitted by their attorney, amount of the attorney fees to account for defendant’s Richard Busch, in which he stated that defendant’s counsel, unwillingness to settle. Defendant did not display Horton Frank, rebuffed an attempt to settle all the claims unwillingness to discuss settlement, only an unwillingness to against Diamond Time in June 2002. That declaration pay plaintiffs money it did not have, in order to settle claims specifically states that Busch approached Frank during a it believed would be dismissed with prejudice, when it had break in depositions sometime in June 2002 and offered to already incurred significant attorney fees in defending itself. dismiss the claims for “a very minimal amount of money.” Cf. Diamond Star Bldg. Co. v. Freed , 30 F.3d 503, 506-07 Frank apparently replied that plaintiffs would have to agree to (4th Cir. 1994) (reversing denial of attorney fees and finding dismiss the claims with prejudice and to pay all or part of it an abuse of discretion to penalize the prevailing defendant Diamond Time’s attorney fees and costs. It is true that the for refusing to admit liability and pay to settle a frivolous district court did not mention this oral exchange in its action). opinion. The court also did not mention the letters dated April 8, 2002, and July 31, 2002, in which defendant’s
NOTES
[8] is the case here. While the ultimate decision to dismiss Tho se considerations include: the primary objective of the the claims against this defendant rested on the statute of Copyright Act to “encourage the production of original literary, artistic, limitations, the plaintiffs’ claims for contributory and musical expression for the good of the public”; the fact that defendants as well as plaintiffs may hold copyrights and run the gamut infringement and negligence were based on shaky facts from large corporations to “starving artists”; the need to encourage and even shakier legal arguments. In response to the “defen dants who seek to advance a variety of meritorious copyright defendant’s motion for summary judgment, the plaintiffs defenses . . . to litigate them to the same extent that plaintiffs are conceded that they had no claim for direct infringement. encouraged to litigate meritorious claims of infringement”; and the fact Their claim for contributory infringement rested on few that “a successful defense of a copyright infringement action may further the policies of the Co pyright Act every bit as much as a successful facts and on case law that was not factually analogous. prosecution of an infringement claim by a holder of a copyright.” Id. at
[10] rejected this argument, explaining that: To bolster their challenge, plaintiffs suggest the award in this case is inconsistent with the denial of attorney fees to the prevailing defendant The deadline for filing dispositive motions in this case in another Bridgep ort case in which a novel claim was found to be objectively reasonable. The same issue was neither presented nor decided was June 21, 2002. The plaintiffs’ initial settlement with respect to the claims against Diamond Time. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 23 24 Bridgeport Music, Inc. v. Nos. 03-5003/5656 Diamond Time, et al. Diamond Time, et al. demand was not made until September 30, 2002. The do so, I ask that you take what I have told you in this plaintiffs cannot be heard now to complain that the letter into account. If you do not intend to do so, my defendant did not settle in a timely manner when the first client will simply move forward and continue to defend offer to settle was not made until three months after the the litigation. dispositive motion deadline, and just two months prior to Plaintiffs did not respond except by making the informal offer trial, at which point the defendant had already incurred in June 2002. On July 31, 2002, Frank wrote to plaintiffs’ almost two-thirds of the amount of attorney’s fees it now counsel as a “follow up” to that exchange and expressed seeks. willingness to discuss settlement. On September 30, 2002, 255 F. Supp.2d at 801-02. Plaintiffs contend that because this plaintiffs made its first written offer to dismiss all the lawsuits against Diamond Time for payment of $20,000.
[11] conclusion rested on incorrect or incomplete facts concerning their first offer to settle, the district court abused its discretion Despite the failure of the district court to discuss plaintiffs’ in refusing to further reduce the amount of attorney fees.
[11] counsel asked that plaintiffs make a settlement demand. In Frank responded in a lengthy letter dated October 14, 2002, the April letter, defendant’s counsel conveyed both that explaining that Diamond Time had no money to pay plaintiffs and had Diamond Time had limited financial resources and that it had already incurred nearly $60,000 in attorney fees; that Diamond Time expected to prevail on summary judgment and would seek attorney fees begun incurring expenses in preparation of its dispositive under Fogerty ; and that Diamond Time would settle if plaintiffs agreed motion. The letter also stated that: to pay the fees incurred in this case. On October 24, 2002, Busch rejected this offer as unrealistic and comm ented that it “seems tragic to me that At the case management conference, Judge Higgins made there have been $60,00 0 worth of attorney’s fees charged to Diamond it very clear that he expected you to “put a price on your Time for engaging in motion practice when all matters could have been settled for less than that amount.” No further counter-offer was made in horse” and to let the Defendants in the case know what that letter, and the summary judgment orders were entered shortly the price was for purposes of settlement. If you intend to thereafter. Nos. 03-5003/5656 Bridgeport Music, Inc. v. 25 Diamond Time, et al. In concluding that the attorney fees incurred by defendant were reasonable, the district court noted that Diamond Time was represented by only a single copyright attorney and that Diamond Time had limited its discovery and motion practice due to its limited financial resources. Plaintiffs, on the other hand, “chose to litigate aggressively each and every issue against each and every defendant, regardless of a particular defendant’s resources or the strengths of the claims against it. The fees incurred by the defendant here were justified and necessary to guard against the plaintiffs’ take-no-prisoners tactics.” Bridgeport , 255 F. Supp.2d at 802. AFFIRMED.