TATTOO ART INCORPORATED, Plaintiff-Appellee, v. TAT INTERNATIONAL LLC; Kirk A. Knapp, Defendants-Appellants.
No. 11-2014.
United States Court of Appeals, Fourth Circuit.
Argued: Oct. 25, 2012. Decided: Dec. 10, 2012.
498 F. App‘x 341
We find no abuse of discretion. First, counsel was appointed to represent Mitchell on November 22, 2011, and was informed by Mitchell about the recordings one month later. Still, counsel waited two weeks to subpoena the recordings and, after five days of attempting to review them, sought a continuance only three days prior to trial. Further, for reasons discussed below, Mitchell cannot show that he suffered prejudice as a result of the denial of his motion.
(2) Denial of motion for new trial.
This court reviews a district court‘s denial of a
Here, the evidence relied upon by Mitchell—recordings of Dugger‘s phone calls from jail almost a month before the nightclub encounter—was not “newly discovered” because Mitchell knew of the recordings (and they were available) bеfore his trial began. And, as the district court properly concluded, the evidence “is impeachment, plain and simple.” Further, we agree with the district court‘s finding that the jury would have reached the same result even had they heard the recordings at issue.
Accordingly, we affirm. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before this court and argument would not aid thе decisional process.
AFFIRMED.
Before TRAXLER, Chief Judge, and WILKINSON and AGEE, Circuit Judges.
Affirmed by unpublished PER CURIAM opinion.
Unpublished opinions are not binding precedent in this circuit.
Plaintiff-Appellee Tattoo Art, Inc. (“Tattoo Art“) brought this action against Defendants-Appellants TAT International, LLC (“TAT“) and Kirk A. Knapp, alleging claims for copyright infringement and breach of a copyright license agreement. The district court granted Tattoo Art‘s motion for partial summary judgment as to liability on both causes of action. The district court then conducted a bench trial solely as to damages and awarded actual damages of $18,105.48 on the breach of contract claim and statutory damages under the Copyright Act of $480,000 on the infringement claim. TAT appeals various aspects of the district court‘s rulings as to both liability and damages. We affirm.
I.
Tattoo Art is a Virginia company owned by Joseph Dufresne, who uses the trade name J.D. Crowe. Tattoo Art holds copyright registrations for hundreds of colorized “tattoo flash” art designs created by Dufresne. A tattoo flash is an original drawing or design of a tattoo printed or drawn on a sheet of paper or a poster and often displayed on the walls of tattoo parlors to give customers design ideas for the tattooist to copy.
To avoid the cost of copyright registration for hundreds of individual works, Tattoo Art grouped its tattoo flash designs into “Books” consisting of 50 pages or “sheets.” Each sheet, in turn, displayed numerous individual tattoo designs; Tattoo Art, however, secured only a single copyright registration for each 50-sheet Book. Tattoo Art licenses interested pаrties to use its copyrighted flash designs in tattoos, posters, cell phone covers, and t-shirts among other things. In this case, Tattoo Art granted permission to TAT, a Michigan company owned by Knapp, to use the copyrighted designs. Among other things, TAT creates and sells stencils for use in applying temporary airbrush body art.
In December 2005, Tattoo Art and TAT entered into an agreement permitting TAT to use specified copyrighted flash drawings to create stencils for temporary airbrushed tattoos. According to Tattoo Art, the complete terms of the parties’ agreement were contained within a 10-page typewritten “License Agreement” (or “the Agreement“), a signed copy of which Tattoo Art attached and incorporated into its complaint. The License Agreement granted TAT the right to use the specified tattoo designs1 “for the manufacture, offer for sale, sale, advertisement, promotion, shipment, and distribution of the Licensed Articles.” J.A. 253. “Licensed Articles,” in turn, was defined as “Stencils for use in applying airbrush body art.” Id. The licensing clause limited TAT‘s use of the copyrighted flash designs to “the creation and sale of Stencils for the application of airbrush body art” and permitted TAT to “distribute graphic representations (including photographs and/or posters)” of the tattoo flash designs only if it did so “in connection with the sale of Stencils. No other use ... is granted by this License.” J.A. 254.
Under the terms of the License Agreement, TAT was required to make quarterly royalty payments of 12.5 percent of its gross sales, if any, of licensed articles created pursuant to the License Agreement, and no less than $6,000 annually, regardless of gross sales. TAT was also obligated under the Agreement to provide Tattoo Art with quarterly sales reports.
TAT concedes that an agreement exists but denies that the written License Agreement constituted the final agreemеnt. Instead, TAT claims that Knapp and Dufresne orally modified some of its terms after Knapp received a fax from Tattoo Art of the proposed License Agreement on December 29, 2005. The alleged modifications included the right for TAT to sell all existing licensed inventory in the event of termination, regardless of the reason, and the elimination of the $6000 minimum annual royalty payment. According to TAT, Tattoo Art promised to prepare a revised License Agreement to reflect the alleged oral modifications. TAT concedes that Knapp signed the signature page on its behalf and faxed it back to Tattoo Art on the understanding that the signature page would be attached to the “revised” License Agreement. TAT contends, however, that a revised Agreement was never prepared or sent and that TAT did not receive a complete copy of the signed License Agreement until the lawsuit was underway.
Following the execution of the signature page by Knapp, TAT made three of the four required quarterly royalty payments in 2006, the total of which was $653. The last royalty payment was made in October 2006, after which time TAT sent no further royalty payments or sales reports. In fact, the parties apparently had no further contact until February 2009. In the meantime, TAT had changed the coloring of Tattoo Art‘s designs and was displаying these re-colored images on TAT‘s website to promote its stencils. TAT also removed the copyright notice from the re-colored images and referred to the images collectively as its “Original Collection.”
After having remained silent for two years despite TAT‘s failure to send royalty payments or reports, Tattoo Art contacted TAT in February 2009. TAT promised to come current with the missed royalty payments and reports but failed to do sо. On May 14, 2009, Tattoo Art sent TAT a termination letter, advising TAT to cease any further use of licensed property and demanding an accounting of all sales up to that date. The termination was based on TAT‘s “failure to pay the minimum royalties and/or report royalties.” J.A. 835. Nonetheless, TAT continued to sell stencils derived from the licensed property and to use altered designs and artwork in the sale and promotion of these items on its website.
In July 2009, Tattoo Art filed an action for breach of the License Agreement and copyright infringement. Relying on a mandatory mediation provision in the License Agreement, TAT argued that Tattoo Art was required to submit any dispute to mediation before filing an action to enforce the Agreement. The district court agreed and granted TAT‘s motion to dismiss. The parties then submitted the case to
In July 2010, Tattoo Art re-filed the action, again asserting claims for breach of thе License Agreement and copyright infringement. TAT pled the affirmative defenses of fraudulent inducement, unclean hands and equitable estoppel. Tattoo Art subsequently filed a motion for partial summary judgment as to liability. The district court granted Tattoo Art‘s motion for summary judgment, concluding that TAT had breached the Agreement and infringed on the copyrights held by Tattoo Art. The district court then held a bench trial as to damages, after which it entered an order awarding Tattoo Art $18,105.48 on the breach of contract claim and statutory damages under the Copyright Act of $480,000 on the infringement claim.
II.
A.
TAT first challenges the district court‘s grant of partial summary judgment in favor of Tattoo Art as to liability on its breach of contract claim. We review the district court‘s grant of summary judgment de novo. See Temkin v. Frederick Cnty. Comm‘rs, 945 F.2d 716, 718 (4th Cir.1991). Summary judgment shall be granted if the movant shows that there is “no genuine dispute as to any material fact” and that it is entitled to judgment as а matter of law.
TAT responds that the question of whether the parties orally modified the License Agreement presented an issue of material fact that was not amenable to resolution at the summary judgment stage. We disagree. A party asserting the existence of a genuine issue of material fact must support its assertion by “citing to particular parts of materials in the record, information, affidavits or declarations, stipulаtions ... admissions, interrogatory answers or other materials.”
The district court found other bases for rejecting TAT‘s orаl modification claim, including the existence of a merger clause in the License Agreement. This clause provided that the written “Agreement constitutes the entire agreement and understanding between the parties” and that any modifications of its written terms were invalid unless contained in “a written document signed by both parties.” J.A. 259. The district court concluded that the signed signature page reflected TAT‘s assent that no oral modifications could be
B.
“[T]he Copyright Act grants the copyright holder ‘exclusive’ rights to use and to authorize the use of his work in five qualified ways, including reproduction of the copyrightеd work in copies,” Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 432-33, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984), and the right “‘to display the copyrighted work publicly,‘” N.Y. Times Co. v. Tasini, 533 U.S. 483, 496 n. 4, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001) (quoting
The district court determined that TAT‘s alteration of the coloring of Tattoo Art‘s designs for display on TAT‘s website was beyond the scope of TAT‘s license under the Agreement and therefore constituted copyright infringement prior to termination of the License Agreement by Tattoo Art in May 2009. The district court concluded further that because Tattoo Art terminated the License Agreement as a result of TAT‘s breach, TAT was prohibited under the terms of the Agreement from any further use of the copyrighted works following termination.
We agree. TAT was given license to use the copyrighted tattoo flash artwork to create stencils and to use copies of the artwork to promote thе stencils. The Agreement did not license TAT to edit, modify or alter the copyrighted works it was licensed to display for marketing purposes, and therefore such use constituted copyright infringement. In the post-termination context, TAT‘s continued display of the copyrighted works constituted infringement for the additional reason that TAT was contractually required to “immediately cease all sales” of the stencils in light of Tattoo Art‘s notice of terminatiоn for breach.
On appeal, TAT argues that the district court should have permitted it to pursue its equitable estoppel affirmative defense at trial. To establish an estoppel defense
III.
Following a bench trial on the issue of damages, the district court issued a 77-page order ruling on numerous issues. After concluding that TAT owed a total of $20,250 in royalties, plus pre- and post-judgment interest but less any payments previously made, the district court considered the appropriate amount of damages to award for the copyright infringement. Under
The district court concluded that Tattoo Art was not entitled to enhanced damages even though there was some evidence of willfulness. The court found that еven were it to accept the explanation offered by TAT at trial for changing the coloration—that the modified color scheme was a more effective marketing tool for the stencils—“any potential legitimacy that such a business justification might have had was entirely overshadowed by the illegitimacy of the circumstances.... The very name chosen by [TAT] for [its] derivative [licensed products]—the Original Collection—is particularly telling.” J.A. 706. Nonetheless, the district court could not “conclude definitively” that TAT willfully engaged in copyright infringement. J.A. 709. Thus, the court determined the appropriate statutory damages range was $750 to $30,000 per infringement, as prescribed by
In determining the number of infringements that occurred, the district court rejected Tattoo Art‘s argument that the display of each individual recolored image was a separate copyright violation; instead, the district court decided that each of Tattoo Art‘s registered “Books” constituted a compilation. See
Finally, as to where the district court should fix the amount of statutory damages for each infringement within the $750–$30,000 range, see
On appeal, TAT does not specifically challenge how the district court arrived at this $20,000 figure. Rather, TAT broadly challenges the total amount of the award, contending that it was grossly disproportional to the amount of actual damages Tattoo Art could have recovered under the Minimum Royalty payment provision of the License Agreement (purportedly 25 times more) or the amount of unpaid royalties due for TAT‘s actual sales (purportedly 68 times more). TAT cites State Farm Mutual Automobile Insurance Company v. Campbell, 538 U.S. 408, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003), and BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), to support its argument that the statutory damages award is subject to proportionality review. Those cases, however, involve proportionality review of punitive damages awards, not statutory damages awards where Congress has limited the district court‘s discretion by establishing a statutory range. TAT is essentially arguing that these аwards within the statutory range were constitutionally excessive. This is an unavailing argument. We review for clear error any factual finding that would determine the appropriate level of copyright statutory damages, but we review an award of those damages within the statutory range for abuse of discretion. See Lyons Partnership, L.P. v. Morris Costumes, Inc., 243 F.3d 789, 799 (4th Cir. 2001). In this case, the district court articulated a reasonable basis for fixing statutory damages at $20,000, and we perceive no abuse оf discretion or constitutional error in the district court‘s conclusions.
Finally, we reject TAT‘s contention that the district court improperly awarded both actual damages for breach of the License Agreement and statutory damages for copyright infringement under
IV.
For the foregoing reasons, we affirm the orders of the district court.
AFFIRMED.