Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00425/USCOURTS-azd-2_04-cv-00425-1/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:101 Copyright Infringement

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1

 The plaintiff has not moved for entry of default or default judgment against defendant

Jane Doe Bullock. Since there is nothing in the Court's record establishing that Jane Doe

Bullock has been served with process and the deadline for doing so having expired on July 6,

2004, the Court will dismiss her from this action without prejudice pursuant to Fed.R.Civ.P.

4(m).

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

David H. Busch, Jr. )

) Plaintiff, ) No. CV 04-0425-PHX-PGR

)

vs. )) ORDER and OPINION Seahawk Software Development, )

L.L.C., Russell T. Bullock and Jane )

Doe , )

)

Defendants. ) )

Pending before the Court is the plaintiff's Motion for Default Judgment (doc.

#21), wherein the plaintiff seeks default judgment against defendants Seahawk

Software Development, L.L.C. ("Seahawk") and Russell T. Bullock ("Bullock").1

Having considered Plaintiff's Memorandum of Points and Authorities in Support of

Application for Entry of Default Judgment and Permanent Injunction Against

Defendants (doc. #30) in light of the record as a whole, the Court finds that the

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2

 The Court reaches this conclusion despite the failure of the plaintiff's counsel to

specifically discuss the Eitel factors in the plaintiff's supporting memorandum. The

Court finds this failure to be inexplicable given that the Court had specifically informed

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plaintiff is entitled to the entry of a default judgment. The Court further finds that

the present record is sufficient, albeit perhaps minimally so, to support the entry

of a default judgment without a hearing.

The plaintiff's Complaint for Copyright Infringement alleges that Seahawk

and Bullock's marketing of two software programs, CommwarePRO and

Commware Lite, directly infringe upon the plaintiff's exclusive copyrights in two

software programs, Commware version 5.06 without report subsystem (Count I)

and Commware version 5.06 report subsystem (Count II) in violation of 17 U.S.C.

§ 106 and § 501(a). The Complaint seeks injunctive relief pursuant to 17 U.S.C.

§ 502(a) and § 503 (Count 3), as well as damages pursuant to 17 U.S.C. § 504

and attorneys' fees and costs pursuant to 17 U.S.C. § 505.

Propriety of Entry of Default Judgment

Notwithstanding the entry of default, entry of a default judgment is a matter

entirely within the Court's discretion and not a matter of right. Eitel v. McCool,

782 F.2d 1470, 1471-72 (9th Cir. 1986). The Ninth Circuit has noted that a court

should consider the following factors in exercising its discretion as to the entry of

a default judgment: 

(1) the possibility of prejudice to the plaintiff, (2) the merits of

plaintiff's substantive claim, (3) the sufficiency of the complaint, 

(4) the sum of money at stake in the action; (5) the possibility of a

dispute concerning material facts; (6) whether the default was due to

excusable neglect, and (7) the strong policy underlying the federal

Rules of Civil Procedure favoring decisions on the merits.

Id. 

The Court concludes that the Eitel factors militate in favor of entry of the

requested default judgment.2

 The first Eitel factor favors entry of default

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the plaintiff of the Eitel factors in two previous orders (docs. #20 and #28) and directed

the plaintiff to set forth in his memorandum why a default judgment should be entered in

light of Eitel.

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judgment because the failure to enter the judgment would prejudice the plaintiff

given that he alleges that Seahawk and Bullock (and their successors) have

continued to infringe his copyrights notwithstanding their knowledge of the

existence of the plaintiff's copyrights and of this action.

The second Eitel factor favors entry of judgment because the well-pled

allegations in the complaint regarding liability are deemed to be true as a result of

the entry of default, Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir.),

cert. denied, 537 U.S. 1018 (2002), and because the plaintiff has supported his

claims with copies of the certificates of registration in his name from the U.S.

Copyright Office for the software at issue, Micro Star v. Formgen Inc., 154 F.3d

1107, 1110 (9th Cir. 1998) (copyright registration creates a presumption of

ownership), as well as an affidavit from the plaintiff setting forth the infringing

activity, and because Seahawk and Bullock have raised no defenses to the

claims.

The third Eitel factor favors entry of judgment because the complaint

sufficiently alleges the two elements of a copyright infringement claim: the

ownership of a valid copyright by the plaintiff and the unauthorized copying of 

expression protected by that copyright by Seahawk and Bullock. Micro Star, 154

F.3d at 1109.

The fourth Eitel factor favors entry of judgment notwithstanding that there is

no evidence of the plaintiff's actual damages because a significant amount of

money is at stake given that the plaintiff has established that he is entitled to

enhanced statutory damages due to Seahawk and Bullock's willful infringement of

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the plaintiff's copyrights.

The fifth Eitel factor favors entry of judgment because the entry of default

establishes that the truth of the non-damages-related factual allegations in the

complaint, Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977),

and Seahawk and Bullock have not raised any factual disputes.

The sixth Eitel factor is at least neutral because the plaintiff has established

that Seahawk and Bullock have made no effort to make an appearance in this

action or to have the entry of default vacated notwithstanding they have been

served with the complaint and with notice of the requests for entry of default and

for default judgment. There is nothing in the record to suggest any excusable

neglect by Seahawk and Bullock.

The final Eitel factor at best weighs lightly against entry of default judgment

because the case cannot be resolved on the merits given the defendants'

continuing unwillingness to make any appearance notwithstanding their

knowledge of the action.

Damages

The plaintiff, as is his right, has elected to seek statutory damages

pursuant to 17 U.S.C. § 504(c). He has requested a total award of $600,000 in

statutory damages, comprised of a maximum award of $150,000 for each of four

acts of willful copyright infringement. 

The Court has wide discretion to award statutory damages "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" anywhere in the range from

a minimum of $750 to a maximum of $30,000 "as the court considers just." 17

U.S.C. § 504(c)(1). However, the Court may increase the statutory damages

award to not more than $150,000 per infringed work if the copyright owner

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establishes that the infringement "was committed willfully." 17 U.S.C. § 504(c)(2). 

The Ninth Circuit, noting that there is no legislative definition, has concluded that

willful infringement means "with knowledge that the defendant's conduct

constitutes copyright infringement." Peer International Corp. v. Pausa Records,

Inc., 909 F.2d 1332,1335 n.3 (9th Cir. 1990), cert. denied, 498 U.S. 1109 (1991).

The Court concludes that enhanced damages are appropriate here

because the plaintiff has made a prima facie showing of willfulness. In addition to

the legal effect of the entry of default on the complaint's allegations of willfulness,

see Warner Bros. Entertainment Inc. v. Caridi, 346 F.Supp.2d 1068, 1074 

(C.D.Cal. 2004) (Court noted that allegation of willful infringement must be taken

as true as a result of the entry of default), the plaintiff has submitted evidence

sufficiently establishing that Seahawk and Bullock marketed their software

programs notwithstanding their knowledge that by doing so they were infringing

the plaintiff's two Commware copyrights. 

More specifically, the plaintiff states in his affidavit that the Maricopa

County Superior Court awarded him, through his counterclaim filed in a suit

against him and others by David H. Busch, Sr. and his sole proprietorship, Wizard

Software, complete ownership of the copyrights at issue. The plaintiff has

submitted a copy of the superior court's declaratory judgment, filed October 9,

2001, which declares that the plaintiff "is the owner of the copyrights pertaining to

Comm Ware DOS and all derivative works therefrom, including, without limitation,

the software known as TeleTracker 6.1 and all other derivative works arising from

this software." 

The plaintiff also states in his affidavit that after the superior court's

judgment, Busch, Sr. entered into a business relationship with Bullock and

Wendell Lackey whose business, Seahawk, began selling licences for the

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Commware software without the plaintiff's permission. The plaintiff further states

in his affidavit that his former attorney wrote Bullock, in his capacity as Seahawk's

manager and statutory agent, a cease and desist letter on November 19, 2003

informing him of the superior court's judgment and demanding that Seahawk

cease selling the Commware software; a copy of the letter has been submitted as

an exhibit to both the complaint and the supporting memorandum. The letter

notes in part that Seahawk is a successor business to Busch, Sr.'s company,

Wizard Software, in that it was servicing the same customers and selling the

same infringing software as Wizard, it was using the same website to sell the

infringing products that Wizard used ("commware.com") and that the website then

still displayed the Wizard name. The plaintiff also states in his affidavit that

Seahawk, Bullock, and Lackey ignored the cease and demand letter and are

continuing to sell the infringing software. 

The plaintiff further states in his affidavit that Bullock contacted him after

the commencement of this action to offer to settle this action, which the plaintiff

believes was a ploy to allow Bullock time to form two new companies, Datahawk

Software, LLC, formed on September 24, 2004, and Datahawk One, LLC, formed

on April 14, 2005; the plaintiff also states that Seahawk ceased doing business in

September, 2004 when Datahawk Software was formed and that Datahawk

Software then began selling, licensing, and servicing Commware software. The

plaintiff has submitted a current copy of the commware.com website which now

refers to Datahawk Software and which has a section that informs "Commware

5.20 customers" that the Datahawk software product will supersede Commware

5.20 in September, 2005. 

The Court concludes that the requested maximum award of $150,000 per

infringement is appropriate here given Seahawk and Bullock's willfulness and

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their decision to ignore this action which suggests that they do not take seriously

the illegality of their infringing activity.

Permanent Injunction

The plaintiff also seeks a permanent injunction to prevent any future

copyright infringement by the defendants or any related entities. The Copyright

Act provides that a court may grant a final injunction "on such terms as it may

deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. 

§ 502(a). The Act also provides that a court, as part of a final judgment, may

order the destruction or other reasonable disposition of all copies found to have

been made or used in violation of the copyright owner's exclusive use. 17 U.S.C.

§ 503(b). The Court concludes that the plaintiff has established, albeit very

marginally so, that the entry of a permanent injunction is appropriate here.

The Court rejects the plaintiff's position that a "permanent injunction should

issue when copyright violations are shown" as an incorrect general statement of

the law. See e.g., eBbay, Inc. v. MercExchange, L.L.C., U.S. , 126 S.Ct.

1837, 1840 (2006) ("Like the Patent Act, the Copyright Act provides that courts

'may' grant injunctive relief 'on such terms as it may deem reasonable to prevent

or restrain infringement of a copyright. 17 U.S.C. § 502(a). And as in our decision

today, this Court has consistently rejected invitations to replace traditional

equitable considerations with a rule that an injunction automatically follows a

determination that a copyright has been infringed,")

In order to be entitled to a permanent injunction, the plaintiff must establish

that the infringement of his copyrights at issue is likely to continue. See MAI

Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 520 (9th Cir. 1993) (Court

stated that "[a]s a general rule, a permanent injunction will be granted when

liability has been established and there is a threat of continuing violations."); see

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also, Orantes-Hernandez v. Thornbaugh, 919 F.2d 549, 564 (9th Cir. 1990)

("Permanent injunctive relief is warranted where ... defendant's past and present

misconduct indicates a strong likelihood of future violations.") In determining the

likelihood of further infringement, "[t]he necessary determination is that there

exists some cognizable danger of recurrent violation, something more than the

mere possibility which serves to keep the case alive." Cummings v. Connell, 316

F.3d 886, 897 (9th Cir.), cert. denied, 539 U.S. 927 (2003) (quoting from United

States v. W.T. Grant Co., 345 U.S. 629, 633 (1953)). The Court concludes that

the plaintiff has sufficiently shown that there is a threat of continuing

infringements by at least Bullock.

In addition, the plaintiff must satisfy the traditional four-factor test for a

permanent injunction by demonstrating: (1) that he has suffered an irreparable

injury; (2) that remedies available at law, such as monetary damages, are

inadequate to compensate for that injury; (3) that, considering the balance of

hardships between himself and the defendants, a remedy in equity is warranted;

and (4) that the public interest would not be disserved by a permanent injunction.

eBbay, Inc. v. MercExchange, L.L.C., 126 S.Ct. at 1839. 

Despite the plaintiff's failure to specifically discuss these factors in his

supporting memorandum, the Court concludes that they militate in favor of the

granting of a permanent injunction because the liability established by the entry of

default establishes the plaintiff's success on the merits, which in turn raises a

presumption of irreparable harm, Sun Microsystems, Inc. v. Microsoft Corp., 188

F.3d 1115, 1119 (9th Cir. 1999) ("Under federal copyright law, ... a plaintiff that

demonstrates a likelihood of success on the merits of a copyright infringement

claim is entitled to a presumption of irreparable harm."); accord, LGS Architects,

Inc. v. Concordia Homes of Nevada, 434 F.3d 1150, 1155 (9th Cir. 2006),

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because continuing infringement causes irreparable injury that cannot be fully

compensated or measure in money, because the plaintiff's establishment of

Seahawk's and Bullock's liability means that the balance of hardship issue is

accorded little if any weight, Cadence Design Systems, Inc. v. Avant! Corp., 125

F.3d 824, 830 (9th Cir. 1997), cert. denied, 523 U.S. 1118 (1998) ("[T]he balance

of hardships issue cannot be accorded significant - if any - weight in determining

whether a court should enter a preliminary injunction to prevent the use of

infringing material in cases where ... the plaintiff has made a strong showing of

likely success on the merits."), and because the public interest is the interest of

upholding copyright protections. Autoskill, Inc. v. National Educational Support

Systems, Inc., 994 F.2d 1476, 1499 (10th Cir.), cert. denied, 510 U.S. 916 (1993).

The Court further concludes that Seahawk and Bullock should be

permanently enjoined from infringing not only the copyrighted software at issue,

but also from infringing all of the plaintiff's copyrighted works, including his future

copyrighted works. See Princeton University Press v. Michigan Document

Services, Inc., 99 F.3d 1381, 1392 (6th Cir. 1996), cert. denied, 520 U.S. 1156

(1997) ("The weight of authority supports the extension of injunctive relief to

future works."); Olin Mills, Inc.v. Linn Photo Co., 23 F.3d 1345, 1349 (8th Cir.

1994) (Court noted that it is permissible in copyright infringement cases to issue a

permanent injunction that applies to future works); Walt Disney Co. v. Powell, 897

F.2d 565, 568 (D.C.Cir. 1990) (same).

Fees and Costs

In addition to the $600,000 in statutory damages, the plaintiff is seeking an

award of attorneys' fees and costs in the total amount of $5,341.75. Pursuant to

17 U.S.C. § 505, the Court has the discretion to award "full costs" to the

prevailing party, which may include "a reasonable attorney's fee". 

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The Court will award the plaintiff the requested $660.00 in costs as they

consist of the filing fee, service of process fee, and publication fee.

The Court will also award the plaintiff reasonable attorneys' fees, but not in

the requested amount of $4,681.75. The Court initially notes that it rejects the

plaintiff's contention that attorneys' fees are generally awarded to a prevailing

plaintiff in a copyright infringement case. The Supreme Court, in a decision

issued subsequent to all of the case law cited by the plaintiff, rejected the

contention that § 505 mandates the automatic recovery of attorney's fees by the

prevailing party absent exceptional circumstances, holding instead that attorney's

fees are to be awarded under § 505 only as a matter of the court's discretion.

Fogerty v. Fantasy, Inc., 510 U.S. 517, 1534, 114 S.Ct. 1023, 1033 (1994). 

Although neither cited nor discussed by the plaintiff, the Ninth Circuit, postFogerty, has identified five non-exclusive factors that should be considered in

deciding whether to award attorney's fees in a copyright infringement case: the

degree of success obtained by the moving party, the frivolousness of any claims;

the motivation for the claims; the objective unreasonableness of the factual and

legal arguments advanced in support of the claims; and the need in particular

circumstances to advance considerations of compensation and deterrence.

Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9th Cir. 1996); Jackson v.

Sturkie, 255 F.Supp.2d 1096, 1104 (N.D.Cal. 2003). Willful infringement does

not, in itself, compel an award of attorney's fees. Historical Research v. Cabral,

80 F.3d 377, 379 (9th Cir. 1996). 

The relevant factors militate in favor of awarding attorneys' fees here

because the plaintiff's has successfully established the liability of Seahawk and 

Bullock, the plaintiff's claims were brought to vindicate the goals of the Copyright

Act and cannot be considered frivolous, and an award of fees serves the goal of

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deterring similar infringement misconduct.

According to the supporting affidavit of plaintiff's counsel Paul E. Steen, the

requested attorneys' fees of $4,681.75 are for 25.85 hours of work performed

between February, 2004 and February, 2006 by three attorneys, at hourly rates of

$250 per hour for Paul Steen (5.65 hours), $225 per hour for Garry Keister (9.40

hours), and $150 per hour for David Gingras (10.80 hours). Although the plaintiff

has not established through Steen's affidavit that the requested hourly rates are

reasonable in light of the prevailing market rate in this community, the Court

concludes that the hourly rates are not unreasonable, especially in view of the

fact that the two lower-billing attorneys did most of the work.

The Court also concludes that the total number of hours expended is not

unreasonable, particularly in light of the fact that the plaintiff's counsel apparently

exercised billing judgment in not seeking fees for the time spent in responding to

the Court's various orders requiring an explanation for the plaintiff's failure to

comply with deadlines for filing the default judgment supporting memorandum,

and in seeking to vacate the Court's previous dismissal of this action pursuant to

Fed.R.Civ.P. 41(b) as a sanction for the plaintiff's failures to comply with the

Court's orders.

However, notwithstanding this exercise of billing judgment, the Court

further concludes that the requested fee award should be reduced by ten percent

as a sanction for the wasting of scarce judicial resources that occurred because

the Court was needlessly forced to issue five orders to resolve the issues caused

by the plaintiff's repeated failures to timely file the required supporting

memorandum. 

Therefore,

IT IS ORDERED that defendant Jane Doe Bullock is dismissed without

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prejudice from this action pursuant to Fed.R.Civ.P. 4(m).

IT IS FURTHER ORDERED that plaintiff David H. Busch, Jr.'s Motion for

Default Judgment (doc. #21) is granted to the extent that a default judgment shall

be entered against defendants Seahawk Software Development, L.L.C. and

Russell T. Bullock in the total amount of $604,873.57, consisting of $600,000.00

in statutory damages pursuant to 17 U.S.C. § 504(c)(2), and $4,213.57 in

attorneys' fees and $660.00 in costs pursuant to 17 U.S.C. § 505.

IT IS FURTHER ORDERED that plaintiff David H. Busch, Jr. is awarded

interest pursuant to 28 U.S.C. § 1961 on the statutory damages and fees and

costs awarded him.

IT IS FURTHER ORDERED pursuant to 17 U.S.C. § 502(a) that

defendants Seahawk Software Development, L.L.C. and Russell T. Bullock, and

their officers, agents, servants, employees, and attorneys, and those persons in

active concert or participation with them who receive actual notice of this Order

by personal service or otherwise, are permanently enjoined from directly or

indirectly infringing plaintiff David H. Busch. Jr.'s rights in his software programs

"Commware version 5.06 without report susbsystem", certificate of registration

number TX-5-154-071, and "Commware version 5.06 report subsystem",

certificate of registration number TX-5-154-072, and any other software, whether

now in existence or later created, that is owned or controlled by the plaintiff or by

any parent or subsidiary of the plaintiff ("Plaintiff's Software"), and from making

any of Plaintiff's Software available for distribution to the public, except pursuant

to a lawful license or with the express written authority of the plaintiff. 

IT IS FURTHER ORDERED pursuant to 17 U.S.C. § 503(b) that

defendants Seahawk Software Development, L.L.C. and Russell T. Bullock shall

destroy all copies of Plaintiff's Software that they, or any of their officers, agents,

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servants, or employees, have copied onto any computer hard drive or server

without plaintiff David H. Busch, Jr.'s authorization, and shall destroy all copies of

those unauthorized downloaded copies that has been transferred onto any

physical medium or device in their possession, custody, or control.

IT IS FURTHER ORDERED that the Clerk of the Court shall enter

judgment accordingly.

DATED this 12th day of June, 2006.

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