Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02611/USCOURTS-caed-2_04-cv-02611-4/pdf.json

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

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

UMG RECORDINGS, INC.,

A Delaware corporation,

UNIVISION MUSIC LLC, a 

Delaware limited liability

company, DISA LLC, a Delaware

limited liability company, and

FONOVISA, INC., a California 

corporation,

NO. CIV. S-04-2611 FCD DAD

Plaintiffs,

v. MEMORANDUM AND ORDER

DISCO AZTECA DISTRIBUTORS,

INC.,

Defendant.

_____________________________/

AND RELATED COUNTERCLAIM.

----oo0oo----

This matter is before the court on plaintiffs UMG

Recordings, Inc. and Fonovisa LLC and plaintiffs and

counterdefendants Univision Music LLC and Disa LLC (collectively

“plaintiffs”) motion for summary judgment or, alternatively,

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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

See E.D. Cal. Local Rule 78-230(h).

2 The court acknowledges that defendant did not expressly

state in its opposition that it did not oppose plaintiffs’ motion

with respect to a finding of liability of infringement; however,

aside from one bald denial of liability in its Statement of

Disputed Facts (under the heading “Contentions of Law”),

defendant’s papers do not address the issue of liability at all,

and at times, make reference to the fact that the court will/may

find liability. (Opp’n, filed July 21, 2006, at 4, 5.) Indeed,

the entirety of defendant’s opposition focuses on the issue of

“willfulness,” and as such, the court finds that defendant

concedes liability for copyright infringement. The only

contested issue is whether that infringement was “willful.” 

2

partial summary judgment.1 By the motion, plaintiffs seek: (1) a

judgment of liability against defendant Disco Azteca

Distributors, Inc. (“defendant” or “Disco Azteca”) for copyright

infringement of 38 of plaintiffs’ works ; (2) a determination

that defendant’s infringement was “willful” within the meaning of

Section 504 of the Copyright Act, 17 U.S.C. § 504(c)(2); and (3)

a judgment of non-liability in favor of counterdefendants

Univision Music LLC and Disa LLC (“counterdefendants”) on

defendant’s counterclaim for copyright infringement. 

Defendant does not oppose the motion with respect to its

direct liability for copyright infringement,2 but argues that a

finding of willfulness cannot be made as a matter of law because

triable issues of fact remain regarding its state of mind. 

Likewise, defendant argues that judgment of non-liability in

favor of counterdefendants cannot be made as triable issues of

fact exist as to whether counterdefendants infringed defendant’s

copyrights in two sound recordings.

For the reasons set forth below, the court GRANTS IN PART

and DENIES IN PART plaintiffs’ motion. Considering plaintiffs’

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3

evidence proffered in support of the motion and defendant’s nonopposition thereto, the court grants plaintiffs’ motion as to 

liability and finds that defendant directly infringed 38 of

plaintiffs’ copyrighted works. However, the court cannot find,

as a matter of law, that said infringement was “willful.” On

that issue, triable issues of fact remain. As to defendant’s

counterclaim for infringement, plaintiffs’ motion is also granted

as defendant’s counterclaim is based on a right to attribution

(i.e., the provision of proper credit to Disco Azteca and the

writer of the original song on plaintiffs’ CDs) which is not a

protected right under the Copyright Act.

BACKGROUND

A. Plaintiffs

Plaintiffs are record companies engaged in the business of

creating, manufacturing, distributing, and selling musical and

sound recordings. (Def.’s Resp. to Pls.’ Stmt. of Undisputed

Facts [“SUF”], filed July 21, 2006, ¶ 1.) Plaintiffs are the

owners or exclusive United States licensees of 38 musical works,

listed on Schedules A and B to the Second Amended Complaint, and

have sold and distributed these works throughout the United

States. (SUF ¶ 2.) 

B. Disco Azteca

Disco Azteca is in the business of selling and distributing

sound recordings both as a wholesaler and in retail outlets that

it owns and operates. (SUF ¶ 3.) Disco Azteca operates

warehouses in Stockton, California and Chicago, Illinois and

eleven retail stores throughout California and Nevada. (SUF ¶

4.) The owners of Disco Azteca, Arturo, Humberto, Jose and

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3 The term “parallel imports” refers to “[r]ecords of

foreign manufacture that are imported to and sold in the United

States in violation of exclusive distribution rights.” CBS, Inc.

v. Casino Record Distributors of Florida, Inc., 654 F. Supp. 677,

4

Christiano Sanchez (the “Sanchezes”), have been involved in the

music business since 1974. (SUF ¶ 5.) In addition to Disco

Azteca, the Sanchezes also own and/or operate a recording company

called Mar International S.A. (“Mar International”) and a music

publishing company called Jarabe Publishing Company (“Jarabe”),

which operate out of the same office as Disco Azteca. (SUF ¶ 6.)

Through Mar International, the Sanchezes have created 300 CDs

that have collectively sold hundreds of thousands of copies, and

Jarabe controls and/or owns thousands of copyrights in musical

works which have been distributed in the United States and

abroad. (SUF ¶ 7.) The Sanchezes arrange for the copyrights in

these works to be registered with the United States Copyright

Office. (Id.) 

From 1985 until about three years ago, Mar International was

a member of an anti-piracy organization called ALARM, which

conducted raids for the purpose of confiscating counterfeit

products, and created educational materials about piracy and

copyright law. (SUF ¶ 8.) For over 20 years, when legal issues

arise, Disco Azteca employs outside counsel (David White,

defendant’s counsel in this case). (SUF ¶ 9; Def.’s Stmt. of

Disputed Facts [“DDF”], filed July 21, 2006, ¶ 1.) Jose Sanchez

(“Sanchez”) testified that he is familiar generally with the

copyright laws and the protections they afford to copyrighted

musical work, and he has, over the years, come to understand the

Copyright Act’s prohibition on “parallel imports.”3 (SUF ¶ 10.) 

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678 (S.D. Fla. 1987); 17 U.S.C. § 602(a) (prohibiting the

importation, without the copyright owner’s permission, of copies

acquired outside the United States).

5

Although, Disco Azteca has not been involved previously in a

copyright lawsuit, and has not had prior experience dealing with

the issue of parallel imports. (DDF ¶ 2.)

C. Plaintiff’s Cease & Desist Letter to Disco Azteca

On March 5, 2003, after receiving information that Disco

Azteca may have purchased or imported parallel imports of

plaintiffs’ work, plaintiff UMG Recordings, Inc. (“UMG”) sent a

letter, in English and Spanish, to Disco Azteca at both its

Stockton, California and Cicero, Illinois addresses, asking Disco

Azteca to cease and desist from:

purchasing, importing and/or causing to be imported

for distribution, sale, or other exploitation in the 

United States copies of records manufactured outside

the United States, which contain copies of various

master recordings owned exclusively by UMG Recordings,

Inc. . . . . (SUF ¶ 11.) 

The letter referenced Section 602(a) of the Copyright Act and

cited specific case law on the prohibition of parallel imports. 

(Id.)

Defendant, however, maintains that it first learned of

plaintiffs’ copyright claims when defendant was served with the

complaint in this action on February 25, 2005. (Certif. of

Service, filed March 9, 2005.) According to Sanchez, while it

appears that UMG’s letter was received and signed for by an

employee of defendant, he declares it was never brought to his

attention, and thus, he never responded to it. UMG did not

attempt to contact defendant further, prior to filing the instant

lawsuit on December 9, 2004 (plaintiffs filed an amended

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4 Sanchez testified that he found the letter in a box in

his office. While he testified he does not recall reading the

letter prior to that discovery in March 2006, he concedes that it

is his company’s policy that if a letter of this type is received

by an employee that it should be forwarded to him, but in this

case, it was not. (Sanchez Dep., 37:18-38:21, 41:2-42:8, Ex. J

to Goldman Decl., filed July 7, 2006.)

5 Defendant’s Statement of Disputed Facts is wholly based

on the declaration of Jose Sanchez, filed July 21, 2006.

Plaintiffs filed objections to each and every paragraph of said

declaration. (Evid. Objs. to Sanchez Decl., filed July 28,

2006.) The court reviewed the objections and hereby overrules

them; the objections are largely based on irrelevancy

contentions, and for the reasons set forth below, Sanchez’

testimony is relevant to the willfulness determination, and to

the extent plaintiffs claim Sanchez has contradicted his

deposition testimony in this declaration, the court relies on his

deposition testimony where any conflict exists, although the

court notes that any such conflict is minor.

6 Phonorecords is a term used in legal definitions to

refer to physical recordings of songs, such as vinyl LPs,

cassette tapes, and compact discs. See 17 U.S.C. § 101 (defining

“phonorecords” as “material objects in which sounds, . . ., are

fixed by any method now known or later developed, and from which

the sounds can be perceived, reproduced, or otherwise

communicated, either directly or with the aid of a machine or

device. . . .”)

6

complaint on February 23, 2005). Sanchez states that he first

saw the March 5, 2003 letter in March 2006, during the course of

this litigation.4 (DDF ¶ 9.)5 

D. Disco Azteca’s Infringing Conduct

Between March 2003 and July 2005, plaintiffs’ investigators

visited Disco Azteca’s retail stores and identified hundreds of

parallel-import versions of plaintiffs’ copyrighted CDs

(including those listed on Schedule A to the Second Amended

Complaint) offered for sale by Disco Azteca. (SUF ¶ 14.) In

2003, Disco Azteca had been purchasing phonorecords6 directly

from plaintiffs, but plaintiffs temporarily ceased selling to

Disco Azteca because it had failed to comply with plaintiffs’

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7 For decades previously, Disco Azteca purchased

inventory directly from plaintiffs–-some millions of copies of

plaintiffs’ recordings. (DDF ¶ 3.)

7

credit policy and had fallen behind on paying plaintiffs’

invoices.7 (SUF ¶ 13.) To obtain inventory during these periods

when plaintiffs halted distribution, Disco Azteca began

purchasing CDs from a Mexico-based company called Musical Del

Norte. (SUF ¶ 15; DDF ¶ 5.) Sanchez testified that Musical Del

Norte’s salesman told him that the product he was purchasing came

from “the warehouses of Universal, Fonovisa, [and] Univision” in

Mexico, and that Musical Del Norte was authorized to export

product from Mexico into the United States on behalf of

plaintiffs--that “everything [was] legal.” (SUF ¶s 16, 17.) The

salesman assured Disco Azteca that Musical Del Norte’s product

was legitimate and that its distribution to Disco Azteca for sale

in the United States was permitted. (DDF ¶ 5.) 

Sanchez relied on these statements and did not attempt to

verify the salesman’s representations by either obtaining

documentation from Musical Del Norte or contacting plaintiffs to

confirm Musical Del Norte was an authorized distributor. (SUF ¶

19.) Sanchez testified, at that time, he was primarily concerned

about keeping Disco Azteca profitable, and that the relationship

with Musical Del Norte enabled the company to “come out of a

hole” financially. (SUF ¶ 21.) The shipments from Musical Del

Norte were delivered from Tijuana, Mexico by Musical Del Norte to

Disco Azteca in California. (SUF ¶ 16.)

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8 In his declaration submitted on the motion, Sanchez

declared that “[d]efendant bought a total of 6400 units from

Musical over approximately 18 months.” (Sanchez Decl., ¶ 8.) 

This conflicts with his deposition testimony, and as such, the

court does not consider this new testimony and instead relies

herein on Sanchez’ deposition testimony on this issue.

8

Disco Azteca purchased around 8,0008 CDs from Musical Del

Norte in 2003 and 2004, some for equal and some for lower than

the wholesale prices offered by plaintiffs. (SUF ¶ 22.) The

packaging on plaintiffs’ CDs purchased by Disco Azteca indicated

that they had been manufactured by plaintiffs’ Mexico-based

affiliates, and the packaging was entirely in Spanish. (SUF ¶

28.) Sanchez testified that when he inspected the product he

received from Musical Del Norte, he only looked to see if

plaintiffs’ respective names appeared on the label copy of the

CDs, i.e., “Universal” or “Univision.” Sanchez did not check to

see whether the product was identified as being manufactured in

the United States or abroad. (SUF ¶ 29.) No one else at Disco

Azteca conducted any further inspection of the product received

from Musical Del Norte. (SUF ¶ 30.) Additionally, Disco Azteca

does not have any procedures or policies which would prevent

parallel imports or counterfeit product from being sold in its

stores; it does not have a written policy, or any other

procedure, to inform its employees that the sale of parallel

imports is illegal, and it does not have any employee designated

to perform such an inspection of the product it receives from

suppliers. (SUF ¶ 31.) 

Disco Azteca’s invoices from Musical Del Norte identified

all of the works listed on Schedule A of the Second Amended

Complaint as among the CDs Disco Azteca purchased from Musical

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Del Norte. (SUF ¶ 24.) Plaintiffs never licensed Disco Azteca

or Muscial Del Norte to import from Mexico into the United States

CDs containing their copyrighted works. (SUF ¶ 23.)

In addition to the parallel imports, plaintiffs’

investigators also discovered that Disco Azteca was selling a

“pirate” (unauthorized) compilation containing a number of

plaintiffs’ copyrighted works. (SUF ¶ 25.) Plaintiffs did not

authorize any of their copyrighted works to appear on the pirated

compilation, and never authorized anyone to reproduce or

distribute any of the copyrighted works in the form contained on

the pirate compilation. (SUF ¶ 26.) Disco Azteca does not

dispute that the pirate compilation was purchased at one of its

retail stores, but it asserts that it has “no idea where the one

disc (called “Latin Hip Hop”) came from” because it is not listed

in any of Disco Azteca’s records and has never been ordered from

any company. (DDF ¶ 11.) Disco Azteca posits that while its

employees are instructed not to accept returns without a receipt,

it is possible that in this case, merchandise not originally

purchased by Disco Azteca was inadvertently received and

mistakenly stocked. (Id.) 

When defendant was served with the complaint, it immediately

stopped purchasing from Musical Del Norte. However, it continued

to sell the product previously purchased from Musical Del Norte. 

(SUF ¶ 32; DDF ¶ 10.) Under defendant’s tracking system, it was

impossible to determine where the units purchased from Musical

Del Norte were located within defendant’s stores. Defendant’s

system tracks units by title not by source; consequently,

defendant could determine the number of units of a particular

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title that it had in stock, but it could not determine from whom

they were purchased. Therefore, the titles purchased from

Musical Del Norte were sold by defendant during the pendency of

this litigation, along with other titles purchased directly from

plaintiffs. (SUF ¶ 33; DDF ¶ 10.) 

During the same time it purchased from Musical Del Norte,

Disco Azteca purchased over 400,000 units of other titles from

plaintiff. (DDF ¶ 7.) Accordingly, the units from Musical Del

Norte accounted for about 2% of Disco Azteca’s purchases for the

time period. (Id.) In or around 2005, plaintiffs relaxed their

credit policies and resumed regular distribution to Disco Azteca. 

Since that time, Disco Azteca has purchased several million

dollars worth of inventory from plaintiffs, including

approximately 500,000 units in 2005. (DDF ¶ 8.)

E. Disco Azteca’s Counterclaim

In its counterclaim, Disco Azteca asserts that it is the

“copyright owner by assignment of exclusive rights under

copyright with respect to certain copyrighted sound recordings

embodied in [its] phonorecords,” entitled “Chavo Romero” and “Mis

Cartas.” (Counterclaim, filed March 24, 2005, ¶ 16, Sch. A.) 

Disco Azteca alleges that plaintiffs have imported unlawful

parallel imports of versions of these copyrighted recordings. 

(Id. at ¶s 16-18, 20, Sch. A.; SUF ¶s 34-35.)

However, at his deposition, Sanchez admitted that Disco

Azteca has received and accepted royalty payments from

counterdefendants for the alleged uses of these songs, and that

the sole basis of the counterclaim is Disco Azteca’s contention

that counterdefendants failed to provide written credit to Disco

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9 Sanchez now maintains, in his declaration, that

plaintiffs’ payment of royalties has been “arbitrary and

irregula[r],” apparently implying that plaintiffs have not made

all payments due. However, as set forth below, the court must

disregard said testimony as it contradicts his deposition

testimony. Block v. City of Los Angeles, 253 F.3d 410, 419 n. 2

(9th Cir. 2001).

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Azteca on the album packaging. (SUF ¶ 36.) Sanchez specifically

disavowed any claim for damages other than for the allegedly

incorrect credits:

Q: I guess what I’m asking you is the way that 

you’ve been harmed is if it turns out you haven’t

been paid royalties at the full statutory rate; 

correct?

A: No. The way we’ve been damaged is by not

giving credit to the right composer and to the 

right publishing company. That’s the way we’ve

been damaged.

Q: Any other way?

A: Not that I can think of.

(Sanchez Dep., 195:10-19, Ex. J. to Goldman Decl.)9

STANDARD

The Federal Rules of Civil Procedure provide for summary

judgment where "the pleadings, depositions, answers to

interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact." Fed. R. Civ. P. 56(c); see California v.

Campbell, 138 F.3d 772, 780 (9th Cir. 1998). The evidence must

be viewed in the light most favorable to the nonmoving party. 

See Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir. 2000) (en

banc).

The moving party bears the initial burden of demonstrating

the absence of a genuine issue of fact. See Celotex Corp. v.

Catrett, 477 U.S. 317, 325 (1986). If the moving party fails to

meet this burden, "the nonmoving party has no obligation to

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produce anything, even if the nonmoving party would have the

ultimate burden of persuasion at trial." Nissan Fire & Marine

Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir. 2000). 

However, if the nonmoving party has the burden of proof at trial,

the moving party only needs to show "that there is an absence of

evidence to support the nonmoving party's case." Celotex Corp.,

477 U.S. at 325.

Once the moving party has met its burden of proof, the

nonmoving party must produce evidence on which a reasonable trier

of fact could find in its favor viewing the record as a whole in

light of the evidentiary burden the law places on that party. 

See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th

Cir. 1995). The nonmoving party cannot simply rest on its

allegations without any significant probative evidence tending to

support the complaint. See Nissan Fire & Marine, 210 F.3d at

1107. Instead, through admissible evidence the nonmoving party

"must set forth specific facts showing that there is a genuine

issue for trial." Fed. R. Civ. P. 56(e). 

ANALYSIS

A. Defendant’s Liability for Infringement

A claim of copyright infringement under federal law,

requires proof that (1) the plaintiff had a valid copyright in

the work allegedly infringed and (2) the defendant infringed the

plaintiff’s copyright by violating one of the exclusive rights

that 17 U.S.C. § 106 bestows upon the copyright holder. See

Marder v. Lopez, 450 F.3d 445, 453 (9th Cir. 2006). “The legal

or beneficial owner of an exclusive right under a copyright is

entitled . . . to institute an action for any infringement of

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10 Section 106(3) of the Copyright Act grants the

copyright owner the exclusive right: “to distribute copies of the

copyrighted work to the public by sale or other transfer of

ownership, or by rental, lease or lending.” 17 U.S.C. § 106(3). 

Section 501(a) of the Copyright Act provides that “[a]nyone who

violates any of the exclusive rights of the copyright owner as

provided by sections 106 through 122 . . . is an infringer of the

copyright.” 17 U.S.C. § 501(a).

11 Plaintiffs’ copyright certificates constitute prima

facie evidence of the validity of the copyrights and of the facts

stated in the certificates, including ownership. 17 U.S.C. §

401(c); Wildlife Express Corp. v. Carol Wright Sales, Inc., 18

F.3d 502, 507 (7th Cir. 1994) (“A certificate of registration

from the U.S. Register of Copyrights constitutes prima facie

evidence of the validity of a copyright.”)

13

that particular right committed while he or she is the owner of

it.” 17 U.S.C. § 501(b). A plaintiff need not demonstrate the

defendant’s intent to infringe the copyright in order to

demonstrate copyright infringement. Educational Testing Service

v. Simon, 95 F. Supp. 2d 1081, 1087 (C.D. Cal. 1999) (copyright

infringement “is a strict liability tort”). Specifically

applicable to this case, Section 602(a) of the Copyright Act

provides:

Importation into the United States, without

the authority of the owner of copyright under

this title, of copies or phonorecords of a work

that have been acquired outside the United States

is an infringement of the exclusive right to

distribute copies of phonorecords under section

106, actionable under section 501.

17 U.S.C. § 602(a).10 

Here, defendant does not dispute the facts and supporting

evidence proffered by plaintiff to establish defendant’s

liability, and thus, a finding of liability for infringement is

mandated. Specifically, defendant does not dispute that: (1)

plaintiffs own the copyrights in the 38 musical works at issue on

this motion;11 (2) in 2003, defendant began purchasing CDs from a

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12 That defendant “lacks sufficient information to respond

to [Undisputed Fact No. 14]” does not raise a genuine issue of

material fact sufficient to defeat summary judgment. Plaintiffs

have proffered evidence to support this fact (concerning its

investigators’ discovery of parallel imports at defendant’s

facilities), and defendant has offered no evidence in rebuttal;

thus, the fact is properly deemed undisputed.

13 Defendant concedes, in its “Disputed” Fact No. 10, that

plaintiffs’ “titles purchased from Musical were sold along with

the same titles purchased from Plaintiffs.” (DDF ¶ 10.)

14 Defendant asserts that it has “no record” of how the

pirated compilation got into its retail store, and that its

return policies are designed to prevent the receipt of such

goods. (DDF ¶ 11.) However, copyright infringement is a strict

liability tort, and because defendant has no defense for its sale

of the pirated compilation, plaintiffs are entitled to summary

judgment as to liability. See Los Angeles News. Serv. v. Conus

Comm. Co., Ltd., 969 F. Supp. 579, 584 (C.D. Cal. 1997).

14

Mexico-based company called Musical Del Norte; (3) Musical Del

Norte brought these CDs from Tijuana, Mexico to defendant in

California; (4) among the CDs purchased from Musical Del Norte

were the musical works at issue on the motion; (5) between March

2003 and July 2005, plaintiffs’ investigators identified hundreds

of parallel import versions of plaintiffs’ copyrighted CDs

offered for sale at defendant’s retail locations; (6) defendant

sold plaintiffs’ copyrighted works purchased from Musical Del

Norte; and (7) plaintiffs never licensed defendant or Musical Del

Norte to import from Mexico into the United States CDs containing

their copyrighted works. (SUF ¶s 2, 1412-16, 23-24, 3213.) 

Further, defendant does not dispute that the pirated compilation

was purchased at one of its retail stores, and that plaintiffs

did not authorize any of their copyrighted works to appear on the

pirated compilation. (SUF ¶ 26-27.)14

Under these undisputed facts, plaintiffs are entitled to a

judgment of liability against defendant for copyright

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15 Otherwise, the maximum recovery per work is $30,000. 

17 U.S.C. § 504(c)(1) (providing that the copyright owner may

elect to recover, instead of actual damages and profits, an award

15

infringement.

Defendant’s only reference to a possible defense in this

action is its statement in the factual background of its

opposition that: “The units were brought by Musical into the

United States and delivered; Defendant did not import them.” 

(Opp’n at 2:23-24.) Even assuming the truth of this statement

and interpreting it as an argument in opposition to plaintiffs’

infringement claims, defendant would still not prevail on the

motion. The fact that defendant did not actually import the CDs

is irrelevant to the determination of liability. Columbia

Broadcasting Systems, Inc. v. Scorpio Music Distributors, Inc.,

569 F. Supp. 47, 48-49 (E.D. Pa. 1983) (“[T]he question whether

defendant was the importer need not be resolved . . . [T]he

copyright holder may proceed against any member of the chain of

distribution.”) Defendant provides no contrary authority;

indeed, defendant does not discuss the issue in the body of its

analysis, let alone provide any legal authority in support of its

factual assertion.

B. Willful Infringement

Section 504(c)(2) of the Copyright Act provides in pertinent

part:

In a case where the copyright owner sustains 

the burden of proving, and the court finds, that

infringement was committed willfully, the court

in its discretion may increase the award of

statutory damages to a sum of not more than

$150,000 [per work].”

17 U.S.C. § 504(c)(2).15 A plaintiff sustains its burden of

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28 of statutory damages “in a sum of not less than $750 or more than

$30,000 [for each infringement] as the court considers just”).

16

proving willfulness “by showing [the] defendant knew or should

have known it infringed [the plaintiff’s] copyrights . . . . 

Willful does not mean malicious, rather, it means with knowledge,

whether actual or constructive.” Basic Books, Inc. v. Kinko’s

Graphics Corp, 758 F. Supp. 1522, 1543 (S.D. N.Y. 1991) (internal

quotations and citation omitted); accord Peer Int’l Corp. v.

Pausa Records, Inc., 909 F.2d 1332, 1335 (9th Cir. 1990).

Alternatively, willfulness is shown where “the defendant

recklessly disregarded the possibility that its conduct

represented infringement.” Yurman Design, Inc. v. PAJ, Inc., 262

F.3d 101, 112 (2nd Cir. 2001) (internal quotations and citation

omitted); Sega Enterprises Ltd. v. MAPHIA, 948 F. Supp. 923, 936

(N.D. Cal. 1996). “Willful blindness is knowledge, in copyright

law . . . as it is in the law generally . . . . [A] deliberate

effort to avoid guilty knowledge is all the law requires to

establish a guilty state of mind.” In re Aimster Copyright

Litigaton, 334 F.3d 643, 650 (7th Cir. 2003).

Willfulness need not be proven directly but may be inferred

from the defendant’s conduct. N.A.S. Import, Corp. v. Chenson

Enters., Inc., 968 F.2d 250, 252 (2nd Cir. 1992). “To refute

evidence of willful infringement, [a defendant] must not only

establish its good faith belief in the innocence of its conduct,

it must also show that it was reasonable in holding such a

belief.” Peer Int’l, 909 F.2d at 1336.

“Generally, a determination as to willfulness requires an

assessment of a party’s state of mind, a factual issue that is

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not usually susceptible to summary judgment.” Sega Enterprises,

948 F. Supp. at 936; Frank Music Corp. v. Metro-Goldwyn-Mayer,

Inc., 772 F.2d 505, 515 (9th Cir. 1985). Rather, the

determination of willfulness is ordinarily a question of fact for

the jury. Hearst Corp. v. Stark, 639 F. Supp. 970, 980 (N.D.

Cal. 1986). However, where the relevant facts are admitted or

otherwise undisputed, willfulness can be appropriately resolved

on summary judgment. Peer Int’l, 909 F.2d at 1335-36; Sega

Enterprises, 948 F. Supp. at 936. Although in reaching this

decision, as in any summary judgment proceeding, the court must

resolve questions of fact in favor of the non-moving party, here

defendant, and must draw all justifiable factual inferences in

the non-moving party’s favor. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 255 (1986).

Here, plaintiffs contend that defendant has no evidence to

contradict the following undisputed facts, which they argue

demonstrate defendant’s actual and/or constructive knowledge that

its conduct constituted copyright infringement and/or, at a

minimum, defendant’s reckless disregard for plaintiffs’ rights:

(1) Defendant admits that the CDs it purchased from 

Musical Del Norte were “parallel imports;”

(2) Defendant admits that it knows that parallel imports

are illegal unless authorized;

(3) Defendant admits that other than relying on the 

representations of Musical Del Norte that it was

an authorized distributor, defendant did not do

anything to verify whether the product it received 

was authorized;

(4) Defendant admits the packaging on the CDs purchased

from Musical Del Norte indicated that the CDs had 

been manufactured for plaintiffs’ Mexico-based

affiliates, and was entirely in Spanish;

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16 While defendant claims to dispute some of these facts,

what it really “disputes,” is plaintiffs’ characterization of

Sanchez’ deposition testimony. See e.g. SUF ¶ 21 (“Plaintiffs

have mischaracterized the deposition testimony of Jose Sanchez

and taken his statements out of context.”) However, the

deposition testimony relied on by plaintiffs is in the record,

and speaks for itself, and in any event, defendant offers no

contradictory evidence in response to these facts.

18

(5) Defendant admits that Sanchez only conducted a cursory

review of the product it received from Musical Del

Norte to see if plaintiffs’ respective names appeared

on the CDs, and did not verify whether the product

was made in the United States or abroad;

(6) Defendant admits that no further review of these CDs

was conducted;

(7) Defendant admits that it has no procedures or policies

to prevent parallel imports or counterfeit goods from 

being sold at its retail stores;

(8) Defendant admits it purchased and sold the parallel

import versions of plaintiffs’ CDs in order to keep its

business profitable; and

(9) Defendant admits that it continued to sell the

infringing CDs after it received notice of this

lawsuit.

(SUF ¶ 10, 15-17, 19-21, 24, 28-32.)16 While said facts are

undisputed, they do not establish willfulness as a matter of law,

as defendant has proffered evidence in rebuttal sufficient to

raise a triable issue of fact as to defendant’s state of mind.

Specifically, defendant submits evidence which adds to these

facts, and if those facts are believed, a jury could find in

defendant’s favor on the issue. 

Defendant’s primary evidence in rebuttal, which provides

necessary context, is the following: First, defendant believed,

at all relevant times prior to the instant lawsuit being filed,

that its purchase and sale of the goods from Musical Del Norte

was legal. (DDF ¶ 5.) In that regard, defendant has submitted

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17 Defendant has never been involved in copyright

litigation and prior to this action had no experience dealing

with parallel imports. (DDF ¶ 2.)

19

evidence to support a finding that its belief was reasonable; for

example, unlike the case of a defendant selling counterfeit

goods, here, defendant sold legitimately manufactured goods it

erroneously believed were permissible to sell in the United

States. Musical Del Norte is a legitimate distributor of

plaintiffs’ products in Mexico, and defendant proffers evidence

that it had no reason to doubt Musical’s representations that it

had authority to import plaintiffs’ products. (DDF ¶s 5.) 

Specifically, Musical Del Norte’s wholesale prices were largely

comparable with plaintiffs’ domestic prices, and defendant

believed, based on its experience,17 that the merchandise

appeared to bear appropriate notices and credits to plaintiffs. 

(Id.) Indeed, defendant asserts it always believed that its

purchases from Musical Del Norte would result in profits for

plaintiffs. (DDF ¶ 6.) Defendant was told that the inventory

from Musical Del Norte was picked up directly from plaintiffs’

warehouses in Mexico, so its understanding was that plaintiffs or

their affiliates were selling the merchandise that defendant in

turn sold. (Id.) Based on this evidence, a jury could find that

defendant reasonably believed that as long as plaintiffs or their

affiliates were being paid for the merchandise it purchased from

Musical Del Norte, plaintiffs would not be harmed in any way.

Defendant additionally proffers evidence that it did not

receive notice of the alleged infringement until the instant

action was filed, and that once the action was filed it

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immediately stopped purchasing from Musical Del Norte. (DDF ¶ 9-

10.) Indeed, Sanchez testified he did not review UMG’s March 5,

2003 letter, received by defendant but not forwarded to Sanchez,

until March 2006, well after this action was filed. (DDF ¶ 9.) 

That defendant’s prior awareness of any infringement was unlikely

is further supported by defendant’s evidence that the total

number of units purchased from Musical Del Norte was quite small

in comparison to the number of units purchased from plaintiffs

during the same time period (during this time, defendant

purchased some 400,000 units from plaintiffs and only

approximately 8,000 units from Musical Del Norte). (DDF ¶ 7.) 

Since the allegedly infringing copies represent only a small

fraction (some 2%) of the total inventory purchased by defendant

during this time period, a jury could reasonably conclude that

the subject infringing copies may have gone unnoticed by

defendant until the lawsuit was filed. 

As to the continued sales of plaintiffs’ works by defendant,

even after the lawsuit was filed, defendant explains the

limitations of its tracking system and why it was impossible for

defendant to stop selling the offending product. (DDF ¶ 10.) 

Again, if this evidence is believed, a jury could find that

defendant was not knowingly committing continued infringement.

In support of its argument for a finding of willfulness,

plaintiffs cite district court cases where the courts find

willfulness after a trial on the merits or appellate decisions

upholding findings of willfulness made after a trial on the

merits. See e.g. Webloyalty.com, Inc. v. Consumer Innovations,

LLC, 388 F. Supp. 2d 435, 441 (D. Del. 2005) (finding willfulness

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after a bench trial); BMG Music v. Perez, 952 F.2d 318, 319 (9th

Cir. 1991) (affirming willfulness finding made after bench

trial); Yurman Design, 262 F.3d at 113 (affirming jury’s finding

of willfulness); Dolman v. Agee, 157 F.3d 708, 715 (9th Cir.

1998) (affirming finding of willfulness made after bench trial);

N.A.S., Import, 968 F.2d at 253 (reversing trial court’s finding

of no willfulness found after a bench trial); see also Granada

Sales Corp. v. Aumer, 2003 WL 21383821, *2 (S.D. N.Y. 2003)

(finding willfulness after default judgment entered). These

cases are inapposite here as they do not address the willfulness

issue as presented on a motion for summary judgment; at this

stage, in determining whether a triable issue of fact remains,

the court must construe the facts in favor of defendant and draw

all reasonable inferences in its favor.

As to those few cases cited by plaintiffs wherein courts

found willfulness as a matter of law, the cases are readily

distinguishable. For example in Sega Enterprises, the court

found that defendant “offered nothing to rebut” the evidence that

he “intentionally contributed to the users’ infringement of

Sega’s copyright, and that he intended to profit in sales of

copiers” by giving customers a free download of Sega’s

copyrighted games when they purchased a copier. 948 F. Supp. at

936. Here, as set forth above, defendant has proffered

significant evidence of its reasonable good faith belief to rebut

plaintiffs’ showing of willfulness. 

In Peer Int’l, also relied on by plaintiffs, the

determinative factor in finding willfulness, as a matter of law,

was the defendant’s undisputed notice of the alleged infringement

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and his continued infringement thereafter despite the

notification. 909 F.3d at 1235-36 (finding willfulness because

the defendants received notice of the termination of their

licenses to manufacture, distribute and sell certain copyrighted

nondramatic musical compositions, continued to fail to account

for and pay royalties, yet nevertheless continued to manufacture

and distribute the copyrighted work); accord Microsoft Corp. v.

Logical Choice Computers, Inc., 2001 WL 58950 (N.D. Ill. 2001)

(finding the defendants’ behavior knowing or “willfully blind,”

as a matter of law, because “despite receiving Microsoft’s June

20, 1997 cease-and-desist letter which confirmed that certain

software [the] defendants had acquired from unauthorized

suppliers was counterfeit, defendants continued to obtain

software from unauthorized suppliers”). Unlike Peer Int’l and

Logical Choice, the issue of defendant’s notice of the alleged

infringement and conduct thereafter is heavily disputed. As

such, plaintiffs’ authorities are not persuasive.

Instead, the court finds that defendant’s authorities are

factually closer and support the denial of plaintiffs’ motion. 

For example, in Island Software and Computer Serv., Inc. v.

Microsoft Corp., 413 F.3d 257 (2nd Cir. 2005), Microsoft argued

that the deposition testimony of Island’s principal established

sufficient “reckless disregard” and “willful blindness” to compel

a finding of willfulness. Id. Microsoft’s argument was based on

three key facts: First, Island conceded that it had purchased

products from a company that it did not consider a “regular

distributor” because its prices were inconsistent. Microsoft

argued that this established that Island was suspicious of the

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authenticity of the purchased products. Id. Second, Island

conceded that it did not investigate a claim of counterfeit

products, allowing the matter to drop when its customer did not

attempt to return the products in question. Microsoft argued

that this causal response constituted clear willful blindness

because a reasonable merchant would have taken additional steps

to investigate the authenticity of his products. Id. Finally,

Island conceded that it did not take extensive measures to

prevent the receipt and sale of high-quality counterfeit

merchandise. Rather, Island’s employees would conduct a

relatively quick visual inspection of goods, and on some

occasions, would not even examine products upon receiving them

from distributors. Microsoft asserted that taken together said

facts conclusively proved willfulness. Id.

The court disagreed holding:

[A]t this stage of the proceedings, where we

must draw all inferences in favor of the nonmoving party, we cannot say that, as a matter

of law, Island is entitled to summary judgment 

on the question of willfulness. A jury could,

without doubt, conclude that Island’s statements

reveal willful blindness, or establish a pattern

of conduct so unreasonable as to constitute 

reckless disregard. Still, it is not beyond

peradventure that a reasonable jury would

conclude otherwise. And that is enough to make

summary judgment on the issue of willfulness

inappropriate.

Id. at 263-64 (emphasis added); accord Chanel, Inc. v. Italian

Activewear of Florida, Inc., 931 F.2d 1472 (11th Cir. 1991)

(trademark case) (acknowledging that a “strong inference” of

knowledge or willful blindness could be drawn from the facts that

the defendant’s principal knew the counterfeit goods lacked the

indicia of authenticity and knew that the broker who provided the

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counterfeit goods was not an authorized distributor yet did not

ask about the origin of the goods, but finding summary judgment

not warranted as willfulness could not be found as a matter of

law.)

Similarly here, based on the evidence offered by defendant,

the court cannot find that no reasonable trier of fact would rule

in defendant’s favor. While it is, like in Island Software,

“without doubt” that a jury could find that the evidence relied

on by plaintiffs demonstrates, at least, defendant’s willful

blindness or reckless disregard, of the possibility that its

conduct constituted infringement, it is “not beyond peradventure

that a reasonable jury could conclude otherwise.” 413 F.3d at

264 (“at the summary judgment stage, although an inference of

constructive knowledge or reckless conduct seems the better of

the possible inferences that can be drawn, we must still draw all

inferences in favor of the non-moving party”). And thus, the

court cannot grant summary judgment in favor of plaintiffs on the

issue of willfulness.

C. Defendant’s Counterclaim

Plaintiffs move for summary judgment in favor of

counterdefendants on defendant’s counterclaim for infringement on

the grounds that defendant has no evidentiary support for such a

claim and/or their stated claim is not cognizable under the

Copyright Act. First, with respect to defendant’s allegation of

infringement by counterdefendants, Sanchez conceded at deposition

that Disco Azteca has received and accepted royalty payments from

counterdefendants, and thus, defendant has not been damaged by

counterdefendants’ alleged uses of defendant’s copyrighted songs.

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(SUF ¶ 36; Sanchez Dep., 195:10-19, Ex. J. to Goldman Decl.) 

Such acceptance of counterdefendants’ payments gives rise to an

implied license as a matter of law. See Effects Assocs., Inc. v.

Cohen, 908 F.2d 555, 558 (9th Cir. 1990); Pamfiloff v. Giant

Records, Inc., 794 F. Supp. 933, 938-39 (N.D. Cal. 1992). 

Moreover, because the implied license here is supported by

consideration, it is irrevocable. See Effects, 908 F.2d at 559;

Lurlirama Ltd., Inc. v. Axcess Broadcast Servs., Inc., 128 F.3d

872, 882 (5th Cir. 1997).

Apparently realizing the effect of his admissions, Sanchez

now claims, in his declaration filed in support of defendant’s

opposition, that “[s]uch [royalty] payments [by

counterdefendants] were arbitrarily and irregularly made,” and

thus, defendants were “damaged under Sections 106, 501, and

602(a) of the Copyright Act.” (Opp’n at 11:2-3.) However, the

court must disregard Sanchez’ declaration on this issue as it

directly contradicts his deposition testimony. Block v. City of

Los Angeles, 253 F.3d 410, 419 n. 2 (9th Cir. 2001) (“A party

cannot create a genuine issue of material fact to survive summary

judgment by contradicting his earlier version of the facts.”).

Accordingly, defendant’s only remaining argument, supported

by Sanchez’ deposition testimony, is that Disco Azteca was

damaged by counterdefendants’ failure to provide written credit

to Disco Azteca (and the writer of the original song) on the

album packaging. (Sanchez Dep., 195:10-19, Ex. J. to Goldman

Decl. [“The way we’ve been damaged is by not giving credit to the

right composer and the right publishing company. That’s the way

we’ve been damaged.].) However, it is well established that the

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18 Indeed, defendant’s only other argument in support of

its counterclaim is, paradoxically, its admission that it has no

evidence to support its copyright claim. Defendant asserts that

it has no record of the number of infringements that have

occurred. (Opp’n at 11 [“Defendant does not know the extent of

Plaintiffs’ infringement . . .”].) This admission, alone,

supports the grant of plaintiffs’ motion.

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right to attribution is not a protected right under the Copyright

Act. Wolfe v. United Artists Corp., 583 F. Supp. 52, 56 (E.D.

Pa. 1983) (holding that the “failure to give [a] plaintiff proper

authorship credit in a copyrighted work is not a [cognizable]

Copyright Act claim”) (internal quotations and citations

omitted); accord Tangorre v. Mako’s, Inc. 2003 WL 470577, *8

(S.D. N.Y. 2003) (rejecting argument that plaintiff’s “copyrights

were infringed when [the defendant] failed to provide him with

written copyright credit on the [allegedly infringing work]”

because “a failure to give copyright credit is not an act of

copyright infringement”). Copyright law is a creature of

statute, 17 U.S.C. § 101 et seq., and a party’s rights and

remedies under the Copyright Act must be derived from the

infringement of one of the exclusive rights set forth in the Act. 

Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 154-55

(1975). Those exclusive rights are enumerated in Section 106

--reproduction, adaptation, distribution, performance and

display. 17 U.S.C. § 106. The right to be credited is not one

of these rights. Thus, the failure to credit a copyright owner

is not an infringement, and defendant accordingly does not have a

viable claim against counterdefendants for infringement.18

Summary judgment in favor of counterdefendants is therefore

granted.

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CONCLUSION

For the foregoing reasons, plaintiffs’ motion for summary

judgment or, alternatively, partial summary judgment is GRANTED

IN PART and DENIED IN PART. The court grants plaintiffs’ motion

as to liability and finds that defendant directly infringed 

plaintiffs’ 38 copyrighted works at issue on the motion. 

However, the court cannot find, as a matter of law, that said

infringement was “willful,” and thus, the court denies

plaintiffs’ motion on that issue. As to defendant’s counterclaim

for infringement, the court finds counterdefendants entitled to a

finding of non-liability for infringement and thus, plaintiffs’

motion in this regard is granted.

 IT IS SO ORDERED.

 DATED: August 14, 2006

 /s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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