*

The Honorable Richard Mills, United States District Judge for the Central District of Illinois, sitting by

designation.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 07a0242p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

ZOMBA ENTERPRISES, INC.; ZOMBA SONGS, INC.,

Plaintiffs-Appellees,

v.

PANORAMA RECORDS, INC., 

Defendant-Appellant.

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Nos. 06-5013/5266

Appeal from the United States District Court

for the Middle District of Tennessee at Nashville.

No. 03-00042—Todd J. Campbell, Chief District Judge.

Argued: March 5, 2007

Decided and Filed: June 26, 2007 

Before: BATCHELDER and MOORE, Circuit Judges; MILLS, District Judge.*

_________________

COUNSEL

ARGUED: Lawrence E. Feldman, LAWRENCE E. FELDMAN & ASSOCIATES, Elkins Park,

Pennsylvania, for Appellant. Timothy L. Warnock, BOWEN, RILEY, WARNOCK & JACOBSON,

Nashville, Tennessee, for Appellees. ON BRIEF: Lawrence E. Feldman, LAWRENCE E.

FELDMAN & ASSOCIATES, Elkins Park, Pennsylvania, for Appellant. Timothy L. Warnock,

William L. Campbell, Jr., BOWEN, RILEY, WARNOCK & JACOBSON, Nashville, Tennessee,

for Appellees. 

_________________

OPINION _________________

KAREN NELSON MOORE, Circuit Judge. From Japan to the United States and beyond,

karaoke is wildly popular. Countless people have lined up at various venues to perform their

favorite songs with, and in front of, their friends. But few participants (with the possible exception

of IP lawyers) ever stop to consider the intellectual property regime governing karaoke.

1
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 2

1

A song’s lyrics are also entitled to independent protection as “literary works.” See 17 U.S.C. § 102(a)(1)

(providing for copyright of literary works); ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60, 64 (2d Cir. 1996)

(noting that “lyrics enjoy independent copyright protection as ‘literary works’”).

Panorama Records, Inc. (“Panorama”), a purveyor of karaoke discs, resembles the majority

of these participants. It entered the business of recording and selling karaoke discs without

considering whether doing so infringed the intellectual property rights of others. Before long, this

lack of foresight caught up with Panorama.

This case requires us to review a district court’s entry of summary judgment in favor of, and

monetary award to, a plaintiff copyright holder whose musical compositions Panorama copied on

its karaoke discs. Ultimately, we conclude that the district court (1) correctly concluded that

Panorama willfully infringed the plaintiffs’ copyrights, and did not abuse its discretion by (2)

awarding the plaintiffs $806,000 in statutory damages, (3) denying Panorama’s motion to transfer

venue, and (4) awarding the plaintiffs attorney fees. Accordingly, we AFFIRM the district court’s

judgment in all respects.

I. FACTS AND PROCEDURE

A. Statutory Background

Our Constitution grants Congress the power “[t]o promote the Progress of Science and useful

Arts, by securing for limited Times to Authors . . . the exclusive Right to their respective Writings.”

U.S.CONST. art. I, § 8, cl. 8. Toward that end, the Copyright Act offers protection to various kinds

of works of authorship, including “musical works, including any accompanying words.” 17 U.S.C.

§ 102(a)(2).1 This protection provides copyright owners with the exclusive rights to reproduce the

works and to distribute these copies to the public. Id. § 106(1), (3). Anyone who violates these, or

other, rights of the copyright owner is an “infringer,” and thus is liable to the owner, id. § 501(a),

(b), and subject to injunctions, id. § 502, damages, id. § 504, and attorney fees, id. § 505.

Plaintiff copyright owners whose copyrights actually have been infringed may elect between

receiving as damages (1) their actual damages plus the infringer’s profits attributable to its

infringement, or (2) statutory damages. Id. § 504(b), (c). In the standard copyright-infringement

case, the district court has discretion to award statutory damages of any amount between $750 and

$30,000 for each copyright infringed. Id. § 504(c)(1). However, if the plaintiff proves that the

infringement is willful, the statutory-damage ceiling rises to $150,000. Id. § 504(c)(2). Conversely,

if the defendant establishes that infringement is innocent, the statutory-damage floor falls to $200.

Id.

B. Factual Background

Since 1998, Panorama has been in the business of manufacturing and selling karaoke

compact discs. It issues a new disc monthly in each of a variety of musical genres, including

country, pop, rock, and R&B. Each installment (or “karaoke package”) contains the top hits in that

genre for the relevant month. Laurindo Santos is one of Panorama’s four shareholders, and at all

times relevant to this case he was the decision-maker regarding the release of products.

The individual discs that Panorama makes and sells are in the CD+G format—shorthand for

“compact disc plus graphics.” As Panorama explains, “[t]hese are compact discs on which

musicians that are hired by Panorama record a musical composition of a work which at some time

may have been made popular by another artist. The CD+G contains a graphic element and is

designed to be viewed when played on a karaoke machine.” Joint Appendix (“J.A.”) at 472 (Resp.

to Req. for Admis. #1). The graphic element consists of the text of each song’s lyrics, and it scrolls
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 3

2

The record does not indicate whether Zomba also holds copyrights to the sound recordings of these songs, but

this is irrelevant to the litigation.

3

Howard testified that a “fixing fee” “is basically a permission to fix the copyrighted musical work with the

technology to allow you to visually see the lyric[s]. And it is a one-time fee . . . .” J.A. at 650 (11/5/05 Hr’g Tr. at 18).

Such permission generally comes in the form of a “synch license.” ABKCO Music, 96 F.3d at 62-63 & n.4.

across a screen as the music (sans vocals) plays, permitting karaoke participants to read the lyrics

as they sing along. Each of Panorama’s karaoke packages contained nine or ten songs, with two

tracks for each song, one track released with audible lyrics and one without.

Zomba Enterprises, Inc. and Zomba Songs, Inc. (collectively, “Zomba”) are music publishing

corporations often identified by the trade name Zomba Music Publishing. Zomba “is in the business

of exploiting musical compositions for commercial gain.” J.A. at 257 (Kalinska Aff. ¶ 2). Toward

this purpose, and at all times relevant to this case, Zomba held and administered the copyrights to

a variety of musical compositions, including songs performed by pop music performers such as 98

Degrees, Backstreet Boys, *NSYNC, and Britney Spears.2

Without Anna Music (“Without Anna”) is another music publishing company, but is not a

party to this action. In 2000, Without Anna discovered that some of the songs to which it owned

copyrights appeared on Panorama’s karaoke packages. In response, attorney Linda Edell Howard

sent a cease-and-desist letter to Panorama on Without Anna’s behalf, demanding that Panorama quit

selling unlicensed copies of Without Anna’s songs. When Panorama received this letter from

Howard in 2000, it had not acquired licenses from the copyright owners of any of the songs it had

released in its karaoke packages. Panorama then hired Vincent Castalucci, a licensing agent, and

began negotiating licenses. Eventually, Panorama obtained license agreements from Without Anna.

On February 28, 2002, Howard sent another cease-and-desist letter to Panorama, this time

on behalf of Zomba. Like Without Anna, Zomba had discovered that Panorama’s karaoke packages

contained copies of songs it owned. Zomba’s cease-and-desist letter specified the terms upon which

Zomba would be willing to grant a license: a $250 fixing fee for each Zomba-owned song on each

package,3 plus royalties of $0.16 per song per CD+G sold for the first half of the five-year license

term, and $0.19 per song per CD+G sold for the second-half of the term. Santos and Castalucci

contacted Howard in response to this letter, but Panorama did not stop selling CD+Gs with Zomba’s

songs on them, nor did it obtain any licenses.

On April 12, 2002, Howard sent a follow-up cease-and-desist letter on Zomba’s behalf.

Again, Santos and Castalucci responded to the letter. And again, Panorama failed both to obtain

licenses to Zomba’s songs and to cease selling CD+Gs containing them.

C. Procedural History

On January 13, 2003, Zomba filed its complaint, asserting thirty counts of copyright

infringement—one count for each Zomba-owned musical composition that Panorama recorded and

sold in its karaoke packages. Panorama answered, asserting no affirmative defenses other than

estoppel, laches, waiver, and acquiescence. On April 22, 2003, the parties entered into a consent

order in which Panorama agreed “to be restrained from distributing, releasing or otherwise

exploiting any karaoke package containing compositions owned or administered by” Zomba. J.A.

at 202 (4/22/03 Dist. Ct. Order). Within a week of entering this consent order, Panorama breached

its agreement and resumed selling CD+Gs containing Zomba’s copyrighted work. This conduct

continued, and a year later, Zomba moved for sanctions on this basis.
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 4

4

Zomba previously had voluntarily dismissed four of the thirty counts in its complaint. For clarity, the

remaining twenty-six musical compositions are referred to as the “relevant compositions.”

5

The former notice of appeal seeks review of (1) the district court’s granting original counsel permission to

withdraw; (2) the grant of summary judgment in favor of Zomba; (3) the default judgment on damages; (4) the denial

of the motion to change venue; and (5) the December 5, 2005 order awarding statutory damages. The latter notice of

appeal seeks review of the district court’s award of attorney fees and costs.

After the parties filed cross-motions for summary judgment but before the district court

ruled, Panorama’s counsel withdrew on May 10, 2004. On June 18, 2004, the district court granted

Zomba’s, and denied Panorama’s, motion for summary judgment on the issue of copyright

infringement, rejecting Panorama’s fair-use defense.

To determine damages, the district court scheduled a bench trial for August 10, 2004.

Panorama was unable to obtain new counsel and consequently failed to file any of the required

pretrial documents or to appear at the pretrial conference held on July 29, 2004. The district court

accordingly entered a default against Panorama on the issue of damages. Panorama responded by

filing for bankruptcy in the Bankruptcy Court for the District of Massachusetts on August 9, 2004.

In response, the district court stayed the case.

After the bankruptcy court lifted its stay, Panorama moved the district court to transfer the

case to either the bankruptcy court, the U.S. District Court for the District of Massachusetts, or the

U.S. District Court for the Southern District of New York. The district court denied this motion on

August 9, 2005. On November 5, 2005, the district court held a hearing to determine the amount

of damages. A month later, the district court issued findings of fact and conclusions of law. The

district court concluded that Panorama’s infringement was willful, and accordingly awarded Zomba

$31,000 for each of the twenty-six infringements at issue,4 for a total of $806,000. On January 23,

2006, the district court also awarded Zomba $76,456.16 in attorney fees and $1058.91 in costs.

Panorama timely filed notices of appeal on December 29, 2005, and February 15, 2006.5

II. JURISDICTION

The district court had federal-question jurisdiction over this copyright case, 28 U.S.C.

§ 1331, and 28 U.S.C. § 1291 gives us jurisdiction over the district court’s final judgment.

III. ANALYSIS

On appeal, Panorama raises a series of challenges. First, it objects to the district court’s

rejection of its fair-use defense and the district court’s correlative conclusion that Panorama

infringed Zomba’s copyrights. Next, it disputes the district court’s statutory-damage calculation,

arguing both that any infringement was not willful and that the $806,000 damage award is

unconstitutionally high. Third, it argues that the district court erred by refusing to grant its motion

to transfer venue. Finally, Panorama appeals the district court’s award of attorney fees to Zomba.

A. Copyright Infringement

1. Standard of Review

The district court granted Zomba’s motion for summary judgment on the issue of copyright

infringement. We review de novo a district court’s order granting summary judgment, DiCarlo v.

Potter, 358 F.3d 408, 414 (6th Cir. 2004), and will affirm a grant of summary judgment “if 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 and that the moving
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 5

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In addition to fair use, Panorama asserts on appeal a number of other affirmative defenses. Specifically,

Panorama argues that Zomba’s copyrights violate “the idea/expression dichotomy,” are subject to compulsory licensing,

and constitute copyright misuse. It also maintains that its use of Zomba’s musical compositions was de minimis, and

accordingly not actionable. We do not consider these arguments because Panorama failed to present any of these

defenses to the district court and accordingly forfeited them. Armstrong v. City of Melvindale, 432 F.3d 695, 700 (6th

Cir. 2006) (“[T]he failure to present an issue to the district court forfeits the right to have the argument addressed on

appeal.”).

party is entitled to a judgment as a matter of law,” Fed. R. Civ. P. 56(c). In reviewing the district

court’s decision to grant summary judgment, we view all evidence in the light most favorable to the

nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

2. Elements

The elements of a copyright-infringement claim are (1) ownership of the copyright by the

plaintiff and (2) copying by the defendant. ATC Dist. Group, Inc. v. Whatever It Takes

Transmissions & Parts, Inc., 402 F.3d 700, 705 (6th Cir. 2005); Ellis v. Diffie, 177 F.3d 503, 506

(6th Cir. 1999). Panorama disputes neither element. Instead, it claims that the fair-use doctrine

affirmative defense precludes liability.6

3. Fair Use

Panorama’s core argument is that its copying should be considered “fair use” under the

Copyright Act. Although Panorama did not raise fair use as an affirmative defense in its answer,

it offered this argument to the district court in support of its, and in opposition to Zomba’s, motion

for summary judgment. Because Panorama presented the issue of fair use to the district court and

because the district court addressed it, we assume without deciding that it was not waived.

The purpose of the fair-use doctrine is to ensure that courts “avoid rigid application of the

copyright statute when, on occasion, it would stifle the very creativity which that law is designed

to foster.” Princeton Univ. Press v. Mich. Doc. Servs., Inc., 99 F.3d 1381, 1385 (6th Cir. 1996) (en

banc), cert. denied, 520 U.S. 1156 (1997). Accordingly, § 107 of the Copyright Act provides that

“the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting,

teaching (including multiple copies for classroom use), scholarship, or research, is not an

infringement of copyright.” 17 U.S.C. § 107. It further instructs district courts to consider the

following factors in analyzing a claim of fair use:

1. the purpose and character of the use, including whether such use is of a

commercial nature or is for nonprofit educational purposes;

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relation to the

copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted

work.

Id. Because, as explained below, none of these factors supports Panorama’s position, we reject

Panorama’s fair-use defense.
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 6

a. Purpose and Character of Use

In evaluating the purpose and character of the use of the work at issue, we consider whether

the new work is “transformative,” and whether the use of that work is for commercial or

noncommercial purposes.

The central purpose of this investigation [into purpose and character of use] is to see

. . . whether the new work merely “supersede[s] the objects” of the original creation,

or instead adds something new, with a further purpose or different character, altering

the first with new expression, meaning, or message; it asks, in other words, whether

and to what extent the new work is “transformative.”

Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994). “[T]he more transformative the new

work, the less will be the significance of other factors, like commercialism, that may weigh against

a finding of fair use.” Id.

As an initial matter, Panorama’s use of the compositions is only minimally, if at all,

transformative. Although Panorama created its own recordings of these songs, Santos admitted that

the hired musicians did not “change the words or music.” J.A. at 684 (11/5/05 Hr’g Tr. at 52).

Unlike a parody, see Campbell, 510 U.S. at 579-80, a facsimile recording of a copyrighted

composition adds nothing new to the original and accordingly has virtually no transformative value.

Cf. Princeton Univ. Press, 99 F.3d at 1389 (“If you make verbatim copies of 95 pages of a 316-page

book, you have not transformed the 95 pages very much . . . . This kind of mechanical

‘transformation’ bears little resemblance to the creative metamorphosis accomplished by the

parodists in the Campbell case.”).

The crux of Panorama’s fair-use argument is its assertion that its use was transformative

because its karaoke packages are used for “teaching.” Notably, this focus is newly found. In the

district court, Panorama’s primary argument was that their karaoke packages “encourage creativity,

and often commentary” among their end-users, and accordingly qualify as “transformative works.”

J.A. at 218-19 (Mem. in Supp. of Def.’s Mot. for Summ. J. at 13-14). Although Panorama offered

a passing reference to karaoke’s value as “an interactive and educational experience,” J.A. at 218

(Mem. in Supp. of Def.’s Mot. for Summ. J. at 13), it never argued that the primary purpose of

karaoke is “teaching,” and for good reason, as this argument is wholly meritless. Panorama’s own

description of karaoke further undermines its assertion regarding “teaching”: “Karaoke is primarily

thought of as a form of entertainment that allows anyone to grab a microphone, hop on stage, and

live out their [sic] fantasies of performing as famous music stars.” J.A. at 208 (Mem. in Supp. of

Def.’s Mot. for Summ. J. at 3) (emphasis added). Moreover, the record is bereft of evidence

indicating that Panorama’s products are used for teaching at all (e.g., invoices showing sales to

schools, advertisements aimed at educators, affidavits from teachers, etc.).

More importantly though, the end-user’s utilization of the product is largely irrelevant;

instead, the focus is on whether alleged infringer’s use is transformative and/or commercial. In

Princeton University Press, we considered a copyright suit against a college-town copy shop that

copied portions of books and then sold these copies to students in “coursepacks.” 99 F.3d at 1383.

We rejected the copy shop’s fair-use defense, concluding that the defendant’s copying was a

commercial use, even though the students ultimately used the copies for educational purposes. Id.

at 1389. To reach this conclusion, we emphasized that “the use of the materials by the students is

not the use that the publishers are challenging.” Id. at 1386. Instead, the publishers were

challenging “the duplication of copyrighted materials for sale by a for-profit corporation that has

decided to maximize its profits . . . by declining to pay the royalties requested by the holders of the

copyrights.” Id.
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 7

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Panorama attacks this analysis as circular, Reply Br. at 7, but fails to acknowledge that we have previously

rejected the identical circularity argument in an en banc case. See Princeton Univ. Press, 99 F.3d at 1387-88.

8

Panorama further argues that its use of Zomba’s musical compositions is likely to enhance, rather than harm,

the market demand for Zomba’s products. While this argument might make sense if the copyrights at issue were

copyrights of sound recordings, that is not the case, and Panorama offers no evidence that unlicensed copying of

Zomba’s musical compositions spurs demand for additional licensing, or even any logical reason why it could.

Quite similarly, Zomba does not challenge karaoke crooners’ renditions (atrocious or

otherwise) of the relevant compositions, but rather Panorama’s decision to copy these songs onto

CD+Gs and then distribute them without paying royalties. Like the copying at issue in Princeton

University Press, Panorama’s manufacturing and selling the karaoke packages at issue “was

performed on a profit-making basis by a commercial enterprise.” Id. at 1389. Accordingly,

Panorama’s use is commercial in nature, a fact militating against its fair-use defense.

b. The Nature of the Copyrighted Work

The second of the § 107 factors “calls for recognition that some works are closer to the core

of intended copyright protection than others,” Campbell, 510 U.S. at 586, and accordingly are

entitled to stronger protection. Like the musical composition in Campbell (Roy Orbison’s “Oh,

Pretty Woman”), the compositions of pop songs here at issue “fall[] within the core of the

copyright’s protective purposes.” Id. Accordingly, this factor militates against a finding of fair use.

c. The Amount and Substantiality of the Portion Used

As the Princeton University Press court recognized, “the larger the volume . . . of what is

taken, the greater the affront to the interests of the copyright owner, and the less likely that a taking

will qualify as a fair use.” Princeton Univ. Press, 99 F.3d at 1389 (quoting Pierre N. Leval, Toward

a Fair Use Standard, 103 HARV. L. REV. 1105, 1122 (1990)). Here, Panorama acknowledges that

it copied the entire compositions. It hired studio musicians to play the songs as closely as possible

to the original performers, and distributed copies of their efforts. Additionally, it copied the lyrics,

in both an auditory (on the tracks containing vocals) and a visual (on the graphics display) fashion.

Because Panorama copied the relevant compositions in their entirety, this factor, too, cuts against

Panorama’s fair-use defense.

d. Effect on the Potential Market for the Copyrighted Work

Finally, we consider the effect on the potential market for licensing of the relevant musical

compositions. Regarding the allocation of proof for this factor, we have held that when the copying

at issue is commercial in nature, the alleged infringer bears the burden of proving the “market effect”

factor. Princeton Univ. Press, 99 F.3d at 1385-86. Here, Panorama has failed to sustain its burden

of proving that its copying does not adversely affect the market value of Zomba’s copyrights.

The thrust of Panorama’s argument—that Zomba and Panorama operate in different

markets—is factually inaccurate, as the record illustrates that Zomba has previously licensed (and

continues to license) its musical compositions to purveyors of karaoke products. It follows, then,

that market harm is a given, as Panorama’s unlicensed copying deprived Zomba of licensing

revenues it otherwise would have received.7

 Further, there can be no doubt that Panorama’s

practices, if they became widespread throughout the karaoke industry, would have a deleterious

effect on the potential market for licenses to Zomba’s songs. Accordingly, Panorama cannot show

that its copying passes the market-harm test,8 and this factor, like the other three, militates in favor

of rejecting its fair-use defense.
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The reasons for these misgivings are numerous. For instance, we note that Panorama did not mention fair use

in its initial licensing discussions with Howard. Instead, Panorama waited to raise its fair-use defense until this litigation

was over a year old. This delay calls into serious question whether Panorama sincerely believed that its copying was

a fair use before it began recording and distributing the karaoke packages. Instead, it appears that the fair-use defense

was merely a post-hoc rationalization concocted to skirt liability. Further, we note that the record is bereft of evidence

that Panorama ever discussed the fair-use doctrine with an attorney. This fact distinguishes Panorama’s situation from

that of the defendant in Princeton University Press, who had consulted with an attorney regarding fair use. See

Princeton Univ. Press, 99 F.3d at 1384.

Because all four fair-use factors indicate that Panorama’s copying was not a fair use, we

conclude that the district court correctly rejected this defense and concluded that Panorama infringed

Zomba’s copyrights.

B. Willfulness

Next, Panorama argues that even if it infringed Zomba’s copyrights, the district court erred

by concluding that the infringement was willful and thus was subject to enhanced statutory damages.

According to Panorama, any infringement was innocent, and certainly not willful. We disagree.

For infringement to be “willful,” it must be done “with knowledge that [one’s] conduct

constitutes copyright infringement.” Princeton Univ. Press, 99 F.3d at 1392 (quoting MELVILLE B.

NIMMER & DAVID NIMMER, 3 NIMMER ON COPYRIGHT § 14.04[B][3] (1996)). Accordingly, “one

who has been notified that his conduct constitutes copyright infringement, but who reasonably and

in good faith believes the contrary, is not ‘willful’ for these purposes.” Id. This belief must be both

(1) reasonable and (2) held in good faith. See id.

Panorama argues that it held a good-faith belief that the copying here at issue was a fair use,

and contends that even if ultimately erroneous, this belief precludes a finding of willfulness. As in

Princeton University Press, the issue is not so much whether Panorama held in good faith its belief

that its copying was fair use (although we have serious misgivings on this matter),9 but whether

Panorama reasonably believed that its conduct did not amount to copyright infringement. Princeton

Univ. Press, 99 F.3d at 1392. To decide this issue, we must determine “whether the copyright law

supported the plaintiffs’ position so clearly that the defendants must be deemed as a matter of law

to have exhibited a reckless disregard of the plaintiffs’ property rights.” Id. We review de novo this

narrow issue, id., but we note that other circuits have reviewed for clear error district courts’

conclusions on the broader issue of willfulness, see, e.g., Kepner-Tregoe, Inc. v. Vroom, 186 F.3d

283, 288 (2d Cir. 1999); Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1227 (7th Cir. 1991)

(citing Int’l Korwin Corp. v. Kowalczyk, 855 F.2d 375, 380 (7th Cir. 1988)). Because our analysis

focuses solely on the narrower issue, we need not determine whether Princeton University Press’s

de novo standard applies to the broader issue of willfulness in general. Accordingly, we express no

opinion on that issue, leaving it for a future case.

Here, we conclude that Panorama exhibited a reckless disregard for Zomba’s rights, and

accordingly, that Panorama’s reliance on its fair-use defense was objectively unreasonable. The fact

most crucial to this inquiry is that Panorama continued to sell karaoke packages containing copies

of each of the relevant compositions after the district court entered its April 22, 2003, consent order

forbidding Panorama to do so.

In copyright cases, it is unreasonable to rely on a defense to infringement after a court rejects

it on the merits. Kepner-Tregoe, 186 F.3d at 288-89 (2d Cir. 1999) (holding that copyright

defendant’s reliance on a defense was unreasonable when the Fifth Circuit had previously concluded

that the plaintiff’s copyright was valid and enforceable). This principle does not dispose fully of

Panorama’s position because the April 22, 2003, consent order did not resolve any issues on the

merits. To the contrary, the order stated that it “shall not be construed as a finding of any fact by
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 9

the [District] Court or a finding by the [District] Court that Plaintiff has established . . . any . . .

substantive element of its case.” J.A. at 202 (4/22/03 Dist. Ct. Order).

This caveat, however, does not justify Panorama’s continued reliance on its fair-use defense.

By entering into the consent decree, Panorama agreed to cease infringing Zomba’s copyrights.

Thus, it implicitly agreed to suspend its reliance on the fair-use defense at least temporarily, and this

agreement was reduced to an order of the court. Because an order entered by a court of competent

jurisdiction must be obeyed even if it is erroneously issued, see Walker v. City of Birmingham, 388

U.S. 307, 321 (1967), Panorama lacked any legal justification for continuing to distribute copies of

Zomba’s copyrighted works after April 22, 2003. Without expressing any opinion regarding the

reasonableness of Panorama’s position before that date, we are certain that from April 22, 2003, on,

the law applicable to this case “supported [Zomba’s] position so clearly that [Panorama] must be

deemed as a matter of law to have exhibited a reckless disregard of [Zomba’s] property rights.”

Princeton Univ. Press, 99 F.3d at 1392. On this basis, we agree with the district court’s conclusion

that Panorama’s infringements were willful and accordingly justified enhanced statutory damages.

C. Amount of Statutory-Damage Award

Panorama next challenges the district court’s $806,000 statutory-damage award. First, it

argues that the district court abused its discretion in calculating the award. Next, it argues that the

awards are disproportionate and unreasonable under the Eighth Amendment and the Fifth

Amendment’s Due Process Clause.

1. Abuse of Discretion

Panorama contends that the district court believed that, after making a finding of willfulness,

it lacked discretion to award statutory damages of less than $30,000 per infringement. On this basis,

Panorama maintains that the district court abused its discretion. The record does not support this

argument.

In its conclusions of law, the district court recognized that it had “wide discretion in

determining the amount of statutory damages to be awarded, constrained only by the maximum and

minimum amounts.” J.A. at 164 (12/5/05 Dist. Ct. Op. at 7). It found “that the maximum statutory

amount of $30,000 per work for ‘innocent’ infringement is not sufficient in this case because of the

clearly willful nature of Defendant’s conduct,” but that the maximum award of $150,000 per

infringement was excessive, given the dollar amounts involved in the case. J.A. at 164-65 (id. at 7-

8).

Nowhere did the district court indicate that it believed that it lacked discretion to award

statutory damages of less than $30,000 per infringement. To the contrary, Panorama’s willfulness

prompted the district court to conclude that the maximum penalty for nonwillful infringement was

not sufficient given Panorama’s conduct. We therefore conclude that Panorama has not shown that

the district court abused its discretion by setting the statutory damage award at $31,000 per

infringement.
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 10

10The district court concluded that it was unable to calculate the actual damages based on the record before it.

Panorama asserted that it sold a total of 74,734 copies of the twenty-six infringed compositions. Based upon this figure,

Zomba lost approximately $11,957.92 in royalties, plus an additional $6500 in fixing fees, for a total of $18,457.92.

Additionally, Panorama asserted that its net profit attributable to the twenty-six compositions at issue was

$9693.86, although Panorama never substantiated its expenses to the district court. Assuming arguendo that this profit

figure is accurate, Zomba would have been entitled to $28,151.78 if it had not elected to pursue statutory damages. See

17 U.S.C. § 504(b).

2. Eighth Amendment

Panorama next argues that such a high award of statutory damages, in light of the relatively

low actual damages,10 renders the district court’s award an “excessive fine” under the Eighth

Amendment. However, the Supreme Court has explained that the word “fine” in this context means

a payment to the government. United States v. Bajakajian, 524 U.S. 321, 327 (1998).

Consequently, the Court has held that the Excessive Fines Clause “does not constrain an award of

money damages in a civil suit when the government neither has prosecuted the action nor has any

right to receive a share of the damages awarded.” Browning-Ferris Indus. of Vermont, Inc. v. Kelco

Disposal, Inc., 492 U.S. 257, 264 (1989). Panorama’s Eighth Amendment argument thus fails.

3. Due Process

Panorama argues, based upon BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996),

and State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), that an award

of statutory damages that (it alleges) is thirty-seven times the actual damages violates its right to due

process. Again, we disagree.

We note at the outset that both Gore and Campbell addressed due-process challenges to

punitive-damages awards. In both cases, the award was greater than one hundred times the amount

of compensatory damages awarded. In Gore, the Court concluded that the award in question (which

amounted to 500 times the compensatory-damages award) was “grossly excessive,” 517 U.S. at 574,

after considering three “guideposts”: (1) “the degree of reprehensibility of the” defendant’s conduct;

(2) “the disparity between the harm or potential harm suffered by [the plaintiff] and [the] punitive

damages award”; and (3) “the difference between this remedy and the civil penalties authorized or

imposed in comparable cases,” id. at 575. In Campbell, the Court considered the same three

guidepost factors and concluded that the punitive-damages award (which amounted to 145 times the

compensatory-damages award) “was an irrational and arbitrary deprivation of the property of the

defendant.” 538 U.S. at 429. Regarding the second guidepost, neither case created a “concrete

constitutional limit[]” to the punitive-to-compensatory damages ratio. Id. at 424. Instead, the

Campbell Court explicitly “decline[d] . . . to impose a bright-line ratio which a punitive damages

award cannot exceed,” although it expressed a general preference for single-digit ratios. Id. at 425.

The Supreme Court has not indicated whether Gore and Campbell apply to awards of

statutory damages. We know of no case invalidating such an award of statutory damages under

Gore or Campbell, although we note that some courts have suggested in dicta that these precedents

may apply to statutory-damage awards. See, e.g., Parker v. Time Warner Entm’t Co., 331 F.3d 13,

22 (2d Cir. 2003) (suggesting that “in a sufficiently serious case,” due process may require courts

to reduce a statutory-damage award in a class action, and citing both Campbell and Gore); Leiber

v. Bertelsmann AG (In re Napster, Inc. Copyright Litig.), Nos. C MDL-00-1369 MHP & C 04-1671

MHP, 2005 WL 1287611, at *10 (N.D. Cal. June 1, 2005) (unpublished) (citing Gore and

Campbell); DIRECTV v. Gonzalez, No. Civ.A.SA-03-1170 SR, 2004 WL 1875046, at * 4 (W.D.

Tex. Aug. 23, 2004) (unpublished) (citing Campbell); but see Lowry’s Reports, Inc. v. Legg Mason,

Inc., 302 F. Supp. 2d 455, 459-60 (D. Md. 2004) (concluding that Gore and Campbell do not limit

statutory damages in copyright cases).
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 11

11Dividing the statutory-damage award ($806,000) by the lost licensing fees, as calculated by Panorama,

($18,458) yields a ratio of about 44:1. The 37:1 figure that Panorama advances in its brief includes in the denominator

Panorama’s unsubstantiated net profits figure of $9693.86. This sum is separate from the “actual damages,” as defined

by 17 U.S.C. § 504(b), which permits a copyright plaintiff to elect to receive “the actual damages suffered by him or her

as a result of the infringement, and any profits of the infringer that are attributable to the infringement and not taken into

account in computing the actual damages.”

12The Supreme Court’s recent decision in Philip Morris USA v. Williams, 127 S. Ct. 1057 (2007), which was

issued after the parties submitted their briefs but before oral argument, does not alter our analysis. There, the Supreme

Court considered only “whether the Constitution’s Due Process Clause permits a jury to base [a punitive-damage] award

in part upon its desire to punish the defendant for harming persons who are not before the court.” Id. at 1060. As there

is absolutely no indication that the district court based its award of statutory damages on Panorama’s conduct vis-à-vis

copyright holders other than Zomba, Philip Morris USA is inapposite.

Regardless of the uncertainty regarding the application of Gore and Campbell to statutorydamage awards, we may review such awards under St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S.

63, 66-67 (1919), to ensure they comport with due process. In such cases, we inquire whether the

awards are “so severe and oppressive as to be wholly disproportioned to the offense and obviously

unreasonable.” Id. at 67. This review, however, is extraordinarily deferential—even more so than

in cases applying abuse-of-discretion review. Douglas v. Cunningham, 294 U.S. 207, 210 (1935)

(Congress’s purpose in enacting the statutory-damage provision of the 1909 Copyright Act and its

delineation of specified limits for statutory damages “take[] the matter out of the ordinary rule with

respect to abuse of discretion”); Broad. Music, Inc. v. Star Amusements, Inc., 44 F.3d 485, 487 (7th

Cir. 1995) (interpreting the modern Copyright Act and noting “that the standard for reviewing an

award of statutory damages within the allowed range is even more deferential than abuse of

discretion”).

Williams is instructive, and leads us to conclude that the statutory-damage award against

Panorama was not sufficiently oppressive to constitute a deprivation of due process. In that case,

a railroad charged two sisters sixty-six cents apiece more than the maximum rate permissible by

regulation. 251 U.S. at 64. A state statute sought to deter such overcharges by providing for

statutory damages of between $50 and $350 when a railroad charged more than the permissible rate.

Id. The sisters sued separately, and received statutory damage awards of $75 apiece—over 113

times the amount they were overcharged. Id. Before the Supreme Court, the railroad argued that

the penalty was so disproportionate to the harm sustained that it violated due process. Rejecting this

argument, the Court concluded that the award “properly cannot be said to be so severe and

oppressive as to be wholly disproportioned to the offense or obviously unreasonable.” Id. at 67.

If the Supreme Court countenanced a 113:1 ratio in Williams, we cannot conclude that a 44:1

ratio11 is unacceptable here. We acknowledge the Supreme Court’s preference for a lower punitiveto-compensatory ratio, as stated in Campbell, but emphasize that this case does not involve a

punitive-damages award. Until the Supreme Court applies Campbell to an award of statutory

damages, we conclude that Williams controls, not Campbell, and accordingly reject Panorama’s dueprocess argument.12

D. Motion to Transfer

We review denials of motions to transfer to determine whether the district court abused its

discretion. Kerobo v. Sw. Clean Fuels Corp., 285 F.3d 531, 533 (6th Cir. 2002). Panorama argues

that the district court erred by refusing to transfer the case pursuant to 28 U.S.C. § 1404(a).

Panorama’s original motion to transfer asked the district court to transfer the case to the U.S. District

Court for the Southern District of New York, the U.S. District Court for the District of

Massachusetts, or the U.S. Bankruptcy Court for the District of Massachusetts. However, on appeal

Panorama argues only that the district court should have transferred the case to the bankruptcy court.
Nos. 06-5013/5266 Zomba Enterprises, Inc., et al. v. Panorama Records, Inc. Page 12

13Panorama cites Ronald Mayotte & Associates v. MGC Building Co., No. 97-1483, 1998 WL 385905 (6th Cir.

July 1, 1998) (unpublished), claiming that “this court reversed an award of attorney fees for failure of the district court

to properly consider” the Fogerty factors. Appellant’s Br. at 61. Two problems with this argument are apparent. First,

Ronald Mayotte is an unpublished case, something that Panorama fails to acknowledge even in its citation. More

importantly, however, Panorama misstates the holding. The Ronald Mayotte panel actually affirmed a refusal to award

attorney fees, notwithstanding the district court’s failure to discuss explicitly the Fogerty factors.

Panorama offers two bases for its argument: (1) the parties, witnesses, and events of the case lacked

ties to Tennessee; and (2) the case was related to a bankruptcy proceeding in Massachusetts.

The first of Panorama’s arguments is factually inaccurate, as the infringing materials were

recorded in Nashville, and Howard, who served as a witness, communicated with Panorama from

her Nashville office. Further, Nashville was the site of the infringements in question, as Panorama

hired Nashville musicians to record copies of the relevant compositions in Nashville. The second

argument similarly fails, as 28 U.S.C. § 1334(b) states that district courts “have original but not

exclusive jurisdiction of all civil proceedings . . . related to cases under title 11.” This provision

does not deprive a district court of jurisdiction over cases “related to” a pending bankruptcy, nor

does it even indicate that the proper course of action is to transfer such cases to the bankruptcy court.

Notably, Panorama cites no cases holding that a district court abuses its discretion by refusing to

transfer a related case to a bankruptcy court. And just as notably, at the November 5, 2005, damages

hearing, Panorama’s counsel conceded that the district court had the authority to proceed.

Furthermore, Panorama did not move to transfer venue until July 25, 2005, which is more

than a year after it filed for bankruptcy and more than two-and-a-half years after Zomba first filed

its complaint. Panorama does not suggest any reason why the district court’s refusal to grant such

a tardy motion constitutes an abuse of discretion. Accordingly, we reject this challenge to the

district court’s judgment.

E. Attorney fees

Lastly, Panorama argues that the district court abused its discretion by awarding attorney fees

to Zomba. The Copyright Act provides that “the [district] court in its discretion may allow the

recovery of full costs . . . [and ] may also award a reasonable attorney’s fee to the prevailing party

as part of the costs.” 17 U.S.C. § 505. In Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), the

Supreme Court endorsed in dicta a series of factors “to guide courts’ discretion” in awarding

attorney fees. Id. at 534 n.19. The factors include “frivolousness, motivation, objective

unreasonableness (both in the factual and in the legal components of the case) and the need in

particular circumstances to advance considerations of compensation and deterrence.” Id. (internal

quotation and citation omitted).

According to Panorama, the district court abused its discretion by failing to consider the

Fogerty factors. However, as Zomba notes, the parties provided the district court with briefing

focused on the factors, so even if the district court did not precisely recount its assessment of the

factors, it was alerted to them. Further, given the unreasonableness of Panorama’s positions and the

need to deter such conduct, it is difficult to see how the imposition of attorney fees here could

qualify as an abuse of discretion.13

IV. CONCLUSION

For the reasons stated above, we AFFIRM the district court’s judgment in all respects.