The H ono rabl e D av id L. Bu nni ng , U ni ted Sta tes Di stri ct J udge for th e E aste rn D is trict of * Ke ntuc ky, si ttin g by

de si gnati on. -1
- NO T REC OM ME ND ED F ORPU BLIC ATION

Fi le Name: 09a 0237n.0 6 Fi led : Ma rc h 31, 2009 No. 07- 1519 UN ITED STATES C OU RT O F APPEA LS FO R THE S IXTH C IR CU IT
DIGIT AL FIL ING SYSTE MS, L.L .C. ) ) Pl ain ti ff-A ppel lee , ) ) ON APP EAL F RO M THE U NI TED v . ) STATES D ISTRI CT C OU RT F OR ) THE E ASTER N DI STRIC T OF AD ITYA IN TERN ATION AL AN D ) MI CH IGAN AKH ILESH AGA RW AL, ) ) OPIN ION Defend ant s-Appe llants. )
Before: BA

TC HE LD ERan d MO OR E, C ircu itJu dg es; an d BU NN IN G, Di st rict Jud ge. * DA VID L . B UN NI NG , D ist rictJu dg e. T his case is before this Court for t h e t h ird time . In the f irst ap pea l, Ca se No. 05 -179 6, w e up held the district cou rt’s entry of a Default Judg ment ag ain st Defendant s-Appel lan ts on Pl ain ti ff-A ppel lee ’s C omplai nt for co py right inf ringemen t. In the seco n d a p p e a l, C ase No. 05-21 01, w e up held in part the district
cour t’ s aw ard of s tatut or

y damag es, inj unct iv e re li ef, and attor ney s’ fees, and rev ersed the dis tr ict c our

t’ s a w ard of st atuto ry

damag es and i nju nct iv e re lie f w it h respect t o the
com put er sof

tw are kno w n as “Dig iCourt ” a n d r em and ed for f urthe r proceed ings. In this thi rd appeal , D efendants-Appel lan ts chal len g e, inter al ia, the dis tr ict c our

t’ s p ost -remandAs w e h av e pr evio us ly no ted, thi s p ro s e s tatus i s a cce ptab le , giv en that Agarw al i s th e 1 so l e pro p ri e to r of th e un i n co rp o ra te d bu si n e ss Ad i ty a I n te rn a ti o n a l

. Se e N.L .R.B

. v. C ons ol. Fo od Se rvs., In c. , 8 1 F

. A p p ’ x 1 3 , 1 4 n .1 ( 6 th C i r. 2 0 0 3 ) (u n p u b l i sh e d d e ci si o n ).

-2
- ruling aff irming its pri or a w ard of relief

. Fo r th e reaso ns state d here in, w e af f irm the district
c o u rt ’s d e c is io n t o a f

f ir m i t s p r i o r

a wa rd o f

st a t u t o ry a n d in ju n c t ive re li e f , t h o u gh we c o n c lu d e t h a tre m a n d is in o rd e r fo r t h e p u rp o s e o f m o d ifyin g t h e sc o p e o f t h e in ju n c t ive
re l i e f. I. BACKGROUND/PROCEDURA L HISTORY Pl ain ti ff-A ppel lee D ig it al Fi li ng Sy ste ms, Inc or porated (h ereafter Pl ain ti ff or D ig it al Fi li ng Sy ste ms) , i s a co rp orate c it iz en of M ic hig an; H ar is h L. Ver ma is it s Presi dent. O n Janu ary31, 20 03, Dig ital Filing Sy stem s sued Defend ant s-Appe llants Akh ilesh Agarw al,
a c it iz en of N ew

D elh i, Indi a, an d the sol e propr iet orshi p he operates , Ad ity a Int er nati onal (h ereafter Defendant s o r Adi ty a Int er nati onal ) in th e Eas ter n D is tr ict of M ic hig an. Appel lan ts proceed ed pro s e before the tr ial co urt and before thi s C our t. 1 Di g it al Fil in g Sy ste ms ow ns a trademar ked comput er so ftw are product“ ProFi le, ”
re g is tered unde r U. S. C opy ri g ht R eg . N o. TX-5 -5 51- 436. In 1999 i t c ontract ed w it h Defendant s t o enhan ce, add, m odi fy, and debug i ts ProFi le product

. That Ag re ement prov ide d tha t Pl ain ti ff

mai ntai ned al l ri g hts to ProFi le, i ncl udi ng a n y workdone by Defendant s, to w hic h D efendants g av e up any and all r ig hts

. It further pro v ide d tha t Defendant s woul d notmar ket , s ell , or di str ibu te i n the U nited Sta tes any doc ument
ma na g em en t s oftw are us i ng a ny a s pe c t of i ma g i ng t ec hn ol og y . D i gital Fi l i ng S y s te ms all eg es Defendant s h ave mark eted and s old so ftw are c all ed “ Di g iF il e,” reg is tered unde r U. S. c opy ri g ht Reg

. No. TX 5- 389- 304, that is ei ther der iv ed from, or

i ncor porates , ProFi le.-3
-

Upo n di sc ov er

y of Di g iF il e’s ex is tenc e, P lai nti ff su ed Defendants in federal dis tr ict c our t for breach of the A g re ement; for unl awful c onv ersi on of Pl ain ti ff ’s proper ty for w hic h i t s oug ht t o st ri k e De fe n d a n t s ’ r e gi s t ra t io n ; a n d fo r a c t u a l a n d st a t u t o ry d a m a ge s , a n d in ju n c t ive
re li ef under

the Cop y ri g ht A ct, 17 U .S.C . § 101, et s eq. Defend ant s’ Answ er asserts tha t the y have t h us far develope d three sof tw are programs po pula r in the United State s: Dig i F i l e ( do c um en t s can/ ima ge sof tw are), Dig iCourt
a n d Di gi Re c o rd (b o t h u s e d a s c a s e m a n a ge m e n ts o f twa re ). De fe n d a n t s c o n t e n d t h e y o wn a U.S . Copyri ght Regi stration No. TX5-38 9-30 4 issued May 18, 20 01, on the ir product Di g iF il e, for merl y

kn ow n as ProFi le. D efendants maint ain thati t was Pl a intiff w ho approache d the m in 1997 about tes ti ng and ev a lu ati ng ProFi le; and that Defendant s cont inu ed to make chang es and i mprov ements to ProFi le ov er the next fe w yea rs then entered i nto a Val ue Add ed R esel ler (VAR ) Ag re ement after Pl ain ti ff req uest ed a
nonex cl usi v e c ontractto m a rke t and sel l the p ro duct

. Adi ty a Int er nati onal co ntends Pl ain ti ff unl awfully

appl ied for a nd w as is sued a U.S. co py ri g ht reg is trati on for ProFi le on Febr uar y 26, 2002, w hen i n fact ProFi le or ig ina ted w it h D efendants and was now re g is tered by

them under

the name D ig iF il e. Di g it al Fi li ng Sy ste ms fil ed a detai led respo nsi v e pleadi ng i n the N ew D elh i act ion , ma intain ing D efend ant s perpe trate d a f raud on the New Delhi court by the ir filing of false informa tion a nd a forged VAR Agreem ent . According to Dig ital Filing Sy stem s , it
e n c o u n t e re d A g a r

w a l w h i l e h e w a s w o r k i n g a s a p ro g ra mm e r fo r a c o mpanyPl ain t i ff cont ra cte d w i t h i n 1 9 9 9 t o re n d e r p ro g ra mm i n g re fi n e me n ts e r v i c e s o n P ro F i l e . P l a i n t i ff subs eq uentl y

st arted wor ki ng di re ctl y w it h A garwal in 1999 for prog ra mming and de v el op me nts er

v i c es ; w i th al l prop er

ty ri g ht s re ta i ne d by

P l ai nt i ff. D i g i ta l F i l i ng S y s te ms-4
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maintain s t hat u pon retur n of it s P ro Fi le softw are, D efendants re tai ned a copy w it hout perm ission a n d l a b e le d it Di giF ile, and also plan ted a bug in the sou rce code before re tur nin g Pro Fil e , so as to recei v e c opi es of Plai nti ff ’s cl ien t c ommunic ati ons and infor mati on. At Defend ant s’ req uest , the district judge initially stayed the Michig an fe dera l court act ion i n M ay of 20 03, w hil e a copy ri g ht i nfri ng ement l aw sui t fil ed by D efendants in New Del hi proceed ed. The sta y w as li fted after Pla int iff re present ed the Indian cas e had been dis mis sed. I n F ebr uar

y of 2005 Defendant s mov ed to cl ar ify Pl ain ti ff ’s i ntent ion to proceed in Mi chi g an federal cour t, cl aimi ng thatthe Indi an c ase w as not d is mis sed as Pl ain ti ff had
er ro neous ly

repor ted, and t hat t he In dia n c our t’ s rul ing on Defendants ’ cont empt pet it ion
re strain ed Pl ain ti ff

from proceed ing furth er w it h the M ic hig an di str ict c our t acti on. After a s e ries of ev ents thatthe dis tr ict c our t v iew ed as w il lful hin drance of the proceed ing s i n her

co urt, on Apr il 22, 2005, the dis tr ict jud g e entered a D efault Judg ment ag ain st Defendant s o n the under ly ing infr ing ement c lai ms al leg ed i n Pl ain ti ff ’s C omplai nt. The di str ict c our

t c oncl uded D efendants had acti v ely av oid ed prosec uti on by ref u sing t o com ply w ith discovery

and a court ord er com pelling them to do so , and had av oide d servi ce of docu me nts an d com mu nicatio ns f rom o ppo sing counse l and th e cou rt, culmin ating in Defendant s’ fail ure t o p a rt ic ipa te i n a c our t- sc hedul ed c onferenc e c all des pit e bei ng ex press ly

i nformed by

ch ambers t hat t he c all w oul d oc cur as schedul ed. Defaul t J udg ment
w as the refore en tered for Defend ant s’ activ e an d un reaso nab le dela y in the pro ceed ings. Defendant s t imel y

appeal ed th at r uli ng . Concl udi ng the dis tr ict c our t had not abuse d i ts dis creti o n b y e n ter ing a de fault j udg ment und er the ci rc umstan ces des cr ibe d abov e, t his C our

t o n A p ri l 28, 2 006, aff ir med entr y of that default jud g ment, based upon-5
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it s c onsi derati on of the factors ide nti fied i n Bank One of Clev

ela nd, N.A. v. Abbe, 916 F .2d 1067, 1073 ( 6th C ir . 199 0)

. This C our t rev iew ed i n det ail the difficul ti es in prosec uti ng the
cas e, t he efforts of couns el and the low er cour t t o procure D efendants’ par ti ci pati on s o tha t the l it iga ti o n could be adv anced , and D efendants’ l ack of par ti ci pati on and ina deq uate
ex pla nati ons for th a t la ck of par ti ci pati on. Defendant s w ere g iv en oppo rt uni ti es by the dis tr ict c our

t t o cure and ex pla in thei r act s and omiss ion s, and w ere w ar ned t hat c onti nued failu re to prosec ute c oul d resul t i n s ev e re sa nct ion s. The di str ict c our t found t hat Defend ant s’ actions prejudiced Plaint if f , an Ame rican busin ess, i n its ability to reaso nab ly adv ance it s l it ig ati on for copy ri g ht i nfrin g ement ata t ime w hen, if the all eg ati ons prov ed true, the inf ringemen t w as con tinuin g to occu r. W hil e tha t app eal w as pendi ng , Pl ain ti ff proceed ed to mov e the dis tr ict c our t for an aw ard of fees, i nju nct iv e reli ef, and damage s o n i ts infr ing ement c lai m. B y Opi nio n and Order of Jul y 20, 2005, the l ow er

co urt granted Pl ain ti ff ’s moti on and entered a jud g ment awarding atto rneys’ fee s a n d f il ing costs totaling $27 ,87 0.5 5, as well as $6 7,5 00. 00 in statu tory dam ages und er 17 U.S.C. § 504 (c)( 1). In awarding this sum , the district court examine d the conside ration s pertine nt to det ermin ing a dam age f igure w ithin th e stat uto rily spec ified rang e. Fi rs t, itl ooked at w hether su ff ic ien t ev ide nce had bee n putforth to show tha t the inf rin ge m e n tw as w illfu l, thereb y allow ing an increase in the m aximum statu tory award, or w het her the inf ringemen t w as inno cent , in w hich case a decrea se in the statu tory mini mum is per mitt ed. It found that “[ t]he ev ide nce present ed byPl ain ti ffs e sta bli shes that D e fe n d a n t s d i d n o ta c t in n ocen tly, but itdoes not suffici entl y es tabl is h tha t D efendants act ed willfully. ” Therefore, pursuantto § 504( c) (1 ), th e d a m a g es for eac h i nfri ng ement
w e re re q u i re d t o b e i n a s u m o f n o t l e s s t h a n $ 7 5 0

. 0 0 o r mo re t h a n $ 3 0,000. 00, a s t he-6
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cour t det er mined w oul d be jus t s o as to de ter and dis courag e w ro ng ful c onduct und er the Copy r i g htA c t. Th e di s tr i c t c ou rt aw arde d Pl ai nt i ff $6 7, 50 0. 00 i n s ta tu to r y d am ages,
w it hout further

el aborati on as ide from not ing that “Pl ain ti ff has identi fied 90 copi es of the inf ringi ng sof

tw are prod uct in 30 iden tif ied locatio ns w ithin the Un ited St ate s. Th e cou rt w ill mult ipl y eac h of t he w or ks by the sta tutor y min imum of $750 and aw ard Pl ain ti ff $67, 500.” It appears t hese 90 i nfri ng ements w ere bas ed upon an a ttac hment t o P la in ti ff ’s moti on lis ti ng 30 p urchas ers w ho pur por tedl y had 90 c opi es of softw are i nfri ng ing on i ts copy ri g hted ProFi le softw are. The di str ict c our

t aw arded i nju nct iv e reli ef, impos ing an i nju n ction pursuantto 17 U. S.C . § 502 “ re strain ing D efendants from offer ing for s ale , sel li ng , re produci ng , prepar ing der iv ati v e w or ks , di str ibu ti ng co pie s o f, or other w is e us ing the softw are productD IGI FI LE, DI GIC OU RT, PR OF ILE . . . .” It also g ra nted inj unct iv e rel ief under § 503(b) byorder ing tha t “all copies of

any softw are iden tif ied as DIGIF I L E , D I G I COURT, or similar softw are obtai ned from Defendant s o r a resel ler or di str ibu tor

of Defendant s b e i mpounded b y Pl ain ti ff and dest ro y ed atPl ain ti ff ’s di sc re ti on . . . .” Defendant s a ls o ti mely

appeal ed th at J udg ment. In an Order dated May

15, 2006,
w e aff ir med the low er

co urt’ s a w ard of atto rn ey s’ fees. This Cou rt ’s re v iew focuse d noton the fa c t t h a t s t a t u t o r

y d a ma g e s h a d b e e n a w a rd e d , s i n c e P l a i n t i ff h a d b e e n g ra n ted a Defaul t J udg ment and thatdete rmi nati on had been affir med on appeal , but rather on the
sc ope of thatst atuto ry

damag e award. Not ed i n our Order w as that inj unct iv e reli ef and the n umber

of infr ing ements had been c alc ula ted b a se d upon Defendant s’ sa les of Di gi Co u rt , a p ro d u c tDe fe n d a n t s p o in t e d o u twa s d e ve lo p e d b y t h e m a n d p ro t e c t e d b y a separate c opy ri g ht. As to thi s p oin t, thi s C our t not ed th at:-7
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T he p ropo sed o rder [ a t t a c hed to Plaint if f ’s motio n] awarded relief not on ly w ith respe ct to Digi File, but a ls o a s to a previously unm ent ione d prod uct know n as D ig iC our

t. The defendants fil ed a re sponse, g enerall y deny ing li abi li ty and ass erti ng thatD ig iC our t had been dev elo ped bythe defendants and w as protected b y

a t hird c opy ri g ht, C o p yrig ht R eg . N o. TX 5- 917- 734. Fur ther more, the defendants all eg ed th at t he purchas ers l is ted i n the moti on w ere pu rchase rs of

DigiCourt, notDigiFil e. T he plaint if f f iled a reply, but did not address the defendants’ arg ument conc er nin g Di g iC o u rt . W it hout hol din g a hear ing , the dist ri ct cour t g ra nted the p lai nti ff ’s moti on and aw arded statu tory dam ages in the am oun t of $75 0 for each copy of inf ringi ng sof tw are prod uct, . . . . Th e district court likew ise did n o ta d dress the defend ant s’ arg uments co ncer nin g D ig iC our t. T h e d is t ri c tco u rt ’s a wa rd o f s t a t u t o ry d a m a ge s wa s t h e re fo re va c a t e d

. In o u r O rd e r, we e mp h a s i z ed t h a t“ p l a i n t i ff c l e a r l y i s e n t i t l e d t o s t a t u t o r y d a ma g e s fo r

e a c h s a l e o f a softw are p ro d u ct imper mis si bly der iv ed from P ro Fi le, ” but remanded t he matt er for add itiona l fin dings of

fact by the district cou rtw ith respe ct to its aw ard of statu tory dam ages. O u r M a y 1 5 , 2 0 0 6 , O rd e r a ls o n o t e d t h e sa m e p ro b le m wit h t h e sc o p e o f in ju n c t ive
re li ef aw arded t o Pl ain ti ff

. The Judg ment inc lud ed Di g iC our t as an o ffendi ng productthat Defendant s w ere rest ra ine d f ro m sel li ng , di str ibu ti ng co pie s o f, or usi ng . Onc e ag ain , t he evidentiary support for the d istrict court’s conclusion thatDig iCourt is an inf ringi ng sof tw are
w as absen t, neces si tati ng remand for f urther fact -fin din g on inc lud ing D ig iC our t w it hin the i n j u n c t i v e re l i e f. On rem and , the district court directed the pa rties to f il e s u pple me nta l briefs in suppo rtof thei r posi ti ons on the is sue of w hether D ig iC our

t w as an i nfri ng ing so ftw are tha t shoul d al so be enj oin ed. The di str ict c our t ent ered formal F ind ing s o f Factand Con cl usi ons of Law

by Order of Febr uar

y 16, 2007, and rein st a te d i n full i ts or ig ina l Opi nio n and Order

aw ardin g st atutory d a m a g es and i nju nct iv e reli ef, thereby i ncl udi ng-8
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Di g iC our t s oftw are w it hin the sc ope of that rul ing

. Defendant s mov ed for re cons ide ra ti on,
w hic h w as deni ed by

Order of Apr il 3, 2007. This appeal foll ow ed.

II. A NA LYSIS The pr imar

y is sue present ed i n thi s t hird appea l is w hether the dis tr ict c our

t abu sed it s d is creti on w hen, on remand, i t rein sta ted i ts pr ior aw ard of st atut o ry

damag es and injunct iv e relief

. A secon dary issue i s Plaint if f ’s request for an award of legal fees fo r this appeal pursuantto 17 U .S.C . § 505. This l atter req uesti s d eni ed for the s ame reason s previously

articulat e d bythis Court in the earlier appe al, Case No. 0 5-21 01, w here in Pl ain ti ff present ed a si mil ar

req uest

. The in sta nt ap peal is n ot fri v olo us as ev ide nced herein , nor

di d Pl ain ti ff

f ile a s e p a rate moti on for an aw ard of fees i n ac cordance w it h Fede ra l Rul e of Appel lat e Proced u re 3 8

. W e the re fore t ur n now to the p ri mary

i ss ue before us. A . St and ard o f Rev iew As noted in the p ri or

appeal , an aw ard of

s ta tu to ry

damag es and t he s cope of per manent i nju nct ion s u nder the Cop y ri g ht A ct are rev iew ed on appeal for a n abus e of dis creti on. Murray Hil

l Publ’ ns, In c. v. A B C Co mm c’ ns, In c. , 264 F.3d 62 2, 63 9 (6th Cir. 2001) ; S. Cen t. Power Co. v. IBE W , Loc al Uni

on 2359 , 186 F.3 d 73 3, 73 7 (6th Cir. 199 9). Iss ues of law

are rev iew ed de nov

o, w hile factu al f indings a re lef t und isturbe d un less cl ear ly er ro neous . For

d Motor C o. v . C atal anotte , 342 F .3d 5 4 3 , 5 4 5 -4 6 ( 6th C ir . 200 3) (rev iew of sta tutor

y damage aw ard i n c ontext of Ant icy bersq uatti ng C onsumer Protecti on Act). Moreover, the Sup reme Court has clarif ied th at “‘[a] f ind ing i s ‘clearly erroneo us’
w hen altho ugh the re is ev iden ce to sup port it, th e revi ewi ng court on the ent ire ev iden ce-9
-

is lef t w ith the def inite and f irm conviction tha t a mista ke ha s bee n com mitt ed. ’” Ander son
v. City of B ess em er

Cit y, 4 7 0 U.S . 5 6 4 , 5 7 3 (19 8 5 ) (qu o ti n g United S tates v. U nited St ates Gyp sumC o. , 333 U .S. 364, 395 ( 1948) ); see a lso Ellis v. D iffie , 177 F .3d 5 03, 5 05- 06 ( 6th Cir. 1999). B. Rev iew of the Merits Defend ant s, cont inuing to proce ed pro se, raise a nu mb er of argumen ts on ap pea l. Ma ny of the q uest ion s they

pose and arg uments theyadv ance are direct ed to the meri ts of the prior tw o rulings by this Cou rt

. T h o se rulings are not the subjectof this app eal; Defendant s’ q uest ion s a nd arg uments reg ardin g our prev iou s r uli ng s sim p lyare not relevant to th is third app ellate p rocee ding. W hatis properly before us are Defend ant s’ chal len g es to t he l ow er co urt’ s s ubseq uent deter minat ion on remand. 1. St at ut or

y D amag es The di str ict c our

t defaul ted D efendants on th e i ss ue of in f ring ement, and De f e n d a n ts are subject to th e rem edy prov isions un der the Copyr ight Act. Th is Court’s pr ior dec is ion recog niz ed th at i nfri ng ement ha d occurred. Therefore, de spi te be ing
uncer tai n, damag es are in order

. See S tor y Par chm ent C o. v

. Pa ter son Par chm ent Paper Co ., 28 2 U .S

. 55 5, 5 62 ( 19 31 ) ( “ The r ul e w hi c h prec l ud es t he rec ov er y o f unce rtain damag es appl ies to suc h as are not the cert ain resul t of the w ro ng , notto thos e damag es
w hich are d ef ini t e ly a t t ri but able to the w rong and o nly unce rtain in respe ct of their amount.” ). D ig it al Fi li ng Sy ste ms c hose the opti on of recov er ing st atuto ry

damag es under § 504( c) i n l ieu of act ual damages

. Sect ion 504(c ) of the C opy ri g ht A ct per mits a c opy ri g ht owner “ to recover, instea d of actua l dam ages and prof its, an aw ard of statut orydam ages.-1 0-

. . ., in a sum of

not les s than $750 or more t han $30 ,000 as the c our t c onsi ders j ust .” 17 U. S.C . § 504( c) (1 ). I n c opy ri g ht i nfri ng ement c ases , t he di str ict c our t has di sc re tion to award statuto ry

d a m a ge s of

any amou nt be tw een this minim um and maximum for each infr ing ement. Hav ing co ncl uded t hat i nfrin gem ent o cc ur re d, an d bas ed on Pl ain ti ff ’s el ect ion of sta tutor y damag es, the dis tr ict cour t w as obli g ated to make an aw ard of statut or y damag es for eac h i nfri ng em e n t, t h o u g h i t has broad di sc re ti on c oncer nin g the amount a w arded
w it hin the mini mum and max imum s tatut or y bounda ri es. See W

ildlife Inte rnatio nale , Inc.
v . B

. R u s s e l

l Clem ents , 7 8 2 F .2d 1 044, 1985 W L 14088 , * 2 ( 6th C ir . D ec. 3, 1985) (u npubl is hed t abl e dec is ion ); see als o Jewel l- La Sal le Rea lt y C o. v . Bu ck , 283 U .S. 202, 206 ( 1931) ( aw ard of mini mum sta tutor y damag es w here oth er

proof of act ual damag e w as lacking). The dis tr ict cour

t aw arded $67,500 .00 in sta tutor y damag es, findi ng there w ere 90 infr ing ements and ass ess ing the sta tutor y min imum of $7 50.00 for each infr ing ement. The damag e s tatut e i tse lf pl aces w ide di sc re ti on i n the as ses si ng co urt t o s et ap propr iat e damag es w it hin the sta tutor y l imi ts. Zom ba Enter

., In c. v. Pa nor

am a R ecor

ds, Inc ., 491 F. 3 d 57 4 , 5 8 7 (6t h Cir. 20 0 7 ) (ci ti n g Dougla s v . C unn in g ham , 294 U .S. 207, 210 ( 1935) (Congress’s purpose in e nact ing th e statu tory- dam age provisi on of t he 190 9 Copyri ght Act and i ts del ine ati on of spe ci fied l imi ts for s tatut or y damag es “t ake[] the matter out of the
ordin ar y rul e w it h resp ectto abuse of dis creti on” ); Broad , Music, Inc. v. Star Am usements, Inc ., 44 F .3d 4 85, 4 87 ( 7th C ir . 199 5) ( int er preti ng the moder n C opy ri g ht A ct and not ing “t h a t t h e s ta n d a rd fo r re viewin g a n a ward o f s ta tu to ry d a m a ges wit h in t h e al lo wed ran ge-1 1-

is ev en more defere nti al than abuse of di sc re ti on” ))

. Inde ed, h is tor ic all y one of the reason s sta tu to ry damage s w ere aw arded i s b ecaus e s uff ic ien t proof of actual damag es w as lac ki ng . See F. W

. W ool wort h Co. v. C ontem

por ar y A rt s, Inc ., 344 U.S. 228, 233 ( 1952) (“t h e am o u n t o f

da m a ges su f

fe re d w a s n o t c o m p u ta b le f ro m th e te st im o n y. . . . warra n t[ in g] resort to th e [da ma ge] statu te in the discretion o f the court, subjectalw ays to th e stat uto ry limitat ions”). ‘The p hraseol og y o f

t h e secti on w as adopted to av oid the str ictnes s o f cons tr uct ion i ncident to a l aw i mposi ng penal ti es, and to g iv e the ow ner of a c opy ri g ht s ome recompens e for inj ur y done him, in a cas e w here the r ule s of law render di ff ic ultor

i mposs ibl e proof of damages or di sc ov er y of profits .’ W ool wort h, 3 4 4 U.S . a t 2 3 1 (quo ti n g Dougla s v . C unni ngham , 294 U.S. 207, 209 (193 5)). ‘I n oth er w ords, the cour

t’ s c oncep ti on of

w hat is justin the par

ti cul ar ca se, cons i d e r i n g t h e n a t u re o f t h e c o p y r i g h t , t h e c i rc u ms t a n c e s o f t he infr ing ement an d the l ik e, i s made the measure of the damag es to be pai d, but w it h the ex press q ual ific ati on th at i n ev er y case the asses sment must be w it hin the presc ri bed l imi tati ons, thati s t o s ay , nei ther more than the ma x imu m no r less than th e min imu m. W it h in t hese limitation s the cou rt’s dis creti on and sens e of just ic e are controll ing , but i t has no d is creti on w hen proceed ing under

thi s p ro v is ion to g o out si de of them.’ W ool wort h, 3 4 4 U.S . a t 2 3 2 (quo ti n g L.A. Wester m ann C o. v

. D is patch Pr int ing C o., 249 U.S. 10 0, 10 6-07 (1919 )). W hile clearly the $75 0.0 0 pe r infringem e n ta s s e ssed b y the district cou rt is
re asona ble bec ause itfall s w it hin the per mis si ble st atuto ry damag e bound ar ies , t he $750.00 per infri ng ement is not w hat l ies at the h ear t of thi s a ppeal

. Rat her , i t i s t he tr ial court’s factu al f indings, in particu lar as they pertain to Dig iCourt, an d its f inding tha t the re
w ere 90 infr ing ements

. Di g iF il e, t he c omputer so ftw are found to be i nfri ng ing , and ProFi le, P l a i n t i ff’ s c o p y r i g h t e d s o ftw a re , a re b o t h u s e d fo r s c a n n i n g / i ma g i n g a n d i n d e x i n g of docu me nts. Digi Court, on the ot her ha nd , is a separate case m ana geme nt softw areT here is anot her case ma nag em ent prod uctdeveloped by Defendant s a nd ref err ed to in 2 th e r e co rd a s D i gi R e co rd , w h i ch p e rfor ms fun ct i o n s si mi lar to DigiCourt b u t w a s d e si gne d for a di f feren t ty pe of coun tyoff ic e l oca ted w ith in l oca l cou rthou ses . -1 2- prog ra m. D efendants hav e a separate copy ri g ht for D ig iC our

t. Pl ain ti ff

has not arg ued 2 that the D ig iC our

t prog ra m it sel f infri ng es upon i ts copy ri g hted ProFi le softw are, no r dis pute d D e fe n d a n t s ’ r i g h tfu l o w n e rs h i p o f t h i s s o ftw a re . Att h e t i me o f t h e u n d er ly ing damag es ru li ng , Pl ain ti ff did notoffer

a manag ement s oftw are s er v ing the same funct ion
as Di g iC our

t. Dig iCourt’s conn ection w ith this litigation turns u pon the nature and exten t to w hich Defend ant s’ inf ringi ng sof tw are, DigiF ile, w as ma de a part of t he DigiC ourt softw are sold by D efendants. To the extent it w as sol d as av ail abl e w it h and inc lud ed i n, or pac kag ed
w it h, t he D ig iC our

t prog ra m, an infr ing ement v iol ati v e of the Cop y ri g ht A ct has occ ur re d. Basi cal ly , t he par

ti es dis pute how

D ig iF il e w as pack ag ed or bundl ed w it h D ig iC our t. The di str ict c our

t’ s first damag es ru li ng , the Jul y 20, 2005, Opi nio n and Order , s tated si mply that“ Pl ain ti ff

has i denti fied 90 co p ie s o f the infr ing ing so ftw are producti n 30 ide nti fied l ocat ion s w it hin the Un it ed States

. The cour t w il l mult ipl y

eac h of the w or ks by the s tatut or

y m ini mum of $750 and aw ard Plai nti ff $67,500.” This referenc e to 90 c opi es cam e f rom t h e M a y 3 , 200 5, de claration of Pearl M. Holfo rty

provi ded w ith Plaint if

f ’s
or ig ina l moti on for damag es. That decl arati on represent ed th at s he i s, and has been, the Ma nag er of Di g it al Fi li ng Sy ste ms from 1995 t o the present

. She attac hed t o her decla ration a list of

so me of Defend ant s’ custom ers, mo st of w hom she represe nts w ere ide nti fied by

F ro nti er C onsul ti ng , one of

Defendants’ U.S. di str ibu tors. M s. Hol forty st ates tw o of the li ste d c ust omers w ere c ontacted t o v er ify thei r sta tus as cu sto m e rs of-1 3-

Defen d a n ts

. Eig ht of the pur por ted c ust omers on t he l is t w ere i denti fied i n 2002 from Defendant s’ w ebsi te. H olfor ty represent s t hat t hei r sta tus as cu sto mers w as v er ified by
cor re spond ence sentdi re ctl y to each cus tomer . Als o s ig nific ant i s H olfor ty ’s dec larati on that “a t l east90 copi es of t he infr ing ing softw are product ” w ere presentat the 3 0 c ust omer loc ati ons ide nti fied on the li st. She ex pla ins that thi s “ number of li cens es at ea ch cus tomer si te i s a n es ti mate bas ed on dis cus si ons w it h three c ounti es. ” The lo w er

co urt’ s a w ard of the sta tutor y min imum for

90 co p ie s w as based upon Hol forty ’s dec larati on. How ev er , t he decl arati on does not d efine w hat s he meantby “ the inf ringi ng product ;” that is, w h e t h er Holforty is refe rring to Dig iFile specif ically or simply Defendant s’ sale s o f the umbrell a i mag e manag ement s oftw are D ig iC our t, a poi nt prev iou sl y

note d by

thi s C our

t i n i ts Ma y 15, 2006, Order i n Appe al No. 05- 2101. The fatal defici enci es in Hol forty ’s st atements that , i n tur n, rendered the l ow er co urt’ s reli ance upon h e r de cla ra ti o n m isp la ce d , were de sc rib e d as fo llo ws in t h is Co u rt ’s p rio r ru lin g: In he r decl arati on, t he pl ain ti ff ’s manag er , Pear l M. Hol forty , did not i ndi cat e the n ame of the i nfri ng ing p roductpurchas ed or othe rw is e v er ify

thatthe infr ing ing productw as der iv ed f ro m ProFi le. Mo re ov er , H olfor ty ’s dec larati on g enerall y

l ack s s uff ic ien t s peci fici ty

. Three sta tements in parti cul ar are w orth noti ng . Fi rs t, the d ecl arati on s tates that“ most cus tomers o n Attac hment 1 w ere prov ide d by

F ro nti er C onsul ti ng and v er ified by c o ntacti ng two of the li s t e d cu s t o m e rs , ” b u tt h e d e c la ra t io n d o e s n o tin d ic a t e wh o t h e two cus tomers w ere or prov ide aff ida v it s from them. Seco nd, the de cl arati on sta tes thatothe r cus tomers “w ere v er ified by di re ct cor re spond ence, ” but t he decl arati on does not incl ude copi es of the cor re spond ence or furni sh other cor ro borati on. Third, the decl arati on sta tes that “[ t]he number of l ic enses at each cus tomer

site is an esti mate based on di sc uss ion s w it h three c ounti es, ” but t he dec larati on ag ain d o e s n ot na me the count ies or deta il the dis cus si ons. Be caus e the dec lara ti on does not g iv e adeq uate infor mati on abo ut th e inf ringi ng sof tw are or t h e custo me rs, the award of statu tory damag es w il l be v acat ed.Ap pare ntl yM ic ha el H ol forty i s th e s on of Pea rl Ho lforty . D efendan ts mov ed the di stri ct 3 cou rt to stri ke M r. Ho lforty ’s dec la rati on, w hi ch moti on w as den ie d. D esp ite the famil ia l rel ati ons hi p, M r. H ol forty ’s de cl arati on sets forth hi s b ackground and trai ni ng i n c ompu ter s oftwa re s ci enc e. -1 4- On remand, P lai nti ff

ca me forth w it h addi ti onal document ati on, a nd D efendants w ere g iv en the opp ortu nity to f ile a brief on da ma ges. M oreo v er, the district court issued specif ic f indings base d up on th is supple m e n t a l e vid ence and argumen t by the parties. T hose findi ng s i ncl uded t hat “ Defendant s’ sa les of the Di g iC our t prog ra m in cl uded s ale s o f the infr ing ing D ig iF il e prog ra m.” The di str ict c our

t’ s s uppl emental findi ng s o n F ebr uar y 16, 2 0 0 7, c onfir m that Dig iCourtwa s not a so f tw are iden tif ied in Plain tif f ’s Compla int. Butthe lower court impl ic it ly fou n d D ig iC our

t rele v ant t o the i ss ue of st atuto ry damag es for pur poses of calc ula ti ng the number of infr ing ements bec ause the d ecl arati ons of Plai nti ff ’s ex per t, M i c ha el Todd Ho l for

ty , i nc l ud ed i n Pl ai nt i ff’s s up pl em en ta l fi l i ng c on fi r m t ha t a de mo
v ersion of

the DigiC ourt softw are con taine d the inf ringi ng sof tw are D igi File as a clickable it em, and that v ersi ons 2.0 a nd 3. 0 of Di g iC our t ex amined by

M r. H olfor

ty at tw o c ust omer co u rt h o u se l o c a t i o n s a lso co n ta in e d th e DigiF ile im a gin g so f twa re . T h e di st ric t ju d ge re mark ed that “F ro m thi s [M r. Hol forty] conc lud ed th at t he s oftw are w hic h thi s C our t and the Cou rt of A ppeal s aff ir med as bei ng offendi ng and infr ing ing on Pl ain ti ff ’s p ro duct , Di g iF il e, i s i nteg ra ted a nd embedde d i n the D igiC our t s oftw are,” and that “M r. H olfor ty
conc lud ed from t his thatthe Di g iF il e i mag ing so ftw are w as int eg ra ted and embedded i n the Di g iC our t Pro v ersi on 3. 0 s oftw are and the D ig iC our t v ersi on 2. 0 s oftw are.” Hol forty des cr ibe s t hree s peci fic i nst ances w here he d o cumented obs er v ing the 3 Di g iF il e s oftw are. The first w as his v is itto Defendant s’ w ebsi te in 2003, w hen he obser v edThe v ari ous oth er d ecl arati ons offered by P la in tiff i n i ts s upp le mental bri efing do no t sp eak 4 to th e que sti on of whet he rD igi Fi le i n p arti cul ar w as v ie w ed and remo v ed f rom p arti cul ar c li ent co mp u te rs . The se de cl a ra ti o n s me re l yco n fir m ge n e ra l l yt h a t D i gi C o u rt w as foun d a nd remov ed from t h e c o mp u te rs . Th e o n e e x ce p ti o n i s th e a ff i d a v i t o f A rma n d o B a l d e rra ma , w h o w a s h i re d t o remov e s oftwa re. He sta tes that Di giRe cord , D igi Co urt a nd DigiFil e softw are hav e b een remo v ed f rom thre e w orkstati ons and one serv er at the Rea gan Cou nty Cle rk’s of

f ic es. Coi nci den tal ly , an d a s su b se que n tl ye x p l a i n e d h e re i n , th e R e a gan C o u n ty D i st ri ct C l e rk a n d C o u n ty C l e rk’ s o ff i ce s a re amon g M r. M ims’ l is t of cus tomers w ho purc has ed Di giCo urt a nd Di giRe cord with im ag ing so f tware, w hi ch is co nsi sten t w ith B al derra ma’ s a f f id av it’ s s tatemen t tha t D igi Fi le w as foun d. -1 5- tha t “[t]he Dig iFile productwas int egrated a nd e mb edd ed in th e de mo v ersion of Dig iCourt tha t I accesse d an d v iew ed o n the w ebsite .” The secon d w as on August 25 , 200 5, w hile on site at the G a rza C oun ty, T exas, Courtho use. Holfo rty declares th at “[t]h e Dig iFile imag ing so ftw are w as int eg ra ted and embedded in the D ig iC our t Pro v ersi on 3. 0 s oftw are,” and “i n the Dig iR ecord s oftw are.” The t hird oc cur re d on Ma y 25, 2006, w hil e on si te atthe Jack Coun ty, T exas, Courth ouse , w here he observed tha t “[t]he Dig iFile imaging sof tw are
w as int eg ra ted a nd embedded in the Dig iC our t v ersi on 2.0 softw are.” Thus, at the w ebsi te 4 demo and at t he two c our thous es he v is it ed, h e noted the p re senc e of the Di g iF il e prog ra m
w ithin th e Dig iCourt sy stem installed at tho se cou rthou ses. Defendant s mai ntai n D ig iF il e i s a prog ra m separat ely so ld and i nst all ed from t hat of Di g iC our

t, and thus the factthat Dig iF il e may be a cl ic kabl e i tem on the D ig iC our t menu do e s n o te q u a t e w i t h a c u s t o me r h a v i n g a c t u a l l y

p a i d fo r a n d h a d t h e s o ftw a re i n s t all ed
suc h tha t an infr ing ement ha s o cc ur re d. As par t of their su ppl emental br iefin g , D efendants offered th e ex per

t dec larati on of Sameer M ehra, w ho s tated he had full acc ess to and had examine d Defend ant s’ Di giC ourt softw are and obse rv ed th at Digi File w as no t accessib le
v ia, and int eg ra ted w it hin , t he D ig iC our t s oftw are. The di str ict j udg e rev iew ed and w eig hed the ev ide nce submi tted by both par ti es on re mand, ulti matel y

concl udi ng that the ex per t i nformati on s ubmitted b y Pl ain ti ff per tai nin g-1 6-

to t he D ig iC our

t s oftw are w as more credi ble

. The lo w er co urt bas ed th is credi bil ity findi ng upon t he s peci fici ty

co ntai ned i n M r. H olfor ty ’s dec larati ons, and his personal obs er v ati ons o f t h e so f twa re o n p a rt ic u la r d a t e s a n d a tsp e c if icc u s t o m e r l o c a t io n s . Co n ve rs e ly, Defendant ’s ex per

t fail ed to spec ify the date he v iew ed D ig iC our t, the v ersi on ex amined , or w hether i t was a w or ki ng v ersi on of the softw are tha t w as acc ess ed. This credi bil ity a s s e s s m e n tb y

t h e d i s t r i c tc o u rta n d h e r f i n d i n g s o f

fa c tre l a t e d t h e r e t o a r e s o u n d

. W e canno t find fault w it h the di str ict co urt’ s c onsi derati on of thi s e v ide nce, nor w oul d i t be proper for u s t o do so, under

the appl ic abl e s tandard. Our role i n rev iew ing the dis tr ict j udg e’s findi ng s o f factupon w hic h s he dec ide d to
re ins tate the p ri or

aw ard i s a l imi ted o ne, d ictated by the boundar ies s e t b y t h e F ederal Civ il R ules. Unde r those rules, “[f] indings of fact sha ll not be se t aside unless c le arly
er ro neous , and due re g ard s hal l be g iv en to the oppor tuni ty of the t ri al cour

t t o j udg e of the
credi bil ity

of the w it ness es. ” Fed. R. Ci v . P. 5 2( a)

. This “ cl ear ly -e rroneous st andard – w it h its deferen ce to th e trier of fact – is the rule, nott h e e xc e ption .” Ander son v. City of Bess em er

Cit y, 470 U.S. 564 , 575 (1985 ). The pl ain l ang uag e of Ru le 52( a) , w it h i ts use of the c onj unct iv e “ and,” di cta tes that dis tr ict c our

t factu al findi ng s b e g iv en appropr iat e defere nce, w hether bas ed on credi bil ity det ermin ation s, or on ph y sical or docum ent aryev iden ce, or on inferen ces f rom o the r fa cts. Id. at 574. M oreov er , t he r ule ca ll s fo r gre a te r deferenc e to a tr ial co urt’ s c re dib il ity f indings. Th e Sup reme Court describe s this great er deferen ce in this ma nne r: [W ]hen a tri al ju dg e’s f ind ing is based on his deci si on to credi t t he te sti mony of one of tw o or

more w it ness es, each o f wh o m has tol d a c oherent a nd facial ly pl ausi ble st or

y thati s n ot c o n tr a d icted by extr ins ic

ev ide nce, that f inding, if

not inte rnallyinconsiste nt, ca n v irtuallynever be clear error.-1 7-

Id. at 575. Mr . H olfor

ty ’s obs er

v ati ons at t he two c our

thous e loc ati ons are c onsi ste nt w it h oth er ev ide nc e s u b mi tt e d u p o n s u p p l emental br iefin g . In i ts Suppl emental R epl y , Pl ain ti ff offered the custom er list compiled byone Michael Mims, w ho is one of Defend ant s’ U.S. resellers. Pl a in ti f f su e d M imsin T e xas in co n ju n ct io n w it h garn ish m e n t a n d en fo rce m e n t p ro ce e d in gs on th e M ic hig an ju dg ment; thi s l is t w as prov ide d by M ims i n c onj unct ion w it h tha t proce edin g. Bot h the Garz a Coun ty, T exas, Courtho use a nd th e Jack Coun ty, T exas, Cou rt house v is it ed by

H olfor ty are i ncl uded on Mi ms’ cus tomer li st. Mi ms’ li st ind ic ates that the C ounty

C lerk a nd D is tr ict C ler k o ff ic es of Jack and Gar

z a C ounti es purchas ed Di g iC our t and D ig iR ecord s oftw are with i mag ing so ftw are, w hic h w oul d also be c onsi ste nt
w it h M r. H olfor

ty ’s obs er

v ati on of D ig iF il e s oftw are w it hin D ig iC our t w h e n h e ex amined tho se com put ers. As further

ev ide nce of the D ig iC our t- Di g iF il e c onnecti o n, P lai nti ff poi nts to sta tements made i n a c ro ss -c lai m file d by M ims ag ain st Pl ain ti ff in that enforc ement acti on for l oss of cus tomers and destr uct ion of his bus ine ss , s tatement s l ik e “ [b]ot h D ig iC our t and Di g iR ecord had Di g iF il e ( the s canni ng so ftware thatw as the s ubj ectof the c opy ri g ht inf ringemen t action in Mi chigan be twe e n Dig ital and Judgme nt-Deb tors) imbe dde d in them.” This st atement from the cross -c lai m w as als o re peated by the d is tr ict c our t i n i ts factu al f indings, em pha siz ing Mims’ descript ion that the Dig iFile sof tw are w as im bedded in Di g iC our

t and D ig iR ecord. W e are ob lig ate d to giv e the district court’s rev iew and interp retat ion of

this evi den ce greatdeferen ce, as lon g as its a c c o u n to f t h e ev iden ce is plausible in lig ht of the reco rd
v iew ed i n i ts enti re ty

. W e s houl d not re v erse the d is tr ict c our t ev en w ere w e c onv inc ed th at-1 8-

w e wo u ld h ave decide d the case dif feren tly . Rather, “ap pellat e cou rts mustconsta ntly have in mind thattheir f unc tion is notto decid e factu al issues de nov o. ” Ander

son, 470 U. S. a t 573 -7 4. The di str ict c our t det er mined that a s tatut or y m in im um for 90 i nfri ng ing
co p ie s was ju st , d e sp it e De fe n d a n ts ’ p ro te st s a n d of fe rin gs o f

pro o f whic h th e di st ric t ju d ge re jected. W e cannot say that this credi bil ity

as ses sment of Defendants ’ tes ti monial proof and Defend ant s’ oth er proo f on dam ages, and the low er court’s acce pta nce o f Plaintif f ’s proo f and the rea sona ble inferen ces to be draw n the ref rom was clear error. In s eeki ng re cons ide ra ti on before the dis tr ict cour t, Defendant s g o to g re at l eng ths seek ing to neg ate t he di str ict j udg e’s findi ng thatD ig iF il e w as embedded w it hin the sal es of Di g iC our

t so ftw are. Defendant s a ttac hed an aff ida v itfrom M ims w herein he s eeks to clarif y a state me nt m ade byhis counse l in the cou nte rclaim to th e ef fect that Di g iC our

t and Dig iR ecord has Dig iF il e i mag ing so ftw are i mbedded i n i t. This i s n ot t echni cal ly ac curate, as ex pla ine d bel ow. D ig iF il e i mag ing s oftw are ha s a l w ay s b ee n pr i c ed a nd s ol d as s ep arat e s oftw are. W he n my busin ess, ODS, a rese ller, int rodu ced Dig iCourt case m ana geme nt softw are in 200 3, the custo me rs had the opt ion of purcha sing i ma ging sof tw are as a separate modu le.

. . . D igiRe co rd for c ounty cl er ks had the s ame opti on: Dig iFile ima ging sof

tw are could be p urcha sed a s sepa rate softw are m odu le and t hen i ncl uded as par t of the Di g iR ecord s oftw are. Mi ms’ aff ida v itfurth er

st ates that“Di g iC our

t JP and Muni ci pal softw are w as nev er so ld w it h imag ing bec ause the S tate did not re q uire J Ps or ci ti es to keep copi es of thei r ti ck ets

. The ima ging sof

tw are w as never im bed ded in their case m ana geme nt softw are.” Th e district
cour t di d notnote or

disc uss these sw or n statement s byMims , or the extent to w hic h the y impacted a ny

findi ng thatthe Di g iF il e s oftw are w as automati cal ly i ncl uded i n and imbedd ed
w it hin a c ust omer’ s p urchas e of Di g iC our t.-1 9-

Plaint if f of fered no evidence to directly cont radict the se stat em ent s. Plaintif f ’s reply brief atta ched a supp lem ent al af f idavit f rom Mr

. Holforty tha t sought to provide mo re deta il
on D i g i C ou rt v ers i on s 2. 0 an d 3. 0 an d th ei r i nt eg rat i on an d em be dd i ng of D i g i F i l e w ithin Di g iC our t, based upon his ex aminat ion of thes e v ersion s a t the Jac k a nd Ga rz a C ounty loc ation s. T o t h e extent Hol forty i s i mpli ci tl y

opi nin g thatthe infr ing ing so ftw are c an be inc lud ed i n v ersi on 2. 0 and is essent ial ly automatic all y

av ail abl e in 3.0, the reco rd co ntai ns no ot her i nformati on to sh ed l ig ht o n wh ich ve rs ion w as ins tal led at each of the v ar iou s cus tomer

l ocat ion s l is ted b y

Pear l Hor

forty i n her dec lara ti on. Pear l Hol forty ’s l is t of
cus tomers w ho pos sessed a c ombine d tot al of 90 cop ies of the “ infr ing ing so ftw are” include d of

f ices tha t, acco rding to M ims, were never sold scan /ima ging sof tw are w ith the ir
cas e manag ement s oftw are. T he weakne ss in this reco nside ration e v iden ce is its em pha sis upon sales; tha t is,
w hether D ig iC our

t or DigiRe co rd w as pr ic ed, s old , or purchas ed w it h D ig iF il e i mag ing
s oftw are. D es pi te t he s e ev i de nt i ar y o ffer i ng s o n rec on s i de rat i on , D efe nd an ts a nd M i ms do notmake cl ear

w hether a c opy of the i nfri ng ing productex is ted w it hin , as a pa rtof, or in conju nctio n wi t h De fend ant s’ case ma nagem entsof tw are sold to a custom er. Th eir emphasi s i s upon the productpurchas ed. The emphasi s o f the C opy ri g ht A ct, i n c ontrast , is not on w h e th e r a s a le of the infr ing ing productoc cur re d. The Actprov ide s c opy ri g ht protecti on to “ or ig ina l w or ks of authorshi p fix ed i n any tang ibl e m e d iu m of

ex press ion .” This i ncl udes comput er prog ra ms, w hic h fall under the Act’ s prot ect ion of “li terar y w or ks .” 17 U .S.C . § 102( a)

. El ements of a copy ri g ht- infr ing ement cl aim are (1) ow nershi p of the copyrig ht by the plain tif f and (2) copy

ing by the defendant. See F

eis t Pu bl’ ns, Inc . v . R ur al Tel. Se rv . C o., 499 U .S. 340, 361 ( 1991) ; Zom ba Enterprises, Inc. v. Pan orama R ecords, Inc ., 491 F.3d 57 4, 58 1 (6th Cir. 200 7).-2 0-

Defend ant s protestthatDig iFile is purch ased sepa rately, fo r a s e p a ra te price, in
order to obtai n ac ces s to the softw are prog ra m. Ev en presumi ng thi s is the cas e, itdoes not e vidence c lea r er ro r in the d is tr ict c our t’ s fact ual findi ng of the n umber of infr ing ing copi es produce d. Each i nfri ng ement for co py ri g ht da mag e c alc ula ti on pur poses i s n ot drive n b y wh e the r Defe nda nts acco mp lished a sale of the softw are for a prof it. It is d ictated by

w hether a c opy of the s oftw are w as made. Se e T ho r ough br ed S oftwa re Inter nati onal , Inc. v. D ic e C or

p., 488 F.3d 35 2, 35 9 (6th Cir. 200 7) (co n c lu d in g, i n ass e ss ing actual damag es for c opy ri g ht v iol ati on, t hat t he i nfri ng er w as “l iab le for th e unp aid license fees for all the un aut horized copies it m ad e , r e gardless of w het her the se copi es w ere acc ess ibl e to or us ed by [t he i nfri ng er ’s ] c ust omers ”) ; see a lso Sen sonics, In c.
v. Aer osonic C or

p., 81 F .3d 1 566, 1573 ( 6th C ir . 199 6) ( re jecti ng appel lan t’ s arg ument t hat pat entdam ages w ere m easu re d b y t he n um ber of devices sold

rather than the number
ma nufac tur

ed, a s p a t e n tl a w

e x c l u d e s o t h e rs fro m ma k i n g , u s i n g , o r s e l l i n g p a t e nted subje ct ma tter). In th is Court’s v iew , d ocum ent ation of a precise nu mb er of

custom ers sepa rately purch asing and p aying a licen se fee for DigiFil e is n ot required. Defend ant s w ould claim
suc h does not ex is t, y et i t is undi sput ed that Di g iF il e w as in fact obser v ed and acc ess ed dur ing on- si te v is it s b y

Pl ain ti ff ’s represent ati v e. Defendant s h av e notbeen forthc oming
w it h i nformati on ev en as to thos e confir med obser v ati ons, and ev ide nce of other sa les of Di g iF il e s peci fical ly

hav e notbeen forthc oming from D efendants ev en th oug h D efendants cont inu e to maint ain thatD ig iF il e i s n ot an i nfri ng ing product

. The record i s a t bes t ambi g uous on w hether D ig iF il e was p a ck ag ed w it h s ale s o f Di g iC our t/D ig iR ecord and merel y i nacc ess ibl e to the c ust omer because i t h ad notbeen sepa rately purchase d, or w het her it physically w as no t include d in each sale of Defend ant s’
case m ana geme nt softw are. P erha ps Defend ant s’ records w ere incom plete ; howev er, if-2 1-

de te r mi ni ng t he n um be r o f i nfr i ng i ng c op i es i s imp ed ed bya defen da nt ’ s fai l ure to c om e forth wi th accu rate or com plete records, a cou rt may draw adve rs e i n f e re n ces f rom th is lack of informa tion. Defe nda nts ha v e no t of fered informa tion o r ev iden ce tha t Dig iFile is not e mbedded or

othe rw is e phy si cal ly

co ntai ned w it hin t h e D igi Cou rtprog ra m w it h i ts distribut ion. I n o t her w ords, th ere is no evidence thata custom er purcha sing D igi Court sof tw are f rom Defend ant s w ho th erea f ter deci d e s t o pu rchase Dig iFile unde rg oes a separate i nst all ati on or

is sent addi ti onal , separate softw are, etc. Ab sentev ide nce of such , it is reaso nab le to i n f e r t h e f a c t, as did th e district judge in this case, thatthe DigiF ile prog ra m is co ntai ned or othe rw is e pac kag ed w it hin and acc ompani es the d is trib uti on of Di g iC our t. Pl ain ti ff

sh oul d notothe rw is e be penal iz ed i n as ses si ng damag es w here itdoes not h av e the abi li ty

to v erifyor

co ntes t represent ati ons by the li abl e i nfri ng er . See W ool wort h, 344 U .S. at 23 3. Defend an t s ’ o wn failure to b e forthco min g in its convey ance of una mb iguous,
acc urate a nd c omplet e s ale s i nformati on as to it s s oftw are product s h as g enerated adv erse cons eq uence s w hic h onl y D efendants shoul d bear

. Due to Defendant s’ default , Di g it al Fi li ng Sy ste ms has had li ttl e oppor tuni ty t o c o n d u ct di sc ov er

y on t he extent of Defendant s’ product ion and sal es of the D ig iF il e product , bei ng left to addre ss w hat l imi ted informa tion in this respe ct Defend ant s cam e forth w ith on supple me nta l brie f in g. Sin ce dam ages are di ffic ul t to a s c er ta i n, d ou bt s a bo utt he p roo f s ho ul d be res ol v ed a g ai nst Defend ant s. [I] f actual damag es canno t be asc ertai ned w it h pre cis io n bec ause the ev ide nce av ail a b le from the i nfri ng er i s i nadeq uate, damag es maybe est im a ted o n the bes t av ail abl e ev ide nce, tak ing co g niz ance of the reason for the ina dequa cy

of proof and resolv ing doub t against the inf ringer. Sens onics, Inc. v. Aer

osonic C or

p., 81 F.3 d 15 66, 157 2 (Fed. Cir. 1 996 ) (citatio ns om itted ).-2 2-

In de ter mini ng d a m a ges , par ti es shoul d notbe rew arded for faili ng to re spond or coope ra te w it h di sc ov er y . Mo n o gr

amModel

s, Inc . v . Indust roMoti ve Cor

p., 492 F .2d 1281 , 1 2 8 7
- 8 8 ( 6 t h C i r . 1 9 7 4 ) ( i n fr i n g e r ’ s c o n d u c ti n re ma i n i n g s i l e n tp re v ented
asc ertai nin g facts co ncer nin g damag es) ; Bel l v. Pr o Ar ts, Inc ., 511 F.2 d 451 , 453 (6th Cir. 197 5) (per curiam) (app ellantinf ringer’s fa il u re to coo pera te in discovery rende red it impos si ble to asc ertai n damag es) ; Lam , Inc. v. Jo hns- Ma nvi lle C or p., 718 F.2d 1056, 1065 (F ed. C ir . 198 3) ( “w hen t he amountof the d am a ges [ fo r patenti nfri ng ement] canno t be
asc ertai ned w it h preci si on, any doubts reg ardin g the amount mus t be re sol v ed ag ain st the infr ing er”) ; Sens onics, Inc. , 81 F.3d at 1572 (w here defendant in patenti nfri ng ement acti on faile d to re tai n product ion records dur ing li ti g ati on per iod , proper for d is tr ict c our

t t o draw strong adverse inferen ce records would have bee n un favorable to d efend ant ). The di str ict c our

t w as proper ly

i n the posit ion to g aug e the reason abl e i nferenc e to be m ade f rom t h e e vid ence subm itted pertain ing to sales of Dig iCourt and , in particula r, the emb edd ing of

Dig iFile w ithin Digi Court. T he reco rd dem onst rates th at th e district court jud g e c onsi dered c arefull y the av ail abl e t e st imonial dec larati ons and doc umentati on provided by the partie s upo n rem and prior to de term ining that th e stat uto ry aw ard sho uld be rein sta ted. C ertai nly , i t w as w it hin the dis tr ict co urt’ s p ro v inc e to re sol v e any unce rtaintie s abo ut th e na ture and exten t to w hich D igi File w as sold as a p ackage w ithin Dig iCourt against Defend ant s, and to det ermin e w hatev iden ce it de e m e d mostcredible after bei ng prov ide d w it h the tes ti monial dec larati ons and document ar y ev ide nce from the parti e s . U n d e r t h e s e e v i d e n t i a r y c i rc u ms t a n c e s , D e fe n d a n t s c a n n o t n o w b e h e a rd to
co m p la in about any

i nacc uracy

i n the di str ict j udg e’s as ses sment w here any pur por ted inaccu racies w ere at lea sti n p a rt a t tributa ble to Defend ant s. Th ey, as the inf ringers, shoul d bear the burden of anyinex act it ude. See N icks on In dust

ri es, Inc . v . R ol Mf g. C o., 847 F.2d 79 5, 79 9 (Fed. Cir. 1988 ).-2 3- W here the tor

t i tse lf i s o f such a n ature as to precl ude t he asc ertai n m e n t o f

the amount of damag es w it h c ertai nty , i t woul d be a per v ersi on of fundamental pr inc ipl es of jus ti ce to deny all reli ef to the i nju re d perso n, and thereby relieve the w rongdoe r from makin g any ame nd for his acts. In su ch case , w hile the dam ages ma y not be dete rmine d by mere spec ula ti on or

g uess , i t w il l be enou g h i f the ev ide nce show the extent of the dam ages as a ma tter o f ju st and reason able inferen ce, alth ough th e result be onl y approx imat e. The w ro ng doer i s n ot en ti tl ed to co mplai n t h at t hey cann ot be mea sured w ith the ex actn ess and precision tha t w ould be p ossible if the cas e, w hic h he alo ne i s respon si ble fo r m a kin g, were oth er w is e. . . . [T]he r is k o f the unc ertai nty sh oul d be throw n upon the w ro ng doer i nst ead o f u p o n t h e in ju re d p a rt y. Stor y Par chm ent C o . v. Pater

son Par chm ent Paper

C o., 282 U .S. 555, 563 ( 1931) (citation s omitt ed). Defend ant s have fa iled to sho w thatthe district ju dge’s f indings of fact
w ere clearly errone ous. In sum ma ry , w hile giv en great f lexi bility , a dam age assessm entis not w ithou t limits. In th e seco nd a ppe al, ad dressing the d istrict court’s initial a ward of statu tory dam ages, there w as v ir

tual ly no ex pla nati on or art ic ula ti on bythe dis tr ict cour t as to how

i t reache d it s a ss ess ment and cons ide re d itj ust

. Thus, as flex ibl e and as dis creti onar y as the sta tute maybe, some ex pla nati on is re q uired. On remand, t he di str ict c our t s oug ht further

proof from both par

ti es, then re ached ex press factual findi ng s and leg al conc lus ion s t herefrom that, i n the end, i t det er mined confir med i ts ini ti al dam a ge as ses sment. U nder the cl ear er ro r sta ndard for thos e factual findi ng s, and given t h a t those damag es fall w it hin the statu tory dam age range, an d giv en th e dist ri c tj udge’s discretion in dete rmining w hatis
cons ide re d to be a “j ust ” sta tutor y damag e aw ard, t he di str ict j udg e’s d eci si on mus t be uph eld. T he district co urt’s in feren ce tha t Defend ant s p rov ided a copy of DigiFi le sof tw are
w ithin cop ies of

case m ana geme nt softwa re sold an d distribut ed b y it w as reaso nab le based upon the ev ide nce before it

. It is thi s copy ing , ra ther than the sal e of, the prog ra m that cons ti tutes the infr ing ing co nduct

. See 107 U .S.C . § 106 (owne rs e xclus iv e r ig ht t o-2 4-

re produce the copy ri g hted w or k a nd di str ibu te c opi es to t he pub lic ); § 50 1 ( v iol ati on of owner’s ex clusiv e cop y rig ht rights is an inf ringemen t, an d the o ne so doin g is an inf ringer)

.

2. Inj un ct iv e R elief Und er the Cop y ri g ht A ct, D efendants are s ubj ectto an inj unct ion rest ra ini ng them from furth er

i nfri ng ement, and t hey may be req uired to turn ov er all in frin g ing copies . “A ny cour t hav ing j ur is dicti on of a ci v il act ion ar is ing under thi s t it le may , . .. g ra nt t emporar y and f inal injun ctions o n such terms as it m a y d eem reason able to prevent or restrain infr ing ement of a c o py ri g ht.” 17 U. S.C . § 502( a)

. Per manent i nju nct ion s a re g ra nted
w here l iab il ity

i s d eter mined and a cont inu ing threat to a copy ri g ht ex is ts. Suc h i nju nct ion s maybe i ss ued w it hout an ev ide nti ar y hear ing w here no tr iab le is sues of fact are i nv olv ed. United S tates

v. M iam i Univ., 294 F.3d 79 7, 81 5 (6th Cir. 200 2). By her deci si on on re mand rei nst ati ng her pri or Order of Ju dg ment for damag es and inj unct iv e reli ef, the d is tr ict j udg e ordered th at: Pursuantto 17 U .S.C . § 502, an i nju nct ion i ss ues, rest ra in in g D efendants f rom o f fering fo r sale, selling, re p rodu cing, preparing deriv ative w orks, dis tr ib u ting co pie s o f, or other w is e us ing the softw are productD IGI FI LE, DI GIC OU RT or

PR OF ILE, and order ing them t o refrai n from as ser ti ng any cont ra ct other

than the 1999 A g re ement.

. . . [P]u rs uant to 17 U. S.C . § 503, that all co pie s o f anyso ftw are i denti fied as DI GIF ILE, D IGI CO UR T, or simi lar softw are obt ain ed from D efendants or a resel ler

or di str ibu tor

of Defendant s b e i mpounded b y Pl ainti ff and dest ro y ed atPl ain ti ff ’s di sc re ti on, w hether i n tan g ibl e media of ex press ion or d is p o s e d o f

e le c t ro n ic a ll y. Plaint if f doe s not disp ute thatDefend ant s’ case ma nagem entsof tw are, DigiC ourt and Dig iRecord, do es no t inf ringe its ProFile prod uct, n or did the district court so f ind in eithe r the de fault jud gmen t of inf ringemen t or its subse quent f indings regarding dama ges. I n l ig h to f t h is u n d is p u t e d c ir c u m s t a n c e , t h e sc o p e o f t h e lo we r c o u rt ’s a wa rd o f in ju n c t ive
re li ef must be modi fied.-2 5-

The abov e q uoted secti ons of the di str ict cour t’ s Order of J udg ment, in par ti cul ar the
use of the w ord “or”, impermi ss ibl y incl udes Di g iC our

t s oftw are g enerall y

i n the sc ope of the injunctio n, regardless of w het her D igi File w as actu ally integrated and imbe dde d w ithin the D igiCo u rtp rog ra m sol d to a par ti cul ar cu sto mer. W hil e under the appl ic abl e l eg al sta ndards that findi ng w as an appropr iat e one for pur poses of ass ess ing and cal cul ati ng statu tory mo net arydam ages, it is ov erly inclusiv e for purp oses of injunctive relief . Th at th is is si m p ly t o o b ro a d is p e rh a p s b e s t e xe m p li f ie d b y c o m p a ri s o n t o t h e s c o p e o f in ju n c t ive
re li ef Pl ain ti ff

in its ori g ina l moti on propose d w as appropr iat e to order under the Cop y ri g ht Act : 1. T hatpursua nt to 1 7 U

. S .C. § 502 (b) that th e inf ringemen t of Plaintif f ’s re g is tered copy ri g ht ceas e and that De fendants sto p the sa le or transfer of the D IGI FI LE s oftw are product , or any produc t t

hat in clu desthe DI GIFILE prod uct, su ch as DIGICOURT and DIGIRECORD. 2. T hatp ursua nt to 17 U.S.C. § 503 (b) th at any inf ringi ng co pies of the work i n t h e U n i t e d S t a t e s b e i mp o u n d e d a n d d e s t ro y e d , t h u s p e r mi t t i n g P l a i n t i ff to offer to re pla ce them w it h copi es of Plai nti ff ’s w or k a t a neg oti ated pr ic e, inc lud ing any

product s t hat includeth e D IGIFIL E s oftwar e, s uch as DIGICOURT and DIGI RECORD. (e mphasi s a dded)

. Thus, Pla int iff ack now led g es that onl y w or ks w hic h s peci fical ly i ncl ude the i nfri ng ing so ftw are D igiFile s h o uld be e njo ine d. How ev er , t he i nju nct ion as w ri tten all ow s for

i mpoundment and des tr uct ion of Di g iC our t g enerall y , w it hout v er ific ati on th at t he actu al Dig iFile program is also present. For this reaso n, rem and for the lim it e d p u rpose o f m o d ifyin g t h e sc o p e o f in ju n c t ive re li e f

is n e c e s s a ry. III . CO NC LU SION For the re asons se t fort h herein , t he di str ict c our t’ s d ecisio n c o n f irmi ng i ts pr ior
a wa rd o f st a t u t o ry d a m a ge s is h e re b y A FF IR ME D and it s d eci si on c onfir ming i ts pr ior
a wa rd o f in ju n c t ive re li e f

is h e re b y REVERSE D and RE MA ND ED fo r f u rt h e r pr o ce e d in gs cons is tent w it h thi s o pin ion

.