Source: http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20040914_0001708.SNY.htm/qx
Timestamp: 2017-06-29 02:17:31
Document Index: 252445502

Matched Legal Cases: ['§ 504', '§ 504', '§ 504', '§\n504', '§ 504', 'art, 310']

| STEHRENBERGER v. R.J. REYNOLDS TOBACCO HOLDINGS
STEHRENBERGER v. R.J. REYNOLDS TOBACCO HOLDINGS
MICHIKO STEHRENBERGER, Plaintiff,
R.J. REYNOLDS TOBACCO HOLDINGS, INC.; R.J. REYNOLDS TOBACCO COMPANY; KIM CLEMMONS, individually and d/b/a GENIUS INSANITY, Inc., and GENIUS INSANITY ENTERTAINMENT; DRAFT WORLDWIDE, INC. associated with/or d/b/a DRAFT INC., and KEVIN BERG & ASSOCIATES, INC. d/b/a KBA MARKETING, Defendants.
In this copyright infringement suit, the issue presented by
defendants' motion for partial summary judgment is whether
plaintiff can claim, as part of her "actual damages," a
multiplier or "fee for unauthorized usage" which would increase
by up to ten times the amount which would otherwise represent a
fair and reasonable license fee for the infringed material.
Plaintiff's damages expert bases his calculation of her
reasonable license fee for the infringing newspaper
advertisements on a fee of $10,000 for a corporate advertisement
in newspapers, and a fee of $50,000 for a limited corporate
identity project for a client with annual revenues in the range
of those of defendant Reynolds. Plaintiff's damages expert thus
concludes, "A total licensing fee of $60,000 is thus appropriate
in this case." He then makes an addition for the fact that the infringing use
was unauthorized:
There must be one final addition for unauthorized
use. The graphic arts community recognizes that
mistakes do occur resulting in unauthorized use. To
resolve these problems, the industry has a schedule
of fees for the granting of what is called a
"retroactive license." A user who discovers that it
has made an unauthorized use can resolve the problem
by paying a reasonable license fee of two to three
times the normal fee, Exhibit 11, thus avoiding the
costly and protracted business of a federal copyright
case. The multiplier applies when the infringer
recognizes the mistake and moves quickly to correct
it. However, where a copyright owner must go to court
to resolve the infringement, the fee guideline is
that the price should be further enhanced up to ten
times what the pre-infringement price would have
Since he perceives that the usage in this case was "clearly
without consent and was clearly willful," requiring this law suit
to enforce plaintiff's rights, he concludes that a multiplier of
ten is appropriate and thus that plaintiff's loss "based on
industry standards and practice" is $600,000. See April 26, 2004
Expert Report of Henri Dauman.
Whatever its utility as a marketplace technique for resolving
problems among the "graphic arts community," this claimed
practice is not the method by which damages are calculated under
the copyright law. In litigated cases, infringement does not make
a copyright more valuable.*fn1 The accepted method for calculation of damages in an
infringement case has been recently summarized by Magistrate
Judge Fox of this court in Barrera and Burgos v. Brooklyn Music,
Ltd., et al., 2004 U.S. Dist. LEXIS 12450 at *8-9 (S.D.N.Y. June
The Copyright Act states, in pertinent part: "an
infringer of copyright is liable for either (1) the
copyright owner's actual damages and any additional
profits of the infringer, as provided by [§ 504 (b)];
or (2) statutory damages, as provided by subsection
[17 U.S.C. § 504 (c)]." 17 U.S.C. § 504 (a) ("§
504(a)"). Actual damages are primarily measured by
"the extent to which the market value of the
copyrighted work at the time of the infringement has
been injured or destroyed by the infringement." See
Inc., 807 F.2d 1110, 1118 (2d Cir. 1986). In
appropriate circumstances, actual damages may be
taken to be a reasonable license fee  that is, the
fair market value of a license authorizing
defendants' use of the copyrighted work. See On
Davis v. The Gap, Inc., 246 F.3d 152, 164-68 (2d
In the present case plaintiff's expert calculated, as an
"appropriate" total licensing fee, the sum of $60,000. Both
facially and substantively, his increase of that figure by a
factor of ten does not define a fair and reasonable license fee,
but represents concepts of punishment for infringement,
deterrence of similar behavior in the future, and recompense for
the costs and effort of litigation. Those components form no part
of "actual damages" under the statute. The copyright law punishes
and deters in other ways: by statutory (enhanced) damages for
willful infringements, disgorgement of profits, and imposition of
costs and attorneys fees  but it has no provision for
"multipliers" in the calculation of actual damages.
As stated in Barrera and Burgos, supra, at *15, a
claimed  additional $45,000, which allegedly
reflects the fact that defendants' use of the Photograph was
unauthorized, cannot logically represent part of the
fair market value of a license authorizing such
use. . . . The portion of Elsner's declaration quoted
above suggests that a photographer or stock
photography agency might demand such an additional
fee in order to avoid the need to resort to
litigation to resolve an infringement dispute.
However, the injuries compensable through actual
damages, as contemplated by §§ 504 (a) & (b), do not
encompass the need to engage in litigation.
Such a multiplier has been used to compute actual damages from
unauthorized use in only one case, Bruce v. Weekly World News.
Inc., 150 F.Supp.2d 313, 321 (D.Mass. 2001), vacated in
part, 310 F.3d 25 (1st Cir. 2002). The Bruce court did not
analyze the issue, because both sides' experts adopted the
multiplier concept, and I decline to follow it, for the reasons
given above. In Baker v. Urban Outfitters, Inc.,
254 F.Supp.2d 346, 359 (S.D.N.Y. 2003) Judge Preska mentioned, arguendo, the
use of a multiplier, but went no further because the higher
measure of damages was defendant's profits. A similar glancing
reference is made in Fournier v. McCann Erickson,
242 F.Supp.2d 318 at 340 (S.D.N.Y. 2003), but in neither of those
cases*fn2 was the court asked squarely to determine the
availability of such a multiplier.
In the end, the purpose of ascertaining a reasonable license
fee is to determine the fair market value of the right the
infringer violated. As stated in On Davis v. The Gap, Inc.,
246 F.3d 152, 172 (2d Cir. 2001): The hypothesis of a negotiation between a willing
buyer and a willing seller simply seeks to determine
the fair market value of a valuable right that the
infringer has illegally taken from the owner. The
usefulness of the test does not depend on whether the
copyright infringer was in fact himself willing to
negotiate for a license. The honest purchaser is
hypothesized solely as a tool for determining the
fair market value of what was illegally taken.
The "value of what was illegally taken" is not determined by
multiplying it. Plaintiff's expert calculated that value at
$60,000 and (if that figure is proved) that amount, and not a
multiplication of it, represents plaintiff's "actual
damages."*fn3
Plaintiff is precluded from offering evidence supporting her
claim that a multiplier should be used in calculating her actual