Source: https://law.justia.com/cases/federal/appellate-courts/F2/968/250/98321/
Timestamp: 2020-01-29 11:13:55
Document Index: 702847151

Matched Legal Cases: ['§ 504', '§ 504', '§ 504', '§ 504', '§ 504', '§ 14', '§ 504', '§ 14', '§ 504', '§ 505']

N.a.s. Import, Corporation, Plaintiff,alentino, Ltd., Plaintiff-appellant, v. Chenson Enterprises, Inc.; Shu Chin Chen (a/k/a Margaretchen) and Ken Lee, Defendants-appellees, 968 F.2d 250 (2d Cir. 1992) :: Justia
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N.a.s. Import, Corporation, Plaintiff,alentino, Ltd., Plaintiff-appellant, v. Chenson Enterprises, Inc.; Shu Chin Chen (a/k/a Margaretchen) and Ken Lee, Defendants-appellees, 968 F.2d 250 (2d Cir. 1992)
U.S. Court of Appeals for the Second Circuit - 968 F.2d 250 (2d Cir. 1992) Argued May 26, 1992. Decided June 29, 1992
Before: MINER and WALKER, Circuit Judges, and KELLEHER* , District Judge.
Appellant Alentino, Ltd. ("Alentino") appeals from a final judgment of the United States District Court for the Southern District of New York (Hon. Louis J. Freeh, Judge) granting statutory damages, pursuant to 17 U.S.C. § 504, against Chenson Enterprises, Inc., and its owners Shu Chen and Ken Lee (hereinafter collectively referred to as "Chenson"). Previously, the district court found that Chenson had infringed Alentino's copyrighted buckle design, which both parties used on women's handbags. Alentino argues that the district court erroneously concluded that Chenson's infringement was not willful and, as a result, the court's calculation of statutory damages was misguided. Alentino also contends that the district court abused its discretion in awarding insufficient attorney's fees and denying Rule 11 sanctions against Chenson.
This Court reversed the district court, determining that Chenson had failed to prove its defense of accord and satisfaction, and that Alentino should have been permitted to pursue its legal claims against Chenson. Alentino, Ltd. v. Chenson Enterprises, Inc., 938 F.2d 26, 28 (2d Cir. 1991) (per curiam). The case was remanded on the issue of damages and was subsequently transferred to Judge Louis J. Freeh.
In an amended opinion filed on February 26, 1992, the district court ordered that Chenson be permanently enjoined from using Alentino's copyrighted handbag ornament in any manner. Chenson was further ordered to pay Alentino damages in the amount of $2,648, plus interest from October 18, 1989. Finally, Chenson was ordered to pay Alentino $8,000 for attorney's fees, and $4,151.85 for costs. The district court denied Alentino's motion for sanctions pursuant to Fed. R. Civ. P. 11. This appeal followed.
In general, a copyright owner is entitled to recover the actual damages suffered, as well as any profits made by the defendant, that are the result of an infringement. 17 U.S.C. § 504(b). However, under § 504(c) (1) of the Act, an owner may elect to recover statutory damages in lieu of any other form of monetary relief. In the ordinary case of statutory damages, the Copyright Act sets the limits of possible recovery at not less than $500 and not more than $20,000. Id. at § 504(c) (1). However, when an owner proves that the defendant's infringement was "willful," the statute permits the court, in its discretion, to increase an award up to $100,000. Id. at § 504(c) (2). The Act states that a plaintiff may elect to receive statutory damages at any time before final judgment is entered. Id.
In determining an award of statutory damages within the applicable limits set by the Act, a court may consider " 'the expenses saved and profits reaped by the defendants in connection with the infringements, the revenues lost by the plaintiffs as a result of the defendant's conduct, and the infringers' state of mind--whether wilful, knowing, or merely innocent.' " 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 14.04 [B], at 14-41 (1991) (hereinafter "Nimmer ") (quoting Boz Scaggs Music v. KND Corp., 491 F. Supp. 908, 914 (D. Conn. 1980)). The Supreme Court has stated that the "statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct." F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233, 73 S. Ct. 222, 225, 97 L. Ed. 276 (1952).
We have held that for the purpose of awarding enhanced statutory damages under § 504(c) (2), an infringement is "willful" if the defendant had "knowledge that its actions constitute an infringement." Fitzgerald Publishing Co. v. Baylor Publishing Co., 807 F.2d 1110, 1115 (2d Cir. 1986). This knowledge may be "actual or constructive." Id. In other words, it need not be proven directly but may be inferred from the defendant's conduct. See, e.g. Fallaci v. New Gazette Literary Corp., 568 F. Supp. 1172, 1173 (S.D.N.Y. 1983).
While an infringement may not be willful when a party, despite warnings to the contrary, " 'reasonably and in good faith believes' " that its conduct is innocent, RCA/Ariola Int'l, Inc. v. Thomas & Grayston Co., 845 F.2d 773, 779 (8th Cir. 1988) (quoting Nimmer at § 14.04 [B] this "analysis is subject to the corollary that reckless disregard of the copyright holder's rights (rather than actual knowledge of infringement) suffices to warrant award of the enhanced damages." Id.; see also Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010, 1020 (7th Cir.) ("willful" infringement where the infringer has acted in reckless disregard of the copyright owner's rights), cert. denied, --- U.S. ----, 112 S. Ct. 181, 116 L. Ed. 2d 143 (1991); International Korwin Corp. v. Kowalczyk, 855 F.2d 375, 379-82 (7th Cir. 1988) (same).
The district court found that Chenson's delay in removing the bags from the store's shelves was excused by its principals' limited command of English. The court stated that Chenson might not have initially understood the import of Alentino's correspondence and thus, " [u]nder the circumstances, it was not unreasonable for Chenson to wait until it had signed Alentino's [fourth] formal demand letter to stop selling the infringing bags." We disagree.
Accordingly, we reverse the district court's finding that Chenson's infringement was not willful, and vacate the statutory damages award. While we remand this issue to the district court for reconsideration of statutory damages, we note that it still remains within the district court's discretion, in light of Chenson's willfulness, to decide whether or not to enhance its award of statutory damages in this case. See 17 U.S.C. § 504(c) (2).
The Copyright Act provides that the award of attorney's fees is within the sound discretion of the court. Section 505 of the Act states that "the court in its discretion may allow the recovery of full costs by or against any party ... [and] may also award a reasonable attorney's fee to the prevailing party as part of the costs." 17 U.S.C. § 505. Because the Copyright Act intended to encourage suits to redress infringement, "fees are generally awarded to a prevailing plaintiff." Roth v. Pritikin, 787 F.2d 54, 57 (2d Cir. 1986). See also Diamond v. Am-Law Publishing Corp., 745 F.2d 142, 148 (2d Cir. 1984). In deciding a reasonable attorney's fee, courts should "consider the amount of work, the skill employed, damages at issue, and the result achieved." Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir. 1983) (per curiam). This award "assures equal access to courts, provides an economic incentive to challenge infringements, and penalizes the losing party." Id.
The Supreme Court has instructed the courts of appeals to review Rule 11 determinations, both as to law and as to fact, for abuse of discretion only. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S. Ct. 2447, 2460, 110 L. Ed. 2d 359 (1990). "Familiar with the issues and litigants, the district court is better situated than the court of appeals to marshall the pertinent facts and apply the fact-dependent legal standard mandated by Rule 11." Id. at 402, 110 S. Ct. at 2459. In view of this direction, we think that the district judge was best able to determine the nature of counsel's representation. We find no abuse of discretion here.