Opinion ID: 6971727
Heading Depth: 3
Heading Rank: 4

Heading: Effect on Market

Text: The district court correctly found that this factor weighed in favor of LANS. The court reasoned that although LANS could not prove loss of subsequent sales of the works, and hence actual adverse effect on the market for videotape footage, defendants’ actions should not go unpunished. Such actions if permitted would result in a substantially adverse impact on the potential market for the original works. Reuters and LANS are in the business of providing audiovisual news material to reporting organizations. When such an organization buys footage from Reuters, it does not need to purchase it from LANS, thus lessening the market for LANS’s footage. Defendants do not contest this factor. In sum, the district court, having found that only one of the four statutory factors weighed in favor of defendants, correctly concluded that the fair use defense did not apply. See Tullo, 973 F.2d at 799 (holding fair use did not shield a defendant from liability when only one of the four statutory factors weighed in its favor). III. STATUTORY DAMAGES Because we reverse the district court’s ruling on extraterritorial damages and affirm its ruling on the fair use defense, we must remand for a new trial on actual damages. Accordingly, we conditionally vacate the award of statutory damages. LANS retains the right, however, to make an election before final judgment to recover statutory damages instead of actual damages and profits. 8 17 U.S.C. § 504(c)(1). Should LANS elect statutory damages, the district court should reinstate its prior award. Against that eventuality, we will address defendants’ cross-appeal challenging the statutory damages award. A. Innocent Infringement 9 The district court found that defendants did not sustain their burden of proving that they were not aware and had no reason to believe that their acts constituted an infringement of copyright, and thus were not entitled to the reduction in statutory damages under § 504(c)(2). Whether the defendants’ infringement was innocent is a factual determination which we review for clear error. See Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 515 (9th Cir.1985). 1. LANS’s works were embedded in a licensed work Defendants contend first that they had “no practicable alternative but to copy those portions of [LANS’s] works which were embedded in a licensed work.” But practicability is not a proxy for innocence. The argument does not sustain the burden of proving that Visnews “was not aware and had no reason to believe that [its] acts constituted an infringement.” § 504(c)(2). 2. Defendants’ awareness of limitations on use Defendants contend that there was no evidence that Visnews accessed the NBC desk log to discover restrictions on the material, and that knowledge of the desk log entry would not have alerted Visnews that the Today show contained the works. Their arguments, however, do not address the ground on which the district court based its ruling. The court agreed that there was no evidence that anyone at Visnews saw the log entry or that knowledge of the entry would have alerted Visnews that copying the NBC feed would violate LANS’s copyrights. And it found that there was no direct evidence in the record as to the state of mind of the Visnews or EBU employees who made the infringing copies from the NBC and Visnews feeds. The court also found, however, that it can be inferred that whoever at Visnews and EBU made the copies of the Today show knew that the feed contained “a downstream that credited KCOP for the production.” 10 Reuters II, 942 F.Supp. at 1280. The downstream indicates that the portion of tape belongs to someone other than NBC and “could indicate that there were in fact restrictions on any further use of the copyrighted works, and lead a reasonable person to inquire whether copying the feed would infringe a copyright held by KCOP or by another.” Id. Defendants have the burden of proving that the infringement was innocent. See 17 U.S.C. § 504(c)(2). The district court’s finding that they failed to meet their burden is not clearly erroneous. B. Even Assuming No Innocent Infringement, the Award Was Excessive Defendants argue, in the alternative, that the award was excessive because LANS licensed the works to the networks and others for lesser amounts and had even established a liquidated damage figure of $10,000 for un authorized use of the works. The district court has “wide discretion in determining the amount of statutory damages to be awarded, constrained only by the specified maxima and minima.” Harris v. Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir.1984) (citing L.A Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 39 S.Ct. 194, 63 L.Ed. 499 (1919)). The court is guided by “what is just in the particular ease, considering the nature of the copyright, the circumstances of the infringement and the like.” Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir.1990) (quoting F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 232, 73 S.Ct. 222, 97 L.Ed. 276 (1952)). Because awards of statutory damages serve both compensatory and punitive purposes, a plaintiff may recover statutory damages “whether or not there is adequate evidence of the actual damages suffered by plaintiff or of the profits reaped by defendant,” Harris, 734 F.2d at 1335, in order “ ‘to sanction and vindicate the statutory policy’ of discouraging infringement.” Peer Int’l Corp., 909 F.2d at 1337 (quoting Woolworth Co., 344 U.S. at 233, 73 S.Ct. 222). The court found that although LANS charged the networks only $3,500 for the licenses, these licenses carried-numerous restrictions and were of limited duration. Later licenses with various restrictions and durations brought from $5,000' to $6,500. LANS secured a total of $250,000 to $300,000 in license fees for the Reginald Denny tape and less for the other tape. LANS would have charged $250,000 for an unlimited domestic license for the works. The court also took into account the public benefit from such works and the need to encourage their creation. To this end, LANS “must be allowed to profit from them, without concern that expediency, exigent circumstances or the very nature of the fast-breaking news-gathering business will deprive [it] of potential profits from those works.” Reuters II, 942 F.Supp. at 1283. The district court “is in a better position than are we to determine appropriate damages.” Harris, 734 F.2d at 1335; Peer Int’l Corp., 909 F.2d at 1337. Its determination of the amount of statutory damages was not clearly erroneous.