Opinion ID: 4557824
Heading Depth: 4
Heading Rank: 1

Heading: Actual Copyright Damages

Text: Following the post-trial motions, the district court reduced ECIMOS’s $1 million actualdamages award to $282,800. “In the absence of undue passion and prejudice on the part of the jury, we review for abuse of discretion the district court’s decision on the issue of remittitur,” but “a jury verdict should not be remitted by a court ‘unless it is beyond the maximum damages that the jury reasonably could find to be compensatory for a party’s loss.’” Gregory v. Shelby Cnty., 220 F.3d 433, 443 (6th Cir. 2000) (quoting Jackson v. City of Cookeville, 31 F.3d 1354, 1358 (6th Cir. 1994)). “[A]n award must stand unless it is (1) beyond the range supportable by proof; or (2) so excessive as to shock the conscience; or (3) the result of a mistake.” Ibid. Generally, the amount of actual damages is “calculated with reference to the loss in the fair market value of the copyright, often measured by the profits lost as a result of the infringement.” Cotter v. Nos. 19-5436/5519 ECIMOS, LLC v. Carrier Corp., et al. Page 16 Christus Gardens, Inc., 238 F.3d 420 (Table), 2000 WL 1871698 at  (6th Cir. 2000) (quoting Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147, 1170 (1st Cir. 1994), overruled on other grounds by Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010)). Actual damages can thus be thought of as the anticipated amount that the copyright holder would have received had the infringer not infringed. See Thoroughbred Software Int’l, Inc. v. Dice Corp., 488 F.3d 352, 358 (6th Cir. 2007) (acknowledging that the parties agreed that the actual damages should be the amount the plaintiff would have received “but for” the defendant’s “unlawful copying of the software”). “A plaintiff seeking actual damages ‘must prove the existence of a causal connection between the . . . alleged infringement and some loss of anticipated revenue.’” Ibid. (alteration in original) (citation omitted). At trial, ECIMOS asked the jury for $1,521,250 in actual copyright damages, which represented $1,021,000 for the total upgrade fee of the IPCS that ECIMOS quoted Carrier in 2014, and $474,150 in lost licensing fees for the period from April 2011 (the time when Carrier installed the VB6 software onto Windows 7) through June 2018 (the beginning of trial). The jury returned an award of $1 million and—following each parties’ post-trial motions—the district court reduced the $1 million to $282,800. The district court concluded that the record only supported $282,800 in lost money that ECIMOS would have earned as a result of the infringement: $164,800 in unpaid licensing fees for the IPCS (at a rate of $50 per month for each of the 103 runtest stations) from October 2015 (when the RES went online at Collierville) to July 2018 (when the trial concluded), and $118,000 for the one-time “software migration fee” that ECIMOS quoted Carrier in its 2014 proposal for upgrading VB6 to VB.Net when the IPCS transitioned to Windows 7. Carrier now contends that it should only be required to pay copyright-infringement damages of $164,800 (only the cost of the lost licensing fees) while ECIMOS claims that the full $1 million should be reinstated. In calculating whether the district erred in reducing the actual-damages award, we must calculate what ECIMOS would have earned had Carrier not infringed on the IPCS databasescript source code. Neither party disputes that an accurate assessment of actual damages would include the $164,800 that ECIMOS lost in licensing fees that Carrier never paid for using its infringing RES database. Nor does either party dispute that Carrier migrated the VB6 software Nos. 19-5436/5519 ECIMOS, LLC v. Carrier Corp., et al. Page 17 from Windows XP to Windows 7 in early 2011 but that it did not pay ECIMOS for the migration. However, contrary to the district court’s conclusion, the software migration cannot be a basis for actual copyright damages because the jury found that Carrier did not infringe on ECIMOS’s software-script source code. Indeed, the jury was specifically asked to find whether Carrier had infringed on aspects of ECIMOS’s “software script-source code,” and it concluded that Carrier did not. Thus, the only foundation for a calculation of actual damages from the infringement must be the profit that ECIMOS expected to receive from its database-script source code; the award cannot be based on anything related to the IPCS software application. The district court held that the history of proposals and purchase orders between the two parties established that ECIMOS would have received the one-time software migration fee from Carrier, because Carrier actually installed VB6 onto Windows 7, in contravention of the licensing terms of the software. Yet, just because Carrier breached the terms of the licensing agreement does not mean that such action can be the basis of a copyright-damages award. ECIMOS does not provide any reason to suggest that the software migration from VB6 to Windows 7 infringed its copyright on the database-script source code, and indeed acknowledges in its briefing on appeal that the district court appears to have conflated “ECIMOS’s software application with the database scripts.” The district court thus erred by including the $118,000 software-migration fee into the actual-damages award. Yet this conclusion does not end the inquiry, as ECIMOS insists that the $1 million can be supported from other evidence in the record. As quoted in the 2014 proposal to Carrier, ECIMOS insists that the entire IPCS upgrade/system is worth $1,021,000. ECIMOS claims that the entire system could not function without the infringed-upon database-script source code and that the system’s hardware, software, and database were “inextricably linked.” However, that is not how actual damages should be calculated. The $1,021,000 quote from ECIMOS contained approximately $834,000 for runtest station repairs as well as other work associated with the IPCS hardware. It also included a $3,600 for a software add-on that Carrier apparently did not use. These additional aspects cannot support actual copyright damages for ECIMOS’s databasescript source code. Contrary to ECIMOS’s insistence, it can only recover damages that resulted from “the loss in the fair market value of the copyright, measured by the profits lost due to the Nos. 19-5436/5519 ECIMOS, LLC v. Carrier Corp., et al. Page 18 infringement or by the value of the use of the copyrighted work to the infringer.” McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 566 (7th Cir. 2003) (emphasis added). The only copyright that was infringed was ECIMOS’s database-script source code. Even if the IPCS hardware and software applications were linked to the database, there is no evidence that the database, by itself, had a fair-market value of anywhere close to $1 million. Although ECIMOS provided Carrier with the 2014 proposal for a system upgrade, which totaled more than $1 million, there was nothing in the proposal that adverted to ECIMOS’s valuation of the database. The only reasonable basis upon which to calculate the amount is ECIMOS’s valuation of how much its IPCS software (which included the database) was worth on a license-per-station basis. This amount was $50 per month for each of the 103 runtest stations at Carrier’s Collierville plant. When this rate is factored alongside the amount of time that the infringement was ongoing at Collierville before trial (32 months—from the time that the infringing RES database went live at Collierville to the time that the trial started), the maximum supportable amount of actual copyright damages is $164,800.