Opinion ID: 3219519
Heading Depth: 2
Heading Rank: 2

Heading: O’Brien, Insurance Concepts, and Cheatham

Text: Turning to the remaining defendants, Bell argues that the district court erred by granting summary judgment for O’Brien, Insurance Concepts, and Cheatham on the issue of damages; denying Bell’s motion to compel discovery of defendants’ tax returns and the spreadsheet of Cheatham’s website traffic; and denying Bell’s request for declaratory relief.
The district court found that Bell established ownership of the copyright of the daytime photo and that O’Brien, Insurance Concepts, and Cheatham had infringed on Bell’s copyright by displaying the photo on their respective websites. See JCW Invs., Inc. v. Novelty, Inc., 482 F.3d 910, 914 (7th Cir. 2007) (“To establish copyright infringement, one must prove two elements: ‘(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.’” (quoting Feist Publ’ns, Inc. v. Rural Tel. Servs. Co., 499 US. 340, 361 (1991))). Nonetheless, the district court concluded that Bell could not prove damages. “The Copyright Act permits a copyright owner to recover actual damages suffered as a result of the infringing activity and any profits of the infringer resulting from the infringement that are not otherwise taken into account in calculating actual damages.” McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 566 (7th Cir. 2003). Actual damages are “usually determined by the loss in the fair market value of the copyright, measured by the profits lost due to the infringement or Nos. 15-2343, 15-3735, 15-3731 15 by the value of the use of the copyrighted work to the infringer.” Id. We have said that “[i]t is not improper for a jury to consider either a hypothetical lost license fee or the value of the infringing use to the infringer to determine actual damages, provided the amount is not based on ‘undue speculation.’” Id. (quoting On Davis v. The Gap, Inc., 246 F.3d 152, 166 (2d Cir. 2001)). Bell attempts to prove damages by establishing the fair market value of the daytime photo, as demonstrated by the licensing fee defendants should have paid Bell for use of the photo. To prove the value of the hypothetical license fee, Bell submitted an affidavit stating: Plaintiff has sold for several years and currently sells the perpetual commercial rights to display digital download version [sic] of all his photos … for use on the web for $200. … Plaintiff believes that the price of $200 is fair and reasonable and represents the fair market value for the perpetual commercial rights to publish the photos. Additionally, Bell cited as evidence of damages a webpage showing that the advertised price for a license to download the daytime photo is $200. The district court deemed Bell’s affidavit insufficient to establish fair market value, stating: “[T]here is no evidence other than Mr. Bell’s unsupported assertion that he has sold the rights to the Indianapolis Photo for years at a price of $200.00. Without any support or evidence, this value is based on undue speculation.” 16 Nos. 15-2343, 15-3735, 15-3731 On appeal, Bell argues that summary judgment was improper because his affidavit and website price listing create a genuine dispute of material fact as to whether he suffered damages from the infringement. He contends that the district court erred by making a credibility determination when it characterized Bell’s affidavit as an “unsupported assertion.” Bell’s argument fails for several reasons. Bell does not aver in his affidavit that he has ever actually had a buyer willing to pay $200 for his photo. Instead, he states that he “believes that the price of $200 is fair and reasonable and represents the fair market value ….” Without additional evidence, Bell’s subjective belief as to the fair market value of his photo is not enough to prove damages. See On Davis, 246 F.3d at 166 (“The question is not what the owner would have charged, but rather what is the fair market value.”). Likewise, the price that Bell listed on his website is not sufficiently concrete to show the fair market value of his photo. See Dash v. Mayweather, 731 F.3d 303, 318 (4th Cir. 2013) (“To survive summary judgment of an actual damages claim, a copyright holder must show that the thing taken had a fair market value. Evidence of the owner’s prior sale or licensing of copyrighted work will satisfy this burden when it is sufficiently concrete.” (internal citations and quotation marks omitted)). Despite the fact that the district court granted defendants’ motion to compel Bell’s sales records, Bell never produced any evidence supporting his assertion that he has sold the photo for $200. 4 4 In fact, Bell attempted to obfuscate the issue of damages by objecting to defendants’ motion to compel his sales records, arguing that the sales records were not relevant and that his financial records were confidential, Nos. 15-2343, 15-3735, 15-3731 17 Finally, Bell argues that defendants did not present any evidence contradicting Bell’s affidavit or price listing. However, it was Bell’s burden to prove damages, and defendants were not required to produce any evidence showing a lack of damages. See McRoberts Software, 329 F.3d at 568. Thus, the district court did not err in granting summary judgment for O’Brien, Insurance Concepts, and Cheatham on the issue of damages.
Next, Bell argues that the district court erred in denying his motions to compel discovery of defendants’ tax returns and the spreadsheet of Cheatham’s website traffic. We review the district court’s denial of a motion to compel for an abuse of discretion. e360 Insight, Inc. v. Spamhaus Project, 658 F.3d 637, 644 (7th Cir. 2011). The Copyright Act permits a plaintiff to recover an infringer’s profits that are “attributable to the infringement ….” 17 U.S.C. § 504(b). The Act specifies that “[i]n establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.” Id. In other words, a plaintiff must show a causal nexus between the infringement and the gross revenues. See Taylor v. Meirick, 712 F.2d 1112, 1122 (7th Cir. 1983) (“If General Motors were to steal your copyright and put it in a sales brochure, you could not just put a copy of General Motors’ corporate income tax return in the record and rest your voluminous, and burdensome to produce. After the district court granted defendants’ motion to compel, Bell still did not produce any sales records; rather, he moved for a protective order, which the district court denied. 18 Nos. 15-2343, 15-3735, 15-3731 case for an award of infringer’s profits.”); Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700, 711 (9th Cir. 2004) (“[T]he copyright claimant must first show a causal nexus between the infringement and the gross revenue ….”). The district court agreed with the magistrate judge who denied Bell’s motion to compel defendants’ tax returns, finding that the request for eleven years of tax returns was overbroad and that Bell’s assertion that the tax returns would establish wrongful profits was “nothing more than a bare allegation.” The court reasoned that even if the tax returns showed an increase in profits during the time the photo appeared on the defendants’ websites, Bell could not establish a nexus between the increased profits and the use of his photo. The district court also denied Bell’s motion to compel discovery of Cheatham’s spreadsheet of website traffic. On appeal, Bell focuses on Cheatham’s tax returns and the spreadsheet related to her website traffic, since O’Brien and his Insurance Concepts website generated no business. Bell alleges that “there is significant evidence in the record that creates a substantial likelihood that Bell would establish a causal nexus.” However, Bell does not develop his argument to demonstrate how the tax returns would allow him to develop a causal nexus, even if they did reflect an increase in profits during the period of infringement. Cheatham used Bell’s daytime photo of the Indianapolis skyline on her website advertising her services as a real estate agent. There is no evidence suggesting that Cheatham attracted more clients because of Bell’s photo. See Eagle Servs. Corp. v. H2O Indus. Servs., Inc., 532 F.3d 620, 623 (7th Cir. 2008) (“It is doubtful that profits from the sale of noninfringing goods or services … can be attributed to Nos. 15-2343, 15-3735, 15-3731 19 a copyright infringement with enough confidence to support a judgment.”); cf. Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 517 (9th Cir. 1985) (causal nexus between profits and infringement demonstrated by casino’s annual report stating that the operations of the casino were “materially enhanced” by the popularity of the infringing stage show (internal quotation marks omitted)). Thus, the district court did not abuse its discretion in denying Bell’s motion to compel defendants’ tax returns. Nor did the district court abuse its discretion in denying Bell’s motion to compel the spreadsheet of Cheatham’s website traffic. As the district court acknowledged, Cheatham had already provided Bell with documents showing the same information contained in the spreadsheet—specifically, seventy-two monthly web reports for Cheatham’s website, encompassing pre- and post-infringement periods. Thus, the spreadsheet would be duplicative. See Fed. R. Civ. P. 26(b)(2) (“[T]he court must limit the frequency or extent of discovery otherwise allowed … [if] the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive ….”); Patterson v. Avery Dennison Corp., 281 F.3d 676, 681 (7th Cir. 2002). For these reasons, we affirm the district court’s denial of Bell’s motions to compel discovery.
Finally, Bell argues that the district court erred in granting summary judgment for defendants on the issue of declaratory relief and denying his request for a declaration that he is the valid owner of the copyright of the daytime photo. “The Declaratory Judgment Act, 28 U.S.C. § 2201, allows federal courts, in their discretion, to render declaratory judgments 20 Nos. 15-2343, 15-3735, 15-3731 only where there exists an actual controversy ….” Trippe Mfg. Co. v. Am. Power Conversion Corp., 46 F.3d 624, 627 (7th Cir. 1995) (citation and internal quotation marks omitted). In deciding whether there is an actual controversy, we focus on whether the facts alleged “show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (citation and internal quotation marks omitted). The district court found that there was no actual controversy between Bell and O’Brien, Insurance Concepts, and Cheatham since defendants were no longer infringing on Bell’s copyright. The court stated, “[t]hese [d]efendants have no desire to interact with Bell or use his photographs in the future.” The district court also noted that it had already found in its first summary judgment opinion that Bell owned the copyright. We agree with the district court. As the court explained, defendants had long since removed Bell’s photo from their websites. In fact, the websites no longer exist. Thus, even if a controversy had existed at the time Bell filed suit, there is currently no actual controversy of “sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” MedImmune, 549 U.S. at 127. Therefore, the district court did not err in granting summary judgment for defendants on the issue of declaratory relief.