Opinion ID: 457915
Heading Depth: 3
Heading Rank: 4

Heading: Liability of Joint Infringers

Text: 49 The district court granted judgment of $22,000 against defendants in the plural. Yet if the district court intended that each of the defendants be jointly and severally liable for the $22,000 award, this was error. 50 When a copyright is infringed, all infringers are jointly and severally liable for plaintiffs' actual damages, but each defendant is severally liable for his or its own illegal profit ; one defendant is not liable for the profit made by another. MCA, Inc. v. Wilson, 677 F.2d 180, 186 (2d Cir.1981); 3 M. Nimmer, supra, Sec. 12.04[C], at 12-50; see Cream Records, Inc. v. Jos. Schlitz Brewing Co., 754 F.2d at 829. 51 The rule of several liability for profits applies, at least, where defendants do not act as partners, or practically partners. Compare Belford, Clarke & Co. v. Scribner, 144 U.S. 488, 507-508, 12 S.Ct. 734, 740, 36 L.Ed. 514 (1892) (printer held jointly liable for publisher's profits on infringing book since they were practically partners.), with Sammons v. Colonial Press, Inc., 126 F.2d at 346-47 (court refused to hold printer jointly liable for publisher's profits since printer was paid a fixed price for work, payable whether or not infringing books made profit). Defendants assert that Arden and MGM Grand are jointly liable since they worked closely together in producing the infringing work. This is a fact question for the district court to consider on remand. The court should consider whether Arden was an employee or an independent contractor rather than a partner. Relevant to this determination, among others, are such factors as whether Arden received a fixed salary or a percentage of profits and whether he bore any of the risk of loss on the production. 52 Arden may be liable for profits he earned in connection with the production of Hallelujah Hollywood, but amounts paid to him as salary are not to be considered as profits. See MCA, Inc. v. Wilson, 677 F.2d at 186. But if Arden did earn profits from the production, such as royalties, he is liable for a proportionate amount of these. Concomitantly, defendant MGM Grand would be entitled to deduct any such royalties as costs in arriving at its own profits. See Smith v. Little, Brown & Co., 396 F.2d 150, 151-52 (2d Cir.1968; see Cream Records, Inc. v. Jos Schlitz Brewing Co., 754 F.2d at 829 (interpreting the 1976 Act). 53 The court must also determine whether MGM, Inc., MGM Grand's parent corporation, should be held liable for the infringement. A parent corporation cannot be held liable for the infringing actions of its subsidiary unless there is a substantial and continuing connection between the two with respect to the infringing acts. 3 M. Nimmer, supra, Sec. 12.04[A], at 12-44 to -45. 54 If the district court finds a substantial and continuing connection between MGM Grand and MGM, Inc., then MGM, Inc., may also be liable for its profits. But to the extent any such profits are merely passed on from its subsidiary, MGM Grand, the plaintiffs should be given only one recovery, to be satisfied by either MGM, Inc. or MGM Grand.