Opinion ID: 1434840
Heading Depth: 3
Heading Rank: 1

Heading: Failure to Allocate Profits (Issue 5)[9]

Text: The $733,878 in compensatory damages that the jury awarded did not, as defendants argue, impermissibly include profits not attributable to the infringement. A victim of copyright infringement may recover any profits of the infringer that are attributable to the infringement. 17 U.S.C. § 504(b); see also Sheldon v. Metro-Goldwyn Pictures Corp., 309 U.S. 390, 399, 60 S.Ct. 681, 84 L.Ed. 825 (1940) (interpreting an earlier version of this statute). In 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. 17 U.S.C. § 504(b); see also Johnson v. Jones, 149 F.3d 494, 506 (6th Cir.1998) (applying burden-shifting approach of statute); Sheldon, 309 U.S. at 406, 60 S.Ct. 681 (Where there is a commingling of gains, [the infringer] must abide the consequences, unless he can make a separation of the profits so as to assure to the injured party all that justly belongs to him.). Here, plaintiffs met their initial burden of presenting proof of defendants' gross revenue. Plaintiffs presented evidence of defendants' profits from the album Ready to Die. Plaintiffs then estimated a fair allocation of profits to the song Ready to Die by dividing the album profits by the number of tracks on the album. (Plaintiffs used the same methodology for the original album, which contained seventeen tracks, and the re-release version of the album, which contained nineteen tracks.) The jury's verdict reflected this allocation. The jury acted within its province when it rejected defendants' argument that plaintiffs' allocation included profits attributable to non-infringing elements of the song Ready to Die. Defendants point to the testimony of their expert musicologist, Dr. Lawrence Ferrara, who evaluated the length of the infringing material in Ready to Die relative to the overall song, the licensing fee that an owner licensing the infringing material could have received, and the overall importance of the infringing material to the song, and concluded that the relative value of the infringing material was approximately 20.5%. Defendants also argue that the jury failed to consider that the song was memorable (and successful) because of certain lyrics relating to Notorious B.I.G.'s life and death. [10] But, as the Eighth Circuit said in Andreas v. Volkswagen of America, Inc., [t]he question of allocating an infringer's profits between the infringement and other factors, for which the defendant infringer carries the burden, is `highly fact-specific' . . . and should [be] left to the jury. 336 F.3d 789, 797-98 (8th Cir.2003) (citation omitted). Because the jury simply returned a numerical amount for damages, and did not specify how it calculated damages, there is no way of knowing the jury's reasons for rejecting defendants' arguments. The jury could have agreed with Dr. Alexander Stewart, an expert witness for plaintiffs, who testified that defendants' expert, Dr. Ferrara, improperly employed a strictly mathematical approach in calculating the value of the infringing material to the song and that this failed to tak[e] into account the significance of the passage to the song. Or the jury could have simply not believed the testimony of defendants' expert witnesses in light of the jurors' having heard the song and concluded that the infringing material was a much more valuable component of the song. In any event, permitting the jury to determine that defendants failed to meet their burden of proving profits attributable to factors other than the infringing material was not reversible error. The jury also acted within its province when it rejected defendants' argument that plaintiffs' allocation failed to consider that the song Ready to Die contributed little to the success of, and therefore the profits from, the album Ready to Die. The jury could have agreed with plaintiffs' expert, Dr. Einhorn, who testified that over the course of time, . . . all songs do tend to contribute equally to the profits of an album and that although factors such as radio play, promotion, and music videos for particular songs might initially drive album sales, it is not clear to [him] how to determine what song had any more or less salability ten years down the road. The jury also could have agreed with Dr. Einhorn that, with respect to the re-release of the album, which contained new material, [i]t is very difficult to determine without any kind of objective evidence, any kind of survey how much in that constellation of different new products was attributable to the new songs that were added at the time of the re-release. Or the jury could have found simply that defendants' subjective evidence on the value of the song to the album as a whole was insufficiently persuasive to meet defendants' burden.