Opinion ID: 3064577
Heading Depth: 3
Heading Rank: 1

Heading: Availability of Actual or Statutory Damages

Text: Although we have not previously addressed whether illegal use or operation of a work by the copyright owner precludes the award of actual or statutory damages for copyright infringement, analogous case law persuades us that it does not. [4] Previously, we have held that fraudulent content is not a basis for denying copyright protection to a work, and is not a defense to infringement. See Belcher v. Tarbox, 486 F.2d 1087, 1088 (9th Cir. 1973) (refusing to deny copyright protection to fraudulent advertising). “[T]he currently prevailing view” is that “no works are excluded from copyright by reason of their content.” 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 2.17 (2008) (citing Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852, 863 (5th Cir. 1979)); see also Belcher, 486 F.2d at 1088 (explicitly disagreeing with a Fifth Circuit case later overruled by Mitchell). Dismissing the defense of obscenity to a claim of copyright infringement, the Fifth Circuit concluded in Mitchell that “[t]he maxim of unclean hands is not applied where plaintiff’s misconduct is not directly related to the merits of the controversy between the parties, but only where the wrongful acts ‘in some measure affect the equitable relations between the parties in respect of something brought before the court for adjudication.’ ” 604 F.2d at 863 (quoting Keystone Driller Co. v. Gen. Excavator Co., 290 U.S. 240, 245 (1933)). It held that “[t]he alleged wrongdoing of the plaintiff does not bar relief unless the defendant can show that he has personally been injured by the plaintiff’s conduct.” Id.; see also Fuller v. Berger, 120 F. 274, 278 (7th Cir. 1903) (“[I]f the defendant can do no more than show that the complainant has committed some legal or moral offense, which affects the defendant only as it does the public at large, the court must grant the equitable remedy and leave the punishment of the offender to other forums.”); Jartech, Inc. v. Clancy, 666 F.2d 403, 406 4002 DREAM GAMES OF ARIZONA v. PC ONSITE (9th Cir. 1982) (recognizing that obscenity is not a defense to copyrightability). As Professor Nimmer has written, the defense of illegality or unclean hands is “recognized only rarely, when the plaintiff’s transgression is of serious proportions and relates directly to the subject matter of the infringement action. For instance, the defense has been recognized when plaintiff misused the process of the courts by falsifying a court order or evidence, or by misrepresenting the scope of his copyright to the court and opposing party.” 4 Nimmer on Copyright § 13.09[B] (citing L.A. News Serv. v. Tullo, 973 F.2d 791, 799 (9th Cir. 1992)) (internal footnotes omitted). Sound policy reasons support the “Congressional intent to avoid content restrictions on copyrightability.” 1 id. § 2.17. In Belcher, we explained that “[t]here is nothing in the Copyright Act to suggest that the courts are to pass upon the truth or falsity, the soundness or unsoundness, of the views embodied in a copyrighted work.” 486 F.2d at 1088. We noted that “[t]he gravity and immensity of the problems, theological, philosophical, economic and scientific, that would confront a court if this view were adopted are staggering to contemplate.” Id.5 Similarly, the Mitchell court was concerned that the broad use of the illegality defense would swallow the entire right to copyright protection. See Mitchell, 604 F.2d at 864 (“[L]imiting copyright protection on a broad public injury rationale would lead to absurd and unacceptable results. . . . Arguably an infringer could defend on the ground that the work had been transported into the state in the copyright owner’s truck that does not meet federal safety and pollution requirements . . . . The possibilities are well nigh limitless.”). 5 In an astute aside applicable to material capable of illegal use, we noted that no “public policy would be served by eliminating [the copyright] restriction in the case of fraudulent matter and permitting it to be reprinted and circulated freely.” Belcher, 486 F.2d at 1088 n.3. DREAM GAMES OF ARIZONA v. PC ONSITE 4003 [5] The Mitchell/Belcher principle leads to the conclusion that illegal operation of a copyrightable work neither deprives the work of copyright protection nor precludes generally available remedies. See 1 Nimmer on Copyright § 2.17 (applying the Mitchell principle to conclude that “the fact that a copyrightable work is being used for illegal purposes should not constitute a defense in a copyright infringement action”). If work that contains illegal content is copyrightable, then a work that contains legal content, but which may be used for illegal purposes is surely copyrightable. The same holds true for works that are capable of illegal uses in geographically limited areas. It would be absurd to deny a work the protection of a federal copyright because it is capable of illegal use in one or more states, but capable of perfectly legal use in other states. The noncontrolling, decades-old cases cited by PC Onsite are not to the contrary because those courts did not consider the question presented in this case—whether illegal use constitutes a defense to infringement. Those courts first found that no infringement was committed, and then denied equitable remedies on the basis of its illegal use. See Kessler v. Schreiber, 39 F. Supp. 655, 656 (S.D.N.Y. 1941) (holding that “defendant has not infringed plaintiff’s copyright,” and that “because plaintiff’s card is primarily intended to be used to carry out a lottery, he can not have relief in a court of equity”); Affiliated Enters., Inc. v. Gantz, 86 F.2d 597, 598-99 (10th Cir. 1936) (holding that “there are no allegations of fact showing infringement of the copyright,” and that the “system is too closely akin [to an illegal lottery] to have the protection and assistance of a court of equity”). Here, by contrast, the jury concluded the defendant did infringe plaintiff’s copyright. [6] Thus, illegal operation of an otherwise copyrightable work does not deprive the work of copyright protection, nor is it a defense to infringement. Because Fast Action Bingo has a valid copyright, and the copyright was unlawfully infringed, 4004 DREAM GAMES OF ARIZONA v. PC ONSITE Dream Games is entitled to damages. The Copyright Act of 1976 provides that “the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action . . . .” 17 U.S.C. § 504(c)(1). Nothing in the Copyright Act suggests that plaintiff’s statutory right to elect the type of damages it seeks is forfeited upon presentation of evidence of illegality. Thus, we hold that an award of either type of damages available under the Copyright Act—actual or statutory—is not precluded by evidence of illegal operation of the copyrighted work, at least where the illegality did not injure the infringer. We therefore reject PC Onsite’s challenge to the district court’s award of statutory damages to Dream Games.