Opinion ID: 145312
Heading Depth: 2
Heading Rank: 2

Heading: The District Court's Decision on Intent and the Amount of Damages

Text: Appellants contend that the District Court erred in finding that Orchard proved that its conduct was innocent, and that Appellants failed to prove that Appellees' conduct amounted to willful infringement. Pursuant to Section 504(c)(2) of the Copyright Act, an infringer's intent can affect the amount of statutory damages awarded: only a minimal award may be warranted where the infringement is innocent; a higher award may be warranted where the infringer acted willfully. We review the district court's findings on intent for clear error. See Fitzgerald Pbl'g Co. v. Baylor Pbl'g Co., 807 F.2d 1110, 1115 (2d Cir.1986). The burden of proving innocence is on the alleged infringer. The burden of proving willfulness is on the copyright holder. See 17 U.S.C. § 504(c).
The District Court found that Orchard acted innocently because Orchard, in making digital copies, reasonably relied on two provisions of the Orchard Agreement: (1) a provision permitting Orchard to distribute the Albums by any and all means and media . . . including digital storage, download and transmission. . . ., Orchard Agreement, Appellants App., A-174; and (2) a provision warranting that Orchard's use of the Albums in accordance with the Agreement would not infringe any copyrights, Orchard Agreement, Appellants App., A-174. We hold that it was not clear error for the District Court to find that it was reasonable for Orchard to believe that it had received the right to copy the Albums.
A copyright holder seeking to prove that a copier's infringement was willful must show that the infringer had knowledge that its conduct represented infringement or . . . recklessly disregarded the possibility. Twin Peaks, 996 F.2d at 1382. The District Court found that Appellees did not prove that Maxwell and Media Right acted willfully in infringing Appellees' copyright. The District Court found that it was not unreasonable for Maxwell not to have anticipated that Orchard would distribute digital copies of the Albums, notwithstanding that the Orchard Agreement granted Orchard the right to do so, because Orchard did not distribute digital music in 2000, when the Orchard Agreement was signed. The District Court also found credible Maxwell's testimony at the evidentiary hearing that he had never before marketed recordings that were not his own, and that, in allowing Orchard broad distribution rights, he focused only on his belief that Appellants wanted him to do everything possible to market their Albums. This testimony shows that Maxwell did not have experience marketing music owned by a third party; that he did not fully understand the rights he had obtained under the Media Right Agreement; and that his focus was on maximizing sales of the Albums. We hold that it was not clear error for the District Court to find that Maxwell and Media Right's infringement was not willful.