Court Opinion

ID: 2968128
Source: CourtListenerOpinion
Date Created: 2015-09-22 04:17:01.783176+00
Date Added: 2024-06-11T11:43:17.433833
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

KENNETH L. BONNER, SR.,               
               Plaintiff-Appellant,
                 v.                             No. 04-1440
BRUCE DAWSON; TERRY BISHOP,
            Defendants-Appellees.
                                      
            Appeal from the United States District Court
       for the Western District of Virginia, at Harrisonburg.
                  Glen E. Conrad, District Judge.
                         (CA-02-65-GEC)

                      Argued: February 1, 2005

                      Decided: April 14, 2005

         Before MICHAEL and DUNCAN, Circuit Judges,
        and Robert E. PAYNE, United States District Judge
                for the Eastern District of Virginia,
                       sitting by designation.

Affirmed by published opinion. Judge Duncan wrote the opinion, in
which Judge Michael and Judge Payne joined.

                            COUNSEL

ARGUED: Robert Neal Cook, WHITHAM, CURTIS & CHRISTOF-
FERSON, P.C., Reston, Virginia, for Appellant. Phillip Stone Griffin,
II, PHILLIP S. GRIFFIN, II, P.C., Winchester, Virginia, for Appel-
lees. ON BRIEF: Michael E. Whitham, WHITHAM, CURTIS &
2                         BONNER v. DAWSON
CHRISTOFFERSON, P.C., Reston, Virginia, for Appellant. Peter
Thomas Hansen, PHILLIP S. GRIFFIN, II, P.C., Winchester, Vir-
ginia, for Appellees.

                             OPINION

DUNCAN, Circuit Judge:

   Plaintiff Kenneth Bonner brought this action in the United States
District Court for the Western District of Virginia, seeking to recover
so-called "infringer’s profits" under 17 U.S.C. § 504(b) for the
infringement of his copyrighted work. After a trial on the issue of
damages, in which the jury awarded Bonner $10,707 in actual dam-
ages but no infringer’s profits, Bonner filed a Rule 50(b) motion for
judgment as a matter of law. Because we find that substantial evi-
dence exists to support the jury’s verdict, we affirm the order of the
district court denying Bonner’s motion.

                                  I.

   Most of the relevant facts are undisputed. Kenneth Bonner is a self-
employed architect and the owner of Bonner Metropolitan Architec-
tural Group in Reston, Virginia. In 1998, Bonner was hired by the
American Woodmark Corporation ("Woodmark") to select a site for
and design the company’s new customer service center. After looking
at various sites, Bonner recommended to Woodmark that it build its
service center on a parcel of land owned by Dawson Investments
("Dawson"). Dawson entered into a lease agreement with Woodmark
and hired Terry Bishop to perform the construction work necessary
for the development of the new center.

   Bonner drafted a design proposal for the new building, and this
proposal became the basis for the building’s final design. After
Woodmark accepted Bonner’s design, the parties agreed to a contract
in which Bonner would be paid seventy dollars an hour for his archi-
tectural services. This agreement resulted in a final fee of $35,690.
While the contract did not contain a specific section articulating
which of the two parties owned the rights to the design, each page of
                            BONNER v. DAWSON                               3
the design proposal bore a Kenneth Bonner copyright seal. Bishop
and his subcontractors erected the building based upon these design
blueprints. At that point the relationship between Bonner and Wood-
mark, Dawson and Bishop ended.

   Pleased with the customer service center constructed by Bishop,
Woodmark contacted Dawson to request the construction of a second
building immediately adjacent for use as the company’s computer
center. Woodmark requested that the second building be similar in
color and style to the first, but that it be a bit larger and have a distinct
interior floor plan. Dawson agreed to build the second building and,
once again, hired Bishop for the construction. However, no one noti-
fied or contacted Bonner. Dawson and Bishop both acknowledged to
the district court that Bonner’s design was used as the basis for the
second building, but they nevertheless did not contact him or any
other architect. The second building was completed in December,
2001.

   After driving past the original building, Bonner noticed that a sec-
ond building, the computer center, had been built immediately adja-
cent with a design that seemed identical to the first. Suspecting a
possible copyright violation, Bonner submitted his set of drawings for
the first building to the United States Copyright Office. Bonner’s
copyright was registered on April 10, 2002. He then filed a complaint
in the United States District Court for the Western District of Virginia
on July 22, 2002, alleging copyright infringement in violation of the
Architectural Works Protection Act of 1990 ("AWCPA"), 17 U.S.C.
§ 102(a). Specifically, Bonner requested that he be deemed the right-
ful copyright owner of the design of the second building and that
Dawson and Bishop be required to pay actual damages and lost "in-
fringer’s profits" under 17 U.S.C. § 504(b). (JA 9004).

   The matter was referred to a magistrate judge for proposed findings
of fact, conclusions of law, and a recommended disposition. On
August 21, 2003, the magistrate judge granted in part and denied in
part Bonner’s motion for summary judgment. He held that Bonner
possessed a valid copyright on the design of the first building based
on the copyright notice attached to all design documents he submitted
to the defendants during the process. The magistrate judge further
found that the copyright was violated, relying in part on the testimony
4                          BONNER v. DAWSON
of the defendant’s own expert that the two buildings were "substan-
tially similar." He determined that while additional facts were needed
to determine the scope of Bonner’s actual damages under § 504(b),
Bonner’s claim for infringer’s profits was barred as a matter of law
because no causal link could be found between Dawson and Bishop’s
profits and the copyright infringement.

   Both parties then requested a review of the magistrate judge’s rul-
ing by the district court. On October 14, 2003, the district court
granted the plaintiff’s motion for summary judgment on the issue of
liability for substantially the same reasons as those relied upon by the
magistrate judge. However, he declined to adopt the magistrate
judge’s recommendation on the issue of damages. The district court
agreed with the magistrate judge that the actual damages issue should
be tried to a jury, but also held that facts could still be found to allow
recovery of infringer’s profits as well. The district court determined
that it was possible for Bonner to prove that some portion of Dawson
and Bishop’s profits was attributable to the infringement. After a trial
solely on the issue of damages, a jury awarded Bonner actual dam-
ages in the amount of $10,707, but found that he was not entitled to
infringer’s profits.

   Following trial, Bonner filed motions in district court for a new
trial and judgment as a matter of law under Federal Rules of Civil
Procedure 59 and 50(b), respectively. The court denied the Rule 59
motion, holding that Bonner had not satisfied the requirement for a
new trial based on new evidence, the only one of the three grounds
for a Rule 59 motion that Bonner had pled. The court also denied the
Rule 50(b) motion for Judgment as a Matter of Law on two grounds.
First, the court held that Bonner had the burden of showing a causal
link between the infringement and the profits incurred, a link that the
jury could have reasonably determined he had not shown. Second,
even if such a link were found, the court held that the jury could have
reasonably determined that Dawson and Bishop satisfied their burden
to show that the profits were derived from sources other than the
infringement. Bonner appeals the court’s decision on his Rule 50(b)
motion, but did not appeal the denial of his motion for a new trial. It
is thus only the limited question as to whether Bonner is entitled to
judgment as a matter of law that we now review.
                           BONNER v. DAWSON                               5
                                    II.

   We review the denial of a motion for judgment as a matter of law
de novo. Figg v. Schroeder, 312 F.3d 625, 635 (4th Cir. 2002).
Because the issue of defendants’ liability has been determined by the
district court and was never appealed, the only question before us is
whether Bonner is entitled to receive infringer’s profits under the
Copyright Act as a matter of law.1

   Section 504(b) of the Copyright Act entitles a successful copyright
plaintiff to recover any "actual damages" suffered by him and "any
profits of the infringer that are attributable to the infringement." 17
U.S.C. § 504(b). The statute creates a burden-shifting provision, stat-
ing:

      "[i]n establishing the infringer’s profits, the copyright owner
      is required to present proof only of the infringer’s gross rev-
      enue, 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. Thus, as in this case, once liability has been shown, § 504(b)
creates an initial presumption that the infringer’s "profits . . . attribut-
able to the infringement" are equal to its gross revenue. See Konor
Enters., Inc. v. Eagle Publ’ns, Inc., 878 F.2d 138, 140 (4th Cir. 1989).
Once the copyright owner establishes the gross revenue, the burden
shifts to the infringer to show that its revenue was "attributable to fac-
tors other than the copyrighted work." Id. (quoting Section 504(b)).

   In meeting its initial burden, however, a copyright holder must
show more than the infringer’s total gross revenue from all of its
profit streams. We have previously determined that a literal interpre-
tation of "gross revenue" in § 504(b) to include all profits produced
by an infringer, no matter the source, would be incorrect. Bouchat v.
  1
    The limited nature of this appeal did not seem apparent to the Appel-
lees, who spent much of their brief and oral argument attempting to
attack Bonner’s qualifications as an architect and argue the dissimilari-
ties between the two designed buildings. Neither of these issues is before
us on appeal.
6                         BONNER v. DAWSON
Balt. Ravens Football Club, Inc., 346 F.3d 514, 520-22 (4th Cir.
2003). Rather, "gross revenue" refers only to revenue reasonably
related to the infringement. Id. at 521. The copyright owner thus has
the burden of demonstrating some causal link between the infringe-
ment and the particular profit stream before the burden-shifting provi-
sions of § 504(b) apply. Id.

   The district court found that no such connection existed here, hold-
ing that Bonner had produced no evidence "that defendants’ gross
revenues were causally connected to the infringement of plaintiff’s
architectural designs." (JA 9048). The court acknowledged that Bon-
ner had presented evidence that Dawson and Bishop had built and
leased the building at issue, and that the profit stream established by
Bonner derived from the building itself. Nevertheless, the court found
this evidence was not sufficient to satisfy the "causal connection"
requirement articulated in Bouchart, because it was not clear that the
basis for the profits was the particularized design of the building. In
doing so, however, the court misinterpreted the level of connection
between infringement and profits that is required under Bouchart.
Bonner produced evidence of the profits generated by the leasing
agreements in the infringed building. This amount was derived exclu-
sively from the infringed building; no other source contributed to the
generated funds. The building generating the funds was designed
based upon Bonner’s copyright. This is sufficient to satisfy Bou-
chart’s requirement of a "causal connection" between the infringe-
ment and the profit stream.

   In Bouchart, we were concerned about the holder of a copyright of
the Baltimore Ravens logo being able to recover from profit streams
that had little or nothing to do with the franchise’s logo, such as those
generated by media rights and game-day parking. Bouchart, 346 F.3d
at 523. We held that these "non-merchandise" revenues had no con-
ceivable connection to the logo printed on team apparel, and thus
were not part of the "gross revenue" intended under § 504(b). Id.
Here, the profits at issue are not generated by outside sources, but by
money collected from the use of the specific infringed work. To
require Bonner to show more of a connection than this in order to sat-
isfy his burden would be to effectively eliminate the burden-shifting
provision of § 504(b) and place the entire burden on the copyright
holder. This was not the intent of Bouchart or § 504(b).
                          BONNER v. DAWSON                            7
   Thus, the district court erred in concluding that Bonner did not
meet his burden of establishing the required causal connection under
§ 504(b) as a matter of law. However, Bonner asks us to find that he
not only met his preliminary burden, but also that he is entitled to
judgment as a matter of law on the question of Dawson and Bishop’s
ability to show that their profits were derived from sources other than
the infringement. This we cannot do.

   In order to prevail on a Rule 50(b) motion, the court must deter-
mine "without weighing the evidence or considering the credibility of
the witnesses, that substantial evidence does not support the jury’s
findings." S. Atl. Ltd. P’ship of Tennessee L.P. v. Riese, 284 F.3d 518,
532 (4th Cir. 2002) (internal quotes omitted). A court should only
grant such a motion if it determines that "the only conclusion a rea-
sonable trier of fact could draw from the evidence is in favor of the
moving party." Figg, 312 F.3d at 635. Once Bonner met his burden
under § 504(b), it was incumbent upon Dawson and Bishop to show
that their profits were "attributable to factors other than the copy-
righted work." 17 U.S.C. § 504(b). Dawson and Bishop presented a
great deal of evidence to the jury that could have led to such a deter-
mination. For example, there is testimony in the record from Wood-
mark that it would have wanted the building built and would have
gone forward with the lease even if a different facade had been used.
Various witnesses testified that the company was primarily concerned
about the need for additional space, and that the focus was on the inte-
rior design and setup of the building.

   A reasonable trier of fact could have concluded that the basis of the
profits that Dawson and Bishop obtained from the construction and
leasing of the building was unrelated to the exterior design provided
by Bonner, and rather reflected other concerns. There is enough evi-
dence in the record to support a determination that Dawson and
Bishop satisfied their § 504(b) burden and thus to support the jury’s
verdict.

   In reviewing a Rule 50(b) motion we simply determine whether
substantial evidence supports the jury’s verdict. We conclude here
that it does.2 The order of the district court is
  2
   The fact that Bonner’s appeal was limited to his Rule 50(b) motion
has circumscribed our remedy. Had Bonner also appealed the denial of
8                          BONNER v. DAWSON
                                                             AFFIRMED.

his Rule 59 motion for a new trial, he might have argued that due to the
district court’s incorrect determination that Bonner had not sustained his
§ 504(b) burden as a matter of law, he was entitled to a new trial.
Because it is possible that the jury did not even reach the question of
whether defendants had evidence that their profits were attributable to
factors other than the infringement, and instead mistakenly concluded
that Bonner did not sustain his initial burden, a new trial might have been
appropriate.