Court Opinion

ID: 8903474
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:28:58.134068+00
Date Added: 2024-06-11T17:08:00.242710
License: Public Domain

SNEED, Circuit Judge:
I concur in the preceding portion of this opinion. The following portion, dealing with the problems of alternative or cumulative recovery and “in lieu” damages, expresses the majority view of this court on these two issues, and is intended to complement the preceding portion of this opinion.
I.

Alternative or Cumulative Recovery.

If defendants can render an accounting of their profits, the question re*1176mains whether plaintiffs are entitled either to (1) the greater of either damages or profits, or (2) both damages and profits. Courts have been unable to agree on this question.1 This disagreement has its roots in the conflict between the statutory language, which appears to contemplate a cumulative recovery,2 and the legislative history, which indicates that Congress envisioned an alternative recovery.3 This circuit in Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354 (9th Cir. 1947) expressly adopted the alternative recovery, and we are constrained to follow that decision here.
It has been argued that the Supreme Court’s decision in F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 73 S.Ct. 222, 97 L.Ed. 276 (1952) and this court’s interpretation of that decision in Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236 (9th Cir. 1966) overruled, sub silentio, Universal Pictures. We disagree. Both Woolworth and Shapiro dealt with the related question of the propriety of “in lieu” damages in certain factual situations; neither squarely confronted the question of cumulative versus alternative recovery.
To illustrate, in Woolworth the district court had awarded “in lieu” damages in the face of ascertained, albeit small, profits and substantial but unproven damages. The Supreme Court affirmed this award for two reasons: (1) to compensate the copyright owner for injury when proof of such injury is difficult or impossible, and (2) to discourage wrongful conduct. In the context of this holding the Court used the following language, which it has been argued, demonstrates that it favors cumulative recovery.
[A] rule of liability which merely takes away the profits from an infringement would offer little discouragement to infringers. It would fall short of an effective sanction for enforcement of the copyright policy. The statutory rule, formulated after long experience, not merely compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct.
344 U.S. at 233, 73 S.Ct. at 225.
When read in light of the issue before the Court, viz. the propriety of “in lieu” damages, this passage does not indicate that cumulative recovery is required to discourage infringement, but rather that the threat of “in lieu” damages should exist to serve as a deterrent to future infringement. The remainder of the quoted passage further evidences the thrust of the Court’s opinion.
The discretion of the court is wide enough to permit a resort to statutory damages for such purposes. Even for uninjurious and unprofitable invasions of copyright the court may, if it deems it just, impose a liability within the statutory limits to sanction and vindicate the statutory policy.

Id.

The fact that “a rule of liability which merely takes away the profits” is an insuf*1177ficient deterrent helped to convince the Court to hold that “in lieu” recovery, not cumulative recovery, was available.
Nor does Shapiro hold that cumulative recovery is available under the Act. In Shapiro, the trial court had determined that, although ascertainable, damages were non-existent and profits were de minimus and consequently, the copyright owner was entitled to no monetary recovery. The Ninth Circuit affirmed these findings of fact and, reasoning from Woolworth, held that although the trial court had the discretion to apply “in lieu” damages, its refusal to do so was not error.
The trial court, relying on Sheldon v. Metro-Goldwyn Corp., 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825 (1940), had concluded that if either profits or damages are ascertainable, then “in lieu” damages are inappropriate. We disagreed with that conclusion. In passing we stated that
since the opinion in Woolworth, Sheldon does not stand for the proposition that where both profits and damages can be ascertained the court should award the higher but not both and should decline to resort to the “in lieu” provision.
367 F.2d at 240.
This statement merely acknowledges the Woolworth dicta which indicates that the trial court has discretion to award “in lieu” damages even though both profits and damages have been proved. Again, we must note that this court was dealing not with the propriety of cumulative versus alternative recovery, but rather with the availability of “in lieu” damages. The question of whether only the higher of the two ascertainable elements may be awarded was not before the court; the court simply held that even with ascertainable profits and damages, “in lieu” damages still may be granted.4
II.

Statutory “In Lieu” Damages.

In the case now before us the district court, after the jury had been dismissed, refused to exercise its discretion to hear additional testimony on the applicability of “in lieu” damages. It ruled that “in lieu” damages should have been submitted previously to the jury and consequently it declined to consider the propriety of such an award. We reverse this determination and hold that, after the plaintiffs have had an opportunity to prove profits, the district court should consider the propriety of “in lieu” damages, although an award of such damages will be within its discretion.
We so hold because the issue of “in lieu” damages is properly addressed to the court, not the jury. Section 101(b) expressly directs the court to use its discretion in the determination of “in lieu” damages.5 The jury plays no role in this determination, because “the court’s conception of what is just in the particular case, considering the nature of the copyright, the circumstances of the infringement, and the like, is made the measure of the damages to be paid . .” Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 106, 39 S.Ct. 194, 196, 63 L.Ed. 499 (1919) (emphasis added). See F. W. Woolworth Co. v. Contemporary Arts, Inc., supra.
*1178The precise scope of the district court’s discretion in awarding “in lieu” damages presents a more difficult question. Although in all cases the amount of “in lieu” damages is left to the discretion of the district court, limited in certain circumstances by the maximum and minimum amounts prescribed by the Act, the circumstances, if any, under which such an award must be made can be discerned only after properly interpreting F. W. Woolworth Co. v. Contemporary Arts, Inc. and Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc.
Woolworth, strictly read, teaches us that when only profits are proven the district court has the discretion to award “in lieu” damages. The Supreme Court, however, indicated that “in lieu” damages also could be awarded when only actual damages were proven: “Lack of adequate proof on either element would warrant resort to the statute in the discretion of the court, subject always to the statutory limitations.”6 F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. at 233, 73 S.Ct. at 225 (Emphasis added).
It has been suggested that Shapiro teaches that if either profits or actual damages are not ascertained the district court must award “in lieu” damages. See, e. g., 2 M. Nimmer § 154.13 at 681, n. 91a (June 1976 Supp. at 77-78). We disagree. Shapiro was a case in which both actual damages and profits were ascertained. Under these circumstances the district court declined to award “in lieu” damages. This court affirmed the findings of fact but held, nonetheless, that the trial court in its discretion could award “in lieu” damages but was under no duty to do so.
Those who read Shapiro to impose a duty to award “in lieu” damages if either profits or actual damages are unascertainable point to dicta that states that “the judicial discretion . . . only comes into play when profits and damages have actually been proved, and unless they have, the court must apply the statutory standard.” 367 F.2d at 240. We read this to mean that the district court has a duty to award “in lieu” damages only when both profits and damages have not been established. Three considerations support this interpretation. First, the cases cited immediately after the above quoted dicta, i. e., Douglas v. Cunningham, 294 U.S. 207, 55 S.Ct. 365, 79 L.Ed. 862 (1935); Jewell-LaSalle Realty Co. v. Buck, 283 U.S. 202, 51 S.Ct. 407, 75 L.Ed. 978 (1931); Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 39 S.Ct. 194, 63 L.Ed. 499 (1919), all involved fact situations in which neither damages nor profits were proven. With this in mind, it is clear why the court said immediately following the citations that Woolworth did not conflict with these cases. Second, a contrary interpretation of Shapiro would place it in direct conflict with the holding of Woolworth. Faced with ascertained profits, but unascertained damages, the Court nevertheless held that “in lieu” damages were discretionary. Third, inasmuch as Shapiro was decided in the context of ascertained profits and ascertained damages, it is not unreasonable to assume that the court was addressing situations in which either both profits and damages are ascertained or neither is ascertained.
This interpretation of Shapiro leaves the problem of “in lieu” damages in the following posture. If either profits or actual damages or both are ascertained, the court, in its discretion, may award statutory “in lieu” damages.7 If neither profits nor *1179actual damages are ascertained, then under the dicta of Shapiro the award of statutory “in lieu” damages is mandatory, although the amount of such recovery remains discretionary.
The foregoing interpretation of Woolworth and Shapiro provide the rules by which the trial court will be guided in respect to “in lieu” damages on remand of this case. On remand the trial court’s first task is to determine, if possible, the profits of the infringers. If these profits are ascertainable, then plaintiffs are entitled to the larger of either the profits or damages, unless the district court, in its discretion, awards the statutory “in lieu” damages. If the profits are not ascertainable, then plaintiffs are entitled to the compensatory damages as found by the jury, unless the district court awards the discretionary “in lieu” damages.
III.

Conclusion.

In view of the holdings set forth in both portions of this opinion the judgment of the district court finding infringement is affirmed. The district court’s denial of plaintiffs’ motion for an accounting is reversed. The case is remanded for an accounting, after which the district court may, in its discretion, award statutory “in lieu” damages.
Affirmed in part and Reversed in part.

. Compare Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354 (9th Cir. 1947) and Gordon v. Weir, 111 F.Supp. 117 (E.D.Mich. 1953) affl'd 216 F.2d 508 (6th Cir. 1954) with Thomas Wilson & Co. v. Irving J. Dorfman Co., 433 F.2d 409 (2d Cir. 1970), cert. denied, 401 U.S. 977, 91 S.Ct. 1200, 28 L.Ed.2d 326 (1971) and Gelles-Widmer Co. v. Milton Bradley Co., 132 U.S.P.Q. 30 (N.D.Ill.1961), aff’d, 313 F.2d 143 (7th Cir.), cert. denied, 373 U.S. 913, 83 S.Ct. 1303, 10 L.Ed.2d 414 (1963).

. The Act provides that an infringer shall be liable for “such damages as the copyright proprietor may have suffered due to the infringement, as well as all the profits which the infringer shall have made from such infringement . . . .” 17 U.S.C. § 101(b).

. H.R.Rep.No.2222, 60th Cong., 2d Sess. 15 (1909) states:
The provision that the copyright proprietor may have such damages as well as the profits which the infringer shall have made is substantially the same provision found in section 4921 of the Revised Statutes relating to remedies for the infringement of patents. The courts have usually construed that to mean that the owner of the patent might have one or the other, whichever was the greater. As such a provision was found both in the trademark and patent laws, the committee felt that it might be properly included in the copyright laws.

. In addition, subsequent to Shapiro, this circuit affirmed an award of only the larger of damages and profits. Runge v. Lee, 441 F.2d 579 (9th Cir.), cert. denied, 404 U.S. 887, 92 S.Ct. 197, 30 L.Ed.2d 169 (1971). In Runge, the trial court elected to award compensatory damages in the amount of $80,000.00 instead of the profits of the infringer which amounted to $64,-253.00. This court held that such an election was within the trial court’s discretion, citing Universal Pictures, with no mention of Shapiro.

. Section 101(b) of 17 U.S.C. states in part: [0]r in lieu of actual damages and profits, such damages as to the court shall appear to be just, and in assessing such damages the court may, in its discretion, allow the amounts hereinafter stated . . . and such damages shall in no other case exceed the sum of $5,000 nor be less than the sum of $250, and shall not be regarded as a penalty. . . . But the foregoing exceptions shall not deprive the copyright proprietor of any other remedy given him under the law, nor shall the limitation as to the amount of recovery apply to infringements occurring after the actual notice to a defendant, either by service of process in a suit or other written notice served upon him. ...”

. The Court in Woolworth also noted that the district court has the discretion to award “in lieu” damages when both profits and actual damages have been proved.
[T]he statute has been interpreted to vest in the trial court broad discretion to determine whether it is more just to allow a recovery based on calculation of actual damages and profits, as found from evidence, or one based on a necessarily somewhat arbitrary estimate within the limits permitted by the Act.
344 U.S. at 231-32, 73 S.Ct. at 224.

. We assume that any such award of “in lieu” damages would exceed the amount of any ascertained damages or profits. Under no circumstances can an award of “in lieu” damages less than the amount of the ascertained damages or profits deprive the aggrieved party of *1179his right to the greater of damages or profits, when both are ascertained, or the greater damages or profits, when only one is ascertained. In brief, an award of “in lieu” damages can only benefit, but not hurt, the aggrieved party.