Cream Records, Inc. v. Jos. Schlitz Brewing Co., 83-5713

• Decision Date: 25 February 1985
• Docket Number: No. 83-5713,83-5713
• Citation: 754 F.2d 826
• Parties: , 1985 Copr.L.Dec. P 25,766 CREAM RECORDS, INCORPORATED, Plaintiff-Appellant, v. JOS. SCHLITZ BREWING COMPANY, a Wisconsin corporation, and Benton and Bowles Incorporated, a New York corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 826

754 F.2d 826

225 U.S.P.Q. 896, 1985 Copr.L.Dec. P 25,766

CREAM RECORDS, INCORPORATED, Plaintiff-Appellant, v. JOS. SCHLITZ BREWING COMPANY, a Wisconsin corporation, and Benton and Bowles Incorporated, a New York corporation, Defendants-Appellees.

No. 83-5713.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 8, 1983.

Decided Feb. 25, 1985.

Gerald B. Weiner, Fischbach & Fischbach, Los Angeles, Cal., for plaintiff-appellant.

Anthony Liebig, Lillick, McHose & Charles, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before BROWNING, Chief Judge, WALLACE and NORRIS, Circuit Judges.

PER CURIAM:

Appellant Cream sued appellees alleging that music in a TV commercial prepared by Benton and Bowles to advertise Schlitz beer infringed appellant's copyright on a popular rhythm and blues composition, "The Theme from Shaft."

The jury found infringement. By agreement of the parties the issue of damages was submitted to the court which awarded Cream a total of $17,000. Cream appealed.

DAMAGES

Schlitz applied to Cream for a one-year license to use the Shaft theme music in its commercial. Cream quoted a fee of $100,000. (Cream conceded at trial, and the district court found, that the market value of such a license was $80,000.) After Schlitz failed to take a license, another manufacturer approached Cream for a license but withdrew when the Schlitz commercial was aired. There was testimony that use of a well-known popular song in a commercial destroys its value to other advertisers for that purpose.

The district court awarded Cream $12,000 in damages for loss of the license fee. The court reasoned that the value of a license for use of the entire song for a year was $80,000, that only a small portion of the song was actually used in the Schlitz commercial, and the reasonable value of a license for use of that portion was 15% of the value of a license to use the entire song.

The only evidence before the court was that unauthorized use of the Shaft theme music in Schlitz's commercial ended Cream's opportunity to license the music for this purpose. There was no evidence that Schlitz sought, or Cream was willing to grant, a license for use of less than the entire copyrighted work, that a license limited to the portion used in the commercial would have had less value, or that use limited to this portion would have had a less devastating effect upon Cream's opportunity to license to another. Since defendants'

unauthorized use destroyed the value of the copyrighted work for this purpose, plaintiff was entitled to recover that value as damages. 3 Nimmer, The Law of Copyright, Sec. 14.02 at 14-6 (1984).

PROFITS

17 U.S.C. Sec. 504(b) (1982) provides that, in addition to actual damages suffered as a result of the infringement, the copyright owner is entitled to recover "any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages." The statute also defines and allocates the burden of proof, providing, "[i]n 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."

Schlitz. Cream offered proof that Schlitz's profit on malt liquor for the period during which the infringing commercial was broadcast was $4.876 million. Cream sought to recover $66,800 as the portion of Schlitz's profit attributable to the infringement, arguing that the expenditure for the infringing commercial constituted 13.7% of Schlitz's advertising budget for the year, the infringing music was responsible for 10% of the commercial's advertising power, and, therefore, 1.37% of the profit on malt liquor were attributable to the infringement.

The district court concluded that the infringement "was minimal," consisting principally of a ten-note ostinato, and that the infringing material did not add substantially to the value of the commercial. The court also concluded, however, that the commercial was successful, that "it sold some beer," and "that the music had a portion of that." The court continued, "So I have to find some profit of the defendants which is allocable to the infringement, but, as I say, I think it's miniscule. I have interpolated as best I can. They made a profit of $5 million. One-tenth of 1 percent is $5,000, so I will add that...."

Cream argues that since it established Schlitz's total profits from the sale of malt liquor, the burden was placed on Schlitz to prove any portion of the profits not attributable to the infringement, and since the defendants put on no evidence, Cream was entitled to recover the part of Schlitz's profits it sought. The court's lesser award, Cream argues, was wholly arbitrary, and supported by no evidence in the record.

Defendants respond that Cream failed to establish that any part of the profits from the sale of malt liquor were attributable to the commercial, much less to its infringing portion, and was therefore entitled to no share of the profits at all. One of the court's formal findings, prepared by defendants, might be read as stating that no causal connection had been shown between the...