Warner Bros. Entm't, Inc. v. X One X Prods.

• Decision Date: 01 November 2016
• Docket Number: No. 15-3728,15-3728
• Citation: 120 U.S.P.Q.2d 1560,840 F.3d 971
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: Warner Bros. Entertainment, Inc.; Warner Bros. Consumer Products, Inc.; Turner Entertainment Co., Plaintiffs–Appellees, v. X One X Productions, doing business as X One X Movie Archives, Inc.; A.V.E.L.A., Inc., doing business as Art & Vintage Entertainment Licensing Agency; Art–Nostalgia.com, Inc. ; Leo Valencia, Defendants–Appellants.

840 F.3d 971

120 U.S.P.Q.2d 1560

Warner Bros. Entertainment, Inc.; Warner Bros. Consumer Products, Inc.; Turner Entertainment Co., Plaintiffs–Appellees,

v.X One X Productions, doing business as X One X Movie Archives, Inc.; A.V.E.L.A., Inc., doing business as Art & Vintage Entertainment Licensing Agency; Art–Nostalgia.com, Inc. ; Leo Valencia, Defendants–Appellants.

No. 15-3728

United States Court of Appeals, Eighth Circuit.

Submitted: September 21, 2016

Filed: November 1, 2016

Frederick J. Sperling, Jin Yan, Schiff & Hardin, Chicago, IL, Nick E. Williamson, Bryan & Cave, Saint Louis, MO, for Plaintiffs–Appellees.

Michael E. Bub, Paule & Camazine, Saint Louis, MO, Christopher Keleher, The Keleher Appellate Law Group, Chicago, IL, for Defendants–Appellants.

Before LOKEN, GRUENDER, and BENTON, Circuit Judges.

GRUENDER

, Circuit Judge.

X One X Productions, A.V.E.L.A., Inc., Art–Nostalgia.com, Inc., and Leo Valencia (collectively, “AVELA”) appeal a permanent injunction prohibiting them from licensing images from the films Gone with the Wind and The Wizard of Oz , as well as the animated short films featuring cat-and-mouse duo Tom and Jerry. The district court¹ issued the permanent injunction after granting summary judgment in favor of Warner Bros. Entertainment, Inc., Warner Bros. Consumer Products, Inc., and Turner Entertainment Co. (collectively, “Warner”) on their claim that AVELA infringed their trademarks and engaged in unfair competition by licensing iconic pictures and phrases from the films. For the reasons discussed below, we affirm.

I. BACKGROUND

Warner holds registered copyrights in the films Gone with the Wind , The Wizard of Oz , and Tom and Jerry cartoons, and it has asserted both registered and common law trademarks in the images, characters, words, names, phrases, and symbols related to these films. AVELA obtained restored versions of movie posters and lobby cards for the films, and from these publicity materials it extracted images of famous characters, including Dorothy, Tin Man, Cowardly Lion, and Scarecrow from The Wizard of Oz , Scarlett O'Hara and Rhett Butler from Gone with the Wind , and Tom and Jerry. AVELA licenses these images for use on a wide variety of consumer products, from shirts, lunch boxes, and playing cards to three-dimensional figurines, water globes, and action figures. Warner filed suit against AVELA in 2006, asserting copyright and trademark infringement claims under the Copyright Act, Lanham Act, and state law. The case is now in its second appeal before this court.

The first appeal concerned Warner's copyright claims. On March 20, 2009, the district court granted Warner summary judgment on its copyright infringement claims and entered a permanent injunction prohibiting AVELA from using any of the publicity material images in any way except for exact duplication of publicity materials in the public domain. AVELA appealed, and this court affirmed in part and reversed in part, upholding summary judgment and most of the injunction. Warner Bros. Entm't, Inc. v. X One X Productions, et al. , 644 F.3d 584, 604 (8th Cir. 2011)

. In that decision, we divided Appellants' products into three categories: (1) products reproducing “one image from an item of publicity material as an identical two-dimensional image”; (2) products “that each juxtapose an image extracted from an item of publicity material with another image extracted from elsewhere in the publicity materials, or with a printed phrase from the book underlying the subject film, to create a new composite work”; and (3) products “that each extend an image extracted from an item of publicity material into three dimensions.” Warner Bros. , 644 F.3d at 602–03

. We determined that while products in category one did not constitute copyright infringement, products falling into categories two and three did constitute copyright infringement. Id. We vacated the permanent injunction with respect to products in the first category and remanded the case to the district court. Id. at 604.

On remand, Warner requested statutory damages for its copyright claims, requested attorneys' fees, and moved for summary judgment on its trademark infringement and unfair competition claims. In its final order, the district court granted statutory damages under the Copyright Act in the amount of $10,000 per infringed copyright (257 copyrights for a total award of $2,570,000). The district court also granted summary judgment on both the trademark infringement and unfair competition claims, finding that Warner holds registered trademarks in words and phrases from the films and common law trademarks in the film characters. It issued a permanent injunction prohibiting AVELA from licensing any images or phrases from the films or cartoons, with the exception of exact reproductions of publicity materials in the public domain. In a separate order, the district court granted Warner's motion for attorneys' fees but ordered supplemental briefing regarding the amount. The amount of attorneys' fees remains undetermined. AVELA appeals the entry of the attorneys' fees, statutory damages, summary judgment, and permanent injunction.

II. DISCUSSION

Although we do not have jurisdiction to hear the portion of the appeal relating to attorneys' fees, we have jurisdiction under 28 U.S.C. § 1291

to hear the remainder of the appeal. Because the amount of attorneys' fees remains unresolved, the order granting attorneys' fees is not final. See

Dieser v. Cont'l Cas. Co. , 440 F.3d 920, 924 (8th Cir. 2006) (“Because the August 2004 order expressly left unresolved amounts of additional statutory penalties, pre-judgment interest and attorneys' fees and costs, and the March 2005 order called for further submissions from the parties to determine the method of calculation ... these orders could not reasonably be believed to be final within the meaning of § 1291.”). However, under the Supreme Court's “bright-line rule ... that a decision on the merits is a ‘final decision’ for purposes of § 1291 whether or not there remains for adjudication a request for attorneys' fees attributable to the case,” Budinich v. Becton Dickinson & Co. , 486 U.S. 196, 202-03, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988), we have jurisdiction to hear the remainder of the appeal. See

Maristuen v. Nat'l States Ins. Co. , 57 F.3d 673, 677–78 (8th Cir. 1995) (explaining that where a district court issues two separate judgments, one of which leaves attorneys' fees undetermined and one of which addresses the merits, Budinich controls and the court has jurisdiction over the merits appeal).

A. Statutory Damages

AVELA argues that the district court violated its Seventh Amendment right to a jury trial by awarding statutory damages under the Copyright Act. AVELA alternatively contends that the amount of statutory damages does not comport with due process.

1. Seventh Amendment

AVELA raises for the first time on appeal the claim that the district court's failure to submit the question of damages to the jury violated the Seventh Amendment. We do not ordinarily “address issues that a party raises for the first time on appeal and failed to raise in the district court.”

Int'l Bhd. of Elec. Workers, Local Union No. 545 v. Hope Elec. Corp. , 380 F.3d 1084, 1096 (8th Cir. 2004)

. Although AVELA made a jury demand in its answer, it did not request a jury in its memorandum in opposition to Warner's damages request or otherwise object to the district court determining damages without a jury. Indeed, AVELA specifically suggested a damages amount to the district court in the event it granted Warner's request. Moreover, AVELA's motion to amend the judgment challenged the district court's decision as controverting the evidence and as inconsistent with this court's decision in the first appeal, not as violating the Seventh Amendment. Claiming that the amount of damages does not conform to statutory authority and a superior court's instruction is wholly distinct from claiming that the district court inappropriately structured the underlying proceeding. As a result, AVELA's Seventh Amendment claim is not properly before us, and we decline to consider it.

2. Due Process

AVELA alternatively argues that the $2,570,000 statutory damages award is disproportionate to the offense, insufficiently reasoned, and in violation of this court's ruling in the previous appeal. AVELA fails to establish that this is the case.

We review damages awarded under the Copyright Act for clear error. Pfanenstiel Architects, Inc. v. Chouteau Petroleum Co. , 978 F.2d 430, 432 (8th Cir. 1992)

. “The Supreme Court long ago declared that damages awarded pursuant to a statute violate due process only if they are ‘so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.’ ” Capitol Records, Inc.

v. Thomas–Rasset , 692 F.3d 899, 907 (8th Cir. 2012) (quoting St. Louis, I. M. & S. Ry. Co. v. Williams , 251 U.S. 63, 67, 40 S.Ct. 71, 64 L.Ed. 139 (1919) ).

The district court's award of $10,000 per infringed work is not clearly erroneous. In Capitol Records

, this court upheld a statutory damages award of $9,250 per infringed work (for a total of $222,000) as consistent with due process, emphasizing the intentionally discretionary nature of statutory damages. 692 F.3d at 907. Although “[t]he absolute amount of the award, not just the amount per violation, is relevant to whether the award is so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable,” id. at 910 (quoting Williams , 251 U.S. at 67, 40 S.Ct. 71 ), the total award of $2.57 million in the present case is not obviously unreasonable. As the district court explained, “This case has had a tortured and laborious discovery history,” in which AVELA's intransigence rendered calculating actual damages impossible due to missing or inaccurate records. Importantly, the district court noted that over the many years of litigation (now a decade), AVELA did not cease the...