Chi-Boy Music v. Charlie Club, Inc.
| Decision Date | 23 April 1991 |
| Docket Number | 90-2794,CHI-BOY,Nos. 90-2779,s. 90-2779 |
| Citation | 930 F.2d 1224 |
| Parties | 1991 Copr.L.Dec. P 26,722, 18 U.S.P.Q.2d 1713 MUSIC, Realsongs and Virgin Music, Incorporated, et al., Plaintiffs-Appellees, v. CHARLIE CLUB, INCORPORATED and Charles Vavrus, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Dennis C. Waldon, Michael J. Allen, Angela Visalli, Keck, Mahin & Cate, Chicago, Ill., Richard H. Reimer, New York City, for plaintiffs-appellees.
Thomas Feehan, Clifford E. Berman, Rooks, Pitts & Poust, Chicago, Ill., Angelo J. Bufalino, C. Michael Kendall, Lockwood, Alex, Fitzgibbon & Cummings, Douglas P. Roller, Thomas Feehan, Rooks, Pitts & Poust, Chicago, Ill., for defendants-appellants.
Before WOOD, Jr., and RIPPLE, Circuit Judges, and FAIRCHILD, Senior Circuit Judge.
The defendants challenge the district court's finding of willful violations of federal copyright law. They also contest the court's damages calculations and attorney's fee award. For the following reasons, we affirm the judgment of the district court.
The plaintiffs are copyright owners and members of the American Society of Composers Charlie Club first entered into a licensing agreement with ASCAP in 1979; the agreement covered music played in connection with the bar, restaurant, and nightclub operations. These licenses periodically were renewed and adjusted to reflect changes in the operations of the various Charlie Club locations, as well as in the licensing policies of ASCAP. In 1983, however, ASCAP brought a copyright infringement action against Charlie Club for activities allegedly occurring at unlicensed locations. This action was settled when Charlie Club agreed to obtain appropriate licensing contracts to cover the activities at each of its locations. From 1984 to 1987, Charlie Club paid appropriate fees to ASCAP in accordance with these agreements.
Authors and Publishers (ASCAP). 1 They brought two separate actions for copyright infringement against Charlie Club, Inc. and its owner and operator, Charles Vavrus (collectively Charlie Club). The suits were based upon unauthorized performances of copyrighted songs at three of the six Charlie Club facilities. These facilities are multi-use complexes, which contain various exercise and sporting facilities and, at some locations, hotel accommodations. From the time of their opening until approximately the summer of 1988, each Charlie Club location also included restaurant, bar, and nightclub operations
Charlie Club operations underwent a significant transformation during 1986 and 1987. At this time, Charlie Club began to cut back on the scope of its restaurant/nightclub activities, and eventually eliminated them in the summer of 1988. Concurrently, the parties became embroiled in a dispute over the amount of licensing fees due. As a result, Charlie Club paid no fees to ASCAP after 1987, and in August 1987, ASCAP terminated all Charlie Club licenses.
This case involves two separate forms of copyright infringement, the occurrence of which Charlie Club does not dispute. First, Charlie Club played radio music over loudspeakers at three of its locations. Second, taped music was played during organized group aerobic workouts at some of these same facilities. These alleged infringements occurred after the termination of Charlie Club's licenses in 1987. Charlie Club maintains that, after the cessation of the restaurant/nightclub operations, it was unaware of the need to secure a new license to cover any other activities. Moreover, it also asserts that a letter mailed by ASCAP on March 22, 1988, detailing Charlie Club's obligations, was never received. Apparently, this letter mistakenly was sent to one of the Charlie Club facilities instead of to the corporate headquarters.
The plaintiffs instituted two separate actions, which were consolidated for trial, involving a total of thirteen alleged instances of copyright infringement. 2 After a three day bench trial, the district court found that the uses challenged by ASCAP constituted clear and willful copyright infringements. Central to the court's decision was its estimation of the testimony of Mr. Vavrus. It considered that testimony less than credible. The court reasoned that Mr. Vavrus reasonably could have concluded that "the prior licenses covered the collateral uses up until the time of termination [of the restaurant/nightclub licenses], but it is very difficult for me to accept the notion that he didn't realize that he didn't The court enjoined Charlie Club from further unauthorized use of the plaintiffs' copyrighted music. Furthermore, the plaintiffs received statutory damages in the amount of $40,000, approximately three times the amount of the expectable license fees that Charlie Club would have owed had it secured licenses. Finally, the court granted costs and attorney's fees totaling $48,633.37. Charlie Club filed a timely notice of appeal challenging various elements of the district court's decision.
have to pay anything to anybody for the subsequent uses...." Tr. at 387. In reaching its decision, the court also considered the course of dealing between the parties, the March 22 letter, Charlie Club's familiarity with the identical policy of ASCAP's competitor, and the testimony of a former Charlie Club employee. In response to Charlie Club's equitable estoppel argument, the court concluded that the plaintiffs had done nothing to mislead Charlie Club.
Charlie Club does not dispute the occurrence of the alleged infringements. It does assert, however, that the district court erroneously characterized these infringements as willful. Charlie Club maintains that its conduct was not willful because it was unaware that a license was necessary to cover the challenged activities. Therefore, Charlie Club argues, the copyright violations were merely innocent infringements. 3 Additionally, Charlie Club challenges as improper the district court's reliance on past disputes between the parties to support its finding of willfulness. The plaintiffs, on the other hand, maintain that Charlie Club clearly had sufficient notice of the illegality of its actions. They also insist that the record contains abundant evidence that supports the district court's conclusion that Charlie Club's infringements were willful.
The district court's finding of willfulness is a factual determination that we shall not disturb unless the finding is clearly erroneous. See International Korwin Corp. v. Kowalczyk, 855 F.2d 375, 380 (7th Cir.1988). In applying this standard of review, "we must remember that a trial judge, in making such factual determinations, has every right to choose between two permissible views of the evidence." Id.
Charlie Club raises several aspects of the district court's decision, which it contends constitute clear error. First, Charlie Club attacks the court's conclusion that ASCAP provided notice concerning the alleged infringements. While not necessarily an essential element, "evidence that notice had been accorded to the alleged infringer before the specific acts found to have constituted infringement occurred is perhaps the most persuasive evidence of willfulness...." Video Views, Inc. v. Studio 21, 925 F.2d 1010, 1021 (7th Cir.1991). Here, the court relied on the March 22, 1988 letter as proof of Charlie Club's notice concerning the need for licensing. Although the letter was sent to a Charlie Club facility, we see no reason to disturb the court's conclusion that the letter reached corporate headquarters. The letter clearly provided Charlie Club with notice. The letter specifically informed Charlie Club that it could not broadcast radio music over the loudspeakers in its clubs without first obtaining an appropriate license. Moreover, schedules attached to the letter explicitly indicated that Charlie Club was required to secure a dance school license if it intended to play music at its aerobic exercise classes. On the basis of such information, the court concluded that Charlie Club chose to ignore the letter.
In addition to the convincing evidence contained in the letter, other evidence supports the court's conclusion that Charlie Club knew of the need to obtain a license to cover the challenged uses. For example, the court noted that Broadcast Music Inc. (BMI), ASCAP's chief competitor, charged Charlie Club separately for the very same uses at issue in this case. In fact, Mr. Vavrus admitted at trial that he had entered into a licensing agreement with BMI to ensure that music legally could be played during aerobic exercise classes. Such evidence certainly supports the court's conclusion that Charlie Club was well aware of the types of activities that required licensing. Moreover, the court credited the testimony of Pamela Fisher, a former Charlie Club employee, that Mr. Vavrus had been informed of the licensing requirement. "In relying on this pattern of conduct as evidence of the defendant's willfulness, the district court was following the approach of other district courts that have considered such evidence as relevant on the issue of willfulness." Kowalczyk, 855 F.2d at 381.
The court did not rely solely on ASCAP's notice and Charlie Club's awareness of that notice. The court based its decision in large part on the testimony of Mr. Vavrus himself. As we noted in Kowalczyk, "when the trial judge's findings are based primarily on oral testimony, the appellant's burden is especially great because the trial judge had the opportunity to evaluate the demeanor and credibility of the witnesses." Id. at 380. Here, the court did not credit Mr. Vavrus' testimony. It simply did not believe that an experienced businessman like Mr. Vavrus would not suspect that he might have to pay for a new license to cover the challenged uses after the cancellation of his original...
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