Blackman v. Hustler Magazine, Inc.
| Decision Date | 29 August 1986 |
| Docket Number | 85-5889,Nos. 85-5849,s. 85-5849 |
| Citation | 800 F.2d 1160 |
| Parties | , 55 USLW 2191, 231 U.S.P.Q. 51, 1986 Copr.L.Dec. P 25,993 Barry M. BLACKMAN, v. HUSTLER MAGAZINE, INC., Appellant. Barry M. BLACKMAN, Appellant, v. HUSTLER MAGAZINE, INC. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (Civil Action No. 76-02103).
Norman Zafman, Beverly Hills, Cal., a member of the Bar of the Supreme Court of Cal., pro hac vice by special leave of Court, with whom Mark W. Foster, Washington, D.C., was on the brief, for appellant in No. 85-5849 and cross-appellee in No. 85-5889.
Bruce R. Genderson, with whom Paul Martin Wolff and Robert W. Hamilton, Washington, D.C., were on the brief, for appellee in No. 85-5849 and cross-appellant in No. 85-5889.
Before EDWARDS, BORK and KOZINSKI, * Circuit Judges.
Opinion for the Court filed by Circuit Judge KOZINSKI.
Encrypted in this story about nude photographs, shoddy business ethics, politics and unexpected riches lies a question about the calculation of damages for copyright infringement. Both facts and law make fascinating reading.
Barry M. Blackman is a professional photographer. In 1972 he took a series of nude photographs of a relatively unknown model named Elizabeth Ray. Ray signed a release giving Blackman all rights to use, publish and copyright the photographs.
In 1976 Ray became something of a celebrity. Then a secretary to a United States congressman, Ray caused a stir by disclosing her intimacy with the legislator and her lack of typing skills. Her stock was on the rise and Blackman sought to cash in. Asking about $25,000, he put the Ray photographs up for sale to purveyors of smut and sensationalism coast to coast. Not to be left out of that competition was Larry Flynt, publisher of Hustler magazine and principal owner of appellant Hustler Magazine, Inc. ("Hustler").
Blackman sent his agent, William Tucker, to meet with Flynt in Las Vegas on June 16, 1976. While no agreement was reached, Flynt managed to wheedle the photographs (and negatives) from the hapless Tucker. The district court found, however, that Flynt did not have permission to use the photos and that any agreement as to their use was subject to Blackman's personal approval.
Blackman and Flynt never reached agreement. Instead, Blackman struck a deal with another magazine. He promptly informed Hustler and requested return of the prints and negatives.
Undeterred by arcane notions about the sanctity of property rights, Flynt's response was to publish the Ray photographs in the September 1976 issue of Hustler. In what the district court aptly described as a "brash adventure with destiny," Flynt twice more published the photographs "after [this] litigation had commenced." Blackman v. Hustler Magazine, Inc., 620 F.Supp. 1501, 1514 (D.D.C.1984) ("Liab. Op."). The first republication, in late 1976, consisted of nine Ray photos in an issue humbly denominated "The Best of Hustler # 2" ("Best of"). The final publication, in July 1979, consisted of a single Ray photo in the gala Fifth Anniversary Issue. Flynt never secured Blackman's permission to use the photographs.
Blackman brought this suit for infringement of his copyright. 1 After a bench trial on liability, the district court found that Hustler had infringed Blackman's copyrights on all three occasions. The court was singularly unimpressed by Hustler's protestations of innocence, finding that the infringements had been "deliberate, intentional, malicious and wanton" and "in conscious disregard of Blackman's rights." Liab. Op., 620 F.Supp. at 1515.
The parties then proceeded to try damages. This task was made considerably more difficult by what the district court termed Hustler's "cavalier" loss of records critical to calculating the profits earned from the infringements. The loss allegedly occurred when Hustler moved its corporate headquarters from Columbus, Ohio, to Los Angeles, California.
Under the Copyright Act of 1909, 2 applicable to the first two publications, 3 Blackman had the initial burden of proving the gross revenues Hustler had earned from the infringements. Blackman did this and those revenues are agreed to be some $2.4 million for the September 1976 issue and over $1.5 million for "Best of." 4 The burden then shifted to the defendant to prove deductible costs associated with the infringement. Because it had lost those records, Hustler declared itself unable to meet this burden directly. Instead, it introduced evidence that the profit margin in 1976 from the overall operations of Larry Flynt Publications, Inc. ("LFP"), its parent company, was 19%. Relying on the common sense notion that the magazine did not spring into existence cost-free, Hustler argued that its profit for the two relevant issues of the magazine was 19% of revenues.
The district court rejected this approach. It noted that the 19% profit figure bore little relationship to the profit margin applicable to the Hustler issues in question. The 19% figure was derived from the operation of all LFP enterprises, of which Hustler was but one. There was no reason to assume that Hustler was precisely as profitable as the average of all other LFP companies, which included such diverse enterprises as Chic magazine and Flynt Distributing Company. Nor was there any reason to believe that the two Hustler issues in question were exactly as profitable as all the others that year.
The district court also rejected the approach suggested by Blackman, who argued that because Hustler had not carried its burden of proving expenses, such expenses must be deemed equal to zero. Under Blackman's approach, profits would be equal to the proven revenues. The district court saw this as giving Blackman far too great a windfall. Damages Opinion 620 F.Supp. 792, 800 (1985) ("Damages Op.").
Having concluded that the proof presented did not permit a calculation of profits, the district court resorted to an alternative measure of damages provided for under the 1909 Act, namely statutory damages. Damages Op. at 16. Searching for an appropriate award, the trial court proceeded as follows: it multiplied Hustler's revenues for the two issues in question by the 19% profit figure it had previously rejected as unreliable. The court then determined how much of that profit was attributable to the infringing photographs. Based on the relative prominence of the Ray pictorials in satisfying the salacious appetites of Hustler 's readership, the court held that they generated 60% of the profits from the September 1976 issue and 35% of those from "Best of." On the basis of these calculations, the court awarded Blackman a total of $397,988 for the 1976 infringements. 5
Both parties appeal. Hustler argues that the 60% and 35% figures selected by the district court are grossly out of proportion to the profits actually generated by
the photographs. Blackman cross-appeals; he contends that the district court erred in failing to award the profits proven at trial, which Blackman argues consist of Hustler's admitted revenues for the two 1976 issues. We consider these contentions in reverse order.
Blackman argues that, under the 1909 Copyright Act, once the holder of the copyright has met his burden in proving revenues from the infringing publication, the district court may not resort to statutory damages simply because the infringer is unable or unwilling to meet its burden of proving expenses. If expenses are not proven, Blackman argues, profits must be deemed to be equal to the proven revenues. Counterintuitive as this argument may seem, it is supported by the 1909 Copyright Act and the authorities interpreting it.
As previously noted, under the 1909 Act the copyright holder is entitled to the profits earned by the infringer as a result of the infringement. 6 17 U.S.C.A. App. Sec. 101(b). Profits are normally determined by subtracting expenses from revenues, with the burdens of proof allocated as discussed above. See pp. 1161-62, supra. The Act also provides an alternative method of calculating profits, known as statutory damages. 17 U.S.C.A. app. Sec. 101(b). Statutory damages may be awarded when profits or ordinary damages are not proven, see, e.g., F.W. Woolworth Co., 344 U.S. at 233, 73 S.Ct. at 225, or where the court considers them insufficient to compensate the plaintiff. See, e.g., Sid & Marty Krofft Television Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1178-79 n. 7 (9th Cir.1977); Shapiro, Bernstein & Co. v. Remington Records, Inc., 265 F.2d 263, 272-73 (2d Cir.1959).
This is not such a case. Plaintiff carried its burden in establishing the revenues earned by Hustler for the infringing issues of its magazine. There was then a failure of proof on Hustler's part in establishing expenses. Defendant attempted to meet its burden by proving an overall profit margin for its parent corporation. However, the district court, with good reason, rejected this feeble effort. As noted by the Ninth Circuit, where the infringer "does not assume this burden or if its attempt to do so is found unacceptable by the court, as was the case here, then 'the gross figure is left to stand as the profit factor.' " Russell v. Price, 612 F.2d 1123, 1131 (9th Cir.1979) (quoting F.W. Woolworth Co., 344 U.S. at 230, 73 S.Ct. at 224), cert. denied sub nom. Drebin v. Russell, 446 U.S. 952, 100 S.Ct. 2919, 64 L.Ed.2d 809 (1980).
We understand--and sympathize with--the learned district judge's attempt to do justice and avoid what may be a windfall to Blackman. 7 However, we are not free to temper the scheme provided by Congress. For better or for worse, Congress allocated the burdens the parties must bear in proving profits under the 1909 Act. Because the plaintiff in a copyright case should be given "the...
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