Demetriades v. Kaufmann

• Decision Date: 03 August 1988
• Docket Number: No. 88 Civ. 0848 (GLG).,88 Civ. 0848 (GLG).
• Citation: 690 F. Supp. 289
• Parties: Chris DEMETRIADES and Demetriades Developers, Inc., Plaintiffs, v. Nicholas KAUFMANN, Cheryl Kaufmann, Judy Koch, Dudley D. Doernberg Company, Inc., Gino Gallo and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers, Defendants. Nicholas KAUFMANN, Cheryl Kaufmann, Gino Gallo and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers, Counterclaim-Plaintiffs, v. Chris DEMETRIADES and Demetriades Developers, Inc., Counterclaim-Defendants.
• Court: U.S. District Court — Southern District of New York

690 F. Supp. 289

Chris DEMETRIADES and Demetriades Developers, Inc., Plaintiffs, v. Nicholas KAUFMANN, Cheryl Kaufmann, Judy Koch, Dudley D. Doernberg Company, Inc., Gino Gallo and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers, Defendants.

Nicholas KAUFMANN, Cheryl Kaufmann, Gino Gallo and John Gallo d/b/a Gallo Brothers, and MCR Consulting Engineers, Counterclaim-Plaintiffs, v. Chris DEMETRIADES and Demetriades Developers, Inc., Counterclaim-Defendants.

No. 88 Civ. 0848 (GLG).

United States District Court, S.D. New York.

August 3, 1988.

Baker & Friedman by Ben C. Friedman, New York City, Shuman & Wood-Smith, by Jeffrey A. Shuman, Lelia Wood-Smith, White Plains, N.Y., for plaintiffs.

McAulay, Fields, Fisher, Goldstein & Nissen by Martin E. Goldstein, New York City, for defendants Nicholas Kaufmann, Cheryl Kaufmann, Gino Gallo and John Gallo d/b/a Gallo Bros., and MCR Consulting Engineers.

Brumbaugh, Graves, Donohoe & Raymond by Richard G. Fuller, Jr., Brendan J. O'Rourke, New York City, for defendants Judy Koch and Dudley D. Doernberg Co., Inc.

MEMORANDUM DECISION

GOETTEL, District Judge:

On March 8 of this year, we granted in part and denied in part plaintiffs' request for preliminary injunctive relief in this matter, pejoratively termed by one wag as "the case of the copycat house."¹ We have before us a new round of motions covering a number of topics. Although discovery has elicited evidence of certain facts pertinent here (noted infra), most of the relevant facts are set forth in our previous decision, familiarity with which is presumed. Demetriades v. Kaufmann, 680 F.Supp. 658, 659-61 (S.D.N.Y.1988) hereinafter "Demetriades I".

a. The Copyright Claim

Under 17 U.S.C. § 501(a), "anyone who violates any of the exclusive rights of the copyright owner ... is an infringer of the copyright." Certain of the defendants —the Kaufmanns, Gallo Brothers and its principals, Gino and John Gallo, and MCR Consulting Engineers—have admitted that they engaged or were involved (albeit innocently) in the unauthorized copying of plaintiffs' architectural plans.² Consequently, plaintiffs have moved and are entitled to partial summary judgment on the issue of liability.³

The amount of damages, however, is still very much in dispute.⁴ Pending further discovery, a trial on this issue would appear to be necessary.

Since oral argument on the instant motions, certain disputes have arisen as to the scope of discovery on the damages question. Consequently, the parties are directed to appear in chambers for a pre-trial conference on Thursday, August 18, at 9:30 a.m. to thresh out the issues bearing on the trial of this matter.

b. The Realtor's Liability

Defendants Dudley D. Doernberg Company and one of its employees, Judy Koch (the "Doernberg defendants"), move for summary judgment on the copyright claim on grounds that they cannot be held liable for whatever infringement took place in this action. Their involvement in this case may be succinctly summarized.

Put simply, the Doernberg defendants sold the unimproved lot at 24 Cooper Road to the Kaufmanns, a service for which they received a handsome fee. The fee was negotiated and, although it was larger than the standard percentage for sale of an unimproved lot, it apparently was not pegged to the value of the house ultimately to be constructed. Regardless, it is clear that Gallo Brothers were not interested in simply selling the lot, a fact known to the Doernberg defendants. Instead, Gallo Brothers required that purchase of the lot be part and parcel of a deal in which Gallo Brothers would build a home on that lot for the ultimate purchaser.

It also appears that at some point during negotiations between the Kaufmanns and Gallo Brothers, the Doernberg defendants became aware that the Kaufmanns sought construction of a house on the lot in question "of `substantially identical design' to the Demetriades house at 12A Cooper Road." Demetriades I, 680 F.Supp. at 660. In addition, there is a substantial factual dispute as to whether the Doernberg defendants ultimately became aware that the other defendants had obtained and/or were duplicating the plaintiffs' architectural plans. Although it is conceded that the Doernberg defendants had no hand in the direct copying of plaintiffs' plans, plaintiffs argue that the Doernberg defendants may be held derivatively liable for the direct copying engaged in by the other defendants. Plaintiffs contend that the role played by the Doernberg defendants in getting the parties together, their brokering of the real estate transaction, their knowledge that the deal was dependent both on construction of a home (Gallo Brothers' demand) and construction of a home imitative of the Demetriades house (the Kaufmanns' desire), and their alleged knowledge of the ongoing copying of plaintiffs' plans all combine to create sufficient involvement with the infringing activity to warrant liability on their part.

Federal copyright law, unlike patent law, does not expressly create any form of derivative, third-party liability. Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 434, 104 S.Ct. 774, 784, 78 L.Ed.2d 574 reh'g denied, 465 U.S. 1112, 104 S.Ct. 1619, 80 L.Ed.2d 148 (1984). Courts have long recognized, however, that one may be held liable for the infringing acts of another, even if such a third party was in no way directly involved in the actual copying and had no knowledge that the infringing acts in question were illegal. Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1161-62 (2d Cir.1971).

In delineating the contours of this third-party liability, and because copyright is analogous to a species of tort, "common law concepts of tort liability are relevant in fixing the scope of the statutory copyright remedy...." Screen Gems-Columbia Music, Inc. v. Mark-Fi Records, Inc., 256 F.Supp. 399, 403 (S.D.N.Y.1966) (Weinfeld, J.). Guided, therefore, by wellestablished precepts of tort liability, it appears that two avenues of third-party liability in copyright have grown up in the law—"vicarious liability" (grounded in the tort concept of respondeat superior) and "contributory infringement" (founded on the tort concept of enterprise liability). Although the Supreme Court has noted that "`the lines between direct infringement, contributory infringement and vicarious liability are not clearly drawn,'" Sony, 464 U.S. at 435 n. 17, 104 S.Ct. at 785 n. 17 (quoting the district court's opinion),⁵ a coherent body of rules seems ascertainable from the precedent of this circuit.

As to vicarious liability, the Second Circuit has noted that "when the right and ability to supervise the infringer coalesce with an obvious and direct financial interest in the exploitation of copyrighted materials," a third party may be held liable for the direct infringement by another. Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 307 (2d Cir.1963). Courts relying on this theory of third-party liability repeatedly have emphasized that some degree of control or supervision over the individual(s) directly responsible for the infringement is of crucial importance.⁶

The doctrine of "vicarious liability" is inapplicable in this case. We may assume that the Doernberg defendants derived some benefit from the infringement at issue⁷; but that is of little avail to plaintiffs since there is no meaningful evidence (as one might expect) suggesting that the Doernberg defendants exercised any degree of control over the direct infringers. Compare Shapiro, Bernstein, 316 F.2d at 308 (holding defendant vicariously liable since it had "the power to police carefully" the infringer's conduct).

The theory of liability ostensibly propounded in the parties' papers is based on "contributory infringement," although the parties (particularly plaintiffs) seem somewhat unsure of the applicable legal standard. That standard, however, was clearly and succinctly set forth in Gershwin, which held that "one who, with knowledge of the infringing activity, induces, causes, or materially contributes to the infringing conduct of another, may be held liable as a `contributory' infringer." Gershwin, 443 F.2d at 1162.⁸ In uncovering the doctrinal basis for this theory of liability, Judge Weinfeld noted that "the basic common law doctrine that one who knowingly participates in or furthers a tortious act is jointly and severally liable with the prime tortfeasor is applicable in suits arising under the Copyright Act." Screen Gems, 256 F.Supp. at 403, cited with approval in Gershwin, 443 F.2d at 1162. Thus, just as benefit and control are the signposts of vicarious liability, so are knowledge and participation the touchstones of contributory infringement.

The knowledge of the Doernberg defendants, either actual or constructive, of the direct infringing in this case is an issue in considerable dispute between the parties. Resolution of that matter is of no consequence, however, since, even assuming that these defendants possessed the requisite knowledge about the infringing activity, they cannot fairly be said to have participated in that infringement—i.e., "induced, caused, or materially contributed" to the statutory violation. Gershwin, 443 F.2d at 1162.

The only evidence linking the Doernberg defendants to any participation in or furtherance of the infringement in this case are two telephone calls made by Ms. Koch to Rocco Circosta, an employee of MCR Consulting Engineers (the firm retained by Gallo Brothers to duplicate the plaintiffs' architectural plans). Those calls, each made at the insistence of defendant John Gallo, were initiated to (1) determine the status of the plans (production of a set of plans apparently had not proceeded at a pace the Kaufmanns desired) and (2) ensure that the completed plans would be delivered for the Kaufmanns' inspection to a specified location. There is no indication that the Doernberg defendants made these or any...