F.E.L. Publications, Ltd. v. Catholic Bishop of Chicago

• Decision Date: 31 January 1985
• Docket Number: 84-2119,Nos. 84-2025,s. 84-2025
• Citation: 754 F.2d 216
• Parties: , 1985 Copr.L.Dec. P 25,754 F.E.L. PUBLICATIONS, LTD., Plaintiff-Appellee, v. CATHOLIC BISHOP OF CHICAGO, Defendant-Appellant. and F.E.L. PUBLICATIONS, LTD., Plaintiff-Appellant, v. CATHOLIC BISHOP OF CHICAGO, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 216

754 F.2d 216

225 U.S.P.Q. 278, 1985 Copr.L.Dec. P 25,754

F.E.L. PUBLICATIONS, LTD., Plaintiff-Appellee, v. CATHOLIC BISHOP OF CHICAGO, Defendant-Appellant. and F.E.L. PUBLICATIONS, LTD., Plaintiff-Appellant, v. CATHOLIC BISHOP OF CHICAGO, et al., Defendants-Appellees.

Nos. 84-2025, 84-2119.

United States Court of Appeals Seventh Circuit.

Argued Nov. 16, 1984.

Decided Jan. 31, 1985.

Robert L. Kiesler, Kiesler & Berman, Chicago, Ill., for plaintiff-appellee.

Don H. Reuben, Reuben & Proctor, Chicago, Ill., for defendants-appellants, cross-appellees.

Before BAUER and CUDAHY, Circuit Judges, and DOYLE, Senior District Judge. ^*

BAUER, Circuit Judge.

Plaintiff F.E.L. Publications, Ltd. (F.E.L.), a publisher of religious music, was awarded $190,400 in actual damages for copyright infringement resulting from the unauthorized use and copying of its hymnals and songsheets by defendant Catholic Bishop of Chicago (Catholic Bishop). Plaintiff appeals this award, challenging the district court's denial of its request for $1.5 million in statutory damages available under the Copyright Act of 1909 ¹ in lieu of the actual damages awarded by the jury. The jury also found that defendant tortiously interfered with plaintiff's business subsequent to the filing of the copyright infringement claim and awarded plaintiff $2 million in compensatory damages and $1 million in punitive damages. Defendant appeals this award, challenging the district court's denial of its motion for judgment notwithstanding the verdict on the tortious interference claim. We find that the district court properly exercised its discretion in refusing to grant plaintiff statutory damages for the copyright infringement claim, but that it incorrectly allowed the jury to consider defendant's conduct toward the parishes within the Chicago Archdiocese in reaching its verdict on the tortious interference claim.

I. FACTS OF THE CASE

F.E.L. publishes religious music of its own and holds exclusive rights to religious songs from other composers in exchange for royalties on its sales. From the 1960's until 1976, Catholic parishes within the Chicago Archdiocese had used F.E.L.'s hymnals and songsheets. Initially F.E.L. licensed the right to copy its songs at a rate of two cents per copy for the life of the copy. Because of unauthorized copying within the parishes, F.E.L. instituted a new licensing scheme in 1972, the Annual Copying License, which allowed parishes to make unlimited copies of F.E.L. songs for a period of one year at a cost of $100, renewable at the end of each year for another $100. F.E.L. also offered the parishes a Prior Copying Release which would excuse past copyright infringement for a single payment of $500. The parishes' response to these offers was less than overwhelming, and, because of continued infringement, F.E.L. filed suit in September, 1976.

At a hearing on September 30, 1976, the district court gave the Catholic Bishop leave to collect all F.E.L. materials in the parishes and deliver them to F.E.L. The Catholic Bishop's Chancery Office then sent two letters to all the parishes in the Chicago Archdiocese directing them to collect all F.E.L. hymnals and songs, both licensed and unlicensed, so that they could be conveyed to F.E.L. The letters further instructed the parishes that F.E.L. material was not to be used in any way until the litigation was completed. Copies of these letters were sent to many of the bishops and archbishops throughout the United States. In response to these actions, F.E.L. amended its complaint to allege tortious interference with its business relationship with the parishes in the Chicago Archdiocese and nationwide.

At trial, the Catholic Bishop admitted liability for copyright infringement. F.E.L. presented evidence regarding the extent of the infringement, and in closing argument requested actual damages based on the licensing scheme it established in 1972. Specifically, F.E.L. argued that if each of the 238 infringing parishes had obtained F.E.L.'s $100 Annual Copying License for each of the three years for which infringement was proved, and had also obtained a $500 Prior Copying Release for all previous unauthorized copying, F.E.L. would have received $190,400.

The jury returned a verdict for F.E.L., awarding the precise amount it had requested. Nonetheless, F.E.L. filed a post-trial motion requesting that the trial court grant the statutory damages provided for under Section 101(b) of the Copyright Act of 1909 in lieu of the actual damages awarded by the jury, arguing that the jury's award was inadequate. The trial court denied this motion. The jury also returned a verdict for F.E.L. on the tortious interference claims, awarding F.E.L. $3 million in damages. The trial court denied the Catholic Bishop's motion for judgment notwithstanding the verdict on this claim. On appeal, both parties challenge the trial court's denial of their respective motions.

II. THE COPYRIGHT INFRINGEMENT AWARD

F.E.L. claims that the trial judge abused his discretion by refusing to award statutory damages in lieu of the jury's award for actual damages. F.E.L. also asserts that the trial judge improperly considered the punitive damages awarded for its separate tortious interference claim in determining that the copyright infringement award was just, and that this constituted reversible error. Conversely, the Catholic Bishop contends that statutory damages cannot be awarded in this case because F.E.L.'s actual damages were ascertainable. In support of this contention, the Catholic Bishop argues that the statutory damages provision of Section 101(b) is not to be used as a penalty, see Universal Pictures v. Harold Lloyd Corp., 162 F.2d 354, 378 (9th Cir.1947); Sammons v. Colonial Press, Inc., 126 F.2d 341, 350 (1st Cir.1942); Davilla v. Brunswick-Balke Collender Co., 94 F.2d 567, 568 (2d Cir.), cert. denied, 304 U.S. 572, 58 S.Ct. 1040, 82 L.Ed. 1536 (1938), and that statutory damages are not available when actual damages can be proved. See Washingtonian Pub. Co. v. Pearson, 140 F.2d 465, 466 (2d Cir.1944); Doehrer v. Caldwell, 207 U.S.P.Q. 391, 393 (N.D.Ill.1980); 4 NIMMER ON COPYRIGHT, Appendix 16 at 16-8.

Under the Copyright Act of 1909, the copyright holder is entitled to an award of both the actual damages suffered due to the infringement and the amount of the infringer's profits. 17 U.S.C. Sec. 101(b) (1976) (repealed 1976); F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 230, 73 S.Ct. 222, 224, 97 L.Ed. 276 (1952). Section 101(b) also provides that the trial judge may, "in lieu of actual damages and profits, [allow] such damages as to the court shall appear to be just" within monetary limits established by the statute. The United States Supreme Court has interpreted Section 101(b) as giving the trial judge broad discretion in determining whether it is more just to allow recovery for actual damages and profits, based on the evidence, or to award statutory damages within the limits provided by the statute. Woolworth, 344 U.S. at 231-32, 73 S.Ct. at 224-25; L.A. Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 106, 39 S.Ct. 194, 195, 63 L.Ed. 499 (1919). In making this determination, the trial judge may consider the difficulty or impossibility of proving actual damages, Woolworth, 344 U.S. at 233, 73 S.Ct. at 225; Douglas v. Cunningham, 294 U.S. 207, 209, 55 S.Ct. 365, 366, 79 L.Ed. 862 (1935), the circumstances of the infringement, Woolworth, 344 U.S. at 232, 73 S.Ct. at 225 (quoting L.A. Westermann, 249 U.S. at 106, 39 S.Ct. at 195), and the efficacy of the damages as a deterrent to future copyright infringement. Woolworth, 344 U.S. at 233, 73 S.Ct. at 225.

Woolworth further states that the statute not only "compels restitution of profit and reparation for injury but also is designed to discourage wrongful conduct. The discretion of the trial court is wide enough to permit a resort to statutory damages for such purposes." Woolworth, 344 U.S. at 233, 73 S.Ct. at 225. Accordingly, the trial judge has discretion to award statutory damages in lieu of or in addition to actual damages for the purpose of deterring future infringement. See Lottie Joplin Thomas Trust v. Crown Publishers, 592 F.2d 651, 657 (2d Cir.1978) (statutory damages and actual damages not mutually exclusive remedies); Peter Pan Fabrics, Inc. v. Jobela Fabrics, Inc., 329 F.2d 194, 196 (2d Cir.1964) (Section 101(b) allows cummulative, not just alternative, recovery for statutory damages and actual damages).

We find that in this case the trial judge properly exercised his discretion in refusing to award F.E.L. statutory damages in addition to or in lieu of the actual damages awarded. The evidence showed that unauthorized copying occurred in 238 parishes during the three year period for which F.E.L. was allowed to sue under the statute. The trial judge, at F.E.L.'s request, used F.E.L.'s licensing scheme to calculate the actual damage to F.E.L.'s business caused by the illegal copying. The jury awarded F.E.L. the exact amount it requested and the trial judge, in his order denying F.E.L.'s post-trial motion, stated that F.E.L.'s business was "substantially made whole" by the award. R. 329 (Order of June 8, 1984). Thus, this was clearly not a case where the court needed to resort to statutory damages because proof of actual damages was difficult or impossible. See, e.g., Lottie Joplin, 592 F.2d at 657; Peter Pan, 329 F.2d at 197. Nor were profits to the Catholic Bishop from the unauthorized copying at issue because F.E.L.'s music was used for ecclesiastical, not commercial, purposes.

Moreover, the record contains testimony concerning the circumstances of the infringement, including testimony as to the structure of the Chicago Archdiocese and its business relationship with F.E.L., the way in which the infringement occurred, and the types of people who actually engaged in the infringement. It is apparent that the trial judge...