Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., Inc.
| Decision Date | 17 December 1986 |
| Docket Number | 140,D,Nos. 37,s. 37 |
| Citation | 807 F.2d 1110 |
| Parties | , 1987 Copr.L.Dec. P 26,037, 1 U.S.P.Q.2d 1261 FITZGERALD PUBLISHING CO., INC., Plaintiff-Appellant, Cross-Appellee, v. BAYLOR PUBLISHING CO., INC., Bill R. Baylor, World Color Press, Inc., and Baylor Publishing Co., and Community Enterprises, Inc., Defendants, World Color Press, Inc., Defendant-Appellee, Cross-Appellant. ockets 86-7361, 86-7363. |
| Court | U.S. Court of Appeals — Second Circuit |
R. Franklin Brown, New York City, for plaintiff-appellant, cross-appellee.
Edwin D. Akers, Jr., St. Louis, Mo. (Gallop, Johnson & Neuman, St. Louis, Mo., James A. Beldner, Seigel Sommers & Schwartz, New York City, of counsel), for defendant-appellee, cross-appellant.
Before FEINBERG, Chief Judge, CARDAMONE, Circuit Judge, and KELLEHER, District Judge. *
This copyright infringement suit arises because a copyright owner and a printer each entered into a contract with Bill Baylor, a "con artist" who towed them both out to sea on a raft of unkept promises. Both deals soon foundered, precipitating the instant litigation. Although the district court found that both Baylor and the printer willfully infringed the owner's copyright, it erroneously refused to hold them jointly and severally liable for statutory damages. The trial court also incorrectly awarded actual damages on a theory appropriate for breach of contract, but not for copyright infringement. This appeal from a judgment entered April 4, 1986 in the United States District Court for the Eastern District of New York (Weinstein, C.J.) focuses on the issues of willful infringement and its consequences, and the standards that are to be applied in determining statutory and actual damages.
Plaintiff, Fitzgerald Publishing Co., Inc., is the publisher and copyright holder of the Golden Legacy Illustrated Magazine. Bertram A. Fitzgerald is the corporation's sole stockholder. Golden Legacy treats the history of prominent Black people in a comic book format. Each Golden Legacy set includes 16 volumes. In September 1983, when the infringement at issue in this suit occurred, Fitzgerald Publishing had obtained copyrights for the set's first 11 volumes; the last five volumes were not copyrighted until February 1984.
Defendant, World Color Press, printed the Golden Legacy series for Fitzgerald from 1974 to 1980. A dispute over the quality of a printing job ended the relationship in 1980. When Fitzgerald refused to pay the approximately $8,000 printing bill from the disputed job, World Color retained possession of the plates from which Golden Legacy was printed. At that point, Bill Baylor contacted Bertram Fitzgerald in March 1982 proposing that Baylor's company, Unique People Advertising, Inc., furnish Fitzgerald with the necessary financing to reprint the Golden Legacy series in return for a portion of the profits from the sales. Fitzgerald wisely rejected this offer, but unfortunately remained in sporadic contact with Baylor throughout the remainder Further importuning by Baylor resulted in a written contract dated January 28, 1983. Under its terms, Baylor Publishing agreed, in return for receiving approximately 100,000 sets, to provide the "finances, material, and labor" to reprint 142,857 sets of Golden Legacy. For "authorizing the reprinting of Golden Legacy" Fitzgerald was to receive the remaining sets. Baylor also agreed to pay Fitzgerald's outstanding indebtedness to World Color. Several other matters regarding the contract are noteworthy. Most significant, no language in the agreement transferred Fitzgerald's Golden Legacy copyright to Baylor. Further, the reprinting of Golden Legacy was to begin by March 28, 1983 and Baylor obtained a reprint option for which Fitzgerald was paid $3,000--$2,000 on the date of the contract and a promissory note for the balance.
of 1982. For example, Baylor--this time as president of Baylor Publishing Co.--made another, substantially similar offer which Fitzgerald again alertly turned down.
The deal began to unravel quickly. Baylor's failure to pay the installments on the note or to provide the promised financing for the reprinting prompted Fitzgerald to call him in April 1984 and terminate their arrangement. Although the Baylor-Fitzgerald contract contemplated that World Color would do the reprinting, Fitzgerald did not contact World Color after either forming or ending his agreement with Baylor.
Fitzgerald's termination of their agreement did not faze Baylor, who proceeded in a "deceptive" manner to make full use of it. Armed with his copy of the contract--which he had shown to a World Color account executive in February 1983--he undertook to arrange with World Color for it to reprint the Golden Legacy series. On March 17, Baylor boldly directed World Color to change the copyright notice on the Golden Legacy plates. World Color did not receive a copy of the Baylor-Fitzgerald contract until March 22, and had neglected to submit it to counsel for review prior to changing the copyright notice. Although some preparatory work had been done in mid-March, Golden Legacy was not printed until September 1983 because of Baylor's inability to obtain sufficient financing.
Fitzgerald learned of Golden Legacy 's republication with the changed copyright in January 1984. The individual volumes in the reprinted series were unchanged from those Fitzgerald had previously published with several minor exceptions. Fitzgerald immediately contacted World Color, informing it that he had not authorized the change in the copyright notice.
On June 7, 1984 Fitzgerald sued World Color and Baylor. The complaint asserted copyright infringement and unfair competition claims against both defendants, adding a breach of contract and fraud claim against Baylor and a negligence cause of action against World Color. The copyright infringement claims were based on the 1976 Copyright Act. 17 U.S.C. Sec. 101 et seq. (1982). The other claims were founded on state law. World Color's answer raised various legal and equitable defenses as well as asserting a cross-claim against Baylor based on the March 14, 1983 Baylor-World Color contract. Baylor defaulted.
Following Baylor's default, the district court referred the claims against him to a magistrate who found that he had willfully infringed Fitzgerald's copyrights for the first 11 volumes of Golden Legacy. In determining that Baylor was liable for the maximum amount of statutory damages, the magistrate relied on Baylor's "deceptive conduct" in arranging for the reprinting of the series. The magistrate rejected Fitzgerald's claim for actual damages for volumes 12 through 16 because Fitzgerald submitted an erroneous contractual theory of damages. But the magistrate did find that Fitzgerald had shown that Baylor had made $866.50 in profits as a result of the infringement. With respect to the other causes of action against Baylor, the magistrate concluded that the unfair competition claim was preempted by federal law, that insufficient documentation existed from A two-day bench trial on Fitzgerald's claims against World Color was held in district court before Chief Judge Weinstein in February 1986. At its conclusion, the district court announced its findings of fact and conclusions of law from the bench and incorporated these determinations in its judgment dated April 4, 1986. The district court adopted, with only a minor change, the magistrate's report with respect to Baylor. Regarding Fitzgerald's claims against World Color, it held that World Color had willfully infringed Fitzgerald's copyrights and awarded Fitzgerald $22,000 in statutory damages for the infringement of the copyrights of volumes one to eleven. In making this determination, the district court considered the following factors: World Color's financial loss as a result of its dealings with Baylor, Fitzgerald's inability to reprint Golden Legacy itself, the absence of any need for deterrence, and the relative value of the copyright. Regarding actual damages for infringement of the copyrights for volumes 12 through 16, the trial court awarded Fitzgerald $27,948.14, the value of the total number of volumes that it was to receive from the reprinting of Golden Legacy. The district court also awarded Fitzgerald $12,500 in attorney's fees as well as certain injunctive relief. It refused to make World Color jointly and severally liable for the payment of the statutory damages awarded Fitzgerald for Baylor's infringement of the copyrights for volumes one to eleven.
which to determine the amount of damages for the breach of contract claim, and that Fitzgerald was entitled to nominal--but not punitive--damages on the fraud claim. Fitzgerald's request for attorney's fees was deferred pending adequate documentation of its expenses.
Thus, the damages awarded Fitzgerald against Baylor were statutory damages of $550,000 and actual damages of $886.50; against World Color the awards were statutory damages of $22,000, actual damages of $27,948.14 and $12,500 in attorney's fees. Fitzgerald appeals the refusal to hold World Color and Baylor jointly and severally liable for the awards of statutory damages. World Color cross-appeals the findings that it both infringed and willfully infringed Fitzgerald's copyrights, and the award of attorney's fees. Both World Color and Fitzgerald appeal the award of actual damages for World Color's infringement of the copyrights for volumes 12 through 16.
We begin by considering World Color's challenge to its liability for infringement. Next, we will examine the appropriate measure of statutory and actual damages.
Section 501(a) of the Act proscribes any unauthorized copying of works of the copyright owner. 17 U.S.C. Sec. 501(a) (incorporating by reference 17 U.S.C. Sec. 106). World Color admits using Fitzgerald's plates in reprinting Golden Legacy. World...
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