Lucerne Textiles, Inc. v.

• Decision Date: 17 January 2013
• Docket Number: 12 Civ. 5456 (KMW) (AJP)
• Parties: LUCERNE TEXTILES, INC., Plaintiff, v. H.C.T. TEXTILES CO., LTD. d/b/a H.C.T. TEXTILES NEW YORK, Defendant.
• Court: U.S. District Court — Southern District of New York

LUCERNE TEXTILES, INC., Plaintiff, v. H.C.T. TEXTILES CO., LTD.d/b/a H.C.T. TEXTILES NEW YORK, Defendant.

12 Civ. 5456 (KMW) (AJP)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

January 17, 2013

REPORT AND RECOMMENDATION

ANDREW J. PECK, United States Magistrate Judge:

To the Honorable Kimba M. Wood, United States District Judge:

Plaintiff Lucerne Textiles sued defendant H.C.T. Textiles for copyright infringement of plaintiff's "Carrera" fabric design. (Dkt. No. 1: Compl.) H.C.T. failed to respond to the complaint and, on December 10, 2012 Judge Wood entered a default judgment permanently enjoining H.C.T. from further infringing use of Lucerne's copyrighted design. (Dkt. No. 11: 12/10/12 Default Judgment ¶ a.) Judge Wood referred the matter to me for an inquest as to damages. (12/10/12 Default Judgment ¶ c; Dkt. No. 10: 12/10/12 Referral Order.)

Plaintiff's inquest submission seeks $39,613.50: $30,000 in statutory damages and $9,613.50 in attorneys' fees. (Dkt. No. 14: Lucerne Br. at 3; Dkt. No. 16: Schachter Aff. Ex. 7: Billing Records; Dkt. No. 15: Rimsky Aff. ¶¶ 15-16.) H.C.T. has not submitted opposition papers and its deadline for doing so, January 9, 2013, has passed. (Dkt. No. 12: 12/11/12 Order.)

For the reasons set forth below, the Court should award Lucerne $37,640.80: $30,000 in statutory damages for copyright infringement and $7,640.80 in attorneys' fees.

FACTS¹

Lucerne owns the intellectual property to an original fabric design identified as "Carrera," bearing copyright registration number VA 1-803-072. (Dkt. No. 1: Compl. ¶¶ 7-10 & Ex. 2: Copyright Certificate of Registration; Dkt. No. 15: Rimsky Aff. ¶ 8.) Without Lucerne's consent or authorization, H.C.T. manufactured and sold a fabric made with a design that was copied from Lucerne's copyrighted Carrera design. (Compl. ¶¶ 12-14; Rimsky Aff. ¶¶ 10, 12.)

Lucerne learned of H.C.T.'s infringement when a Lucerne employee saw a "Tahari" garment made with the copied fabric design for sale in a department store. (Rimsky Aff. ¶¶ 9, 11.) Tahari informed Lucerne that it purchased the infringing fabric from H.C.T. (Rimsky Aff. ¶ 11; Dkt. No. 16: Schachter Aff. ¶ 4.) Lucerne sent cease and desist letters to H.C.T. on April 11, 2012 and May 31, 2012. (Rimsky Aff. ¶ 13; Schachter Aff. ¶ 6 & Exs. 4-5: 4/11/12 & 5/31/12 Cease & Desist Letters.) According to Tahari's counsel and an independent sales representative for H.C.T., H.C.T. was aware of Lucerne's copyright infringement claim, but H.C.T. did not respond to the cease and desist letters. (Schachter Aff. ¶¶ 6-7; Rimsky Aff. ¶ 13.)

Lucerne's complaint asserts a claim against H.C.T. for its willful infringement of Lucerne's copyrighted Carrera fabric design in violation of 17 U.S.C. § 501. (Compl. ¶¶ 1, 12-13; Rimsky Aff. ¶¶ 10-15; see also Schachter Aff. ¶ 7.) Lucerne seeks statutory damages of $30,000 (Dkt. No. 14: Lucerne Br. at 3), plus attorneys' fees of $9,613.50 (Schachter Aff. Ex. 7: Billing Records), totaling $39,613.50.

ANALYSIS²

I. COPYRIGHT DAMAGES

Pursuant to 17 U.S.C. § 504(c)(1) and (2), Lucerne seeks to recover statutory damages for copyright infringement in the amount of $30,000. (Dkt. No. 14: Lucerne Br. at 3.)

Section 504(c) provides, in part:

(c) Statutory Damages.--

(1) Except as provided by clause (2) of this subsection, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.

(2) In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. . . .

17 U.S.C. § 504(c)(1)-(2).

Section 504(c)(1) "shifts the unit of damages inquiry from number of infringements to number of works." Twin Peaks Prods., Inc. v. Publ'ns Int'l, Ltd., 996 F.2d 1366, 1381 (2d Cir. 1993). "'Where the suit involves infringement of more than one separate and independent work,minimum statutory damages for each work must be awarded.'" 6 William F. Patry, Patry on Copyright § 22:185 (2012 ed.); see, e.g., John Wiley & Sons, Inc. v. Kirtsaeng, 654 F.3d 210, 214 n.10 (2d Cir. 2011) ("'[T]he total number of awards of statutory damages that a plaintiff may recover in any given action depends on the number of works that are infringed . . . regardless of the number of infringements of those works.'" (quoting WB Music Corp. v. RTV Commc'n Grp., Inc., 445 F.3d 538, 540 (2d Cir. 2006))), cert. granted, 132 S. Ct. 1905 (2012).³ Here, the complaint alleges that H.C.T. sold products that infringed on Lucerne's registered copyright for the Carrera. (See page 2 above.)

Statutory damages for copyright infringement "'are available without proof of plaintiff's actual damages or proof of any damages.'" Nat'l Football League v. PrimeTime 24 Joint Venture, 131 F. Supp. 2d 458, 472 (S.D.N.Y. 2001) (Peck, M.J.) (quoting Starbucks Corp. v. Morgan, 99 Civ. 1404, 2000 WL 949665 at *2 (S.D.N.Y. July 11, 2000) (Peck, M.J.) (citing 17 U.S.C. § 504(c)(1))); see, e.g., Bus. Trends Analysts, Inc. v. Freedonia Grp., Inc., 887 F.2d 399, 403 (2d Cir. 1989) ("[C]opyright plaintiffs may elect at any time before final judgment to receive statutory damages under Section 504(c), a method useful where proof of actual damages or profits is insufficient."); CJ Prods. LLC v. Your Store Online LLC, 11 Civ. 9513, 2012 WL 2856068 at *2 (S.D.N.Y. July 12, 2012) (Peck, M.J.), report & rec. adopted, 2012 WL 4714820 (S.D.N.Y. Oct. 3, 2012); Broad. Music, Inc. v. DFK Entm't, LLC, No. 10-CV-1393, 2012 WL 893470 at *4 (N.D.N.Y.Mar. 15, 2012); UMG Recordings, Inc. v. Griffin, No. 08-CV-00274, 2008 WL 4974856 at *2 (N.D.N.Y. Nov. 24, 2008) ("[A] plaintiff may elect statutory damages regardless of the adequacy of the evidence offered as to his actual damages and the amount of the defendant's profits." (quotations omitted)); Interscope Records v. Sharp, No. 05-CV-920, 2007 WL 4555905 at *2 (N.D.N.Y. Dec. 19, 2007).⁴ As Professor Patry has explained:

Since actual damages and profits frequently are difficult to prove, the Copyright Act provides for minimum and maximum statutory damages. These damages may be elected by the copyright owner at any time before final judgment is rendered, without proof of actual damages.

2 William F. Patry, Copyright Law & Practice 1170 (1994) (fns. omitted).

H.C.T. has defaulted and is deemed to be a willful infringer by virtue of its default. E.g., CJ Prods. LLC v. Your Store Online LLC, 2012 WL 2856068 at *3; Coach, Inc. v. O'Brien, 10 Civ. 6071, 2012 WL 1255276 at *14 (S.D.N.Y. Apr. 13, 2012) ("[T]his Court has already found that . . . [defendant's] conduct was willful '[b]y virtue of [her] default' . . . ."); All-Star Mktg. Grp., LLC v. Media Brands Co., 775 F. Supp. 2d 613, 621 (S.D.N.Y. 2011) (Berman, D.J. & Peck, M.J.) ("Defendants have defaulted . . . and by virtue of their default are deemed to be willful infringers.").⁵

Where, as here, a defendant has acted willfully, "a statutory award should incorporate not only a compensatory, but also a punitive component to discourage further wrongdoing by the defendants and others." Malletier v. Carducci Leather Fashions, Inc., 648 F. Supp. 2d 501, 504 (S.D.N.Y. 2009).⁶

Courts determining statutory damages pursuant to § 504(c) have considered the following factors:

(1) the expenses saved and the profits reaped; (2) the revenues lost by the plaintiff; (3) the value of the copyright; (4) the deterrent effect on others besides the defendant; (5) whether the defendant's conduct was innocent or willful; (6) whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential for discouraging the defendant.

Kenneth Jay Lane, Inc. v. Heavenly Apparel, Inc., 03 Civ. 2132, 2006 WL 728407 at *6 (S.D.N.Y. Mar. 21, 2006); accord, e.g., Bryant v. Media Right Prods., Inc., 603 F.3d 135, 144 (2d Cir.), cert. denied, 131 S. Ct. 656 (2010); N.A.S. Imp., Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2d Cir. 1992); Fitzgerald Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1117 (2d Cir. 1986).⁷

Here, the key factors weigh in Lucerne's favor.⁸ As to the fourth factor, "the goal of deterring similar conduct by other enterprises requires a substantial award." Louis Vuitton Malletier, S.A. v. LY USA, 06 Civ. 13463, 2008 WL 5637161 at *2 (S.D.N.Y. Oct. 3, 2008), aff'd, 472 F. App'x 19 (2d Cir. 2012). As to the fifth factor, this Court has already found that H.C.T.'s conduct was willful. (See page 5 above.) As to the seventh factor, H.C.T. appears to have continued to sell infringing products even after it received two cease and desist letters, and even after suit was brought. (See page 2 above.)⁹

Having found that H.C.T. willfully infringed Lucerne's copyright, the Court may award up to $150,000 in statutory damages. 17 U.S.C. § 504(c)(2); accord, e.g., Getaped.com, Inc. v. Cangemi, 188 F. Supp. 2d 398, 403 (S.D.N.Y. 2002) ("Since I find defendants' infringement to have been willful, I can award up to $150,000 in statutory damages."). Lucerne has requested statutory damages of $30,000 (Lucerne Br. at 3; Rimsky Aff. ¶ 15), which is the maximum amount permitted for non-willful infringement. 17 U.S.C. § 504(c)(1).

After consideration of the factors enumerated above, the Court finds that Lucerne's request for $30,000 in statutory damages is appropriate and consistent with awards in similar cases. See, e.g., Tokar v. 8 Whispering Fields Assocs., Ltd., 2011 WL 7445062 at *2 ("I...