MCA Television Ltd. v. Feltner

• Decision Date: 26 July 1996
• Docket Number: No. 95-4424,95-4424
• Citation: 89 F.3d 766
• Parties: MCA TELEVISION LTD. a Delaware Corporation, Plaintiff-Appellee, v. C. Elvin FELTNER, Jr., Defendant-Appellant. J. Clifford Curley, et al., Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 766

89 F.3d 766

39 U.S.P.Q.2d 1586

MCA TELEVISION LTD. a Delaware Corporation, Plaintiff-Appellee, v. C. Elvin FELTNER, Jr., Defendant-Appellant J. Clifford Curley, et al., Defendants.

No. 95-4424.

United States Court of Appeals Eleventh Circuit.

July 26, 1996.

Richard I. Chaifetz, Columbia, Maryland, for appellant.

Christopher K. Kay, Michael J. Beaudine, Foley & Lardner, Orlando, FL, for appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before COX and BARKETT, Circuit Judges, and BRIGHT ^*, Senior Circuit Judge.

BARKETT, Circuit Judge:

C. Elvin Feltner, Jr., appeals from a $9 million judgment against him in favor of MCA Television following a non-jury copyright infringement trial. Feltner contends that the judgment must be reversed because the district court (1) lacked subject matter jurisdiction, (2) erred in finding that he breached licensing agreements when he failed to pay licensing fees that had become due under those agreements, and, finally (3) erred in calculating damages. We affirm.

Factual Background

MCA owns syndicated television programs and Feltner owns television stations. MCA and Feltner entered into an agreement in which MCA licensed Feltner to show certain programs, such as "Kojak" and "The A Team." When Feltner failed to pay fees that had become due, MCA suspended his right to televise its programs. Notwithstanding the suspension, Feltner continued to televise the MCA programs. MCA sued Feltner claiming 900 separate acts of copyright infringement; one for each unauthorized program that Feltner aired. The district court found for MCA, awarded $10,000 pursuant to statute for each of the 900 unauthorized programs aired, and entered a $9 million judgment against Feltner.

Discussion

Feltner initially asserts that the district court lacked subject matter jurisdiction because this cause did not "arise under" the Copyright Act. 17 U.S.C. § 501 et seq. Feltner argues that this case involves a breach of contract claim and that the federal district court therefore did not have jurisdiction. We disagree and find that the court had subject matter jurisdiction over MCA's claim under the Copyright Act. See Sullivan v. Naturalis, 5 F.3d 1410, 1413 (11th Cir.1993).

Feltner next asserts that the district court erred in finding that he breached the licensing agreements when he failed to pay the licensing fees. The licensing agreements provided that, if Feltner failed to pay the licensing fees, MCA could terminate Feltner's right to broadcast MCA programs. Feltner does not dispute that he failed to pay the fees. He argues, rather, that MCA waived its right to terminate the licensing agreements because MCA treated prior termination letters merely as collection letters to induce payment. We conclude that the district court's factual finding that MCA did not waive its right to terminate the licensing agreements was not clearly erroneous.

Finally, Feltner argues that the district court erred in its calculation of damages in various ways, only some of which we find necessary to discuss here. Initially, we reject Feltner's assertion that the district court erred in finding that Feltner acted "willfully" in infringing MCA's copyright, which resulted in a higher statutory damages determination. Section 504(c)(1) of the Copyright Act, 17 U.S.C. § 504(c), provides that the copyright owner may elect to recover, instead of actual damages and profits, an award of statutory damages "in a sum of not less than $500 or more than $20,000" for each infringement. See 17 U.S.C. § 504(c)(1) (1996). Section 504(c)(2) provides for an enhanced damages award if the infringement was willful and for a reduced award if the infringement was innocent. One commentator has stated that "[i]t seems clear that as here used 'willfully' means with knowledge that the defendant's conduct constitutes copyright infringement." 3 Nimmer on Copyright (1990), § 14.04[B], 14-58-60 (emphasis added).

We note that, although the district court found that Feltner's infringements of MCA's copyrights were "willful, not innocent, in nature," the district court awarded damages of $10,000 per airing, an amount which did not require a finding of willfulness. In any event, the district court's finding that Feltner acted willfully was not clearly erroneous. As the court pointed out, Feltner knew that MCA's revocation of his stations' license to air MCA programs prevented him from lawfully broadcasting them. As such, Feltner knew his conduct constituted copyright infringement.

Feltner also argues that the district court erred in calculating damages because it awarded damages for each episode broadcast, as opposed to each series, as a separate "work." Although the federal Copyright Act allows for damages based on each "work," see 17 U.S.C. § 504(c)(1) (providing that "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 ") (emphasis added), it does not define the term "work."

The circuits that have defined "work" have held that "separate copyrights are not distinct 'works' unless they can 'live their own copyright life.' " Gamma Audio & Video, Inc. v. Ean-Chea, 11 F.3d 1106, 1116 (1st Cir.1993); Robert Stigwood Group, Ltd. v. O'Reilly, 530 F.2d 1096, 1105 (2nd Cir.1976); Walt Disney Co. v. Powell, 897 F.2d 565, 569 (D.C.Cir.1990). This test focuses on whether each expression has an independent economic value and is, in itself, viable. Gamma, 11 F.3d at 1116, O'Reilly, 530 F.2d at 1105, Powell, 897 F.2d at 568.

Feltner asserts that the industry practice is to enter contracts for television series, not individual episodes of series, and that no one would purchase and air just one episode of a series. He argues that, for these reasons, an individual episode of a series does not have independent value, is not "commercially viable," and therefore is not a "work" under the test adopted by the First, Second, and D.C. Circuits.

Although we agree with the test adopted by other circuits in defining a "work," we find that Feltner has failed to meet it here. Indeed, in Gamma, the First Circuit rejected the same argument Feltner now makes. Gamma involved a video rental store, Ean-Chea, that reproduced and rented unauthorized videotape copies. Gamma, 11 F.3d at 1108. The district court found that Ean-Chea infringed the copyrights of four episodes of a Chinese language television series owned by Gamma. In calculating statutory damages, the district court gave Gamma a single award, concluding that although Ean-Chea had infringed upon the copyrights in four separate episodes of the series, these episodes constituted only one work based in part on the fact that Gamma sells or rents only complete sets of the series to video stores. Id. at 1115. The First Circuit reversed, reasoning that

[a] distributor's decision to sell or rent complete sets of a series to video stores in no way indicates that each episode in the series is unable to stand alone. More significant for present purposes is the fact that (1) viewers who rent the tapes from their local video stores may rent as few or as many tapes as they want, may view one, two, or twenty episodes in a single sitting, and may never watch or rent all of the episodes; and (2) each episode in the [ ] series was separately produced.

Id. at 1117.

Similarly, the decision of a distributor of television programs to sell television series as a block, rather than as individual shows, in no way indicates that each episode in a series is unable to stand alone. Each episode was produced independently from the other episodes and each was aired independently from preceding and subsequent episodes. Moreover, each episode, and not each series, was individually copyrighted by MCA.

Along the same lines, we reject Feltner's argument that each episode was part of a "collective work." Section 504(c)(1) provides that "all parts of a compilation ... constitute one work." The Copyright Act defines "compilation" as

a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. The term "compilation" includes collective works.

17 U.S.C. § 101 (emphasis added). A "collective work" is "a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole." Id.

Feltner points to a clause in the licensing agreements referring to anthologies and argues that each series at issue here is an anthology. We are not persuaded. In Twin Peaks Productions, Inc. v. Publications International, Ltd., 996 F.2d 1366 (2nd Cir.1993), the Second Circuit addressed the issue of the appropriate unit for determining statutory copyright damages. There, Publications International had published a book containing a detailed discussion of the plots of eight episodes of the television show "Twin Peaks." Publications International argued, as Feltner does here, that, although each episode of "Twin Peaks" was individually copyrighted, it constituted a single work under section 504 of the Copyright Act. The Second Circuit rejected this argument, stating that "[t]he author of eight scripts for eight television episodes is not limited to one award of statutory damages just because he or she can continue the plot line from one episode to the next and hold the viewers' interest without furnishing a resolution." Id. at 1381.

Feltner's argument is not as strong as that rejected by the Second Circuit in Twin Peaks. Whereas "Twin Peaks" involved a series of eight shows with a plot that linked the shows together into one cohesive story, the programs at issue here--"The A Team" ...