Polar Bear Productions, Inc. v. Timex Corp.
| Decision Date | 03 September 2004 |
| Docket Number | No. 03-35245.,No. 03-35188.,03-35188.,03-35245. |
| Citation | 384 F.3d 700 |
| Parties | POLAR BEAR PRODUCTIONS, INC., a Montana corporation, Plaintiff-Appellant, v. TIMEX CORPORATION; Does 1-10, Defendants-Appellees. Polar Bear Productions, Inc., a Montana corporation, Plaintiff-Appellee, v. Timex Corporation, Defendant-Appellant, Does 1-10, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert C. Lukes and Terry J. MacDonald, Missoula, MT, for Polar Bear Productions, Inc.
Roger L. Zissu, John P. Margiotta, New York, NY, and Ronald A. Bender, Missoula, MT, for Timex Corp.
Appeal from the United States District Court for the District of Montana, Sam E. Haddon, District Judge, Presiding. D.C. Nos. CV-00-00141-SEH, CV-00-00141-SEH.
Before BRUNETTI, McKEOWN, and GOULD, Circuit Judges.
This intellectual property case pits the sport of extreme kayaking against the iconic American timepiece, Timex. In an effort to update its image, Timex Corporation ("Timex") arranged with Polar Bear Productions ("Polar Bear") to produce film footage featuring some of the stars of whitewater kayaking, paddling through exotic locales in North and South America and using equipment bearing the Timex logo. The promotion was so popular with Timex that it just kept on ticking1 and continued using the footage well beyond any permission to do so. The result is a lawsuit that has taken on a life far beyond a simple copyright and trademark case. Now, after two trials, two jury verdicts awarding in excess of $2 million to Polar Bear, and a long history between the parties, the case presents us with several novel issues of copyright law. The consequence of this appeal is a series of rulings resulting in yet another round in the trial court.
In response to Timex's unauthorized use of footage from its copyrighted film, Polar Bear brought state and federal copyright and trademark claims against the watchmaker. Through pretrial rulings, the district court disposed of all of Polar Bear's claims, with the exception of its copyright action. On this claim, the jury awarded Polar Bear $2.4 million in damages for actual damages and indirect profits stemming from Timex's infringement. Polar Bear appeals the district court's various orders precluding the remainder of its claims. Timex cross-appeals, arguing that Polar Bear's infringement claim is time-barred, and even if it is not, the jury award is invalid because the evidence does not demonstrate a sufficient causal nexus between the infringement and the amount awarded.
These appeals provide the opportunity to reiterate the principle that a plaintiff in a copyright infringement action must establish a sufficient causal connection between the infringement and the infringer's profits it seeks to recover. Because the evidence at trial was insufficient to support a finding that the lost and indirect profits resulted from Timex's infringements, we vacate the jury award. We also conclude the district court erred in barring prejudgment interest, and we reverse the district court's grant of Timex's motion for summary judgment on Polar Bear's trademark claim under state law. We affirm the district court on the remaining issues and claims.
In an effort to market its line of "Expedition" brand watches to outdoor sports enthusiasts, Timex, the Connecticut-based watch company, entered into a contract with Polar Bear, a Montana-based film production company. Timex agreed to sponsor Polar Bear's production of an extreme-kayaking film entitled "PaddleQuest." Under the terms of the sponsorship agreement, Timex paid Polar Bear a $25,000 fee and provided assistance in promoting and showing the film. In return, Timex received an exclusive one-year license to use the film in its promotional materials, and the Timex logo was featured prominently on the film's packaging and posters, as well as on equipment used in the film itself. The "PaddleQuest" promotion was, in Timex's words, "an unqualified success." Apparently, Timex enjoyed its association with "PaddleQuest" so much that it continued to use images from the film in its promotion of the Expedition line of watches after the license expired.
The most significant acts of infringement occurred when Timex used "PaddleQuest" materials at twelve different trade shows between 1995 and 1998. These materials included a ten minute promotional "loop tape" — so named because it is shown continuously — displayed at Timex's presentation booth at the trade shows. Under the license agreement, Timex had the option of retaining Polar Bear to produce such a video at a price to be determined by the parties. Timex instead notified Polar Bear that it planned to produce the tape separately. Polar Bear warned Timex that it had no right to use images from "PaddleQuest" without permission, and Timex agreed not to produce the tape. Nevertheless, without Polar Bear's knowledge or permission, Timex proceeded to create the video, one-third of which consisted of images from "PaddleQuest."
Polar Bear first learned of Timex's infringement approximately two years later when the producer of "PaddleQuest," one of Polar Bear's two shareholders, witnessed the Timex-produced loop tape playing continuously at a trade show. At the same trade show, employees of Polar Bear also witnessed Timex showing "PaddleQuest" in its entirety at its display booth as part of the watchmaker's promotional efforts.
Polar Bear later discovered that Timex used Polar Bear's copyrighted images on two other occasions — in a promotional campaign associated with the soft drink Mountain Dew and in videos used to train salespeople at a large national retailer. In all three instances, Polar Bear expressly denied Timex permission to use the images, and Timex deleted any reference to Polar Bear's copyright. Timex does not dispute that it used the copyrighted images without permission and beyond the period of time allowed by the license.
Polar Bear brought suit against Timex, alleging claims for copyright infringement under the Copyright Act, 17 U.S.C. § 101 et seq., removal of copyright management information under the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1202, trademark infringement under the Lanham Act, 15 U.S.C. § 1125, Montana statutory claims for trademark infringement and unfair practices, and common law claims for breach of contract, unjust enrichment, and unfair trade practices.2 Before the first trial, the district court disposed of a number of Polar Bear's claims in a series of oral rulings. The district court precluded Polar Bear's effort to claim attorney's fees under the DMCA, 17 U.S.C. § 1203. The district court reasoned that even though the pretrial order referenced the copyright information management statute, allowing this claim would result in "manifest injustice" because Polar Bear had not pleaded this claim in either its original or amended complaint, and the inclusion of the claim in the pretrial order "lacked candor." The district court also granted summary judgment to Timex on Polar Bear's unfair trade practices charge on the grounds that the Montana Consumer Protection Act only covers "personal, family, or household purchases of goods," not manufacturers' claims. Finally, the district court granted Timex's motion to dismiss Polar Bear's trademark infringement claims, concluding that both the Lanham Act and Montana trademark law claims were barred by a two-year statute of limitations. By dismissing Polar Bear's two state law tort claims, the district court effectively precluded Polar Bear from seeking punitive damages.
Considering only the copyright and breach of contract claims, the first jury returned a verdict for Polar Bear with compensatory damages totaling $2.1 million. However, the district court vacated the verdict and ordered a new trial on the grounds that Polar Bear violated certain pretrial evidentiary rulings. In advance of the second trial, the district court granted Timex's motion for judgment as a matter of law regarding Polar Bear's breach of contract claim, thus limiting the second trial to the issue of damages for copyright violations. The second jury returned a verdict of $2,415,00.00 — in actual damages and $2.1 million in indirect profits related to Timex's infringements.3
Polar Bear appeals the district court's grant of summary judgment on its state law claim for trademark infringement, as well as its common law unfair trade practices claim, arguing that both claims should be governed by a three-year statute of limitations applicable to tort actions under Montana law. It also appeals the district court's decision to modify the pretrial order to remove its claim for attorney's fees under 17 U.S.C. § 1203. Polar Bear further contends that the district court erred in concluding that prejudgment interest on wrongful profits resulting from copyright infringement is unavailable under the Copyright Act of 1976. Timex cross-appeals, asserting that recovery for damages should be limited to instances of infringement occurring within three years of the commencement of the lawsuit. Timex also argues that there is insufficient evidence to support the jury award, and that the district court erroneously admitted the testimony of Polar Bear's expert witness.
The first issue we confront is Timex's claim that Polar Bear is barred from recovering monetary relief for infringements occurring more than three years prior to the commencement of its copyright action. Section 507(b) of the Copyright Act provides that copyright claims must be "commenced within three years after the claim accrued." 17 U.S.C. § 507(b).
In copyright litigation, the statute of limitations issue that often arises...
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