Societe Civ. Suc. Richard Guino v. International

• Decision Date: 03 November 2006
• Docket Number: No. CV 06 1540 PHX NVW.,CV 06 1540 PHX NVW.
• Citation: 460 F.Supp.2d 1105
• Parties: SOCIETE CIVILE SUCCESSION RICHARD GUINO, Plaintiff, v. INTERNATIONAL FOUNDATION FOR ANTICANCER DRUG DISCOVERY, and Arizona corporation; Deborah Lindquist; Marcia Karen Horn, Defendants.
• Court: U.S. District Court — District of Arizona

460 F.Supp.2d 1105

SOCIETE CIVILE SUCCESSION RICHARD GUINO, Plaintiff, v. INTERNATIONAL FOUNDATION FOR ANTICANCER DRUG DISCOVERY, and Arizona corporation; Deborah Lindquist; Marcia Karen Horn, Defendants.

No. CV 06 1540 PHX NVW.

United States District Court, D. Arizona.

November 3, 2006.

Richard William Morris, Morris Law Firm, PLLC, Surprise, AZ, for Societe Civile Succession Richard Guino, Plaintiff.

Phil Scott Flemming, Yen Pilch Komadina & Flemming PC, Phoenix, AZ, Joshua J. Kaufman, Venable Baetjer Howard & Civiletti LLP, Washington, DC, for International Foundation for Anticancer Drug Discovery an Arizona corporation, Deborah Lindquist, Marcia Karen Horn, Defendants.

ORDER

WAKE, District Judge.

This case poses the question of whether the Copyright Act of 1976 authorizes the impoundment of infringing property innocently purchased by a non-infringing person. The Court holds that, like the Copyright Act of 1909, the 1976 Act does not provide such a remedy.

I. Background

Plaintiff Societe Civile Succession Richard Guino ("Societe") is a French trust formed to preserve the rights of the Guino family in a set of bronze sculptures created in the early 1900s by Richard Guino and Pierre-Auguste Renoir. Defendants are the International Foundation for Anticancer Drug Discovery ("International Foundation"), an Arizona corporation; Marcia Karen Horn ("Horn"), an Arizona resident and the President and Chief Executive Officer of International Foundation; and Arizona resident Deborah Lindquist ("Lindquist").

In October 2003, International Foundation held a "Jewels of the Sea" ball to raise money for its anti-cancer programs. International Foundation permitted Beseder, Inc., a local art gallery, to display and sell several replicas of the Guino-Renoir sculptures at the event. Lindquist, who was in attendance, purchased a replica of a work entitled "La Laveuse." Lindquist was unaware that Beseder, Inc., lacked authorization from Plaintiff to display or sell the sculpture when she made her purchase.

Plaintiff alleges that it obtained a valid copyright for "La Laveuse" on June 11, 1984, and holds the exclusive rights to its replicas. On this basis, it argues that International Foundation's unauthorized sale of the work in 2003 constitutes contributory infringement under the Copyright Act of 1976 (Count I). Plaintiff further alleges vicarious infringement against Defendant Horn on the theory that she had the right and ability to supervise International Foundation's sale of "La Laveuse," and received direct financial benefit from that transaction (Count II). Plaintiff does not allege that Defendant Lindquist is liable for infringement. As remedies, Plaintiff seeks actual damages, lost profits, statutory damages, attorneys' fees, and, in Count III, the impoundment of the infringing sculpture. A separate order has addressed Defendants' Motion to dismiss Counts I and II. This order addresses the Motion to dismiss Count III, impoundment, for failure to state a claim upon which relief may be granted.

II. Standard of Review.

Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Barnett v. Centoni, 31 F.3d 813, 816 (9th Cir.1994) (citations and internal quotation marks omitted). When analyzing a complaint for failure to state a claim, all factual allegations are taken as true and construed in the light most favorable to the nonmoving party. Iolab Corp. v. Seaboard Sur. Co., 15 F.3d 1500, 1504 (9th Cir.1994).

III. The Copyright Act of 1976 does not authorize the impoundment of infringing property purchased by a non-infringing person.

Defendant Deborah Lindquist argues that the request for impoundment under Count III should be dismissed because Plaintiff has not alleged that Defendant Lindquist infringed any copyrights by purchasing or possessing "La Laveuse," and 17 U.S.C. § 503 does not permit the impoundment of infringing property once it has been purchased by an innocent third party. The issue hinges on the meaning of 17 U.S.C. § 503(a).

Before the passage of the Copyright Act of 1976, a copyright holder could not obtain the impoundment of infringing articles possessed by a non-infringing purchaser. Section 101(c) of the Copyright Act of 1909 provided:

If any person shall infringe the copyright in any work protected under the copyright law of the United States such person shall be liable ....

(c) To deliver up on oath, to be impounded during the pendency of the action, upon such terms and conditions as the court may prescribe, all articles alleged to infringe a copyright.

17 U.S.C. § 101(c) (1970) (amended 1976). The words "such person" were interpreted to permit the impoundment of an infringing work only when it was possessed by a defendant who had himself infringed the plaintiff's copyright. See Foreign & Domestic Music Corp. v. Licht, 196 F.2d 627, 629 (2nd Cir.1952) (finding impoundment improper when sought against a purchaser of copyrighted material because the "remedy of forfeiture and destruction is given only against an infringer" and "one does not infringe a copyright by buying an infringing copy" of a work); Jewelers' Circular Pub. Co. v. Keystone Pub. Co., 274 F. 932, 936 (S.D.N.Y.1921) (holding that impoundment could not interrupt a bailee's possession because, under the 1909 Act, the remedy was "expressly limited to infringers"); Matenciot, Inc. v. David & Dash, Inc., 422 F.Supp. 1199, 1203 (S.D.N.Y.1976) (describing an impoundment order concerning items in the infringer's "possession or control"); 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 14.07, at 14-160 (2006) ("Under the 1909 Act, impoundment and destruction were applicable only against an infringer.").¹

Principles of equity were occasionally referenced in support of this interpretation. In Jewelers' Circular, for example, a writ of seizure was denied with regard to infringing books that the defendant bookstore had already lent to its customers. The result was primarily grounded in the language of § 101 of the 1909 Act. However, it was also noted that seizure of the books would have been inequitable as both "extremely disastrous" to the defendant's business and unhelpful to the plaintiff. 274 F. at 937.

Although sparse,² the legislative history also supported the view that the old § 101(c) did not authorize the impoundment of infringing items purchased by non-infringing parties. Congressional analysis of the statute suggested that impoundment would target only items possessed by infringers. See, e.g., H.R.Rep. No. 60-2222, at 16 (1909) (explaining how the remedy of impoundment is "necessary in dealing with infringers"). Motivating this approach, it seems, was the view that impoundment is a severe remedy that is only appropriate in limited circumstances. See, e.g., Revision of Copyright Laws: Hearing Before the House and Senate Comm. on Patents, 60th Cong. 166, 169 (1908) (statement of Albert H. Walker); Copyright Hearings: Arguments Before the Senate and House Comm. on Patents on S. 6330 and H.R. 19853, 59th Cong. 146 (1906) (statement of Ansley Wilcox, Esq.).³

Subsequent congressional examinations of the copyright laws also reflected an understanding that impoundment is a remedy that applies only to infringers. See, e.g., Register's Rep. on the Gen. Revision of the U.S. Copyright Law 45 (1961) (stating that the "remedies available against copyright infringers ... include ... the impounding and destruction of infringing articles"); id. (proposing that where a copyright has not been registered within a prescribed period of time, a court should have discretion to "order the impounding and destruction of infringing articles, but only on condition that the infringer be fully reimbursed for his outlay"). A House of Representatives committee print discussing proposed revisions to the 1909 Act states that Congress meant for § 503(a) to "retain[] the substance" of the old § 101(c) with only minor changes in detail, none of which concern the type of defendant against whom impoundment may be imposed. See Supp. Register's Rep. on the Gen. Revision of the U.S. Copyright Law 133 (1965).

Plaintiff argues, however, that the 1976 Act reversed the settled rule and permits the impoundment of infringing articles even in the hands of non-infringing persons. 17 U.S.C. § 503(a), which replaced 17 U.S.C. § 101(c) of the 1909 Act, reads:

At any time while an action under this title is pending, the court may order the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in violation of the copyright owner's exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.

The purpose of the statute is to "maintain the feasibility of the eventual destruction of items found at trial to violate the copyright laws by safeguarding them during the pendency of the action." Midway Mfg. Co. v. Omni Video Games, Inc., 668 F.2d 70, 72 (1st Cir.1981). On cursory reading, the text is conceivably open to Plaintiffs interpretation. The phrase, "on such terms as [the court] may deem reasonable," for example, imports considerable discretion. Section 503(a) of the current act also lacks the words "such person" who "shall infringe the copyright" that confirmed the remedy's limits under the 1909 Act.⁴ The adoption of such an interpretation, however, would greatly expand the scope of the impoundment remedy. For the reasons discussed below, that expansive interpretation of § 503(a) is unpersuasive.

A. Statutory Construction

Most importantly, Plaintiffs interpretation fails because it is inadequately supported by the text of § 503(a). The first sentence of the statute provides that impoundment may be ordered "[a]t any time...