Walt Disney Co. v. Powell
| Decision Date | 06 March 1990 |
| Docket Number | No. 88-7266,88-7266 |
| Parties | , 1990 Copr.L.Dec. P 26,537, 14 U.S.P.Q.2d 1160 WALT DISNEY COMPANY, Appellee, v. Carl POWELL, et al., Appellants. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (Civil Action No. 87-CV-2434).
Alan H. Bernstein, Robert S. Silver, with whom Gary S. Marx, Washington, D.C., was on the brief, for appellants.
Arthur J. Levine, with whom Richard L. Stroup, Washington, D.C., was on the brief, for appellee.
Before WALD, Chief Judge, and RUTH BADER GINSBURG and WILLIAMS, Circuit Judges.
Opinion for the Court filed by Chief Judge WALD.
Carl Powell appeals from all three parts of a decision of the district court in a copyright infringement suit instituted against Powell, trading as J & L Distributors, by the Walt Disney Company ("Disney"). Pursuant to 17 U.S.C. Sec. 504(c)(2), the district court awarded Disney statutory damages in the amount of $15,000 for each of six copyright infringements it found Powell had committed. It also awarded Disney $20,000 in attorneys' fees pursuant to 17 U.S.C. Sec. 505. Finally, pursuant to 17 U.S.C. Sec. 502, the court permanently enjoined Powell from infringing Disney's copyrights on the characters in suit--Mickey Mouse and Minnie Mouse--and all other Disney cartoon characters, including, but not limited to, the copyrights in the characters Donald Duck, Huey, Duey, Louie, Pluto, Goofy and Roger Rabbit. We affirm both the district court's award of attorneys' fees and its issuance of a permanent injunction. Because, however, we hold that only two works were infringed, we vacate the district court's judgment finding Powell guilty of six infringements and ordering him to pay Disney $15,000 for each, and remand to the district court for a redetermination of damages.
At the time this suit arose, appellant conducted a wholesale souvenir business, selling items to local tourists through street vendors. Included in his inventory were shirts with mouse faces printed on them that resembled Mickey and Minnie Mouse. Since, as the district court found, Powell "did not keep normal business records," Memorandum Opinion ("Mem. op.") 698 F.Supp. 10, 12, it is not possible to determine how many of these shirts he sold and how much profit he accrued from selling them.
During the time Powell was selling the mouse-face shirts, representatives of the Hard Rock Cafe, whose mark Powell was also infringing, Mem. op. 698 F.Supp. at 12, executed a search and seizure order at the J & L premises. Powell claims that after this raid, he stopped selling the shirts and "confine[d] sales solely to clearly authorized merchandise." Appellant's Brief at 9. Disney subsequently brought suit.
At trial, appellant admitted liability, Appellant's Brief at 11, but contested the propriety of relief beyond token damages. Much of his argument focused on his good faith, including his voluntary cessation of infringement, about which the district judge said the following:
Powell's counsel makes much of Powell's "cooperation" and reformation. The Court has serious doubt that the defendant's professed reformation is more than skin deep. Powell's "cooperation" in large part was simply a recognition of the strength of Disney's ability to show that its marks and trade dress were blatantly infringed. The investigator's reports and testimony establish Powell's continuing ambivalence regarding possible future operations in copyright infringement, operations which had been lucrative to him in the past. His voluntary cessation did not occur even after some of his goods were seized on a federal warrant by another party, the Hard Rock Cafe, whose mark Powell was also exploiting.... Also Pepsi, Playboy and Georgetown University each complained about infringements of their marks. As the illegality of his affairs faced increasing exposure, Powell suddenly reformed.
Mem. op. at 698 F.Supp. at 12-13 (emphasis added).
The district judge also found that Powell's infringements were willful. Mem. op. 698 F.Supp. at 12. Relying on the six copyrights of Mickey and Minnie Mouse entered into the record by Disney, the district judge found Powell guilty of six infringements and awarded Disney $15,000 per infringement. He also awarded Disney $20,000 in attorneys' fees and permanently enjoined Powell from infringing Disney's copyrights on the characters in suit and all other Disney cartoon characters.
Powell argues that the district judge abused his discretion in granting the permanent injunction, awarding attorneys' fees and awarding $90,000 in statutory damages. We will address each of his claims in turn.
Powell's claim that the district court abused its discretion in permanently enjoining him from future infringements of the characters in suit and all other Disney cartoon characters is without merit. 1
When a copyright plaintiff has established a threat of continuing infringement, he is entitled to an injunction. Universal City Studios v. Sony Corp. of America, 659 F.2d 963, 976 (9th Cir.1981), rev'd on other grounds, 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). 2 "Gener ally,, it would appear to be an abuse of discretion to deny a permanent injunction where liability has been established and there is a threat of continuing infringement." M. & D. Nimmer, 3 Nimmer on Copyright, Sec. 14.06[B] at 14-55-14-56 (1989).
Powell argues that since he voluntarily ceased infringing Disney's copyrights, there is no basis to assume that he will infringe them again in the future. The judge disagreed. He interpreted appellant's decision to cease infringing in a more Machiavellian light. The judge concluded that like Boris and Natasha, Snidely Whiplash and Bluto, 3 Powell simply took the action that best suited him at the time; he was caught red-handed, thus "as the illegality of his affairs faced increasing exposure, Powell suddenly reformed." 4 Mem. op. 698 F.Supp. at 12. Consequently, the judge found it not unlikely that Powell would attempt to infringe Disney's copyrights in the future. Since there is nothing in the record contradicting the judge's finding, we conclude that he acted within his discretion in granting the injunction. See Universal City, 659 F.2d 963.
Powell argues alternatively that even if the injunction against future infringements of Mickey and Minnie was appropriate, the district court abused its discretion by extending it to Disney characters not in suit, the aforementioned Huey, Duey, Louie, et al. Powell is wrong. Where, as here, liability has been determined adversely to the infringer, there has been a history of continuing infringement and a significant threat of future infringement remains, it is appropriate to permanently enjoin the future infringement of works owned by the plaintiff but not in suit. Encyclopedia Britannica Educational Corp. v. Crooks, 542 F.Supp. 1156, 1187 (W.D.N.Y.1982); Ortho-O-Vision, Inc. v. Home Box Office, 474 F.Supp. 672, 685-86 (S.D.N.Y.1979).
Powell's claim that the district court abused its discretion in awarding Disney attorneys' fees requires only brief discussion. 5
In Reader's Digest, 821 F.2d at 808, without taking sides, we noted that some courts have required a finding of deliberate infringement as a precondition to an award of fees, see Cooling Systems and Flexibles, Inc. v. Stuart Radiator, Inc., 777 F.2d 485, 493 (9th Cir.1985), while others have permitted such awards even when the infringement was not deliberate. See Lieb v. Topstone Indus., 788 F.2d 151, 155-56 (3rd Cir.1986); see also Engel v. Teleprompter, 732 F.2d 1238, 1241 (5th Cir.1984) (). Since the district court found that Powell's infringement was deliberate, that Powell acted "recklessly, willfully and knowingly," Mem. op. 698 F.Supp. at 12, the award of $20,000 in fees was clearly within the district court's discretion even under the more stringent standard. 6
A copyright owner may elect an award of statutory damages "instead of actual damages and profits." 17 U.S.C. Sec. 504(c)(1). Statutory damages in this action could have ranged from a minimum of $250 to a maximum $10,000 for infringement of "any one work." Id. (emphasis added). If the infringement were willful, however, the maximum could be increased to $50,000 per infringed work. 17 U.S.C. Sec. 504(c)(2).
Here, finding that Powell willfully infringed Disney's copyrights, Mem. op. 698 F.Supp. at 12, the district judge elected to award $15,000 for each infringement he found. In explaining his decision on damages, the district judge said:
Six different infringements were proven by a preponderance of the evidence.... It is unnecessary to consider the precise application of the copyright to each of these examples. They all, without any doubt ... definitely infringe [Disney's] copyright.... These violations are not overlapping.... Each of these is subject to damages to be assessed pursuant to 17 U.S.C. Sec. 504(c)(2). The Court assesses $15,000 for each violation, or $90,000, plus interest from the date of judgment.
Mem. op. 698 F.Supp. at 13 (emphasis added).
The district court erred in assessing damages based upon six "violations," mistakenly focusing on the number of infringements rather than on the number of works infringed. Both the text of the Copyright Act and its legislative history make clear that statutory damages are to be calculated according to the number of works infringed, not the number of infringements.
17 U.S.C. Sec. 504(c)(1) authorizes a judge to award damages "for all infringements ... with respect to any one work." As the House Report on the bill explains,...
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