Warner Bros., Inc. v. Dae Rim Trading, Inc.

• Decision Date: 21 January 1988
• Docket Number: No. 84 Civ. 4675 (IBW).,84 Civ. 4675 (IBW).
• Citation: 677 F. Supp. 740
• Parties: WARNER BROS. INC., Plaintiff, v. DAE RIM TRADING, INC., and Yun Yon Cho, Defendants.
• Court: U.S. District Court — Southern District of New York

677 F. Supp. 740

WARNER BROS. INC., Plaintiff, v. DAE RIM TRADING, INC., and Yun Yon Cho, Defendants.

No. 84 Civ. 4675 (IBW).

United States District Court, S.D. New York.

January 21, 1988.

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Reboul, MacMurray, Hewitt, Maynard & Kristol, New York City, for plaintiff; J. Joseph Bainton, of counsel.

Curtis, Morris & Safford, P.C., New York City, for defendants; Pasquale A. Razzano, of counsel.

OPINION, WITH FINDINGS OF FACTS, CONCLUSIONS OF LAW, AND DECISION

WYATT, District Judge.

These are the findings of fact and conclusions of law (Fed.R.Civ.P. 52(a)) and the decision in this action tried without a jury. The action was commenced on July 2, 1984, with a simple one count complaint for copyright infringement in which jurisdiction was asserted solely on a federal question (28 U.S.C. § 1331), specifically federal copyright laws (28 U.S.C. § 1338(a)).

Any reason for the action as one to stop copyright infringement disappeared early in the litigation when, as will appear, the defendants in this action admitted infringement of the one copyright which they had in fact infringed. The action has for over three years been persistently and aggressively prosecuted, not to stop copyright infringement but, as admitted by plaintiff in its "Revised Proposed Finding of Facts and Conclusions of Law" filed July 20, 1987, p. 3; hereafter cited "P Brief," for a different reason: "The basic issue in these actions is who should bear the reasonable expenses of a copyright enforcement program—the copyright owner which has had its property infringed or the persons who have willfully infringed it." Under the seemingly permissible guise of securing for plaintiff "(a) the amount of statutory damages, if any ... and (b) ... the amount of costs and attorneys' fees, if any, ...". (Pre-Trial Memorandum of Plaintiff, filed June 17, 1985, p. 25, hereafter referred to as "PTM") the real purpose of the plaintiff in this action has been to shift the business expense of promoting a motion picture away from its producer (Warner, which made a large profit) and to place it, not on a willful infringer, but on a small shopkeeper who committed but a single and innocent infringement.

Thus, the reality is that, while defendants at no time caused any damages whatever to it, Warner has been pressing this litigation for over three years for the purpose of collecting disproportionately large statutory damages and attorneys' fees. The motives for this litigation seem dubious; they have not been necessary to protect any copyright interest of Warner; they have not been necessary to compensate plaintiff for any damages suffered or reasonable expenses incurred; they have not been necessary to deter and penalize defendant, a small and innocent infringer; they seem in context to be "oppressive reasons" and "vexatious" within the meaning of those words in the opinion of the Supreme Court in F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974). Moreover, the litigation, unreasonably prolonged, was itself conducted in an unfair, vexatious, and oppressive manner.

There was a joint trial in October 1986 and May 1987 of this action and nine other actions "involving a common question of law or fact" (Fed.R.Civ.P. 42(a)). The same plaintiff brought each of the ten related actions; the defendants in each of the actions were different. The joint trial was directed by order filed October 2, 1986. While the order for a joint trial directed that the ten actions be "consolidated for a joint trial," it is well settled that

consolidation is permitted as a matter of convenience and economy in administration, but does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another.

Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-497, 53 S.Ct. 721, 727-728, 77 L.Ed. 1331 (1933). See also Garber v. Randell, 477 F.2d 711, 715 (2nd Cir.1973). Where several actions are ordered to be tried together "each retains its separate character and requires the entry of a separate judgment." 9 Wright & Miller, Federal Practice and Procedure: Civil § 2382 at 254 (1971).

A separate decision, with findings of fact and conclusions of law, will be filed hereafter in each of the nine other actions tried together with this action.

The principal issue as initially framed by the pleadings was whether there should be a permanent injunction against any infringement by defendants of the two copyrights in suit. As will appear, the defendants early offered on November 2, 1984, to consent to a permanent injunction as to both copyrights, this despite the fact that plaintiff had no evidence when the action was commenced (and had never had any evidence) of any infringement by defendants of one of the two copyrights claimed in the complaint to have been infringed; this offer by defendants was rejected by plaintiff, even though it gave plaintiff protection from copyright infringement, because it did not promise payment of substantial statutory damages (there were no actual damages) and attorneys' fees. The defendants do not now contest, and have not for a long time contested, a permanent injunction as to one of the copyrights (that as to the Gizmo character), the only copyright as to which plaintiff has ever had any evidence of infringement. The claim as to infringement of one copyright (that as to the Stripe character), as will appear, was withdrawn by plaintiff on June 17, 1985.

There now remain, some three years after plaintiff had been assured of the primary relief it sought, the following issues for decision which plaintiff pressed to trial:

(a) should the court award statutory damages to plaintiff against defendants under 17 U.S.C. § 504(c) and, if so, in what amount?;

(b) should the Court "in its discretion," under 17 U.S.C. § 505, "allow the recovery of full costs" by plaintiff against defendants, including "a reasonable attorney's fee"?; and

(c) should the Court "in its discretion," under 17 U.S.C. § 505, "allow the recovery of full costs" by defendants against plaintiff, including "a reasonable attorney's fee" or make such an allowance under Rule 11 of the Federal Rules of Civil Procedure, or otherwise?

For the reasons hereafter stated, the decision of this Court is

(a) there will be judgment in favor of plaintiff enjoining defendant Dae Rim Trading, Inc. and Yun Yon Cho from infringement of Registered Copyright VAu 54-952 ("Gizmo");

(b) there will be judgment in favor of plaintiff against defendant Dae Rim Trading, Inc. in the sum of $100 as statutory damages for past infringement of Registered Copyright VAu 54-952 ("Gizmo");

(c) no costs are allowed to plaintiff; no attorney's fee is awarded to plaintiff; and

(d) full costs are allowed to defendants Dae Rim Trading, Inc. and Yun Yon Cho against plaintiff Warner; a reasonable attorney's fee is awarded to defendants against plaintiff; no costs are allowed and no attorney's fee is awarded to defendants in defending against the infringement of Registered Copyright VAu 54-952 ("Gizmo") prior to February 20, 1985, when defendants conceded that they had infringed that copyright.

A. PROCEDURAL STEPS THROUGH COMPLETION OF THE TRIAL

1.

The plaintiff in this action is Warner Bros. Inc., ("Warner"), a Delaware corporation, whose principal place of business is on Warner Boulevard in Burbank, California, a suburb of Los Angeles near Hollywood. Warner is a subsidiary of Warner Communications Inc. ("Warner Com."), a very large corporate enterprise, the stock of which is publicly owned and listed on the New York Stock Exchange and on other exchanges. Warner Com. has offices at 75 Rockefeller Plaza in New York City and is reported in Standard and Poor's Register for 1986 to have had revenue in that year of 2.23 billion dollars; Warner Com. and subsidiaries are similarly reported to have 8,000 employees, of whom 3,000 are employed by Warner.

Warner provides entertainment services to the public, including the production and distribution of motion pictures; it is reported also to license feature films for television, to distribute TV specials, to produce phonograph records, and to publish music.

On June 8, 1984, Warner released for public showing a motion picture entitled "Gremlins" which became very popular and successful, with attendant and wide publicity. The "Gremlins" motion picture is aimed primarily at children; it concerns fanciful characters which Warner, in the complaint, avers (para. 7) "were developed specifically for the film"; the relevant such characters are "Stripe" and "Gizmo." According to the film, Gizmo is a "Mogwai"; the Mogwais are benign and cuddly; Stripe is a "Gremlin"; the Gremlins are evil; under some circumstances, a Mogwai becomes a Gremlin.

Warner obtained and owns a valid copyright in the "Gremlins" motion picture, which copyright has been registered with the Copyright Office, but no claim is made on that copyright (T5-8; "T" references are to pages of the stenographic transcript of the joint trial). Warner obtained and owns valid copyrights in the graphic representations of Stripe and Gizmo, which copyrights were registered for copyright as "artwork" or "pictorial work," being drawn representations of the characters "Stripe" (certificate VAu 54-951, dated December 30, 1983) and "Gizmo" (Certificate VAu 54-952, dated December 30, 1983).

After its release on June 8, 1984, the film was widely promoted nationally by Warner. Warner claims (PTM, p. 3) that in the first 66 days after release, Gremlins had a box office "gross" of about $125,000,000; that by the end of 1984 it had "grossed" more than $142,000,000; that it was the third most successful film released in 1984; that Warner, through another subsidiary of Warner Com., promoted a licensing campaign for Gremlins character merchandise; and that licenses for such Gremlins...