Zomba Enterprises, Inc. v. Panorama Records, Inc.
| Decision Date | 26 June 2007 |
| Docket Number | No. 06-5013.,No. 06-5266.,06-5013.,06-5266. |
| Citation | 491 F.3d 574 |
| Parties | ZOMBA ENTERPRISES, INC.; Zomba Songs, Inc., Plaintiffs-Appellees, v. PANORAMA RECORDS, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Lawrence E. Feldman, Lawrence E. Feldman & Associates, Elkins Park, Pennsylvania, for Appellant. Timothy L. Warnock, Bowen, Riley, Warnock & Jacobson, Nashville, Tennessee, for Appellees. ON BRIEF: Lawrence E. Feldman, Lawrence E. Feldman & Associates, Elkins Park, Pennsylvania, for Appellant. Timothy L. Warnock, William L. Campbell, Jr., Bowen, Riley, Warnock & Jacobson, Nashville, Tennessee, for Appellees.
Before: BATCHELDER and MOORE, Circuit Judges; MILLS, District Judge.*
From Japan to the United States and beyond, karaoke is wildly popular. Countless people have lined up at various venues to perform their favorite songs with, and in front of, their friends. But few participants (with the possible exception of IP lawyers) ever stop to consider the intellectual property regime governing karaoke.
Panorama Records, Inc. ("Panorama"), a purveyor of karaoke discs, resembles the majority of these participants. It entered the business of recording and selling karaoke discs without considering whether doing so infringed the intellectual property rights of others. Before long, this lack of foresight caught up with Panorama.
This case requires us to review a district court's entry of summary judgment in favor of, and monetary award to, a plaintiff copyright holder whose musical compositions Panorama copied on its karaoke discs. Ultimately, we conclude that the district court (1) correctly concluded that Panorama willfully infringed the plaintiffs' copyrights, and did not abuse its discretion by (2) awarding the plaintiffs $806,000 in statutory damages, (3) denying Panorama's motion to transfer venue, and (4) awarding the plaintiffs attorney fees. Accordingly, we AFFIRM the district court's judgment in all respects.
Our Constitution grants Congress the power "[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors ... the exclusive Right to their respective Writings." U.S. CONST. art. I, § 8, cl. 8. Toward that end, the Copyright Act offers protection to various kinds of works of authorship, including "musical works, including any accompanying words." 17 U.S.C. § 102(a)(2).1 This protection provides copyright owners with the exclusive rights to reproduce the works and to distribute these copies to the public. Id. § 106(1), (3). Anyone who violates these, or other, rights of the copyright owner is an "infringer," and thus is liable to the owner, id. § 501(a), (b), and subject to injunctions, id. § 502, damages, id. § 504, and attorney fees, id. § 505.
Plaintiff copyright owners whose copyrights actually have been infringed may elect between receiving as damages (1) their actual damages plus the infringer's profits attributable to its infringement, or (2) statutory damages. Id. § 504(b), (c). In the standard copyright-infringement case, the district court has discretion to award statutory damages of any amount between $750 and $30,000 for each copyright infringed. Id. § 504(c)(1). However, if the plaintiff proves that the infringement is willful, the statutory-damage ceiling rises to $150,000. Id. § 504(c)(2). Conversely, if the defendant establishes that infringement is innocent, the statutory-damage floor falls to $200. Id.
Since 1998, Panorama has been in the business of manufacturing and selling karaoke compact discs. It issues a new disc monthly in each of a variety of musical genres, including country, pop, rock, and R & B. Each installment (or "karaoke package") contains the top hits in that genre for the relevant month. Laurindo Santos is one of Panorama's four shareholders, and at all times relevant to this case he was the decision-maker regarding the release of products.
The individual discs that Panorama makes and sells are in the CD+G format—shorthand for "compact disc plus graphics." As Panorama explains, Joint Appendix ("J.A.") at 472 . The graphic element consists of the text of each song's lyrics, and it scrolls across a screen as the music (sans vocals) plays, permitting karaoke participants to read the lyrics as they sing along. Each of Panorama's karaoke packages contained nine or ten songs, with two tracks for each song, one track released with audible lyrics and one without.
Zomba Enterprises, Inc. and Zomba Songs, Inc. (collectively, "Zomba") are music publishing corporations often identified by the trade name Zomba Music Publishing. Zomba "is in the business of exploiting musical compositions for commercial gain." J.A. at 257 (Kalinska Aff. ¶ 2). Toward this purpose, and at all times relevant to this case, Zomba held and administered the copyrights to a variety of musical compositions, including songs performed by pop music performers such as 98 Degrees, Backstreet Boys, *NSYNC, and Britney Spears.2
Without Anna Music ("Without Anna") is another music publishing company, but is not a party to this action. In 2000, Without Anna discovered that some of the songs to which it owned copyrights appeared on Panorama's karaoke packages. In response, attorney Linda Edell Howard sent a cease-and-desist letter to Panorama on Without Anna's behalf, demanding that Panorama quit selling unlicensed copies of Without Anna's songs. When Panorama received this letter from Howard in 2000, it had not acquired licenses from the copyright owners of any of the songs it had released in its karaoke packages. Panorama then hired Vincent Castalucci, a licensing agent, and began negotiating licenses. Eventually, Panorama obtained license agreements from Without Anna.
On February 28, 2002, Howard sent another cease-and-desist letter to Panorama, this time on behalf of Zomba. Like Without Anna, Zomba had discovered that Panorama's karaoke packages contained copies of songs it owned. Zomba's cease-and-desist letter specified the terms upon which Zomba would be willing to grant a license: a $250 fixing fee for each Zomba-owned song on each package,3 plus royalties of $0.16 per song per CD+G sold for the first half of the five-year license term, and $0.19 per song per CD+G sold for the second-half of the term. Santos and Castalucci contacted Howard in response to this letter, but Panorama did not stop selling CD+Gs with Zomba's songs on them, nor did it obtain any licenses.
On April 12, 2002, Howard sent a follow-up cease-and-desist letter on Zomba's behalf. Again, Santos and Castalucci responded to the letter. And again, Panorama failed both to obtain licenses to Zomba's songs and to cease selling CD+Gs containing them.
On January 13, 2003, Zomba filed its complaint, asserting thirty counts of copyright infringement—one count for each Zomba-owned musical composition that Panorama recorded and sold in its karaoke packages. Panorama answered, asserting no affirmative defenses other than estoppel, laches, waiver, and acquiescence. On April 22, 2003, the parties entered into a consent order in which Panorama agreed "to be restrained from distributing, releasing or otherwise exploiting any karaoke package containing compositions owned or administered by" Zomba. J.A. at 202 (4/22/03 Dist. Ct. Order). Within a week of entering this consent order, Panorama breached its agreement and resumed selling CD+Gs containing Zomba's copyrighted work. This conduct continued, and a year later, Zomba moved for sanctions on this basis.
After the parties filed cross-motions for summary judgment but before the district court ruled, Panorama's counsel withdrew on May 10, 2004. On June 18, 2004, the district court granted Zomba's, and denied Panorama's, motion for summary judgment on the issue of copyright infringement, rejecting Panorama's fair-use defense.
To determine damages, the district court scheduled a bench trial for August 10, 2004. Panorama was unable to obtain new counsel and consequently failed to file any of the required pretrial documents or to appear at the pretrial conference held on July 29, 2004. The district court accordingly entered a default against Panorama on the issue of damages. Panorama responded by filing for bankruptcy in the Bankruptcy Court for the District of Massachusetts on August 9, 2004. In response, the district court stayed the case.
After the bankruptcy court lifted its stay, Panorama moved the district court to transfer the case to either the bankruptcy court, the U.S. District Court for the District of Massachusetts, or the U.S. District Court for the Southern District of New York. The district court denied this motion on August 9, 2005. On November 5, 2005, the district court held a hearing to determine the amount of damages. A month later, the district court issued findings of fact and conclusions of law. The district court concluded that Panorama's infringement was willful, and accordingly awarded Zomba $31,000 for each of the twenty-six infringements at issue,4 for a total of $806,000. On January 23, 2006, the district court also awarded Zomba $76,456.16 in attorney fees and $1058.91 in costs. Panorama timely filed notices of appeal on December 29, 2005, and February 15, 2006.5
The district court had federal-question jurisdiction over this copyright case, 28 U.S.C. § 1331, and 28 U.S.C. § 1291 gives us jurisdiction over the district court's final judgment.
On appeal, Panorama raises a series of challenges. First, it...
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