Is a notice terminating a license to use a copyrighted composition sufficient to establish willful copyright infringement?

In a recent decision, the United States District Court for the Southern District of New York held that evidence that a record company continued to sell records containing copyrighted compositions after receiving a notice terminating its compulsory licenses for failure to pay the required statutory royalties was sufficient to establish that the infringement was willful. EMI Entertainment World, Inc. v. Karen Records, Inc.  2011 WL 3795037, 1 (S.D.N.Y.,2011).

Plaintiff, EMI Entertainment World, Inc. is a music publisher and owns copyrights in the four musical compositions at issue in this case. EMI receives royalty payments for its compositions through Harry Fox Agency. Defendants are record companies owned by individual defendants Isabel Rodriguez and her husband Bienvenido Rodriguez. On Janurary 14, 2005, EMI filed a lawsuit for copyright infringement against the record company. Following discover, the Court granted partial summary judgment to EMI with respect to its claims of copyright infringement of the works for which royalty was not paid. However, the Court denied summary judgment to EMI for its claims for statutory damages for willful infringement. The Court requested the parties to submit supplemental evidence indicating the number of infringing sales that occurred during the time period for which damages were sought.

A plaintiff who successfully proves copyright infringement may request the court to award statutory damages under 17 U.S.C. §504(c) in addition to the award of actual damages and profits. “The Copyright Act affords a trial court ‘wide discretion … in setting the amount of statutory damages.’” Id at 2. In determining this amount, the trial court takes into account ‘the expenses saved and the profits reaped by the infringers’; ‘the revenues lost by the plaintiff’; ‘the value of the copyright’; ‘the potential for discouraging the defendant’ and ‘the deterrent effect on other besides the defendant.’ Id. In addition to these factors, it is also relevant to determine whether the defendants conduct was willful or innocent. To prove willful infringement under the Copyright Act, the plaintiff must show that the:

(1) Defendant was actually aware of the infringing activity; or

(2) Defendant’s actions were the result of the reckless disregard for, or willful blindness to, the copyright holder’s rights. Id. at 3.

In this case, EMI advanced three reasons for the Defendant’s willful infringement:

(1) The individual defendants had extensive experience in the industry who owned ‘more than six hundred copyrighted sound recordings and musical compositions’. Id. at 4.

(2) EMI’s prior suit against the Defendant’s with respect to other copyrights made the Defendant’s ‘well aware of the obligations to obtain mechanical licenses and pay statutory license fees for the use of others’ musical compositions.’ Id at 5.

(3) EMI’s letter to the Defendant’s put them on notice about the termination of its compulsory licenses for failure to pay the required statutory royalties. Id.

The Court held that EMI presented a strong circumstantial evidence of willfulness which warranted an award of enhanced statutory damages. The Court awarded EMI $25,000 in statutory damages for infringement of each composition.

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© 2011 Nissenbaum Law Group, LLC