Case 2:06-cv-05578-SVW-JC Document 681 Filed 10/10/13 Page 1 of 26 Page ID #:8047

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JENNER & BLOCK LLP STEVEN B. FABRIZIO (pro hac vice) [email protected] KENNETH L. DOROSHOW (pro hac vice) [email protected] 1099 New York Avenue, N.W. Suite 900 Washington, D.C. 20001 Telephone: (202) 639-6000 Facsimile: (202) 661-4823 GIANNI P. SERVODIDIO (pro hac vice) [email protected] 919 Third Avenue, 37th Floor New York, NY 10022 Telephone: (212) 891-1600 Facsimile: (212) 891-1699 Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

COLUMBIA PICTURES 18 INDUSTRIES, INC., et. al. 19 20 21 22 23 24 25 26 27 28 Defendants. v. GARY FUNG, et. al. Plaintiffs,

CV-06-05578 SVW (JCx) PLAINTIFFS BRIEF IN RESPONSE TO THE COURTS SEPTEMBER 30, 2013 ORDER CONCERNING THE PROPER JURY INSTRUCTION TO BE GIVEN ON STATUTORY DAMAGES

PLFS BR. IN RESPONSE TO COURTS SEPT. 30, 2013 ORDER RE JURY INSTRUCTION ON STATUTORY DAMAGES

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TABLE OF CONTENTS Page

3 INTRODUCTION ................................................................................................... 1 4 DISCUSSION .......................................................................................................... 4 5 I. 6 7 II. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

The Jury Should Be Instructed To Consider Defendants Infringing Conduct In Light Of The Purposes Of Statutory Damages .......................... 4 The Jury Should Not Be Instructed To Consider Plaintiffs Actual Damages ........................................................................................................ 7 A. B. Plaintiffs Actual Damages Are Irrelevant To The Jurys Determination Of Statutory Damages. ................................................ 7 Allowing The Jury To Consider Actual Damages Would Undermine The Purposes Of Statutory Damages, And Would Effectively Turn Every Statutory Damages Case Into An Actual Damages Case. .................................................................................. 11 Even If Actual Damages Were Appropriate To Consider In Other Statutory Damages Cases, The Court Should Exercise Its Discretion To Preclude Their Consideration Here ........................... 14

C.

III.

The Jury Should Be Instructed To Consider Only The Courts Prior Findings Of Fact Concerning Willfulness................................................... 16

CONCLUSION...................................................................................................... 18 EXHIBIT 1: PLAINTIFFS PROPOSED JURY INSTRUCTION ...................... 19

Case 2:06-cv-05578-SVW-JC Document 681 Filed 10/10/13 Page 3 of 26 Page ID #:8049 1 2 3 4 FEDERAL CASES 5 Apple, Inc. v. Psystar Corp., 6

TABLE OF AUTHORITIES Page(s)

673 F.Supp.2d 926 (N.D. Cal. 2009).............................................................. 5, 11 No.06 CV 5936(KMW), 2011 WL 1486640 (S.D.N.Y. April 11, 2011) .......... 11

7 Arista Records LLC v. Lime Group LLC, 8 9 10 11 12

Broadcast Music, Inc. v. Spring Mountain Area Bavarian Resort, Ltd., 555 F. Supp.2d 537 (E.D. Pa. 2008)................................................................. 4, 6 Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899 (8th Cir. 2012) ................................................................................ 9

Childrens Broadcasting Corp. v. Walt Disney Co., 13 357 F.3d 860 (8th Cir. 2004) ................................................................................ 6
14 Columbia Pictures Indus., Inc. v. Fung 15 16 17 18 19 20

(Fung I), No. CV 06-5578 SVW (JCX), 2009 WL 6355911 (C.D. Cal. Dec. 21, 2009) .................................................................................................... 16 Columbia Pictures Indus., Inc. v. Fung (Fung II), 710 F.3d 1020 (9th Cir. 2013)........................................................ 16 Columbia Pictures Television, Inc. v. Krypton Broadcasting of Birmingham, 259 F.3d 1186 (9th Cir. 2001) ............................................................................ 10

F.W. Woolworth Co. v. Contemporary Arts, Inc., 21 344 U.S. 228 (1952) ......................................................................................... 4, 7
22 Ingle v. Circuit City, 23

408 F.3d 592 (9th Cir. 2005) .............................................................................. 17 829 F.2d 783 (9th Cir. 1987) .............................................................................. 10 185 F.R.D. 324 (D. Kan. 1999) ............................................................................ 6

24 Kamar Intern. v. Russ Berrie & Co., Inc., 25

26 Law v. Natl Collegiate Athletic Assn, 27 28

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Case 2:06-cv-05578-SVW-JC Document 681 Filed 10/10/13 Page 4 of 26 Page ID #:8050 1 Los Angeles News Serv. v. Reuters Television Intl, Ltd., 2

149 F.3d 987 (9th Cir. 1998) .............................................................................. 14 302 F. Supp. 2d 455 (D. Md. 2004) ................................................................... 14 New Form, Inc. v. Tekila Films, Inc., 357 Fed. Appx. 10 (9th Cir. 2009) ................................................................7, 8-9 Nintendo of Am., Inc. v. Dragon Pacific Intl, 40 F.3d 1007 (9th Cir. 1994) ................................................................................ 8

3 Lowrys Reports, Inc. v. Legg Mason, Inc., 4 5 6 7 8

Original Appalachian Artworks, Inc. v. J.F. Reicher, Inc., 9 658 F.Supp. 458 (E.D. Pa. 1987) .......................................................................... 5
10

Peer Intl Corp. v. Pausa Records, Inc., 909 F.2d 1332 (9th Cir. 1990) .............................................................................. 9 11
12 Sid & Marty Krofft Television Productions, Inc. v. McDonalds Corp., 13

562 F.2d 1157 (9th Cir. 1977) ............................................................................ 14 719 F.3d 67 (1st Cir. 2013) .................................................................................. 9 No. 01 CV 5779(JCL), 2007 WL 1456193 (D.N.J. May 17, 2007) .................5-6

14 Sony BMG Music Entmt v. Tenenbaum, 15

16 Yash Raj Films (USA) Inc. v. Rannade Corp., 17 18 19 20 21

Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574 (6th Cir. 2007) ................................................................................ 9 FEDERAL STATUTES 17 U.S.C. 504(c)(1) ............................................................................................ 1, 7

22 OTHER AUTHORITIES 23 ABA Model Jury Instructions: Copyright, Trademark and Trade Dress 24

Litigation (2008) ............................................................................................... 5, 6

25 H.R. Rep. No. 106-216 (1999) .................................................................................. 8 26 Kevin F. OMalley, Jay E. Grenig, and Hon. William C. Lee, Federal Jury 27

Practice & Instructions 2010) (5th & 6th eds.) .................................................... 6

28 Melville B. Nimmer & David Nimmer, Nimmer on Copyright (2012) ........ 7, 10, 15
PLFS BR. IN RESPONSE TO COURTS SEPT. 30, 2013 ORDER RE JURY INSTRUCTION ON STATUTORY DAMAGES

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Case 2:06-cv-05578-SVW-JC Document 681 Filed 10/10/13 Page 5 of 26 Page ID #:8051 1 PAUL GOLDSTEIN, COPYRIGHT (2d ed. 1996) ........................................................... 11 2 Register of Copyrights, Report of the Register of Copyrights on the General 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
PLFS BR. IN RESPONSE TO COURTS SEPT. 30, 2013 ORDER RE JURY INSTRUCTION ON STATUTORY DAMAGES

Revision of the U.S. Copyright Law, 87th Cong., 1st Sess. (House Judiciary Comm. Print 1961) ................................................................... 4, 11, 14

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INTRODUCTION During the hearing in this case on September 30, 2013, this Court ordered the

3 parties to submit simultaneous briefs on the proper instruction to be given to the jury 4 on the calculation of statutory damages. The Court observed that neither the 5 Copyright Act nor the Ninth Circuits model jury instructions provides detailed 6 guidance to the jury beyond the direction to award an amount within the statutorily7 defined range that the trier of fact considers just. 17 U.S.C. 504(c)(1). The 8 Court thus ordered the parties to consider whether the Court should provide 9 additional guidance, and to propose a jury instruction as appropriate to address: (1) 10 what the proper instruction should be regarding Defendants willfulness, which the 11 Court has already found as a matter of law, and (2) what significance, if any, the 12 jury should be instructed to assign to evidence regarding Plaintiffs actual damages 13 from Defendants infringing conduct. This brief responds to the Courts Order. As explained in greater detail below, the Court can provide adequate guidance 14 15 to the jury by instructing it to consider the facts and evidence including those facts 16 already found in this case, which the Court should read to the jury in light of the 17 purposes of statutory damages. As the Court is aware, some courts have identified 18 factors that juries may consider, in appropriate cases, in calculating awards of 19 statutory damages. Most important of these considerations consistent with the 20 policy goals of statutory damages are the culpability of the defendant and the need 21 to deter the defendant and other potential infringers. The jury can thus be instructed 22 to consider the fact that Defendants conduct was willful, including the specific facts 23 on which the Court relied in so concluding; the need to deter these Defendants and, 24 importantly, other potential infringers; the circumstances and scale of the 25 infringement; the litigation conduct of the parties; the nature of the copyrights; and 26 the expenses saved and profits earned by Defendants. 27 Plaintiffs do not believe the Court should permit the jury to consider the 28 extent of Plaintiffs actual damages. This is so because Plaintiffs actual damages 1
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1 are generally irrelevant to the jurys calculation of an appropriate award of statutory 2 damages and particularly so where, as here, Defendants have been adjudicated to 3 be willful infringers, and Plaintiffs have disclaimed any attempt to quantify their 4 economic loss. In such circumstances, statutory damages serve a discrete punitive 5 and deterrent purpose to which actual damages are inapposite. Indeed, Defendants approach to this case amply illustrates the problem of 6 7 allowing consideration of actual damages in a statutory damages case. Defendants 8 contend that, to challenge the extent of Plaintiffs actual damages, they must be 9 allowed sweeping and intrusive discovery into Plaintiffs business affairs, including 10 exploration of vast amounts of highly sensitive and confidential information 11 concerning the books, records and commercial practices of each Plaintiff pertaining 12 to each of the thousands of works in suit. Defendants also contend that such 13 discovery must be followed by complex expert analyses, ensuring that this case will 14 drag on for many more months, costing hundreds of thousands more dollars, and 15 needlessly complicating what should otherwise be a straightforward statutory 16 damages trial. 17 But to what end? For all of their insistence on such disruptive, burdensome 18 and highly-invasive discovery, Defendants do not explain because they cannot 19 how such discovery and expert analyses, even if undertaken to the extremes that 20 Defendants propose, could ever meaningfully quantify the true extent of the actual 21 economic damage their mass infringement has caused the Plaintiffs. As this Court 22 has already found, Defendants built an engine of online infringement with a user23 base that numbers in the millions, and willfully encouraged incalculable 24 infringements of Plaintiffs copyrights on a global basis for more than a decade. 25 Invasive discovery into Plaintiffs business affairs such as the revenues generated 26 by each of the works in suit will not resolve the extent of Plaintiffs actual injury 27 from Defendants infringing conduct, and will serve only to harass Plaintiffs and 28 needlessly complicate this case. Congress recognized that calculation of actual 2
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1 damages is often a difficult, costly, and ultimately speculative endeavor, and created 2 the statutory damages regime precisely to eliminate the need for such a process. 3 Accordingly, Defendants should be precluded from introducing evidence or 4 argument on Plaintiffs actual damages as a basis for lowering the statutory damages 5 award, and the jury should be instructed to disregard any such evidence or 6 argument. To allow otherwise would turn this (and every other) statutory damages 7 case into a complex, expensive, enormously burdensome and ultimately pointless 8 dispute over the extent of Plaintiffs actual damages the very scenario that 9 Congress sought to avoid in the first place by allowing copyright owners to elect 10 statutory damages in lieu of actual damages. Finally, as for Defendants willfulness, the Court should instruct the jury to 11 12 consider only the Courts prior findings of fact each of which should be read to the 13 jury and preclude Defendants from arguing anything further on these settled 14 issues. Attached hereto as Exhibit 1 is proposed text of jury instructions reflecting 15 16 the foregoing points, which Plaintiffs respectfully submit for the Courts 1 17 consideration. 18 19 20 21 22 23 24 25 26 27 28 3
PLFS BR. IN RESPONSE TO COURTS SEPT. 30, 2013 ORDER RE JURY INSTRUCTION ON STATUTORY DAMAGES

The jury instructions that Plaintiffs propose in Exhibit 1 concern only statutory damages and the issues related thereto that the Court identified in the September 30 hearing. Plaintiffs intend to offer more complete proposed jury instructions on the schedule contemplated by Your Honors Rule 13(c). Moreover, because the ultimate jury instructions on the question of statutory damages may depend on the Courts rulings on several pending motions, Plaintiffs expect that they may need to modify these proposed instructions in light of the Courts forthcoming rulings on the pending motions.

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DISCUSSION The Jury Should Be Instructed To Consider Defendants Infringing Conduct In Light Of The Purposes Of Statutory Damages. Statutory damages serve the dual purposes of compensation and deterrence:

5 they compensate the plaintiff for the infringement of its copyright; and they deter 6 future infringements by punishing the defendant for its actions. Broadcast Music, 7 Inc. v. Spring Mountain Area Bavarian Resort, Ltd., 555 F. Supp.2d 537, 544 8 (E.D. Pa. 2008) (quotation marks omitted). See also, e.g., F.W. Woolworth Co. v. 9 Contemporary Arts, Inc., 344 U.S. 228, 233 (1952) (The statutory rule, formulated 10 after long experience, not merely compels restitution of profit and reparation for 11 injury but also is designed to discourage wrongful conduct). Importantly, statutory 12 damages also serve the purpose of easing the copyright owners burden in 13 presenting its damages case. See, e.g., Register of Copyrights, Report of the 14 Register of Copyrights on the General Revision of the U.S. Copyright Law, 87th 15 Cong., 1st Sess. 102-03 (House Judiciary Comm. Print 1961) (Report of the 16 Register of Copyrights) (The value of a copyright is, by its nature, difficult to 17 establish, and the loss caused by an infringement is equally hard to determine. As a 18 result, actual damages are often conjectural, and may be impossible or prohibitively 19 expensive to prove.). 20 One leading model jury instruction sums up these general purposes and 21 would have the Court so instruct the jury as follows: 22 23 24 25 26 27 28 4
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A copyright owner may elect to recover statutory damages for each infringed work that was timely registered. Within certain limits that I will describe below, the statute gives you broad discretion to determine the amount of statutory damages that you find to be just in light of the evidence presented. In deciding what amount is just, you should take into consideration the purposes and factors that I will describe to you. The general purposes of statutory damages include the following:

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1.

Relieving copyright owners of the often difficult burden of proving their actual damages and the defendants profits; Providing adequate compensation to the copyright owner and disgorgement of the infringers benefits from infringement; Deterring the infringer and others similarly situated from future infringement; and Where appropriate, punishing the infringer.

2.

3.

4.

Thus, statutory damages are available without proof of plaintiffs actual damages, defendants profits, or other direct economic effects of the infringement. ABA Model Jury Instructions: Copyright, Trademark and Trade Dress Litigation 1.7.4 (2008). Consistent with these purposes, courts have also identified a variety of additional factors for juries to consider in calculating statutory damages awards, depending on the facts of each case, such as: (1) the expenses saved and the profits reaped; (2) the revenues lost by the plaintiff; (3) the value of the copyright; (4) the deterrent effect on others besides the defendant; (5) whether the defendants conduct was innocent or willful; (6) whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential for discouraging the defendant. Apple, Inc. v. Psystar Corp., 673 F.Supp.2d 926, 928 (N.D. Cal. 2009). However, [i]n weighing these factors, most courts that have pondered the issue do not attach great weight to profits gained or to income lost, because these amounts are difficult to monetize, and may be marginal at best. Original Appalachian Artworks, Inc. v. J.F. Reicher, Inc., 658 F.Supp. 458, 465 (E.D. Pa.

26 1987) (citation omitted). Accordingly, [c]ourts have focused largely on the 27 element of intent, and the per infringement award tends understandably to escalate, 28 in direct proportion to the blameworthiness of the infringing conduct. Yash Raj 5
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1 Films (USA) Inc. v. Rannade Corp., No. 01 CV 5779(JCL), 2007 WL 1456193, at 2 *11 (D.N.J. May 17, 2007) (ellipses and quotation marks omitted). 3 With these considerations in mind, the Court can instruct the jury in this case 4 to consider: (1) the fact that Defendants conduct was willful, including the specific 2 5 facts on which the Court relied in so concluding; (2) the circumstances and scale of 6 the infringement; (3) the need to deter these Defendants; (4) the need to deter other 7 potential infringers; (5) the nature of the copyright; (6) the litigation conduct of the 8 parties; and (7) the expenses saved and profits earned by Defendants. These factors 9 are consistent with the overall purposes of statutory damages, especially in the case 10 of willful infringement, and place the primary focus where it properly should be 11 on Defendants conduct. Broadcast Music, Inc. 555 F. Supp. 2d at 544 (In 12 determining the just amount of statutory damages, the defendants conduct is the 3 13 most important factor) (brackets and quotation marks omitted). 14 15 16 17 18 19 20 21 It is perfectly appropriate for the Court to read to the jury its prior findings of fact that bear on the jurys consideration of a proper damages award. See Law v. Natl Collegiate Athletic Assn, 185 F.R.D. 324, 331-32 (D. Kan. 1999) (in trial on damages, proper to instruct jury regarding the history of the case and the issues which had been resolved); cf. 3 Kevin F. OMalley, Jay E. Grenig, and Hon. William C. Lee, Federal Jury Practice & Instructions 101.22 (Remand on Issue of Damages Only) (6th ed. 2011) (model instruction with provisions for court recitation of specific findings from prior phase of the litigation, adapted from an approved instruction in Childrens Broadcasting Corp. v. Walt Disney Co., 357 F.3d 860, 867-68 n.3 (8th Cir. 2004)).
3 2

This list is also consistent with the leading model jury instructions on copyright 22 damages. See ABA Model Jury Instructions: Copyright, Trademark and Trade 23 Dress Litigation (2008) 1.7.8 (model jury instruction providing similar list of some of the factors that may help guide your assessment of an appropriate award); 24 3B OMalley, Grenig & Lee, Federal Jury Practice and Instructions 160.92 (5th 25 ed. 2001) (In determining the just amount of statutory damages, you may consider the willfulness of the defendants conduct, the defendants innocence, the 26 defendants continuation of infringement after notice or knowledge of the copyright 27 or in reckless disregard of the copyright, effect of the defendants prior or 28 6 (continue)
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1 II. 2 3 4 5 6 7 8 9 10

The Jury Should Not Be Instructed To Consider Plaintiffs Actual Damages. Section 504(c) of the Copyright Act allows a plaintiff to elect to recover

statutory damages instead of actual damages and profits . . . . 17 U.S.C. 504(c)(1). Plaintiffs have made such an election here, and have expressly disclaimed any attempt -- or even an ability -- to quantify their actual economic loss. As a result, Plaintiffs actual damages should play no role in the jurys calculation of statutory damages. A. Plaintiffs Actual Damages Are Irrelevant To The Jurys Determination Of Statutory Damages.

It is well-settled in the Ninth Circuit and elsewhere that a plaintiff is entitled

11 to statutory damages regardless of the adequacy of the evidence offered as to his 12 actual damages and the amount of the defendants profits, and even if he has 13 intentionally declined to offer such evidence, although it was available. 4 Melville 14 B. Nimmer & David Nimmer, Nimmer on Copyright 14.04[A] at 14-66 (2012) 15 (citing cases). See also, e.g., F.W. Woolworth, 344 U.S. at 233 (statutory damages 16 are appropriate [e]ven for uninjurious and unprofitable invasions of copyright); 17 New Form, Inc. v. Tekila Films, Inc., 357 Fed. Appx. 10 (9th Cir. 2009) (We have 18 consistently held and stated that statutory damages are recoverable without regard to 19 the existence or provability of actual damages) (unpublished decision, citing Ninth 20 Circuit cases). The extent of a plaintiffs actual damages, therefore, has no bearing 21 on the calculation of an award of statutory damages. 22 This is particularly so where, as here, the infringement at issue is willful. As 23 the Ninth Circuit has held, when infringement is willful, the statutory damages 24 25 (continued from previous page) 26 concurrent copyright infringement activity, and whether profit or gain was 27 established.) (emphasis added). 28 7
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1 award may be designed to penalize the infringer and to deter future violations. 2 Nintendo of Am., Inc. v. Dragon Pacific Intl, 40 F.3d 1007, 1011 (9th Cir. 1994) 3 (quoting Chi-Boy Music v. Charlie Club, Inc. 930 F.2d 1224, 1228-29 (7th Cir. 4 1991)) (quotation marks omitted); see also H.R. Rep. No. 106-216 (1999) (Courts 5 and juries must be able to render awards that deter others from infringing 6 intellectual property rights. It is important that the cost of infringement substantially 7 exceed the costs of compliance). Because willfulness implicates a distinct 8 deterrent purpose of statutory damages independent of actual damages, this Court 9 was correct in its contemplation, during the September 30 hearing, that a willful 10 infringer should not be able to rely on the absence of actual damages as a basis for
4 11 minimizing its liability. See Nintendo, 40 F.3d at 1011 (observing that statutory 12 damages may serve completely different purposes than actual damages).

13

Appellate courts have expressly rejected the notion, which Defendants

14 advance here, that statutory damages must bear some relation to actual damages, 15 even in cases where the defendants infringement was also found to be willful. 16 Defs Opp. to Plfs Ex Parte App. For Protective Order, Dkt. # 648, at 9-10. The 17 Ninth Circuit has held that [t]here is no required nexus between actual and 18 statutory damages under 17 U.S.C. 504(c) and rejected a proposed jury 19 instruction to the contrary as a misstatement of the law. New Form, Inc., 357 Fed. 20 21 22 23 24 25 26 27 28 8
PLFS BR. IN RESPONSE TO COURTS SEPT. 30, 2013 ORDER RE JURY INSTRUCTION ON STATUTORY DAMAGES

Transcript of Hearing, Sept. 30, 2013 (Sept. 30 Hearing Tr.) at 5:2-14 (There are a few courts which have said that you can consider actual loss in considering the measure of statutory damages, but no case that I have found has said you must. And the question has to also be considered in terms of the fact that there is a finding of willfulness. Now, willfulness involves issues that dont necessarily relate to loss. It is punitive. So to the extent that there is some authority that actual loss is relevant to statutory damages, I am wondering whether that would, to the extent that that is good authority, whether or not that would be equally applicable where there was willfulness.); id. at 11:9-12 (there isnt persuasive authority saying actual damages are an appropriate consideration).

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1 Appx. at 11-12. Other Circuits concur, and none has held to the contrary. See Sony 2 BMG Music Entmt v. Tenenbaum, 719 F.3d 67, 71-72 (1st Cir. 2013) (holding that 3 statutory damages are not to be measured in relation to actual damages because 4 they are imposed as a punishment for the violation of a public law and thus relate 5 to the public wrong rather than the private injury . . . .) (quoting St. Louis, I.M. & 6 S. Ry. Co. v. Williams, 251 U.S. 63, 66 (1919)); Capitol Records, Inc. v. Thomas7 Rasset, 692 F.3d 899, 907-10 (8th Cir. 2012) (rejecting district courts conclusion 8 that statutory damages must still bear some relation to actual damages) (emphasis
5 9 in original). Indeed, in one of its leading cases on the subject, the Ninth Circuit upheld an 10

11 award of statutory damages against a willful infringer at the maximum allowable 12 amount, despite the defendants complaint that the award amounted to a windfall 13 because the plaintiff has suffered only nominal damages. Peer Intl Corp. v. 6 14 Pausa Records, Inc., 909 F.2d 1332, 1336-37 (9th Cir. 1990). The court noted that 15 the authority on which the defendant relied involved nonwillful infringements, id. 16 at 1337, and reasoned that, given the willfulness of the infringements at issue, an 17 award of the maximum statutory amount was justified, notwithstanding the 18 19 20 21 22 23 24 25 At the September 30 hearing, the Court asked whether statutory damages should bear some relationship to actual damages in the way that punitive damages must bear some relationship to compensatory damages. Tr. at 34. Both the Tenenbaum and Thomas-Rasset courts examined this precise question and answered it in the negative. See Tenenbaum, 719 F.3d at 70-71 (rejecting application of the BMW v. Gore guideposts for punitive damages to statutory damages under the Copyright Act); Thomas-Rasset, 692 F.3d at 907 (The Supreme Court never has held that the punitive damages guideposts are applicable in the context of statutory damages.). See also Zomba Enters., Inc. v. Panorama Records, Inc., 491 F.3d 574, 586-88 (6th Cir. 2007) (same).
6 5

Peer Intl is among the leading cases on which the Ninth Circuits Model Jury 26 Instructions on the issue of statutory damages in copyright are based. See Ninth 27 Circuit Model Jury Instructions 17.25 (comments). 28 9
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1 nominal actual damages suffered by the plaintiff, to sanction and vindicate the 2 statutory policy of discouraging infringement. Id. (quoting Woolworth, 344 U.S. at 3 233). 4 Similarly, in Columbia Pictures Television, Inc. v. Krypton Broadcasting of 5 Birmingham, 259 F.3d 1186 (9th Cir. 2001), the Ninth Circuit upheld a statutory 6 damages award of $72,000 per work infringed without regard to the plaintiffs 7 actual damages, simply on the ground that the defendants infringement was willful 8 and the award was well within the statutory range for willful infringement. Id. at 9 1194-95. The court noted that [a] plaintiff may elect statutory damages regardless 10 of the adequacy of the evidence offered as to his actual damages and that, [i]f 11 statutory damages are elected, the court has wide discretion in determining the 12 amount of statutory damages to be awarded, constrained only by the specified 13 maxima and minima. Id. at 1194 (quotations omitted). Defendants rely on a smattering of unpublished district court cases within the 14 15 Ninth Circuit for their contrary view. See Defs Opp. to Pltfs. Ex Parte App. For 16 Protective Order at 9-10. Plaintiffs respectfully submit that these decisions are 17 inconsistent with the foregoing Ninth Circuit precedent, which clearly rejects such a 18 theory. As Professor Nimmer notes, Peer Intl explicitly rejected the approach of 19 other courts that would limit statutory damages awards to prevent a windfall where, 20 as a practical matter, the plaintiff has suffered only nominal damages. Nimmer 21 14.04[B][1][a] at 14-70 n.44 (quoting Doehrer v. Caldwell, 207 U.S.P.Q. 391 (N.D. 22 Ill. 1980)). See also Kamar Intern. v. Russ Berrie & Co., Inc., 829 F.2d 783, 787 23 (9th Cir. 1987) (statutory damages need not reflect actual damages). 24 25 26 27 28 10
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1 2 3 4

B.

Allowing The Jury To Consider Actual Damages Would Undermine The Purposes Of Statutory Damages, And Could Effectively Turn Every Statutory Damages Case Into An Actual Damages Case.

One of the primary reasons for statutory damages is that [t]he value of a

5 copyright is, by its nature, difficult to establish, and the loss caused by an 6 infringement is equally hard to determine. As a result, actual damages are often 7 conjectural, and may be impossible or prohibitively expensive to prove. Report of 8 the Register of Copyrights, supra at 102-03. Congress thus gave copyright owners 9 the option to pursue statutory damages in part to avoid the difficulty and expense of 10 having to prove their actual damages, particularly in cases against willful infringers. 11 As one leading copyright commentator has explained: Because actual damages are 12 so often difficult to prove, only the promise of a statutory award will induce 13 copyright owners to invest in and enforce their copyrights, and only the threat of a 14 statutory award will deter infringers by preventing their unjust enrichment. 2 PAUL 15 GOLDSTEIN, COPYRIGHT 12.2, at 12:34 (2d ed. 1996). See also Doroshow Decl., Ex. 16 A (CBS Broadcasting Inc. v. FilmOn.com, Inc., 10-Civ-7532 (NRB) (S.D.N.Y. July 17 21, 2011)) ([G]iven [plaintiffs] reliance on statutory damages, the information 18 sought by defendants relating to plaintiffs online distribution of their programming 19 is irrelevant); Arista Records LLC v. Lime Group LLC, No.06 CV 5936(KMW), 20 2011 WL 1486640, at *2 (S.D.N.Y. April 11, 2011) (noting earlier ruling denying 21 defendants requests for documents sufficient to show plaintiffs earned profits and 22 accepting Plaintiffs argument that allowing discovery into Plaintiffs profits and 23 costs would be contrary to the very reason that Congress created statutory 24 damages) (quotation marks omitted); Apple, 673 F. Supp. 2d at 928 (plaintiff is 25 not obliged to provide proof of its own profits when it has elected to seek statutory 26 damages). 27 28 11
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To allow consideration of actual damages here would undermine these

2 purposes. With trial less than a month away, Defendants have propounded 3 extensive discovery into a potentially limitless range of sensitive and confidential 4 topics, each calling for thousands of documents from Plaintiffs files, in addition to 5 complex expert analyses and testimony regarding Plaintiffs revenues for each of the 6 thousands of work in suit, licensing agreements, the costs of policing for 7 infringements, and other matters putatively related to Plaintiffs actual damages. 8 See Sept. 30 Tr. at 35-39 (Defendants counsel outlining how Defendants intend to 9 prove the absence of actual damages). Just by way of example, Defendants seek 10 such detailed and highly sensitive information as: Documents sufficient to identify [each Plaintiffs] total annual profits related 11 12 13 14 15 16 17 18 19 to each of the [works in suit], for each of the past ten (10) years. All documents evidencing, referring or relating to any and all valuations of [each Plaintiff] at any time during the past ten (10) years. All documents evidencing, referring or relating to any and all analyses of [each Plaintiffs] actual or projected revenues, costs and profits for the past ten (10) years. All documents concerning [each Plaintiffs] use of the internet to promote and/or exploit the [works in suit].

20 Defendants Requests for Production of Documents to Plaintiffs, Set Three, Dkt. # 21 632-2 (Exhibit 1 to Declaration of Gianni P. Servodidio in Support of Plaintiffs 22 Motions in Limine). The detailed and highly sensitive discovery and expert 23 analyses that Defendants seek would take many months to conduct, and will likely 24 cost $1 million or more in legal and expert fees, to say nothing of the enormous 25 disruption to Plaintiffs businesses that such discovery would involve. And, if 26 Defendants were permitted to pursue such intrusive discovery and to argue that the 27 extent of Plaintiffs actual damages should bear some relationship to the amount of 28 12
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1 statutory damages, then Plaintiffs would be forced to conduct their own actual 2 damages analyses in rebuttal. Such an arms race of discovery and expert analyses 3 would defeat the whole point of statutory damages, as this case and, indeed, any 4 case involving statutory damages would effectively become a complex dispute 5 over actual damages. More fundamentally, such an exercise would serve no ultimate purpose (other 6 7 than Defendants purpose to complicate and delay this case), as no amount of 8 discovery or analyses can meaningfully quantify the vast damage that Defendants 9 have caused here. As this Court has already found, Defendants have caused 10 Plaintiffs to suffer continuing infringement on an enormous scale through their 11 willful conduct in ways that are incalculable: For years, Defendants operated their websites as popular destinations 12 for copyright infringement and etched their niche in the market for 13 infringement. Defendants were enormously successful in building a user-base of infringers that, by Defendants own account, number in the 14 millions. As stated, the evidence of Defendants illegal objective 15 was overwhelming and the resulting amount of infringement of Plaintiffs copyrights has been staggering. 16 17 Order Granting Plaintiffs Motion for Permanent Injunction, Dkt. # 426, at 4, 7 18 (May 20, 2010) (quotations omitted). See also id. at 3 (observing that downloads 19 from Defendants websites involve automatic and simultaneous distribution to 20 innumerable others as a required part of the download process, that end-users 21 obtain an unprotected digital copy of Plaintiffs work that [they] can further 22 distribute indefinitely at will, and that it is axiomatic that the availability of free 23 infringing copies of Plaintiffs works through Defendants websites irreparably 24 undermines the growing legitimate market for consumers to purchase access to the 25 same works). For example, if a Plaintiff earned a billion dollars in revenue from a 26 blockbuster film, it would not mean that the Plaintiff was not still harmed by 27 Defendants infringing conduct. Neither would Plaintiffs commercial information 28 13
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1 give any indication of the harm attributable to Defendants infringing conduct, as 2 opposed to online piracy more generally. In the end, the full nature and extent of the 3 harm that Defendants have caused is impossible to know. As such, the discovery 4 that Defendants seek cannot yield a meaningful measure of the true extent of 5 Plaintiffs actual damages here. To permit consideration of actual damages under these circumstances would 6 7 be perverse and particularly unfair given that Plaintiffs elected statutory 8 damages precisely because their actual damages are not capable of meaningful 9 measurement. Defendants should not be permitted to exploit the inherent difficulty 10 of proving actual damages in a case such as this as a basis for lowering the statutory 11 damages award, especially when the very purpose of statutory damages was to 12 provide a remedy that is not dependent on proof of actual damages. See, e.g., 13 Report of the Register of Copyrights, supra at 102; Lowry's Reports, Inc. v. Legg 14 Mason, Inc., 302 F. Supp. 2d 455, 460 (D. Md. 2004) (Statutory damages exist in 15 part because of the difficulties in proving . . . actual harm in copyright infringement 16 actions); Sid & Marty Krofft Television Productions, Inc. v. McDonalds Corp., 17 562 F.2d 1157, 1178 n.7 (9th Cir. 1977) (noting that an award of statutory damages 18 can only benefit, but not hurt, the aggrieved party). 19 20 21 C. Even If Actual Damages Were Appropriate To Consider In Other Statutory Damages Cases, The Court Should Exercise Its Discretion To Preclude Their Consideration Here.

The district court has wide discretion in determining the amount of statutory

22 damages to be awarded, constrained only by the specified maxima and minima. 23 Los Angeles News Serv. v. Reuters Television Intl, Ltd., 149 F.3d 987, 996 (9th Cir. 24 1998) (quotation marks omitted). The trier of fact is guided by what is just in the 25 particular case, considering the nature of the copyright, the circumstances of the 26 infringement and the like. Id. (quoting Peer Intl, 909 F.2d at 1336). 27 28 14
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While some courts in decisions containing scant analysis or reasoning

2 have allowed some consideration of the revenues lost by the plaintiff as a result of 3 the defendants conduct, no court has ever held that the plaintiffs lost revenue 4 must be considered in calculating an award of statutory damages, a point that this 5 Court correctly observed during the September 30 hearing. Sept. 30 Tr. at 5:2-5. 6 To the contrary, as noted above, the Ninth Circuit has upheld substantial awards of 7 statutory damages without regard to the plaintiffs actual damages, simply because 8 the defendants infringement was willful and the award was within the statutory 7 9 range. See supra at 9-10. 10 Moreover, Plaintiffs cannot identify a single statutory damages case in which 11 the court has permitted anything close to the far-ranging, highly invasive discovery 12 that Defendants seek here. Plaintiffs have already advised Defendants (in response 13 to one of Defendants many discovery requests) that Plaintiffs have no documents 14 reflecting the actual injury caused by these Defendants. For all the reasons stated, 15 that fact has no place in a statutory damages case. But here, Defendants seek much 16 more. Defendants effectively want to perform a full-scale audit of Plaintiffs 17 financial books and records, a comprehensive review of Plaintiffs licensing 18 arrangements with legitimate providers, and have multiple expert witnesses purport 19 to calculate the actual economic injury caused by Defendants for each of the 20 thousands of works at issue. Thus, Defendants propose months of fact and expert 21 discovery, hundreds of thousands of dollars (at the very least) in cost, and days on 22 end of testimony to the jury. No court has ever allowed anything like what 23 Defendants demand. To the contrary, when such sweeping discovery has been 24 As Professor Nimmer observes, the standards that courts have identified are largely precatory; as long as the district court acts within the prescribed statutory 26 limits, its discretion will probably be upheld on appeal. Nimmer 14.04[B][1][a] 27 at 14-70. 25 28 15
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1 attempted in a statutory damages case, it has been rejected. See Doroshow Decl., 2 Ex. A (CBS Broadcasting Inc. v. FilmOn.com, Inc., 10-Civ-7532 (NRB) (S.D.N.Y. 3 July 21, 2011)) (agreeing with plaintiffs that, given their reliance on statutory 4 damages, the information sought by defendants relating to plaintiffs online 5 distribution of their programming is irrelevant, and denying discovery in light of 6 the competitively sensitive and business-intrusive nature of the requested 7 documents). 8 III. The Jury Should Be Instructed To Consider Only The Courts Prior Findings Of Fact Concerning Willfulness. 9 During the September 30 hearing, this Court confirmed that its prior rulings 10 on Defendants inducement liability had already established, as a matter of law, that 11 Defendants are willful infringers with respect to all of the works in suit for 12 purposes of the upcoming damages trial. See Sept. 30 Tr. at 3:12-21. In so doing, 13 the Court also asked the parties to address whether, notwithstanding this finding of 14 willfulness, Defendants should be able to offer testimony on some of the 15 underlying factual issues that may shape the degree of willfulness. Sept. 30 Tr. at 16 21:17-20. The answer to the Courts question is no, as to allow such testimony 17 would invite Defendants to attempt to argue facts that are inconsistent with the 18 Courts existing rulings. This would essentially result in re-litigation of this settled 19 issue. 20 This Court has already concluded and the Ninth Circuit has affirmed that 21 Defendants engaged in purposeful, culpable conduct in inducing third party 22 infringement with the specific intent to cause copyright infringement, Columbia 23 Pictures Indus., Inc. v. Fung (Fung I), No. CV 06-5578 SVW (JCX), 2009 WL 24 6355911 at *11, 15 (C.D. Cal. Dec. 21, 2009) (emphasis added), and that [n]o 25 reasonable jury could find otherwise. Columbia Pictures Indus., Inc. v. Fung 26 (Fung II), 710 F.3d 1020, 1035 (9th Cir. 2013) (emphasis added). Defendants are 27 intentional, willful infringers. The many facts found by the Court in support of that 28 16
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1 conclusion are law of the case, which precludes Defendants from attempting to 2 reargue or recast these factual findings now. See, e.g., Ingle v. Circuit City, 408 3 F.3d 592, 594 (9th Cir. 2005) (Under the law of the case doctrine, a court is 4 generally precluded from reconsidering an issue previously decided by the same 5 court, or a higher court in the identical case). Permitting Defendants to challenge these facts at the statutory damages trial 6 7 would undermine seven years of litigation and the Courts prior summary judgment 8 rulings that Defendants intentionally and willfully induced copyright infringement. 9 Doing so would also enormously expand and complicate what should be a 10 straightforward trial on damages. The liability record included voluminous 11 evidence from Fungs admissions, to technical evidence, to statistical analyses. If 12 Defendants are permitted to retry all of the facts established through that 13 evidence, Plaintiffs will be forced to present substantially all of the same evidence 14 so that the jury does not get a distorted view of the facts. The evidence presented in 15 the liability phase was overwhelming. As this Court and the Ninth Circuit found, no 8 16 rational jury could view the same evidence and come to different factual findings. 17 Defendants can argue from the established facts what they will about their 18 conduct. But the damages trial will end up being a redo of the entire liability 19 proceeding if Defendants are permitted to introduce evidence to contradict the facts 20 that are already established. At the same time, precluding Defendants from 21 contradicting the established facts will not prevent Defendants from presenting a 22 case at trial. Defendants are free to provide testimony on other considerations that 23 On September 30, 2013, Plaintiffs filed a motion in limine requesting, inter alia, 24 a ruling that Defendants should be precluded from presenting evidence contrary to 25 the factual findings and legal rulings that the Court has already made in this case. See Plaintiffs Memorandum in Support of Motion In Limine, Sept. 30, 2013, Dkt. # 26 632, at 3-8. The Courts ruling on that motion should be dispositive of or should 27 at least significantly inform the question presented here. 28 17
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1 they contend should weigh in favor of a lower statutory award such as the extent 2 to which Defendants profited from the infringement, the parties conduct in the 3 course of the litigation, and whether an award of a particular amount is necessary to 4 deter them or other potential infringers. However, on the settled issue of their 5 willfulness, Defendants should not be permitted to present evidence contrary to the 6 established facts, or otherwise suggest that their conduct was anything but the 7 purposeful, intentional inducement of infringement that this Court and the Ninth 8 Circuit have already concluded it was. Accordingly, the jury should be instructed to 9 consider only the Courts finding of willfulness and the various facts that underpin 10 that finding. 11 12 13 appropriate for trial in this case. 14 15 Dated: October 10, 2013 16 17 18 19 20 21 22 23 24 25 26 27 28 18
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CONCLUSION For the above reasons, the jury instructions proposed in Exhibit 1 hereto are

Respectfully submitted, JENNER & BLOCK LLP By: /s/ Kenneth L. Doroshow Kenneth L. Doroshow STEVEN B. FABRIZIO KENNETH L. DOROSHOW GIANNI P. SERVODIDIO JENNER & BLOCK LLP KAREN R. THORLAND FARNAZ M. ALEMI MOTION PICTURE ASSOCIATION OF AMERICA 15301 Ventura Boulevard, Building E Sherman Oaks, CA 91403 Attorneys for Plaintiffs

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1 2 3

EXHIBIT 1 PLAINTIFFS PROPOSED JURY INSTRUCTION As I have explained to you, this is a copyright infringement case, and the

4 purpose of this trial is to determine the appropriate amount of damages to be 5 awarded to Plaintiffs as a result of Defendants inducement of infringement of each 6 of Plaintiffs works that have been identified to you. Plaintiffs have elected to seek 7 a statutory damage award, established by Congress to permit copyright owners to 8 recover damages within a statutory range instead of either the actual damages 9 suffered by them or any profits of the Defendants that are attributable to the 10 infringement. The purpose of allowing Plaintiffs to elect statutory damages instead 11 of actual damages and profits is to penalize the infringer and deter future violations 12 of the copyright laws. 13 The amount you may award as statutory damages is not less than $750, nor 14 more than $150,000, for each work of the works that [you find to have been] [were] 15 infringed. Ordinarily, the maximum amount that could be awarded as statutory 16 damages is $30,000 for each work infringed. However, because this Court has 17 already found Defendants to have willfully infringed Plaintiffs copyrights, you are 18 not limited to a maximum of $30,000 per work infringed and instead are permitted, 19 but are not required, to award statutory damages up to $150,000 for each work 20 infringed, as you consider just. 21 Within the monetary limits that I have just described, the statute gives you 22 broad discretion to determine the amount of statutory damages that you find to be 23 just in light of the evidence presented. In deciding what amount is just, you should 24 take into consideration the purposes and factors that I will describe to you. 25 The general purposes of statutory damages include the following: 26 27 28 19
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1.

Relieving copyright owners of the often difficult burden of proving their actual damages and the defendants profits;

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1 2 3 4 5

2.

Providing adequate compensation to the copyright owner and disgorgement of the infringers benefits from infringement;

3.

Deterring the infringer and others similarly situated from future infringement; and

4.

Where appropriate, punishing the infringer.

6 Thus, statutory damages are available without proof of plaintiffs actual damages, 7 defendants profits, or other direct economic effects of the infringement 8 There are many facts and considerations that could impact your determination 9 of the amount of statutory damages in a given case. In this case, you are the 10 ultimate judge of the facts and the appropriate award, within the statutory range. 11 The following are some of the factors that may help guide your assessment of an 12 appropriate award and you may consider any or all of them: 13 14 15 16 17 18 19 20 21 22 23 [If the Court permits the jury to consider Plaintiffs actual damages, the the fact that Defendants conduct was willful, the facts on which the Court relied in concluding that Defendants conduct was willful (as I have read them to you), the circumstances and scale of the infringement, the need to deter these Defendants, the need to deter other potential infringers, the nature of the copyright, the litigation conduct of the parties, and the expenses saved and profits earned by Defendants,

24 instruction should also include the following: You may or may not hear evidence 25 from either side as to the actual damages Plaintiffs suffered from Defendants 26 infringement. While you are permitted consider the extent to which Plaintiffs do or 27 do not offer evidence of their actual damages as part of your determination of the 28 20
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1 appropriate statutory damages award, you are not required to give that factor any 2 particular weight or any weight at all. Because they have elected to accept statutory 3 damages, Plaintiffs are not required to submit any evidence of their actual damages, 4 and you may award statutory damages at any level with the range Ive given you 5 whether or not Plaintiffs submit any evidence of actual damages from Defendants 6 infringement or even if you conclude Plaintiffs have not suffered any actual 7 damages. ] 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21
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Sources: 17 U.S.C. 504(c); Ninth Circuit Manual of Model Jury Instructions 17.25; American Bar Assn, Model Jury Instructions: Copyright, Trademark and Trade Dress Litigation 1.7.4, 1.7.8 (2008); 3B OMalley, Grenig & Lee, Federal Jury Practice and Instructions 160.92 (5th ed. 2001); F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952); New Form, Inc. v. Tekila Films, Inc., 357 Fed. Appx. 10, 11-12 (9th Cir. 2009); Nintendo of Am., Inc. v. Dragon Pacific Intl, 40 F.3d 1007, 1011 (9th Cir. 1994); Peer Intl Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336-37 (9th Cir. 1990). Sony BMG Music Entmt v. Tenenbaum, 719 F.3d 67, 71-72 (1st Cir. 2013); Capitol Records, Inc. v. ThomasRasset, 692 F.3d 899, 907-10 (8th Cir. 2012).