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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`IO GROUP, INC.,
`Plaintiff,
`
` v.
` MARTIN TANGUAY, as known as, KEVIN
`DORN, an individual, and JOSEPH
`QUAINTER, an individual
`Defendants.
` /
`
`No. C-04-04175 EDL
`REPORT AND RECOMMENDATION
`RE: PLAINTIFF’S MOTION FOR
`DEFAULT JUDGMENT
`
`On October 1, 2004, Plaintiff IO Group filed this action against Defendant Kevin Dorn for,
`inter alia, copyright infringement. On June 20, 2005, Plaintiff filed a first amended complaint
`adding Joseph Quainter as a defendant and adding Martin Tanguay as an alternative name for
`Defendant Dorn. The summons and complaint were served on Defendant Quainter on August 25,
`2005. Sperlien Decl. ¶ 2. The clerk of the court entered default against Defendant Quainter on
`November 22, 2005. Efforts to serve Defendant Dorn, also known as Martin Tanguay, were
`unsuccessful and on January 9, 2006, Plaintiff dismissed Defendant Dorn/Tanguay with prejudice.
`On February 1, 2006, Plaintiff filed a motion for default judgment against Defendant
`Quainter. The motion came on for hearing on March 14, 2006. Attorney Gill Sperlein appeared for
`Plaintiff. Defendant Quainter did not file an opposition to Plaintiff’s motion and did not appear at
`the hearing.
`Background
`In its complaint, Plaintiff alleges the following facts: Plaintiff, doing business as Titan
`Media, produces, markets and distributes adult entertainment products, including Internet website
`content, videos, DVDs and photographs. Compl. ¶ 2. Plaintiff maintains a subscription-based
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`For the Northern District of California
`For the Northern District of California
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`United States District Court
`United States District Court
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`Case3:04-cv-04175-SC Document40 Filed03/15/06 Page2 of 8
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`website through which high-resolution versions of its photographic works and audiovisual content
`can be viewed by individuals. Compl. ¶ 10. Plaintiff has won numerous awards for its work, and is
`recognized in the industry as one of the highest quality producers of gay erotica. Compl. ¶ 12;
`Declaration of Keith Webb ¶ 2.
`Defendant Quainter is an individual who co-owns and co-operates a highly interactive,
`commercial Internet website (www.kevscave.com) featuring adult entertainment. Compl. ¶ 4, 15.
`Defendant Quainter received revenue from the infringing website in the form of affiliate payments
`made directly to him. Compl. ¶ 4.
`At various times, Plaintiff’s employees discovered a number of Plaintiff’s copyrighted
`photographs being publicly displayed by and through www.kevscave.com. Compl. ¶ 17.
`Defendants reproduced, distributed and publicly displayed more than 157 copyrighted photographs.
`Id. ¶¶ 19, 23.
`On June 10 and 11, 2004, Plaintiff sent a take down notice and a cease-and-desist letter to
`Defendant Dorn, demanding that he remove all of Plaintiff’s proprietary content from
`www.kevscave.com and that he refrain from any future use of Plaintiff’s content. Declaration of
`Gill Sperlein Decl. ¶ 7. Subsequently, Defendants removed the images from the website. See
`Sperlein Decl. ¶ 8.
`Default Judgment
` Federal Rule of Civil Procedure 55(b)(2) authorizes the Court to enter judgment against a
`defendant against whom a default has been entered, assuming that defendant is not an infant, is not
`incompetent or in military service. Defendants here are not unrepresented minors, incompetent or in
`military service. See Sperlein Decl. ¶ 6.
`“The general rule of law is that upon default the factual allegations of the complaint, except
`those relating to the amount of damages, will be taken as true.” Geddes v. United Financial Group,
`559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1, 12 (1944)). In
`exercising its discretion to grant default judgment, the court may consider the following factors: (1)
`the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's substantive claims; (3) the
`sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a
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`Case3:04-cv-04175-SC Document40 Filed03/15/06 Page3 of 8
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`dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the
`strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. See
`Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Generally, upon entry of default, the
`factual allegations of the complaint are taken as true, except for those relating to damages. See
`Televideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir.1987).
`Here, the Eitel factors weigh in favor of default judgment. Most importantly, the substantive
`claim in the complaint on which Plaintiff seeks default judgment appears to have merit and the
`complaint is sufficient to state that claim. A claim for copyright infringement has two elements: (1)
`ownership of the copyright; and (2) infringement by the defendant. See Kling v. Hallmark Cards,
`Inc., 225 F.3d 1030, 1037 (9th Cir. 2000). In its complaint, Plaintiff alleges that each of the 157
`photographs at issue is registered with the Copyright Office and the Defendants reproduced,
`distributed and publicly displayed the photographs on www.kevscave.com without permission.
`Compl. ¶¶ 19, 23, 28. Therefore, Plaintiff has alleged sufficient facts to state a claim for copyright
`infringement.
`The remaining Eitel factors also weigh in favor of granting default judgment. First, if the
`motion were denied, Plaintiff would likely be without a remedy; Plaintiff attempted to reach a
`compromise with Defendants but was unsuccessful. See Sperlein Decl. ¶ 9; see Pepsico, Inc. v. Cal.
`Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) (“If Plaintiffs’ motion for default judgment
`is not granted, Plaintiffs will likely be without other recourse for recovery.”). Second, the amount of
`money sought is not completely disproportionate or unreasonable given the number of copyrighted
`images that Defendant copied. Finally, because Defendant did not file an answer to the complaint,
`there is little to suggest that there is a possibility of a dispute concerning material facts, and it is
`unlikely that Defendant’s default was due to excusable neglect, especially when Plaintiff served its
`motion for default judgment on Defendant, but still received no response.
`Accordingly, the motion for default judgment should be granted. The remaining issue is the
`amount of the judgment.
`Damages for Copyright infringement
`A copyright infringer is liable for either the actual damages incurred or statutory damages.
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`See 17 U.S.C. § 504(a). Plaintiff concedes that it is impossible to determine the former. Statutory
`damages are assessed by the Court in the range between $750 and $30,000 per work, increased to
`$150,000 in cases of willful infringement. See 17 U.S.C. § 504(c).
`Here, Plaintiff argues that Defendant should pay at least $2,500.00 per work infringed, for a
`total of $392,500.00 ($2,500 x 157 photographs). Because Plaintiff believes that the infringement
`was willful, Plaintiff argues that Defendant should pay $7,500.00 per work, which represents treble
`damages, for a total of $1,177,500.00 ($7,500 x 157 photographs).
`In support of Plaintiff’s request for $2,500.00 per work infringed, Plaintiff has submitted the
`declaration of Keith Webb, its vice-president of marketing and legal affairs. Attached to Mr.
`Webb’s declaration is a form license for use of Plaintiff’s images. See Webb Decl. Ex. A. That
`license provides for a one-time license of an image and states that Plaintiff shall be compensated
`$2,500.00 in liquidated damages per image for the unauthorized use of an image. See Webb Decl. ¶
`8. Also attached to Mr. Webb’s declaration is a legal statement of Plaintiff’s intellectual property
`rights, which is posted on its website. See Webb Decl. Ex. B. The legal statement provides in part:
`“Each individual photograph or image contained on our web pages or portion thereof contained in
`this site has a retail value of $2,500.00 U.S. and is only available when ordered from the author.”
`See id. at 1.
`This type of evidence of damages does not always justify an award of $2,500.00 per
`photograph on default judgment. Compare IO Group v. Bench, C-04-3116 CRB (JCS) (N.D. Cal.
`Mar. 19, 2005) (order adopting report and recommendation re: application for default judgment by
`the court) at 8:7-8 (awarding statutory damages of $2,500.00 for one work infringed), with IO Group
`v. Ryan, C-02-5140 RMW (N.D. Cal. Apr. 21, 2003) (order granting in part and denying in part
`plaintiff’s application for default judgment) at 1:23-2:1 (finding statutory damages of $1,000.00 per
`work to be the appropriate amount) and IO Group v. Adkins, 2005 WL 1492381, *5 (N.D. Cal.,
`June 23, 2005) (awarding statutory damages of $1,000.00 per work infringed). The Court is
`persuaded by the latter cases. The form license offered by Plaintiff is just that -- a form. Plaintiff
`failed to provide any evidence of actual licenses negotiated with third parties. Further, the form
`license does not show what a third party would pay for a license; it simply describes the penalty for
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`unauthorized use. Also, the legal statement of intellectual property rights is an unsubstantiated
`claim that the images are each worth $2,500.00. Plaintiff failed to submit any evidence that a third
`party in the marketplace has actually paid $2,500.00 per image or that in negotiations, Plaintiff
`would never accept anything but $2,500.00.
`The Court concludes that Plaintiff should receive $1,000.00 per work infringed. An award of
`more than the statutory minimum of $750 per image is warranted because of the large number of
`images copied and the fact that Plaintiff limits distribution of its images to maintain their value. See
`Webb Decl. ¶¶ 4-7. An award greater than $1,000.00 is not justified because there is no evidence
`that Defendants enjoyed profits of $1,000 or more per image.
`The remaining question is whether the infringement was willful. The Court does not credit
`any allegations in the complaint regarding willfulness because those allegations go to damages. See,
`e.g., IO Group v. Ward, C-03-5285 JSW (N.D. Cal. Sept. 1, 2004) (order granting motion for default
`judgment) at 3:12-14 (“IO Group’s allegations of willfulness bear directly on the question of
`damages; the assertion here that Defendant acted willfully is insufficient to justify enhanced
`damages in this instance.”).
`Plaintiff first makes its standard arguments in these types of default judgment cases. Plaintiff
`claims that willfulness is shown because Defendant could not have reasonably believed that the
`photographs were not protected by copyright, or had passed into the public domain so they were no
`longer protected by copyright. According to Plaintiff, Defendant willfully used Plaintiff’s high-
`quality photographs to build its business and then, after this lawsuit was filed, switched to legally
`obtained content. In addition, Plaintiff argues that Defendants’ failure to settle this matter or to
`respond to this lawsuit is evidence of willfulness.
`The Court does not find these standard arguments persuasive. Knowingly posting material
`on a website that does not belong to the posting party is, of course, classic willful conduct. See
`Perfect 10 v. Talisman, 2000 U.S. Dist. LEXIS 4564 at 5 (C.D. Cal. Mar. 27, 2000) (holding that
`when a defendant “ knew or should have known that . . . photographs belonged to someone else at
`the time that it posted them on its website [the defendant’s] infringement . . . was willful.”). In this
`case, however, there is no evidence that Defendant knew or should have known that the posted
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`photographs belonged to Plaintiff; Plaintiff itself states that it has discovered “well over one hundred
`websites illegally publishing its copyright protected works.” Webb Decl. ¶ 16. Defendant may have
`obtained Plaintiff’s copyrighted material from another source with insufficient reason to believe the
`material was protected by copyright, rather than, for example, dedicated to the public domain. See
`IO Group v. Bench, C-04-3116 CRB (JCS) (N.D. Cal. Mar. 19, 2005) (order adopting report and
`recommendation re: application for default judgment by the court) at 8:1-4 (“In other words,
`Defendant could have obtained the photograph at issue from one of the many web sites that has
`pirated Plaintiff’s images and further, could reasonably have believed that the photograph was not
`protected by copyright.”). Nor is the Court convinced that the unwillingness to settle and the failure
`to participate in this lawsuit by themselves constitute willfulness. Furthermore, Defendant did
`remove the copyrighted images from its website after receiving Plaintiff’s cease and desist letter.
`See IO Group v. Ryan, C-02-5140 RMW (N.D. Cal. Apr. 21, 2003) (order granting in part and
`denying in part plaintiff’s application for default judgment) at 2:8-10 (“As these acts of infringement
`pre-dated plaintiff’s mailing of the July 18, 2002 cease and desist letter to defendant, the court does
`not find the infringement to have been willful.”).
`Plaintiff also raises a new willfulness argument in this case based on a recent amendment to
`the Copyright Act regarding the use of false contact information in registering a domain name:
`In a case of infringement, it shall be a rebuttable presumption that the
`infringement was committed willfully for purposes of determining relief if the
`violator, or a person acting in concert with the violator, knowingly provided or
`knowingly caused to be provided materially false contact information to a domain
`name registrar, domain name registry or other domain name registration authority
`in registering, maintaining or renewing a domain name used in connection with
`the infringement.
`17 U.S.C. § 504(c)(3)(A) (2005). Plaintiff argues that Defendant’s use of false contact information
`to register the www.kevscave.com domain name triggers the statute’s rebuttable presumption of
`willful infringement. Congress enacted this provision in 2004 in response to the growing number of
`online fraud cases associated with the booming Internet economy in an effort to target the practices
`whereby “materially false contact information is increasingly used by those who infringe on the
`copyrights and trademarks of others to hide their identity and avoid civil suits. . . . . The Committee
`believes that such activity is a sign of willful infringement and should deserve, in most cases, the
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`additional civil penalties that result from willful infringement.” H. R. Rep. No. 108-536 (2004) (“. .
`. the Committee maintains that consumers should be able to check the ownership of a particular
`domain name. If penalties are not created to penalize the provision of materially false contact
`information in connection with a violation of existing law, there will be no incentive for domain
`name registrants to provide accurate information in the first place.”). This legislation has a broad
`scope, sweeping beyond registration information included in the publicly-accessible WHOIS
`database of registrant-supplied domain name ownership contact information and covering “all
`contact information supplied by domain name owners to domain name registrars, registries, or other
`authorities.” H.R. Rep. No. 108-536 (2004).
`Here, Plaintiff’s search in May 2004 of publicly available records in the WHOIS database in
`an effort to obtain contact information for the operators of www.kevscave.com revealed an address
`in Canada. Sperlein Decl. ¶ 18. Plaintiff’s attempts to have process served at that address by
`Canadian officials were unsuccessful. Sperlein Decl. ¶ 11 (process server returned a certification in
`March 2005 stating that the address was not good and the person had moved); ¶ 14 (process server
`returned a certification in November 2005 that Defendant Kevin Dorn/Martin Tanguay was
`unknown at the address, which was a UPS store that did not have any information about Defendant);
`Ex. C, D. Plaintiff performed another WHOIS database search on January 23, 2006, which resulted
`in the return of a similar, although less complete, address in Canada. Sperlein Decl. ¶ 19.
`The two unsuccessful service attempts demonstrate that the domain name registration contact
`information for www.kevscave.com was materially false. Moreover, the contact information
`remained essentially the same in January 2006, but had been slightly changed to remove the street
`address, which demonstrates a further attempt to create anonymity and avoid lawsuits. Accordingly,
`Defendant Quainter, as the co-owner and co-operator of www.kevscave.com, either acting on his
`own, or in concert with co-owner and co-operator Defendant Dorn/Tanguay, knowingly provided or
`caused to be provided materially false contact information in connection with the registration and
`maintenance of the registration of that domain name. Therefore, the rebuttable presumption of
`willfulness imposed by § 504(c)(3)(A) applies. Although there is some evidence that Defendant’s
`infringement was not willful, such as the removal of the infringing images from Defendant’s website
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`upon receipt of Plaintiff’s cease and desist letter, that evidence is not sufficient to rebut the strong
`presumption of willfulness under § 504(c)(3)(A).
`The Court recommends finding that Defendant’s infringement was willful under
`§ 504(c)(3)(A), and that Plaintiff is entitled to increased damages. Plaintiff’s motion for default
`judgment should be granted for copyright infringement in the amount of $471,000 ($3,000.00 x 157
`works).
`Conclusion
`The Court recommends granting Plaintiff’s motion for default judgment in the total amount
`of $471,000.00. Any party may serve and file specific written objections to this recommendation
`within ten (10) business days after being served with a copy. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P.
`72(b); Civil Local Rule 72-3 . Failure to file objections within the specified time may waive the
`right to appeal the District Court’s order.
`IT IS SO ORDERED.
`Dated: March 15, 2006
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`ELIZABETH D. LAPORTE
`United States Magistrate Judge
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