Case3:10-cv-03647-WHA Document65 Filed10/07/11 Page1 of 6
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`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`IO GROUP, INC. d/b/a TITAN MEDIA, a
`California corporation,
`Plaintiff,
`
` v.
`MARIUSZ PRALAT, CAROL B. PEAL,
`YUNSHU KANG, CHUN RONG ZHENG,
`ZHI NENG WU, RUBEN MORENO, HAO
`XU, CHIAFEN LIN, SANG YEOL KIM, and
`MALGORZATA FRACZYK, individuals,
`Defendants.
` /
`
`No. C 10-03647 WHA
`
`ORDER GRANTING
`PLAINTIFF’S MOTION
`FOR DEFAULT JUDGMENT
`
`INTRODUCTION
`In this copyright-infringement action, plaintiff moves for default judgment against the
`two remaining defendants. For the following reasons, plaintiff’s motion is GRANTED.
`STATEMENT
`Plaintiff commenced this action against 244 Doe defendants in August 2010.
`Plaintiff produces, markets, and distributes adult entertainment products, including videos.
`“Plaintiff operates and maintains a website by and through which customers paying a monthly
`subscription fee may view Plaintiff’s photographic and audiovisual works.” In 2007, plaintiff
`created the movie Breakers, which allegedly is of high production value and is “easily discernible
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`Case3:10-cv-03647-WHA Document65 Filed10/07/11 Page2 of 6
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`as a professional work.” Plaintiff holds a copyright registration certificate from the United States
`Copyright Office for Breakers (First Amd. Compl. ¶¶ 5, 22, 33; Ruoff Decl. Exh. A).
`Defendants are allegedly participants in the eDonkey2000 network, a “peer-to-peer” file
`sharing system. The “eDonkey2000 Network allows users simultaneously to download and
`upload pieces of a file from multiple peers.” Plaintiff alleges that defendants used this network
`to engage in a copyright infringement scheme together. “During the months of April, May, and
`June 2010, they all reproduced, shared, distributed, and republished the same file . . . containing
`Plaintiff’s motion picture, Breakers (First Amd. Compl. ¶¶ 10, 24).
`Defendants Mariusz Pralat and Malgorzata Fraczyk were served with the first amended
`complaint and summons on May 25, 2011, alleging (1) copyright infringement, (2) contributory
`copyright infringement, (3) vicarious copyright infringement, (4) negligence, and (5) civil
`conspiracy. Pralat and Fraczyk failed to answer the complaint or to otherwise make appearances
`in this action. On July 20, 2011, the Clerk of the Court entered default as to defendants Pralat
`and Fraczyk, the last two defendants remaining in this action (Dkt. Nos. 52, 55).
`Plaintiff now moves for default judgment against Pralat and Fraczyk, jointly and severally,
`for the maximum statutory damages of $30,000 for infringing its copyright in Breakers.
`Defendants were served with copies of this motion, but neither defendant filed an opposition.
`A hearing on the instant motion was held on October 6. Defendants did not appear at the hearing,
`either personally or through counsel. At the hearing, plaintiff’s counsel said after serving the
`defendants with this motion, one packet was returned to him as undeliverable. Counsel also
`stated that he previously spoke on the phone with that defendant, and that defendant was made
`aware of the present action by service of the summons and the complaint.
`ANALYSIS
`Pursuant to FRCP 55(a), a default judgment can be entered “[w]hen a party against
`whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.”
`Although there is a “general rule that default judgments are ordinarily disfavored,” the factors to
`consider when exercising discretion as to the entry of a default judgment are: (1) the possibility
`of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claim; (3) the sufficiency
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`Case3:10-cv-03647-WHA Document65 Filed10/07/11 Page3 of 6
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`of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a 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. Eitel v.
`McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). In the present action, these factors weigh in
`favor of the entry of default judgment against defendants Pralat and Fraczyk.
`1.
`MERITS OF PLAINTIFF’S SUBSTANTIVE CLAIMS
`AND SUFFICIENCY OF THE COMPLAINT.
`“The general rule 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 Fin. Group, 559 F.2d
`557, 560 (9th Cir. 1977). Thus, this order considers the merits of plaintiff’s substantive claims,
`the sufficiency of the complaint, and the possibility of a dispute concerning the material facts
`together. All three of these factors weigh in favor of entering default judgment against the two
`remaining defendants. Because plaintiff only addresses and seeks damages for direct copyright
`infringement in its brief, this order too only reaches plaintiff’s claim for direct infringement.
`Plaintiff alleges that defendants infringed its copyright in the movie Breakers in violation
`of Section 501 of Title 17 of the United States Code. Section 501(a) states: “Anyone who
`violated any of the exclusive rights of the copyright owner as provided by sections 106 through
`122 . . . is an infringer of the copyright.” In order to state a claim for copyright infringement,
`plaintiff must show (1) that it owns a valid copyright in the allegedly infringed material, and
`(2) that defendants violated an exclusive right granted to the copyright owner. The exclusive
`rights of the copyright owner are enumerated in Section 106 and include “to reproduce the
`copyrighted work in copies or phonorecords” and “to distribute copies or phonorecords of the
`copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or
`lending.” 17 U.S.C. 106(1), (3).
`The operative complaint alleges that plaintiff holds a copyright registration certificate
`from the United States Copyright Office for the 2007 movie Breakers. The registration certificate
`is also attached as exhibit A to the Ruoff declaration. Under our copyright laws, a registration
`certificate constitutes prima facie evidence of a valid copyright, and shifts the burden to the
`opposing party to prove the invalidity of the copyright. Entm't Research Group, Inc. v. Genesis
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`Case3:10-cv-03647-WHA Document65 Filed10/07/11 Page4 of 6
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`Creative Group, Inc., 122 F.3d 1211, 1217 (9th Cir. 1997). Defendants have not offered any
`evidence to rebut the presumption created by plaintiff’s copyright registration certificate that
`plaintiff’s copyright in Breakers is valid.
`Plaintiff further asserts that defendants reproduced and distributed its copyrighted work,
`Breakers, by and through the eDonkey2000 peer-to-peer network without authorization (First
`Amd. Compl. ¶¶ 33–34). Plaintiff has pled facts to demonstrate defendants violated its exclusive
`rights as the copyright owner of Breakers. Taking the factual allegations of the complaint as true,
`plaintiff has sufficiently pled facts establishing a copyright infringement claim against defendants.
`These factors weigh in favor of entering default judgment against defendants.
`FOUR REMAINING EITEL FACTORS.
`2.
`The remaining Eitel factors — the possibility of prejudice to the plaintiff, the sum of
`money at stake, whether the default was due to excusable neglect, and the strong policy
`underlying the FRCP favoring decisions on the merits — also favor entry of default judgment
`against defendants Pralat and Fraczyk. First, plaintiff would be prejudiced if default judgment
`were not entered against defendants. This would allow their alleged infringing conduct to
`continue undeterred and leave plaintiff without recourse against them or a way to recoup lost
`profits. Second, the maximum amount of damages sought by plaintiff is $30,000. This is
`substantially less than the $3 million in damages at stake in Eitel. Third, defendants have been
`served with the complaint and summons, as well as numerous other documents in this action, but
`have failed to make an appearance. No oppositions to this motion were filed, and defendants did
`not appear at the hearing. Excusable neglect is thus unlikely. Fourth, FRCP 55(a) provides for a
`default judgment to be entered in circumstances where the defendants fail to appear, such as here.
`The fact that defendants refuse to participate in the judicial process renders a decision on the
`merits virtually impossible. Accordingly, the seven Eitel factors all weigh in favor of granting
`default judgment against the two remaining defendants.
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`Case3:10-cv-03647-WHA Document65 Filed10/07/11 Page5 of 6
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`DAMAGES.
`3.
`The owner of a copyright is entitled to recover the actual damages suffered as a result of a
`copyright infringement in addition to any profits earned by the copyright infringer. 17 U.S.C.
`504(a). In the alternative,
`the copyright owner may elect, at any time before final judgment is
`rendered, to recover, instead of actual damages and profits, an
`award of statutory damages for all infringements involved in the
`action, with respect to any one work, for which any one infringer is
`liable individually, or for which any two or more infringers are
`liable jointly and severally, in a sum of not less than $750 or more
`than $30,000 as the court considers just.
`17 U.S.C. 504(c)(1). Plaintiff requests $30,000 in damages, the maximum statutory damages
`award permissible for the copyright infringement of one work, when willfulness is not
`established.
`District courts have “wide discretion in determining the amount of statutory damages to be
`awarded, constrained only by the specified maxima and minima.” Harris v. Emus Records Corp.,
`734 F.2d 1329, 1335 (9th Cir. 1984). The maximum statutory damages award for the
`infringement of Breakers is $30,000 and the minimum is $750. In determining the amount of
`damages to award, the court is guided by
`what is just in the particular case, considering the nature of the
`copyright, the circumstances of the infringement and the like, . . .
`but with the express qualification that in every case the assessment
`must be within the prescribed [maximum or minimum]. Within
`these limitations the court's discretion and sense of justice are
`controlling.
`Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir. 1990) (internal citation
`omitted). Moreover, the statutory rule is designed to discourage wrongful conduct. F. W.
`Woolworth Co. v. Contemporary Arts, 344 U.S. 228, 233 (1952). “Even for uninjurious and
`unprofitable invasions of copyright the court may, if it deems it just, impose a liability within
`statutory limits to sanction and vindicate the statutory policy.” Ibid.
`Plaintiff seeks the maximum statutory damages because its works are valuable and
`defendants’ acts harmed and continue to harm the value of its works. Plaintiff alleged that its
`works, including Breakers, are of high quality, and plaintiff has won numerous awards for its
`productions. Attachments to the Ruoff declaration show that the suggested retail price of a
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`“3-Disc Combo Pack” of Breakers retails on its website for $49.95. In addition, a monthly
`subscription to plaintiff’s website costs $29.95. As plaintiff’s exhibits demonstrate, the prices for
`plaintiff’s films and website featuring adult content are higher than the prices for non-erotic films.
`Furthermore, plaintiff considers online piracy to be the “single greatest threat” to the continued
`viability of its business because it threatens to reduce future sales and memberships to its website
`(Ruoff Decl. ¶ 11, Exhs. B–E).
`Moreover, “Defendants caused Plaintiff harm by reproducing and distributing Plaintiff’s
`works with no digital protection systems, thereby making it possible for the unending and
`continual distribution of Breakers, by and through peer-to-peer networks” (Br. 5; Ruoff
`Decl. ¶ 10). Due to the type of infringement committed by defendants, there could be an infinite
`number of potential customers of plaintiff who are instead viewing Breakers without any
`compensation to plaintiff.
`There is no evidence, however, that defendants profited from their infringement in any
`way. Nor were defendants the creators or owners of the eDonkey2000 network used to infringe
`plaintiff’s works; they were mere users of the infringing website. Although the conduct of
`defendants was damaging to plaintiff’s business, it was not so egregious as to warrant the
`maximum damages award under the statute.
`This order finds that the extensiveness and continuity of the infringement of Breakers has
`caused substantial harm to plaintiff, and an award of $20,000 against defendants jointly and
`severally is appropriate.
`
`CONCLUSION
`For the foregoing reasons, plaintiff’s motion for default judgment against defendants
`Pralat and Fraczyk, jointly and severally for the amount of $20,000, is GRANTED.
`
`IT IS SO ORDERED.
`
`Dated: October 7, 2011.
`
`
`WILLIAM ALSUP
`UNITED STATES DISTRICT JUDGE
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