Case4:04-cv-04174-SBA Document35 Filed01/30/06 Page1 of 11
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`IO GROUP INC.,
`Plaintiff,
`
`v.
`ARYEH MEIR,
`Defendant.
`_______________________________________
`
`No. C 04-4174-SBA
`
`ORDER
`[Docket No. 34]
`
`This matter comes before the Court on Plaintiff IO Group, Inc.'s application for default
`judgment against Defendant Aryeh Meir [Docket No. 34.] Having fully considered Plaintiff’s
`application, the allegations contained in the Complaint, the declarations and exhibits filed in support
`of Plaintiff’s application, the factors enunciated in Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986),
`and for good cause appearing, the Court hereby GRANTS Plaintiff's application as set forth in this
`Order.
`
`BACKGROUND
`Plaintiff IO Group, Inc. ("Plaintiff") is a California corporation doing business as "Titan
`Media," with its principal place of business located at 121 Capp Street, Suite 200, San Francisco,
`California 94110. Complaint ¶ 2. Plaintiff produces and distributes adult-oriented entertainment
`products, including Internet website content, audiovisual works, photographs, videos and DVDs. Id.
`¶ 9.
`
`Defendant Aryeh Meir ("Defendant") is an individual who resides in British Columbia,
`Canada who owned and operated www.icravedick.com, a highly-interactive, commercial Internet
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`For the Northern District of California
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`United States District Court
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`Case4:04-cv-04174-SBA Document35 Filed01/30/06 Page2 of 11
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`website. Complaint ¶¶ 3, 14.
`Plaintiff alleges that Defendant illegally copied, distributed and publicly displayed on
`www.icravedick.com, and other websites owned or operated by the Defendant, one hundred and
`sixty-seven (167) images that belong to Plaintiff and for which Plaintiff holds valid Certificates of
`Copyright Registration. Complaint ¶¶ 18, 21.
`On April 16, 2004, Plaintiff sent to Archer Consulting, Inc., the fictitious entity to whom the
`website icravedick was registered at the time, a take-down notice and a letter demanding that it cease
`and desist illegally copying and publishing Plaintiff's works.1 Declaration of Gill Sperlein ("Sperlein
`Decl.") ¶ 8; Exs. A & B. The April 16, 2004 letter explained that Plaintiff believed the website
`owned or controlled by Archer Consulting, Inc. infringed upon Plaintiff's copyrights. Id. at Ex. B.
`The operator removed Plaintiff's images from the website. Id. ¶ 9. Through counsel, Plaintiff
`attempted to reach a compromise and avoid litigation, but Defendant refused to negotiate a
`settlement. Id.
`On October 1, 2004, Plaintiff filed the instant action. Defendant was served with a copy of
`the Summons and Complaint on November 1, 2004. Id. ¶ 12. A response became due on November
`21, 2004. On November 28, 2004, Plaintiff delivered to Defendant by United States mail and by e-
`mail a letter reminding Defendant that a response was past due and that Plaintiff intended to ask the
`Clerk of the Court to enter default against Defendant. Defendant failed to serve an answer or
`otherwise respond to the Complaint. Id. ¶ 14. Upon Plaintiff's request, the Clerk entered default on
`January 21, 2005 [docket no. 7.]
`On February 25, 2005, without first having moved to set aside the entry of default,
`Defendant, proceeding in pro per, and Plaintiff filed a Joint Case Management Statement and
`Proposed Order in which Defendant contested all of the facts in Plaintiff's Complaint, and Plaintiff
`expressed a willingness to postpone discovery upon Defendant's providing credible and verifiable
`information that he was not the owner of the allegedly offending website [docket no. 16.] On March
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`1 www.icravedick.com was registered using the fictitious business Archer Consulting. Plaintiff
`later subpoenaed the payment processor for the site and learned that all funds were being paid to
`Defendant.
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`For the Northern District of California
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`United States District Court
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`Case4:04-cv-04174-SBA Document35 Filed01/30/06 Page3 of 11
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`10, 2005, the parties appeared before the Court in a telephonic Case Management Conference,
`stipulated to set aside the default, and agreed to have the matter referred to a magistrate judge for an
`early settlement conference. On March 21, 2005 the Court entered Plaintiff's and Defendant's
`Stipulation in which they stipulated to set aside the default and appear before a magistrate judge for
`an early settlement conference. In addition, the parties stipulated to a further case management
`conference on May 12, 2005, and agreed that Defendant would file an answer to the Complaint, or
`other responsive pleading, within thirty (30) days of the stipulation and order. Defendant failed to
`appear for the scheduled settlement conference and failed to file an answer or other responsive
`pleading by April 20, 2005, as required by the order. Moreover, Defendant failed to make himself
`available for the May 12, 2005 telephonic Case Management Conference.
`On May 18, 2005, this Court issued an Order to Show Cause why sanctions should not be
`imposed and/or default re-entered against Defendant for his failure to comply with the Court’s
`March 21, 2005 Order. Defendant failed to appear for the show cause hearing. Consequently, the
`Court re-entered default against Defendant on June 21, 2005 and ordered Plaintiff to file a motion
`for default judgment by July 18, 2005. On July 1, 2005, Plaintiff filed the instant application for
`default judgment [docket no. 34.]
`
`LEGAL STANDARD
`The decision of whether to grant or deny a request for default judgment lies within the sound
`discretion of the district court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (affirming
`denial of motion for default judgment and sua sponte dismissal of plaintiff’s claims). In exercising
`its discretion, the district court is guided by consideration of the following factors:
`(1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive
`claim; (3) the sufficiency 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) (affirming denial of motion for default
`judgment where district court had serious reservations concerning the substantive merit of the
`claims, a large amount of damages were at issue, and there was a factual dispute with regard to the
`matters alleged in the pleadings).
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`A.
`
`The Eitel Factors
`1.
`Substantive Merits and Sufficiency of the Complaint
`The first two Eitel factors are (1) the merits of plaintiff's substantive claim, and (2) the
`sufficiency of the complaint. Eitel, 782 F.2d at 1471-72. These two factors require that a plaintiff
`"state a claim on which the [plaintiff] may recover." Kloepping v. Fireman's Fund, No. C 94-2684
`TEH, 1996 WL 75314, at *2 (N.D. Cal. Feb. 13, 1996). Since default has been entered against
`Defendant, the factual allegations of the Complaint, with the exception of the allegations regarding
`damages, will be taken as true. Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir.
`1977).
`
`Copyright Infringement
`a.
`Plaintiff alleged a claim for copyright infringement.
`The Copyright Act, 17 U.S.C. § 106, protects the owner of a copyright by granting him or
`her exclusive rights to "reproduce, distribute, and publicly display copies of the work." Mattel Inc.
`v. Walking Mt. Prods., 353 F.3d 792, 799 (9th Cir. 2003) (citation omitted). "A prima facie case of
`copyright infringement by reproduction is established by showing ownership by the plaintiff and
`copying by the defendant." Id.
`The Complaint alleges that Plaintiff holds properly registered copyright certificates for the
`one hundred and sixty seven (167) photographic and audiovisual works that it claims Defendant
`reproduced. Complaint ¶¶ 23, 25. The Complaint further alleges that Defendant infringed these
`works by reproducing, distributing and publicly displaying the works on the www.icravedick.com
`and other websites without proper approval or authorization of Plaintiff. Id. ¶ 26. Accordingly,
`Plaintiff has stated a claim for copyright infringement.
`b.
`Right to Publicity
`The Complaint also alleges a claim for misappropriation of the right to publicity under both
`common law and under California Civil Code § 3344.
`Under California law, an individual's right to publicity is invaded if another appropriates for
`his advantage the individual's name, image, identity or likeness. Fleet v. CBS, Inc., 58 Cal. Rptr. 2d
`645, 649 (1996). "This is an actionable tort under both common law and Civil Code section 3344."
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`Case4:04-cv-04174-SBA Document35 Filed01/30/06 Page5 of 11
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`Id.
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`"A common law cause of action for appropriation of name or likeness may be pleaded by
`alleging (1) the defendant's use of the plaintiff's identity; (2) the appropriation of plaintiff's name or
`likeness to defendant's advantage, commercially or otherwise; (3) lack of consent; and (4) resulting
`injury." Id. (citations omitted). "In addition, to plead the statutory remedy provided in Civil Code
`section 3344, there must also be an allegation of a knowing use of the plaintiff's name, photograph
`or likeness for purposes of advertising or solicitation or purchases." Id. "Furthermore . . . [a] 'direct'
`connection must be alleged between the use and the commercial purpose." Id.
`The Complaint alleges that Plaintiff's copyrighted works embody images of actors all of
`whom executed written agreements with Plaintiff through which Plaintiff became the exclusive
`proprietor of the actors' rights to publicity in the performances embodied in Plaintiff's creative
`works. Complaint ¶ 35; see KNB Enterprises v. Matthews, 92 Cal. Rptr. 2d 713, 721-23 (2000)
`(where models assigned right to publicity to owner of copyrighted photo, copyright owner could
`bring claim under section 3344 for unauthorized use of the model's human likeness). The Complaint
`further alleges that Defendant displayed photographs of the actors for commercial gain without
`Plaintiff's consent. Id. ¶ 37. As a direct and proximate result of Defendant' conduct, Plaintiff claims
`that it was damaged. Id. ¶ 38. The Complaint further claims that Defendant acted in conscious
`disregard of Plaintiff's rights. Id. ¶ 39. Thus, Plaintiff has stated a claim for both common law and
`statutory misappropriation of the right to publicity.
`Accordingly, the Court finds that the first two Eitel factors are satisfied.
`2.
`Amount at Stake
`Under the third Eitel factor, the court must consider the amount of money at stake in relation
`to the seriousness of Defendant's conduct. Here, Plaintiff is seeking $1,252,500 in statutory
`damages in relation to its copyright claim, and $125,250 in statutory damages in relation to its
`statutory misappropriation of right to publicity claim. Given that Defendant never filed a responsive
`pleading in this action, and discovery was never taken, it is unknown how this amount correlates
`with Defendant's ill-gotten gains. Plaintiff has, however, submitted evidence sufficient to show that
`it sells its images at the prevailing rate of $2,500 per image. Declaration of Keith Webb ("Webb
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`Decl.") ¶ 8; Complaint ¶ 12.2 Plaintiff also states that it uses these images to drive subscriptions to
`its own website and thus illegal distribution of these images decreases the overall value of its site.
`Webb Decl. ¶ 5. Illegal distribution of Plaintiff's works also decreases the uniqueness of the works
`and damages Plaintiff's goodwill, thereby increasing the amount of Plaintiff's loss. In light of the
`circumstances, this Court finds that Plaintiff's request of $2,500 per image is reasonable.
`Further, the amount of damages requested by Plaintiff are within the range that is specifically
`authorized by statute. See 17 U.S.C. § 504 (providing that court may award statutory damages in the
`amount of $750 to $30,000 per work, increased to $150,000 in cases of willful infringement); Cal.
`Civ. Code § 3344(a) (providing that court may award statutory damages in the amount of $750 per
`photograph). Given this, the Court finds that the third Eitel factor has been met.
`3.
`Possibility of Prejudice
`The fourth Eitel factor considers whether Plaintiff will suffer prejudice if default judgment is
`not entered. Potential prejudice to Plaintiff favors granting default judgment. Considering
`Defendant's refusal to cooperate in this case, if Court were to deny Plaintiff's application for default
`judgment, Plaintiff will likely be without other recourse for recovery. Thus, the fourth Eitel factor is
`satisfied.
`Possibility of Dispute
`4.
`The fifth Eitel factor considers the possibility of dispute as to any material facts in the case.
`Upon entry of default, all well-pleaded facts in the Complaint are taken as true. Accordingly, no
`genuine dispute of material facts would preclude granting Plaintiff's application.
`5.
`Possibility of Excusable Neglect
`The sixth Eitel factor considers the possibility that the default resulted from excusable
`neglect. Plaintiff sent the fictitious entity that registered Defendant's website a cease-and-desist
`notice and letter on April 16, 2004 regarding the conduct alleged in the instant action. Sperlein
`Decl. ¶ 8. Defendant was also properly served with summons and Complaint on November 1, 2004.
`Further, on November 28, 2004, Plaintiff mailed to Defendant a letter regarding the Complaint and
`
`2 When $2,500 per image is multiplied by 167 images, the result is $417, 500. When this
`amount is trebled, it results in Plaintiff's requested damages of $1,252,500.
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`reminding Defendant that its response was past due. Defendant briefly appeared before this Court in
`a Case Management Conference held on March 10, 2005, at which time the case was referred to an
`early settlement conference. Defendant never appeared for the settlement conference, or ever again
`for that matter. Finally, Defendant has been served with the instant application. Neither Plaintiff
`nor the Court has received any response from Defendant. Thus, considering the numerous
`opportunities for Defendant to participate in this action the possibility of excusable neglect in this
`action is remote.
`6.
`Policy for Deciding on the Merits
`"Cases should be decided upon their merits whenever reasonably possible." Eitel, 728 F.2d
`at 1472. However, the mere existence of Fed. R. Civ. P. 55(b) indicates that "this preference,
`standing alone, is not dispositive." Kloepping, 1996 WL 75314, at *3. Moreover, Defendant's
`failure to answer the Complaint makes a decision on the merits impractical, if not impossible. Under
`Fed. R. Civ. P. 55(a), termination of a case before hearing the merits is allowed whenever a
`defendant fails to defend an action. Thus, "the preference to decide cases on the merits does not
`preclude a court from granting default judgment." Kloepping, 1996 WL 75314, at *3.
`In light of the foregoing analysis, the Court concludes that it may properly enter default
`judgment against Defendant.
`B.
`Damages
`Since default judgment is proper, the Court must next assess Plaintiff's requested award of
`damages. Here, Plaintiff seeks monetary damages for two claims: (1) copyright infringement; and
`(2) statutory misappropriation of right of publicity under California Civil Code § 3344. Plaintiff
`seeks statutory damages in the amount of $1,252,500 for Defendant's willful infringement of
`plaintiff's copyrighted works and statutory damages in the amount of $125,250 for statutory
`misappropriation of right to publicity.
`1.
`Copyright Claim
`In an action for copyright infringement, the copyright owner is entitled to recover the actual
`damages suffered by him or her as a result of the infringement, and any profits of the infringer that
`are attributable to the infringement. Alternatively, at the election of the plaintiff, the Court may
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`Case4:04-cv-04174-SBA Document35 Filed01/30/06 Page8 of 11
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`award statutory damages in the amount of $750.00 to $30,000.00 per work as it considers just,
`increased to $150,000 in cases of willful infringement. 17 U.S.C. § 504.
`In this case, Plaintiff argues that it should be awarded statutory damages in the amount of
`$2,500 per work because it is too difficult to determine the amount or extent of Defendant's illicit
`profits or the actual amount of Plaintiff's loss. Specifically, Plaintiff contends that it cannot
`determine the amount of Defendant's profits because Defendant failed to respond in this action, and
`discovery did not occur. Additionally, Plaintiff alleges its actual losses cannot be readily determined
`given that the value of Plaintiff's works lies in their high quality and uniqueness and given that
`Defendant's actions have resulted in harm to Plaintiff's reputation. Plaintiff further notes that
`Defendant apparently took no precautions to prevent further distribution of Plaintiff's works, and
`thus Defendant may have allowed Plaintiff's images to be further distributed to an unknown number
`of other persons. Webb Decl. ¶ 9. Plaintiff has submitted evidence showing that it charges a
`licensing fee of $2,500 per image. Webb Decl. ¶ 10. Plaintiff therefore asserts that $2,500 should
`constitute the minimum amount of statutory damages awarded per work. In light of the absence of
`objective evidence of harm and the difficulty in determining actual damages, statutory damages is an
`appropriate measure.
`Plaintiff further asserts that because of the willfulness of Defendant's infringing acts, the
`statutory damages should be trebled to $7,500 per work, for a total of $1,252,500. "Willful"
`infringement means "with knowledge that the defendant's conduct constitutes copyright
`infringement." Peer Int'l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1335 & 1335 n.3 (9th Cir.
`1990). This includes constructive knowledge. See Spectravest, Inc. v. Fleet Street, Ltd., No.
`C-88-4539 RFP, 1989 WL 135386, at *5 (N. D. Cal. Aug. 23, 1989) ("To find [an infringer's]
`actions willful, we need only determine whether she should have known that her actions would
`constitute infringement.").
`In Perfect 10, Inc. v. Talisman Communs., Inc., No. CV99-10450 RAP MCX, 2000 WL
`364813 (C.D. Cal. Mar. 27, 2000), plaintiff, a magazine publisher sued a website for publishing its
`adult photographs on the Internet. The court found that the infringement was willful because: (1) the
`magazine from which the photographs were taken displayed a clear copyright notice; and (2) the
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`photographs themselves displayed the names of the models and other information. Id. at *4. The
`court then ordered statutory damages in the amount $100,000 per infringing photograph. Id.
`Here, the photographs at issue were displayed on a website maintained by Plaintiff. High-
`resolution versions of its photographic works and audiovisual content can be viewed by individuals
`who pay a monthly subscription fee. Complaint ¶ 9. Users are allowed to view only and are not
`allowed to download or save materials to their home computers. Id. The website contains a "Legal
`Statement of Intellectual Property Rights." Webb Decl., Exh. B. The statement provides in relevant
`part:
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`[a]ll web pages text and accompanying code is intellectual property and is
`copyrighted, having a retail value of $6000.00 US and is only available when
`ordered directly from the author. Each individual photograph or image
`contained on our web pages or portion thereof contained in this site has a
`retail value of $2,500 U.S. and is only available when ordered from the
`author . . . No portion of this site may be used or redistributed for commercial
`or personal purposes.
`Id. The statement further provides that "[u]sers may not circumnavigate any technological means
`we have deployed to effectively control access on our site to protect our materials . . . and [doing so]
`is considered theft. Theft of any of the above materials will result in swift and severe legal action
`being taken . . . [including a civil suit for] copyright infringement." Id. In several places, the
`statement indicates that the website is protected by federal copyright laws. Id. Given this, any
`visitor to Plaintiff's site would or should have known that the material contained in the site was
`protected by copyright.
`Further, Plaintiff wrote a cease-and-desist letter before filing of the instant Complaint,
`specifically informing the fictitious entity to whom the website icravedick was registered at the time
`that it was violating Plaintiff's copyrights and listing each such alleged act of infringement. Sperlein
`Decl. Exs. A & B. The letter also sought compensation for the acts of infringement and further
`stated if the entity failed to satisfy its financial obligation, Plaintiff would file a complaint in federal
`court seeking damages. While the offending images were removed, Defendant has been unwilling to
`compensate Plaintiff for the illegal use. Further, Plaintiff attempted to reach a compromise with
`Defendant in order to avoid litigation, but Defendant refused to negotiate in good faith in order to
`reach a settlement.
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`In light of the foregoing, the Court finds that the infringement was willful. Since, the Court
`is authorized to award up to $150,000 per copyright, the Court finds that Plaintiff's request for
`$7,500 per copyright is reasonable. Therefore, Plaintiff's request for a total of $1,252,500 in
`statutory damages is GRANTED.
`2.
`Misappropriation Claim
`California Civil Code § 3344 provides that, "[a]ny person who knowingly uses another's . . .
`photograph . . . in any manner, on or in products, merchandise, or goods or for purposes of
`advertising or selling, or soliciting purchases of products, merchandise, goods or services, without
`such person's prior consent . . . shall be liable for any damages . . . equal to the greater of seven
`hundred fifty dollars ($750) or the actual damages." Cal Civ. Code § 3344(a).3 The remedies
`provided for by § 3344 are cumulative and shall be in addition to any others provided for by law.
`Cal. Civ. Code § 3344(g).
`Here, under California Civil Code § 3344, Plaintiff is entitled to statutory damages of $750
`for each unauthorized use of Plaintiff's photographs. Cal. Civ. Code § 3344(a); see Perfect 10, 2000
`WL 364813, at * 4-5 (awarding statutory damages of $750 for each model's rights violated).
`Plaintiff argues that it should therefore be awarded damages in the amount of $125,250 because one
`hundred and sixty seven (167) unique images of recognizable models appeared on Defendant's
`websites. In support of this, Plaintiff has provided the Court with a chart documenting the one
`hundred and sixty seven url addresses and names of the recognizable models found on Defendant's
`websites. Supplemental Declaration of Gill Sperlein ("Supp. Sperlein Decl.") Ex. A. Additionally,
`Plaintiff provided a compilation of the images Defendant improperly and without prior authorization
`distributed on his websites. Supplemental Declaration of Keith Webb ("Supp. Webb Decl.") Ex. A.
`Plaintiff contends that one hundred and seventeen (117) images contain at least one
`identifiable model and twenty-five (25) images contain two readily identifiable models. Plaintiff
`admits that a person is not recognizable where the face is obscured and there are no other unique
`
`3 It is well established that the Copyright Act does not preempt this section of the California
`Code. See Downing v. Abercrombie & Fitch, 265 F.3d 994, 1004-05 (9th Cir. 2001) (section 3344 not
`preempted by Copyright Act).
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`characteristics, such as a tattoo. Supp. Sperlein Decl. ¶6. Plaintiff concedes twenty-five (25) such
`images contain unrecognizable models. Id. & Ex. A. Upon reviewing Plaintiff's evidence, the Court
`finds Plaintiff's evidence is sufficient to show that one hundred and thirty nine (139) readily
`identifiable images are present in the photographs. With respect to three of the photographs, the
`Court disagrees that the model's face or body is readily identifiable.4 Accordingly, Plaintiff has
`proven it is entitled to damages under this section in the amount of $104,250.5
`CONCLUSION
`Plaintiff's Application for Default Judgment is GRANTED and Plaintiff is awarded damages
`in the total amount of $1,356,750.
`
`IT IS SO ORDERED.
`
`Dated: January 27, 2006
`
`SAUNDRA BROWN ARMSTRONG
`United States District Judge
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`4 Of the one-hundred sixty seven images Plaintiff provided, twenty-five (25) of the photographs
`did not present a readily identifiable image. Additionally, in three of the photographs, the model's face
`or body was not readily identifiable. This results in one hundred and thirty-nine (139) readily
`identifiable images.
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`5 $104,250 is equal to one hundred and thirty nine (139) photographs at $750 each.
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`For the Northern District of California
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`United States District Court