Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 1 of 25
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MARYLAND
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`Civil No. CCB-14-2614
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`SINCLAIR BROADCAST GROUP, INC.
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`v.
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`COLOUR BASIS, LLC
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`MEMORANDUM
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`Sinclair Broadcast Group, Inc. (“SBG”) has brought this declaratory judgment action
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`against Colour Basis, LLC (“CB”) and Christi Schreiber (collectively, “the defendants” or
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`“counterclaimants”), requesting, inter alia, that the court find that SBG has not infringed CB’s
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`copyright. CB and Schreiber have brought counterclaims against SBG, Scott Livingston, and
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`Samantha Dinges (collectively, “the counter-defendants”), alleging copyright infringement,
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`circumvention of copyright protection systems, fraudulent inducement, and unfair competition.
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`Now pending before the court are the counter-defendants’ motion for summary judgment, and
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`the defendants’ motion for leave to file a surreply. Oral argument was heard on June 21, 2016.
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`For the reasons that follow, the counter-defendants’ motion for summary judgment will be
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`granted in part and denied in part, and the defendants’ motion to file a surreply will be denied as
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`moot.1
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`BACKGROUND
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`CB is a three-person media appearance consulting company based in Fort Worth, Texas,
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`which provides image consultation services to on-air television personalities. (First Am.
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`Countercl. ¶¶ 1, 3, ECF No. 47.) Schreiber is CB’s president and chief executive officer
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`(“CEO”). (Id. ¶ 12.) SBG is a television company with its principal place of business in
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`1 The court also will grant the defendants’ unopposed motion to seal, (ECF No. 60), in accordance with the
`stipulated confidentiality order signed by Judge J. Mark Coulson on April 3, 2015, (ECF No. 28).
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 2 of 25
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`Maryland that owns and operates, programs, or provides sales services to over 150 television
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`stations in over seventy markets. (Second Am. Compl. ¶ 1, ECF No. 42.) David Smith is SBG’s
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`president and CEO. (Mot. Summ. J. Ex. 4, Livingston Dep. (“Summ. J. Livingston Dep.”) 115:1-
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`3, ECF No. 53-7.) Livingston became SBG’s Vice President of News in March 2012. (Second
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`Am. Compl. ¶ 9.)
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`Many of the facts in this case are undisputed. In 2011, CB, through Schreiber, began
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`providing consulting services to on-air personalities at several television stations that are direct
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`or indirect subsidiaries of SBG. (Second Am. Compl. ¶ 8; First Am. Countercl. ¶ 11.) In 2012,
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`Schreiber contacted Livingston, and they began discussing the possibility of a group deal
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`between SBG and CB. (Mot. Summ. J. Exs. 10 & 11, ECF Nos. 53-11 & 53-12; Opp’n Mot.
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`Summ. J. Ex. K, ECF No. 58-11.) They also agreed that CB would create a “Style Guide” to
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`establish standards and expectations for SBG’s on-air talent. (Second Am. Compl. ¶ 13; Mot.
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`Summ. J. Ex. 2, Schreiber Dep. (“Summ. J. Schreiber Dep.”) 179:5-180:6, ECF No. 53-5.)
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`Schreiber followed up about the group deal—without firm numbers—with emails in August and
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`October 2012, (Mot. Summ. J. Exs. 12 & 13, ECF Nos. 53-13 & 53-14; Opp’n Mot. Summ. J.
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`Exs. L & M, ECF Nos. 58-12 & 58-13), to which Livingston never responded, (Summ. J.
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`Schreiber Dep. 167:18-168:4, 178:20-179:4). In January 2013, Schreiber gave a presentation
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`about on-air appearance issues at a conference in Maryland for news directors employed by SBG
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`subsidiaries. (Second Am. Compl. ¶¶ 15-16; Opp’n Mot. Summ. J. Ex. N, ECF No. 58-14.) Soon
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`after the conference, Livingston told Schreiber that SBG would not be able to consider a group
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`deal before the summer and, until then, the company would continue to work with CB on an as-
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`needed basis. (Mot. Summ. J. Ex. 15, ECF No. 53-16; Summ. J. Schreiber Dep. 203:3-204:7.)
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`In March 2013, Schreiber proposed a $25,000 price tag for the Style Guide, which she
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 3 of 25
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`said would include 400 printed copies and 400 PDF licenses, and additional copies could be
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`purchased on an as-needed basis. (Mot. Summ. J. Ex. 22, ECF No. 53-23; Opp’n Mot. Summ. J.
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`Ex. S, ECF No. 58-19.) Livingston countered that he was looking to spend $12,000 to $15,000,
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`and proposed that CB cut costs by providing a PDF-only version. (Mot. Summ. J. Ex. 23, ECF
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`No. 53-24; Opp’n Mot. Summ. J. Ex. T, ECF No. 58-20.) Schreiber responded that she was
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`willing to drop the price on the Style Guide because she was “not looking at the book as a big
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`money maker, it’s the relationship, future contract and being seen in each station that appeals to
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`me,” and noted that she would not be willing to offer a lower price if she “did not see the
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`potential in future business with [SBG] and especially [its] interest in doing a multiple year
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`deal.” (Mot. Summ. J. Ex. 25, ECF No. 53-26; Opp’n Mot. Summ. J. Ex. U, ECF No. 58-21.)
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`Importantly for this motion, the parties dispute the content of a telephone conversation between
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`Livingston and Schreiber that occurred sometime at the end of March or the beginning of April
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`2013. According to Livingston, he explained to Schreiber that SBG would pay a flat fee for the
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`Style Guide, to which it would have full rights without conditions. (Summ. J. Livingston Dep.
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`234:4-235:2.) In contrast, Schreiber claims to have clarified that any copies of a PDF-only Style
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`Guide would have to be printed through her, and she was amenable to SBG’s reduced price
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`proposal only because of their future relationship and group deal. (Summ. J. Schreiber Dep.
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`222:13-224:15.) More specifically, the defendants allege in their counterclaims that the parties
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`agreed that $15,000 would cover 400 PDF Style Guides, with extra copies requiring the payment
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`of additional license fees, and that the Style Guide would be used as part of a multi-year
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`consulting deal. (First Am. Countercl. ¶ 17.) On April 1, 2013, Livingston left Schreiber a
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`voicemail requesting numbers for a group deal, which, he cautioned, was “no guarantee[]”
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`because it would have to be approved within SBG. (Mot. Summ. J. Ex. 27, ECF No. 53-28;
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 4 of 25
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`Opp’n Mot. Summ. J. Ex. CC, ECF No. 58-29.)
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`On May 2, 2013, CB sent SBG an invoice for the Style Guide. (Mot. Summ. J. Ex. 36,
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`Invoice, ECF No. 53-37.) The invoice description stated that it was for the “SBG Style Guide
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`PDF create appearance policy manual,” and the only term listed was that payment was “[d]ue on
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`receipt.” (Id.) SBG sent a $15,000 check to CB on May 23, 2013. (Id. Ex. 39, ECF No. 53-40.)
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`On June 7, 2013, Schreiber sent Livingston the final Style Guide, (id. Ex. 45, ECF No. 53-46),
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`which Livingston circulated to all SBG news directors on June 14, 2013, (id. Ex. 46, ECF No.
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`53-47). The document includes a CB copyright symbol on most pages, and explains that “[t]he
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`SBG Style Guide is [SBG on-camera talent’s] reference to the Sinclair Broadcast Group
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`appearance policy as recommended and written by Colour Basis president and CEO, Christi
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`Schreiber.” (Mot. Summ. J. Ex. 9, Style Guide 5, ECF No. 53-10; Opp’n Mot. Summ. J. Ex. DD,
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`Style Guide 5, ECF No. 58-30.)
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`Also in the spring of 2013, Livingston began communicating with Samantha Dinges
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`about working at SBG as an internal image consultant. Dinges is Smith’s stepdaughter and, at
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`that time, was a costume designer for a television show, The Young and the Restless. According
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`to Livingston, Smith broached the idea in early March, (Summ. J. Livingston Dep. 104:1-108:1,
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`108:17-22, 114:9-117:17), and on April 1, 2013, Livingston and Dinges met, (Mot. Summ. J. Ex.
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`20, ECF No. 53-21). After the meeting, at Livingston’s request, Dinges reviewed broadcasts of a
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`few SBG television stations and offered feedback on their newscasters’ appearances. (See Mot.
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`Summ. J. Ex. 35, ECF No. 53-36.) Ultimately, SBG created an internal image consultant
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`position, for which Dinges was hired, and she started work on June 27, 2013. (Mot. Summ. J. Ex.
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`38, ECF No. 53-39.) Around the same time that Dinges began working at SBG, Livingston
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`called Schreiber to tell her about the new position. (Opp’n Mot. Summ. J. Ex. B, Livingston Dep.
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 5 of 25
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`(“Opp’n Livingston Dep.”) 137:7-18, ECF No. 58-2; id. Ex. A, Schreiber Dep. (“Opp’n
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`Schreiber Dep.”) 246:13-247:22, ECF No. 58-1.) According to Schreiber, Livingston told her
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`that their relationship would not change, and SBG would continue to use CB’s consulting
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`services. (Opp’n Schreiber Dep. 247:16-19, 248:16-20.) Livingston, in contrast, testified that he
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`told Schreiber that SBG would use her on a case-by-case, station-by-station basis while they
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`fleshed out Dinges’s position. (Opp’n Livingston Dep. 137:15-18.) In an email at the beginning
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`of July introducing Dinges to SBG news directors and general managers, Livingston said that
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`Dinges would be the point person for all image consulting at SBG, including for enforcing the
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`Style Guide’s standards, and that Schreiber would continue to be available to stations on a case-
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`by-case basis.2 (Mot. Summ. J. Ex. 48, ECF No. 53-49.)
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`Approximately one year later, on July 2, 2014, the defendants registered the Style Guide
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`with the U.S. Copyright Office. (Def. Answer ¶ 35, ECF No. 46.) Two weeks after the
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`registration, defense counsel sent Smith a letter alleging that SBG was infringing CB’s copyright
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`by using unauthorized copies of the Style Guide and because the Style Guide was only to be used
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`in connection with CB’s consulting services. (Mot. Summ. J. Ex. 52, Counsel Letter 1, ECF No.
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`53-53.) On August 15, 2014, SBG brought this declaratory judgment action. (Compl., ECF No.
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`1.) SBG filed an amended complaint on September 7, 2015. (Second Am. Compl.) Count I of its
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`amended complaint requests a declaratory judgment that: (1) SBG has an implied nonexclusive
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`license to use the Style Guide, and its use of the Style Guide has been consistent with that
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`license; (2) SBG owes no license fees to the defendants; (3) SBG has not infringed the
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`defendants’ copyright; (4) the defendants have no right to terminate the implied license; (5) SBG
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`2 The defendants argue that Dinges was not qualified to be SBG’s internal image consultant, and would have been
`incapable of meeting the position’s obligations without the Style Guide. (See First Am. Countercl. ¶ 55.) They have
`gone to great lengths to make this point, including by introducing testimony and exhibits that, in the court’s opinion,
`were irrelevant and unwarranted.
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 6 of 25
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`has not engaged in promissory fraud; and (6) SBG has not engaged in unfair competition.
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`(Second Am. Compl. ¶¶ 43, 44.) It also requests that the court issue an injunction ordering the
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`defendants not to interfere with SBG’s use of the Style Guide. (Id. ¶ 44.) In Counts II and III of
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`the complaint, the plaintiffs have alleged, as alternatives to the declaratory judgment and
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`injunctive relief count, fraud and negligent misrepresentation, respectively. (Id. ¶¶ 45-60.) The
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`defendants answered the amended complaint on September 21, 2015, and filed their amended
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`counterclaims on September 24, 2015. CB and Schreiber allege that all counter-defendants are
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`liable for copyright infringement, circumvention of copyright protection systems in violation of
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`17 U.S.C. § 1201, and unfair competition; and that SBG and Livingston are liable for fraudulent
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`inducement. (First Am. Countercl. ¶¶ 31-59.) The defendants allege that they are entitled to
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`actual damages and profits for any infringement, statutory damages for infringement after they
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`registered their copyright, and punitive damages for the fraudulent inducement and unfair
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`competition claims. (Id. ¶¶ 37, 50, 58.) The counter-defendants answered on October 13, 2015,
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`(Counter-defs. Answer, ECF No. 51), and filed a motion for summary judgment on October 27,
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`2015, requesting that the court enter partial summary judgment in their favor on Count I of their
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`amended complaint, the declaratory judgment claim, and against the defendants on all counts of
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`their amended counterclaims or, in the alternative, on Counts I, III, and IV of their
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`counterclaims, (Mot. Summ. J. Mem. Law 49, ECF No. 53-1). The defendants opposed that
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`motion, (Opp’n Mot. Summ. J., ECF No. 58), and the counter-defendants replied, (Reply, ECF
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`No. 66). The defendants also have filed a motion for leave to file a surreply in order to, inter
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`alia, respond to the counter-defendants’ criticism of CB’s expert, Brian Greif. (Surreply Mot.,
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`ECF No. 67.) The counter-defendants have opposed that motion. (Opp’n Surreply Mot., ECF No.
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`68.)
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`For the reasons that follow, the court will grant in part and deny in part the counter-
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`defendants’ motion for summary judgment. The court will deny as moot the defendants’ motion
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`for leave to file a surreply.
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`STANDARD OF REVIEW
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`Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted
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`“if the movant shows that there is no genuine dispute as to any material fact and the movant is
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`entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A dispute is genuine if ‘a
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`reasonable jury could return a verdict for the nonmoving party.’” Libertarian Party of Va. v.
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`Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Dulaney v. Packaging Corp. of Am., 673 F.3d
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`323, 330 (4th Cir. 2012)). “A fact is material if it ‘might affect the outcome of the suit under the
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`governing law.’” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
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`Accordingly, “the mere existence of some alleged factual dispute between the parties will not
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`defeat an otherwise properly supported motion for summary judgment.” Anderson, 477 U.S. at
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`247-48 (alteration in original). The court must view the evidence in the light most favorable to
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`the nonmoving party, Tolan v. Cotton, 134 S. Ct. 1861, 1866 (2014) (per curiam), and draw all
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`reasonable inferences in that party’s favor, Scott v. Harris, 550 U.S. 372, 378 (2007); see also
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`Jacobs v. N.C. Admin. Office of the Courts, 780 F.3d 562, 568-69 (4th Cir. 2015). At the same
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`time, the court must “prevent factually unsupported claims and defenses from proceeding to
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`trial.” Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 526 (4th Cir. 2003) (quoting
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`Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993)).
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`I.
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`Copyright infringement
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`a. Implied nonexclusive license
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`ANALYSIS
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 8 of 25
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`In order to prove copyright infringement, a plaintiff must establish that it owns a valid
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`copyright, and the defendant engaged in unauthorized copying of the work protected by the
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`copyright. See Nelson-Salabes, Inc. v. Morningside Dev., LLC, 284 F.3d 505, 513 (4th Cir.
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`2002). SBG does not appear to contest that CB owns a valid copyright to the Style Guide.
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`Instead, SBG alleges that it cannot be held liable for copyright infringement because it enjoyed
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`an implied nonexclusive license to use the Style Guide, which constitutes an affirmative defense
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`to an allegation of copyright infringement. See id. at 514. Accordingly, SBG has the burden of
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`establishing an implied license. See Atkins v. Fischer, 331 F.3d 988, 992 (D.C. Cir. 2003).
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`An implied nonexclusive license for the use of a copyright-protected work is created
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`“when (1) a person (the licensee) requests the creation of a work, (2) the creator (the licensor)
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`makes that particular work and delivers it to the licensee who requested it, and (3) the licensor
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`intends that the licensee copy and distribute his work.” Nelson-Salabes, 284 F.3d at 514
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`(adopting the three-part test from Effects Assocs., Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990)).
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`The Fourth Circuit has said that courts should examine the totality of the circumstances when
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`determining the licensor’s intent, and has identified three nonexclusive factors to assist with that
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`inquiry: “(1) whether the parties were engaged in a short-term discrete transaction as opposed to
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`an ongoing relationship; (2) whether the creator utilized written contracts . . . providing that
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`copyrighted materials could only be used with the creator’s future involvement or express
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`permission; and (3) whether the creator’s conduct during the creation or delivery of the
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`copyrighted material indicated that use of the material without the creator’s involvement or
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`consent was permissible.” Id. at 515-16.
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`Here, it is undisputed that SBG, the licensee, requested the creation of the Style Guide,
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`which CB, the licensor, created and delivered. Accordingly, only the third prong of the Effects
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 9 of 25
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`Associates test is at issue. The first Nelson-Salabes factor indicates neither an intent to grant nor
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`an intent to deny a license without CB’s future involvement. On the one hand, CB had done
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`work for various SBG affiliates over the course of approximately two years. On the other hand,
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`these jobs were negotiated individually with the stations; SBG’s invitation for Schreiber to
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`present at the January 2013 conference appears to have been a one-time request; and there is an
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`issue of fact, discussed further below, as to whether the Style Guide was to be part of a package
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`that included a group deal between SBG and CB. See Asset Mktg. Sys., Inc. v. Gagnon, 542 F.3d
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`748, 756 (9th Cir. 2008). The second factor favors SBG. There is no written contract between the
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`parties, and CB’s invoice—the only written document that exists related to the Style Guide aside
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`from emails—indicates no terms associated with the project, other than that payment was “[d]ue
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`on receipt.” (Invoice.) For the third factor, the court is sympathetic to many of SBG’s arguments.
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`Ultimately, however, the summary judgment standard mandates that this court credit CB’s
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`version of the facts, and Schreiber claims that, in the controverted phone call at the end of March
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`or the beginning of April 2013, she made clear to Livingston that she was accepting his lowered
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`price proposal only because SBG would be required to pay for additional licenses and printed
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`copies of the Style Guide, and SBG’s use of the Style Guide would be accompanied by CB’s
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`services as part of a group deal. Cf. Atkins, 331 F.3d at 993 (“Such statements are appropriate
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`evidence in determining whether an implied nonexclusive license arises from the conduct of the
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`parties, and further expose the genuine issue of material fact that requires jury deliberation.”
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`(internal citation omitted)). Further, Schreiber’s email with her original cost proposal specifically
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`said that her suggested price would include 400 printed copies and 400 PDF licenses, (Mot.
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`Summ. J. Ex. 22; Opp’n Mot. Summ. J. Ex. S), and a follow-up email the next week about a
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`PDF-only Style Guide also mentioned licenses, (Mot. Summ. J. Ex. 25), suggesting she did not
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 10 of 25
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`anticipate granting an implied nonexclusive license to SBG, at least not one with the scope SBG
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`contemplates. To the extent the counter-defendants argue that CB’s inaction in the face of SBG’s
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`use of the Style Guide argues for an implied nonexclusive license, again, at least one version of
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`the facts according to CB dictates otherwise. In particular, Schreiber claims that Livingston,
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`when he called about Dinges, said that SBG’s relationship with CB would not change, and his
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`company would continue to use CB’s consulting services.3 Assuming these facts to be true, and
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`recognizing also that Schreiber continued to reach out to SBG stations after this phone call, if not
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`to Livingston himself, the court at this stage cannot find as a matter of law that SBG possessed
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`an implied nonexclusive license to the Style Guide. Accordingly, the counter-defendants’ motion
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`for summary judgment regarding the implied nonexclusive license will be denied.
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`b. Circumvention of copyrighted materials, 17 U.S.C. § 1201
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`The counter-defendants’ motion requests that the court grant summary judgment in its
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`favor on the counterclaimants’ allegations that SBG, Livingston, and Dinges violated the Digital
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`Millennium Copyright Act
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`(“DMCA”), 17 U.S.C. § 1201. The DMCA prohibits
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`“circumvent[ing] a technological measure that effectively controls access to a work protected
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`under [the Copyright Act].” 17 U.S.C. § 1201(a)(1)(A). The DMCA defines circumvention as an
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`action that intends “to descramble a scrambled work, to decrypt an encrypted work, or otherwise
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`to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of
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`the copyright owner.” Id. § 1201(a)(3)(A). In addition, the statute provides that “a technological
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`3 The court acknowledges that the defendants have not been consistent in describing the contents of this telephone
`conversation. In their counterclaims, the defendants state that Livingston “contacted Colour Basis and explained that
`it had hired a full-time employee to utilize Colour Basis’s Style Guide to consult with on-camera talent and that
`there would be no multi-year consulting deal contrary to SBG’s and Livingston’s agreement.” (First Am. Countercl.
`¶ 21.) In their opposition to the motion for summary judgment and in Schreiber’s deposition, in contrast, the
`defendants allege that Livingston said the relationship between SBG and CB would not change. (See, e.g., Opp’n
`Mot. Summ. J. 28; Opp’n Schreiber Dep. 247:16-19, 248:16-20.) At the June 21 hearing, the defendants represented
`to the court that they were alleging the second set of circumstances. Due to that clarification, and because the court
`will view the evidence in the light most favorable to the defendants, the court will assume that CB believed its
`relationship with SBG would continue even after Dinges was hired.
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 11 of 25
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`measure ‘effectively controls access to a work’ if the measure, in the ordinary course of its
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`operation, requires the application of information, or a process or a treatment, with the authority
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`of the copyright owner, to gain access to the work.” Id. § 1201(a)(3)(B). However, merely
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`alleging that a defendant “accessed” a copyrighted work that is protected by a technological
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`measure is not enough to state a claim for a violation of the DMCA. Rather, “[t]he plain
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`language of the statute [] requires a plaintiff alleging circumvention . . . to prove that the
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`defendant’s access was unauthorized.” See Ground Zero Museum Workshop v. Wilson, 813 F.
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`Supp. 2d 678, 691 (D. Md. 2011) (alteration in original) (quoting Chamberlain Grp. v. Skylink
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`Techs., Inc., 381 F.3d 1178, 1193 (Fed. Cir. 2004)).4
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`In their counterclaims, the counterclaimants allege that SBG, Livingston, and Dinges
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`“willfully removed the password protection and print disabling technological measures that
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`controlled access to the copyright protected Style Guide.” (First Am. Countercl. ¶¶ 24, 26, 28.)
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`Because, however, the counterclaimants gave the counter-defendants access to the copyrighted
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`work, the PDF Style Guide, they cannot make out a violation of the DMCA. Further, the
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`evidence of the alleged circumvention—the email attached to Schreiber’s affidavit from
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`AlphaGraphics, the firm CB says added password protections to the Style Guide—is
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`inadmissible hearsay. (Opp’n Mot. Summ. J. Ex. HH 3, ECF No. 58-34.) To be entitled to
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`consideration on summary judgment, facts set forth in affidavits must be such as “would be
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`admissible in evidence.” Fed. R. Civ. P. 56(c); see also Sakaria v. Trans World Airlines, 8 F.3d
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`164, 171 (4th Cir. 1993) (finding that the district court properly did not consider inadmissible
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`hearsay in an affidavit filed with a motion for summary judgment). “While properly
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`authenticated e-mails may be admitted into evidence under the business records exception, . . .
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`4 The Ground Zero opinion also noted that using a password “to access a copyrighted work, even without
`authorization, does not constitute ‘circumvention’ under the DMCA.” Id. at 692.
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`[a]n e-mail created within a business entity does not, for that reason alone, satisfy the business
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`records exception of the hearsay rule.” United States v. Cone, 714 F.3d 197, 220 (4th Cir. 2013)
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`(internal quotations and citations omitted). Without providing more of a basis to establish that it
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`was kept as part of the business’s regular operations, the AlphaGraphics e-mail cannot be
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`admitted under an exception to the hearsay rule. Id. Finally, the counter-defendants said they had
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`no difficulty printing the Style Guide, and defense counsel at the hearing cited no evidence as to
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`how the circumvention allegedly occurred. Accordingly, the counter-defendants’ motion for
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`summary judgment on the counterclaimants’ circumvention claim will be granted.
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`c. Damages
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`i. Willful infringement
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`At any time before final judgment is entered, a copyright owner may elect to recover
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`statutory damages instead of actual damages and profits.5 See 5 Melville B. Nimmer & David
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`Nimmer, Nimmer on Copyright § 14.01[B]. The Copyright Act permits a court to increase
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`statutory damages to a maximum of $150,000 per infringed work if “the copyright owner
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`sustains the burden of proving, and the court finds, that infringement was committed willfully.”6
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`17 U.S.C. § 504(c)(2). “Willfulness” means that the infringer either had actual knowledge that it
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`was infringing the owner’s copyrights or acted in reckless disregard of those rights. Brown v.
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`McCormick, 87 F. Supp. 2d 467, 482 (D. Md. 2000). “Evidence that the infringed works bore
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`prominent copyright notices supports, but by no means compels, a finding of willfulness.”
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`5 At the June 21 motions hearing, the defendants represented that they did not believe they were entitled to statutory
`damages. The court will assume for purposes of this motion that they were representing only that they cannot seek
`statutory damages for any infringement that occurred before they registered their copyright, given that their
`amended counterclaims allege the right to recover statutory damages. (See, e.g., First Am. Countercl. ¶ 37, 14 ¶ 8.)
`6 Unlike for statutory damages, the section of the Copyright Act addressing actual damages and profits does not
`mention “willfulness.” 17 U.S.C. § 504(b). A few courts—as far as this court has found, only in the Southern
`District of New York—have held that punitive damages may be awarded where the plaintiff elected to receive actual
`damages and the defendants engaged in willful infringement. Compare Caffey v. Cook, 409 F. Supp. 2d 484, 510
`(S.D.N.Y. 2006), with Leonard v. Stemtech Health Scis., Inc., 981 F. Supp. 2d 273, 279 (D. Del. 2013).
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 13 of 25
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`Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F. Supp. 2d 737, 753 (D. Md. 2003). The
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`defendants allege that SBG, Livingston, and Dinges willfully infringed CB’s copyright by
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`copying, printing, and distributing copies of the Style Guide without authorization. (First Am.
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`Countercl. ¶¶ 33, 34.)
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`The question is a close one. The court, however, must credit Schreiber’s version of her
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`telephone conversation with Livingston at the end of March or beginning of April 2013. If
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`Schreiber in fact made clear to Livingston that SBG was required to purchase additional licenses
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`of the Style Guide and use it only in conjunction with CB’s services, then the court cannot say
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`that any use of the Style Guide by SBG in contravention of that alleged agreement was not
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`willful. Accordingly, the court will deny the counter-defendants’ motion for summary judgment
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`as to willfulness.
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`ii. SBG’s profits attributable to infringement
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`In their motion for summary judgment, the counter-defendants argue that CB has not met
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`its burden of establishing a nexus between SBG’s use of the Style Guide and the company’s
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`profits. (Mot. Summ. J. Mem. Law 34-38.) The Copyright Act provides that “[t]he copyright
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`owner is entitled to recover the actual damages suffered by him or her as a result of the
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`infringement, and any profits of the infringer that are attributable to the infringement and are not
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`taken into account in computing the actual damages.” 17 U.S.C. § 504(b). To establish the
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`infringer’s profits, the section requires “the copyright owner [] to present proof only of the
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`infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses
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`and the elements of profit attributable to factors other than the copyrighted work.” Id. The Fourth
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`Circuit has interpreted the term “gross revenue” to refer only to revenue “reasonably related to
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`the infringement.” Bonner v. Dawson, 404 F.3d 290, 294 (4th Cir. 2005); see also Bouchat, 346
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 14 of 25
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`F.3d at 520-21.
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`There are three avenues by which a defendant (in this case, the counter-defendants) can
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`argue that summary judgment is appropriate for all or some of a plaintiff’s (in this case, the
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`counterclaimants’) profit damages. Dash v. Mayweather, 731 F.3d 303, 330-31 (4th Cir. 2013).
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`First, summary judgment is appropriate if the plaintiff fails to meet his initial burden of proving
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`the infringer’s gross revenues because there is “no conceivable connection between the
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`infringement and those revenues.” Id. at 328. Establishing a conceivable connection is not an
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`exacting standard, and a proffered connection will be considered “conceivable” as long as it is
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`“hypothetically possible,” even if it is “highly unlikely that the infringement actually contributed
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`to the claimed revenues.” Id. at 330. Second, summary judgment is appropriate if, despite the
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`existence of a conceivable connection, the plaintiff has offered “only speculation as to the
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`existence of a causal link between the infringement and the revenues.” Id. at 328 (alteration in
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`original) (internal quotation omitted). To demonstrate a causal link, the plaintiff must show that
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`“the infringement could reasonably be viewed as one of the causes of the claimed revenues.” Id.
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`at 331. Finally, summary judgment may be granted if the defendants file a properly supported
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`motion for summary judgment showing that “the claimed revenues are attributable entirely to
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`factors other than the infringement, and the plaintiff fails to respond with evidence that can raise
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`a genuine dispute as to the issue.” Id. at 328 (internal quotation omitted).
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`In their response in opposition to the motion for summary judgment, the defendants argue
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`that the profits attributable to SBG’s infringement of the Style Guide are the combined revenues
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`“generated from the sale of advertising time slots within the local newscasts and within the
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`shows aired just before and just after the local newscasts, for each station that received a copy of
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`the Style Guide, for the time period during which it had the Style Guide.” (Opp’n Mot. Summ. J.
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`Case 1:14-cv-02614-CCB Document 75 Filed 06/29/16 Page 15 of 25
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`35.) In support of this argument, the defendants offer the affidavit of Brian Greif, who has
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`worked as a reporter and anchor for various television stations, and in management positions at
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`media companies. (Opp’n Mot. Summ. J. Ex. G, Greif Aff., ECF No. 58-7.) Greif avers that,
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`based on his experience and the market research he previously conducted, “a viewer’s decision
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`to watch a particular news station is guided in part by the social affinity of the on-air talent,
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`which is largely driven by their clothing, hairstyle and makeup.” (Id. ¶ 14.) In their reply, the
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`counter-defendants argue that Greif’s affidavit should be excluded, either because he has no
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`personal knowledge of SBG’s operations or under Federal Rule of Evidence 702. (Reply, 18-20.)
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`CB and Schreiber have filed