Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 1 of 21
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
`
`CIVIL ACTION NO. 06-11557-RGS
`
`SITUATION MANAGEMENT SYSTEMS, INC.
`
`v.
`
`LAMOCO CONSULTING, LLC f/k/a
`ASP. CONSULTING LLC and
`ASP. CONSULTING GROUP
`
`FINDINGS OF FACT AND
`RULINGS OF LAW AFTER A
`JURY-WAIVED TRIAL
`
`March 30, 2011
`
`STEARNS, D.J.
`
`This case was tried originally in another session of this court in February of
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`2008. The case was vacated on appeal and remanded. See Situation Mgmt. Sys. v.
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`ASP. Consulting LLC, 560 F.3d 53, 62 (1st Cir. 2009). It was then redrawn to this
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`session. A second trial was held from March 29, 2010, through April 1, 2010. By
`
`request, the trial was adjourned to permit the parties to obtain the transcript of the
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`proceedings and to prepare proposed findings and rulings. Post-trial briefing concluded
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`on October 20, 2010.
`
`The Parties
`
`BACKGROUND
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`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 2 of 21
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`Plaintiff Situation Management Systems, Inc. (SMS) is a Massachusetts
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`corporation owned by Sharon Malouf and members of her family. Defendant Lamoco
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`Consulting LLC, formerly ASP. Consulting LLC (ASP), is a Massachusetts limited
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`partnership. ASP was founded by three disaffected former employees of SMS –
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`namely Dane Harwood, Alexander Moore, and Alon Shklarek.
`
`Facts
`
`The following are the facts as related in the decision of the Court of Appeals.1
`
`For more than thirty years, plaintiff Situation Management Systems, Inc.
`(“SMS”) has provided consulting services aimed at improving employee
`communication and negotiation skills within the workplace. As part of its
`services, SMS has developed a series of training materials focused on
`teaching effective communication and negotiation techniques. Companies
`buy these materials from SMS and use them in employee training
`workshops. SMS typically charges its clients $200 to $250 per
`participant for the use of its materials. SMS’s clients include
`Anheuser-Busch, General Mills, NASA, Pfizer, Procter & Gamble,
`Verizon, and companies abroad.
`
`A number of SMS employees, including Dane Harwood and Alexander
`Moore, left SMS after Sharon Malouf acquired the company through
`bankruptcy proceedings in 2001. Following the end of Harwood’s
`noncompete period, Harwood and Moore, along with an executive from
`a former European sublicensee of SMS, Alon Shklarek, founded
`defendant ASP. Consulting LLC (“ASP”) in 2003. ASP offers training
`programs similar to SMS’s, and the two compete for the same customers.
`
`1 While witnesses at trial testified to the factual background of the case, no
`material facts were developed that deviated from those recited in the Court of Appeals
`opinion. The irony of copying verbatim a large swath of text from the First Circuit
`opinion in deciding a copyright infringement case is not lost.
`
`2
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`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 3 of 21
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`ASP also has a series of training materials that focus on the same subject
`matter and teach similar communication and negotiation strategies as
`SMS’s.
`
`SMS claims ASP infringed its copyright in three of SMS’s training
`workbooks: Positive Power & Influence (“PPI”), Positive Negotiation
`Program (“PNP”), and Promoting and Implementing Innovation (“PII”).
`PPI was first published in 1976 and is currently in its fourth edition. PPI
`is SMS’s most widely circulated work and generates approximately
`seventy-five percent of SMS’s revenues. More than a quarter million
`people have taken the PPI course. PNP, now in its third edition, was first
`published in 1978 and accounts for approximately fifteen percent of
`SMS’s revenues. PII was first published in 1993 and is a much smaller
`part of SMS’s business than the other two works at issue. SMS’s works
`contain hundreds of pages of text, flowcharts, and illustrations teaching
`techniques for communication and negotiation within the workplace.
`
`This suit claims infringement by three of defendant ASP’s workbooks:
`Communicating 2 Influence (“C2I”), Negotiating Successful Agreements
`(“NSA”), and Championing Ideas (“CI”). SMS claims that ASP’s C2I
`infringes its copyright to PPI, that NSA infringes PNP, and that CI
`infringes PII. ASP’s works address the same topics as SMS’s.
`Considering the circumstances under which ASP developed its materials,
`the district court found that this similarity was no coincidence. Situation
`Mgmt., 535 F. Supp. 2d at 235. In particular, Harwood, Moore, and
`Shklarek each had access to SMS’s works prior to forming ASP;
`Harwood even kept copies of SMS’s works in the attic of his home after
`he left SMS. And Harwood and Moore were intimately familiar with
`SMS’s works, having authored several editions of PPI, PNP, and PII
`while working at SMS. Moreover, Harwood and Moore together
`authored each of the allegedly infringing works relatively quickly after
`forming ASP. For example, they prepared a version of C2I over a period
`of six to thirty-four days.
`
`On September 24, 2003, one of SMS’s European licensees contacted
`Malouf to tell her that ASP’s new C2I program was the same as SMS’s
`PPI. Malouf then visited ASP’s website and read a brief description of
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`3
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 4 of 21
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`C2I, which she found strikingly similar to the PPI program. Malouf
`contacted ASP and asked to see ASP’s written materials so that she could
`assess whether SMS had a claim against ASP for copyright infringement.
`SMS and ASP were unable to reach an agreement regarding the
`conditions under which Malouf could inspect ASP’s works, and Malouf
`did not view ASP’s works before filing suit.
`
`On December 28, 2005, based upon the tip from the European licensee
`and the information on ASP’s website, Malouf believed that SMS had a
`viable claim of copyright infringement and sued ASP in federal district
`court in New Hampshire, where SMS has its principal place of business.
`That suit was ultimately dismissed on August 15, 2006 for lack of
`personal jurisdiction over ASP.
`
`SMS then sued ASP in the District of Massachusetts on September 1,
`2006.
`
`Situation Mgmt. Sys., 560 F.3d at 55-57.
`
`RULINGS OF LAW
`
`Law of the Case
`
`The law of the case doctrine has two branches. Under the first, which is
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`permissive and flexible, a court must respect and follow its prior rulings in a case. The
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`second branch, the mandate rule – which controls here – “stringently precludes a lower
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`court from contravening the rulings of a higher court made at an earlier stage of the
`
`same controversy.” Conley v. United States, 323 F.3d 7, 12 (1st Cir. 2003) (en banc);
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`see also Ellis v. United States, 313 F.3d 636, 646-647 (1st Cir. 2002) (explaining the
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`policy considerations behind the doctrine). A decision of an appellate court on an issue
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`4
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 5 of 21
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`of law “establishes the law of the case and it must be followed by the trial court on
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`remand.” United States v. Rivera-Martinez, 931 F.2d 148, 150 (1st Cir. 1991)
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`(emphasis in original). See also Commercial Union Ins. Co. v. Walbrook Ins. Co., 41
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`F.3d 764, 769 (1st Cir. 1994).
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`Controlling Law
`
`To establish copyright infringement, a plaintiff must show: (1) ownership of a
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`valid copyright in a work; and “(2) copying of constituent elements of the work that are
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`original.” Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991);
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`Lotus Dev. Corp. v. Borland Int’l, Inc., 49 F.3d 807, 813 (1st Cir. 1995). A plaintiff
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`bears the burden of proving “that the work as a whole is original and that the plaintiff
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`complied with applicable statutory formalities.” Id. Original does not mean novel.
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`“[T]he requisite level of creativity is extremely low; even a slight amount will suffice.”
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`Feist, 499 U.S. at 345. Whether or not a work is original is a question that a court can
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`determine as a matter of law. See CMM Cable Rep, Inc. v. Ocean Coast Props., Inc.,
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`97 F.3d 1504, 1517 (1st Cir. 1996) (affirming summary judgment on the originality of
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`a promotional contest theme, stating “[w]hile we do not dispute that the question of
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`originality can be a question of fact for the jury, it is not necessarily so.”); see also
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`Feist, 499 U.S. at 341 (deciding a question of originality as a matter of law).
`
`“Case law supports the ‘ordinary observer’ test and the disregard of minor
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 6 of 21
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`differences in favor of major similarity.” Matthews v. Freedman, 157 F.3d 25, 28 (1st
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`Cir. 1998). Major or substantial similarity exists “if a reasonable, ordinary observer,
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`upon examination of the two works, would ‘conclude that the defendant unlawfully
`
`appropriated the plaintiff’s protectable expression.’” T-Peg, Inc. v. Vermont Timber
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`Works, Inc., 459 F.3d 97, 112 (1st Cir. 2006) (citation omitted). “[D]e minimis
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`copying is best viewed not as a separate defense to copyright infringement but rather
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`as a statement regarding the strength of the plaintiff’s proof of substantial similarity.”
`
` Situation Mgmt. Sys., 560 F.3d at 59.
`
`First Circuit Holding and The Mandate
`
`In its decision, the First Circuit summarized the fundamental errors in the district
`
`court’s prior analysis.
`
`Here, the district court improperly denied copyright protection to large
`portions of SMS’s works because it, in an error of law, found “they focus
`on concepts and teach a noncopyrightable process.” Situation Mgmt.,
`535 F. Supp. 2d at 240; see also id. at 241 (finding that “the structure or
`essence of SMS’s works is not copyrightable” because, unlike a work of
`fiction that has a plot and characters, they merely discuss processes and
`ideas). The fact that SMS’s works describe processes or systems does
`not make their expression noncopyrightable. See Feist, 499 U.S. at 350-
`51, 111 S. Ct. 1282 (holding that a factual compilation may be entitled to
`copyright protection if it features an original selection or arrangement of
`facts even though the underlying facts themselves are noncopyrightable).
`SMS’s creative choices in describing those processes and systems,
`including the works’ overall arrangement and structure, are subject to
`copyright protection. See id. (recognizing that the original selection and
`arrangement of noncopyrightable elements is entitled to copyright
`
`6
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 7 of 21
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`protection). The district court’s analysis did what we cautioned against
`in CMM Cable, 97 F.3d at 1515: it lost sight of the expressiveness of the
`works as a whole by focusing too closely on their noncopyrightable
`elements.
`
`Because the original selection and arrangement of noncopyrightable
`elements is itself copyrightable, the district court also erred in limiting the
`narrow copyright protection it allowed for SMS’s works “to little more
`than [their] original text and formatting.” Situation Mgmt., 535 F. Supp.
`2d at 241. There are numerous ways to teach the concepts and processes
`disclosed in SMS’s works and so SMS need not show “‘near identity’
`between the works at issue” to prove copyright infringement. Concrete
`Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 606 (1st Cir.
`1988) (quoting Sid & Marty Krofft Television Prods., Inc. v. McDonald’s
`Corp., 562 F.2d 1157, 1167 (9th Cir. 1977)).
`
`Situation Mgmt. Sys., 560 F.3d at 61-62.
`
`The court then remanded the case with the following instructions.
`
`The district court’s analysis of substantial similarity improperly excluded
`from consideration large portions of SMS’s works under the mistaken
`belief that they are unoriginal or a noncopyrightable process or system,
`making its assessment of substantial similarity clearly erroneous. We
`leave undisturbed the district court’s finding of actual copying and hold,
`as a matter of law, that SMS’s works both satisfy the originality
`requirement for copyright protection and are entitled to protection beyond
`the textual level even though they describe processes and systems. We
`leave the analysis of the question of substantial similarity between SMS’s
`and ASP’s works within the framework we have outlined to be addressed
`on remand.
`
`Id. at 62.
`
`Thus, the only task before the court is to determine whether SMS has met the
`
`“substantial similarity” test, and, if it has, the damages and other relief to which it is
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 8 of 21
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`entitled.
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`Finding of Substantial Similarity
`
`As described by SMS, the focus of its works is on corporate training with syllabi
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`directed at “(i) promoting innovations internally; (ii) successful negotiation, and (iii)
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`promoting one’s influence inside an organization.” As identified by the First Circuit
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`and SMS, the accused ASP publications found to copy from SMS’s works are C2I,
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`NSA, and CI. The only reasonable approach in applying the “ordinary observer” test
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`is to do exactly that. I have compared the three SMS workbooks at issue, PPI, PNP,
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`and PII, side-by-side with the accused workbooks. Based on that comparison, I easily
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`conclude that the copying is substantial.2 Three representative selections from the
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`many offered in evidence by SMS will suffice.
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`2 This is not to say that there are no differences. In describing NSA, for example,
`Harwood pointed out that it includes a “purpose-value” statement and a list of “do’s
`and don’ts,” while PNP does not. These are differences, however, without a
`distinction. See Segrets, Inc. v. Gillman Knitwear Co., Inc., 207 F.3d 56, 65-66 (1st
`Cir. 2000) (affirming the district court’s findings that two of defendant’s sweater
`designs were, as a matter of law, substantially similar to plaintiff’s copyrighted design,
`where the designs differed in but a few details); Concrete Mach. Co., 843 F.2d at 608
`(“Slight or trivial variations between works will not preclude a finding of infringement
`under the ordinary observer test.”).
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 9 of 21
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`ASP’s “NSA”
`
`SMS’s “PNP”
`
`This pre-work assignment is an
`important beginning . . .
`
`A crucial beginning: the pre-program
`assignment . . .
`
`What are my interpersonal
`negotiating strengths?
`
`What are my strengths?
`
`What are my shortcomings, if
`any?
`
`What are my shortcomings, if
`any?
`
`Are there potentially useful
`negotiation skills that I do not
`use?
`
`Are there potentially useful
`negotiation skills that I do not
`use?
`
`Which aspects of internal and
`external negotiations do I
`perform particularly well?
`Which not so well?
`
`Which aspects or parts of a
`negotiation do I perform
`particularly well? Which not so
`well?
`
`Tr. Ex. 125, p. 5
`
`Tr. Ex. 125, p. 5
`
`9
`
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 10 of 21
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`5 point scale self-assessment for
`negotiation skills, ranging from
`“seldom” to “frequently”
`
`5 point scale self-assessment for
`negotiation style, ranging from “Not
`very characteristic” to “Very
`characteristic”
`
`Tr. Ex. 125, p. 6
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`Tr. Ex. 125, p. 6
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`10
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 11 of 21
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`Representative self-assessment
`questions:
`
`Representative self-assessment
`questions:
`
`1(e): Ask questions in a way that
`encourages the participation of the
`other negotiator.
`
`ISQ 18: Ask for contributions from
`individuals to encourage participation in
`a discussion.
`
`2(a): Give the other negotiator time to
`respond completely.
`
`3(a): Make suggestions that are relevant
`from the other negotiator’s perspective.
`
`3(d): Skillfully use facts and data to
`justify a position.
`
`NSQ 16: I give the other party a chance
`to express themselves without
`interrupting or showing impatience.
`
`ISQ 37: Make suggestions relevant to
`the topic under discussion.
`
`NSQ 31: I win points with skillful use
`of logic and reason.
`
`Tr. Ex. 125, p. 13
`
`5(f): Use breaks and caucuses
`appropriately.
`
`Tr. Ex. 125, p. 14
`
`Tr. Ex. 125, p. 13
`
`NSQ 49: I suggest a break or caucus
`when a situation gets overheated.
`
`Tr. Ex. 125, p. 14
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`11
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`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 12 of 21
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`Tactical Checklist – Framing
`
`Key Tactical Choice Points –
`Preliminary Stage
`
`Authority to Finalize an Agreement
`
`Will you assess authority level?
`
`How will you r eact if their
`authority level is ambiguous or
`less than your own?
`
`My Authority to Finalize an Agreement
`Will you inform the other party
`or leave the issue ambiguous or
`unaddressed?
`
`Their Authority
`How will you r eact if the other
`party’s authority is ambiguous or
`less than your own?
`
`Managing Readiness Disputes
`
`Location
`
`Where do you plan to negotiate –
`your office, their office, neutral
`location?
`
`What space, seating
`arrangements, or electronic
`support should be arranged?
`
`Do you want to stipulate, accept,
`negotiate, or leave the deadline
`ambiguous?
`
`Do you prefer your office, their
`office, neutral location?
`
`Physical Setting
`What needs do you have
`involving space, seating
`arrangements, electronic support,
`and so on?
`
`Deadlines
`Will you stipulate, accept,
`negotiate, or leave ambiguous
`
`Tr. Ex. 125, p. 56
`
`Tr. Ex. 125, p. 56
`
`12
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`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 13 of 21
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`ASP’s “C2I”
`
`SMS’s “PPI”
`
`Influence Skills Inventory
`
`Influence Style Questionnaire
`
`First, we ask you to assess your own
`frequency of use by completing a “self-
`rating” involving a situation where you
`are effective and productive with a
`specific colleague
`
`Identify an associate (peer, direct
`report, supervisor, client, and so on)
`with whom you have a productive
`working relationship.
`
`[A scale for the questionnaire is
`included ranging from “seldom” to
`“average amount” to “frequently”]
`
`[A scale for the questionnaire is
`included ranging from “rarely” to
`“average amount” to “frequently”]
`
`Tr. Ex. 126, p. 5
`
`Tr. Ex. 126, p. 5
`
`“Self-Rating” chart with questions
`asking “How Often Do I”, and
`providing radio buttons to answer on
`the above-mentioned scale of 1-5.
`
`“Self-Rating” chart with questions
`asking “How Often Do I”, and
`providing radio buttons to answer on
`the above-mentioned scale of 1-5.
`
`Tr. Ex. 126, p. 6
`
`Tr. Ex. 126, p. 6
`
`13
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 14 of 21
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`Task 3: Select at least five people to
`complete an Influence Skills Inventory
`for you
`
`Choose people who are important to
`you or who are involved with you . . .
`Consider:
`The colleagues who you referred
`to when you completed your
`“Effective and “Needs
`Improvement” self-ratings
`Any team member from your
`own business unit . . .
`Team members from other
`functions or business units
`Your immediate manager
`Your immediate direct reports . .
`.
`Important external working
`relationships (customers, client
`contacts)
`
`Task 2: Select 5 people to complete
`ISQs for you
`
`Choose people who are important for
`you to influence, including:
`The two people in the Critical
`Influence Situations you
`identified I [sic] completing
`Assignment 1 (strongly
`recommended)
`People who observe or work
`with you in situations where your
`skill in dealing with other people
`is important. They may be
`managers, direct reports,
`customers, clients, or peers. You
`may include someone who
`knows you well outside of work,
`such as a family member or
`someone in your community.
`
`Tr. Ex. 126, p. 16
`
`Tr. Ex. 126, p. 16
`
`[Graph showing the frequency with
`which participants use different
`influence-style behaviors]
`
`[Graph showing the frequency with
`which participants use different
`influence-style behaviors]
`
`Tr. Ex. 126, p. 19
`
`Tr. Ex. 126, p. 19
`
`14
`
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`(cid:129)
`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 15 of 21
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`ASP’s “CI”
`
`Program Introduction
`
`SMS’s “PII”
`
`Introductions
`
`“On the Table” – What did you
`bring?
`Tr. Ex. 127, p. 23
`
`What innovation or idea for change
`have you brought with you?
`Tr. Ex. 127, p. 23
`
`The Progress of an Initiative
`
`The Innovation Process
`
`Use the formal approval process or
`work informally?
`
`[Top-down graphic uses “formal
`approval” when describing end result]
`
`What the research tells us:
`
`Innovation Research Bulletin No. 2:
`
`“It is better to beg forgiveness
`than ask permission” . . .
`
`While many innovations proceed
`through normal channels of approval,
`many other innovations will not be
`successfully implemented unless they
`proceed through informal channels.
`Idea champions often find that “it is
`better to beg forgiveness than
`permission”.
`
`Tr. Ex. 127, p. 24
`
`Tr. Ex. 127, p. 24
`
`15
`
`(cid:129)
`(cid:129)
`

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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 16 of 21
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`Building a Stakeholder “Coalition”
`
`But acting alone is almost always
`unnecessarily risky. To help manage
`and moderate the risk, champions
`typically build an informal network or
`team – and occasionally a more formal
`group with a project focus – of some of
`these stakeholders, which we will call a
`“coalition”.
`
`What are some possible advantages that
`a coalitions [sic] can provide to the idea
`champion? List them here:
`Tr. Ex. 127, p. 64
`
`Sources of Resistance and Champion’s
`Effective Response
`
`A coalition is an informal team or
`network of supportive people working
`together on a project. Innovators
`working in organizations can seldom
`accomplish everything by themselves.
`
`Why are coalitions so important to idea
`champions? What are their benefits?
`
`Tr. Ex. 127, p. 64
`
`Reduce Uncertainty, open the process
`
`Reduce uncertainty and surprise.
`
`Identify and acknowledge legitimate
`interests
`
`Facilitate new learning.
`
`Use your coalition to educate about
`competition, the market, customer
`needs
`
`Allow people to retain some control.
`
`Minimize disruptions and differences.
`
`Provide ways of retaining control
`
`Overcome negative history.
`
`Work to overcome negative history
`
`Deal with real threats.
`
`Seek ways to reduce discomfort
`
`Others?
`Tr. Ex. 127, p. 72
`
`Tr. Ex. 127, p. 72
`
`16
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 17 of 21
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`Willfulness
`
`“Infringement is willful when the infringer knew or should have known that [his]
`
`action was copyright infringement.” Fitzgerald v. CBS Broad. Inc., 491 F. Supp. 2d
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`177, 180 (D. Mass. 2007). Here, I have no doubt that the copying was not only
`
`substantial, but also willful. It is inconceivable that defendants, who had years of
`
`experience in their prior employment at SMS with the quest to protect SMS’s
`
`copyrights from plagiarism or misuse by third parties, would not have known that their
`
`nearly verbatim copying of SMS’s workbooks constituted deliberate infringement.3
`
`Damages
`
`As an alternative to an award of actual damages and the profits of the infringer,
`
`a plaintiff may “elect, at any time before final judgment is rendered, to recover . . . an
`
`award of statutory damages for all infringements involved in the action, with respect
`
`3 This is especially true in Harwood’s case as he testified to having been
`responsible for copyright registration and protection matters at SMS during his 19 years
`with the firm. SMS points to the failure of ASP to produce either Moore or Shklarek
`(who had been subpoenaed by SMS, but were beyond the court’s jurisdiction to compel
`attendance) as witnesses at trial, together with ASP’s evasive conduct during discovery,
`as further evidence of willfulness. Harwood, who did testify, attributed the authorship
`of the infringing material to his absent partners and professed ignorance of the creative
`process they had used in assembling the works. The court also notes Judge Young’s
`observation that ASP’s failure to cooperate with inspection and discovery invited an
`inference of willfulness sufficiently strong to inform a jury of the circumstances. See
`No. 06-11557 (April 6, 2007).
`
`17
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 18 of 21
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`to any one work . . . in a sum of not less than $750 or more than $30,000 as the court
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`considers just.” 17 U.S.C. § 504(c)(1). SMS has made such an election in this case.
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`Furthermore, the court has the discretion to award as much as $150,000 upon
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`determining that the infringement was committed “willfully.” Id. § 504(c)(2).
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`The court has broad discretion in determining the amount of statutory damages.
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`Venegas-Hernandez v. Sonolux Records, 370 F.3d 183, 190 (1st Cir. 2004). Some of
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`the factors that may be considered are: “(a) The nature of the infringement; (b) The
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`defendant’s purpose and intent; (c) The profit that the defendant reaped, if any, and/or
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`the expense that the defendant saved; (d) The revenue lost by the plaintiff as a result
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`of the infringement; (e) The value of the copyright; (f) The duration of the infringement;
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`(g) The defendant’s continuation of infringement after notice or knowledge of copyright
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`claims; and (h) The need to deter this defendant and other potential infringers.” Sony
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`BMG Music Entm’t v. Tenenbaum, 721 F. Supp. 2d 85, 93 n.6 (D. Mass. 2010).
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`With respect to the first four factors, the copying was large-scale and predatory,
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`and was intended to be used in direct competition with SMS, indeed, was targeted at
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`many of SMS’s existing customers. With respect to the fifth factor, the copied works
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`are valuable, having earned over $50 million in revenue for SMS over the years. With
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`respect to the sixth and seventh factors, the infringement was carried out for over two
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`and a half years, two of which, as SMS notes, occurred after SMS served a cease and
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 19 of 21
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`desist letter.4
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`Based on the above factors, an award to SMS of $30,000 in statutory damages
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`for each of the three infringed works at issue is merited ($90,000 in the aggregate).
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`Moreover, because the infringement was blatantly willful, the court will, in the exercise
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`of its discretion, make a maximum statutory award of $150,000 on each of the works
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`($450,000 in the aggregate).
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`Attorneys’ Fees
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`The Copyright Act allows “full costs” and a “reasonable attorney’s fee to the
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`prevailing party as part of the costs.” 17 U.S.C. § 505. Whether to award attorneys’
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`fees is a matter for the court’s discretion. See Fogerty v. Fantasy, Inc., 510 U.S. 517,
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`534 (1994). “There is no precise rule or formula for making these [fee award]
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`determinations, but instead equitable discretion should be exercised in light of the
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`considerations we have identified.” Id. (non-exclusive factors that may guide a court’s
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`discretion in awarding attorneys’ fees include frivolousness, motivation, objective
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`unreasonableness, and the need in particular circumstances to advance considerations
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`of compensation and deterrence “so long as [they] are faithful to the purposes of the
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`Copyright Act.” Id. at 534 n.19 (internal citations and quotations omitted)).
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`4 The eighth factor has less relevance given the absence of evidence that there
`is a widespread practice of plagaristic copying among competitors in the corporate
`training market.
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 20 of 21
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`The court has found that ASP willfully infringed SMS’s copyrights, therefore
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`SMS is a “prevailing party” for purposes of the Act. The court in its discretion also
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`finds that an award of attorneys’ fees is warranted in the interests of compensating
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`SMS for its losses and to deter ASP’s principals from engaging in similar infringing
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`conduct in the future.
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`Injunctive Relief
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`The Copyright Act explicitly authorizes injunctive relief for copyright
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`infringement: “Any court having jurisdiction of a civil action arising under this title
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`may, subject to the provisions of section 1498 of title 28, grant temporary and final
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`injunctions on such terms as it may deem reasonable to prevent or restrain infringement
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`of a copyright.” 17 U.S.C. § 502(a). “A finding of liability for copyright infringement,
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`combined with the threat of future infringement, justifies the imposition of a permanent
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`injunction.” Cipes v. Mikasa, Inc., 404 F. Supp. 2d 367, 371 (D. Mass. 2005); see also
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`United States v. Mass. Water Res. Auth., 256 F.3d 36, 51 n.5 (1st Cir. 2001) (“At least
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`with respect to some statutory injunction provisions . . . when Congress decides to
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`make available the remedy of injunction for violations of a statute’s substantive
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`provisions, irreparable injury is presumed to flow from such violations.”). The court
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`finds that a threat of future infringement remains, in light of the repeated current and
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`past acts of ASP’s principals. Thus, the court will grant SMS’s motion for a permanent
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`Case 1:06-cv-11557-RGS Document 115 Filed 03/30/11 Page 21 of 21
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`injunction.
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`ORDER
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`Judgment will be GRANTED to SMS on its Complaint for copyright
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`infringement. SMS is awarded enhanced statutory damages in the amount of $450,000.
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`It is further ORDERED that ASP, its principals, officers, agents, servants, employees,
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`attorneys, successors, assigns and others in privity, or acting in concert therewith, are
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`enjoined from copying, using, selling, marketing, distributing, publishing, performing,
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`displaying, or otherwise infringing any of SMS’s rights in its copyrighted works. SMS
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`may submit an application for its costs and reasonable attorneys’ fees within thirty (30)
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`days of the date of this Order. ASP will have fourteen (14) days to file an objection.
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`SO ORDERED.
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`/s/ Richard G. Stearns
`_______________________________
`UNITED STATES DISTRICT JUDGE
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