Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 1 of 32 Page ID#5711
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
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`JOEL GOLDMAN,
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`Plaintiff,
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`-v-
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`HEALTHCARE MANAGEMENT
`SYSTEMS, INC. and THOMAS E. GIVENS,
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`Defendants.
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`Case No. 1:05-cv-035
`
`HONORABLE PAUL L. MALONEY
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`OPINION AND ORDER DENYING DEFENDANTS’ MOTION (DKT. NO. 161) IN
`LIMINE/DAUBERT MOTION ON PLAINTIFF’S EXPERT NORMAN JACOBSON
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`OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
`MOTION (DKT. NO. 155) IN LIMINE/DAUBERT MOTION ON PLAINTIFF’S DAMAGES,
`CLAIMS AND EXPERT (VINCENT A. THOMAS) REPORT AND TESTIMONY
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`ORDER DENYING DEFENDANTS’ EMERGENCY MOTION (DKT. NO. 248) TO EXCLUDE
`TESTIMONY AND EVIDENCE FROM PLAINTIFF’S EXPERTS AT THE MARCH 18 THROUGH
`MARCH 20 DAUBERT HEARINGS
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`OPINION AND ORDER DENYING DEFENDANTS’ MOTION (DKT. NO. 163) IN LIMINE ON
`GOLDMAN’S COPYRIGHT CLAIMS
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`ORDER DENYING IN PART DEFENDANTS’ MOTION (DKT. NO. 202) FOR LEAVE TO FILE
`REPLY BRIEF TO PLAINTIFF’S MOTIONS IN LIMINE REGARDING COPYRIGHT CLAIMS
`AND MATERIALS DEPOSITED WITH THE COPYRIGHT OFFICE
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`OPINION AND ORDER GRANTING IN PART PLAINTIFF’S MOTION (DKT. NO. 200) IN
`LIMINE TO EXCLUDE EVIDENCE AND EXPERT TESTIMONY OF HMS “RE-WRITE” COSTS
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`Before this Court are multiple motions to exclude evidence from trial and related motions.
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`Although this action was filed more than three years ago, the parties filed these and a number of other
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`similar motions in the weeks just prior to the final pretrial conference, which was scheduled for February
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`19, 2008.
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`I. LEGAL FRAMEWORK
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 2 of 32 Page ID#5712
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`The underlying complaint alleges copyright infringement of a computer program. In order to
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`prevail on a claim of copyright infringement, a plaintiff must show (1) ownership of a valid copyright, and
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`(2) copying by the defendant of protected components of the copyrighted material. Feist. Publ’ns, Inc.
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`v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 361 (1991); Kohus v. Mariol, 328 F.3d 848, 853 (6th Cir. 2003).
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`A. FEDERAL RULES OF EVIDENCE
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`Under the Federal Rules of Evidence, all relevant evidence is admissible and evidence that is not
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`relevant is not admissible. FED. R. EVID. 402. The rules define “relevant evidence” as any “evidence
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`having any tendency to make the existence of any fact of consequence to the determination of the action
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`more probable or less probable than it would be without the evidence.” FED. R. EVID. 401. Evidence that
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`is relevant may be excluded if its “probative value is substantially outweighed by the danger of unfair
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`prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of
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`time, or needless presentation of the evidence.” FED. R. EVID. 403. The Supreme Court has remarked on
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`several occasions that the standard for relevancy is liberal. See e.g. Daubert v. Merrell Dow Pharms., Inc.,
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`509 U.S. 579, 587 (1993). See also Churchwell v. Bluegrass Marine, Inc., 444 F.3d 898, 905 (6th Cir.
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`2006) (noting same).
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`B. MOTION IN LIMINE
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`The Federal Rules of Evidence do not specifically contemplate the use of motions in limine,
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`however, their use has evolved under the federal courts’ inherent authority to manage trials. See Luce v.
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`United States, 469 U.S. 38, 41 n. 4 (1984). See also Figgins v. Advance America Cash Advance Ctrs. of
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`Michigan, Inc., 482 F. Supp.2d 861, (E.D. Mich. 2007) (explaining that such motions find some basis for
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`authority under Rule 103(c), which provides that jury proceedings should be conducted “so as to prevent
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`inadmissible evidence from being suggested.”). The purpose of a motion in limine is to allow a court to
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`rule on evidentiary issues in advance of trial in order to avoid delay and ensure an even-handed and
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 3 of 32 Page ID#5713
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`expeditious trial and to focus the issues the jury will consider. United States v. Brawner, 173 F.3d 966,
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`970 (6th Cir. 1999) (holding federal rules of evidence, civil procedure and criminal procedure and
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`interpretive rulings of the Supreme Court all encourage parties to use pretrial procedures, such as motions
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`in limine, to narrow the issues and minimize disruptions at trial); Jonasson v. Lutheran Child and Family
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`Servs., 115 F.3d 436, 440 (7th Cir. 1997). The decision to grant or deny a motion in limine is within a trial
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`court’s discretion. United States v. Certain Lands Situated in the City of Detroit, 547 F.Supp. 680, 681
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`(E.D. Mich. 1982). Such motions serve important gatekeeping functions by allowing the trial judge to
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`eliminate from consideration evidence that should not be presented to the jury because it would not be
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`admissible for any purpose. Jonasson, 115 F.3d at 440.
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`C. DAUBERT MOTION
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`The admission or exclusion of expert testimony is within the broad discretion of the trial court.
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`Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999), Barnes v. Kerr Corp, 418 F.3d 583, 588 (6th
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`Cir. 2005). Federal Rule of Evidence 702 governs the admissibility of expert testimony. The rule provides
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`If scientific, technical, or other specialized knowledge will assist the trier of fact to
`understand the evidence or to determine a fact in issue, a witness qualified as an expert by
`knowledge, skill, experience, training, or education may testify thereto in the form of an
`opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the
`testimony is the product of reliable principles and methods, and (3) the witness has applied
`the principles and methods reliably to the facts of the case.
`FED. R. EVID. 702. As amended, the rule reflects the United States Supreme Court’s decisions in Daubert
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`and Kumho. Johnson v. Manitowoc Boom Trucks, Inc., 484 F.3d 426, (6th Cir. 2007). In Daubert, the
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`Supreme Court charged trial courts with the task of “gatekeeping” to protect juries from being exposed
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`to misleading or unreliable scientific testimony. 509 U.S. at 592-593, 597. Kumho clarified the gatekeeper
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`role applied to all expert testimony, not just testimony based in science. 526 U.S. at 147.
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`As gatekeeper, a trial judge should ensure that expert testimony is both relevant and reliable.
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`Kumho, 526 U.S. at 147 (quoting Daubert, 509 U.S. at 589). Initially, the witness should be qualified as
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`3
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 4 of 32 Page ID#5714
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`an expert by reference to his or her knowledge, skill, experience, training, or education. Pride v. BIC
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`Corp., 218 F.3d 566, 577 (6th Cir. 2000). The requirement that testimony be relevant stems from the
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`portion of Rule 702 which demands the testimony “assist the trier of fact to understand the evidence or to
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`determine a fact in issue.” Daubert, 509 U.S. at 591. The relevancy inquiry is often described as ensuring
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`there is a “fit” between the testimony and the issue to be resolved by the trial. Id.; Greenwell v.
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`Boatwright, 184 F.3d 492, 496 (6th Cir. 1999) (citing United States v. Bonds, 12 F.3d 540, 555 (6th Cir.
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`1993)).
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`The reliability requirement focuses on the methodologies and principles which form the basis of
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`the expert’s testimony. Greenwell, 184 F.3d at 497 (citing Bonds, 12 F.3d at 556). The Supreme Court
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`grounded the reliability requirement in the opening phrase of Rule 702, “scientific, technical, or other
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`specialized knowledge.” Daubert, 509 U.S. at 589-590. “In order to qualify as ‘scientific knowledge,’
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`an inference or assertion must be derived by the scientific method. Proposed testimony must be supported
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`by appropriate validation-i.e., ‘good grounds,’ based on what is known.” Id. at 590. There is no single
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`criterion for determining whether a specific methodology is reliable. Pride, 218 F.3d at 577. In Daubert,
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`the Supreme Court provided a non-exhaustive list of factors which may inform a trial judge’s decision.
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`Those factors include (1) whether the theory or technique can be or has been tested, (2) whether the theory
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`has been subjected to peer review and publication, (3) whether there is any known rate of error or
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`standards controlling the technique’s operation, and (4) whether the theory or technique enjoys general
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`acceptance within the relevant community. Daubert, 509 U.S. at 592-594.
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`In Kumho, the Supreme Court clarified the test for reliability should be flexible. 529 U.S. at 150.
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`The factors listed in Daubert are not a definitive checklist and the reliability inquiry must be tied to the
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`facts of a particular case, the nature of the issue, the expert’s particular area of expertise, and the subject
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`of his or her testimony. Id. “The focus, of course, must be solely on the principles and methodology, not
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 5 of 32 Page ID#5715
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`on the conclusions that [the experts] generate.” Daubert, 509 U.S. at 595; Bonds, 12 F.3d at 556 (holding
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`that by defining reliability in terms of scientific validity, the Supreme Court instructs trial courts to focus
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`on the validity of the principles and methodologies underlying the testimony and not to be concerned with
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`the reliability of the conclusions generated by valid methods, principles and reasoning). However, where
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`the conclusions offered by the expert are not supported by the data upon which the expert relies, a trial
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`court need not admit the expert’s testimony. GE v. Joiner, 522 U.S. 136, 146 (1997) (explaining that
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`Daubert does not require a court to “admit opinion evidence that is connected to existing data only by the
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`ipse dixit of an expert” and citing Turpin v. Merrell Dow Pharm., Inc., 959 F.2d 1349, 1360 (6th Cir.
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`1992)).
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`Under Rule 702, a trial court must determine whether proposed testimony is (1) scientific, technical
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`or other specialized knowledge that (2) will assist the trier of fact to understand or determine a fact in
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`issue. Daubert, 509 U.S. at 592. The party offering the expert testimony must prove its admissibility by
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`a preponderance of the proof. Id. at 593 n. 10 (citing FED. R. EVID. 104(a) and Bourjaily v. United States,
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`483 U.S. 171, 175-176 (1987)); Pride, 218 F.3d at 578. Importantly, trial courts have additional
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`guidance, “Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the
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`burden of proof are the traditional and appropriate ways of attacking shaky, but admissible evidence.”
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`Daubert, 509 U.S. at 596.
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`II. ANALYSIS
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`On February 21, 2008, after the final pretrial conference, this Court issued an Omnibus Order (Dkt.
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`No. 198) regarding issues raised at the pretrial conference. The order scheduled an evidentiary hearing
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`of Defendants’ Motions in Limine/Daubert Motions for March 18, 19, and 20, 2008. (Omnibus Order ¶
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`5). The order further stipulated “Plaintiff shall have until the close of business on February 29, 2008 to
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`5
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 6 of 32 Page ID#5716
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`file responses, including any supplement to the response already filed.” (Id.). The order further required
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`all responses to pending motions be timely filed. (Id. ¶ 6). Plaintiff filed a response to Defendants’ motion
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`regarding Mr. Jacobson (Dkt. No. 161) on February 19 and did not file any supplement to the response.
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`On February 27, 2008, Defendants’ filed amended motions regarding both experts: Jacobson (Dkt.
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`No. 207) and Thomas (Dkt. No. 208). Defendants sought to preclude the experts from testifying on
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`additional areas not covered by the earlier motions. Plaintiff filed a response (Dkt. No. 217) to
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`Defendants’ motion regarding Mr. Thomas on February 29, 2008 at 11:39 p.m. Plaintiff filed a Motion
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`(Dkt. No. 218) to Strike Defendants’ Amended Motions as untimely. Defendants filed a response (Dkt.
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`No. 225) in which they pointed out that Plaintiff’s response to their Motion regarding Mr. Thomas was not
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`timely. On March 14, 2008, this Court issued an order (Dkt. No. 246) striking Defendants’ amended
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`motions and striking Plaintiff’s response to Defendants’ Motion regarding Mr. Thomas.
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`A. Defendants’ Motion in Limine/Daubert Motion on Plaintiff’s Expert Norman Jacobson (Dkt.
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`No. 161)
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`Because Plaintiff did not timely file his response, it has been stricken. Generally, a court may not
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`grant a dispositive motion simply because the adverse party neglected to file a response. See Carver v.
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`Bunch, 946 F.2d 451 (6th Cir. 1991). Although Defendants’ motion was not filed under either Rule 12
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`or Rule 56 of the Federal Rules of Civil Procedure, as noted by Plaintiff at the hearing and in response to
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`numerous other motions, many of Defendants’ motions in limine have the practical effect of a dispositive
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`motion. Given the ramifications of granting Defendants’ motion, this Court examines the motion to ensure
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`Defendants’ have fulfilled their burden in establishing that the evidence should be excluded.
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`Mr. Jacobson opines that there are substantial similarities between Plaintiff’s computer program
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`and Defendant HMS’s computer program and that those similarities suggest that HMS’s program was
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`derived from Plaintiff’s program. (Dkt. No. 162-5, Exhibit D to Defendants’ Brief in Support - Jacobson
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 7 of 32 Page ID#5717
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`Report at 12). Defendants seek to exclude Mr. Jacobson’s report on the basis that his opinions are
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`irrelevant, unreliable and prejudicial because none of the data used by Mr. Jacobson contained the required
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`copyright notices. Put another way, Defendants argue Mr. Jacobson’s testimony, which Plaintiff will use
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`to establish the second element of a copyright claim, should be excluded because Plaintiff cannot establish
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`the first element of a copyright claim.
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`Defendants’ motion (Dkt. No. 161) is DENIED. Defendants have not established Mr. Jacobson’s
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`testimony should be excluded as inadmissible evidence through a motion in limine. Neither have
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`Defendants established Mr. Jacobson’s testimony is irrelevant or unreliable such that it should be excluded
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`under Daubert and Kumho. Mr. Jacobson has not offered an opinion regarding the first element of a
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`copyright claim. Certainly, Mr. Jacobson’s opinions and conclusions are relevant only if Plaintiff
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`establishes a valid copyright. In the event Defendants establish that Plaintiff has no valid ownership of
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`a copyright, Plaintiff’s copyright claim would be dismissed and Mr. Jacobson’s testimony would be
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`irrelevant.
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`Pursuant to its power to control the order of proof, See FRE 104(b), and recognizing that Jacobson's
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`testimony is relevant only if the first element of Plaintiff's cause of action is sufficiently proved for jury
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`consideration, the Court orders that Plaintiff shall introduce its evidence of the first element of his cause
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`of action before offering Mr. Jacobson as a witness.
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`B. Defendants’ Motion in Limine/Daubert Motion on Plaintiff’s Damages Claims and Expert
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`(Vincent A. Thomas) Report and Testimony (Dkt. No. 155)
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`Defendants advance separate legal and factual reasons for excluding portions or all of Mr. Vincent
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`Thomas’ testimony.
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`1. Legal Reasons to Exclude Portions of Mr. Thomas’ Report
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`Defendants argue Mr. Thomas calculates damages using facts or assumptions which are legally
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 8 of 32 Page ID#5718
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`unsupportable for four separate reasons.
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`a. Statute of Limitations
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`Mr. Thomas calculates damages based on the number of installations of HMS software. (Dkt. No.
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`158 - Exhibit B to Defendants’ Brief in Support - Thomas Report Supplement at 3). In exhibits 3 and 4,
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`Mr. Thomas provides a chart identifying the number of contracts per year, beginning in 1985, in which
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`Defendants installed the allegedly infringing software. (Id.). Mr. Thomas calculates damages using all
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`installations of software between 1985 through 2005.
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`The parties dispute the applicable statute of limitation. Defendants argue the statute of limitations
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`under the Copyright Act is three years and therefore conclude Plaintiff cannot recover damages for
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`infringements which occurred more than three years prior to the date upon which the complaint was filed.
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`Defendants allege Mr. Thomas calculates damages based on acts of infringement which occurred beyond
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`the three years prior to the date when the complaint was filed. Defendants argue the three year statute of
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`limitations claim applies to both Count I (copyright) and Count III (Digital Millennium Copyright Act).
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`Plaintiff responds that Defendants are merely rearguing their earlier summary judgment motion, which
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`Judge Enslen already rejected.1 Plaintiff alleges he first learned about the infringement in 2004. Plaintiff
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`asserts Mr. Thomas should be allowed to testify to the amount of damages that Plaintiff has sustained since
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`1Defendants filed an earlier motion for summary judgment raising the three year statute of
`limitation in a different context. See Goldman v. Healthcare Mgt. Sys., Inc., No. 1:05-cv-035,
`2006 WL 3589069 (W.D. Mich. Dec. 8, 2006) (unpublished order denying plaintiff’s motion for
`partial summary judgment and defendants’ motion for summary judgment). In that motion,
`Defendants alleged Plaintiff was on notice of infringement in 1997. Defendants argued in that
`motion that the three-year statute of limitations prevented Plaintiff from maintaining the suit.
`Plaintiff responded that the incident in 1997 did not put him on notice of copyright infringement.
`Plaintiff also argued he should, at the very least, be able to pursue the acts of infringement which
`occurred during the three years prior to when the complaint was filed. Judge Enslen denied
`Defendants’ motion finding the record “rife with disputed facts” including “whether Plaintiff was
`on notice that his copyright was being infringed upon such that the statute of limitations began to
`toll in 1997 or earlier.” Id.
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 9 of 32 Page ID#5719
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`1983.
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`The complaint was filed on January 13, 2005. The relevant statute provides:
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`(b) Civil Actions - - No civil action shall be maintained under the provisions of this title
`unless it is commenced within three years after the claim accrued.
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`17 U.S.C. § 507(b). The Sixth Circuit Court of Appeals has interpreted section 507(b) to bar recovery for
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`damages in copyright infringement actions accruing more than three years prior to the date the complaint
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`was filed.2 Hoste v. Radio Corp. of America, 654 F.2d 11 (1981) (6th Cir. 1981) (per curiam); Phoenix
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`Publ’g Int’l, Inc. v. Mutual of Omaha Ins. Co., No. 1:99-cv-92, 2000 WL 33173916 (W.D. Mich. April
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`5, 2000) (McKeague, J.) (“the law clearly indicates the statute of limitations bars recovery of any claims
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`based upon damages accruing more than three years before the complaint was filed” (emphasis in
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`original)). See also Bridgeport Music, Inc. v. Rhyme Syndicate Music, 376 F.3d 615, 621 (6th Cir. 2004)
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`(“because each act of infringement is a distinct harm, the statute of limitations bars infringement claims
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`that accrued more than three years before the suit was filed, but does not preclude infringement claims that
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`accrued within the statutory period.”) and Roger Miller Music, Inc. v. Sony/ATV Publ’g, LLC, 477 F.3d
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`383, 390 (6th Cir. 2007) (quoting Bridgeport Music).
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`Under the applicable statute of limitations, as interpreted by the Sixth Circuit, Plaintiff may recover
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`damages only for infringements occurring on or after January 13, 2002, but cannot recover damages for
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`2This Court is bound to follow the Sixth Circuit. The Sixth Circuit’s interpretation of
`section 507(b) is the majority approach, with only the Seventh Circuit reaching a different
`interpretation. See generally, Bart A. Starr, Fixing Copyright’s Three-Year Limitations Clock:
`The Accrual of an Infringement Claim under 17 U.S.C. 507(b), 78 Wash. U. L.Q. 623 (2000).
`Mr. Starr argues courts have not interpreted the statute as written, which allows recovery for
`damages for all copyright claims so long as the complaint is filed within three years from when
`the claim accrues. A claim “accrues,” according to Mr. Starr, when the claim is discovered.
`Under Mr. Starr’s proposal, a copyright suit could be initiated today for an infringement dating
`back to the time when the Copyright Act was passed, or earlier if the Act was retroactive. Such
`approach runs squarely against the twin justifications for statutes of limitations that are
`eloquently summarized by Mr. Starr. Id. at 628.
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 10 of 32 Page ID#5720
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`infringements occurring before that date. Mr. Thomas’ damage calculation improperly includes
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`infringements outside the three year statute of limitations. Such damage calculations are barred from
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`presentation to the Jury.
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`Plaintiff's assertion that my colleague's prior ruling precludes defendant's argument here misses the
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`mark. Judge Enslen made no ruling on Plaintiff's alternative argument that regardless of when he was
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`placed on notice, he should be able to pursue acts of infringement which occurred during the three years
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`prior to the filing of the complaint. As noted, that is the law. See Hoste. In addition, the four squares of
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`Judge Enslen's opinion do not finally adjudicate Plaintiff's right to pursue claims outside that three year
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`period. This is not the same argument Defendants raised in their prior motion for summary judgment.
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`b. Pre-Complaint Interest
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`Mr. Thomas includes prejudgment interest in his calculation of damages. (Thomas Report
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`Supplement at 3). Mr. Thomas states in a footnote that it is his understanding that the “appropriateness
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`and amount of a pre-judgment interest award are a matter for the court and/or jury to determine.” (Id. n.
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`4).
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`The parties dispute whether there is a legal basis for awarding prejudgment interest and whether
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`the court or the jury would make such an award. Defendants also argue there is no legal basis for awarding
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`“pre-complaint” interest (prejudgment interest). Defendants also argue Mr. Thomas has inflated his
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`damages estimates by including pre-complaint interest. Defendants contend (1) there is no legal basis for
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`awarding prejudgment interest from 1985 to 2005, (2) there is no basis for awarding prejudgment interest
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`from 2005 forward and (3) if there is a legal basis, the issue will be decided by the court and not by the
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`jury. Rather than precluding prejudgment interest as a matter of law, Plaintiff argues the Sixth Circuit
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`explicitly allowed an award of prejudgment interest in copyright cases. Plaintiff points to other
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`jurisdictions which have found a court may award prejudgment interest under the Copyright Act. Plaintiff
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 11 of 32 Page ID#5721
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`argues the Sixth Circuit has found the decision to award prejudgment, in other contexts, are decisions to
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`be made by the trier of fact, citing Treev, Inc. v. MSX Int’l, 34 F.App’x 219, 222 (6th Cir. 2002).
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`The lead case in the Sixth Circuit on prejudgment interest under the Copyright Act is Robert R.
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`Jones Assocs., Inc. v. Nino Homes, 858 F.2d 274 (6th Cir. 1988). Robert J. Jones has been cited as holding
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`that prejudgment interest is not available under the Copyright Act. See Powell v. Penhollow, No. 06-
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`10760, 2007 WL 4513119 at * 7 n. 7 (5th Cir. Dec. 21, 2007). In Robert J. Jones, Judge Martin, writing
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`for a unanimous panel, stated
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`The Copyright Act neither expressly allows nor prohibits awarding prejudgment interest
`in copyright infringement cases. As we stated in Bricklayers, ‘[i]n the absence of
`legislative direction, the Supreme Court, directed that the decision to grant or deny
`prejudgment interest should hinge on whether to do so would further the congressional
`purposes underlying the obligations imposed by the statute in question.’”
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`Id. at 282 (citations and alterations omitted) . The Circuit panel vacated an award of prejudgment interest
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`by the district court explaining “we believe the measure of damages applied in this case is clearly sufficient
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`to promote innovation in architectural design and deter unauthorized exploitation of someone else’s
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`creative expressions.” Id.
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`The citation and footnote after this statement are confusing. After the explanation of why the court
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`vacates the award of prejudgment interest, the court immediately cites a case from a district court in
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`Illinois, Baldwin Cooke Co. v. Keith Clark, Inc., 420 F.Supp. 404, 409 (N.D. Ill. 1976), with the “accord”
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`signal. The accord signal may be used to show that the law of one jurisdiction is in accord with the law
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`of another.3 The Bluebook: A Uniform System of Citations 46 (Columbia Law Review Ass’n et al. eds.,
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`3More typically the accord signal is used before a second source when more than one
`source clearly supports a proposition, but the text quotes or refers to only one source. The
`Bluebook: A Uniform System of Citations 46 (Columbia Law Review Ass’n et al. eds., 18th ed.
`2005); Black’s Law Dictionary, 17 (8th ed. 2004). Here, the Sixth Circuit did not cite any other
`authority.
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 12 of 32 Page ID#5722
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`18th ed. 2005). In Baldwin Cooke, the district court, after discussing the difference between the Copyright
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`Act and the Patent Act, denied a request for prejudgment interest because “the cumulative award of
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`defendant’s profits and plaintiff’s damages is sufficiently severe as to deter others from like conduct.” 420
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`F.Supp. at 409. The district court then stated “Plaintiff recognizes that its request is addressed to our
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`discretion.” Id. Immediately after its summary of the holding in Baldwin Cooke, the Sixth Circuit inserts
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`a footnote. In footnote eight, the circuit court compares the Copyright Act, which does not mention
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`prejudgment interest, to the Patent Act, which does explicitly authorize prejudgment interest. Id. n. 8. In
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`that footnote, the court infers that Congress believed the discretionary authority to award costs and attorney
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`fees would be sufficient to enable courts to enhance the deterrent force of the Copyright Act in situations
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`involving flagrant conduct. Id.
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`The statement in the footnote is dicta at best. The holding in Baldwin Cooke cannot fairly be
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`interpreted as concluding that prejudgment interest is not available under the Copyright Act. The results
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`in Robert J. Jones on appeal and in Baldwin Cooke both hinge on the trial court’s discretion to award
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`prejudgment interest when necessary to deter copyright infringement.
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`There is no consensus in the federal circuits as to whether prejudgment interest may be awarded
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`under the Copyright Act. See Powell, 2007 WL 4513119 at * 7 n. 7 (noting a circuit split and explaining
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`that the First Circuit found it was not an abuse of discretion to fail to award prejudgment interest in a
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`copyright case, the Sixth Circuit found prejudgment interest was not available in Robert R. Jones, and the
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`Seventh, Ninth and Tenth Circuits have held that the Copyright Act permits an award of prejudgment
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`interest). The Seventh, Ninth and Tenth Circuits have found that prejudgment interest may be awarded
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`on claims for copyright violations. See Polar Bear Prods. Inc. v Timex Corp., 384 F.3d 700, 718 (9th Cir.
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`2004); McRoberts Software, Inc. v. Media 100, Inc., 329 F.3d 557, 572 (7th Cir. 2003); Kleier Advert., Inc.
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`v. Premier Pontiac, Inc., 921 F.2d 1036, 1041 (10th Cir. 1990). The First Circuit upheld a decision by a
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 13 of 32 Page ID#5723
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`district court finding district court did not abuse its discretion when it declined to award prejudgment
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`interest under the Copyright Act because the damages award was entirely for disgorged profits and
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`reasoning that, unlike actual damages, the plaintiff would not have had the funds and deserved no
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`compensation for loss of use of the money. John G. Danielson, Inc. v. Winchester-Conant Props., Inc.,
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`322 F.3d 26, (1st Cir. 2003). Similarly, the Fourth Circuit, in an unpublished opinion, declined to award
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`prejudgment interest because the award of actual damages plus profits sufficiently compensated for the
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`loss and because the infringement was unintentional. Payphone, Inc. v. Executives Unlimited of Durham,
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`Inc., 1991 WL 64957 at *4, 931 F.2d 888 (4th Cir. 1991) (unpublished table opinion).
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`This Court concludes prejudgment interest is a remedy available under the Copyright Act. The
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`majority of circuits who have examined the question of whether court may award prejudgment interest
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`under the Copyright Act have found that such an award is permissible. The Sixth Circuit’s opinion does
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`not clearly and unambiguously state that prejudgment interest is not allowed. Rather, it vacates an award
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`of prejudgment interest because the damages awarded were sufficient to serve as a deterrent. In the event
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`that actual damages, profits, costs and attorney fees are insufficient to provide the sort of deterrent intended
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`by Congress, this Court should be able to award prejudgment interest.
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`Defendants have the better argument on the last two points raised. Assuming such an award was
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`authorized, Plaintiff could only be awarded interest on the actual damages found by the trier of fact. As
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`noted above, Plaintiff can only recover damages for acts of infringement which occurred within three years
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`of the filing of the complaint. Therefore, the interest calculation should reflect only those infringement
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`claims between 2005 and 2002. Courts, not juries, decide whether to award prejudgment interest in
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`copyright actions. The courts who have looked at the issue generally conclude the decision to award
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`prejudgment interest is within the discretion of the trial court. See Polar Bear Prods., 384 F.3d at 718;
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 14 of 32 Page ID#5724
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`Kleier Advert., 921 F.2d at 1040.4 As a result, Mr. Thomas is precluded from testifying on this issue
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`before the jury. If Plaintiff wishes to take the testimony of Mr. Thomas outside the presence of the jury
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`on this issue, he may do so to preserve proofs should damages be awarded.
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`c. Recovery of Damages and Profits Under the Copyright Act(Count I)
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`Defendants argue Mr. Thomas overstates damages by calculating a double recovery. Defendants
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`contend Plaintiff may recover actual damages and Defendants’ net profits that are not taken into account
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`when calculating actual damages. Plaintiff responds that the jury may consider evidence of both actual
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`damages and lost profits. Plaintiff argues the jury is entitled to hear evidence regarding both. Plaintiff
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`argues any concern about double recovery should be solved through an appropriate jury instruction.
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`Under the Copyright Act, a copyright owner is entitled to recover “actual damages suffered by him
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`or her as a result of the infringement, and any profits of the infringer that are attributable to the
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`infringement and are not taken into account in computing the actual damages.” 17 U.S.C. § 504(b). The
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`provision has the effect of preventing a double recovery. Robert R. Jones, 858 F.2d at 281.
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`Lost profit damages serve to make the copyright owner whole in cases where the
`infringer’s gains exceed the owner’s losses. This is true even if the owner never would
`have realized the profit made by the infringer; by disgorging any net profits from the
`infringer, lost profit damages eliminate a major incentive to steal the copyright instead of
`fairly negotiating for its use with the owner.
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`McRoberts, 329 F.3d at 568.
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`Paragraph 10 of Omnibus Order renders this issue moot. See Dkt. No. 198. At the pretrial
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`conference, the parties agreed and stipulated to several legal and factual points. The parties and this Court
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`agreed that the statute precludes Plaintiff from receiving a double recovery. The Omnibus Order
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`4Plaintiff authority, Treev, Inc.,34 F.App’x at 222, is not helpful. Treev was a breach of
`contract (license) action, not a copyright infringement case, and resolved the question of
`prejudgment interest under Michigan law, not federal law.
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`Case 1:05-cv-00035-PLM Doc #264 Filed 06/05/08 Page 15 of 32 Page ID#5725
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`memorialized the parties’ agreement. Paragraph 10 of the Omnibus Order states “the statute authorizes
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`a prevailing plaintiff to recover the greater amount of actual damages or defendant’s net profits, but not
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`both.” Id. Plaintiff is correct that the jury may consider evidence of both actual damages and net profits,
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`