Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 1 of 8
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`ARISTA RECORDS LLC; ATLANTIC RECORDING
`CORPORATION; ARISTA MUSIC, fka BMG
`MUSIC; CAPITOL RECORDS, INC; ELEKTRA
`ENTERTAINMENT GROUP INC; INTERSCOPE
`RECORDS; LAFACE RECORDS LLC; MOTOWN
`RECORD COMPANY, L.P.; PRIORITY RECORDS
`LLC; SONY MUSIC ENTERTAINMENT, fka SONY
`BMG MUSIC ENTERTAINMENT; UMG RECORDINGS,
`INC; VIRGIN RECORDS AMERICA, INC.; and
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`WARNER BROS. RECORDS INC.,
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`Plaintiffs,
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`06 CV 5936 (KMW)
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`OPINION AND ORDER
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`-against-
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`LIME GROUP LLC; LIME WIRE LLC; MARK
`GORTON; GREG BILDSON; and M.J.G. LIME WIRE
`FAMILY LIMITED PARTNERSHIP,
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`Defendants.
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`KIMBA M. WOOD, U.S.D.J.:
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`I.
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`Introduction
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`On May 11, 2010, this Court granted summary judgment in favor of Plaintiffs on their
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`claims against Defendants LimeWire LLC (“LW”), Lime Group LLC (“Lime Group”), and Mark
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`Gorton (collectively, “Defendants”) for secondary copyright infringement. The Court found that
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`Defendants had induced multiple users of the LimeWire online file-sharing program
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`(“LimeWire”) to infringe Plaintiffs’ copyrights. In the Court’s Opinion and Order (as amended
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`on May 25, 2010), the Court detailed this case’s procedural and factual background, familiarity
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`with which is assumed. (See Dkt. Entry No. 223.) The litigation is now in the damage phase,
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`with a trial on damages scheduled for May 2, 2011.
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`1
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 2 of 8
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`Plaintiffs have identified approximately 11,205 sound recordings that have allegedly been
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`infringed through the LimeWire system. Of those, approximately 9,715 are sound recordings as
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`to which Plaintiffs have elected to seek statutory damages under Section 504(c)(1) of the
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`Copyright Act.1 See 17 U.S.C. § 504(c)(1).
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`The parties now seek resolution of a discovery dispute and accompanying legal question
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`concerning the applicability of Section 412 of the Copyright Act to Plaintiffs’ claims for
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`statutory damage awards against Defendants. Defendants contend that, pursuant to Section 412,
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`if an individual LimeWire user infringed a work prior to the registration of the copyright for that
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`work, Plaintiffs are barred from recovering a statutory damage award from Defendants with
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`respect to that work, unless registration was made within three months after the first publication
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`of that work. See 17 U.S.C. § 412(2) (stating that no statutory damage award and attorney’s fees
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`shall be made for “any infringement of copyright commenced after first publication of the work
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`and before the effective date of its registration, unless such registration is made within three
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`months after the first publication of the work [hereinafter the “statutory three month grace
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`period].”). Defendants assert that Plaintiffs failed to register 1,322 sound recordings within the
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`statutory three month grace period. (Def. Mem. at 3.) Accordingly, Defendants are seeking
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`discovery as to the first date that those 1,322 sound recordings were downloaded on the
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`LimeWire system.
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`Plaintiffs have filed an objection to Magistrate Judge Freeman’s December 28, 2010
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`“Report & Recommendation Concerning 17 U.S.C. § 412(2),” which recommended that
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`1 Plaintiffs are also seeking to recover actual damages for approximately 1,490 sound recordings
`from the pre-1972 period, for which statutory damages under the Copyright Act are not
`available. Those sound recordings are not subject to this Order and Opinion.
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`2
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 3 of 8
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`Defendants be granted such discovery. (Dkt. Entry No. 398.) For the reasons that follow, the
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`Court ADOPTS the Report in its entirety.
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`II.
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`Procedural History
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`The procedural background leading up to the December 28, 2010 Report &
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`Recommendation is as follows:
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`On November 2, 2010, without addressing the merits of Defendants’ argument, Judge
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`Freeman granted Defendants’ discovery request, ordering, inter alia, Plaintiffs to “provide
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`Defendants with documents or information sufficient to show the earliest dates that each such
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`recording was downloaded.” (Dkt. Entry No. 339, at 3.)
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`Plaintiffs appealed Judge Freeman’s Order. On November 19, 2010, the undersigned
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`issued an Order holding in abeyance the portion of Judge Freeman’s Order compelling Plaintiffs
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`to produce such evidence. (Dkt. Entry No. 363.) The undersigned then referred to Judge
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`Freeman, for a report and recommendation, the threshold legal question of whether the
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`infringement of a work by an individual LimeWire user prior to the registration2 of the copyright
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`for that work should bar Plaintiffs from recovering a statutory damage award from Defendants
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`with respect to that work. (Id.)
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`On December 28, 2010, Judge Freeman issued a Report and Recommendation,
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`concluding that, under Section 412, where an individual infringed a work on the LimeWire
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`system prior to the Registration of the copyright for that work, Plaintiffs are not entitled to
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`statutory damages with respect to that work. (Dkt. Entry No. 398, at 2 (hereinafter the
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`“Report”).) Specifically, the Report recommends that, so long as any LimeWire user infringed a
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`work prior to the Registration of the copyright for that work, Plaintiffs should not be able to
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`2 For ease of reference, in this Opinion, the word “Registration” is used to encompass any work
`registered within the statutory three month grace period.
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 4 of 8
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`recover a statutory damage award from Defendants with respect to that work, even if there are
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`other individual LimeWire users who first infringed that work after the work was registered. The
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`Report concludes by recommending that Plaintiffs be directed to produce the discovery set forth
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`in the November 2, 2010 Order, namely, “information sufficient to show the earliest dates that
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`each such recording was downloaded.” (Report at 10.)
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`Plaintiffs have filed a timely objection to the Report. (Dkt Entry No. 410.)
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`III.
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`Standard of Review
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`Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rules of Civil Procedure 72(a), a “district
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`judge . . . must consider timely objections [to a nondispositive order] and modify or set aside any
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`part of the order that is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a). “A
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`Magistrate Judge’s order is considered ‘contrary to law’ when it ‘fails to apply or misapplies
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`relevant statutes, case law, or rules of procedure.’” Gucci America, Inc. v. Guess?, Inc., No. 09
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`Civ. 4373, 2011 WL 9375, at *1 (S.D.N.Y. Jan. 03, 2011) (citing In re Comverse Tech., Inc. Sec.
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`Litig., No. 06 Civ. 1825, 2007 WL 680779, at *2 (E.D.N.Y. Mar. 2, 2007)).
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`IV. Analysis
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`Under Section 504 of the Copyright Act, a copyright owner whose work has been
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`infringed is entitled to recover “actual damages suffered . . . as a result of the infringement.” 17
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`U.S.C. § 504(b). Under certain circumstances, however, a copyright owner may elect to recover
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`an award of statutory damages in lieu of actual damages. 17 U.S.C. § 504(c)(1). Statutory
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`damages are considered an extraordinary remedy, and there are thus limitations on a copyright
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`holder’s ability to elect such a remedy H.R. Rep. No. 94-1476 (Sept. 3, 1976); see also The
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`Football Ass’n Premier League Ltd. v. YouTube, Inc., 633 F. Supp. 2d 159, 163 (S.D.N.Y. 2009
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 5 of 8
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`(describing the “the special or extraordinary remedies of statutory damages”) (internal quotations
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`omitted).
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`One such limitation is found in Section 412, which states that statutory damages are not
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`available where “any infringement of copyright [is] commenced . . . before the effective date of
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`registration, unless such registration is made within three months after the first publication.” 17
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`U.S.C. § 412.
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`In addition to barring recovery for infringement of a work that occurs before Registration,
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`courts have held that Section 412 “imposes a bright-line rule, barring the recovery of statutory
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`damages for infringement occurring after registration if that infringement is part of an ongoing
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`series of infringing acts and the first act occurred before registration.” U2 Home Entm’t, Inc. v.
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`Hong Wei Int’l Trading, Inc., No. 04 Civ, 1689, 2008 WL 3906889, at *15 (S.D.N.Y. Aug. 21,
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`2008) (internal quotations omitted) (emphasis added). Known as the “ongoing series of
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`infringing acts” doctrine, courts have repeatedly applied this doctrine to the ongoing
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`infringement of a work by the same direct infringer. See Mason v. Montgomery Data, Inc., 967
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`F.2d 135, 143 (5th Cir. 1992) (“[S]tatutory damages [must] be denied not only for the particular
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`infringement that a defendant commenced before registration, but for all of that defendant’s
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`infringements of a work if one of those infringements commenced prior to registration.”); Shady
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`Records, Inc. v. Source Enterprises, Inc., No. 03 944, 2005 WL 14920, at *21 (S.D.N.Y. Jan. 3,
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`2005) (same); Johnson v. Jones, 149 F.3d 494, 506 (6th Cir. 1998) (“Every court to consider this
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`question has come to the same conclusion; namely, that infringement ‘commences’ for the
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`purposes of § 412 when the first act in a series of acts [by the defendant] constituting
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`infringement occurs.”). Accordingly, the parties appear to agree that, if the defendant in this
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`case were an individual direct infringer, Plaintiffs would be barred from seeking a statutory
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 6 of 8
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`damage award with respect to any work that the direct infringer infringed prior to that work’s
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`Registration, even if the direct infringer continued to infringe the work after the work had been
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`registered. (See Pl. Mem. at 11-13.)
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`The crux of the present dispute is how this Court should apply Section 412 in the context
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`of a secondarily liable defendant such as LimeWire. Defendants contend that, if an individual
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`direct infringer infringed a work on the LimeWire system prior to the Registration of that work,
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`Plaintiffs should be barred from seeking a statutory damage award from Defendants with respect
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`to that work, even if other LimeWire users first infringed that work after its Registration.
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`Plaintiffs, however, contend that, even if the first direct infringement of a work occurred prior to
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`Registration, they may still recover a statutory damage award with respect to that work where
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`there are individual infringers who first infringed the work after the work was registered.
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`The plain meaning of Section 412, as further illuminated by its legislative history,
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`compels the conclusion that, if an individual direct infringer infringed a work on the LimeWire
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`system prior to the Registration of that work, Plaintiffs are barred from seeking a statutory
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`damage award from Defendants with respect to that work, notwithstanding that other LimeWire
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`users first infringed that work after the work had been registered.
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`The intent behind enacting Section 412 was to make available the “extraordinary relief”
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`of statutory damages only to those who promptly registered their copyrights, and to deny that
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`remedy to those who failed to do so. See H.R. Rep. No. 94-1076, at 158 (Sept. 3, 1976); see also
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`Andrew Berger, Statutory Damages in Copyright Litigation, 81 Dec. N.Y. St. B. J. 30, 31 (“The
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`purpose of § 412 was to encourage early registration.”). Indeed, as one court has explained:
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`Since under the new legislation copyright registration would no longer be compulsory,
`Congress, deeming registration useful and important, sought some practical means of
`inducing it. The means chosen was to deny the “extraordinary” remedies of statutory
`damages and attorneys fees where registration is not promptly made.
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 7 of 8
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`Love v. City of New York, No. 88 CIV. 7562, 1989 WL 140578, at *1 (S.D.N.Y. Nov. 17, 1989)
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`(citing Singh v. Famous Overseas, Inc., 680 F. Supp. 533, 536 (E.D.N.Y. 1988)). As the Love
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`court further explained, “[t]he threat of such a denial [of statutory damages] would hardly
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`provide a significant motivation to register early if the owner of the work could obtain those
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`remedies for acts of infringement taking place after a belated registration.” Id. at *1.
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`The Report points out that “[t]here would be little motivation to register early in the face
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`of massive induced infringement, if the copyright owner could obtain statutory damages against
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`an inducer so long as the copyright was registered prior to any one act of direct infringement,
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`regardless of how long the owner delayed in registration from the date when the inducer began
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`distribution of an infringement-enabling product or service.” (Report at 8.)
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`The undersigned agrees that, if Plaintiffs were able to obtain a statutory damage award
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`for a late-registered work that was first infringed prior to Registration simply because another
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`direct infringer first infringed that work after Registration, Plaintiffs would have no incentive to
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`promptly register their work.
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`V.
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`Conclusion
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`In conclusion, for the foregoing reasons, the Court ADOPTS Judge Freeman’s Report
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`and Recommendation. (Dkt. Entry No. 398.) If a LimeWire user infringed a work prior to the
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`Registration of the copyright for that work, Plaintiffs are barred from seeking a statutory damage
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`award from Defendants with respect to that work. 3 However, Plaintiffs may still seek to recover
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`3 The Court need not address whether the “ongoing series of infringing acts” doctrine should be
`extended to the context of a secondarily liable inducer, because the Court finds that the plain
`meaning of Section 412, as further illuminated by its legislative history, compels the Court’s
`holding.
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`Case 1:06-cv-05936-KMW-DCF Document 630 Filed 03/18/11 Page 8 of 8
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`actual damages for those works, and will thus be compensated in the event that those works were
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`infringed on the LimeWire system.4
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`The discovery ordered on November 2,2010 is hereby reinstated. (Dkt. Entry No. 339.)
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`Accordingly, to the extent that Plaintiffs have not already done so, Plaintiffs are directed to
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`provide Defendants with documents or information sufficient to show the earliest dates that each
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`of the allegedly 1,322 late-registered sound recordings was downloaded on the LimeWire
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`system. Plaintiffs shall provide Defendants with this discovery by Friday, April 1, 2011. 5
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`SO ORDERED.
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`Dated: New York, New York
`March rl, 2011
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`(~M.~
`KimbaM. Wood
`United States District Judge
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`4 See supra note 1.
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`5 Any disputes that may arise with respect to this discovery are hereby referred to Magistrate
`Judge Freeman.
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`8