Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 1 of 11
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`CORBIS CORPORATION,
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`Plaintiff,
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`vs.
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`AMAZON.COM, INC., et al.,
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`Defendants.
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`NO. CV03-1415L
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`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`This matter comes before the Court on plaintiff’s “Motion for Default Judgments Against
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`Defendants Famed and Framed, Inc., Iconographics, Carolyn Otwell, (d/b/a Matdiln.com), Pix
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`Poster Cellar, Wynnco.com; and for Dismissal Without Prejudice of Defendants Famous Faces,
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`Inc., Legends Memorabilia Inc., Posters Now, Sign Here Autographs, and HDS Productions”
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`(Dkt. # 265, the “Motion”). This Court previously granted plaintiff’s request for entry of
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`default under Fed. R. Civ. P. 55(a) against defendants Famed and Framed, Inc., Iconographics,
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`Carolyn Otwell (d/b/a Matdiln@aol.com), Pix Poster Cellar, and Wynnco.com (collectively, the
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`“Defaulted Defendants”). Plaintiff now requests that this Court enter a default judgment under
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`Fed. R. Civ. P. 55(b) against the Defaulted Defendants. In addition, plaintiff requests that the
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`Court dismiss without prejudice defendants Famous Faces, Inc., Legends Memorabilia Inc.,
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`Posters Now, and Sign Here Autographs (the “Unserved Defendants”). For the reasons set forth
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`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 2 of 11
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`below, plaintiff’s motion is granted in part, denied in part, and deferred pending further
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`submissions by plaintiff.
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`I. BACKGROUND
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`On June 30, 2003, plaintiff filed a complaint alleging, among other things, direct
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`copyright infringement, violation of the Digital Millennium Copyright Act, false designation of
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`origin and unfair competition, trademark dilution, unfair competition under Washington’s
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`Consumer Protection Act, R.C.W. 19.86.020, et seq., and tortious interference with business
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`relationships against the Defaulted and Unserved Defendants. After it had filed its complaint,
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`plaintiff attempted to serve all of the defendants. Although it successfully served the Defaulted
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`Defendants, they failed to plead or otherwise defend and, on August 25, 2003, this Court issued
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`an entry of default under Fed. R. Civ. P. 55(a) against them. After the entry of default, one of
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`the Defaulted Defendants, Iconographics, filed a submission with this Court. Plaintiff attempted
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`to serve the complaint on the Unserved Defendants but, for various reasons, could not do so. On
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`July 14, 2005, Corbis filed this Motion.
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`II. DISCUSSION
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`A.
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`Request for Default Judgment.
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`1.
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`Standard for Entry of Default Judgment.
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`A district court has discretion to enter a default judgment under Fed. R. Civ. P. 55(b)(2).
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`The Court may consider a number of factors, including: “(1) the possibility of prejudice to the
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`plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint,
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`(4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material
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`facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying
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`the Federal Rules of Civil Procedure favoring decisions on the merits.” Eitel v. McCool, 782
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`F.2d 1470, 1471-1472 (9th Cir. 1986).
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`If necessary, the Court may conduct hearings “or order such references as it deems
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`necessary” to enable it to enter a default judgment. Fed. R. Civ. P. 55(b)(2). The scope of the
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 3 of 11
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`Court’s inquiry extends to determining the amount of damages and establishing “the truth of any
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`averment by evidence,” or making “an investigation of any other matter.” Id.
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`2.
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`Claims Subject to Entry of Judgment.
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`Although plaintiff makes a general request for entry of a default judgment, it is clear from
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`its motion that plaintiff only seeks default judgment on its claim that the Defaulted Defendants
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`directly infringed its rights under the Copyright Act. The Motion only addresses the direct
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`infringement claim and, significantly, calculates damages based solely on that claim.
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`Accordingly, the Court will only address the propriety of entering default judgment with respect
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`to the direct infringement claim.1
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`3.
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`Subject Matter Jurisdiction.
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`In its Order Regarding Summary Judgment Motions this Court held that it “does not have
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`subject matter jurisdiction over an infringement claim until the Copyright Office grants the
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`registration application and issues a certificate of registration.” (Dkt. # 242 at p. 32). Although
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`plaintiff has not addressed the issue of subject matter jurisdiction in its Motion, it is incumbent
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`on the Court to do so sua sponte. See Watts v. Pinckney, 752 F.2d 406, 409 (9th Cir. 1985) (if
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`court lacks subject matter jurisdiction, any default judgment it issued would be void).
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`Of the images that Corbis claims were infringed by the Defaulted Defendants, it asserts
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`1There is some question regarding whether plaintiff would be entitled to default judgment with
`respect to all of the remaining claims. On December 21, 2004, this Court issued an Order Regarding
`Summary Judgment Motions (Dkt. # 242) in which it granted summary judgment in favor of defendant
`Amazon.com Inc. with regard to the false designation of origin and unfair competition, trademark
`dilution, unfair competition under Washington’s Consumer Protection Act, R.C.W. 19.86.020, et seq.,
`and tortious interference with business relationships claims. See Dkt. # 242 at pp. 38-43. It is improper
`to enter a default judgment against a defaulted defendant on claims on which a similarly situated
`defendant has prevailed. See In re First T.D. & Inv., Inc., 253 F.3d 520, 532 (9th Cir. 2001). Here,
`plaintiff has not attempted to distinguish defendant Amazon.com from the Defaulted Defendants, and the
`extent to which the defenses raised by Amazon.com would apply to the Defaulted Defendants remains
`unclear.
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`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 4 of 11
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`two copyright interests. The first is the copyright interests of the photographers who took the
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`photos (the “photographer’s copyright”). Corbis has retained the right to assert a photographer’s
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`copyright interests through its respective agreements with the photographers. The second
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`copyright interest is Corbis’ own interest in the compilation of photographs contained in bulk
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`CD-ROM filings submitted to the Copyright Office (the “Corbis copyright”).2 A number of the
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`images plaintiff lists as having been infringed do not include the photographer’s copyright
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`registration. Other images do not include a copyright registration for the Corbis copyright. To
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`the extent that plaintiff claims a default judgment for copyrights for which Corbis does not have
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`a certificate of registration, its motion is denied.
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`4.
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`Sufficiency of Evidence Supporting Entry of Default.
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`Based on the evidence submitted in support of the Motion, the Court is unable to enter
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`default judgment. To begin, plaintiff makes no distinction between damages for infringment of
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`the photographer’s copyright and damages for infringement of the Corbis copyright. As a
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`general rule, plaintiff’s exclusive rights under the Corbis copyright only extend to “the elements
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`of compilation and editing that went into the collective work as a whole . . . and those
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`copyrighted contributions that have been transferred in writing to the owner by their authors.”
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`H.R. No. 94-1476, reprinted in 1976 U.S.C.C.A.N. 5659 (emphasis added). With regard to the
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`Corbis copyrights, it is not clear whether plaintiff seeks damages for infringement of the
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`elements of compilation and editing of the collective work or for infringment of the copyrighted
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`contributions of the collective work. If plaintiff seeks damages for infringement of the elements
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`of compilation and editing, it has failed to make clear why a licensing fee for the contributed
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`2Plaintiff has previously indicated that it also holds a derivative copyright interest in changes made
`to the photographs by its employees. In its motion, however, plaintiff does not mention the derivative
`work of its employees or indicate that it seeks judgment based on infringement of a derivative copyright.
`Accordingly, this Court will not address the potential derivative copyright interests in this Order.
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`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 5 of 11
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`work is the appropriate lodestar for determining damages. If plaintiff is seeking damages only
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`for the copyrighted contributions, plaintiff fails to explain why it has included contributions for
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`which there is no copyright registration. Without such information, the Court is unable to
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`determine which copyright interests have been infringed and, consequently, the amount of
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`damages that are appropriate.
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`Setting aside plaintiff’s failure to distinguish between the collective copyrights and the
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`copyrights in the individual images, plaintiff has failed to meet its burden of sufficiently
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`establishing the extent of its damages. See Geddes v. United Financial Group, 559 F.2d 557,
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`560 (9th Cir. 1977). “Actual damages are defined as ‘the extent to which the market value of a
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`copyrighted work has been injured or destroyed by an infringement.’” U.S. v. King Features
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`Entertainment, Inc., 843 F.2d 394, 400 (9th Cir. 1988) (citing Frank Music Corp. v.
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`Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 512 (9th Cir. 1985)). “Actual damages are usually
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`determined by the loss in the fair market value of the copyright, measured by the profits lost due
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`to the infringement or by the value of the use of the copyrighted work to the infringer.” Polar
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`Bear Productions, Inc.. v. Timex Corp., 384 F.3d 700, 708 (9th Cir. 2004) (internal citations
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`omitted).
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`Plaintiff has not provided any evidence of profits lost due to infringement or the value of
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`the use of the copyrighted work to the Defaulted Defendants. Instead, plaintiff has attempted to
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`establish the fair market value of the copyright by reference to the license fees it would have
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`received if the Defaulted Defendants had properly licensed the images for distribution and sale.
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`In determining the appropriate licensing fee, plaintiff relies on the expert opinion of Mark A.
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`Roessler. Mr. Roessler reviewed the images that had been infringed, consulted three reference
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`books regarding celebrity licensing, and applied “generally accepted principles that are used to
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`negotiate licenses of celebrity images in the industry.” Donlan Decl. at p. 63. Mr. Roessler
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`attaches a monetary value for a licensing fee for each of the pictures that plaintiff claims have
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`been infringed by the Defaulted Defendants. Plaintiff has added the amount of that fee that it
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 6 of 11
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`would have received and presented it as the total actual damages it should be awarded.
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`Although a plaintiff may argue that it is entitled to a lost license fee as actual damages,
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`see Sid & Marty Kroft Television Productions, Inc. v. McDonald’s Corp., 562 F.2d 1157, 1174
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`(9th Cir. 1977); see also On Davis v. The Gap, Inc., 246 F.3d 152, 166 (2nd Cir. 2001), the Court
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`has some concerns with the manner in which plaintiff calculated that fee. As the On Davis court
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`made clear, “the lost license fee can risk abuse. Once the defendant has infringed, the owner
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`may claim unreasonable amounts as the license fee. . . .” Id. As a result, the question when
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`determining damages according to lost license fees “is not what the owner would have charged,
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`but rather what is the fair market value.” Id. In determining fair market value, the Court does
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`not look to “the highest use for which plaintiff might license but the use the infringer made.” Id.
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`at n.3. Under the circumstances, “the proper inquiry was what price a willing buyer and a
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`willing seller would have agreed on for the actual use made by the defendant.” Country Road
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`Music, Inc. v. MP3.Com, Inc., 279 F.Supp.2d 325, 331 (S.D.N.Y. 2003) (internal quotations
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`omitted). The Court may “reject a proffered measure of damages if it is too speculative.” Frank,
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`772 F.2d at 513.
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`Here, it appears as if Mr. Roessler has determined the fair market value based on a
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`presumed use of the celebrity images and not based on the actual use made by the defendants.
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`As Mr. Roessler concedes, “[a] fundamental component in negotiating the fee for use of a
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`celebrity is to articulate precisely the scope of what the party is receiving by virtue of the
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`agreement.” Donlan Decl. at p. 64 (endnote omitted). Mr. Roessler states that the exclusivity of
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`the license and “whether the grant would effectively preclude giving similar rights to any other
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`party” would effect the licensing fee. Id. Exclusive licenses or licenses that preclude similar
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`uses “warrant the payment of premium fees.” Id. In addition, “whether the celebrity wishes to
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`associate with the proposed project” also affects the amount of the fee. Id.
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`Having established the significance of these factors, Mr. Roessler fails to determine how
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`each factor applies to the particular use made of the images by the respective defendants.
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 7 of 11
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`Instead, Mr. Roessler makes a blanket and unsupported assertion that the license fee applicable
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`to the images infringed by the Defaulted Defendants “warrants payment of premium advances or
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`guarantees” because “if a license was granted for the use of the image, the license would likely
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`be exclusive.” Regardless of whether an exclusive license may have been likely, this Court is
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`not convinced that it describes “the use the infringer[s] made” of the images. See Trell v.
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`Marlee Electronics Corp., 912 F.2d 1443, 1446-47 (Fed. Cir. 1990) (“A particular fee is not the
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`correct measure of damages unless that which is provided . . . to [the] licensees for that fee is
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`commensurate with that which the defendant has appropriated”). There is no evidence to
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`suggest that the Defaulted Defendants use of the images was consistent with an exclusive
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`license. See Bi-Rite v. Button Master, 578 F.Supp. 59, 60 (S.D.N.Y. 1983) (declining to rely,
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`for purposes of calculating a hypothetical license on an exclusive license where defendant’s use
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`was consistent with a non-exclusive license). Similarly, there is no evidence from plaintiff or
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`Mr. Roessler that the use made by Defaulted Defendants was akin to an exclusive license
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`because plaintiff was unable to license the images to other potential purchasers as a result of the
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`infringing use. Without such evidence, measuring damages according to premium advances or
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`guarantees for an exclusive license is inappropriate. See Frank, 772 F.2d 505, 513, (1985)
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`(holding that plaintiff had not provided sufficient evidence that infringement of a portion of a
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`play impaired “the prospects for presenting a full production of that play”); cf. Cream Records,
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`Inc. v. Jos. Schlitz Brewing Co., 754 F.2d 826, 827 (9th Cir. 1985) (evidence showed that
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`defendant’s use of song in commercial “destroys its value to other advertisers for that purpose”).
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`In addition, in calculating the licensing fees and subsequent royalties that would have
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`been generated, Mr. Roessler assumed the Defaulted Defendants would enter into a four-year
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`agreement. See Donlan Decl. at p. 65. Mr. Roessler does not justify the use of a four-year term,
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`nor is there evidence produced by plaintiff that any of the Defaulted Defendants infringed the
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`images over a four-year period. Without evidence regarding the Defaulted Defendant’s actual
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`use, reliance on such an extended term is inappropriate. See Bi-Rite, 578 F.Supp. at 60
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 8 of 11
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`(refusing to rely on license for one-year term as basis for damages when defendant’s infringing
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`use lasted only six weeks).
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`Finally, Corbis asserts that it “is in the business of licensing photographic and fine art
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`images on behalf of itself and the photographers it represents.” Motion at p. 3. This Court finds
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`it noteworthy that Corbis chose not to base its damages on its own experience in licensing
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`images. Although this evidence may not be dispositive, it certainly reduces the inevitable
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`speculation that goes into calculating actual damages for copyright infringement. Where
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`“copyright owners are represented by agents who have established rates that are regularly paid
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`by licensees . . . establishing the fair market value of the license fee of which the owner was
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`deprived is no more speculative than determining the damages in the case of a stolen cargo of
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`lumber or potatoes.” On Davis, 246 F.3d at 167. Notably, plaintiff does not even attempt to
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`explain why it eschewed the presumed wealth of evidence at its disposal and, instead, chose to
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`rely solely on Mr. Roessler’s opinion. Cf. Barrera v. Brooklyn Music, Ltd., 346 F.Supp.2d 400,
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`409 (S.D.N.Y. 2004) (plaintiffs hired expert to assess fair market value of license to use
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`infringed photograph because plaintiffs sell prints of their work through art galleries and were
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`“unfamiliar with the market for such licensed work”).
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`When a court finds that “neither the infringer’s profits nor the copyright holder’s actual
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`damages can be proved, statutory damages are mandatory.” Russell v. Price, 612 F.2d 1123,
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`1129 (9th Cir. 1979), cert. denied, 446 U.S. 952 (1980). Plaintiff, however, has failed to provide
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`the necessary information for awarding statutory damages. In order to recovery statutory
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`damages, a copyright must have been registered before infringement. See Polar Bear Prods., 384
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`F.3d 700, 708 (9th Cir. 2004). Here, plaintiff has not provided the dates of registration of the
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`images or the dates on which the infringements occurred. As a result, the Court cannot
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`determine which, if any, of the claimed infringements merit statutory damages.
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`5.
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`Default Judgment as to Iconographics.
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`In addition to the deficiencies set forth above, the motion for entry of default judgment
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`with respect to defendant Iconographics fails for other reasons. Plaintiff is required to give
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`those defaulting parties who have appeared in the action notice of its intent to seek a default
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`judgment by sending “written notice of the application for judgment at least 3 days prior to the
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`hearing on such application.” Fed. R. Civ. P. 56(b)(2). In addition, this Court’s local rules
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`require that a motion for entry of default judgment against a party who has appeared be noted for
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`consideration seven judicial days after the motion has been filed (as opposed to the same judicial
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`day of filing for defaulted parties who have not appeared) and that all papers filed in support of
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`the motion must be served to the defaulting party’s address of record. See Local CR 56(b)(2).
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`Although plaintiff has made no assertions regarding whether the defaulted parties have
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`made appearances or otherwise participated in the litigation, the record suggest that one of the
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`Defaulted Defendants, Iconographics, has appeared in this action. After default had been
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`entered, Jeff Gainey wrote a letter on behalf of Iconogrpahics to the Court (Dkt. # 41).
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`Mr. Gainey stated that he obtained copies of the poster containing the infringing image at a
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`collectibles show. He indicated that he sold three of the posters for $5 to $10 each and would be
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`willing to reimburse plaintiff for the licensing fee that he owes. He further indicated that he
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`could not afford a lawyer to represent him in Washington state and requested that the case
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`against him be dismissed.
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`Upon examination, Mr. Gainey’s letter constitutes an appearance on behalf of
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`Iconographics. Although Mr. Gainey’s letter may not be the typical appearance expected of a
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`defendant, “[t]he appearance need not necessarily be a formal one.” Wilson v. Moore &
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`Associates, Inc., 564 F.2d 366, 369 (9th Cir. 1977). Significantly, he submitted the letter directly
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`to the Court. See Key Bank of Maine v. Tablecloth Textile Co., 74 F.3d 349, 353 (1st Cir.
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`1996) (“appearance in an action typically involves some presentation or submission to the
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`court”). What is more, Mr. Gainey responded to the allegations against him, asked the Court to
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`dismiss the claim, and indicated his interest in settling the dispute with plaintiff. Based on Mr.
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`Gainey’s letter, the Court concludes that Iconographics did demonstrate to this Court and to
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 10 of 11
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`plaintiff an intent to defend itself and, accordingly, has entered an appearance for purposes of
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`Rule 55.
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`Once Iconographics “‘appeared’ for Rule 55 purposes [it was] entitled to notice of the
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`application for default judgment under Rule 55(b)(2).” Key Bank, 74 F.3d at 354. In addition,
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`under the local rules, plaintiff was required to note its default judgment for at least seven judicial
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`days after it had filed and sent Iconographics all the material in support of the motion. The
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`record makes it clear that the motion was not properly noted as required by the local rules.
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`What is more, plaintiff has not asserted, nor can it be gleaned from the record, that
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`Iconographics was “made aware that a default judgment may be entered against [it].” Wilson,
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`564 F.2d at 369 (quoting 10 C. Wright & A. Miller, Federal Practice and Procedure § 2687
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`(1973)). “[T]he failure to provide 55(b)(2) notice, if the notice is required, is a serious
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`procedural irregularity,” In re Roxford Foods, Inc., 12 F.3d 875, 879 (9th Cir. 1993) (quotations
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`omitted), that requires this Court to deny the motion for default with regard to Iconographics.
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`6.
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`Request for Additional Information.
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`Pursuant to Rule 55(b), the Court requests that plaintiff provide additional information to
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`assist the Court in determining which copyrights it claims have been infringed and what is a
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`sufficient amount of damages for the respective infringements. In addition, if plaintiff seeks to
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`re-file its motion for entry of default judgment against Iconographics, it must provide evidence
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`that it gave Iconographics sufficient notice under the local rules and the Federal Rules of Civil
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`Procedure. Plaintiff must submit the additional information to this Court by 4:30 p.m. on
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`Friday, October 7, 2005. The Court will then review plaintiff’s request for entry of default
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`judgment. If necessary, the Court may request a hearing on the issue once the additional
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`information has been reviewed.
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`7.
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`Plaintiff’s Request for Injunctive Relief.
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`The Court will defer ruling on plaintiff’s request for injunctive relief until it has received
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`the additional information.
`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`Case 2:03-cv-01415-RSL Document 267 Filed 09/02/05 Page 11 of 11
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`B. Motion to Dismiss Unserved Defendants Without Prejudice.
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`Plaintiff’s motion to dismiss Famous Faces, Inc., Legends Memorabilia Inc., Posters
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`Now, and Sign Here Autographs without prejudice is granted.
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`III. CONCLUSION
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`For the foregoing reasons, the “Motion for Default Judgments Against Defendants Famed
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`and Framed, Inc., Iconographics, Carolyn Otwell, (d/b/a Matdiln.com), Pix Poster Cellar,
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`Wynnco.com; and for Dismissal Without Prejudice of Defendants Famous Faces, Inc., Legends
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`Memorabilia Inc., Posters Now, Sign Here Autographs, and HDS Productions” (Dkt. # 265) is
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`granted in part, denied in part, and deferred in part. The Court GRANTS plaintiff’s motion to
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`dismiss the Unserved Defendants. Famous Faces, Inc., Legends Memorabilia Inc., Posters Now,
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`and Sign Here Autographs are DISMISSED WITHOUT PREJUDICE. The Court DENIES
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`plaintiff’s motion for default judgment with respect to defendant Iconographics. The Court
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`DEFERS RULING on the motion for default judgment with regard to defendants Famed and
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`Framed, Inc., Carolyn Otwell, (d/b/a/ Matdiln.com), Pix Poster Cellar, and Wynnco.com.
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`Plaintiff is required to submit additional evidence pursuant to Section II.A.6, above.
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`The Clerk of the Court is directed to note this motion on the Court’s calendar for Friday,
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`October 7, 2005.
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`DATED this 2nd day of September, 2005.
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`A R
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`obert S. Lasnik
`United States District Judge
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`ORDER REGARDING MOTION
`FOR DEFAULT JUDGMENTS AND
`DISMISSAL WITHOUT PREJUDICE
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`-11-