No Contract Formed by New Car Satellite Radio Trial Subscription Offer

This case is not a copyright case or even an intellectual property law case.  However, this case discusses contract formation issues that every intellectual property owner would benefit from knowing.  This case discusses contract formation for a digital service.  Since many business owners rely on licenses (a type of contract) to help protect their intellectual property rights, understanding when and how a contract is formed is essential.

Satellite radio service Sirius XM Radio Inc. broadcasts commercial-free radio channels to over 20 million subscribers.  A trial subscription of Sirius XM radio comes with many new vehicles. Erik Knutson activated the Sirius XM radio trial subscription that came with his new truck on November 7, 2011.  Knutson afterward received telemarketing calls on his cell phone from Sirius XM.  Knutson brought a class action lawsuit against Sirius XM, claiming federal Telephone Consumer Protection Act violations.  The district court ruled that Knutson was bound by the arbitration provision in the Sirius XM Customer Agreement and dismissed Knutson’s case.  The Ninth Circuit Court of Appeals reversed and remanded.

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Prevailing Party Did Not Prevail Enough for Attorney’s Fee Award

Yellow Pages Photos sued Ziplocal and Yellow Pages Group for copyright infringement.  The jury found that Ziplocal willfully infringed 123 copyrights owned by Yellow Pages Photos.  The jury awarded Yellow Pages Photos $123,000 in statutory damages against Yellow Pages Group for willful infringement, $1 in actual damages against Ziplocal, $0 in statutory damages against Ziplocal and $100,000 in actual damages for Ziplocal’s contributory willful infringement.  The total jury award against Ziplocal was $100,001.  Yellow Pages Photos brought a post trial motion against Ziplocal for attorney’s fees and costs. 

The Copyright Act provides in 17 U.S.C. §505 that “the court in its discretion may allow the recovery of full costs by or against any party.”  Under §505, “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.”  The district court refused to award attorney’s fees under the Copyright Act.

An award of fees to either side would run afoul of any perceived even-handed approach. The jury’s verdict speaks for itself that Ziplocal committed both willful infringement and willful contributory infringement. Nevertheless, the jury did not award a great amount of damages. While the Plaintiff vigorously and successfully defended its copyright, the damages sought based on the number of works at 10,200 far exceeded those actually recovered for the less than 200 works. The disconnect between the damages sought and the damages awarded weigh heavily against an award of fees. The Court exercises its discretion to deny attorney’s fees under the Copyright Act in this very contentious case.

The district court did award Yellow Pages Photos attorney’s fees and costs against Ziplocal for breaching Yellow Pages Photo’s End User License Agreement (EULA).  Florida state law applied to the EULA breach and the district court did not have discretion under state law to deny the fee award.  The jury awarded $0 to Yellow Pages Photo’s for Ziplocal’s breach of the EULA.

This case is Yellow Pages Photos, Inc. v. Ziplocal, LP, No. 8:12-cv-755-T-26TBM, U.S. District Court, Middle District of Florida.

Plaintiff Proactively Shuts Down Defendant’s Fair Use Defense

In a typical fair use case, the defendant brings a motion for summary judgment that her actions in copying the plaintiff’s work are protected by the fair use defense.  In this case, plaintiffs Erickson Productions and Jim Erickson brought a motion for summary judgment asking the district court to rule that the defendant Kraig Kast is not protected by the fair use defense.  The district court agreed with Erickson and granted his motion for summary judgment.

Erickson is a professional photographer who licensed some of his photos to Wells Fargo.  Kast’s website designer copied some of Erickson’s photos from the Wells Fargo website and used them in Kast’s own website, Atherton Trust.  Kast admitted to the copying, but claimed fair use.  Kast argued that the commercial character of the use was minimal because he did not like the photos, that the photos weren’t meaningful to him and that he never intended for the photos to be used in the final Atherton Trust website.  Aside from Kast’s novel argument that his dislike of the photos is somehow relevant to fair use, the district court addressed Kast’s arguments that Erickson didn’t lose that much money and that the website designer dude done it.

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