Corporate Officer Found Liable for Copyright Infringement in Online Copying Case

This case discusses the potential liability of a corporate officer for the infringing acts of the corporation.  Defendant Larry Chasin, CEO of the corporate defendant IDS, filed a motion for summary judgment against Plaintiff Blue Nile.  Blue Nile filed a cross motion for summary judgment against defendant Chasin on the issue of Chasin’s liability for copyright infringement.  Judge Thomas S. Zilly, Western District of Washington, Seattle, denied Chasin’s motion for summary judgment and granted Blue Nile’s motion for summary judgment, finding Chasin liable for copyright infringement (pdf).

Facts

Blue Nile, Inc. is an online jewelry and diamond retailer.  It alleged that defendants Ideal Diamond Solutions, Inc. (IDS) and Larry Chasin infringed its copyrights by posting Blue Nile’s copyrighted images of diamonds and jewelry on websites owned and operated by IDS and Chasin.

Chasin created IDS to provide brick and mortar jewelry retailers with web services to enable them to compete online.  The court determined from declarations and the parties’ moving papers that IDS was the “brainchild” of the defendant Chasin, that it is a small company and that defendant Chasin controlled the company’s corporate affairs.

Chasin did not dispute the allegations of infringement in Blue Nile’s moving papers.  The bases for Chasin’s motion for summary judgment and his defense to Blue Nile’s motion were “1) he cannot be held liable for copyright infringement because he had no role in creating the infringing websites and no knowledge that content used on the websites was copyrighted by Blue Nile; and 2) he cannot be held liable for IDS’s alleged infringement.”  (Opinion pdf pages 2-3).

The court found that Chasin was mistaken as a matter of law and that no genuine issue of material fact existed and therefore granted Blue Nile’s motion and denied Chasin’s motion.  (Opinion pdf page 3).  The court did not rule on whether IDS infringed Blue Nile’s copyrights, but the order is written on the assumption that IDS did infringe.

Summary Judgment

Summary judgment shall be granted if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.  Fed.R.Civ.P. 56(c).

(Opinion pdf page 3). 

The non-moving party must demonstrate that there is a genuine issue of material fact for trial by identifying “specific facts” to establish a genuine issue.

This blog also discusses the standard for granting summary judgment in Ninth Circuit Upholds Ruling that Sony’s God of War Video Game Not Infringing in Dath v. Sony, Photograph of Model Dancing Copyrighted Bronze Dance Steps Could be Fair Use and Copyright Infringement Suit Regarding Precast Concrete Vault Drawings Yields Summary Judgment Rulings.

Personal Liability for Copyright Infringement

Copyright is a strict liability tort; therefore there is no corporate veil and all individuals who participate are jointly and severally liable.

(Opinion pdf page 4.)

Corporate officers are liable as joint tortfeasors with the corporation when the corporate officer is the dominant influence in the corporation and determines the policies that produce the copyright infringement.

Because Chasin controlled the corporation, his argument that he did not create the infringing websites or know that infringing material was posted was not a defense.  The court stated that

[t]he Copyright Act is a strict liability regime under which any infringer, whether innocent or intentional, is liable.

(Opinion pdf page 5).

The court also indicated that there is a genuine question of material fact regarding whether Chasin is an “innocent infringer.”  Innocent infringement is discussed in my post Fair Use in AP Fairey Dispute but not in Cooks Source Magazine Controversy.  The distinction between an innocent infringer and an intentional infringer is important in calculating damages under the Copyright Act.  17 U.S.C. §504(c)(2).  Regarding innocent infringement, §504(c)(2) states:

In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages…

Vicarious Liability for Copyright Infringement

The court ruled that Chasin is alternatively “liable for vicarious copyright infringement because he had the right and ability to supervise the infringing activity and also had a direct financial interest in such activities.”  (Opinion pdf page 5).  Chasin admitted that he had the ability to remove infringing content, that he controlled corporate affairs, that he invested his own money in IDS and that he received a salary and benefits from IDS.

Vicarious liability is also discussed on this blog in Game Developer Alleges Copyright and Computer Fraud and Abuse Act Violations in Suit Against Unknown Defendants.

This case is Blue Nile, Inc. v. Ideal Diamond Solutions, Inc., et al., No. C10-380Z, Western District of Washington at Seattle.

Ninth Circuit Upholds Ruling that Sony’s God of War Video Game Not Infringing in Dath v. Sony

On July 29, 2011, the Ninth Circuit filed what must be one of its shortest opinions in a copyright case:

We adopt and affirm the district court’s well-reasoned opinion in Bissoon-Dath v. Sony Computer Entm’t Am., Inc., 694 F. Supp.2d 1071 (N.D. Cal. 2010).

Dath v. Sony Computer Entertainment, No. 10-15783.

Facts.

The Plaintiffs Jonathan Bissoon-Dath and Jennifer B. Dath alleged that Sony Computer Entertainment of America, Inc., and one of Sony’s former employees infringed their copyrights in five works with the God of War video game, developed by Sony for its PlayStation 2 and PlayStation Portable video game consoles.  Plaintiffs wrote five works describing the story of Spartan kings at war against Athens, the involvement of the Greek Gods, how the Gods choose a mortal to achieve peace and how the mortal eventually secures peace and democracy in Greece.  Plaintiffs started distributing their works in early 2002.

Sony’s God of War video game also involves the tale of war between Sparta and Athens, but the mortal chosen by the Greek God Athena to end the war later becomes the Greek God of War, overseeing modern wars such as World War II and the Vietnam War.  Sony released the game in March 2005.

Plaintiffs filed this case in February 2008.  After the parties were unable to resolve the case through alternative dispute resolution, the defendants filed a motion for summary judgment.

The decision on summary judgment.

Summary judgment is a pretrial motion to decide the case on its merits without a trial.  The case is decided as a matter of law, relying on the evidence obtained by the parties as of the time the motion is made.  See my posts Photograph of Model Dancing Copyrighted Bronze Dance Steps Could be Fair Use and Copyright Infringement Suit Regarding Precast Concrete Vault Drawings Yields Summary Judgment Rulings for more detailed discussions of the requirements.  Those posts also discuss substantial similarity and scenes a faire, concepts relevant to this case.

Although summary judgment is not highly favored on questions of substantial similarity in copyright cases, summary judgment is appropriate if the court can conclude, after viewing the evidence and drawing inferences in a manner most favorable to the non-moving party, that no reasonable juror could find substantial similarity of ideas and expression.

(District court opinion page 1078).

The “substantial similarity” referred to by the court in the quote above is an aspect of the test used by the court to determine copyright infringement.  The plaintiff must prove that 1) she owns a valid copyright in the work and 2) “the defendant copied protected elements of that work.”  (District court opinion page 1078).  In this case, the defendants did not dispute the validity of the plaintiffs’ copyrights.  The issue on summary judgment was whether plaintiffs could establish that defendants copied the protectable elements of their works.

A plaintiff may establish copying either (1) by presenting direct evidence of copying or (2) by showing that the defendant had access to the work and that the works at issue are substantially similar.

The plaintiffs did not present direct evidence of copying and relied on showing access and substantial similarity.  The Ninth Circuit recognizes a relationship between access and substantial similarity with its “inverse ratio rule.”  When there is a high degree of access, a lower standard of proof of substantial similarity is required. 

The “substantial similarity” element includes a two-part test of its own:  1.  The extrinsic test is an objective test which examines whether “there are substantial similarities in both ideas and expression.”  (District court opinion page 1079).  2.  The intrinsic test is a subjective inquiry into the similarity of expression and is a test for the jury to apply.  The court considers only the extrinsic test on summary judgment.

Copyright law only prohibits copying of the protectable elements of a plaintiff’s work.  Ideas are not protected, but the expression of those ideas is.  General plot ideas and scenes a faire,stock scenes, are also not protected.  A particular sequence of a significant number of unprotectable elements may itself be a protectable element.  The court determines what the protectable elements are and disregards the non-protectable elements.

The court ruled that “no reasonable juror could find substantial similarity of ideas and expression, even if access to all of plaintiffs’ works were proven.”  The court examined the protectability of plaintiffs’ works and the articulable similarities between the works, using the following elements:

  • Plot
  • Themes
  • Dialogue
  • Mood
  • Settings 
  • Pace
  • Characters
  • Sequence of Events

Plot.  The court found similarities between the two plots, but stated that “[o]nce the unprotectable elements are filtered, the two stories’ plots are similar only at a level of abstraction that is barely meaningful, if at all.”  (District court opinion page 1082).

Themes.  The court found that the themes are quite different.  Plaintiffs’ works focus on the establishment of peace and democracy, while God of War focuses on violence, divine forgiveness and continued war.

Dialogue.  The court found that the dialogue similarities either referred to different things in the plaintiffs’ works and God of Waror were clichéd and unprotectable.

Mood.  The court found the mood for plaintiff’s works to be light-hearted, with some darker scenes sprinkled in for contrast and the mood of God of War to be dark and extremely violent.

Settings.  The court found that the shared settings of Greece, Athens, Mount Olympus, Sparta and the Underworld were generic and clichéd and unprotectable elements of stories concerning ancient Greece and Greek gods.

Pace.  The court found that plaintiffs’ works are relatively fast-paced and that God of War is very fast paced, but that the pace of the game is indicative of a violent video game and not of copying plaintiffs’ works.  In addition, the storyline in plaintiffs’ works is linear, whereas in God of War it is repeatedly interrupted with flashbacks.

Characters.  “Greek gods, dialogues among them about mortal affairs, rivalries among the gods, and mythical beasts such as the Hydra or the Nemean Lion are unprotectable elements; it is uncontroversial that they have been used widely in both ancient and modern artistic works, in the naming of astronomical bodies and spacecraft, and in other fields.”  (District court opinion page 1088).

Sequence of Events.  As indicated under the Pace element, the plaintiff’s storyline is linear, with scenes occurring in chronological order, while the scenes in God of War jump around through flash-backs.

In summing up, the court indicated that plaintiffs’ works were comprised of stock elements used in literary and artistic works for a long time.  Even though a particular sequence of stock elements can be protectable, in this case, the sequences of elements and relationships between the elements in the two works were entirely dissimilar.