Copyright Infringement Judgment Debt Not Discharged in Bankruptcy

The managing member of a saloon had a $41,231.90 default judgment for copyright infringement entered against him.  The saloon did not have a public performance license, but played music promoted and licensed by the American Society of Composers, Authors and Publishers (ASCAP) anyway.  ASCAP sued the managing member and received a default judgment when the managing member failed to defend himself in the lawsuit.

The managing member filed for bankruptcy after the default judgment was entered against him.  The bankruptcy court held that “the debtor had willfully failed to obtain an ASCAP license and maliciously disregarded the rights of ASCAP’s members and Federal copyright law.” The bankruptcy court therefore excepted the copyright infringement judgment debt from discharge in bankruptcy. The Eight Circuit Bankruptcy Appellate Panel upheld the bankruptcy court’s ruling.  Before filing its lawsuit, ASCAP tried to contact the managing member 44 times in three years using a variety of means.  The Bankruptcy Appellate Panel found that the managing member was responsible for complying with the applicable laws and that he “blatantly failed to comply with Federal copyright law.”

This case is Sailor Music v. Walker, No. 14-6012, U.S. Bankruptcy Appellate Panel for the Eighth Circuit.

Textbook Publishers’ Copyright Litigation Strategy Implodes in Bankruptcy Court

Textbook publishers Pearson EducationCengage Learning and The McGraw-Hill Companies filed suit against an individual for copyright infringement when, without authorization, that individual sold the publishers’ college textbook solutions manuals on the Internet.  The publishers probably could have stopped the infringing activities by sending a cease and desist letter.  Instead, the publishers sought to make an example of the infringer by filing a lawsuit in the Southern District of New York.  The publishers’ plan backfired when the litigation expenses overwhelmed the alleged infringer’s resources and he filed for bankruptcy in Minnesota, where he resides.

The bankruptcy court judge struck the publishers’ demand for a jury trial, awarded the publishers the minimum in statutory damages even after finding willful infringement of the publishers’ copyrights and denied the publishers’ motion for attorney’s fees.  The district court affirmed the bankruptcy court’s decision.  The Eighth Circuit Court of Appeals likewise affirmed the bankruptcy court’s decision.  On appeal to the Eighth Circuit, the publishers argued that they should have had a jury trial to determine damages and that they should have been awarded their attorney’s fees of more than $90,000.

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