Merchandising Missteps Lead to Willful Infringement and CMI Removal Claims

Music merchandising company Live Nation admitted to copyright infringement by using photographer Glen Friedman’s photographs of the hip-hop group Run-DMC on t-shirts and a calendar without Friedman’s authorization.  On appeal to the Ninth Circuit, the issues in Friedman’s lawsuit against Live Nation involved whether the evidence was sufficient to establish that Live Nation willfully infringed Friedman’s copyrights and to establish that Live Nation violated §1202(b) by knowingly removing copyright management information (CMI) from Friedman’s photos.  There was also an issue of whether the number of retailers who purchased infringing merchandise from Live Nation could be used to calculate statutory damages.

The district court granted summary judgment to Live Nation on the willful infringement and CMI issues.  The district court ruled that Friedman could recover one statutory damages award per work infringed, rejecting Friedman’s damages calculation based on the number of retailers.  The Ninth Circuit reversed the district court’s rulings on the willful infringement and CMI issues, but upheld the district court’s ruling on the statutory damages issue.

Willful Infringement

Copyright owners may recover higher damage amounts if the infringer willfully infringes.  17 USC §504(c)(2).  The copyright owner bears the burden of proving willful infringement. 

To prove ‘willfulness’ under the Copyright Act, the plaintiff must show (1) that the defendant was actually aware of the infringing activity, or (2) that the defendant’s actions were the result of ‘reckless disregard’ for, or ‘willful blindness’ to, the copyright holder’s rights.

(Opinion pdf page 11).

A willfulness finding can be based on either intentional or reckless behavior.  An assessment of the infringer’s state of mind is required.  Questions involving a person’s state of mind are generally not appropriate for summary judgement and must be left for the jury to decide.  Although the district court recognized that questions involving a person’s state of mind are generally issues for the jury, the district court ruled that Friedman did not offer evidence that would create an issue of fact for the jury.  The Ninth Circuit disagreed. 

In a declaration in support of Live Nation’s summary judgment motion, one of its employees explained that when artists did not own the rights to photographs, ‘they were not supposed to, and should not, provide their written approval to develop merchandise using those photographs.’ But the employee did not say how or when Run-DMC was apprised of this duty. She asserted only that as an industry practice ‘it is generally the responsibility of the music artists’ personal managers to uncover the relevant facts and ascertain the scope of the music artists’ rights.’ Given an approval process that never explicitly asks about copyrights at all, a jury could reasonably conclude that Live Nation’s reliance on the artists who were the subjects of the photographs at issue to clear photographic rights, rather than on the photographers who took them — based only on a purported industry practice never reflected in any document — amounted to recklessness or willful disregard, and thus willfulness.

(Opinion pdf pages 12 – 13).

Drawing all inferences in Friedman’s favor, the Ninth Circuit concluded that the evidence on record gave rise to a triable issue of fact regarding Live Nation’s willfulness.

Copyright Management Information

The Digital Millennium Copyright Act (DMCA) covers more than online behavior.  Section 1202(b) prohibits the distribution of works “knowing that the copyright management information has been removed or altered without authority of the copyright owner or the law,” and with knowledge that such distribution “will induce, enable, facilitate, or conceal” copyright infringement. 

The district court concluded that Friedman did not make a factual showing the Live Nation removed CMI from Friedman’s photos or that Live Nation knowingly removed the CMI.  The Ninth Circuit thought the district court focused on the wrong question. 

The statute does prohibit the intentional removal of CMI.  But Friedman could also prevail upon a showing that Live Nation distributed his works with the knowledge that CMI had been removed, even if Live Nation did not remove it. The question, therefore, is whether evidence in the record creates a triable issue of fact as to whether Live Nation distributed Friedman’s photographs with the requisite knowledge. We conclude that in the circumstances of this case, it does.

Contrary to the district court’s assertion, Friedman did produce evidence supporting his claim. Most importantly, Friedman produced the images as they appeared on Live Nation’s merchandise and the same images as they had appeared on Sony’s website and in his book. In his motion for summary judgment, he compared them, demonstrating that there were striking similarities.

A ‘striking similarity’ between the works may give rise to a permissible inference of copying.  Here, the fact that the photographs used by Live Nation were exact copies of the images precisely as they appeared on Sony’s website and in Friedman’s book gives rise to the compelling inference that Live Nation’s photographs were directly copied from those sources. Because the only material difference in the Live Nation versions was that the CMI was missing, it was necessarily the case that the CMI had been removed on the copied version.

(Opinion pdf pages 14 – 16).

Friedman had licensed some of his images of his Run-DMC photos to Sony Music for limited use on its website.

The Ninth Circuit ruled that Friedman was not required to produce direct evidence of Live Nation’s knowledge of the CMI removal.  Circumstantial evidence can be used to prove any fact.  Whether a party had knowledge of a particular circumstance is a question of fact.  A person’s state of mind when taking a particular action is almost always established by circumstantial evidence.

Live Nation is wrong, therefore, that the evidence in the record as a whole is not consistent with a reasonable, if not particularly strong, inference that Live Nation knew of the removal of the CMI when it distributed Friedman’s photographs. Because Friedman had therefore discharged his burden of production at summary judgment, the burden shifted back to Live Nation to carry its ultimate burden of persuasion by persuading the court that there is no genuine issue of material fact. It might have done so by providing some explanation for how it came to possess Friedman’s images — missing their CMI — in the first place, establishing its lack of knowledge and negating the inference drawn from the juxtaposition of the photographs.

How Live Nation came to possess Friedman’s photographs — and thus whether it had knowledge that the CMI had been removed — is a fact particularly within Live Nation’s knowledge. It would be unfair to burden Friedman at the summary judgment stage with proving that knowledge with greater specificity than he did. We therefore reverse the district court’s decision granting summary judgment to Live Nation on Friedman’s CMI claim.

(Opinion pdf pages 18 – 19).

Statutory Damages

An award of statutory damages under §504(c)(1) depends on 1) the number of individual works infringed and 2) the number of separate infringers. 

Friedman argued that he should be able to collect statutory damages from the downstream infringers to whom Live Nation distributed infringing merchandise, even though Friedman did not name those downstream infringers as defendants in his suit against Live Nation.  Friedman argued that the downstream infringers were each jointly and severally liable with Live Nation for the infringements.  The Ninth Circuit rejected Friedman’s arguments.

We hold that Section 504(c)(1)’s provision of separate statutory damage awards for the infringement of each work ‘for which any two or more infringers are liable jointly and severally’ applies only to parties who have been determined jointly and severally liable in the course of the liability determinations in the case for the infringements adjudicated in the action. A plaintiff seeking separate damages awards on the basis of downstream infringement must join the alleged downstream infringers in the action and prove their liability for infringement. Because Friedman did not join any of his alleged downstream infringers as defendants in this case, the district court correctly held that he was limited to one award per work infringed by Live Nation. We therefore affirm the district court’s statutory damages ruling.

(Opinion pdf page 25).

This case is Friedman v. Live Nation Merchandise, Inc., No. 14-55302, Ninth Circuit Court of Appeals.

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