Seven music company members (Music Companies) of the American Society of Composers, Authors, and Publishers (ASCAP) sued East Coast Foods, Inc. and its sole officer and director, Herbert Hudson, for copyright infringement arising out of musical performances of eight works at the Long Beach, California, Roscoe’s House of Chicken and Waffles restaurant. The Ninth Circuit Court of Appeals upheld the district court’s grant of summary judgment and award of $36,000 in damages in favor of the Music Companies and the district court’s award of $162,728.22 in attorney’s fees to the Music Companies.
East Coast owns the Roscoe’s restaurant chain. The Long Beach Roscoe’s restaurant opened in 2001. The Sea Bird Jazz Lounge is attached to the restaurant. ASCAP is a nonprofit music licensing organization that collects royalties for its members. ASCAP contacted East Coast shortly after the Long Beach Roscoe’s opened to offer East Coast a license to perform music in the restaurant and lounge. East Coast did not obtain a license and between 2001 and 2007, ignored ASCAP’s recurring requests to pay licensing fees.
ASCAP hired an investigator, who visited the Long Beach Roscoe’s on May 30, 2008. On that day, a live act played songs that the investigator recognized. The live act announced the names of some of the songs before playing them and indicated that they were “Coltrane standards.” Songs were also played over the lounge’s sound system from a CD. The investigator did not recognize the songs played from the CD, but obtained the titles of the songs from the jewel case he saw next to the CD player. The investigator identified eight infringing songs in his report, some of which were played by the live band and some of which were played from the CD. The Music Companies own valid, registered copyrights in the eight songs identified.
The Music Companies sued East Coast and Hudson for copyright infringement for each of the eight songs identified by the investigator. The complaint alleged that the Long Beach Roscoe’s was owned and operated by East Coast and that Herbert Hudson was East Coast’s president and principal stockholder. East Coast and Hudson counterclaimed for a declaratory judgment that they did not infringe the copyrights.
The Music Companies’ motion for summary judgment was granted by the district court. The district court awarded $4,500 in statutory damages for each of the eight songs infringed, for a total of $36,000. East Coast and Hudson were held jointly and severally liable. The district court later awarded the Music Companies $162,728.22 in attorney’s fees and costs against East Coast and Hudson. East Coast and Hudson appealed the grant of summary judgment and the attorneys’ fee award.
Summary judgment standard. Summary judgment will be granted when, after the evidence is viewed in the light most favorable to the non-moving party and all reasonable inferences are drawn in favor of that party, there exist no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.
Sufficiency of the complaint. East Coast and Hudson argued that the Music Companies’ complaint did not state a claim of vicarious liability for copyright infringement and was therefore insufficient. Vicarious liability applies to certain people who are not direct infringers. The direct infringers in this case are the live band and the DJ who played the disc in the CD player. The requirements for vicarious liability are discussed in greater detail below.
The Ninth Circuit disagreed with the defendants’ argument that the complaint was insufficient:
The Music Companies’ complaint contained an adequate statement of the claim of vicarious infringement: it alleged that copyrighted musical compositions were publicly performed at the Long Beach Roscoe’s, and pleaded specific facts to raise a plausible inference that East Coast and Hudson exercised control over and financially benefitted from the performance venue.
(Opinion pdf page 7.)
Sufficiency of the evidence of infringement. East Coast and Hudson argued that the district court erred in granting summary judgment because it relied on expert testimony given by a lay witness when it relied on the evidence of the investigator and because the Music Companies failed to prove a “substantial similarity” between the songs publicly performed and the copyrighted works.
The Ninth Circuit ruled that the district court did not err in relying on the investigator’s report and deposition testimony and that an expert witness is not required in this situation.
Identifying popular songs does not require scientific, technical, or other specialized knowledge….The distinction between lay and expert witness testimony is that lay testimony results from a process of reasoning familiar in everyday life, while expert testimony results from a process of reasoning which can be mastered only by specialists in the field.
The Ninth Circuit called the defendants’ “substantial similarity” argument a “red herring.” According to the court, the proper question is whether or not the infringing performances occurred. East Coast and Hudson could not raise a genuine issue of material fact on that question. The report and deposition testimony of the investigator were sufficient to establish that the songs were publicly performed.
All of this evidence was completely uncontradicted by East Coast and Hudson, who proffered no evidence tending to contradict [the investigator’s] testimony that the eight copyrighted compositions at issue were publicly performed at the Long Beach Roscoe’s on the night he visited the venue.
(Opinion pdf page 8.)
The copyright owner in a copyright infringement case must prove “1) ownership of a valid copyright, and 2) copying of constituent elements of the work that are original.” (Opinion pdf page 8). The word “copying” in a copyright infringement case is an abbreviation referring to a violation of any one of the copyright owner’s exclusive rights under 17 U.S.C. §106. One of the exclusive rights is the right of public performance.
“Substantial similarity” is not an element of a copyright infringement claim. It is a doctrine that assists courts in determining whether the “constituent elements of the work that are original” have been copied when the allegedly infringing work incorporates elements from the original work without copying the original work in its entirety. The reason that showing “substantial similarity” was irrelevant in this case is that the Music Companies produced evidence that the public performances involved direct copying of the copyrighted songs. There is no need to show substantial similarity between the copyrighted work and the infringing work when there is evidence of direct copying.
East Coast’s and Hudson’s liability. East Coast and Hudson argued that they could not be held liable for vicarious copyright infringement, as the Long Beach Roscoe’s and the attached Sea Bird Jazz Lounge were owned by Shoreline Foods, an independent corporate entity. A defendant will be held liable for vicarious copyright infringement when the defendant exercises the necessary degree of control over the direct infringer and receives a direct financial benefit from the direct infringement. “A defendant exercises control over a direct infringer when he has both a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.” (Opinion pdf page 10).
In this case, the evidence showed that East Coast and Hudson exercised control over the Long Beach Roscoe’s and the Sea Bird Jazz Lounge and received direct financial benefit from the infringing performances. For example, there was a single liquor license, owned by East Coast and signed by Hudson, covering both the restaurant and the lounge. The court found that Hudson’s unsubstantiated and self-serving declaration that he never owned the Long Beach Roscoe’s was the only evidence offered to establish that East Coast and Hudson were not proper defendants. Such a declaration is insufficient to create a genuine issue of material fact.
Attorney’s fees. The court has the power to award reasonable attorney’s fees to the prevailing party in a copyright infringement case. 17 U.S.C. §505. “[D]istrict courts are given wide latitude to exercise ‘equitable discretion.’” (Opinion pdf page 12). The Ninth Circuit determined that the district court thoroughly considered both parties’ arguments, applied the factors articulated in Entertainment Research Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d 1211, 1229 (9th Cir. 1997), and provided an analytical explanation for the fee award.
The factors from Entertainment Research Group that the district court may consider in awarding attorney’s fees under the Copyright Act are
- the degree of success obtained;
- the objective unreasonableness of the losing party’s factual and legal arguments; and
- the need, in particular circumstances, to advance considerations of compensation and deterrence.
In upholding the attorneys’ fees award, the Ninth Circuit pointed out
East Coast and Hudson could have avoided liability by purchasing a valid license at any point during the seven years in which ASCAP importuned them to do so. Moreover, much of the fees and costs were occasioned by East Coast’s and Hudson’s obfuscation of the corporate structure of Roscoe’s.
(Opinion pdf page 12.)
A noteworthy thing about this case is that even though ASCAP nudged the defendants to pay for a license for seven years, the case was brought on the basis of the eight infringing songs played on the one night that the investigator was at Long Beach Roscoe’s and the damages were awarded for only those eight infringing songs.
This case is Range Road Music, Inc. v. East Coast Foods, Inc., No 10-55691.