This case illustrates the difficulty in proving actual damages and profits damages in copyright infringement cases. Anthony Lawrence Dash composed “Tony Gunz Beat,” (TGB), an instrumental music track. Floyd Mayweather, a famous boxer, co-wrote lyrics to TGB and renamed the song “Yep.” Mayweather used “Yep” as his introductory music for two World Wrestling Entertainment, Inc. (WWE) broadcast events he appeared in. Dash sued Mayweather, WWE and others for copyright infringement.
As Dash did not register his copyright until after the alleged infringement occurred, he could not recover statutory damages and was limited to proving his actual damages and the infringers’ profits. The parties requested the district court to rule on whether Dash was entitled to damages before determining whether the defendants were liable for copyright infringement. The defendants moved for summary judgment on both damages issues. The district court ruled that Dash was not entitled to receive either actual damages or profits damages. Dash did not present evidence that TGB had a market value, precluding actual damages. Dash did not present evidence of a causal link between the playing of his song and an increase in profits received by the defendants, preventing profits damages. The district court then dismissed the case entirely, including the liability portion of the case. The Fourth Circuit Court of Appeals affirmed the district court’s decision.
The controlling statute is 17 U.S.C. §504(b):
Actual Damages and Profits.— The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.
Actual damages evidence did not establish a market value for TGB and was speculative.
In moving for summary judgment, defendants presented evidence that Dash admitted that he did not commercially exploit TGB, that Dash’s tax returns did not reflect income from licensing or selling musical compositions and that Dash did not offer any proof that he previously sold any of his beats. This evidence supported the defendants’ argument that TGB did not have any market value. In response, Dash had the burden of showing by nonspeculative evidence that TGB did have market value. That “Yep” was a derivative work of TGB did not affect the Fourth Circuit’s analysis, since the court focused on the broader question of whether Dash should recover damages at all.
Dash relied on the lost licensing theory to establish market value. The lost licensing theory looks at the fair market value of a license negotiated between a willing buyer and a willing seller making the same use of the work as the infringer. There are no subjective elements, such as hurt feelings or the artist’s objections to another’s treatment of her work, considered.
Dash relied on the report of his expert witness, Dr. Michael Einhorn, to establish his actual damages claim. The Fourth Circuit ruled that value estimation in the Einhorn Report was too speculative and that summary judgment in favor of the defendants was properly granted. The Einhorn Report assigned a maximum value to the lost licensing fee, but did not establish a minimum value. The Report did not expressly conclude that TGB had a market value.
Without any evidence that Dash previously sold or otherwise garnered some market value for the use of his music, any claim that he would have earned a licensing fee, based solely on his history as an artist, is too speculative to preclude summary judgment on his actual damages claim.
(Opinion pdf pages 31-32).
How do new artists establish the value of a lost licensing fee? This can be done by examining what the infringer has paid to license works in the past.
Evidence of an infringer’s entrance into licensing agreements with other copyright holders is not overly speculative when the benchmark licenses contemplate comparable uses of comparable works.
(Opinion pdf page 33).
Even non-comparable benchmark licenses can be used to establish the value of the lost licensing fee of an infringed work, as long as undue speculation is not relied upon to reach a value. The value reached must be supported by enough sound analysis to take it out of the realm of undue speculation.
In this case, although the Einhorn Report compared TGB to non-comparable benchmarks, the Report did not offer any reasons why the license fee for TGB should be the same as the non-comparable benchmark with the lowest licensing fee.
Because Dash did not provide nonspeculative evidence to counter the defendants’ evidence supporting a finding of no market value for TGB, the Fourth Circuit affirmed the district court’s ruling.
A causal link between the infringement and claimed revenues, supported by nonspeculative evidence, was not established.
A plaintiff seeking profit damages has an affirmative duty to prove the defendant’s gross revenue reasonably related to the infringement. This requires the plaintiff to prove (1) the amount of the claimed revenue streams, and (2) that there is some reasonable relationship between the infringement and those particular profit streams. Proving that the claimed profit streams are reasonably related to the infringement requires the plaintiff to (1) allege a conceivable connection between the infringement and the claimed revenues, and (2) offer nonspeculative evidence that a causal link exists.
(Opinion pdf pages 59-60).
Dash stipulated that he had no evidence that playing the “Yep” song at the WWE events increased any of the WWE revenue streams. He argued that the necessary causal link was established when the infringing song was included in the WWE event broadcasts and that the revenue from those events was derived exclusively from the infringed work.
The Fourth Circuit disagreed. The infringing content comprised only a small, incidental portion of the productions that created the revenue streams. In this situation, Dash must show more than that the infringed work was used in the WWE productions. He must show that the infringement contributed to the defendants’ profits.
Dash was required to show not merely that Appellees generated more revenue from playing “Yep” than from playing no song, but that they generated more revenue from playing “Yep” than from playing a non-infringing song.
(Opinion pdf page 65).
Since Dash did not make the required connection between the infringements and the revenue streams, the Fourth Circuit affirmed the district court’s ruling in favor of the defendants on the profits damages issue.
This case is Dash v. Mayweather, No. 12-1899, Fourth Circuit Court of Appeals.