Attorney Steve® Copyright Law Essentials - Punitive Damages in Infringement Cases?

Basic Facts:

Dashgo sells and distributes music throughout the world using internet distribution and retail channels. Adrev performs business, administrative, distribution, and technological functions in connection with Dashgo's business operations. Dashgo is a wholly owned subsidiary of Adrev, and Adrev dominates the management of Dashgo. Dashgo had a contractual right to exploit the Domestic Works and Foreign Works pursuant to two distribution agreements. One agreement was between Dashgo and Colonize Media (the “Colonize Agreement”), and the other agreement was between Dashgo and MAR International Records (“the MAR Agreement”). Both of these agreements were validly terminated under the terms of those agreements after Yellowcake had acquired the exclusive ownership of all rights in the Domestic Works and the Foreign Works.

Dashgo acknowledged in writing that both the Colonize Agreement and the MAR Agreement were validly terminated in writing and that it would cease distributing the Domestic Works and the Foreign Works. Yellowcake did not enter another distribution agreement with Dashgo, and Dashgo did not obtain any valid rights to exploit the Domestic Works and Foreign Works from any third party after Yellowcake terminated the Colonize Agreement and the MAR Agreement. Whatever rights Dashgo may have had in the Domestic Works and Foreign Works no longer exist. Despite the termination of the two distribution agreements, Dashgo has engaged in a number of unauthorized exploitations of the Domestic Works and Foreign Works, all in violation of Yellowcake's exclusive rights under 17 U.S.C. § 106. Dashgo has inter alia sold, distributed, reproduced, synchronized, created derivative works, and publicly performed Domestic Works and Foreign Works through digital transmission on online Digital Distribution Platforms (i.e. iTunes, Apple Music, Spotify, Amazon Music, and YouTube) without Yellowcake's authorization. Dashgo created and/or uploaded or caused to be created and/or uploaded videos containing unauthorized derivative works of the Domestic Works and Foreign Works. Dashgo continues to benefit from the unauthorized exploitations of the Domestic Works and Foreign Works. Adrev performed inter alia distribution and technological functions for Dashgo in connection with the unauthorized exploitation of the Domestic Works and Foreign Works. On multiple occasions, Yellowcake through its agent Colonize Music has notified either Dashgo or its agent/business affiliate Adrev, of the unauthorized exploitation of the Domestic Works and Foreign Works and demanded that Defendants cease their infringing conduct. Adrev contacted Colonize to discuss unauthorized exploitations by Dashgo. Nevertheless, Dashgo and Adrev continue their unauthorized exploitation.

Despite confirming that all unauthorized uses would cease, Defendants have engaged in at least 165 unauthorized uses of the Domestic Works. 

DEFENDANT'S MOTION A. MOTION TO STRIKE – PUNITIVE DAMAGES

The Court discussed the motion to strike punitive damages in the copyright cause of action:

Defendants' Arguments With respect to the motion to strike, Dashgo argues that Yellowcake seeks punitive damages under the first cause of action for Copyright Infringement. However, punitive damages are unavailable under the Copyright Act. Thus, the punitive damages request must be stricken. Plaintiff's Opposition Yellowcake argues that punitive damages are permitted in connection with a claim for copyright infringement if the plaintiff elects to receive actual damages, or is limited to pursuing actual damages instead of statutory damages. None of the authority cited by Defendants prohibits a plaintiff from seeking punitive damages in connection with a claim for copyright infringement. Discussion Initially, the Court finds that Defendants utilization of Rule 12(f) is improper. “Rule 12(f) does not authorize district courts to strike claims for damages on the grounds that such claims are precluded as a matter of law.” Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 974-75 (9th Cir. 2010).

Thus, Rule 12(f) may not be used to strike a request for punitive damages. Oushana v. Lowe's Cos., 2017 U.S. Dist. LEXIS 182852, *6 (E.D. Cal. Nov. 2, 2017).

However, the Court will exercise its discretion and consider the propriety of punitive damages through Rule 12(b)(6). See id.; Kelley v. Correction Corp. of Am., 750 F.Supp.2d 1132, 1146 (E.D. Cal. 2010). Yellowcake relies on two cases, and only two cases, for the proposition that it is entitled to seek punitive damages if it elects to pursue actual damages instead of statutory damages:

TVT Records v. the Island Def Jam Music Grp., 262 F.Supp.2d 185 (S.D. N.Y. 2003)

and

Blanch v. Koons, 329 F.Supp.2d 568 (S.D. N.Y. 2004).

However, these cases are not binding and have never been followed by any court in the Ninth Circuit.

In fact, these cases are recognized as outliers by courts and treatises alike.

E.g. Falkner v. GM, LLC, 393 F.Supp.3d 927, 939 (C.D. Cal. 2018)

Viacom Int'l, Inc. v. Youtube, Inc., 540 F.Supp.2d 461, 463-64 (S.D. N.Y. 2008)

4 Nimmer on Copyright § 14.02[C][2].

The clear weight of authority is that punitive damages are unavailable in copyright infringement cases.

E.g. Wooten v. Netflix, Inc., 2021 U.S. Dist. LEXIS 203672, *19-*20 (N.D. Ga. May 25, 2021) (and cases cited therein); Falkner, 393 F.Supp.3d at 939 (and cases cited therein)

Graham v. Prince, 265 F.Supp.3d 366, 390 (S.D. N.Y. 2017) (and cases cited therein)

Massacre v. Davies, 2014 U.S. Dist. LEXIS 114787, *16-*17 (N.D. Cal. Aug. 18, 2014)

Reinicke v. Creative Empire, 2013 U.S. Dist. LEXIS 9793, *11-*12 (S.D. Cal. Jan. 24, 2013)

4 Nimmer on Copyright § 14.02[C][2].

The Court will follow the majority rule. Because punitive damages are unavailable in copyright infringement cases, dismissal of the prayer for punitive damages without leave to amend is appropriate.

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