Vondran Legal® Strike 3 Holdings Legal Insights - Statutory Damages on Default can lead to $750 per movie infringed!  Call us to discuss your case at (877) 276-5084.  

Introduction

I see a lot of talk on websites like Reddit discussing how one should JUST IGNORE the ISP subpoena and don't reach out to Strike 3 Holdings and the matter will literally disappear and the torrent infringer will not have to pay a penny.  While this approach may work in certain cases where (1) Strike Three cannot identify the alleged infringer or (2) they perform their due diligence after obtaining the subscribers name and home address, and determine they have no money or are not worth pursuing. For example, where a suspected downloader is a minor, or in school, or has not significant job profile on LinkedIn.  These types of things may result in Strike3 dropping the federal court litigation case.  But, on the other hand, if you have a job and personal assets, and do not want to risk a default judgment, it may make sense to discuss your case with a Torrent Copyright Defense Firm.  This blog shows how ignoring a lawsuit, and taking advice from non-attorney Reditt users could backfire to your detriment.

Strike 3 Holdings, LLC v. Doe (E.D.Pa. Mar. 30, 2022, No. 20-5122) 2022 U.S.Dist.LEXIS 57930, at *1.

In this case, Plaintiff Strike 3 Holdings, LLC moves for default judgment against Defendant Bernard S. Gray pursuant to Federal Rule of Civil Procedure 55(b)(2).To date, Defendant has not answered the Amended Complaint or entered an appearance, despite multiple attempts at service at his home address and two successful instances of personal service on Defendant's wife at that address. For the reasons stated below, Plaintiff's motion will be granted.

Federal Rule of Civil Procedure 55(b)(2) authorizes a court to enter default judgment against a properly served defendant who fails to file a timely responsive pleading.

Watch Attorney Steve® Explain the Federal Court Default Process

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When considering a motion for default judgment, "the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." To grant default judgment, a court first "must ascertain whether the unchallenged facts constitute a legitimate cause of action."

Attorney Steve® Tip:  When you default, the factual allegations will be deemed admitted (if plausible).  This means, you are essentially admitting you engaged in willful copyright infringement, which is what they typically allege in their infringement complaints.  This alone, could permit the court to raise the damages to a whopping $30,000 to $150,000 PER INFRINGED MOVIE.

If the complaint pleads a legitimate cause of action, the question of whether a court should grant default judgment is governed by the Chamberlain factors:

(1) the potential for prejudice to the plaintiff if default judgment is denied;

(2) whether the defendant appears to have a litigable defense;

and 

(3) whether the defendant's failure to respond is due to culpable conduct.

Relief Sought

Plaintiff seeks multiple forms of relief. First, Plaintiff seeks a permanent injunction, enjoining Defendant from continued distribution of Plaintiff's copyrighted works and requiring Defendant to delete any infringing files from computers in Defendant's possession or control.  Next, Plaintiff seeks minimum statutory damages in the amount of $72,750. Finally, Plaintiff seeks a statutory award of certain litigation costs, in the total amount of $590.

The Court's Award

Plaintiff will typically seek the minimum statutory damage award of $750 per infringed title.  Keep in mind, if you defend, you could potentially establish "innocent infringement" which can be as low as $200 per downloaded movie.

Statutory Damages

"Unlike liability, damages 'cannot be awarded simply on the basis of the pleadings, but must instead be established at an evidentiary hearing held pursuant to [Rule] 55(b)(2),' unless damages are 'liquidated or computable' or the plaintiff otherwise submits such proof without a hearing."

The Copyright Act provides that a copyright owner may elect to recover statutory damages-rather than actual damages-for each work infringed.

The provision further provides that "[f]or the purposes of this subsection, all the parts of a compilation or derivative work constitute one work."

Here Plaintiff has elected to seek the minimum statutory damages provided by the Copyright Act of $750 per infringement, and so no hearing is necessary to establish the harm suffered by Plaintiff.

However, to calculate damages under the Copyright Act in any default judgment, the Court must make a factual finding about the number of infringed "works." 17 U.S.C. § 504(c) provides that "[f]or the purposes of calculation of statutory damages, all the parts of a compilation or derivative work constitute one work."

Where a plaintiff moving for default judgment claims multiple infringements, the Court must determine whether each allegedly infringed property should be considered a "separate work" for the purpose of § 504. When determining whether a work is part of a compilation for purposes of § 504(c)(1), a court must look at "whether the protected works have value only in and through their composite whole (and thus meeting the definition of a 'compilation'[]) or instead have standalone value at the level of 'one work.'"

Considerations like the existence of separate copyrights for each element of a copyrighted work are informative, but not dispositive. The focus is "on whether the plaintiff—the copyright holder—issued its works separately, or together as a unit," and whether each individually copyrighted work has its own "copyright life."

For instance, courts have held that each infringed episode of a television series constitutes a separate work for purposes of § 504(c) where each episode has independent economic value.

Similarly, courts have held that illustrations constitute separate works for purposes of § 504(c) when each illustration  has "distinct and discernible value."

The Amended Complaint and Plaintiff's supplemental briefing supports a finding that each of Plaintiff's 97 works was created, registered, and issued separately, constituting separate works under § 504. Plaintiff cites to Arista Recordings LLC v. Lime Group. LLC, which held that several record companies could "recover a statutory damage award with respect to each sound recording," on an album.

The court in Arista explained that "[a]lthough the Copyright Act states that 'all parts of a compilation . . . constitute one work,' it does not say that any work included in a compilation cannot also exist as a separate, independent work."  Thus, the court concluded that each individual track infringed upon was a "work" issued by the plaintiffs, "to which Plaintiffs may seek to recover a statutory damage award."

Like the plaintiffs in Arista, Plaintiff issued and released each of its works individually. Even though 15 of the 97 videos were later distributed on DVD, and some DVD distributions compiled more than one of the videos in question, this subsequent compilation does not negate the fact that Plaintiff's works were originally issued individually. Therefore, each work "has independent economic value and is, in itself, viable," and each of the 97 works is entitled to a separate award.

As Plaintiff has provided substantial proof that Defendant infringed on 97 separate copyrighted works by Plaintiff, 17 U.S.C.A. § 504 entitles Plaintiff to minimum statutory damages of $750.00 per infringed work, for a total amount of $72,750.00. (Strike 3 Holdings, LLC v. Doe (E.D.Pa. Mar. 30, 2022, No. 20-5122) 2022 U.S.Dist.LEXIS 57930, at *9-12.).

Attorney Steve® Note:  Make sure to watch my video on Copyright Penalties and Damages for a better understanding.

Moral of the Story - Contact a IP Copyright Attorney before you just ignore the subpoena and the lawsuit.

Waiting to see what happens in a Strike 3 lawsuit may make good sense if you take your legal advice from Reddit users, some who may have gotten lucky and were not pursued by the California based adult pornography company, and yes, you could get lucky to.  However, if you have a job, and assets, and they can track infringement to you, it is wise to obtain a free consultation from a firm like Vondran Legal that has settled several hundred of these cases, and we also litigate cases when needed - as we are doing now in both Texas and California Federal Court. Can they prove their case?  That is reserved for another blog, but to my knowledge, they have never once taken a case to trial and prevailed.  Call us at (877) 276-5084 or fill out the contact form on the right side of this page.

Need references? Check out our Steve Vondran past client reviews (they have done the due diligence for you).