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Unicolors v Urban Outfitters – willful copyright infringement includes “reckless” infringement in 9th Circuit

Posted by Steve Vondran | Nov 29, 2018 | 0 Comments

Willful vs. non-willful and innocent copyright infringement

Unicolors vs. Urban Outfitters

Click above to hear Attorney Steve® define willful copyright infringement

Decision of the Court on Appeal – Affirmed Lower Court finding of infringement

NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT UNICOLORS, INC., Plaintiff-Appellee, v. URBAN OUTFITTERS, INC., et al, Defendants-Appellants.

The district court granted plaintiff Unicolors's motion for summary judgment on the issue of copyright infringement and, following a two-day trial, a jury found Urban liable for willful infringement. In a published opinion filed concurrently with this memorandum disposition, we reject Urban's arguments that the district court erred in granting summary judgment because it improperly applied the subjective “intrinsic test” and improperly concluded that Unicolors had validly registered the Subject Design, and we uphold the jury's verdict on willful infringement.

This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. The Honorable William H. Orrick, United States District Judge for the Northern District of California, sitting by designation. F

Here, we consider the district court's rulings on a variety of Urban's objections to evidentiary and procedural matters. Review of the district court's evidentiary rulings is for abuse of discretion. Harper v. City of Los Angeles, 533 F.3d 1010, 1030 (9th Cir. 2008). We have jurisdiction under 28 U.S.C. § 1291, and we affirm. The district court did not rely on inadmissible evidence in assessing substantial similarity at summary judgment. Urban objects to the district court's purported reliance on “Exhibit 1,” an unauthenticated comparison exhibit prepared by Unicolors's counsel. Urban's argument is not supported by the record. The record clearly shows that the district court did not rely on Exhibit 1 in its order granting summary judgment. Instead, it relied on Exhibits 3 and 5, which were properly authenticated and admissible.

The district court did not abuse its discretion in excluding evidence of Unicolors's prior copyright infringement lawsuits, which Urban hoped to offer in support of an unclean hands defense. Evidence of prior lawsuits should be excluded when the possible prejudice to a party outweighs any probative value. See Fed. R. Evid. 403. We have noted that “[t]he attempted use of past litigation to prevent a litigant from pursuing a valid claim in federal court warrants our most careful scrutiny.” D'Lil v. Best W. Encina Lodge & Suites, 538 F.3d 1031, 1040 (9th Cir. 2008).

Urban presented no evidence that Unicolors's prior lawsuits were fraudulent and merely speculated that they were brought as part of a copyright-trap conspiracy. The low probative value of this evidence was outweighed by the likely prejudice to Unicolors. The district court was well within its discretion to exclude it. Nor did the district court abuse its discretion in refusing to admit the deposition testimony of Jonathan Rho. Although Rule 804 creates a hearsay exception for deposition testimony by declarants who are unavailable to be witnesses at trial, Rule 804 also defines “unavailable” as when the declarant “is absent from the trial . . . and the statement's proponent has not been able,

Counsel for Urban consistently misrepresented the district court record on this issue, insisting in its opening brief and reply that the district court relied exclusively on Exhibit 1 despite clear record evidence to the contrary. Counsel's repeated misrepresentation on this point and refusal, at oral argument, to admit to any mistake was inappropriate and unprofessional. by process or other reasonable means, to procure the declarant's attendance.” Fed. R. Evid. 804(a)(5)(A). Urban failed to use reasonable means to procure Rho's attendance; it did not seek to determine whether Unicolors would make Rho available as a witness until two weeks before trial and only began attempting to serve Rho four days before trial. The district court did not abuse its discretion in concluding that Rho's deposition testimony was inadmissible under Rule 804(a)(5)(A) because Urban failed to show that he was “unavailable.”

The district court also did not abuse its discretion in refusing to issue a jury instruction on Urban's estoppel defense. Estoppel is an equitable defense that the court, not the jury, must decide. Granite State Ins. Co. v. Smart Modular Techs., Inc., 76 F.3d 1023, 1027 (9th Cir. 1996). Because Urban's jury instruction on estoppel would have been superfluous, misleading, and inappropriate, the district court properly declined to offer it. Finally, the district court did not commit reversible error by permitting Unicolors to elicit testimony from Urban's trademark-valuation expert indicating that he had been previously retained by Urban. Unicolors's questioning of the expert did not clearly violate the in limine order barring evidence of prior lawsuits.

The exchange challenged by Urban was ambiguous and left unclear whether Urban's expert had been previously retained with regard to a lawsuit or for some other purpose, so it did not clearly violate the in limine order. Further, even if the admission of the expert testimony could be construed as error, it was harmless. Although prejudicial errors require reversal, harmless errors do not. Copper v. Firestone Tire & Rubber Co., 945 F.2d 1103, 1106 (9th Cir. 1991). Contrary to Urban's assertion, Unicolors presented substantial evidence to support a finding of willful infringement— which may be based on “merely reckless behavior.” Barboza v. New Form, Inc. (In re Barboza), 545 F.3d 702, 707 (9th Cir.2008) (internal quotation marks omitted). Given that evidence, it is not plausible that Urban's expert's three-word response to an ambiguous question impacted the jury's conclusion. Appellants shall bear the costs of appeal. See Fed. R. App. P. 39(a)(2). AFFIRMED.

Barboza v. New Form, Inc. (In re Barboza), 545 F.3d 702, 707 (9th Cir.2008)

This was another case from the 9th Circuit (cited above) which dealt with “willful infringement” and whether or not this was dischargeable in bankruptcy.  In this case the Court discussed:

“Lucia Munguia Albarran (“Albarran”) and her husband, Antonio Barboza (“Barboza”) (collectively “Appellants”), were found liable after a jury trial in District Court for willful infringement of New Form, Inc.'s (“Appellee”) copyright for certain Spanish language films. The District Court instructed the jury that “willful infringement” required a showing by a preponderance of the evidence that Appellants “knew that they were infringing the [Appellee's] copyrights or that they acted with reckless disregard as to whether they were doing so.” After judgment was entered, Appellants filed for bankruptcy and sought to discharge the judgment award. The Bankruptcy Judge held on summary judgment that the judgment award was nondischargeable under 11 U.S.C. § 523(a)(6) as a “willful and malicious injury” based upon the jury's finding of willful infringement and uncontroverted evidence of Appellants' knowledge of Appellee's copyright interest. The BAP affirmed and held that a statutory award of dam- ages for willful copyright infringement is a debt for a “categorically harmful activity,” which is nondischargeable under § 523(a)(6) “if the Bankruptcy Court determines that the infringer had the requisite subjective intent to injure another's property interest.” The BAP held that the uncontroverted evidence of knowledge of the creditor's copyright interest at the time of infringement was proof of their “substantial certainty” of resultant harm. We now REVERSE and REMAND for further consideration because:

(1) there is a genuine issue of material fact as to whether the infringement was a “willful” injury within the meaning of § 523(a)(6) of the Bankruptcy Code;

and

(2) the “malicious” requirement was not addressed separately from the “willfulness” requirement as required by our precedent.”

Proving your infringement was not willful [Willful vs. non-willful]

The Court addressed this point as well:

“To prove willful infringement, the Plaintiff must prove by a preponderance of the evidence that the Defendants knew that they were infringing the Plaintiff's copyrights or that they acted with reckless disregard as to whether they were doing so. If you conclude that the Defendants reasonably and in good faith believed that they were not infringing the Plaintiff's copyrights, then you may not find that they willfully infringed those copyrights.”

But does this take the Defendant home scotch-free?  NO, if there is infringement, and not willful, the Court may still award $200 or from $750 to $30,000 for the infringement PLUS attorney fees.  In fact, the attorney fee award may be larger than the damage award.

Contact a Copyright Lawyer in the U.S.

We can help with many types of copyright related legal claims including ISP subpoena response, cease and desist letters (ex. selling Adobe Software online without authorization), software compliance audits with companies like Autodesk and Microsoft, or the Business Software Alliance, photography infringement, cable and TV signal piracy, font infringement and more.  Call us for a free initial consultation (potential clients only,  not other lawyers) at (877) 276-5084.  In many cases we are able to offer low flat rate legal fees.

About the Author

Steve Vondran

Thank you for viewing our blogs, videos and podcasts. As noted, all information on this website is Attorney Advertising. Decisions to hire an attorney should never be based on advertising alone. Any past results discussed herein do not guarantee or predict any future results. All blogs are written by Steve Vondran, Esq. unless otherwise indicated. Our firm handles a wide variety of intellectual property and entertainment law cases from music and video law, Youtube disputes, DMCA litigation, copyright infringement cases involving software licensing disputes (ex. BSA, SIIA, Siemens, Autodesk, Vero, CNC, VB Conversion and others), torrent internet file-sharing (Strike 3 and Malibu Media), California right of publicity, TV Signal Piracy, and many other types of IP, piracy, technology, and social media disputes. Call us at (877) 276-5084. AZ Bar Lic. #025911 CA. Bar Lic. #232337

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