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What are the potential settlement amounts in Strike 3 Holdings and Malibu Media cases?

Posted by Steve Vondran | Sep 22, 2018 | 0 Comments

Torrent Illegal File Sharing Essentials [Settlement Factors] – by Attorney Steve®, theCopyright Lawyer™!

Introduction

Many of my internet file sharing John Doe defendant clients ask me “how much will it cost me to settle the case?”  Usually we cannot answer this question directly as there are a lot of possibilities and factors that get taken into account.  Click on the video below for a better understanding of the factors that may be taken into account when seeking to settle a lawsuit.  This blog discusses a few cases that a Defendant may have to contend with.

Potential damages in a Strike 3 Holdings Lawsuit or Malibu Media

One of the main cases that might be cited to a movie downloader (or even in a photo, font, jewelry or software infringement case), is the Tashiro case where a damage award amounted to $240,850 (21k damages award + 199k in attorney fees).  The case is Malibu Media v. Tashiro.  This case involved four attorneys working on the case for the Plaintiff.  While some people might say “wow, that is excessive,” the Court did not see it that way and ordered Defendant to pay $199,560.53 in attorney fees.  In so holding, the Court noted:

“The Defendants argue that in amassing over $199,999 in fees, the Plaintiff “overlitigated” this case in light of its early stipulation that it would only seek $21,000 in damages. Indeed, the Defendants argue that “[c]ertainly, responsible counsel should have seen very early on that the attorney's fees were outpacing the total value of the case, to which Plaintiff had consented, and taken reasonable action to conclude the matter in a more cost-effective manner.” Dkt. No. 275 (emphasis in original). The Defendants do not identify the “reasonable action” that they believe should have been taken or point to any particular work by Plaintiff's counsel—with one exception discussed below—that they believe was unreasonable. The Defendants' argument essentially boils down to the assertion that a small-stakes copyright infringement action should not be pursued because the cost of litigation exceeds the damages at stake. That is exactly the result—an abandonment of legitimate copyright cases because of the expense of litigation—that the Seventh Circuit sought to prevent by adopting a presumption in favor of fee awards in such cases.”

The Seventh Circuit has further held that “the prevailing party in a copyright case in which the monetary stakes are small should have a presumptive entitlement to an award of attorneys' fees.” The reason for this rule is that “willful infringements involving small amounts of money cannot be adequately deterred . . . without an award of attorneys' fees.” Accordingly, “the smaller the damages, provided there is a real, and especially a willful, infringement, the stronger the case for an award of attorneys' fees” because to hold otherwise would create a situation in which “minor infringements, though willful, [were permitted] to be committed with impunity, to be in effect privileged, immune from legal redress.”

So, as you can see, attorney fees awards can be HUGE in photo infringement cases, general copyright infringement litigation and software piracy litigation.

Watch Attorney Steve® Explain Copyright Infringement Penalties

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Other cases – $750 per infringement as statutory minimum

This is not an isolated case.  Here are some other cases discussing fee awards in copyright infringement cases including music infringement.

  1. Malibu Media, LLC v. Funderburg, 2015  (N.D.Ill. April 24, 2015) (Court awarded $750 per violation for a total award of $9,000).  The Court said: A copyright owner may elect to pursue actual or statutory damages. 17 U.S.C. § 504(c)(1). Statutory damages are assessed on a per work basis.  For each work infringed, the Plaintiff in this case has elected to pursue only the minimum available statutory damages. (“Plaintiff only seeks an award of $9,750.00 in statutory damages ($750.00 per work).”).  The Magistrate Judge considers this amount “just.” 17 U.S.C. § 504(c)(1). Plaintiff is entitled to this amount as a matter of law, and Defendant can hardly protest Plaintiff's decision to pursue the smallest possible amount of damages. In addition, the Court has no discretion to award a lesser amount. See, e.g., Universal Statuary Corp. v. Gaines, 310 F.2d 647, 648 (5th Cir. 1962) (“The discretion of the trial court in assessing such damages as appear just is limited by the statutory minimum . . and maximum; accord, e.g., Yash Raj Films (USA) Inc. v. SUR Sangeet Video Electronics Inc., (D.N.J. Feb. 28, 2008) (“Under the Copyright Act . . . the Court is bound by certain statutory minimum and maximum limits[.]”).1 The Magistrate Judge can therefore say with at least “reasonable certainty,” In re Catt, 368 F.3d at 793, that Plaintiff is entitled to an award of $9,750.00.
  2. Malibu Media, LLC v. Funderburg 2015 – (Court awarded $750 per violation for a total award of $9,000).
  3.  Malibu Media, LLC v. Cui, 2014 – (Court awarded $750 per violation, for a total award of $18,000),
  4. UMG Recordings v. Adams,  (S.D. Ill. Oct. 3, 2008) (awarding statutory damages of $750 per infringement for a total award of $6,000)

According to the Court:

“The Copyright Act, 17 U.S.C.§ 504(c), authorizes this Court to grant the Plaintiff's request for “statutory damages for all infringements involved in the action . . . in a sum of not less than $750 or more than $30,000 as the court considers just.” Thus, because the Plaintiffs' Complaint alleges nine separate counts of infringement the Court finds the Plaintiffs' request of $750 for each of the nine counts of infringement to be appropriate and just. Accordingly, the Court grants the Plaintiffs' request for the minimum award of statutory damages in the amount of $6,750.”

  1. Capital Records, Inc. v. Mattingley, 461 F. Supp. 2d 846, 851–53 (S.D. Ill. 2006) (awarding statutory damages of $750 per infringement for a total amount of $3,750)
  2. Laface Records, LLC v. Khan, (“Here, Plaintiff is seeking only the minimum statutory damages. Accordingly, Plaintiffs' request for statutory damages is reasonable and appropriate in this case.”)

Other cases – Awards of MORE THAN $750 per infringement

When warranted, Courts have also awarded an amount higher than the minimum statutory damages of $750 for each copyrighted work infringed.

Malibu Media, LLC v. Goodrich (D.Colo. Dec.18 2013) ($2,250 per violation, for a total award of $36,000 in statutory damages);

Malibu Media, LLC v. Brenneman, 2013 WL 6560387, (N.D.Ind. Dec.13, 2013) ($1,500 per violation, for a total award of $16,500);

“Plaintiff, a California-based company d/b/a X-Art.com, alleges Defendant violated the United States Copyright Act of 1976 (“Copyright Act”) by using the BitTorrent file distribution network to distribute adult pornographic films subject to copyrights held by Plaintiff.  BitTorrent is a peer-to-peer file sharing system that allows users to interact with one another to distribute large files, including digital movie files.  Individuals often use BitTorrent to obtain and circulate infringed copyright content.  The system allows users to distribute an entire file by sending small “bits” individually. Plaintiff alleges that its investigator, IPP International UG, downloaded “bits” of 23 of Plaintiff's copyrighted films from Defendant's Internet Protocol address (“IP address”). (ECF No. 9, at 3-4). Those downloads are the basis for this claim.”

Malibu Media, LLC v. John Does 1, 6, 13, 14, 950 F. Supp. 2d 779, 788 (E.D. Pa. 2013) (“As many judges in copyright cases automatically begin with the minimum amount of statutory damages, $750 per infringement, and then treble that amount to note that the defendant committed a serious tort, I followed this practice.”);

Sony BMG Music Entm't v. Tenenbaum, 660 F.3d 487, 489 (1st Cir. 2011) .  This was a HUGE music infringement case.  (Reinstating a jury's statutory damages award against Defendant in the amount of $22,500 per work infringed, which totaled $675,000.).  Per wikipedia:

“The initial district court decision awarded the plaintiffs $675,000 in statutory damages for Joel Tenenbaum's willful copyright infringement via peer-to-peer file-sharing of 30 songs. Tenenbaum then challenged the constitutionality of the damage award and asked for a retrial or a reduction of the award via common law remittitur. The district court judge rejected Tenenbaum's arguments in favor of a retrial, and declined to invoke remittitur because, in this case, it would prompt a retrial which would broach the constitutional issues remittitur was intended to avoid. Asserting that the question of the award's constitutionality was unavoidable, the judge reduced the damages to $67,500 on constitutional grounds, reasoning that the damages were effectively punitive, as well as excessive and in violation of Tenenbaum's Due Process rights. Both parties then cross-appealed to the First Circuit Court of Appeals—Sony, et al., for full reinstatement of the original damages, and Tenenbaum challenging both liability and damages.

The First Circuit rejected all of Tenenbaum's arguments, affirmed the denial of Tenenbaum's motion for a new trial, reversed the District Court's decision to reduce the damages, reinstated the original award, and remanded on the question of the common law remittitur. Defendant and cross-appellant Joel Tenenbaum was an undergraduate student studying physics and mathematics at Goucher College in Maryland 2005 prior to the original litigation in the Massachusetts District Court. During this period, Joel Tenenbaum downloaded and distributed, via a peer-to-peer file-sharing network, a number of songs owned by the plaintiffs.”

The plaintiffs and defendant collectively brought suit in the First District Court of Appeals to argue several matters:

statutory damages

injunctive relief under the Copyright Act

constitutionality of the damages reduction

matters of fair use

a district court's ability to invoke constitutionality”

While the plaintiffs are listed collectively as Sony BMG Music Entertainment, the plaintiffs in both the district court case and the subsequent appeal actually included five record companies:

  • Sony BMG Music Entertainment
  • Arista Records, LLC, a subsidiary of Sony BMG Warner Bros. Records, part of Warner Music Group
  • Atlantic Recording Corporation, part of Warner Music Group UMG Recordings, Inc., part of Universal Music Group

As the plaintiffs are all members of the Recording Industry Association of America(RIAA), and it is the RIAA which makes public statements about the case, the case is sometimes informally referenced as RIAA v. Tenenbaum. However, references more commonly use Sony, Sony BMG, Sony BMG Music Entertainment, and the more precise Sony BMG Music Entertainment, et al. as the name of the plaintiffs.

Malibu Media, LLC v. Wells, No. 1:13-CV-531 (W.D. Mich. Jan. 21, 2014) (“Malibu Media is entitled to statutory damages of $2,250 per infringement, or $49,500 total.”);

Disney Enters. v. Farmer, 427 F. Supp. 2d 807, 817 (E.D. Tenn. 2006) (awarding statutory damages of $1,200 per infringement for a total award of $6,000);

Disney Enterprises, Inc. v. Delane, 446 F. Supp. 2d 402, 407 (D. Md. 2006) (“[T]he court will grant Plaintiffs' request for statutory damages in the amount of $6,500 per each of the ten infringements, for a total of $65,000 in statutory damages. Disney Enterprises, Inc., will be awarded $13,000 for infringements of two of its copyrights, Twentieth Century Fox Film Corporation will be awarded $32,500 for infringements of five of its copyrights, and Paramount Pictures Corporation will receive $19,500 for infringements of three of its copyrights.”). In this case the Court noted:

“An infringer of copyright is liable for statutory damages, with respect to any one work, ranging from $750 to $30,000 as the court considers just. See 17 U.S.C. § 504(c)(1). Where the infringement was committed willfully, the court may increase the award of statutory damages to a sum of not more than $150,000. See 17 U.S.C. § 504(c)(2).

The determination of statutory damages within the applicable limits may turn on such factors as the expenses saved and the profits reaped by the defendant in connection with the infringement; the revenues lost by the plaintiff as a result of the defendant's conduct; and the state of mind of the defendant, whether willful, knowing, or innocent. N.A.S. Import, Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2nd Cir. 1992).

The standard for willfulness is whether the defendant had knowledge that his or her conduct represented infringement or the defendant recklessly disregarded that possibility. Hamil Am., Inc. v. GFI, 193 F.3d 92, 97 (2nd Cir.1999), cert. denied, 528 U.S. 1160, 120 S.Ct. 1171, 145 L.Ed.2d 1080 (2000). Also, when the infringement is willful, the statutory damages may be designed to penalize the infringer and to deter future violations. See Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1229-30 (7th Cir.1991) (cited with approval in Superior Form Builders, Inc. v. Dan Chase Taxidermy Supply Co., Inc., 74 F.3d 488, 496-97 (4th Cir.), cert. denied, 519 U.S. 809, 117 S.Ct. 53, 136 L.Ed.2d 16 (1996)).

Warner Bros. Entm't, Inc. v. Carsagno, (E.D.N.Y. June 4, 2007) (awarding statutory damages of $6,000 for electronic downloading of single copyrighted film).  In this case statutory damages was also discussed:

“Pursuant to § 504 of the Copyright Act, a plaintiff who prevails on a claim of copyright infringement may elect to recover, in lieu of actual damages and defendant's profits, statutory damages in a sum of not less than $750 or more than $30,000 per work infringed. 17 U.S.C. §§ 504(a), (c)(1); see Island Software & Computer Serv. Inc. v. Microsoft Corp., 413 F.3d 257, 262-63 (2d Cir.2005) [hereinafter Island Software I ]. Within these parameters, courts have broad discretion in setting an amount of statutory damages that effectuates the “dual purposes of the Copyright Act-compensation of copyright owners and deterrence of potential infringers.” Video Aided Instruction, Inc. v. Y & S Express, Inc., No. 96-CV-518 (CBA/RML), 1996 WL 711513, at *3 (E.D.N.Y. Oct. 29, 1996); see also F.W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 233 (1952) (“Even for uninjurious and unprofitable invasions of copyright the court may, if it deems it just, impose a liability within statutory limits to sanction and vindicate the statutory policy [of discouraging infringement].”); Island Software I, 413 F.3d at 265 (“[W]ithin the statutory framework, a district judge has wide discretion in setting the statutory damage award ….”) (citing Fitzgerald Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1116-17 (2d Cir.1986)). Where a plaintiff proves that the infringement was willful, the court has further discretion to award enhanced statutory damages of up to $150,000. 17 U.S.C. § 504(c)(2);4 see Island Software I, 413 F.3d at 263.”

Factors relevant to determining an appropriate award of statutory damages include “the expenses saved and profits reaped by the defendants,   the revenues lost by the plaintiffs,   the value of the copyright,   the deterrent effect of the award on other potential infringers,   and   factors relating to individual culpability.”  U2 Home Entm't, Inc. v. Doe, No. 04-CV-4402 (RJD/JMA), 2005  WL 3018702, at *3 (E.D.N.Y. Sept. 13, 2005) [hereinafter  U2 Home Entm't I ] (quoting  Stevens v. Aeonian Press, Inc., No. 00-CV-6330 (JSM), 2002  WL 31387224, at *1 (S.D.N.Y. Oct. 23, 2002));  see also  N.A.S. Imp., Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2d Cir.1992). Considerations of individual culpability include the willfulness of the defendant's conduct, the defendant's cooperation in providing discovery, and the deterrent potential of the award.  See  Van Der Zee v. Greenidge, 03-CV-8659 (RLE), 2006  WL 44020, at *2 (S.D.N.Y. Jan. 6, 2006);  Stevens, 2002. In connection with the determination of enhanced damages under § 504, the Second Circuit has defined “ willfulness” as the defendant's actual or constructive knowledge that his or her actions constitute an infringement; thus, “reckless disregard of the copyright holder's rights … suffices to warrant award of the enhanced damages.”  N.A.S Imp., 968 F.2d at 252 (internal quotation marks and citation omitted);  see  Yurman Design, Inc. v. PAJ, Inc., 262 F.3d 101, 112 (2d Cir.2001) (“Willfulness in this context means that the defendant recklessly disregarded the possibility that its conduct represented infringement. A plaintiff is not required to show that the defendant had knowledge that its actions constituted an infringement.”) “[W]illful infringement may … be inferred from [defendant's] failure to appear and defend the action.”  Van Der Zee, 2006.    Entral Group Int'l v. Honey Café on 5th, Inc., No. 05-CV-2290 (NGG/MDG), 2006 (E.D.N.Y. Dec. 14, 2006).

The Court must next determine a just amount of enhanced statutory damages for the infringement at issue. Plaintiff's lost revenues and defendant's profits, if any, remain unascertainable as a result of defendant's default and the lack of pretrial discovery.6

See Video Aided Instruction, 1996 (awarding enhanced statutory damages where defendants' profits and plaintiffs' lost revenue “remain unknown” due to defendants' default). Plaintiff also contends that it incurs considerable costs in the protection of its property rights against defendant and other infringers (aside from its legal fees). Plaintiff alleges that its costs “just to get in position to bring a lawsuit such as this one,” which requires retaining an anti-piracy consultant and filing a John Doe lawsuit to identify the alleged infringers, range from $3,000 to $5,000. Id. at 9; Nguyen Decl. Accordingly, under these circumstances, plaintiff's request for $6,000 in statutory damages-well below the enhanced statutory limit of $150,000-is eminently reasonable

See W arner Bros. Entm't v. Carsagno, 2007  (E.D.N.Y. June 4, 2007).

Settlement Factors in Copyright Infringement Cases

Here is a video I did that discusses some of the financial factors to be considered (in addition to the factors named above).

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Contact a Torrent Peer-To-Peer file sharing lawyer

Our law firm has helped many Clients accused of illegal movie downloading and file sharing on the internet.  We can help with legal demand letters, cease and desist, DMCA takedowns on Youtube, Fair Use Defense, and cases with Strike 3 Holdings, LLC and Malibu Media.  Call us for a free initial consultation.  We can help you understand what's going on, and our plan to help settle these cases fairly.  Call us at (877) 276-5084.  Unlike most intellectual property law firms, we offer low flat rate fees for most non-litigation cases. 

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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