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What is “innocent” copyright infringement?

Posted by Steve Vondran | Mar 26, 2016 | 0 Comments

Copyright Law Basics – “I made an honest mistake” defense

Introduction

As a litigation attorney we have handled all kinds of intellectual property disputes, from trademark bully cases to software infringement disputes.  One of the main issues in copyright cases is defining whether or not there was “willful” infringement.  In many cases the business owner (or individual) simply didn't realize there was unauthorized copies of the copyrighted work, whether the subject of the scuffle is art, photographs on a website, videos, comics, video games, or software.  This blog discusses what happens when the Defendant in a case (or business owner who receives an audit letter alleging piracy of products such as Microsoft Office, Windows, Autodesk Autocad, Adobe or other products), had no clue that wrongful conduct was taking place by themselves, or their employees and staff.

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Is “Innocent Intent” a Defense to Copyright Infringement?

The first thing to think about before turning to the question of defenses is WHAT IS COPYRIGHT INFRINGEMENT?  The short answer was addressed by one federal court case which noted:

Not all copying, however, is copyright infringement. To establish infringement, two elements must be proven:  

(1) ownership of a valid copyright,  

and  

(2) copying of constituent elements of the work that are original.   See Harper & Row, 471 U.S., at 548, 105 S.Ct., at 2224. See  Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 1296, 113 L. Ed. 2d 358 (1991)

As you can probably see, there is no requirements that the copyright or infringement be “intentional” or “willingly” or even “knowingly.”  In other words, unlike what happens in CRIMINAL LAW, a “guilty mindset” is not one of the elements of copyright infringement that must be proven.  It's not part of the definition.

So that brings us to the question of whether “innocent” infringement is a defense to copyright infringement including software piracy.

This “defense” is explained in once case, and as you can see:

“Innocent intent generally is not a defense to copyright infringement, and injunctions may be issued without a showing of willful or deliberate infringement.”  See Williams Electronics, Inc. v. Artic International, Inc., 685 F.2d 870, 878 (3d Cir.1982). There is, however, some authority for the proposition that a court may consider a copyright infringer's innocent intent, as well as potential harm to the public, when fashioning the remedy for infringement. See Cadence Design Systems, Inc. v. Avant! Corp., 125 F.3d 824, 829 (9th Cir.1997); Abend v. MCA, Inc., 863 F.2d 1465, 1479 (9th Cir.1988).  See CyberMedia, Inc. v. Symantec Corp., 19 F. Supp. 2d 1070, 1079 (N.D. Cal. 1998). As this makes fairly clear, having an innocent or good faith explanation for infringing the copyrighted goods of another person or company is not a surefire way to have a case dismiss, (i.e. it will not stop the Plaintiff from seeking or being able to obtain an injunction), the judge may consider the mindset and intent of an infringer when it comes time to fashion a remedy for infringement.

9th Circuit Model Jury Instructions re Innocent Infringement

In looking at the Model Civ. Jury Instr. 9th Cir. 17.26 (2007), Model Civ. Jury Instr. 9th Cir. 17.26 (2007), “An infringement is considered innocent when the defendant has proved both of the following elements by a preponderance of the evidence:

1. the defendant was not aware that [his] [her] [its] acts constituted infringement of the copyright; and 2. the defendant had no reason to believe that [his] [her] [its] a cts constituted an infringement of the copyright

As the jury instructions note the BURDEN OF PROOF is on the Defendant to show the innocence of their conduct.

Immigrants who are unsophisticated and do not understand the laws of the United States may get more leeway in settlements

Our firm handles many types of infringement claims and many minorities, foreigners, and immigrants are being sued for photo infringement, using software outside the licensing conditions and illegal movie file sharing on the internet.  Companies like Strike 3 Holdings, and Malibu Media are filing mass copyright cases across the United States (ex. California, New York, Illinois, Colorado) and many of these people are being sued.  While we are all immigrants, and we all have different levels of knowledge, newer persons to our communities are normally not aware that they are doing anything wrong by downloading files on BitTorrent protocol (think Napster, how many "educated" citizens had any clue they were doing anything illegal.

At any rate, I think you get my point.  Some people (of any race, color, ethnic background) may be more unsophisticated than the next.  In these circumstances, there is federal case law that addresses this situation and the Courts are permitted to consider the level of sophistication in crafting an award (watch my video above as I discuss the case).

The case is the D.C. Comics vs. Mini Gift Shop Case - 912 F.2d 29 which noted:

"Warner, through its subsidiaries, owns and licenses certain copyrights related to the comic book character "Batman." Immediately prior to release of the movie Batman in the summer of 1989, Warner discovered that merchandise infringing on its copyrights was being sold at various flea markets. At about the same time, Warner discovered that infringing goods were also being sold in retail stores. After making some informal efforts to discourage the sale of such goods, Warner commenced the three actions involved in this appeal seeking permanent injunctions, destruction of the infringing goods, monetary relief and attorney's fees under the Copyright Act. Since the facts and issues differ, the retail store action and flea market actions will be addressed separately.
 
The burden is on the defendants to establish that any infringement was innocent. Although "it is not sufficient for a defendant merely to claim such innocence, and then rely upon the plaintiff's failure to disprove the claim," 3 M. Nimmer & D. Nimmer, Nimmer on Copyright Sec. 14.04[B][a], at 14-40 (1989), the defendants may rely on evidence introduced by the plaintiff that tends to support their defense of innocence, see Bradford Audio Corp. v. Pious, 392 F.2d 67, 73 (2d Cir.1968). Having chosen to consolidate these individual actions against unrelated defendants, Warner also will not be heard to complain that evidence introduced by one defendant benefits all. In this regard, the district court was presented with evidence that there were no copyright notices on the infringing goods and that a layman would not be able to distinguish between licensed and unlicensed goods based on the style or quality of the art work. This evidence tends to establish that defendants' infringement was innocent. Compare Dolori Fabrics, Inc. v. The Limited, Inc., 662 F.Supp. 1347, 1354 (S.D.N.Y.1987) (Lumbard, C.J., sitting by designation) (copyright mark removed prior to defendant's purchase of infringing goods) and L & L White Metal Casting Corp. v. Cornell Metal Specialties Corp., 353 F.Supp. 1170, 1172, 1174 (E.D.N.Y.1972) (Moore, C.J., sitting by designation) (product purchased from third-party manufacturer with no copyright notice) with Original Appalachian Artworks, Inc. v. J.F. Reichert, Inc., 658 F.Supp. 458, 464-65 (E.D.Pa.1987) (defendants not innocent infringers where goods "were clearly marked as being copyrighted material").
 
The mere absence of a copyright mark is not sufficient to establish innocent infringement, of course, if the defendant had reason to believe the goods were copyrighted and unlicensed. The reduction of statutory damages for innocent infringement requires an inquiry into the defendant's state of mind to determine whether he or she "was not aware and had no reason to believe that his or her acts constituted an infringement." 17 U.S.C. Sec. 504(c)(2); see also Fitzgerald Publishing, 807 F.2d at 1115. The court determined that the defendants who appeared at the hearing and trial lacked "the sophistication or level of understanding" to prompt an inquiry into the source of the unmarked goods. The court had a short colloquy with each pro se defendant at the start of the hearing. Plaintiffs' own evidence also established that the defendants were unsophisticated merchants. The level of sophistication of the defendant in business is an entirely proper means of determining whether or not his infringement was innocent. See Warner, 877 F.2d at 1126 (court "may take into account the attitude and conduct of the parties"); cf. Little Mole Music v. Spike Investment, Inc., 720 F.Supp. 751, 755 (W.D.Mo.1989) ("experienced operators[ ] in the ... business" were not innocent infringers).
 

How this plays out in real life copyright cases?

The Plaintiff (or a large software publisher in BSA or SIIA audits), will be pushing hard to try to establish that the Defendant (or business owner) was engaged in “ willful” conduct, while the Defendant will be trying to limit their legal liability by fighting hard to show any illegal copying, reproduction, distribution, etc., was merely innocent and large monetary damages should not attach.  This is basically how the fight goes.  So as your copyright counsel, we will help you explore all the relevant aspects of your case in order to steer the facts into innocent, as opposed to willful misconduct.  If we represent a Plaintiff or software company, of course the opposite is true.

Listen to Attorney Steve® explain “Innocent” copyright infringement defense

PODCAST:  Click on the image above to hear this broadcast dealing with photo infringement defenses.  The defense may work in cases involving alleged illegal movie downloading, software piracy and other copyright infringement cases.

If the defense applies, must the judge reduce the damages?

Not necessarily.  At times, the $200 minimum statutory damage award may apply, but the judge is NOT required to keep it to this low level as noted in another federal case in Los Angeles News Serv. v. Tullo, 973 F.2d 791, 800 (9th Cir. 1992) which held: “AVRS claims that because it had a good faith belief in the legality of copying the newscasts containing LANS's copyrighted material, the district court erred by awarding more than minimal damages. AVRS relies on 17 U.S.C. § 504(c)(2), which provides that “in a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.” The district court did not find AVRS “ had no reason to believe” its acts did not constitute infringement. Even if the court had so found, § 504(c)(2) does not mandate a nominal award. On this record, the district court did not abuse its discretion by declining to reduce the award.” So although you always want to fight for the innocence if you are the Defendant, this is not the same as saying you will only face minimal damages for infringement.

Willful and Innocent Infringement - is it a Question of Fact for the Jury?

A key cases from the California 9th circuit discussed this important legal issue:

Both UFI and Defendants move for summary judgment on the issue of willfulness. UFI contends that undisputed evidence proves that Defendants' willfully infringed on the Subject Design copyright. UFI points to the evidence that G-III has been a customer of UFI since 2007, and samples of the Subject Design were ordered by G-III on at least three occasions in 2009 and 2010. (Simantob Decl. ¶ 9, Ex. 5.) On the other hand, Defendants argue that there is no evidence of willfulness, and thus the Court should grant summary judgment in Defendants' favor on the issue. (E.g. Defs' Opp'n 10:24-25.) Defendants contend that UFI's evidence of sampling the Subject Design is irrelevant because the sampling was done by a different division of G-III that has no contact with AM Retail Group. (Id.) Instead, Defendants move for summary judgment on innocent infringement, arguing that both G-III and McKlein purchased the Accused Products from Cheng Shun Textiles in China on a good-faith reasonable belief that the products were free from any claim of copyright infringement. (Defs' Mot. 8-12.)

The nature of Defendants' infringement on UFI's copyright—whether it was willful or innocent—is essentially a question of damages. A finding of willfulness on the part of Defendants allows UFI, within the Court's discretion, to obtain more in statutory damages. 17 U.S.C. § 504(c)(2). A finding of innocent infringement would allow the Court, in its discretion, to limit the statutory damages available. Id. While the Copyright Act does not define the term "willful," the Ninth Circuit has held that the term means "with knowledge that the defendant's conduct constitutes copyright infringement." Peer Int'l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1335 n. 3 (9th Cir. 1990); see also Columbia Pictures Television v. Krypton Broad., 106 F.3d 284, 293 (9th Cir. 1997) rev'd on other grounds sub nom. Feltner v. Columbia Pictures Television, 523 U.S. 340, 118 S. Ct. 1279, 140 L. Ed. 2d 438 (1998); cf. Danjaq LLC v. Sony Corp., 263 F.3d 942, 957-58 (9th Cir. 2001). In contrast, innocent infringement occurs where the infringer was "not aware and had no reason to believe that his or her acts constituted an infringement of copyright." 17 U.S.C. § 504(c)(2).

The Court finds that genuine issues of material fact remain as to the nature of Defendants' infringement in this case. UFI's President Shar Simantob states that G-III has been a customer of UFI since as early as 2007. (Simantob Decl. ¶ 9.) In addition, UFI has supplied invoices indicating that the Jessica Howard division of G-III ordered a sample of the Subject Design in 2009, and four yards of the Subject Design on different fabrics on July 14, 2010 and August 8, 2010. (Id. at Ex. 5.) Defendants counter this evidence with declarations from employees at G-III's AM Retail Group. AM Retail Group's Director of Product Development Al Minniti and Buyer Elizabeth Monico state that the Jessica Howard division of G-III is located, to the best of their knowledge, in New York City, far away from AM Retail Group's location in Minnesota. (Minniti Decl. ¶ 5; Monico Decl. ¶ 5.) In addition, both Minniti and Monico, who worked with McKlein to select the fabric design for the Accused Products, state that they never received samples of the Subject Design from anyone at the Jessica Howard division. (Minniti Decl. ¶¶ 3-6; Monico Decl. ¶¶ 3-6.)

This conflicting evidence presents a genuine dispute as to G-III's knowledge that the Subject Design was copyrighted by UFI.

A reasonable jury could infer, although tenuous, that the individuals at G-III involved in purchasing the Accused Products had knowledge of UFI's copyright, based on the samples and orders placed at the Jessica Howard division of G-III. While Defendants have presented declarations from two G-III employees to the contrary, there is little evidence presented regarding the corporate structure of G-III beyond rather conclusory statements from Minniti and Monico. The weight to be given to the evidence presented by UFI and Defendants should be left to a jury.

UFI also argues that Defendants willfully infringed on the Subject Design copyright because they continued to sell the Accused Products for three months after UFI sent a cease and desist letter in December 2012. (UFI Mot. 18:20-20:4.)However, the Court cannot make such a finding as a matter of law. "To hold that willfulness must be inferred whenever an alleged infringer uses an intellectual property in the face of disputed title would turn every copyright claim into willful infringement and would improperly discourage many legitimate, good faith transactions." Danjaq, 263 F.3d at 959.

Instead, the applicable standard after receipt of a cease and desist letter is whether Defendants' had a good faith, reasonable belief that their conduct was innocentPeer Int'l Corp., 909 F.2d at 1335-36. In this case, a jury could find that three months was a reasonable amount of time for Defendants to investigate the infringement claims contained in UFI's cease and desist letter, and to pull the Accused Products from the shelves. The jury could also find that it was unreasonable. It is a question of fact that cannot be decided on summary judgment.

Since the Court finds that genuine issues of material fact remain with respect to whether Defendants' infringement of the Subject Design was willful, it necessarily follows that the Court cannot grant summary judgment on innocent infringement.

Contact us to speak with a lawyer

If you are facing a copyright infringement cease and desist letter, arbitration demand, software audit with BSA, SIIA, Autodesk or Adobe, or dealing with other claims of piracy of games, videos (Malibu Media or Strike 3 Holdings adult porn videos), photos, comics (Marvel), videos, or other copyrighted works, contact us for a free initial consultation.  We offer flat rate legal fees for many non-litigation cases, and tenacious legal representation in all cases.  Call us at (877) 276-5084 or fill out the form submission and we will get back to you.

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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