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Copyright Law Commentary
Bridgeport v. Combs: Putting Limits on Punitive Damage Awards in Copyright Action
Bridgeport Music, et al. v. Justin Combs Publishing, et al.
Posted: 12/04/2007
By: Araceli Campos, Esq.
Companies Mentioned: Bad Boy Entertainment, Inc. d.b.a. Bad Boy Records, Bad Boy Records LLC, Janice Combs Publishing, Inc. d.b.a. Justin Combs Publishing, UMG Recordings, Inc., Westbound Records, Inc.
Introduction
It was once highly unusual for a successful copyright infringement plaintiff to win punitive damages – indeed, most courts have held that punitives were wholly unavailable for claims under the federal Copyright Act. But in the last decade, courts have been increasingly willing to allow punitive damages in actions based on both federal and state common law, and the awards are getting bigger and bigger. In Bridgeport v. Combs, 507 F.2d 470 (6th Cir. 2007), the 6th Circuit puts some parameters around these awards, explaining why a jury’s $3.5 million punitive damages award was unconstitutionally excessive, and offering future courts some guidance on assessing punitive damage awards
Detailed Commentary
Background
Plaintiffs Bridgeport Music and Westbound Music own the copyright for the Ohio Player’s song “Singing in the Morning.” In 1994, defendants Justin Combs Publishing and Bad Boy Entertainment released the album Ready to Die by Notorious B.I.G. The title song on the album contained a sample of the copyrighted material. The album was a huge success and was re-released in 2004.
Plaintiffs sued defendants for copyright infringement: Bridgeport sued under federal copyright law, while Westbound sued under New York state common law. The district court bifurcated the trial into separate liability and damages phases.
Both plaintiffs prevailed, and both were awarded compensatory and punitive damages. Bridgeport was awarded $733,878 in compensatory damages; Bridgeport had elected statutory damages under 17 USC §101, and it received the statutory maximum of $150,000, in addition to its compensatory damage award. The jury separately awarded another $733,878 1 to Westbound under New York copyright infringement and unfair competition laws. Westbound also received $3.5 million in punitive damages.
Defendants filed a “Motion for Mistrial or Modification of Jury Verdict,” arguing that plaintiffs should have only received one joint award of $733,878, that Bridgeport should only receive the statutory damages that it had previously elected, and that the punitive damages award was excessive. The trial court agreed in part, awarding Bridgeport only its $150,000 statutory award and Westbound $366,939 (half of a single compensatory damages award of $733,878) plus $276,763.93 in pre-judgment interest from May 4, 1998. The trial court denied defendants motion to reduce the punitive damages award, allowing the jury award to stand.
Defendants appealed to the 6th Circuit on numerous grounds, including the district court’s decision to uphold the jury’s punitive damages award.2
Punitive damages have increasingly become available in infringement cases
In the past, litigants who filed infringement claims under the federal Copyright Act were barred from pursuing a separate award of punitive damages.3Not only were punitive damages not separately authorized under the statute, the courts interpreted the statutory damage provision as including punitive damages, in that the statutory award can be increased from as low as $200 to as high as $150,000 in the instance of willful, as opposed to innocent, infringement.
But in May 2003, the case TVT Records v. Island Def Jam Music Group, 262 F. Supp, 2d 185 (SDNY 2003) signified a change – the district court in that case allowed the plaintiffs, who could not seek statutory damages on one claim and chose not to on another, to seek punitive damages. The plaintiffs later elected statutory damages, but the door had been opened.
One year later, the same court again let a plaintiff seek punitive damages in her copyright infringement action in Blanch v. Koons, 329 F.Supp. 568 (SDNY 2004). The court said, “(u)ltimately, the determination of whether punitive damages are available for copyright infringement cases must be made in a case where the issue is squarely presented: where the jury could find malice or willful infringement, and the plaintiff is not seeking (or is barred from obtaining) statutory damages.” Id. at 569.
Plaintiffs who filed their infringement claims under state common law theories have always had a better chance of being able to seek and obtain punitive damages because the common law does not incorporate set statutory damages like the federal act.4
The Bridgeport court put limits on the amount of punitive damages available
The Bridgeport court’s discussion and holding on the measure of punitive damages offers important guidance for future copyright infringement litigants. The Bridgeport case is in line with the Blanch rubric – Bridgeport made a claim for and received statutory damages, including the increased statutory amount due to the defendants’ willfulness, and therefore it was not able to make a separate claim for punitive damages. Westbound, on the other hand, filed its claim under state common law and was therefore able to seek and receive punitive damages.
The court found that the $3.5 million punitive damages award that the jury handed Westbound on its common law claims was excessive in light of the U.S. Supreme Court’s three “guideposts” for evaluating punitive damages, as set forth in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 418 (2003). The court addressed each of the guideposts as follows:
1) Reprehensibility of defendants’ conduct: In State Farm, the Supreme Court set forth the following factors for analyzing reprehensibility:
a. whether the harm was physical or economic;
b. whether the conduct evinced an indifference to or a reckless disregard for the health or safety of others;
c. the financial vulnerability of the target;
d. whether the conduct was repeated or an isolated incident;
e. whether the harm was the result of intentional malice, trickery or deceit, or whether it was instead mere accident.State Farm, 538 U.S. at 419.
The Bridgeport court noted that only the last factor – the question of intentional malice or deceit – was present in this case, and not in an overwhelmingly strong way. 507 F3d at 486. The Bridgeport court held that the harm was purely economic and did not threaten anyone’s health or safety, Westbound was not financially vulnerable, and the conduct was not repeated.
Because only one reprehensibility factor was present, the court determined that a punitive damages “ratio in the range of 1:1 o r 2:1 is all that due process will allow.” 507 F.3d at 407.
2) Disparity between compensatory and punitive damage awards
The Bridgeport court pointed to three reasons why the disparity between the compensatory and punitive damage awards indicated that the award was unconstitutionally excessive. First, the overall ratio of punitive to compensatory damages (9.5:1) was really large. The court quoted State Farm in stating that “an award of more than four times the amount of compensatory damages might be close to the line of constitutional impropriety.” 538 U.S. at 425. Second, the compensatory damage award itself was very high, warranting an even lower ratio. Third, compensatory damages in copyright infringement cases include, by definition, a “punitive” element – compensatory damages includes both plaintiffs’ loss plus disgorgement of defendants’ profits due to the infringement. That latter element is punitive in nature, designed to deter, and allowing a separate award of punitive damages on top of that is akin to allowing dual recovery.
3) Comparison of statutory damages to the punitive award
The Bridgeport court compared the maximum statutory damages available to a plaintiff under the Copyright Act—$150,000, if the plaintiff proves willful infringement – to the $3.5 million punitive damages award to Westbound, and determined that the punitive damages awarded was entirely inappropriate. The court stated, “Of course, $150,000 is the maximum allowable, and thus would be the largest award that a victim of copyright infringement could receive irrespective of the reprehensibility of an infringer’s conduct. Here, defendants’ conduct, though willful, was not highly reprehensible.” 507 F.3d at 490.
In light of these factors, the appellate court determined that the jury’s punitive damages award was excessive, and remanded the issue back to the district court for a remittitur on the punitive damages issue, or new trial, if necessary.
Conclusion
With an increasing number of courts allowing plaintiffs under the federal Copyright Act to make a separate claim for punitive damages if they don’t elect the statutory damages, and ever-rising punitive damage awards in all infringement cases, the Bridgeport analysis of excessive punitive damages awards is important. Bridgeport signifies the court’s willingness to limit runaway jury awards for punitive damages in copyright infringement cases where a very large award is simply not warranted.
The author, Araceli Campos, Esq., is an associate in the transactional department of Zuber & Taillieu LLP, focusing on entertainment law and intellectual property law.
1This amount was based on plaintiffs’ evidence of defendants’ estimated gross sales due from the infringing song.
2Though the defendants appealed on numerous grounds, and the appellate court addressed those grounds in its opinion, this commentary only focuses the court’s important discussion of the measure of punitive damages.
3 See, e.g. Oboler v. Goldin, 714 F.2d 211, 213 (2nd Cir. 1983).
4 See e.g., Cormack v. Sunshine Food Stores Inc., 675 F. Supp. 374 , 375 (E.D. Mich. 1987) (“Defendants assert that punitive damages may only be awarded in common law copyright actions, not for claims under the Copyright Act of 1976. Defendants’ assertion is entirely correct… I note that all cases that have awarded punitive damages for copyright infringement have been in common law actions.”)
Copyright Law Summary
Read the related Copyright Law summary: Sixth Circuit Orders Remittitur of Punitive Damage Award in Bridgeport Music v. Justin Combs Case
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