Amy Axelrod, Inc. v. Simon & Schuster, Inc., S.D. N.Y., Aug. 27, 2007

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A children’s book author sued her publisher, claiming breach of contract, copyright infringement, fraud, and mischaracterization of sales. The district court denied the defendant’s motion to dismiss the copyright infringement and breach of contract claims, while granting the defendant’s motion to dismiss the fraud claim. The court also denied the plaintiff’s motion to amend her complaint.

The plaintiff entered into six publishing agreements with the defendant to publish eight of her books that teach math to children using animal characters. The publishing agreements allowed the publisher to sell copies of books at “remainder” prices in specified circumstances with reduced royalty payments to the plaintiff (or no royalties if sold at or below manufacturing cost).

The plaintiff claimed that the defendant stopped printing her books and secretly sold paperback editions at remainder or other deeply discounted prices to third parties who allegedly rebound them and sold them as hardcover editions at full price. The plaintiff also claimed that the defendant failed to notify her that the books had gone out of print, provided fraudulent and incorrect information about the sales of remaindered titles, failed to disclose the disposition of thousands of copies of the books, fabricated sales data, and issued fraudulent royalties based on the incorrect data.

The defendant moved to dismiss for failure to state a claim for copyright infringement, contributory and vicarious liability, and fraud, and the defendant moved to dismiss plaintiff’s remaining state law claims for lack of subject mater jurisdiction.

In its motion to dismiss the copyright infringement claims, the defendant argued that when a copyright owner grants a license to use the copyrighted material, she waives any right to sue the licensee for copyright infringement. The court rejected this argument, citing Tasini v. New York Times Co., Inc., 206 F.3d 161 (2d Cir. 2000), aff’d, 533 U.S. 483 (2001), which “explicitly recogniz[ed] claims for copyright infringement even where plaintiff has licensed certain rights.” The court also held that the complaint sufficiently stated a claim for contributory or vicarious infringement by alleging that the defendant sold remaindered or deeply discounted copies of her books to “rogue rebinders” with knowledge that they would create and distribute infringing derivative works. 

The court granted the defendant’s motion to dismiss the fraud claim because the actions giving rise to the fraud claim were the same as those for the breach of contract claim. “The plaintiffs' allegations that the defendant allegedly failed to disclose its sales of deeply discounted and remaindered titles and reported false information to plaintiffs' auditor are premised on their failure to adhere to contractual duties to disclose that arise from the publishing agreements. In short, the plaintiffs' fraud claim rests entirely on the duties contained in the agreements.” The court also denied the plaintiff’s motion to amend her complaint by adding a claim for breach of fiduciary duty, finding that there was no fiduciary relationship between the author and her publisher and that adding such a claim would be futile.

Miller v. Collectors Universe, Inc., Cal. App. 4th Dist., Aug. 30, 2007

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A jury found that the defendant had used the plaintiff’s name on 14,060 certificates of authenticity without his permission in violation of California’s right to privacy statute. The question before the court was whether the plaintiff was entitled to statutory damages for a single violation in the amount of $750, or if issuance of each of the 14,060 certificates constituted a violation so that the plaintiff would be entitled to $10,545,000. The court relied on legislative history and case law relating to other torts to conclude that there was a single cause of action and the plaintiff’s statutory damages were limited to $750.

The defendant owned a company that sold sports memorabilia, autographs, stamps, coins and other collectible items. A division of the company called PSA/DNA provided letters and certificates of authentication for a fee. The certificates were in the form of a 3x5 inch card which stated “This item has been examined by PSA/DNA and it is our unwavering opinion that the item is genuine.” Each certificate included the printed names of the plaintiff and five other people who comprised the “Expert Committee” and each certificate contained a unique serial number.

The plaintiff had sold his collectibles company to the defendant in 2000 and was employed as an authenticator of certain items. After his employment was terminated in May, 2004, the plaintiff informed the defendant that he had never been an authenticator for the PSA/DNA division. The defendant said he would make sure the plaintiff’s name was removed from letters and certificates of authentication, but the company continued to use the preprinted certificates with the plaintiff’s name until new ones arrived.

The plaintiff filed suit for violating Cal. Civ. Code §3344(a) which provides in part:

Any person who knowingly uses another's name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person's prior consent . . . shall be liable for any damages sustained by the person or persons injured as a result thereof. In addition, in any action brought under this section, the person who violated the section shall be liable to the injured party or parties in an amount equal to the greater of seven hundred fifty dollars ($750) or the actual damages suffered by him or her as a result of the unauthorized use, and any profits from the unauthorized use that are attributable to the use and are not taken into account in computing the actual damages.

The court first addressed why the single publication rule did not apply in the case. The rule is codified at Cal. Civ. Code §3425.3 and provides in part: 

No person shall have more than one cause of action for damages for libel or slander or invasion of privacy or any other tort founded upon any single publication or exhibition or utterance, such as one issue of a newspaper or book or magazine or any one presentation to an audience or any one broadcast over radio or television or any one exhibition of a motion picture.

The court noted that the single publication rule is intended to apply to mass communications and the issuance of the certificates of authenticity in this case constituted a series of transactions, rather than a mass communication.

The court then turned to how the plaintiff’s damages should be calculated. The court acknowledged that the language of the statute was ambiguous in calculating damages and that there is little case law on this issue. The court turned to legislative history which explained that the statutory damages provision was intended to provide some compensation for non-celebrity plaintiffs who would probably not be able to show actual damages. The court also noted that the injury resulting from a violation of the right to privacy is not injury to character or reputation, but injury to the plaintiff’s feelings and peace of mind. The court reasoned that the plaintiff’s injury occurred when the first certificate bearing his name without permission was issued and that the number of subsequent certificates that were issued was irrelevant for purposes of the statutory damages amount. “The number of [certificates] issued may be relevant to his actual damages, if any, and to punitive damages. But with regard to his statutory damages, the issuance of subsequent improper [certificates] did not give rise to new causes of action.” The court concluded that the plaintiff was entitled to $750 in statutory damages and remanded the case for a new trial.

Columbia Pictures, Inc. v. Bunnell, C.D. Cal., Aug. 24, 2007

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A district court held, in a case of first impression, that information stored in a computer’s random access memory (RAM) is “electronically stored information” under Federal Rule of Civil Procedure 34 and denied the defendants’ motion to review an order to produce server log data. This is one of the first decisions to hold that information in RAM is subject to Rule 34 since the rule was amended in 2006.

Plaintiff motion picture studios filed a copyright infringement suit against operators of a web site called TorrentSpy. The web site features a search engine that allows users to locate and download dot-torrent files which are particularly useful for large files such as movies. A magistrate judge ordered the defendants to produce activity logs from their computer servers that would show the IP address of users of the web site who request dot-torrent files, the identity of the dot-torrent files requested, and the dates and times of such requests. (The magistrate judge also ordered that the IP addresses be masked or encrypted so that they could not be used, at this stage of the litigation, to identify individuals.) The defendants filed a motion for review of the order, claiming, among other things, that the activity logs resided temporarily in the random access memory (RAM) of the servers and were therefore not “electronically stored information” for Rule 34 purposes. The court rejected this argument and held that such data was subject to discovery under Rule 34.

Federal Rule of Civil Procedure Rule 34 was amended in 2006, and the court relied on the Notes of the Advisory Committee to the 2006 Amendments which make it clear that the definition of electronically stored information “was intended to be read expansively to include all current and future electronic storage mediums.” The court wrote that “[i]nformation in the RAM of defendants’ computers ‘can be obtained’ by defendant. It is undisputed that the Server Log Data plaintiffs seek can be copied from RAM in defendants’ computers and produced to plaintiffs. Rule 34 requires no greater degree of permanency from a medium than that which makes obtaining the data possible.” The court also relied on the Ninth Circuit’s decision in Mai Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (1993), a copyright infringement case which held that a software program in RAM was “fixed in a tangible medium of expression” which is a prerequisite for determining copyright infringement.

The defendants also argued that there were reasonable alternative means to obtaining the activity logs, but the court noted that the plaintiffs were not just seeking the IP addresses and titles of the dot-torrent files. “[I]n order to prevail in this action, plaintiffs will need to establish that defendants were in some way responsible for the direct infringement of others. The Server Log Data will show that individuals access the defendants’ web site and request and download dot-torrent files, which can be used to obtain plaintiffs’ copyrighted works without permission. This link in the causal chain is essential to proving defendants’ responsibility for copyright infringement under theories of contributory infringement, vicarious infringement, and inducement.” The court also rejected the defendants’ argument that producing the server logs would violate users’ privacy expectations since identifying information would be masked or encrypted and because using a peer-to-peer network necessarily involves making one’s computer files available to others.

Greenberg v. National Geographic Society, 11th Cir., Aug. 30, 2007

The U. S. Court of Appeals for the 11th Circuit vacated the June, 2007, decision by a three-judge panel of the 11th Circuit and ordered a rehearing en banc.

The case involves a freelance photographer’s claim of copyright infringement for photographs that originally appeared in National Geographic magazines and later were included in a CD-ROM collection of the magazines. The defendant moved to dismiss on the grounds that the CD-ROM version was merely a revision of the original collective work and that Section 201(c) of the Copyright Act provides owners of the copyright in a collective work a privilege to make revisions of the work. (If the CD-ROM version is considered a privileged collective work, National Geographic does not need to get permission from or make payments to photographers whose works originally appeared in the magazine.)

In 1998, a district court in Florida granted the defendant’s motion to dismiss the copyright infringement claim based on the 201(c) privilege. In March, 2001, a three-judge panel on the 11th Circuit reversed and remanded, holding that the CD-ROM version was not a privileged revision under Section 201(c). In June, 2001, the U.S. Supreme Court decided Tasini v. The New York Times Co., Inc., holding that newspapers and other periodicals in electronic databases were not privileged collective works under 201(c) because each individual work could be retrieved and viewed independently of its original context within the collective work.

In October, 2001, the U.S. Supreme Court denied certiorari in Greenberg v. National Geographic Society, and in June, 2007, a different three-judge panel on the 11th Circuit reconsidered the case and overruled the 2001 11th Circuit decision. The court held that Tasini created a new framework for analyzing the 201(c) privilege: “[u]nder the Tasini framework, the relevant question is whether the original context of the collective work has been preserved in the revision.” The court concluded that the CD-ROM version of the magazines was a privileged version under 201(c), vacated the jury verdict and damages award, and remanded the case back to the district court.

The decision issued on August 30, 2007, vacates the June, 2007, decision and allows the entire 11th Circuit to hear and rule on the case.