Balsley v. LFP, Inc., --- F.3d ---, 2012 WL 3517571 (6th Cir. 2012)

Plaintiff Balsley is a newscaster. In 2003, Ms. Balsley entered a wet t-shirt contest at a bar while on vacation and eventually danced nude. Someone took pictures of Ms. Balsley without her knowledge or permission and published them on a website. Ms. Balsley and her husband, also a Plaintiff, purchased the copyrights in the photographs from the photographer so that they “would have a legal means of ending the photographs’ dissemination.” Defendant is the owner and publisher of Hustler magazine, and Defendant came across one of the photos of Ms. Balsley. Defendant did minimal research as to the owner of the copyright of that photo. Despite not determining the owner, but on advice of counsel, Defendant published the photo in one of its issues in an article about “Hot News Babes.”

Plaintiff sued Defendant for direct, contributory, and vicarious copyright infringement, as well as for violations of several state laws. Defendant admitted that it committed direct copyright infringement but asserted a fair use defense and also alleged that its actions were not willful because it relied on counsel’s advice in publishing the photo. After a trial, a jury found in Plaintiffs’ favor on the direct infringement claim, rejected Defendant’s fair use defense, but found that Defendant did not act willfully. The jury gave Plaintiff $135,000. Defendant filed motions under Fed. R. Civ. P. 50 and 59, which the district court denied. Defendant appealed the court’s decisions.

On appeal, the Sixth Circuit first addressed Defendant’s contention that the district court incorrectly denied Defendant’s Rule 50(b) motion because “a reasonable jury could not have rejected its fair use defense . . . .” The Circuit held that Defendant’s use of Plaintiffs’ photo was obviously for a commercial purpose. As to the nature of the work, the Sixth Circuit made it clear that photographs “have varying degrees of creativity,” and the photo at hand was “a mixed nature of fact and creativity.” Therefore, the nature of the work either favored Plaintiff or was neutral. Because Defendant “published the entire photograph at issue less minor cropping of the background,” the amount and substantiality of the use also weighed in Plaintiffs’ favor. Finally, the Sixth Circuit discussed the effect of Defendant’s use on the potential market for the photo. The Sixth Circuit held that there was a “presumption of unfair exploitation” because of the commercial nature of Defendant’s use, and the court made clear that Plaintiffs’ “current desire or ability to avail themselves of the market for the . . . photograph is immaterial . . . .” The Sixth Circuit then concluded that a reasonable jury could have rejected Defendant’s fair use defense.

Defendant also argued that the district court should have granted Defendant a new trial because Plaintiffs did not show that they were entitled to an award of profits, and the award of profits from the jury was excessive. The Sixth Circuit rejected Defendant’s argument and held that Plaintiffs had no duty to show what profits were “attributable to” the copyright infringement. Instead, it was Defendant’s “burden to apportion the profits among its costs and other elements that gave rise to its profits, proving causally why certain profits are or are not attributable to the . . . infringement.” The Sixth Circuit found that Plaintiffs met their burden, and the amount of profits awarded was not so excessive that the court would overturn it.