MEMORANDUM AND ORDER
DAMRELL, District Judge.
This matter is before the court on plaintiffs UMG Recordings, Inc. and Fonovisa LLC and plaintiffs and counterdefendants Univision Music LLC and Disa LLC (collectively "plaintiffs") motion for summary judgment or, alternatively, partial summary judgment.
Defendant does not oppose the motion with respect to its direct liability for copyright infringement,
For the reasons set forth below, the court GRANTS IN PART and DENIES IN PART plaintiffs' motion. Considering plaintiffs' evidence proffered in support of the motion and defendant's non-opposition thereto, the court grants plaintiffs' motion as to liability and finds that defendant directly infringed 38 of plaintiffs' copyrighted works. However, the court cannot find, as a matter of law, that said infringement was "willful." On that issue, triable issues of fact remain. As to defendant's counterclaim for infringement, plaintiffs' motion is also granted as defendant's counterclaim is based on a right to attribution (i.e., the provision of proper credit to Disco Azteca and the writer of the original song on plaintiffs' CDs) which is not a protected right under the Copyright Act.
Plaintiffs are record companies engaged in the business of creating, manufacturing, distributing, and selling musical and sound recordings. (Def.'s Resp. to Pls.' Stmt. of Undisputed Facts ["SUF"], filed July 21, 2006, ¶ 1.) Plaintiffs are the owners or exclusive United States licensees of 38 musical works, listed on Schedules A and B to the Second Amended Complaint, and have sold and distributed these works throughout the United States. (SUF ¶ 2.)
Disco Azteca is in the business of selling and distributing sound recordings both as a wholesaler and in retail outlets that it owns and operates. (SUF ¶ 3.) Disco Azteca operates warehouses in Stockton, California and Chicago, Illinois and eleven retail stores throughout California and Nevada. (SUF ¶ 4.) The owners of Disco Azteca, Arturo, Humberto, Jose and Christiano Sanchez (the "Sanchezes"), have been involved in the music business since 1974. (SUF ¶ 5.) In addition to Disco Azteca, the Sanchezes also own and/or operate a recording company called Mar International S.A. ("Mar International") and a music publishing company called Jarabe Publishing Company ("Jarabe"), which operate out of the same office as Disco Azteca. (SUF ¶ 6.) Through Mar International, the Sanchezes have created 300 CDs that have collectively sold hundreds of thousands of copies, and Jarabe controls and/or owns thousands of copyrights in musical works which have been distributed in the United States and abroad. (SUF ¶ 7.) The Sanchezes arrange for the copyrights in these works to be registered with the United States Copyright Office. (Id.)
From 1985 until about three years ago, Mar International was a member of an anti-piracy organization called ALARM, which conducted raids for the purpose of confiscating counterfeit products, and created educational materials about piracy and copyright law. (SUF ¶ 8.) For over 20 years, when legal issues arise, Disco Azteca employs outside counsel (David White, defendant's counsel in this case). (SUF
On March 5, 2003, after receiving information that Disco Azteca may have purchased or imported parallel imports of plaintiffs' work, plaintiff UMG Recordings, Inc. ("UMG") sent a letter, in English and Spanish, to Disco Azteca at both its Stockton, California and Cicero, Illinois addresses, asking Disco Azteca to cease and desist from:
The letter referenced Section 602(a) of the Copyright Act and cited specific case law on the prohibition of parallel imports. (Id.)
Defendant, however, maintains that it first learned of plaintiffs' copyright claims when defendant was served with the complaint in this action on February 25, 2005. (Certif. of Service, filed March 9, 2005.) According to Sanchez, while it appears that UMG's letter was received and signed for by an employee of defendant, he declares it was never brought to his attention, and thus, he never responded to it. UMG did not attempt to contact defendant further, prior to filing the instant lawsuit on December 9, 2004 (plaintiffs filed an amended complaint on February 23, 2005). Sanchez states that he first saw the March 5, 2003 letter in March 2006, during the course of this litigation.
Between March 2003 and July 2005, plaintiffs' investigators visited Disco Azteca's retail stores and identified hundreds
Sanchez relied on these statements and did not attempt to verify the salesman's representations by either obtaining documentation from Musical Del Norte or contacting plaintiffs to confirm Musical Del Norte was an authorized distributor. (SUF ¶ 19.) Sanchez testified, at that time, he was primarily concerned about keeping Disco Azteca profitable, and that the relationship with Musical Del Norte enabled the company to "come out of a hole" financially. (SUF ¶ 21.) The shipments from Musical Del Norte were delivered from Tijuana, Mexico by Musical Del Norte to Disco Azteca in California. (SUF ¶ 16.)
Disco Azteca purchased around 8,000
Disco Azteca's invoices from Musical Del Norte identified all of the works listed on Schedule A of the Second Amended Complaint as among the CDs Disco Azteca purchased from Musical Del Norte. (SUF ¶ 24.) Plaintiffs never licensed Disco Azteca or Muscial Del Norte to import from Mexico into the United States CDs containing their copyrighted works. (SUF ¶ 23.)
In addition to the parallel imports, plaintiffs' investigators also discovered that Disco Azteca was selling a "pirate" (unauthorized) compilation containing a number of plaintiffs' copyrighted works. (SUF ¶ 25.) Plaintiffs did not authorize any of their copyrighted works to appear on the pirated compilation, and never authorized anyone to reproduce or distribute any of the copyrighted works in the form contained on the pirate compilation. (SUF ¶ 26.) Disco Azteca does not dispute that the pirate compilation was purchased at one of its retail stores, but it asserts that it has "no idea where the one disc (called "Latin Hip Hop") came from" because it is not listed in any of Disco Azteca's records and has never been ordered from any company. (DDF ¶ 11.) Disco Azteca posits that while its employees are instructed not to accept returns without a receipt, it is possible that in this case, merchandise not originally purchased by Disco Azteca was inadvertently received and mistakenly stocked. (Id.)
When defendant was served with the complaint, it immediately stopped purchasing from Musical Del Norte. However, it continued to sell the product previously purchased from Musical Del Norte. (SUF ¶ 32; DDF ¶ 10.) Under defendant's tracking system, it was impossible to determine where the units purchased from Musical Del Norte were located within defendant's stores. Defendant's system tracks units by title not by source; consequently, defendant could determine the number of units of a particular title that it had in stock, but it could not determine from whom they were purchased. Therefore, the titles purchased from Musical Del Norte were sold by defendant during the pendency of this litigation, along with other titles purchased directly from plaintiffs. (SUF ¶ 33; DDF ¶ 10.)
During the same time it purchased from Musical Del Norte, Disco Azteca purchased over 400,000 units of other titles from plaintiff. (DDF ¶ 7.) Accordingly, the units from Musical Del Norte accounted for about 2% of Disco Azteca's purchases for the time period. (Id.) In or around 2005, plaintiffs relaxed their credit policies and resumed regular distribution to Disco Azteca. Since that time, Disco Azteca has purchased several million dollars worth of inventory from plaintiffs, including approximately 500,000 units in 2005. (DDF ¶ 8.)
In its counterclaim, Disco Azteca asserts that it is the "copyright owner by assignment of exclusive rights under copyright with respect to certain copyrighted sound recordings embodied in [its] phonorecords," entitled "Chavo Romero" and "Mis Cartas." (Counterclaim, filed March 24, 2005, ¶ 16, Sch. A.) Disco Azteca alleges that plaintiffs have imported unlawful parallel imports of versions of these copyrighted recordings. (Id. at ¶ s 16-18, 20, Sch. A.; SUF ¶ s 34-35.)
However, at his deposition, Sanchez admitted that Disco Azteca has received and
(Sanchez Dep., 195:10-19, Ex. J. to Goldman Decl.)
The Federal Rules of Civil Procedure provide for summary judgment where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c); see California v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998). The evidence must be viewed in the light most favorable to the nonmoving party. See Lopez v. Smith, 203 F.3d 1122, 1131 (9th Cir.2000) (en banc).
The moving party bears the initial burden of demonstrating the absence of a genuine issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party fails to meet this burden, "the nonmoving party has no obligation to produce anything, even if the nonmoving party would have the ultimate burden of persuasion at trial." Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102-03 (9th Cir.2000). However, if the nonmoving party has the burden of proof at trial, the moving party only needs to show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp., 477 U.S. at 325, 106 S.Ct. 2548.
Once the moving party has met its burden of proof, the nonmoving party must produce evidence on which a reasonable trier of fact could find in its favor viewing the record as a whole in light of the evidentiary burden the law places on that party. See Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.1995). The nonmoving party cannot simply rest on its allegations without any significant probative evidence tending to support the complaint. See Nissan Fire & Marine, 210 F.3d at 1107. Instead, through admissible evidence the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
A claim of copyright infringement under federal law, requires proof that (1) the plaintiff had a valid copyright in the work allegedly infringed and (2) the defendant infringed the plaintiff's copyright by violating one of the exclusive rights that 17 U.S.C. § 106 bestows upon
17 U.S.C. § 602(a).
Here, defendant does not dispute the facts and supporting evidence proffered by plaintiff to establish defendant's liability, and thus, a finding of liability for infringement is mandated. Specifically, defendant does not dispute that: (1) plaintiffs own the copyrights in the 38 musical works at issue on this motion;
Defendant's only reference to a possible defense in this action is its statement in the factual background of its opposition that: "The units were brought by Musical into the United States and delivered; Defendant did not import them." (Opp'n at 2:23-24.) Even assuming the truth of this statement and interpreting it as an argument in opposition to plaintiffs' infringement claims, defendant would still not prevail on the motion. The fact that defendant did not actually import the CDs is irrelevant to the determination of liability. Columbia Broadcasting System, Inc. v. Scorpio Music Distributors, Inc., 569 F.Supp. 47, 48-49 (E.D.Pa.1983) ("[T]he question whether defendant was the importer need not be resolved . . . [T]he copyright holder may proceed against any member of the chain of distribution.") Defendant provides no contrary authority; indeed, defendant does not discuss the issue in the body of its analysis, let alone provide any legal authority in support of its factual assertion.
Section 504(c)(2) of the Copyright Act provides in pertinent part:
17 U.S.C. § 504(c)(2).
Willfulness need not be proven directly but may be inferred from the defendant's conduct. N.A.S. Import, Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2nd Cir.1992). "To refute evidence of willful infringement, [a defendant] must not only establish its good faith belief in the innocence of its conduct, it must also show that it was reasonable in holding
"Generally, a determination as to willfulness requires an assessment of a party's state of mind, a factual issue that is not usually susceptible to summary judgment." Sega Enterprises, 948 F.Supp. at 936; Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 515 (9th Cir.1985). Rather, the determination of willfulness is ordinarily a question of fact for the jury. Hearst Corp. v. Stark, 639 F.Supp. 970, 980 (N.D.Cal.1986). However, where the relevant facts are admitted or otherwise undisputed, willfulness can be appropriately resolved on summary judgment. Peer Int'l, 909 F.2d at 1335-36; Sega Enterprises, 948 F.Supp. at 936. Although in reaching this decision, as in any summary judgment proceeding, the court must resolve questions of fact in favor of the non-moving party, here defendant, and must draw all justifiable factual inferences in the non-moving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
Here, plaintiffs contend that defendant has no evidence to contradict the following undisputed facts, which they argue demonstrate defendant's actual and/or constructive knowledge that its conduct constituted copyright infringement and/or, at a minimum, defendant's reckless disregard for plaintiffs' rights:
(SUF ¶ 10, 15-17, 19-21, 24, 28-32.)
Defendant's primary evidence in rebuttal, which provides necessary context, is the following: First, defendant believed, at all relevant times prior to the instant lawsuit being filed, that its purchase and sale of the goods from Musical Del Norte was legal. (DDF ¶ 5.) In that regard, defendant has submitted evidence to support a finding that its belief was reasonable; for example, unlike the case of a defendant selling counterfeit goods, here, defendant sold legitimately manufactured goods it erroneously believed were permissible to sell in the United States. Musical Del Norte is a legitimate distributor of plaintiffs' products in Mexico, and defendant proffers evidence that it had no reason to doubt Musical's representations that it had authority to import plaintiffs' products. (DDF ¶ s 5.) Specifically, Musical Del Norte's wholesale prices were largely comparable with plaintiffs' domestic prices, and defendant believed, based on its experience,
Defendant additionally proffers evidence that it did not receive notice of the alleged infringement until the instant action was filed, and that once the action was filed it immediately stopped purchasing from Musical Del Norte. (DDF ¶ 9-10.) Indeed, Sanchez testified he did not review UMG's March 5, 2003 letter, received by defendant but not forwarded to Sanchez, until March 2006, well after this action was filed. (DDF ¶ 9.) That defendant's prior awareness of any infringement was unlikely is further supported by defendant's evidence that the total number of units purchased from Musical Del Norte was quite small in comparison to the number of units purchased from plaintiffs during the same time period (during this time, defendant purchased some 400,000 units from plaintiffs and only approximately 8,000 units from Musical Del Norte). (DDF ¶ 7.) Since the allegedly infringing copies represent only a small fraction (some 2%) of the total inventory purchased by defendant during this time period, a jury could reasonably conclude that the subject infringing copies may have gone unnoticed by defendant until the lawsuit was filed.
As to the continued sales of plaintiffs' works by defendant, even after the lawsuit was filed, defendant explains the limitations of its tracking system and why it was impossible for defendant to stop selling the offending product. (DDF ¶ 10.) Again, if this evidence is believed, a jury could find that defendant was not knowingly committing continued infringement.
As to those few cases cited by plaintiffs wherein courts found willfulness as a matter of law, the cases are readily distinguishable. For example in Sega Enterprises, the court found that defendant "offered nothing to rebut" the evidence that he "intentionally contributed to the users' infringement of Sega's copyright, and that he intended to profit in sales of copiers" by giving customers a free download of Sega's copyrighted games when they purchased a copier. 948 F.Supp. at 936. Here, as set forth above, defendant has proffered significant evidence of its reasonable good faith belief to rebut plaintiffs' showing of willfulness.
In Peer Int'l, also relied on by plaintiffs, the determinative factor in finding willfulness, as a matter of law, was the defendant's undisputed notice of the alleged infringement and his continued infringement thereafter despite the notification. 909 F.2d at 1335-36 (finding willfulness because the defendants received notice of the termination of their licenses to manufacture, distribute and sell certain copyrighted nondramatic musical compositions, continued to fail to account for and pay royalties, yet nevertheless continued to manufacture and distribute the copyrighted work); accord Microsoft Corp. v. Logical Choice Computers, Inc., 2001 WL 58950 (N.D.Ill.2001) (finding the defendants' behavior knowing or "willfully blind," as a matter of law, because "despite receiving Microsoft's June 20, 1997 cease-and-desist letter which confirmed that certain software [the] defendants had acquired from unauthorized suppliers was counterfeit, defendants continued to obtain software from unauthorized suppliers"). Unlike Peer Int'l and Logical Choice, the issue of defendant's notice of the alleged infringement and conduct thereafter is heavily disputed. As such, plaintiffs' authorities are not persuasive.
Instead, the court finds that defendant's authorities are factually closer and support the denial of plaintiffs' motion. For example, in Island Software and Computer Serv., Inc. v. Microsoft Corp., 413 F.3d 257 (2nd Cir.2005), Microsoft argued that the deposition testimony of Island's principal established sufficient "reckless disregard" and "willful blindness" to compel a finding of willfulness. Id. Microsoft's argument was based on three key facts: First, Island conceded that it had purchased products from a company that it did not consider a "regular distributor" because its prices were inconsistent. Microsoft argued that this established that Island was suspicious of the authenticity of the purchased
The court disagreed holding:
Id. at 263-64 (emphasis added); accord Chanel, Inc. v. Italian Activewear of Florida, Inc., 931 F.2d 1472 (11th Cir.1991) (trademark case) (acknowledging that a "strong inference" of knowledge or willful blindness could be drawn from the facts that the defendant's principal knew the counterfeit goods lacked the indicia of authenticity and knew that the broker who provided the counterfeit goods was not an authorized distributor yet did not ask about the origin of the goods, but finding summary judgment not warranted as willfulness could not be found as a matter of law.)
Similarly here, based on the evidence offered by defendant, the court cannot find that no reasonable trier of fact would rule in defendant's favor. While it is, like in Island Software, "without doubt" that a jury could find that the evidence relied on by plaintiffs demonstrates, at least, defendant's willful blindness or reckless disregard, of the possibility that its conduct constituted infringement, it is "not beyond peradventure that a reasonable jury could conclude otherwise." 413 F.3d at 264 ("at the summary judgment stage, although an inference of constructive knowledge or reckless conduct seems the better of the possible inferences that can be drawn, we must still draw all inferences in favor of the non-moving party"). And thus, the court cannot grant summary judgment in favor of plaintiffs on the issue of willfulness.
Plaintiffs move for summary judgment in favor of counterdefendants on defendant's counterclaim for infringement on the grounds that defendant has no evidentiary support for such a claim and/or their stated claim is not cognizable under the Copyright Act. First, with respect to defendant's allegation of infringement by counterdefendants, Sanchez conceded at deposition that Disco Azteca has received and accepted royalty payments from counterdefendants, and thus, defendant has not been damaged by counterdefendants' alleged uses of defendant's copyrighted songs. (SUF ¶ 36; Sanchez Dep., 195:10-19, Ex. J. to Goldman Decl.) Such acceptance of counterdefendants' payments
Apparently realizing the effect of his admissions, Sanchez now claims, in his declaration filed in support of defendant's opposition, that "[s]uch [royalty] payments [by counterdefendants] were arbitrarily and irregularly made," and thus, defendants were "damaged under Sections 106, 501, and 602(a) of the Copyright Act." (Opp'n at 11:2-3.) However, the court must disregard Sanchez' declaration on this issue as it directly contradicts his deposition testimony. Block v. City of Los Angeles, 253 F.3d 410, 419 n. 2 (9th Cir. 2001) ("A party cannot create a genuine issue of material fact to survive summary judgment by contradicting his earlier version of the facts.").
Accordingly, defendant's only remaining argument, supported by Sanchez' deposition testimony, is that Disco Azteca was damaged by counterdefendants' failure to provide written credit to Disco Azteca (and the writer of the original song) on the album packaging. (Sanchez Dep., 195:10-19, Ex. J. to Goldman Decl. ["The way we've been damaged is by not giving credit to the right composer and the right publishing company. That's the way we've been damaged."].) However, it is well established that the right to attribution is not a protected right under the Copyright Act. Wolfe v. United Artists Corp., 583 F.Supp. 52, 56 (E.D.Pa.1983) (holding that the "failure to give [a] plaintiff proper authorship credit in a copyrighted work is not a [cognizable] Copyright Act claim") (internal quotations and citations omitted); accord Tangorre v. Mako's, Inc. 2003 WL 470577, *8 (S.D.N.Y.2003) (rejecting argument that plaintiff's "copyrights were infringed when [the defendant] failed to provide him with written copyright credit on the [allegedly infringing work]" because "a failure to give copyright credit is not an act of copyright infringement"). Copyright law is a creature of statute, 17 U.S.C. § 101 et seq., and a party's rights and remedies under the Copyright Act must be derived from the infringement of one of the exclusive rights set forth in the Act. Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 154-55, 95 S.Ct. 2040, 45 L.Ed.2d 84 (1975). Those exclusive rights are enumerated in Section 106—reproduction, adaptation, distribution, performance and display. 17 U.S.C. § 106. The right to be credited is not one of these rights. Thus, the failure to credit a copyright owner is not an infringement, and defendant accordingly does not have a viable claim against counterdefendants for infringement.
For the foregoing reasons, plaintiffs' motion for summary judgment or, alternatively, partial summary judgment is GRANTED IN PART and DENIED IN PART. The court grants plaintiffs' motion as to liability and finds that defendant
IT IS SO ORDERED.