JAMES M. CARTER, Circuit Judge:
This is a copyright infringement action. Plaintiffs Sid and Marty Krofft Television Productions, Inc., and Sid and Marty Krofft Productions, Inc. were awarded $50,000.00 in their action against defendants McDonald's Corporation and Needham, Harper & Steers, Inc. Defendants were found to have infringed plaintiffs' "H. R. Pufnstuf" children's television show by the production of their "McDonaldland" television commercials.
Defendants cross-appeal. They contend that their television commercials did not infringe upon plaintiffs' television series as a matter of law. To find infringement, they suggest, would abridge their first amendment rights. They also refute plaintiffs' contentions as to damages.
We believe that the district court's finding of infringement was not clearly erroneous, and see no merit to defendants' first amendment claims, We find, however, that the district court was in error in awarding damages. We therefore affirm in part, reverse in part, and remand for further proceedings.
In 1968, Sid and Marty Krofft were approached by the NBC television network to create a children's television program for exhibition on Saturday morning.
In early 1970, Marty Krofft, the President of both Krofft Television and Krofft Productions and producer of the show, was contacted by an executive from Needham, Harper & Steers, Inc., an advertising agency. He was told that Needham was attempting to get the advertising account of McDonald's hamburger restaurant chain and wanted to base a proposed campaign to McDonald's on the H. R. Pufnstuf characters. The executive wanted to know whether the Kroffts would be interested in working with Needham on a project of this type.
Needham and the Kroffts were in contact by telephone six or seven more times. By a letter dated August 31, 1970, Needham stated it was going forward with the idea of a McDonaldland advertising campaign based on the H. R. Pufnstuf series. It acknowledged the need to pay the Kroffts a fee for preparing artistic designs and engineering plans. Shortly thereafter, Marty Krofft telephoned Needham only to be told that the advertising campaign had been cancelled.
In fact, Needham had already been awarded McDonald's advertising account and was proceeding with the McDonaldland project.
Prior to the advent of the McDonaldland advertising campaign, plaintiffs had licensed the use of the H. R. Pufnstuf characters
Plaintiffs filed suit in September 1971. The complaint alleged, inter alia, that the McDonaldland advertising campaign infringed the copyrighted H. R. Pufnstuf television episodes as well as various copyrighted articles of Pufnstuf merchandise.
The three week jury trial began on November 27, 1973. The jurors were shown for their consideration on the question of infringement: (1) two H. R. Pufnstuf television episodes; (2) various items of H. R. Pufnstuf merchandise, such as toys, games, and comic books; (3) several 30 and 60 second McDonaldland television commercials; and (4) various items of McDonaldland merchandise distributed by McDonald's, such as toys and puzzles. The jury was instructed that it was not to consider defendants' profits in determining damages, but could consider the value of use by the defendants of plaintiffs' work.
A verdict in favor of plaintiffs was returned and damages of $50,000.00 assessed. After the verdict, the parties briefed the question of whether plaintiffs were entitled to additional monetary recovery in the form of profits or statutory "in lieu" damages. The district court denied plaintiffs' claim for such relief. The court found that these matters were properly for the jury to consider so that it would not exercise its discretion in hearing further evidence. These appeals followed.
Proof of Infringement
It has often been said that in order to establish copyright infringement a plaintiff must prove ownership of the copyright and "copying" by the defendant. See, e. g., Reyher v. Children's Television Workshop, 533 F.2d 87, 90 (2 Cir. 1976); Universal Athletic Sales Co. v. Salkeld, 511 F.2d 904, 907 (3 Cir. 1975); 2 M. Nimmer on Copyright § 141 at 610-11 (1976) (hereinafter "Nimmer"). "Copying," in turn, is said to be shown by circumstantial evidence of access to the copyrighted work and substantial similarity between the copyrighted work and defendant's work. Reyher v. Children's Television Workshop, supra, 533 F.2d at 90; 2 Nimmer § 141.2 at 613. But an analysis of the cases suggests that these statements frequently serve merely as boilerplate to copyright opinions.
Under such statements, infringement would be established upon proof of ownership, access, and substantial similarity. Application of this rule, however, would produce some untenable results. For example, a copyright could be obtained over a cheaply manufactured plaster statue of a nude. Since ownership of a copyright is established, subsequent manufacturers of statues of nudes would face the grave risk
Clearly the scope of copyright protection does not go this far. A limiting principle is needed. This is provided by the classic distinction between an "idea" and the "expression" of that idea. It is an axiom of copyright law that the protection granted to a copyrighted work extends only to the particular expression of the idea and never to the idea itself. Mazer v. Stein, 347 U.S. 201, 217-18, 74 S.Ct. 460, 98 L.Ed. 630 (1954); Baker v. Selden, 101 U.S. 99, 102-03, 25 L.Ed. 841 (1879). This principle attempts to reconcile two competing social interests: rewarding an individual's creativity and effort while at the same time permitting the nation to enjoy the benefits and progress from use of the same subject matter.
The real task in a copyright infringement action, then, is to determine whether there has been copying of the expression of an idea rather than just the idea itself. "[N]o one infringes, unless he descends so far into what is concrete [in a work] as to invade . . . [its] expression." National Comics Publications v. Fawcett Publications, 191 F.2d 594, 600 (2 Cir. 1951). Only this expression may be protected and only it may be infringed.
The difficulty comes in attempting to distill the unprotected idea from the protected expression. No court or commentator in making this search has been able to improve upon Judge Learned Hand's famous "abstractions test" articulated in Nichols v. Universal Pictures Corporation, 45 F.2d 119 (2 Cir. 1930), cert. denied, 282 U.S. 902, 51 S.Ct. 216, 75 L.Ed. 795 (1931):
The test for infringement therefore has been given a new dimension. There must be ownership of the copyright and access to the copyrighted work. But there also must be substantial similarity not only of the general ideas but of the expressions of those ideas as well. Thus two steps in the analytic process are implied by the requirement of substantial similarity.
The determination of whether there is substantial similarity in ideas may often be a simple one. Returning to the example of the nude statue, the idea there embodied is a simple one — a plaster recreation of a nude human figure. A statue of a horse or a painting of a nude would not embody this idea and therefore could not infringe. The test for similarity of ideas is still a factual one, to be decided by the trier of fact. See International Luggage Registry v. Avery Products Corp., 541 F.2d 830, 831 (9 Cir. 1976); Williams v. Kaag Manufacturers, Inc., 338 F.2d 949, 951 (9 Cir. 1964).
We shall call this the "extrinsic test." It is extrinsic because it depends not on the responses of the trier of fact, but on specific criteria which can be listed and analyzed. Such criteria include the type of artwork involved, the materials used, the subject matter, and the setting for the subject. Since it is an extrinsic test, analytic dissection and expert testimony are appropriate. Moreover, this question may often be decided as a matter of law.
The determination of when there is substantial similarity between the forms of expression is necessarily more subtle and complex. As Judge Hand candidly observed, "Obviously, no principle can be stated as to when an imitator has gone beyond copying the `idea,' and has borrowed its `expression.' Decisions must therefore inevitably be ad hoc." Peter Pan Fabrics, Inc. v. Martin Weiner Corp., 274 F.2d 487, 489 (2 Cir. 1960). If there is substantial similarity in ideas, then the trier of fact must decide whether there is substantial similarity in the expressions of the ideas so as to constitute infringement.
The test to be applied in determining whether there is substantial similarity in expressions shall be labeled an intrinsic one — depending on the response of the ordinary reasonable person. See International Luggage Registry v. Avery Products Corp., supra, 541 F.2d at 831; Harold Lloyd Corp. v. Witwer, 65 F.2d 1, 18-19 (9 Cir. 1933). See generally Nimmer § 143.5. It is intrinsic because it does not depend on the type of external criteria and analysis which marks the extrinsic test. As this court stated in Twentieth Century-Fox Film Corp. v. Stonesifer, 140 F.2d 579, 582 (9 Cir. 1944):
Because this is an intrinsic test, analytic dissection and expert testimony are not appropriate.
This same type of bifurcated test was announced in Arnstein v. Porter, 154 F.2d 464, 468-69 (2 Cir. 1946), cert. denied, 330 U.S. 851, 67 S.Ct. 1096, 91 L.Ed. 1294 (1947). The court there identified two separate elements essential to a plaintiff's suit for infringement: copying and unlawful appropriation. Under the Arnstein doctrine, the distinction is significant because of the different tests involved.
The Tests Applied
In the context of this case, the distinction between these tests is important. Defendants do not dispute the fact that they copied the idea of plaintiffs' Pufnstuf television series — basically a fantasyland filled with diverse and fanciful characters in action. They argue, however, that the expressions of this idea are too dissimilar for there to be an infringement. They come to this conclusion by dissecting the constituent parts of the Pufnstuf series — characters, setting, and plot — and pointing out the dissimilarities between these parts and those of the McDonaldland commercials.
This approach ignores the idea-expression dichotomy alluded to in Arnstein and analyzed today. Defendants attempt to apply an extrinsic test by the listing of dissimilarities in determining whether the expression they used was substantially similar to the expression used by plaintiffs. That extrinsic test is inappropriate; an intrinsic test must here be used. As the court in Arnstein stated:
Analytic dissection, as defendants have done, is therefore improper.
Defendants contest the continued viability of Arnstein. It is true that Arnstein's alternative holding that summary judgment may not be granted when there is the slightest doubt as to the facts has been disapproved. See, e. g., First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-90, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Beal v. Lindsay, 468 F.2d 287, 291 (2 Cir. 1972); Janis v. Wilson, 385 F.Supp. 1143, 1147 (D.S.D. 1974); Keller v. California Liquid Gas Corp., 363 F.Supp. 123, 126 (D.Wyo.1973). But the case's tests for infringement have consistently been approved by this court. See, e. g., Goodson-Todman Enterprises, Inc. v. Kellogg Co., 513 F.2d 913, 914 (9 Cir. 1975); Overman v. Loesser, 205 F.2d 521, 523 (9 Cir. 1953). They have also been accepted by other courts. See, e. g., Universal Athletic Sales Co. v. Salkeld, supra, 511 F.2d at 907; Scott v. WKJG, Inc., 376 F.2d 467, 469 (7 Cir. 1967).
As a finding of fact, a conclusion as to the question of copying is subject to the "clearly erroneous" standard. Fed.R.Civ.P. 52(a). But it follows that this court will be less likely to find clear error when the subjective test for copying of expression has been applied.
The present case demands an even more intrinsic determination because both plaintiffs' and defendants' works are directed to an audience of children. This raises the particular factual issue of the impact of the respective works upon the minds and imaginations of young people. As the court said in Ideal Toy Corp. v. Fab-Lu Ltd., 261 F.Supp. 238, 241-42 (S.D.N.Y.1966), aff'd, 360 F.2d 1021 (2 Cir. 1966):
The H. R. Pufnstuf series became the most popular children's show on Saturday morning television. This success led several manufacturers of children's goods to use the Pufnstuf characters. It is not surprising, then, that McDonald's hoped to duplicate this peculiar appeal to children in its commercials.
Defendants would have this court ignore that intrinsic quality which they recognized to embark on an extrinsic analysis of the two works. For example, in discussing the principal characters — Pufnstuf and Mayor McCheese — defendants point out:
So not only do defendants remove the characters from the setting, but dissect further to analyze the clothing, colors, features, and
Duplication or near identity is not necessary to establish infringement. Runge v. Lee, 441 F.2d 579, 582 (9 Cir. 1971); Williams v. Kaag Manufacturers, Inc., supra, 338 F.2d at 951. As this court stated in Universal Pictures Co., Inc. v. Harold Lloyd Corp., infra, 162 F.2d 354, at 360:
And, as Judge Learned Hand put it, copyright "cannot be limited literally to the text, else a plagiarist would escape by immaterial variations." Nichols v. Universal Pictures Corp., 45 F.2d 119, 121 (2 Cir. 1930).
We have viewed representative samples of both the H. R. Pufnstuf show and McDonaldland commercials. It is clear to us that defendants' works are substantially similar to plaintiffs'.
Unity of Idea and Expression
Defendants argue that dissection is proper and that duplication or near identity is necessary because the competing works are things, rather than dramatic works. They cite numerous cases in which infringement was found because the defendants' works were nearly identical to those of the plaintiffs. See, e. g., Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 250, 23 S.Ct. 298, 47 L.Ed. 460 (1903) (circus posters); Sunset House Distributing Corp. v. Doran, 304 F.2d 251, 252 (9 Cir. 1962) (plastic Santa Claus); King Features Syndicate v. Fleischer, 299 F. 533, 534 (2 Cir. 1924) (doll). Defendants fail to perceive, however, that near identity may be required in some cases not because the works are things, but because the expression of those works and the idea of those works are indistinguishable.
Herbert Rosenthal Jewelry Corp. v. Kalpakian, 446 F.2d 738 (9 Cir. 1971), upon which defendants rely, is illustrative of this point. In that case, plaintiff sued for infringement of its jeweled bee pin, claiming it should be protected against the manufacture of any substantially similar object. This court responded:
See also Herbert Rosenthal Jewelry Corp. v. Honora Jewelry Co., Inc., 509 F.2d 64, 65 (2 Cir. 1974).
The idea and the expression will coincide when the expression provides nothing new or additional over the idea. Thus, the expression of a jeweled bee pin contains nothing new over the idea of a jeweled bee pin. Returning to our own example, the idea of a plaster statute of a nude will probably coincide with the expression of that idea when an inexpensive manufacturing process is used. There will be no separately distinguishable features in the statute's expression over the idea of a plaster nude statute.
The complexity and artistry of the expression of an idea will separate it from even the most banal idea. Michaelangelo's David is, as an idea, no more than a statute of a nude male. But no one would question the proposition that if a copyrighted work it would deserve protection even against the poorest of imitations. This is because so much more was added in the expression over the idea.
When idea and expression coincide, there will be protection against nothing other than identical copying of the work. When other defendants made jeweled bees from the same molds as plaintiffs, they were held liable. See Herbert Rosenthal Jewelry Corp. v. Grossbardt, 436 F.2d 315 (2 Cir. 1970). Therefore, the scope of copyright protection increases with the extent expression differs from the idea.
The coincidence of idea and expression may occur in works other than "things."
There is no special standard of similarity required in the case of "things." Nor is any such standard suggested by any of the cases cited by defendants. For example, in Monogram Models, Inc. v. Industro Motive Corp., 492 F.2d 1281, 1284 (6 Cir. 1974), the issue was one of copyright infringement of scale model airplane kits. Defendant admitted copying, but argued lack of substantial copying. The court affirmed a jury finding of infringement, citing the ordinary reasonable observer test. Id. at 1286. See also Williams v. Kaag Manufacturing, Inc.,
No standard more demanding than that of substantial similarity should be imposed here. This is not a case where the idea is indistinguishable as a matter of law from the expression of that idea. See Goodson-Todman Enterprises, Inc. v. Kellogg Co., supra, 513 F.2d at 914. The expression inherent in the H. R. Pufnstuf series differs markedly from its relatively simple idea. The characters each have developed personalities and particular ways of interacting with one another and their environment. The physical setting also has several unique features.
Lest we fall prey to defendants' invitation to dissect the works, however, we should remember that it is the combination of many different elements which may command copyright protection because of its particular subjective quality. Reyher v. Children's Television Workshop, Inc., supra, 533 F.2d at 91-92; Ideal Toy Corp. v. Sayco Doll Corp., 302 F.2d 623, 624 (2 Cir. 1962). As the court said in Malkin v. Dubinsky, 146 F.Supp. 111, 114 (S.D.N.Y.1956): "While any one similarity taken by itself seems trivial, I cannot say at this time that it would be improper for a jury to find that the over-all impact and effect indicate substantial appropriation."
Copyright and the First Amendment
Defendants argue that the first amendment operates in this case to limit the protection for plaintiffs' works.
The constitutionality of the copyright law was settled long ago by the Supreme Court. In Kalem Co. v. Harper Brothers, 222 U.S. 55, 32 S.Ct. 20, 56 L.Ed. 92 (1911), the defendant argued that the copyright law could not grant an author an exclusive right to dramatize his works. In rejecting this contention, the Court stated:
The Court recognized that the protection of the copyright laws is necessary to provide an incentive for artistic creation which ultimately advances the public good. See Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 45 L.Ed.2d 84 (1975).
But the impact, if any, of the first amendment on copyright has not been discussed by the Court.
Nimmer, Does Copyright Abridge the First Amendment Guarantees of Free Speech and Press?, 17 U.C.L.A.L.Rev. 1180, 1192-93 (1970). Cf. Lee v. Runge, 404 U.S. 887, 892-93, 92 S.Ct. 197, 30 L.Ed.2d 169 (1971) (Douglas, J., dissenting).
Ideas which may be of public interest are not subject to copyright; the specific form of expression of these ideas are. Thus, the political views of Dr. Martin Luther King may be widely disseminated. But the precise expression of these views in a speech may be protected. King v. Mister Maestro, Inc., 224 F.Supp. 101 (S.D.N.Y.1963). See also Public Affairs Associates, Inc. v. Rickover, 177 F.Supp. 601 (D.D.C.1960), rev'd, 109 U.S.App.D.C. 128, 284 F.2d 262 (1960), rev'd, 369 U.S. 111, 82 S.Ct. 580, 7 L.Ed.2d 604 (1962), on remand, 268 F.Supp. 444 (D.D.C.1967); Atlantic Monthly Co. v. Post Pub. Co., 27 F.2d 556 (D.Mass.1928). Similarly, the facts about a historical figure are available to all to use. But if the expression of those facts in a biography is substantially copied infringement will be found. See, e. g., Toksvig v. Bruce Publishing Co., 181 F.2d 664 (7 Cir. 1950); Marvin Worth Productions v. Superior Films Corp., 319 F.Supp. 1269 (S.D.N.Y.1970); Holdredge v. Knight Publishing Corp., 214 F.Supp. 921 (C.D.Cal.1963).
With the law of copyright permitting the free use of ideas, it is not surprising that the few courts addressing the issue have not permitted defendants who copy a work's expression to hide behind the first amendment. See, e. g., Duchess Music
The district court in Disney recognized that the expression inherent in plaintiff's works differs from the mere idea of those works. The "idea" of Mickey Mouse is, after all, no more than a mouse. Yet the particular expression of that mouse has phenomenal commercial value and is recognized worldwide. Defendants there could have chosen any number of ways to express their idea of a mouse, but chose to copy Disney's. So too the defendants in this case had many ways to express the idea of a fantasyland with characters, but chose to copy the expression of plaintiffs'. The first amendment will not protect such imitation.
There may be certain rare instances when first amendment considerations will operate to limit copyright protection for graphic expressions of newsworthy events.
In addition to substantial similarity, a plaintiff must show access in order to prove infringement. Reyher v. Children's Television Workshop, supra, 533 F.2d at 90; 2 Nimmer § 141.2 at 613. Access is proven when the plaintiff shows that the defendant had an opportunity to view or to copy plaintiff's work. Arrow Novelty Co. v. Enco National Corp., 393 F.Supp. 157, 160 (S.D.N.Y.), aff'd, 515 F.2d 504 (2 Cir. 1975); Universal Athletic Sales Co. v. Salkeld, 340 F.Supp. 899, 901 (W.D.Pa.1972). In this case, there is no dispute as to defendants' access to plaintiffs' work. Indeed, defendants were engaged in negotiations with plaintiffs for licensing of the works even while preparing the McDonaldland commercials.
No amount of proof of access will suffice to show copying if there are no similarities. Williams v. Kaag Manufacturers, Inc., supra, 338 F.2d at 951; Arnstein v. Porter, supra, 154 F.2d at 468. This is not to say, however, that where clear and convincing evidence of access is presented, the quantum of proof required to show substantial similarity may not be lower than when access is shown merely by a preponderance of the evidence. As Professor Nimmer has observed:
In this case, representatives of Needham actually visited the Kroffts' headquarters in Los Angeles to discuss the engineering and design work necessary to produce the McDonaldland commercials. They did this after they had been awarded the contract by McDonald's and apparently with no intention to work with the Kroffts. We believe that this degree of access justifies a lower standard of proof to show substantial similarity. Since the subjective test applies, it is impossible to quantify this standard. But there is no question it is met here.
Section 101(b), 17 U.S.C., provides that a copyright infringer shall be liable as follows:
Thus, a court in making an award for infringement must determine both actual damages suffered by a plaintiff and profits from the infringement made by defendant.
While there is disagreement as to whether both damages and profits are to be included in the award, an issue we will take up shortly, there is agreement that a successful plaintiff is entitled to at least the greater of damages or profits. See Universal Pictures Co. v. Harold Lloyd Corp., 162 F.2d 354, 375-77 (9 Cir. 1947); L & L White Metal Casting Corp. v. Joseph, 387 F.Supp. 1349,
The jury assessed damages of $50,000 against defendants in this case. Subsequent to the return of the verdict, counsel for both sides, at the district court's request, briefed the question of whether plaintiffs were entitled to additional monetary recovery either in the form of profits or statutory "in lieu" damages. After considering this question, the district court concluded that plaintiffs were not entitled to any additional recovery and denied plaintiffs' motion for an accounting of profits by defendants.
The issues on appeal are threefold: (1) whether the jury considered profits in assessing damages; (2) if not, whether plaintiffs are entitled to recovery of damages and profits or merely damages or profits; and (3) whether, if profits cannot accurately be determined, plaintiffs are entitled to statutory "in lieu" damages.
Consideration of Profits by the Jury
Two weeks before trial, the district court signed the Pre-Trial Conference Order that was prepared and "approved as to form and content" by counsel for both sides. It provided:
Rule 16 of the Federal Rules of Civil Procedure expressly provides that a Pre-Trial Conference Order "when entered controls the subsequent course of the action, unless modified at the trial to prevent manifest injustice." There was no modification of this Order at trial or at any other time. Rule 39(a) of the Federal Rules further provides that issues will not be given to the jury when reserved for the court by "written stipulation filed with the court."
Defendants argue that plaintiffs' original demand for a jury trial meant that all issues had to go to the jury. See Fed.R.Civ.P. 38(c). But the clear language of the Pre-Trial Conference Order and the subsequent conduct of the parties contradict any claimed general demand for a jury trial.
This conclusion is supported by the instructions given to the jury. Jury Instruction No. 26 was accepted by the court and read to the jury as follows:
The record also shows that inquiry from the court elicited agreement with this instruction from counsel for both sides.
Defendants claim that the value of use provided in this instruction is equivalent to defendant's profits from the infringement.
The value of use reference in Instruction No. 49 is defined as a part of the reasonable value of plaintiffs' work. It amounts to a determination of what a willing buyer would have been reasonably required to pay to a willing seller for plaintiffs' work. That is a different measure than the determination of defendants' actual profits from the infringement. An author might license the use of his copyright either for a lump sum based on the reasonable value of the work or for a royalty derived from the licensee's profits, or for a combination of both.
The district court recognized the potential for confusion between these two instructions. It agreed upon an explanation offered by counsel for plaintiffs: "I think that the difference would be that a person may pay to use `Living Island' and the characters, and then, even though they have paid for them, they may have suffered a loss and suffered no profit." It was only because the district court concluded that there was a difference between profits and value of use that both Instructions 26 and 49 were delivered to the jury. We agree with this distinction.
Defendants argue further that profits in fact were considered by the jury. The record does not support this conclusion. No exhibits regarding either defendants' profits were submitted to the jury in the infringement action.
An Accounting of Profits as a Legal Remedy
In denying plaintiffs' motion for an accounting of profits, the district court relied upon Dairy Queen v. Wood, 369 U.S. 469, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). That
The issue whether an accounting of profits in an infringement action is legal or equitable was considered by the court in Swofford v. B & W, Inc., 336 F.2d 406 (5 Cir.), cert. denied, 379 U.S. 962, 85 S.Ct. 653, 13 L.Ed.2d 557 (1964). That court held that Dairy Queen controlled, and said:
We agree with this reasoning. Plaintiffs in this case had a right to a jury trial.
But a right is not an obligation. Dairy Queen only decided when a party has a right to a jury trial. It certainly cannot be read to hold that the parties are required to have a jury determination even if they do not wish it. It is clear from our analysis of the Pre-Trial Conference Order and jury instructions that the parties did not intend the jury to consider profits. The district court therefore was in error in concluding that Dairy Queen compelled the jury to consider profits in this case.
The judgment of the district court finding infringement is affirmed. The McDonald commercials are based on the same ideas as the H. R. PufnStuf series. The expression of that idea is sufficiently similar so that a jury applying an intrinsic test could find infringement. This is especially true here since there was strong evidence of access.
SNEED, Circuit Judge:
I concur in the preceding portion of this opinion. The following portion, dealing with the problems of alternative or cumulative recovery and "in lieu" damages, expresses the majority view of this court on these two issues, and is intended to complement the preceding portion of this opinion.
Alternative or Cumulative Recovery.
If defendants can render an accounting of their profits, the question remains
It has been argued that the Supreme Court's decision in F. W. Woolworth Co. v. Contemporary Arts, Inc., 344 U.S. 228, 73 S.Ct. 222, 97 L.Ed. 276 (1952) and this court's interpretation of that decision in Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236 (9th Cir. 1966) overruled, sub silentio, Universal Pictures. We disagree. Both Woolworth and Shapiro dealt with the related question of the propriety of "in lieu" damages in certain factual situations; neither squarely confronted the question of cumulative versus alternative recovery.
To illustrate, in Woolworth the district court had awarded "in lieu" damages in the face of ascertained, albeit small, profits and substantial but unproven damages. The Supreme Court affirmed this award for two reasons: (1) to compensate the copyright owner for injury when proof of such injury is difficult or impossible, and (2) to discourage wrongful conduct. In the context of this holding the Court used the following language, which it has been argued, demonstrates that it favors cumulative recovery.
344 U.S. at 233, 73 S.Ct. at 225.
When read in light of the issue before the Court, viz. the propriety of "in lieu" damages, this passage does not indicate that cumulative recovery is required to discourage infringement, but rather that the threat of "in lieu" damages should exist to serve as a deterrent to future infringement. The remainder of the quoted passage further evidences the thrust of the Court's opinion.
The fact that "a rule of liability which merely takes away the profits" is an insufficient
Nor does Shapiro hold that cumulative recovery is available under the Act. In Shapiro, the trial court had determined that, although ascertainable, damages were non-existent and profits were de minimus and consequently, the copyright owner was entitled to no monetary recovery. The Ninth Circuit affirmed these findings of fact and, reasoning from Woolworth, held that although the trial court had the discretion to apply "in lieu" damages, its refusal to do so was not error.
The trial court, relying on Sheldon v. Metro-Goldwyn Corp., 309 U.S. 390, 60 S.Ct. 681, 84 L.Ed. 825 (1940), had concluded that if either profits or damages are ascertainable, then "in lieu" damages are inappropriate. We disagreed with that conclusion. In passing we stated that
367 F.2d at 240.
This statement merely acknowledges the Woolworth dicta which indicates that the trial court has discretion to award "in lieu" damages even though both profits and damages have been proved. Again, we must note that this court was dealing not with the propriety of cumulative versus alternative recovery, but rather with the availability of "in lieu" damages. The question of whether only the higher of the two ascertainable elements may be awarded was not before the court; the court simply held that even with ascertainable profits and damages, "in lieu" damages still may be granted.
Statutory "In Lieu" Damages.
In the case now before us the district court, after the jury had been dismissed, refused to exercise its discretion to hear additional testimony on the applicability of "in lieu" damages. It ruled that "in lieu" damages should have been submitted previously to the jury and consequently it declined to consider the propriety of such an award. We reverse this determination and hold that, after the plaintiffs have had an opportunity to prove profits, the district court should consider the propriety of "in lieu" damages, although an award of such damages will be within its discretion.
We so hold because the issue of "in lieu" damages is properly addressed to the court, not the jury. Section 101(b) expressly directs the court to use its discretion in the determination of "in lieu" damages.
Woolworth, strictly read, teaches us that when only profits are proven the district court has the discretion to award "in lieu" damages. The Supreme Court, however, indicated that "in lieu" damages also could be awarded when only actual damages were proven: "Lack of adequate proof on either element would warrant resort to the statute in the discretion of the court, subject always to the statutory limitations."
It has been suggested that Shapiro teaches that if either profits or actual damages are not ascertained the district court must award "in lieu" damages. See, e. g., 2 M. Nimmer § 154.13 at 681, n. 91a (June 1976 Supp. at 77-78). We disagree. Shapiro was a case in which both actual damages and profits were ascertained. Under these circumstances the district court declined to award "in lieu" damages. This court affirmed the findings of fact but held, nonetheless, that the trial court in its discretion could award "in lieu" damages but was under no duty to do so.
Those who read Shapiro to impose a duty to award "in lieu" damages if either profits or actual damages are unascertainable point to dicta that states that "the judicial discretion . . . only comes into play when profits and damages have actually been proved, and unless they have, the court must apply the statutory standard." 367 F.2d at 240. We read this to mean that the district court has a duty to award "in lieu" damages only when both profits and damages have not been established. Three considerations support this interpretation. First, the cases cited immediately after the above quoted dicta, i. e., Douglas v. Cunningham, 294 U.S. 207, 55 S.Ct. 365, 79 L.Ed. 862 (1935); Jewell-LaSalle Realty Co. v. Buck, 283 U.S. 202, 51 S.Ct. 407, 75 L.Ed. 978 (1931); Westermann Co. v. Dispatch Printing Co., 249 U.S. 100, 39 S.Ct. 194, 63 L.Ed. 499 (1919), all involved fact situations in which neither damages nor profits were proven. With this in mind, it is clear why the court said immediately following the citations that Woolworth did not conflict with these cases. Second, a contrary interpretation of Shapiro would place it in direct conflict with the holding of Woolworth. Faced with ascertained profits, but unascertained damages, the Court nevertheless held that "in lieu" damages were discretionary. Third, inasmuch as Shapiro was decided in the context of ascertained profits and ascertained damages, it is not unreasonable to assume that the court was addressing situations in which either both profits and damages are ascertained or neither is ascertained.
This interpretation of Shapiro leaves the problem of "in lieu" damages in the following posture. If either profits or actual damages or both are ascertained, the court, in its discretion, may award statutory "in lieu" damages.
The foregoing interpretation of Woolworth and Shapiro provide the rules by which the trial court will be guided in respect to "in lieu" damages on remand of this case. On remand the trial court's first task is to determine, if possible, the profits of the infringers. If these profits are ascertainable, then plaintiffs are entitled to the larger of either the profits or damages, unless the district court, in its discretion, awards the statutory "in lieu" damages. If the profits are not ascertainable, then plaintiffs are entitled to the compensatory damages as found by the jury, unless the district court awards the discretionary "in lieu" damages.
In view of the holdings set forth in both portions of this opinion the judgment of the district court finding infringement is affirmed. The district court's denial of plaintiffs' motion for an accounting is reversed. The case is remanded for an accounting, after which the district court may, in its discretion, award statutory "in lieu" damages.
Affirmed in part and Reversed in part.
JAMES M. CARTER, Circuit Judge, concurring and dissenting.
I concur in that portion of Judge Sneed's Opinion dealing with statutory "in lieu" damages. However, I am convinced that the Copyright Act contemplates cumulative recovery of both damages and profits, and therefore dissent from that portion of the Majority Opinion dealing with this issue.
The statutory language of Section 101(b) provides for recovery of "such damages as the copyright proprietor may have suffered due to the infringement, as well as all the profits which the infringer shall have made from such infringement . . . ." Thus, the statute itself provides for cumulative recovery of both damages and profits. However, considerable confusion was engendered by the House Report on the 1909 Act which indicated that recovery was to be in the alternative, as under the Patent Law.
In the Woolworth case the lower court had awarded statutory "in lieu" damages and attorneys' fees for infringement of a statute. The Supreme Court found that there had been an adequate showing of profits by the infringer to enable assessment of that liability. "As to the other ingredient in computing liability, damages suffered by the copyright proprietor, the record is inadequate to establish an actually sustained amount." 344 U.S. at 230, 73 S.Ct. at 224. Nonetheless, the Court approved the "in lieu" damages award because cumulative recovery is provided by the Copyright Act. Thus the Court stated:
The majority argues that Woolworth should not be viewed as controlling precedent in this case because it did not specifically deal with the issue of cumulative or alternative recovery. But the above-quoted language indicates that the Court believed that recovery of more than just profit is necessary. While in that case, damages could not be ascertained so that "in lieu" damages were appropriate, the conclusion is inescapable that where damages can be ascertained, they must be awarded in addition to profits in order to obtain the deterrent effect sought by the Court. As the Supreme Court recognized, the damage provision of the Copyright Act aims at more than just compensation of the copyright owner. It also served to prevent unjust enrichment by the infringer and to deter infringement. I agree with the Second Circuit that fulfillment of these purposes requires cumulative recovery. See Thomas Wilson & Co. v. Irving J. Dorfman Co., supra, 433 F.2d at 413-14; Peter Pan Fabrics, Inc. v. Jobela Fabrics, Inc., supra, 329 F.2d at 196. It follows that plaintiffs in this case should be entitled to recover both damages and profits, if the latter can be proven.
Universal Pictures Co. v. Harold Lloyd Corp., supra, was decided before the Woolworth case. It relied, instead, on Sheldon v. Metro Goldwyn Pictures Corp., 309 U.S. 390, 400, 60 S.Ct. 681, 84 L.Ed. 825 (1940) and Underwood Typewriter Co. v. E. C. Stearns & Co., 227 F. 74, 82 (2 Cir. 1915). This Court has already concluded that the Sheldon case was superseded by Woolworth. As the Court said in Shapiro, Bernstein & Co. v. 4636 S. Vermont Ave., Inc., 367 F.2d 236, 240 (9 Cir. 1966):
In Runge v. Lee, 161 U.S.P.Q. 770 (C.D.Cal.1969), aff'd 441 F.2d 579 (9 Cir.), cert. denied, 404 U.S. 887, 92 S.Ct. 197, 30 L.Ed.2d 169 (1971), The jury returned a verdict in favor of plaintiff in a copyright infringement action and awarded plaintiff compensatory damages of $80,000. The district court later held an accounting of profits and determined that defendant's profits attributable to the infringement amounted to $64,253. But the court awarded plaintiff only "the higher of the two" figures. 161 U.S.P.Q. at 772. Plaintiff, however, did not claim both damages and profits, and it is clear that neither the district court nor this court considered the damage issue.
It is significant that the Second Circuit also did not feel constrained by its early precedent establishing alternative recovery. Indeed, Peter Pan Fabrics, Inc. v. Jobela Fabrics, Inc., 329 F.2d 194 (2 Cir.1964), which established the cumulative rule, did not even mention Underwood Typewriter. It seems clear that the Second Circuit concluded that Underwood Typewriter, like Sheldon, was no longer good law after Woolworth. I agree.
The cumulative recovery rule is supported by the recent general revision of the Copyright Act. Act of October 19, 1976, Publ.L.No. 94-553, 90 Stat. 2541, amending 17 U.S.C. § 101 et seq. (1909). Section 504(b) thereof provides in part:
The new Act thus makes it explicit that the plaintiff is entitled to both actual damages and additional profits realized by the defendant from the infringement. See H.R.Rep.No.94-1476, 94th Cong., 2d Sess., at 161 (1976); S.Rep.No.94-473, 94th Cong., 1st Sess., at 143-44 (1976); U.S.Code Cong. & Admin.News 1976, p. 5659. This court should view this new Act as indicative of Congressional intent in this area, see N.L.R.B. v. Bell Aerospace Co., 416 U.S. 267, 275, 94 S.Ct. 1757, 40 L.Ed.2d 134 (1974), and follow the cumulative recovery rule.
GOODWIN, Circuit Judge, concurs in the Opinion by Judge Carter on infringement and concurs in the Opinion by Judge Sneed on damages.
Of course, the scope of protection against infringement is not necessarily coextensive with the scope of the copyright secured. See Puddu v. Buonamici Statuary, Inc., 450 F.2d 401, 402 (2 Cir. 1971).
The characters are also similar. Both lands are governed by mayors who have disproportionately large round heads dominated by long wide mouths. They are assisted by "Keystone cop" characters. Both lands feature strikingly similar crazy scientists and a multi-armed evil creature.
It seems clear that such similarities go beyond merely that of the idea into the area of expression. The use of the basic idea of the works does not inevitably result in such similarities. Certainly a jury applying an intrinsic test could find such similarities of expression substantial.
This instruction properly warned the jury against analytic dissection in accordance with Arnstein and our opinion today.
The record shows that the value of the H. R. Pufnstuf series, particularly as regards to its merchandising potential, was sizeably diminished after the McDonaldland commercials appeared. While we do not think that infringement should be so objectively measured, it is another indication of infringement here.
We do not believe that defendants should now be permitted to ignore the difference between damages and profits when they clearly recognized this difference during trial.
344 U.S. at 231-32, 73 S.Ct. at 224.
Id. at 15. I do not believe that resort to the legislative history of the 1909 Copyright Act is necessary. The language of the statute itself is plain. It is a well-established rule of statutory construction that where the language of a statute itself is clear and unambiguous, it is determinative of construction. Monte Vista Lodge v. Guardian Life Ins. Co. of America, 384 F.2d 126, 128 (9 Cir. 1967); 2A C. Sands, Statutes and Statutory Construction §§ 45.02, 46.04 at 4, 54 (Rev.ed.1973). The legislative history does not resolve ambiguity; it creates it.