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By Tamlin Bason
Nov. 12 — HarperCollins Publishers LLC is entitled to $30,000 in statutory damages for a defendant's infringing sales of an e-book version of the popular children's novel “Julie and the Wolves,” but is not entitled to an award of attorneys' fees under Section 505 of the Copyright Act, the U.S. District Court for the Southern District of New York held Nov. 6.
The publisher, in addition to being denied any of the more than $1 million it sought in attorneys' fees, also came up short in its bid for the broadest possible injunction.
The court, after acknowledging HarperCollins's argument that its ruling was likely “to have a ripple effect beyond the immediate parties,” agreed to enjoin the defendant from offering e-book copies of “Julie and the Wolves,” and of any works to which HarperCollins held rights based on “language identical” to the relevant contract here.
But the court declined to expand the injunction to include contract agreements containing “substantially identical language” to the one relevant to the instant dispute.
In an earlier ruling, the court construed the terms of that 1971 contract between the publisher and author as granting HarperCollins exclusive rights to authorize third parties to publish e-book versions of the novel. Liability having been established, the instant opinion dealt only with whether HarperCollins was entitled to a permanent injunction, the scope of that injunction and the amount of damages and fees, if any, to which the publisher was entitled.
The case was notable because the defendant, Open Road Integrated Media LLP, sold the e-book only after it was authorized to do so by the book's author, the late Jean Graighead George.
Prior to granting that authorization, George asked HarperCollins if it would match Open Road's offer of splitting royalties on equal terms. The publisher declined to do so and then filed suit after the e-book was made available by Open Road.
Throughout the litigation, HarperCollins stressed that the importance of the case extended beyond just the work in question, and in its complaint it requested broad injunctive relief against Open Road's digitization and sale of any work that the publisher owned the rights to pursuant to an agreement similar to the one between it and George.
In March, the court granted HarperCollins summary judgment on its copyright infringement claim. The court concluded that the following provision, found in paragraph 20 of the agreement, was dispositive on the issue of whether the 1971 agreement between George and HarperCollins granted exclusive e-book publication rights:
Anything to the contrary herein notwithstanding, the Publisher shall grant no license without the prior written consent of the Author with respect to the following rights in the work: use thereof in storage and retrieval and information systems, and/or whether through computer, computer-stored, mechanical or other electronic means now known or hereafter invented.
The relevant language, emphasized by the court, “is sufficiently broad to draw within its ambit e-book publication,” the court said in its March 17 order. The court then invited the parties to either reach an agreement or to brief the issue of remedies.
During the subsequent negotiations, HarperCollins learned that Open Road was still offering e-book versions of the book. The negotiations broke down, and HarperCollins filed a remedies brief requesting no less that $30,000 for Open Road's willful infringement, $1,089,371.50 in attorneys' fees and $7,040.62 in costs. It also sought to enjoin the e-publication of works to which it owned rights based on a contact that contains the identical provision the court construed, “or contains a grant of rights comprising substantially identical language.”
HarperCollins argued that it was entitled to up to $150,000 in infringement damages because Open Road's infringement was willful, and thus eligible for enhancement under Section 504(c) of the Copyright Act, 17 U.S.C. § 504(c).
Open Road consented to an award of up to $30,000, based in large part on the fact that it continued offering the e-book even after the court's grant of summary judgment on the infringement issue.
Judge Naomi Reice Buchwald ultimately determined that $30,000 was “the appropriate amount of statutory damages” based on an evaluation of all the factors. Those factors included evidence that Open Road made less than $40,000 from sales of the book, and of that amount it gave half to George's estate.
Moreover, HarperCollins was not able to demonstrate any economic loss. The sales taking place after the court's summary judgment order, “ however ill advised,” do not support a large scale enhancement given that those sales stopped as soon as HarperCollins complained of them, the court determined.
“This case is well suited to an award of $30,000—the amount at the very threshold of an enhancement for willfulness,” the court said.
On the issue of injunctive relief, the court concluded that HarperCollins had demonstrated that a permanent injunction was warranted and that the equitable factors favored HarperCollins. Moreover, “Because the result in this case turned on the specific language found in the 1971 Contract, we conclude that an injunction is appropriate as to works whose copyright assignments to HarperCollins used the same language,” the court said.
The court, however, noted that there were variations of the contractual language on which this case turned, “and because we have not had occasion in this case to consider the ramifications of those variations, we decline to extend the scope of our injunction to works as to which the publishing contracts contained ‘substantially identical language.' ”
Turning to the issue of fees, the court noted that an award of attorneys' fees under the Copyright Act hinges on a nonexclusive list of factors, including whether the losing party's position was objectively unreasonable.
“We find that although Open Road's position did not prevail, it was not objectively unreasonable,” the court said. “Our reticence to characterize the losing position as objectively unreasonable is informed by the fact that this dispute arose in the context of a developing, and still somewhat uncharted, area of copyright law.”
HarperCollins argued that a fee award was particularly appropriate in cases like this, where the massive amount incurred by the prevailing party, if not reimbursed, would deter similarly situated parties from enforcing their rights. The court said:
Although such reasoning may be persuasive in some circumstances, it is inapplicable here. The manner in which HarperCollins has conducted this litigation, by devoting resources to it far in excess of its individual economic significance, demonstrates that HarperCollins has had ample motivation to enforce its copyright. The wider interest of both parties, transcending the facts of this case, is readily apparent.
The court accordingly determined that fees were not appropriate under Section 505 of the Copyright Act. In a footnote, the court left little doubt about who it thought was to blame for the costly litigation, saying:
Further, were we to reach the issue of the amount of fees, we would include in our calculus HarperCollins' initial decision not to match the royalty offer made to Ms. George. Had HarperCollins agreed to match the fifty percent royalty offer, Ms. George would not have come to terms with Open Road and there would have been no disproportionately costly litigation.
HarperCollins was represented by Robert Bruce Rich of Weil, Gotshal & Manges LLP, New York. Open Road was represented by Joanne E. Zack of Boni & Zack LLC, Bala Cynwyd, Pa.
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