Fourth Circuit: Claim preclusion prevents new determination of actual damages against licensees

Yesterday, the Fourth Circuit decided another copyright infringement case based on use of the logo for the Baltimore Ravens football team.  The court had previously affirmed two cases involving the same logo, where copyright infringement was found but no damages were issued.  In this case, several hundred licensees were sued for using the infringing logo.

The court again affirmed there was infringement of the plaintiff's copyright, and again affirmed the decision to award no damages. Statutory damages were not granted due to a failure to register his copyright before infringement began, and actual damages were not granted based on the doctrine of claim preclusion. The court stated that the plaintiff "had his day in court on his [infringement] claim against the Ravens and [National Football League Properties]."  Because the defendants in this case were all licensees of one of those two organizations, damages were also precluded in this case.

More detail of Bouchat v. Bon-Ton Dep't Stores, Inc. after the jump.



The copyright involved is a sketched logo illustrating the Ravens name that was authored by Bouchat, an amateur artist from Cleveland, in December 1995 (shortly after the move from Cleveland to Baltimore was announced).  Bouchat sent the drawing to the Ravens on April 1 or 2, 2006, and requested recognition and a signed helmet in exchange for its use by the team.  National Football League Properties (NFLP) hired artists to design the logo, and the ultimate logo selected "bore a remarkable resemblance" to Bouchat's drawing.  The two logos are depicted below:

Bouchat drawing Ravens logo

The team did not provide the requested helmet or recognition.  Bouchat registered his drawing on July 25 1996, months after he provided it to the team for use.

In the present case, Bouchat sued hundreds of "downstream defendants," described as "NFL-related entities . . . who utilized the infringing work."  The district court found copyright infringement, but awarded no damages, based on earlier litigation brought by Bouchat against the Ravens and NFLP where a jury held there were no actual damages attributable to the infringement, and statutory damages were not available.  The court held that Bouchat was estopped from relitigating the damages issues.  Bouchat appealed.

The court began by addressing the doctrine of claim preclusion and defined it as such:

A subsequent claim is precluded when (1) the judgment in the prior action was final and on the merits; (2) the parties in the two actions are identical or in privity; and (3) the claims in the two actions are identical.

The first and second elements of a final judgment and identical parties or privities were not disputed:  the prior judgment was final and affirmed by the Fourth Circuit, and the defendants in this case were licensees of the defendants in the first case, and thus were virtually represented in the first case.  

The third element of identical claims was contested.  Bouchat asserted that the actions did not "arise out of the same transaction or series of transactions as the claim resolved by the prior judgment."  The court noted that there are several actions involved, but they all arise from a "single nucleus of operative facts, satisfying the third element of claim preclusion."  Specifically, even though Bouchat's first case related to the licensors' actions and the subsequent cases involved the licensees' actions, they all involved Bouchat's copyrights, creating "one interwoven story." The court did not place importance on the fact that Bouchat had not sought actual damages in the first trial.

The court also rejected Bouchat's alternative argument that the district court erred in finding he was not entitled to statutory damages.  Statutory damages are only awarded for infringement after an effective registration of the copyright.  Here, NFLP's infringement began a month before Bouchat filed for copyright registration, thereby precluding an award of statutory damages. The court also noted that each individual defendant in this case commenced infringement on the same date as NFLP, since it was authorized to do so by NFLP.  Because of this, Bouchat was also precluded from receiving statutory damages from each licensee since the court held that "it is appropriate to treat the earliest date of infringement by any participant in a line of related copyright violations as the date of commencement."

All in all, a pyrrhic victory for Bouchat:  while his copyright was found to be infringed, he ended up not being able to get anything for the infringement.  Not even an autographed helmet.

To read the full decision in Bouchat v. Bon-Ton Dep't Stores, Inc., click here.

Update (10/20):  William Patry weighs in on the case here.

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