Ninth Circuit: No statutory damages for continuing infringement that began before registrationJune 16, 2008

In a decision last week, the Ninth Circuit reversed a district court's award of statutory damages for copyright infringement and affirmed the district court's default judgment award of attorney's fees for trademark infringement. The plaintiff's copyright registration had an effective date of approximately one month after the first act of infringement, and nearly two years after first publication. The Ninth Circuit held that the first act of copyright infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under 17 U.S.C. § 412, joining the Second, Fourth, Fifth, and Sixth Circuits in this conclusion. Because there was no legal significance between the defendant's re- and post-registration infringement, statutory damages were unavailable.More detail of Derek Andrew, Inc. v. Poof Apparel Corp. after the jump.The plaintiff, Derek Andrew, Inc. (producer of Twisted Heart brand clothing) sued the defendant, Poof Apparel, for trademark and copyright infringement. Andrew's logo, used on hang tags and on its website, is depicted below:Twisted Heart logoAndrew's clothing is predominantly sold at "high-end department stores such as Nordstrom, Saks Fifth Avenue, and Neiman Marcus." Poof sells clothing similar in style to Andrew's "Twisted Heart" clothing, but sells to "lower-end retail stores such as T.J. Maxx, The Wet Seal, and Marshall's . Poof failed to respond to the complaint, and the court entered a default judgment. Below is a timeline of the relevant events:

  • August 11, 2003: Plaintiff's copyrighted work is first published
  • May 9, 2005: Plaintiff obtains possession of a garment bearing defendant's infringing hang-tag – undisputed initial act of infringement
  • June 15, 2005: Effective registration date of Plaintiff's Twisted Heart hang-tag (configuration and artwork) with U.S. Copyright office
  • August 8, 2005: Defendant fails to respond to plaintiff's complaint and default judgment is entered
  • March 23, 2006: Defendant files a motion to set aside the entry of default
  • April 14, 2006: Magistrate judge recommends denying defendant's motion to set aside entry of default because defendant failed to establish "good cause"
  • June 19, 2006: Judge denies defendant's motion to set aside entry of default
  • December 4, 2006: Bench trial on damages

At the bench trial on damages, the district court awarded Andrew statutory damages for copyright infringement, enjoined Poof from further infringement on the plaintiff's trademarks, and awarded the Andrew attorney's fees. Poof appealed the award of statutory damages and attorney's fees.The Ninth Circuit vacated the award of statutory damages. Under 17 U.S.C. § 412(2), statutory damages are only available if the copyrighted work is registered either before infringement begins or within three months of first publication of the copyrighted work. Here, the copyrighted work was registered over a month after the first infringement and almost two years after the first publication. The Ninth Circuit determined the district court must have concluded the post-registration infringements were separate and distinct from the pre-registration infringements and therefore had not "commenced" before the registration in order to conclude statutory damages were not barred by § 412. The court noted § 412 is designed to implement dual purposes: to provide an incentive to copyright owners to register their copyrights promptly and to provide and incentive for potential infringers to check the Copyright Office's database. The court held the district court's interpretation thwarted the dual purposes of § 412 and that the first act of infringement in a series of ongoing infringements of the same kind marks the commencement of one continuing infringement under § 412. The court joined the Second, Fourth, Fifth, and Sixth Circuits in this interpretation of § 412. As a result, statutory damages and attorney fees for copyright infringement were unavailable in this case.Turning to the question of attorney fees, the Ninth Circuit recognized that an award of reasonable attorney's fees and costs is available under the Lanham Act for "exceptional cases" trademark infringement where the infringement is malicious, fraudulent, deliberate, or willful. The court held that generally a default judgment results in a determination that the allegations in the complaint are true, and that because in this case the complaint alleged willful infringement, the plaintiff was entitled to the award of attorney's fees. Nevertheless, the court remanded the award of fees to determine whether the calculation included fees from the copyright claim, which would be impermissible because of the sequence of events described above.To read the full decision in Derek Andrew, Inc. v. Poof Apparel Corp., click here.

Update (6/17): Michael Atkins at Seattle Trademark Lawyer provides this post on the case, as well as this post on the district court's decision.

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