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Goldman v. Healthcare Management Systems, Inc., et al.

In litigation involving software programs and claims of copyright infringement and DMCA violations, the district court made several rulings in response to motions to exclude evidence.

Despite plaintiff’s claim that the complaint had been filed within three years of the discovery of the alleged infringement, the court held that the plaintiff can recover damages only for infringements that occurred within the three-year statute of limitations from the date the complaint was filed. The complaint was filed on January 13, 2005, and the plaintiff’s expert report calculated damages based on infringements that occurred prior to that date. The court barred the plaintiff’s expert’s report that included calculations of damages for infringements that occurred outside the three-year period.

The defendant also moved to exclude the plaintiff’s expert’s report that calculated prejudgment interest. The defendant argued that the report should be excluded because prejudgment interest is not allowed in copyright cases in the Sixth Circuit. The court disagreed and denied the motion. The court noted that the majority of circuits that have examined the question of whether a court may award prejudgment interest under the Copyright Act have found that such an award is permissible. According to the court, the Seventh, Ninth and Tenth Circuits have held that the Copyright Act permits an award of prejudgment interest; the First Circuit affirmed a district court’s refusal to award prejudgment interest because the damages award was entirely for disgorged profits, and the Fourth Circuit declined to award prejudgment interest because the award of actual damages plus profits sufficiently compensated for the loss and because the infringement was unintentional.

The court also rejected the defendant’s argument that a Sixth Circuit decision precluded prejudgment interest in copyright cases. The court said the decision - Robert R. Jones Assocs., Inc. v. Nino Homes, 858 F.2d 274 (6th Cir. 1988) - vacated an award of prejudgment interest because the damages awarded were sufficient to serve as a deterrent and did not clearly and unambiguously state that prejudgment interest is not allowed.

The court also addressed the issue of whether repeated violations of the DMCA constitute a single violation or multiple violations. Section 1203(c)(3) of the Copyright Act authorizes statutory damages “for each violation” of §§ 1201 and 1202, without defining what constitutes a violation. The court held that the DMCA authorizes statutory damages for each instance in which a copy of an infringed program was provided to a third party. “Unlike a television signal or an AP wire story sent simultaneously to all subscribers, the alleged ‘violation’ here [i.e., sale of software] is not a singular, isolated event. Instead, Defendants allegedly provided computer programs at different times, under different circumstances, to multiple hospitals. The computer program in the case at bar might be the same, but the conduct of distributing the software is variable.”