LTVN Holdings, LLC v. Odeh

In copyright infringement action, court grants defendants’ motion to dismiss plaintiffs’ claim for statutory and punitive damages and attorney’s fees, but denies motion to dismiss plaintiffs’ claim for compensatory damages.

Plaintiff LTVN Holdings and Irwin Kramer produce and distribute videos on business, legal and consumer topics. Plaintiffs post their videos on their website www.clienttelevision.com. LTVN allows others to post its videos on their websites by licensing topical “channels” on clienttelevision.com to them through basic and premium service plans. Under the basic service plan, individuals or companies may register as “network affiliates” and receive access codes for embedding channels containing a limited selection of videos for use on their own websites. Each video is followed by a seven-second message promoting plaintiffs’ website as the source of its content. Although LTVN does not charge affiliates for the basic service plan, it only grants access codes to those affiliates that accept LTVN’s Network Affiliation Agreement, which prohibits affiliates from tampering with the videos through editing. In addition, the Agreement prohibits affiliates from presenting the videos as their own and requires them to “stipulate that the Content is supplied by LTVN and is protected by copyright and owned by LTVN.”

LTVN’s premium service plan offers affiliates customized channels for an annual license fee. Premium service affiliates may select any video within the Client Television library and present the videos without promotional messages, taglines, or advertising. Premium service affiliates must agree to display the videos in accordance with LTVN’s Network Affiliation Agreement.

Defendants Nader Odeh and his company Claims Consulting maintain a website relating to property insurance claims. Odeh contacted Kramer about licensing plaintiffs’ videos in the form of a customized channel, but said he was no longer interested when plaintiffs provided a quote. Odeh subsequently registered as a network affiliate, posted twelve of plaintiffs’ videos on his website, removed all material identifying plaintiffs as the source of the videos and attached his own copyright notice.

Plaintiffs sued for federal and state copyright infringement, false designation of origin, breach of contract and other state law claims. Defendants moved to dismiss plaintiffs’ claims for statutory, punitive, and compensatory damages and attorney’s fees. Because plaintiffs failed to register their copyrights in the videos prior to the alleged infringement or within three months of first publication, the court held that plaintiffs could not sue for statutory damages or attorney’s fees. The court also held that the Copyright Act does not provide punitive damages, and “[a]lthough the plaintiffs cite Blanch v. Koons, 329 F. Supp. 2d 568, 569 (S.D.N.Y. 2004) and TVT Records v. Island Def Jam Music Group, 262 F. Supp. 2d 185, 186 (S.D.N.Y. 2003) for the proposition that punitive damages are permitted when statutory damages cannot be pursued, these cases remain outliers and Judge Stanton, who decided Blanch, has since declared Blanch ‘no longer good law.’”

The court denied defendants’ motion to dismiss plaintiffs’ claim for compensatory damages in the amount of $250,000. Plaintiffs asserted that the $250,000 represents their “actual damages” because this was the cost of creating the videos, which the defendants avoided paying by posting LTVN’s videos as their own. According to the court, copyright infringers are liable for “the actual damages suffered by [the copyright owner] as a result of the infringement.” 17 U.S.C. § 504(b). In addition, although the Copyright Act does not define “actual damages,” several courts have interpreted the term to allow recovery for the fair market value the infringer would have paid to use the copyrighted material. The court held that this case is similar to Polar Bear Prods., Inc. v. Timex Corp., 384 F.3d 700 (9th Cir. 2004), in which the defendant used the plaintiff’s film footage without authorization, after the plaintiff quoted the defendant a $37,500 licensing fee for use of the film. Rather than award the plaintiff the cost of producing the footage itself, the court held that an award of $37,500 in lost licensing fees was appropriate. In this case, the court held that “if LTVN and Mr. Kramer establish copyright liability, they may seek actual damages for any fair market licensing fee they would have charged the defendants for use of their videos. At this stage in the litigation, however, it is not necessary to determine the precise amount of actual damages. As the plaintiffs may seek actual damages for lost licensing fees, Count I states a claim upon which relief can be granted.”

The court dismissed the Lanham Act claim for false designation of origin, and dismissed state law claims for breach of contract, unjust enrichment and conversion as preempted by the Copyright Act. The court also dismissed Kramer’s claim for invasion of privacy, holding that his appearance in the videos was incidental.