Laser surgery cannot remove the permanent injunction slapped on Defendants TAT International and Kirk Knapp after being found last week to have infringed copyrights on tattoo art designs. Reaching that injunction required the Eastern District of Virginia to weigh in on splits among the federal courts and to survey the state of the law with respect to copyright remedies after the Supreme Court’s decision in Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010).
U.S. District Judge Mark Davis’s 77-page damages ruling in Tattoo Art, Inc. v. TAT International, LLC, et al., case no. 2:10-cv-00323, comes four months after a 23-page order granting partial summary judgment as to liability. (The docket and that prior order can be obtained from PACER or via the foregoing links courtesy of RECAP and the Internet Archive.)
The new ruling begins with factual findings. In a nutshell, Defendants contracted with Tattoo Art to use some of its designs. Defendants failed to make required accountings and royalty payments, however. Fatally for copyright law purposes, Defendants also re-colored and used at least certain portions of the designs in works that Defendants named their “Original Collection.” Defendants did not get far with the claim that they stopped making payments because they received a bankruptcy notice with a name similar to the professional name of Tattoo Art’s owner. The court noted that Defendants received the notice only after they were already two months overdue on a royalty payment and that they never verified or sought legal advice about the notice. (Indeed, the notice ultimately turned out not to be related to Tattoo Art’s owner.)
It is important to note that this case involved both registered and unregistered designs, and Tattoo Art (to reduce expenses) had registered its designs in "books" of 50, which were not copyrighted as compilations. (For the statutory definitions of compilations and other related terms, see p.30 of the ruling.)
Muchnick addressed the issue of whether 17 U.S.C. §411(a), which provides that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title,” is jurisdictional. The Supreme Court held that the answer was no – § 411(a) is a precondition to maintaining a suit for infringement but is not jurisdictional. Accordingly, Judge Davis found that jurisdiction existed over all claims.
The court then began its remedies analysis with statutory damages – the only monetary relief that Tattoo Art clearly sought. Based on finding 24 registered works to have been infringed and concluding that the evidence was insufficient to show willfulness but did show conduct that was “far from the innocent or unwitting end of the spectrum,” the court made 24 statutory damage awards of $20,000 each, for total statutory damages of $480,000. Along the way, the court discussed the divergent analyses by the circuits with respect to the mixed factual and legal question of when a work is a compilation for purposes of statutory damages and follows the “plain language approach” in Bryant v. Media Right Prods., Inc., 603 F.3d 135 (2d Cir.), cert. denied, 131 S. Ct. 656 (2010), rejecting the “independent economic value” exception. See pp.36-45.
Although its pleading was somewhat unclear, Tattoo Art’s claim of entitlement to actual damages then led the court to address that issue. Applying Muchnick and reaching the same conclusion as other district courts within the Fourth Circuit, the court held that there was no entitlement to damages for infringement of unregistered designs. See pp.45-52.
After a detour into the contract claim (see pp.52-56), in which the court concluded the damages evidence was too speculative under Virginia law to recover anything more than a paltry amount, the court then reached the question of injunctive relief on the copyright claim. The court first applied and found that Tattoo Art satisfied the four-part test for injunctive relief. See pp.56-60. See generally eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); Winter v. Natural Res. Def. Council, Inc., 555 U. S. 7, 129 S. Ct. 365 (2008).
Registration reared its head again, however, with respect to the scope of the injunction – specifically, whether the court has the authority to extend a permanent injunction to both registered and unregistered designs. If you were thinking that someone who cannot maintain an action for infringement of unregistered works cannot possibly get an injunction covering those works, think again. Judge Davis gave a thorough account of the split among the federal courts on this issue (see pp.61-65), among which one will find one pre-Muchnick Eastern District opinion and no Fourth Circuit opinions. He then concluded:
“In the absence of binding precedent to the contrary, and in light of Muchnick's recognition of the existence of subject-matter jurisdiction with respect to unregistered works, this Court follows the majority of the United States Courts of Appeals that have considered this issue, and concludes, in light of the fact that at least some of plaintiff's designs ... were registered, that it has the authority to enjoin defendants' infringement of both the registered and unregistered tattoo designs...”
Judge Davis’s discussion suggests that the decision to extend an injunction to unregistered works may depend on whether the infringer “manifests a pattern of disregard for plaintiff's copyrights,” as the court concluded Defendants did here. See p.75 of the ruling for the actual injunction language.
Rounding out a trifecta of case split issues, the court again surveyed the law, followed the majority “in holding that an award of prejudgment interest is available in connection with plaintiff's copyright infringement claim,” and ruled for plaintiff Tattoo Art, awarding prejudgment interest. See pp.66-71.
In this case, the pain, lingering mark, and regret are not limited to tattoo customers.
