April 2012 – 6th Circuit Copyright Litigation Update

The 6th Circuit Court of Appeals and its subordinate district courts decided a total of four cases involving copyright infringement claims in the month of April 2012:

 

Injunctions; Recovery of Damages for Wrongful Injunction

Static Control Components, Inc. v. Lexmark Int’l, Inc., Nos. 5:02-571 & 5:04-84, 2012 U.S. Dist. LEXIS 57164 (E.d. Ky. Apr. 24, 2012)

When this DMCA lawsuit was originally filed in 2002, the court granted Lexmark a TRO against Static’s sale of microchips used to repair and refill Lexmark printer cartridges.  On Static’s motion, the court imposed on Lexmark a $75,000 bond to maintain the injunction, which was later increased to $250,000.  In a widely cited appellate decision, however, the 6th Circuit vacated the injunction and found that Lexmark was unlikely to prevail on its DMCA claims.  The parties proceeded to jury trial on the remaining claims.  After entry of final judgment, Static moved to collect damages for the harm that the injunction had inflicted on its business.

The court granted the motion, finding that the 6th Circuit’s reversal was tantamount to a holding that Static had been wrongfully enjoined.  Static argued for damages in an amount greater than the $250,000 bond, but the court interpreted 6th Circuit law as limiting the recovery to the amount of the bond.

Personal Jurisdiction; Venue

Sony/ATV Music Publ’g, LLC v. KTS Karaoke, Inc., No. 3-12-0089, 2012 U.S. Dist. LEXIS 52825 (M.D. Tenn. Apr. 16, 2012)

Sony’s lawsuit alleged that KTS unlawfully sold copyrighted karaoke recordings.  In this decision, the court in Tennessee granted defendant’s motion to transfer the case to California based on the first-to-file rule.  Before filing suit, Sony had sent KTS a “Confidential Settlement Letter” offering to resolve its claims before trial.  KTS responded by filing a declaratory judgment action in California.  Although suits filed in anticipation of imminent litigation are exceptions to the first-to-file rule, “a letter which suggests the possibility of legal action … in order to encourage or further a dialogue, is not a specific, imminent threat of legal action.”  Here, the letter repeatedly expressed Sony’s desire to avoid litigation.  That was enough to convince the court that KTS’s action was not anticipatory.

In the alternative, the court transferred venue on a discretionary basis, citing KTS’s lack of presence in Tennessee.

Costs and Attorneys’ Fees

Pollick v. Kimberly-Clark Corp., No. 11-12420, 2012 U.S. Dist. LEXIS 50932 (E.D. Mich. Apr. 11, 2012)

The court had previously found defendant was entitled to an award of costs and fees, but denied defendant’s motion for same without prejudice because it lacked sufficient detail about how the fees were incurred.  Considering defendant’s renewed motion, the court granted it only in part.  While holding that the expertise and experience of defendant’s counsel generally supported their requested rate, it found the number of hours spent to be excessive.  The court repeated several times its conclusion that the parties’ works were obviously dissimilar, and that plaintiff’s case was therefore frivolous.  In light of that conclusion, the court found that the attorneys had invested substantially more time than should have been necessary in defending what it considered to be an easy case.  In the end, the court awarded about $10,500 out of the requested $41,600.

Joinder; Mass-Defendant Litigation

Patrick Collins, Inc. v. Doe, No. 11-15232, 2012 U.S. Dist. LEXIS 57962 (E.D. Mich. Apr. 5, 2012)

Plaintiff sued 21 defendants, identified only by their IP addresses, for downloading a copyrighted adult film via BitTorrent.  The court allowed Plaintiff to serve subpoenas on defendants’ ISPs in order to discover their identity.  One of those defendants–John Doe 18–moved to quash the subopoena and to sever his case from the others, on the grounds that the defendants had been improperly joined.

The magistrate judge hearing the motion recommended that it be denied.  He reasoned that the rule governing permissive joinder of defendants should be interpreted liberally, and that the fact that the defendants were alleged to have participated in the same BitTorrent “swarm” to download the same film was a sufficient connection to justify their joinder.  The court’s opinion collected citations to several cases reaching similar conclusions, and expressed disagreement with the several decisions that went the other way–including one decided just the month before by another judge on the same court in a case involving the same plaintiff.

Such a distinct split within a single court highlights the chaos in which the principles of joinder in mass-defendant cases currently lies.  The parties’ objections to the magistrate’s report and recommendation are pending.