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Case 1:11-cv-09343-RA-RLE Document 44
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW
TANYA STEELE,
Plaintiff,
REPORT AND
RECOMMENDA TION
- against11 Civ. 9343 (RA) (RLE)
RICHARD BELL and JOSH MILANI
GALLERY PTY. LTD.,
Defendants.
To the HONORABLE RONNIE ABRAMS, U.S.D.J.:
I. INTRODUCTION
Plaintiff Tanya Steele ("Steele") commenced this action against Richard Bell ("Bell")
and Josh Milani Gallery, Pty. Ltd. ("Milani Gallery") (collectively, "Defendants") for
declaratory judgment, copyright infringement, fraud on the U.S. Copyright Office, breach of
contract, and other claims. Steele seeks declaratory and injunctive relief, damages, and
attorney's fees and costs, pursuant to the Copyright Act, 17 U.S.c. §§ 106,201,410,502,504,
505 (the "Act"). (Mem. of Law in Supp. of PI. 's Second Mot. for Default J. ("Mem. of Law") at
3.) On May 16,2013, the Honorable Ronnie Abrams entered default judgment against
Defendants and referred the case to the undersigned for an inquest on damages. (Doc. Nos. 41,
42.) For the reasons set forth below, the COUli recommends the following: that declaratory
judgment for Steele be GRANTED in part, as described below; that Steele's request for a
permanent injunction be GRANTED; and that Steele's requests for monetary damages and
attorney's
and costs be DENIED.
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II. BACKGROUND A. Factual History
In October 2009, Steele, a Brooklyn-based filmmaker, was introduced to Bell, an
Australian artist, and Josh Milani, an Australian art dealer who shows Bell's artwork at his
gallery in Australia, Milani Gallery. (Decl. of Tanya Steele in Supp. ofPl.'s Second Mot. for
Default J. (,'Steele
Decl"')~';
2,4.) After their initial meeting, Bell told Steele "that he was
interested in being involved in a film while in New York," and he asked Steele to produce and
direct it. (Jd. at ~ 5.) Steele independently developed the "concept, content, and overall
aesthetic" for the film. (Jd. at ~ 8.) She proposed to make a film "about an Aborigine's
perspective of New York City," called Blacklella 's Guide to New York City (the "Film"). (Jd. at
~
9.) The Parties entered into an oral contract whereby Steele agreed to produce and direct a ten
minute film, to be shot, edited, and completed in New York for a budget of $20,000, and Bell
promised to star in the Film and obtain the necessary financing. (Jd. at '111.) Steele and Bell
"did not agree orally or in writing to distribution rights" (id. at I' 14), nor did they determine who
would own the copyright. (Steele Decl.
~
12.) Steele's goals were "to licence the Film to
HBO's Documentary Division and/or to promote the Film at festivals." (Jd. at '113.)
Steele proceeded to execute the Film, developing content, hiring a crew, preparing daily
production schedules, shooting and reviewing tootage, instructing Bell on his script, and keeping
track of expenses. (Id. at~'; 15-16, 19,20.) After Bell viewed preliminary footage of the Film,
he asked Steele to extend it in length from ten minutes to forty minutes. (Jd. at,; 22.) Steele
agreed, and Bell promised to pay Steele an additional $4,000. (Jd. at ~ 23.)
Steele shot the rest of the Film in April and May 2010. (ld. at ~ 24.) In July 2010, Steele
provided Bell with a copy of the tootage without professional sound (but with sound from the
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camera microphone). (Steele DecL
f' 28.)
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Shortly thereafter, Bell returned to Australia, and
Steele continued to oversee the editing process and post-production work in New York. (ld. at
~~ 30-31.) She hired an editor, whom Milani, on behalf of Bell, agreed to pay.
(ld. at ~ 31.)
On December I, 20 I 0, Steele sent Milani a two-hour "rough cut" of the first edited
version of the Film. (ld. at f' 33.) Bel! provided no feedback, and Steele completed a second
editing session in late December. (ld. at ~~ 33,35-36.) Steele contacted Bell and Milani on
mUltiple occasions in early 2011. (ld. at 'Il37.) On February 23,2011, Milani told Steele: "we
love your work." (Steele DecL 'Il37.)
In May 2011, Steele informed Bell that she would be unable to complete the Film
because she lacked the necessary post-production funds. (ld. at 'Il39.) In May 2011, Bell
suggested that an Australian editor work on the Film. (lei.) Steele refused the offer and replied
that "it was unacceptable for the Film, my work product, to be edited without my oversight."
(ld.) On June 29, 2011, Steele told Bell and Milani: "to be clear, no film, stills, or anything that
has to do with the Film can be shown without my permission." (ld. at 'Il40.) In July 2011, Bell
and Milani asked Steele to give Bell the copyright to the Film. (ld. at 'Il41.) Steele
unequivocally refused, stating: "I do not, under any circumstance, give over copyright to any
work I've created." (Steele Decl. 'Il41.) On July 2, 2011, Milani told Steele "he would have to
discuss the matter" with Bell, but Steele "never heard back from either" of them. (ld.)
On July 11,2011, Steele filed an online copyright application with the U.S. Copyright
Office for screenplays. (ld. at 'Il46.) After she paid the filing fee and uploaded the deposit, she
believed that her application was complete. (Jd.)
On October 12, 2011, Steele discovered that Milani Gallery had posted a still photograph
from the Film and a link to a trailer of the Film on its Facebook page, along with the caption:
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"The trailer for Richard Bell's new video Blackfellas Guide to New York is now available to
view on Milani Gallery's Vimeo site." (/d. at'1 53.) Shortly thereafter, Steele learned that the
Milani Gallergy was also displaying the trailer on its website. (Id. at
~
54.) Neither the trailer
nor the photograph credited Steele as producer and director of the Film. (Steele Decl. , 54.)
On October 14, 2011, Steele sent a cease and desist letter to Defendants, "asking them to
refrain from displaying any footage or still photographs from the Film" and "to disclose all uses"
of the materials. (Id.) Although the photograph and trailer were temporarily removed from the
website, they were reposted at a later date. (/d. at " 53-54).
On October 22, 2011, Steele discovered that the American Federation of Arts (the
"AFA") had coordinated an art tour of Bell's work in the United States, and that it had issued a
press release that included the photograph from the Film. (/d. at, 57.) The AFA also created a
catalog containing the still photograph and a discussion about the Film. (/d. at '159.) As part of
the AFA tour, the Tufts University Art Gallery (the "Tufts Gallery") was showing Bell's work.
(/d. at, 58.) The Tufts Gallery website displayed the photograph and was showing the trailer
continuously. (Steele Decl. , 58.) Steele also discovered that the trailer was posted on
Vimeo.com. (/d. at' 61.) Steele's counsel sent cease and desist letters to the AFA, the Tufts
Gallery, and Vimeo.com, asking that any use of any aspect of the Film cease. (/d." 58, 62.)
The materials were removed from the respective venues. (/d.)
On an unspecified date in October, Steele discovered that the deposit she had submitted
to the Copyright Office had not fully uploaded. (/d. at, 48.) She sent a copy "of all raw footage
and professional sound from the Film" on October 22, and on October 25, the Copyright Office
issued her a registration. (/d.; Steele Decl. Ex. 8.)
On December 12, 2011, Steele discovered that Bell had filed two copyright applications
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for the Film with the U.S. Copyright Office. (Steele Decl. ~ 63.) Bell's first registration, which
was issued on October 25,2011, is entitled The Blackfella's Guide to NeHJ York
Trailer.
(Steele Dec!. ~ 65; Steele Decl. Ex. H.) Bell's second application, entitled The Blac~fella 's
Guide to New York ~ Video Footage, was registered on November 7, 2011. (Steele Decl,
~
66;
Steele Decl. Ex. 1.)
Following the commencement of this action, Steele learned that Bell paid James
Richards, "a cameraman who was used for part of the Film," five hundred dollars "in connection
with an alleged Art Film Agreement to attempt to transfer to Mr. Bell rights which Mr. Richards
did not own in the Film." (Steele Decl.
~
69.) Steele also learned that Bell paid Soopum Sohn,
an editor of the Film, $2,500 in connection with an Art Film Agreement in an attempt to transfer
to Mr. Bell rights which Mr. Sohn did not own in the Film:' (Jd. at ~~ 35, 70.)
B.
Procedural History
On October 21, 2011, Bell filed an action against Steele in the Federal Court of Australia,
claiming that he owned the copyright in the Film. (Decl. of Kerry A. Brennan in Supp. of PI. 's
Second Mot. for Default 1. ("Brennan Decl.") ~ 12.) On February 7,2012, Bell obtained default
judgment against Steele in Australia. (Jd. at ~ 13.) While the Australian case was pending,
Steele tiled her Complaint in this Court on December 20, 2011, asserting five causes of action:
(1) declaratory and injunctive relief; (2) eopyright infringement; (3) fraud on the U.S. Copyright
Office; (4) breach of contract; and (5) deceptive practices in violation of New York General
Business Law. (Mem. of Law at 3.) The Honorable P. Kevin Castel permitted Steele to serve an
Amended Complaint on Defendants by email, which she did on March 21, 2012. (Doc. Nos. 12,
15.) Defendants answered on April 16,2012, and asserted eight counterclaims against Steele.
(Doc. No. 17.) Steele filed an Answer and affirmative defenses to the counterclaims on May 10,
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2012. (Doc. No. 19.) On July 9, 201
Abrams. (Doc.
]\io.
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this case was reassigned to the Honorable Ronnie
21.)
On September 5, 2012, after an unsuccessful mediation session, Defendants filed a
motion to withdraw their counterclaims. (Doc. No. 24.) Additionally, Defendants' counsel
requested leave to withdraw because Defendants "no longer wished to cooperate with their
representation, thus rendering representation unreasonably difficult." (ld.) On December 19,
2012, Judge Abrams issued an Opinion and Order: (1) dismissing Defendants' counterclaims
with prejudice; (2) granting Defendants' counsel's motion to withdraw; and (3) scheduling a
telephone conference "to determine whether Deiendants intend[ ed] to defend themselves in this
action." (Doc.
]\io.
32.) Judge Abrams warned that "failure to participate in this conference or
seek an adjournment [would] result in a default judgment being entered against them." (ld.)
Defendants did not appear for the telephone conference. (Brennan Decl.
~
25.)
On January 8, 2013, Judge Abrams issued an Order directing the Clerk of the Court to
enter a Certificate of Default against Defendants, which the Clerk did. (Doc. Nos. 33, 34.) On
April 5,2013, Steele moved for dei;:lUltjudgment and attorney's fees. (Doc. No. 36.)
Steele asks the Court to provide three forms of relief: declaratory, injunctive, and
monetary. First, she asks that the Court enter eight declarations in her favor. C\1em. of Law at
2,4-13.) Second, Steele asks that Defendants be permanently enjoined "from using any aspect
of the Film in any way." (Id. at 2.) Third, she seeks damages "in the form of actual damages or
statutory damages." (Id. at 2-3.)
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III. DISCUSSION A.
Legal Standard Applicable to Default Judgment and Inquest
1. General Principles
A party may move for a default judgment against an adversary who fails to answer or
appear. Fed. R. Civ. P. 55(b). Following a default judgment, all well-pled factual allegations of
the complaint, except those relating to damages, are accepted as true. Cotton v. Slone, 4 F.3d
176, 181 (2d Cir. 1993); Au Bon Pain Corp. v. Artec!, Inc., 653 F.2d 61,65 (2d Cir. 1981). A
factual allegation will be deemed not well-pled only in "very narrow, exceptional
circumstances." Trans World Airlines, Inc. v. Hughes, 308 F. Supp. 679, 683 (S.D.N.V. ] 969),
modified on other grounds, 449 F.2d 51 (2d Cir. 197]), rev 'd on other grounds, 409 U.S. 363
(1973). A court may conduct an inquest hearing "to determine the amount of damages" with
reasonable certainty, but may make such determination without a hearing, "as long as it [has]
ensured that there is a basis for the damages specified in the default judgment." Fed. R. Civ. P.
55(b)(2); TMS Entm 't Ltd, 2005 WL 2063786, at *2 (citing Transatl. Jvfarine Claims Agency,
Inc. v. Ace Shipping Corp., 109 F. 3d 105, ] 11 (2d Cir. 1997). Therefore, the Court must
consider whether Steele's factual allegations in the affidavits and documentary evidence provide
sufficient basis for the relief sought.
2. Damages Are Limited by the Complaint
"A default judgment must not differ in kind from, or exceed in amount, what is
demanded in the pleadings." Fed. R. Civ. P. 54(c).
[The theory of this provision] is that the defending party should be able to decide on
the basis of the relief requested in the original pleading whether to expend the time,
effort, and money necessary to defend the action. It would be fundamentally unfair
to have the complaint lead defendant to believe that only a certain type and
dimension of relief was being sought and then, should defendant attempt to limit the
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scope and size of the potential judgment by not appearing or otherwise defaulting,
allow the court to give a different type of relief or a larger damage award.
Si/ge v. Alerz, 510 F.3d 157,159 (2d Cir. 2007) (quoting 10 Charles Alan Wright, Arthur R.
~1iller
& Mary Kay Kane, Federal Practice and Procedure, § 2663 (1998)). Rule 54(c) requires
the pleadings to have given the defendant "meaningful notice" of potential liability in the event
of a default judgment. Si/ge, 510 F .3d at 160. "The timing and method of such notice (i.e., that
it come before the decision to default and be evident from the face of the complaint) are both
critical to the analysis." Id. at 161.
B.
The Appropriateness of Declaratory Relief in this Case
Cnder the Declaratory Judgment Act ("DJA"), "any court of the United States, upon the
filing of an appropriate pleading, may declare the rights and other legal relations of any
interested party seeking such declaration, whether or not further relief is or could be sought." 28
U.S.c. § 2201(a). The DJA "confers discretionary jurisdiction upon federal courts rather than an
absolute right upon the litigant invoking the remedy." Dow Jones & Co., Inc. v. Harrods, Ltd,
237 F. Supp. 2d 394, 405 (S.D.N.Y. 2002). "The propriety of issuing a declaratory judgment
may depend upon equitable considerations and is also informed by the teachings and experience
concerning the functions and extent of federal judicial power." Green v. Jvfansour, 474 U.S. 64,
72 (1985) (citation and quotation marks omitted). Courts should exercise their broad discretion
to grant declaratory relief "(1) when the judgment will serve a useful purpose in clarifying and
settling the legal relations in issue; and (2) when it will terminate and afford relief from the
uncertainty, insecurity, and controversy giving rise to the proceeding." Cant 'I Cas. Co. v.
Coastal Sav. Bank, 977 F.2d 734, 737 (2d Cir. 1992) (quoting BroadvieYl! Chern. Corp. v. Loetite
Corp., 417 F.2d 998, 1001 (2dCir.1969).
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In her Amended Complaint, Steele sought seven declarations:
(1) Steele is the sole author of the Film;
(2) Steele is the sole copyright owner of the Film:
(3) Steele and Bell's contract to make the Film is enforceable;
(4) Bell breached his contract with Steele to complete the Film;
(5) Defendants infringed Steele's copyright in the Film by creating or arranging for the
creation of, and displaying or arranging for the display ot: the photograph still and trailer
on websites, in Bell's art exhibit, and in the accompanying exhibit catalog;
(6) Bell's U.S. Copyright Registrations shall be cancelled by the U.S. Copyright Office;
and
(7) the Art Film Agreements that purport to transfer any copyright in the Film to Bell are
null and void because Steele is the sole copyright owner in the Film.
(Am. Compl. at 22.)
1. Steele is the Sole Author of the Film.
Steele seeks a declaration that she is the "sole author of the Film because she single
handedly generated the concept for the Film and supervised the Film's creation from start to
finish." (Mem. of Law at 4.) The Supreme Court has stated that "[t]he sine qua non of
copyright is originality." Feist Publ 'n, Inc. v. Rural Tel Servo Co., 499 U.S. 340, 345 (1991).
"Original, as the term is used in copyright, means only that the work was independently created
by the author (as opposed to copied from other works), and that it possesses at least some
minimal degree of creativity." Id. at 345; see also Tl1fAmerica, Inc.
V.
Diamond, No. 12 Civ.
3529 (AJN) (S.D.N.Y. Sept. 10,2013).
Steele developed the concept, content, and overall aesthetic for the Film, and created the
title to the Film: BlacVidla's Guide to New York City. (Steele Decl.
~~
7,10.) She executed the
Film, prepared production schedules, shot and reviewed footage, and wrote the script. (ld. at
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15-16, 19,20.) After Bell viewed initial footage of the Film, he asked Steele to extend the
length from ten minutes to forty minutes, which she did. (ld. at ~~121-23.) The idea for the
Film, and its execution, belonged to Steele. The COUli recommends that Steele's request for a
declaration that she is the sole author of the Film be GRANTED.
2. Steele is the Sole Copyright Owner of the Film.
If Steele is declared to be the sole author of the Film, she also seeks a declaration that she
is sole copyright owner of the Film. (Mem. of Law at 4.) The Copyright Act provides that
..[c ]opyright in a work protected under this title vests initially in the author or authors of the
work." 17 U.S.C. § 201. Steele has established that she is the "author" of the Film under the
Act. Copyright thus "vests" in her. Additionally, Steele explicitly told Bell and Milani that "no
film, stills or anything that has to do with the film can be shown without [her] permission" and
that she would not "give over copyright to any work [she] created." (See Steele Dec\.
~~
40-41.)
The Court recommends that her request for a declaration that she is the sole copyright owner be
GRANTED.
3. Because Steele has Failed to Allege Any Breach of Contract Damages, the Court
Should Not Issue a Declaration that Bell Breached the Contract Between Him and
Steele.
To state a claim for breach of contract under New York law, a plaintiff must allege:
(I) the existence of an agreement; (2) the plaintiff's adequate performance of that agreement;
(3) a breach by the defendant; and (4) damages. Log On Am.) Inc. v. Promethean Asset Mgmt.
LLC, 223 F. Supp. 2d 435, 451 (S.D.N.Y. 2001). Under the terms of Steele and Bell's oral
agreement, Steele agreed to "be producer and director of a ten-minute film" and Bell agreed to
be featured "as the guide and interviewer" and to "obtain finaneing for the film and underwrite
certain expenses for the film, thus serving in the role of executive producer," (Steele Decl. ~ 11.)
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Steele and Bell later modified their agreement, at Bell's request, to increase the length of the
Film. (ld. at '1'121-22) Steele fulfilled her part of the agreement by executing the "concept,
content, and aesthetic of the Film," recruiting and instructing crew members, and preparing daily
production schedules. (ld.
at~';
15-18.) Bell paid for Steele's expenses in connection with the
Film, but "the Film was not completed because [Steele] did not have the funds to complete its
post-production." (ld. at ~'129, 38.) Although the first three clements are satisfied, Steele fails
to state what damages
if any
she suffered from Defendants' breach of contract. In the
absence of proof of damages, Steele fails to state a valid cause of action. While the Court
presumes that the damages set forth in conjunction with Steele's copyright infringement
allegations apply to her breach of contract claim, as discussed below, Steele has failed to put
forth proof of damages in her infringement claim. I therefore reeommend that Steele's requests
for declarations that the contract is enforceable and that Bell breached the contract be DENIED.
4. Defendants Infringed Steele's Copyright in the Film.
Steele next asks for a declaration that Bell and the Milani Gallery infringed her copyright
in the Film "by creating multiple infringing works derived from the Film and displaying these
works on publicly-available websites, in print, and at the Tufts University Art Gallery." (Mem.
of Law at 7.) The Act states: "Anyone who violates any of the exclusive rights of the copyright
owner ... or of the author ... is an infringer of the copyright or right of the author, as the case
may be." 17 U.S.c. § 50 I (a). Section 106 provides that "the owner of copyright under this title
has the exclusive rights to ... prepare derivative works based upon the copyrighted work." 17
U.S.c. § 106(2). Without Steele's knowledge or consent, Defendants created and distributed a
trailer of the Film without crediting Steele; posted a still photograph from the Film and a link to
the trailer of the Film on Facebook and the Milani Gallery website, calling it a "trailer for
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Richard Bell's new video"; and, after receiving cease and desist letters and removing the
materials, reposted the photograph and trailer. (See Steele Dec!. .- 53-61.) Steele is the owner of
the copyright. She alone had the right to create derivative works. Defendants violated Steele's
exclusive rights through their actions. The Court recommends that Steele's request for
declaratory judgement that Defendants infringed her copyright should be GRANTED.
s. The Court Should Not Nullify Bell's Copyright.
Steele next seeks a declaration nullifying Bell's copyright registration "because the
material covered by the registrations is not original; it belongs solely to Ms. Steele, and Ms.
Steele never transferred any of these ownership rights to Mr. Bell." (Mem. of Law at 9.) She
further asserts that Bell "committed fraud on the Copyright Office by submitting a copyright
application for the Film falsely identifYing himself as the author of the Film." (ld.) Steele urges
the Court to hold that Bell's "copyright registration is invalid and should be cancelled." (ld. at
10.) She has failed to convince the Court that issuing such a declaration would be proper.
The Copyright Office has full authority to cancel copyrights that have been registered to
work that is not "copyrightable." 37 C.F.R. 20l.7. Steele's counsel cites to Psychopathic
Records, Inc. v. Anderson, No. 08 Civ. 15034,2010 WL 4683470 (E.D. Mich. Nov. 10,2010),
and Willsea v. Theis, No. 98 Civ. 6773 (BSJ), 1999 WL 595629 (S.D.N.Y. Aug. 5, 1999), for the
proposition that district courts may nullify copyright registrations before the Copyright Office "if
the copyrighted material was not original and therefore not subject to copyright protection in the
first place." (Mem. of Law at 10.) Her reliance on these cases is misplaced. Here, unlike in
hychopathic Records, Steele possesses a copyright registration, making her eligible for other
forms of relief, as discussed above. 2010 WL 4683470, at *2. In Willsea, although the court
acknowledged that, in the case of fraud, a copyright "would be voided," it gave no indication
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that the court, and not the Copyright Office, would be the proper entity to nullify the copyright
registration. 1999 WL 595629, at *9 n.l O. Here, the Copyright Office is capable of determining
whether fraud was committed upon it, and pursuing a remedy. Accordingly, the Court
recommends that Steele's request that Bell's copyright be declared invalid and cancelled be
DENIED.
6. The Art Film Agreements Purporting to Transfer Interest in the Film to Bell
Should be Declared Null and Void.
Steele seeks a declaration that "any agreements that attempted to transfer any interests
(copyright or otherwise) in the Film to Mr. Bell are null and void because Ms. Steele is the sole
copyright owner of the Film and thus the sole individual with the right to authorize use of the
Film." (Mem. of Law at II.) "The owner of copyright under this title has the exclusive rights to
... prepare derivative works based upon the copyrighted work:' 17 V.S.c. § 106(2).
The Court recommends that Steele's request be GRANTED because Steele is the sole copyright
owner. Assuming her allegations to be true, Bell was not entitled to transfer any interests in
Steele's work to other individuals. Art Film Agreements that Bell entered into with cameraman
James Richards and editor Soopum Sohn should be declared null and void.
7. Declarations Not Included in the Amended Complaint
In her current request for relief, Steele also seeks two declarations that were not in her
Amended Complaint: (l) Steele's copyright registration for the Film is valid and enforceable;
and (2) Defendants are barred from bringing claims against Steele for enforcement of the
Australian judgment or seeking to obtain ownership of the computer and hard drive containing
the Film. (Mem. of Law at
4-13.) Because these two declarations were not in Steele's
pleadings, they are barred, and I recommend that this relief be DENIED.
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C.
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Injunctive Relief
A court may grant injunctions "on such terms as it may deem reasonable to prevent or
restrain infringement of a copyright." 17 U.S.c. § 502(a). A court may issue an injunction when
the moving party establishes that there is a statutory basis for relief and that it meets the
prerequisites for the issuance of an injunction." TigerCandy Arts, Inc. v, Blab'son Corp., No. 09
Civ. 6215 (GBD) (FM), 2012 WL 760168 (S.D.N.Y. Feb. 23,2012), report and
recommendation adopted, 2012 WL 1948816 (S.D.N.Y. May 30, 2012). A plaintiff seeking a
permanent injunction must show "(1) actual success on the merits and (2) irreparable harm."
Gucci Am., Inc, v. Duty Free Apparel, Ltd., 286 F, Supp, 2d 284, 290 (SD.N.Y. 2003). In
intellectual property actions, permanent injunctions are normally granted when there is "a threat
of continuing violations." Warner Bros. Entm 'f Inc. v. Carsagno, No. 06 Civ. 2676 (NG)
(RLM), 2007 WL 1655666, at *5 (E.D.N.Y. June 4, 2007).
Here, 42 U.S.c. § 502(a) provides the statutory basis for Steele's injunctive relief Bell's
default demonstrates Steele's success on the merits. See Pitbull Prods., Inc. v. Universal
Netmedia, Inc., 07 Civ. 1784 (RMB) (GWG), 2007 WL 3287368, at *6 (S.D.N.Y. Nov. 7, 2007).
Defendants created, distributed, and exhibited unauthorized derivative works from the Film
without Steele's permission. Steele claims that these acts caused her financial losses and
reputational harm. Defendants' actions against Steele constitute irreparable harm because they
damaged personal and potential business relationships, which are often not cured by a monetary
award. See Rex Medical L.P. v. Angiotech Pharm. (US), Inc., 754 F. Supp. 2d 616,621
(S.D.N.Y. 2010).
In her Amended Complaint, Steele demanded, among other things, an order "directing
Defendants to deliver to Plaintiff for Plaintiff's disposition any infringing works derived from
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the Film and all documents referring, relating or containing any infringing works in the
possession, custody or control of Defendants and/or any other parties to whom Defendants
provided such materials" and an order requiring Bell to complete the Film "pursuant to the Film
Agreement, including, but not limited to, financing for any final post-production costs." (Am.
CompI. at 22.) Steele now seeks the entry of a permanent injunction. She states:
Defendants should be barred from using any aspect of the Film in any way, including, but
not limited to, the Unauthorized Trailer and Unauthorized Photograph, and ordered to
remove all existing infringing works and to take reasonable efforts to regain copies of the
infringing works that Defendants distributed to third parties (including, but not limited to,
the American Federation of Arts, Tufts University Art Gallery, Australian media entities,
and Vimeo.com).
(Mem. of Law at 2.)
Rule 54 mandates that "[a] default judgment must not differ in kind from, or exceed in
amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c). The requested relief now
before the Court differs in kind from the relief requested in the Amended Complaint. Bell was
therefore not on meaningful notice of the potential liability. See Silge, 510 F.3d at 160.
Nonetheless, courts have long held that there is "no requirement that the plaintiff request in his
complaint the specific relief which is eventually granted." Us. for Use and Benefit ofBergen
Point Iron Works v. Maryland Cas. Co., 384 F.2d 303, 304 (2d CiT. 1967). Because there is a
statutory basis for the relief Steele seeks, and because Defendants have demonstrated that they
will continue to appropriate images
of~
and portions from, the Film under false pretenses, I
recommend that Steele's request for a permanent injunction be GRANTED.
D.
Monetary Damages
Because Steele owns the copyright, she may be entitled to monetary damages hased on
Defendants' infringements. Under the Act, a copyright owner is entitled to recover either (1)
15 Case 1:11-cv-09343-RA-RLE Document 44
Filed 03/03/14 Page 16 of 22
actual damages and any additional profits of the infringer; or (2) statutory damages for copyright
infringement. 17 U.S.c. § 504(a). "A plaintiff shall elect the form of damages prior to final
judgment." Kamakazi lvlusic Corp. v. Robbins Alusic Corp., 534 F. Supp. 69, 74 (S.D.N.Y.
1982). "[O]nce a plaintiff elects statutory damages he may no longer seek aetual damages."
Latin Am. Music Co., inc. v. Spanish Broad.
5~vs.,
inc., 866
Supp. 780, 782 (S.D.N.Y. 1994)
(referencing Twin Peaks Prods., inc. v. Publ'ns Int'l, Ltd., 996 F.2d 1366, 1380 (2d Cir. 1993);
Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir.1983). Steele did not elect statutory damages. She
asks the to grant her "the highest damage award to which she is entitled under the CopyTight Act:
actual damages ... , or, in the alternative statutory damages for willful infringement." (Mem. of
Law at 16.) The Court may also award attorney's fees and costs. 17 U.S.c. at § 505.
1.
Actual Damages and Profits
"[A] copyright owner is entitled to recover the actual damages suffered by him or her as
a result of the infringement, and any profits of the infringer that are attributable to the
infringement and are not taken into account in computing actual damages." 17 U.S.c. § 504(b).
"[T]he primary measure of recovery is the extent to which the market value ofthe copyrighted
work at the time of the infringement has been injured or destroyed by the infringement."
Fitzgerald Publ'g. Co. v. Baylor Pub. Co., 807 F.2d 1110, 1118 (2d Cir. 1986). A plaintiff may
rely on indirect evidence to prove damages. id. at 1118. Moreover, a copyright owner may
recover the profits it would have earned but for the infringement. id. (citing Kenbrooke Fabrics
v. Holland Fabrics, inc., 602
Supp. 151, 155 (S.D.N.Y. 1984». "The actual damages must
bear a 'necessary, immediate and direct causal connection' to the defendant's infringement."
Sunset Lamp Cmp. v. Alsy Corp., 749 F. Supp. 520,522 (S.D.N.Y. 1990) (citing Big Seven
Music Corp. v, Lennon, 554 F.2d 504, 509 (2d Cir. 1977».
16
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Steele estimates that, prior to "Defendants' infringing use of the Film," the Film had a
market value of "at least $250,000, based on the gross earnings of two recent documentaries in
line with my goals for the Film ...." (Steele Dec!.
~
71.) She states that "[b ]ecause it is likely
no longer an option to license the Film to HBO's Documentary Division or show the Film at film
festivals," the current market value is "$30,000 or less." (Id. at ~ 73.) In addition to a decreased
market value, Steele also claims she has suffered harm to her "personal reputation" because she
has had "to correct the public record" about her ownership of the Film "numerous" times. (Id. at
~~
75-76.) Steele, however, has provided no evidence that HBO's Documentary Division was
interested in the Film. Her statement that the Film "not completed" due to a lack of funds belies
any assertion that HBO might have purchased the Film in its then-current state. (ld. at ~ 35.)
Similarly, there is no documentation supporting Steele's unrealized goal that the Film might be
accepted at a film festival. She has provided no proof that anyone expressed interest, or that
showing the film at a festival was a realistic possibility.
Further, Steele is unable to provide any estimate of Defendants' profits based on sales of
Steele's work. (See Mem. of Law at 19.) "In establishing the infringer's profits, the copyright
owner is required to present proof only of the infringer's gross revenue ...." 17 U.S.C. 504(b).
Steele's estimate that Bell earned $20,000 in profit "from displaying the Unauthorized Trailer as
an art film installation" is not based on any proof of Bell's gross revenue. She has submitted no
evidence that Bell has made any money from Steele's Film.
Because Steele's actual damages are speculative and do not bear a "necessary, immediate
and direct causal connection" to Defendants' infringement, Sunset Lamp Corp., 749 F. Supp. at
522, and because she cannot demonstrate that Defendants profited from the infringements, I
recommend that her request for actual damages and profits be DENIED.
17
Case 1:11-cv-09343-RA-RLE Document 44
2.
Filed 03/03/14 Page 18 of 22
Statutory Damages and Attorney's Fees
The Act provides:
[T]he copyright owner may elect, at any time before final judgment is rendered, to
recover, instead of actual damages and profits, an award of statutory damages for all
infringements involved in the action, with respect to anyone work, for which anyone
infringer is liable individually, or for which any two or more infringers are liable jointly
and severally, in a sum of not less than $7S0 or more than $30,000 as the court considers
just. For the purposes of this subsection, all the parts of a compilation or derivative work
constitute one work.
17 u.s.c. § S04(c)(1). A court may increase the award of statutory damages up to $IS0,000 if
the infringement was willful. /d. at § S04(c)(2). The Second Circuit has stated that "[t]he
standard is simply whether the defendant had knowledge that its conduct represented
infringement or perhaps recklessly disregarded that possibility." Twin Peaks Prods., 996 F.2d at
1382 (citing Fitzgerald Publ'g, 807 F.2d at IllS). Statutory damages are prohibited, however,
in certain circumstances. Section 412 of the Copyright Act provides that "no award of statutory
damages or attorney's fees, as provided by sections S04 and SOS, shall be made for: (1) any
infringement of an unpublished work commenced before the effective date of its registration."
17 U .S.c. § 412. "If any alleged infringement of an unpublished work occurs before
registration, statutory damages are unavailable." Fournier v. Erickson, 202 F. Supp. 2d. 290,
298 (S.D.N.Y. 2002). Here, Steele did not elect statutory damages under § S04(c)(1). Her
request for an award of "the highest damage award to which she is entitled" therefore appears
unsupported. As discussed below, even if she had elected statutory damages, Steele has not
shown an entitlement to them.
a. The Effective Registration Date of the Film is October 25, 2011
Steele filed an online copyright application for the Film as an unpublished work on July
11,2011. (Steele Dec!. ~ 46; Steele Decl. Ex. A.) Because she failed to upload all necessary
18
Case 1:11-cv-09343-RA-RLE Document 44
Filed 03/03/14 Page 19 of 22
materials, her registration was not completed at that time. (Steele Decl.
~
46.) On or around
October 12, 2011, Steele discovered that a trailer to her Film had been posted on the Milani
Gallery Facebook page and on the gallery website. (Jd. at
~
53.) She completed the registration
process for her copyright on October 25,2011. (Steele Decl. Ex. B.) Steele asks the Court to
find that the effective date of her registration is July 11,2011, the date on which she filed her
application, and not October 25,2011, the date on which she successfully completed the
registration process. (Mem. of Law at 22.)
Steele recognizes that her request requires the Court to permit her to alter the statutory
copyright registration date. Her argument for doing so rests on equitable principles, and she
does not cite any cases in support of the relief sought. She urges the Court to consider that she
was unrepresented "at the time of her copyright application" and that she lacked "prior
experience with copyright applications for films." (Jd. at 23.) Her argument would have greater
force if the failure here were attributable to a lack of legal training. The facts, however, do not
support this conclusion.
First, Steele acknowledges that she had "previously filed online copyright applications
with the U.S. Copyright Office for screenplays ...." (Steele Decl.
~
45.) Second, the
application that Steele submitted plainly states: "Claim Status: Pending." (Steele Decl. Ex. A.)
Third, Steele did not receive a copyright registration number, the key indicator that a person has
successfully obtained a valid copyright. (See id.) As someone who had successfully obtained
copyrights for screenplays, Steele reasonably should have known that she would be issued a
copyright registration number upon completion of her application and that the claim status would
not be "pending." A complete copyright registration requires an application form, payment of a
fee, and a deposit of "one complete copy or phonorecord." 17 U.S.c. § 408(a)-(b). Here, as
19
Case 1:11-cv-09343-RA-RLE Document 44
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Steele failed to provide all required materials by July 11, 2011, her application was not
complete. The Court sees no reason to recommend otherwise.
b. Defendants' Repostings Do Not Constitute a New Series ofInfringements.
If the Court finds October 25, 2011, to be the effective date of copyright registration,
Steele argues, in the alternative, that it consider the second infringing post, during the week of
October 29, 2011, as a "new series of infringements" warranting an award of statutory damages
and attorney's fees. (Mem. of Law at 24,25.) She notes that Defendants responded to
counsel's October 14, 20 II cease and desist letters by removing the infringing materials from
the Milani Gallery Facebook page and website. (Id. at 25.) After Steele properly registered her
copyright on October 25,2011, Defendants "reposted the Infringing Works onto the Milani
Gallery website and Faeebook profile," thus aeting in "willful defiance of' Steele's copyright.
(ld. at 25-26.)
Steele relies on Troll Co. v. Uneeda Doll Co. for the proposition that Congress
understood Section 412 to mean that a post-registration act of infringement will not be deemed
to have commenced before registration if the infringing activity ceased for an appreciable period
of time. 483 F. 3d 150, 159 (2d CiI. 2007). The present case is factually distinct from Troll,
which concerned the ownership of a "restored" copyright under Section] 04A. ld. at 152. In
that case, the defendant sought reliance party status I where the copyright for a troll doll was in
the public domain at the time of the infringement. ld. at 152-53. The court found that the
defendant's "renewed manufacture" and sale of troll dolls after a nine or ten-year hiatus "was not
i Section 104A of the Act concerns the enforcement of restored copyrights against parties that were
legitimately exploiting works in reliance on their public domain status. 17 U.S.C. § I04A. The statute creates a
category of prior exploiters called ;'reliance parties" who may continue to exploit the work until the owner of the
restored copyright makes known its intent to enforce its copyright. Id.
20
Case 1:11-cv-09343-RA-RLE Document 44
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a continuation of infringement." ld. at 159. Unlike Troll, the present case neither involves the
restoration of a lost copyright, nor was there a multi-year hiatus in between the two
infringements. The first instance of infringement was discovered on or around October 12,
20 11, while the second instance occurred around October 29, 20 II. (Brennan Decl.
~[
11).
Defendants did not stop infringement for an appreciable amount of time. Instead, they removed
the infringing materials for twelve days. Steele's reliance on Kwan v. Schlein, 246 F.R.D. 447
(S.D.N.Y. 2007), in which the court granted plaintiffs motion to amend her pleadings to assert
claims of copyright infringement and did not address the merits of whether a "new edition" of a
book marks a new infringment, is likewise unconvincing.
Defendants' second act of infringement cannot be viewed as a new series of
infringement warranting statutory damages and attorney's fees; therefore, I recommend that
Steele's claim for statutory damages and attorney's fees be DENIED.
CONCLUSION
For the foregoing reasons, I recommend that:
(1) the Court issue the following declarations:
(a) Steele is the Sole Author of the Film;
(b) Steele is the Sole Copyright Owner of the Film;
(c) Defendants Infringed Steele's Copyright in the Film;
(d) the Art Film Agreements Purporting to Transfer Interest in the Film to Bell
Should are Null and Void; and
(2) Steele's application for a permanent injunction be GRANTED; and
(3) Steele's requests for damages and attorney's fees be DENIED. Pursuant to Rule 72, Federal Rules of Civil Procedure, the parties shall have fourteen 21
Case 1:11-cv-09343-RA-RLE Document 44
Filed 03/03/14 Page 22 of 22
(14) days after being served with a copy of the recommended disposition to file written
objections to this Report and Recommendation. Such objections shall be filed with the Clerk of
the Court and served on all adversaries, with extra copies delivered to the chambers of the
Honorable Ronnie Abrams, 40 Foley Square, Room 2203, and to the chambers of the
undersigned, Room 1970. Failure to file timely objections shall constitute a waiver of those
objections both in the District Court and on later appeal to the United States Court of Appeals.
See Thomas v. Am, 474 U.S. 140, 150 (1985); Small v. Sec'y 0.( Health & Human Servs., 892
F.2d 15, 16 (2d Cir. 1989) (per curiam); 28 U.S.c. § 636(b)(1); Fed. R. Civ. P. 72, 6(a), 6(d).
DATED: March 3, 2014
York, New York
~ew
Respectfully Submitted,
rT7". V1J;(5- ~
~~n~;~~.
h
Ellis
United States Magistrate Judge
22

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