On November 1st, the U.S. Court of Appeals for the Eighth Circuit (8th Cir.) issued a decision in a case brought by motion picture entertainment company Warner Bros. and appealed by a group of defendants who licensed images culled from publicity material for some of Warner’s most famous entertainment properties. A panel from the 8th Cir. found in favor of Warner Bros. and affirmed an earlier verdict, which has helped to define whether publicity material for films and animated shows are available in the public domain. This decision is the second time that 8th Cir. has issued a judgment in this case.
In the case, Warner Bros. sought an injunction against multiple defendants including A.V.E.L.A., X One X Productions, Art-Nostalgia.com and Leo Valencia. The defendants, collectively referred to as “AVELA” in court documents, were targeted for their business activities which involved licensing images obtained from movie posters and lobby cards, a type of movie poster which depicted a certain scene from a film. The publicity materials included images from the feature-length films Gone with the Wind and The Wizard of Oz as well as short animated films featuring the Tom and Jerry characters. These images were licensed by AVELA on a range of consumer products including shirts, lunches, playing cards, water globes and action figures.
Warner Bros. first filed suit against the AVELA defendants back in 2006 in the U.S. District Court for the Eastern District of Missouri (E.D. Mo.) with infringement claims under state law as well as federal claims under the Copyright Act and the Lanham Act. In March 2009, E.D. Mo. granted a summary judgment in the case based on the copyright infringement claims, awarding $2.57 million in statutory damages for that infringement. E.D. Mo. also entered a permanent injunction on the trademark infringement and unfair competition claims “prohibiting AVELA from using any of the publicity material images in any way except for exact duplication of publicity materials in the public domain,” according to the most recent 8th Cir. decision.
On the original appeal, much of the injunction was upheld by an 8th Cir. judicial panel but the court did make an important distinction in the types of products sold by the defendants, which were charged as instances of copyright infringement. The 8th Cir. panel agreed with Warner Bros. on copyright infringement posed by AVELA’s products which juxtapose images collected from different publicity materials or superimposed with a phrase from the movie’s book, as well as those products that extend an image extracted from publicity materials into three dimensions, as in the case of the action figures. Where the 8th Cir. panel failed to find copyright infringement, however, was in the case of products reproducing a single image from publicity materials as an exact two-dimensional images. The case was remanded to E.D. Mo. with the permanent injunction ended against this last category of products.
The total damages of $2.57 million awarded to Warner Bros. reflects for statutory damages of $10,000 per infringed copyright on a total of 257 copyrights. The 8th Cir. determined this amount was not clearly erroneous or disproportionate, and it did not violate the court’s prior order in the previous appeal. The district court also awarded attorney’s fees, although the amount of fees remained undetermined at the time of 8th Cir.’s most recent decision, which prevented the panel from reviewing or commenting on that aspect of the case.
AVELA’s second appeal argued that the defendants had their Seventh Amendment rights violated by E.D. Mo. when the court failed to put the question of statutory damages to the jury. That issue was raised by AVELA on appeal for the first time and the panel quoted another 8th Cir. decision in 2004 which held that the appellate court doesn’t “address issues that a party raises for the first time on appeal and failed to raise in the district court.” AVELA also tried the argument that $2.57 million in statutory damages was disproportionate to the offense, but the 8th Cir. panel found that the amount of damages was not obviously unreasonable. The appellate court notes that not only has the case had a long history, defendants did not cease the infringing activity for about a decade. AVELA defendants also maintained poor records which made calculating actual damages impossible. “That the district court therefore considered a substantial damages award necessary to deter future infringement and provide sufficient restitution to the copyright holder is not clearly erroneous,” according to the recent decision.
On the summary judgment appeal, AVELA insisted that the motion must be overturned because of judicial admission and judicial estoppel. In requesting a final judgment, Warner Bros. made the admission that if the copyright infringement claim was held up by the district court and survived appeal, the firm would not have to move forward with its trademark infringement and unfair competition claims. 8th Cir. found that Warner Bros.’ statement wasn’t an admission but rather a conditional prediction that “could prevent the courts from having to consider the trademark claims because Warner would not need to pursue them to obtain the relief it wanted. This does not admit anything or add evidentiary value.” 8th Cir. also found that the statement did not warrant raising any issues of judicial estoppel because Warner Bros. isn’t acting inconsistently if it wants to pursue trademark infringement claims because the copyright damages weren’t sufficient and it didn’t persuade the E.D. Mo. judge to accept that statement.
In its argument against the permanent injunction, AVELA defendants argue that the injunction violates both Federal Rule of Civil Procedure 52(a)(2) and Federal Rule of Civil Procedure 65(d). Again, the 8th Cir. panel notes that AVELA failed to bring this issue up at the appropriate time during civil proceedings at E.D. Mo. Also, AVELA proposed an alternative amended judgment in October 2015 which would have submitted to general injunctive relief after the original judgment was entered in March 2014. “Accordingly, AVELA not only was well-aware of the injunction’s generality for over a year and failed to challenge it, but also would have agreed to a judgment with the same failings it now tries to challenge,” the 8th Cir. panel found.