Wilen v. Alternative Media Net, Inc. | 74 USPQ2d 1053 | January 26, 2005

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Wilen v. Alternative Media Net, Inc.

74 U.S.P.Q.2d 1053 (2005)

Patrick WILEN, Plaintiff,
v.
ALTERNATIVE MEDIA NET, INC. and Claudio R. Lovo, Defendants.

No. 03CIV2524(RMB)(JCF).

United States District Court, S.D. New York.

Jan. 26, 2005.

DECISION AND ORDER

BERMAN, J.

I. Background

On April 11, 2003, Patrick Wilen ("Plaintiff") filed a complaint against Alternative Media Net, Inc. ("AltMedia" or the "corporation") and its President, Claudio R. Lovo ("Lovo") (collectively, "Defendants") alleging copyright infringement under the Federal Copyright Act of 1976 ("Copyright Act"), 17 U.S.C. §§ 101 et seq. (See Complaint, dated April 10, 2003 ("Complaint" or "Compl.") ¶¶ 1, 9.) Plaintiff, a professional photographer, asserts that in late 2002 or early 2003, AltMedia and Lovo appropriated seven photographs copyrighted by Plaintiff and "copied them without authorization on AltMedia's web site called 'tvchismes.com." ' (Compl.¶¶ 1, 2, 21, 22, 32.) AltMedia was alleged to have replaced Plaintiff's copyright notice on these photographs "with a prominent yellow banner stating "Tvchismes.com." (Compl.¶ 27.)

In May, June, and July of 2003, Lovo, acting without counsel and purportedly on behalf of himself and the corporation, AltMedia, attempted to move to dismiss the action. (See Defendant's Sworn Motion to Dismiss, dated May 28, 2003; Letter from Lovo to the Court, dated June 23, 2003 ("June 23, 2004 Letter"); Letter from Lovo to the Court, entitled "Motion to Dismiss," dated July 7, 2003 ("July 7, 2003 Letter").)

At the initial pre-trial conference with the Court held on July 8, 2003, at which Lovo appeared, the Court dismissed Lovo's proposed motion to dismiss "without prejudice," stating that the Court was "not going to accept [the proposed motion] at this time because it purports to be made on behalf of both [Lovo] and the corporation and, as we just said, the corporation needs to be represented by counsel." (Transcript of Proceedings held on July 8, 2003 ("Tr."), at 3-4; see also Order, dated July 8, 2003). The Court advised Lovo that "a corporation must be represented by counsel" and directed that he obtain counsel for AltMedia by July 29, 2003.[1] (Tr. at 2; Case Management Plan, dated July 8, 2003). At the July 8, 2003 conference, Lovo indicated that he would continue to represent himself prose. (Tr. at 2.) By letter dated July 28, 2003, Lovo informed the Court that "I cannot comply with your order" to obtain counsel for AltMedia because "I don't have any financial capacity to afford counsel." (Letter from Lovo to the Court, dated July 28, 2003.)

Both Lovo and AltMedia subsequently (i.e. after the purported motion to dismiss was denied without prejudice) failed to answer the Complaint and, despite notice, failed to appear at a scheduled conference with the Court on December 29, 2003. On or about June 7, 2004, Plaintiff moved for default judgment by way of an order to show cause. (See Order to Show Cause [13].) Defendants did not file any response to this application and, despite notice, again failed to appear on the hearing date of July 6, 2004. A default judgment against both Defendants was signed by the Court on that date, and the matter was referred to United States Magistrate Judge James C. Francis, IV, for an inquest to determine damages. (See Default Judgment Order, dated July 6, 2004; Order of Reference to a Magistrate Judge, dated July 6, 2004.) An inquest was held by Magistrate Judge Francis on August 20, 2004, and again, despite notice, Defendants failed to appear.

On December 6, 2004, Magistrate Judge Francis issued a thoughtful and comprehensive Report and Recommendation ("Report") recommending that "judgment be entered in favor of the plaintiff and against the defendants, jointly and severally, in the amount of $180,888.42 ($140,000 in copyright damages and $40,888.42 in attorneys' fees and costs)." (Report at 7.) The Report also found that Plaintiff had "registered each of his photographs and has not authorized the defendants to utilize them. AltMedia, as directed by Mr. Lovo, copied seven of the photos and displayed them on the 'members only' section of its Web site. Accordingly, the defendants have engaged in copyright infringement." (Report at 4) (citations omitted.) On December 20, 2004, Lovo submitted objections to the Report, purportedly on behalf of himself and the corporation.[2] (Defendant Lovo's "Appeal and Objection," received December 20, 2004 ("Lovo Obj.")) Plaintiff responded to these objections by letter dated January 6, 2005.

For the reasons set forth below, the Court adopts the Report in all material respects.

II. Standard of Review

The Court may adopt those portions of a magistrate judge's report to which no objections have been made and which are not facially erroneous. See Fed.R.Civ.P. 72(b); see, e.g., Pizarro v. Bartlett, 776 F.Supp. 815, 817 (S.D.N.Y.1991); Nelson v. Smith, 618 F.Supp. 1186, 1189 (S.D.N.Y.1985). The Court conducts a de novo review of those portions of the report to which timely objections have been made. See, e.g., Pizarro, 776 F.Supp. at 817. Once objections have been received, a district judge may accept, reject, or modify, in whole or in part, the findings and recommendations of the magistrate judge. See, e.g., Deluca v. Lord, 858 F.Supp. 1330, 1345 (S.D .N.Y.1994); Walker v. Hood, 679 F.Supp. 372, 374 (S.D.N.Y.1988).

Where, as here, a party is proceeding pro se, "lenience is generally accorded." Bey v. Human Res. Admin., No. 97 Civ. 6616, 1999 WL 31122, at *2 (E.D.N.Y. Jan. 12, 1999).

III. Analysis

The facts as set forth in the Report are incorporated herein unless otherwise noted.

The Court has reviewed Lovo's objections, the record and applicable legal authorities, and has conducted a de novo review. There is no basis to depart from the Report's recommendations.[3]

In his objections, Lovo raises what appears to be a defense to liability arising out of his and the corporation's use of Plaintiff's photographs. Based upon the allegations of the Complaint, Magistrate Judge Francis dealt with liability by finding that Plaintiff had registered his photographs, that "AltMedia, as directed by Mr. Lovo" copied and displayed the photographs without authorization, and "[a]ccordingly, the defendants have engaged in copyright infringement." (Report at 4.)

The Court, in its discretion and in the interest of giving a pro se litigant "extra leeway," is treating this "Appeal and Objection" as a motion to set aside the entry of default. See Meehan v. Snow, 652 F.2d 274, 276, 277 (2d Cir.1981) ("Opposition to a motion for a default judgment can be treated as a motion to set aside the entry of default despite the absence of a formal Rule 55(c) motion."); see also Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir.1993) (pro se litigants are afforded "extra leeway in meeting the procedural rules governing litigation").[4]

A. Liability

Lovo asserts, as he did in his purported motion to dismiss (see June 23, 2003 Letter; July 7, 2003 Letter), that his (and his corporation's) use of Plaintiff's photographs is protected by the "fair use" doctrine. (Lovo Obj. at 2-3.) Lovo contends:

TVCHISMES.COM made a parody named 'The Magic of Photoshop 7.0' and made 'fair use' of certain pictures of the Plaintiff from a calendar entitled Sissi 2003. We have featured before [on the website] and made a parody of the noticeable 'digital retouching' that the photographer and her make up artist made on the said calendar. In order to illustrate our point, we made 'fair use' of the Plaintiff picture 'cycle photo' and clearly labeled a parody in the Spanish text accompanying a series of photos and video captures.

(Id. at 2.)

Courts have generally considered three factors in determining whether to set aside a default: "(1) whether the default was willful; (2) whether setting aside the default would prejudice the adversary; and (3) whether a meritorious defense is presented." Enron, 10 F.3d at 96.

Willfulness

Lovo's default was wilful. "[A] default may be found to have been willful where the conduct of counsel or the litigant was egregious and was not satisfactorily explained." Gonzalez v. City of New York, 104 F.Supp.2d 193, 196 (S.D.N.Y.2000) (citing S.E.C. v. McNulty, 137 F.3d 732, 738-39 (2d Cir.1998)). Lovo has not made a serious effort to comply with the Court's directions in this case. He has not attempted to defend the case appropriately after his proposed motion to dismiss was not accepted on July 8, 2003. Despite notice, he failed to appear at court proceedings on at least three separate occasions. He has not found counsel for AltMedia and has not indicated that the corporation has ceased business operations.[5] Accordingly, Lovo's default was willful. See Au Bon Pain Corp. v. Artect, Inc.,653 F.2d 61, 65 (2d Cir.1981) (corporate president's "failure to appear for a deposition, dismissing counsel, giving vague and unresponsive answers to interrogatories, and failing to appear for trial were sufficient to support a finding that he had 'failed to plead or otherwise defend' under Federal Rule Civil Procedure 55."); S.E.C. v. U.N. Dollar Corp., No. 01 Civ. 9059, 2003 WL 192181, at *1 (S.D.N.Y. Jan. 28, 2003) ("While leeway is often afforded to pro se litigants regarding knowledge of legal procedure ... pro sedefendants are still required to make a good faith effort to comply with Federal Rules in their defense of a civil action.") (citation omitted).

Defense

Lovo asserts (unpersuasively) that his and AltMedia's appropriation of the photographs copyrighted by Plaintiff constituted "fair use." (Lovo Obj. at 2-3.) "Fair use" of a copyrighted work includes use for "purposes such as criticism, comment, news reporting, teaching, scholarship, or research." 17 U.S.C. § 107. Whether a particular use constitutes a "fair use" within the meaning of the statute is determined by reference to the following four factors: "(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work." Id. These factors are to be considered together, and no single one is dispositive. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577-78 (1994).

Lovo has not shown "fair use." Plaintiff sought default judgment with respect to only the first claim in the Complaint, namely that Lovo and AltMedia copied seven photographs and placed them in a "membership section" of their website, altering these images by obliterating Plaintiff's copyright notice and replacing it with AltMedia's own label, "tvchismes.com." (See Compl. ¶¶ 2, 24, 27, 33-39; id.Exs. A & C; Order to Show Cause at 1; Memorandum of Law in Support of Plaintiff's Application for a Default Judgment, dated June 7, 2004, at 3; Report at 2, 4.) Lovo's assertion that the use of Plaintiff's photographs was a parody fails entirely to address this claim and, instead, addresses only the second claim in the Complaint, which is not currently before the Court.[6] (See Lovo Obj. at 2-3; see alsoCompl. ¶¶ 22-23, 40-45; id. Ex. B.) As the willful concealment of the copyright notices on the seven photographs at issue constituted the only change to those photographs, any defense based upon these photographs being a parody lacks merit. See Campbell, 510 U.S. at 578-79 (holding that the heart of the fair use inquiry "is to see ... whether the new work merely 'supersede[s] the objects' of the original creation ... or instead adds something new ... altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is 'transformative." '); On Davis v. The Gap, Inc., 246 F.3d 152, 174-76 (2d Cir.2001)(same).

Prejudice

While delay, standing alone, does not establish prejudice, Enron, 10 F.3d at 98, Plaintiff would be prejudiced if entry of default were set aside "given that the case has already been delayed extensively ... and that allowing [Lovo] to continue to defend would cause substantial further delay in concluding the case...." S.E.C. v. Alexander, No. 00 Civ. 7290, 2004 WL 1468528, at *6 (S.D.N.Y. June 28, 2004) (finding prejudice where defendant had failed to respond to complaint within time frame specifically prescribed by the court and "failed to participate in any meaningful way in the discovery process"). Lovo has refused to follow the Court's instructions, including obtaining counsel for the corporation, AltMedia. He has failed to appear at court proceedings on at least three separate occasions. And, he has defiantly asserted that "even if there is a judgment against my corporation and me, [Plaintiff] will never be able to collect it." (Lovo Obj. at 5.) There is no reason to believe that Lovo will be cooperative should this case be permitted to progress.

Further, setting aside entry of default is not warranted here as Lovo has not shown good cause and the Court has found that the "willfulness" and "meritorious defense" factors weigh heavily against him. See Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 244 (2d Cir.1994).

B. Objections As To Damages

Lovo asserts that he "never profited from the posting of Plaintiff's photos" because the "significant number of 'hits' that the Plaintiff states [the website in question] received, does not mean that every 'hit' paid $9.95.... The site is free except for an insignificant paid membership that does not exceed 30[or] 40 per month." (Lovo Obj. at 2.) Lovo also contends that he "is not a wealthy individual" and that "even if there is a judgment against my corporation and me, they will never be able to collect it." (Id. at 4-5.) He asks "What's the purpose of continuing with this?" (Id.)

The Copyright Act provides that a copyright owner may elect between actual damages or statutory damages at any time before final judgment is rendered. 17 U.S.C. § 504(b) & (c). Magistrate Judge Francis correctly found that "[i]n this case, the plaintiff has elected statutory damages" under the Copyright Act. (Report at 4.) Magistrate Judge Francis also correctly determined that:

Given the absence of evidence presented to the Court regarding the parties' profits and losses.... I must rely principally on the fact that the defendants' action were willful, as evidenced by its blatant concealing of the copyright notice appearing on each photo. Furthermore, the need to deter AltMedia and others from committing similar violations in the future supports [statutory damages of] $20,000 for each of the seven infringed photos.

(Id. at 5-6) (citing Eastern Am. Trio Prods., Inc. v. Tang Elecs. Corp., 97 F.Supp.2d 395, 419 (S.D.N.Y.2000); ASA Music Productions v. Thomsum Elecs., 49 U.S.P.Q.2d 1545, 1552 (S.D.N.Y.1998)).

Lovo's contention that he did not profit from the infringement does not mitigate Magistrate Judge Francis' assessment of damages, which, as noted above, is based principally on the Defendants' willful infringement. (Report at 5.) Lovo's contention that he will be unable to pay any damages is also unpersuasive. Although the Court has discretion to award a plaintiff statutory damages within a range set by the Copyright Act "as the court considers just," 17 U .S.C. § 504(c)(1) & (2); Fitzgerald Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1116 (2d Cir.1986), a defendant's ability to pay damages is not generally a factor that is considered in determining the amount of statutory damages awarded under the Act. See, e.g., Fitzgerald, 807 F.2d at 1116-17. The Court perceives no legal or equitable basis to disturb Magistrate Judge Francis' recommendations as to damages.

IV. Conclusion and Order

For the reasons stated herein and therein, the Court adopts Magistrate Judge Francis' Report [17]. The Clerk of the Court is respectfully directed to enter judgement in favor of Plaintiff and against the Defendants, jointly and severally, in the amount of $140,000 in copyright damages and $40,888.42 in attorneys' fees and costs, for a total of $180,888.42. Plaintiff is also awarded post-judgment interest calculated from the date of entry of this Order of Judgment. 28 U.S.C. § 1961.

[1] In attempting to move to dismiss, Lovo failed to follow the Court's individual rules, which require premotion conference letters. The Court directed Lovo to comply with this rule on two separate occasions. (See Order, dated June 9, 2003; Tr. at 2.)

[2] To the extent Lovo's objections purport to be lodged on behalf of AltMedia, they need not be considered because corporations may not appear pro se, as Lovo is well aware. See, e.g., Jacobs v. Patent Enforcement Fund, Inc., 230 F.3d 565, 568 (2d Cir.2000) (holding that a corporation cannot appear pro se ); S.E.C. v. Research Automation Corp., 521 F.2d 585, 589 (2d Cir.1975) (holding that a corporation cannot appear except through an attorney and "where a corporation repeatedly fails to appear by counsel, a default judgment may be entered against it.").

[3] As to any portions of the Report to which no objections have been made, the Court concludes that the Report is not clearly erroneous. See Pizarro, 776. F.Supp. at 817. Any Objections that are not specifically discussed in this Order have been considered de novo and rejected.

[4] Fed.R.Civ.P. 55(c) permits the Court to set aside an entry of default "[f]or good cause shown." See Fed.R.Civ.P. 55(c);see also Enron, 10 F.3d at 95.

[5] Indeed, the fact that Lovo's objections purport to concern "my corporation and me" suggests that AltMedia is still in operation. (Lovo Obj. at 5.)

[6] Plaintiff's second claim concerns two of the seven photographs, reproduced in a public section of AltMedia's website, to which the Defendants made additional changes. (See Compl. ¶¶ 2, 22-23, 40-45; id. Ex. B.) Plaintiff's motion for default judgment and, consequently, the default judgment, make no mention of this second claim. (See Order to Show Cause at 1; Memorandum of Law in Support of Plaintiff's Application for a Default Judgment, dated June 7, 2004, at 3; Report at 2, 4.)

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Case Information

June 02, 2015

2005-01-26

Berman

74 USPQ2d 1053

No. 03CIV2524(RMB)(JCF).

United States District Court, S.D. New York

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