IP Law Daily Art publisher denied permanent injunction against online marketplace; fails to show irreparable harm
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Friday, July 10, 2020

Art publisher denied permanent injunction against online marketplace; fails to show irreparable harm

By Robert B. Barnett Jr., J.D.

The only true ongoing copyright infringement during the appeal was a purchase of a product by the publisher’s lawyer at the publisher’s request.

Following remand from the Ninth Circuit in a copyright infringement case brought by publishing company Greg Young Publishing, Inc., against marketplace operator Zazzle, Inc., the federal district court in Los Angeles has once again denied the publisher’s motion for a permanent injunction, ruling that irreparable harm had not been demonstrated and that an adequate remedy at law existed. The court also rejected the victorious copyright holder’s renewed motion for attorney fees under the Copyright Act, concluding that the publisher was not completely successful at trial (receiving only 21% of what was asked for) and that the actions in the litigation by Zazzle, the infringer, were objectively reasonable and not frivolous. In 2019, the Ninth Circuit had reversed the district court’s reduction of the jury’s damages award in favor of the publisher because the court erred in finding that Zazzle’s infringement was not willful (Greg Young Publishing, Inc. v. Zazzle, Inc., July 9, 2020, Wilson, S.).

Background. Greg Young Publishing, Inc., publishes visual art. Zazzle, Inc., operates a website that allows users to buy consumer products containing images that the user has chosen to appear on the product. The publisher sued the website, alleging copyright infringement of 41 different images that the publisher held copyrights on. After trial, a jury awarded the publisher $460,800 in statutory damages. The trial court, however, granted the website’s post-trial motion to reduce the verdict, ruling that the jury never found willfulness, and it reduced damage awards for any individual violations that exceeded $30,000, the statutory limit on violations that were not willful. The publisher appealed to the Ninth Circuit, which concluded that willfulness did exist because the website’s oversight of the infringements was reckless. Although the Ninth Circuit did not disturb the lower court’s denial of a permanent injunction or its refusal to award attorney fees, the Ninth Circuit gave the publisher the right to refile those motions should new evidence of ongoing copyright infringement be discovered.

On remand, the publisher did just that, contending that four new violations of its copyright had occurred while the matter was on appeal. As a result, the trial court was asked to rule on a renewed motion for a permanent injunction and a renewed motion for attorney fees under the Copyright Act.

Permanent injunction. The publisher contended that the four new violations caused it irreparable harm. The court noted, however, that evidence of copyright infringement does not automatically result in irreparable harm. In addition, upon a closer look, the court discovered that the four violations consisted of three images in promotional advertisements on the Zazzle website or on third-party websites (which did not constitute copyright infringement) and only one true violation, which resulted when the publisher’s lawyer bought a product at the publisher’s request. The publisher argued that the infringements caused a loss of reputation, but it offered no supporting evidence for that claim. The publisher also contended that irreparable harm occurred because it lost its exclusive right to control its copyright. Such a conclusion, however, was inconsistent with a Ninth Circuit ruling that copyright infringement does not lead to a per se presumption of irreparable harm (Flexible Lifeline Sys., Inc. v. Precision Life, Inc., 654 F.3d 989, 998 (9th Cir. 2011)). In the absence of any further evidence, the court concluded that irreparable harm had not been shown.

In addition, the court noted, the publisher had an adequate remedy at law, as demonstrated by the jury award of money damages, which the website could afford to pay. As for balancing the interests, the publisher never established any evidence that an injunction would prevent further infringement and so failed to meet its burden that the balance of hardships weighed in its favor. Weighing the various factors, the court denied the motion for a permanent injunction.

Attorney fees. One key factor under the Copyright Act in determining whether attorney fees should be awarded to the prevailing party is the degree of success by the moving party. In this case, while the publisher prevailed in its case, it received only 21% of the amount it sought as damages. Furthermore, the website obtained summary judgment on several grounds, which meant that the publisher did not achieve complete success. As a result, the "degree of success" test did not weigh in either party’s favor.

The next key factor was the level of frivolousness of the losing party’s legal positions. Frivolousness just did not exist, the court noted, citing the website’s success in numerous areas, including successfully proving that four instances of infringement were not willful. Similarly, the website’s positions on the issues were objectively reasonable. No bad faith existed, and no deterrence was necessary. Although the website was found to have engaged in willful conduct, the court concluded that no substantial likelihood existed of future infringement. For example, the website had pulled the infringing images from its website when it first learned of the infringement allegations. In fact, the court concluded that the only factor weighing in the publisher’s favor was that their motivation in pursuing the fees was not based on bad faith. For those reasons, with the factors weighing against an award of fees, the court denied the motion for attorney fees.

The court, therefore, denied the motion for a permanent injunction, and it denied the motion for attorney’s fees.

This case is No. 2:16-cv-04587-SVW-KS.

Attorneys: Darren James Quinn (Darren J. Quinn Law Offices) for Greg Young Publishing, Inc. Timothy J. Halloran (Murphy Pearson Bradley & Feeney) for Zazzle Inc.

Companies: Greg Young Publishing, Inc.; Zazzle Inc.

MainStory: TopStory Copyright TechnologyInternet GCNNews CaliforniaNews

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